contracting officer in writing whether SBA desires to submit contrary views concerning the determination.

(iii) If the contracting officer is not so notified, he may conclude that SBA has no objection to the determination, and he may then submit it for approval to the head of the procuring activity or his designee.

(iv) If SBA notifies the contracting officer of an intent to submit contrary views, SBA will, within 10 workdays from the date of notification to the contracting officer, furnish the contracting officer with such contrary views and the reasons therefor, together with any additional factors considered which were not included in the contracting officer's determination. If the SBA response is not received at the expiration of the 10day period, the contracting officer may forward the determination for approval with advice that such was the case.

(v) If, after consideration of SBA views, the contracting officer agrees with the SBA position, the determination shall be rescinded. If the contracting officer does not agree with the SBA position, he shall then forward the determination to the head of the procuring activity or his designee for resolution, with an explicit indication of his views and the contrary SBA position. The decision of such higher authority shall be final.

(vi) The provisions of § 1-1.7082(a) (1) apply if the award must be made without delay. In such instance, if the procedures of § 1-1.708-2(a) (5) (1) through (v) are not followed due to considerations of urgency, the requirements of 1-1.708-2(a) (1) shall be complied with and the determination that a small business concern is not responsible for reasons other than deficiencies in capacity or credit shall be submitted immediately to the head of the procuring activity or his designee for approval.

(b) To assist SBA in determining the capacity and credit of small business concerns involved in a particular procurement, the procurement agency shall at the time of notification make available to SBA all pertinent technical and financial information with respect to the small business concern involved, including but not limited to copies of the invitation for bids or request for proposals. drawings, specifications, preaward surveys, and abstracts of bids.

(c) Nothing in this section shall be construed to prevent a contracting officer

from selecting, in the first instance, the source of supply offering the highest competence obtainable or the best scientific approach where such source is needed in certain negotiated procurements of research and development, highly complex equipment, or personal or professional services. However, if a small business concern has been selected on the basis of the highest competence obtainable or best scientific approach and, prior to award, the contracting offcer determines that the concern is not responsible because of lack of capacity or credit, the certificate of competency procedure in paragraph (a) of this § 1-1.708-2 is applicable.

(d) After a contracting officer refers a negative finding regarding the capacity or credit of a small business concern to the SBA regional office, the SBA office shall notify the contracting officer if it plans to issue a certificate of competency or to refer the application to the SBA Central Office, Washington, D.C. The contracting officer shall also be informed of any new or additional facts in the case which have been developed. If these facts warrant, the contracting officer should consider a reversal of his negative finding. Every effort should be made to resolve the differences between SBA and the contracting agency through a complete exchange of preaward information.

(e) If agreement cannot be reached between the SBA regional office and the contracting officer. the contracting officer shall request the SBA regional office to suspend action and to forward the case to the SBA Central Office, Washington, D.C., for review. The SBA Central Office may decline to issue a certificate of competency and inform the contracting officer of this decision, or it may inform the contracting officer and higher authority within the procuring agency of the reasons for SBA's proposed affirmative action. The procuring agency shall notify the SBA Central Office within 10 workdays after receipt of written notification of SBA's proposed affirmative action whether a formal appeal will be made at the Central Office level. The appeal shall be presented within 10 workdays after the SBA Central Office is notified that an appeal will be made or at such later date as may be agreed upon by SBA and the procuring agency. Following the appeal, the SBA Associate Administrator shall make a determination relative to the certificate

or

Executive agencies shall maintain records of the value of procurement contracts placed with small business concerns. Accordingly, each procuring activity shall, in soliciting bids, proposals, request from any bidder or offeror any information needed to determine whether the bidder or offeror is a small business concern (when Standard Forms 18, 19-B, and 33 are used, this information is available from the small business representation included on these forms). Agencies shall summarize and report such procurement data on Standard Form 37 (Report on Procurement by Civilian Executive Agencies) in accordance with § 1-16.804. [31 F.R. 5880. Apr. 16. 1966] § 1-1.710 Subcontracting business concerns. General.

