higher authority (Office of Assistant Secretary (Installations and Logistics) in the appropriate Military Department or the Office of the Director of the Defense Supply Agency).

(3) Upon making a determination to refer the matter to the SBA, the procuring contracting officer shall furnish to the SBA, or to the surveying activity, whichever is consistent with the action taken under subparagraph (2) of this paragraph, the data prescribed in paragraph (d) of this section. The activity that refers the matter to the SBA shall maintain close liaison with the SBA to assure compliance with paragraph (e) of this section. If such activity does not hear from the cognizant SBA Regional Office within 5 working days after the matter has been referred, the activity will contact the SBA Office to which the matter was referred to determine whether a certificate of competency is being processed. When, in accordance with subparagraph (2) of this paragraph, the procuring contracting officer has requested the pre-award survey activity to refer the matter to SBA, that activity shall keep the procuring contracting officer advised of significant developments, including the results of any inquiry to the SBA at the end of the five working day period, and any new or additional facts, learned from the SBA, that warrant reversal of the pre-award survey activity's negative finding. Higher authority specified in subparagraph (2) of this paragraph shall be promptly informed in writing of all cases where (i) the small business concern elects not to file an application for a certificate of competency, or (ii) SBA declines to issue a certificate of competency, or (iii) the purchasing activity reverses the pre-award survey activity's negative finding concerning capacity or credit.

(4) A referral need not be made to the SBA if the contracting officer certifies in writing, and his certificate is approved by the chief of the purchasing office, that the award must be made without delay, includes such certificate and supporting documentation in the contract file, and promptly furnishes a copy to the SBA. Contracting officers shall, immediately upon receipt of sufficient information, make a determination concerning the responsibility of the low responsive prospective small business contractor. If a contracting officer makes a determination of nonresponsibility, and if only capacity or credit considerations

are involved, he shall promptly refer to SBA for Certificate of Competency consideration unless he executes a documented certificate of urgency indicating the specific reasons why an award must be made without the delay incident to referral to SBA. Referral of a case to SBA or execution of a certificate of urgency shall not be deferred pending investigation and determination of the responsibility of other offerors.

(5) A referral need not be made to the SBA if a contracting officer determines a small business concern nonresponsible pursuant to § 1.903-1(5) and such determination is approved by the head of the procuring activity or his designee.

(6) A determination by a contracting officer that a small business concern is not responsible pursuant to § 1.903-1 (3) and (4), must be supported by substantial evidence documented in the contract files. These factors of responsibility are not covered by the certificate of competency procedure, but are for determination by the contracting officer, and approval by the head of the procuring activity or his designee. Concurrent with the contracting officer's submission of such determination of nonresponsibility to the head of the procuring activity or his designee for approval, the contracting officer shall transmit a copy of the documentation supporting the determination that a small business concern is not responsible for reasons other than deficiencies in capacity or credit to the assigned SBA representative or to the nearest SBA Regional Office and to the appropriate Departmental Small Business Advisor identified in § 1.704-2. The documentation transmitted to the SBA shall include: Two copies of the solicitation, and one copy of the preaward survey findings, pertinent technical and financial information, the abstract of bids, if available, and other pertinent information which supported the contracting officer's determination of nonresponsibility for reasons other than capacity and credit. The SBA office receiving the documentation shall, within 5 working days, notify the contracting officer in writing of the SBA's intent to appeal to the head of the procuring activity or his designee with information and recommendations which would materially bear on any approval action being considered by the head of the procuring activity or his designee. Within 10 days of the SBA's written notification to the contracting

officer, the SBA shall present to the head of the procuring activity or his designee the appeal in writing. Such appeal shall contain the basis for the SBA position, and include statements from the small business concern as to tenacity, integrity noted in the contracting officer's determination have been or will be eliminated. After consideration of the appeal, the decision by the head of the procuring activity or his designee shall be final. If the contracting officer does not receive notification within 5 working days specified above that the SBA intends to appeal, it shall be deemed that the SBA does not intend to file such an appeal. The procedures of 1.705-4(c) (4) apply if the award must be made without delay.

(d) It is the policy of the Department of Defense to endeavor to reach agreement with the SBA regarding the lack of capacity or credit of a small business concern. To assist the SBA and to assure that it has the benefit of the view of the Military Department or DSA, the SBA shall be furnished three copies of the solicitation, one copy of the pertinent drawings and specifications, the preaward survey findings, pertinent technical and financial information, and, if available, the abstract of bids.

