Small Business (SB) and Micro Business (MB)/ Disabled Veteran Business Enterprise (DVBE) Programs

Small Business (SB) and Micro Business (MB)

In order for a small business to be eligible for certification, the small business must meet the following requirements:

  • Be independently owned and operated;
  • Not dominant in field of operation;
  • Principal office located in California;
  • Owners (officers, if a corporation) domiciled in California; and,
  • Including affiliates, be either,
    • A business with 100 or fewer employees; an average annual gross receipts of $15 million dollars or less, over the last three tax years;
    • A manufacturer* with 100 or fewer employees; or,
    • A micro business - a small business will automatically be designated as a micro business, if gross annual receipts are less than $5 million dollars; or the small business is a manufacturer with 25 or fewer employees.

* For Small Business Certification purposes, a manufacturer is a business that is both of the following:

  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.

For more information, please visit the Office of Small Business and Disabled Veteran Business Enterprise Services website.

Upon meeting the Small Business Certification eligibility requirements, certified small business (SBs) and micro businesses (MBs) are entitled to the following benefits:

  • A five percent bid preference on applicable State solicitations;
  • As a certified small business/micro business, you are eligible for the State's Small Business Participation Program. This program sets a goal for the use of small businesses in at least 25 percent of the State's overall annual contract dollars;
  • 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);
  • State agencies may use a streamlined process, known as the SB/DVBE Option, by contracting directly with a California certified small business/micro business 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 business/micro business;
    • Effective January 1, 2010, the maximum thresholds are:
      Goods,Services, or Information Technology - $249,999.99
      Public Works - $250,000
    • Effective January 12, 2012, the maximum thresholds are:
      Goods,Services, or Information Technology - $249,999.99
      Public Works - $314,000 (Effective 2/22/18: BL 18-03)
  • The Department of General Services, Procurement Division (DGS-PD) 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/micro business;
  • As an incentive, a non-small business prime contractor, who uses certified small business/micro business subcontractors for at least 25 percent of its net bid price, is eligible for a bid preference of 5 percent of the lowest responsible bid, when competing against another non-small business; and, when applying bidder preferences, in which non-small business bidders may be eligible, certified small business/micro business bidders have precedence over non-small business bidders.

NOTE: Small business/micro business bids cannot be displaced by non-small business/micro business bids, when applying any applicable lawful preferences.

For more information, please visit the Office of Small Business and Disabled Veteran Business Enterprise Services website.

For the CSU policy on Small and Micro Businesses as vendors, please see ICSUAM 5216.00 (PDF).

Related Form

Disabled Veteran Business Enterprise (DVBE)

For DVBE certification purposes, a "disabled veteran" is:

  • A veteran of the U.S. military, naval, or air service;
  • The veteran must have a service-connected disability of at least ten percent or more; and
  • The veteran must reside in California.

To be certified as a DVBE, your firm must meet the following requirements:

  • Your business must be at least 51 percent owned by one or more disabled veterans;
  • Your daily business operations must be managed and controlled by one or more disabled veterans
  • Your home office must be located in the U.S. (the home office cannot be a branch or subsidiary of a foreign corporation, foreign firm, or other foreign based business).
  • All existing and all new DVBE applicants must submit to the Office of Small Business and DVBE Services (OSDS) complete copies of the DVBE's federal income tax returns for the previous three years. DVBEs who have been in business for less than three years shall submit the federal tax returns for each year they've been in business.
  • A DVBE applicant that is not a sole proprietorship and rents equipment to the state must provide the federal income tax returns for each of their disabled veteran owners or your firm will be deemed to be an equipment broker.
  • DVBE limited liability companies must be wholly owned by one or more disabled veterans.

NOTE: The disabled veteran who manages and controls the business is not required to be an owner of the applicant business

For more information, please visit the Office of Small Business and Disabled Veteran Business Enterprise Services website.

Upon meeting eligibility requirements, certified DVBEs are entitled to the following:

  • State-certified DVBEs are eligible for the state's DVBE Participation Program. The program sets the goal to use DVBEs in at least three percent of the state's overall annual contract dollars.
  • State agencies may use a streamlined process known as the "SB/DVBE Option" by contracting directly with a California certified DVBE business 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 DVBE businesses. For more information, see Government Code Sections 14838.5 and 14838.7.
    • Effective January 1, 2010, the maximum thresholds are:
      Goods, Services, or Information Technology - $249,999.99
      Public Works - $250,000
    • Effective January 12, 2012, the maximum thresholds are:
      Goods, Services, or Information Technology - $249,999.99
      Public Works - $281,000 (Effective 1/30/14: BL 14-01)

For more information, please visit the Office of Small Business and Disabled Veteran Business Enterprise Services website.

For the CSU policy on Disabled Veteran Business Enterprise as vendors, please see ICSUAM 5215.00 (PDF).

Related Form

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