[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR124.109]

[Page 355-358]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 124--8(A) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS STATUS DETERMINATIONS--Table of Contents
 
                  Subpart A--8(a) Business Development
 
Sec. 124.109  Do Indian tribes and Alaska Native Corporations have any special rules for applying to the 8(a) BD program?

    (a) Special rules for ANCs. Small business concerns owned and 
controlled by ANCs are eligible for participation in the 8(a) program 
and must meet the eligibility criteria set forth in Sec. 124.112 to the 
extent the criteria are not inconsistent with this section. ANC-owned 
concerns are subject to the same conditions that apply to tribally-owned 
concerns, as described in paragraphs (b) and (c) of this section, except 
that the following provisions and exceptions apply only to ANC-owned 
concerns:
    (1) Alaska Natives and descendants of Natives must own a majority of 
both the total equity of the ANC and the total voting powers to elect 
directors of the ANC through their holdings of settlement common stock. 
Settlement common stock means stock of an ANC issued pursuant to 43 
U.S.C. 1606(g)(1), which is subject to the rights and restrictions 
listed in 43 U.S.C. 1606(h)(1).
    (2) An ANC that meets the requirements set forth in paragraph (a)(1) 
of this section is deemed economically disadvantaged under 43 U.S.C. 
1626(e), and need not establish economic disadvantage as required by 
paragraph (b)(2) of this section.
    (3) Even though an ANC can be either for profit or non-profit, a 
small business concern owned and controlled by an ANC must be for profit 
to be eligible for the 8(a) program. The concern will be deemed owned 
and controlled by the ANC where both the majority of stock or other 
ownership interest and total voting power are held by the ANC and 
holders of its settlement common stock.
    (4) The Alaska Native Claims Settlement Act provides that a concern 
which is majority owned by an ANC shall be deemed to be both owned and 
controlled by Alaska Natives and an economically disadvantaged business. 
Therefore, an individual responsible for control and management of an 
ANC-owned applicant or Participant need not establish personal social 
and economic disadvantage.
    (5) Paragraphs (b)(3)(i), (ii) and (iv) of this section are not 
applicable to an ANC, provided its status as an ANC is clearly shown in 
its articles of incorporation.
    (6) Paragraph (c)(1) of this section is not applicable to an ANC-
owned concern to the extent it requires an express waiver of sovereign 
immunity or a ``sue and be sued'' clause.
    (b) Tribal eligibility. In order to qualify a concern which it owns 
and controls for participation in the 8(a) BD program, an Indian tribe 
must establish its own economic disadvantaged status under paragraph 
(b)(2) of this section. Thereafter, it need not reestablish such status 
in order to have other businesses that it owns certified for 8(a) BD 
program participation, unless specifically required to do so by the AA/
8(a)BD or designee. Each tribally-owned concern seeking to be certified 
for 8(a) BD participation must comply with the provisions of paragraph 
(c) of this section.
    (1) Social disadvantage. An Indian tribe as defined in Sec. 124.3 is 
considered to be socially disadvantaged.
    (2) Economic disadvantage. In order to be eligible to participate in 
the 8(a) BD program, the Indian tribe must demonstrate to SBA that the 
tribe itself is economically disadvantaged. This must involve the 
consideration of available

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data showing the tribe's economic condition, including but not limited 
to, the following information:
    (i) The number of tribal members.
    (ii) The present tribal unemployment rate.
    (iii) The per capita income of tribal members, excluding judgment 
awards.
    (iv) The percentage of the local Indian population below the poverty 
level.
    (v) The tribe's access to capital.
    (vi) The tribal assets as disclosed in a current tribal financial 
statement. The statement must list all assets including those which are 
encumbered or held in trust, but the status of those encumbered or in 
trust must be clearly delineated.
    (vii) A list of all wholly or partially owned tribal enterprises or 
affiliates and the primary industry classification of each. The list 
must also specify the members of the tribe who manage or control such 
enterprises by serving as officers or directors.
    (3) Forms and documents required to be submitted. Except as 
otherwise provided in this section, the Indian tribe generally must 
submit the forms and documents required of 8(a) BD applicants as well as 
the following material:
    (i) A copy of all governing documents such as the tribe's 
constitution or business charter.
    (ii) Evidence of its recognition as a tribe eligible for the special 
programs and services provided by the United States or by its state of 
residence.
    (iii) Copies of its articles of incorporation and bylaws as filed 
with the organizing or chartering authority, or similar documents needed 
to establish and govern a non-corporate legal entity.
    (iv) Documents or materials needed to show the tribe's economically 
disadvantaged status as described in paragraph (b)(2) of this section.
    (c) Business eligibility. In order to be eligible to participate in 
the 8(a) BD program, a concern which is owned by an eligible Indian 
tribe (or wholly owned business entities of such tribe) must meet the 
conditions set forth in paragraphs (c)(1) through (c)(7) of this 
section.
    (1) Legal business entity organized for profit and susceptible to 
suit. The applicant or participating concern must be a separate and 
distinct legal entity organized or chartered by the tribe, or Federal or 
state authorities. The concern's articles of incorporation, partnership 
agreement or limited liability company articles of organization must 
contain express sovereign immunity waiver language, or a ``sue and be 
sued'' clause which designates United States Federal Courts to be among 
the courts of competent jurisdiction for all matters relating to SBA's 
programs including, but not limited to, 8(a) BD program participation, 
loans, and contract performance. Also, the concern must be organized for 
profit, and the tribe must possess economic development powers in the 
tribe's governing documents.
    (2) Size. (i) A tribally-owned applicant concern must qualify as a 
small business concern as defined for purposes of Federal Government 
procurement in part 121 of this title. The particular size standard to 
be applied is based on the primary industry classification of the 
applicant concern.
    (ii) A tribally-owned Participant must certify to SBA that it is a 
small business pursuant to the provisions of part 121 of this title for 
the purpose of performing each individual contract which it is awarded.
    (iii) In determining the size of a small business concern owned by a 
socially and economically disadvantaged Indian tribe (or a wholly owned 
business entity of such tribe) for either 8(a) BD program entry or 
contract award, the firm's size shall be determined independently 
without regard to its affiliation with the tribe, any entity of the 
tribal government, or any other business enterprise owned by the tribe, 
unless the Administrator determines that one or more such tribally-owned 
business concerns have obtained, or are likely to obtain, a substantial 
unfair competitive advantage within an industry category.
    (3) Ownership. (i) For corporate entities, a tribe must own at least 
51 percent of the voting stock and at least 51 percent of the aggregate 
of all classes of stock. For non-corporate entities, a tribe must own at 
least a 51 percent interest.

