2134.1(a) An Applicant for a Provisional, initial, or renewal Sports Wagering Operator or MSP License shall submit for approval by the Director of the Department of Small and Local Business Development ("DSLBD") , a CBE plan ("CBE Plan") that demonstrates that at least thirty-five percent (35%) of the expenses included in the Applicant's operating budget will be contracted or subcontracted with one (1) or more CBEs ("CBE Minimum Expenditure") and that such contracts or subcontracts will be for commercially useful functions related to sports wagering.(b) The CBE Plan shall include: (1) An itemized Operating Budget that includes a detailed breakdown of all estimated revenues and expenses generated from the operations of a Sports Wagering Facility, or where wagering occurs in connection with a Sports Wagering License. The Operating Budget shall include: (A) Detailed line items setting forth the expenditures needed to carry out the desired operating plan;(B) A list of each function associated with the Operating Budget, the dollar amount of the expenditures associated with each function; a designation of whether the function will be self-performed or carried out by a contractor; and, if the function will be carried out by a contractor, a designation of whether the contractor is a CBE; and(C) For each contract that will be carried out by a CBE:(i) The name and address of the CBE contractor;(ii) The certification number of the CBE contractor;(iii) The scope of work to be performed by the CBE contractor, which shall be for a commercially useful function related to sports wagering;(iv) The price to be paid by the Applicant to the CBE contractor; and(v) The length of the contract with the CBE contractor.(2) A CBE capacity building plan that includes:(A) A detailed description of how the Applicant will operate and manage Sports Wagering activities for each year of the licensing period, increase contracting with CBEs for both professional and non-professional services;(B) A detailed description of how the Applicant will develop the capacity of SBEs and SBE-eligible firms to become Sports Wagering Operators and Management Service Providers;(C) A detailed description of how the Applicant will develop the capacity of SBEs and SBE-eligible firms to become equity partners in the various Sports Wagering licensed operations;(3) A written justification for any portion of the Operating Budget the Applicant seeks to exclude from the thirty- five percent (35%) CBE contracting requirement; and(4) A copy of the auditor's report submitted to the Office pursuant to Section 307(a) of the Act.(c) When reviewing the Operating Budget, DSLBD may exclude from the thirty-five percent (35%) CBE contracting requirement, expenditures related to internally generated costs such as employee insurance; employee benefits; employee salaries; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, dues, and utilities.(d) When evaluating a CBE plan, DSLBD shall consider whether the Applicant has demonstrated good faith efforts to increase CBE participation in the areas related to Sports Wagering.2134.2 Each contract that is utilized to meet the CBE Minimum Expenditure shall include a requirement that the CBE perform at least thirty- five percent (35%) of the contracting effort with its own organization and resources.
2134.3 An Applicant that is a CBE or a certified joint venture shall not be required to comply with the CBE Minimum Expenditure requirement, provided the CBE or certified joint venture performs at least fifty percent (50%) of its contracting effort with its own organization and resources and, if it contracts, thirty- five percent (35%) of the contracted effort shall be with Certified Business Enterprises.
2134.4(a) Upon receipt of the CBE Plan from the Office, the Director of DSLBD shall conduct a preliminary review of the submission for compliance with the requirements of the Act and this chapter and: (1) If the CBE Plan submission is complete, accept the CBE Plan for review by DSLBD; or(2) If the CBE Plan submission is incomplete or additional information is needed by DSLBD, return the CBE Plan to the Applicant with a notice indicating the need for additional actions or materials in order for the submission to be accepted for review.(b) If the Applicant receives a notice from DSLBD under paragraph (a)(2) of this subsection, the Applicant shall submit to DSLBD, no later than five (5) days after receipt of the DSLBD notice, information sufficient to complete the submission for DSLBD's review of the CBE Plan. If the CBE Plan remains incomplete after the five (5)-day submission period, the CBE Plan shall be denied.2134.5 The Director of DSLBD, or the Director of DSLBD's designee, may hold interviews or discussions with an Applicant or Applicant 's representative(s) as part of the CBE Plan review process.
