PURPOSE: This rule describes the procedures and policies which MoDOT will use to certify firms as DBEs under federal law.

1. (1) The Certification Application and Review Process.

   1. (A) All applicants for Disadvantaged Business Enterprise (DBE) certification by or through MoDOT shall be furnished an application form in one or more parts, written instructions for completing the application, a copy of the rules in this chapter, and a copy of the eligibility requirements of Title 49 CFR part 26. Through this application process, each firm seeking DBE certification has the burden of demonstrating to Missouri Department of Transportation (MoDOT) by a preponderance of the evidence, that it meets the requirements of 49 CFR part 26, subpart D, concerning group membership or individ- 7 CSR 10-8

ual social and economic disadvantage, business size, ownership and control. As a part of this application process, each applicant must:

1. 1. Provide information showing that the

individuals who own and control the applicant firm are members of one or more groups identified in 49 CFR section 26.67(a) that are rebuttably presumed to be socially and economically disadvantaged. Each applicant firm, through one or more of the individuals owning and controlling that firm, must submit one or more signed, notarized “statement of disadvantage” certification(s) on a form provided by MoDOT, certifying under oath that each owner listed in the application as presumptively disadvantaged is, in fact, socially and economically disadvantaged. If MoDOT has no reason to question these sworn certifications, then MoDOT will rebuttably presume that each such owner is actually socially and economically disadvantaged. If MoDOT has any reason to question whether one or more of the designated individuals is actually a member of a United States Department of Transportation (USDOT) rebuttably-presumed socially and economically disadvantaged group, MoDOT shall require each such individual to demonstrate, by a preponderance of the evidence, that he is a member of, and has held himself out over a long period of time as a member of, a group whose members are classified by USDOT in 49 CFR sections 26.5 and 26.67(a) as being rebuttably presumed to be “socially and economically disadvantaged individuals”;

1. 2. Alternatively, if an applicant firm is

owned and controlled by one or more individuals who are not or do not claim to be a member of a group identified in 49 CFR section 26.67(a) as socially and economically disadvantaged, then as part of the application, each such individual must submit an alternative signed and notarized “statement of disadvantage” bearing the same certification under oath as the “statement of disadvantage” form described in paragraph 1. above; which alternative form shows and demonstrates with supporting documentation and details of a convincing nature that such individual is in fact both socially and economically disadvantaged under the criteria specified in 49 CFR part 26;

1. 3. Each individual owner of an appli-

cant firm whose ownership and control are being relied upon for DBE certification must submit a signed, notarized statement of personal net worth (PNW), referencing and accompanied by appropriate supporting documentation. If an individual’s PNW statement shows that the individual’s personal net worth exceeds $750,000, then any presumption of economic disadvantage of that individual is rebutted, and that individual cannot be deemed to be “economically disadvantaged” for DBE firm certification purposes.

1. A. If any financial statement or other

information from an accountant or certified public accountant (CPA) is used in preparing or supporting the PNW statement, the supporting documentation must include the accountant’s financial statement or analysis, together with all disclosures and footnotes appearing in that document, or an explanation of why that documentation would be unduly lengthy, burdensome or intrusive.

1. B. If any documentation prepared

within the last two years valuing any of the individual owner’s corporate or other business or personal property in excess of $25,000 (except as limited in subparagraph (1)(A)3.C. below) exists, that documentation should be included, or else an explanation of why that documentation would be unduly lengthy, burdensome or intrusive.

1. C. An individual’s PNW statement

must report an individual’s ownership interest in the applicant firm and the individual’s equity in his or her primary residence (except any portion of such equity that is attributable to excessive withdrawals from the applicant firm); however, those factors will be excluded from the final computation of personal net worth. A contingent liability does not reduce an individual’s net worth. The personal net worth of an individual claiming to be an Alaska native will include assets and income from sources other than an Alaska Native Corporation (ANC) and exclude any of the following which the individual receives from any ANC: cash (including cash dividends on stock received from an ANC) to the extent that it does not, in the aggregate, exceed $2,000 per individual per annum; stock (including stock issued or distributed by an ANC as a dividend or distribution on stock); a partnership interest; land or an interest in land (including land or an interest in land received from an ANC as a dividend or distribution on stock); and an interest in a settlement trust.

