California Resident Bidder Preference

Revised September 10, 2020

Government Code – GOV
Title 1: General
Division 5: Public Work and Public Purchases
Chapter 4: Preference for Materials
Section 4361: Services and supplies of agricultural aircraft operators.

Public officers and bodies charged with the purchase or the letting of contracts for services or supplies for any public use may give such contracts and purchase such services and supplies from agricultural aircraft operators who are residents of California if the bids of such persons, or the prices quoted by them, do not exceed by more than 5 percent the lowest bids or prices quoted by agricultural aircraft operators who are not residents of California.

Government Code – GOV
Title 1: General
Division 5: Public Work and Public Purchases
Chapter 10.5: Target Area Contract Preference Act
Section 4530 – 4535.3

4531: The Legislature hereby declares that it serves a public purpose, and is of benefit to the state, to encourage and facilitate job maintenance and job development in distressed and declining areas of cities and towns in the state. It is the intent of the Legislature to further these goals by providing appropriate preferences to California based companies submitting bids or proposals for state contracts to be performed at worksites in distressed areas by persons with a high risk of unemployment when the contract is for goods or services in excess of one hundred thousand dollars ($100,000).

4532: As used in this chapter:

(a) “California-based company” means either of the following:
- (1) A business or corporation whose principal office is located in California, and the owners, or officers if the entity is a corporation, are domiciled in California.
- (2) A business or corporation that has a major office or manufacturing facility located in California and that has been licensed by the state on a continuous basis to conduct business within the state and has continuously employed California residents for work within the state during the three years prior to submitting a bid or proposal for a state contract.

4533: Whenever the state prepares a solicitation for a contract for goods in excess of one hundred thousand dollars ($100,000), except a contract in which the worksite is fixed by the provisions of the contract, the state shall award a 5-percent preference to California-based companies who demonstrate and certify under penalty of perjury that of the total labor hours required to manufacture the goods and perform the contract, at least 50 percent of the hours shall be accomplished at an identified worksite or worksites located in a distressed area.

4533.1: Where a bidder complies with the provisions of Section 4533, or the worksite or worksites where at least 50 percent of the labor required to perform the contract is within commuting distance of a distressed area, the state shall award a 1-percent preference for bidders who certify under penalty of perjury to hire persons with high risk of unemployment equal to 5 to 9 percent of its work force during the period of contract performance; a 2-percent preference for bidders who shall agree to hire persons with high risk of unemployment equal to 10 to 14 percent of its work force during the period of contract performance; a 3-percent preference for bidders who shall agree to hire persons with high risk of unemployment equal to 15 to 19 percent of its work force during the period of contract performance; and a 4-percent preference for bidders who shall agree to hire persons with high risk of unemployment equal to 20 or more percent of its work force during the period of contract performance.

4534:

(a) In evaluating proposals for contracts for services in excess of one hundred thousand dollars ($100,000), except a contract in which the worksite is fixed by the provisions of the contract, the state shall award a 5-percent preference on the price submitted by California-based companies that demonstrate and certify under penalty of perjury that not less than 90 percent of the total labor hours required to perform the contract shall be accomplished at an identified worksite or worksites.
(b) Where a bidder complies with the provisions of subdivision (a), the state shall award the additional preferences as set forth in Section 4533.1 as appropriate.

4535.2:

(a) The maximum preference and incentive a bidder may be awarded pursuant to this chapter and any other provision of law shall be 15 percent. However, in no case shall the maximum preference and incentive cost under this chapter exceed fifty thousand dollars ($50,000) for any bid, nor shall the combined cost of preferences and incentives granted pursuant to this chapter and any other provision of law exceed one hundred thousand dollars ($100,000). In those cases where the 15-percent cumulated preference and incentive cost would exceed the one hundred thousand dollar ($100,000) maximum preference and incentive cost limit, the one hundred thousand dollar ($100,000) maximum preference and incentive cost limit shall apply.
(b) Notwithstanding the provisions of this chapter, small business bidders qualified in accordance with Section 14838 shall have precedence over non-small business bidders in that the application of any bidder preference for which non-small business bidders may be eligible, including the preference contained in this chapter, shall not result in the denial of the award to a small business bidder. This subdivision shall apply to those cases where the small business bidder is the lowest responsible bidder, as well as to those cases where the small business bidder is eligible for award as the result of application of the 5-percent small business bidder preference and incentive.

