36C25018Q9647-001.pdf

Small Business Administration § 125.6 its receipt of the notice under para-graph (h) of this section. The appeal and any supporting documentation must be filed within 10 working days (or a different time period agreed to by both agencies) after SBA receives the request for a formal appeal.

(3) The SBA Director, Office of Gov-ernment Contracting (D/GC) will make a final determination, in writing, to issue or to deny the COC.

(j) Decision by SBA Headquarters where contract value exceeds $25 million. (1) Prior to taking final action, SBA Head-quarters will contact the contracting agency at the secretariat level or agen-cy equivalent and afford it the fol-lowing options:

(i) Ask SBA Headquarters to suspend the case so that the agency can meet with Headquarters personnel and re-view all documentation contained in the case file; or

(ii) Submit to SBA Headquarters for evaluation any information which the contracting agency believes has not been considered.

(2) After reviewing all available in-formation, the AA/GC will make a final decision to either issue or deny the COC. If the AA/GC’s decision is to deny the COC, the applicant and contracting agency will be informed in writing by the Area Office. If the decision is to issue the COC, a letter certifying the responsibility of the firm will be sent to the contracting agency by Head-quarters and the applicant will be in-formed of such issuance by the Area Of-fice. Except as set forth in paragraph

(l) of this section, there can be no fur-ther appeal or reconsideration of the decision of the AA/GC.

(k) Notification of denial of COC. The notification to an unsuccessful appli-cant following either an Area Director or a Headquarters denial of a COC will briefly state all reasons for denial and inform the applicant that a meeting may be requested with appropriate SBA personnel to discuss the denial.

Upon receipt of a request for such a meeting, the appropriate SBA per-sonnel will confer with the applicant and explain the reasons for SBA’s ac-tion. The meeting does not constitute an opportunity to rebut the merits of the SBA’s decision to deny the COC, and is for the sole purpose of giving the applicant the opportunity to correct deficiencies so as to improve its ability to obtain future contracts either di-rectly or, if necessary, through the issuance of a COC.

(l) Reconsideration of COC after issuance. (1) An approved COC may be reconsidered and possibly rescinded, at the sole discretion of SBA, where an award of the contract has not occurred, and one of the following circumstances exists:

(i) The COC applicant submitted false or omitted materially adverse informa-tion;

(ii) New materially adverse informa-tion has been received relating to the current responsibility of the applicant concern; or

(iii) The COC has been issued for more than 60 days (in which case SBA may investigate the firm’s current cir-cumstances).

(2) Where SBA reconsiders and reaf-firms the COC the procedures under paragraph (h) of this section do not apply.

(m) Effect of a COC. By the terms of the Act, a COC is conclusive as to re-sponsibility. Where SBA issues a COC on behalf of a small business with re-spect to a particular contract, con-tracting officers are required to award the contract without requiring the firm to meet any other requirement with respect to responsibility.

(n) Effect of Denial of COC. Denial of a COC by SBA does not preclude a con-tracting officer from awarding a con-tract to the referred firm, nor does it prevent the concern from making an offer on any other procurement.

(o) Monitoring performance. Once a COC has been issued and a contract awarded on that basis, SBA will mon-itor contractor performance.

[61 FR 3312, Jan. 31, 1996; 61 FR 7987, Mar. 1, 1996, as amended at 72 FR 50041, Aug. 30, 2007]

§ 125.6 Prime contractor performance requirements (limitations on sub-contracting).

(a) In order to be awarded a full or partial small business set-aside con-tract, an 8(a) contract, a WOSB or EDWOSB contract pursuant to part 127 of this chapter, or an unrestricted pro-curement where a concern has claimed

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13 CFR Ch. I (1–1–12 Edition) § 125.6 a 10 percent small disadvantaged busi-ness (SDB) price evaluation preference, a small business concern must agree that:

(1) In the case of a contract for serv-ices (except construction), the concern will perform at least 50 percent of the cost of the contract incurred for per-sonnel with its own employees.

(2) In the case of a contract for sup-plies or products (other than procure-ment from a non-manufacturer in such supplies or products), the concern will perform at least 50 percent of the cost of manufacturing the supplies or prod-ucts (not including the costs of mate-rials).

(3) In the case of a contract for gen-eral construction, the concern will per-form at least 15 percent of the cost of the contract with its own employees (not including the costs of materials).

(4) In the case of a contract for con-struction by special trade contractors, the concern will perform at least 25 percent of the cost of the contract with its own employees (not including the cost of materials).

