Or. Admin. R. 123-200-1240 - [Effective 6/28/2024] Determination of Management Control
(1) All legal documents and financial
statements must clearly document that the socially disadvantaged individual has
management control of the firm.
(2)
A certified owner must hold the highest officer position in the company (e.g.
chief executive officer or president).
(a) In
a corporation, the certified owner(s) must control the Board of
Directors.
(b) In a partnership,
one or more certified owner(s) must serve as general partners, with control
over all partnership decisions.
(c)
In order for a certified individual(s) to control a partnership, any
non-certified partners must not have the power, without the specific written
concurrence of the certified partner(s), to contractually bind the partnership
or subject the partnership to contract or tort liability.
(d) Certified owners and/or firms must not be
subject to any formal or informal restrictions, which limit the customary
discretion of the certified owner(s). There can be no restrictions (i.e.
through corporate charter provisions, by-laws, contracts, or any other formal
or informal devices) preventing the certified owners from making any business
decision for the firm without the cooperation or vote of any non-certified
individual. This paragraph does not preclude a spousal co-signature on
documents as provided for in
49 CFR §
26.69(j)(2) (2013
Edition).
(3) The
socially disadvantaged individual(s) must possess sufficient knowledge,
managerial and technical competence, and experience, and have an overall
understanding directly related to the type of business in which the firm seeks
certification. The socially disadvantaged individual(s) must also be able to
maintain day-to-day control over all operational aspects of the business.
(a) The COBID will evaluate the training and
experience of the applicant based on a variety of factors. In determining
whether socially and economically disadvantaged owners control a firm, COBID
will consider all the facts in the record, viewed as a while. The qualifying
individual must be able to demonstrate clearly that he or she meets the
following factors. The list is not exclusive and COBID may take additional
training and experience into consideration when making a determination
regarding the owner's qualifications. Factors include:
(A) A college degree in the field of
expertise;
(B) Essential license in
Oregon in the field in which the firm operates (e.g. electrician, plumber,
engineer, or landscape architect, etc.) that is current and
up-to-date;
(C) Experience and/or
training in the primary field of expertise;
(D) Experience in project management in the
primary field of expertise;
(E)
Individual's presence and activity on work site and ability to determine if
work is proceeding in accordance with plans and to supervise field operations,
resolve problems, and answer technical questions for subordinates;
(F) Individual's demonstration of knowledge
in area of expertise during the certification interview process;
(G) Letters of reference from individuals
providing same or similar types of work;
(H) Contracts, proposals, or other related
documents; and
(I) Additional
training and experience related specifically to construction firms.
(i) Has ability to read and interpret
blueprints and specifications.
(ii)
Has independently done take offs and can prepare estimates and bids.
(iii) Can operate necessary equipment (e.g.
excavator, backhoe, dump truck, etc.)
(b) Quality of work performed does not
determine an applicant's eligibility for certification.
(c) In order to determine that the socially
disadvantaged individual(s) has the technical expertise and competence to
maintain operational control, the socially disadvantaged individual(s) may be
required to submit proof of expertise to include:
(A) A copy of his or her essential
license(s).
(B) His or her
resume.
(4)
The socially disadvantaged applicant(s) must have responsibility for the
critical areas of business operations and demonstrate the ability to make
independent and unilateral business decisions needed to guide the future of the
business.
(5) The certified
owner(s) must possess the power to direct or cause the direction of the
management and policies of the firm and to make day-to-day as well as long-term
decisions on matters of management, policy, and operations.
(6) The socially disadvantaged applicant(s)
is not required to have hands-on, direct control or expertise in every aspect
of the business' affairs so long as the owner is able to intelligently use
discretion, critically evaluate, and determine appropriate course of action
based on information presented by employees.
(7) In order to substantiate management and
control of a firm, a certified owner(s) cannot engage in outside employment or
other business interests that conflict with the management of the firm or
prevent the applicant from devoting sufficient time and attention to the
affairs of the firm to control its activities.
