Minority- and Women-Owned Business Enterprise Certification Program

RCNY tit. 66, ch. 11, subch. B

in effect

66 RCNY § 11-21 Definitions.

§ 11-21 Definitions. As used in this subchapter, the following terms have the following meanings: Applicant. "Applicant" means a business enterprise which has applied for certification as an MBE and/or WBE. Audit. "Audit" means an examination of a business enterprise to determine whether the business enterprise is eligible for certification as an MBE and/or WBE, and may include an examination of books, records, physical facilities and interviews of applicants. Business enterprise. "Business enterprise" means any entity, including a sole proprietorship, partnership or corporation which is authorized to and engages in lawful business transactions in accordance with the laws of New York State. Certified business. "Certified business" means a business enterprise which has been approved for certification as an MBE and/or WBE in accordance with the procedures set forth in 66 RCNY § 11-22, subsequent to verification that the business enterprise is owned, operated, and controlled by minority group members as defined in 66 RCNY § 11-21, or women. Certification director. "Certification director" means the director of the minority- and women-owned business enterprise program or his or her designee or his or her successor in function. Certification letter. "Certification letter" means the letter sent by DSBS to an applicant notifying it of its certification as an MBE and/or WBE. City. "City" means the City of New York. Commissioner. "Commissioner" means the Commissioner of the New York City Department of Small Business Services or his or her designee or his or her successor in function. Day. "Day" means a calendar day unless otherwise specified. Denial or denied. "Denial" or "denied" means a determination by DSBS that a business enterprise is not eligible for certification as an MBE and/or WBE because it does not meet the criteria for certification. Division. "Division" means the division of economic and financial opportunity within the department of small business services. DSBS. "DSBS" means the New York City Department of Small Business Services or its successor in function. Geographic Market. "Geographic market" of the City means the following counties: Bronx, Kings, New York, Queens, Richmond, Nassau, Putnam, Rockland, Suffolk and Westchester within the State of New York; and Bergen, Hudson, and Passaic within the State of New Jersey. Graduate MBE and/or graduate WBE. "Graduate MBE" and/or "graduate WBE" means an MBE and/or WBE which has been awarded contracts by one or more agencies within the past three years where the total city funding from the expense and capital budgets for such contracts was equal to or greater than fifty million dollars and whose size has exceeded the size standards established for its industry by the United States small business administration for three years. Minority group member. "Minority group member" means a United States citizen or lawfully admitted permanent resident who is, and can demonstrate membership in, one of the following groups: (1) Black persons having origins in any of the Black African racial groups; (2) Hispanic persons of Mexican, Puerto Rican, Dominican, Cuban, Central or South American descent of either Indian or Hispanic origin, regardless of race; (3) Asian and Pacific Islander persons having origins in any of the Far East countries, South East Asia, the Indian Subcontinent or the Pacific Islands; or (4) Native American persons who originate from any of the original peoples of North America and who maintain cultural identification through tribal affiliation or community recognition. Minority-owned business enterprise or MBE. "Minority-owned business enterprise" or "MBE" means a minority-owned business enterprise that is certified in accordance with Section 1304 of the Charter. Minority- and women-owned business enterprise certification application or certification application. "Minority- and women-owned business enterprise certification application" or "certification application" means the form that DSBS requires an applicant to submit for purposes of applying for certification as an MBE and/or WBE. Non-certified firm. "Non-certified firm" means a business enterprise that has not been certified as an MBE and/or WBE in accordance with Section 1304 of the Charter. Principal office or place of business. "Principal office or place of business" means where the main office and regular meeting place of the board of directors that manages, conducts, and directs the business is located. Rejected or rejection. "Rejected" or "rejection" means the refusal by DSBS to certify a business enterprise as an MBE and/or WBE due to an insufficiency in documentation submitted by the applicant. Women-owned business enterprise or WBE. "Women-owned business enterprise" or "WBE" means a woman-owned business enterprise that is certified pursuant to Section 1304 of the Charter. (Amended City Record 5/25/2021, eff. 6/24/2021)

