Secretary of Labor in accordance with 29 CFR 8.7(c) and 8.9 (d) with respect to employment of disadvantaged individuals, and which will agree to perform, or cause to be performed by certified concerns with first or second preferences, a substantial proportion of a contract; it includes a concern which, though not so certified, agrees to have a substantial proportion of a contract performed by such certified concerns. A concern shall be deemed to perform a substantial proportion of a contract if the costs that the concern will incur on account of manufacturing or production (by itself, if a certifiled concern, or by certified concerns with first or second preferences acting as first-tier subcontractors) amount to more than 25 percent of the contract price.

(111) "Persistent or substantial labor surplus area concern" means a concern that agrees to perform, or cause to be performed, a substantial proportion of a contract in persistent or substantial labor surplus areas. A concern shall be deemed to perform & substantial proportion of a contract in persistent or substantial labor surplus areas if the costs that will be incurred by the concern on account of manufacturing or production performed in such areas (by itself or its first-tier subcontractors) or in any areas (by itself if a certified concern or its first-tier certified subcontractors) amount to more than 50 percent of the contract price.

(3) A "small business concern" is a concern, including its affiliates, which is independently owned and operated, is not dominant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in the regulations of the Small Business Administration (13 CFR 121.3-8). In addition to meeting these criteria, a manufacturer or a regular dealer submitting bids or proposals in his own name must agree to furnish in the performance of the contract end items manufactured or produced in the United States, its territories and possessions, Puerto Rico, the Trust Territory of the Pacific Islands, and the District of Columbia by small business concerns: Provided, That this additional requirement does not apply in connection with construction or service

contracts.

(c) Identification of Areas of Performance. Each bidder desiring to be considered for award as a labor surplus area concern on the set-aside portion of this procurement shall identify in his bid the geographical areas in which he proposes to perform, or cause to be performed, a substantial proportion of the production of the contract. If the Department of Labor classification of any such area changes after the bidder has submitted his bid, the bidder may change the areas in which he proposes to perform, provided that he so notifies the Contracting Officer before award of the set-aside portion. Priority for negotiation will be based upon the labor surplus classification of the designated pro

duction areas as of the time of the proposed award.

(d) Eligibility Based on Certification. Where eligibility for preference is based upon the status of the bidder or bidder's subcontractors as a "certified-eligible concern," the bidder shall furnish with his bid evidence of certification by the Secretary of Labor.

(e) Agreement. The bidder agrees that: (1) If awarded a contract as a certifiedeligible concern with a first preference under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial proportion of the contract in or near sections of concentrated unemployment or underemployment or in persistent or substantial labor surplus areas; and in the performance of such contract will employ, or require certified first-tier subcontractors with first preferences to employ, a proportionate number of disadvantaged individuals residing within such sections or areas in accordance with plans approved by the Secretary of Labor.

(2) If awarded a contract as a certifiedeligible concern with a second preference under the set-aside portion of this procurement, he will perform, or cause to be performed, 8 substantial proportion of the contract in certified facilities, and in the performance of such contract will employ or require certified first-tier subcontractors with first or second preferences to employ, disadvantaged individuals in accordance with plans approved by the Secretary of Labor.

(3) If awarded a contract as a persistent or substantial labor surplus area concern under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial proportion of the contract (1) in areas classified at the time of the award, or at the time of performance of the contract, as persistent or substantial labor surplus areas or (ii) in any area (by himself if certified or by first-tier certified subcontractors).

[End of Notice]

[29 F.R. 10104, July 24, 1964, as amended at 30 F.R. 16110, Dec. 28, 1965; 35 F.R. 8483, June 2, 1970]

§ 1-1.804-3 Award procedures.

(a) Awarding the non-set-aside portion. Awards on the non-set-aside portion shall be made in accordance with normal procurement procedures.

