Commentary: Quick Tips on State Incentives for SB/DVBE Companies

California state procurement mistake: Many people use Small Business (SB) Preference and Disabled Veteran Business Enterprise (DVBE) Incentive interchangeably — but they’re NOT the same.

Both support under-represented businesses, but they work differently:

• SB Preference – A 5 percent bid preference (up to $50,000) for certified SBs/Microbusinesses (MBs). This lowers the bid price for evaluation purposes but not the actual contract price.
• DVBE Incentive – A 1–5 percent scoring advantage for bidders subcontracting with certified DVBEs. Unlike SB Preference, it’s based on participation levels and has no fixed cap.
  

  KEY DIFFERENCES

• SB Preference is a fixed 5 percent price reduction for evaluation
• DVBE Incentive is a scoring boost based on subcontracting participation
• SB Preference applies only to SB/MB-certified vendors
• DVBE Incentive is available to any bidder including a DVBE subcontractor

The Bottom Line: If you're bidding on state contracts, knowing the difference can boost your competitiveness. Can a vendor qualify for BOTH? Can a vendor receive both the SB Preference and DVBE Incentive in a single bid? Yes! If a vendor qualifies for SB Preference AND includes a DVBE subcontractor, they can leverage both advantages.

How It Works:

• SB Preference (5 percent) applies if you’re a certified SB/MB with the California Department of General Services (DGS)
• DVBE Incentive (1 percent to 5 percent) applies if you subcontract with a certified DVBE (or are one yourself)
• SB Preference has a $50,000 cap; DVBE Incentive has no fixed cap
• Any bidder can qualify for DVBE Incentive — you don’t have to be a DVBE yourself

Why this matters: By stacking both benefits, vendors can increase their competitive advantage in winning California state contracts.

Tip: If you qualify for one program, explore the other — it could make the difference in winning a bid.

Editor's note: The California Department of General Services offers multiple resources for businesses of all sizes on its website's procurement section.