SBA OHA Provides Clarity on the Nonmanufacturer Rule

To be eligible for a small business set-aside procurement seeking a manufactured product, an offeror has to either be the product’s manufacturer or otherwise qualify under the nonmanufacturer rule.

Determining whether a business qualifies—either as the manufacturer or nonmanufacturer—can be a fact-intensive and confusing task. But it’s a vitally important one, as the penalty for not qualifying can be the loss of an awarded contract.

Recently, however, the SBA Office of Hearings and Appeals provided important clarity on how a small business might qualify as a nonmanufacturer.

Let’s take a look.

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VA Class Deviation Restricts SDVOSB Nonmanufacturers

The VA has adopted a Class Deviation to the VAAR, severely restricting the ability of VA Contracting Officers to request waivers of the nonmanufacturer rule–and, even more troubling, suggesting that Contracting Officers need not apply the statutory SDVOSB and VOSB preferences even when the SBA has already granted a class waiver.

You may be wondering “does the VA’s Class Deviation comply with Kingdomware?”  Good question.

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SmallGovCon Week In Review: April 17-21, 2017

I was fortunate enough to spend the beginning half of my week speaking at the 2017 SAME Small Business Symposium in Bremerton, Washington. It was a wonderful event and it was nice to be able to see so many familiar faces (and make some new acquaintances). I am back in the office to wrap up the week and bring you yet another SmallGovCon Week In Review.

In this week’s edition: former President Obama’s “mandatory sick leave” Executive Order may remain on the books after all, IDIQ contracts made up about one-third of all federal contracting spending over a four-year period, contractors react to President Trump’s “Buy American, Hire American” Executive Order, and much  more. Continue reading

SmallGovCon Week In Review: March 13-17, 2017

March Madness is here!  I hope your brackets are doing well.  So far, mine haven’t been “busted,” but Notre Dame looked mighty shaky in that opening-round win over Princeton.

While I get ready for tomorrow’s games with my Duke Blue Devils and Kansas Jayhawks, I’m keeping an eye on the latest and greatest (or not so great) in government contracting. In this week’s SmallGovCon Week In Review, the GAO releases a major report on the state of government contracting, an IT contractor will pay $45 million to resolve claims of overcharging the government, the SBA proposes to terminate a nonmanufacturer rule class waiver, and more.

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SBA OHA: “Manufacturer” Need Not Create Most Expensive Component

The SBA Office of Hearings and Appeals reaffirmed recently that a business need not manufacture the most expensive component of an item in order to be considered its manufacturer.

Rather, under the SBA’s size rules, a company may be considered a manufacturer if it adds important functionality to the end product, even if the proportion of total dollar value added by the company is relatively small.

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SBA Adopts New Exemption From Nonmanufacturer Rule

The nonmanufacturer rule will not apply to small business set-aside contracts valued between $3,000 and $150,000, according to the SBA.

In its recent major rulemaking, the SBA exempts these small business set-aside contracts from the nonmanufacturer rule, meaning that small businesses will be able to supply the products of large manufacturers for these contracts without violating the limitations on subcontracting.

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Small Business Set-Asides: Two Small Manufacturers Required

When an agency acquires manufactured products or supplies, the agency need not set aside the solicitation for small businesses under the FAR’s “rule of two” unless the agency has a reasonable expectation of receiving offers from small businesses offering the products of two or more small manufacturers.

A recent GAO bid protest decision highlights a little-known provision of the FAR, which provides that the “rule of two” does not apply to acquisitions for manufactured products over $150,000 where two or more small business nonmanufacturers are likely to submit offers, but the small business nonmanufacturers will not offer the products of two or more small business manufacturers.

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