1. Commercial Office Moving Services
   Contracts exceeding $2,500 with a carrier for commercial office moving services must conform to the requirements contained in SAM § 3810 which provide for such contracts to be with a carrier whose drivers and supporting personnel are operating under current collective bargaining agreements or who are maintaining the prevailing wages, standards, and conditions of employment for its driver and supporting personnel. See Government Code Section 14920. Agencies must include such requirements in Invitations for Bids and contracts.

2. Pest Control and Fumigation Contracts
   Pest control and fumigation contracts must contain the insurance provisions found in SCM 7.40.

3. Elevator Maintenance Contracts
   Contracts for elevator maintenance shall include the following provision:
   Commencement and termination of contract:
   The service to be performed under this contract shall begin on the date specified and continue for a period of five years. The State may terminate this contract at any time by giving the contractor at least thirty (30) days written notice of its intention to do so.

7.80 ? MULTIPLE YEAR CONTRACTS
(Rev 10/05)

1. Contracts for services should normally not exceed two years, absent a substantial written justification for a longer term, based on business reasons.
   Approval by DGS/OLS must be obtained prior to releasing any RFP or IFB solicitation that contains for a contract term beyond two years. A justifiable business reason must support such a request for approval. Prior approval for multiple year contracts is not required for:
   1. Contracts not subject to OLS review;

   2. Use of, or subscription to, Master Service Agreements (MSA);

   3. Interagency Agreements (I/A), or
   Agencies who wish to get prior approval from OLS should contact the attorney assigned to their department on how to proceed. Failure to obtain prior approval from DGS/OLS may be cause for non-approval of the contract.
   If the additional option years are considered in the method for selecting the contractor, an agency will not need to get an NCB exemption when amending the contract to exceed two years so long as all terms, conditions, and costs are those evaluated in the bidding procedure.

2. Unless an agency has either statutory authority or a written exemption each contract service should be re-bid after a total of thirty-six (36) months consecutive with the same contractor.

3. For services such as fiscal audit or quality audit, it is desirable to obtain a different contractor after three years .

1. Agencies should carefully consider the types of termination clauses to be used in each contract.
   1. TERMINATION FOR CAUSE. The preprinted language on the Std. Form or STD 213, and the General Terms and Conditions available on the internet at (www.dgs.ca.gov/contracts) are satisfactory for a termination for cause. Agencies should not change or modify this language due to the possibility of accidentally changing a legal requirement.

   2. TERMINATION WITHOUT CAUSE. It is recommended that contracts contain a termination clause to allow the state to terminate the contract, without cause, with advance written notice provided to the contractor. Whether or not to provide the same right to the contractor (mutual termination), must be given careful consideration in that considerable effort may have been expended in establishing the contract. It is not recommended that mutual termination, without cause, be included in the contract.

8. BUSINESS PARTICIPATION PROGRAM REQUIREMENTS

8.00 ? INTRODUCTION
(Rev 1/01)

DESCRIPTION	SECTION
Introduction	8.00
Table of Contents	8.01
Procurement Division Responsibility and Legal References	8.02
Introduction to Disabled Veteran Business Enterprise (DVBE) Participation Program	8.10
DVBE Regulations	8.11
When to Apply DVBE Goals to a Contract	8.12
Bidders' Response to DVBE Requirements in a Solicitation	8.13
Qualifying as a DVBE	8.14
DVBE Bid Information	8.15
Management of DVBE Contract Requirements	8.16
Annual Report of DVBE Participation	8.17
Certified Small and Microbusiness Program	8.20
Small Business Preference Program	8.21
Non-Small Business Preference Program	8.22
Prompt Payment of Small Businesses	8.23
Programs Stimulating Business and Employment in Specific Geographic Areas (TACPA, EZA and LAMBRA)	8.30

Table 8.1 indicates responsibilities for various programs.

Table 8.1

8.12 ? WHEN TO APPLY DVBE GOALS TO A CONTRACT
(Rev 10/05)

1. Agencies should develop a plan or strategy to ensure goal achievement for their overall departmental contract program.
   1. Unless statutorily exempt, all contracts, regardless of amount, are subject to the DVBE requirement. Agencies may waive the requirement for an individual contract, however, agencies are still expected to meet their overall goal attainment at the end of each year. When an agency decides to waive the DVBE requirement, this must be noted in the solicitation.

