Lewis Bass received official small business certification status in California in December of 2020 (you can download our official certificate here).

Much like the benefits and incentives granted us by our WOSB and WBENC certifications on a nationwide level, the California SB designation allows for California state contract bidding benefits not normally granted to larger or non-minority owned businesses.

According to the California Department of General Services, the small business certification 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 also pay a certified SB/MB higher interest penalties for late payment of an undisputed invoice.

The Department of General Services (DGS) headquarters in West Sacramento.

The benefits for a registered small/micro business in California are substantial.

Qualifying as a certified California micro/small business allows us the following additional benefits:

1. A five percent (5%) bid preference on applicable State solicitations.
2. Under the Prompt Payment Act, the State of California must pay a certified SB higher interest penalties for late payment of an undisputed invoice.
3. 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. Many state agencies, school districts, state universities, and local government offices operate under these guidelines.

A California certified SB must provide a Commercially Useful Function to qualify.

But, what are the differences between CUF registered SB businesses and non-CUF, non-registered, California SB businesses?

According to the official DGS page on this topic:

All certified firms doing business with the state can learn how to perform a commercially useful function (CUF), which is a requirement.

A SB/DVBE certified firm performs CUF when doing all of the following:

• Executes a distinct element of the contract scope of work including supplying of goods/services.
• Performs, manages, or supervises the work including supplying of goods/services.
• Performs work that is normal for the firm’s business services and functions.
• Is responsible, with respect to products, inventories, materials and supplies required for the subcontract, negotiating price, determining quality and quantity, ordering, installing (if applicable), and paying for the material.
• Does not subcontract a portion of the work greater than expected by industry practices.

A SB/DVBE certified firm does NOT perform CUF when:

• The firm is an extra participant involved in a transaction, contract, or project through which funds are passed through in order to obtain the appearance of SB/DVBE participation.
• The firm is not being used to perform the work as stipulated in the bid.
• The firm is no longer used to provide good/services listed in initial bid response.

What are the requirements for qualifying for California’s SB/DVBE certification?

• Complete Federal Tax returns (last 3 years) for applicant firm and affiliates.
• IRS verification of your firm’s TIN (tax identification number).
• Quarterly Contribution Return & Report of Wages – Continuation (Form DE 9C) for firm and affiliates.
• Award of Entitlement, eBenefits Service/Benefit Verification, or Retired/Retainer letter (for DVBE).
• And more.