1. D. To calculate an individual’s PNW

statement, count the present value of assets attributable to the individual. For marital property held as community property or jointly (such as tenants by the entirety), normally 50% of the value of the asset is attributable to each person. However, a legal instrument valid under state law may alter this method of asset attribution between married owners. For PNW calculations, the present value of assets, including retirement savings or investment devices (such as a pension plan, IRA, 401(k) plan) do count toward calculations of an individual’s personal net worth. These assets, even though generally not readily available as sources of financing for business operations, are still part of an individual’s overall wealth. However, only the present value of a retirement savings or investment device should be counted in the PNW computation; not what the individual’s return from it may be at some point in the future. Also in making a PNW calculation, it is proper to deduct or subtract any interest or tax losses the individual would incur if he or she liquidated that asset (converted it into cash) today;

1. 4. The applicant firm must certify and

show that it is a “small business,” within the current U.S. Small Business Administration business size standards found in 13 CFR part 121, for the type or types of work the firm seeks to perform in USDOT-assisted contracts;

1. 5. The applicant firm must certify and

show that it (and its affiliates) has had average annual gross receipts (as that term is defined in current U.S. Small Business Administration regulations) over the firm’s previous three fiscal years of $16.6 million or less per year;

1. 6. The applicant firm must certify and

show with supporting documentation that the firm is at least fifty-one percent (51%) owned by socially and economically disadvantaged individuals. The applicant firm’s ownership by these socially and economically disadvantaged individuals must be real, substantial, and continuing, going beyond pro forma ownership of the firm as reflected in ownership documents. The disadvantaged owners must enjoy the customary incidents of ownership, and share in the risks and profits commensurate with their ownership interests, as demonstrated by the substance, not merely the form, of the firm’s arrangements. All securities that constitute actual, effective ownership of a firm must be held directly by disadvantaged persons, as described and with the exceptions provided in 49 CFR section 26.69(d). Also, the applicant firm must certify and show that the contributions of capital or expertise by the socially and economically disadvantaged owners to acquire their ownership interests must be real and substantial. All of USDOT’s criteria provided in 49 CFR section 26.69 and in other approved guidance apply to govern the determination that the firm is sufficiently owned by socially and economically disadvantaged individuals for DBE Program purposes;

1. 7. The applicant firm must certify and

show with supporting documentation that the same socially and economically disadvan- Transportation Commission

taged individuals who own the firm are in control of that firm; and that the applicant firm is an independent business which is viable on its own, without being dependent on its relationship with another firm or firms. The applicant firm must certify and show that its socially and economically disadvantaged owners possess the real and unrestricted power to direct or cause the direction of the management and policies of the firm, and to make day-to-day as well as long-term decisions on matters of management, policy and operations. Furthermore, the applicant firm must certify and show that its socially and economically disadvantaged owners have an overall understanding of, and managerial and technical competence and experience directly related to, the type(s) of business in which the firm is engaged, and the firm’s operations. Also, to the extent that state or local law may require the persons who own and/or control a type of firm (such as an engineering design or consulting firm) to have a particular license, registration or other credential, then the same socially and economically disadvantaged individuals who own and control an applicant firm of that type must possess the required license, registration or credential. All of USDOT’s criteria provided in 49 CFR section 26.71 and in other approved guidance apply to govern the determination that the firm is actually controlled by socially and economically disadvantaged individuals for DBE Program purposes;

1. 8. The applicant firm must certify and

show that it is an operational, for-profit firm, and that it is not owned or controlled by another firm, even a DBE firm, except as authorized in 49 CFR section 26.73(e), and that the firm meets all other USDOT certification eligibility criteria of 49 CFR part 26, subpart D;

1. 9. Furthermore, the applicant must pro-

vide all of the information required by MoDOT in its application form and materials (plus any subsequent requests for information or clarification) relevant to show that the applicant is eligible under 49 CFR section 26.83, as well as 49 CFR part 26, subpart D; and

1. 10. The application must be signed by

all of the applicant firm’s socially and economically disadvantaged individual owners who are in control of the firm. The application must include the sworn affidavits of those individuals before a notary public or other person authorized to administer oaths, under penalty of perjury of the laws of the United States, attesting to the accuracy, completeness and truthfulness of the information on and accompanying the application form.

