SMALL BUSINESS PREFERENCE AND COMPETITIVE SOLICITATIONS - 1204

Preference Amount

Small businesses will be granted the five percent (5%) small business preference on a bid evaluation by an awarding department when a responsible non-small business has submitted the lowest-priced, responsive bid or a bid that has been ranked as the highest scored bid pursuant to a solicitation evaluation method described in Section 1896.8, of the California Code of Regulations. The SB preference applies for competitive solicitations regardless of the solicitation format (e.g., RFQ, IFB, RFP) or dollar value with few exceptions.

Exception:

The SB preference is not applicable when:

• Using the SB or DVBE Option as the procurement approach in accordance with Government Code Section 14838.5(a)

Applying the Preference

1. If SB preference is claimed, it shall be 5% of the net bid price of the lowest responsive and responsible bid of a business that is not eligible for the SB preference (CCR Section 1896.8(a)). The SB preference is not applied when the lowest responsive, responsible bidder is eligible for the SB preference.  The net bid price is the value of the bid excluding sales and use tax, finance charges, postage and handling charges.  Shipping charges are also excluded from the net cost unless the shipping charge is included in the evaluation such as FOB Origin, Freight Collect or FOB Destination.  The net bid price includes any evaluation corrections and applicable discounts.
2. Subtract this amount from all qualifying small business and qualifying small business subcontractor bids.
3. If no other preferences or the DVBE incentive are applicable, re-rank bids to determine which bidder has the low responsive bid.  Award is made to the #1 ranked bid.  Applying the SB preference formula is for evaluation purposes only and does not change the actual bids offered by any suppliers.
4. Document the procurement file in sufficient detail to support the award.  Documenting the file includes recording the SB preference calculations.

Example:

Supplier A – Bidder does not qualify for the SB preference:  Multiply the low net bid price by preference factor ($12,500 x .05 = $625)

Supplier B – Certified SB:  Subtracted the preference adjustment from the net bid price ($13,000 - $625 = $12,375)

Results:  Since $12,375 is less than $12,500 the award was made to the certified SB (assuming all other conditions of the solicitation were met).

Awards based on High Point

Small business preference calculation is performed for awards based on high points.

To apply the preference:

1. Identify the highest ranked bid (the responsive bid with the highest total score) not eligible for the SB preference (CCR Section 1896.8(b)).  If the highest ranked bid is eligible for the SB preference, the preference is not applied.
2. Multiply the total score of the highest ranked bid by 5% to determine the preference amount (per Government Code Section 14838(b)(2)).
3. Add the preference amount to the total score of responsive bids eligible to receive the preference.

The following are examples based on a value effective IT solicitation where only the SB preference was claimed by bidders and a two-envelope method was used.

Preference Calculation

	BIDDER A	BIDDER B	BIDDER C
Responsive & responsible	Yes	Yes	Yes
Eligible preference	None	None	SB
Combined administrative & Technical Score	400	450	450
Score based on price bid	1200	1140	1100
Total Score	1600	1590	1550
Rank	1	2	3
Preference Amount			80
Final Score	1600	1590	1630
Final Rank	2	3	1

The preference calculation is performed as follows:

1. Identify the total score of the #1 ranked bidder (Bidder A at 1600).
2. Determine the preference amount (1600 X .05 = 80).
3. Add the preference amount to the total score of bids eligible to receive the preference (Bidder C: 1,550 + 80 = 1,630).

The award is to Bidder C.

Maximum Preference Allowed for Low Price Awards

For awards based on low price, the maximum SB preference allowed may not exceed $50,000 per bid.  In combination with any other preferences (TACPA, recycled, etc.), the maximum limit of the combined preferences is 15% of the bid amount and, in no case, more than $100,000.00 per bid, whichever is less.

Tie between Suppliers

In the event of a precise tie between the bid of a certified SB and the bid of a certified DVBE that is also a SB, the award shall go to the DVBE that is also a SB.  (Reference Government Code, Section 14838 (g)).

After application of the SB preference, in the event of a precise tie: the award shall first go to a certified SB, secondly to a non-SB using eligible SB subcontracting, last to a bid not eligible for the SB preference.

Only the recycle preference* can preclude award to a SB that is either ranked #1 or moves into the #1 rank following application of the SB preference.  However, one SB can displace another SB for award as a result of application of other preferences and/or the DVBE incentive.

*The recycle preference when award is based on low cost is limited to $50,000 if its application would preclude award to a SB.