1. Knowingly and with intent to defraud, or fraudulently obtain or retain Disabled Veteran Business Enterprise (DVBE) certification.
   
2. Willfully and knowingly make a false statement with the intent to defraud, or to influence any entity's DVBE certification.
   
3. Willfully and knowingly obstruct, impede or attempt to obstruct or impede any state official or employee who is investigating a business entity's qualifications regarding the requested acceptance or certification as a DVBE.
   
4. Knowingly and with intent to defraud, obtaining or attempting to obtain public monies to which the person is not entitled under the DVBE Participation Program. 
   
5. Establish or cooperate in the establishment of, or exercise control over, a firm found to have violated any of the above.

Program violations should be reported to the awarding agency. Awarding agencies will investigate and report all alleged DVBE Participation Program violations with a recommendation for action to the Procurement Division, Office of Small Business and DVBE Certification (OSDC). The Procurement Division, OSDC will subsequently forward the allegations to the attorney general for possible action. Questions related to reporting potential DVBE program abuse, "commercially useful function," ownership and management/operation control by the qualifying disabled veteran(s), or the identity of the qualifying disabled veteran(s), should be directed to the Procurement Division, OSDC, at (800) 559-5529 or(916) 375-4936.

Violators are guilty of a misdemeanor and may also be liable for a civil penalty. Additionally, violators shall be suspended from bidding on, or participating as either a contractor, subcontractor, or supplier in any state contract or project.

Note: Validated program violations may result in revocation of DVBE certification.

[Reference CCR 2, §1896.80]
Prior to reporting an alleged violation of PCC § 10115.10 to the DGS-PD, Office of Small Business and DVBE Certification, awarding agencies must investigate the alleged violation and shall prepare a written report of their findings. The written report must also include an action recommendation to be taken commensurate with the awarding agency's findings and must be submitted to the DGS-PD within 60 days of notification to the awarding agency of the alleged violation.

In the court ruling of Monterey Mechanical vs. Wilson, the California Minority and Women Business Enterprise (M/WBE) Participation Program requirements of PCC § 10115, et seq., were found unconstitutional, thereby eliminating the M/WBE participation goals from state contracts. This ruling does not apply to state contracts that are federally funded.

Substitution of a DVBE

[Reference CCR 2, §1896.64 c-d)]

• After a contract award, the successful bidder/contractor must use the DVBE subcontractors and/or suppliers proposed in the solicitation response to the state, unless a substitution is requested. The bidder/contractor must request the substitution in writing to the awarding agency and the awarding agency must approve the substitution in writing prior to commencement of any work by the new subcontractor/supplier. At a minimum, the substitution request must include:
  
  a)  A written explanation of the substitution reason; and if applicable, the contractor must also include the reason a non-DVBE subcontractor is proposed for use. (See specific explanations in item 4 on the following page as identifiable substitution reasons.)
  
  b)  A written description of the substitute business enterprise, including their business status as a:
  
  
  • sole proprietorship, partnership, corporation or other entity, and
  • the firm's DVBE certification status, if any.
    
    
  c) A written notice detailing a clearly defined portion of the work identified both as a task and as a percentage share/dollar amount of the overall contract that the substitute firm will perform.
  
• The request for substitution of the DVBE subcontractor/supplier must be approved in writing by the awarding department prior to the commencement of any work by the subcontractor/supplier.
  
• The DVBE substitution request and the awarding agency's approval or disapproval cannot be used as an excuse for noncompliance with any other law provision, including, but not limited to, the Subletting and Subcontracting Fair Practices Act (PCC §§ 4100 et seq.) or any other contract requirements relating to subcontractors substitution.
  
• The awarding agency may consent to the subcontractor substitution in any of the following situations:
  
  a)  After having a reasonable opportunity to do so, the subcontractor listed in the bid fails or refuses to execute a written contract presented to the subcontractor by the prime contractor. The written contract is based upon the general terms, conditions, plans and project specifications or the terms of that subcontractor's written bid.
  
  b)  When the listed subcontractor becomes bankrupt or insolvent, or goes out of business.
  
  c)  When the listed subcontractor fails or refuses to perform their subcontract.
  
  d)  When the listed subcontractor fails or refuses to meet the prime contractor's bond requirements.
  
  e)  When the prime contractor demonstrates to the awarding agency, or its duly authorized officer, that the subcontractor's name was listed as a result of an inadvertent clerical error.
  
  f)  When the listed subcontractor is not licensed pursuant to any applicable licensing requirement of any regulatory agency of the State of California.
  
  g)  When the awarding agency, or its duly authorized officer, determines that the work performed by the listed subcontractor is substantially unsatisfactory and not in substantial accordance with the plans and specifications, or the subcontractor is substantially delaying or disrupting the work process.
  
•  Prior to the approval of the prime contractor's substitution request, the awarding agency, or its duly authorized officer, must give written notice to the prime contractor's listed subcontractor being substituted and the reasons for the request. The notice shall be served by certified or registered mail to the subcontractor's last known address.
  
• The noticed subcontractor has five days to submit a written objection to the substitution to the awarding agency. Failure to file the written objection constitutes the listed subcontractor's consent to the substitution.
  
• If written objections are filed, the awarding authority shall give at least five working days written notice to the listed subcontractor of the awarding agency's hearing on the prime contractor's substitution request.

• Random verification of contact claimed by the bidder (either federal, state or local organizations);
• Review multiple bids submitted by the same vendor to verify independent effort and documentation. Evidence of insincere efforts may include:
  
  1. Repeating unsuccessful contacts rather than trying a new contact.
  2. Using contacts that are out of business.
  3. Soliciting businesses not relevant to the contract.
  4. Copying identical DVBE documentation packages.
  5. Soliciting DVBEs after the bid due date or with insufficient time for a quality response.
     
• Review job-related bid evaluation criteria and how it was applied to subcontractor/supplier bids;
• Contact DVBEs listed for participation prior to or upon contract award.

[Reference State Contracting Manual 8.15 (c), Rev 10/98]

If a bidder fails to comply with the contract goal requirements, the awarding department shall deem the bidder nonresponsive and ineligible for the contract award.