Title of Regulation: 7VAC10-21. Regulations to Govern the Certification of Small, Women-, and Minority-Owned Businesses (amending 7VAC10-21-20, 7VAC10-21-130, 7VAC10-21-310).

Statutory Authority: § 2.2-1403 of the Code of Virginia.

Effective Date: April 1, 2010.

Agency Contact: Paula Gentius, Esq., Executive Policy Advisor, Department of Minority Business Enterprise, 1111 East Main Street, Suite 300, Richmond, VA 23219, telephone (804) 786-1616, FAX (804) 786-9736, or email paula.gentius@dmbe.virginia.gov.

Summary:

This action revises the definition of "principal place of business" by requiring that the control of the business's day-to-day operations occur at the location for it to qualify as the principal place of business, consistent with the requirements for certification as a small, women-owned and minority-owned (SWaM) business. This action amends the definition of "Virginia-based business" and the certification eligibility requirements for out-of-state businesses to reflect the consistent use of one criterion, i.e., principal place of business. Finally, this action removes the prohibition on imposing a fee on a non-Virginia based business that is certified in another state as a SWaM to be so certified in Virginia, consistent with § 2.2-1403(8) of the Code of Virginia as amended by Chapter 869 of the 2009 Acts of Assembly.

7VAC10-21-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context requires a different meaning:

"Affiliate" means a person effectively controlled by another person or under common control with a third person, including a branch, division, or subsidiary of a business, or under the Investment Company Act (15 USCA § 8a-2), a company in which there is ownership (direct or indirect) of 5.0% or more of the voting stock.

"Agent" means a person who (i) has the authority to act on behalf of a principal in transactions with third parties; (ii) is subject to the principal's control; and (iii) does not have title to the principal's property.

"Appeal" means a written request by an applicant to reconsider a denial or revocation of certification.

"Applicant" means any business that applies to the department for certification or recertification as a small, women-owned or minority-owned business.

"Application" means the documents the department requires the applicant to submit in the course of certification or recertification, including the application form the applicant submits under penalty of perjury, which may include any additional documentation that the department requests that the applicant submit, and any information or report that the department generates during or upon completion of an on-site visit.

"Broker" means a person who acts as an intermediary between a buyer and seller.

"Business" means any legal entity organized in the United States or a commonwealth or territory of the United States that regularly engages in lawful commercial transactions for profit.

"Certification" means the process by which a business is determined to be a small, women-owned or minority-owned business for the purpose of reporting small, women-owned and minority-owned business participation in state contracts and purchases pursuant to §§ 2.2-1404 and 2.2-1405 of the Code of Virginia.

"Certified" means the status accorded to an applicant upon the department's determination that the applicant has satisfied the requirements for certification as a small, women-owned or minority-owned business.

"Control" means the power to direct the operation and management of a business as evidenced through governance documents and actual day-to-day operation.

"Corporation" means a legal entity that is incorporated under the law of a state, the United States, or a commonwealth or territory of the United States.

"Day" means any day except Saturday, Sunday, and legal state holidays unless otherwise noted.

"Dealer" means a person or business that has the exclusive or nonexclusive authority to sell specified goods or services on behalf of another business.

"Department" means the Department of Minority Business Enterprise.

"Director" means the Director of the Department of Minority Business Enterprise or his designee.

"Expiration" means the date on which the director specifies that a certified business will cease to be certified.

"Franchise" means a contractual arrangement characterized by the authorization granted to someone to sell or distribute a company's goods or services in a certain area.

"Franchisee" means a business or group of businesses established or operated under a franchise agreement.

"Individual" means a natural person.

"Industry standard" or "standard in the industry" means the usual and customary practices in the delivery of products or services within a particular business sector.

"Joint venture" means a formal association of two or more persons or businesses for the purpose of carrying out a time-limited, single business enterprise for profit, in which the associated persons or businesses combine their property, capital, efforts, skills or knowledge, and in which the associated persons or businesses exercise control and management and share in profits and losses in proportion to their contribution to the business enterprise.

"Limited liability company" means a specific type of legal entity that is in compliance with the applicable requirements of the law of its state of formation.

"Manufacturer's representative" means an agent whose principal is a manufacturer or group of manufacturers.

