ence the earlier notice of proposed debarment, (ii) specify the reasons for debarment, (iii) state the period of debarment, including effective dates, and (iv) advise that the debarment is effective throughout the Department of Defense. If, following the notice of proposed debarment, a determination is made that debarment will not be effected, the firm or individual shall be notified in writing accordingly.

(b) Copies of the notice of debarment and of any removals from such debarment shall be furnished to the General Services Administration.

(i) Commission of fraud or a criminal offense as an incident to obtaining, attempting to obtain, or in the performance of a public contract;

(ii) Violation of the Federal antitrust statutes arising out of the submission of bids and proposals; or

(iii) Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty, which seriously and directly affects the question of present responsibility as a Government contractor; or

(2) For other cause of such serious and compelling nature as may be determined by the Secretary of the Department concerned to justify suspension.

(b) Suspension of a firm or individual by the Secretary of a Department, or his authorized representative, shall operate

to suspend such firm or individual throughout the Department of Defense. § 1.605-2 Period of suspension.

All suspensions shall be for a temporary period pending the completion of investigation and such legal proceedings as may ensue. Upon the completion of such investigation or proceedings, the suspension shall be removed and, if appropriate, changed to a debarment in accordance with § 1.604-1(a).

§ 1.605-3 Restrictions during period of

suspension.

During a period of suspension of a firm or individual, the following policies and procedures shall be applicable:

(a) Bids and proposals will not be solicited from suspended contractors. If received, bids and proposals will not be considered and award for contracts may not be made to suspended contractors unless it is determined to be in the best interest of the Government by the Secretary of a Department or his authorized representative.

(b) Suspended contractors will be subject to the provisions of § 1.603 (b) and (c).

§ 1.605-4 Notice of suspension.

(a) The firm or individual concerned shall be furnished a written notice by the Secretary of the Department concerned, or his authorized representative, of the suspension within 10 days after the effective date of the suspension. The notice of suspension shall state

(1) That the suspension is based on information that the firm or individual has committed irregularities of a serious nature in business dealings with the Government or that the suspension is based on irregularities which seriously reflect on the propriety of further dealings of the firm or individual with the Government;

(2) That the suspension is for a temporary period pending the completion of an investigation and such legal proceedings as may ensue;

(3) That bids and proposals will not be solicited from the firm or individual and if received will not be considered, and awards of contracts may not be made unless it is determined to be in the best interest of the Government by the Secretary of the Department or his authorized representative to do so; and

(a) The General Services Administration is charged by GSA Regulation 1-II-207.07 with compiling from the notifications of debarments furnished them by the Military Departments and executive agencies, a combined list of such debarments, including the basis of action, and distributing a copy of such lists to all executive agencies including the Military Departments. In general application, this listing will be for information purposes only and it is not intended to take the place of, or be in addition to, the lists maintained by the various agencies.

(b) Each Department will notify the General Services Administration of the name and address of its central office where debarment information should be sent.

(c) Each Department will check the list of debarred bidders furnished by the General Services Administration and consider firms or individuals listed thereon for inclusion upon their own lists, in accordance with the provisions of this Subpart F.

(d) On specific request, the General Services Administration has agreed to furnish to the Military Departments a copy of the notice reflecting the basis for debarment action taken by another

The Commander-in-Chief, United States European Command, the Commander-in-Chief, Pacific, and the Commander-in-Chief, Caribbean, or the Commanders of a component command which each of the these unified commanders may designate, will establish and maintain a consolidated list of offshore suppliers to whom contracts will not be awarded and from whom bids or proposals will not be solicited. The CINCEUR consolidated list will include names in the North Atlantic and Mediterranean areas including all of Europe, North Africa and the Middle East. The CINCPAC consolidated list will include names in the Far East and Pacific Ocean areas excluding United States Territories and possessions. The CINCARIB consolidated list will include names in Central and South America excluding Territories and possessions. All other overseas commanders will utilize and contribute to such list as appropriate to their geographical location or areas in which they award contracts. Lists shall not be established or maintained except as provided above.

§ 1.609-2 Information

overseas lists.

contained on

The lists shall show as a minimum the following information:

(a) The names and addresses of those firms or individuals to whom contracts shall not be awarded and from whom bids or proposals will not be solicited. (Names will be set forth in alphabetical order with appropriate cross reference

where more than one name is involved in a single action and where a parent firm or individual in one country is known to control subisidiaries, branches, or agencies in the same or other countries.)

(b) The basis or authority for each action;

(c) The extent of restrictions imposed;

(d) The termination date for each debarred listing; and

(e) The originating activity, component or agency.

