SBA S NEW ITVAR SIZE RULE

Transcription

1 th Street, NW, 11 th Flr Washingtn, DC Tel: (202) Fax: (202) SBA S NEW ITVAR SIZE RULE A PilierMazza Webinar April 12, 2016

2 PRESENTED BY PILIEROMAZZA GOVERNMENT CONTRACTS GROUP Jn Williams, Partner (202) Cy Alba, Partner (202) PilierMazza PLLC

3 ABOUT PILIEROMAZZA PilierMazza PLLC is a full-service law firm lcated in Washingtn, D.C. We are mst well knwn as gvernment cntracting firm and fr 25 years we have helped ur clients navigate the cmplexities f ding business with the federal gvernment. We als prvide a full range f legal services including advice n crprate, labr and emplyment, SBA prcurement prgrams, and litigatin matters. Our clients value the diverse array f legal guidance they receive frm us and ur respnsiveness as we guide their grwth and secure their success. Sign up fr ur newsletters and blg at PM Legal Minute ur blg, written by all f PilierMazza s attrneys, prvides trending insight t small and mid-sized businesses. Legal Advisr Newsletter ur quarterly publicatin which addresses current issues that are f cncern t federal gvernment cntractrs and cmmercial businesses natinwide. The Legal Advisr articles fcus n recent legal trends, curt decisin, legislative and regulatry rule-making as well as ther newswrthy events. Weekly Update an sent every Friday that prvides an up-t-the minute recap f legislative and regulatry issues affecting small businesses. Webinars n YuTube all f ur past webinars can be fund n the PilierMazza YuTube channel. Fllw us PilierMazza Channel PilierMazza PLLC

4 OVERVIEW Histry and prpsed changes t SBA s ITVAR size rule What is SBA s new ITVAR size rule? Understanding the nnmanufacturer rule and waivers What shuld ITVARs d nw? PilierMazza PLLC

5 THE OLD ITVAR SIZE RULE In 2002, SBA created the ITVAR exceptin t NAICS cde in Ftnte 18 Exceptin added 150-emplyee size standard fr ITVARs Use f exceptin discretinary fr COs Available when between 15-50% f the cntract is fr valueadded services SBA explicitly rejected the 500-emplyee size standard under the nnmanufacturer rule SBA fund that cmpanies with 150 emplyees are similar in size t the revenue limits f the regular size standard PilierMazza PLLC

6 SBA S PROPOSED CHANGE TO THE ITVAR SIZE RULE In 2014, SBA prpsed t eliminate the ITVAR exceptin in Ftnte 18 t NAICS cde SBA s reasning: Exceptin being misused; nnmanufacturer rule shuld apply Many industries mix supplies and services but d nt receive special exceptins Cnfusin in the industry leading t size prtests Cnfusin at agencies abut whether t cunt cntracts under tward small business gals PilierMazza PLLC

7 SBA S FINAL ITVAR SIZE RULE Effective February 26, 2016 SBA did nt eliminate the 150-emplyee size standard exceptin fr ITVARs in Ftnte 18 Hwever, SBA rule nw says that ITVARs must cmply with the nnmanufacturer rule when using Ftnte 18 under NAICS cde Des this effectively eliminate the 150-emplyee size standard in Ftnte 18? PilierMazza PLLC

8 SBA S FINAL ITVAR SIZE RULE SBA nted that ITVAR cntracts are nly minimally fr services, s they shuld be classified as supply cntracts SBA s final rule is new 180-degree change frm 2002 rule New rule shuld apply prspectively nly, nt retractively PilierMazza PLLC

9 THE NONMANUFACTURER RULE Allws a small business t be the prime cntractr n a supply prject, when the small business is nt the manufacturer f the prduct, as lng as the small business: Des nt exceed 500 emplyees; Is primarily engaged in the retail r whlesale trade and nrmally sells the type f item being supplied; Takes wnership r pssessin f the item(s) with its persnnel, equipment, r facilities in a manner cnsistent with industry practice; and Supplies the prduct f a small business manufacturer made in the U.S., unless a waiver is granted PilierMazza PLLC

10 EXCEPTIONS TO THE NONMANUFACTURER RULE The nnmanufacturer rule des nt apply t: Cntracts predminantly fr services Full and pen prcurements Subcntracts Supply prcurements using simplified acquisitin prcedures r set-aside rders under a full-and-pen MAC, valued <$25,000 Small business set-aside cntracts between $3,000 and $150,000 Pending SBA rulemaking wuld cnfirm this exceptin SBA wants t spur mre small business spending fr supply f name brand items like cmputers withut need fr waiver Will this apply t rders under FSS and MAC cntracts? PilierMazza PLLC

11 WAIVERS OF THE NONMANUFACTURER RULE Under the new ITVAR size rule, ITVARs must cmply with the nnmanufacturer rule unless a waiver is granted Tw types f waivers: Individual: applies t a specific cntract Class: applies t an entire class f prduct PilierMazza PLLC

