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What You Need to Know About Service Disabled Veteran-Owned Business Certification

Thursday, October 23rd, 2014

Service Disabled Veteran-Owner Business (“SDVOB”) Certification Requirements:  

1. The service-disabled veteran must have a service-connected disability that has been determined by the Department of Veterans Affairs or Department of Defense

2. The service-disabled veteran-owned small business concern must be small under the North American Industrial Classification System (NAICS) code assigned to the procurement;

 3.The service-disabled veteran-owned small business concern must also be at least 51% owned by one or more service-disabled veterans or, in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more Service-Disabled Veterans.

 4.Management and daily business operations of the service-disabled veteran-owned business concern must be controlled by one or more Service-Disabled Veterans or, in the case of a veteran with a permanent and severe disability, the spouse or permanent caregiver of such a veteran.

5. The service-disabled veteran must hold the highest officer position in the small business concern.

 6.Further:

 To be an eligible SDVOSBC the following must be met:

  • The management and daily business operations of the concern must be controlled by one or more service-disabled veterans.
    • Control by one or more service-disabled veterans means that both the long-term decision making and the day-to-day management and administration of the business operations must be conducted by one or more service-disabled veterans
    • The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse of permanent caregiver of such veteran
  • Service-disabled veteran means a veteran with a disability that is service-connected.
  • Ownership must be direct. Ownership by one or more service disabled veterans must be direct ownership.
    • A concern owned principally by another business entity that is in turn owned and controlled by one or more service-disabled veterans does not meet this requirement.

GSA Certification as SDVOB:

GSA does not require formal certification, instead they allow a business to self-certify.  Go to www.sam.gov for more information. 

 SDVOSB program — bidding firm is responsible for self-certifying or representing to the contracting officer that it is a service disabled veteran owned small business concern.

 -Self-certification can be achieved through SAM

 -Under the SDVOSB program, the bidding firm is responsible for self-certifying or representing to the contracting officer that it is a service disabled veteran owned small business concern. A firm can do this by simply self-certifying through the government’s System for Award Management (SAM) – by declaring that it meets the definition of a service disabled veteran owned small business.

 Dept. of Veterans Affairs (“VA”) Certification

 Veterans First Contracting Program requires verification of veteran status and placement in VetBiz database.  Agencies cannot require certification by the VA.

 The Veterans First Contracting Program, which applies only to VA acquisitions and requires verification of veteran status through the VA in its Vendor Information Pages or VetBiz database. Agencies, other than VA, cannot require certification by the VA or placement in the VetBiz database.

 Veterans First Contracting Program:

 -Applies only to VA acquisitions

 -Provides sole-source authority to the VA and permits restricted set-asides to both SDVOSBs and VOSBs

 -Establishes contracting goals unique to the VA

 -7% for veteran owned businesses; 10% for service disabled veteran owned businesses

 -Requires veteran status to be verified by the VA

 

 

 

 

Sample Confessed Judgment Note for Commercial Use

Thursday, October 23rd, 2014

CONFESSED JUDGMENT NOTE

[SAMPLE]

 Amount –

Date –

            The undersigned __________________________ (hereinafter referred to as “Maker”) hereby promises to pay ________________________________(“______________”), located at [Address], the sum of ___________________ ($_______________) to resolve a dispute over monies owed to ______________________ related to _________________________________.

 NOW, THEREFORE, in consideration of the foregoing, the covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maker hereby agrees as follows:

 1.   Payment by Maker Upon Execution of this Note. Maker agrees to pay the sum of $_________________ to ____________________ upon execution of this Note.

 2.   Balance of Sum to be Paid by Maker. Maker agrees to pay the balance owed of the Sum in the amount of $_______________ on or before _________________ (the “Due Date”).  

 3.   Default. Maker shall be in default of this Note should Maker fail to make any payment due to ______________ under this Note, or fail to pay in full all amounts owed under this Note, on or before the Due Date. Upon default, the Entire Sum owed to ______________ of $__________________ shall be then immediately due and payable by Maker, less any amounts previously paid by Maker to _______________ in settlement of this matter.

 4.     Prepayment. Maker may prepay the principal amount outstanding in whole or in part at any time without penalty. 

5.  Confession of Judgment. Should Maker default under this Note, Maker appoints _______________________ as its duly authorized attorney-in-fact with authority, in its name, place, and stead, to confess judgment in the office of the clerk of any Court of any city or county in the state of ____________________ against Maker, in the amount of the $________________, less any amounts previously paid by Maker to _________________ in settlement of this matter.

