SBA offers workshops on government contracting topics

July 26, 2013 by

The Georgia District Office of the Small Business Administration (SBA) is offering several workshops in the coming months to help small businesses understand how to take advantage of SBA programs that can enhance their ability to pursue government contracts.

Below is the latest listing of SBA workshops, along with registration links:

 

 

 

 

 

 

 

 

 

 

 

In addition to the above workshops, the SBA also provides a number of on-line short courses to acquaint small businesses with government contracting.  You can find these resources at: http://www.sba.gov/gcclassroom.

 

 

 

New SBA rule mandates notification if contractors don’t use small business subcontractors

July 22, 2013 by

A new rule set to go into effect Aug. 15, 2013 directs prime contractors to notify  contracting officers if they don’t use small business subcontractors that were  integral to producing a bid proposal.

In the Small Business Administration’s discussion of the final  rule, the agency says a prime contractor must represent that it will  make a good faith effort to utilize the small business subcontractors used in  preparing its bid or proposal.

The rule, authority for which comes from the Small Business Jobs Act of 2010,  spells out three conditions of small business involvement in a prime contract  bid, any one of which trigger the notification requirement: the prime  specifically references a small business in a bid or proposal; the small  business has entered into a written agreement with the prime to perform specific  work as a subcontractor under the contract should the prime win; or the small  business drafted portions of the proposal or submitted pricing or technical  information that appears in the bid or proposal.

Keep reading this article at: http://www.fiercegovernment.com/story/new-sba-rule-mandates-notification-if-contractors-dont-use-small-business-s/2013-07-19

 

New rule implements ‘presumption of loss’ over small business misrepresentation

July 12, 2013 by

A new rule goes into effect Aug. 27, 2013 implementing a “presumption of loss” of the entire dollar value of any contract given to small businesses that  misrepresent their status.

The rule makes the basis of damages for a civil lawsuit equal to the value of the full  contract.

The government will consider any misrepresentation to be intentional after a  business registers itself as small in any federal database or submits a bid for  a contract as a small business.

The rule, which implements provisions from the 2010 Small Business Jobs Act, does limit liability in cases of unintentional error, technical  malfunction, “or other similar situations.” The Small Business Administration  found 200 firms that misrepresented their size in 2010.

Keep reading this article at: http://www.fiercegovernment.com/story/new-rule-implements-presumption-loss-over-small-business-misrepresentation/2013-07-08?utm_medium=nl&utm_source=internal 

Federal government again falls short of small business contracting goals

July 3, 2013 by

The federal government made progress but again fell short of its small business contracting goals last year, according to government data released Tuesday.

Just 22.25 percent of federal contracting dollars, or $89.9 billion, went to small businesses in fiscal 2012, according to the Small Business Administration (SBA). That’s higher than last year’s 21.65 percent but still shy of the goal of 23 percent set by Congress. It is the 12th consecutive year officials have missed the target.

The government also fell short of its goal for women-owned businesses and firms in economically disadvantaged areas.

The Obama administration has made it a priority to funnel more of the billions the government spends every year on contracts to small businesses, but it has struggled to move the needle significantly. The problem has been exacerbated by federal spending cuts related to the sequester, which economists say tend to hit small firms the hardest.

Interim rule removes dollar limitation for set asides to women-owned small businesses

June 27, 2013 by

A new interim rule took effect on June 21, 2013, formally amending the Federal Acquisition Regulation (FAR), that removes the dollar limitation for set-asides to women-owned small businesses (WOSBs) and economically disadvantaged women-owned small businesses (EDWOSBs), eligible under the Small Business Administration’s Women-Owned Small Business program.

The new interim rule implements section 1697 of the fiscal 2013 National Defense Authorization Act (NDAA) which amends the part of the Small Business Act that establishes the regulations governing federal agencies’ administration of the WOSB contracting program.

Agencies previously could award WOSB/EDWOSB set-aside contracts only up to the limit of $6.5 million for manufacturing and $4 million for all other acquisitions.