1. (B) Each application received shall be reviewed for completeness, and the applicant firm will be notified in writing of any additional information required. The additional information requested must be received within a maximum of thirty (30) days or as specified in writing. After that period, if the additional information requested has not been received and no extension of time has been requested and granted in writing, MoDOT may deny the application for the firm’s failure or refusal to provide the relevant information requested by MoDOT (or possibly requested by USDOT), in accordance with 49 CFR section 26.73(c).
2. (C) After all required information is received, an on-site visit to the offices of the applicant firm, and to job sites at which the firm is working in Missouri, will be scheduled as required by 49 CFR section 26.83(C)(1). Minutes of the on-site review will be made and a copy of these minutes will be given to the applicant after the close of the on-site review. MoDOT will usually not make an on-site visit of firms domiciled outside of Missouri, but will contact the state of residence of that firm (or another certifying USDOT recipient) for a copy of their on-site visit.
3. (D) Following the on-site review, a final review of the application and its related documentation, plus the review minutes, will be made to determine that the application is complete, and that MoDOT has no questions or issues which require further submissions or documentation.

1. (2) The Effect of Small and Disadvantaged Business Program Certification From or Recognized By the U.S. Small Business Administration. MoDOT does not accept a firm’s Section 8(a) or Small and Disadvantaged Business (SDB) Program certification from, or as recognized by, the U.S. Small Business Administration. Each such firm having 8(a) or SDB certification must independently establish its eligibility for initial DBE Program certification by MoDOT under the procedures of section (1) above. Each such firm which was previously certified as a DBE by MoDOT under the mandates of the former (now repealed) USDOT DBE Program regulations at 49 CFR part 23 on the basis of its 8(a) or SDB certification, must establish its right to certification independently under the standards of 49 CFR part 26 and the provisions of this chapter, in order to be certified or re-certified as a MoDOT DBE firm after March 4, 1999.
2. (3) The Effect of Certification as a DBE by Another USDOT Funding Recipient. In accordance with 49 CFR section 26.83(e), MoDOT does not accept a firm’s certification by another USDOT funding recipient as a basis upon which MoDOT will rely in the DBE certification process. In each instance, and regardless of the other USDOT recipients which may have previously or currently certified this firm as a DBE for the purposes of their DBE programs, MoDOT will request, accept and consider certification documentation provided by any other certifying USDOT recipient, together with the documentation required by section (1) of this rule; but MoDOT will in each instance make an independent determination of whether the applicant firm will be certified as a DBE or not.
3. (4) The Effect of Certification as a DBE by a Missouri Unified Certification Program. A Unified Certification Program (UCP) for the state of Missouri, as required by 49 CFR section 26.81, is being developed but does not currently exist. Once a Missouri UCP exists and has been approved by the U.S. Secretary of Transportation under 49 CFR section 26.81(a), certification as a DBE by the UCP shall be binding upon and honored by MoDOT, and that Missouri-certified DBE firm will not be obligated to separately apply for MoDOT DBE certification under this rule or chapter.
4. (5) The Burdens of Proof in Certification Determinations. As provided in 49 CFR section 26.61, any firm applying for DBE certification has the burden of demonstrating to MoDOT by a preponderance of the evidence, that the firm meets the requirements of 49 CFR part 26, subpart D, concerning group membership or individual disadvantage, business size, firm ownership and control of the firm. MoDOT will rebuttably presume that individuals who establish themselves to be members of any of the USDOT-designated groups identified in 49 CFR section 26.67(a) are socially and economically disadvantaged. However, such applicants still have the obligation to provide MoDOT with the information concerning their economic disadvantage as required by this chapter and by 49 CFR part 26, subpart D, especially at section 26.67. All other individuals who are not presumed to be socially and economically disadvantaged, and individuals concerning whom the presumption of disadvantage has been rebutted, have the burden of proving to MoDOT by a preponderance of the evidence that they are socially and economically disadvantaged. 7 CSR 10-8
5. (6) Pre-Determination Informal Proceedings to Receive Evidence for DBE Certification Purposes. MoDOT is not obligated to do so, but in the course of any DBE certification application review, if MoDOT decides that facts, circumstances, relationships or other DBE issues require clarification or explanation by this method, MoDOT may request the applicant in writing to appear before MoDOT External Civil Rights Unit personnel and a notary public, to provide verbal testimony in person, sworn under penalty of perjury, together with supporting documentation, on the outstanding questions which MoDOT requests additional information. MoDOT’s written notice will specify the issues or questions which require clarification and supplementation by the applicant. MoDOT’s written notice will also afford the applicant the alternative opportunity to submit written testimony by affidavit sworn under penalty of perjury, and accompanied by other documentation, on these issues or questions, in lieu of providing sworn verbal testimony before a notary public, if the applicant is confident that such a written reply will sufficiently answer MoDOT’s questions and issues. The sworn verbal presentation will not be a hearing, but will be an informal question and answer session. The applicant may have legal counsel present for any reason, including to ask clarifying questions but all sworn statements made and documentation presented shall be given by the individual owners and/or representatives of the applicant firm. A verbatim transcript of any such informal verbal presentation will be prepared by MoDOT at its own cost, and one copy will be provided to the applicant firm at no charge. The information so obtained shall also be used by MoDOT in reaching its determination on DBE firm certification.
6. (7) Certification Determination. MoDOT shall make its determinations of whether individuals and firms have met their burden of demonstrating group membership, ownership, control, and social and economic disadvantage, by considering all the facts in the record, viewed as a whole. MoDOT will make its decision on the great majority of applications for DBE certification within ninety (90) days of receipt of all information required from the applicant firm under 49 CFR part 26 and this chapter. However, if MoDOT is unable to decide a DBE certification question within that ninety (90)-day period, MoDOT may extend that time period once, for up to an additional sixty (60) days, upon written notice to the applicant firm, explaining fully and specifically the reasons for this extension. If for any reason, MoDOT fails to issue a written decision on certification within that time period (as it may have been extended once in writing), then MoDOT is deemed to have denied the DBE certification application by USDOT, and the applicant firm may appeal that constructive denial to USDOT under the provisions and authority of 49 CFR sections 26.83(k) and 26.89.