 6.  Waiver. Maker waives presentment and demand of payment. The failure of ______________________ to exercise any of its rights hereunder in any instance shall not constitute a waiver thereof in that or any other instance. Any notice to Maker shall be given by mailing such notice by first class mail, postage prepaid, addressed to Maker at ____________________________________, or to such other address as Maker may designate by written notice to _____________________. Notice of non-payment is not required by the terms of this Note.

 7.  Costs and Expenses. Maker shall pay __________________ for all costs and expenses, including, but not limited to filing fees, investigative costs and reasonable pre- and post-judgment attorney fees, incurred by __________________ in enforcing and collecting this Note.

 8.  Obligations and Benefits. The obligations and benefits of this Note shall be binding upon and inure to the benefit of the Maker, _____________________ and their respective heirs, successors and assigns.

MAKER

____________________________             

By: _________________________

Title: ________________________

Date: ________________________

 

Here is a Sample Document for a Corporate Supplier Diversity Program

Thursday, October 23rd, 2014

COMPANY NAME

Supplier Diversity Program

COMPANY NAME takes its social and environmental responsibilities seriously. A good example is our strong and longstanding commitment to a diverse supplier base.

The businesses we categorize as diverse suppliers are Minority-Owned, Women-Owned, Veteran-Owned, and Service-Disabled Veteran-Owned Small Businesses, as well as businesses located in Historically Underutilized Business regions (HUBZone) and Small Disadvantaged Businesses (SDB).

A business joins our Supplier Diversity Program by contacting _________ at ______________________ and requesting an application. Following a verification and screening process to ensure a good fit between supplier strengths and capabilities and our current and future requirements, we review the supplier information. The business then becomes a potential supplier who may be used in the procurement process as business needs dictate.

Use the IRS 20 Factor Test to Determine Employee or Independent Contractor Status

Thursday, October 23rd, 2014

Before your company can legally classify a worker as an independent contractor instead of an employee, serious research and analysis must be undertaken. Be sure to review and apply the IRS guidelines below to the specific job which you are considering independent contractor status for. Go through each factor and analyze the job on a step by step basis before arriving at a conclusion. Remember, this is a balancing act, so make sure the scale tilts significantly in your favor before solidifying IC status for your personnel:

IRS 20 Factor Test

  1. Instructions.  Workers who must comply with your instructions as to when, where, and how they work are more likely to be employees than independent contractors.
  2. Training.  The more training your workers receive from you, the more likely it is that they’re employees. The underlying concept here is that independent contractors are supposed to know how to do their work and, thus, shouldn’t require training from the purchasers of their services.
  3. Integration.  The more important that your workers’ services are to your business’s success or continuation, the more likely it is that they’re employees.
  4. Services rendered personally. Workers who must personally perform the services for which you’re paying are more likely employees. In contrast, independent contractors usually have the right to substitute other people’s services for their own in fulfilling their contracts.
  5. Hiring assistants. Workers who are not in charge of hiring, supervising, and paying their own assistants are more likely employees.
  6. Continuing relationship. Workers who perform work for you for significant periods of time or at recurring intervals are more likely employees.
  7. Set hours of work. Workers for whom you establish set hours of work are more likely employees. In contrast, independent contractors generally can set their own work hours.
  8. Full time required.  Workers whom you require to work or be available full time are likely to be employees. In contrast, independent contractors generally can work whenever and for whomever they choose.
  9. Work done on premises.  Workers who work at your premises or at a place you designate are more likely employees. In contrast, independent contractors usually have their own place of business where they can do their work for you.
  10. Order or sequence set.Workers for whom you set the order or sequence in which they perform their services are more likely employees.
  11. Reports.  Workers whom you require to submit regular reports are more likely employees.
  12. Payment method.  Workers whom you pay by the hour, week, or month are more likely employees. In contrast, independent contractors are usually paid by the job.
  13. Expenses.  Workers whose business and travel expenses you pay are more likely employees. In contrast, independent contractors are usually expected to cover their own overhead expenses.
  14. Tools and materials.  Workers who use tools, materials, and other equipment that you furnish are more likely employees.
  15. Investment.  The greater your workers’ investment in the facilities and equipment they use in performing their services, the more likely it is that they’re independent contractors.
  16. Profit or loss.  The greater the risk that your workers can either make a profit or suffer a loss in rendering their services, the more likely it is that they’re independent contractors.
  17. Works for more than one person at a time. The more businesses for which your workers perform services at the same time, the more likely it is that they’re independent contractors.
  18. Services available to general public.  Workers who hold their services out to the general public (for example, through business cards, advertisements, and other promotional items) are more likely independent contractors.
  19. Right to fire.  Workers whom you can fire at any time are more likely employees. In contrast, your right to terminate an independent contractor is generally limited by specific contractual terms.
  20. Right to quit. Workers who can quit at any time without incurring any liability to you are more likely employees. In contrast, independent contractors generally can’t walk away in the middle of a project without running the risk of being held financially