Written comments need to be received by Aug. 20 before the interim rule becomes final.  The interim rule can be found at: https://www.federalregister.gov/articles/2013/06/21/2013-14616/federal-acquisition-regulation-contracting-with-women-owned-small-business-concerns.

The SBA previously announced that agencies should take immediate steps, per the provisions of the NDAA, to dispense with the dollar caps on contracts set-aside for WOSBs or EDWOSBs.   Other restrictions on WOSB/EDWOSB set asides (e.g., the rule of two and NAICS code applicability) still apply.

If you have questions about the federal government’s WOSB contracting program, or if need assistance in certifying your business as a WOSB and/or EDWOSB, please contact your GTPAC Counselor.

8(a) contractor indicted on Federal charges of conspiracy, money laundering, obstruction of justice, wire, and tax fraud

June 11, 2013 by

On May 20, 2013, U.S. Attorney Wendy J. Olson and Assistant Attorney General for the Tax Division Kathryn Keneally of the U.S. Attorney’s Office f0t the District of Idaho announced that a federal grand jury in Boise returned a 42-page Superseding Indictment this week that charges Elaine Martin, 66, of Meridian, Idaho, with making false statements, conspiracy, wire fraud, mail fraud, and obstruction of justice. It also seeks forfeiture of over $9 million as the proceeds of the alleged crimes. Darrell Swigert, 67, of Boise, Idaho, is charged with obstructing and conspiring to obstruct a federal criminal proceeding.

Martin was the president and majority stockholder of Marcon, Inc., a Treasure Valley construction company. Swigert was a minority shareholder. An earlier indictment that charged only Martin, filed on March 13, 2013, was unsealed by the court today. A court date has not been set.

The Superseding Indictment charges Martin with four counts of making and subscribing a false tax return, two counts of conspiracy, five counts of wire fraud, one count of making a false statement, five counts of mail fraud, four counts of interstate transportation of property taken by fraud, one count of conspiracy to commit money laundering, one count of conspiracy to obstruct justice, and one count of obstructing justice.

The Superseding Indictment alleges that as early as 2000, and continuing through January 2012, Martin took steps to lower her personal net worth, such as acquiring, holding and transferring assets into the names of nominees. According to the Superseding Indictment, this and other alleged conduct enabled Martin to successfully apply for and be admitted into the U.S. Small Business Administration (SBA) 8(a) Program. The Superseding Indictment alleges that Martin’s actions also allowed Marcon to fraudulently maintain its certification with the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) Program, in the states of Idaho and Utah. The SBA 8(a) Program and DBE Program are designed to help economically and socially disadvantaged business compete in the marketplace. Both programs require applicants to show that their personal net worth is below a certain statutory threshold. The Superseding Indictment alleges that Martin remained in control of her assets while appearing to meet the personal net worth requirements of both programs.

According to the Superseding Indictment, Martin also caused false and fraudulent tax returns to be filed for herself and Marcon, Inc., which did not report all of the income received by Martin or the company. These false returns were allegedly submitted in support of Marcon’s applications to the SBA 8(a) Program and DBE Programs for Idaho and Utah, along with allegedly false personal financial statements. According to the Superseding Indictment, Martin caused the financial books and records for Marcon to be false by purposefully omitting, deleting, altering or mis-categorizing entries. The Superseding Indictment further alleges that Martin concealed her role or relationship in other business entities that dealt with Marcon, Inc.

While a participant in the SBA 8(a) Program, the Superseding Indictment alleges that Martin sought to conceal withdrawals of capital that exceeded the SBA 8(a) Program limits by executing loans with her family members and with entities that she controlled.

The Superseding Indictment charges that Marcon received more than $2.5 million in government contracts based on the company’s fraudulently obtained SBA 8(a) status. The Superseding Indictment further alleges that Marcon received more than $6 million in government contracts based on the company’s fraudulently obtained DBE status in the states of Idaho and Utah.

Both Martin and Swigert are charged with conspiracy to obstruct justice by fabricating documents and making false statements that sought to conceal the true nature, source, and extent of property belonging to Martin. According to the Superseding Indictment, Martin and Swigert fabricated a loan document and document that purported to memorialize a gift in order to impede a civil audit by the IRS and criminal investigation by the IRS and U.S. Attorney’s Office. Swigert is also charged with a second count of obstruction of justice based on allegedly false statements that he made to conceal the nature, source, and extent of property belonging to Martin.

