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Fara Fasat

Difference between SBA regs and FAR

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In an earlier thread (http://www.wifcon.com/discussion/index.php?/topic/2564-total-small-business-set-asides/) there seemed to be a consensus that the SBA and the FAR differed in the small business set-aside requirements, with no explanation for the difference.

This seems to be another: In the SBA's discussion of the non-manufacturer rule ("NMR"), the SBA requires the NM to be "primarily engaged in the retail or wholesale trade...." (13 CFR 121.406( b )(1)(ii)). In other words, a reseller. The FAR NMR does not have this requirement. At 19.102(f)(1) it says the NM can be a concern that can, but elects not to, manufacture the end product. This would be a manufacturer. At 19.502( c ), there is simply no mention of a requirement to be a reseller.

The statutory NMR includes the wholesale or retail trade requirement at 15 USC 637(a)(17). This would lead me to believe that the SBA got it right and the FAR is wrong.

Does the FAR have this requirement somewhere else and I missed it? If not, is there an explanation for the difference, or an interpretation that would harmonize the two?

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FAR 19.106 simply summarizes some of SBA's rules about size standards and begins by referring the reader to 13 CFR Part 121. While the FAR language is peculiar and appears to depart from SBA's rules, it is merely descriptive and explanatory and does not direct anyone to do anything. See the definition of "nonmanufacturer rule" in FAR 19.001, which refers the reader to 13 CFR 121.406.

In short, the FAR's description is not a good thing, but it's not a problem.

What lesson do you draw from this?

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That could explain it. What lesson do I draw? Only that the FAR, in some places, is not the most carefully drafted document. But we already knew that.

On the other hand, the FAR might contradict the statute and SBA. At 19.102(f)(1), it says a non-manufacturer can be a manufacturer that simply chooses not to manufacture a product. That would include more than just a business primarily engaged in the reselling trade.

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