to the assigned SBA representative or to the nearest SBA regional office, as appropriate.

(ii) The SBA office receiving the documentation will, within 5 workdays after receipt of the documentation, notify the contracting officer in writing whether SBA desires to submit contrary views concerning the determination.

(iii) If the contracting officer is not so notified, he may conclude that SBA has no objection to the determination, and he may then submit it for approval to the head of the procuring activity or his designee.

(iv) If SBA notifies the contracting officer of an intent to submit contrary views, SBA will, within 10 workdays from the date of notification to the contracting officer, furnish the contracting officer with such contrary views and the reasons therefor, together with any additional factors considered which were not included in the contracting officer's determination. If the SBA response is not received at the expiration of the 10day period, the contracting officer may forward the determination for approval with advice that such was the case.

(v) If, after consideration of SBA views, the contracting officer agrees with the SBA position, the determination shall be rescinded. If the contracting officer does not agree with the SBA position, he shall then forward the determination to the head of the procuring activity or his designee for resolution, with an explicit indication of his views and the contrary SBA position. The decision of such higher authority shall be final.

(vi) The provisions of § 1-1.7082(a) (1) apply if the award must be made without delay. In such instance, if the procedures of § 1-1.708-2(a) (5) (i) through (v) are not followed due to considerations of urgency, the requirements of § 1-1.708-2(a)(1) shall be complied with and the determination that a small business concern is not responsible for reasons other than deficiencies in capacity or credit shall be submitted immediately to the head of the procuring activity or his designee for approval.

(b) To assist SBA in determining the capacity and credit of small business concerns involved in a particular procurement, the procurement agency shall at the time of notification make avail able to SBA all pertinent technical and financial information with respect to the small business concern involved, including but not limited to copies of the invi

tation for bids or request for proposals, drawings, specifications, preaward surveys, and abstracts of bids.

(c) Nothing in this section shall be construed to prevent a contracting officer from selecting, in the first instance, the source of supply offering the highest competence obtainable or the best scientific approach where such source is needed in certain negotiated procurements of research and development, highly complex equipment, or personal or professional services. However, if a small business concern has been selected on the basis of the highest competence obtainable or best scientific approach and, prior to award, the contracting officer determines that the concern is not responsible because of lack of capacity or credit, the certificate of competency procedure in paragraph (a) of this § 1-1.708-2 is applicable.

(d) If the contracting officer learns, after referral of a negative finding as to capacity or credit, that an SBA regional office is planning to issue a certificate of competency or to refer the application therefor to the SBA Central Office, Washington, D.C., the contracting officer should ask the local office of SBA if there are new or additional facts in the case. If these facts warrant, the contracting officer should consider a reversal of his negative finding. Every effort should be made to resolve the differences between SBA and the contracting agency through a complete exchange of preaward information.

[30 F.R. 9591, July 31, 1965, as amended at 34 F.R. 19675, Dec. 2, 1969; 35 F.R. 3283, Feb. 21, 1970]

§ 1-1.708-3 Conclusiveness of certificate of competency.

As provided in the Small Business Act (15 U.S.C. 637(b) (7)), procurement agencies are required to accept SBA certificates of competency as conclusive of a prospective contractor's responsibility as to capacity and credit. However, if the contracting officer has substantial doubt as to the firm's ability to perform, he shall, before award, promptly refer the matter to higher authority within the agency in accordance with procedures of the agency concerned. In cases referred to higher authority, SBA may be requested to consider withdrawal of the certificate and, in any event, the contracting officer will be informed of the final decision in the matter.

§ 1-1.709 Records and reports.

Executive agencies shall maintain records of the value of procurement contracts placed with small business concerns. Accordingly, each procuring activity shall, in soliciting bids, or proposals, request from any bidder or offeror any information needed to determine whether the bidder or offeror is a small business concern (when Standard Forms 18, 19-B, and 33 are used, this information is available from the small business representation included on these forms). Agencies shall summarize and report such procurement data on Standard Form 37 (Report on Procurement by Civilian Executive Agencies) in accordance with § 1-16.804.

[31 F.R. 5880, Apr. 16, 1966]

§ 1-1.710 Subcontracting with small business concerns.

