2020-15535. Class Waiver of the Nonmanufacturer Rule

AGENCY:

U.S. Small Business Administration.

ACTION:

Notification of waiver of the Nonmanufacturer Rule for diabetic test strips.

SUMMARY:

The U.S. Small Business Administration (SBA) is granting a class waiver of the Nonmanufacturer Rule (NMR) for diabetic test strips under North American Industry Classification System (NAICS) code 325413 and Product Service Code (PSC) 6515. This U.S. industry comprises establishments primarily engaged in manufacturing diabetic test strips.

DATES:

This action is effective August 17, 2020.

FOR FURTHER INFORMATION CONTACT:

Carol J. Hulme, Attorney Advisor, by telephone at [phone] or by email at [e-mail].

SUPPLEMENTARY INFORMATION:

Section 8(a)(17) and 46 of the Small Business Act (Act), 15 U.S.C. 637(a)(17) and 657s, and SBA's implementing regulations require that recipients of Federal supply contracts issued as a small business set-aside (except as stated below), service-disabled veteran-owned small business (SDVO SB) set-aside or sole source contract, Historically Underutilized Business Zone (HUBZone) set-aside or sole source contract, WOSB (women-owned small business) or economically disadvantaged women-owned small business (EDWOSB) set-aside or sole source contract, 8(a) set-aside or sole source contract, partial set-aside, or set aside of an order against a multiple award contract 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 (NMR). 13 CFR 121.406(b). Note that the NMR does not apply to small business set-aside acquisitions with an estimated value between the micro-purchase threshold and the simplified acquisition threshold. Sections 8(a)(17)(B)(iv)(II) and 46(a)(4)(B) of the Act authorize SBA to waive the NMR for a “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market.

The SBA defines “class of products” based on a combination of (1) the six-digit NAICS code, (2) the four-digit PSC, and (3) a description of the class of products. As implemented in SBA's regulations at 13 CFR 121.1202(c), in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or been awarded a contract to supply the class of products within the last 24 months.

SBA received a request to waive the NMR for diabetic testing strips under NAICS code 325413 and PSC 6515. According to that request, submitted with supporting information, there are no small business manufacturers of these items in the Federal market.

On April 20, 2020 (85 FR 08304), the SBA issued a Notice of Intent to grant a class waiver for diabetic test strips. SBA received no comments in response to the Notice. Therefore, in the absence of a small business manufacturer of diabetic test strips, this class waiver is necessary to allow otherwise qualified regular dealers to supply the product of any manufacturer on a Federal contract or order set aside for small business, SDVOSB, WOSB, EDWOSB, HUBZone or participants in the SBA's 8(a) Business Development Program. SBA's waiver of the nonmanufacturer rule has no effect on the requirements in 13 CFR 121.406(b)(1)(i) to (iii) and on requirements external to the Small Business Act which involve domestic sources of supply, such as the Buy American Act or the Trade Agreements Act.

More information on the NMR and Class Waivers can be found at https://www.sba.gov/​contracting/​contracting-officials/​non-manufacturer-rule/​non-manufacturer-waivers.

David Wm. Loines,

Director, Office of Government Contracting.