N.Y. Comp. Codes R. & Regs. tit. 9 § 252.3

Current through Register Vol. 46, No. 25, June 18, 2024

Section 252.3 - Statewide Certification Program - Purpose, scope and applicability

The purpose of this section is to provide criteria and procedures by which the director makes determinations to approve, deny or revoke the service-disabled veteran-owned business enterprise status of applicants and certified business enterprises. This section is applicable to the certification of businesses as service-disabled veteran-owned businesses under article 3 of the Veterans' Services Law.

(a)Eligibility criteria. The following standards shall be used to determine whether a business enterprise is eligible to be certified as a service-disabled veteran-owned business enterprise.

(1) Ownership. For the purposes of determining whether an applicant should be granted or denied service-disabled veteran-owned business enterprise status, or whether such status should be revoked, the following rules regarding ownership shall be applied on the basis of information supplied in relation to the application:

(i) the contribution of the service-disabled veteran-owner must be proportionate to their equity interest in the business enterprise, as demonstrated by, but not limited to, contributions of money, property, equipment or expertise;

(ii) the business enterprise must demonstrate that it is an independent, real, substantial and continuing entity which has been actively seeking contracts or orders and regularly and actively performing business activities;

(iii) a sole proprietorship must be owned by a service-disabled veteran member;

(iv) a partnership or a limited liability company must demonstrate that service-disabled veteran member(s) have a 51 percent or greater share of the partnership or limited liability company; and

(v) a corporation must have issued at least 51 percent of its authorized voting and all other stock to service-disabled veteran members or shareholders.

(2) Control. Determinations as to whether service-disabled veteran owners or members control the business enterprise will be made according to the following criteria:

(i) Decisions pertaining to the operations of the business enterprise must be made by service-disabled veteran owners or members claiming ownership of that business enterprise. The following will be considered in this regard:

(a) Service-disabled veteran owners or members must have adequate managerial experience or technical competence in the business enterprise seeking certification.

(b) Service-disabled veteran owners or members must demonstrate the working knowledge and ability needed to operate the business enterprise.

(c) Service-disabled veteran owners or members must show that they devote time on an ongoing basis to the daily operation of the business enterprise.

(ii) Articles of incorporation, corporate bylaws, partnership agreements, limited liability company agreements and other agreements including, but not limited to, loan agreements, lease agreements, supply agreements, credit agreements or other agreements must permit service-disabled veteran owners or members who claim ownership of the business enterprise to make those decisions without restrictions.

(iii) Service-disabled veteran owners or members must demonstrate control of negotiations, signature authority for payroll, leases, letters of credit, insurance bonds, banking services and contracts, and other business transactions through production of relevant documents.

(3) Additional requirements. The following requirements apply to all applicants seeking service-disabled veteran-owned business enterprise status and inclusion in the directory of certified businesses:

(i) documentation may be required to substantiate the claim of service-disabled veteran owner status;

(ii) an eligible service-disabled veteran owner applicant must be an independent business enterprise. The ownership and control by the service-disabled veteran-owner must be real, substantial and continuing and must go beyond the pro forma ownership of business as reflected in the ownership documents. The service-disabled veteran owner must enjoy the customary incidents of ownership and must share in the risks and profits, in proportion with their ownership interest in the business enterprise;

(iii) where the actual management of the business enterprise is contracted out to individuals other than service-disabled veteran-owner, the owner must demonstrate that they have the ultimate power to hire and fire these managers, that they exercise this power and make other substantial decisions which reflect control of the business enterprise;

(iv) applicants are required to conduct business activities for, generally, at least one year prior to the application date. Applicants who have been conducting business activities for less than one year, may not be able to provide sufficient information upon which a certification decision can reasonably be made, and therefore their application may be rejected; and

(v) the division may require additional documentation in order to ascertain and/or identify an applicant's ability and/or capacity to perform a commercially useful function on certain State contracts.

(b)Application intake and verification.

(1) Applications for certification may be obtained from and returned to DSDVBD.