66 RCNY § 11-22 Eligibility Criteria.

§ 11-22 Eligibility Criteria. The following standards will be used to determine whether a business enterprise is eligible for certification as an MBE and/or WBE. (a) Nexus. In order to be eligible for certification as an MBE and/or WBE, a business enterprise must have a real and substantial business presence in the geographic market for the city of New York. An MBE and/ or WBE which meets one of the following conditions will be deemed to have a real and substantial business presence in the geographic market for the city of New York: (1) the business enterprise's principal office or place of business or headquarters is located within the City; or (2) the business enterprise maintains full-time employees in one or more of the business enterprise's offices within the City to conduct or solicit business in the City the majority of their working time; or (3) the business enterprise's principal office or place of business or headquarters is located within the geographic market of the City, and (i) has transacted business more than once in the City within the last three years, or (ii) has sought to transact business more than once in the City within the last three years; or (4) twenty-five percent (25%) of the business enterprise's annual gross receipts for the last three years were derived from transacting business in the City; or (5) the business enterprise's principal office or place of business or headquarters is not located within the geographic market of the City but the business enterprise has demonstrated two or more of the following indicia of a real and substantial presence in the market for the City of New York: (i) the business enterprise has maintained a bank account or engaged in other banking transactions in the City; (ii) the business enterprise, or at least one of its owners, possesses a license issued by an agency of the City to do business in the City; (iii) the business enterprise has transacted or sought to transact business in or with the City more than once in the past three years. (b) Ownership. For the purposes of determining whether an applicant should be certified as an MBE and/or WBE, or whether such certification should be revoked, the following rules concerning ownership will be applied: (1) The equity interest of minority group member(s) and/or women owners must be proportionate to the contribution of the minority group member(s) and/or women owners; (2) A sole proprietorship must be owned by a minority group member and/or woman; (3) A partnership must demonstrate that minority group members and/or women have a fifty-one (51%) percent or greater share of the partnership; and (4) A corporation must have issued at least fifty-one (51%) percent of its issued and authorized voting and all other stock to minority group members and/or women shareholders. (b-1) (1) For the purposes of subdivision b of this section, the term "contribution" shall include: (i) contributions of money, property, equipment or relevant expertise to a business enterprise in furtherance of the legitimate business objectives of such business enterprises; and (ii) payments to other persons or entities in consideration for an equity interest in a business enterprise. (2) Notwithstanding any provision of this subdivision, the term "contribution" shall not include: (i) a payment to a person or entity in exchange for an equity interest in a business enterprise where such payment is made from the proceeds of a promissory note or loan for which the balance outstanding is over 50% of the total note or loan amount; (ii) the receipt of an equity interest as a gift; or (iii) payments from a bank account over which the minority and/or women owners cannot demonstrate control. (c) Control. Determinations as to whether minority group members and/or women control the business enterprise will be made according to the following criteria: (1) Decisions pertaining to the operations of the business enterprise must be made by minority group members and/or women claiming ownership of that business enterprise. The following will be considered in determining whether the minority group members and/or women are making such decisions: (i) whether minority group members and/or women have experience and technical competence in the business enterprise seeking certification; (ii) whether minority group members and/or women demonstrate the working knowledge and ability needed to operate the business enterprise; and (iii) whether minority group members and/or women show that they devote time on an ongoing basis to the daily operation of the business enterprise. (2) Articles of incorporation, corporate by-laws, partnership agreements, business certificates, corporate tax returns, unincorporated business tax returns, partnership tax returns and other agreements, including, but not limited to, loan agreements, lease agreements, supply agreements, credit agreements or other agreements must permit minority group members and/or women who claim ownership of the business enterprise to make those decisions pertaining to operations of the business enterprise without restrictions. (3) Minority group members and/or women 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. (d) Additional eligibility provisions. The following provisions apply to all applicants seeking certification as an MBE and/or WBE: (1) Documentation may be required to substantiate the claim of membership in a minority group. This documentation may include, but is not limited to, birth certificates, foreign passports, naturalization papers, registration on Native American tribal rolls and nonresident visas; (2) Where the actual management of the business enterprise is contracted out to individuals other than minority group members and/or women, minority group members and/or women 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; (3) Documentation of one (1) year's business activity