bid or offer, between the bidder or offeror and the refiner of the product to be delivered to the Government which requires exchanges in a stated ratio on a refined petroleum product for a refined petroleum product basis, and precludes a monetary settlement, and that the products exchanged for the products offered and to be delivered to the Government meet the requirements in (i)(1)(iii) of this section: And provided further, That the exchange of products for products to be delivered to the Government will be completed within 90 days after the expiration of the delivery period under the Government contract, and that any products furnished pursuant to a bona fide exchange agreement must be for delivery in the same Petroleum Administration for Defense (PAD) District as that in which the small refinery is located; or (2) its number of employees does not exceed 500 persons and the product to be delivered to the Government has been refined by a concern which qualifies under (i)(1) of this section. The proviso in (i)(1)(iii) of this section that the product to be delivered in the performance of the contract will contain at least 90 percent components refined by the bidder from either crude oil or bona fide feed stocks contemplates that, in accomplishing such refining, the bidder will utilize its own employees and facilities which it owns or obtains under a bona fide lease as distinguished from any other arrangement having the same effect as a lease. The provision permitting a concern which meets the requirements in (i)(1) (i) and (ii) of this section to furnish the product of a refinery not qualified as small business if such product is obtained pursuant to a bona fide exchange agreement which meets prescribed requirements, contemplates that the product exchanged by the bidder for the product to be furnished shall have been refined by the bidder utilizing only its own employees and its own facilities or facilities obtained through a bona fide lease. ("Bona fide feed stocks" means crude and any other hydrocarbon material actually charged to refinery processing units as distinguished from materials used as components in prod

ucts to be delivered after merely filtering, settling, or blending. “Crude-oil capacity" means the maximum daily average throughput of a refinery in complete operation, with allowance for necessary shutdown time for routine maintenance, repairs, etc. It approximates the maximum daily average crude runs to stills that can be maintained for an extended period.)

[29 FR 10104, July 24, 1964, as amended at 30 FR 9590, July 31, 1965; 32 FR 2624, Feb. 8, 1967; 36 FR 11435, June 12, 1971; 37 FR 15372, Aug. 1, 1972; 39 FR 35657, Oct. 3, 1974; 41 FR 3737, Jan. 26, 1976; 41 FR 50687, Nov. 17, 1976]

§ 1-1.701-2 Affiliates.

Business concerns are affiliates of each other when either directly or indirectly (a) one concern (other than an investment company licensed under the Small Business Investment Act of 1958 or registered under the Investment Company Act of 1940, as amended), controls or has the power to control the other, or (b) a third party or parties (other than an investment company licensed under the Small Business Investment Act of 1958 or registered under the Investment Company Act of 1940, as amended), controls or has the power to control both. In determining whether concerns are independently owned and operated and whether affiliation exists, consideration shall be given to all appropriate factors, including common ownership, common management, and contractual relationships: Provided, however, That restraints imposed on a franchisee by its franchise agreement shall not be considered in determining whether the franchisor controls or has the power to control and, therefore, is affiliated with the franchisee, if the franchisee has the right to profit from his effort, commensurate with ownership, and bears the risk of loss or fail

ure.

[32 FR 2626, Feb. 8, 1967]

§ 1-1.701-3 Dominance in field of oper

ation.

A concern "is not dominant in its field of operation" when it does not exercise a controlling or major influence in a kind of business activity in

which a number of business concerns are primarily engaged. In determining whether dominance exists, consideration shall be 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, facilities, sales territory, and nature of business activity.

§ 1-1.701-4 Small business Government subcontractors.

(a) Any concern, in connection with subcontracts of $10,000 or less which relate to Government procurement, will be considered a small business concern if, including its affiliates, its number of employees does not exceed 500 persons.

(b) Any concern, in connection with subcontracts exceeding $10,000 which relate to Government procurement, will be considered a small business concern if it qualifies as such under § 1-1.701-1.

