Page images
PDF
EPUB

tor for Small Business Policy of the Department of Defense; or

(ii) If subdivision (1) of this subparagraph is inapplicable, the responsibility shall be assigned through coordinated action of the Director of Small Business Policy of the Department of Defense and the Small Business Advisors of the Departments.

(2) In contracts for maintenance, repair and construction (see § 1.707-3(c)), the contracting officer awarding the contract shall be responsible for reviewing the contractor's Small Business Subcontracting Program.

(b) In appropriate instances, however, when jointly determined by the Director of Small Business Policy and the Small Business Advisors of the Departments, criteria other than those specified in paragraph (a) of this section may be used in assigning responsibility to a Department for reviewing an individual contractor's Small Business Subcontracting Program.

(c) The Department placing a contract with a prime contractor containing the "Small Business Subcontracting Program" clause shall either (1) assume responsibility for reviewing the subcontracting program of the prime contractor if such Department meets the criteria specified in paragraph (a) or (b) of this section, or (2) promptly request in writing the Small Business Advisor of the Department which does meet such criteria to assume responsibility for review of this program.

(d) Promptly upon receipt of the names of subcontractors who will participate in the Small Business Subcontracting Program, the Department concerned will assume, or provide for the assumption of, responsibility for review of each subcontractor's program in accordance with procedures set forth in paragraph (a) or (b) of this section.

(e) The responsible Department will determine the adequacy of the contractor's Small Business Subcontracting Program and bring any deficiencies to the attention of the contractor's designated liaison officer with a request for corrective action.

[27 F.R. 3444, Apr. 11, 1962, as amended at 32 F.R. 12086, Aug. 23, 1967]

§ 1.707-5 Reports on DD Form 1140-1.

In connection with the submission of DD Form 1140-1 Reports under the "Small Business Subcontracting Program" clause, a subcontractor may con

tact the nearest military purchasing or contract administration activity and request advice as to the Department to which he should submit reports. The military purchasing or contract administration activity shall, through channels, submit such a request to the Small Business Advisor of the Department concerned. The Small Business Advisor shall submit it to the Director for Small Business Policy of the Department of Defense for his determination in coordination with the Small Business Advisors of the Departments.

[29 F.R. 2818, Feb. 29, 1964]

§ 1.707-6 Subcontracting studies and

surveys.

Each purchasing activity shall assist the SBA to obtain such reasonably obtainable information and records concerning the subcontracting of its prime contractors and its subcontractors, having contracts that contain the Small Business Subcontracting Program clause, as the SBA may deem necessary. Асcordingly, the contracting officer or his representative, separately, or together with a representative of SBA may 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 purchasing activity 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 purchasing activity regarding methods for increasing small business participation in subcontract awards. SBA and the purchasing activity will freely interchange, at the operating level, information resulting from these surveys. [27 F.R. 3444, Apr. 11, 1962]

§ 1.707-7 SBA review of agency records.

To the extent that subcontracting records are maintained in purchasing or contract administration activities, such records shall be made available to SBA, upon request for review. [27 F.R. 3445, Apr. 11, 1962]

§ 1.708 Mobilization planning.

The policy of placing a fair proportion of purchases and contracts with small business concerns (see § 1.702) applies in the field of mobilization planning and each Military Department shall continually study its industrial readiness planning procedures to include the Small Business Program, to the maximum practical extent.

[27 F.R. 3445, Apr. 11, 1962]

Subpart H-Labor Surplus Area
Concerns

§1.800 Scope of subpart.

This subpart sets forth Department of Defense policy and procedures with respect to aiding areas of persistent or substantial labor surplus and sections of concentrated unemployment or underemployment, hereinafter referred to as "labor surplus areas," in the United States, its possessions, and Puerto Rico. This part implements Defense Manpower Policy No. 4 (Revised), October 16, 1967 (32A CFR Chapter 1), and U.S. Department of Labor Regulations, 29 CFR Part 8, as amended, October 16, 1967. Defense Manpower Policy No. 4 states the policy of the Government to encourage the placing of contracts and facilities in labor surplus areas and to assist such areas in making the best use of their available

resources.

