Introduction to NITAAC GWACs

In this section, we will discuss the significance of the Non-Manufacturer Rule for small businesses using the CIO-CS contract vehicle.

The Non-Manufacturer Rule (NMR)

The Non-Manufacturer Rule (NMR) outlined in FAR 19.505 allows a small business to supply products it did not manufacture. There are two ways the NMR allows IT procurements to be set aside for small businesses. The first is when the small business is supplying a product that has been manufactured by a small business; or a waiver is granted.

Waivers to the NMR

There are two types of waivers: individual waivers for specific contracts and class waivers for classes of products. These waivers allow small businesses to supply products from large manufacturers when necessary.

Individual Waivers

An individual waiver applies to a specific contract where no small business manufacturers are available for the particular product being solicited.

Only a CO can request an individual waiver. COs can request an individual waiver when they identify that no small business is capable of supplying the necessary goods, allowing a small business to source products from a large manufacturer instead. In the case of the CIO-CS GWAC, where IT products may often be sourced from large OEMs, small business value added resellers (VARs) can apply for individual waivers if no small business OEM is available.

"Individual waivers are contract-specific, must be utilized within one year of issuance, and expire at the end of the contract. You may request an individual waiver for more than one product on a contract. You must include the required information for each product" (USSBA, 2024e). The request for the waiver must be submitted to the Small Business Administration (SBA) for review and approval.

Class Waivers

A class waiver applies to an entire class of products where it has been determined that no small business manufacturers exist. The SBA maintains a list of products that are eligible for class waivers, and COs can refer to this list when making procurement decisions. If a product falls under a class waiver, small businesses can supply products from large manufacturers without the need for an individual waiver.

"SBA may issue a class waiver when no small business manufacturer has submitted, performed, or been awarded an offer on a solicitation for a class of products within the previous two years. Anyone can request a class waiver" (USSBA, 2024e).

See USSBA for more waiver request details for both types of waivers.

The CIO-CS contract was awarded to allow COs to set aside orders in accordance with the NMR. NITAAC awarded small business contracts to 57 VARs to compete in five socio-economic categories.

Value Added Resellers (VARs)

VARs are companies that enhance or add value to existing products from manufacturers by offering additional services, such as installation, configuration, integration, training, or support. They typically purchase products from OEMs, modify or bundle them with related services, and then sell the combined package to end users.

In the context of CIO-CS, where there are no small business OEMs, small business VARs play a critical role in federal acquisitions. Instead of manufacturing IT products themselves, VARs add value by offering services such as technical support, customization, and after-sales services to meet the specific needs of federal agencies. This allows small businesses to participate in the CIO-CS GWAC by reselling products from large OEMs while offering additional services that enhance the product's value.

For COs or acquisition professionals, this means they can still meet small business contracting goals by working with VARs that qualify under socio-economic categories, even though the products themselves may come from larger OEMs. VARs provide flexibility and ensure that small businesses can remain competitive in the federal marketplace through the CIO-CS GWAC.

Implications of the NMR for Acquisition Professionals Using CIO-CS

So how is the NMR significant for contracting officers and acquisition professionals using CIO-CS GWAC? The following points address this question:

1. Broadens Participation: The NMR allows small businesses to supply products from other manufacturers, including large businesses, as long as certain conditions are met (such as obtaining a waiver). This broadens the pool of small business suppliers available under CIO-CS, increasing competition and allowing COs to meet their small business contracting goals.
2. Compliance with Socio-Economic Goals: The NMR ensures that COs can still prioritize small business participation, even if the small business is acting as a reseller rather than a manufacturer. This is particularly useful for fulfilling small business set-aside requirements while sourcing IT products through the CIO-CS GWAC.
3. Waiver Flexibility: The NMR includes provisions for obtaining waivers when there are no small business manufacturers available for a particular product. COs using CIO-CS can use these waivers to meet procurement needs without violating small business set-aside requirements. Check the SBA site for more information as several class waivers apply to the CIO-CS contract.

Conclusion

In conclusion, the NMR outlined in FAR 19.505 plays a crucial role in supporting small businesses in federal acquisitions through the CIO-CS contract vehicle.

References

Koprince, S. (2017, January 18). ITVAR Nonmanufacturer Subject To 150-Employee Size Standard, Court Says. SMALLGOVCON. Koprince McCall Pottroff LLC.

National Archives. (n.d.). Code of federal regulations: A point in time eCFR system. (See 13 C.F.R §§ 121.1201 -1206 for detailed information concerning waivers of the nonmanufacturer rule for classes of products and for individual contracts). Last amended, June 17, 2024.

Small Business Administration. (2016). Small business size standards: Industries with employee based size standards not part of manufacturing, wholesale trade, or retail trade (RIN 3245–AG51). Federal Register, 81(16), 4436-4454.

U.S. Small Business Association. (2024e, May 1). Nonmanufacturer rule.