small business subcontracting should be encouraged or required;

(8) Use small business concerns to the maximum extent feasible as planned producers in the Industrial Readiness Planning Program; and

(9) Maintain liaison with Federal, State (including Governors' Commissions), and local agencies and other organizations for the purpose of providing information and assistance to small busi

ness concerns.

(c) The extent of small business participation in defense procurement shall be accurately measured, reported, and publicized. All solicitations shall require each prospective supplier to represent whether he is small business concern for purposes of the specific procurement (see §§ 1.701 and 1.703). Records of the total value of contracts and subcontracts placed with small business concerns during each fiscal year shall be maintained by the use of DD Form 350 (Individual Procurement Action Report), DD Form 1057 (Monthly Procurement Summary by Purchasing Office) (see § 1.110), and DD Form 1140-1 (Defense Small Business Subcontracting Program Monthly Report of Participating Large Company on Subcontract Commitments to Small Business Concerns) (see § 1.707).

[29 F.R. 11810, Aug. 19, 1964]

§ 1.703 Determination of status as small business concern.

(a) Except as provided in paragraph (b) of this section, the contracting officer shall accept at face value for the particular procurement involved, a representation by the bidder or offeror that it is a small business concern (see § 1.701-1).

(b) Representation by a bidder or offeror that it is a small business concern shall be effective, even though questioned in accordance with the terms of this paragraph, unless the SBA, in response to such question and pursuant to the procedures in subparagraph (3) of this paragraph, determines that the bidder or offeror in question is not a small business concern. The controlling point in time for a determination concerning the size status of a questioned bidder or offeror shall be the date of award, except that no bidder or offeror shall be eligible for award as a small business concern unless he has in good faith represented himself as small business prior

to the opening of bids or closing date for submission of offers (see § 2.405 (b) of this chapter with respect to minor informalities and irregularities in bids).

(1) Any bidder or offeror may, prior to award, question the small business status of any apparently low bidder or offeror by sending a written protest to the contracting officer responsible for the particular procurement. Any contracting officer who receives such a protest or who wishes to question the small business status of a bidder or offeror himself shall forward such protest record (or submit a written protest) to the Small Business Administration regional office serving the area in which the protested concern is located. The Small Business Administration will promptly notify the contracting officer of the date of its receipt of any such protest and will advise the questioned bidder or offeror that his small business status is under review. The protest shall contain the basis for the protest together with specific detailed evidence supporting the protestant's claim that such bidder is not a small business. A protest received after award of a contract will not be considered a "protest" and will be returned to the sender with an explanation of why it could not be acted upon.

(2) A contracting officer may, prior to award, question the small business status of the apparently successful bidder or offeror by sending a written notice to the SBA regional office of the region in which the bidder or offeror has his principal place of business. Such notice shall contain a statement of the basis for questioning and of available supporting facts. SBA will promptly notify the contracting officer of the date such notice was received and will advise the bidder or offeror in question that his small business status is under review.

(3) SBA will determine the small business status of the questioned bidder or offeror and notify the contracting officer and the bidder or offeror of its decision. If the SBA determination is not received by the contracting officer within ten working days after SBA's receipt of the protest or notice questioning small business status, it shall be presumed that the questioned bidder or offeror is a small business concern. This presumption will not be used as a basis for making an award to the questioned bidder or offeror without first ascertaining when a size determination can be expected from

part. When the volume of procurement does not warrant assignment of a small business specialist, the contracting officer shall be responsible for the program.

(b) A small business specialist appointed pursuant to paragraph (a) of this section shall perform the following duties, as determined to be appropriate to the activity by the appointing officer or his designee.

(1) He shall maintain a program designed to locate capable small business sources for current and future procurements, through SBA or other methods.

(2) He shall coordinate inquiries and requests for advice from small business concerns on procurement matters.

(3) Prior to issuance of solicitations or contract modifications for additional supplies or services, he shall determine that small business concerns will receive adequate consideration including initiation of set-asides (§ 1.706). This determination may be made jointly with the contracting officer or may be in the form of a recommendation to him. Disagreements between the small business specialist and the contracting officer shall be resolved by the appointing authority or his designee, whose decision shall be final. (See § 1.706-3 as to resolution of disagreements with SBA recommendations. See § 1.308(b) (4) as to the required record of contract actions.)

(4) If small business concerns cannot be given an opportunity to compete because adequate specifications or drawings are not available, unless there are sufficient and valid reasons to the contrary, initiate action, in writing, with appropriate technical and contracting personnel to ensure that necessary specifications or drawings for the current or future procurements, as appropriate, are available.