Government Code – GOV
Title 2: Government of the State of California
Division 3: Executive Department
Part 5.5: Department of General Services
Chapter 6.5 Small Business Procurement and Contract Act
Section 14835-14843: General Provisions

14838: In order to facilitate the participation of small business, including microbusiness, in the provision of goods, information technology, and services to the state, and in the construction (including alteration, demolition, repair, or improvement) of state facilities, the directors of the department and other state agencies that enter those contracts, each within their respective areas of responsibility, shall do all of the following:

(a) Establish goals, consistent with those established by the Office of Small Business and Disabled Veteran Business Enterprise Services, for the extent of participation of small businesses, including microbusinesses, in the provision of goods, information technology, and services to the state, and in the construction of state facilities.
(b) Provide for small business preference, or non-small business preference for bidders that provide for small business and microbusiness subcontractor participation, in the award of contracts for goods, information technology, services, and construction, as follows:
- (1) In solicitations where an award is to be made to the lowest responsible bidder meeting specifications, the preference to small business and microbusiness shall be 5 percent of the lowest responsible bidder meeting specifications. The preference to non-small business bidders that provide for small business or microbusiness subcontractor participation shall be, up to a maximum of 5 percent of the lowest responsible bidder meeting specifications, determined according to rules and regulations established by the Department of General Services.
- (2) In solicitations where an award is to be made to the highest scored bidder based on evaluation factors in addition to price, the preference to small business or microbusiness shall be 5 percent of the highest responsible bidder’s total score. The preference to non-small business bidders that provide for small business or microbusiness subcontractor participation shall be up to a maximum 5 percent of the highest responsible bidder’s total score, determined according to rules and regulations established by the Department of General Services.
- (3) The preferences under paragraphs (1) and (2) shall not be awarded to a noncompliant bidder and shall not be used to achieve any applicable minimum requirements.
- (4) The preference under paragraph (1) shall not exceed fifty thousand dollars ($50,000) for any bid, and the combined cost of preferences granted pursuant to paragraph (1) and any other provision of law shall not exceed one hundred thousand dollars ($100,000). In bids in which the state has reserved the right to make multiple awards, this fifty thousand dollar ($50,000) maximum preference cost shall be applied, to the extent possible, so as to maximize the dollar participation of small businesses, including microbusinesses, in the contract award.
(c) Give special consideration to small businesses and microbusinesses by both:
- (1) Reducing the experience required.
- (2) Reducing the level of inventory normally required.
(d) Give special assistance to small businesses and microbusinesses in the preparation and submission of the information requested in Section 14310.
(e) Under the authorization granted in Section 10163 of the Public Contract Code, make awards, whenever feasible, to small business and microbusiness bidders for each project bid upon within their prequalification rating. This may be accomplished by dividing major projects into subprojects so as to allow a small business or microbusiness contractor to qualify to bid on these subprojects.
(f) Small business and microbusiness bidders qualified in accordance with this chapter shall have precedence over non-small business bidders in that the application of a bidder preference for which non-small business bidders may be eligible under this section or any other provision of law shall not result in the denial of the award to a small business or microbusiness bidder. In the event of a precise tie between the low responsible bid of a bidder meeting specifications of a small business or microbusiness, and the low responsible bid of a bidder meeting the specifications of a disabled veteran-owned small business or microbusiness, the contract shall be awarded to the disabled veteran-owned small business or microbusiness. This provision applies if the small business or microbusiness bidder is the lowest responsible bidder, as well as if the small business or microbusiness bidder is eligible for award as the result of application of the small business and microbusiness bidder preference granted by subdivision (b).