Legal Differences Between a Stock Purchase and an Asset Purchase

Tuesday, February 8th, 2011

A Stock Purchase refers to the sale and purchase of an ownership interest in an entity like a corporation, partnership or limited liability company. The Seller sells, and the Buyer purchases, all or part of the outstanding shares of stock in a corporation, or all or part of the membership interest in an LLC or partnership, as well as all of the existing assets and liabilities of the entity. This includes the name and goodwill of the business, which oftentimes can be valuable. The existing entity itself does not change. Rather, the owners of the stock or membership interest in the entity change from Seller to Buyer, while the entity itself continues uninterrupted.

In a Stock Purchase, unless agreed otherwise, the Seller is absolved of any obligations or liabilities stemming from its prior ownership interest in the entity, as the Purchaser becomes the owner of not only the assets of the entity, but likewise the debts and obligations as well. For this reason a Seller will generally prefer a Stock Purchase over an Asset Purchase, as a Stock Purchase allows the Seller to walk away from the business without the fear of future debts, liabilities or obligations of the business. For the Purchaser of stock in such a transaction, I cannot stress how important it is to perform the maximum amount of due diligence it can, in order the possibility of assuming any unintended or unknown liabilities and obligations, since such liabilities should have or could have been known.

Unlike a Stock Purchase, an Asset Purchase involves, as the name implies, the purchase and sale of only the assets of a particular business, without the purchase or sale of any stock or other ownership interest in the company. The Purchaser buys, and the Seller sells, only the specific assets identified in the governing document, named the Asset Purchase Agreement. Any assets not included in the Asset Purchase Agreement remain the property of Seller. The Buyer must create a new entity that will own the purchased Assets, or use an already existing entity for the transaction.

The Seller of assets retains ownership of the shares of the stock or other membership interest in the business, and as a result the Seller also retains any existing or future obligations and liabilities of such business, except those specifically transferred to the Buyer as part of the sale. For this reason a Purchaser will normally prefer an Asset Purchase to a Stock Purchase. This way, the Buyer obtains only the specific assets which it desired to purchase, and which debts, obligations and liabilities it is assuming, if any.

An additional cost that may be necessary in an Asset Purchase is the need to possibly transfer ownership of certain assets used in or by the business, and/or assign leases and other third party contracts to which Seller was a party.

There are many tax issues that must be addressed when deciding between a Stock Purchase an Asset Purchase. I advise my clients to see the advice of an accountant for such issues.

Lessons to be Learned – Recent MDOT Denial of DBE/MBE Application

Wednesday, January 26th, 2011

A local business owner came to me recently in order to appeal MDOT’s denial of an application for Maryland DBE/MBE certification. Since I had never before read an MDOT denial opinion, there were several interesting issues raised by MDOT that I thought were worth discussing.

1. Ownership – The owners of the business are a husband and wife, and the wife applied as the majority owner of the business for MBE Certification. MDOT focused in part in denying the application on the fact that when the woman owner invested capital in the business at the outset, that her investment came from a credit card jointly held with her husband, and that the credit card balance was eventually paid in full from a jointly held checking account owned by her and her husband. Careful legal drafting of the Articles of Incorporation, and legal advice with regard to who funds the business and how it was funded, would have gone a long way at the outset in potentially avoiding MDOT’s rejection of this application.

2. Control – With regard to control, MDOT focused on two issues: i) the woman owner unquestionably has to be able to prove that she exercises control over the day-to-day operation and management of the company, and has an overall understanding, competence and experience in the business; and ii) the corporate documents, including the Articles of Incorporation, Bylaws, and Shareholder Agreement or Operating Agreement cannot in any way restrict or limit the woman owner’s ability from making the business decisions of the company without the cooperation of the non-disadvantaged owner. In this instance, the company’s Bylaws gave the non-minority owner the same voting rights as the disadvantaged owner, so that she was effectively precluded from making business decisions unilaterally. Properly drafted Bylaws may have avoided this problem.

Reading the opinion as a whole, MDOT focused on several issues which, while separately may not have added up to much, when combined, raised enough questions in MDOT’s mind so as to justify the denial of the business’s DBE/MBE application. The good news is that many of these issues can be avoided with careful legal drafting at the outset.

The Importance of an Attorneys Fees Clause

Thursday, January 20th, 2011

I was recently asked to litigate a breach of contract claim on behalf of a party who was wronged by the breach of another party to a contract. The kind of contract is immaterial for the purpose of this article. It could have been an independent contractor agreement, or employment agreement, or an asset purchase, stock purchase, non-compete, or non-solicitation agreement, or any one of a dozen other types of contracts. Regardless, as I have said previously in these posts, there are certain contractual provisions that should be found in just about every contract. What may be possibly be the single most important provision, from my perspective, happened to have been omitted from this particular contract, that is, a provision addressing the potential recovery of attorney’s fees resulting from litigation.