will be required in order to provide sufficient information upon which certification can be reasonably made. The commissioner, in his or her discretion, may permit documentation for a lesser period; (4) Any business enterprise that satisfies the eligibility criteria as set forth in 66 RCNY § 11-22, is presumptively eligible for certification as an MBE and/or WBE under these rules; provided that the commissioner may decline to certify, or revoke the certification of, any business enterprise on the ground that there is not a firm basis for believing that there is a compelling state interest to justify certification of that business enterprise under these rules. (e) Graduate MBE and/or WBE determinations. The division will, upon reviewing applications for certification and recertification, determine whether a business enterprise qualifies as a graduate MBE and/or WBE. The division will make such determinations in accordance with the following procedures: (1) In the event that the division determines a business enterprise seeking new certification as an MBE and/or WBE qualifies as a graduate MBE and/or WBE pursuant to 66 RCNY § 11-21, the division will provide a written notice of such determination to the applicant business enterprise stating the reason(s) for such determination and the procedures for challenging the graduate MBE and/or WBE determination. (2) In the event that the division determines a certified MBE and/or WBE qualifies as a graduate MBE and/or WBE pursuant to 66 RCNY § 11-21, the division will provide a written notice of such determination to the business enterprise seeking recertification setting forth the reason(s) for such determination and the procedures for challenging the graduate MBE and/or WBE determination. (3) In the event that the division determines a business enterprise seeking new certification or a certified MBE and/or WBE to be a graduate MBE and/or WBE pursuant to 66 RCNY § 11-21, the business enterprise may challenge such a determination pursuant to the procedures set forth in 66 RCNY §§ 11-24 and 11-25. (4) In the event that the division has determined a business enterprise to be a graduate MBE and/or WBE, and the business enterprise has not made a timely challenge to that determination, or has made such a challenge and the department has affirmed its determination, the business enterprise may not apply to have the designation lifted for at least two years from the date of the original determination notice. The division will lift the designation if the firm demonstrates that (i) it has not been awarded contracts by one or more agencies within the past three years where the total city funding from the expense and capital budgets for such contracts was equal to or greater than fifty million dollars; and (ii) it has been below the size standards established by the United States small business administration for its industry for a period of two years or more. (f) Certification as both an MBE and a WBE. In order to be certified as both an MBE and a WBE, a business enterprise must show that the ownership standard described in subdivision b of this section and the control standard described in subdivision c of this section are met by women who are minority group members. (g) Certification decision for firms held in trust. (1) Notwithstanding any other provision of this subchapter, the Division may determine a business enterprise that does not meet all of the eligibility criteria set forth in subdivisions (b), (b-1), and (c) of this section is nevertheless eligible for certification as an MBE or WBE if the business enterprise previously met all the eligibility criteria set forth in subdivisions (b), (b-1), and (c) of this subdivision, regardless of whether such business enterprise previously sought or obtained certification during the time period in which such business enterprise met all such criteria, and if the minority group or women owner or owners subsequently transferred some or all of such owner's or owners' shares into one or more trusts for estate planning purposes, provided that in determining whether to certify such business entity, the commissioner shall consider whether such certification would advance the purposes of this subchapter, based on the following factors: (i) the degree to which transfers of shares to the trust or trusts resemble common estate planning practices; (ii) the degree to which the former owner or owners have a bona fide estate planning interest in selecting the trust beneficiaries and trustees; (iii) the degree to which day-to-day management obligations, including control of negotiations, signature authority for payroll, leases, letters of credit, insurance bonds, banking services and contracts, and other business transactions, and the ability to hire and fire employees, are retained by women or members of a minority group. (iv) the degree to which voting shares are retained by minority group members or women; (v) the degree to which the business entity has provided to the Division adequate and transparent documentation memorializing the trust relationship; (vi) the degree to which the trust or trusts are revocable; and (vii) the degree to which the former owner or owners retain any liabilities or other legal exposure for the entity. (2) Any determination of eligibility pursuant to this subdivision shall be made in writing and shall include: (i) a written statement that the Division has considered each of the factors set forth in paragraph (1) of this subdivision; and (ii) for each criterion set forth in subdivisions (b), (b-1), or (c) that a business enterprise does not satisfy, an explanation of why such business enterprise's failure to satisfy such criterion is exclusively attributable to the transfer of shares into one or more trusts in furtherance of a bona fide estate planning interest. (Amended City Record 5/25/2021, eff. 6/24/2021; amended City Record 5/12/2023, eff. 5/12/2023)