(a) It is the policy of the Government to enable small business concerns to be considered fairly as subcontractors and suppliers to contractors performing work or rendering services as prime contractors or subcontractors under Government procurement contracts, and to assure that prime contractors and subcontractors having small business subcontracting programs will consult through the appropriate procuring agency with the Small Business Administration when requested by SBA. However, the Small Business Administration is not authorized to prescribe the extent to which any contractor or subcontractor shall subcontract or specify the concerns to which subcontracts shall be granted, and is not vested with authority respecting the administration of individual prime contracts or subcontracts. (See § 1-1.805 for subcontracting policies with respect to labor surplus area concerns.)

(b) This § 1-1.710 sets forth the program for furtherance of this policy and, together with Subpart 1-3.9, prescribes the contract clauses and procedures for use in carrying out the small business subcontracting program.

(c) As used in this Subpart 1-1.7, the term subcontractor includes a supplier and applies at any level of performance of the contract; and the term subcontract includes a purchase order.

§ 1-1.710-2 Small business subcontracting program.

The Government's small business subcontracting program requires Government prime contractors to assume an affirmative obligation with respect to subcontracting with small business concerns. In contracts which range from $5,000 to $500,000, the contractor undertakes the obligation of accomplishing the maximum amount of small business subcontracting which is consistent with the efficient performance of the contract. This undertaking is set forth in the contract clause prescribed in § 1-1.710-3(a). In contracts which may exceed $500,000, the contractor is required, pursuant to the clause set forth in § 1-1.710-3(b), to undertake a number of specific responsibilities designed to assure that small business concerns are considered fairly in the subcontracting role and to impose similar responsibilities on major subcontractors. (The liaison officer required by the latter clause may also serve as liaison officer for labor surplus area matters.)

§ 1-1.710-3 Required clauses.

(a) The Utilization of Small Business Concerns clause, set forth in this § 1-1.710-3, shall be included in all contracts in amounts which may exceed $5,000 except (1) contracts which, including all subcontracts thereunder, are to be performed entirely outside the United States, its possessions, and Puerto Rico, and (2) contracts for services which are personal in nature:

UTILIZATION OF SMALL BUSINESS CONCERNS

(a) It is the policy of the Government as declared by the Congress that a fair proportion of the purchases and contracts for supplies and services for the Government be placed with small business concerns.

(b) The Contractor agrees to accomplish the maximum amount of subcontracting to small business concerns that the Contractor finds to be consistent with the efficient performance of this contract.

[End of Clause]

(b) The Small Business Subcontracting Program clause, set forth in this § 1-1.710-3, shall be included in all contracts which may exceed $500,000, which contain the clause required by § 1-1.710-3 (a) and which, in the opinion of the procuring activity, offer substantial subcontracting possibilities. Furthermore, prime contractors who are to be awarded contracts which may not exceed $500,000,

but which, in the opinion of the procuring activity, offer substantial subcontracting possibilities, shall be urged to accept this clause.

SMALL BUSINESS SUBCONTRACTING PROGRAM

(a) The Contractor agrees to establish and conduct a small business subcontracting program which will enable small business concerns to be considered fairly as subcontractors and suppliers under this contract. In this connection, the Contractor shall

(1) Designate a liaison officer who will (i) maintain liaison with the Government on small business matters, (ii) supervise compliance with the Utilization of Small Business Concerns clause, and (iii) administer the Contractor's "Small Business Subcontracting Program."

(2) Provide adequate and timely consideration of the potentialities of small business concerns in all "make-or-buy" decisions.

(3) Assure that small business concerns will have an equitable opportunity to compete for subcontracts, particularly by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation of small business concerns. Where the Contractor's lists of potential small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time.

(4) Maintain records showing (1) whether each prospective subcontractor is a small business concern, (ii) procedures which have been adopted to comply with the policies set forth in this clause, and (iii) with respect to the letting of any subcontract (including purchase orders) exceeding $10,000, information substantially as follows:

(A) Whether the award went to large or small business.

(B) Whether less than three or more than two small business firms were solicited.

(C) The reason for nonsolicitation of small business if such was the case.

(D) The reason for small business failure to receive the award if such was the case when small business was solicited.

The records maintained in accordance with (iii) above may be in such form as the Contractor may determine, and the information shall be summarized quarterly and submitted by the purchasing department of each individual plant or division to the Contractor's cognizant small business liaison officer. Such quarterly summaries will be considered to be management records only and need not be submitted routinely to the Government; however, records maintained pursuant to this clause will be kept available for review by the Government until the expiration of 1 year after the award of this contract, or for such longer period as may be required by any other clause of this contract or by applicable law or regulation.

