Current through Register Vol. 49, No. 13, September 23, 2024
Subpart 1. [Repealed, 42 SR 543]
Subp. 2. [Repealed, 16 SR 194]
Subp. 3. [Repealed, 16 SR 194]
Subp. 4. [Repealed, 28 SR 499]
Subp. 5.
Grounds for denying application.
An applicant must be notified in writing of the acceptance
or denial of the application, within 60 calendar days of receipt of the
application form and all supporting documents required by the division. An
application must be denied on any of the following grounds:
A. the applicant is dominant in its field of
operation or is an affiliate or subsidiary of a business dominant in its field
of operation;
B. the applicant has
failed to provide all relevant required information;
C. the applicant failed to establish that
majority ownership and day-to-day operating control are held by qualifying
individuals;
D. the applicant has
failed to comply with laws and rules of the state relating to
procurement;
E. the applicant has
intentionally or negligently falsified application information;
F. the applicant is a broker and/or
third-party lessor or operates as a franchiser or franchisee;
G. the applicant's principal place of
business is not in Minnesota;
H.
ownership of the applicant's business is shared with a previously certified
participant who was removed from the vendor list or directory of certified
businesses by operation of Minnesota Statutes, section
16C.19, paragraph (c), and part
1230.1850; and
I. the applicant's financial data profile
does not ft within the parameters in subpart
5a, item C, when applying as
an individual business under part 1230.1607.
Subp. 5a.
Criteria for determinations.
A. In addition to
the standards in parts 1230.1604 and 1230.1605, the following circumstances
will be given special consideration in determining eligibility:
(1) newly formed businesses and businesses
whose ownership or day-to-day operating control or both ownership and control
has changed will be closely scrutinized to determine the reasons for the timing
of the formation or of a change in the business;
(2) any relationship between a socially and
economically disadvantaged, economically disadvantaged area, or veteran-owned
small business and a nonqualifying business that has an interest, financial or
otherwise, in the socially and economically disadvantaged, economically
disadvantaged area, or veteran-owned small business will be carefully reviewed
to determine if the interest conflicts with the ownership and day-to-day
operating control requirements.
B. The combined gross sales or revenues from
businesses operated by the same owners in related fields exceed the highest
size standard for the fled defend under Minnesota Statutes, section
16C.16, subdivision 2.
C. The following standards, along with
supporting documentation, must be used in reaching a determination to certify
an applicant under part 1230.1607:
(1)
Financial data for the company seeking certification shall be analyzed using
formulas, techniques, processes, and ratios used in the annual statement
studies published by Robert Morris and Associates (RMA), Philadelphia. Where
RMA data does not reflect or provide adequate comparable data for the
applicant's main line of business, the "Industry Norms and Key Business
Ratios," published by Dun and Bradstreet Credit Services, or any similar
representative reporting service may be used.
(2) Certification determination will be made
upon careful review of all the evidence submitted. However, to establish
eligibility for this review, the financial data applicable to the applicant
company shall fall within the following parameters: financial ratios: at any
point between the lower quartile and the upper quartile. Upper quartile ratings
are indicative of a successful company not in need of the assistance provided
through certification. Lower quartile ratings indicate a need for additional
assistance before certification. Lower quartile businesses will be referred to
the Department of Employment and Economic Development for remedial assistance
before becoming eligible for reconsideration for certification.
(3) The following ratios and formulas will be
used to determine eligibility for certification:
(a) lacking adequate external support in
obtaining long-term or working capital financing: earnings before interest and
taxes (EBIT)/interest, sales/working capital, quick ratio, fixed/worth,
debt/worth;
(b) lacking adequate
external support in obtaining equipment, raw materials, or supplier trade
credit: current ratio, quick ratio;
(c) bonding and insurance: none - review of
documentation only;
(d) the
business has not captured a proportionate share of the market for its goods and
services, based on the most current annual statement studies published by RMA.
The national average revenues appropriate for the applicant business's standard
industrial code and asset size will be divided by the national average assets
determined similarly and multiplied by the applicant's actual total assets to
indicate a proportionate market share. The applicant business's actual revenues
will be divided by this proportionate market share to indicate the actual
percentage of the proportionate market attained. Any percentage at 75 or less
shall qualify for eligibility.
(4) If eligible under part 1230.1607, all
other documentation shall be reviewed to arrive at a determination to grant or
deny certification. The key determinant is "lacking adequate external support
... as evidenced by diminished ability to secure ..." Even though an applicant
qualifies as an eligible business on the basis of financial ratios, if the
business has been able to secure sufficient loans, bonding, insurance, or
credit at the usual industry norms, it is not qualified as there is no evidence
showing lack of support. Conversely, the business may show adequate financial
ratios but still find itself unable to obtain any, or only partial, amounts of
financing, bonding, credit, or insurance needed to remain competitive, or it
can only acquire such at unfavorable terms not normal for its industry segment.
Upon finding that such circumstances are not a result of internal management
deficiencies as indicated by ratios appropriate to these concerns such as the
following:
(a) percent profit before
taxes/tangible net worth;
(b)
percent profit before taxes/total assets;
(c) percent depreciation, depletion,
amortization/sales; and
(d) percent
officers' compensation/sales;
the business can be certified as a targeted group business.
The same management efficiency review shall apply when determining
certification due to an inability to capture a proportionate market share;
however, no other documentation will need be considered under this eligibility
criterion. Findings that a business suffers from internal management
deficiencies will require a denial of certification until remedial assistance
has been obtained through referral to the Department of Employment and Economic
Development for help from public or private resources. When the appropriate
ratio indicators fall within the eligible zone, the business may again apply
for certification.
The impact of both short- and long-term business cycles for
the economy in general and for the particular business segment in specific
shall be considered in arriving at certification findings. When appropriate, an
average of two to five years of fiscal data for the applicant company shall be
used in determining ratio values.
D. Businesses seeking certification that
operate in distinctly defend commodities, construction services, or product
lines must be reviewed for certification under those distinctions. If the
company operates in more than one classification, the review must be made under
the primary industry segment if 75 percent or more of its net sales or contract
revenues are generated by that segment. The business may seek certification for
individual product, service, commodity, or construction activities if 25
percent or more of its net sales or contract revenues is generated by a given
category. All other financial data required by this application process must be
proportionately attributed to the categories for which certification is sought
unless it can be conclusively demonstrated that the dollar amounts shown are
directly attributable to specific elements. If the company is unable to provide
the breakdown of financial data requested by this rule, it shall accept or
request certification under the predominant category in its operation.
Subp. 6.
Appeal of denial of application.
After an applicant has received written notice of denial of
the application for certification as a socially and economically disadvantaged,
economically disadvantaged area, or veteran-owned small business, the applicant
may appeal the decision in writing to the commissioner of administration within
15 calendar days of receipt of the determination. The applicant has the burden
of proof in establishing qualifications for certification. The commissioner
shall, if time permits, refer the appeal to a panel designated by the
commissioner, for a recommendation before reaching a final decision. If there
are facts in dispute, the commissioner may refer the matter to the Office of
Administrative Hearings for a contested case hearing under Minnesota Statutes,
sections 14.57 to
14.62, or, if feasible, may
affirm or reject the decision. The commissioner shall make a final decision in
writing within 60 calendar days of receipt of the appeal. Any person receiving
an adverse decision from the commissioner may appeal in any appropriate court
of the state.
Statutory Authority: MS s
16B.04; 16B.18; 16B.19; 16B.22;
16C.03;
16C.16;
16C.19