§ 1-1.710-1

with small

(a) It is the policy of the Government to enable small business concerns to be considered fairly as subcontractors and suppliers to contractors performing work or rendering services as prime contractors or subcontractors under Government procurement contracts, and to assure that prime contractors and subcontractors having small business subcontracting programs will consult through the appropriate procuring agency with the Small Business Administration when requested by SBA. However, the Small Business Administration is not authorized to prescribe the extent to which any contractor or subcontractor shall subcontract or specify the concerns to which subcontracts shall be granted, and is not vested with authority respecting the administration of individual prime contracts or subcontracts.

(See § 1-1.805 for subcontracting policies with respect to labor surplus area concerns.)

(b) This § 1-1.710 sets forth the program for furtherance of this policy and, together with Subpart 1-3.9, prescribes the contract clauses and procedures for use in carrying out the small business subcontracting program.

(c) As used in this Subpart 1-1.7, the term subcontractor includes a supplier and applies at any level of performance of the contract; and the term subcontract includes a purchase order.

(d) To carry out more effectively the Government's policy objectives stated in paragraph (a) of this section, prime contractors and subcontractors having small business subcontracting programs must be informed of (1) the Government's evaluation of their efforts in carrying out an effective small business subcontracting program, (2) any specifically noted deficiencies in their small business subcontracting programs. and (3) any areas of outstanding achievement where they may have exceeded contractual requirements. Any evaluation and remarks to the contractor, including areas of suggested improvement and areas where the contractor has exceeded contractual requirements, must be documented.

[29 F.R. 10104, July 24, 1964, as amended at 36 F.R. 3117, Feb. 18, 1971]

§ 1-1.710-2 Small business subcontracting program.

The Government's small business subcontracting program requires Government prime contractors to assume an affirmative obligation with respect to subcontracting with small business concerns. In contracts which range from $10,000 to $500,000, the contractor undertakes the obligation of accomplishing the maximum amount of small business subcontracting which is consistent with the efficient performance of the contract. This undertaking is set forth in the contract clause prescribed in § 1-1.710-3(a). In contracts which may exceed $500,000, the contractor is required, pursuant to the clause set forth in § 1-1.710-3(b), to undertake a number of specific responsibilities designed to assure that small business concerns are considered fairly in the subcontracting role and to impose similar responsibilities on major subcontractors. (The liaison officer required by the latter clause may also serve as liaison officer for labor surplus

§ 1-1.710-3, shall be included in all contracts in amounts which may exceed $10,000 except (1) contracts which, including all subcontracts thereunder, are to be performed entirely outside the United States, its possessions, and Puerto Rico, and (2) contracts for services which are personal in nature.

UTILIZATION OF SMALL BUSINESS CONCERNS

(a) It is the policy of the Government as declared by the Congress that a fair proportion of the purchases and contracts for supplies and services for the Government be placed with small business concerns.

(b) The Contractor agrees to accomplish the maximum amount of subcontracting to small business concerns that the Contracto finds to be consistent with the efficient performance of this contract.

[End of Clause]

(b) The Small Business Subcontract. ing Program clause, set forth in this 1-1.710-3, shall be included in all contracts which may exceed $500,000, which contain the clause required by § 1-1.710-3 (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.

SMALL BUSINESS SUBCONTRACTING PROGRAM

(a) The Contractor agrees to establish and cor.duct 8 small business subcontracting program which will enable small business concerns to be considered fairly as subcontractors and suppliers under this contract In this connection, the Contractor shall

(1) Designate a liaison officer who will (1) maintain liaison with the Government on small business matters, (11) supervise compliance with the Utilization of Small Business Concerns clause, and (111) administer the Contractor's "Small Business Subcontracting Program."

(2) Provide adequate and timely consideration of the potentialities of small business concerns in all “make-or-buy" decisions.

(3) Assure that small business concerns will have an equitable opportunity to compete for subcontracts, particularly by arranging solicitations, time for the prepara

tion of bids, quantities, specifications, and delivery schedules so 88 to facilitate the participation of small business concerns. Where the Contractor's lists of potential small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time.

