Any business seeking certification for preference under this
chapter must present its application on forms provided by the Indian
Preference Office and the required documentation to the Indian Preference
Office, whose decision on the application shall constitute a final
decision for the purpose of satisfying administrative process. Nothing
in this chapter shall prohibit any person or entity from reapplying
for certification upon proof of cure of the reason for denial of certification.
The Indian Preference Office in its sole discretion may reject any
application which is oppressive, repetitive, or vexatious. For purposes
of this chapter, a certified NHBP-owned business, an NHBP member-owned
business, a certified NHBP family-owned business, a certified tribally
owned business, and a certified Native American-owned business will
collectively be referred to as a "certified preference business."
A complete application for certification as a certified preference
business owned by NHBP members, an NHBP family-owned business, or
a Native American-owned business shall include:
A. Proof that the applicant business owner(s) are enrolled with the
NHBP, are NHBP family, or enrolled with another federally recognized
Indian tribe (i.e., articles of incorporation; articles of organizations;
tribal identification cards for Indian owners; marriage certificates;
etc.);
B. Documentation that verifies that the business ownership and management,
including management of the business operations related to transactions
with the Tribe or its subdivision, are controlled, in whole or substantial
part, by one or more NHBP members, NHBP family or other Native American(s);
C. Documentation of the business's profit arrangement (i.e., operating
agreement; partnership; tax returns);
D. Documentation verifying that the extent to which the applicant business
has the ability to directly perform contractual obligations of the
business for which it seeks certification (i.e., number of employees;
statement of assets/liabilities; major subcontractors and responsibilities
of major subcontractors); and
E. Documentation detailing the applicant's business operations
(i.e., type of goods produced/sold or services provided).
All joint ventures seeking certification for preference priority
as a certified preference business shall submit documentation of the
business arrangements of the joint venture in addition to the required
documentation for certification.
To become a certified preference business, an applicant shall
meet the following criteria:
A. Ownership. The business is 60% or more owned by NHBP members, family,
or other Native Americans, as established by:
(1) Financial ownership. At least 60% ownership is vested in one or more
persons who are NHBP members, NHBP family, or other Native Americans.
A business that is owned by a combination of NHBP members or family
and other Native Americans will qualify for preference as a Native
American-owned business if the NHBP members or family owners can demonstrate
ownership of at least 60% of the business.
(2) Value provided. The NHBP member, NHBP family or Native American owner(s)
provide real value commensurate with the value of their ownership
share by providing capital, equipment, real property or similar assets,
or engineering or professional services.
(3) When NHBP member, NHBP family or Native American participants demonstrate
that they were unable to borrow from traditional capital sources and
therefore were unable to pay real value for their 60% or more Indian
ownership, they may satisfy the ownership requirement by demonstrating
further that they extended their capital-raising capability as far
as possible, such that the preference participants are clearly at
risk in the business. It will not be considered real value if the
preference owner(s) purchased the ownership share, directly or indirectly,
when the ultimate creditor is the non-Indian owner of the firm or
an immediate relation thereof.
B. Profit distribution. In any profit distribution, the NHBP member,
NHBP family or Native American owner(s) receive profits proportional
to their ownership interest. If any provision in the organizational
agreement of the business gives non-Indian owner(s) a greater share
of the profits, in whatever form and under whatever name, such as
through management fees, equipment rental fees, or bonuses tied to
profits, certification will be denied. The Indian Preference Office
shall review salary scales to ensure that salaries are not being used
to circumvent the requirement that owners receive salaries proportional
to ownership interest.
C. Management control.
(1) The business must be able to demonstrate to the Indian Preference
Office's satisfaction that:
(a)
The NHBP member or other Native Americans upon whose tribal
membership the preference is based control daily operations and have
the majority of voting rights and other decisional authority;
(b)
All significant decisions of the business are made by a majority
vote, unless made entirely by the Native American owners except where
otherwise required by law;
(c)
The NHBP member, NHBP family or Native American owner(s) through
prior experience or training have substantial ties to the area of
business in which the firm is engaged such that they are competent
to serve in the senior position;
(d)
The NHBP members, NHBP family or Native American owner(s) are
sufficiently knowledgeable about the firm's activities to be
accountable to the Tribe or the subdivision proposing to contract
for goods or services for those activities; and
(e)
The Indian Preference Office shall not consider the management
of the business to be Indian if the business subcontracts 65% or more
of its work to non-Indian-owned companies, unless subcontracting substantial
portions of the work is a normal practice in that particular field
of business (i.e., construction). In the case of contracts for construction
services, the business seeking Indian preference must provide evidence
that it can and will perform not less than 15% of the work with its
own employees. In the absence of a determination by the Indian Preference
Officer that the subcontracting arrangement disclosed is typical for
that field of business, an entity operating thus shall be considered
a front which does not qualify for certification as an NHBP member,
NHBP family or Native American-owned business and is ineligible for
preference.
(2) Exceptions to management control criteria. The requirements listed
above regarding experience, training, occupation requirements, and
knowledge of the firm's activities may be waived when the firm
is modeled on a publicly held corporation such that it is owned by
10 or more persons, of whom at least 70% are NHBP members, NHBP family
or Native American, the chief executive officer and the highest-salaried
employee in the firm is/are NHBP members and/or NHBP family or Native
American, and a majority of the employees are NHBP members or other
Native Americans.
(3) Brokers. Brokers will only be certified in two instances:
(a)
For purposes of RFPs which seek to engage the services of a
broker to assist the Purchasing Department in the acquisition of certain
goods and/or services; or
(b)
The broker is a dealer or distributor, which owns, operates,
or maintains a store, warehouse, or other establishment in which the
commodities being supplied are bought, kept in stock, and sold to
the public in the usual course of business, unless the applicant demonstrates
that it is usual and customary not to keep the commodities in stock.
D. Integrity of structure. In addition to the factors described in §
5.4-24A through C, the Indian Preference Office shall consider the following criteria to determine whether the applicant qualifies for preference:
(1) History of the firm. Whether the firm, a portion of the firm, or
key actors in the firm were originally associated with a non-Indian-owned
business that gained little except eligibility for preference priority
in terms of equipment capital or expertise, by adding Native American
ownership or by merging with a Native American-owned firm.
(2) Employees.
(a)
Whether key non-Indian employees of the applicant are former
employees of the non-Indian firm with which the firm seeking preference
certification is or has been affiliated through a joint venture or
other arrangement such that there is reason to believe the non-Indian
firm controls the applicant.
(b)
Whether NHBP members or Native Americans are employed in all
of the positions for which qualified Indians are available. A high
percentage of non-Indian employees in such positions will provide
reason to believe that the firm was established primarily to benefit
non-Indians.
(3) Relative experience and resources. Whether the non-Indian owner's
experience, expertise and resources are so much greater than those
of the preference owner(s) that there is little reason for the non-Indian
to accept a junior role in the firm or venture other than to be able
to take advantage of the Indian preference program.
Certified preference businesses must renew their certification annually in order to remain eligible for the business preference established by this chapter by reporting any material change in the structure, ownership, management, or information submitted required to be submitted under §
5.4-22 or
5.4-25 of this Act.