(b) An SDVO SBC prime contractor can subcontract part of an SDVO con-tract (as defined in § 125.15) provided:

(1) In the case of a contract for serv-ices (except construction), the SDVO SBC spends at least 50% of the cost of the contract performance incurred for personnel on the concern’s employees or on the employees of other SDVO SBCs;

(2) In the case of a contract for gen-eral construction, the SDVO SBC spends at least 15% of the cost of con-tract performance incurred for per-sonnel on the concern’s employees or the employees of other SDVO SBCs;

(3) In the case of a contract for con-struction by special trade contractors, the SDVO SBC spends at least 25% of the cost of contract performance in-curred for personnel on the concern’s employees or the employees of other SDVO SBCs; and

(4) In the case of a contract for pro-curement of supplies or products (other than procurement from a non-manufac-turer in such supplies or products), at least 50% of the cost of manufacturing the supplies or products (not including the costs of materials), will be per-formed by the SDVO SBC prime con-tractor or other SDVO SBCs.

(5) In accordance with § 125.15(b)(3), the SDVO SBC joint venture must per-form the applicable percentage of work.

(c) A qualified HUBZone SBC prime contractor can subcontract part of a HUBZone contract (as defined in § 126.600 of this chapter) provided:

(1) In the case of a contract for serv-ices (except construction), the quali-fied HUBZone SBC spends at least 50% of the cost of the contract performance incurred for personnel on the concern’s employees or on the employees of other qualified HUBZone SBCs;

(2) In the case of a contract for gen-eral construction, the qualified HUBZone SBC spends at least 15% of the cost of contract performance in-curred for personnel on the concern’s employees;

(3) In the case of a contract for con-struction by special trade contractors, the qualified HUBZone SBC spends at least 25% of the cost of contract per-formance incurred for personnel on the concern’s employees;

(4) In the case of a contract for pro-curement of supplies (other than pro-curement from a regular dealer in such supplies), the qualified HUBZone SBC spends at least 50% of the manufac-turing cost (excluding the cost of mate-rials) on performing the contract in a HUBZone. One or more qualified HUBZone SBCs may combine to meet this subcontracting percentage require-ment; and

(5) In the case of a contract for the procurement by the Secretary of Agri-culture of agricultural commodities, the qualified HUBZone SBC may not purchase the commodity from a sub-contractor if the subcontractor will supply the commodity in substantially the final form in which it is to be sup-plied to the Government.

(d) SBA may use different percent-ages if the Administrator determines that such action is necessary to reflect conventional industry practices among small business concerns that are below the numerical size standard for busi-nesses in that industry group. Rep-resentatives of a national trade or in-dustry group or any interested SBC

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Small Business Administration § 125.6 may request a change in subcon-tracting percentage requirements for the categories defined by six digit in-dustry codes in the North American In-dustry Classification System (NAICS) pursuant to the following procedures.

(1) Format of request. Requests from representatives of a trade or industry group and interested SBCs should be in writing and sent or delivered to the Di-rector, Office of Government Con-tracting, U.S. Small Business Adminis-tration, 409 3rd Street, SW., Wash-ington, DC 20416. The requester must demonstrate to SBA that a change in percentage is necessary to reflect con-ventional industry practices among small business concerns that are below the numerical size standard for busi-nesses in that industry category, and must support its request with informa-tion including, but not limited to:

(i) Information relative to the eco-nomic conditions and structure of the entire national industry;

(ii) Market data, technical changes in the industry and industry trends;

(iii) Specific reasons and justifica-tions for the change in the subcon-tracting percentage;

(iv) The effect such a change would have on the Federal procurement proc-ess; and

(v) Information demonstrating how the proposed change would promote the purposes of the small business, 8(a), SDB, woman-owned business, or HUBZone programs.

(2) Notice to public. Upon an adequate preliminary showing to SBA, SBA will publish in the FEDERAL REGISTER a no-tice of its receipt of a request that it considers a change in the subcon-tracting percentage requirements for a particular industry. The notice will identify the group making the request, and give the public an opportunity to submit information and arguments in both support and opposition.

(3) Comments. SBA will provide a pe-riod of not less than 30 days for public comment in response to the FEDERAL REGISTER notice.

(4) Decision. SBA will render its deci-sion after the close of the comment pe-riod. If SBA decides against a change, SBA will publish notice of its decision in the FEDERAL REGISTER. Concurrent with the notice, SBA will advise the re-quester of its decision in writing. If SBA decides in favor of a change, SBA will propose an appropriate change to this part.

(e) Definitions. The following defini-tions apply to this section:

(1) Cost of the contract. All allowable direct and indirect costs allocable to the contract, excluding profit or fees.

(2) Cost of contract performance in-curred for personnel. Direct labor costs and any overhead which has only direct labor as its base, plus the concern’s General and Administrative rate multi-plied by the labor cost.

