NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

DOI TODD, Acting P. J.

Respondent the Department of Transportation (Caltrans) did not award a contract to plaintiff and appellant C.C. Myers, Inc. because it determined that appellant was not the low bidder. Appellant challenged that determination and the trial court denied its petition for writ of mandate, finding that the evidence supported Caltrans' determination that one of appellant's proposed subcontractors did not qualify as a Disabled Veteran Business Enterprise within the meaning of the Military and Veterans Code section 999.1 Because substantial evidence supported Caltrans' determination, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

California's Disabled Veteran Business Enterprise (DVBE) program, within the Department of General Services, is designed to recognize the sacrifices of Californians disabled during military service and to benefit qualified disabled veterans and their businesses by giving them preferences in state contracting. (Niles Freeman Equipment v. Joseph (2008) 161 Cal.App.4th 765, 770.) To effect these goals, section 999 provides that "[i]t is the intent of the Legislature that every state procurement authority honor California's disabled veterans by taking all practical actions necessary to meet or exceed the disabled veteran business enterprise participation goal of a minimum of 3 percent of total contract value." (§ 999, subd. (a).)

In March 2010, Caltrans issued a bid notice for Contract No. 07-1786A4, a project involving the modification and realignment of certain highway on and off ramps in Glendale (Project). Though the bid notice did not establish a specific DVBE contract goal for the Project, it specified that Caltrans encouraged bidders to obtain DVBE participation and would grant a DVBE incentive to bidders achieving a DVBE participation of at least one percent. The DVBE incentive was in the form of "a reduction, for bid comparison only, in the total bid submitted by the lesser of: [¶] 1. Percentage of DVBE achievement, rounded to 2 decimal places, of the verified total bid of the low bidder [¶] 2. 5 percent of the verified total bid of the low bidder [¶] 3. $250,000." Once calculated, Caltrans would apply the DVBE incentive to determine whether it changed the bid ranking and would award the contract to the new low bidder.

Appellant was the initial low bidder on the Project, with C.A. Rasmussen, Inc. (Rasmussen) having the second lowest bid. As part of its bid, appellant received a DVBE incentive for including the use of Sam's Equipment and Supplies (Sam's) to furnish aggregate base material.2 Following its receipt of the bids, Caltrans submitted a 15-question "Commercially Useful Function Questionnaire" (questionnaire) to Sam's to obtain information to make a determination about Sam's ability to perform a commercially useful function on the Project. (See § 999, subd. (b)(5)(B).) Sam's indicated that it had delivered slurry or class 2 base for four previous Caltrans projects.

In answer to the question of its relationship with appellant, Sam's responded: "We provided [appellant] with a quote for base rock material delivered to [the] jobsite for Caltrans Contract # 07-1786A4." Sam's further responded that it had "open accounts established with several suppliers throughout the State of California," identifying five of them. With respect to what material or services it intended to provide for the Project, Sam's answered, "We will provide base rock material delivered to the jobsite." In describing the process it intended to use to provide the aggregate base material to appellant, Sam's wrote that "We will order, purchase, set up quantities, time and dates of deliveries. Once delivered we will invoice [appellant] for materials delivered." With respect to invoices, Sam's stated that it would be invoiced from its supplier and would, in turn, invoice appellant. Sam's further indicated that it was financially responsible and liable for all orders placed and purchased on its account.

Addressing questions related to the delivery of the aggregate base material, Sam's responded: "Based on the contractor's schedule of the material, we will schedule and coordinate the quantity, date, time and location of delivery with our supplier. We will track the progress throughout the delivery." Sam's further stated that its supplier would select, supervise, manage and pay its own trucking operators to deliver the material. Of the $185,010 bid to supply the aggregate base material, $52,597 was allocated for trucking.

On the basis of this information, Caltrans determined that Sam's would not provide a commercially useful function as an aggregate base supplier. In a July 1, 2010 letter to Sam's, Caltrans outlined the factors that supported its determination, explaining that because Sam's neither owned nor leased trucks that could haul the aggregate base, Sam's could not serve as a transporter of the material and did not have the opportunity to supervise or manage the element of the Project requiring transportation. As a result, Sam's appeared to be subcontracting the transport aspect of the contract. According to Caltrans, Sam's inability to provide or supervise the transport of the aggregate base material limited its role to that of an extra participant in the purchase and delivery of the material.

Following this determination, Caltrans calculated that appellant had achieved only two percent DVBE participation, while Rasmussen had achieved 4.6 percent DVBE participation. Adjusting the bids to reflect these percentages, Rasmussen became the low bidder with a total bid of $5,520,088.08, as compared with appellant's now second lowest bid of $5,528,014.97. Accordingly, Caltrans awarded the contract on the Project to Rasmussen.

