Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) A business' request for small business
certification (application) will be denied on any of the following grounds:
(1) A business does not meet the eligibility
requirements for certification, submits insufficient documentation to
demonstrate eligibility, or does not respond to requests from OSDS for
additional information by the date and time specified.
(2) The application and supporting documents,
including any additional information subsequently provided by the business for
correction, amendments and/or clarification, do not meet the eligibility
requirements.
(3) When the
application for certification is submitted by a business or one or more
principals of a business (new or existing) that is formed, financed by, or
affiliated with a business suspended from contracting with the state of
California, or whose certifications have been revoked, in accordance with
Government Code section
14842 or
14842.5 or
Military and Veterans Code section
999.9.
(4) Applicants without an active status with
the California Secretary of State or Contractors State License Board, when
legally required to do so.
(b) OSDS may discontinue the certification of
a small business for any of the following reasons, including but not limited
to:
(1) Failure by a small business to provide
requested information that supports its continued eligibility as a certified
small business, by the date and time specified by the OSDS;
(2) Failure to reinstate to active status
with the Secretary of State, Contractors State License Board, or other such
authorities during the period of certification;
(3) The average annual gross receipts and/or
employee limits imposed by section
1896.12, subdivisions (a) and (b)
have been exceeded during the period of certification;
(4) The officers, owners, and/or partners,
managers or members of the small business fail to satisfy the California
domicile requirement described in Government Code section
14837,
subdivision (d)(1);
(5) If a small
business or small business for the purpose of public works is determined by
OSDS to no longer meet the eligibility requirements of this
subchapter.
(c)
Restoration After Discontinuance:
(1)
Certified status shall be restored for the remaining period of certification
when satisfactory action on the part of the certified entity corrects
identified insufficiencies.
(d) If a business holds both the small
business certification and the DVBE certification, both certifications shall be
revoked for a period of not less than five (5) years if the business violates
Government Code section
14842,
subdivision (a). For additional or subsequent violations, the revocation shall
be extended for a period of up to ten (10) years. Revocation applies to
principals of business and any subsequent business formed by one or more of
those principals, as set forth by Government Code section
14842,
subdivision (e).
(e) A business
that has obtained certification based on either furnishing incorrect and/or
incomplete information or withholding information, which they knew or should
have known would affect their certification eligibility, and, as a result, was
awarded a contract to which it would not otherwise have been entitled, shall,
in accordance with Government Code section
14842:
(1) Pay to the state any difference between
the contract amount awarded to the business and the contract amount had the
business been properly awarded; and
(2) Pay to the awarding state agency and the
Department an amount equal to the costs incurred for investigating the
certification that led to the finding that the contract had been improperly
awarded; and
(3) The business shall
be assessed an additional penalty in the amount of not more than ten percent
(10%) of the amount of the contract.
(f) The Department shall suspend any person
who violates subdivision (a) of Government Code section
14842 from
transacting any business with the state in the capacity of a contractor or a
subcontractor for a period of not less than three (3) years and not more than
ten (10) years. State agencies may reject the bid of a supplier offering goods,
information technology, or services manufactured or provided by a subcontractor
if the supplier or subcontractor has been declared ineligible to transact any
business with the state pursuant to Government Code section
14842,
even though the bidder is a business in good standing otherwise.
(g) Government Code section
14842.5,
subdivision (a) makes it unlawful for any person to:
(1) Knowingly and with intent to defraud,
fraudulently obtain, retain, attempt to obtain or retain, or aid another in
fraudulently obtaining or retaining or attempting to obtain or retain:
(A) Small business or microbusiness
certification;
(B) Public moneys,
contracts, or funds expended under a contract, that are awarded by any state
agency, department, officer, or other state governmental agency, to which the
person is not entitled under the Act;
(2) Knowingly and with intent to defraud,
fraudulently represent:
(A) Certified small
business or microbusiness participation in order to obtain or retain a bid
preference or a state contract;
(B)
That a commercially useful function is being performed by a certified small
business or microbusiness in order to obtain or retain a bid preference or a
state contract;
(3)
Willfully and knowingly:
(A) Make a false
statement with the intent to defraud, whether by affidavit, report, or other
representation, to a state official or employee for the purpose of influencing
the small business or microbusiness certification or denial of
certification;
(B) Obstruct,
impede, or attempt to obstruct or impede, any state official or employee who is
investigating the qualifications of a business entity that has requested small
business or microbusiness certification;
(C) Make or subscribe to any statement,
declaration, or other document that is fraudulent or false as to any material
matter, whether or not that falsity or fraud is committed with the knowledge or
consent of the person authorized or required to present the declaration,
statement, or document; or
(D) Aid
or assist in, or procure, counsel, or advise, the preparation or presentation
of a declaration, statement, or other document that is fraudulent or false as
to any material matter, regardless of whether that falsity or fraud is
committed with the knowledge or consent of the person authorized or required to
present the declaration, statement, or document.
(4) Establish, or knowingly aid in the
establishment of, or exercise control over a firm found to have violated any
provisions of subdivisions (e)(1), (e)(2), or (e)(3).
(5) Any person in violation of subdivisions
(e)(1), (e)(2) or (e)(3) shall pay all investigation costs leading to the
finding of the violation:
(A) Incurred by the
awarding state agency; or
(B)
Incurred by the Department of General Services;
(6) Investigation costs shall include, but
are not limited to costs and attorney's fees related to hearings and court
appearances.
(h) Any
suspension, revocation and/or civil penalty issued pursuant to Government Code
section
14842 or
14842.5
shall, unless otherwise statutorily specified, apply to the principals of the
business, and neither the business nor the principals may re-apply for
certification, either as the same business or a new business, for a period of
not less than three (3) years, nor more than ten (10) years, from the date of
certification revocation.
(i) When
denying certification, discontinuing small business certification, or imposing
any other sanction, including suspension, revocation, monetary penalty, or cost
recovery, the OSDS will notify the business in writing. The notice shall
include the reasons for the determination together with the statutory or
regulatory authority or basis for such action, and provide information
regarding the process of restoring the certification or appealing the
decision(s).
1. New
section filed 1-23-2017; operative 1-23-2017 pursuant to Government Code
section
11343.4(b)(3)
(Register 2017, No. 4).
2. Amendment of subsection (a)(5) and NOTE
filed 11-8-2018; operative 1-1-2019 (Register 2018, No. 45).
3.
Amendment of section heading, section and NOTE filed 6-29-2023; operative
6-29-2023 pursuant to Government Code section
11343.4(b)(3)
(Register 2023, No. 26).
Note: Authority cited: Sections
14837,
14839.1
and
14843,
Government Code. Reference: Sections
4525,
14836,
14837,
14938,
14840,
14841,
14842 and
14842.5,
Government Code; and Section
1101,
Public Contract Code.
