Limitations on Subcontracting: FAR Council Finally Proposes Rule Change

For small government contractors, the disconnect between the SBA’s updated limitations on subcontracting rule and the FAR’s outdated rules has been very confusing.  For more than two years, the FAR and SBA regulation have used different formulas to determine compliance, and the SBA rule–but not the FAR–allows the use of “similarly situated entities” on small business set-asides and 8(a) contracts.

This has created major headaches for small businesses, who have had no definitive answer to what should be a simple question: “which rule do I follow?”  Now, finally, there is some important progress to report in clearing up this discrepancy: yesterday, the FAR Council issued a proposed rule to update the FAR’s limitations on subcontracting provisions and conform them to the SBA’s rule.

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5 Things You Should Know: SBA’s Definition of Manufacturer

SBA’s regulations say that in order to qualify as a small business under a set-aside or sole-source contract seeking manufactured products or supply items, an offeror ordinarily must either be the manufacturer of the end item or qualify under the nonmanufacturer rule.

This post will discuss five things your small business should know about qualifying as a manufacturer under the SBA’s rules; in a future post, I’ll walk through the nonmanufacturer rule.

Let’s get to it: here are 5 Things You Should Know about the SBA’s definition of manufacturer.

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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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