(e) SBA field offices will notify the procuring contracting officer of each case where they (1) plan to issue a certificate of competency, or (2) are submitting a case to SBA, Washington, D.C., for approval prior to issuance of a certificate of competency, and to provide the contracting officer or his designated representative with a brief written statement citing the reasons for SBA's proposed affirmative action. Prior to final SBA action, the procuring contracting officer (or the pre-award survey activity when authorized to act as his representative) will be afforded an opportunity to meet or communicate with SBA field office representatives and furnish to them new or additional information on the case. Copies of significant data developed by SBA that are pertinent to the case will be made available, upon request, to the procuring contracting officer, or his representative, at such meeting or through correspondence. SBA case files may be examined at the meeting and pertinent notes taken by the contracting officer or his representative, but such files will not be released outside of SBA. Personnel from a purchasing office or surveying activity, who participated in a pre-award survey of the pro

spective contractor or other personnel having cognizance of such survey, shall be prepared to discuss with the SBA the basis for the pre-award findings. Every effort should be made to resolve any differences between the SBA and the Military Departments or DSA through a complete exchange of pre-award information developed by each agency.

(f) One of the following courses of action shall be taken subsequent to discussions or a meeting between representatives of the contracting officer and SBA field offices:

(1) If the new and additional facts presented by the SBA field office representatives so warrant, the negative determination as to capacity and credit of the apparent low bidder or offeror shall be reversed, the referral to SBA shall be withdrawn, and the contract award shall be made without the necessity for issuance of a certificate of competency by SBA. The procuring contracting officer shall promptly inform higher authority in his agency (see paragraph (c) (2) of this section) and the SBA field office of his intention to take such action and the anticipated date of contract award.

(2) If agreement cannot be reached between the SBA field office and the procuring contracting officer and substantial doubt still exists as to the ability of the contractor to perform, the contracting officer shall request the SBA field office to suspend action to permit referral of the case to higher authority in the Military Department or DSA for review and possible appeal to SBA, Washington, D.C. The contracting officer shall forward through channels on an expedited basis a complete case file to the appropriate higher Military Department or DSA authority specified in paragraph (c) (2) of this section with a request that the case be considered for appeal to SBA, Washington, D.C. This file will include the data specified in paragraph (d) of this section, SBA's rationale for proposing affirmative certificate of competency action, and the contracting officer's comments thereon. Procurement action shall be suspended until the contracting officer is informed by higher authority of the final decision in the case. If any organization review level above the contracting officer in the Military Department or DSA concludes that the request for certificate of competency action should be withdrawn and a contract awarded without benefit of a certificate of competency, the contracting officer should be so

informed and provided written instructions on how to proceed with the procurement. A copy of such instructions will be furnished to higher authority specified in paragraph (c) (2) of this section. If all organizational review levels including higher authority, as specified in paragraph (c) (2) of this section in the Military Department or DSA, agree with the recommended appeal action of the contracting officer, higher authority will request in writing the SBA Associate Administrator for Procurement and Management Assistance, Washington, D.C., to review the proposed affirmative certificate of competency action of the SBA field office. If SBA, Washington, D.C., does not concur with the proposed affirmative certificate of competency action of its field office, it shall so inform the Office of the Assistant Secretary of Defense (Installations and Logistics) which will promptly make this information available to the appropriate higher Military Department or DSA authority. If SBA, Washington, D.C., concurs with the affirmative certificate of competency action proposed by the SBA field office, it shall so inform the Office of Small Business and Economic Utilization Policy, Office of the Assistant Secretary of Defense (Installations and Logistics), giving reasons for its position orally. This information will be made promptly available by OASD (I&L) to higher authority in the Military Department or DSA which may then request OASD (I&L) to establish a meeting with SBA, Washington, D.C., to present an appeal on the proposed certificate of competency action. A representative of OASD (I&L) will join with a Military Department or DSA team on each formal appeal made to SBA, Washington, D.C. Following an appeal, the determination made by the SBA Associate Administrator relative to certificate of competency action shall be considered final and not subject to further appeal by the Military Department or DSA.

(3) If agreement cannot be reached between the contracting officer and the SBA field office, the contracting officer may conclude it would not be practicable to appeal the case to the Washington SBA level nor would it be appropriate to withdraw his request for certificate of competency action. In that case, the contracting officer shall inform the SBA field office that it must issue a certificate of competency as a prerequisite to contract

award. However, such action shall not be taken by the contracting officer without prior approval from the designated higher authority (see paragraph (c) (2) of this section) within his Department. This higher authority will inform OASD (I&L) in writing of each procurement coming under this category indicating the basis for the determination not to appeal the case to SBA, Washington, D.C.