14838.4. No small business preference shall be allowed if allowing the small business preference would result in a computed bid of the preference recipient which would exceed the amount of funds appropriated by the Legislature for the construction project, plus any augmentation that may be made by the State Public Works Board pursuant to authority granted in the annual Budget Act.

Government Code – GOV
Title 2: Government of the State of California
Division 3: Executive Department
Part 10b: State Building Construction
Chapter 2.1: Art in Public Buildings
Section 15813.3

In order to carry out the purposes of this chapter, the State Architect and the council, jointly, shall do all of the following:

(a)
- (1) Determine and implement procedures for the purchase or lease by written contract of existing works of art from an artist or the artist’s authorized agent. Works of art to be purchased or leased shall be selected by the State Architect and the council, jointly, from lists of works prepared and submitted by the council or by advisory committees empowered by the council. In making such purchases or in executing such leases, preference may be given to artists who are California residents. No lease obligation shall be incurred under the provisions of this chapter without the prior approval of the Department of Finance.
- (2) Determine and implement procedures, one of which shall provide for competition among artists, for the selection and commissioning of artists by written contract to create works of art. Commissioned artists shall be selected by the State Architect and the council, jointly, from lists of qualified and available artists prepared and submitted by the council or by advisory committees empowered by the council. In making such contracts, preference may be given to artists who are California residents.

Code of Regulations – CCR
Title 2: Administration
Division 2: Financial Operations
Chapter 3: Department of General Services
Subchapter 8: Office of Small Business Procurement and Contracts
Article 2: Small Business Preference
Section 1896.6: Application of the Small Business and Non-Small Business Preferences

(a) 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 § 1896.8, and when the small business:
- (1) Has included in its bid a notification to the awarding department that it is a small business or that it has submitted to OSDS a complete application pursuant to § 1896.14(a) no later than 5:00 p.m. on the bid due date, and is subsequently certified by OSDS as a small business; and
- (2) Has submitted a timely, responsive bid; and
- (3) Is determined to be a responsible bidder.
(b) Non-small business bidders will be granted a five percent (5%) non-small business subcontracting 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 §1896.8, and when the non-small business bidder:
- (1) Has included in its bid a notification to the awarding department that it commits to subcontract with at least twenty-five percent (25%) of its net bid price with one (1) or more small business; and
- (2) Has submitted a timely, responsive bid; and
- (3) Is determined to be a responsible bidder; and
- (4) Submits a list of the small business(es) it commits to subcontract with for a commercially useful function in the performance of the contract. The list of subcontractors shall include their name, address, phone number, small business certification number (if applicable), a description of the work to be performed, and the dollar amount or percentage (as specified in the solicitation) per subcontractor.

Code of Regulations – CCR
Title 2: Administration
Division 2: Financial Operations
Chapter 3: Department of General Services
Subchapter 8: Office of Small Business Procurement and Contracts
Article 2: Small Business Preference
Section 1896.8: Computing the Small Business and the Non-Small Business Preferences.

