Transcript Slide 1

UNDERSTANDING THE
NONMANUFACTURER RULE
(NMR)
U.S. Small Business Administration
Office of Government Contracting
FY 2014
The Nonmanufacturer Rule Program
 Applies to firms that receive supply contracts, above
$25,000, under the 8(a) program or on a small business
set aside, who can be either a manufacturer or a
nonmanufacturer of a product;
 A nonmanufacturer who receives one of these contracts
must agree to supply the product of a domestic small
manufacturer or processor;
 SBA can waive this requirement;
 Once a waiver of the manufacturer rule is approved, a
firm may supply the product of a large manufacturer.
Overview
• Key Definitions
• Regulations, Laws
• Applicability
• Waivers
• Best Practices
Definitions
• Manufacturer
• Nonmanufacturer
• Kit Assembler
• Reseller
• Wholesaler
Who is a Manufacturer?
 A manufacturer is a concern which, with its
own facilities, performs primary activities in
transforming inorganic or organic
substances, including the assembly of
parts and components, into the end item
being acquired.
Who is a Nonmanufacturer?
A concern may qualify as a small business
nonmanufacturer if:
•
Less than 500 employees;
•
Primarily engaged in retail or wholesale and normally sells
type of product being supplied;
•
Takes ownership or possession of the item(s) with its
personnel, equipment or facilities in a manner consistent
with industry practice; and
•
Will supply the end product of a small business
manufacturer or processor made in U.S. or obtain waiver
to non-manufacturer rule
Who is a Kit Assembler?
 When the manufactured item being acquired is a
kit of supplies, or other goods provided an offeror
for a special purpose, the offeror cannot exceed
500 employees, and 50 percent of the total value
of the components of the kit must be a small
business under the size standards for the NAICS
codes of the components being assembled.
 The offeror doesn’t need to be the manufacturer
of any items assembled
Who is a Retailer? Wholesaler?
 Retailer -- a person who is authorized to
sell someone else’s goods and/or
services
 Wholesaler -- An intermediary (go-
between) which sells to other
intermediaries, such as a firm that buys
from a manufacturer and sells to a
retailer
Regulatory Requirements
The regulations that govern the NMR:
 Federal Acquisition Regulation (FAR) Part 19
› FAR 19.001 et seq. - Definitions
› FAR 19.102 Size Standards
› FAR 52.219-1(a)(3) - Provision
 Code of Federal Regulations (CFR) 13 CFR
› 13 CFR § 121.406 – The Rule
› 13 CFR § 121.1202 et seq. - Waivers
› 13 CFR § 125.15 – SDVO Set-Asides
› 13 CFR § 127.505 – WOSB Set - Asides
Summary of CFR regulations
•
SBA size regulations
13 CFR 121.103(h)
•
HUBZone regulations
13 CFR 126.616
•
SBA Certificate of Competency
13 CFR 125.5
•
Service-disabled veteran
13 CFR 125.15(b)
•
8(a) and SDB regulations
13 CFR 124.513
•
Small disadvantaged business
13 CFR 124.1002(f)
•
WOSB Program
13 CFR 127
• SBA Prime Contracting
13 CFR125.2
• SBA Subcontracting
13 CFR125.3
Interaction of Small Business Programs
Below the SAT
 Small business set asides are mandatory for the
acquisition of supplies and services valued from
$3,000 to $150,000
 FAR permits but does not require the reservation of
an award of a contract with a value less than the
SAT to different types of small businesses such as
8(a), HUBZone, WOSB, SDVO SBCs
Interaction of Small Business Programs
Above the SAT
• SBA’s regulations provide for parity among certain
small business programs
• KO will determine which set-aside program to use
Analysis: Regulatory Applications
Statute
Federal Acquisition Regulations
SBAs Regulations
Sections 8(a)(17) and 46 of the
Small Business Act, 15 U.S.C. §§
637(a)(17) and 657s
FAR 19
13 CFR 121.406, 1204 /
13 CFR 121, 124, 125, 126, 127
Small Business Jobs Act of 2010:
FAR Subpart 8.4 amended to clarify
that agencies may set aside orders
and blanket purchase agreements
