Back to Basics: The Nonmanufacturer Rule

To qualify as a small business under most set-aside or sole-source contracts seeking manufactured products or supplies, SBA’s regulations require an offeror to be the item’s manufacturer or, alternatively, comply with the nonmanufacturer rule.

In this post, we’ll discuss qualifying under the nonmanufacturer rule.

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Department of Defense Proposes Rule to Reauthorize and Improve the Mentor-Protégé Program

The Department of Defense (DoD) has proposed to revise the Defense Federal Acquisition Regulations (DFARS) to reauthorize and improve the DoD Mentor-Protégé Program (MPP). The primary purpose of the proposed rule (Proposed Rule) is to reauthorize the DoD MPP, provide incentives to large DoD contractors to serve as mentors to small businesses, and extend opportunities for small businesses to participate in the MPP. In addition, the proposed rule removes restrictions on the eligibility of small businesses by aligning the size of the small business with the size standard associated with its primary NAICS code.

The Proposed Rule is here.

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SBA’s Paycheck Protection Program: Affiliation Still Matters

The SBA’s Paycheck Protection Program went into effect March 27, 2020.  At that time many business owners faced confusion in trying to navigate the affiliation rules to determine their company’s eligibility for the program. Fast forward nearly two years and many businesses that received Paycheck Protection Loans have submitted applications for forgiveness of those loans. Some of those businesses are now having to consider potential affiliation issues that they may have initially overlooked in response to inquiries from SBA in its review of their loan forgiveness application.

We thought this would be a good time to revisit the basics of SBA’s affiliation rules for the Paycheck Protection Program.

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House Passes Senate Bill to Modernize Processes to Increase Small Business Participation in Federal Contracting

The House recently passed Senate Bill 583, titled the “Promoting Rigorous and Innovative Cost Efficiencies for Federal Procurement and Acquisitions (PRICE) Act.” The Price Act would require the Department of Homeland Security (DHS) to report projects from its Procurement Innovation Lab (PIL) that have used innovative techniques to help modernize contracting procedures. The bill would also require the DHS to offer training to its personnel on how to use these techniques. In addition, the PRICE Act would require that these innovative best practices be made available to other federal agencies to improve procurement methods and training. The Price Act also supports the White House’s goals of providing new federal contracting opportunities to small disadvantaged businesses.

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IHS Issues Final Rules Implementing the Buy Indian Act

On January 13, 2022 the Secretary of the Department of Health and Human Services (HHS) issued its Final Rule governing the implementation of the Buy Indian Act (Act). This rule clarifies the preference for Indian-owned and controlled businesses and removes barriers by alleviating unnecessary regulatory burdens. If you’re a frequent visitor to our blogs, you may be thinking, “wait what, didn’t you just blog about this last November?” Actually, the subject of the blog about the Buy Indian Act from November was the proposed rules governing the Buy Indian Act issued by the Department of Interior (DOI) covering procurements of the Bureau of Indian Affairs (BIA). HHS’s Final Rules issued on January 13th  (Final Rule) supplement and amend regulations guiding implementation of the Buy Indian Act for procurements by the Indian Health Service (IHS).

Given the long scattershot implementation of the  Buy Indian Act, how the Act it is applied to different agencies, the multiple notices of proposed changes to the Buy Indian Act, along with the general decentralized structure of procurement regulations, it can all be a bit confusing. A bit of background may help to put it all in context.

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SBA Eliminates Use of Product Service Codes For Nonmanufacturer Rule Class Waivers

As January 5, 2022, SBA will no longer use Product Service Codes (PSCs) to classify products covered by class waivers for the nonmanufacturer rule. SBA’s rationale for discontinuing PSC’s to classify class waivers is to “improve consistency in the application of class waiver.” SBA will use North American Industry Classification System codes (NAICS) as its sole classification system to identify products covered by class waivers going forward. Notification of the change of SBA’s rule was published in the Federal Register on December 6, 2021.

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GAO Confirms that Novations Work: Agency Properly Recognized Buyer of Contract as Awardee

The Anti-Assignment Act (41 U.S.C. § 6305) prohibits the transfer of a government contract or interest in a government contract to a third party. However, government agencies recognized that contractors are on occasion bought, sold, merged, or simply encounter circumstances upon which it becomes desirable or necessary for them to assign a government contract to a third party.  

To address this issue, the Federal Acquisition Regulation (FAR) provides for a novation process to give contractors a method to transfer government contracts and not run afoul of the prohibitions in the Anti-Assignment Act. The ultimate goal of the novation process is to successfully transfer the contract and have the government recognize a new contractor as the successor-in-interest to the transferred contract.

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