[41 FR 31207, Nov. 27, 1976]

§ 1-1.701-5 Number of employees.

In connection with the determination of small business status, "number of employees" means the average employment of any concern, including the employees of its domestic and foreign affiliates, based on the number of persons employed on a full-time, parttime, temporary, or other basis during each of the pay periods of the preceding 12 months. If a concern has not been in existence for 12 months, "number of employees" means the average employment of such concern and its affiliates during the period that such concern has been in existence based on the number of persons employed during each of the pay periods of the period such concern has been in business. If a concern has acquired an affiliate during the applicable accounting period, it is necessary, in computing the applicant's number of employees, to include the affiliate's number of employees during the entire applicable accounting period rather that only its employees during the period in which it has been an affiliate. The employees of a former af

filiate are not included even if such concern had been an affiliate during a portion of the applicable accounting period.

[41 FR 50688, Nov. 17, 1976]

§ 1-1.701-6 Industry.

"Industry" means a grouping of establishments primarily engaged in similar lines of activity as listed and described in the Standard Industrial Classification (SIC) Manual, as amended, prepared and published by the Office of Management and Budget (formerly Bureau of the Budget), Executive Office of the President. (The Standard Industrial Classification (SIC) Manual, as amended, is used as a guide by the Small Business Administration in defining industries. Its use, therefore, is advisory and not mandatory.)

[36 FR 11438, June 12, 1971]

§ 1-1.701-7 Certificate of competency and determination of eligibility.

(a) A "certificate of competency" means a certificate issued by the Small Business Administration (SBA), as authorized by the Small Business Act (15 U.S.C. 637(b)(7)(A)), stating that the holder is responsible (with respect to all elements of responsibility, including but not limited to capability, competency, capacity, credit, integrity, perseverance, and tenacity) to receive and perform a specific Government contract (see § 1-1.708).

(b) A "determination of eligibility" means a determination issued by SBA, as authorized by the Small Business Act (15 U.S.C. 637(b)(7)(B)), stating that the holder is eligible as a manufacturer or regular dealer, under the provisions of the Walsh-Healey Public Contracts Act (41 U.S.C. 35-45(a)), to receive and perform a specific Government contract. It also means a certificate issued by SBA based on a finding of eligibility by the Secretary of Labor after SBA initially determines that a concern is ineligible.

[43 FR 26005, June 16, 1978]

§ 1-1.701-8 Set-aside for small business.

A set-aside for small business is the act of reserving an entire procurement

income of the concern (not including its affiliates), shall be reduced by the percentage prescribed for that State or area as follows:

(total set-aside for either small business-labor surplus area concerns or small business concerns) or a portion of a procurement (partial set-aside for small business concerns) for the exclusive participation of small business concerns. Set-asides may be made for individual procurements of items or for classes of items (class set-asides).

[43 FR 26005, June 16, 1978]

§ 1-1.701-9 Small business restricted advertising.

Small business restricted advertising is a special method of negotiated procurement conducted in the same manner as for formal advertising, except that competition and awards are restricted to small business concerns.

§ 1-1.701-10 Base maintenance.

"Base maintenance" means furnishing at an installation within the several States, Puerto Rico, Virgin Islands, or the District of Columbia three or more of the following services: Janitorial and custodial services, protective guard services, commissary services, fire prevention services, refuse collection services, safety engineering services, messenger services, grounds maintenance and landscaping services, and air-conditioning and refrigeration maintenance: Provided, however, That whenever the contracting officer determines prior to the issuance of bids that the estimated value of one of the foregoing services constitutes more than 50 percent of the estimated value of the entire contract, the contract shall not be classified as base maintenance but in the industry in which such service is classified.

[32 FR 2626, Feb. 8, 19671

§ 1-1.701-11 Differentials.