57

(5) Notify the Contracting Officer before soliciting bids or quotations on any subcontract (including purchase orders) in excess of $10,000 if (1) no small business concern is to be solicited, and (ii) the Contracting Officer's consent to the subcontract (or ratification) is required by a "Subcontracts" clause in this contract. Such notice will state the Contractor's reasons for nonsolicitation of small business concerns, and will be given as early in the procurement cycle as possible so that the Contracting Officer may give SBA timely notice to permit SBA a reasonable period to suggest potentially qualified small business concerns through the Contracting Officer. In no case will the procurement action be held up when to do so would, in the Contractor's judgment, delay performance under the contract.

(6) Include the Utilization of Small Business Concerns clause in subcontracts which offer substantial small business subcontracting opportunities.

(7) Cooperate with the Contracting Officer in any studies and surveys of the Contractor's subcontracting procedures and practices that the Contracting Officer may from time to time conduct.

(8) Submit quarterly reports of subcontracting to small business concerns on either Optional Form 61, Small Business Subcontracting Program Quarterly Report of Participating Large Company on Subcontract Commitments to Small Business Concerns, or such other form as may be specified in the contract. Except as otherwise provided in this contract, the reporting requirements of this subparagraph (8) do not apply to small business contractors, small business subcontractors, educational and nonprofit institutions, and contractors or subcontractors for standard commercial items.

(b) A "small business concern" is a concern that meets the pertinent criteria established by the Small Business Administration and set forth in § 1-1.701 of the Federal Procurement Regulations.

(c) The Contractor agrees that, in the event he fails to comply with his contractual obligations concerning the small business subcontracting program, this contract may be terminated, in whole or in part, for default.

(d) The Contractor further agrees to insert, in any subcontract hereunder which may exceed $500,000 and which contains the Utilization of Small Business Concerns clause, provisions which shall conform substantially to the language of this clause, including this paragraph (d), and to notify the Contracting Officer of the names of such subcontractors.

[End of Clause]

[29 F.R. 10104, July 24, 1964, as amended at 33 F.R. 17293, Nov. 22, 1968; 34 F.R. 17953, Nov. 6, 1969]

§ 1-1.710-4 Review of subcontracting

program.

(a) The adequacy of the contractor's "Small Business Subcontracting Program” shall be reviewed by the procuring agency concerned, and any deficiencies shall be brought to the attention of the contractor's liaison officer with a request for corrective action.

(b) Each procuring agency shall assist the SBA to obtain such reasonable obtainable information and records concerning the subcontracting of its prime contractors and its subcontractors, having contracts which contain the Small Business Subcontracting Program clause, as the SBA may deem necessary. Accordingly, the contracting officer may separately or together with a representative of SBA, periodically conduct studies and surveys of the contractor's subcontracting procedures and practices and those of his subcontractors. Such studies and surveys may originate with the procuring agency in order to have available the pertinent data concerning subcontracting by its primes, or, if such data is not currently available, the studies and surveys may originate upon the request of the SBA for such data. On the basis of the foregoing studies, surveys, and records, the SBA may make recommendations to the procuring agency regarding methods for increasing small business participation in the contractor's subcontract awards. SBA and the procuring agency will freely interchange, at the operating level, information resulting from these surveys.

(c) Subcontracting records maintained by Government offices shall be made available for review, as requested, by SBA.

§ 1-1.711 Federal Supply Schedule con

tracts.

Where orders are placed under Federal Supply Schedule contracts and one or more of the contractors for an item on a given schedule are small business concerns, the orders shall be placed in accordance with the policies and procedures set forth in § 101-26.408-4(b) of the Federal Property Management Regulations.

[32 F.R. 6568, Apr. 28, 1967]

§ 1-1.712 Small business participation in research and development procurement actions.

[35 F.R. 4260, Mar. 7, 1970]

§ 1-1.712-1 Publicizing research and development procurement actions to attract small business.

To the fullest extent practicable, agencies shall publicize proposed research and development procurement contracts through use of the Commerce Business Daily (see § 1-1.1003) sufficiently in advance to allow participation of appropriate small business concerns in such procurements. Agencies shall also consider use of other suitable methods of publicizing research and development requirements to attract small business participation in addition to the use of the Commerce Business Daily. [35 F.R. 4260, Mar. 7, 1970]

§ 1-1.712-2 Expansion of small business sources for research and development procurement.

