(a) DVBE participation must be included in the contracting activity report by awarding departments as required by Public Contract Code section 10111, section 999.5, subdivision (d) of the Military and Veterans Code and Government Code section 14841, and consistent with applicable regulations. For contracts with a participation goal, awarding departments shall report awards and DVBE participation as proposed by the contractor pursuant to section 1896.70, subdivision (g) or as documented by contract modification per section 1896.76. For contracts awarded without a participation goal, the awarding departments shall report each DVBE business represented in the contract.

(b) Awarding departments shall not count toward its DVBE participation goal funds expended on a DVBE during any period in which that DVBE is not in compliance with the subdivision provisions of Military and Veterans Code section 999.2, subdivisions (c), (d) and (f), regarding required declarations.

(c) Contract funds awarded during any period in which a DVBE is not in compliance with Military and Veterans Code section 999.2, subdivision (g) with respect to furnishing required tax returns, cannot count toward DVBE participation goals.

(d) Awarding departments shall not count toward the DVBE participation goals any state funds expended with a business that is not DVBE certified at the time of award or does not meet and maintain the certification requirements in accordance with Military and Veterans Code sections 999.2, subdivision (g)(4) and 999.5, subdivision (c).

(e) Upon completion of an awarded contract for which a commitment to achieve a DVBE goal was made, state departments shall require the prime contractor who subcontracted with DVBEs, to certify on the Prime Contractor's Certification -- DVBE Subcontractor Report (STD 817) (Rev. 10/2021), incorporated by reference, all of the following in accordance with Military and Veterans Code section 999.5:

(f) State departments must establish appropriate review procedures for records related to the certification requirement to ensure the accuracy and completeness of the amounts awarded and paid. The maintenance of all records of the information provided by the prime contractor in compliance with Military and Veterans Code section 999.5 shall be retained for six years.

(g) State departments shall withhold, on a contract, ten thousand dollars ($10,000) from the final payment, or the full final payment if less than ten thousand dollars ($10,000), until the prime contractor complies with the certification requirements of subsection (e) of this section. A prime contractor that fails to comply with the certification requirement shall, after notice, be allowed to cure the defect. Notwithstanding any other law, if, after at least fifteen (15) calendar days but no more than thirty (30) calendar days from the date of the state department's notice, the prime contractor refuses to comply with the certification requirements, the state department shall permanently deduct ten thousand dollars ($10,000) from the final payment, or the full payment if less than ten thousand dollars ($10,000) in accordance with Military and Veterans Code section 999.7.

(h) State departments shall review the State Contracting Manual for alternative mechanisms to enforce the certification requirement for contracts awarded for use by multiple state agencies.