§ 26.63 General certification rules. ( a ) *General rules.* Except as otherwise provided: ( 1 ) The firm must be for-profit and engaged in business activities.
( 2 ) In making eligibility determinations, a certifier may not consider whether a firm performs a commercially useful function (CUF), or the potential effect on goals or counting.
( 3 ) A certifier cannot condition eligibility on State prequalification requirements for bidding on contracts.
( 4 ) Certification is not a warranty of competence or suitability.
( 5 ) A certifier determines eligibility based on the evidence it has at the time of its decision, not on the basis of historical or outdated information, giving full effect to the “curative measures” provisions of this part.
( 6 ) Entering into a fraudulent transaction or presenting false information to obtain or maintain DBE certification is disqualifying.
( b ) *Indirect ownership.* A subsidiary (*i.e.,* S) that SEDOs own and control indirectly is eligible, if it satisfies the other requirements of this part and only under the following circumstances. ( 1 ) *Look-through.* SEDOs own at least 51 percent of S through their ownership of P (*i.e.,* the parent firm) as shown in the examples following.
( 2 ) *Control.* SEDOs control P, and P controls S.
( 3 ) *One tier of separation.* The SEDOs indirectly own S through P and no other intermediary. That is, no applicant or DBE may be more than one entity (P) removed from its individual SEDOs.
( 4 ) *Examples.* The following examples assume that S and its SEDOs satisfy all other requirements in this part. ( i ) *Example 1 to paragraph (b)(4).* SEDOs own 100 percent of P, and P owns 100 percent of S. S is eligible for certification.
( ii ) *Example 2 to paragraph (b)(4).* Same facts as Example 1, except P owns 51 percent of S. S is eligible.
( iii ) *Example 3 to paragraph (b)(4).* SEDOs own 80 percent of P, and P owns 70 percent of S. S is eligible because SEDOs indirectly own 56 percent of S. The calculation is 80 percent of 70 percent or .8 × .7 = .56.
( iv ) *Example 4 to paragraph (b)(4).* SEDOs own and control P, and they own 52 percent of S by operation of this paragraph (b). However, a non-SEDO controls S. S is ineligible.
( v ) *Example 5 to paragraph (b)(4).* SEDOs own 60 percent of P, and P owns 51 percent of S. S is ineligible because SEDOs own just 31 percent of S.
( vi ) *Example 6 to paragraph (b)(4).* P indirectly owns and controls S and has other affiliates. S is eligible only if its gross receipts, plus those of all of its affiliates, do not exceed the applicable small business size cap of § 26.65. Note that all of P's affiliates are affiliates of S by virtue of P's ownership and/or control of S.
( c ) *Indian Tribes, NHOs, and ANCs* — ( 1 ) *Indian Tribes and NHOs.* A firm that is owned by an Indian Tribe or Native Hawaiian organization (NHO), rather than by Indians or Native Hawaiians as individuals, is eligible if it meets all other certification requirements in this part.
( 2 ) *Alaska Native Corporations (ANCs).* ( i ) Notwithstanding any other provisions of this subpart, a subsidiary corporation, joint venture, or partnership entity of an ANC is eligible for certification if it meets all the following requirements: ( A ) The Settlement Common Stock of the underlying ANC and other stock of the ANC held by holders of the Settlement Common Stock and by Natives and descendants of Natives represents a majority of both the total equity of the ANC and the total voting power of the corporation for purposes of electing directors;
( B ) The shares of stock or other units of common ownership interest in the subsidiary, joint venture, or partnership entity held by the ANC and by holders of its Settlement Common Stock represent a majority of both the total equity of the entity and the total voting power of the entity for the purpose of electing directors, the general partner, or principal officers; and
( C ) The subsidiary, joint venture, or partnership entity has been certified by the Small Business Administration under the 8(a) or small disadvantaged business program.
( ii ) As a certifier to whom an ANC-related entity applies for certification, a certifier must not use the Uniform Certified Application. The certifier must obtain from the firm documentation sufficient to demonstrate that the entity meets the requirements of paragraph (c)(2)(i) of this section. The certifier must also obtain sufficient information about the firm to allow the certifier to administer its program (*e.g.,* information that would appear in a UCP directory).
( iii ) If an ANC-related firm does not meet all the conditions of paragraph (c)(2)(i) of this section, then it must meet the requirements of paragraph (c)(1) of this section in order to be certified.
[89 FR 24969, Apr. 9, 2024]