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In order to be certified as a disadvantaged business enterprise (“DBE”) in Maryland, must the business enterprise be independent for purposes of demonstrating control?

Yes.  Under Maryland law, control is the exercise of the power to manage and operate a business enterprise.  Only a business enterprise that is independent may be certified as a DBE.  An independent business enterprise is one the viability of which does not depend on its relationship with another firm or firms. 

In determining whether a business enterprise is independent for DBE certification purposes, relationships with non-DBE firms in such areas as personnel, facilities, equipment and financial support are carefully scrutinized. Relationships between the business enterprise seeking DBE certification and non-DBE firms, or persons associated with non-DBE firms, are considered to determine consistency with normal industry practice and to ensure that the business enterprise’s independence is not compromised. In addition, relationships with prime contractors are thoroughly examined in order to determine whether a pattern of exclusive or primary dealings may exist which could compromise the independence of the business enterprise seeking DBE certification.

Certification of a business can be a viable tool for developing and maintaining business relationships. Businesses seeking certification as a DBE in Maryland may want to consider obtaining legal advice concerning eligibility requirements for certification prior to applying for certification.    

By:  James R. Benjamin, Jr., Esq                 
jbenjamin@pklaw.com

 

This information is provided for general information only.  None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.