What Is California's DVBE Program?

California's Disabled Veteran Business Enterprise (DVBE) program is a state initiative designed to increase contracting opportunities for businesses owned and operated by service-disabled veterans. The program is administered by the California Department of General Services (DGS) and applies to most state agency contracts above a specific dollar threshold.

The program requires state agencies and prime contractors to make a good-faith effort to include certified DVBE firms in their contracts: either as prime contractors or subcontractors. When participation is achieved, prime contractors may receive scoring preferences and other competitive advantages in the bidding process.

California Government Code Section 999 et seq. establishes the DVBE program and requires state agencies to meet an annual DVBE participation goal of at least 3 percent of overall contract dollars.

Which Contracts Require DVBE Participation?

DVBE participation requirements apply to most California state contracts, but the specifics depend on the agency, contract type, and dollar value. Generally speaking:

  • State agency contracts over $5,000: most contracts above this threshold require a good-faith effort to include DVBE participation
  • Competitive bids and RFPs: agencies typically require a DVBE Participation Plan or Bidder Declaration as part of the proposal package
  • IT and professional services contracts: commonly include DVBE incentive scoring of 5% of the total evaluation score
  • Construction and facilities contracts: often include DVBE subcontracting requirements as a condition of award
  • Non-competitive or emergency contracts: may have different or waived requirements depending on the circumstances

The best practice is to check each solicitation's specific DVBE requirements in the RFP or IFB documents. Agencies are required to include DVBE participation instructions in all applicable solicitations.

What Is the Required DVBE Participation Percentage?

California state policy sets an overall DVBE participation goal of 3% of total contract dollars across all state contracting. However, individual contracts may have different participation targets depending on the agency and solicitation.

3% Statewide annual DVBE participation goal
5% Typical bid scoring incentive for DVBE inclusion
$5,000 Minimum contract threshold for most DVBE requirements
25% Minimum veteran ownership for DVBE certification

It is important to note that the 3% statewide goal applies to the agency's aggregate contracting spend: not necessarily to each individual contract. However, individual solicitations may specify a required or target DVBE participation percentage. Prime contractors should read each RFP carefully to understand what is required versus incentivized.

How Is a Business Certified as a DVBE?

To be certified as a DVBE in California, a business must meet the following requirements:

  • Veteran ownership: at least 51% owned by one or more service-disabled veterans
  • Management and control: the veteran owner must manage and control daily business operations
  • California-based: the business must be headquartered or have its principal place of business in California
  • For-profit status: the business must be a for-profit entity
  • Service-connected disability: the veteran owner must have a service-connected disability rating from the U.S. Department of Veterans Affairs

Certification is granted by the California Department of General Services. Once certified, businesses are listed in the California SB/DVBE Option database and CalProcure, making them searchable by state agencies and prime contractors.

What Documentation Do Prime Contractors Need?

When submitting a bid that includes DVBE participation, prime contractors are typically required to provide:

  • STD 843 Bidder Declaration: the standard form declaring the DVBE subcontractors included in the bid, their scope, and their participation percentage
  • DVBE Participation Summary: a breakdown of how DVBE participation meets or exceeds the required threshold
  • Letter of Intent: a signed commitment from the DVBE subcontractor confirming their participation and scope
  • DVBE Certification Verification: confirmation that the subcontractor holds an active California DVBE certification
  • Good Faith Effort documentation: if full participation goals cannot be met, documentation showing the steps taken to find and include DVBE firms

Running Logistics LLC provides all required DVBE documentation: including signed letters of intent, certification verification, and support completing your STD 843: within 24 to 48 hours of outreach.

What Happens After the Contract Is Awarded?

DVBE compliance does not end at bid submission. Once a contract is awarded, prime contractors must ensure that DVBE subcontractors actually perform the work they committed to in the bid. California auditors may review:

  • Payment records: confirmation that the DVBE subcontractor was paid for the work performed
  • Performance documentation: evidence that the DVBE performed a Commercially Useful Function (CUF) on the contract
  • Substitution requests: any changes to the DVBE subcontractor must be approved by the contracting agency
  • Final participation reports: many contracts require a final DVBE participation report at contract closeout

Failure to meet DVBE participation commitments can result in contract penalties, loss of future bid preferences, and reputational damage with state agencies. This is why choosing a DVBE subcontractor who genuinely performs their scope is critical.