cial method of negotiated procurement conducted in the same manner as that for formal advertising, except that competition and awards are restricted to labor surplus area concerns. [43 FR 26009, June 16, 1978]

§ 1-1.802 Labor surplus area policies.'

§ 1-1.802-1 General policy.

It is the policy of the Government to award appropriate contracts and grants to, and to execute agreements with, eligible labor surplus area concerns and to encourage prime contractors to place subcontracts with concerns which will perform substantially in labor surplus areas.

[43 FR 26009, June 16, 1978]

§ 1-1.802-2 Specific policies.'

To further the general policy, the following specific policies shall be applied to procurements which are estimated to exceed $2,500:

(a) [Reserved]

(b) Procurements shall be set-aside for award to labor surplus area concerns in accordance with § 1-1.804.

(c) Procuring activities shall disseminate available publications and other information identifying labor surplus areas promptly to appropriate procurement personnel.

(d) The Department of Labor classifications of labor surplus areas shall be considered conclusive with respect to individual procurement actions.

(e) Concerns located in labor surplus areas, which are on appropriate bidders lists, shall be given the opportunity to submit bids or proposals on all procurements for which they are qualified, except where the procurement has been set aside in its entirety for a specific class of firms, such as small business concerns. Where less than a complete bidders list is to be used, pursuant to § 1-2.205-4, all prospective contractors in labor surplus areas shall be solicited, except that only a pro rata number of prospective

For a document relating to this section, see Appendix-Temporary Regulations appearing at the end of Chapter 1.

labor surplus area concerns need 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.

(f) Subcontracting with concerns in labor surplus areas shall be encouraged in accordance with § 1-1.805.

(g) In the event of equal low bids, preference shall be given to labor surplus area concerns in accordance with § 1-2.407-6.

(h) Depressed industries shall be assisted in accordance with § 1-1.806.

(i) Procuring activities shall cooperate with the Departments of Labor and Commerce, the Small Business Administration, and the Federal Preparedness Agency, GSA, to achieve the objectives of this Subpart 1-1.8.

(j) Procurement placed in labor surplus areas as a result of preference procedures shall be reported in accordance with § 1-1.807.

[29 FR 10104, July 24, 1964, as amended at 43 FR 26009, June 16, 1978]

§ 1-1.802-3 Buy American Act.

Any preference under the "Buy American Act" due to performance in labor surplus areas (see section 3(c) of Executive Order No. 10582 of December 17, 1954, which prescribes uniform procedures for certain determinations under the Buy American Act) shall be in addition to the assistance accorded pursuant to this subpart.

§ 1-1.803 [Reserved]

§ 1-1.804 Total set-asides for labor surplus

area concerns.

[43 FR 26009, June 16, 1978]

§ 1-1.804-1 General.

(a) Subject to the conditions set forth in §§ 1-1.706-1 and 1-1.706-2, the entire amount of an individual procurement or class of procurements shall be set aside for labor surplus area concerns where there is a reasonable expectation that bids or proposals will be obtained from a sufficient number of responsible labor surplus area concerns so that awards will be made at reasonable prices. Total setasides shall not be made unless such a

reasonable expectation exists. Although past procurement history of the item or similar items is always important, it is not the only controlling factor which should be considered in determining whether a reasonable expectation exists.

(b) Contracts involving total labor surplus area set-asides shall be entered into by conventional negotiation or by a special method of procurement known as "Labor Surplus Area Restricted Advertising." Whenever possible, the restricted advertising method, as defined in § 1-1.801(e), shall be used.

(c) In procurements involving total set-asides for labor surplus area concerns, each invitation for bids or request for proposals shall contain the following notice.

NOTICE OF TOTAL LABOR SURPLUS AREA SETASIDE

(a) General. Bids or proposals under this procurement are solicited from concerns that will agree to perform as labor surplus area concerns. This action is based on the provisions of the Small Business Act (15 U.S.C. 644(e)) and Defense Manpower Policy 4A. Bids or proposals received from concerns which do not agree to perform as labor surplus area concerns will be considered nonresponsive.

(b) Definitions. (1) The term "labor surplus area" means a geographical area identified by the Department of Labor as an area of concentrated unemployment or underemployment or an area of labor surplus.

(2) The term "concern located in a labor surplus area" means a labor surplus area concern.

(3) The term "labor surplus area concern" means a concern that together with its firsttier subcontractors will perform substantially in labor surplus areas.

(4) The term "perform substantially in labor surplus areas" means that the costs incurred on account of manufacturing, production, or appropriate services in labor surplus areas exceed 50 percent of the contract price.

(c) Agreement. The bidder or offeror agrees that, if awarded a contract as a labor surplus area concern, he will:

(1) Perform the contract, or cause it to be performed, substantially in areas classified as labor surplus areas on the date of the solicitation. However, if an area selected by the bidder or offeror is no longer classified as a labor surplus area at the time of performance, he is encouraged to select an

other area for performance which is classi fied at that time as a labor surplus area.

