[Code of Federal Regulations]

[Title 13, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 13CFR124.109]



[Page 374-377]

 

                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.



[[Page 375]]



    (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 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



[[Page 376]]



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.

    (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



[[Page 377]]



    (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% or more must demonstrate 

good character. See Sec. 124.108(a).