(a) Awards Made to the Lowest Responsive, Responsible Bidder
(1) The five percent (5%) small business or non-small business subcontracting preferences are used for bid evaluation purposes when determining a contract award in the following situations:
- (A) There is at least one (1) small business competing, and award of the contract will be made to the lowest responsive, responsible bidder. The preference shall be computed as follows:
  - 1. Five percent (5%) is computed from the lowest, responsive and responsible bid of a business that is not a small business. This results in the preference amount.
  - 2. The preference amount is subtracted from the small business' bid amount.
- (B) There is at least one (1) non-small business competing that is subcontracting at least twenty-five percent (25%) of its net price bid to one (1) or more small businesses, and award of the contract will be made to the lowest responsive, responsible bidder. The preference shall be computed as follows:
  - 1. Five percent (5%) is computed from the lowest, responsive and responsible bid of a business that is not a small business or is not subcontracting to a small business. This results in the preference amount.
  - 2. The preference amount is subtracted from the bid of the non-small business that is subcontracting at least twenty-five percent (25%) of its net price bid to one or more small businesses.
(b) Awards Based on Highest Scored Proposal
- (1) The five percent (5%) small business preference or non-small business subcontracting preferences are used for bid evaluation purposes when determining a contract award in the following situations:
  - (A) There is at least one (1) small business competing, and award of the contract is to be made to the highest scored responsive bid submitted by a responsible bidder following an evaluation process that weighs factors other than price, together in a formula with price. The preference shall be computed as follows:
    - 1. The awarding department shall specify the minimum number of points, if any, that a bid must receive in order to be deemed responsive and of acceptable quality. If a small business does not achieve the specified minimum number of points, it shall not be entitled to the five percent (5%) preference.
    - 2. Five percent (5%) of the score of the highest scored responsive bid submitted by a responsible non-small business is computed as specified in the solicitation. The result of the calculation is a number that represents the preference points.
    - 3. The preference points are then included in the formula as specified in the solicitation to determine the highest scored bidder.
(B) There is at least one (1) non-small business competing that is subcontracting at least twenty-five percent (25%) of its net price bid to one (1) or more small businesses, and award of the contract is to be made to the highest scored responsive bid submitted by a responsible bidder following an evaluation process that weighs factors other than price, together in a formula with price. The preference shall be computed as follows:
- 1. The awarding department shall specify the minimum number of points, if any, that a bid must receive in order to be deemed responsive and of acceptable quality. If a non-small business does not achieve the specified minimum number of points, it shall not be entitled to the five percent (5%) preference.
- 2. If the non-small business achieves the specified minimum number of points, five percent (5%) of the score of the highest scored responsive bid submitted by a responsible non-small business that is not subcontracting a minimum of twenty-five percent (25%) of its net price bid to one
- (1) or more small businesses is computed as specified in the solicitation. The result of the calculation is a number that represents the preference points.
- 3. The preference points are then included in the formula as specified in the solicitation to determine the highest scored bidder.
(c) If, after application of the small business preference to the bid of a small business, that bid is equal to the lowest priced, responsive bid from a responsible non-small business, or equal to the highest scored bid offered by a responsible non-small business, as applicable, the contract shall be awarded to the small business for the amount of its bid.
(d) If, after application of the non-small business subcontracting preference, a responsible non-small business that has submitted a responsive bid is the lowest bidder, and does not displace a small business from winning the award, the contract shall be awarded to the non-small business for the amount of its bid.
(e) In no event shall the amount of the small business or non-small business subcontracting preferences awarded on a single bid exceed fifty thousand dollars ($50,000), and in no event shall the combined cost of the small business or non-small business subcontracting preference and preferences awarded pursuant to any other provision of law exceed one hundred thousand dollars ($100,000). In bids that the state has reserved the right to award by line item, or make multiple awards, the small business preference shall be applied to maximize the participation of small businesses.
(f) In the event of a precise tie between the bid of a small business and the bid of a DVBE that is also a small business, the award shall go to the DVBE that is also a small business.

Code of Regulations – CCR
Title 2: Administration
Division 2: Financial Operations
Chapter 3: Department of General Services
Subchapter 8: Office of Small Business Procurement and Contracts
Article 3: Small Business Eligibility, Certification Process and Responsibilities
Section 1896.12: Eligibility for Certification as a Small Business

