annual sales or receipts for its preceding three fiscal years do not exceed $5,000,000 ($6,250,000 if the concern is located in Alaska).

(4) As small if it is bidding on a contract for janitorial and custodial services and its average annual sales or receipts for its preceding 3 fiscal years do not exceed $3 million ($3,750,000 if the concern is located in Alaska).

(5) As small if it is bidding on a contract for base maintenance and its average annual sales or receipts for its preceding 3 fiscal years do not exceed $5 million ($6,250,000 if the concern is located in Alaska).

(6) As small if it is bidding on a contract for naval architectural and marine engineering services and its average annual sales or receipts for its preceding 3 fiscal years do not exceed $6 million ($7,500,000 if the concern is located in Alaska).

(7) As small if it is bidding on a contract for marine cargo handling services and its annual sales or receipts for its preceding 3 fiscal years do not exceed $5 million ($6,250,000 if the concern is located in Alaska).

(g) Transportation. Any concern bidding on a contract for passenger or freight transportation, not elsewhere defined in this section, is classified:

(1) As small if its number of employees does not exced 500 persons.

(2) As small if it is bidding on a contract for air transportation and its number of employees does not exceed 1,000 persons.

(3) As small if it is bidding on a contract for trucking (local and long distance), warehousing, packing and crating, and/or freight forwarding, and its annual receipts do not exceed $3,000,000 (except that if the concern is located in Alaska, such receipts do not exceed $3,750,000). No concern will be denied small business status for the purpose of Government procurement solely because of its contractual relationship with a large interstate van line, provided that its annual receipts have not exceeded

The size standards for SIC 30111, 30112, and 37171 are set forth in §§ 1-1.701-1(c) (2) and 1-1.701-1(c)(5).

The three Standard Industrial Classification industries (3711, 3712, and 3714) have been combined because of a major problem of defining the reporting unit in terms of these industries. This difficulty arises from the fact that many large establishments have integrated operations which include the production of parts or bodies and the assembly of complete vehicles at the same location.

Includes maintenance as defined in the Federal Aviation Regulations (14 CFR 1.1) but excludes contracts solely for preventive maintenance as defined in 14 CFR 1.1. As defined in the Federal Aviation Regulations:

"Maintenance' means inspection, overhaul, repair, preservation, and the replacement of parts, but excludes preventive maintenance."

"Preventive maintenance' means simple or minor preservation operations and the replacement of small standard parts not involving complex assembly operations."

Guided missile engines and engine parts are classified in SIC 3722. Missile control systems are classified in SIC 3662.

6 Shipbuilding and repairing industry includes establishments primarily engaged in building and repairing all types of ships, barges, canal boats, and lighters, of 5 gross tons and over, whether propelled by sail or motor power or towed by other craft. Establishments primarily engaged in fabrication or repairing structural assemblies or components for ships, or subcontractors engaged in ship painting, joinery, carpentry work, electrical wiring installation, etc., are not included. The size standard for boatbuilding and repairing (establishments primarily engaged in building and repairing all types of boats, except rubber boats, under 5 gross tons) is 500.

Any

(i) Refined petroleum products. concern bidding on a contract for a refined petroleum product other than a product classified in Standard Industrial Classification Industries No. 2951, Paving mixture and blocks, No. 2952, Asphalt felts and coatings, No. 2992, Lubricating oils and greases, or No. 2999, Products of petroleum and coal, not elsewhere classified, is classified as small if (1) (i) its number of employees does not exceed 1,000 persons; (ii) it does not have more than 30,000 barrels-per-day crude oil or bona fide feed stock capacity from owned or leased facilities; and (iii) the product to be delivered in the performance of the contract will contain at least 90 percent components refined by the bidder from either crude oil or bona fide feed stocks: Provided, however, That a petroleum refining concern which meets the requirements in subdivisions (i) and (ii) of this subparagraph may furnish the product of a refinery not qualified as small business if such product is obtained pursuant to a bona fide exchange agreement, in effect on the date of the bid or offer, between the bidder or offeror and the refiner of the product to be delivered to the Government which requires ex

changes in a stated ratio on a refined petroleum product for a refined petroleum product basis, and precludes a monetary settlement, and that the products exchanged for the products offered and to be delivered to the Government meet the requirement in subdivision (iii) of this subparagraph: And provided further, That the exchange of products for products to be delivered to the Government, will be completed within 90 days after expiration of the delivery period under the Government contract; or (2) its number of employees does not exceed 500 persons and the product to be delivered to the Government has been refined by a concern which qualifies under subparagraph (1)(i) of this paragraph. ("Bona fide feed stocks" means crude and any other hydrocarbon material actually charged to refinery processing units, as distinguished from materials used as components in products to be delivered after merely filtering, settling, or blending.)

[29 F.R. 10104, July 24, 1964, as amended at 30 F.R. 9590, July 31, 1965; 32 F.R. 2624, Feb. 8, 1967]

Business concerns are affiliates of each other when either directly or indirectly (a) one concern (other than an investment company licensed under the Small Business Investment Act of 1958 or registered under the Investment Company Act of 1940, as amended), controls or has the power to control the other, or (b) a third party or parties (other than an investment company licensed under the Small Business Investment Act of 1958 or registered under the Investment Company Act of 1940, as amended), controls or has the power to control both. In determining whether concerns are independently owned and operated and whether affiliation exists, consideration shall be given to all appropriate factors, including common ownership, common management, and contractual relationships: Provided, however, That restraints imposed on a franchisee by its franchise agreement shall not be con

sidered in determining whether the franchisor controls or has the power to control and, therefore, is affiliated with the franchisee, if the franchisee has the right to profit from his effort, commensurate with ownership, and bears the risk of loss or failure.

[32 F.R. 2626, Feb. 8, 1967]

§ 1-1.701-3 Dominance in field of operation.

A concern "is not dominant in its field of operation" when it does not exercise a controlling or major influence in a kind of business activity in which a number of business concerns are primarily engaged. In determining whether dominance exists, consideration shall be given to all appropriate factors, including volume of business, number of employees, financial resources, competitive status or position, ownership or control of materials, processes, patents and license agreements, facilities, sales territory, and nature of business activity.

§ 1-1.701-4 Small business Government

subcontractors.

(a) Any concern, in connection with subcontracts of $2,500 or less which relate to Government procurement, will be considered a small business concern if, including its affiliates, its number of employees does not exceed 500 persons.

(b) Any concern, in connection with subcontracts exceeding $2,500 which relate to Government procurement, will be considered a small business concern if it qualifies as such under § 1-1.701-1. § 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 last 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 last day of each month.

§ 1-1.701-6 Industry.

"Industry" means a grouping of establishments primarily engaged in similar lines of activity as listed and described in the Standard Industrial Classification Manual (and the 1963 supplement thereto) prepared and published by the Bureau of the Budget, Executive Office of the President.

§ 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.

§ 1-1.701-10 Base maintenance.

"Base maintenance" means furnishing at an installation within the several States, Puerto Rico, Virgin Islands, or the

District of Columbia three or more of the following services: Janitorial and custodial services, protective guard services, commissary services, fire prevention services, refuse collection services, safety engineering services, messenger services, grounds maintenance and landscaping services, and air-conditioning and refrigeration maintenance: Provided, however, That whenever the contracting officer determines prior to the issuance of bids that the estimated value of one of the foregoing services constitutes more than 50 percent of the estimated value of the entire contract, the contract shall not be classified as base maintenance but in the industry in which such service is classified.

[32 F.R. 2626, Feb. 8, 1967]

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