Chapter Adm 82

Adm 82.25 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.28 Adm 82.28 Determination of control.

Adm 82.28(1) (1) Factors that the department may consider in determining whether one or more disabled veteran owners control a business include the following:

Adm 82.28(1)(a) (a) Authority and restrictions as indicated in the articles of incorporation, by-laws, minutes of corporate meetings, bank signature cards, partnership and joint venture agreements and other business agreements and documents.

Adm 82.28(1)(b) (b) Membership of one or more disabled veteran owners on the board of directors.

Adm 82.28(1)(c) (c) Holdings by disabled veteran owners of the voting interests in the business.

Adm 82.28(1)(d) (d) The managerial experience, knowledge and expertise of the disabled veteran owners in such areas as finance, budgeting, personnel, production, marketing and research.

Adm 82.28(1)(e) (e) Whether the disabled veteran owners have the authority to make policy decisions in such areas as finance, budgeting, personnel, production, marketing and research.

Adm 82.28(1)(f) (f) Whether the daily business operations are controlled by one or more duly authorized representatives of one or more disabled veterans.

Adm 82.28(1)(g) (g) Whether the disabled veteran owners or their duly authorized representatives are substantially unconnected with the principal place of business, such as by being incarcerated.

Adm 82.28(2) (2) An applicant’s assertion of being independent from a business that is owned by other than a disabled veteran may not rest solely on recognition of the disabled veteran owners by governmental taxing authorities. Other test criteria may include the following:

Adm 82.28(2)(a) (a) An applicant’s relationship with any business that is not owned by a disabled veteran, which involves any long-term contract or lease agreements.

Adm 82.28(2)(b) (b) The existence of working agreements with any business that is not owned by a disabled veteran.

Adm 82.28(2)(c) (c) An applicant’s status as a party to any contract or lease agreement on terms at variance with industry standards or prudent business practices.

Adm 82.28(2)(d) (d) The existence of restrictive financing agreements with any business that is not owned by a disabled veteran or any financial institution which impose undue limitations on the applicant.

Adm 82.28(2)(e) (e) Interlocking stock ownership of the applicant and any business that is not owned by a disabled veteran in the same industry.

Adm 82.28(2)(f) (f) Common directors or officers between the applicant and any business that is not owned by a disabled veteran.

Adm 82.28(2)(g) (g) An applicant’s use of employees, equipment, expertise, facilities, or other resources from a business that is not owned by a disabled veteran.

Adm 82.28(2)(h) (h) The receipt of financial benefits, such as profits and wages, that are not commensurate with the duties performed, by a business that is not owned by a disabled veteran.

Adm 82.28(2)(i) (i) An applicant that cannot operate without licenses, permits or insurance held by another business.

Adm 82.28(2)(j) (j) An applicant that does not possess all legal requirements necessary to its operation.

Adm 82.28 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.29 Adm 82.29 Documentation of control.

Adm 82.29(1) (1) An applicant shall submit evidence that one or more disabled veteran owners or their duly authorized representatives have control over the business. The evidence may include any of the following:

Adm 82.29(1)(a) (a) Signed bids and contracts.

Adm 82.29(1)(b) (b) Signed debt instruments.

Adm 82.29(1)(c) (c) Signed hiring decisions.

Adm 82.29(1)(d) (d) Bank signature cards and bank resolution authorizations, for savings, checking and other financial accounts.

Adm 82.29(1)(e) (e) Written proof that the organizational and governing documents of an applicant, such as limited liability company operating agreements, partnership agreements, or articles of incorporation and by-laws, do not contain any provision which restricts the disabled veteran owner or his or her duly authorized representative from exercising control of the business.

Adm 82.29(1)(f) (f)

Adm 82.29(1)(f)1. 1. Documentation, such as résumés, showing that the disabled veteran owners or their duly authorized representatives have the managerial experience, knowledge and expertise — in such areas as finance, budgeting, personnel, production, marketing and research — needed for exercising day-to-day control over the business.

Adm 82.29(1)(f)2. 2. The department may waive the managerial experience required in subd. 1., when a disabled veteran is starting a disabled veteran-owned business, financial adviser, or investment firm.

Adm 82.29(1)(g) (g) Documentation establishing the representation authorization prescribed in s. 45.04 (1) (a), Stats., if another person is acting for the disabled veteran.