[[Page 357]]

    (ii) A tribe cannot own 51% or more of another firm which, either at 
the time of application or within the previous two years, has been 
operating in the 8(a) program under the same primary SIC code as the 
applicant. A tribe may, however, own a Participant or an applicant that 
conducts or will conduct secondary business in the 8(a) BD program under 
the same SIC code that a current Participant owned by the tribe operates 
in the 8(a) BD program as its primary SIC code.
    (iii) The restrictions of Sec. 124.105(h) do not apply to tribes; 
they do, however, apply to non disadvantaged individuals or other 
business concerns that are partial owners of a tribally-owned concern.
    (4) Control and management. (i) The management and daily business 
operations of a tribally-owned concern must be controlled by the tribe, 
through one or more disadvantaged individual members who possess 
sufficient management experience of an extent and complexity needed to 
run the concern, or through management as follows:
    (A) Management may be provided by committees, teams, or Boards of 
Directors which are controlled by one or more members of an economically 
disadvantaged tribe, or
    (B) Management may be provided by non-tribal members if SBA 
determines that such management is required to assist the concern's 
development, that the tribe will retain control of all management 
decisions common to boards of directors, including strategic planning, 
budget approval, and the employment and compensation of officers, and 
that a written management development plan exists which shows how 
disadvantaged tribal members will develop managerial skills sufficient 
to manage the concern or similar tribally-owned concerns in the future.
    (ii) Members of the management team, business committee members, 
officers, and directors are precluded from engaging in any outside 
employment or other business interests which conflict with the 
management of the concern or prevent the concern from achieving the 
objectives set forth in its business development plan. This is not 
intended to preclude participation in tribal or other activities which 
do not interfere with such individual's responsibilities in the 
operation of the applicant concern.
    (5) Individual eligibility limitation. SBA does not deem an 
individual involved in the management or daily business operations of a 
tribally-owned concern to have used his or her individual eligibility 
within the meaning of Sec. 124.108(b).
    (6) Potential for success. (i) A tribally-owned applicant concern 
must be in business for at least two years, as evidenced by income tax 
returns for each of the two previous tax years showing operating 
revenues in the primary industry in which the applicant is seeking 8(a) 
BD certification, or demonstrate potential for success as set forth in 
paragraph (c)(6)(ii) of this section.
    (ii) In determining whether a tribally-owned concern has the 
potential for success, SBA will look at a number of factors including, 
but not limited to:
    (A) The technical and managerial experience and competency of the 
individual(s) who will manage and control the daily operation of the 
concern;
    (B) The financial capacity of the concern; and
    (C) The concern's record of performance on any previous Federal or 
private sector contracts in the primary industry in which the concern is 
seeking 8(a) certification.
    (7) Other eligibility criteria. (i) As with other 8(a) applicants, a 
tribally-owned applicant concern shall not be denied admission into the 
8(a) program due solely to a determination that specific contract 
opportunities are unavailable to assist the development of the concern 
unless:
    (A) The Government has not previously procured and is unlikely to 
procure the types of products or services offered by the concern; or
    (B) The purchase of such products or services by the Federal 
Government will not be in quantities sufficient to support the 
developmental needs of the applicant and other program participants 
providing the same or similar items or services.
    (ii) Except for the tribe itself, the concern's officers, directors, 
and all shareholders owning an interest of 20%

[[Page 358]]

or more must demonstrate good character. See Sec. 124.108(a).