(8) A socially disadvantaged individual may
control a firm even though one or more of the individual's immediate family
members (who themselves are not socially disadvantaged individuals) participate
in the firm as a manager, employee, owner, or in another capacity.
(9) When a socially disadvantaged individual
obtains ownership or control of a firm and the previous owner or individual in
control is not a socially disadvantaged individual but remains active in some
role at the firm, the socially disadvantaged individual must demonstrate to the
COBID, by clear and convincing evidence, that:
(a) The transfer of ownership or control to
the applicant was made for reasons other than obtaining certification;
and
(b) The applicant actually
controls the management, policy, and operations of the firm, notwithstanding
the continuing participation of a non-certified individual who formerly owned
and/or controlled the firm.
(10) In considering a MBE, WBE, or SDV
certification where a non-disadvantaged individual was formerly controlling the
firm, the COBID may consider the difference between the compensation of the
non-disadvantaged individual and the socially disadvantaged applicant as a
factor in determining control.
(11)
If the COBID is unable to determine that the socially disadvantaged owner(s)
control the firm, as distinct from the family as a whole, then the socially
disadvantaged owner(s) have failed to carry their burden of proof concerning
control even though they may participate significantly in the firm's
activities.
(12) Individuals who
are not socially disadvantaged may be involved in a MBE, WBE, and/or SDV firm
as owners, managers, employers, stockholders, officers, and/or directors. Such
individuals must not, however, possess or exercise the power to control the
firm or be disproportionately responsible for the operation of the
firm.
(13) The certified owner(s)
of the firm may delegate various areas of management, policymaking, or daily
operations of the firm to other participants in the firm, regardless of whether
these participants are socially disadvantaged individuals. Such delegation of
authority must be revocable and the certified owner(s) must retain the power to
hire and fire any person to whom they delegate such authority. The managerial
role of the certified owner(s) in the firm's overall affairs must be such that
the COBID can reasonably conclude that the certified owner(s) actually
exercises control over the firm's operations, management, and policy.
(14) The certified individual(s) controlling
a firm may use an employee leasing company. The use of such a company does not
preclude the certified individual(s) from controlling the firm if he or she
continues to maintain an employer-employee relationship with the leased
employees.
(15) When a firm
contracts out the actual management of the business to individuals other than
the owner or delegates the management to employees, those persons who have the
power to hire and fire these managers exercise management control.
(16) In determining whether a certified
owner(s) controls a firm, the COBID may consider whether the firm owns
equipment necessary to perform its work. The business must own or lease
sufficient machinery, equipment, and employees to operate. In making this
determination, the COBID shall compare the operations of the certified firm to
a non-certified firm in the same or similar business. If leasing, it must be a
normal industry practice and the lease must not involve a relationship with a
prime contractor or non-disadvantaged individual that compromises the control
or independence of the firm as referenced under OAR 123-200-1100(2).
(17) The COBID may grant certification to a
firm only for specific types of work in which the certified owner(s) has the
ability to control the firm. To gain certification in an additional type of
work, the firm needs to demonstrate to the COBID that only its certified
owner(s) controls the firm with respect to that type of work.
(a) The North American Industry
Classification System (NAICS) codes assigned to the firm must describe the
types of work an applicant can control and manage and must directly relate to
the services provided.
(b) The
applicant bears the burden of providing the necessary, detailed company
information to COBID for it to make an appropriate NAICS code designation and
is primarily responsible to ensure the codes remain current to reflect services
provided.
(c) In order for
certified individuals to control a partnership, any non-certified partners must
not have the power, without the specific written concurrence of the certified
partner(s), to contractually bind the partnership or subject the partnership to
contract or tort liability.
Notes
Statutory/Other Authority: ORS 285A.070, 285A.075(1)(a) & ORS 200.025(2)
Statutes/Other Implemented: ORS 200.005 & 200.055
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