Understanding the Nonmanufacturer Rule (NMR) and

the NMR Waiver Process

First Wednesday Virtual Learning Series 2018

www.sba.gov

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Hosts

Jan Kaiser, Procurement Center Representative SBA Office of Government Contracting, Area IV, Chicago janis.kaiser@sba.gov (312) 353-7442

Deborah Crumity, Procurement Center Representative SBA Office of Government Contracting, Area IV, Rock Island Arsenal deborah.d.crumity.civ@mail.mil (309) 782-5734

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Welcome to “SBA Virtual Learning 2018”

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1. Questions answered during the final 10 minutes.

2. Technical problems: Contact the moderator with a note or call AT&T

Connect Support at 1-888-796-6118.

3. Page numbers stated for those working off hard copies of the

program.

4. We cover the “SBA Quick Reference” as time allows.

5. For more SBA training visit the SBA Learning Center website https://www.sba.gov/tools/sba-learning-center/search/training

Procurement Technical Assistance Centers are a vital resource partner.

• APTAC posts past “First Wednesday” programing at this link:

http://www.aptac-us.org/for-contracting-officers-sba-webinar-library/

• Contracting officer resources: “How PTACs partner with federal

agencies”: http://www.aptac-us.org/federal-partners/

• Find your nearest Procurement Technical Assistance Center at

http://www.aptac-us.org

Association of Procurement Technical Assistance Centers (APTAC)

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The program schedule above is for information only and is subject to change.

FY 2018 Date Topic

1 October 4, 2017 Non-Manufacturer Rule

2 November 1, 2017 SBA Native American Programs - AI/ANC/NHO

3 December 6, 2017 SBA Programs You May Not Know About Natural Resources Assistance/Disaster Assistance

4 January 10, 2018 Historically Underutilized Business Zones

5 February 7, 2018 Certificate of Competency Program

6 March 7, 2018 Woman Owned Small Business

7 April 4, 2018 Size and Affiliation

8 May 2, 2018 Subcontracting Plans: Pre-Award

9 June 6, 2018 SDVOSB

10 July 11, 2018 SBA Legislative Update

11 August 1, 2018 Mentor/ Protégé Program

1st WEDNESDAY VIRTUAL LEARNING SERIES 2018 SCHEDULE

1:00 to 2:00 Central Time

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One Continuous Learning Point

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Phoning in only: If you listen in groups and you want all attendees to be included on the future mailing list, send email addresses of participants in an excel document to sbalearning@sba.gov.

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Understanding the

Nonmanufacturer Rule

(NMR) and the NMR

Waiver Process

Presented by:

Roman Ivey

U.S. Small Business Administration

Office of Government Contracting

Overview

• The Nonmanufacturer Rule (NMR)

• Applicability of the NMR

• Individual Waivers to the NMR

• Class Waivers to the NMR

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The Nonmanufacturer

Rule (NMR)

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NMR Definition

The Nonmanufacturer Rule (NMR) allows an

otherwise responsible business concern to be

awarded a procurement contract for the

supply of a product – even though it is not the

manufacturer or processor of the product – as

long as it meets certain conditions

- Small Business Act section 8(a)(17)

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NMR Conditions

To qualify as a nonmanufacturer under the NMR, a firm:

• Cannot exceed 500 employees;

• Must be primarily engaged in retail or wholesale and

normally sells type of product being supplied;

• Must take ownership or possession of the item(s) in a

manner consistent with industry practice; and

• Must supply the end product of a small business

manufacturer or processor made in U.S. or obtain a

waiver to the NMR

13 CFR 121.406(b)(1)

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Manufacturer Defined

• The manufacturer of an item is the concern which

performs the primary activities in transforming

organic or inorganic substances, including the

assembly of parts and components, into the end

item being acquired

• Firms which only perform minimal operations on the

end item or firms which add substances, parts, or

components to the end item do not qualify as the

manufacturer of the item being acquired

13 C.F.R 121.406(b)(2)

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Kit Assemblers

• A small business that supplies a pre-assembled “kit” of supplies/goods meets the conditions of the NMR if:

• The small business providing the “kit” does not exceed 500 employees; and

• 50% of the total value of the “kit” is manufactured by US small businesses

13 CFR 121.406(c)

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Applicability of the NMR

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Applicability of the NMR

The NMR applies to

• Small business set-asides

• Against a manufacturing or supply contract

• With a total estimated value greater than

$150,000

13 CFR 121.406(a), (d)

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Set-Aside Requirement

• The NMR does not apply unless and until

there is a small business set-aside

• Thus, the NMR

• Would apply to task orders within a “full and

open” overall contract

• Would not apply to an IDIQ where the intent is to

establish small business set-asides during the

life of the contract

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NMR Applicable NAICS Codes

The NMR only applies to manufacturing/supply

acquisitions with certain assigned NAICS codes:

