Under the City of San Diego’s Small Local Business Enterprise Program, public works contracts valued at $1 million and above include a mandatory subcontractor participation requirement for certified SLBEs, contracts valued between $500,000 and $1 million have a 5 percent bid discount for SLBEs, and contracts valued between $250,000 and $500,000 are only open to certified SLBEs. Other forms of contracts, such as those for goods and services, contain similar elements. The program is administered by the city’s Equal Opportunity Contracting Program.
San Diego’s definition of “local” is a strong one. To qualify for the SLBE program, a business must have both a principal place of business and a significant employment presence in the city or in San Diego County. Drilling deeper into those definitions, the program describes “principal place of business” as a physical location through which the firm earns no less than half of its overall customers or sales dollars, and “significant employment presence” as no less than a quarter of the firm’s total number of employees living in the city or the county.
The SLBE Program went into effect in 2010, and it continues to grow. In 2013, the program directed $39 million in construction, architectural, and engineering contracts to 411 small, local firms. Just the next year, those numbers had increased to $68.8 million, and 430 firms.
More Information:
- “Reports.” Equal Opportunity Contracting, City of San Diego.
- “About the Program.” Small Local Business Enterprise Program, City of San Diego.
Excerpts from Chapter 2, Article 2, Division 36 of San Diego Municipal Code.
- 22.3603 Definitions
Local Business Enterprise (“LBE”): A business that has both a Principal Place of Business and a Significant Employment Presence in the County of San Diego, and that has been in operation for 12 consecutive months.
Principal Place of Business: A location where a business maintains a physical office and through which it obtains no less than fifty percent of its gross annual receipts.
Significant Employee Presence: No less than twenty-five percent of a firm’s total number of employees.
Small Business Enterprise (“SBE”): A business whose gross annual receipts do not exceed the amount set by the City Manager, and that meets all other criteria set forth in regulations implementing this Division. The City Manager shall review the threshold amount for SBEs on an annual basis, and adjust as necessary to reflect changes in the marketplace. A business certified as a Disabled Veteran Business Enterprise by the State of California, and that has provided proof of such certification to the City Manager, shall be deemed to be an SBE. Small Local Business Enterprise or SLBE means a Local Business Enterprise that is also a Small Business Enterprise.
- 22.3609 Solicitation of Bids for and Award of Major Public Works Contracts Valued at
$1,000,000 and Over
The City Manager shall, on a project-by-project basis, include a mandatory subcontractor participation requirement for SLBEs and/or ELBEs for major public works contracts valued at $1,000,000 or more. Bids that do not reach the mandatory subcontractor participation requirement, or demonstrate good faith efforts to do so, will be deemed nonresponsive and ineligible for award.
- 22.3610 Solicitation of Bids for and Award of Major Public Works Contracts Valued at
More Than $500,000 but Less Than $1,000,000
In addition, the City Manager shall, on a project-by-project basis, do one or both of the following for major public works contracts valued at more than $500,000 but less than $1,000,000:
(a) Permit a bid discount of:
(1) 5 percent for SLBE or ELBE prime contractors; or
(2) the amount of SLBE or ELBE subcontractor participation, or the amount of SLBE or ELBE participation in a City-approved joint venture, up to a maximum of 5 percent. The discount will not apply if an award to the discounted bidder would result in a total contract cost of $50,000 in excess of the lowest, non-discounted bid. In the event of a tie bid between a discounted bidder and non-discounted bidder, the discounted bidder will be awarded the public works contract.
(b) Include a mandatory subcontractor participation requirement for SLBEs or
ELBEs. Bids that do not reach the mandatory subcontractor participation requirement, or demonstrate good faith efforts to do so, will be deemed nonresponsive and ineligible for award. SLBE and ELBE prime contractors will be deemed to have met the subcontractor participation requirement, provided that the SLBE or ELBE prime contractor self-performs at least 51 percent of the public works contract.
- 22.3611 Solicitation of Bids for and Award of Minor Public Works Contracts Valued at
More Than $250,000 but Less Than or Equal to $500,000
(a) Minor public works contracts valued at more than $250,000 but less than or equal to $500,000 shall be awarded through a competitive bid process open only to businesses listed on the SLBE or ELBE eligibility lists.
(b) The lowest responsible and reliable SLBE or ELBE bidder shall be awarded the public works contract. If there are no responsible bids, the City Manager shall follow the advertising, bidding, and award procedures for major public works contracts valued at more than $500,000 but less than $1,000,000 as set forth in Section 22.3610.
- 22.3612 Solicitation of Bids for and Award of Minor Public Works Contracts Valued at
$250,000 and Under
(a) Minor public works contracts valued at $250,000 or less shall be awarded through a competitive bid process open only to businesses listed on the ELBE eligibility list unless there are no businesses on the ELBE eligibility list that have the requisite licenses for the contract, in which case the competitive bid process will also be open to SLBEs.
(b) The lowest responsible and reliable ELBE bidder shall be awarded the public works contract. If there are no responsible bids, the City Manager shall follow the advertising, bidding, and award procedures for major public works contracts valued at more than $500,000 but less than $1,000,000 as set forth in Section 22.3610.
- 22.3619 Technical Assistance
The City Manager may establish technical assistance programs to assist SLBEs and
ELBEs in applying for business-type certifications, becoming eligible for minor public works contracts, securing necessary bonding and insurance, and generally complying with the City’s advertising, bidding, and award process.
