Summary
SB 70 will increase the maximum contract value under the Small Business Procurement and Contract Act from $250,000 to $350,000 while tying future adjustments to the California Consumer Price Index (CPI).
Background
Current law allows state agencies and the California State University system to award contracts for goods, services, or information technology valued between $5,000 and $250,000 to certified small businesses (SBs), microbusinesses (MBs), and disabled Veteran business enterprises (DVBEs). This streamlined process, known as the Small Business/DVBE Option, requires obtaining price quotes from at least two certified small businesses or DVBEs before awarding a contract.
However, the $250,000 contract cap has remained unchanged since 2009 despite significant economic changes. Increase in expenses due to inflation have substantially diminished the actual value of these contracts, resulting in reduced opportunities for small businesses and DVBEs. This impact is noticeable in industries requiring substantial investments in materials, equipment, and staffing. When accounting for inflation, the $250,000 cap from 2009 would equate to around $350,000 in today's dollars – meaning qualified small businesses are effectively excluded from contracts they would have been eligible for when the cap was originally set.
Raising the contract cap to $350,000 and tying it to the California CPI will modernize the procurement process and create expanded opportunities for small businesses and DVBEs. The bill also requires the Director of General Services to review the cap biennially and adjust it to reflect CPI changes, ensuring the program remains aligned with inflation and market conditions. These updates reinforce California’s commitment to supporting small businesses and DVBEs, enabling them to stay competitive and thrive as vital contributors to the State’s contracting system.
Proposal
SB 70 increases the maximum contract value under the Small Business Procurement and Contract Act from $250,000 to $350,000 and ties future adjustments to the California CPI. This update ensures small businesses and DVBEs can effectively compete for larger contracts that better reflect today's economic realities.