§ 1896.12. Eligibility for Certification as a Small Business.
2 CA ADC § 1896.12Barclays Official California Code of RegulationsEffective: June 29, 2023
Barclays California Code of Regulations
Title 2. Administration
Division 2. Financial Operations (Refs & Annos)
Chapter 3. Department of General Services
Subchapter 8. Office of Small Business Procurement and Contracts
Article 3. Small Business Eligibility, Certification Process and Responsibilities
Effective: June 29, 2023
2 CCR § 1896.12
§ 1896.12. Eligibility for Certification as a Small Business.
(3) The officers of the business (in the case of a corporation); officers and/or managers, or in the absence of officers and/or managers, all members in the case of a limited liability company; partners in the case of a partnership; or the owner(s) in all other cases, are domiciled in California; and
(A) A business that, together with all affiliates, has one hundred (100) or fewer employees, and annual gross receipts of fifteen million dollars ($15,000,000) or less as averaged for the previous three (3) tax years, as biennially adjusted by the Department in accordance with Government Code section 14837, subdivision (d)(3) (If the business or its affiliate(s) has been in existence for less than three (3) tax years, then the GAR will be based upon the number of years in existence); or
(1) A business that, together with all affiliates, has annual gross receipts of five million, dollars ($5,000,000) or less as averaged for the previous three (3) tax years, as biennially adjusted by the Department in accordance with Government Code section 14837, subdivision (d)(3) (If the business or its affiliate(s) has been in existence for less than three (3) tax years, then the GAR will be based upon the number of years in existence); or
(c) Joint ventures may be certified as a small business or microbusiness when each individual business of the joint venture is a certified small business. The joint venture is established by written agreement to engage in and carry out a business venture for joint profit, for which purpose they combine their efforts, property, money, skills and/or knowledge. The joint venture shall not be subject to the average annual gross receipts and employee limits imposed by this subchapter.
(1) In determining if a business is eligible for certification, OSDS may consider the applicant's organizational structure, operations and business relationships during the previous three (3) tax years (or years the business has been in existence if fewer than three (3) tax years). OSDS may request the applicant provide copies of income tax returns as filed with the State of California or other jurisdictions in addition to the required federal income tax returns and schedules, as filed with the Internal Revenue Service, and/or other documentation deemed necessary for the OSDS to make a final certification determination.
(A) Whether the business, with its own facilities, performs the primary activities in transforming inorganic or organic substances into the end item being acquired, and is not a packager or, in the case of kits, a final assembler. The end item must possess characteristics that did not exist, before the original substances, parts, or components were assembled or transformed, as a result of mechanical, chemical, or human action. The end item may be finished and ready for utilization or consumption, or it may be semi-finished as a raw material to be used in further manufacturing, and
(5) OSDS's determination of whether the principal office of a small business is located in California, under the location requirements of Government Code section 14837, subdivision (d)(1), shall be based on factors including, but not limited to, a review of the address or physical location where management, direction, and control of operations originate.
(6) OSDS's determination of business affiliations, with respect to the requirements under Government Code section 14837, subdivision (d), shall be based on factors including, but not limited to, historical and current ownership, management, financial and/or business relationships or ties with another business, such as familial relationships, contractual relationships, assignments, passage of title to goods or merchandise, and other related matters as reflected in tax returns and other documentation.
(7) A business entity whose ownership interests, management and operation are not subject to control, restriction, modification, or limitation by one or more individual(s) and/or business entities, other than those involved in the day-to-day operations of the business is considered independently owned and operated. OSDS shall presume an applicant business not to be independently owned and operated if evidence exists of any of the following:
(B) One or more individuals, or business owners, general partners, directors, officers, or members of another business entity not involved in the day-to-day operations, controls, or has the power to control, or influence the day-to-day operations of the applicant business, management and/or owner(s) of the applicant business.
(8) An applicant that exercises or has the ability to exercise a controlling or major influence, on a statewide basis, in a business activity or field of operation, may be determined to be dominant in its field of operation, and thereby statutorily ineligible for small business certification in accordance with Government Code section 14837, subdivision (d)(1). The following criteria, among others, may be considered by the OSDS in determining if the applicant business is dominant in its field of operation:
(e) Except as limited by law, and only in order to determine the eligibility of a business for certification, OSDS may consider information provided to it from multiple sources, including but not limited to those seeking certification, information provided by another applicant, any previously submitted, provided, or collected documentation contained within the OSDS certification database, and records gathered or held by any California state or local agency, any governmental agency of another state, or the federal government.
(g) To facilitate and promote a core statewide small business certification process, the Department shall provide local agencies and the general public web access to a small business statewide directory maintained by the OSDS for the purpose of searching and confirming small business certifications.
(h) Nonprofit veteran service agencies are eligible for certification as a small business if all of the conditions set forth in Military and Veterans Code section 999.51 are met. Nonprofit public benefit corporations are registered with the Department solely for the purpose of compliance with the provisions of the California Prompt Payment Act (Government Code § 927 et seq.).
Credits
Note: Authority cited: Sections 14837, 14839 and 14843, Government Code. Reference: Sections 927.2, 14615, 14837, 14838, 14839, 14839.1 and 14340, Government Code; Section 999.51, Military and Veterans Code; and Title 13, Code of Federal Regulations (CFR), Chapter I, § 121.406.
History
1. Renumbering and amendment of former Section 1896.12 to Section 1896.18, and new Section 1896.12 filed 6-6-88, as an emergency; operative 6-6-88 (Register 88, No. 25). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 10-4-88. For history of former section 1896.12, see Register 82, No. 50.
2. Certificate of Compliance transmitted to OAL 10-4-88 and filed 11-2-88 (Register 88, No. 46).
3. Change without regulatory effect amending section filed 3-30-99 pursuant to section 100, title 1, California Code of Regulations (Register 99, No. 14).
4. New article 3 heading and repealer and new section filed 8-10-2004; operative 9-9-2004 (Register 2004, No. 33).
5. Amendment of subsections (a)(5)(A), (b)(1) and (d)(2)-(3) filed 1-11-2007; operative 1-11-2007 pursuant to Government Code section 11343.4 (Register 2007, No. 2).
6. Amendment of subsections (a)(5)(A), (b)(1) and (d)(2)-(3) and amendment of Note filed 12-21-2009; operative 1-20-2010 (Register 2009, No. 52).
7. Amendment of article heading, section and Note filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
8. Amendment of subsection (b)(1) filed 11-8-2018; operative 1-1-2019 (Register 2018, No. 45).
9. Amendment filed 6-29-2023; operative 6-29-2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 26).
This database is current through 4/26/24 Register 2024, No. 17.
Cal. Admin. Code tit. 2, § 1896.12, 2 CA ADC § 1896.12
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