[33 F.R. 7354, May 18, 1968]

§1.801 Definitions.

[33 F.R. 7354, May 18, 1968]

§ 1.801-1 Labor surplus area concern. This term includes:

(a) Concerns (1) located in or near

sections of concentrated unemployment or underemployment which have been certified by the Secretary of Labor in accordance with 29 CFR 8.7(b) with respect to the employment of disadvantaged persons residing within such sections and (2) which will agree to perform, or cause to be performed by certified concerns, a substantial proportion of a contract in or near such sections; it also includes concerns which, though not so certified, agree to have a substantial proportion of a contract performed by certified concerns in or near such sections. Such concerns are herein referred to as "certified-eligible concerns." The term "certified-eligible" is derived from 29 CFR Part 8, which makes a firm eligible for first preference in the award of certain contracts on the basis that such firm agrees to employ disadvantaged persons in per

formance of a substantial proportion of the contract; and that such employment must be provided by a certified firm, whether such firm be the prime or a first tier subcontractor. A certified-eligible concern shall be deemed to perform a substantial proportion of a contract in or near sections of concentrated unemployment or underemployment if the costs that the concern will incur on account of manufacturing or production in or near such sections (by itself if a certified concern, or by first tier certified concerns acting as subcontractors) amount to more than 25 percent of the contract price.

(b) Persistent labor surplus area concerns which will perform or cause to be performed any contracts awarded to them as labor surplus area concerns substantially in "Areas of Persistent Labor Surplus." A concern shall be deemed to perform a substantial proportion of a contract in persistent labor surplus areas if the costs that will be incurred by the prime or first tier subcontractors on account of manufacturing or production performed in such areas and in or near a section of concentrated unemployment or underemployment by a certified-eligible prime or first tier certified subcontractors amount to more than 50 percent of the contract price.

(c) Substantial labor surplus area concerns which will perform or cause to be performed any contracts awarded to them as labor surplus area concerns substantially in "Areas of Substantial Labor Surplus." A concern shall be deemed to perform a substantial proportion of a contract in substantial labor surplus areas if the costs that will be incurred by the prime or first tier subcontractors on account of manufacturing or production performed in substantial and persistent labor surplus areas and in or near a section of concentrated unemployment or underemployment by a certified-eligible prime or certified first tier subcontractors amount to more than 50 percent of the contract price.

Example A. John Doe Company, manufacturing in or near a section of concentrated unemployment or underemployment and holding a current Certificate of Eligibility issued by the Secretary of Labor with respect to an agreement to employ disadvantaged persons residing in such section, bids on a contract at $1,000. John Doe Company will incur the following costs:

[blocks in formation]
[blocks in formation]

GHI Company qualifies as a labor surplus area concern since it will incur costs in a labor surplus area amounting to more than 50 percent of the contract price. [34 F.R. 13832, Aug. 29, 1969]

§ 1.801-2 Labor surplus area.

This term means a geographic area which at the time of award is:

(a) An appropriate section of a City, State, or an Indian Reservation classified by the Secretary of Labor as a "section of concentrated unemployment or underemployment" (Cities and States with classified sections of unemployment or underemployment, as well as eligible Indian Reservations are listed by the Department of Labor in its publication "Area Trends in Employment and Unemployment."); or

(b) Classified by the Department of Labor as an "Area of Persistent Unemployment" (herein referred to as an area of persistent labor surplus) and listed as such by that Department in its publication "Area Trends in Employment and Unemployment," or

(c) Classified by the Department of Labor as an "Area of Persistent Unemployment" (herein referred to as an area of persistent labor surplus) and listed as such by that Department in its publication "Area Trends in Employment and Unemployment", or

(d) Not classified as in paragraphs (b) or (c) of this section, but which is individually certified as an area of persistent or substantial unemployment by the Department of Labor at the request of a prospective contractor.