(b) Awarding the set-aside portion. (1) After all awards have been made on the non-set-aside portion, award of the set-aside portion shall be effected by negotiation with eligible concerns as provided in the notice. To determine whether a concern is eligible for preferential consideration as a labor surplus area concern the area classification of the Department of Labor in effect at the

time of the award, as well as any applicable evidence of a Department of Labor certification, shall be used. Contracts for the set-aside portion shall specify the preferential status of the bidder or offeror on which the award was based.

(2) If equal low bids were received on the non-set-aside portion from concerns which are eligible for the set-aside portion, the concern which is awarded the non-set-aside portion (under the equal low bid procedures of § 1-2.407-6 shall have the first priority with respect to negotiations for the set-aside portion.

(c) Nonawarded set-aside portion. If any part of the set-aside quantity cannot be awarded by the method described in this § 1-1.804, any unawarded portion may be procured by advertising or negotiation, as appropriate, in accordance with existing regulations. A record of the reasons for failure to award the setaside portion to labor surplus area concerns shall be included in the contract file.

[32 FR. 18047, Dec. 16, 1967]

§ 1-1.804-4 Withdrawal of set-asides.

If, prior to the award of a contract involving a labor surplus set-aside, the contracting officer considers that the setaside is detrimental to the public interest, e.g., because of unreasonable prices, the contracting officer shall withdraw the set-aside and complete the procurement by advertising or negotiation, as appropriate, in accordance with existing regulations. A record of the reasons for the withdrawal of any set-aside shall be made and included in the contract file. § 1-1.804-5 Contract authority.

Contracts for set-asides made under this subpart shall cite as 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 revised Armed Services Procurement Act of 1947 (10 U.S.C. 2304(a) (1)), or other applicable proper authority (see § 1-3.201).

§ 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

from $5,000 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.

§ 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 $5,000, 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 $5,000.)

(a) It is the policy of the Government to award contracts to labor surplus area concerns that (1) have been certified by the

Secretary of Labor (hereafter referred to as certified-eligible concerns with first or second preferences) regarding the employment of a proportionate number of disadvantaged individuals and have agreed to perform substantially (1) in or near sections of concentrated unemployment or underemployment or in persistent or substantial labor surplus areas or (ii) in other areas of the United States, respectively, or (2) are noncertified concerns which have agreed to perform substantially in persistent or substantial 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) Certifiedeligible concerns with a first preference which are also small business concerns; (2) other certified-eligible concerns with a first preference; (3) certified-eligible concerns with a second preference which are also small business concerns; (4) other certified-eligible concerns with a second preference; (5) persistent or substantial labor surplus area concerns which are also small business concerns; (6) other persistent or substantial labor surplus area concerns; and (7) small business concerns which are not labor surplus area concerns.

[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 (1) maintain liaison with duly authorized representatives of the Government on labor surplus area matters, (11) supervise compliance with the Utilization of Concerns in Labor Surplus Areas clause, and (111) 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. 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 applicable 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) A "labor surplus area concern" is a concern that (1) has been certified by the Secretary of Labor (hereafter referred to as a certified-eligible concern) regarding the employment of a proportionate number of disadvantaged individuals and has agreed to perform substantially in or near sections of concentrated unemployment or underemployment, in persistent or substantial labor surplus areas, or in other areas of the United States or (2) is a noncertified concern which has agreed to perform a substantial proportion of a contract in persistent or substantial labor surplus areas. A certified-eligible concern shall be deemed to have performed a substantial proportion of a contract in or near sections of concentrated unemployment or underemployment, in persistent or substantial labor surplus areas, or in other areas if the costs that the concern will incur on account of manufacturing or production in or near such sections or in such areas (by itself. if a certified concern, or by certified concerns acting as first-tier subcontractors) amount to more than 25 percent of the contract price. A concern shall be deemed to have performed a substantial proportion of a contract in persistent or substantial labor surplus areas (by itself or its first-tier subcontractors) if the costs that the concern will incur on account of production or manufacturing in such areas amount to more than 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

When an entire industry is depressed, the Office of Emergency Planning 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 Planning Notifications, and such industries will be given special treatment as specified therein. Sections 1-1.806-2 through 1-1.806-5 reflect pertinent requirements of such Notifications with respect to the industries indicated. No price differentials will be paid to carry out policies of these Notifications. Executive agencies shall report on procurement from these industries in accordance with § 1-1.807.