12 Apprved by SBA Requested by CO INDIVIDUAL WAIVERS Available when n small business manufacturer can reasnably be expected t ffer a prduct meeting the specificatins f a slicitatin Applies t a specific cntract nly PilierMazza PLLC

13 PROCESS FOR INDIVIDUAL WAIVERS CO submits a written waiver request t Directr f SBA s Office f Gvernment Cntracting N particular frmat fr request, but must include: Statement f specific item t be waived and justificatin fr why the item is required Slicitatin number, NAICS cde, dllar amunt, and brief statement f prcurement Fr cntracts ver $500k, must include a cpy f the SOW CO s determinatin (with supprting narrative) that there are n knwn small business manufacturers r prcessrs fr the item PilierMazza PLLC

14 CLASS WAIVERS Applies t entire class f prducts Available when n small business manufacturers are available in the Federal market fr a class f prducts Available means small businesses have been awarded a cntract r submitted an ffer t supply the class f prduct within the last 24 mnths Class f prducts is a subdivisin f an NAICS industry number GSA Prduct/Service Cdes ( PSC ) List develped by GSA delineating all majr prduct categries (i.e., PSC 5961 Semicnductr Devices and Assciated Hardware) Class waivers applied at the PSC level, thus, wuld never be applied t the service nly PSCs PilierMazza PLLC

15 PROCESS FOR CLASS WAIVERS SBA may initiate n its wn initiative Any interested persn, business, assciatin, r Federal agency may submit a request t the Directr f SBA s Office f Gvernment Cntracting N particular frmat fr request, but must include: Statement f class f prduct t be waived Applicable NAICS cde Detailed infrmatin n the effrts t identify small business manufacturers r prcessrs fr the class PilierMazza PLLC

16 CURRENT CLASS WAIVERS Class waivers currently exist fr sme IT prducts Such as ruters and switches, mainframe cmputers and peripherals, televisins, and CD players Full list: There are currently n class waivers fr Class waivers are tied t the supply NAICS cde that best fits the prduct is a service cde, s class waivers are unlikely Will supply cde waivers apply t prcurements using ? PilierMazza PLLC

17 CLASS WAIVERS FOR SOFTWARE PURCHASES Pending SBA prpsal intended t make it easier t grant class waivers fr name brand sftware Applies t sftware that is generally available t bth the public and private sectr unmdified Prpsal may be finalized by mid t late 2016 Sftware waivers wuld be under NAICS cde Hw will this wrk fr ITVARs selling under ? Hw lng will waiver prcess take? PilierMazza PLLC

18 OTHER PENDING CHANGES TO WAIVERS COs wuld be required t ntify ptential fferrs in the slicitatin if a class r individual waiver applies SBA culd grant waivers after the slicitatin is issued, as lng as CO prvides fferrs additinal time t respnd SBA culd grant waivers after cntract award when additinal items that are waiver-eligible are sught thrugh an in-scpe mdificatin These prpsals may als be finalized by mid t late 2016 PilierMazza PLLC

19 POLICY ISSUES Incnsistent treatment f ITVARs ver the years 2002: SBA creates ITVAR exceptin, says nnmanufacturer des nt apply 2012: SBA reiterates that the nnmanufacturer rule des nt apply t service cdes 2014: Curt rules that nnmanufacturer rule applies t all cntracts, even thse predminantly fr services SBA prpses t eliminate the ITVAR exceptin 2015: NDAA verturns curt case, says nnmanufacturer rule des nt apply t cntracts with services cdes 2016: SBA final rule applies nnmanufacturer rule t ITVARs GAO ruling addresses market research fr nnmanufacturers PilierMazza PLLC

20 POLICY ISSUES Current SBA rule and GAO ruling culd significantly diminish use f small business set-asides fr IT prducts SBA shuld return t its 2002 interpretatin when nnmanufacturer rule did nt apply t SBA and/r Cngress need t clarify that market research fr set-asides shuld include small business nnmanufacturers Will agencies ignre the new rule, leading t prtests? SBA shuld als clarify that class waivers issued under manufacturing cdes will apply when the waived prducts are btained using PilierMazza PLLC

21 WHAT SHOULD ITVARS DO? Understand and utilize existing exceptins t the nnmanufacturer rule and existing class waivers Facilitate individual waivers fr yur COs Develp a template Talk t COs as early in the acquisitin cycle as pssible Strength in numbers Push SBA fr class waivers Push SBA and Cngress fr plicy changes and clarificatins PilierMazza PLLC

22 Questins? Thank yu fr jining us tday. If yu wuld like t speak with Jn r Cy abut SBA s new ITVAR size rule, r fr help in pursuing waivers and ther wrkarunds, please cntact them at: Jn Williams Cy Alba jwilliams@piliermazza.cm ialba@piliermazza.cm (202) (202) PilierMazza PLLC