   2. Awarding agencies have sole discretion to exempt contracts from the DVBE Participation Program requirements. In reviewing contracts, the Department of General Services will rely on the awarding agency's decision to exempt contracts.

   3. Contracts with government agencies, including public colleges and universities, and Joint Power Authorities JPAs are exempt from the DVBE Participation requirements.

   4. Standard contract language for DVBE participation requirements can be found at the web site: http://www.pd.dgs.ca.gov

1. General Options

   When the DVBE participation requirements have been included in the IFB or RFP, there are three basic ways for bidders to meet the requirements for this program (See SCM 8.10):

   1. Achieve the minimum DVBE participation goals.

   2. Make and document a "good faith effort" to achieve participation.

   3. Submit and have approved a DVBE Utilization Plan. Utilization Plans are administered by DGS Procurement Small Business/DVBE Outreach & Education Section and apply to contracts for goods and information technology.

2. Meeting Goals

   There are two methods of meeting the goals. If a bidder is a:

   1. Non-DVBE: Commit to use DVBEs for not less than three percent of the dollar amount of the bid or

   2. DVBE: Commit to perform not less than three percent of the dollar amount of the bid with its own forces or in combination with other DVBEs.

   Note: A department may require greater or lesser (even zero) goals on an individual contract, so long as this decision is reflected in the IFB/RFP. If the goals are included in the IFB/RFP, they apply to all bidders and they may not be waived after the bids/proposals are received.

3. Making A Good Faith Effort
   The five legally defined "good faith effort" steps and applicable processes are:
   1. Contact was made with the awarding agency to identify DVBEs. The contact purpose is to identify potential DVBE subcontractors and/or suppliers, not merely to request the bid package. Awarding agency responses may include but are not limited to the following:

      1. A list of DVBEs who have expressed interest in the contract by phone, writing, or bid conference attendance.

      2. A list of DVBEs who have participated, considered, or represented interest for prior contracts.

      3. Use of an internal database or directory.

      4. Referral to other resource or service providers. Including the PD web site: www.dgs.ca.gov/pd

   2. Contact was made with other state and federal agencies, and with local DVBE organizations to identify DVBEs. The contact purpose is to identify potential DVBE subcontractors and/or suppliers. Agency responses may include but are not limited to the following:

      1. Use of an internal database or directory.

      2. Notices on bulletin boards or in newsletters.

      3. Sharing of association.

      4. Referral to other resources or service providers.
      Currently, a federal contact is available that allows for compliance with the Step 2 requirement of the good faith effort. The Small Business Administration (SBA) provides an electronic search engine, containing business profiles on nearly 200,000 businesses, including certified and non-certified disabled veteran owned businesses. The electronic search engine, PRO-Net, may be accessed at http://pronet.sba.gov/
      Agencies should be careful to verify that firms identified on PRO-Net are State of California certified DVBEs. Qualifying, non-certified DVBE firms should be encouraged to seek certification.
      The SBA requests Internet contact only. A list of potential firms downloaded from PRO-Net will verify that the bidder made contact with the SBA.

   3. Advertisements were published in trade papers and papers focusing on DVBEs, unless time limits imposed by the awarding agency did not permit that advertising. This is the only good-faith-effort step that state agencies have discretion to waive. Specific advertising requirements are noted in SCM 8.13.D.

   4. Invitations to bid Solicitations were submitted to potential subcontractors identified in steps 1-3. Solicitations must be specific so that a bid reply may be made. Solicitations must also be equal. For example, if bonding assistance is offered to one potential subcontractor, it must be offered to all.

   5. Available DVBEs were considered. The bidder must apply the same information and evaluation criteria in considering all responding subcontractors for a specified service. Subcontractors that are selected should be identified according to solicitation requirements. Each selected subcontractor must contribute to the fulfillment of the contract by performing a commercially useful function. If the bidder decides not to select a potential subcontractor, the business reasons for non-selection must be documented and submitted in its bid to the awarding agency.