(2) DSDVBD shall date stamp an application upon receiving it. If an application is received by the division and required documents are missing, questions are unanswered or the application is not properly notarized, the division will notify the applicant within 30 days of the initial date stamped on the application of the status of its application and any deficiency arising from missing documents, unfinished questions or deficiencies in notarization. An applicant may cure the notice deficiency by providing the division with documents or information requested in the notice of status and deficiency, within 20 days of the date of receipt of the notice of status and deficiency.

(3) When the applicant cures a noticed deficiency, pursuant to procedures set forth in subdivision (b) of this section, the division shall have an additional 30 days to advise the applicant of any further deficiency, which deficiency may be cured in accordance with paragraph (2) of this subdivision.

(4) If the applicant does not cure a noticed deficiency, pursuant to procedures set forth in subdivision (b) of this section and the application remains incomplete, for at least 20 days of the date of the notice of deficiency, the applicant shall be notified , in writing, that its application has been rejected and will not be processed.

(5) An applicant may not reapply for certification for at least 90 days from the date of the notice of rejection of its application.

(6) Applicants for certification may be required to submit additional information including, but not limited to, tax and financial information, leases and business agreements and consent to inquiries of bonding companies, banking institutions, credit agencies, contractors, affiliates and clients to ascertain the applicant's eligibility for certification. Refusal to permit such inquiries shall be grounds for rejection of a certification application.

(7) An application shall be deemed complete when written notice has been sent to the applicant by the division stating that its application is complete.

(8) An applicant's refusal to permit an inspection of its place of business may be grounds for rejection of the application.

(9) An application may be withdrawn by an applicant without prejudice at any time before the division has sent a notice that an application has been completed. Following the withdrawal of an application, the applicant may not reapply for certification for a period of at least 90 days.

(10) Vendor responsibility is not a certification issue. Each State agency independently verifies vendor responsibility per each solicitation.

(c)Notice of determination, right to appeal and requests for hearing.

(1) Within 60 days of the mailing of a notice by the division that the application has been completed, the director shall provide the applicant with written notice of a determination approving or denying certification status.

(2) In the event a determination is made to approve certification by the director, the applicant will be provided with written notice of such determination and will hold service-disabled veteran-owned business enterprise status for five years or until notified of the need to reapply at the director's request.

(3) In the event a determination is made to deny certification, a written notice of such determination shall be provided to the applicant stating the reason(s) for denial. Such notice shall also state the procedures for filing an appeal before a hearing officer.

(d)Revocation of service-disabled veteran-owned business enterprise status.

(1) The director shall revoke the service-disabled veteran owned business enterprise status of a certified business for a period of two years, if it is demonstrated that the service-disabled veteran owner members no longer own and control the business enterprise in accordance with rules set forth in this Part.

(i) A certified business enterprise must notify the division within 30 days of any material change in the information contained in the original application. A material change may include, but is not limited to, any of the following developments: percentage of ownership in the business enterprise, address, officers or services provided by the certified business. If a material change is indicated, a review may be conducted by the division.

(2) The division, only upon receiving specific allegations based in facts which indicate that a certified business enterprise is no longer entitled to service-disabled veteran-owned business enterprise status, may take the following actions:

(i) determine whether the allegation can be substantiated;

(ii) obtain in writing, if possible, the basis of any allegation from the person or persons making the allegation;

(iii) notify a certified business in writing upon a determination that its service-disabled veteran-owned business enterprise status is under review by the director and may be revoked. This notice shall specify the basis for such review and any facts specifically at is sue;

(iv) provide the certified business whose status is under review, with an opportunity to respond in writing to any allegations set forth in notices of certification status review within 20 days of the date of such notice, by personal service or certified mail, return receipt requested; and

(v) meet or conduct site visits, if deemed necessary, with service-disabled veteran owners or members claiming ownership and control of the certified business enterprise.

(3) If the service-disabled veteran owners or members of a certified business fail to timely respond in writing to the notice of certification status review, or fail to meet or agree to a site visit, the service-disabled veteran owned business status of the certified business enterprise shall be revoked by the director.

