Last month, Steve wrote about a new Class Deviation rule adopted by the VA that, in effect, would limit the VA’s use of class waivers as part of its decision to restrict competition to SDVOSBs (or otherwise issue solicitations as sole source awards). But in an apparent contradiction to this Class Deviation rule, GAO recently denied a challenge to an SDVOSB set-aside decision for a manufacturing solicitation, based in large part on SBA’s adoption of a class waiver for the particular NAICS code.
Where an agency buys manufactured goods, the FAR’s Rule of Two is satisfied when two or small business manufacturers of the end products exist. It is not enough, as GAO recently held, for two or more small business distributors of manufactured products to exist.
I am pleased to announce that I will be presenting three Learning Sessions at the 2015 National Veterans Small Business Engagement in Pittsburgh.
My first session, Joint Venturing and Teaming on SDVOSB Set-Aside Contracts, will take place on November 17 at 11:10 a.m. in Room 333. The second session, The SBA’s Proposed New “Universal” Mentor-Protege Program, will be that same day at 3:10 p.m. in Room 413. The third session, Is My Company a “Non-Manufacturer”–The Ins and Outs of the Non-Manufacturer Rule will be held on November 18 at 11:10 a.m. in Room 413.
If you will be attending NVSBE 2015, I hope you’ll make it to my Learning Sessions. See you at the conference!
Assembling components into a commercial item does not make a contractor a “kit assembler” for the purposes of the non-manufacturer rule, according to the SBA Office of Hearings and Appeals.
A recent size appeal required OHA to delve in to what is meant by “kit.” In B GSE Group, LLC, SBA No. SIZ-5679 (Sept. 17, 2015), OHA stated that a kit is not a commercial item that has been purchased in parts and assembled, rather, it is a collection of manufactured items packaged together, like a tool kit.
Many small contractors (and the SBA) were surprised when the Court of Federal Claims held last year that the non-manufacturer rule applies any time the government buys manufactured products–regardless of the NAICS code assigned to the procurement.
Now the U.S. House of Representatives is proposing to fix the confusion caused by the Court’s decision. The House version of the 2016 National Defense Authorization Act would amend the Small Business Act to specify that the non-manufacturer rule applies only to contracts for supplies.
A business was not engaged in “manufacturing” within the meaning of the SBA’s regulations where the firm provided another entity with specifications and financing, and the second entity produced the end item being acquired by the government.
As demonstrated in a recent SBA Office of Hearings and Appeals decision, being a “manufacturer” means engaging in the primary activities of transforming substances into an end item. Merely providing specifications and financing doesn’t do the trick.
A contractor did not qualify as a small business under the non-manufacturer rule where it proposed to sell foreign-made products–even though the contractor itself was well below the solicitation’s 500-employee size standard.
In a recent decision, the SBA Office of Hearings and Appeals held that a contractor was ineligible to be awarded a small business set-aside contract for manufactured products because the products were to be manufactured in Turkey.