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The SB/DVBE Option: how California agencies buy under $250,000
The SB/DVBE Option is the single most useful procurement mechanism for a certified California small business or DVBE, and it is under-used relative to how well it works. This page explains what it is, what it covers, and where its limits are.
What it is
Under Government Code sections 14838.5 and 14838.7, California state agencies and departments may contract directly with a California-certified Small Business or Disabled Veteran Business Enterprise, without advertising the solicitation, provided the purchase falls inside a defined dollar range and the department obtains quotes from at least two certified businesses.
| Element | Requirement |
|---|---|
| Authority | Government Code §14838.5 and §14838.7 |
| Covered purchases | Goods, services, and information technology |
| Dollar range | $5,000.01 to $249,999.99 |
| Public works | Higher threshold applies; check the current DGS figure |
| Quotes required | Minimum of two certified SBs, or two certified DVBEs |
| Advertising | Not required |
Why departments use it
DGS positions the Option as the fastest and least expensive procurement method available, estimating time savings on the order of 90 days versus a competitive solicitation. It also guarantees participation credit on every contract where it is used, which is why many departments have adopted it as internal policy to help reach the state's 25% small business and 3% DVBE participation goals.
Where it does not apply
- Above the ceiling. A purchase at or above $250,000 cannot use the Option. Splitting a requirement to fit under the threshold is not permitted.
- Below the floor. Purchases of $5,000 or less fall under other simplified purchase rules.
- Local agencies. Cities, counties, and special districts are not state departments and are not governed by these sections. Many run their own local preference programs instead.
- Existing leveraged agreements. Where a department is required to buy from an existing statewide contract, that obligation generally takes precedence.
What this means if you are the buyer
If your requirement is a software purchase between $5,000.01 and $249,999.99 and you need two certified DVBE quotes, Anchor Ridge Solutions can be one of them. Certification ID 2053715, current through July 2028. Send the requirement to mat@anchorridgesolutions.com.
This page summarizes publicly available DGS guidance and is provided for general information. Thresholds and procedures change — confirm current figures with DGS or your department's procurement office before relying on them.
Common questions
What is the SB/DVBE Option dollar range?
Goods, services, and information technology valued between $5,000.01 and $249,999.99. Public works contracts use a higher threshold set separately by DGS.
How many quotes does an agency need?
A minimum of two — either two California-certified small businesses or two California-certified DVBEs, depending on which program the department is using.
Does the SB/DVBE Option apply to cities and counties?
No. Government Code 14838.5 and 14838.7 govern California state agencies and departments. Local agencies typically operate their own local preference programs.