4. Program Compliance Clarification
   1. Advertising

      1. Bidders must publish advertisements in trade and focus publications at least 14 calendar days before the date the bid or proposal is due, unless a different time frame is specified in the solicitation.

      2. Typically, advertisements should be specific enough to encourage responses from potential DVBE subcontractors and suppliers and include information such as the following:
         • Identify the awarding department.

         • Identify the solicitation.

         • State the bid opening date.

         • Identify the type of work available for subcontracts or the supplies needed.

         • Request bids or quotes from DVBE subcontractors or suppliers.

         • Specify the geographical area and location in which the work will take place.

         • Identify the focus group or groups needed for participation.

   2. Trade Paper:
      A paper meeting all the following criteria qualifies as a trade paper:

      1. Has a business orientation relating to the trade or industry for which the advertisement is being placed;

      2. Is known and used by the members of the trade or industry;

      3. Primarily offers articles, editorials (if any), and advertisements of business opportunities aimed at the trade or industry; and

      4. Is available within the geographic area for which the advertisement is placed and in which the services are to be performed.

   3. Focus Paper:
      A paper focusing on disabled veteran business enterprises that meets all the following criteria qualifies as a focus paper:

      1. Has an orientation relating to disabled veteran business enterprises;

      2. Is known and used by the members of the disabled veteran business enterprise community;

      3. Primarily offers articles, editorials (if any), and advertisements of business opportunities aimed at disabled veteran business enterprises; and

      1. Is available within the geographic area for which the advertisement is placed and in which the services are to be performed.

   Note: Typically, advertisements in at least one trade paper and at least one DVBE focus paper are required. However, the awarding agency has discretion to modify these requirements provided the specific requirements are clearly explained in the solicitation.

5. Resource Packet
   DGS Procurement Division maintains the Resource Packet that is useful in attaining program compliance. The Resource Packet provides listings of referral organizations (state, federal, and local), trade papers, and focus papers that may be used to identify potential subcontractors and suppliers.

   Note: The solicitation document must contain one of the following:

   1. Procurement Division Resource Packet for trade and focus publications,

   2. A list of trade and focus publications specific to the business of the awarding department, or

   3. The following paragraph:
      "In accordance with PCC § 10115.2(b)(3), bidders must advertise in trade and focus publications unless all DVBE goals are satisfied. The Procurement Division publishes a list of trade and focus publications to assist bidders in meeting these contract requirements. To obtain this list, please contact the Procurement Division and request the "Resource Packet". The Procurement Division may be contacted at: (awarding agency to list current address and telephone number of PD)."

1. Disabled Veteran Business Enterprise
   1. Disabled Veteran: A veteran of the U.S. military, naval, or air service, with a service-connected disability of ten percent or more, and is a resident of California.

   2. Disabled Veteran Business Enterprise: A business concern certified by OSDC as meeting all of the following requirements:

      1. It is a sole proprietorship at least 51 percent owned by one or more disabled veterans or, in the case of a publicly owned business, at least 51 percent of its stock is owned by one or more disabled veterans; a subsidiary which is wholly owned by a parent corporation, but only if at least 51 percent of the voting stock of the parent corporation is owned by one or more disabled veterans; or a joint venture in which at least 51 percent of the joint venture's management and control and earnings are held by one or more disabled veterans.

      2. The management and control of the daily business operations are by one or more disabled veterans. The disabled veterans who exercise management and control are not required to be the same disabled veterans as the owners of the business concern.

      3. It is a sole proprietorship, corporation, or partnership with its home office located in the United States, which is not a branch or subsidiary of a foreign corporation, foreign firm, or other foreign-based business.

      4. It is a contractor, subcontractor or supplier that performs a "commercially useful function" in providing services or goods that contribute to the fulfillment of the contract requirements. "Commercially useful function" is defined as a person or entity doing all of the following: 1) is responsible for the execution of a distinct element of the work of the contract; 2) carries out the obligation by actually performing, managing or supervising the work involved; 3) performs work that is normal for its business services and functions; and 4) is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry standards.