(2) Submit a report to the Contracting Officer 30 days after the award of the contract (if it exceeds $10,000), or such longer time as prescribed by the contracting officer, which contains the following information. REPORT ON PERformance in Labor Surplus AREAS

(a) Amount of the contract

PERFORMANCE IN LABOR SURPLUS AREAS

(b) By the prime contractor:

(1) (Identity of labor surplus area)
(2) ......do
(3) ......do

(4) ......do

(c) By the subcontractors (first-tier): (1) (Identity of labor surplus area) (2) ......do

(3) ......do (4)......do

(d) Total of (b) and (c)

'Costs incurred by the Contractor or his first-tier subcontractors on account of production, manufacturing, or appropriate services performed in the labor surplus area.

[End of Notice]

(d) The rejection of a labor surplus area set-aside may not be based on any of the following:

(1) A large part of the previous procurement 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 30 days from the date of issuance of an invitation for bids or a request for proposals is prescribed for the submission of bids or proposals.

(5) The procurement is classified. [43 FR 26009, June 16, 1978]

§ 1-1.804-2 [Reserved]

§ 1-1.804-3 Award procedures.

(a) Awarding the set-aside. Contracts involving total labor surplus area setasides shall be effected by negotiation, through the use of the Labor Surplus Area Restricted Advertising procedures or conventional negotiation, with eligible concerns, as provided in the solicitation. Awards shall be made

(b) Nonawarded set-aside. If a setaside cannot be awarded by the methods described in this § 1-1.804, any unawarded portion may be procured by advertising or negotiation, as appropriate, in accordance with applicable regulations. A record of the reasons the set-aside portion of a procurement could not be awarded to labor surplus area concerns shall be includ

ed in the contract file.

[43 FR 26010, June 16, 1978]

§ 1-1.804-4 Withdrawal of set-asides.

If the contracting officer considers that a set-aside is detrimental to the public interest, e.g., because of unreasonable prices, the contracting officer may withdraw the set-aside and complete the procurement by advertising or negotiation, as appropriate, in accordance with applicable regulations. A record of the reasons for the withdrawal of any set-aside shall be made and included in the contract file.

[43 FR 26010, June 16, 1978]

§ 1-1.804-5 Contract authority.

Contracts for set-asides made under this subpart 1-1.8 shall cite, as the legal authority for negotiation, section 302(c)(1) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252(c)(1)), the Armed Services Procurement Act (10 U.S.C. 2304(a)(1)), or other proper authority (see § 1-3.201).

[43 FR 26010, June 16, 1978]

§ 1-1.805 Subcontracting with labor surplus area concerns.

§ 1-1.805-1 General.

(a) In furtherance of the general policy stated in § 1-1.802, procuring agencies shall encourage prime contractors to place subcontracts with concerns which will perform a substantial proportion of the production in areas of labor surplus, where this can be done consistent with efficient performance of contracts and at prices no higher than are obtainable elsewhere. (See § 1-1.710 for subcontract

(b) As used in this Subpart 1-1.8, the term subcontractor includes a supplier and applies at any level of performance of the contract; and the term subcontract includes a purchase order.

§ 1-1.805-2 Labor surplus area subcontracting program.

The Government's labor surplus area subcontracting program requires Government prime contractors to assume an affirmative obligation with respect to subcontracting with labor surplus area concerns. In contracts which range from $10,000 to $500,000, the contractor undertakes the obligation of using his best efforts to place his subcontracts with concerns which will perform such subcontracts substantially in areas of labor surplus, where this can be done consistent with the efficient performance of the contract and at prices no higher than are obtainable elsewhere. This undertaking is set forth in the contract clause prescribed in § 1-1.805-3(a). In contracts which may exceed $500,000, the contractor is required, pursuant to the clause set forth in § 1-1.805-3(b), to undertake a number of specific responsibilities designed to assure achievement of the objectives referred to above and to impose similar responsibilities on major subcontractors.

[40 FR 44137, Sept. 25, 19751

§ 1-1.805-3 Required clauses.

(a) The Utilization of Labor Surplus Area Concerns clause, set forth below, shall be inserted in all contracts in amounts which may exceed $10,000 except:

(1) Contracts with foreign contractors which, including all subcontracts thereunder, are to be performed entirely outside the United States, its territories and possessions, Puerto Rico, the Trust Territory of the Pacific Islands, and the District of Columbia;

(2) Contracts for services which are personal in nature; and

(3) Contracts for construction.

UTILIZATION OF LABOR Surplus AREA
CONCERNS

(The following clause is applicable if this contract exceeds $10,000.)