7. (8) Effect of DBE Certification.

   1. (A) If MoDOT determines to certify an applicant firm as a DBE, that firm shall be notified in writing by MoDOT, and MoDOT shall notify the firm of the specific category or categories of work in which the firm is DBE certified. The firm and its pertinent information, including its approved categories of DBE work shall be added to MoDOT’s DBE directory immediately. The firm will remain certified for MoDOT purposes for a period of three (3) years from its date of certification. On that date, the firm’s DBE certification shall lapse and be null and void, unless the firm has submitted a reasonably complete new certification application to MoDOT. Provided, however, that during the three (3)-year certification period, each DBE firm must accurately, truthfully and completely submit the interim sworn affidavits and documentation to MoDOT required annually and/or when there is a material change in circumstances relating to that firm, as specified in 49 CFR section 26.83 and in this chapter. Also, any certified DBE firm is potentially subject to having its DBE certification removed through the procedures specified in 49 CFR section 26.87 and in this chapter.
   2. (B) DBE certification confers no vested or permanent right or property interest which continues beyond the three (3)-year certification period. About sixty (60) days prior to the end of its three (3)-year certification period, each DBE firm will be mailed a complete packet of certification application materials to be completed and submitted for another three (3)-year certification period. If the certification application materials are completed reasonably accurately and completely by the applicant DBE firm and received by MoDOT’s External Civil Rights Unit staff on or before the certification expiration date, then that firm’s DBE certification will not lapse on the third anniversary date after certification. While a timely new certification application is pending, the prior DBE certification shall continue until MoDOT rules on the new certification application. If a new certification application is not timely received by MoDOT on or before the third anniversary date of certification, then that firm’s DBE certification shall lapse, and the firm shall no longer be DBE certified by MoDOT. Should a firm whose certification has lapsed later apply for DBE certification with MoDOT, that firm shall remain without DBE certification unless and until its new DBE application is approved by MoDOT.

8. (9) Effect of MoDOT DBE Certification Denial.