Adm 82.29 Note Note: Section 45.04 (1) (a) of the Statutes defines “duly authorized representative” and is reprinted under section Adm 82.12 (20).

Adm 82.29(2) (2) The managerial experience, knowledge and expertise of the disabled veteran owners or their duly authorized representatives substantially demonstrates their ability to make independent and unilateral business decisions necessary to guide the future and destiny of the business. The applicant may document this ability and control in a number of ways. For a disabled veteran owner or his or her duly authorized representative to demonstrate the extent of this control, the department may consider the following or other aspects of a business:

Adm 82.29(2)(a) (a) Authority to sign payroll checks and letters of credit.

Adm 82.29(2)(b) (b) Signature responsibility for insurance or bonds.

Adm 82.29(2)(c) (c) Authority to negotiate and execute contracts and financial services agreements.

Adm 82.29(2)(d) (d) Ability to obtain bank authorization resolutions.

Adm 82.29(3) (3) Agreements for support services are permitted as long as the power of the disabled veteran owner or his or her duly authorized representative to control the company is not restricted or impaired, as determined by the department.

Adm 82.29 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.32 Adm 82.32 Determination of active management. Factors that the department may consider in determining whether one or more disabled veteran owners or their duly authorized representatives actively manage a business include the following:

Adm 82.32(1) (1) Direct operational management.

Adm 82.32(1)(a) (a) The operational management of the disabled veteran owner or his or her duly authorized representative is the demonstrated extent to which the disabled veteran owner or his or her duly authorized representative actually operates the day-to-day business.

Adm 82.32(1)(b) (b) Departmental assessments of operational management shall rest upon the peculiarities of the industry of which the business is a part. In order to clarify the level of operational management of the disabled veteran owner or his or her duly authorized representative, the department may consider each of the following:

Adm 82.32(1)(b)1. 1. ‘Experience.’ The disabled veteran owner or his or her duly authorized representative has education, demonstrable working knowledge or experience in the area of specialty or industry claimed in the application.

Adm 82.32(1)(b)2. 2. ‘Responsibility for decision-making.’

Adm 82.32(1)(b)2.a. a. The disabled veteran owner or his or her duly authorized representative makes basic decisions pertaining to the daily operation of the business, such as the purchase of goods, equipment, business inventory and services.

Adm 82.32(1)(b)2.b. b. The disabled veteran owner or his or her duly authorized representative supervises the business’s employees.

Adm 82.32(1)(b)3. 3. ‘Technical competence.’

Adm 82.32(1)(b)3.a. a. The disabled veteran owner or his or her duly authorized representative has technical competence in the industry or specialty of the business or a working knowledge of the technical requirements of the business sufficient to critically evaluate the work of subordinates.

Adm 82.32(1)(b)3.b. b. The disabled veteran owner or his or her duly authorized representative has the ability to perform in his or her area of specialty or expertise without substantial reliance upon finances and resources – such as equipment, automobiles and facilities – of entities that are not owned by disabled veterans.

Adm 82.32(1)(b)4. 4. ‘Connection to the principal place of business.’ The disabled veteran owner or his or her duly authorized representative is not substantially removed from the principal place of business, such as by being incarcerated.

Adm 82.32(2) (2) Delegated operational management. Where the actual day-to-day operational management is delegated to a person other than a disabled veteran owner or his or her duly authorized representative, the active-management requirements may be met if the disabled veteran owner or his or her duly authorized representative has the ultimate power to hire and fire that person.

Adm 82.32(3) (3) Potential constraints on operational management. In reviewing governance documents and issues, the department shall give special attention to the extent to which all of the following aspects affect the ability of the disabled veteran owner or his or her duly authorized representative to direct the management and policies of the business:

Adm 82.32(3)(a) (a) The composition of the business’s governing body.

Adm 82.32(3)(b) (b) The functioning of the governing body.

Adm 82.32(3)(c) (c) The content of shareholder’s agreements, bylaws, or state incorporation statutes.

Adm 82.32 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.33 Adm 82.33 Documentation of active management. The applicant shall submit evidence that one or more disabled veteran owners or their duly authorized representatives actively manage the business. This evidence may include, but is not limited to, the following:

Adm 82.33(1) (1) Signed purchase orders, invoices and contracts.

