Sec. 21.11.03.12-1. Counting Minority Business Enterprise Participation

A. General. When a certified MBE participates in a contract, the procurement agency shall consider §§B, C, D, and E of this regulation in determining whether and the extent to which the certified MBE’s participation may be counted toward the MBE participation goals.

B. Commercially Useful Function. A procurement agency may count participation of a certified MBE contractor toward MBE goals only if the certified MBE is performing a commercially useful function on that contract.

(1) Commercially Useful Function.

(a) A certified MBE performs a commercially useful function when it is responsible:

(i) For execution of the work of the contract and is carrying out its responsibilities by actually performing, managing, and supervising the work involved; and

(ii) With respect to materials and supplies used on the contract, for negotiating price, determining quality and quantity, ordering the material, and installing (where applicable) and paying for the material itself.

(b) To determine whether a certified MBE is performing a commercially useful function, the procurement agency shall evaluate:

(i) The amount of work subcontracted;

(ii) Industry practices;

(iii) Whether the amount the certified MBE is to be paid under the contract is commensurate with the work it is actually performing; and

(iv) Other relevant factors.

(2) A certified MBE does not perform a commercially useful function if its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of MBE participation. In deciding whether a certified MBE is such an extra participant, the procurement agency may examine similar transactions, particularly those in which MBEs do not participate.

(3) A certified MBE is presumed not to perform a commercially useful function if it does not perform or exercise responsibility for at least 30 percent of the total dollar value of its contract with its own work force, or the certified MBE subcontracts a greater portion of the work of a contract than would be expected on the basis of industry practice for the type of work involved. A procurement agency may, however, upon evaluation of the work involved and industry practices, decide that the certified MBE is performing a commercially useful function.

C. Joint Venture. When a certified MBE performs as a participant in a joint venture, a procurement agency may count, subject to §D of this regulation, a portion of the total dollar value of the contract equal to the distinct, clearly defined portion of the work of the contract that the certified MBE performs with its own forces toward fulfilling the contract goal and not more than one of the contract subgoals, if any.

D. Counting Participation of Certified MBE Prime.

(1) This section shall apply to contracts that are solicited and awarded on or after June 9, 2014.

(2) Subject to the requirements of §B of this regulation and Regulation .09C of this chapter, when a certified MBE participates as a prime contractor on a contract, a procurement agency may count the distinct, clearly defined portion of the work of the contract that the certified MBE performs with its own forces toward fulfilling up to 50 percent of the MBE participation goal and up to 100 percent of not more than one of the MBE participation subgoals, if any, established for the contract, provided that the certified MBE prime contractor is:

(a) Identified on the MBE participation schedule pursuant to Regulation .09C(3)(b) of this chapter, including the certification category under which the MBE prime is self-performing and the percentage of the contract value attributed to that work; and

(b) Certified by the certification agency to provide the services, materials, or supplies that it has committed itself to self-perform on the MBE participation schedule.

E. Counting Value of Supplies and Equipment.

(1) For purposes of this section, “regular dealer” means:

(a) A firm that owns, operates, or maintains a store, a warehouse, or any other establishment in which the materials, supplies, articles, or equipment are of the general character described by the specifications required under the contract and are bought, kept in stock, or regularly sold or leased to the public in the usual course of business; and

(b) Does not include a packager, a broker, a manufacturer’s representative, or any other person that arranges or expedites transactions.

(2) If the certified MBE is a regular dealer, then a procurement unit may apply only 60 percent of the costs of the materials and supplies provided by the regular dealer toward the MBE participation goal.

(3) If the certified MBE is neither a regular dealer nor a manufacturer, a procurement unit:

(a) May not count any portion of the costs of the materials and supplies toward the MBE participation goal; and

(b) May count the entire amount of the fees or commissions charged for assistance in procuring materials and supplies, fees, or transportation charges for delivering the materials and supplies required on a procurement toward the MBE participation goal if the procurement unit determines the fees:

(i) Are reasonable; and

(ii) Not excessive as compared with fees customarily allowed for similar services.