66 RCNY § 11-23 Application Intake and Verification.

§ 11-23 Application Intake and Verification. (a) Minority- and/or women-owned business enterprise certification applications may be obtained from, and must be returned to DSBS or may be submitted electronically, to the extent an online application process is available. DSBS will record the date that each application is received. (b) An applicant must submit such information or documentation as may be required by DSBS in connection with its certification as an MBE and/or WBE. Failure to submit such information or documentation may result in the rejection or revocation of such certification. (c) If a certification application is received by DSBS and required documents are missing, questions are unanswered or the certification application is not properly signed, DSBS will send to the applicant, within 45 days of the date the application was received by DSBS, a notice of status and deficiency (the "Notice"), stating any deficiency arising from missing documents, unfinished questions or deficiencies in signature. An applicant may cure the noticed deficiency by providing DSBS with documents or information requested in the Notice, within 30 days of the date of the Notice. (d) When the applicant cures a noticed deficiency, pursuant to procedures set forth in 66 RCNY § 11-23(c), DSBS will have an additional forty-five (45) days to advise the applicant of any further deficiency which may be cured in accordance with 66 RCNY § 11-23(c). (e) If the applicant does not cure a noticed deficiency, pursuant to procedures set forth in 66 RCNY § 11-23(c), and the certification application remains incomplete for at least forty-two (42) days of the date of the Notice, unless such time is extended by the division, the applicant must be sent a notice stating that its certification application has been rejected and will not be processed, together with its rejected certification application. (f) An applicant whose certification as an MBE and/or WBE is rejected may not reapply for certification for at least one hundred twenty (120) days of the date of the notice of rejection of its application. (g) Applicants may be required to consent to inquiries of their bonding companies, banking institutions, credit agencies, contractors, affiliates, clients and other entities to ascertain the applicant's eligibility for certification. Refusal to permit such inquiries will be grounds for rejection of a certification application. (h) All applicants and certified businesses will be subject to an audit at any time. An applicant's or certified business' refusal to facilitate an audit will be grounds for denial of its certification application or revocation of its certification. (i) A certification application may be withdrawn by an applicant without prejudice at any time prior to an audit. Following the withdrawal of a certification application, the applicant may not reapply for certification for a period of at least one hundred twenty (120) days from the date of withdrawal of the application. (j) All applicants and certified businesses may be required to provide documentation to substantiate that the business has the skill and expertise to perform in the particular area of work for which it is requesting listing or is listed on the M/WBE Directory. (k) The division will conduct site visits for at least 5% of all MBE and/or WBE certification applications received during a fiscal year to verify that such business enterprises are eligible for certification under these rules. (Amended City Record 5/25/2021, eff. 6/24/2021)

