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The Small Business Procurement and Contract Act (Government Code, Section 14835) was enacted in 1973 to afford small businesses the same free enterprise opportunities as their non-small business-certified competitors.
What is the 5% Small Business Preference
State law allows certified small business (SB) and microbusiness (MB) firms and non-small businesses who subcontract with a certified SB/MB firm to receive a 5% bidding preference on applicable state solicitations. The effect of the preference is to help SBs/MBs be more competitive in the bid process, thereby enhancing state contract awards directly or indirectly to SB/MB. The preference is only used for computation purposes to determine the winning bidder, the contract is awarded at the actual bid amount.
Note: Prior to the review of preferences, the state's buyer will determine that bidders are responsive to the solicitation requirements, are responsible bidders and are otherwise eligible to receive the contract under all applicable laws and regulations.
General Rules Relating to the Small Business Preference
There are several general rules relating to the application of the small business preference:
- DGS-PD's preference programs for TACPA, EZA, LAMBRA, or the non-SB subcontracting preference cannot displace a direct award to a certified SB.
- In no event shall the SB preference or non-SB subcontracting preference exceed $50,000 in any single bid.
- In no event shall the combined cost of available preferences exceed $100,000.
- In the event of a tie between a SB/MB and a firm that is SB/MB and DVBE, the award shall be made to the firm that is SB/MB and DVBE.
Applying and Calculating the 5% Small Business Bid Preference
For specific information on how to apply and calculate the 5% Small Business Bid Preference, go to Purchasing Authority Manual (PAM), Chapter 3, Socioeconomic and Environmental Programs, Topic 4.
Authority
Need Help? Contact Us
Email osdchelp@dgs.ca.gov or call (916) 375-4940.
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