   1. (A) If any applicant for DBE certification (whether currently certified by MoDOT or not) is denied certification by MoDOT’s External Civil Rights Unit, MoDOT’s External Civil Rights Unit shall notify the firm of that decision in writing by certified mail, return receipt requested. The notice shall set out the specific grounds for certification denial in Title 49 part 26 and in this chapter, and shall specifically describe or refer to the evidence (or lack thereof) which supports that determination by MoDOT’s External Civil Rights Unit.
   2. (B) The written notice of denial shall inform the applicant firm of its discretionary right to seek MoDOT administrative review of this certification denial by an independent hearing officer who did not take part in the actions leading to the denial of certification, and who is not subject to direction or instruction from the External Civil Rights Unit, its administrator or its personnel, who did take part in those actions. The notice of denial shall inform the applicant firm that if it requests this MoDOT administrative review within fifteen (15) days of the date of the MoDOT certification denial letter, the firm will have the choice of an informal hearing before the hearing officer, with sworn testimony; and MoDOT will maintain a verbatim record of the hearing and the record evidence. The notice shall further inform the applicant firm of its right to elect to present additional information and arguments supporting its certification to the hearing officer in writing, without going to a hearing. The notice will provide that if the applicant firm elects MoDOT administrative review by either an informal hearing or by written submissions, the applicant firm shall be afforded an opportunity to respond to the reasons stated for denial of certification, and may provide information and arguments concerning why it should be certified. In such an administrative review, the applicant firm still bears the burdens of proof specified in section (5) of this rule and in 49 CFR section 26.61. The procedures for such an informal hearing or written presentation to an independent MoDOT hearing officer are the same as those set forth in this chapter in rule 7 CSR 10- 8.091, except that the applicant for initial or renewed certification shall bear the burdens Transportation Commission

of proof, and not MoDOT. As a result of the MoDOT administrative review, the hearing officer may either affirm the initial MoDOT denial of certification, or may reverse that determination and rule that the firm shall be certified. The ruling of the hearing officer shall be by written findings of fact and conclusions of law, and shall restate or provide by enclosure all pertinent USDOT rules in 49 CFR part 26. If the independent hearing officer ultimately affirms the denial of certification, the applicant firm shall be informed in writing of its right to appeal the certification denial to USDOT under the procedures set forth in 49 CFR section 26.89, and that USDOT regulation shall be cited in full or enclosed.

1. (C) The written notice of denial shall also clearly state that further administrative review by an independent MoDOT hearing officer is optional, and not mandatory, before the firm may appeal the MoDOT certification denial to USDOT. The applicant firm, if it so wishes, may bypass any further MoDOT administrative review and may appeal the certification denial within ninety (90) days of the date of that certification denial directly to USDOT under the procedures set forth in 49 CFR section 26.89, specifying the procedures for certification appeals to the U.S. Department of Transportation. A copy of 49 CFR section 26.89, and any other pertinent USDOT DBE Program regulations cited in the determination, shall be enclosed with the written notice of denial.
2. (D) A firm which has been denied DBE certification may not reapply for DBE certification to MoDOT for a period of at least twelve (12) months from the date of the written notice of denial. The written notice of denial shall also inform the applicant firm of that MoDOT restriction.
3. (E) A firm which has previously been certified, but has been denied renewed certification as a DBE firm upon reapplication to MoDOT for DBE certification, shall be removed immediately from MoDOT’s DBE directory listings. The firm, its owners, agents and employees, shall no longer represent this firm’s status as an eligible MoDOT DBE firm to any other firm or person. As with any other MoDOT denial of certification, such a firm may not reapply for DBE certification to MoDOT for a period of at least twelve (12) months from the date of the written notice of denial. The written notice of denial shall also inform the applicant firm of that MoDOT restriction.

1. (10) The Finality of MoDOT’s Determination to Deny Initial or Renewal Certification. Whether MoDOT’s determination to deny DBE certification initially or on a renewal application is made by MoDOT’s External Civil Rights Unit and not appealed to a MoDOT hearing officer, or the determination is made by an independent MoDOT hearing officer under this rule, that determination is final as to MoDOT, but that determination remains appealable to USDOT under the provisions of 49 CFR sections 26.87 and 26.89, and until USDOT has resolved such an appeal, the determination is not final under 49 CFR part 26. Therefore, for purposes of Missouri law, the MoDOT determination to deny initial or renewal certification is not a final state administrative decision, and it is not subject to judicial review in Missouri’s courts under the provisions of Chapter 536, RSMo, or 49 CFR part 26.

AUTHORITY: section 226.150, RSMo 1994*; Title 49 Code of Federal Regulations part 26; section 1101(b) of the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, 112 Stat. 107, 113; and MoDOT’s approved DBE Program submittals to the U.S. Department of Transportation. Emergency rule filed May 10, 2000, effective May 20, 2000, expired Nov. 6, 2000. Original rule filed May 10, 2000, effective Nov. 30, 2000. *Original authority: 226.150, RSMo 1939, amended 1977.