(a) It is the policy of the Government to award contracts to labor surplus area concerns that agree to perform substantially in labor surplus areas, where this can be done consistent with the efficient performance of the contract and at prices no higher than are obtainable elsewhere. The Contractor agrees to use his best efforts to place his subcontracts in accordance with this policy.

(b) In complying with paragraph (a) of this clause and with paragraph (b) of the clause of this contract entitled "Utilization of Small Business Concerns," the Contractor in placing his subcontracts shall observe the following order of preference: (1) Small business concerns that are labor surplus area concerns, (2) other small business concerns, and (3) other labor surplus area con

cerns.

(c)(1) The term "labor surplus area" means a geographical area identified by the Department of Labor as an area of concentrated unemployment or underemployment or an area of labor surplus.

(2) The term "labor surplus area concern" means a concern that together with its firsttier subcontractors will perform substantially in labor surplus areas.

(3) The term "perform substantially in a labor surplus area" means that the costs incurred on account of manufacturing, production, or appropriate services in labor surplus areas exceed 50 percent of the contract price.

[End of Clause]

(b) The "Labor Surplus Area Subcontracting Program" clause, set forth in this paragraph (b), shall be included in all contracts which may exceed $500,000, which contain the clause required by § 1-1.805-3(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.

LABOR SURPLUS AREA SUBCONTRACTING
PROGRAM

(a) The Contractor agrees to establish and conduct a program which will encourage labor surplus area concerns to compete for subcontracts within their capabilities. In this connection, the Contractor shall

(1) Designate a liaison officer who will (i) maintain liaison with duly authorized representatives of the Government on labor surplus area matters, (ii) supervise compliance with the Utilization of Concerns in Labor Surplus Areas clause, and (iii) administer the Contractor's "Labor Surplus Area Subcontracting Program";

(2) Provide adequate and timely consideration of the potentialities of labor surplus area concerns in all "make-or-buy" decisions;

(3) Assure that labor surplus area 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 labor surplus area concerns;

(4) Maintain records showing the procedures which have been adopted to comply with the policies set forth in this clause and report subcontract awards (see 41 CFR 116.804-5 regarding use of Optional Form 61). 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 ap plicable law or regulations; and

(5) Include the Utilization of Concerns in Labor Surplus Areas clause in subcontracts which offer substantial labor surplus area subcontracting opportunities.

(b)(1) The term "labor surplus area" means a geographical area identified by the Department of Labor as an area of concentrated unemployment or underemployment or an area of labor surplus.

(2) The term "concern located in a labor surplus area" means a labor surplus area concern.

(3) The term "labor surplus area concern" means a concern that, together with its first-tier subcontractors, will perform substantially in labor surplus areas.

(4) The term "perform substantially in labor surplus areas" means that the costs incurred on account of manufacturing, production, or appropriate services in labor surplus areas exceed 50 percent of the contract price.

(c) The Contractor further agrees to insert, in any subcontract hereunder which may exceed $500,000 and which contains the Utilization of Concerns in Labor Surplus Areas clause, provisions which shall conform substantially to the language of this clause, including this paragraph (c), and to notify the Contracting Officer of the names of such subcontractors.

[End of Clause]

[29 FR 10104, July 24, 1964, as amended at 32 FR 18048, Dec. 16, 1967; 34 FR 17954.

(b) Where proposals received in competitive negotiated procurements evidence violations of the antitrust laws, the procedures in this Subpart 1-1.9 may be used in referring such proposals to the Attorney General.

(c) The reports required by this subpart are in addition to and are not to be considered as satisfying the requirements of Subpart 1-1.16 for reporting identical bids to the Attorney General.

§ 1-1.902 Documents to be transmitted.

In reporting cases of possible violations of the antitrust laws to the Attorney General, each agency shall transmit, in addition to a copy of each suspect bid, the documents and statements enumerated below (the expression "suspect bids" or variations thereof, as used in this Subpart 1-1.9, shall be deemed to include any bids which indicate practices which may evidence possible violations of the antitrust laws including collusive bidding, follow-the-leader pricing, rotated low bids, identical bids, or any other bid device intended to deprive the Government of the benefit of full and free competition):

(a) One copy of the invitation for bids and any amendments thereto.

(b) An abstract of all bids received for each item covered by the bid invitation for which suspect bids were received, showing for each such item(1) The unit and total price bid.

(2) The net price to the Government after discounts and allowance for transportation, or other costs, are absorbed by the bidder.

(3) The name of the manufacturer of the item or the source of supply if the bidder is a dealer or distributor, and the location of the plant from which shipment will be made. Where identical bids are filed by dealers, distributors, or jobbers representing the same manufacturer or supplier, they frequently indicate adherence to the supplier's list or suggested price to the Government. Unless the procurement agency has some evidence that such identical bids resulted from collusion or concert of action among the bidders they need not be reported to the Attorney General.