(g) If an SBA field office fails to give a contracting officer the opportunity to refer a proposed affirmative certificate of competency action to higher authority in his Military Department or DSA for review and possible appeal, appeal action described in paragraph (f) of this section may be taken by the contracting officer subsequent to the issuance of a certificate of competency if he has substantial doubt as to the ability of the contractor to perform.

(h) When the contracting officer has questioned only one of the general standards of responsibility (e.g., capacity) of a small business offeror, but the SBA has declined to issue a Certificate of Competency, due to its findings concerning the offeror's capability to perform under a different standard of responsibility (e.g., credit) the responsible SBA office will inform the contracting officer of the basis for its decision. The information furnished by SBA to the contracting officer will generally consist of a copy of the letter sent to the offeror in question explaining why SBA declines to issue a Certificate of Competency. This information will be considered by the contracting officer in making an award of the procurement.

[33 F.R. 7349, May 18, 1968, as amended at 33 F.R. 19990, Dec. 28, 1968; 34 F.R. 13831, Aug. 29, 1969; 35 F.R. 6808, Apr. 30, 1970] § 1.705-5 Contracting with the Small Business Administration.

(a) Authority. In accordance with section 8(a) of the Small Business Act (15 U.S.C. 637(a)), in any case in which the Administrator of the Small Business Administration (SBA) certifies to the Secretary concerned that the SBA is competent to perform any specific contract, the contracting officer is authorized, in his discretion, to award the contract to the SBA in accordance with the terms and conditions of this section and such others as may be agreed upon between the SBA and the contracting officer.

(b) Policy. It is the policy of the Department of Defense to enter into contracts with the SBA to foster or assist in the establishment or the growth of small business concerns as designated by the SBA so that these concerns may become self-sustaining, competitive entities within a reasonable period of time. The SBA is empowered to arrange for the performance of such contracts by negotiating or otherwise letting contracts to small business concerns or others. It is the stated policy of the SBA to contract with only those small firms which have submitted a written business plan specifically outlining a reasonable approach to the attainment of the policy objectives of this section. This business plan, if approved by the SBA, will be the basis for DOD's consideration of participation in a section 8(a) program for the firm. In the execution of this policy, the SBA will furnish to the Directorate for Small Business and Economic Utilization Policy, Office of the Assistant Secretary of Defense (Installations and Logistics), its proposal for supporting the approved plan, showing at least the following information:

(1) The background and ownership of the firm;

(2) How and when the firm is expected to become a self-sustaining, competitive entity;

(3) The extent to which procurement assistance is needed and an identification of the requirements sought from the Department of Defense (The identification of the supplies or services which the SBA may require in connection with a small firm's business plan will be developed by SBA representatives. This may be accomplished through liaison with appropriate procuring activities either before or after SBA's approval of a small firm's business plan as the SBA may elect. Small business and labor surplus area specialists at procuring activities shall cooperate and assist SBA representatives in developing identifying information for the requirements being sought from the procuring activity. To the extent possible, identifying information should be definitive and include, if available, purchase descriptions or Federal stock numbers. The small business and labor surplus area specialist shall, when practicable and feasible, arrange for such additional assistance as may be required, from procurement, technical and supply management officials in order that the development of the identifying information may be mean

ingful. Current and future requirements of a small firm's business plan, if identified in meaningful terms will enable the Department of Defense to relate the items to present and future procurement requirements.); and

(4) If the firm is currently in existence, the present production capacity and related facilities and how any additional facilities needed will be provided.

(c) Procedures. The Director for Small Business and Economic Utilization Policy, OASD (I&L), will coordinate the requirements of the SBA approved business plan with the Departments through Departmental Small Business or Economic Utilization advisors. The Department concerned will evaluate and make recommendations as to whether or to what extent that Department can support the SBA requested commitments as procurement assistance. In making such comments and recommendations, consideration shall be given to:

(1) Estimated total quantities of the identified items planned for procurement in the current fiscal year and, to the extent known, future fiscal years;

(2) Required monthly rates of production and delivery schedules;

(3) Items of similar complexity and nature if there are no known requirements of the specifically identified items;

(4) Problems encountered in prior production of the items either by the proposed contractor or other contractors;

(5) Impact if items are urgent or if slippage in delivery occurs;

(6) Impact if items were procured historically by small business or labor surplus area set-aside; and

(7) Any other information concerning the items or the proposed contractor which is pertinent to the evaluation of the requested commitments.

