"Non-manufacturer" means any concern which in connection with a specific Government procurement contract, other than a construction or service contract, does not manufacture, produce, or furnish the products or services required to be furnished by such procurement. Non-manufacturer includes a concern which can furnish the products or services referred to in the specific procurement but does not manufacture, produce, or furnish such products or services in connection with that procurement.

§ 1-1.701-5 Number of employees.

In connection with the determination of small business status, "number of employees" means the average employment of any concern, including the employees of its domestic and foreign affiliates, based on the number of persons employed on a full time, part time, temporary, or other basis during the pay period ending nearest the 15th day of the third month in each calendar quarter for the preceding four quarters. If a concern has not been in existence for four full calendar quarters, "number of employees" means the average employment of such concern and its affiliates during the period such concern has been in existence based on the number of persons employed during the pay period ending nearest the 15th day of each month.

holder of the certificate is a small business concern for the purpose of Government procurement in accordance with the terms of the certificate.

§ 1-1.701-7 Certificate of competency.

A "certificate of competency" means a certificate issued by SBA pursuant to the authority contained in the Small Business Act (15 U.S.C. 637(b) (7)) stating that the holder of the certificate is competent as to capacity and credit to perform a specific Government procurement contract. (Also see § 1-1.708.)

§ 1-1.701-8 Set-aside for small business.

A set-aside for small business is the act of reserving the entire amount (total set-aside) or a portion (partial setaside) of a procurement for the exclusive participation of small business concerns. Set-asides may be made for individual items or for classes of items (class set-asides).

§ 1-1.701-9 Small business restricted advertising.

Small business restricted advertising is a special method of negotiated procurement conducted in the same manner as for formal advertising, except that competition and awards are restricted to small business concerns.

§ 1-1.702

Small business policies.

(a) General policy. It is the policy of the Government to aid, counsel, assist, and protect, insofar as possible, the interests of small business concerns in order to preserve free competitive enterprise; and to place with small business concerns a fair proportion of the total Government purchases and contracts for property and services (including contracts for maintenance, repair, construction, and research and development).

(b) Specific policies. The following specific small business policies shall be followed by procurement agencies in order to further the general policy stated in (a) of this § 1-1.702:

(1) Small business concerns shall be afforded an equitable opportunity to compete for prime contracts and subcontracts.

(2) Bidders mailing lists (see § 12.205) shall include all established and potential small business suppliers who have made acceptable application for inclusion or who appear from other in

formation (including recommendations by the SBA representative) to be qualified for inclusion therein.

(3) Where invitations for bids or requests for proposals are sent to less than the complete mailing list pursuant to § 1-2.205-4, all small business concerns shall be solicited, except that only a pro rata number of small business concerns need be solicited when the bidders list is composed predominantly of small business concerns and the estimated award is not expected to be more than $25,000.

(4) Proposed procurements and contract awards shall be publicized in the Department of Commerce "Synopsis of U.S. Government Procurement, Sales, and Contract Awards" in accordance with Subpart 1-1.10.

(5) Procurement of property and services shall be divided into reasonably small lots (not less than economic production runs) in order to permit bidding on quantities less than the total requirements.

(6) The maximum amount of time practicable (see § 1-2.202-1) shall be allowed for preparation and submission of bids and proposals.

be

(7) Delivery schedules shall established on a realistic basis which will encourage small business participation to the extent consistent with the actual requirements of the Government.

(8) Applicable specifications, plans, and drawings either shall be furnished with invitations for bids and requests for proposals or, when not so furnished, information as to locations where they may be obtained or examined shall be furnished.

(9) Procurements shall be set aside for exclusive participation by small business concerns in accordance with § 1-1.706.

(10) In the event of equal low bids, preference shall be given to small busiconcerns in accordance with

ness

§ 1-2.407-6.

(11) Subcontracting to small business concerns shall be encouraged in accordance with § 1-1.710.

(12) Procurement agencies and SBA are responsible for consulting and cooperating in carrying out the purposes of the Small Business Act, as amended (15 U.S.C. 631-647), in accordance with § 1-1.705.

(13) Placement of small purchases with small business concerns shall be encouraged (see § 1-3.602).

§ 1-1.703 Determination of status as a small business concern.

§ 1-1.703-1 Representation by bidder or offeror.

In the absence of a written protest or question, the contracting officer shall accept as conclusive for the purpose of a specific procurement either (a) a small business certificate issued by SBA (see § 1-1.701-6), or (b) a representation by the bidder or offeror that it is a small business concern as defined by SBA. § 1-1.703-2 Protest regarding small business status.