• 31XXXX-33XXXX

• 511210 (software)

• 541519 footnote 18 (Information Technology

Value Added Reseller – ITVAR)

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Individual Waivers to

the NMR

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Standard for Individual NMR Waivers

• SBA will grant an individual waiver to the NMR

after determining that “no small business

manufacturer or processor can reasonably be

expected to supply the product meeting the

specifications of the solicitation”

• 13 CFR 121.406(b)(5)(i)

• Individual waivers apply only to a single

solicitation (one-time waiver) and the specific

item(s) identified in the waiver request

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Procedure for Requesting an

Individual NMR Waiver

• The contracting officer must email the

request to the SBA Office of

Government Contracting at

nmrwaivers@sba.gov

• The request should include all the

elements noted on the following slide

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What to Submit – Individual NMR

Waiver Request Checklist

Request signed by the contracting officer

Solicitation number (or other ID)

Estimated total dollar amount of the contract

Assigned NAICS code(s) for the solicitation

Brief statement of the procurement history

For contracts over $500,000 need a Statement of Work (or equivalent)

A definitive statement of the item(s) to be waived and justification for why they are required

A narrative describing market research and supporting documentation

13 CFR 121.1204(b)(1)

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Definitive Statement of Item(s)

• SBA needs the items sought under the

solicitation to be described in terms of their

qualities and attributes

• This could include laymen’s terminology,

technical specifications, or any other identifying

characteristics

• SBA will generally not grant an individual NMR

waiver if the primary justification for the

narrowing of sources is a brand name

requirement

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“Brand Name Only” Procurements

• If the requesting agency has a legitimate

need for a particular brand name item, then

the contracting officer must provide a Limited

Sources Justification (LSJ) or equivalent

document

• The LSJ must include the reasoning for why

the brand name item is essential to the

procurement and it must comply with all

relevant FAR requirements

• FAR 6.302, 6.303, 8.405, etc.

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Market Research Considerations

Market Research is the most important part

of the individual waiver request

• SBA needs to see a narrative and documentation

that provides reasonable certainty that there are no

small business manufacturers that make and could

supply the items sought

• This requires the contracting officer to perform

extensive market research and provide a clear

description of that market research

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Market Research Considerations (cont.)

• Examples of market research tools:

• Sources Sought Notice (or RFI) that includes

language specifically seeking small business

manufacturers

• DSBS/SAM searches for potential small business

manufacturers (with follow up)

• Industry days and roundtable discussions (recent)

• Direct correspondence with small businesses

identified by OSBDU, past procurements, etc.

• General industry knowledge when based on

recent, thorough market research and assertion of

no change in the market*

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Market Research Considerations (cont.)

• In general, the Sources Sought Notice (RFI)

is the most effective market research tool

• It reaches the entire Federal procurement

community via FedBizOpps

• SBA requires that a Sources Sought (RFI):

• Include language specifically seeking small

business manufacturers;

• Define the item(s) in terms of salient

characteristics; and

• Be posted on FedBizOpps for 14 calendar days

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Multi-Item Procurements

• A contracting officer must provide separate

justification and market research for each

item to be covered by an NMR waiver

• However, an NMR waiver is not necessary

for every item manufactured by a large

business in a multi-item procurement

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Multi-Item Procurements (cont.)

There are two paths to compliance with the

NMR for multi-item procurements:

1) At least 50% of the total estimated contract value

manufactured by small business

• 13 CFR 121.406(e)(1), 125.6(a)(2)(ii)(A)

2) Over 50% of the total estimated contract value

manufactured by large business, obtain NMR

waivers so that 50% of the remaining total value

(items not covered by NMR waiver) is manufactured

by small business

• 13 CFR 125.6(a)(2)(ii)(B)

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Multi-Item Procurement Examples

• Example 1 – Total contract value of $1 million. $500k

manufactured by small business.

• Result: Complies with NMR. 50% of total contract value is

manufactured by small business (no waivers needed)

• Example 2 – Total contract value of $1 million. $200k

manufactured by small business. Contracting officer obtains NMR

waivers for $200k of remaining value.

• Result: Does not comply with NMR. Of the $800k not covered

by an NMR waiver, only 25% manufactured by small business

• Example 3 – Total contract value of $1 million. $300k

manufactured by small business. Contracting officer obtains NMR

waivers for $400k of remaining value.