"Minority individual(s)" means an individual(s) who is a citizen of the United States or a noncitizen who is in full compliance with United States immigration law and who satisfies one or more of the following definitions:

"African American" means a person having origins in any of the original peoples of Africa and who is regarded as such by the community of which this person claims to be a part.

"Asian American" means a person having origins in any of the original peoples of the Far East, Southeast Asia, the Indian subcontinent, or the Pacific Islands, including but not limited to Japan, China, Vietnam, Samoa, Laos, Cambodia, Taiwan, Northern Mariana, the Philippines, a U.S. territory of the Pacific, India, Pakistan, Bangladesh, Sri Lanka and who is regarded as such by the community of which this person claims to be part.

"Hispanic American" means a person having origins in any of the Spanish-speaking peoples of Mexico, South or Central America, or the Caribbean Islands or other Spanish or Portuguese cultures and who is regarded as such by the community of which this person claims to be part.

"Native American" means a person having origins in any of the original peoples of North America and who is regarded as such by the community of which this person claims to be part or who is recognized by a tribal organization.

"On-site visit" means a visit by department representatives to the applicant's physical place(s) of business to verify the applicant's representations submitted to the department in the course of certification or recertification.

"Ownership" means an equity, partnership or membership interest in a business.

"Person" means a natural person or a business.

"Principal" means a person who contracts with another to act on the principal's behalf subject to the principal's control.

"Principal place of business" means the physical business location where natural persons who manage control the business's day-to-day operations spend most working hours.

"Partnership" means an association of two or more persons to carry on, as co-owners, a business for profit.

"Recertification" means the process by which a business applies to the department for renewed or continued status as a certified business.

"Record" means the materials submitted in support of an application for certification or recertification, which may include the application, supporting documentation, and additional materials obtained by the department in the course of the application, certification, or recertification process.

"Sole proprietorship" means a business the assets of which are wholly owned by a single natural person.

"Virginia-based business" means a business that is organized in and has its principal place of business in Virginia.

7VAC10-21-130. Eligible out-of-state business enterprise.

The department may certify a non-Virginia based business if:

1. It meets the applicable eligibility standards for certification as a small, women-owned or minority-owned business; and

2. The state in which the business is incorporated or has its principal place of business does not deny a like certification to a Virginia-based small, women-owned or minority-owned business or provide a preference to small, women-owned or minority-owned firms that is not available to Virginia-based businesses.

7VAC10-21-310. Procedures for initial certification of businesses previously certified by other qualifying local, state, private sector, or federal certification programs.

A. A Virginia-based business that has been certified as a small, women-owned or minority-owned business by a local, state, private sector or federal certification program determined by the department pursuant to Part V (7VAC10-21-400 et seq.) of this chapter to meet the minimum eligibility, ownership and control requirements shall be certified as a small, women-owned or minority-owned business in Virginia, without additional paperwork or fee, upon presentation to the department of documentation that the business has received such certification, the certification has not expired and ownership and control of the applicant business remains unchanged since the certification was granted.

B. A business that is not based in Virginia that has been certified as a small, women-owned or minority-owned business by a local, state, private sector or federal certification program determined by the department pursuant to Part V (7VAC10-21-400 et seq.) of this chapter to meet the minimum eligibility, ownership and control requirements, shall be certified as a small, women-owned or minority-owned business in Virginia, without additional paperwork or fee, upon presentation to the department of documentation that it has received such certification, the certification has not expired and ownership and control of the applicant business remains unchanged since the certification was granted only after the department determines that such certification would be available to Virginia-based businesses in the state in which the business is incorporated or has its principal place of business.

C. A business certified by the department under this section shall be certified for a period of three years unless:

1. The certification is revoked by the department or the program issuing the original certification;

2. The business is no longer in business; or

3. The business is no longer eligible as a small, women-owned or minority-owned business.

D. A business certified under this section is responsible for notifying the department of any change in legal structure, ownership, control, management, or status of the business or its certification within 30 calendar days of such change. Failure to do so may be grounds for revocation of certification.

E. It shall be the responsibility of the certified business to notify the department of any change of name, address or contact information and to keep the department informed of its current address and contact information. Changes of name and address must be reported to the department in writing within 30 calendar days of such change. Failure to do so may be grounds for revocation of certification. The department shall not be liable or responsible if a certified business fails to receive notices, communications or correspondence based upon the certified business' failure to notify the department of any change of address or to provide correct address and contact information.