NON-SMALL BUSINESS SUBCONTRACTOR PREFERENCE AND COMPETITIVE SOLICITATIONS - 1205

Preference Amount

A 5% preference shall be offered to a non-small business (non-SB) that commits to subcontract at least 25 percent (25%) of its net bid price to a California certified SB(s) per Government Code, Section 14838(b).  SB and MB bidders shall have precedence over non-SB bidders in that application of the preference for which a non-SB bidder may be eligible shall not result in the denial of the award to a SB or MB bidder, per Government Code, Section 14838(f).

Exception:

The non-SB preference is not applicable when the solicitation is being conducted using the “SB or DVBE Option” acquisition method.

Documenting the Commitment

A non-SB claiming 25% California certified SB subcontractor participation must identify applicable subcontractor information in their bid response to support the subcontracting claim:

• Subcontractor name(s)
• Subcontractor address(es)
• Subcontractor phone number(s)
• A description of the work to be performed and/or the products supplied and,
• The dollar amount or percentage of the net bid price (as specified in the solicitation) per subcontractor

Completion of the Bidder Declaration serves this purpose.

Each listed California certified SB must perform a ”Commercially Useful Function” in performance of the contract as defined in Government Code, Section 14837(d)(4).

Required Solicitation Language

Buyers must include non-SB preference language in all written solicitations, except those solicitations conducted as a “SB or DVBE Option” acquisition method.

When applying the non-SB preference to a solicitation that is not written, the same concepts required for a written solicitation must be applied and the appropriate documentation must be retained in the procurement file.

Email the PAU for further information on the required non-SB solicitation language.

Awards based on Low Price

The following is an example of applying the non-SB preference to determine the successful bidder when award is based on low price.

BIDDER	NET BID PRICE	BID AFTER APPLYING SB PREFERENCE	STATUS OF BIDDER
A	$19,870	$18,894	Non-SB subcontractor preference (commits to 25% certified SB participation)
B	$19,975	$19,975	Does not claim to be SB and does not claim non-SB subcontractor participation
C	$19,520	$19,520	Does not claim to be SB and does not claim non-SB subcontractor participation.

 

1. Calculate 5% of the net bid price of the lowest responsible and responsive bid.  In this example Bidder C is the lowest responsive bid.
   Bidder C:  Multiply net bid price by the preference factor ($19,520 x .05 = $976).  $976 is the preference value to be applied for evaluation purposes to non-SB and SB.
2. Subtract the preference value from the bid amount of Bidder A claiming non-SB subcontractor preference.  Applying the SB preference formula is for evaluation purposes only and does not change the actual bids offered by any suppliers.
3. Bidder A (non-SB claiming subcontractor preference):  Subtract preference value amount from the net bid price of Bidder A.
   ($19,870 - $976 = $18,894)
   Results:  Since $18,894 is less than $19,520 the award is made to Bidder A.
4. Document the procurement file in sufficient detail to support the award.  This includes recording the non-SB preference calculations.

In the case above, if Bidder C was a SB, a preference would not be calculated since a SB that is already ranked #1 cannot be displaced for award due to application of the SB preference.

Award Based on High Point Awards

SB preference calculation is performed for awards based on high points. To apply the preference:

1. Identify the bidder with the #1 ranked bid (the responsive bid with the highest total score
2. Multiply the total score of the #1 ranked bid by five (5%) to determine the preference amount (per Government Code Section 14838(b)).
3. Add the preference amount to the total score of responsive bids eligible to receive the preference.
4. Identify the total score of the #1 ranked bidder (Bidder A at 1600).
5. Determine the preference amount (1600 X .05 = 80).
6. Add the preference amount to the total score of bids eligible to receive the preference (Bidder C: 1,550 + 80 = 1,630).

Example:

	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 award is to Bidder C.

Ties between Suppliers Claiming Preferences

In the event of a precise tie between a California certified SB bid and a non-SB subcontracting with California certified SB, the award will be made to the California certified SB.

In the event of a precise tie between a certified SB bid and a certified DVBE/SB bid, the award will be made to the certified DVBE/SB.

Maximum Preference Allowed for Low Price Awards

For awards based on low price, the maximum bid preference allowed individually may not exceed $50,000 for any bid.  In combination with any other preferences (TACPA, SB, non-SB subcontracting participation, recycled, etc.), the maximum limit of the combined preferences is 15% of the bid amount or $100,000.00 whichever is less.