The government seeks forfeiture of $9,237,722.10, which represents the proceeds that Martin obtained as a result of the alleged offenses.

“Those who seek federal contracts and seek to benefit from federal funds have a solemn obligation to deal honestly and openly with the federal government,” said Olson. “This office will continue to work side-by-side with its federal program partners to ensure that fraud is thoroughly investigated and, where appropriate, vigorously prosecuted.”

“The 8(a) Business Development Program is designed to help small, disadvantaged businesses compete in the marketplace and offers significant benefits to eligible small businesses,” said Inspector General Peggy E. Gustafson of the Small Business Administration. “Preferences for federal contract awards must not be given to persons who lie in order to claim eligibility. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their commitment to seek justice on behalf of the American taxpayer.”

“Those who commit tax fraud and fraudulently benefit from government programs are cheating honest taxpayers. IRS-Criminal Investigations will work diligently with our law enforcement partners to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice,” said Stephen Boyd, IRS Criminal Investigation Special Agent-in-Charge for the State of Idaho.

“The Disadvantaged Business Enterprise (DBE) Program is a business assistance program of the U.S. Department of Transportation (DOT) which helps economically and socially disadvantaged small businesses compete in the marketplace. DBE fraud harms the integrity of the program and adversely impacts law-abiding, small business contractors trying to compete on a level playing field,” said William Swallow, regional Special Agent-in-Charge of the DOT’s Office of Inspector General. “Working with our Federal, State, and local law enforcement and prosecutorial colleagues, we will vigorously pursue those who violate the law, and expose and shut down fraud schemes that adversely affect public trust and DOT-assisted highway programs.”

Each charge of making and subscribing a false return, as charged in counts one through four, is punishable by up to three years in prison, a maximum fine of $250,000, and up to three years of supervised release. The charge of conspiracy, as charged in counts five, twelve, and23, is punishable by up to five years in prison, a maximum fine of $250,000, and up to three years of supervised release. Each count of wire fraud, as charged in counts six through ten, is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to five years of supervised release. The charge of making a false statement, as charged in count 11, is punishable by up to two years in prison, a maximum fine of $250,000, and up to one year of supervised release. Each charge of mail fraud, as charged in counts 13 through 16, is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to five years of supervised release. Each charge of interstate transportation of property taken by fraud, as charged in counts 18 through 21, is punishable by up to 10 years in prison, a maximum fine of $250,000, and up to three years of supervised release. The charge of conspiracy to commit money laundering, as charged in count 22 is punishable by up to 20 years in prison, a maximum fine of $250,000, and up to three years of supervised release. The charges of conspiracy to obstruct justice, count 23, and obstruction of justice, counts 24 and 25, are each punishable by up to five years in prison, a maximum fine of $250,000, and up to three years of supervised release.

The case is being investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, the Office of Inspector General for the U.S. Small Business Administration, and the Office of Inspector General for the U.S. Department of Transportation.

The announcement is part of an effort by President Obama’s Financial Fraud Enforcement Task Force (FFETF), created in November 2009, to combat financial fraud crimes by waging aggressive, coordinated and proactive investigations and prosecutions. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, the task force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

An indictment is a means of charging a person with criminal activity. It is not evidence. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Posted at: http://www.justice.gov/usao/id/news/2013/may/martin05202013.html

SBA hosts ‘American Supplier Initiative’ May 20th in Atlanta

May 13, 2013 by

SBA Administrator Karen Mills will kick-off Connect Atlanta, a day-long event that will bring together small business suppliers with corporate and federal government buyers on Monday, May 20, 2013 from 10:00 am to 5:30 pm, at the MLK Federal Building. The event will include small business matchmaking to connect entrepreneurs with federal and commercial supply chain opportunities and provide the tools and resources needed for small businesses to become effective suppliers.