When a concern which has 50 percent or more of its annual sales or receipts attributable to business activity within one of the States or nonforeign areas set forth herein, then, whenever the term "annual sales or annual receipts" is used in any size definition contained in this subpart, such annual receipts, average annual receipts, assets, net worth, or average net

(a) General policy. It is the policy of the Government to aid, counsel, assist, and protect, insofar as possible, the interests of small business concerns in order to preserve free competitive enterprise; and to place with small business concerns a fair proportion of the total Government purchases and contracts for property and services (including contracts for maintenance, repair, construction, and research and development).

(b) Specific policies. The following specific small business policies shall be followed by procurement agencies in order to further the general policy stated in (a) of this § 1-1.702:

(1) Small business concerns shall be afforded an equitable opportunity to compete for prime contracts and subcontracts.

(2) Bidders mailing lists (see § 12.205) shall include (i) all established and potential small business concerns, and (ii) potential small business concerns that are also potential labor surplus area concerns. In either case, concerns shall have made acceptable applications for inclusion or appear from other information, including recommendations by SBA representatives, to be qualified for inclusion. Prior to the issuance of invitations for bids and within the framework of the time available, contracting officers should make every reasonable effort to find additional small business concerns. This effort should include contacts with SBA where there is no local SBA representative. The requirement to locate additional concerns may be omitted where bidders lists are excessively long and only a portion of the concerns on the list will be solicited (see subparagraph (3) of this paragraph (b) and § 1-2.205-4).

(3) Invitations for bids or requests for proposals shall be sent to all firms on the appropriate mailing list except that where less than a complete list is used pursuant to § 1-2.205-4, a pro rata number of small business concerns shall be solicited.

(4) Proposed procurements and contract awards shall be publicized in the "Commerce Business Daily" in accordance with Subpart 1-1.10.

(5) Procurement of property and services shall be divided into reasonably small lots (not less than economic production runs) in order to permit bidding on quantities less than the total requirements.

(6) The maximum amount of time practicable (see §1.202-1) shall be allowed for preparation and submission of bids and proposals.

(7) Delivery schedules shall be established on a realistic basis which will encourage small business participation to the extent consistent with the actual requirements of the Government.

(8) Applicable specifications, plans, and drawings either shall be furnished with invitations for bids and requests for proposals or, when not so furnished, information as to locations where they may be obtained or examined shall be furnished.

(9) Procurements shall be set aside for exclusive participation by small business concerns which are also labor surplus area concerns or for small business concerns in accordance with § 1-1.706.

(10) In the event of equal low bids, awards shall be made in accordance with the preferences in § 1-2.407-6.

(11) Subcontracting to small business concerns shall be encouraged in accordance with § 1-1.710.

(12) Procurement agencies and SBA are responsible for consulting and cooperating in carrying out the purposes of the Small Business Act, as amended (15 U.S.C. 631-647), in accordance with § 1-1.705.

(13) Placement of small purchases with small business concerns shall be encouraged (see § 1-3.602).

(14) Small business firms seeking Government contracts, but found to lack qualifications as prime contrac

tors. should be referred to the nearest SBA office for management assistance, counseling, financial assistance, and other programs of assistance as may be appropriate.

(15) An offer submitted by a small business concern that is otherwise qualified to perform a specific Government contract but is determined to be ineligible under the provisions of the Walsh-Healey Public Contracts Act shall be referred to SBA. The Administration may certify that the concern is eligible to receive and perform the contract (see § 1-1.708).

(16) To the extent practicable, work to be performed which exceeds the maximum amount of any contract for which a surety may be guaranteed against loss under 15 U.S.C. 694(b) shall be placed so that more than one small business concern may perform the work.

(17) Public and private organizations for the handicapped and handicapped individuals are eligible to participate in small business set-asides (see Small Business Act (15 U.S.C. 636(h)(1)).

