SMALL BUSINESS AND DISABLED VETERAN BUSINESS ENTERPRISE CONTRACTING - 1200

(Revised: 05/2025)

Opportunity

Pursuant to the Small Business Procurement and Contract Act (Government Code (GC), Section 14835 through 14843) and Military and Veterans Code (M&VC), Section 999 et seq., all departments must offer procurement opportunities to California (CA) certified Small Businesses (SB), Microbusinesses (Micros) and Disabled Veteran Business Enterprise (DVBE) whenever possible. Hereafter, unless otherwise directed, any reference to certified SB also includes certified Microbusinesses as defined by the above referenced GC.

Each department is required to make continuous efforts to expand the pool of California certified SB, Micros and DVBE firms participating in state contracts by regularly seeking out and identifying certified firms that have not previously done business with, or that are not regularly used by the awarding department and other state agencies, and include those SBs, Micros and DVBEs when soliciting offers/ quotes/ bids. This requirement is not meant to exclude previously contracted SBs, Micros and DVBEs businesses from future contracting opportunities. This policy applies to all purchases of goods and services, including but not limited to non-IT goods, non-IT services, public works, IT goods, IT services, and telecommunications.

Annual Statewide Participation Goals

Each department shall have an annual statewide participation goal in state procurement and contracting of not less than 25% for SB participation and not less than 3% for DVBE participation.

These participation goals were established to enhance and encourage competition by creating an optimum environment that affords all businesses equal access to State procurement and contracting opportunities. Departments unable to meet the required participation goal(s) are required to submit an Improvement Plan to DGS by October 1 of each year as detailed in Chapter 22, Section 2200.2 with their annual reporting(s).

Remedial actions will be taken for departments that failed in three out of five years to meet their small business or disabled veteran business enterprise goals, including, but not limited to, the removal of the department's delegated contract authority or the placement of additional restrictions on contracting activity. The consolidated annual report will include actions taken to enforce this provision.

SB/DVBE Advocate

In accordance with GC, Section 14846 and M&VC, Section 999.12, state departments whose annual purchasing activities $100,000 or more (regardless of purchasing type(s) or categories) shall designate a SB/DVBE advocate whose duties include but are not limited to:

• Identify potential SB and/or DVBE prime contractors or subcontractors and potential contracting opportunities.
• Information regarding pending solicitations available to and consider offers from certified SB and/or DVBE firms capable of meeting the state’s business need.
• Ensure that payments due on purchase documents with SB suppliers are promptly made as provided by GC, Section 927 et seq.

Available Acquisition Approaches to Achieve Goals

Several purchasing categories, depending on a department’s approved purchasing authority, including competitive solicitation, leveraged procurement agreement (LPA) contracts and the SB/DVBE option, are available to departments for use in achieving participation goals.

All acquisition methods approaches can be used to achieve participation goals.  Examples include competitive solicitations, such as the SB/DVBE Option and use of existing sources such as leveraged procurement agreements (LPAs). 

Refer to Leveraged Procurement Agreements (LPA), for information on the process of claiming SB and DVBE contracting dollars under an LPA purchasing category.

SB or DVBE Option

GC, Section 14838.5 (a) and (b) enables a department to conduct a competitive solicitation valued at $5,000.01 through $249,999.99 that targets only certified SB, including microbusinesses, or certified DVBEs.

Competitive acquisitions using the SB Option or the DVBE Option are to be conducted as follows:

1. Create the solicitation (verbal or written).
2. Consider the use of best value award criteria to select a contractor. Best value can be determined using any one or all the criteria but not limited to the ones enumerated below.
3. Although not required, consider advertising the contracting opportunity in the California State Contracts Register (CSCR) to send automatic notifications to vendors including all SB/DVBE with UNSPSCs matching the ones in the advertised opportunity. Advertising less than 10 days is allowed for the SB/DVBE Option Acquisition Methods without approval from DGS. Effective immediately, DGS exempts the SB/ DVBE Option Acquisition Method advertised in CSCR from DGS fees. 
4. Verify SB or DVBE certification status through Financial Information System for California (FI$Cal) (certification status is maintained in “real-time” in (FI$Cal).
5. Release the solicitation only to California certified SBs/Micros or DVBEs.
6. Contract award may be made upon receipt of responsive price quotations from at least two (2) responsible California certified SB/Micros or DVBEs and award must be made based upon the solicitation format used.
7. The procurement file must be documented to support the contract award and the action taken.

Buyers conducting a competitive solicitation utilizing the SB/DVBE Option need to verify if there are mandated or sourced contracts associated to the product or services. Some Statewide Contracts include language allowing departments to exercise a SB/DVBE off-ramp.

Solicitations (including verbal or written requests for offers), consideration of bids, or award of contracts shall not be provided to any firm that has been suspended from state procurement and contracting as listed on DGS/PD web page.

The FI$Cal system maintains certification status of SBs and DVBEs.

The database printout in support of an SB and/or DVBE certification must be maintained in the procurement file.

Legal Reference

Assembly Bill No. 2974, Chapter 600

Assembly Bill No. 2019, Chapter 730

California Code of Regulations, Section 1896.5

Government Code (GC), Section 927 et seq.

Government Code (GC), Section 14835 through 14844

Related Policy, Procedures & Resources

Broadcast Bulletin, P-11-22, NEW Requirement to Expand the Pool of Small Businesses and Microbusinesses in State Contracts/Procurements

Broadcast Bulletin, P-12-22, Economic Equity for Small Business (SB) and Disabled veteran Business Enterprises (DVBE) Firms and Diversity Among State Contractors

State Contracting Manual (SCM), vol. 2, Section 100.1, Purchasing Authority Basics

State Contracting Manual (SCM), vol. 2, Section 100.6, Deficiency Notices

State Contracting Manual (SCM), vol. 2, Section 1405.3, SB/DVBE Option

State Contracting Manual (SCM), vol. 2, Section 1510, Fair and Reasonable (F&R) Acquisition Method Purchases

State Contracting Manual (SCM), vol. 2, Section 1602, Leveraged Procurement Agreement (LPA) Basics

State Contracting Manual (SCM), vol. 2, Section 2200.2, Reporting Requirements

Attachments

None.