Appellant protested the bid ranking, relying primarily on a February 11, 2009 letter from Caltrans in response to a previous bid ranking protest by appellant on a separate contract. There, appellant had protested another bidder's use of Sam's to satisfy the DVBE participation goal. In that instance, Caltrans had rejected the protest on the ground that Sam's demonstrated it was providing a commercially useful function in its supply and delivery of hot mix asphalt. On this Project, Caltrans again denied appellant's protest, stating that it had reevaluated appellant's submission and concluded that Sam's was not providing a commercially useful function by supplying aggregate base material. Caltrans specifically noted that "[e]ach contract is evaluated on its own merit. What resulted in that past contract, may not apply in this instance."

Appellant filed a petition for writ of mandate in August 2010, seeking to set aside and rescind Caltrans' determination that Sam's was not a qualified DVBE and to reinstate appellant as the low bidder on the Project. Caltrans answered the petition, denying any allegations giving rise to liability. Thereafter, appellant filed a motion for writ of mandate and Caltrans responded. Following a September 15, 2010 hearing, the trial court denied the petition for writ of mandate. It ruled: "There is no evidence that Respondent [Caltrans] abused its discretion. There is no authority for the assertion that Sam's Equipment and Supplies must qualify as a DVBE because it qualified before [on] different projects; nor is there evidence demonstrating Respondent was wrong in its assessment."

In October 2010, the trial court denied appellant's ex parte application for a stay of enforcement of judgment pending appeal. Judgment was entered in November 2010 and this appeal followed. We summarily denied appellant's petition for writ of supersedeas seeking to stay the award of the contract to Rasmussen and any construction on the Project pending appeal.

DISCUSSION

Appellant contends that substantial evidence did not support Caltrans' determination that Sam's was not a qualified DVBE and argues that the determination violated Caltrans' obligation to apply its bidding standards in a uniform manner. We find no merit to appellant's position.

I. Standard of Review.

The court in Cypress Security, LLC v. City and County of San Francisco (2010) 184 Cal.App.4th 1003, 1010-1011, recently summarized the applicable standard of review: "`Appellate review of the award of a public contract is governed by certain well-established principles. In a mandamus action arising under Code of Civil Procedure section 1085, we limit our review to an examination of the proceedings before the agency to determine whether its findings and actions are supported by substantial evidence. [Citations.] "Our review is limited to an examination of the proceedings to determine whether [Caltrans'] actions were arbitrary, capricious, entirely lacking in evidentiary support or inconsistent with proper procedure. There is a presumption that [Caltrans'] actions were supported by substantial evidence, and [petitioner/plaintiff] has the burden of proving otherwise. We may not reweigh the evidence and must view it in the light most favorable to [Caltrans'] actions, indulging all reasonable inferences in support of those actions. [Citations.] Mandamus is an appropriate remedy to compel the exercise of discretion by a governmental agency, but does not lie to control the exercise of discretion unless under the facts, discretion can only be exercised in one way. [Citations.]" [Citation.]' [Citations.]"

II. Substantial Evidence Supported Caltrans' Determination That Sam's Would Not Be Performing a Commercially Useful Function.

"Generally, cities, as well as other public entities, are required to put significant contracts out for competitive bidding and to award the contract to the lowest responsible bidder. [Citation.]" (Valley Crest Landscape, Inc. v. City Council (1996) 41 Cal.App.4th 1432, 1438; see also Pub. Contract Code, § 10180.) "`"The term `lowest responsible bidder' has been held to mean the lowest bidder whose offer best responds in quality, fitness, and capacity to the particular requirements of the proposed work."' [Citations.]" (Domar Electric, Inc. v. City of Los Angeles (1994) 9 Cal.4th 161, 172, fn. 5.)

Here, the bid notice specified that the bids would be calculated using an incentive for DVBE participation. (See §§ 999.2, subd. (a) ["Notwithstanding any other provision of law, contracts awarded by any state agency, department, officer, or other state governmental entity, including school districts when they are expending state funds for construction, professional services . . . materials, supplies, equipment, alteration, repair, or improvement shall have statewide participation goals of not less than 3 percent for disabled veteran business enterprises. These goals apply to the overall dollar amount expended each year by the awarding department"], 999.5, subd. (a) ["The Director of General Services shall adopt written policies and guidelines establishing a uniform process for state contracting that would provide a disabled veteran business enterprise participation incentive to bidders. The incentive program shall be used by all state agencies when awarding contracts"].) While Caltrans initially determined that appellant was the low bidder when applying a DVBE incentive for Sam's, it concluded that it was the second lowest bidder once that DVBE incentive was eliminated.

Caltrans concluded that Sam's did not qualify as a DVBE by applying the definition set forth in section 999, subdivision (b)(5)(B), which provides: "`Disabled veteran business enterprise contractor, subcontractor, or supplier' means any person or entity that has been certified by the administering agency pursuant to this article and that performs a `commercially useful function,' as defined below, in providing services or goods that contribute to the fulfillment of the contract requirements: [¶] (i) A person or an entity is deemed to perform a `commercially useful function' if a person or entity does all of the following: [¶] (I)(aa) Is responsible for the execution of a distinct element of the work of the contract. [¶] (ab) Carries out the obligation by actually performing, managing, or supervising the work involved. [¶] (ac) Performs work that is normal for its business services and functions. [¶] (II) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices. [¶] (ii) 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 a disabled veteran business enterprise participation." (See also Cal. Code Regs., tit. 2, § 1896.61, subd. (l).)

