Small Business Certification Eligibility Requirements

• Must be independently owned and operated.
• Cannot be dominant in its field of operation.
• Must have its principal office located in California.
• Must have its owners (or officers in the case of a corporation) domiciled in California.
• Together with its affiliates, be either:
  • A business with 100 or fewer employees, and an average annual gross receipts of $14 million or less over the previous three tax years, or
  • A manufacturer with 100 or fewer employees.
• Microbusiness: A small business will automatically be designated as a microbusiness if gross annual receipts, together with all affiliates, are less than $3,500,000 or, the small business is a manufacturer with 25 or fewer employees.

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1. Primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products.
2. Classified between Codes 31 to 339999, inclusive, of the North American Industrial Classification System (NAICS) Manual published by the United States Census Bureau, 2007 edition.

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• A 5% bid preference on applicable state solicitations.
• Under the Prompt Payment Act, the state must pay a certified SB/MB higher interest penalties for late payment of an undisputed invoice.  Prompt payment penalties for construction firms are addressed separately under Public Contract Code, Section 10261.5).  (See Prompt Payment Program.)
• State agencies may use a streamlined process known as the "SB/DVBE Option" by contracting directly with a California certified small business/microbusiness for goods, services, information technology and public works projects. The solicitation must be valued at more than $5,000, and the State agency must obtain price quotes from at least two California certified small businesses/microbusinesses. For more information, see Government Code Sections 14838.5 and 14838.7.

  For solicitations issued before December 31, 2009, the maximum dollar thresholds are:

  • Goods, Services, or Information Technology - $99,999.99
  • Public Works - $147,000

  For solicitations issued on or after January 1, 2010, the maximum dollar thresholds are:

  • Goods, Services, or Information Technology - $249,999.99
  • Public Works - $250,000
• The Department of General Services, Procurement Division charges state and local agencies an administrative fee when contracting with a California Multiple Award Schedules (CMAS) vendor.  As an incentive, the fee is waived if the CMAS vendor is a certified small business/microbusiness.
• As an incentive, a non-small business prime contractor who uses certified small business/microbusiness subcontractors for at least 25% of its net bid price is eligible for a bid preference of five percent (5%) of the lowest responsible bid when competing against another non-small business.

When applying bidder preferences in which non-small business bidders may be eligible, certified small business/microbusiness bidders have precedence over non-small business bidders.  (Small business/microbusiness bids cannot be displaced by non-small business bids when applying any applicable lawful preferences).

• As a certified small business/microbusiness you are eligible for the state's Small Business Participation Program.  The program sets a goal for the use of small businesses in at least 25% of the state's overall annual contract dollars.
• Certified small businesses/microbusinesses increase their visibility and expand their business networking opportunities by being automatically listed in the online Certified Firm and Application Status Search.

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California Government Code, Section 14835
California Code of Regulations, Title 2, Section 1896-1896.40

Need Help?  Contact Us

Email OSDSHelp@dgs.ca.gov or call (916) 375-4940.