LABOR SURPLUS AREA CONCERNS

1.805 Subcontracting With Labor Surplus Area Concerns.

1.805-1 General Policy. It is the policy of the Government to promote equitable opportunities for labor surplus area concerns to compete for subcontracts and to encourage placement of subcontracts with concerns which will perform such contracts substantially in labor surplus areas in the order of priority described in 1.802 where this can be done, consistent with efficient performance of contracts, at prices no higher than are obtainable elsewhere.

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 $5,000 to $500,000, the contractor undertakes the simple obligation of using his best efforts to place his subcontracts with concerns which will perform such subcontracts substantially in labor surplus areas where this can be done, consistent with the efficient performance of the contract, at prices no higher than are obtainable elsewhere. This undertaking is set forth in the contract clause prescribed in 1.805-3(a). In contracts which may exceed $500,000, the contractor is required, pursuant to the clause set forth in 1.805-3(b), to undertake a number of specific responsibilities designed to insure achievement of the objectives referred to above and to impose similar responsibilities on major subcontractors.

1.805-3 Required Clauses.

(a) The "Utilization of Concerns in Labor Surplus Areas" clause set forth below shall be inserted in all contracts in amounts which may exceed $5,000, except

(1) contracts with foreign contractors which, including all subcontracts thereunder, are to performed entirely outside the United States, its possessions, and Puerto Rico; and

(2) contracts for construction.

UTILIZATION OF CONCERNS IN LABOR SURPLUS AREAS (APRIL 1968)

It is the policy of the Government to place contracts with concerns which wilt perform such contracts substantially in or near sections of concentrated unemploymen or underemployment as a certified-eligible concern or in areas of persistent or substantial labor surplus where this can be done, consistent with the efficient performance of the contract, 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. In complying with the foregoing 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: (i) certified-eligible concerns which are also small business concerns; (ii) other certified-eligible concerns; (iii) persistent labor surplus area concerns which are also small business concerns; (iv) other persistent labor surplus area concerns; (v) substantial labor surplus area concerns which are also small business concerns; (vi) other substantial labor surplus area concerns; and (vii) small business concerns which are not labor surplus area concerns.

(b) The "Labor Surplus Area Subcontracting Program" clause below shall be included in all contracts which may exceed $500,000, but which contain the clause required by (a) above and which, in the opinion of the contracting officer, offer substantial subcontracting possibilities. Prime contractor who are to be awarded contracts that do not exceed $500,000, which in the opinion

GENERAL PROVISIONS

of the contracting officer offer substantial subcontracting possibilities, shall be urged to accept the following clause:

LABOR SURPLUS AREA SUBCONTRACTING PROGRAM (APRIL 1968)

(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 procedures which have been adopted to comply with the policies set forth in this clause; and

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

(b) A "labor surplus area concern" is a concern which will perform, or cause to be performed, a substantial proportion of any contract awarded to it (i) in or near "Sections of concentrated unemployment or underemployment" as a certified-eligible concern, (ii) in "Areas of Persistent Labor Surplus" or (iii) in "Areas of Substantial Labor Surplus," as designated by the Department of Labor. A certified-eligible concern shall be deemed to perform a substantial proportion of a contract in or near sections of concentrated unemployment or underemployment if the costs that the concern will incur on account of manufacturing or production in or near such sections (by itself if a certified concern, or by certified concerns acting as first-tier subcontractors) amount to more than 30 percent of the price of such contracts; a concern shall be deemed to perform a substantial proportion of a contract in a persistent or substantial labor surplus area if the costs that the concern will incur on account of manufacturing or production (by itself or its first-tier subcontractors) in such area amount to more than 50 percent of the price of such contract.

(c) The Contractor further agrees, with respect to any subcontract hereunder which is in excess of $500,000 and which contains the clause entitled "Utilization of Concerns in Labor Surplus Areas," that he will insert provisions in the subcontract which will conform substantially to the language of this clause, including this paragraph (c), and that he will furnish the names of such subcontractors to the Contracting Officer. 1.805-4 Review of Subcontracting Program. The adequacy of the contractor's Labor Surplus Area Subcontracting Program shall be reviewed in accordance with the procedures set forth in 1.707-4, and any deficiencies shall be brought to the attention of the contractor's liaison officer with a request for corrective action.

1.806 Depressed Industries.

1.806-1 General. When an entire industry is depressed, the Office of Emergency Preparedness may, under Defense Manpower Policy No. 4, establish appropriate measures on an industry-wide, rather than on an area, basis. Designations of such industries are made by Office of Emergency Preparedness Notifications, and such industries will be given special treatment as specified therein. Paragraph 1.806-2 reflects pertinent requirements of such Notifica

LABOR SURPLUS AREA CONCERNS

tion with respect to the Petroleum and Petroleum Products Industry. No price differentials will be paid to carry out policies of this Notification.

1.806-2 Petroleum and Petroleum Products Industry (Notification No. 58). There shall be no labor surplus area set-asides in this industry.

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NASA PROCUREMENT REGULATION

1.806-2

Subpart 9 Responsible Prospective Contractors

1.900 Scope of Subpart. This Subpart sets forth:

(i) general policy with respect to responsibility of prospective contractors;

(ii) minimum standards for responsible prospective contractors;

(iii) procedures for determining responsibility of prospective contractors; (iv) policy and procedures with respect to pre-award surveys; and

(v) policy concerning subcontractor responsibility.

1.901 Applicability. This Subpart applies to procurements from contractors located in the United States, its possessions, and Puerto Rico; and will be applied in other places except where it is inconsistent with the laws and customs of the place where the prospective contractor is located. It is not applicable to procurements from:

(i) other governments, including State and local governments;

(ii) Canadian Commercial Corporation;

(iii) other United States Government agencies or their instrumentalities (such as Federal Prison Industries, Inc.); or

(iv) National Industries for the Blind.

1.902 General Policy. Contracts shall be awarded only to responsible prospective contractors. A responsible prospective contractor is one who meets the minimum standards set forth in 1.903-1, and such additional standards as may be prescribed for specific procurements. The award of a contract to a supplier based on lowest evaluated price alone can be false economy if there is subsequent default, late deliveries, or other unsatisfactory performance resulting in additional procurement or administrative costs. While it is important that Government purchases be made at the lowest price, this does not require an award to a marginal supplier solely because he submits the lowest bid or offer. A prospective contractor must demonstrate affirmatively his responsibility, including, when necessary, that of his proposed subcontractors. The contracting officer shall make a determination of nonresponsibility if, after compliance with 1.905 and 1.906, the information thus obtained does not indicate clearly that the prospective contractor is responsible. Recent unsatisfactory performance, in either quality or timeliness of delivery, whether or not default proceedings were instituted, is an example of a problem which the contracting officer must consider and resolve as to its impact on the current procurement prior to making an affirmative determination of responsibility. Doubt as to productive capacity or financial strength which cannot be resolved affirmatively shall require a determination of nonresponsibility.

1.903 Minimum Standards for Responsible Prospective Contractors. 1.903-1 General Standards. A prospective contractor must meet the following minimum standards as they relate to the particular procurement under consideration:

(i) have adequate financial resources or the ability to obtain such resources as required during performance of the contract (see 1.904(d) and 1.905-2, and for Small Business Administration (SBA) certificates of competency, see 1.705-4);