(a) Any bidder, offeror, or other interested party may, before award, question the small business status of any bidder or offeror by sending a written protest, as defined in (b) of this § 1-1.703-2, to the contracting officer responsible for the particular procurement. Any contracting officer who receives such protest, or who wishes to question the small business status of a bidder or offeror, shall forward such protest record (or submit his protest) to the SBA regional office serving the area in which the protested concern is located.

(b) As used in this section, "protest" means a statement in writing from a party having a valid interest in whether or not a bidder or offeror qualifies as a small business concern, which contains the basis for the protest together with specific detailed evidence supporting the protestant's claim that such bidder is not a small business concern.

(c) Upon receipt of a protest, the SBA Regional Director will promptly notify the contracting officer of the date it was received, and will inform the affected bidder or offeror that its size status is under review.

(d) SBA will, within 10 working days, if possible, after receipt of a protest, investigate and determine the small business status of the protested bidder or offeror and notify the contracting officer, the protestant, and the protested bidder or offeror of its decision.

(e) Procurement action shall be suspended pending SBA's determination or expiration of the 10-day period, whichever is earlier, unless unusual conditions make it necessary that an award be made. If SBA's determination is not received by the contracting officer within 10 working days after SBA's receipt of the protest, the contracting officer shall

§ 1-1.705 Cooperation with the Small Business Administration.

§ 1-1.705-1 General.

It is a requirement of the Small Business Act that SBA and procurement agencies consult and cooperate in carrying out the policies of that Act. Such consultation and cooperation is particularly significant in the areas and programs described in §§ 1-1.705-2 through 1-1.705-7.

§ 1-1.705-2 SBA representatives.

SBA may assign one or more representatives (hereinafter referred to as "SBA representatives") on a full- or part-time basis to any procuring activity for the purpose of carrying out SBA responsibilities under the Small Business

Act.

SBA representatives will comply with agency directives concerning the conduct of procurement personnel and instructions concerning release of procurement information.

§ 1-1.705-3 Screening of procurements.

(a) Individual set-asides. SBA representatives (cleared for security where classified procurements are to be screened) shall, upon request, promptly be afforded an opportunity at the procuring activity to review all proposed procurements for the purpose of recommending set-asides if it is anticipated that the resulting contract or contracts will exceed $2,500 unless in the case of procurements which are not expected to exceed $10,000, the head of the procuring activity determines that such review would unduly delay the procurement process. A copy of the determination and the justification therefor shall be furnished to the SBA representative. Where it is anticipated that the resulting contract or contracts will exceed $2,500, such SBA representatives shall, upon request, promptly be afforded an opportunity to make recommendations concerning proposed procurements, including that they be exclusively or partially set aside for small business concerns.

The contracting officer shall afford the SBA representative an opportunity to recommend appropriate names of small business concerns for inclusion in lists of bidders for firms to be solicited in connection with current and future procurements.

(b) Class set-asides. SBA representatives shall be afforded an opportunity to make recommendations that current and future procurements, or portions thereof, of selected items or services, or groups of like items or services, shall be set aside as provided in § 1-1.706, for exclusive small business participation. Such set-asides, when approved by the contracting officer, shall be known as class set-asides. Concurrence in a class set-aside shall not be dependent upon the existence of a current procurement if future procurements can be clearly foreseen.

(a) Purpose. The purpose of small business set-asides is to increase small business participation in Government procurement.

(b) Applicability. This section is applicable to small business set-aside programs of executive agencies in connection with all procurement of property and services, maintenance, repair and construction, and research and development.

(c) Implementation. Subject to any applicable preference for labor surplus area set-asides as provided in § 1-1.802, any individual procurement or class of procurements, or an appropriate part thereof, shall be set aside for the exclusive participation of small business concerns when such action (1) is jointly determined by an SBA representative and the contracting officer upon the initiation of either agency, or (2) if no SBA representative is available, is unilaterally determined by the contracting officer to be in the interest of maintaining or mobilizing the Nation's full productive capacity, or to be in the interest of war or national defense programs, or to be in the interest of assuring that a fair proportion of Government procurement is placed with small business concerns.

(d) Initiation of set-asides. Insofar as practicable, joint determinations initiated by SBA representatives shall be used as the basis for small business setasides rather than unilateral determinations. This, however, does not preclude an agency from initiating with SBA a proposal for a joint determination. The impracticability of arranging a joint determination should not be treated as an obstacle to making a set-aside based on a unilateral determination initiated by the contracting officer in an otherwise appropriate case. § 1-1.706-2

proposals.