Research shows that small businesses who are suppliers to large corporations reported revenue growth of more than 250 percent and employment increased by more than 150 percent on average. But small business suppliers face a number of challenges as they seek to break into both federal and commercial supply chains, namely access to markets, access to capital and skills and business capabilities.

The U.S. Small Business Administration (SBA) has launched the American Supplier Initiative (ASI): a federal government-wide initiative designed to increase government and commercial supply chain opportunities for small firms. As part of the American Supplier Initiative, the SBA is holding a series of supply chain events, in collaboration with federal agencies and private companies, throughout the country. Connect Atlanta is the first of these events.

What:                         American Supplier Initiative

When:                         Monday, May 20th, 2013 10:00 am – 5:30 pm

Where:                       Martin Luther King, Jr. Federal Building, 77 Forsyth Street SW, Atlanta, GA, 30303

To Register:              https://atlanta.mybusinessmatches.com/

Contract award price no longer a factor in federal WOSB program

May 8, 2013 by

An interim final rule published May 7, 2013 in the Federal Register and effective immediately will amend regulations to the U.S. Small Business Administration’s Women-Owned Small Business Federal Contract Program allowing for greater access to federal contracting opportunities for women-owned businesses as a result of the National Defense Authorization Act of 2013 (NDAA) signed in January.

The interim final rule removes the anticipated award price of the contract thresholds for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB) to allow them greater access to federal contracting opportunities without limitations to the size of the contract.   The rule can be accessed at: http://www.gpo.gov/fdsys/pkg/FR-2013-05-07/html/2013-10841.htm  and comments can be submitted on or before June 6, 2013, at www.regulations.gov, identified by the following RIN number:  RIN 3245-AG55.

As a result of the rule change, contracting officers will be able to set aside specific contracts for certified WOSBs and EDWOSBs at any dollar level which will help federal agencies achieve the existing statutory goal of five percent of federal contracting dollars being awarded to WOSBs. The SBA is currently working on the changes to the Federal Acquisition Regulations.

Prior to the rule change, the anticipated award price of the contract for women-owned and economically disadvantaged women-owned small businesses could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.

Every firm that wishes to participate in the WOSB program must meet the eligibility requirements and either self-certify or obtain third party certification.  There are four approved third-party certifiers that perform eligibility exams: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women’s Chamber of Commerce, and the Women’s Business Enterprise National Council. Additional information and links about approved third-party certifiers are available at: http://www.sba.gov/content/contracting-opportunities-women-owned-small-businesses

To qualify as a WOSB, a firm must be at least fifty-one percent owned and controlled by one or more women, and primarily managed by one or more women.  The women must be U.S. citizens and the firm must be considered small according to SBA size standards.  To be deemed “economically disadvantaged,” a firm’s owners must meet specific financial requirements set forth in the program regulations.

The WOSB Program identifies eighty-three four-digit North American Industry Classification Systems (NAICS) codes where WOSBs are underrepresented or substantially underrepresented.   Contracting officers may set aside contracts in these industries if the contract can be awarded at a fair and reasonable price and the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.

For more information on the Women-Owned Federal Small Business Contract Program or to access the instructions, applications or database, please visit www.sba.gov/wosb or contact your GTPAC counselor.

Contractors plead guilty to illegally obtaining $31 million in contracts intended for small businesses

March 20, 2013 by

Executives at two Arlington, Va.-based businesses have pleaded guilty to fraudulently obtaining more than $31 million in government contract payments that should have gone to disadvantaged small businesses.

The guilty pleas were announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and NASA Inspector General Paul K. Martin.

“These executives used their knowledge and experience to abuse a program created to ensure minority small business owners could compete for government contracts,” said U.S. Attorney MacBride. “They not only illegally obtained millions from the United States, they also victimized legitimate minority owners who didn’t get the bids.”

“Keith Hedman and his co-conspirators fraudulently obtained valuable government contracts intended for minority-owned small businesses, and pocketed millions of dollars for themselves,” said Acting Assistant Attorney General Raman.  “They abused an important government program, and will now face the consequences.”