[33 F.R. 7355, May 18, 1968, as amended at 34 F.R. 13833, Aug. 29, 1969]

§ 1.801-3 Small business concern.

Small business concern is defined in § 1.701.

[25 F.R. 14097, Dec. 31, 1960]

§ 1.802 General policy.

Except as provided in § 1.806 with respect to depressed industries, it is the policy of the Department of Defense to aid labor surplus areas by placing contracts with labor surplus area concerns, to the extent consistent with procurement objectives and where such contracts can be awarded at prices no higher than those obtainable from other concerns and by encouraging prime contractors to place subcontracts with concerns which will perform substantially in labor surplus areas. In carrying out this policy, to accommodate the small business policies of Subpart G of this part, preference shall be given in the following order of priority to (a) certified-eligible concerns which are also small business concerns; (b) other certified-eligible concerns; (c) persistent labor surplus area concerns which are also small business concerns, (d) other persistent labor surplus area concerns, (e) substantial labor surplus area concerns which are also small business concerns, (f) other substantial labor surplus area concerns and (g) small business concerns which are not labor surplus area concerns. But in no case will price differentials be paid for the purpose of carrying out this policy. Heads of Procuring Activities and Heads of Field Purchasing and Contract Administration Activities are responsible for the effective implementation of the Labor Surplus Area Program within their respective activities. Responsibility for administration of the program may be assigned to small business specialists appointed pursuant to § 1.704-3. [33 F.R. 7355, May 18, 1968]

§ 1.803 Application of policy.

(a) Within the policy set forth in §1.802, the following shall be applied to procurements which are estimated to exceed $10,000:

(1) Negotiated procurements shall, where procurement objectives permit, be awarded to labor surplus area concerns: Provided, That in no case shall price differentials be paid for the purpose of carrying out this policy;

(2) Where appropriate, procurements shall be made from labor surplus area concerns by partial set-aside procedures, in accordance with § 1.804, and such setasides shall be given preference over any small business set-aside (but no total setaside shall be made for labor surplus area concerns);

(3) Each Department shall assure that information identifying labor surplus areas is disseminated promptly to procurement personnel;

(4) Department of Labor certification (see $ 1.801-2(d)) shall be considered conclusive with respect to the particular procurement concerned;

(5) even though less than a complete bidders list is to be used pursuant to $2.205-4 of this subchapter, all prospective contractors in labor surplus areas shall be solicited, except that only a pro rata number of prospective labor surplus area concerns may be solicited when the

bidders list is composed predominantly of labor surplus area concerns and the estimated award is not expected to be more than $25,000;

(6) Subcontracting with concerns in labor surplus areas shall be encouraged in accordance with § 1.805.

(b) Records of the total value of all contracts in excess of $10,000 placed with labor surplus area concerns during each fiscal year, and reports based thereon, are maintained by each Department through the Department of Defense Reporting System described in §§ 1.110. Accordingly, each Department in soliciting bids and proposals for any procurement estimated to exceed $10,000 shall request from any bidder or offeror, or other source, any information needed to determine whether the bidder or offeror is a labor surplus area concern. Contract files shall be documented to indicate the extent to which labor surplus area concerns were considered and the action taken with respect thereto.

[25 F.R. 14098, Dec. 31, 1960, as amended at 26 F.R. 5300, June 14, 1961; 83 F.R. 7355, May 18, 1968]

§ 1.804 Partial set-asides for labor surplus area concerns.

[25 F.R. 14098, Dec. 31, 1960] § 1.804-1 General.

