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quantities under the set-aside portion shall not be requested to accept a lower price because of the increased quantities of the award, nor shall negotiation be conducted with a view to obtaining such a lower price based solely upon receipt of award of both portions of the procurement. This does not prevent acceptance by the contracting officer of voluntary reductions in price prior to award, acceptance of refunds, or the change of prices after award by negotiation of a contract modification. If the entire setaside portion cannot be awarded by the method described herein, any unawarded portion may be procured by advertising or negotiations, as appropriate, in accordance with existing regulations (see §§ 18-3.201-2(a) and 18-3.210-3 as to negotiation). Since a considerable time may have elapsed since the initiation of the requirement, contracting officers, prior to issuing a new solicitation, shall review the required delivery schedule (see § 18-1.305-2) to insure that it is realistic in the light of all relevant factors including the capabilities of labor surplus
(2) When the award price for a nonsetaside portion has been determined and where an award will be made to a labor surplus area concern and the same labor surplus area concern is entitled to receive a set-aside portion of the solicitation, the set-aside portion may be added to the basic contract by supplemental agreement. The supplemental agreement shall include the "Examination of Records" clause, applicable to the set-aside portion only.
[36 F.R. 21463, Nov. 10, 1971]
§ 18-1.804-3 Withdrawal of set-asides. If, prior to the award of a contract involving a labor surplus set-aside, the contracting officer considers that the set-aside 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 signed memorandum setting forth the basis of the withdrawal of any set-aside shall be made and retained.
purposes see § 18-3.201-2(a) for contracts awarded to labor surplus area concerns and § 18-3.201-2(b) for contracts awarded to small business concerns which are not labor surplus area concerns.
Subcontracting with labor surplus area concerns.
§ 18-1.805-1 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 § 18-1.802 where this can be done, consistent with efficient performance of contracts, at prices no higher than are obtainable elsewhere. § 18-1.805-2 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 § 18-1.805-3(a). In contracts which may exceed $500,000, the contractor is required, pursuant to the clause set forth in § 18-1.805-3 (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.
(2) Contracts for construction; and (3) Contracts with the petroleum and petroleum products industry. UTILIZATION OF LABOR SURPLUS AREA CONCERNS (SEPTEMBER 1970)
(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 respectively as certified concerns with a first or second preference) regarding the employment of a proportionate number of disadvantaged individuals and have agreed to perform substantially (i) 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; 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) certified concerns with a first preference which are also small business concerns, (2) other certified concerns with a first preference, (3) certified concerns with a second preference which are also small business concerns, (4) other certified 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.
(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 paragraph (a) of this section and which, in the opinion of the contracting officer, offer substantial subcontracting possibilities. Prime contractors who are to be awarded contracts that do not exceed $500,000, which in the opinion of the contracting officer offer substantial subcontracting possibilities, shall be urged to accept the following clause:
LABOR SURPLUS AREA SUBCONTRACTING PROGRAM (SEPTEMBER 1970)
(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) For subcontracting purposes, a "labor surplus area concern" is a concern that (1) has been certified by the Secretary of Labor (hereafter referred to as a certified 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 not a certified concern but has agreed to perform substantially in persistent or substantially labor surplus areas. A certified concern shall be deemed to perform 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 of the United States if the costs that the concern will incur on account of manufacturing or production in or near such sections or in such areas amount to more than 25 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 in such areas 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 Labor Surplus Area Concerns" 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. [36 F.R. 21465, Nov. 10, 1971]
Petroleum and petroleum products industry (Notification No. 58).
There shall be no labor surplus area set-asides in this industry.
§ 18-1.900 Scope of subpart.
(a) General policy with respect to responsibility of prospective contractors; (b) Minimum standards for responsible prospective contractors;
(c) Procedures for determining responsibility of prospective contractors;
(d) Policy and procedures with respect to preaward surveys; and
(e) Policy concerning subcontractor responsibility.