(3) Cost of manufacturing. Those costs incurred by the firm in the production of the end item being acquired. These are costs associated with the manufac-turing process, including the direct costs of fabrication, assembly, or other production activities, and indirect costs which are allocable and allow-able. The cost of materials, as well as the profit or fee from the contract, are excluded.

(4) Cost of materials. Includes costs of the items purchased, handling and as-sociated shipping costs for the pur-chased items (which includes raw ma-terials), off-the-shelf items (and simi-lar proportionately high-cost common supply items requiring additional man-ufacturing or incorporation to become end items), special tooling, special testing equipment, and construction equipment purchased for and required to perform on the contract. In the case of a supply contract, the acquisition of services or products from outside sources following normal commercial practices within the industry are also included.

(5) Off-the-shelf item. An item pro-duced and placed in stock by a manu-facturer, or stocked by a distributor, before orders or contracts are received for its sale. The item may be commer-cial or may be produced to military or Federal specifications or description.

Off-the-shelf items are also known as Nondevelopmental Items (NDI).

(6) Personnel. Individuals who are ‘‘employees’’ under § 121.106 of this chapter except for purposes of the HUBZone program, where the defini-tion of ‘‘employee’’ is found in § 126.103 of this chapter.

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13 CFR Ch. I (1–1–12 Edition) § 125.7

(7) Subcontracting. That portion of the contract performed by a firm, other than the concern awarded the contract, under a second contract, purchase order, or agreement for any parts, sup-plies, components, or subassemblies which are not available off-the-shelf, and which are manufactured in accord-ance with drawings, specifications, or designs furnished by the contractor, or by the government as a portion of the solicitation. Raw castings, forgings, and moldings are considered as mate-rials, not as subcontracting costs.

Where the prime contractor has been directed by the Government to use any specific source for parts, supplies, com-ponents subassemblies or services, the costs associated with those purchases will be considered as part of the cost of materials, not subcontracting costs.

(f) Compliance will be considered an element of responsibility and not a component of size eligibility.

(g) The period of time used to deter-mine compliance will be the period of performance which the evaluating agency uses to evaluate the proposal or bid. If the evaluating agency fails to articulate in its solicitation the period of performance it will use to evaluate the proposal or bid, the base contract period, excluding options, will be used to determine compliance. In indefinite quantity contracts, performance over the guaranteed minimum will be used to determine compliance unless the evaluating agency articulates a dif-ferent period of performance which it will use to evaluate the proposal or bid in its solicitation.

(h) Work to be performed by subsidi-aries or other affiliates of a concern is not counted as being performed by the concern for purposes of determining whether the concern will perform the required percentage of work.

(i) Where an offeror is exempt from affiliation under § 121.103(h)(3) of this chapter and qualifies as a small busi-ness concern, the performance of work requirements set forth in this section apply to the cooperative effort of the joint venture, not its individual mem-bers.

[61 FR 3312, Jan. 31, 1996; 61 FR 39305, July 20, 1996; as amended at 64 FR 57372, Oct. 25, 1999;

65 FR 45835, July 26, 2000; 69 FR 25266, May 5, 2004; 69 FR 29208, May 21, 2004; 69 FR 29420, May 24, 2004; 70 FR 14527, Mar. 23, 2005; 70 FR 51248, Aug. 30, 2005; 72 FR 3040, Jan. 24, 2007, 72 FR 50041, Aug. 30, 2007; 73 FR 56948, Oct. 1, 2008]

§ 125.7 Acquisition-related dollar thresholds.

The Federal Acquisition Regulatory Council (FAR Council) has the respon-sibility of adjusting each acquisition-related dollar threshold on October 1, of each year that is evenly divisible by five. Acquisition-related dollar thresh-olds are defined as dollar thresholds that are specified in law as a factor in defining the scope of the applicability of a policy, procedure, requirement, or restriction provided in that law to the procurement of property or services by an executive agency as determined by the FAR Council. 41 U.S.C. 431a(c).

Part 125, Government Contracting Pro-grams, contains acquisition-related dollar thresholds subject to infla-tionary adjustments. The FAR Council shall publish a notice of the adjusted dollar thresholds in the FEDERAL REG- ISTER. The adjusted dollar thresholds shall take effect on the date of publica-tion.

[74 FR 46887, Sept. 14, 2009]

Subpart A—Definitions for the Service-Disabled Veteran- Owned Small Business Con-cern Program

SOURCE: 69 FR 25267, May 5, 2004, unless otherwise noted.

§ 125.8 What definitions are important in the Service-Disabled Veteran- Owned (SDVO) Small Business Con-cern (SBC) Program?

(a) Contracting Officer has the mean-ing given such term in section 27(f)(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 423(f)(5)).

(b) Interested Party means the con-tracting activity’s contracting officer, the SBA or any concern that submits an offer for a specific SDVO contract.

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