      5. It is not a "commercially useful function if the DVBEs role is limited to that of an extra participant in a transaction, contract or project through which funds are passed in order to obtain the appearance of DVBE participation. (Military and Veterans Code section 999(e)(2))

   Note: The State Treasurer's Office certifies DVBEs for contracts for professional bond services.

2. Control
   As applied to "ownership (or management) and control" of DVBE means the DVBE owner(s) and or DVBE manager(s) must demonstrate expertise specifically in the firm's field of operation in controlling the overall destiny and the day-to-day operations of the firm. Office management, clerical, or other experience unrelated to the firm's field of operations is not sufficient to establish control. The control is comprised of two parts: Managerial and Operational. For more detail see 2 CCR § 1896.61(f).

3. Certification
   DVBEs are required to be formally certified by OSDC. DVBEs are asked to include a copy of their OSDC certification letter.

   Note: By regulation, DVBEs have until 5:00 p.m. on the bid opening day due date to submit a complete certification application. If they are certified they would have DVBE Participation Program eligibility. In this instance, the firm would not have a copy of their OSDC certification letter and should indicate their certification is pending. Verification can then be made by the agency with OSDC.

1. Once the decision has been made to include the DVBE participation requirements in the contract, detailed DVBE specifications must be included in the IFB/RFP. Most agencies have developed standard DVBE specifications. If an agency does not have such specifications or if there is any question about the sufficiency of the specifications used by the agency, the agency should consult with Procurement or with OSDC.

2. In evaluating program compliance by the bidder, the awarding agency must review the activities to be performed by any DVBEs proposed to participate in the contract to assure that the DVBE performs a "Commercially useful function" as defined in SCM 8.14 A. 2. (d.)(e.). For equipment rental bids, special rules apply to DVBEs which rent equipment or DVBEs which are found to be "equipment brokers" within the meaning of Military and Veterans Code section 999.2(3)

3. In evaluating the program compliance by the bidder, the awarding agency must require written evidence of completion of steps 1 through 5 of the good faith effort (SCM 8.13.C), including evidence of advertising, unless waived by the awarding department.

4. Based on the evaluation, the awarding agency, in its sole discretion, may find that the bidder has complied with the program requirements. If a bidder fails to meet the participation program requirements, the bidder must be deemed non-responsive for purposes of an awarding agency's evaluation and is not eligible for the contract award.

   Note: A common mistake bidders make is to state that no subcontractors are needed and that goals are not applicable, offering that all the work can be done by the bidder with its own resources. Bidders should be warned that this is not an option if their bid is to be deemed responsive.

1. Compliance
   1. The awarding agency shall establish a method of monitoring adherence to the goals. Examples of monitoring methods include:

      1. Random verification of contacts made, either for federal, state or local organization contacts, or for DVBE solicitations or bid consideration.

      2. Review of multiple bids submitted by the same vendor to verify independent effort and documentation. Evidence of insincere efforts may include:
         • Repeating unsuccessful contacts rather than trying a new contact.
         • Use of contacts that are out of business.
         • Business solicitations not relevant to the contract.
         • Copying of identical DVBE documentation packages.

      3. Review of job related bid evaluation criteria and how it was applied to subcontractor/supplier bids.

      4. Contacting DVBEs listed for participation upon award of contract.

      5. Post award audits.

   2. Awarding agencies must investigate and report program violations as follows to the DGS-OSDC. The OSDC may suspend the violator and will forward the investigative report to the Attorney General for possible action. It is unlawful for a person or firm to:

      1. Knowingly and with intent to defraud, fraudulently obtain or retain certification as a DVBE.

      2. Willfully and knowingly make a false statement with the intent to defraud, to influence certification of any entity as a DVBE.

      3. Willfully and knowingly obstruct an investigation regarding DVBE certification.

      4. Knowingly and with intent to defraud, obtaining or attempting to obtain public moneys to which the person is not entitled under the DVBE Participation Program.

      5. Knowingly and with intent to defraud, fraudulently represent DVBE participation in order to obtain or retain a bid preference or state contract.