(4) The director shall notify, in writing, a business of the revocation of its service-disabled veteran-owned business enterprise status within 10 days of revoking such status. The service-disabled veteran owners or members claiming ownership and control of a business which has had its service-disabled veteran-owned business enterprise status revoked, may request a hearing before a hearing officer within 30 days of the date of the notice of revocation. Such hearing shall be conducted in accordance with procedures set forth in this section. If a request for a hearing is not made within the 30 day period, the director's determination shall be final and the business enterprise may not reapply for certification for two years from the date of the notice of revocation provided, however, that if the facts and circumstances forming the basis of the revocation decision have changed significantly, the business enterprise may reapply sooner.

(5) The service-disabled veteran owners or members shall be provided with notice of the date, time and place of their hearing before the hearing officer, at least 10 days prior to the date of the hearing.

(6) The hearing officer shall conduct a hearing and render a decision whether the certified business should retain its service-disabled veteran-owned business enterprise status, or whether such status should be revoked in accordance with paragraph (1) of this subdivision. The hearing officer may request additional information of the service-disabled veteran owners and members who requested the hearing, or the division.

(7) The hearing officer shall issue a decision to the director to affirm, reverse or modify the original determination. Within 30 days of the decision, the director shall accept, reject or modify the hearing officer's decision and set forth in writing the reasons for doing so. The director shall forward a copy of the decision to the business enterprise by personal service or certified mail, return receipt requested. In the event of a decision to revoke the service-disabled veteran-owned business enterprise status of a business enterprise, the business enterprise may not reapply for certification for two years from the date of the original notice of revocation, provided, however, that if the facts and circumstances forming the basis of the revocation decision have changed significantly, the business enterprise may reapply sooner.

(8) The final decision of the director shall be subject to review, pursuant to article 78 of the Civil Practice Law and Rules.

(e)Criteria for acceptance of Federal certification in lieu of completing and submitting the New York State service-disabled veteran-owned business enterprise certification application.

(1) The DSDVBD shall approve an applicant as a certified business without requiring that applicant to complete the New York State service-disabled veteran-owned business enterprise certification application provided:

(i) the applicant demonstrates that it holds a current federal certification by submitting a true copy of the certification to the DSDVBD;

(ii) the applicant completes the supplemental application;

(iii) the applicant provides a signed authorization for the exchange of information between the division and the certifying entity for the purpose of determining the applicant's eligibility for certification;

(iv) an owner, a partner or a principal officer that is authorized to act on behalf of the applicant signed and has notarized an attestation that the information submitted in connection with the Federal certification is accurate to the best of that person's knowledge; and

(v) the applicant provides proof satisfactory to the DSDVBD that the applicant is owned, operated and controlled by service-disabled veteran owners or members and that the individual or individuals whose ownership, control and operation are relied upon for certification, meet the requirements of and the definition of small business set forth in these regulations.

(2) Notwithstanding anything to the contrary in paragraph (1) of this subdivision, the DSDVBD reserves the right to:

(i) conduct an investigation of an applicant (which may include, but not be limited to, conducting a site visit to the applicant's place of business, and or requesting documentation from the applicant) to verify that the applicant meets all of the eligibility criteria set forth in article 3 of the Veterans' Services Law;

(ii) reject or deny certification if the DSDVBD is not satisfied that the applicant meets all of the eligibility criteria set forth in article 3 of the Veterans' Services Law.

(3) After verification by the DSDVBD that an applicant has satisfied all such criteria as applicable, such applicant shall become certified as a service-disabled veteran-owned business enterprise without completing the New York State service-disabled veteran-owned business enterprise certification application.

(4) The process described in this section of this Part will apply to the supplemental applications.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 252.3

Adopted New York State Register January 28, 2015/Volume XXXVII, Issue 04, eff. 1/28/2015

Amended New York State Register December 6, 2023/Volume XLV, Issue 49, eff. 12/6/2023