(5) He shall review procurement programs for possible breakout of items suitable for procurement from small business concerns.

(6) He shall assure that financial assistance, available under existing regulations, is offered and that requests by small business concerns for proper assistance are not treated as a handicap in the award of contracts. (See Subparts D and E of Part 163 of this chapter.)

(7) He shall participate in determinations concerning responsibility of a prospective contractor (see § 1.904) whenever small business concerns are involved.

(8) He shall participate in the evaluation of a prime contractor's small business subcontracting program (see § 1.707-4).

(9) He shall review and make appropriate recommendations to the contracting officer on any proposal to furnish Government-owned facilities to a contractor if such action may hurt the small business program.

(10) He shall assure that participation of small business concerns is accurately reported.

(11) He shall make available to SBA copies of solicitations when so requested. [29 F.R. 11811, Aug. 19, 1964]

§ 1.705 Cooperation with the Small

Business Administration. [25 F.R. 14092, Dec. 31, 1960]

§ 1.705-1 General.

The Assistant Secretary of Defense (Installation and Logistics) and the Administrator, SBA, are responsible for consulting, and cooperating in establishing policies and programs for small business participation in Defense procurement. All Department of Defense purchasing activities are responsible for working with SBA in carrying out these policies and programs, in accordance with the provisions of § 1.705. [26 F.R. 5297, June 14, 1961]

§ 1.705-2 SBA representative.

(a) SBA may assign one or more representatives to any purchasing activity, on a full- or part-time basis, to carry out SBA policies and programs. The SBA representative shall be informed of the procurement mission of the activity and shall be furnished necessary facilities. In accordance with the procedures of the Department concerned, SBA shall obtain security clearances for each of its representatives. SBA representatives and employees shall comply with departmental directives concerning the conduct of Military Department procurement personnel.

(b) The purchasing activities shall inIclude in the appropriate bidders list or in any group of firms to be solicited in specific procurements, the names of firms submitted by SBA unless there is a valid reason for not so doing. [29 F.R. 11811, Aug. 19, 1964]

§ 1.705-3 Screening of procurements. (a) Individual set-asides. SBA representatives, when properly authorized

and cleared for security, shall, upon request, promptly be afforded an opportunity at the purchasing activity to review all proposed classified and unclassified procurements if it is anticipated that the resulting contract or contracts will exceed $2,500 unless in the case of procurements which are not expected to exceed $10,000, the head of the purchasing activity determines that such review would unduly delay the procurement process. A copy of the determination and the justification therefor shall be furnished to the SBA representative. Where it is anticipated that the resulting contract or contracts will exceed $2,500, such SBA representatives shall, upon request, promptly be afforded an opportunity to make recommendations concerning proposed procurements, including that they be exclusively or partially set aside for small business concerns.

The contracting officer shall afford the SBA representative an opportunity to recommend appropriate names of small business concerns for inclusion in lists of bidders for firms to be solicited in connection with current and future procurements.

(b) Class set-asides. SBA representatives shall be afforded an opportunity to make recommendations that current and future procurements, or portions thereof, of selected items or services or groups of like items or services shall be set aside as provided in § 1.706, for exclusive small business participation. Such set-asides, when approved by the contracting officer, shall be known as class set-asides. Concurrence in a class set-aside shall not be dependent upon the existence of a current procurement if future procurements can be clearly foreseen.

[27 F.R. 1686, Feb. 22, 1962]

§ 1.705-4 Certificates of competency.

(a) SBA has statutory authority to certify the competency of any small business concern as to capacity and credit. "Capacity" means the overall ability of a prospective small business contractor to meet quality, quantity, and time requirements of a proposed contract and includes ability to perform, organization, experience, technical knowledge, skills, "know-how," technical equipment, and facilities or the ability to obtain them. Contracting officers shall accept SBA certificates of competency as conclusive of a prospective contractor's capacity

(see §§ 1.903-1(b) and 1.903-2) and credit (see § 1.903-1(a)), unless the contracting officer has substantial doubt as to the firm's ability to perform, in which case the procedures in paragraph (e) of this section apply.

(b) If a bid or proposal of a small business concern is to be rejected solely because the contracting officer has found the concern to be nonresponsible as to capacity or credit, SBA shall be notified of the circumstances, and award shall be withheld until SBA action concerning issuance of a certificate of competency or until 15 working days after SBA is so notified, whichever is earlier, subject to the following:

(1) This procedure is not mandatory where the contracting officer certifies in writing that award must be made without delay, includes this certification and supporting information in the contract file, and promptly furnishes a copy to the SBA representative.