      6. Willfully and knowingly make a statement, declaration or other document, which is false as to any material matter.

      7. Willfully and knowingly aid or assist in the preparation or presentation of a false document.

      8. Willfully and knowingly fail to file any declaration or notice required by section 999.2.

      9. Establish or cooperate in the establishment of, or exercise control over, a firm found to have violated the above. 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 a contractor, subcontractor, or supplier in any state contract or project.
         Prior to reporting an alleged violation of PCC § 10115.10 to the DGS-OSDC awarding agencies must investigate the alleged violation and must prepare a written report of their findings. The written report must also include a recommendation for action to be taken commensurate with the awarding agency's findings and must be submitted to the DGS-OSDC within 60 days of notification to the awarding agency of the alleged violation.

      10. For contracts with DVBE goals, agencies should include the following language to assist in verifying compliance:
          "Contractor agrees to provide verification, in a form agreed to by the state, that DVBE subcontractor participation under this agreement is in compliance with the goals specified at the time of award of contract, or with any subsequent amendment."

2. Substitution of Subcontractors
   1. After award of a contract, the successful bidder/contractor must use the DVBE subcontractors and/or suppliers proposed in the bid or proposal 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 proposed subcontractor/supplier. At a minimum, the substitution must include:

      1. A written explanation of the reason for the substitution.

      2. A written description of the business enterprise to be substituted, including the DVBE certification status of the firm.

      3. If applicable, the contractor must also include the reason a non-DVBE subcontractor is proposed for use.

      4. 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 substitution business will perform.

   2. The request for substitution of DVBE and the awarding agency's approval or disapproval cannot be used as an excuse for noncompliance with any other provision of law, including, but not limited to, the Subletting and Subcontracting Fair Practices Act (PCC §§ 4100 et seq.) or any other contract requirements relating to substitution of subcontractors.

   3. The awarding agency may consent to the substitution of another person or business as a subcontractor in any of the following situations:

      1. When the subcontractor listed in the bid, after having a reasonable opportunity to do so, fails or refuses to execute a written contract, when that written contract based upon the general terms, conditions, plans and specifications for the project involved or the terms of that subcontractor's written bid, is presented to the subcontractor by the prime contractor.

      2. When the listed subcontractor becomes bankrupt or insolvent, or goes out of business.

      3. When the listed subcontractor fails or refuses to perform his/her subcontract.

      4. When the listed subcontractor fails or refuses to meet the bond requirements of the prime contractor.

      5. When the prime contractor demonstrated to the awarding agency, or its duly authorized officer, that the name of the subcontractor was listed as a result of an inadvertent clerical error.

      6. When the listed subcontractor is not licensed pursuant to any applicable licensing requirement of any regulatory agency of the State of California.

      7. 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 that the subcontractor is substantially delaying or disrupting the process of the work.

   4. Prior to the approval of the prime contractor's request for substitution, the awarding agency, or its duly authorized officer, must give notice in writing to the listed subcontractor of the prime contractor's request to substitute and the reasons for the request. The notice shall be served by certified or registered mail to the last known address of the subcontractor.

   5. The listed subcontractor who has been so notified will have five working days within which to submit written objections to the substitution of the awarding authority. Failure to file these written objections will constitute the listed subcontractor's consent to the substitution.

   6. If written objections are filed, the awarding authority shall give at least five working days notice in writing to the listed subcontractor of a hearing by the awarding agency on the prime contractor's request for substitution.

3. Audit
   The DVBE regulations require inclusion of an audit clause in the contracts sufficient to permit audit for compliance with DVBE requirements. The audit clause contained in SCM 7 meets this requirement.

1. Due Date and General Content
   On January 1 of each year, each agency must report to the Governor and the Legislature on the level of participation by DVBEs in contracts for the fiscal year beginning July 1 and ending June 30.
   In addition, the report must contain the levels of participation by DVBE for the following categories of contracts:
   1. Construction

   2. Purchases of materials, supplies, and equipment

   3. Professional services

   4. All contracts for a dollar amount of less than $25,000
      If the established goals are not being met, the agency shall include in the report the reasons for its inability to achieve the standards and identify the remedial steps it shall take.

