Small Business Size Standards: Waiver of the Nonmanufacturer Rule, 20294-20295 [2014-08088]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 79, Number 70 (Friday, April 11, 2014)]
[Notices]
[Pages 20294-20295]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-08088]


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 SMALL BUSINESS ADMINISTRATION


Small Business Size Standards: Waiver of the Nonmanufacturer Rule

AGENCY: U.S. Small Business Administration.

ACTION: Notice of rescission of four class waivers of the 
Nonmanufacturer Rule under North American Industry Classification 
System (NAICS) code 335999 and granting of three new class waivers 
under NAICS codes 335122, 335110, and 335311.

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SUMMARY: The U.S. Small Business Administration (SBA) is rescinding 
four class waivers of the Nonmanufacturer Rule which were classified 
under NAICS code 335999 (All Other Miscellaneous Electrical Equipment 
and Component Manufacturing) and which were further classified under 
Product Service Codes (PSCs) 5999, 6210, 6240, and 6250. The class 
waiver applicable to PSC 5999 (Miscellaneous Electrical and Electronic 
Components) is being rescinded because it has been determined that 
several small business manufacturers of miscellaneous electrical 
equipment are currently available to participate in the Federal 
marketplace. The class waivers applicable to PSCs 6210, 6240, and 6250 
are being rescinded because it has been determined that they were each 
improperly classified under NAICS code 335999. In order to correct this 
error, SBA is granting three new class waivers under the correct NAICS 
codes. Specifically, SBA is granting class waivers for the following: 
(1) NAICS code 335122 (Commercial, Industrial, and Institutional 
Electric Lighting Fixture Manufacturing), PSC 6210 (Indoor and Outdoor 
Electrical Lighting Fixtures); (2) NAICS code 335110 (Electric Lamp 
Bulb and Part Manufacturing), PSC 6240 (Electric Lamps); and (3) NAICS 
Code 335311 (Power, Distribution, and Specialty Transformer 
Manufacturing), PSC 6250 (Ballasts, Lampholders, and Starters). SBA is 
taking these actions in response to public comments and SBA's 
independent analysis. The effect of the rescission of the four class 
waivers will be to require recipients of Federal supply contracts 
assigned NAICS code 335999 that are set aside for small businesses, 
service-disabled veteran-owned small businesses, women-owned small 
businesses, or Participants in the SBA's 8(a) Business Development (BD) 
program to provide the products of a domestic small business 
manufacturer or processor, unless an individual waiver of the 
Nonmanufacturer Rule is granted by SBA. The effect of the three new 
class waivers will be to allow otherwise qualified small business 
regular dealers to supply products of a domestic manufacturer on a 
Federal contract set aside for small businesses, service-disabled 
veteran-owned small businesses, women-owned small businesses, or 
Participants in the SBA's 8(a) BD program, where the class of products 
being procured is classified under PSC 6210, 6240, or 6250.

DATES: This action is effective the date of publication in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Edward Halstead, (202) 205-9885, 
Edward.halstead@sba.gov.

SUPPLEMENTARY INFORMATION: Sections 8(a)(17) and 46 of the Small 
Business Act (Act) and SBA's implementing regulations generally require 
that recipients of Federal supply contracts that are set aside for 
small businesses, service-disabled veteran-owned small businesses, 
women-owned small businesses, or Participants in the SBA's 8(a) BD 
program provide the product of a small business manufacturer or 
processor if the recipient is other than the actual manufacturer or 
processor of the product. 15 U.S.C. 637(a)(17), 657s; 13 CFR 
121.406(b). This requirement is commonly referred to as the 
Nonmanufacturer Rule. The Act authorizes SBA to waive the 
Nonmanufacturer Rule for any ``class of products'' for which there are 
no small business manufacturers or processors available to participate 
in the Federal market. SBA defines ``class of products'' as an 
individual subdivision within a NAICS code as established by the Office 
of Management and Budget in the NAICS Manual. 13 CFR 121.1202(d). In 
addition, SBA uses Product Service Codes (PSCs) to further identify 
particular products within the NAICS code to which a waiver would 
apply.

[[Page 20295]]