Adm 82.33(2) (2) Evidence that the disabled veteran owners or their duly authorized representatives have delegated work assignments to the business employees.

Adm 82.33(3) (3) Documentation, such as résumés, showing that the disabled veteran owners or their duly authorized representatives have the education or work experience in the skill areas required to produce the product or service provided by the business.

Adm 82.33(4) (4) Where the actual day-to-day operational management is delegated to a person other than a disabled veteran owner or his or her duly authorized representative, documentation, such as a signed contract, showing that the disabled veteran owners or their duly authorized representatives have the ultimate power to hire and fire that person.

Adm 82.33 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.36 Adm 82.36 Determination of performance of a useful business function. Factors that the department may consider in determining whether a disabled veteran-owned entity is performing a useful business function include the following:

Adm 82.36(1) (1) The degree to which the business has customers other than the state.

Adm 82.36(2) (2) The adequacy of the business’s resources to carry out its business functions.

Adm 82.36(3) (3) The degree to which the business is independent of control or substantial influence by another business. Business relationships that tend to defeat the useful business function include shared space, equipment, employees, or other resources, and financing agreements.

Adm 82.36(4) (4) Whether the business acts as a conduit to transfer funds to a business that is not owned by a disabled veteran, unless doing so is a normal industry practice.

Adm 82.36 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.37 Adm 82.37 Documentation of performance of a useful business function. The applicant shall submit evidence that the business is performing a useful business function. This evidence may include, but is not limited to, the following:

Adm 82.37(1) (1) Contracts, purchase orders, invoices, and other documents demonstrating that the business has customers.

Adm 82.37(2) (2) Evidence that the quantity, type and condition of the business’s equipment and inventory are adequate to carry out its business functions.

Adm 82.37(3) (3) Loans and other financing agreements, leases, employee contracts, payroll records and other documents demonstrating that the business’ relationships with businesses that are owned by other than disabled veterans do not preclude it from performing a useful business function.

Adm 82.37(4) (4) Contracts, purchase orders, invoices, and other documents showing that the business has a diversity of suppliers and is not acting as a conduit for a single supplier.

Adm 82.37 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.40 Adm 82.40 Special circumstances. Any one of the following circumstances creates a presumption that an applicant does not satisfy the eligibility standards for certification as a DVB. In such instances, the applicant has the burden of establishing to the department’s satisfaction that the business meets the eligibility standards despite the existence of one or more of the following factors:

Adm 82.40(1) (1) The business was formed less than three years but at least one year prior to an application for certification.

Adm 82.40(2) (2) The ownership or control of the business has changed within two years prior to an application for certification.

Adm 82.40(3) (3) Shares of stock transferred from a person other than a disabled veteran to a disabled veteran owner of the business, within two years prior to an application for certification.

Adm 82.40(4) (4) The business has unissued shares that, if issued, could result in less than 51 percent disabled veteran ownership of the business or in less than dominant control by disabled veteran owners or their duly authorized representatives.

Adm 82.40(5) (5) The business is subject to conversion rights that, if exercised, would result in less than 51 percent disabled veteran ownership of the business or in less than dominant control by disabled veteran owners or their duly authorized representatives.

Adm 82.40(6) (6) One or more of the disabled veteran owners is a former or current employee of a business which is not owned by a disabled veteran and which has an ownership interest in or a business relationship with the applicant, particularly if the business that is not owned by a disabled veteran is in a substantially similar line of business.

Adm 82.40(7) (7) An applicant’s directors or management or both, are substantially the same as those of a business which is not owned by a disabled veteran and which has an ownership interest in, an investment in, or a business relationship with the applicant, particularly if the business that is not owned by a disabled veteran is in a substantially similar line of business.

Adm 82.40(8) (8) The business shares indistinguishable facilities, such as office space; production, distribution or storage facilities; machinery and equipment; or employees, with a business that is not owned by a disabled veteran.

Adm 82.40 History History: EmR1041: emerg. cr., eff. 11-14-10; CR 11-004: cr. Register September 2011 No. 669, eff. 10-1-11.

Adm 82.50 Adm 82.50 Certification procedure for disabled veteran-owned entities.

Adm 82.50(1) (1) Application and review.