An act to amend Sections 12098.3 and 12100.63 of the Government Code, and to add Chapter 2.7 (commencing with Section 22060) to Part 3 of Division 2 of the Public Contract Code, relating to small business.
SB 781 expands the state’s small-business support framework in two main ways. First, it directs the Small Business Advocate to work with local agencies on strategies to increase small business participation in local procurement, and it authorizes cities, counties, and city and county governments to create a Small Business Utilization Program (SBUP). An SBUP would establish a small business certification process, set a minimum goal of 25% procurement participation for small businesses and microbusinesses, and include policies such as preferences, set-asides, subcontracting opportunities, bid unbundling, streamlined bidding, and other tools to improve access to local contracts for small firms.
Second, the bill revises the California Small Business Technical Assistance Program. For grants in fiscal years 2025-26 through 2027-28, it relaxes some eligibility requirements for technical assistance centers, including allowing certain applicants to rely on prior federal contracts and waiving some requirements for centers whose federal contracts were canceled, frozen, or rescinded in 2024-25, so long as the cancellation was not due to noncompliance. It also authorizes applicants to use federal and private funding contracts in specified ways and allows a portion of state grant funds to be used for outreach, while capping direct program administration expenses at 15%.
The bill would change state law by adding a new chapter to the Public Contract Code governing local SBUPs and by amending Government Code provisions that govern the Office of the Small Business Advocate and the technical assistance grant program. It also creates reporting expectations: local agencies may submit procurement data to the Office of Small Business Advocate, which would issue annual data calls and publish annual reports, subject to funding and legislative appropriation. The bill’s operative date for the new local procurement chapter is January 1, 2026, and the temporary technical-assistance modifications would run through June 30, 2029.
Overall sentiment in the legislative history appears strongly favorable. The recorded committee votes were unanimous or near-unanimous, and the bill advanced through multiple committees with recommendations to consent calendar or do pass. That pattern suggests broad support for the bill’s small-business promotion goals, especially its emphasis on procurement access, technical assistance, and support for underserved business groups.
The main points of contention appear to be practical rather than ideological. The bill’s reporting, certification, and 25% participation goal could raise implementation concerns for local agencies, and the temporary grant modifications reflect sensitivity to disruptions in federal funding. The suspension-file action in Appropriations also suggests fiscal or workload scrutiny, even though the bill is not an appropriation measure. No direct opposition is reflected in the available vote history.
SB 781 would add a new local procurement framework to the Public Contract Code and expand the duties of the Office of Small Business Advocate under the Government Code. Local agencies that choose to adopt a Small Business Utilization Program would need to build certification, preference, reporting, and monitoring systems aimed at increasing small business participation in contracts for goods, information technology, and services. The bill also requires the state advocate to collaborate with local agencies and, if funded and appropriated, to collect and publish procurement data from participating local governments.
In the technical assistance area, the bill temporarily loosens eligibility and funding rules for the California Small Business Technical Assistance Program for specified grant years, especially for centers affected by canceled or rescinded federal contracts. It also authorizes a portion of state funds to be used for outreach and limits administrative spending, which affects nonprofit technical assistance centers, fiscal agents, and the Office of the Small Business Advocate. Local agencies, small businesses, microbusinesses, and underserved business groups would be the primary affected parties.
The available legislative record shows generally positive sentiment toward SB 781. Committee votes were unanimous or overwhelmingly supportive, and the bill repeatedly advanced with do-pass recommendations, including consent-calendar treatment in one committee. That pattern indicates the measure was viewed as a pro-small-business policy with broad appeal. The bill’s focus on procurement access, technical assistance, and support for women-, minority-, veteran-owned, rural, and disaster-impacted businesses likely contributed to that support.
The main areas of potential contention are implementation burden, fiscal exposure, and the scope of local discretion. Local agencies may view the SBUP framework—especially the 25% procurement participation goal, certification process, data collection, and annual reporting—as administratively demanding or difficult to meet. Technical assistance providers and policymakers could also differ over the temporary waivers for grant eligibility and the use of state funds for outreach versus direct services. The bill’s suspension-file placement suggests some budgetary or workload concerns, even though no recorded votes show active opposition.