§ 18-1.901 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:
(a) Other governments, including State and local governments;
(b) Other U.S. Government agencies or their instrumentalities (such as Federal Prison Industries, Inc.); or
(c) National Industries for the Blind. [36 F.R. 21465, Nov. 10, 1971]
§ 18-1.902 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 § 18-1.903-1, 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 §§ 18-1.905 and 18-1.906, 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.
§ 18-1.903 Minimum standards for responsible prospective contractors.
§ 18-1.903-1 General standards.
Except as otherwise provided in this § 18-1.903, a prospective contractor must:
(a) Have adequate financial resources or the ability to obtain such resources as required during performance of the contract (see §§ 18-1.904(d) and 18-1.905-2, and for Small Business Administration (SBA) certificates of competency, see § 18-1.705-4);
(b) Be able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing business commitments, commercial as well as governmental (for SBA certificates of competency, see § 181.705-4);
(c) Have a satisfactory record of performance (contractors who are seriously delinquent in current contract performance, when the number of contracts and the extent of delinquencies of each are considered, shall, in the absence of evidence to the contrary or circumstances properly beyond the control of the contractor, be presumed to be unable to fulfill this requirement). Past unsatisfactory performance, due to failure to apply necessary tenacity or perseverance to do an acceptable job, shall be sufficient to justify a finding of nonresponsibility. (In the case of small business concerns, see §§ 18-1.705-4 (c) (6) and 18-1.905–2);
(d) Have a satisfactory record of integrity (in the case of a small business concern, see § 18-1.705-4(c) (6)); and
(e) Be otherwise qualified and eligible to receive an award under applicable laws and regulations, e.g., §§ 18-12.6 and 18-12.8 (in the case of a small business concern, see § 18-1.706-4 (c) (5)). [36 F.R. 21465, Nov. 10, 1971]
§ 18-1.903-2 Additional
Standards for production, maintenance, construction, and research and development contracts.
In addition to the standards in § 181.903-1, in procurement involving production, maintenance, construction, or research and development work (and in other procurement as appropriate), a prospective contractor must:
(a) Have the necessary organization, experience, operational controls and technical skills, or the ability to obtain them (including where appropriate, such elements as production control procedures, property control system and quality assurance measures applicable to materials produced or services performed by the prospective contractor and subcontractors (see § 18-1.903-4)); and
(b) Have the necessary production, construction, and technical equipment and facilities, or the ability to obtain them. Where a prospective contractor proposes to use the facilities or equipment of another concern, not a subcontractor, or of his affiliate, all existing business arrangements, firm or contingent, for the use of such facilities or
equipment shall be considered in determining the ability of the prospective contractor to perform the contract; see also § 18-1.904-2.
[36 F.R. 21465, Nov. 10, 1971] § 18-1.903-3
When the situation warrants, contracting officers shall develop with the assistance of technical personnel or other specialists, special standards of responsibility to be applicable to a particular procurement or class of procurements. Such special standards may be particularly desirable where a history of unsatisfactory performance has demonstrated the need for insuring the existence of unusual expertise or specialized facilities necessary for adequate contract performance. The resulting standards shall form a part of the solicitation and shall be applicable to all bidders or offerors.
§ 18-1.903-4 Ability to meet certain minimum standards.
Except to the extent that a prospective contractor proposes to perform the contract by subcontracting (see § 181.906), acceptable evidence of his ability to obtain financial resources, experience, organization, technical qualifications,
skills, and facilities (see § 18-1.903-1 (a), and (f)) generally shall be a commitment or explicit arrangement which will be in existence at the time the contract is to be awarded for the rental, purchase or acquisition of such resources, equipment, facilities, or personnel.