In its June 2010 letter, Caltrans separately addressed each factor set forth in section 999, subdivision (b)(5)(B). First, Caltrans concluded that Sam's was not responsible for a distinct element of the work on the Project on the basis of evidence that Sam's "does not own nor have a long-term lease for trucks that can haul the aggregate base." Second, Caltrans concluded that Sam's had no opportunity to manage or supervise any element of the Project for the same reason—it neither owned nor leased trucks that could haul the aggregate base. Third, Caltrans reasoned that Sam's was not performing work normal for its business services and functions, as it was not a transporter of aggregate base. Fourth, again for the reason that Sam's neither owned nor leased trucks capable of hauling the aggregate base, Caltrans concluded that Sam's appeared to be subcontracting the transport aspect of the job. Finally, Caltrans determined that Sam's role was "limited to that of an extra participant in the purchase and delivery of aggregate base."

Substantial evidence supported Caltrans' findings. According to Sam's responses to the inquiries posed by the questionnaire, Sam's role on the Project was to provide appellant with aggregate base material delivered to the Project site. But in further describing how it intended to carry out that role, Sam's responded that it had no lease or other contractual arrangement with any trucking providers. Rather, it represented that its aggregate base supplier would select the trucking operators, the supplier would pay the trucking operators and the supplier would supervise and manage the trucking operators. This information, coupled with Sam's description of its role to "order, purchase, set up quantities, time and dates of delivery" reasonably led Caltrans to conclude that Sam's was not performing a commercially useful function for the Project. (Cf. Niles Freeman Equipment v. Joseph, supra, 161 Cal.App.4th at p. 773 [entity having no distinct employees or work force, no materials and no discrete facilities rendered no commercially useful function within the meaning of § 999].) Given that there was no evidence to show that Sam's had any means to deliver or role in delivering the aggregate base material to the Project site, Sam's role was essentially confined to that of an extra participant through which funds would be passed in order to achieve the appearance of DVBE participation. (See § 999, subd. (b)(5)(B)(ii).)

Appellant contends that evidence showing Caltrans had previously concluded Sam's performed a commercially useful function on a separate contract undermines Caltrans' determination here and establishes that Caltrans failed to apply its own rules on a consistent basis. (See Pozar v. Department of Transportation (1983) 145 Cal.App.3d 269, 271 [court may "direct an agency to follow its own rules when it has a ministerial duty to do so or when it has abused its discretion"].) Though appellant concedes that Caltrans is not permanently bound to find that Sam's will provide a commercially useful function on every contract by reason of the prior determination, it argues that the earlier decision renders Caltrans' contrary conclusion arbitrary in this instance.

In support of its bid protest and petition for writ of mandate, appellant submitted a February 2009 letter from Caltrans which had rejected a prior bid protest from appellant on a contract awarded to Professional Construction Services (PCS), which used Sam's as a DVBE. There, Caltrans explained that Sam's was performing a commercially useful function for PCS on the basis of evidence showing that Sam's: "1. Is responsible for the execution of distinct elements or work items in the contract, and those items are itemized on the DVBE summary. [¶] 2. Carries out the obligation by actually performing, managing, or supervising the work involved, and this includes supervising and or/managing [sic] the delivery of materials to the job site. [¶] 3. Performs work that is normal for its business services and functions. [Sam's] has stated that it routinely acts as a supplier, it does own the message boards that will be rented to the prime contractor, and it will provide delivery of the hot mix asphalt to the job site."

There is no further evidence in the record concerning the PCS contract, including the terms of the contract, the DVBE summary referenced in the letter or the evaluation conducted by Caltrans to make its commercially useful function determination. In the absence of additional information, we have no basis to conclude that Caltrans acted arbitrarily or inconsistently in making different determinations on different contracts. In any event, even considering the limited record, there were significant differences between Sam's role on the PCS contract and its role on the Project as described in the questionnaire. In connection with the PCS contract, Sam's owned some of the materials that were to be rented to PCS and it intended to provide delivery of the hot mix asphalt to the jobsite. Here, in contrast, Sam's owned none of the materials that would be used on the Project and did not intend to select, pay for, supervise or manage the trucking operators that would be delivering the aggregate base to the Project site. Substantial evidence supported Caltrans' conclusion that Sam's was not performing a commercially useful function on this Project.

DISPOSITION

The judgment is affirmed. Caltrans is entitled to its costs on appeal.

We concur:

ASHMANN-GERST, J.

CHAVEZ, J.