Small Business Size Standards: Waiver of the Nonmanufacturer Rule

AGENCY:

Small Business Administration.

ACTION:

Notice of termination of waiver of the Nonmanufacturer Rule for Small Arms Manufacturing.

SUMMARY:

The U.S. Small Business Administration (SBA) is terminating the waiver of the Nonmanufacturer Rule for Small Arms Manufacturing based on our recent discovery of small business manufacturers for this class of products. Terminating this waiver will require recipients of contracts set aside for small or 8(a) businesses to provide the products of small business manufacturers or processor on such contracts.

DATES:

This termination of waiver is effective on March 30, 2004.

FOR FURTHER INFORMATI0N CONTACT:

Edith Butler, Program Analyst, by telephone at (202) 619-0422; by FAX (202) 205-7280; or by e-mail at edith.butler@sba.gov.

SUPPLEMENTARY INFORMATION:

Section 8(a)(17) of the Small Business Act (Act), 15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses or SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market.

As implemented in SBA's regulations at 13 CFR 121.1204, in order to be considered available to participate in the Federal market for a class of product, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on the six digit North American Industry Classification System (NAICS) and the four digit Product and Service Code established by the Federal Procurement Data System.

SBA granted a waiver of the Nonmanufacturer Rule for Small Arms Manufacturing, based on its determination that no small business manufacturers were available to participate in the Federal market for this class of products. It was recently brought to SBA's attention by small business manufacturers and a SBA Procurement Center Representative that small business manufacturers exist for items within the Small Arms Manufacturing class of products, identified under the NAICS 332994. In response, on October 29, 2003, SBA published in the Federal Register a notice of intent to terminate the waiver of the Nonmanufacturer Rule for Small Arms Manufacturing. SBA explained in the notice that it had discovered the existence of small business manufacturers of that class of products. SBA did not receive any comments in response to the published notice. Accordingly, based on the available information, SBA has determined that there are small business manufacturers of this class of products, and is therefore terminating the class waiver of the Nonmanufacturer Rule for Small Arms Manufacturing, NAICS 332994.

Authority: 15 U.S.C. 637(a)(17).