(a) (1) In accordance with the policy set forth in §§ 1.802 and 1.803, a portion of each procurement shall be set aside for labor surplus area concerns if:

(i) The procurement is severable into two or more economic production runs or reasonable lots; and

(ii) One or more labor surplus area concerns are expected to qualify as labor surplus area concerns and to have the technical competency and productive capacity to furnish a severable portion of the procurement at a reasonable price, except that a partial set-aside shall not be made if there is a reasonable expectation that bids or proposals will be received from only two concerns with technical competency and productive capacity (one concern which will not qualify as a labor surplus area concern and one concern which will qualify as a labor surplus area concern). Before reaching this conclusion, the contracting officer shall consult with the labor surplus area specialist and may make advance inquiries to determine the number and expected classification of interested concerns. Any deviation from this partial set-aside prohibition must be approved by the Head of the Procuring Activity on a case-by-case basis.

(2) In determining whether a proposed procurement is susceptible to division into two or more economic production runs or reasonable lots, consideration should be given to the following factors and any others deemed appropriate:

(i) Price and procurement history of the items,

(il) Open industry capacity,
(iii) Startup cost including special

tooling requirements,

(iv) Delivery schedule, and

(v) Nature of item and quantity being procured.

Before a portion or portions, constituting more than 50 percent of the total requirement may be set aside, a determination must be made that there is a reasonable expectation the action proposed will not result in the payment of a price differential. The determination and supporting information will be made part of the contract file.

(3) In furtherance of the policy to assure that a fair proportion of procurements is placed with small business concerns, each labor surplus area set-aside shall provide that, in addition to labor surplus area concerns, small business concerns not performing in such areas are also eligible for participation in the set-aside for such quantities thereof as are not awarded to labor surplus area concerns. In this respect, see the provisions of § 1.804-2(b) for notice to bidders or offerors, and § 1.804-2(c) for conduct of set-aside negotiations.

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

(1) A large part of previous procurements of the item in question has been placed with labor surplus area concerns;

(2) The item to be purchased is on an established planning list under the Industrial Readiness Planning Program;

(3) The item to be purchased is on a Qualified Products List;

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

(5) The procurement is classified; or (6) Labor surplus area concerns are receiving a fair proportion of contracts.

(c) Procurement of supplies which were developed and financed in whole or in part by Canadian sources under the U.S.-Canadian Defense Development Sharing Program shall not be set aside for labor surplus areas. Identification of the supplies covered by the Program will be in accordance with Departmental procedures.

[25 F.R. 14098, Dec. 31, 1960, as amended at 26 F.R. 9633, Oct. 12, 1961; 30 F.R. 14706, Nov. 9, 1965]

§ 1.804-2 Set-aside procedures.

(a) Where a portion of a procurement is to be set aside pursuant to § 1.804-1, the procurement shall be divided into a non-set-aside portion and set-aside portion, each of which shall be not less than an economic production run or reasonable lot. Insofar as practical, the setaside portion will be such as to make the maximum use of the capacity of labor surplus area concerns. Delivery terms and other terms applicable to the set-aside portion of an item and those applicable to the non-set-aside portion of that item shall be comparable.

(b) (1) In advertised procurements involving set-asides pursuant to this subpart, each invitation for bids shall contain substantially the following notice. In negotiated procurements, the notice shall be appropriately modified for use with requests for proposals. The notice shall be made a part of each contract under the set-aside portion of the procurement.

NOTICE OF LABOR SURPLUS AREA SET-ASIDE
(JUNE 1969)

(a) General. A portion of this procurement, as identified elsewhere in the Schedule, has been set aside for award only to one or more labor surplus area concerns, and, to a limited extent, to small business concerns which do not qualify as labor surplus area concerns. Negotiations for award of the setaside portion will be conducted only with responsible labor surplus area concerns (and small business concerns to the extent indicated below) who have submitted responsive bids or proposals on the non-set-aside portion at a unit price no greater than 130 percent of the highest unit price at which an award is made on the non-set-aside portion. (For the purposes of this paragraph (a), such "unit price" in the case of award of the nonset-aside portion to a foreign bidder shall be the evaluated unit price established under applicable Buy American-Balance of Payments procedures.) Negotiations for the setaside portion will be conducted with such bidders in the following order of priority:

Group 1. Certified-eligible concerns which are also small business concerns.

« PreviousContinue »