(a) To be eligible for certification as a small business, a business must meet all of the following qualifying criteria:
- (1) It is independently owned and operated; and
- (2) Its principal office is located in California; and
- (3) The officers of the business (in the case of a corporation); officers and/or managers, or in the absence of officers and/or managers, all members in the case of a limited liability company; partners in the case of a partnership; or the owner(s) in all other cases, are domiciled in California; and
- (4) It is not dominant in its field of operation(s), and
- (5) It is either:
  - (A) A business that, together with all affiliates, has 100 or fewer employees, and annual gross receipts of fifteen million dollars ($15,000,000) or less as averaged for the previous three (3) tax years, as biennially adjusted by the Department in accordance with Government Code § 14837(d)(3) (If the business or its affiliate(s) has been in existence for less than three (3) tax years, then the GAR will be based upon the number of years in existence); or
  - (B) A manufacturer as defined herein that, together with all affiliates, has 100 or fewer employees.
- (b) To be eligible for designation as a microbusiness, a business must meet all the qualifying criteria in subparagraph (a)(1) - (4), and in addition, must be either:
  - (1) A business that, together with all affiliates, has annual gross receipts of five million, dollars ($5,000,000) or less as averaged for the previous three (3) tax years, as biennially adjusted by the Department in accordance with Government Code §14837(d)(3) (If the business or its affiliate(s) has been in existence for less than three (3) tax years, then the GAR will be based upon the number of years in existence); or
  - (2) A manufacturer as defined herein that, together with all affiliates, has 25 or fewer employees.
- (c) Joint ventures may be certified as a small business or microbusiness when each individual business of the joint venture is a certified small business. The joint venture is established by written agreement to engage in and carry out a business venture for joint profit, for which purpose they combine their efforts, property, money, skills and/or knowledge. The joint venture shall not be subject to the average annual gross receipts and employee limits imposed by this subchapter.

Code of Regulations – CCR
Title 2: Administration
Division 2: Financial Operations
Chapter 3: Department of General Services
Subchapter 9: Small and Minority Business Procurement and Assistance Division – Target Area Contract Preference Act
Article 1: General Provisions
Section 1896.31: Worksite Preference/Contract for Goods.

Whenever a state agency prepares an invitation for bid (IFB) for a contract for the purchase of goods, the cost of which is estimated to be in excess of $100,000, except a contract where the worksite will be fixed by the terms of the contract, provision shall be made in the IFB for a 5 percent preference for California based companies who certify under the penalty of perjury that no less than 50 percent of the labor required to perform the contract shall be accomplished at a worksite or worksites located in a distressed area.

Where a bidder complies with the provisions of rule 1896.31 the state shall award additional preferences ranging from 1 percent to 4 percent in accordance with Government Code Section 4533.1 if the bidder certifies under penalty o perjury it will hire the specified percentage of persons with high risk of unemployment during the period of contract performance.

Preferences provided for by sections 1896.31 and 1896.32 for a contract for goods shall be granted in an amount equal to a corresponding percentage of the lowest responsible bid: provided, however, that for contract award purposes the total of any preferences for which the low responsible bidder qualifies under any provision of law shall be deducted from the total of any preferences to which a higher bidder may be entitled.

Whenever a state agency prepares an IFB or a request for proposals (RFP) for a contract for services, the cost of which is estimated to be in excess of $100,000, except an IFB or a RFP where the worksite is fixed by the terms of the contract, provision shall be made in the IFB or the RFP for a 5 percent preference on the price submitted by California based companies who certify under penalty of perjury that they shall perform the contract at a worksite or worksites located in a distressed area.

Where a bidder complies with the provisions of rule 1896.34 the state shall award additional preferences ranging from 1 percent to 4 percent in accordance with Government Code Section 4534.1 if the bidder certifies under penalty of perjury it will hire the specified percentages of persons with high risk of unemployment for contract performance.

Preferences provided for by sections 1896.34 and 1896.35 for a contract for services shall be granted in an amount equal to a corresponding percentage of the price offered by the lowest responsible bid or the lowest responsible proposal: provided, however, that for contract award purposes the total of any preferences for which the low responsible bidder qualifies under any provision of law shall be deducted from the total of any preferences to which a higher bidder may be entitled.

Code of Regulations – CCR
Title 2: Administration
Division 2: Financial Operations
Chapter 3: Department of General Services
Subchapter 11: Employment and Economic Incentive Act Contract Preferences
Article 1, Section 1896.101: Worksite Preference/Contract for Goods.