“This investigation confirmed that these executives repeatedly took actions that gave them a fraudulent advantage in the contracting process,” said NASA Inspector General Martin.  “I commend the outstanding efforts of our agents and our law enforcement partners involved in this case in protecting the integrity of the 8(a) program.”

According to court documents, Keith Hedman, 53, of Arlington, formed an Arlington-based security service consulting company in approximately 2001.  Hedman formed the company, listed as Company A in court filings, with an African-American woman who was listed as its president and CEO to enable the company to participate in the Small Business Administration’s (SBA) Section 8(a) program, which enables certain small businesses to receive sole-source and competitive-bid contracts set aside for minority-owned and disadvantaged small businesses.  In 2001, Hedman’s company received approval to participate in the 8(a) program on the basis of the African-American president and CEO’s listed role, but when she left the company in 2003, Hedman became its sole owner and the company was no longer 8(a)-eligible.

Hedman admitted that in 2003 he created a shell company, listed as Company B in court records, to ensure he could continue to gain access to 8(a) contracting preferences for which Company A was not qualified.  Prior to applying for the shell company’s 8(a) status, Hedman selected an employee, Dawn Hamilton, 48, of Brownsville, Md., to serve as a figurehead owner based on her Portuguese heritage and history of social disadvantage, when in reality the new company would be managed by Hedman and senior leadership at Company A.  To deceive the SBA, they falsely claimed that Hamilton formed and founded the company and that she was the only member of the company’s management.  They continued to mislead the SBA through 2012, even lying to the SBA to overcome a protest filed by another company accusing Hedman’s former company and the shell company of being inappropriately affiliated.

From Company B’s creation through February 2012, Hedman – not Hamilton – exercised ultimate decision-making authority and control over the company by controlling its finances, allocation of personnel and government contracting activities.  Hedman nonetheless maintained the impression that Hamilton was leading the company, including through forgeries of signatures by Hamilton to documents she had not seen or drafted.  Hedman also retained ultimate control over the shell business’s bank accounts throughout its existence.  In 2011, Hedman withdrew $1 million in cash from Company B’s accounts and gave the funds in cash to Hamilton and three other co-conspirators. In total, Hedman and Hamilton secured through the shell company more than $31 million in government contract payments, which generated more than $6 million in salary and payments for the conspirators that they were not entitled to receive.

In addition, Hedman admitted that he agreed to pay a $50,000 bribe through the shell business to a U.S. government contracting official for the official’s help in securing contracts for Company B.

Hedman and Hamilton pleaded guilty on March 13 and March 15, 2013, respectively, in U.S. District Court for the Eastern District of Virginia to major government fraud and face a maximum penalty of 10 years in prison and a multimillion-dollar fine for that charge. Hedman also pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison.  Hedman agreed to forfeit more than $6.3 million, and Hamilton agreed to forfeit more than $1.2 million.  Hedman is scheduled to be sentenced on June 21, 2013, before U.S. District Judge Gerald Bruce Lee.  Hamilton’s sentencing is scheduled for June 21, 2013, before U.S. District Judge T. S. Ellis, III.

In addition, the following individuals have also pleaded guilty to major fraud or conspiracy to commit major fraud:

• David George Lux, 62, of Springfield, Va., pleaded guilty today before U.S. District Judge Leonie M. Brinkema.  Lux served as the chief financial officer at Company A from 2007 through February 2012 and performed work for Company B throughout that time while officially on Company A’s payroll.  He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.

• Joseph Richards, 51, of Arlington, pleaded guilty on March 14, 2013, before U.S. District Judge Brinkema in the Eastern District of Virginia.  Richards served as the chief operating officer and chief of staff for Company A from 2005 through 2008 and then vice president from 2010 through February 2012.  He also served as Company B’s chief of staff from 2008 through 2010.  According to court documents, Richards performed work for Company B throughout his time at both companies. He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.

• David Sanborn, 60, of Lexington, S.C., pleaded guilty on March 13, 2013, before U.S. District Judge Claude M. Hilton in the Eastern District of Virginia.  Sanborn served as vice president at Company A from 2001 through 2009 and the company’s president from 2010 through February 2012.  According to court documents, Sanborn performed work for Company B from its inception while on Company A’s payroll.  He is scheduled to be sentenced on June 28, 2013, by Judge Hilton.

