ing and Repair Shops) and not to procurements for the repairing and/or retreading of pneumatic aircraft tires which, by reason of the extent and nature of the equipment and operations required, are considered for size standard's purposes to be manufactured within the meaning of Standard Industrial Classification Industry No. 3011, Tires and Inner Tubes (see § 11.701-1(h)).

(14) Data processing. As small if it is bidding on a contract for data processing services and its average annual receipts for its preceding 3 fiscal years do not exceed $4 million (see § 1-1.70111 for size standard differentials which are applicable to specified nonforeign areas).

As

(15) Computer maintenance. small if it is bidding on a contract for computer maintenance services and its average annual receipts for its preceding 3 fiscal years do not exceed $7 million (see § 1-1.701-11 for size standard differentials which are applicable to specified nonforeign areas).

(16) Helicopters and fixed-wing aircraft. As small if it is bidding on a contract for services requiring the use of one or more helicopters or fixed-wing aircraft and its average annual receipts for its preceding 3 fiscal years do not exceed $3.5 million (see § 11.701-11 for size standard differentials which are applicable to specified nonforeign areas).

(g) Transportation. Any concern bidding on a contract for passenger or freight transportation, not elsewhere defined in this section, is classified:

(1) General. As small if its number of employees does not exceed 500 per

sons.

(2) Air transportation. As small if it is bidding on a contract for air transportation and its number of employees does not exceed 1,500 persons.

(3) Trucking. As small if it is bidding on a contract for trucking (local and/ or long distance), warehousing, packing and crating, and/or freight forwarding and its average annual receipts do not exceed $7 million (see § 1-1.701-11 for size standard differentials which are applicable to specified nonforeign areas).

(h) Table of specific industry employment size standards for the pur

'The "number of employees" means the average employment of any concern and its affiliates based on the number of persons employed during the pay period ending nearest the last day of the 3d month in each calendar quarter for the preceding 4 quarters.

2 The size standard for SIC 2911 is set forth in § 1-1.7011(i).

3 The size standards for SIC 30111, 30112, and 37171 are set forth in §§ 1-1.701-1(c)(2) and 1-1.701-1(c)(3).

The three Standard Industrial Classification Industries (3711, 3712, and 3714) have been combined because of a major problem of defining the reporting unit in terms of these industries. This difficulty arises from the fact that many large establishments have integrated operations which include the production of parts or bodies and the assembly of complete vehicles at the same location.

5 Includes maintenance as defined in the Federal Aviation Regulations (14 CFR 1.1) but excludes contracts solely for preventive maintenance as defined in 14 CFR 1.1. As defined in the Federal Aviation Regulations:

"Maintenance" means inspection, overhaul, repair preservation, and the replacement of parts, but excludes preventive maintenance.

"Preventive maintenance" means simple or minor preservation operations and the replacement of small standard parts not involving complex assembly operations.

Guided missile engines and engine parts are classified in SIC 3722. Missile control systems are classified in SIC 3662. "The size standard for Census Classification Code 2026, Fluid Milk, will be reduced to 625 employees effective May 1, 1973, and further reduced to 500 employees effective May 1, 1974.

(i) Refined petroleum products. Any concern bidding on a contract for a refined petroleum product other than a product classified in Standard Industrial Classification Industries No. 2951, Paving mixtures and blocks; No. 2952, Asphalt felts and coatings; No. 2992, Lubricating oils and greases; or No. 2999, Products of petroleum and coal, not elsewhere classified, is classified as small if:

(1)(i) Its number of employees does not exceed 1,000 persons; (ii) if it does not have more than 30,000 barrels-perday crude oil or bona fide feed stock capacity from owned or leased facilities or from facilities made available to such concern under an arrangement such as, but not limited to, an exchange agreement (except one on a refined product for refined product basis), or throughput or other form of processing agreement, with the same effect as though such facilities had been leased; and (iii) 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: Provided, however, That a petroleum refining concern which meets the requirements in paragraphs (i)(1) (i) and (ii) of this section may furnish the product to a refinery not qualified as small business if such product is obtained pursuant to a bona fide exchange agreement, in effect on the date of the 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 paragraph (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 paragraph (i)(1) of this section. The proviso in paragraph (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 paragraphs (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 products 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; 45 FR 55721, Aug. 21, 1980]

§ 1-1.701-2 Affiliates.

Business concerns are affiliates of each other when either directly or in

directly: (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 operation.

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.

the

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, part-time, 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 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 affiliate 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 Adminis

tration 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 (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