• Result: Complies with NMR. Of the $600k not covered by an

NMR waiver, 50% manufactured by small business

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Class Waivers to the

NMR

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Standard for Class NMR Waivers

A class waiver is justified when no small

business manufacturers are

• available to participate

• in the federal market

• for a class of products

13 CFR 121.406(b)(5)(ii)

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“Class of Products”

• “Class of products” refers to an individual

subdivision within a NAICS Industry

Number

• For practical purposes, SBA uses a

combination of NAICS code, PSC, and an

item description to identify the “class of

products” for a class waiver to the NMR

• E.g. NAICS 333333, PSC 1234, Doohickeys

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“Available to Participate”

• “Available to participate” means that small

business contractors have performed, been

awarded, or submitted an offer on a federal

government contract/solicitation for the class

of products within last 24 months

• 13 CFR 121.1202(c)

• If just one small business manufacturer has

been awarded/submitted a bid for a

solicitation concerning the item in question

over the previous 2 years, the class waiver

request must be denied

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Procedures for Requesting and

Establishing a Class Waiver

• Any government agency (including the SBA),

business association, or interested party may

request a NMR waiver for a class of products

• The class waiver request must include

• A statement of the class of products to be waived

(NAICS code, PSC, description)

• Detailed information on efforts to identify domestic

small business manufacturers for the class of

products

13 CFR 121.1204(a)(1-3)

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Class Waiver Procedure (cont.)

• SBA will then conduct its own market research

to confirm whether any small business

manufacturers were awarded a contract on the

class of products within the prior 24 months

• If no small business manufacturers are found

initially, SBA will 1) Publish notices in FedBizOpps and the Federal Register

announcing intent to establish class waiver

2) Allow (at least) 15 day public comment period

3) Publish final notice of class waiver in the Federal

Register if no small business manufacturers are

identified after public comment period

13 CFR 121.1204(a)(4)

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Procedures for Reviewing and

Terminating Class Waivers

• A class waiver to the NMR has no time limitation

• SBA will periodically review existing class waivers to

determine if small business manufacturers have

become available in the federal market

• Other interested parties can also request review and

termination of a class waiver to the NMR

• Discovery of just one small business manufacturer

will trigger termination of the class waiver

• Notice in the Federal Register of intent to terminate class

waiver, public comment period, final FR notice

13 CFR § 121.1204(a)(7)

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Existing NMR Class Waivers

• Existing NMR class waivers can be found

at the following link:

• https://www.sba.gov/contracting/contracting-

officials/non-manufacturer-rule/class-waivers

• Make sure to keep track of class waiver

terminations and always check the list for

up-to-date effective class waivers before

issuing a small business set-aside

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How to Submit NMR Waiver

Requests

• Submit NMR waiver requests and attachments to the

NMR program email address at:

nmrwaivers@sba.gov

• For individual waivers, use the solicitation number (or

equivalent) and agency abbreviation in the subject line

• e.g. SBA SBA123-18-Q-0001 NMR Waiver Request

• For class waivers, use the NAICS code, PSC, and a

description of the product in the subject line

• e.g. NAICS 333333, PSC 1234, Widgets

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Nonmanufacturer Rule (NMR) Program

Roman Ivey

Office of Government Contracting

U.S. Small Business Administration

Washington, D.C.

nmrwaivers@sba.gov

roman.ivey@sba.gov

(202) 401-1420

Questions??

Dynamic Small Business Search

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SBA Size Regulations 13 CFR Part 121

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 CFR 125.2

SBA Subcontracting 13 CFR 125.3

Summary of CFR Regulations

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Types of SBA Contacts and Offices

A. SBA Government Contracting Area Offices

1. SBA Procurement Center Representatives (PCRs)

2. SBA Commercial Market Representatives (CMRs)

B. SBA District Offices

1. Business Opportunity Specialists (BOS)

C. SBA Regional Offices

D. SBA Headquarters

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SBA Government Contracting Areas at hyperlink:

https://www.sba.gov/content/pcr-directory

Six SBA Government Contracting Areas

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1. Size protests (with recertification) FAR 19.302

13 CFR 121.1001

13 CFR 121.1010

2. Locating nearest SBA staffer FAR 19.4

3. Certificate of Competency FAR 19.6

13 CFR 125.5

4. COC Limitations on Subcontracting Compliance

FAR 19.601

13 CFR 125.6(f)

5. Receiving copies subcontracting plans

FAR 19.705-6

A. SBA Quick Reference - SBA Area Offices

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FAR 19.402 Small Business Administration procurement center

representatives. (a)(1) The SBA may assign one or more

procurement center representatives to any contracting activity or

contract administration office to carry out SBA policies and

programs…

(2) If a SBA procurement center representative is not assigned to the

procuring activity or contract administration office, contact the SBA

Office of Government Contracting Area Office…..