66 RCNY § 11-24 Notice of Determination and Right to Appeal.

§ 11-24 Notice of Determination and Right to Appeal. (a) The division will provide the applicant with written notice of a determination approving or denying the certification. (b) In the event certification is approved by the division, the applicant must be sent a certification letter and will be certified as an MBE and/or WBE for five years from the date of the certification letter or until notified of the need to reapply at the division's request, whichever is earlier, so long as the applicant submits to the division an affidavit of no material change in ownership or control annually. (c) In the event certification is denied by the division, a written notice of such determination will be provided to the applicant stating the reason(s) for such denial. Such notice will also state the procedures for filing an appeal. (d) The applicant may appeal the determination within sixty (60) days after the date of the notice denying the business enterprise's certification. In the event that a request for an appeal is not made within the sixty (60) day period, the division's determination will be deemed final and the applicant may not reapply for certification for two (2) years from the date of the written notice denying certification, provided, however, that if the facts and circumstances forming the basis of the denial decision have changed significantly, the applicant, at the discretion of the division, may be granted permission to reapply sooner. (e) The request for an appeal must state the grounds upon which the denial of certification is being appealed. (Amended City Record 5/25/2021, eff. 6/24/2021)

66 RCNY § 11-25 Appeals.

§ 11-25 Appeals. A business entity denied certification or re-certification as an MBE and/or WBE will be given written notice by DSBS of the grounds for such denial and an opportunity to appeal such denial in writing to the commissioner. Such appeal or a request for an extension to file an appeal must be received by the commissioner no later than sixty (60) days after the date of the notice denying the business enterprise's certification or re-certification. The commissioner may extend the period in which to initiate an appeal for good cause shown. Such appeal must include, at a minimum, a description of the reasons why the decision to deny certification or re-certification is in error and provide evidence to support the appeal. Such business entity must provide such other documentation or information as is requested by the commissioner, in his or her sole discretion. The commissioner will render a written determination no later than one hundred twenty (120) days after receipt of the appeal, unless the time to render a determination has been extended upon agreement of the commissioner and the business enterprise. If the commissioner's determination is not made within the prescribed one hundred twenty (120) days after receipt of the appeal or within the agreed upon extended time period, then the appeal is deemed denied. The decision of the commissioner granting or denying such appeal will constitute the final agency determination.