under the GSA Schedule
FAR Subpart 12.2 now
acknowledges that discretionary setasides may be used under multipleaward contracts
FAR Subpart 16.5 and 19.5
amended to clarify that agencies may
set-aside orders for small businesses
in connection with multiple-award
contracts (and orders thereunder)
13 CFR 121.406, 1204 /
13 CFR 121, 124, 125, 126, 127
FAR Subpart 52.219-14 Limitations on
Subcontracting will be affected
although NDAA has not yet been
implemented in the FAR
13 CFR 125.6 will be affected
although NDAA has not yet been
implemented in SBA’s regulations
http://www.gpo.gov/fdsys/pkg/FR2013-10-02/pdf/2013-22064.pdf
National Defense Authorization Act
of 2013 - Section 1651 – Limitations
on Subcontracting
Applicability of the NMR
• Small business set-asides on supply contracts, orders, BPAs
over $25k
• The NMR will be applied when a small business
nonmanufacturer will provide the end item of:
• a small business manufacturer
• an other than small business manufacturer under a waiver
(an existing class waiver or individual –or solicitation
specific-waiver)
• Does not apply to full and open solicitations
When the NMR does NOT apply
 There are NO waivers to the NMR for:
 Service or construction contracts
 HUBZone Contracts
 NAICS codes outside of sector 31-33, Manufacturing
Choosing NAICS Codes
 The North American Industry Classification System
(NAICS) code chosen must be that which best
describes the principal purpose of the product or
service being acquired
 Procurements for supplies must be classified under
the appropriate manufacturing NAICS code, NOT
under the wholesale or retail trade NAICS code. 13
C.F.R. § 121.402(b)
 SECTORS 42, 44 and 45 ARE NOT TO BE USED
FOR GOVERNMENT PROCUREMENT OF
SUPPLIES
Applying NAICS Codes to Acquisitions
 The KO designates the size standard of the procurement
by selecting the size standard in effect on the date the
solicitation is issued.
 The basis for designation NAICS that best describes the
goods or services that are going to be procured.
 SBA's size regulations pertaining to federal procurement
are also found in the Federal Acquisition Regulation, 48
CFR part 19.
 To bid on a federal contract, a concern must self-certify that
it is a small business under the appropriate size standard in
the solicitation.
Applicable Size Standards-NMR
 A small business nonmanufacturer must meet size
standards that apply to acquisitions covered by the
NMR.
 A small business nonmanufacturer (500 or less
employees) will provide the end item of:
 a small business manufacturer (as regulated by SBA’s Table of
Size Standards 13 C.F.R. § 121 whether the size standard is 500
employees or not)
an other than small business manufacturer under a waiver
 The size standard for a nonmanufacturer is 500 or less
employees. In any case, a small business
nonmanufacturer cannot exceed 500 employees.
Waivers to the NMR
 Two types of waivers
Class Waiver
Individual Waiver
Class Waivers to the NMR
 A class waiver applies to all items in a class of products.
 Class waivers apply to categories of items and continue in effect
unless revoked by SBA.
 A waiver of the NMR for classes of products has no time
limitation or duration.
 Any government agency, business association, or interested
party may request a waiver for a class of products.
 Discovery of even one small business manufacturer for a single
item in the class will justify denial of a request for a class waiver.
Four steps in checking “NMR” class
waivers
1. NAICS code
2. Product description
3. Product service code at
http://www.acquisition.gov/
4. Federal Register, where SBA
communicates “NMR” changes
Individual Waivers to the NMR
 SBA will consider granting in individual waiver when a KO
determines no small business manufacturers exist to meet
requirement
 The waiver to the NMR on an individual procurement is
provided for in Section 8(a)(17) of the Small Business Act.