This case was investigated by the NASA Office of the Inspector General (OIG), the SBA OIG, the Defense Criminal Investigative Service, the General Services Administration OIG and the Department of Homeland Security OIG.  Assistant U.S. Attorneys Chad Golder and Ryan Faulconer, a former Trial Attorney for the Criminal Division’s Fraud Section, are prosecuting the case on behalf of the United States.

– News release from U.S. Dept. of Justice – Mar. 18, 2013 – http://www.justice.gov/opa/pr/2013/March/13-crm-323.html 

Waivers to non-manufacturer rule available to small businesses

March 11, 2013 by

Small businesses participating in Federal procurements may not always be aware of non-manufacturer waivers and how a waiver may assist them in pursuing Federal contracts.

This article explains non-manufacturer waivers and what Federal agency contracting officers are responsible for.   In addition, it explains the Small Business Administration’s non-manufacturer rule (NMR).

What is the Non-manufacturer Rule?

The Small Business Act and SBA’s regulations impose performance requirements (limitations on subcontracting) on firms that are awarded Federal set-aside contracts.

Applicable regulations are:

  • 15 USC §§ 637(a)(14), 644(o);
  • 13 CFR § 125.6;
  • Federal Acquisition Regulation (FAR) §§ 52.219-14, 52.219-27

On a supply contract, a firm must perform at least 50% of the cost of manufacturing the supplies (not including the cost of materials).

The NMR is an exception to the performance requirements, and provides that a firm that is not a manufacturer may qualify as a small business on a supply contract set aside for small business if, among other things, it supplies the product of a small business made in the United States (15 USC § 637(a)(17); 13 CFR § 121.406).

What is the difference between a Manufacturer and a Non-manufacturer?

  • A manufacturer is a concern which, with its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired (13 CFR § 121.406(b)(2); FAR § 19.102(f)(1)).
  • A concern may qualify a non-manufacturer if it:
    • Does not exceed 500 employees;
    • Is primarily engaged in the retail or wholesale trade and normally sells the type of item being supplied; and
    • Will supply the end item of a small business manufacturer or processor made in the United States, or obtains a waiver of such requirement (13 CFR § 121.406(b)).

Non-manufacturer Rule Reminders

Federal contracting officers applying the Nonmanufacturer Rule are to abide by the following guidelines:

  • The NMR does not apply to service contracts. The NMR is an exception to the manufacturing performance requirements (limitations on subcontracting) applicable to supply contracts. Service and construction contracts have different performance requirements. See 13 CFR § 125.6; FAR §§ 19.102(f), 19.502-2(c).
  • Contracting officers are to designate the proper NAICS code and size standard in the solicitation, selecting the NAICS code which best describes the principal purpose of the product or service being acquired. Primary consideration is given to the industry description in the NAICS, the product or service description in the solicitation and any attachments to it, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being purchased.
  • Wholesale or retail trade NAICS code are not be applied to a procurement for supplies.
  • Non-manufacturer waivers are not granted for HUBZone procurements.
  • Non-manufacturer waivers cannot be granted after bids on a solicitation have been received.

Non-Manufacturer Waiver Information

In order to qualify as a small business on a small business set-aside, Service-Disabled Veteran-Owned set-aside or 8(a) Business Development procurement (sole source or competitive) for the acquisition of supplies, an offeror must either manufacture the item in accordance with the Limitations on Subcontracting (see FAR section 52.219-14, 52.219-27 and 13 C.F.R. section 125.6) or supply the product of a small business made in the United States. The requirement that a non-manufacturer supply the product of a small business concern is commonly referred to as the Non-Manufacturer Rule (NMR) (13 C.F.R. section 121.406). The Small Business Act also contains provisions that allow the Administrator of the SBA to waive this requirement when there are no small business manufacturers or processors available to supply the product to the Federal Government. The Administrator has delegated the authority to make decisions on waivers of the Non-Manufacturer Rule to the Associate Administrator for Government Contracting in the following cases:

  • Individual waiver. After reviewing a determination by a contracting officer 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; or
  • Class waiver. For a product or class of products after determining that no small business is available to participate in the Federal procurement market.