(18) A small business concern that is qualified to receive and perform a specific Government contract but is determined by the contracting officer to be nonresponsible under the provisions of § 1-1.1203, may be certified to be competent (as to any or all elements of responsibility) by SBA (see § 1-1.708) under the provisions of the Small Business Act (15 U.S.C. 637(b)(7)(A)).

[29 FR 10104, July 24, 1964, as amended at 36 FR 3117, Feb. 18, 1971; 43 FR 26005, June 16, 1978]

§ 1-1.703 Determination of status as a small business concern.

§ 1-1.703-1 Representation by bidder or offeror.

(a) A concern must be a small business concern at the time of the opening of bids or the closing date for the submission of initial offers and at the time of award in order to be eligible for a preference which requires status as a small business concern.

(b) A representation by a bidder or offeror that he is a small business concern shall be accepted as conclusive by

the contracting officer regarding the status of the concern with respect to a specific solicitation, except as provided in paragraphs (c), (d), and (e) of this section.

(c)(1) A bidder or offeror which meets the criteria in § 1-1.701 and has not been determined by the SBA to be ineligible may represent that he is a small business concern in the submission of a bid or offer in connection with a specific solicitation.

(2) A representation by a bidder or offeror that he is a small business concern is not conclusive with respect to SBA. If a representation is challenged, SBA will determine whether the bidder or offeror is a small business concern.

(3) A bidder or offeror shall not be eligible for an award as a small business concern unless he represented in good faith that he was a small business concern at the time of the opening of bids or the closing date for the submission of initial offers (see § 12.405(b) regarding minor informalities and irregularities in bids).

(4) If a contracting officer has cause to question the veracity of a self-certification, he shall refer the eligibility issue to the SBA by filing a formal protest pursuant to § 1-1.703-2.

(d) The small business status of a bidder or offeror may be challenged prior to award even though SBA previously has ruled that the concern is a small business concern at the time of the opening of bids or the closing date for the submission of initial offers. In the event of such a challenge, SBA will make a further determination regarding the status of the concern.

(e) A concern cannot become eligible for an award with respect to a specific contract by taking action to constitute itself a small business after SBA has determined that the concern was not a small business concern at the time of opening of bids or the closing date for the submission of initial offers.

[43 FR 26005, June 16, 1978]

§ 1-1.703-2 Protest regarding small business status.

(a) Any bidder or offeror or other interested party may challenge the small business status of any other

bidder or offeror on a particular procurement by sending or delivering a protest, as defined in paragraph (b) of this § 1-1.703-2, to the contracting officer responsible for the particular procurement. Any contracting officer who receives a timely protest, or who wishes to question the small business status of a bidder or offeror himself, shall promptly forward such protest (or submit his protest) to the SBA district office serving the geographical area in which the principal office of the protested concern, not including its affiliates, is located.

(b)(1) As used in this section, "protest" means a statement by telephone or in writing from any bidder or offeror on a particular procurement (or from any other interested party) alleging that another bidder or offeror on such procurement is not a small business concern. The statement shall contain the basis for the protest, together with specific detailed evidence in support of the protestant's claim. In order to apply to the procurement in question, such protest must be filed prior to the close of business on the fifth day (exclusive of Saturdays, Sundays, and legal holidays) after the bid opening or the date for submission of proposals, except that in the case of negotiated procurements, a protest may be filed within 5 days (exclusive of Saturdays, Sundays and legal holidays) after receipt from the contracting officer of notification of the identity of the offeror being protested. Such filing must be delivered to the contracting officer by hand, telegram, or mail within the 5-day period allotted. A protest shall be considered timely if made by telephone to the contracting officer within the 5-day period allotted, and the contracting officer thereafter receives a confirming letter (i) within such 5-day period, or (ii) postmarked no later than 1 day after the date of such telephone protest.

(2) The contracting officer may at any time after the bid opening or the date for the submission of proposals question the small business status of any bidder or offeror for the purpose of a particular procurement by filing a written protest with the SBA district office serving the area in which the