The Law Supersedes The Regulation - Fact or Fiction?

[Troy]

My understanding of this matter is that any regulation issued by a government agency (in this case the FAR), by definition, must be authorized by the law and must fall within the scope and intent of that law.

A concern was raised as to whether a CO could elect to follow the permissive FAR guidance as opposed to the statutory imperative. The issue involves the non-manufacturer rule (NMR) and the responsibility to request an individual waiver.

15 U.S. Code § 637(a)(17)(A) of the Small Business Act states:

An otherwise responsible business concern that is in compliance with the requirements of subparagraph (B ) shall not be denied the opportunity to submit and have considered its offer for any procurement contract for the supply of a product to be let pursuant to this subsection or subsection (a) of section 644 of this title solely because such concern is other than the actual manufacturer or processor of the product to be supplied under the contract.

The intent of the law in my reading, if a responsible small business is capable of distributing the product but would otherwise be excluded solely because the manufacturer of the product is a large business not another small under the NMR, the CO shall not deny the opportunity denotes the intent that the CO at least request an individual waiver. Whether or not that waiver is approved is left up to the SBA. However -

FAR 19.102(f)(5) states:

For a specific solicitation, a contracting officer may request a waiver of that part of the nonmanufacturer rule which requires that the actual manufacturer or processor be a small business concern if no known domestic small business manufacturers or processors can reasonably be expected to offer a product meeting the requirements of the solicitation.

In this scenario, is the CO justified in taking the position that because the FAR uses the auxiliary verb may, that no attempt need be made to request an individual waiver?

[Retreadfed]

Yes, the CO is justified in declining to request a waiver. Nothing in the statute requires the CO to request a waiver.

[Troy]

Correct, the statute does not expressly require the CO to request a waiver.

Understanding however the intent of the law here, being to maximize small business opportunity for set-aside, and knowing (when all the market research supports the finding that no small business manufacturers exist) the only means to ensure a set-aside opportunity is to request the individual waiver; I'm at a loss trying to comprehend why the CO would continue to go unrestricted and elected to cite his discretion under the FAR, when the opportunity clearly did exist.

I feel this was a missed opportunity and the CO (actually stated he hadn't seen the opportunity prior to it being brought to his attention), when made aware of it, stubbornly dug in his heels and said I'm not going to request a waiver and the FAR say's I don't have to.

I guess I just expected that the intent of the law coupled with the VA's commitment to small business and meeting it's socioeconomic goals, would be motivation enough. Anyway, thanks for your reply I appreciate the insight.

But in general, does the statute supersede the FAR? If the statute, in this case, had said shall request the waiver while the FAR at the same time said may request the waiver, would the CO still be justified to decline in this instance?

[Martin]

If anyone has an issue with the Contracting Officer’s decision not to request an individual waiver have them request a class waiver to the SBA. See 13 CFR 121.1204.

The fact that a class or individual waiver exists does not necessarily mean a CO must set-aside the acquisition. Suppose a waiver is issued, but the CO does not have a reasonable expectation that award will be made at a fair market price. Is a set-aside appropriate? A waiver does not ensure a set-aside. See also FAR 19.502-2 ( c ).

[Troy]

I agree, however going down the list of all the reasons a set-aside would not be appropriate, in my particular scenario the reason given for not requesting the waiver was, as the CO stated, they simply were not aware of the option. All the rational reasons for electing not to request a waiver have been ruled out through market research.

Simply not wanting to in this case, doesn't seem implied by any determination covered in the FAR as a sound business decision. I feel there should be something more substantial to concur with than them not wanting to, when all the leg work has been done to ensure the option was viable (even communicating with the SBA in advance).

In the end the decision is the CO's to make, so I guess I'm basically beating a dead horse.

Again, I appreciate the insight.

[C Culham]

Troy - A might help. Consider contacting the SBA regarding your concern with regard to future acquisitions. Starting places....

Local District Office - http://www.sba.gov/tools/local-assistance/districtoffices and maybe even.....

Appropriate Procurement Center Representative - http://www.sba.gov/content/government-contracting-field-staff-directory

[Martin]

Troy -

...and knowing (when all the market research supports the finding that no small business manufacturers exist) the only means to ensure a set-aside opportunity is to request the individual waiver...

If the market research has already been performed, and indeed there are no small business manufacturers, submit all pertinent information to the SBA and request a class waiver for the product in question. If the waiver is granted, and the set-aside would have been appropriate but for the waiver issue, the CO would be hard pressed not to set-aside future acquisitions.

[fizzy]

If you go back to the US code you cited, the imperative is for small businesses that are "other than the manufacturer" to not be denied the opportunity to compete for a contract.

That says very little about whether or not in any given circumstance a NMR waiver would maximize small business opportunities, so it seems appropriate FAR Part 19 states NMR waivers are discretionary.

If the supply contract in question is set aside for small business, and a small business is other than the manufacturer, but qualifies as a non-manufacturer, then it can compete for a prime contract, as long as it supplies the end item of another small business in accordance with the limitations on sub-contracting. The NMR shouldn't be waived if there are small businesses who can and should receive the sub-contracts.

If on the other hand the limitations on sub-contracting would be prohibitive, then a waiver to the Rule allows a prime small business contractor to sub-contract with a large business manufacturer.

So, to answer the question, from my perspective there's not a conflict between the law and the FAR, and one is not in a position to take precedent over the other. The question is would there have been an opportunity to set aside the contract had a NMR waiver been obtained, and was it in the interest of the government or a responsibility of the government under Part 19 to set-aside the contract at all, which are two entirely different questions.