Sec. 95.816  Competitive bidding proceedings.

    (a) Mutually exclusive IVDS initial applications are subject to 
competitive bidding.
    (b) The General Procedures set forth in 47 CFR part 1, subpart Q are 
applicable to competitive bidding proceedings used to select among 
mutually exclusive applicants for initial IVDS licenses.
    (c) The specific procedures applicable to auctioning particular IVDS 
licenses will be set forth by Public Notice. Generally, the following 
competitive bidding procedures will be used to auction mutually 
exclusive IVDS licenses. The Commission, however, may design and test 
alternative procedures.
    (1) Competitive bidding design options and mechanisms. The Wireless 
Telecommunications Bureau will select competitive bidding design(s) and 
mechanisms in accordance with Secs. 1.2103 and 1.2104 of this chapter. 
If simultaneous multiple round bidding is used, the Wireless 
Telecommunications Bureau has the discretion to vary the duration of the 
bidding rounds or the interval at which bids are accepted at any time 
before or during the course of the auction.
    (2) Forms. (i) Applicants must submit short-form applications (FCC 
Form 175) as specified in Commission Public Notices. Minor deficiencies 
may be corrected prior to the auction. Major modifications such as 
changes in ownership, failure to sign an application or failure to 
submit required certifications will result in the dismissal of the 
application. See 1.2105(a) and (b) of this chapter.
    (ii) Applicants must submit a long-form application (FCC Form 600) 
within ten (10) business days after being notified that it is the 
winning bidder for a license. See 1.2107(c) and (d) of this chapter.
    (3) Upfront payments. Each eligible bidder in the IVDS auction will 
be required to submit an upfront payment of $9,000 per MSA license and 
$2,500 per RSA license for the maximum number of licenses on which it 
intends to bid pursuant to section 1.2106 of this chapter and procedures 
specified by Public Notice.
    (4) Down payments. See Sec. 1.2107(b) of this chapter.
    (5) Full payment. Auction winners, except for small businesses 
eligible for installment payments, must pay the balance of their winning 
bids in a lump sum within five (5) business days following the grant of 
their license(s). The grant of a license(s) to an auction winner(s) will 
be conditioned on the timely payment of all monies due the Commission. 
See 47 CFR 1.2109(a).
    (6) Withdrawal, default or disqualification. See Secs. 1.2104(g) and 
1.2109 of this chapter.
    (d) Designated entities. Designated entities are small businesses, 
and businesses owned by members of minority groups and/or women, as 
defined in 47 CFR 1.2110(b).
    (1) Bidding credits. (i) A winning bidder that qualifies as a small 
business (as defined in 95.816(d)(4)(i) of this section) may use a 
bidding credit of 10 percent to lower the cost of its winning bid.
    (ii) A winning bidder that qualifies as a very small business (as 
defined in 95.816(d)(4)(ii) of this section) may use a bidding credit of 
15 percent to lower the cost of its winning bid.
    (2) Installment payments. Each licensee that qualifies as a small 
business may pay the remaining 80 percent of the net auction price in 
quarterly installment payments pursuant to Sec. 1.2110(e) of this 
chapter. Licensees who qualify for installment payments are entitled to 
pay their winning bid amount in installments over the term of the 
license, with interest charges to be fixed at the time of licensing at a 
rate equal to the rate for five-year U.S. Treasury obligations. Payments 
shall include interest only for the first two years and payments of 
interest and principal amortized over the remaining three years of the 
license term. A license issued to an eligible small business that elects 
installment payments shall be conditioned on the full and timely 
performance of the license holder's quarterly payments.
    (3) Audits. (i) Applicants and licensees claiming eligibility under 
this section shall be subject to audits by the Commission, using in-
house and contract resources. Selection for audit

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may be random, on information, or on the basis of other factors.
    (ii) Consent to such audits is part of the certification included in 
the short-form application (Form 175). Such consent shall include 
consent to the audit of the applicant's or licensee's books, documents, 
and other material (including accounting procedures and practices) 
regardless of form or type, sufficient to confirm that such applicant's 
or licensee's representations are, and remain, accurate. Such consent 
shall include inspection at all reasonable times of the facilities, or 
parts thereof, engaged in providing and transacting business, or keeping 
records regarding licensed IVDS and shall also include consent to the 
interview of principals, employees, customers and suppliers of the 
applicant or licensee.
    (4) Definitions--(i) Small business. A small business is an entity 
that, together with its affiliates and persons or entities that hold 
interests in such entity and their affiliates, has average annual gross 
revenues that are not more than $15 million for the preceding three 
years.
    (ii) Very small business. A very small business is an entity that, 
together with its affiliates and persons or entities that hold interests 
in such entity and their affiliates, has average annual gross revenues 
that are not more than $3 million for the preceding three years.
    (iii) Gross revenues. Gross revenues shall mean all income received 
by an entity, whether earned or passive, before any deductions are made 
for costs of doing business (e.g., cost of goods sold), as evidenced by 
audited financial statements for the relevant number of most recently 
completed calendar years, or, if audited financial statements were not 
prepared on a calendar-year basis, for the most recently completed 
fiscal years preceding the filing of the applicant's short-form 
application (Form 175). If an entity was not in existence for all or 
part of the relevant period, gross revenues shall be evidenced by the 
audited financial statements of the entity's predecessor-in-interest or, 
if there is no identifiable predecessor-in-interest, unaudited financial 
statements certified by the applicant as accurate. When an applicant 
does not otherwise use audited financial statements, its gross revenues 
may be certified by its chief financial officer or its equivalent.
    (iv) Controlling interest shall be attributable. Controlling 
interest means majority voting equity ownership, any general partnership 
interest, or any means of actual working control (including negative 
control) over the operation of the licensee, in whatever manner 
exercised.
    (v) Multiplier. Ownership interests that are held indirectly by any 
party through one or more intervening corporations will be determined by 
successive multiplication of the ownership percentages for each link in 
the vertical ownership chain and application of the relevant attribution 
benchmark to the resulting product, except that if the ownership 
percentage for an interest in any link in the chain exceeds 50 percent 
or represents actual control, it shall be treated as if it were a 100 
percent interest.
    (e) Unjust enrichment. (1) Any business owned by minorities and/or 
women that has obtained a IVDS license in the IVDS auction held in July 
1994 through the benefit of tax certificates shall not assign or 
transfer control of its license within one year of its license grant 
date. If the assignee or transferee is a business owned by minorities 
and/or women, this paragraph shall not apply; provided, however, that 
the assignee or transferee shall not assign or transfer control of the 
license within one year of the grant date of the assignment or transfer.
    (2) A licensee's (or other attributable entity's) increased gross 
revenues due to nonattributable equity investments (i.e., from sources 
whose gross revenues are not considered under 95.816(d)(4)(iv) of this 
section), debt financing, revenue from operations or other investments, 
business development or expanded service shall not be considered to 
result in the licensee losing eligibility for preferences as a small 
business or very small business under this section.
[ 59 FR 24957 , May 13, 1994, as amended at  61 FR 49075 , Sept. 18, 1996; 
 61 FR 60205 , Nov. 27, 1996]

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