Review of SBA set-aside

(a) (1) When an SBA representative has recommended that all, or a portion, of an individual procurement or class of procurements be set aside for small

business, the contracting officer (or other designated representative) of the procurement agency shall promptly either (i) concur in the recommendation, or (ii) disapprove the recommendation, stating in writing his reasons for disapproval. The SBA representative shall be allowed two working days to appeal any such disapproval to the head of the procuring activity or his designee for decision. During consideration of such appeal there shall be full and free interchange of all pertinent facts between the SBA representative and the procuring activity concerned. Within one working day after receipt of a decision from the head of the procuring activity or his designee disapproving a recommended set-aside, the SBA representative may request the contracting officer to suspend procurement actions affected by the recommended set-aside pending a further appeal by the Administrator of SBA to the head of the agency concerned for determination. SBA shall be allowed seven working days after making any such request within which (i) the Administrator of SBA may appeal the decision of the head of the procuring activity (or his designee) to the head of the agency concerned, and (ii) to notify the contracting officer whether such an appeal has in fact been taken. If such notification is not received by the contracting officer within the seven-day period, it shall be deemed that the SBA request to suspend procurement action has been withdrawn and that no appeal to the head of the agency was taken. Where an appeal to the head of the agency concerned has been taken and the contracting officer has been notified of that fact within the seven-day period, the head of the procuring activity will, in accordance with agency procedures, forward through appropriate channels to the head of the agency a full justification of his decision.

(2) Any procurement action affected by a set-aside recommendation which has been disapproved by the contracting officer and appealed by the SBA representative shall be suspended pending the decision of the head of the procuring activity or his designee. If the decision sustains the disapproval and if the SBA representative requests further suspension in accordance with (1) of this § 11.706-2(a), the suspension shall continue until (i) the SBA appeal is deemed to have been withdrawn (as provided in (1) of this § 1-1.706-2(a), or (ii) the matter

is determined by the head of the agency concerned. Such suspension shall not apply, however, to any particular procurement action which, as determined by the contracting officer, must, in order to protect the public interest, be initiated without delay and as to which he inserts in the contract file a statement signed by him setting forth the facts and circumstances justifying the determination. The contracting officer shall promptly notify the SBA representative of any procurement action initiated pursuant to the preceding sentence by supplying him with a copy of the justification.

(b) None of the following is, in itself, sufficient cause for not making a setaside:

(1) A large percentage of previous procurements of the item in question has been placed with small business concerns.

(2) The item to be purchased is on an established planning list under the Industrial Readiness Planning Program, except that a total set-aside shall not be authorized when one or more large business Planned Emergency Producers of the item desire to participate in the procurement.

(3) The item to be purchased is on a Qualified Products List, except that a total set-aside shall not be authorized when the products of one or more large businesses are on the Qualified Products List unless it has been confirmed that none of such large businesses desires to participate in the procurement.

(4) A period of less than 30 days from date of issuance of invitations for bids or requests for proposals is prescribed for the submission of the bids or proposals.

(5) The procurement is classified. (6) Small business concerns are receiving a fair proportion of the total contracts for property or services.

(7) A class set-aside of the item or service concerned has been made at some other procuring activity.

(8) The item will be described by "brand name or equal."

(c) In approving a proposed class setaside, the contracting officer shall make sure that the set-aside determination (1) specifically identifies the items or services subject thereto; (2) provides that it will, at least once each year, be reviewed jointly by an SBA representative and the procuring activity to determine

whether it should be withdrawn (see § 1-1.706-3 for withdrawal procedures); (3) provides that it does not apply to any individual procurement for which small purchase procedures are to be used; and (4) provides that such class set-aside applies only to the procuring activity making or participating in the set-aside determination. Any class of procure

ments proposed to be totally set aside shall satisfy the requirements of

§ 1-1.706-5(a). With respect to any class of procurements proposed to be partially set aside, the set-aside determination shall specify that it is not applicable to any individual procurement which is not severable into two or more economic production runs or reasonable lots.

§ 1-1.706-3 Withdrawal or modification of set-asides.

(a) Each individual procurement governed by a class set-aside shall be carefully reviewed to insure that any changes in the magnitude of anticipated requirements, specifications for the items or services, delivery requirements, or competitive market conditions, since the initial approval of the class set-aside, are not of such material nature as to result in the probable payment of an unreasonable price by the Government or in a change in small business capability.

(b) If, prior to the award of a contract involving an individual or class setaside for small business, the contracting officer considers that procurement of the set-aside portion from a small business concern would be detrimental to the public interest (e.g., because of unreasonable price), the contracting officer shall withdraw a unilateral set-aside determination. In the case of a joint set-aside determination, the contracting officer may initiate the withdrawal thereof by giving notice, containing the reason therefor, to the SBA representative. Similarly, a class set-aside may be modified so as to withdraw one or more individual procurements therefrom. In the case of a joint set-aside determination, if the SBA representative does not agree to a withdrawal or modification, the action may be appealed in accordance with the procedures set forth in § 1-1.706-2(a).

(c) A statement supporting any withdrawal or modification of a set-aside shall be made by the procuring activity and retained in the contract file.