California to encourage more contracts with small businesses

SACRAMENTO
October 12, 2009 11:11am

Small businesses may find it easier to get more business from the state of California under a new law.

It increases to $250,000 the maximum amount of contracts made under the Small Business Procurement and Contract Act. The previous limit was $100,000.

The Small Business Procurement and Contract Act permits a state agency to award a contract for goods, services, or information technology to a certified small business, including a microbusiness and a disabled veteran business enterprise, without complying with specified competitive bidding requirements.

The bill is expected to allow more contracts to small business using money from the federal American Recovery and Reinvestment Act (Recovery Act) that flows through the state.

Small businesses and disabled veteran business enterprises make up 98 percent of all California enterprises, the state says, employ over half of the state’s workforce and are projected to create 99 percent of the state’s future jobs.

A recent study commissioned by the Procurement Division of the Department of General Services found that small businesses produce about 50 percent more overall California economic impact for each dollar spent than large enterprises.

“Small businesses are the backbone of California’s economy and will be the force that drives our economic recovery,” says Gov. Arnold Schwarzenegger in signing the legislation.

The state government spends about $10 billion a year in contracts with private industry.