2. Consolidated Statewide Report
   State agencies are also required to report participation to the DGS and the Department of Veteran Affairs by January 1. The DGS compiles statistics on all agencies and submits an annual report to the Governor, Legislature and Department of Veterans Affairs by April 1st (Military and Veterans Code § 999.7).

1. Definition
   Small business means a business certified by OSDC in which:
   1. The principal office is located in California.

   2. The officers are domiciled in California.

   3. The business is independently owned and operated.

   4. The business, with any affiliates, is not dominant in its field of operation.

   5. And either:

      1. The business, together with any affiliates, has 100 or fewer employees and average annual gross receipts of $10,000,000 (10 million) or less over the previous three years, or

      2. The business is a manufacturer with 100 or fewer employees.

2. Microbusiness means a small business certified by OSDC in which:
   1. The principal office is located in California.

   2. The officers are domiciled in California.

   3. The business is independently owned and operated.

   4. The business, with any affiliates, is not dominant in its field of operation.

   5. And either:

      1. The business, together with any affiliates, has 25 or fewer employees and average annual gross receipts of $2,500,000 (2.5 million) or less over the previous three years, or

      2. The business is a manufacturer with 25 or fewer employees.

3. A certified small business or microbusiness shall provide goods or services that contribute to the fulfillment of the contract requirements by performing a "commercially useful function" defined
   as follows: 1) is responsible for the execution of a distinct element of the work of the contract; 2), carries out its obligation by actually performing, managing or supervising the work involved; 3, performs work that is normal for its business services and functions; and 4), is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices. A small or microbusiness contractor, subcontractor or supplier is not performing a "commercially useful function" if its role is limited to that of an extra participant in a transaction, contract or project through which funds are passed in order to obtain the appearance of small business or microbusiness participation. (Government Code Section 14837(d)(4))

4. Eligibility
   A business must be formally certified by OSDC to be considered for the small business or microbusiness preference.

5. Benefits of Certification
   A certified small business or microbusiness is entitled to claim a five percent preference in bidding on state contracts as explained in SCM 8.21. Certified small business or microbusinesses are also entitled to interest penalties paid by the state for late payment of invoices. The penalties are greater for certified small business or microbusinesses than for non-certified businesses.

6. Nonprofit Veteran Service Agency Small Business Certification
   Effective January 1, 2005, nonprofit veteran service agencies (NVSA) can qualify for small business certification through the OSDC if the NVSA meets the requirements of Military and Veterans Code Section 999.50 et seq. Upon certification, an SB/NVSA participating as a prime bidder is eligible for the 5% small business bidding preference if they have submitted a timely, responsive bid and have been determined to be a responsible bidder. An SB/NVSA is not subject to the same standards as other certified small businesses. SB/NVSA standards are identified in Military and Veterans Code Section 999.51(a)(3).

8.21 ? SMALL BUSINESS PREFERENCE PROGRAM
(Rev 10/05)

1. How The Preference Works
   1. Certified small businesses or microbusinesses can claim the five percent preference when submitting a bid on a state contract. A non-small business, may receive a preference of five percent if the business commits to subcontract at least twenty-five percent of its net bid price with one or more small businesses or microbusinesses. The five percent preference is used only for computation purposes, to determine the winning bidder and does not alter the amounts of the resulting contract. The value of the preference is limited to $50,000 when a contract award is based upon award to the lowest compliant bid. A contract awarded on the basis of the five percent preference is awarded to the small business, microbusiness or non-small business for the actual amount of its bid.

   2. An example of the method used in determining the successful bidder for an IFB, or the cost component of an RFP Primary follows:

      Small Business Preference Program

      8.21 Table

      Bidder	Bid Amount	Bid after preference
      One	$30,750	$30,750	Claims small business or microbusiness status but is not a certified small business or microbusiness; does not claim small business subcontractor participation
      Two	$28,975	$28,975	Does not claim to be a small business or microbusiness, and does not claim subcontractor participation
      Three	$29,520	$29,520	Claims non-small business subcontractor preference and does commit to 25% certified small business or microbusiness participation
      Four	$29,870	$28,421	Claims small business or microbusiness status and is a certified small business or microbusiness

      For evaluation purposes, five percent of the low responsible bid of $28,975 would be $1,448.75 ($28,975 x .05); that amount would be subtracted from the bids of Three and Four for a computed total of $28,421.75 ($29,870 less $1,448.75). The contract would be awarded to bidder Four for $29,870, as the non-small business subcontractor preference cannot remove an award from a certified small business or microbusiness.

