Disadvantaged Business Enterprise and the Maryland Department of Transportation

As part of determining whether a company is eligible for certification as a disadvantaged business enterprise (DBE) with the Maryland Department of Transportation (MDOT), must the company be considered an independent business?  

Yes.  Only an independent business may be certified as a DBE.  To be an independent business, the viability of the business must not be dependent on a relationship with another company or companies. 

As part of the certification application process, in determining whether a potential DBE is independent MDOT will scrutinize its relationships with non-DBE firms in areas such as personnel, facilities, equipment, financial and bonding support.  Also, the potential DBE’s relationships with prime contractors are examined in order to determine whether there is a pattern of exclusive or primary dealings with the primes that would compromise its independence.  However, it should be noted that MDOT, in assessing relationships between the potential DBE and non-DBE firms, does factor in and consider normal industry practices. 

Certification of a business can be a viable tool for developing and maintaining business relationships. Businesses seeking certification as a DBE in Maryland may want to consider obtaining legal advice concerning eligibility requirements for certification prior to applying for certification.    

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.

Can a joint venture be certified as a disadvantaged business enterprise (DBE) in the State of Maryland?

No.  A joint venture is an association of a DBE firm and one or more firms to carry out a single, for-profit business enterprise for which the parties combine their property, capital, skills and knowledge.  Because a joint venture consists of businesses brought together temporarily, the joint venture itself cannot be certified. 

However, with that said, a joint venture can receive DBE credit for a specific contract if the DBE partner of the joint venture meets the standards for an eligible DBE, and the DBE is responsible for a clearly defined portion of the work to be performed and shares in the ownership, control, management responsibilities, risks and profits of the joint venture.  With that said, the joint venture cannot serve as an instrument to meet contract goals in instances where the DBE is not given the opportunity to exercise independent judgments.

Certification of a business can be a viable tool for developing and maintaining business relationships. Businesses seeking certification as a DBE in Maryland may want to consider obtaining legal advice concerning eligibility requirements for certification prior to applying for certification. 

By:  James R. Benjamin, Jr., Esqiure                 
jbenjamin@pklaw.com 

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.

What is a joint venture and how is it counted towards minority business enterprise (“MBE”) participation goals in Baltimore City?

Under the Baltimore City Code, a joint venture is an association between at least two (2) business enterprises that provides for the sharing of economic interest. Generally, the joint venture is entered into for mutual benefit with the understanding that each business enterprise in the joint venture is to share in its profits and losses.

Should a business certified as an MBE seek to enter into a joint venture, the business owner should keep in mind that a bidder for a contract in Baltimore City may count towards the contract goal the portion of its expenditure to a joint venture that is equal to the percentage of the MBE’s participation in the joint venture.  The MBE member of the joint venture must have an interest in the control, management, risks and operation of the joint venture that is commensurate with the member’s percentage of ownership. In addition, the MBE member must be responsible for a clearly defined portion of the work to be performed with its own forces equal to its share in the ownership, control and management of the joint venture.

Certification of a business can be viable tool for developing and maintaining business relationships. Businesses seeking certification as an MBE in Baltimore City may want to consider obtaining legal advice concerning eligibility requirements for certification prior to applying for certification.

By:  James R. Benjamin Jr., Esquire                                     
jbenjamin@pklaw.com

What rights of appeal does a minority-owned business have in the event it is decertified as a minority business enterprise (“MBE”) in Baltimore City?

To be certified as an MBE in Baltimore City, the business must be independent; at least 51% minority owned; been minority-owned for at least 12 months and been in operation for at least 12 months.  The minority owner must also demonstrate sufficient control of the business.

Baltimore City’s Minority and Women’s Business Opportunity Office (“MWBOO”) may decertify an MBE if it determines that the business no longer meets certification criteria.  An MBE that is decertified has the right to protest the decision to decertify and seek administrative review from MWBOO.  Within seven (7) days of receiving written notice of decertification from MWBOO, the MBE must submit a written protest to the Chief of MWBOO specifying the reasons and factual grounds for its protest.  Documents in support of the MBE’s position should be included with the written protest.

Within twenty-five (25) days of receiving the written protest, the Chief of MWBOO must review the written protest along with any supporting documents and render a written decision stating the reasons for affirming or reversing the decision to decertify.  In the event the Chief of MWBOO affirms MWBOO’s decision, the MBE may submit, in writing, a request for hearing before MWBOO’s Certification Appeals Board.

A minority-owned business that has been decertified as an MBE and is seeking to exercise any rights of appeal may want to consider obtaining legal advice concerning the administrative appeal process.

By:  James R. Benjamin Jr., Esquire                                  
jbenjamin@pklaw.com

In order to be certified as a disadvantaged business enterprise (“DBE”) in Maryland, must the business enterprise be independent for purposes of demonstrating control?

Yes.  Under Maryland law, control is the exercise of the power to manage and operate a business enterprise.  Only a business enterprise that is independent may be certified as a DBE.  An independent business enterprise is one the viability of which does not depend on its relationship with another firm or firms. 

In determining whether a business enterprise is independent for DBE certification purposes, relationships with non-DBE firms in such areas as personnel, facilities, equipment and financial support are carefully scrutinized. Relationships between the business enterprise seeking DBE certification and non-DBE firms, or persons associated with non-DBE firms, are considered to determine consistency with normal industry practice and to ensure that the business enterprise’s independence is not compromised. In addition, relationships with prime contractors are thoroughly examined in order to determine whether a pattern of exclusive or primary dealings may exist which could compromise the independence of the business enterprise seeking DBE certification.

Certification of a business can be a viable tool for developing and maintaining business relationships. Businesses seeking certification as a DBE in Maryland may want to consider obtaining legal advice concerning eligibility requirements for certification prior to applying for certification.    

By:  James R. Benjamin, Jr., Esq                 
jbenjamin@pklaw.com

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.