66 RCNY § 11-26 Revocation of Minority- or Women-Owned Business Enterprise Status.

§ 11-26 Revocation of Minority- or Women-Owned Business Enterprise Status. (a) A certified business must notify DSBS within forty-five (45) days of any material change in the information contained in the certification application. A material change may include, but is not limited to, a change in any of the following: ownership; address; officers; services provided by the certified business; market sector in which the business enterprise operates, bonding capacity of the business enterprise; and the union affiliation(s), if any, of the business enterprise. If a material change occurs, a review may be conducted by DSBS. If the review reveals that the firm is no longer eligible for certification, certification may be revoked pursuant to the procedures set out below in subdivision (d) of this section. If an MBE's and/or WBE's certification is revoked, such business enterprise may not reapply for certification for a period of two (2) years from the date of the written notice revoking certification. If a certified business fails to notify the division of such material change, the division may revoke the certification of an MBE and/or WBE for a period of up to five years. (b) DSBS, upon having reason to believe or upon receiving allegations indicating that a certified business enterprise is not eligible for certification as an MBE and/or WBE, may meet with minority group members and/or women claiming ownership and control of the certified business and/or conduct an audit of such business enterprise, and will take the following actions: (1) Determine whether the allegation can be substantiated; (2) Obtain in writing, if possible, the basis of any allegation from the person or persons making the allegation; (3) Notify a certified business in writing that its certification as an MBE and/or WBE is under review by the division and may be revoked. This notice will specify the bases for such review and any facts specifically at issue; and (4) Provide the certified business with an opportunity to respond in writing to any allegations set forth in any notices questioning the certification status of a certified business, within twenty-eight (28) days of the date of such notice, by personal service or certified mail, return receipt requested. (c) If the minority group members or women claiming ownership of the certified business fail to respond timely in writing to the notice of certification status review, or fail to meet with a DSBS representative or agree to an audit, the certification of the MBE and/or WBE may be revoked by the division. (d) The division will notify, in writing, a certified business of the revocation of its certification as an MBE and/or WBE within fourteen (14) days of revoking such certification pursuant to 66 RCNY § 11-26(c) or based on a determination that such business is not currently eligible for certification. The minority group members and/or women claiming ownership and control of a business enterprise which has had its certification as an MBE and/or WBE revoked, may request an appeal of this decision within thirty (30) days of the date of the notice of revocation. Such appeal must be conducted in accordance with procedures set forth in 66 RCNY § 11-25. If a request for an appeal is not made within the thirty (30) day period, the division's determination will be final and the business enterprise may not reapply for certification for two (2) 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, at the discretion of the division, be granted permission to reapply sooner. (e) If at any time DSBS has reason to believe that an applicant or certified business has willfully and knowingly provided incorrect information or made false statements, it will refer the matter to the Department of Investigation for investigation. Falsification of any document by an applicant or a certified business may lead to the imposition of civil and criminal penalties as provided by law and contract and revocation of certification as an MBE and/or WBE. (f) A business certified as an MBE or WBE may voluntarily withdraw from the M/WBE program by providing written notice to the division, in a format determined by the division, stating the request and the reason for withdrawal. The division will notify, in writing, such MBE or WBE that the withdrawal process is complete no later than thirty (30) days after receipt of the written notice from the business. Following voluntary withdrawal from the M/WBE program, a business shall not reapply for certification for a period of at least one (1) year from the date of the written notice from the division. (Amended City Record 5/25/2021, eff. 6/24/2021)

66 RCNY § 11-27 Certification Criteria and Procedures for Firms Certified as Minority- and/or Women-Owned Business Enterprises by Other Governmental Entities.

§ 11-27 Certification Criteria and Procedures for Firms Certified as Minority- and/or Women-Owned Business Enterprises by Other Governmental Entities. (a) DSBS may grant MBE and/or WBE certification status to eligible firms certified as minority owned businesses and/or women owned businesses by other governmental entities in accordance with the criteria and procedures contained in this section. (b) Eligibility. Firms certified as minority owned businesses and/or women owned businesses by other governmental entities must satisfy the following eligibility requirements to be recognized by the division as certified MBEs and/or WBEs by the city of New York: (1) The business enterprise must be eligible under 66 RCNY § 11-22; and (2) The business enterprise must be (i) certified as an MBE and/or WBE by the New York State Department of Economic Development, Division of Minority and Women's Business Development pursuant to Article 15-A of the New York State Executive Law and any rules or regulations promulgated thereunder; or (ii) The business enterprise must be certified as an MBE and/or WBE by another governmental entity whose minority- and women-owned business enterprise whose certification criteria the commissioner has determined to be consistent with the certification criteria set forth in these rules and must be able to submit documentation evidencing such certification; (3) The business enterprise must submit the appropriate application(s), form(s) and/or similar document(s) identified by the DSBS for certification pursuant to this section. Failure to submit such information or documentation may result in the rejection of such certification; and (4) The business enterprise must submit such information or documentation as may be required by DSBS in connection with its certification as an MBE and/or WBE pursuant to this section. Failure to submit such information or documentation may result in the rejection of such certification. (c) Certification period. Unless the commissioner determines otherwise, the maximum period for which any certification granted by DSBS pursuant to this subdivision is valid will be the period during which the business enterprise is certified as an MBE and/or WBE with the original certifying entity.

Source: City of New York, Charter, Administrative Code and Rules (American Legal Publishing XML export, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCrules/0-0-0-93566Fetched: 10/24/2026