I say that this may be the single most important provision in a contract not in a substantive sense, as the material terms of the contract must of course be included with specificity. The services to be performed or the products to be sold are obviously vital, since without which there may be no meeting of the minds and thus no contract in the first place. And there are other material provisions related to the deal itself that must be included as well, ie the duration of the agreement, compensation, termination, etc.

But aside from the substantive points of the deal, there is not a more important procedural, boilerplate, provision than a provision addressing attorney’s fees. Why? Because in many cases, the lack of such a provision makes litigating over a contract a financially untenable idea. A party to a contract may have the facts and the law on its side. The case may essentially be a slam dunk, if such things exist. However, if at the end of the day, the damages available to the winning party only barely exceed the amount the party paid to its attorney’s to prosecute the case, then regardless of how great a case it is, the filing of a lawsuit or arbitration makes little sense from a bottom line perspective. None of us, clients or attorneys, litigate in order to achieve moral victories. If maintaining a lawsuit does not make sense from a financial point of view, then regardless of right and wrong and getting even, I always advise my clients to consider the case strictly from a business perspective, leaving aside emotion.

That is why it is such a huge benefit when a contract at issue contains a prevailing party clause with regard to attorney’s fees. This magic language allows a wronged party to sue with the understanding that if the facts and the law support her case, then she will be made whole in regard to not only the actual damages she sustained as a result of the breach of contract, but in addition, all costs, expenses and attorney’s fees she expended in litigating the matter. Please then, I ask you to review EVERY agreement your business has signed, as well as every agreement you sign from here on out, and prior to execution, include a provision similar to the following:

“In the event of litigation [or arbitration] for any matter arising out of or related to this Agreement, the party prevailing in any such action shall be entitled to recover from the losing party its reasonable attorney’s fees and all other legal costs and expenses, including filing fees, expended in the matter.”

The importance of this provision cannot be overstated, since attorney’s fees on even a fairly “routine” matter can easily run into the tens of thousands of dollars, and for more complex cases against defendants with deep pockets, it would not be a surprise to see attorneys’ fees in the hundreds of thousands of dollars.

Why a Single Member LLC Needs an Operating Agreement

Wednesday, October 6th, 2010

Maryland law does not require that a sole member limited liability company (“LLC”) have an existing, enforceable operating agreement on file. Nevertheless, there is an excellent reason to draft and execute one: by executing an LLC operating agreement, the single member of the LLC has drawn a line of protection guarding that person against personal liability for the business debts and obligations of the LLC.

Specifically, Maryland courts have held that the protection from liability that exists by virtue of the LLC’s formation can disintegrate if the LLC fails to observe certain corporate formalities. One of these formalities is the existence of a valid operating agreement. Having an operating agreement in place can protect the single member from liability when a third party attempts to sue the individual member in order to satisfy an obligation resulting from a debt of the LLC.

Without an operating agreement, it may prove more difficult for the sole member to avoid liability. Courts sometimes blur the line between a sole member LLC with its protection from liability for its individual owners, and a sole proprietorship where such protection does not exist. However, this line becomes more clear cut, and courts will as a result hesitate to “pierce the corporate veil” and hold an individual liable for the LLC’s debts, when corporate formalities like having an operating agreement are complied with.

Maryland Minority Business Enterprise (MBE) powerpoint presentation

Tuesday, August 24th, 2010

Click this link to view an excellent powerpoint presentation discussing the application process for Maryland Minority Business Enterprise status as found on the Maryland Transit Administration website:

http://mta.maryland.gov/business/advertisingwithmta/MBE%20Certification%20Power%20Point%20Presentation.pdf

Please contact me if you need assistance with your MBE certification.

Information for Women-Owned Businesses.

Tuesday, August 24th, 2010

Many of my woman-owned business clients want information dealing with the certification process in order for their businesses to get certified in Maryland as a woman-owned business.

If you are a woman-owned business and you want to do business with Montgomery County or the state of Maryland, check out the following link from the Montgomery County Department of Economic Development website which contains a ton of useful information:

http://www.montgomerycountymd.gov/dedtmpl.asp?url=/content/ded/ tech_transfer/bew_resources.asp

As you will see, the available information is extremely beneficial, including information on business coaching roundtables, networking events, the local small business reserve program, the technology women’s network, and of course, how to get the certification process started as a woman-owned business.

If you need assistance with the woman-owned business certification process, please contact me.