(4) Maintain records showing (1) whether each prospective subcontractor is a small business concern, (11) procedures which have been adopted to comply with the policies set forth in this clause, and (111) with respect to the letting of any subcontract (including purchase orders) exceeding $10,000, information substantially as follows:

(A) Whether the award went to large or small business.

(B) Whether less than three or more than two small business firms were solicited. (C) The reason for nonsolicitation of smal) business if such was the case.

(D) The reason for small business failure to receive the award if such was the case when small business was solicited.

The records maintained in accordance with (111) above may be in such form as the Contractor may determine, and the information shall be summarized quarterly and submitted by the purchasing department of each Individual plant or division to the Contractor's cognizant small business liaison officer. Such quarterly summaries will be considered to be management records only and need not be submitted routinely to the Government: however, 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 regulation.

(5) Notify the Contracting Officer before soliciting bids or quotations on any subcontract (including purchase orders) in excess of $10,000 1 (1) no small business concern is to be solicited, and (11) the Contracting Officer's consent to the subcontract (or ratification) is required by a "Subcontracts" clause in this contract. Such notice will state the Contractor's reasons for nonsolicitation of small business concerns, and will be given as early in the procurement cycle as possible so that the Contracting Officer may give SBA timely notice to permit SBA a reasonable period to suggest potentially qualified small business concerns through the Contracting Officer. In no case will the procurement action be held up when to do so would. In the Contractor's judgment, delay performance under the contract.

(6) Include the Utilization of Small Business Concerns clause in subcontracts which offer substantial small business subcontracting opportunities.

(7) Cooperate with the Contracting Officer in any studies and surveys of the Contractor's subcontracting procedures and practices that

71

the Contracting Officer may from time to time conduct.

(8) Submit quarterly reports of subcontracting to small business concerns on either Optional Form 61, Small Business Subcontracting Program Quarterly Report of Participating Large Company on Subcontract Commitments to Small Business Concerns, or such other form as may be specified in the contract. Except as otherwise provided in this contract, the reporting requirements of this subparagraph (8) do not apply to small business contractors, small business subcontractors, educational and nonprofit institutions, and contractors or subcontractors for standard commercial items.

(b) A "small business concern" is a concern that meets the pertinent criteria established by the Small Business Administration and set forth in § 1-1.701 of the Federal Procurement Regulations.

con

(c) The Contractor agrees that, in the event he fails to comply with his tractual obligations concerning the small business subcontracting program, this contract may be terminated, in whole or in part. for default.

(d) The Contractor further agrees to insert in any subcontract hereunder which may exceed $500.000 and which contains the Utilization of Small Business Concerns clause provisions which shall conform substantially to the language of this clause, including this paragraph (d), and to notify the Contracting Officer of the names of such subcontractors.

[End of Clause]

[29 F.R. 10104, July 24, 1964, as amended at 33 F.R. 17293, Nov. 22, 1968; 34 F.R. 17953, Nov. 6, 1969; 40 FR 44137, Sept. 25, 1975] § 1-1.710-4 Review of subcontracting program.

(a) Contractor's program. The procuring agency concerned shall be responsible for conducting periodic reviews to determine the adequacy of the contractor's "Small Business Subcontracting Program." The reviews shall be made in accordance with paragraph (c) of this section, and the procuring agency should make arrangements concerning participation by representatives of SBA. as appropriate.

(b) Subcontractor's program. Promptly upon notification by the contractor of the placement of a subcontract requiring the subcontractor to establish such a program in accordance with 1-1.7103(b), the contracting officer shall either assume responsibility for review of the subcontractor's program or request that the review be made by an appropriate official or organization, in accordance with whatever policy may be adopted by the procuring agency.

