FEDERAL PROCUREMENT REGULATIONS 1-1.710-3 §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. (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 (i) 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. (5) Notify the Contracting Officer before soliciting bids or quotations on any subcontract (including purchase orders) in excess of $10,000 if (i) 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 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 subcontracts, 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 Contractors further agree 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 (a), and to notify the Contracting Officer of the names of such subcontractors. APPENDIX C LETTER FROM HON. THOMAS S. KLEPPE, ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, TO SENATOR WILLIAM D. HATHAWAY, CHAIRMAN, SUBCOMMITTEE ON GOVERNMENT PROCUREMENT, DEC. 12, 1973 U.S. GOVERNMENT, Hon. WILLIAM D. HATHAWAY, Chairman, Subcommittee on Government Procurement, U.S. Senate, Washington, D.C. DEAR SENATOR HATHAWAY: This is in response to your letter of November 30, 1973, wherein you requested additional information regarding the Subcontracting Assistance Program. Our answers are presented in the same order as your questions. 1. SBA conducted 813 prime contractor plant reviews during FY 1973; 709 reviews during FY 1972; and 503 reviews during FY 1971. 2. The most common deficiency found, as a result of these reviews, was failure of the prime contractors to refer planned procurements to SBA for source action where small business was solicited due to "No Known Small Business Sources." 3. The records required to be maintained in accordance with the Subcontracting clause (General Provision (a) (4) of paragraph 1-707.3 of ASPR) are substantially adequate. However, one observed deficiency is that they may be maintained in such form as the individual contractor may determine. This lack of standardization makes it difficult to analyze the contractors adherence to the program goals. 4. Following are two examples of activities used by the prime contractors to encourage small business subcontracting: a. Extensive national searches are made by some contractors prior to and during prototyping of new systems; b. Some contractors have initiated extensive "second sourcing" of selected interchangeable items. This increases small business opportunities. 5. 24.071 manpower hours were spent by SBA on the entire subcontracting program, including the reviews, in FY 1973. The journeyman subcontract specialist's grade level is GS-13; however, a few specialists are presently graded GS-12. 6. The background of the Voluntary Subcontracting Program (VSP) is as follows: Public Law 87-305 directed the Administrators of SBA and GSA, along with the Secretary of Defense, to establish a small business subcontracting program. The above law barred SBA from functions relating to the administration of individual contracts. SBA was only allowed contact with prime contractors through appropriate procuring agencies. The VSP, which allowed SBA to contact the contractors direct, was established by the joint "Horne-Morris" letter of May 3, 1963. This voluntary program, which started with 25 of the largest DOD prime contractors, has now increased to 70 corporations which include approximately 350 plants. An example of direct contractor contact is the Subcontract Introductory Program, wherein well qualified small firms are introduced nationally to procurement activities of large firms. Last year, introductory firms received approximately thirty-five million additional contract dollars which directly resulted from the program. In addition, the VSP members also agree to go beyond the contractual requirement in assisting small business. Examples of this additional assistance are in the fields of Development, Engineering, Manufacturing, Quality, Finance and Marketing. 7. With regard to the number of contractors and total value of subcontract dollars of civilian agencies, SBA has very little information on these agencies, with the following exceptions. Since most NASA contracts are administered by DOD, SBA reviews the NASA and DOD subcontracts simultaneously. Also, SBA and AEC have been working together for about a year in small business subcontract reviews of their operating contractors. With regard to statistics on other civilian agencies, SBA was responsible for the establishment of a standard report form about 4 years ago to capture subcontract awards. The statistics, to the extent reported, are now published semiannually by GSA. Following statistics are: GSA does not gather or report the names or numbers of companies participating in these subcontracts. Thank you for this opportunity to furnish this additional information on the Subcontracting Program. Sincerely, THOMAS S. KLEPPE, Administrator. |