Subpart 1-1.9-Reporting Possible Antitrust Violations

§ 1-1.901 General.

(a) Section 302(d) of the Federal Property and Administrative Services Act of 1949 requires, with respect to advertised procurement, that bids be referred to the Attorney General for appropriate action when in the opinion of the agency head they evidence any violation of the antitrust laws. The referral of such bids shall be in accordance with this Subpart 1-1.9.

(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.

(4) The destination of shipments, and whether the price quoted includes or excludes the cost of transportation to destination.

(5) The identity of the successful bidder, and, where identical low bids were submitted by several bidders, an indication of how the award was made.

(c) Copies of documents filed by suspect bidders as part of the bid submission or obtained by the procuring agency such as the following

(1) Contracts with contingent fee representatives who acted on behalf of one or more of the bidders who submitted identical bids or assisted them in the preparation of their bids.

(2) Correspondence or other evidence of patent rights owned or licensed by bidders quoting identical prices.

(3) Evidence of the existence of financial or other ties between bidders submitting suspect bids as revealed by Dun and Bradstreet or other reliable financial reports.

(4) Any pertinent financial or corporate information concerning the suspect bids as may be contained in financial statements or annual reports to stockholders.

(d) Copies of reports containing the findings of any special investigations conducted by the procurement agency concerning the bids reported.

(e) Copies of any correspondence between the procurement agency and the suspect bidders revealing the factors responsible for the filing of suspect bids, or explaining the prices bid.

§ 1-1.903 Additional information.

In addition to the documentary matter described above, the following information must be submitted, or appropriate remarks made, to the degree available, with respect to each suspected antitrust violation:

(a) Where there is a prior pattern of procurement of the item for which suspect bids were received, indicate the procurement agency's annual dollar value of purchases of the item in each of the three calendar years preceding

the year in which the suspect bids were received.

(b) With respect to purchases of the itern in prior years, submit an abstract of all suspect bids received in response to each invitation for bids issued in the preceding three-year period, setting forth in such abstract the information described in § 1-1.902. If this information was submitted with a prior reference of identical bids to the Attorney General it will be necessary only to state that the information was submitted with a suspect bid reference of a specified date.

(c) Indicate whether the pattern of bidding in the three-year period preceding the receipt of the suspect bids reported appears to indicate such practices as bid rotation, sharing of the business, collusive bidding, or any other form of joint action. If such practices are indicated, explain in detail.

(d) If there are any known financial, personal, or other than personal relationships among any of the suspect bidders, describe them.

(e) Indicate if the Government's specifications for the item are so drawn that only a limited number of potential bidders are capable of meeting these specifications.

(f) Indicate whether the item is covered by active patents and if such patents are owned or controlled by any of the suspect bidders. If information is available, submit full details, including any evidence that patent control may have a bearing on price identity.

(g) If there are any known manufacturers or suppliers of the item who consistently avoid bidding on Government contracts, identify such suppliers or manufacturers and indicate whether the procurement agency has any knowledge as to the reasons why these firms avoid seeking Government business.

(h) Indicate if the prices bid by the suspect bidders are their published list prices or if they are prices applicable only to the particular bid. If the prices quoted by the suspect bidders are not their published list prices, state whether they appear to have been arrived at by the application of a uniform Government discount from list prices or by some other method of computation. If available, furnish photostatic copies of suspect bidders' and other bidders' price lists.

(1) Indicate whether it is known to be the general practice of the manufac