(c) Procedure for conducting review. The following factors shall be considered in the periodic review to determine the adequacy of the contractor's (including subcontractor's) "Small Business Subcontracting Program":

(1) The extent to which the contractor pursues an energetic program to locate additional small business subcontract sources, including utilization of the services of the contract administration office. SBA. and appropriate media such as the Commerce Business Daily;

(2) The contractor's efforts to place with small business concerns development type work likely to result in later production opportunities;

(3) The contractor's policy and practices in providing financial, engineering, technical, or managerial assistance to small business subcontractors;

(4) The contractor's efforts to break out components of large systems in order to promote broader competition and greater opportunities for small business subcontractors;

(5) The extent to which top management supports the program by issuing oral and written policy statements and holding periodic training and discussion meetings for personnel;

(6) The extent of contractor's participation in procurement conferences, vendor open house days, and similar meetings designed to provide an "open door" to small companies seeking subcontract work;

(7) The adequacy of justification included in procurement files for decisions not to solicit small business on individual procurements;

(8) The extent to which the contractor considers small business interests in make-or-buy decisions;

(9) The extent to which the contractor has taken corrective action to remedy deficiencies in his program which were previously called to his attention;

(10) The accuracy of the contractor's records indicating the size status of subcontractors; and

(11) Any unusual efforts to promote the program whether or not they exceed contractual requirements.

(d) Report of review. A written report of each review shall be prepared indicating the extent of compliance with all contractual provisions pertaining to the assistance of small business. The specific areas of deficiency or superior performance of the contractor (or subcontractor), as appropriate, shall be documented.

A summary of the findings and recommendations normally should be sent to the contractor's corporate office (or to the contractor's plant, if a plant was involved). Any deficiencies of the contractor's (or subcontractor's) program shall be brought to the attention of the contractor's designated liaison officer with a request for corrective action. In addition to the distribution outlined above, written reports of reviews shall be maintained in the contract administration office. These reports shall be made available to SBA, small business specialists, other contracting officers, and to other procuring agencies, upon request.

(e) Subcontracting records. Subcontracting records maintained by Government offices shall be made available for review by SBA upon request.

(f) SBA recommendations. On the basis of the foregoing records and the periodic reviews of the adequacy of the contractor's "Small Business Subcontracting Program," SBA may make recommendations to the procuring agency regarding methods for increasing small business participation in the contractor's subcontract awards. SBA and the procuring agency will freely interchange, at the operating level, information resulting from the reviews.

(g) Use of periodic reviews by other procuring agencies. Where a procuring agency has made a periodic review of a contractor's "Small Business Subcontracting Program" within the preceding 12 months, that review may be used by another procuring agency in lieu of making a new and separate review of the same contractor's program.

[36 F.R. 3118, Feb. 18, 1971]

§ 1-1.711 Federal Supply Schedule con

tracts.

Where orders are placed under Federal Supply Schedule contracts and one or more of the contractors for an item on a given schedule are small business concerns, the orders shall be placed in accordance with the policies and procedures set forth in § 101-26.408-4(b) of the Federal Property Management Regulations.

[32 F.R. 6568, Apr. 28, 1967]

§ 1-1.712 Small business participation in research and development procvre ment actions.

[35 F.R. 4260, Mar. 7, 1970]

§ 1-1.712-1 Publicizing research and development procurement actions to attract small business.

To the fullest extent practicable, agencies shall publicize proposed research and development procurement contracts through use of the Commerce Business Daily (see § 1-1.1003) sufficiently in advance to allow participation of appropriate small business concerns in such procurements. Agencies shall also consider use of other suitable methods of publicizing research and development requirements to attract small business participation in addition to the use of the Commerce Business Daily. [35 FR 4260, Mar. 7, 1970]

§ 1-1.712-2 Expansion of small business sources for research and development procurement.

Agencies shall continually search for and develop information as to small business concerns which are competent to perform research and development. The search shall include (a) a review of relevant data or brochures furnished by small business sources seeking research and development work and (b) a cooperative effort by technical personnel. small business specialists, and contracting officers to obtain information and recommendations with respect to such potential sources.

[35 F.R. 4260, Mar. 7, 1970]

§ 1-1.712-3 Selection of small busines sources for research and development procurement.

(a) Policy. Agencies shall exercise all reasonable efforts to increase the number of qualified small business sources to perform research and development contracts and shall encourage the participation of small business sources, as well as other sources, in such procurement actions.