(b) Upon their request and subject to applicable acquisition and

security regulations, contracting officers shall give SBA procurement

center representatives….access to all reasonably obtainable

contract….

B. SBA Quick Reference - SBA Procurement Center Representatives(PCRs)

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B. SBA Quick Reference SBA PCRs, cont.

1. SBA PCR coordination records FAR 19..501(b) 13 CFR 125.2 2. Small business set-aside appeals FAR 19.505 13 CFR 125.2(b)(7) 3. HUBZone set-aside appeals FAR 19.1305 FAR 19.1306 13 CFR 126.61 4. SDVOSB set-aside appeal FAR 19.1405 FAR 19.1406 13 CFR 125.22 5. Reporting bundling to SBA (MATOCs) FAR 19.202-1(e)(1) 13 CFR 125.2 6. SBA subcontracting plan reviews-copies FAR 19.705-5(3) 13 CFR 125.2(b)(6)(iii) FAR 19.705-6(c) 13 CFR 125.2(b)(6)(iii)(C) 7. SBA subcontracting program review FAR 19.707(4) 13 CFR 125.2(b)(6)(iii)(C) 8. Small business TFD FAR 49.402-3 (e)(4)) (Termination for default) 9. Surveillance review of agency contracting FAR 19.402(c)(5) 47

Small Business Coordination Forms Sent To SBA PCRs Agency Form Title

1 Commerce CD 570 Small Business Set-aside Review

2 Defense 2579 Small Business Coordination Record

3 Energy 4220.2 Small Business Review Form

4 GSA 2689 Small Business Analysis Record

5 HHS 653 Small Business Review Form

6 Homeland Security 700-22 Small Business Review Form

7 Interior 1886 Acquisition Screening and Review Form

8 Labor DL1-2004 Small Business Procurement Determination

9 NASA NF 1787 Small Business Review Sheet

10 State DS-1910 Small Business Clearance Form

11 Transportation 4250 Small Business Program Review Form

12 USDA AD-1205

Small Business Program – Procurement

Review

13 VA 2268

Procurement Request Review For Small

Business Programs and Contract Bundling 48

19.705-6 Postaward responsibilities of the contracting officer. …:

(a) Notifying the SBA of the award by sending a copy of the award document to

the Area Director, Office of Government Contracting, in the SBA area

office where the contract will be performed.

(c) Giving to the SBA procurement center representative….a copy of—

(1) Any subcontracting plan submitted in response to a sealed bid

solicitation; and

(2) The final negotiated subcontracting plan that was incorporated into a

negotiated contract or contract modification.

(d) Notifying the SBA procurement center representative…. of the opportunity to

review subcontracting plans in connection with contract modifications.

Document that you have provided SBA Area Directors with copies of subcontracting plans

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1. Prime contractor portfolio management 13 CFR 125.3

2. Reviews of subcontracting plan holders 13 CFR 125.3

3. Matchmaking 13 CFR 125.3

4. SBA SUB-Net link at: http://www.sba.gov/content/sub-net

5. SBA Subcontracting Opportunities Directory link at:

http://www.sba.gov/subcontracting-directory

6. “SBLO Handbook” link at: http://www.sba.gov/content/small-

business-liaison-officer-handbook

C. SBA Quick Reference - SBA Commercial Market Representatives (CMRs) link at: https://www.sba.gov/content/cmr-directory

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Link to district offices at: http://www.sba.gov/about-offices-list/3

D. SBA Quick Reference – SBA Regional and District Offices

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To locate SBA 8(a) business development servicing

office, check Dynamic Small Business Search at the link:

http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm and then

local resources at the link http://www.sba.gov/tools/local-

assistance/districtoffices

D. SBA Quick Reference - SBA District Offices, cont.

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1. HUBZone status protests FAR 19.306

13 CFR 126.801

2. NAICS code appeal FAR 19.30 3

13 CFR 121.1103

3. Non-manufacturer rule waivers FAR 19.102(f)(1)-(7)

13 CFR 121.1204

4. SDVOSB status protest FAR 19.307

13 CFR 125.23

5. WOSB Program status protest FAR 19.308/13 CFR 1275.600

E. SBA Quick Reference - SBA Headquarters

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The preferred and most expeditious method for asking questions and submitting waiver requests is by e-mail to nmrwaivers@sba.gov.

NMR Program Office

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Find your PCR at https://www.sba.gov/content/pcr-directory