§ 18-1.904 Determinations of responsibility and nonresponsibility. [36 F.R. 21466, Nov. 10, 1971] § 18-1.904-1
No purchase shall be made from, and no contract shall be awarded to, any person or firm unless the contracting officer first makes an affirmative determination that the prospective contractor is responsible within the meaning of § 18-1.902. The signing of the contract by the contracting officer constitutes such a determination; therefore, he must assure himself that the applicable requirements of § 18-1.903 are met before signing the contract or order. When a certificate of competency has been issued, the factors covered by the certificate of competency may be accepted by the contracting officer without further inquiry. When a bid or offer on which an award would otherwise be made is rejected because
the prospective contractor is found to be nonresponsible, a determination of nonresponsibility shall be made, signed, and placed in the file. The determination of nonresponsibility shall set forth the basis of the determination. In making a determination of responsibility or nonresponsibility for purchase or contract awards of $100,000 and over, contractor performance information and other performance data should be acquired and considered when the contracting officer deems it necessary. Supporting documents or reports, including any preaward survey reports (see § 18-1.905-4) and SBA certificate of competency (see § 18-1.705-4), shall be included in the contract file.
[36 F.R. 21466, Nov. 10, 1971]
§ 18-1.904-2 Affiliated concerns.
(a) Affiliated concerns (see § 18-1.7011(c)) shall be considered as separate entities in determining whether the one of them which is to perform the contract meets the applicable standards for a responsible prospective contractor (but see § 18-1.701-1 with respect to status as a small business concern).
(b) Notwithstanding the above, the record of performance and integrity of affiliated concern which may adversely affect the responsibility of the prospective contractor shall be considered by the contracting officer when making a determination of responsibility.
[36 F.R. 21466, Nov. 10, 1971]
§ 18-1.905 Procedures for determining responsibility of prospective contrac
(a) Before making a determination of responsibility (see § 18-1.904), the contracting officer shall have in his possession or obtain information sufficient to satisfy himself that a prospective contractor currently meets the minimum standards set forth in § 18-1.903, to the extent that such standards are applicable to a specific procurement.
(b) Maximum practicable use shall be made of currently valid information on file or within the knowledge of personnel in NASA. Each installation shall at such level and manner as it deems appropriate, maintain useful records and experience data for the guidance of contracting officers in the placement of new procurement, and shall inform its contracting officers of the means of access thereto.
(c) Generally, information necessary to make determinations of responsibility shall be obtained only concerning prospective contractors within range for an award.
[36 F.R. 21466, Nov. 10, 1971]
§ 18-1.905-2 When information will be obtained.
Generally, information regarding the responsibility of a prospective contractor (including preaward surveys (see § 18-1.905-4) when deemed necessary) shall be obtained promptly after bid opening, or receipt of proposals. However, in negotiated procurements, especially those involving research and development, such information may be obtained before the issuance of requests for proposals. Notwithstanding the foregoing, information regarding financial resources (see § 18-1.903-1) and performance capability (see § 18-1.9031(b)) shall be obtained on as current a basis as feasible with relation to the date of contract award.
[36 F.R. 21466, Nov. 10, 1971]
§ 18-1.905-3 Source of information.
Information regarding the responsibility of prospective contractors shall be sought among the following sources:
(a) The Joint Consolidated List of Debarred, Ineligible, and Suspended Contractors (see § 18-1.601).
(b) From the prospective contractorincluding representations and other information contained in or attached to bids and proposals; replies to questionnaires on financial data, such as balance sheets, profit and loss statements, cash forecasts, financial history of the contractor and affiliated concerns; current and past production records; personnel records; lists of tools, equipment, and facilities; written statements or commitments concerning financial assistance and subcontracting arrangements; and analyses of operational control procedures. Where it is considered necessary by the contracting officer to prevent practices prejudicial to fair and open competition or for other reasons, prospective contractors may be required to submit affidavits concerning their ability to meet any of the minimum standards set forth in § 18-1.903 and company ownership and control (see § 18-2.201-1(a) (23)).
(c) Existing information within NASA and other Government agenciesincluding records on file and knowledge