2.134.6 In addition to the information supplied in the Applicant's CBE Plan submission, the Director of DSLBD may require an Applicant to supply or provide access to additional information and documents relevant to DSLBD's review of the Applicant's CBE Plan.
2134.7 Upon completion of DSLBD's review of a CBE Plan, the Director of DSLBD shall provide the Applicant and the Office in writing DSLBD's approval or denial of the CBE Plan, and if the CBE Plan is approved, certify the CBE Minimum Expenditure. DSLBD shall deny the CBE Plan if the Applicant fails to demonstrate compliance with relevant requirements of the Act or this chapter.
2134.8 In accordance with the Act, the CBE Act, and these regulations, an Applicant may seek the Director of DSLBD's approval to waive the CBE Minimum Expenditure requirement, or any portion of the CBE Minimum Expenditure requirement, if the Applicant can demonstrate that there is insufficient market capacity for the goods or services that comprise the Sports Wagering Operation, and such lack of capacity leaves the Applicant commercially incapable of achieving the CBE Minimum Expenditure requirement.
2134.9 An Applicant seeking a waiver of the CBE Minimum Expenditure requirement shall submit, through the Office, a request for approval of a waiver by the Director of DSLBD ("Waiver Application"). The waiver request shall include a written justification ("Waiver Justification") that includes:
(a) The number of certified business enterprises, if any, qualified to perform the elements of work that comprise the Sports Wagering Operation;(b) A summary of the market research or outreach conducted to analyze the relevant market;(c) Consideration given to alternate methods for acquiring the work to be contracted to make the work more amenable to be performed by CBE;(d) An itemized Operating Budget and operation plan in the same manner prescribed in Subsection 2134.1 of this chapter; and(e) A copy of the auditor's report submitted to the Office pursuant to Section 307(a) of the Act.2134.10(a) Upon receipt of the Waiver Application, the Director of DSLBD shall conduct a review of the submission for compliance with the requirements of the Act and this chapter and: (1) If the Waiver Application is complete, accept the Waiver Application for review by DSLBD; or(2) If the Waiver Application is incomplete or additional information is needed by DSLBD, return the Waiver Application to the Applicant with a notice indicating the need for additional actions or materials in order for the Waiver Application to be accepted for review.(b) If the Applicant receives a notice from DSLBD under paragraph (a)(2) of this subsection, the Applicant shall submit to DSLBD, no later than three (3) days after receipt of the DSLBD notice, information sufficient to complete the Waiver Application for DSLBD review. If the Waiver Application remains incomplete after the three (3)-day submission period, the waiver request shall be denied. 2134.11 The Director of DSLBD, or the Director of DSLBD's designee, may hold interviews or discussions with an Applicant or Applicant's representative(s) as part of the waiver review process.
2134.12 In addition to the information supplied in the Applicant's Waiver Justification, DSLBD may require an Applicant to supply or provide access to additional information and documents relevant to DSLBD's review and determination of the Applicant's waiver request.
2134.13 Upon receipt of a complete Waiver Application, the Director of DSLBD shall post the waiver request on DSLBD's website for ten (10) days to provide the public notice of the waiver request.
2134.14 Upon completion of DSLBD's review of a Waiver Application, the Director of DSLBD shall approve or deny the waiver request in writing, with notices sent to both the Office and the Applicant. If the Director of DSLBD neither approves or denies the waiver request within thirty (30) days after the submission of a complete Waiver Application, the waiver request shall be deemed approved.