After the requested commitments have been coordinated and Departmental recommendations and comments have been received and considered, the Director for Small Business and Economic Utilization Policy, OASD (I&L), will notify the Office of Business Development, SBA, Washington, D.C., and the appropriate Departmental Small Business or Economic Utilization advisor of the extent to which contracts wil be placed with SBA as requested. This notification represents a firm commitment of the Department of Defense to place contracts with SBA: Provided, That there is no material change in requirements, availability of

funds, and other pertinent factors. Upon receipt of the notification, the Departments will direct the appropriate procuring activities to reserve the initially identified requirements for negotiation of a section 8(a) award to SBA. Within 10 working days after receipt of the notice, SBA will establish contact with the designated procuring activity and initiate negotiation of the section 8(a) contract in support of the SBA requested commitments. If negotiations with the procuring activity have not been initiated by SBA within the time indicated, the procuring activity will notify the Departmental Small Business or Economic Utilization advisors of the intent to proceed with the procurement without further regard to the section 8(a) procedures, unless additional time is requested by SBA and such additional time can be granted considering the urgency of the requirement. When satisfactory terms and conditions, including price, have been negotiated, considering the estimated costs of SBA's prospective contractor, the contracting officer shall proceed with the award of a contract to SBA, after approval has been obtained from: Department of the Army, the Director of Material Acquisition, OASA (I&L); Department of the Navy, the Director of Procurement, OASN (I&L); Department of the Air Force, SAFIL; Defense Supply Agency, the Executive Director of Procurement and Production. For follow-on year procurements in support of the SBA requested commitment, the SBA will initiate individual requests to the Director for Small Business and Economic Utilization Policy for each ensuing section 8(a) contract. This process will permit, prior to actual negotiations of follow-on section 8(a) awards, the Departments to verify the availability of requirements, funding and other pertinent factors. It will be the responsibility of SBA to provide certification to the Secretary of the Department, with a copy of the certification to the designated procuring activities.

(d) Contract format. To assist the SBA, DOD procuring agencies shall prepare two contract sets as follows:

(1) Prepare Standard Form 26 and Standard Form 36 Continuation Sheets for use by the SBA with the SBA's contractor. The Standard Form 26 shall show "15 U.S.C. 637(a) (2)" in block 3 and contain all of the information required with the exception of the following, which will be inserted by the SBA:

50-070-71- -8

(i) Block 1, the SBA contract number; (ii) Block 2, the effective date;

(iii) Block 24, the signature of SBA's contractor;

(iv) Block 25, the SBA contractor's date;

(v) Block 27, the signature of SBA's contracting officer;

(vi) Block 28, the name of SBA's contracting officer; and

(vii) Block 29, the date signed.

The Standard Form 36 shall incorporate the general provisions of Standard Form 32, including DOD alterations thereto, and other appropriate provisions as required, recognizing that this Standard Form 36 will be executed between the SBA and the SBA's contractor. The contract set prepared as shown herein will be provided to the SBA at the time distribution of the contract set prepared in accordance with subparagraph (2) of this paragraph.

(2) Prepare a Standard Form 26 with Standard Form 36 Continuation Sheets for execution with the SBA. The general provisions of this contract shall not be applicable to the SBA. This contract also shall contain the following clause:

It is agreed that the provisions of the ""Termination for Convenience of the Government," "Changes," "Disputes," and "Default" clauses which are included in the contract between the Small Business Administration and its Contractor shall be invoked in appropriate cases when requested by the Contracting Officer. If the SBA does not agree with the Contracting Officer's request, the case shall be referred to the Secretary for decision.

(e) Contract administration. Contract administration functions will be performed by the cognizant contract administration office as listed in DOD Directive 4105.59-H. Since the contractual relationship between SBA and its contractor would be analogous to that of a PCO and a prime contractor, the contract administration assignment shall include all functions as required by ASPR and shall relate to the location of SBA's contractor.

(f) Execution and distribution of procurement documents. (1) Execution and distribution of procurement documents shall be in accordance with ASPR section XX, part 4.

(2) SBA shall be responsible for effecting execution and distribution to the DOD procuring activities and others of the documents prepared for the SBA in paragraph (d) (1) of this section.