Agencies shall continually search for and develop information as to small business concerns which are competent to perform research and development. The search shall include (a) a review of relevant data or brochures furnished by small business sources seeking research and development work and (b) a cooperative effort by technical personnel, small business specialists, and contracting officers to obtain information and recommendations with respect to such potential sources.

[35 F.R. 4260, Mar. 7, 1970]

§ 1-1.712-3 Selection of small business sources for research and development procurement.

(a) Policy. Agencies shall exercise all reasonable efforts to increase the number of qualified small business sources to perform research and development contracts and shall encourage the participation of small business sources, as well as other sources, in such procurement actions.

(b) Procedures—(1) Development and use of information on small business sources. Contracting officers, technical personnel, and small business specialists shall cooperatively seek and develop information on the technical competence of small business concerns for research and development contracts. Small business specialists shall regularly bring to the attention of contracting officers and technical personnel descriptive data, brochures, and other information as to small business concerns that are apparently competent to perform research

and development work in fields in which the purchasing activity is interested.

the

(2) Cooperation with SBA in source selection. To cooperate with the Small Business Administration (SBA) in carrying out its responsibility of assisting small business concerns to obtain contracts for research and development, contracting officers, technical personnel, and small business specialists shall provide to authorized SBA representatives information necessary to understand the agency's needs concerning research and development programs under consideration for specific future procurement actions. Normally, this information shall be provided to SBA representatives assigned to a purchasing activity, as early as practicable, and shall cover agency's requirements for each proposed research and development procurement involving the solicitation of proposals exceeding $10,000. To the maximum extent feasible, SBA shall be afforded a minimum of 15 workdays to provide pertinent information concerning qualified potential small business sources developed through its investigation of the capabilities of specific firms in the particular field of research and development covered by such procurements. The 15 workdays afforded SBA to recommend suggested sources may run concurrently with the usual publication notice in the Commerce Business Daily (see § 11.1003-3 (a)). Full evaluation shall be given to any such information in selecting qualified sources. Sources recommended by SBA for a specific procurement shall be solicited. Exception to the policy of providing SBA a minimum of 15 workdays interval to recommend additional qualified small research and development sources for a proposed procurement will be permitted only in those instances where the head of the purchasing activity, or his designee, advises the SBA representative that such action would result in unjustifiable delay.

[35 F.R. 4260, Mar. 7, 1970]

hereinafter referred to as labor surplus areas, in the United States, its possessions, Puerto Rico, and the Trust Territory of the Pacific Islands. This subpart implements Defense Manpower Policy 4 (Revised), October 16, 1967 (32A CFR ch. 1), and U.S. Department of Labor regulations, as amended, February 3, 1970 (29 CFR Part 8). [35 F.R. 8483, June 2, 1970] § 1-1.801 Definitions. [35 F.R. 8483, June 2, 1970]

§ 1-1.801-1 Labor surplus area concern. The term "labor surplus area concern" includes certified-eligible concerns with a first preference, certified-eligible concerns with a second preference, and persistent or substantial labor surplus defined in this

area concerns as § 1-1.801-1.

(a) "Certified-eligible concern with a first preference" means a concern (located in or near a section of concentrated unemployment or underemployment or in an area of persistent or substantial labor surplus) which has been certified by the Secretary of Labor in accordance with 29 CFR 8.7(b) and 8.9(c) with respect to the employment of disadvantaged individuals residing within such sections or areas, and which will agree to perform, or cause to be performed by certified concerns with first preferences, a substantial proportion of a contract in or near such sections or in such areas; it includes a concern which, though not so certified, agrees to have a substantial proportion of a contract performed by certified concerns with first preferences in or near such sections or in such areas. A concern shall be deemed to perform a substantial proportion of a contract in or near such sections or in such areas if the costs that the concern will incur on account of manufacturing or production in or near such sections or in such areas (by itself, if a certified concern, or by certified concerns with a first preference acting as first-tier subcontractors) amount to more than 25 percent of the contract price.

(b) "Certified-eligible concern with a second preference" means a concern (located in any area) which has been certified by the Secretary of Labor in accordance with 29 CFR 8.7(c) and 8.9 (d) with respect to employment of disadvantaged individuals and which will agree to perform or cause to be performed by certified concerns with first