2134.15 An Applicant for certification as a joint venture shall:
(a) Submit an executed copy of the Applicant's joint venture agreement, which must: (1) Specify in reasonable detail the purpose of the joint venture and the location the joint venture will apply for a Sports Wagering Operator or MSP License;(2) Identify the parties to the joint venture and define their respective obligations, rights, and responsibilities, including the management structure, control of the joint venture, financial contributions, service and labor contributions, revenue or fees for services or labor, and distribution of profits;(3) Demonstrate that the majority owner(s) of the joint venture is/are a CBE;(4) Demonstrate that the majority CBE owner and/or managing CBE member of the joint venture maintains the Resident-Owned Business (ROB), Disadvantaged Business Enterprise (DBE), or Small Business Enterprise (SBE) certification category;(5) Provide for the establishment and administration of a separate bank account in the name of the joint venture into which all funds received will be deposited and through which all expenses will be paid, and which requires all withdrawals and deposits to be approved by the CBE member;(6) Contain a provision indicating that the CBE's interest in the joint venture shall not be reduced or diluted;(7) Contain a provision indicating that the CBE's financial risk is commensurate with its percentage interest in the joint venture;(8) Contain a provision indicating that the joint venture agreement is the controlling agreement between the parties regarding interest, ownership, control, responsibilities, duties, and functions of the parties and the joint venture agreement shall prevail if there is any conflict between the joint venture agreement and any other agreement between the parties; (9) Specify the responsibilities of the parties in at least the areas of negotiations with the owners, subcontract negotiation, and contract and subcontract performance; and(10) Indicate the level at which the CBE will perform services of the joint venture, receive profits of the joint venture, provide labor hours required of the joint venture, and perform other work for the joint venture (which level must be approved by DSLBD as part of the application process and which level may not be less than the percentage of the CBE's ownership interest in the joint venture).(b) Submit all other agreements between the joint venture parties, concerning the joint venture;(c) Submit additional information that: (1) Demonstrates that each participant in the joint venture has the competence and expertise necessary to perform the type of work in connection with which the joint venture wishes to be certified;(2) Demonstrates the joint venture has created a separate for-profit entity and registered with the Department of Consumer and Regulatory Affairs (DCRA);(3) Includes any other agreements between the parties regarding the operations of the joint venture; and(4) Includes the most current audited or reviewed financial statement for the non-CBE participant(s); and(d) Include certifications that: (1) All agreements between the joint venture parties, concerning the joint venture, have been provided with the application and if any additional such agreement is later entered into by the joint venture parties, the Applicant will provide the agreement to DSLBD within five (5) business days after it is executed by the joint venture parties;(2) The joint venture will permit DSLBD to enter and conduct onsite inspections and re-inspection of the joint venture's business Premises;(3) The joint venture will make its records available to DSLBD at any time deemed appropriate by DSLBD; and(4) The information in the application is true, correct, and complete.2134.16 The joint venture shall permit DSLBD to enter and conduct onsite inspections and re-inspections of the joint venture's business Premises.
2134.17 DSLBD shall deny certification of any joint venture whose joint venture agreement lacks any of the provisions in §2134.15.
2134.18 The joint venture shall make its records available to DSLBD at any time deemed appropriate by DSLBD.
2134.19 If the application for certification of a joint venture is incomplete or additional information is needed by DSLBD, DSLBD shall notify the Applicant indicating the need for additional actions or materials in order to complete the application, and the joint venture shall complete the additional actions and provide the additional materials within three (3) calendar days of DSLBD's notification.
2134.20 The joint venture shall notify DSLBD in writing within five (5) days of the receipt of a Sports Wagering Operator or MSP License.
2134.21 The joint venture shall notify DSLBD in writing if its application for a Sports Wagering Operator or MSP License is denied by the Office or if it is no longer pursuing a Sports Wagering Operator or MSP License.
