Insert the following clause in solicitations and contracts when the item being acquired has been assigned a manufacturing or supply North American Industry Classification System (NAICS) code, and the requirement is awarded on a sole-source basis in accordance with subpart 19.8. Do not insert the clause when the Small Business Administration has determined that there are no small business manufacturers of the product or items and has waived the nonmanufacturer rule.
NONMANUFACTURER RULE (MAR 2020) (DEVIATION 2020-O0008)
(a) Definitions. As used in this clause—
“Manufacturer” means the concern that transforms raw materials, miscellaneous parts, or components into the end item. Concerns that only minimally alter the item being procured do not qualify as manufacturers of the end item. Concerns that add substances, parts, or components to an existing end item to modify its performance will not be considered the end item manufacturer, where those identical modifications can be performed by and are available from the manufacturer of the existing end item.
“Nonmanufacturer” means a concern, including a supplier, that provides an end item it did not manufacture, process, or produce.
(b) Applicability.
(1) This clause does not apply to contracts awarded pursuant to the unrestricted portion of a partial set-aside or to a contractor that is the manufacturer of the product or end item.
(2) This clause applies to—
(i) Contracts that have been awarded pursuant to a competitive 8(a) procurement;
(ii) Contracts that have been awarded on a sole-source basis in accordance with subpart 19.8; and
(iii) Orders competed among 8(a) participants under multiple-award contracts as described in 8.405-5 and 16.505(b)(2)(i)(F); and
(iv) Orders issued directly to an 8(a) participant under multiple-award contracts as described in 19.504(c)(1)(ii).
(c) Requirements.
(1) The Contractor shall—
(i) Provide an end item that a small business has manufactured, processed, or produced in the United States or its outlying areas;
(ii) Be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied; and
(iii) Take ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice; for example, providing storage, transportation, or delivery.
(2) For contracts or orders for multiple end items, at least 50 percent of the total value of the contract or order shall be manufactured, processed, or produced in the United States or its outlying areas by small business concerns.
(End of clause)
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