Why Small Businesses Need to Understand the Non-Manufacturer Rule

Small businesses interested in doing business with the federal government must understand the “non-manufacturer rule” and how it impacts the products and supplies that can be set-aside for small business contractors. The non-manufacturer rule is explained in FAR 19.001 as “a contractor under a small business set-aside or 8(a) contract shall be a small business under the applicable size standard and shall provide either its own product or that of another domestic small business manufacturing or processing concern.”

This excludes most small businesses from selling products manufactured by large companies under small business set-asides. However, there are exceptions to the rule. The SBA identifies two classes of exceptions-individual waivers and class waivers. A contracting officer is the only individual who can request an individual waiver for a specific solicitation, after determining that “no small business manufacturer or processor can reasonably be expected to offer a product meeting the specifications (including period of performance) required of an offeror or by the solicitation.”

However, class waivers apply to entire groupings of products and can be applied for by small business owners. The business owner must submit a request along with market research evidence to the Small Business Administration to support the conclusion that small business manufacturers for a particular class of items are not participating in the federal marketplace. The SBA provides specific guidelines for requesting a waiver at www.sba.gov/content/non-manufacturer-waivers. In addition, the SBA also provides a list of item classes with waivers already in place at www.sba.gov/sites/default/files/09212011_classwaivers.pdf 

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