52.219-33
Nonmanufacturer Rule
The Nonmanufacturer Rule requires small business suppliers on set-aside contracts to provide products made by U.S. small businesses, not just resell large business goods.
Overview
FAR 52.219-33, the Nonmanufacturer Rule, establishes requirements for small business concerns that supply products they do not manufacture themselves under certain set-aside and sole-source contracts. The rule ensures that small businesses acting as suppliers or distributors provide products manufactured by other small businesses in the United States or its outlying areas, rather than simply reselling large business products. It also sets specific requirements for kit assemblers and clarifies when the rule applies based on contract type and acquisition method.
Key Rules
- Definitions of Manufacturer and Nonmanufacturer
- Clarifies what constitutes a manufacturer versus a nonmanufacturer, focusing on the extent of transformation or modification performed on the end item.
- Applicability
- Applies to set-aside and sole-source contracts for small business programs, certain orders under multiple-award contracts, and contracts using the HUBZone price evaluation preference (unless waived).
- Does not apply to unrestricted portions of partial set-asides or to contractors who are manufacturers.
- Nonmanufacturer Requirements
- Nonmanufacturers must supply end items manufactured by small businesses in the U.S. or outlying areas, be primarily engaged in retail/wholesale trade, and take ownership/possession of the items.
- Kit assemblers must ensure at least 50% of kit component costs are from small businesses in the U.S. or outlying areas.
Responsibilities
- Contracting Officers: Must ensure the clause is included in applicable contracts and verify compliance with the rule.
- Contractors: Must source products from qualifying small businesses, meet trade and possession requirements, and document compliance, especially for kits.
- Agencies: Oversee and enforce compliance with the nonmanufacturer rule in relevant procurements.
Practical Implications
- The rule prevents small business set-asides from being used to simply pass through products from large businesses, supporting the intent of small business programs.
- Contractors must carefully vet their supply chains and maintain documentation to prove compliance.
- Common pitfalls include misunderstanding the definition of manufacturer, failing to meet the 50% kit requirement, or not taking proper ownership of goods.