being affiliated with its joint venturers since they have no power to control its performance of the contract being bid on. Where a concern is not considered as being an affiliate of a concern with which it is participating in a joint venture, it is necessary, nevertheless, in computing annual receipts, etc., for the purpose of applying size standards to include such concern's share of the joint venture receipts (as distinguished from its share of the profits of such venture).

(iv) Franchise and license agreements. If a concern operates or is to operate under a franchise (or a license) agreement, the following policy is applicable: In determining whether the franchisor controls or has the power to control and, therefore, is affiliated with the franchisee, the restraints imposed on a franchisee by its franchise agreement shall not be considered provided that the franchisee has the right to profit from its effort and the risk of loss or failure, commensurate with ownership. Even though a franchisee may not be controlled by the franchisor by virtue of the contractual relationship between them, the franchisee may be controlled by the franchisor or others through common ownership or common management, in which case they would be considered as affiliated.

(d) Section 121.3-8, "Definition of small business for Government procurement (1) Sawmills. For the purpose of a size determination, a sawmill is considered as the manufacturer of treated lumber, even if it contracts out the treatment of the lumber. Therefore, a small business sawmill can deliver in the performance of a set-aside procurement lumber which has been treated by a concern which does not qualify as a small business concern.

(2) Oxygen converters. For the purpose of a size determination, a concern which converts liquid oxygen to gaseous oxygen with or without additives, is a nonmanufacturer of the gaseous oxygen and therefore must furnish gaseous oxygen converted from liquid oxygen manufactured by a small business concern.

(e) Section 121.3-8. Section 121.3-8 provides that, in the submission of a bid or proposal on a Government procurement, a concern which meets the size standards criteria provided in § 121.3-8, may represent that it is a small business: Provided further, however, That a con

cern which has been determined by SBA to be ineligible as a small business under a particular size standard: (1) Shall, if it has self-certified as a small business on a pending procurement subject to the same or lower number of employees or annual receipts size standard (whichever is applicable), immediately notify the contracting officer of such adverse size determination and, (2) shall not thereafter self-certify on a procurement subject to the same or a lower employee or annual receipts size standard (whichever is applicable) until it has applied for recertification based on a significant change in its ownership, management or contractural relations, and has been determined eligible as a small business under such size standards by either the regional office which issued the adverse determination or the Small Business Size Appeals Board.

(f) Section 121.3-4 "Application for small business size status determination.” Contracting officers, in order to determine whether to set particular contracts aside for exclusive award to small business concerns or whether to send invitations for bids to particular concerns, may require information from SBA concerning the small business size status of such concerns and be unable to wait for a formal small business size determination. In such cases, informal advice or information may be given based on the best evidence available concerning the small business size of such a concern. However, such informal advice is not a small business size determination within the meaning of that term in the Small Business Size Standards Regulation and is not binding with respect to eligibility as a small business for the purpose of a particular Government procurement. Further, an opinion as to a concern's future small business size status, based on proposed but unexecuted changes in its organization, management or contractual relations, is not a small business size determination.

(g) Section 121.3-6 "Appeals." The Size Appeals Board only has jurisdiction to consider appeals from formal determinations as to a concern's small business size status and appeals from product or service classification determination made by contracting officers for the purpose of Government procurements. It has no jurisdiction to consider an appeal from an informal opinion or advice con

cerning a company's small business size status, an opinion as to a company's future small business size status based on proposed but unexecuted change in its organization, management or contractural relations, or an appeal based on an allegation that the small business size standard established by SBA for a particular industry or field of operation is improper for the purpose intended.

(h) Sections 121.3-2 (r) and 121.3-8 (c) "Definition of nonmanufacturer". For size determination purposes there can only be one manufacturer of the end item being procured. The manufacturer of the end item being procured is the concern which with its own forces transforms inorganic or organic substances including raw materials and/or miscellaneous parts or components into such end item. Whether a bidder on a particular procurement is the manufacturer or a nonmanufacturer for the purpose of a size determination is not for determination by the contracting officer. The decision shall be made by the appropriate SBA regional director or his delegatee, and need not be consistent with the contracting officer's decision as to whether such concern is or is not a manufacturer for the purpose of the Walsh-Healey Act, etc.

(i) Section 121.3-8(g) “Refined petroleum products." The proviso in § 121.3-8 (g) (1) (iii) 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 proviso in § 121.3-8 (g) (1) permitting a concern which meets the requirements in subdivisions (i) and (ii) of § 121.3-8(g) 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.

Definition of

(j) Section 121.3-10 Small Business for SBA Loans. Following is an example of the method to be utilized in computing a diversified concern's size status for the purpose of an SBA loan:

Concern A applies for an SBA loan. It is affiliated with Concern B. Concern A has 15 employees and $2.5 million in receipts and is primarily engaged in the retail sale of groceries (Industry No. 5411) for which the size standard is $5 million in annual receipts. Concern B has 100 employees and $3 million in receipts and is primarily engaged in the manufacture of macaroni (Industry No. 2098) for which the size standard is 250 employees. The receipts of Concern A are only 50 percent of the size standard for its industry and the employment of Concern B is only 40 percent of the size standard for its industry. Since the combined percentages are less than 100 percent, Concern A can qualify for an SBA loan.

(k) Section 121.3-8(e) (12). The Small Business Size Appeals Board has interpreted this section to apply only to procurements requiring the services of tire retreading and repair shops (Standard Industrial Classification Industry No. 7534, Tire Retreading 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, is considered for size standards purposes to be manufactured within the meaning of Standard Industrial Classification Industry No. 3011, Tires and Inner Tubes.

(1) Section 121.3-8 (c) "Definition of Nonmanufacturer." The Government often purchase items in the form of kits such as, but not limited to, tool kits and survival kits, which are not manufactured items but merely assemblages of separate manufactured items. Accordingly, a concern which purchases some or all of such items and packages them into kit form is considered to be a nonmanufacturer for size determination purposes. Such a concern can qualify as a small business only if it meets all other qualifications of a small nonmanufacturer set forth in this part and if more than 50 percent of the total value of the kit and its contents is accounted for by items manufactured by small business. [Rev. 10, 36 F.R. 4832, Mar. 12, 1971, as amended by Amdt. 8, 36 F.R. 20671, Oct. 28, 1971]