§ 1.609-3 Protection of lists.

The lists and all correspondence relative thereto shall be protected to prevent inspection of contents by personnel who are not required to have access to such information. The lists shall be marked "For Official Use Only."

§ 1.609-4 Maintenance and distribution of lists.

The lists shall be kept current by issuance of notices of additions or deletions and by periodic reprinting. Copies of the list shall be distributed to contracting officers as the unified commanders and their component commanders direct. CINCEUR, CINCPAC, and CINCARIB will exchange lists directly. Copies will also be furnished to the Assistant Secretary of Defense (Supply and Logistics), the Assistant Secretary of Defense (International Security Affairs), the Assistant Secretary of the Army (Logistics) (Assistant Judge Advocate General), the Chief of Naval Material (Code M22), and the Commander, Air Material Command (MCPI). § 1.609-5 [Reserved]

thorized representative to have engaged in improper East-West trade activity;

(c) Those found by the Assistant Secretary of Defense (ISA) or his authorized representative to be ineligible because they do not meet the political or security criteria;

(d) Those found by a United States Diplomatic Mission or a Country Team (consisting of members of the United States Diplomatic Mission in the country or countries in which the firms or individuals are located) to be ineligible because they do not meet the labor-political criteria; and

(e) Those who for other causes of a serious and compelling nature are so designated by the unified commander.

§ 1.609-7 Treatment to be accorded firms or individuals in debarred or ineligible status.

The provisions of § 1.603 will be complied with, if applicable. In addition, contracts will not be awarded to, nor shall bids or proposals be solicited from, or furnished to firms or individuals abroad which come into the categories (a) through (e) of § 1.609-6. With respect to (a) of § 1.609-6, an exception may be made by the Secretary of the Treasury only. With respect to (b), (c), and (d) of § 1.609-6, an exception may be made by the Assistant Secretary of Defense (ISA) or his authorized representative.

§ 1.609-8 Causes and conditions under which unified commanders may place names on the consolidated list. CINCEUR, CINCPAC, and CINCARIB, or their designated component commanders are respectively authorized to place on the list names of firms or individuals doing business within the areas for which they are responsible, for any of the causes and under the conditions set forth in §§ 1.609-6 and 1.609-7. Overseas commanders or unified commanders overseas other than CINCEUR, CINCPAC, and CINCARIB are similarly authorized to designate firms or individuals in their command areas and will promptly notify either CINCEUR, CINCPAC, or CINCARIB, who will add the names to their consolidated lists. In these cases the information contained in § 1.609-2 will be furnished. The list

ing shall operate to deny contracts to such firms or individuals throughout the Department of Defense.

§ 1.609-9 Liaison with United States diplomatic missions.

The Chief of the United States Diplomatic Mission, or such attaché or other officer as he directs, in the country where the firm or individual concerned is located, will be notified of actions contemplated under the foregoing sections which may have important political significance. In such cases of contemplated action against a branch or subsidiary firm or agency in one or more countries, the Chief of the United States Diplomatic Mission in each country, inIcluding that in which the parent or principal is located, will be notified.

§ 1.610 Use of overseas lists within United States.

(a) Due to the length of the lists, the numerous revisions and distances involved, as well as the infrequent contracting by offices in the United States with offshore supplies, the CINCEUR, CINCPAC, and CINCARIB consolidated lists of ineligible, debarred and suspended bidders will not be distributed to contracting officers in the United States. However, no contracts will be awarded by contracting officers in the United States, and its possessions, to offshore suppliers without ascertaining that the names of the firms or individuals involved do not appear on the overseas consolidated lists. These lists will be held for reference in each of the Military Departments and will be utilized in accordance with procedures established by each of the Departments.

(b) Where a contracting officer becomes aware that a prospective contractor proposes to furnish products of a concern that has been placed on an overseas list in accordance with § 1.609-b (a), (b), (c), or (d), the matter shall, in accordance with Departmental procedures, be referred to the Assistant Secretary of Defense (ISA) for advice. In the Army, referral will be through the Assistant Secretary of the Army (Logistics) (Assistant Judge Advocate General) with an information copy to the Deputy Chief of Staff for Logistics, Attn: Chief, Contracts Branch; in the Navy, through the Office of Naval Material-Code M-30; in the Air Force, through Headquarters USAF, AFMPP-PR.

Subpart G-Small Business Concerns

§ 1.700 Scope of subpart.

