123:2-16-15 Commercially useful function.

(A) A contractor awarded a contract for goods and services, information technology services, construction, architecture and engineering, and professional services pursuant to Chapters 123., 125., and 153. of the Revised Code may count toward its EDGE goal only those expenditures to EDGE business enterprises that perform a commercially useful function.

(B) EOD will consider the following (but not limited to) when determining if an EDGE business enterprise is performing a commercially useful function :

(1) The workers on the EDGE contract or project are regular employees of the contracted EDGE business enterprise.

(a) Regular employees are employees that would be working for the EDGE business enterprise on any other subcontract with any other contractor.

(b) An individual is not considered a regular employee if the individual is an employee of the contractor or of a supplier of goods or services to the EDGE business enterprise.

(2) The equipment used by the EDGE business enterprise is owned, leased, or controlled by the EDGE business enterprise.

(a) Equipment is controlled by the EDGE business enterprise if:

(i) The EDGE business enterprise owns or rents or leases from a traditional rental or leasing source pursuant to a written rental or lease agreement; and

(ii) The equipment would be used by the EDGE business enterprise on other contracts with other contractors.

(b) Equipment is not considered under the control of the EDGE business if the equipment belongs to the contractor awarded the contract or to another contractor working on the contract or project.

(3) The EDGE business enterprise has the responsibility, with respect to execution of the work of the contract, for actively managing, performing, and supervising the work involved. Examples are (but not limited to):

(a) Negotiating the cost of services

(b) Arranging delivery

(c) Taking ownership and paying for materials and supplies

(d) Preparation of estimates

(e) Determining quantity of material

(f) Determining and ensuring quality of materials

(4) The EDGE business enterprise has the responsibility, with respect to materials and supplies used on the contract, for (but not limited to) negotiating price, determining quality and quantity, ordering, payment, and, where applicable, installation.

(5) The EDGE business does not purchase any of the required materials for the contract or project from the contractor.

(6) The relationship between the contractor and the EDGE business enterprise remains at arms-length throughout the performance of the contract or project.

(7) EDGE business enterprise only purchases materials and performs little or no direct work on the contract or project.

(8) The agreement between the contractor and EDGE business enterprise artificially inflates the EDGE participation or erodes the ownership, control or independence of the EDGE business enterprise.

(9) Volume of work is beyond the capacity of the EDGE business enterprise.

(10) EDGE business owner has a good understanding of the business and is able to answer questions about the business and industry and has a keen understanding of the business financially and operationally.

(11) Work to be performed by the EDGE business enterprise is outside of the its known experience or capability.

(12) EDGE business enterprise works solely for only one contractor on different contracts or projects.

(13) Amount the EDGE business enterprise is paid under the contract is commensurate with the work that is actually being performed to be credited towards the goal.

(C) An EDGE business enterprise does not perform a commercially useful function if:

(1) Its role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of EDGE participation.

(2) EDGE business enterprise subcontracts a greater portion of the work of a contract than would be expected on the basis of normal industry practice for the type of work involved.

(3) Materials or supplies that are necessary for the EDGE business enterprise's performance are billed to or paid by another business; invoices for materials must be in the name of the EDGE business enterprise.

(4) Any portion of the work designated to be performed by an EDGE business enterprise is performed by the prime contractor.

(D) An EDGE business enterprise must have a necessary and useful role in the transaction, of a kind for which there is a market outside the context of the program. The business's role must not be a superfluous step added in an attempt to obtain EDGE credit towards the goal. The EDGE business enterprise's role must be real and required to complete the transaction.

(E) If the EDGE business is used only to gain EDGE credit towards the goal, then the EDGE business enterprise will be found to not be performing a commercially useful function.

(F) An EDGE business enterprise shall provide all information requested by EOD concerning the commercially useful function of the EDGE business on a contract or project. Failure to provide the requested information may lead to revocation of any certification pursuant to rule 123:2-16-06 of the Administrative Code.

(G) EODmay conduct on-site inspections and investigations at any location of the EDGE business enterprise, including locations at which the EDGE business enterprise has contracted to provide services, to determine whether an EDGE business enterprise is performing a commercially useful function on a contract or project. Failure to cooperate in such on-site inspection may lead to revocation of any certification pursuant to rule 123:2-16-06 of the Administrative Code.

Effective: 2/1/2016
Five Year Review (FYR) Dates: 11/05/2015 and 11/20/2020
Promulgated Under: 119.03
Statutory Authority: R.C. 123.152
Rule Amplifies: R.C. 123.152
Prior Effective Dates: 3/16/2009