Performing a Commercially Useful Function is a critical requirement of doing business with the state. As such, the Office of Small Business and Disabled Veteran Business Enterprise Services (OSDS) is providing the following information that we hope you will find helpful.
Your responsibility as a certified firm to perform a Commercially Useful Function
Each certified Small Business (SB) and Disabled Veteran Business Enterprise (DVBE) program bidding or participating on a state contract in any capacity must perform a Commercially Useful Function (CUF).
Need a refresher on what CUF is? See the FAQs.
Per Government Code Section 14837 and Military and Veterans Code Section 999, each certified SB or DVBE must perform a CUF when bidding/participating on any state contract as a contractor, subcontractor, or supplier of goods and/or services, regardless of the procurement or payment method.
To perform a CUF, an SB and/or DVBE must do all of the following:
A contractor, subcontractor, or supplier will not be considered to perform a commercially useful function if the contractor’s, subcontractor’s, or supplier’s role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the appearance of small business or microbusiness participation.
CUF does not exist outside of a contract!
Being certified as a SB or DVBE by the DGS Office of Small Business and Disabled Veteran Business Enterprise Services (OSDS) is not an indication that the certified firm performs or has intent to perform a CUF. With the latest revisions of the SB and DVBE regulations effective January 2017, OSDS stopped making determinations of intent to perform a CUF.
Evaluating CUF performance prior to the award
To help with the CUF performance evaluation at the state level, DGS’ Procurement Division, in a joint effort with its Small Business Council members and other state departments, developed and published in December 2015 the following CUF-related sample documents:
Penalties, sanctions and actions
Penalties are applicable to any person who violates the provisions of Government Code Section 14842.5 and/or Military and Veterans Code Section 999.9(a), including SBs, DVBEs, large noncertified businesses, their principals and business affiliates, and state government employees. Sanctions/penalties include:
DGS has the authority to take the following actions
These are applicable to SBs, DVBEs, large noncertified firms, their principals and any subsequent business formed or financed by, or affiliated with, one or more of those principals, per Military and Veterans Code Section 999.9(c):
For more CUF-related information: