DVBE Compliance Guide

A Disabled Veteran Business Enterprise (DVBE) is a California state certification for businesses that are at least 51% owned, controlled, and operated by one or more service-disabled veterans. The program is administered by the California Department of General Services (DGS) and is designed to increase business opportunities for disabled veterans in state contracting.

California law sets a statewide goal of awarding at least 3% of total contract dollars to certified DVBEs. This goal applies to all state agencies and is tracked annually. Every year, each state agency must submit a report to the legislature demonstrating their DVBE and Small Business participation and, if goals are not met, provide justification and remedial action plans.

For general contractors bidding on California public works projects, DVBE participation is not optional. When a solicitation includes a DVBE participation goal, the awarding department must award the contract to the lowest responsible bidder who meets that goal. A bid that fails to meet the DVBE requirement – without demonstrating adequate justification – risks being deemed non-responsive.

The simplest way to meet DVBE participation goals is to source construction materials through a certified DVBE supplier. Material purchases count at 100% of their value toward DVBE participation, and if the supplier also holds a Small Business (SB) certification, the same dollars count toward SB goals as well.

California law requires that DVBE firms perform a commercially useful function (CUF) on contracts. This means the DVBE must be responsible for the execution of a distinct element of the work and must carry out its responsibilities by actually performing, managing, and supervising the work involved.

For material suppliers, CUF means the DVBE must negotiate with vendors, purchase materials, coordinate or manage delivery logistics, and assume contractual responsibility for the products supplied. A firm that simply passes orders through to another supplier without adding value does not meet the CUF requirement.

AEY Inc. meets all CUF requirements as a material supplier. We source, negotiate, purchase, coordinate delivery, and assume full responsibility for every material order we fulfill.

Per Senate Bill 115 and the Military and Veterans Code section 999.5(a), California established a DVBE incentive for competitive solicitations. The incentive is required in solicitations that include DVBE program requirements and may be offered in other competitive solicitations.

Additionally, a non-small business prime contractor who uses certified SB subcontractors for at least 25% of its net bid price is eligible for a 5% bid preference when competing against another non-small business. This creates a dual incentive for primes to work with firms like AEY that hold both DVBE and SB certifications.