To implement the Small Business Act, Pub. Law 85-536, and the Armed Services Procurement Act, as amended, this subpart sets forth (a) policy with reference to small business concerns, (b) policy governing relationship with the Small Business Administration, (c) small business set-aside procedures, and (d) the Defense Small Business Subcontracting Program. This subpart applies only in the United States, its Territories, its possessions, and Puerto Rico.

§ 1.701 Definitions.

As used throughout this subpart, the following terms shall have the meanings set forth below. § 1.701-1

Small business concern.

(a) (1) General definitions. Except as provided in subparagraph (2) of this paragraph, a small business concern is a concern that is (i) independently owned and operated, is not dominant in its field of operation and, with its affiliates, employs fewer than 500 employees, or (ii) is certified as a small business concern by SBA.

(2) Special industry definitions. Unless certified as a small business concern by SBA, in addition to being independently owned and operated, and not dominant in its field of operation, a small business concern in order to qualify as such must meet special criteria in the following industries:

(i) Construction industry. In the construction industry, the average annual receipts of the concern and its affiliates for the preceding three years must have been $5,000,000 or less; except that if the concern is located in Alaska, such receipts must have been $6,250,000 or less.

(ii) Aircraft equipment and parts industry. In the aircraft equipment and parts industry, the number of employees of the concern and its affiliates must not exceed 1,000 employees. This special definition for the aircraft equipment and parts industry applies only in the procurement of the following items:

Airframes and structural components.
Aircraft propellers and hubs.
Wheel and brake systems.

Jet engines.

Fuel tanks.

Aircraft hydraulic systems.

Aircraft vacuum systems. Aircraft air-conditioning.

Heating and pressurizing equipment.

Fire control systems.
Flight instruments.

Flight simulators (except small cockpit trainers).

Aircraft de-icing systems.

(iii) Petroleum refining industry. In the petroleum refining industry, the concern and its affiliates must employ not more than 1,000 employees and not have more than 30,000 barrels per day crude oil capacity from owned or leased facilities.

(iv) Food, canning, and preserving industry. In the food, canning and preserving industry, the concern and its affiliates must employ fewer than 500 employees exclusive of "agricultural labor" as defined in 26 U.S.C. 3306(k).

(v) Air transportation industry. In the air transportation industry the number of employees of the concern and its affiliates must not exceed 1,000 employees.

(b) Dominance in field of operations. A concern "is not dominant in its field of operations" when it does not exercise a controlling or major influence in an area of business activity. In determining whether dominance exists, consideration is 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, sales territory, and business activity.

(c) Affiliates. Business concerns are affiliates of each other when either directly or indirectly (1) one concern controls or has the power to control the other, or (2) a third party controls or has the power to control both. In determining whether concerns are independently owned and operated whether or not affiliation exists, consideration is given to all appropriate factors including common ownership, comand management, contractual mon

relationships.

and

(d) Number of employees. In connection with the determination of small business status, except as SBA otherwise determines in a particular industry or part thereof, "number of employees" means the average employment of any concern and its affiliates based on the number of persons employed during the pay period ending nearest the 15th 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 of each month.

(e) Small business certificate. A small business certificate is a certificate issued by SBA pursuant to the authority contained in sections 3 and 8(b)(6) of the Small Business Act certifying that the holder of the certificate is a small business concern for the purpose of Government procurement and in accordance with the terms of the certificate.

§ 1.701-2 Established supplier.

An "established supplier" of an item is a concern which is a "source of supplies," within the meaning of § 1.201-18, and which has supplied the items satisfactorily to one or more military departments, or a concern with which mobilization planning is in effect.

§ 1.701-3 Potential supplier.

A "potential supplier" of an item is a concern which is a "source of supplies," within the meaning of § 1.201-18, but which is not an established supplier.

§ 1.701-4 Regular dealer (nonmanufacturer) as small business concern. One who submits bids or offers in his own name, but who proposes to furnish a product not manufactured by himself, shall be deemed to be a small business concern only if (a) he is a small business concern within the meaning of § 1.701-1; (b) he is a regular dealer (nonmanufacturer) (see § 1.201-18); and (c) in the case of a procurement set aside for small business (see § 1.706) or involving equal low bids (see § 2.407-6 of this subchapter) or otherwise involving the preferential treatment of small business, he agrees to furnish in the performance of the contract end items manufactured or produced in the United States, its possessions, or Puerto Rico, by small business concerns; provided, that this section does not apply to construction or service contractors.

§ 1.702 General policy.

(a) It is the policy of the Department of Defense to place a fair proportion of its total purchases and contracts for supplies and services (including, but