For the purpose of waivers, a class of products is defined based on the Office of Management and Budget’s North American Industry Classification (NAICS) Manual and the General Services Administration’s Product and Service Code (PSC) Directory. Within each NAICS code and PSC are subdivisions of products that can be considered for waiver. A request for a waiver of a class of products should refer to a specific subdivision, or statement of product, within the NAICS and PSC.

Any individual or organization (government agency, business, association, etc.) may request a waiver for a class of products. The request should be in writing addressed to the Associate Administrator for Government Contracting and should specifically state the class (or classes) of products for which the waiver is sought.

Requesting the Individual Waiver

Contracting officers are the only ones who can request an individual waiver for a specific solicitation.  At a minimum, waiver requests from contracting officers must include:

  • A definite statement identifying the specific products for which a waiver is being requested, including market research documentation supporting the contracting officer’s determination that there are no known small business manufacturers or processors for the requested items.
  • The solicitation number for the procurement on which the item(s) is required, the NAICS code, estimated dollar amount of the procurement, and a brief statement of the procurement history.
  • For contracts expected to exceed $500,000, a copy of the Statement of Work.
  • A determination by the procuring agency’s contracting officer that there are no known small business manufacturers for the requested items. The determination must contain a clear, narrative statement of the contracting officer’s efforts to search for small business manufacturers or processors of the item(s) and the results of those efforts. The information should include the findings of a search on the SBA’s Central Contractor Registration (CCR) “Dynamic Small Business Search” ; other market surveys performed; the results of discussions with small business representatives to find manufacturers (i.e., Office of Small Disadvantaged Business Utilization (OSDBU) Representative or Procurement Center Representative (PCR)); and, a statement by the contracting officer that there are no known small business manufacturers for the items and that no small business can reasonably be expected to offer the required supplies.
  • A contracting officer may request an individual waiver for more than one item on a solicitation. The required information indicated above must be included for each item.

Requests for waivers of the Non-Manufacturer Rule should be sent to the Director for Government Contracting at: U. S. Small Business Administration, Office of Government Contracting, Mail Code 6700, 409 3rd Street, SW, Washington, DC 20416.

Class Waivers

Anyone can request a class waiver. The requester should supply SBA with the relevant NAICS code and other identifying information concerning the item. The requester should also supply SBA with market research and other data to support a determination that no small business manufacturer is participating in the Federal procurement market.

Use the following format for submitting class waivers:

Dear Director:

In accordance with 13 Code of Federal Regulations (Reference 12l.1204(a)(2)), the (your name and/or the name of your organization) hereby requests a class waiver of the Non-manufacturer Rule (NMR) for name of product(s)_______, under the North American Industry Classification (NAICS) code _______, Product Service Code (PSC) _____.

(Describe any background information relative to the product(s) you are requesting to be waived. Include detailed information on the efforts made to identify small business manufacturers or processors for the class.)

I can be reached at ( ) ______, fax number ( ) _______, and mailing address_______.

Sincerely,

_____________

Signed/dated

Send to: Director, Office of Government Contracting, U.S. Small Business Administration, 409 3rd Street, SW, MC 6700, Washington, DC 20416.

Timeframes for Handling

  • A request for an individual waiver will take about 15 working days to process if the contracting officer provides complete information.
  • Requests for waivers of classes of products take an average of 45 – 60 working days for processing.

This period of time allows SBA staff to publish Waivers of the Non-manufacturer Rule in the Federal Register, a required notice of an intent to grant a waiver for the class of products, a notice on the FedBizOpps web site of potential sources sought, and a final notice in the Federal Register of any decision to grant the waiver if no small business manufacturers or processors have been identified.

For questions about the Nonmanufacturer Rule, or questions on how to submit a waiver request, please contact SBA’s Edward Halstead  at vog.absnull@daetslah.drawde