Whenever a state agency prepares an invitation for bid (IFB) for a contract for the purchase of goods, the cost of which is estimated to be in excess of $100,000, except a contract where the worksite will be fixed by the terms of the contract, provision shall be made in the IFB for a 5-percent preference for California-based companies who certify under penalty of perjury that no less than 50 percent of the labor required to perform the contract shall be accomplished at a worksite or worksites located in a program area.

Where a bidder complies with the provisions of rule 1896.71 the state shall award additional preferences ranging from 1-percent to 4-percent in accordance with Government Code section 7095(b) if the bidder certifies under penalty of perjury it will hire the specified percentage of persons living in a high density unemployment area or enterprise zone qualified employees during the period of contract performance.

Preferences provided for by sections 1896.71 and 1896.72 for a contract for goods shall be granted in an amount equal to a corresponding percentage of the lowest responsible bid: provided, however, that for contract award purposes the total of any preferences for which the low responsible bidder qualifies under any provision of law shall be deducted from the total of any preferences to which a higher bidder may be entitled.

Whenever a state agency prepares an IFB or a request for proposals (RFP) for a contract for services, the cost of which is estimated to be in excess of $100,000, except an IFB or a RFP where the worksite is fixed by the terms of the contract, provision shall be made in the IFB or the RFP for a 5-percent preference on the price submitted by California-based companies who certify under penalty of perjury that they shall perform the contract at a worksite or worksites located in a program area.

Where a bidder complies with the provisions of rule 1896.74 the state shall award additional preferences ranging from 1-percent to 4-percent in accordance with Government Code section 7095(d) if the bidder certifies under penalty of perjury it will hire the specified percentages of persons living in high density unemployment areas or enterprise zone qualified employees for contract performance.

Public Contract Code – PCC
Division 2: General Provisions
Part 1: Administrative Provisions
Chapter 6: Awarding of Contracts
Section 6107

(a) As used in this section, “California company” means a sole proprietorship, partnership, joint venture, corporation, or other business entity that was a licensed California contractor on the date when bids for the public contract were opened and meets one of the following:
- (1) Has its principal place of business in California.
- (2) Has its principal place of business in a state in which there is no local contractor preference on construction contracts.
- (3) Has its principal place of business in a state in which there is a local contractor construction preference and the contractor has paid not less than five thousand dollars ($5,000) in sales or use taxes to California for construction related activity for each of the five years immediately preceding the submission of the bid.
(b)
- (1) When awarding contracts for construction, a state agency shall grant a California company a reciprocal preference as against a nonresident contractor from any state that gives or requires a preference to be given contractors from that state on its public entity construction contracts.
- (2) The amount of the reciprocal preference shall be equal to the amount of the preference applied by the state of the nonresident contractor with the lowest responsive bid, except where the resident contractor is eligible for a California small business preference, in which case the preference applied shall be the greater of the two, but not both.
- (3) If the contractor submitting the lowest responsive bid is not a California company and has its principal place of business in any state that gives or requires the giving of a preference on its public entity construction contracts to contractors from that state, and if a California company has also submitted a responsive bid, and, with the benefit of the reciprocal preference, the California company’s bid is equal to or less than the original lowest responsive bid, the public entity shall award the contract to the California company at its submitted bid price.
(c)
- (1) The bidder shall certify, under penalty of perjury, that the bidder qualifies as a California company.
- (2) A nonresident contractor shall, at the time of bidding, disclose to the awarding agency any and all bid preferences provided to the nonresident contractor by the state or country in which the nonresident contractor has its principal place of business.
(d) The reciprocal preference is waived if the certification described in paragraph (1) of subdivision (c) does not appear on the bid.
(e) This section does not apply if application of this section might jeopardize the receipt of federal funds or the nonresident contractor certifies, under penalty of perjury, in its bid that its state of residency does not give a preference for contractors from that state on its public entity construction contracts.

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California Resident Bidder Preference

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