 An individual waiver is narrowly applied to select contract
line item numbers (CLINS) for a specific solicitation.
 A NMR Waiver must be in place prior to receipt of offers in
order for a nonmanufacturer to qualify as a small
business for set-aside purposes.
How to Obtain an Individual Waiver
• 13 C.F.R. 121.406 and 121.1202 - 1204
• www.sba.gov
• The basis of granting an individual waiver rests on the
market research presented with an agency’s request to
justify the claim that no small business manufacturers
exist that can meet the procurement requirements
What to Submit
• Using an SBA NMR request template, submit the following:
• NMR request on Agency letterhead, signed by a KO
• Include elements of SBA’s requirements (FAR has limited guidance)
• Market Research report or memo as an attachment
• Market research should be based on search for SB manufacturers
using the NAICS code for the solicitaion
• Supporting documentation or copies of:
• FBO Sources Sought / RFI / Vendor Survey including a summary of
findings
• Brand Name Justification for brand name items
• DSBS search results (don’t search for name brands, use generic terms
and remember to search on the NAICS code used for the solicitation)
• Internet searches (Google, Thomasnet.com, etc.)
What to Submit, cont.
• List of items to be waived – provide specific
information including multiple item requests
• Statement of Work is REQUIRED on contracts
expected to exceed a total estimated value of
$500,000
• Any other documents that you think would help in
the analysis and determination that no small
business can produce the end product
Identification of Small Business Sources on Multiple
Item Request for a Single Solicitation (Individual Waiver)
• Each line item must identify whether the end
product will be supplied by a small business
manufacturer
• CLINs
• NSNs
• SINs
• One waiver per solicitation
How to Submit
• Submit NMR waiver requests and attachments to
the NMR program email address at:
[email protected]
• Use the solicitation number and agency
abbreviation in the subject line – ex: SBA
SBA123-14-Q-0001 Waiver Request
Analysis: Review for Completeness
• Regulatory vs Program Requirements
• Use the NMR Waiver Request template as a guide
Minimum Required Documents
Agency
Request
• Request template preferred
• Required information must
be included in the request
Market
Research
• Research must be recent
and specific
• Supporting documentation
must be presented
Statement
of Work
(SOW)
•Required on contracts
estimated to exceed $500,000
•Other names include: Minimum
Technical Requirements,
Purchase Requirements, etc.
NMR Request Package
Minimum
Required
Docs
• Agency request
• Market research
• SOW
Supporting
Evidence
• Brand-name justification
• Copy of FBO notices
(Sources Sought, RFI)
• DSBS results, including
summary of findings
• Acquisition history
Item
Description
or List of
Items
• Specific item(s) to be
waived
• Identification of SB vs LB
representation on multiple
item procurements
You have a Waiver, Now What?
Excellent
“NMR”
reference with
size standard
You have a Waiver, Now What?
Excellent
“NMR”
reference with
“LOS”
FBO Notices
Oops.
Incorrect
“4” NAICS
code used
Class Waivers to the NMR Does the
class
waiver to
the “NMR”
apply?
Are they
looking for
resellers
or
dealers?
Market Research Recommendations
 SBA’s Dynamic Small Business Search http://dsbs.sba.gov
 FedBizOpps – Sources Sought results
 Summary of event results, i.e. “Industry Day” etc.
 Online product information
 Acquisition history
 SBA Procurement Center Representative (PCR)
 FAR Part 10
Best Practices
 Plan ahead
 Solid market research with supporting documentation
 Communicate to contractors how the NMR is applicable to
solicitations (FBO listings, etc.)
 Communicate with the small business office to identify small
business goaling needs or opportunities
 Work with an SBA PCR - Small Business Coordination Record
(Form DD 2579)
 Use the right NAICS code for procurement of supplies
Questions?
Nonmanufacturer Rule Program
Amy Garcia
Office of Contract Assistance
Office of Government Contracting
U.S. Small Business Administration
Washington, D.C.
[email protected]
202/205-6842