(2) This procedure does not apply to proposed awards not exceeding $2,500, and for proposed awards exceeding $2,500, but not exceeding $10,000, its use is within the discretion of the contracting officer.

(3) This procedure does not apply where the contracting officer has found a small business concern nonresponsible for a reason other than lack of capacity or credit. Thus, it does not apply where a concern does not satisfy the criteria of responsibility in § 1.903-1(d), (e), and (f). Where the contracting officer determines that a concern does not meet the requirements of § 1.903-1 (c) as to a satisfactory record of performance, the procedure is mandatory only if the unsatisfactory record of performance was due solely to inadequate capacity or credit.

(4) A determination by a contracting officer that a small business concern is not responsible for reasons other than deficiencies in capacity or credit (e.g., lack of integrity, business ethics, or persistent failure to apply necessary tenacity or perseverance to do an acceptable job) must be supported by substantial evidence documented in the contract file. (See § 1.904.)

(5) If the contracting officer has any doubt as to whether the unsatisfactory record of performance can reasonably be attributed solely to lack of capacity or credit, he shall forward the matter to higher authority within this Department

for resolution.

The decision of such higher authority shall be final.

(c) In procurements where the highest competence obtainable or the best scientific approach is needed, such as in certain negotiated procurements of research and development, highly complex equipment, or personal or professional services, the certificate of competency procedure is not applicable to the selection of the source offering the highest competence obtainable or the best scientific approach. However, if a small business concern has been selected on the basis of the highest competence obtainable or best scientific approach and, prior to award, the contracting officer determines that the concern is not responsible because of lack of capacity or credit, the certificate of competency procedure in paragraph (b) of this section is applicable.

(d) It is the policy of the Department of Defense to endeavor to reach agreement with the Small Business Administration regarding the lack of capacity or credit of a small business concern. To assist the SBA and to ensure that SBA has the benefit of the views of the Military Department, the office which notifies SBA of a negative finding shall furnish to the SBA three copies of the solicitation, one copy of the pertinent drawings or specifications, the preaward survey findings, pertinent technical and financial information, and, if available, the abstract of bids.

(e) If an activity learns, after referral of a negative finding as to capacity or credit, that an SBA regional office is planning to issue a certificate of competency or to refer the application therefor to Headquarters SBA, it will ask the local office of SBA if there are new or additional facts in the case. If these facts warrant, the activity should reverse its negative finding. Every effort should be made to resolve the differences between SBA and the Military Department through a complete exchange to preaward survey information. If a certificate of competency is issued and the contracting officer has substantial doubt as to the ability of the contractor to perform, the case shall be forwarded through channels on an expedited basis with documentation as to the element of substantial doubt to, as appropriate, the Directorate of Procurement, Office of the Assistant Secretary of the Army (I&L); Office of Naval Material (MAT21D); Director of Procurement Policy (AFSPP),

Headquarters USAF; or the Executive Director, Procurement and Production, Headquarters DSA, for review. The contracting officer shall withhold procurement action pending receipt of instructions from departmental headquarters. [29 F.R. 11811, Aug. 19, 1964] § 1.705-5 SBA.

Performance of contract by

In accordance with section 8a of the Small Business Act, in any case in which the Administrator of SBA certifies to the Secretary concerned that SBA is competent to perform any specific contract, the contracting officer is authorized, in his discretion, to award the contract to SBA upon such terms and conditions, consistent with this subchapter, as may be agreed upon between SBA and the contracting officer.

[29 F.R. 11812, Aug. 29, 1964] § 1.706 Set-asides.

[29 F.R. 11812, Aug. 19, 1964] § 1.706-1 General.

(a) Subject to any applicable preference for labor surplus area set-asides as provided in § 1.803 (a) (2) and the following criteria, any individual procurement or class of procurements or an appropriate part thereof, shall be set aside for the exclusive participation of small business concerns when such action is determined jointly by an SBA representative and the contracting officer (upon the initiation of either). If an SBA representative is not available, the foregoing determination may be made, by the contracting officer, to be in the interest of (1) maintaining or mobilizing the Nation's full productive capacity, (2) war or national defense programs, or (3) assuring that a fair proportion of Government procurement is placed with small business concerns. Insofar as practicable joint rather than unilateral determination shall be used as a basis for set-asides, but the impracticability of obtaining a joint determination should not be an obstacle to making a unilateral set-aside determination in an otherwise appropriate case.

(b) In individual set-asides, at the request of the SBA representative, the purchasing activity shall make available to him for review (to the extent that he has been granted security clearance) all proposed classified and unclassified procurements expected to exceed $2,500 on which unilateral set-asides have not been made.