Cal. Code Regs. Tit. 2, § 1896.71 - Definition and Determination of Commercially Useful Function (CUF)

(a) A DVBE contractor, subcontractor or supplier of goods and/or services that contributes to the fulfillment of the contract requirements, shall perform a Commercially Useful Function (CUF) for each contract.

(b) A DVBE contractor, subcontractor, or a supplier of goods and/or of services is deemed to perform a CUF if the business does all of the following:

(1) Is responsible for the execution of a distinct element of work of the contract (including the supplying of services and goods);

(2) Carries out its obligation by actually performing, managing, or supervising the work involved;

(3) Performs work that is normal for its business services and functions;

(4) Is responsible, with respect to products, inventories, materials, and supplies required for the contract, for negotiating price, determining quality and quantity, ordering, installing, if applicable, and making payment;

(5) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices.

(c) A contractor, subcontractor or supplier will not be considered to perform a commercially useful function if its role is limited to that of an extra participant in the transaction, contract or project through which funds are passed in order to obtain the appearance of DVBE participation.

(d) Contracting/procurement officials of the awarding department must:

(1) Evaluate if a DVBE awarded a contract meets the CUF requirement as defined in subdivision (b);

(2) During the duration of the contract, monitor for CUF compliance (See State Contracting Manual Volume 1 applicable chapters and Volume 2, Chapter 12, Section 1200.1); and

(3) Verify the procurement file contains the certification required by Military and Veterans Code section 999.10, subdivision (a)(3).

(e) If a CUF evaluation identifies potential program violations, awarding departments shall investigate and report findings to OSDS, referring to sections 1896.88, 1896.91 and the State Contracting Manual.

Notes

Cal. Code Regs. Tit. 2, § 1896.71

1. New section filed 2-14-2013; operative 4-1-2013 (Register 2013, No. 7). For prior history, see Register 94, No. 4.
2. Amendment of section heading, section and NOTE filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
3. Amendment of section and NOTE filed 11-29-2018; operative 1-1-2019 (Register 2018, No. 48).
4. Amendment of subsections (d)(1)-(2), new subsection (d)(3), amendment of subsection (e) and amendment of NOTE filed 6-29-2023; operative 6-29-2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 26).

Note: Authority cited: Sections 14600 and 14839, Government Code; and Section 999.5, Military and Veterans Code. Reference: Sections 14837 and 14615.1, Government Code; Sections 999, 999.5, 999.55, 999.6 and 999.9, Military and Veterans Code; and Section 10230, Public Contract Code.

1. New section filed 2-14-2013; operative 4-1-2013 (Register 2013, No. 7). For prior history, see Register 94, No. 4.
2. Amendment of section heading, section and Note filed 1-23-2017; operative 1-23-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 4).
3. Amendment of section and Note filed 11-29-2018; operative 1/1/2019 (Register 2018, No. 48).
4. Amendment of subsections (d)(1)-(2), new subsection (d)(3), amendment of subsection (e) and amendment of Note filed 6-29-2023; operative 6/29/2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 26).