   3. The method used in determining the successful bidder for an RFP Secondary follows:

      1. Calculate the "earned" score for all bidders.

      2. If the highest scored proposal is from a non-certified small business or microbusiness, then:
         1. Calculate five percent (5%) of the highest responsible bidder's total score.

         2. Add the amount calculated above to the score of each of the certified small business or microbusinesses. This new amount is the total score.

         3. Award of the contract must go to the bidder with the highest point count.

         4. An example of applying the small business preference to an RFP Secondary follows:

         Bidders (*Indicates certified small business)	A*	B	C*	D
         Criteria 1(15 Max. points)	11	14	13	12
         Criteria 2 (25 Max. points)	21	21	14	19
         Criteria 3 (30 Max. points)	18	15	15	18
         Cost (30 Max. points)	29.1	30.0	28.3	29.7
         (cost points awarded are based on these bid amounts)	($103)	($100)	($106)	($101)
         Total "earned" points for each bidder	79.1	80.0	70.3	78.7

         Bidder B's was the highest scored proposal, a non-certified small business or microbusiness. Therefore points must be re-apportioned after application of the five percent calculation of B's point score. B's bid received 80.0 points. 5% of 80 is 4. All bids from certified small business or microbusinesses will receive 4 additional points. All bids from eligible non-small businesses will receive 4 additional points.

         Point awards prior to preference points	79.1	80.0	70.3	78.7
         Preference points	4.0		4.0
         Total final points for each bidder	83.1	80.0	74.3	78.7

         The highest scored proposal is now the proposal received from A, a certified small business. The contract award amount will be A's original bid amount.

2. Small Business Preference Procedures
   1. Notice of availability of the Small Business Preference Program must be included in all IFBs and RFPs. Agency staff should be familiar with the program in order to clearly explain it to bidders. Firms needing more information should be referred to the OSDC website

   2. Bidders claiming the small business preference may be requested, but not required, to submit a copy of their certification approval letter from OSDC with the bid or proposal. Failure to provide a copy of their certification approval letter in their response is not a material deviation. A bidder may claim the preference if the bidder submits a complete application for certification to the OSDC by 5 p.m. on the bid opening due date. Therefore, the awarding agency should check the status of the application with OSDC before awarding the contract. An awarding agency shall evaluate the activities to be performed by any certified small or microbusiness on the proposed contract to assure that the certified small or microbusiness is performing a "commercially useful function as defined in SCM 8.20 C.

3. Procedures for Tie Bids Between Small Business and DVBE or Microbusiness In the event of a precise tie between the low responsible bid of a certified small business and the low responsible bid of a certified disabled veteran business enterprise (DVBE), or microbusiness, the contract must be awarded to the DVBE or the microbusiness (GC § 14838 (f))

1. Reason for the Program
   Typically, small business and nonprofit organizations do not have the resources or cash flow to carry the state as an account receivable for an extended period of time. Therefore, to encourage expeditious invoice payment, the law provides for assessment of a penalty for late payments of invoices from contractors, including certified small businesses on all contracts and nonprofit organizations registered with OSDC (contracts less than $500,000) (GC § 927.6). As part of the implementation of this law, every solicitation should alert the bidder about this program

2. Description of the Program
   The Prompt Payment Act (GC § 927 et seq.) applies to both small and non-small businesses. (See SCM 7.20) However the penalty calculation differs for small businesses as follows. The penalty is calculated, for certified small businesses and non-profit organizations, at a rate of 0.25 percent of the amount outstanding per calendar day from the required payment date. Agencies must automatically calculate and pay the penalties, without requiring the contractor to submit an invoice for these penalty amounts (GC § 927.6). See SCM 7.20 for required payment times.

   >Note: The time starts to run when the invoice is first received by the agency, not when it gets to your business or accounting office. The program encourages small businesses or recognized nonprofit organizations to stamp their invoices to identify the invoices as subject to the penalty if not paid within the specified time. Small business stamps are available from OSDC for a fee. However, the invoices are not to payment of the penalty without any further demand for payment when the invoices are not paid within the prescribed time.

   Involvement of DGS Procurement Division (PD)
   PD, Acquisition Quality Assurance Program serves as a resource for state agencies and businesses in the implementation of the prompt payment program. State agencies must be sure that a small business is certified before paying the higher interest penalty and that may require contacting PD. The PD does not investigate, arbitrate, or advocate for business firms or state agencies in the resolution of payment disputes.
   The Prompt Payment Advocate in PD works with agency Small Business Advocates to provide information about the Act and assistance to contractors who have difficulty resolving payment problems.
   Effective January 1, 1999, each state agency, with an annual contracting program of $100,000 or more, must appoint a State Contracting Small Business Advocate to act as a liaison for small business (GC §14846).

3. Contracting Consideration
   The subject of prompt payment should be considered during the contracting process to ensure that the contract gives clear and accurate instructions about where invoices are to be sent. Those employees who will be involved in the receipt and approval of the invoices need to be familiar with the program. In addition, when an award is made to a certified small business or microbusiness, the contract office should appropriately flag the copy of the contract sent to the accounting office.

1. Introduction
   The state has three programs designed to stimulate business and employment in geographic areas determined to be economically distressed, with areas of high unemployment. These programs are the Target Area Contract Preference Act (TACPA), the Enterprise Zone Act (EZA) and the Local Agency Military Base Recovery Area Act (LAMBRA). The Procurement Division/Dispute Resolution/Preference Program Section administers these programs and provides resource information about the programs.

2. Applicability to contracts
   The TACPA, EZA and LAMBRA preferences apply to goods and service contracts that meet specific criteria. The criteria are described in Table 8.2.

   Summary of TACPA, EZA and LAMBRA Preferences
   Table 8.2

   Criterion	TACPA	EZA	LAMBRA
   Contract Amount: The dollar threshold or applicability	$100,000 or more	Same as for TACPA	Same as TACPA and EZA
   Excluded Contracts: Contracts not covered by the program	Construction contracts and contracts with a designated work site	Same as for TACPA	Same as TACPA and EZA
   Geographic Areas: The work site to be used by the contractor to qualify for the preference must be located within a designated area	Distressed areas as specified by the Office of Planning and Research	Enterprise zones as specified by the Trade and Commerce Agency	Work site(s) must be located in a Local Agency Military Base Recovery Area as specified by Trade and Commerce Agency
   Percent Of Work: The percentage of the contracted work (hours in to perform the contract) that the contractor must agree to perform at the qualifying work site	Commodities 50% Services 90%	Same as for TACPA	Goods 50% Services 100%
   Company Base: The home base of the company	Must be in California	Same as for TACPA	Same as TACPA and EZA
   Work Site Preference: The percentage of preference associated with the work site	5 percent	Same as for TACPA	Same as TACPA and EZA
   Work Force Preference: An additional preference of one to four percent available if the contractor agrees to perform the contract with persons with a high risk of unemployment	Depends on percent of work force: Percent % Hired      Preference 5 to 9                1% 10 to 14            2% 15 to 19            3% 20 or more        4%	Same as for TACPA	Same as TACPA and EZA
   Preference Limits: The highest preference that can be given	9 percent up to $50,000	Same as for TACPA	Same as TACPA and EZA
   Maximum Combined Preferences: TACPA plus EZA plus LAMBRA plus small business	15% up to $100,000	Same as for TACPA	Same as TACPA and EZA

3. Preference Procedures
   TACPA, EZA and LAMBRA preference notices and request forms STD 830, 831, and 832 must be included in all IFBs and RFPs when the estimated cost exceeds $100,000, unless the work site is specified in the contract. To receive the preferences, the bidder must complete the forms and certify to perform the contract work as specified. This commitment must be enforced as part of the contract.
   Standard contract language for TACPA, EZA and LAMBRA preferences can be found at the Procurement website of http://www.pd.dgs.ca.gov/