2134.22 DSLBD may revoke the certification of a joint venture for failure to comply with the Act and these regulations.
2134.23 Each Operator and MSP shall comply with the reporting requirements of the Act and the CBE Act. Pursuant to D.C. Official Code § 2-218.46(i), each Operator and MSP shall provide a quarterly report that includes, for each contract that is part of the Operator or MSP's plan to meet the CBE Minimum Expenditure requirement:
(a) The price to be paid by the Operator or MSP to the contractor or subcontractor under the contract;(b) A description of the goods procured or the services subcontracted for;(c) The amount paid by the Operator or MSP to the contractor or subcontractor under the contract; and(d) A copy of the fully executed contract or subcontract, if the fully executed contract or subcontract was not provided in a prior quarterly report.2134.24 DSLBD may also require an Operator or MSP to demonstrate compliance with relevant requirements of the Act, the CBE Act, this chapter, and other laws of the District of Columbia. In furtherance of such demonstration, the Operator and/or MSP shall:
(a) Permit DSLBD to enter onto and conduct an on-site inspection of the Operator's or MSP's business Premises;(b) Provide DSLBD, during the on-site inspection, with immediate access to any records or area of the Premises that DSLBD deems necessary to review to determine whether the Operator or MSP is in compliance with relevant requirements of the Act, the CBE Act, this chapter, and other laws of the District of Columbia; and(c) Provide any other information DSLBD deems necessary to evidence compliance with relevant requirements of the Act, the CBE Act, this chapter, and other laws of the District of Columbia.2134.25 Each Operator and MSP shall promptly report to DSLBD any material changes that may affect the CBE Plan, including but not limited to:
(a) A change in ownership of a CBE included in the CBE Plan;(b) A change in the address of a CBE included in the CBE Plan;(c) The expiration of CBE certification of a contractor included in the CBE Plan;(d) Removal of a CBE contractor from the CBE Plan;(e) Addition of a CBE contractor to the CBE Plan;(f) A change to the CBE capacity building plan; and(g) A change to the Operating Budget.2134.26 If the Operating Budget of an Operator or MSP increases or decreases by an amount greater than five percent (5%) of the amount of the Operating Budget submitted to DSLBD, the Operator or MSP shall within ten (10) business days submit to DSLBD a copy of the revised Operating Budget. DSLBD shall review the revised Operating Budget and determine if a modification to the CBE Minimum Expenditure is required.
2134.27 Each Operator and MSP shall meet with DSLBD within ten (10) days after receiving a license from the Office.
2134.28 Thereafter, the Operator and/or MSP shall meet on an annual basis with DSLBD to provide an update of the CBE Plan for utilization of Certified Business Enterprises. The Operator and/or MSP will inform DSLBD of any issues that might negatively impact the CBE performance or the CBE goal.
2134.29 The Applicant shall use print advertising, internet notices, pre-bid and pre-proposal conferences and the resources of DSLBD, including DSLBD's website (http://dslbd.dc.gov) and other resources to identify individuals or businesses that could qualify as CBEs and is encouraged to refer any such individuals or businesses to DSLBD's Certification unit to apply for certification. The Applicant may identify individuals or businesses that could qualify as CBEs and is encouraged to refer any such firms to DSLBD's Certification unit to apply for certification.
2134.30 If DSLBD determines that an Operator or MSP has failed to comply with an applicable CBE requirement, the Operator or MSP must develop and implement a corrective action plan, approved by DSLBD, that demonstrates how the Operator or MSP will comply with the CBE requirements in the future.
2134.31 If DSLBD determines, in accordance with the procedures set forth in this section that an Operator or MSP has violated Sub section 2134.23 of this chapter, DSLBD may:
(a) Assess a civil penalty of not more than five thousand dollars ($5,000) for the first offense;(b) Assess a civil penalty of not more than fifteen thousand dollars ($15,000) for the second offense;(c) Assess a civil penalty of not more than twenty-five thousand dollars ($25,000) for the third and each subsequent offense; and(d) Refer the matter to the Office, which may revoke or suspend the Operator's or MSP's License under §§ 314 (a)(2) and (a)(3) of the Act.2134.32 In addition to other penalties assessed, if DSLBD determines that an Operator or MSP has failed to use good faith efforts to meet contracting requirements in accordance with Section 305(g) of the Act and Subsection 2134.1 of this chapter, DSLBD may assess a civil penalty equal to ten (10) percent (10%) of the dollar volume of the Operator or MSP's Operating Budget.
D.C. Mun. Regs. tit. 30, r. 30-2134
Final Rulemaking published at 66 DCR 011618 (8/30/2019)