Reporting obligations of disadvantaged businesses
Most businesses certified as Disadvantaged Business Enterprises (DBEs) are generally aware that they have some sort of obligation to report changes in their business at some point. Some believe that changes should only be reported in the annual affidavit. This is not the case. This blog explains what, when, and how changes should be reported to your certifying agency.
What to report:
Section 26.83(i) requires a DBE to report all changes that may affect their eligibility for DBE status, including:
Changes in business size (under Small Business Administration (SBA) regulations – either number of employees or gross revenue, depending on NAICS code).
Disadvantaged Status Changes. For example, has a disadvantaged homeowner exceeded the maximum personal net worth allowance?
Changes in the control of the company, such as significant changes in the tasks, changes in the articles of association of the company, etc.
When to report:
Section 28.83(i)(3) requires a certified DBE to report all changes within 30 days of the change.
How to report:
Under section 28.83(i)(3), changes must be reported by means of an affidavit under oath (ie before a notary public). You must also provide supporting documents attesting to the change. For example, if the bylaws have changed, you must submit a copy of the new bylaws. If a new owner has purchased the business, you must provide these documents.
What happens if you don’t report?
If your company does not report these changes within 30 days, you compromise your DBE certification. The certifying agency may immediately suspend your DBE certification without the required notice and hearing process set forth in Section 26.87(d). While on suspension, the DBE may not be considered to have achieved a contract objective, and any work they perform on a contract received as part of the suspension may not count toward project objectives. These reporting requirements are taken very seriously.
©2022 Strassburger McKenna Gutnick & GefskyNational Law Review, Volume XII, Number 62