SBA may then identify a specific item within a PSC and NAICS code to 
which a class waiver would apply. ``Available to participate'' in the 
context of the Federal market means that contractors exist that have 
been awarded or have performed a contract to supply a specific class of 
products to the Federal Government within 24 months from the date of 
the request for waiver, either directly or through a dealer, or that 
have submitted an offer on a solicitation for that class of products 
within that time frame. 13 CFR 121.1202(c).
    On November 2, 2004, SBA granted a class waiver of the 
Nonmanufacturer Rule for Miscellaneous Electrical Equipment and 
Component Manufacturing, classified under NAICS code 335999 (All Other 
Miscellaneous Electrical Equipment and Component Manufacturing), PSC 
5999 (Miscellaneous Electrical and Electronic Components). 69 FR 61429. 
On January 28, 2008, SBA granted a class waiver for Fluorescent Lamps, 
Incandescent Lamps, etc., classified under NAICS code 335999, PSC 6240 
(Electric Lamps). 73 FR 4940. The same day, SBA granted a class waiver 
for Electric Lamp Starters and Lamp Holders, etc., classified under 
NAICS code 335999, PSC 6250 (Ballasts, Lampholders, and Starters). 73 
FR 4941. On March 21, 2008, SBA granted a class waiver for Indoor and 
Outdoor Electric Lighting Fixtures, classified under NAICS code 335999, 
PSC 6210 (Indoor and Outdoor Electrical Lighting Fixtures). 73 FR 
15251.
    In 2013, SBA received a request from a small business manufacturer 
to rescind the class waiver of the Nonmanufacturer Rule for 
Miscellaneous Electrical Equipment and Component Manufacturing 
(classified under NAICS code 335999, PSC 5999). According to the 
request, there was at least one small business manufacturer that had 
conducted business with the Federal Government within the previous 24 
months and provided at least one of the various supplies listed under 
the class waiver applicable to Miscellaneous Electrical Equipment and 
Component Manufacturing. SBA's independent research resulted in the 
discovery of other small business manufacturers of various items listed 
under the descriptors applicable to Miscellaneous Electrical Equipment 
and Component Manufacturing.
    On July 17, 2013, SBA published a notice in the Federal Register 
stating that SBA intended to rescind the class waiver for NAICS code 
335999. 78 FR 42817. The public comment period for this notice closed 
on August 1, 2013. Soon after it closed, a small business manufacturer 
requested that the public comment period be reopened to allow 
submission of additional data. SBA reopened the comment period from 
August 20, 2013 to September 19, 2013. 78 FR 51263. During the comment 
periods, five respondents submitted eight comments.
    Two commenters strongly supported rescinding the class waiver for 
NAICS code 335999, PSC 5999. These commenters also stated that the 
three other previously granted class waivers under NAICS code 335999 
were misclassified and recommended that SBA reclassify them under 
different NAICS codes. Another respondent, a small business 
manufacturer of electrical equipment, fully supported the rescission of 
the class waiver for NAICS code 335999, PSC 5999. A fourth commenter 
opposed the rescission but insisted that SBA adopt the above revisions 
and reclassifications of the class waivers under NAICS code 335999. A 
fifth respondent, a small distributor of lighting, electrical and voice 
and data products, opposed rescinding the waiver and commented that the 
rescission of this waiver would negatively impact his business. 
However, the commenter did not provide an explanation or evidence as to 
how rescission of this wavier would negatively impact his business. 
That same commenter also recommended that the class waivers for PSCs 
6210, 6240, and 6250 be reclassified under different NAICS codes. A 
small business distributor of electrical supplies supported the 
rescission of the class waiver for NAICS code 335999, PSC 5999 on the 
grounds that contracting officers are justifying their refusal to set 
aside contracts for the procurement of miscellaneous electrical 
equipment based on this wavier being in place. Another respondent, a 
small business lighting products distributor, supported rescission of 
all of the class waivers classified under NAICS code 335999. This 
respondent commented that a class waiver should never have been granted 
for PSC 5999 and that the waivers for PSCs 6210, 6240, and 6250 are 
misclassified under NAICS code 335999, resulting in contracting 
officials refusing to set aside these procurements for small business 
and instead choosing to procure through unrestricted procedures. One 
commenter's request was not relevant to the purpose of this class 
waiver and therefore is not addressed here.
    Based on the public comments received, SBA's analysis of data 
submitted, and independent market research performed by SBA, it has 
been determined that several small business manufacturers of 
miscellaneous electrical equipment are currently available to 
participate in the Federal marketplace. In addition, SBA's research 
validated the commenters' assertions regarding the improper NAICS code 
classification of the class waivers for PSCs 6210, 6240, and 6250. 
Therefore, SBA has decided to take the following actions: (1) Rescind 
the class waiver for Miscellaneous Electrical Equipment and Component 
Manufacturing, classified under NAICS code 335999, PSC 5999 (see 69 FR 
61429); (2) rescind the class waiver for Indoor and Outdoor Electric 
Lighting Fixtures, classified under NAICS code 335999, PSC 6210 (see 73 
FR 15251), and replace it by granting a class waiver for Indoor and 
Outdoor Electrical Lighting Fixtures, under NAICS code 335122 
(Commercial, Industrial, and Institutional Electric Lighting Fixture 
Manufacturing), PSC 6210 (Indoor and Outdoor Electrical Lighting 
Fixtures); (3) rescind the class waiver for Fluorescent Lamps, 
Incandescent Lamps, etc., classified under NAICS code 335999, PSC 6240 
(see 73 FR 4940) and replace it by granting a class waiver for Electric 
Lamps, under NAICS code 335110 (Electric Lamp Bulb and Part 
Manufacturing), PSC 6240 (Electric Lamps); and (4) rescind the class 
waiver for Electric Lamp Starters and Lamp Holders, etc., classified 
under NAICS code 335999, PSC 6250 (see 73 FR 4941) and replace it by 
granting a class waiver for Ballasts, Lampholders, and Starters, under 
NAICS code 335311 (Power, Distribution, and Specialty Transformer 
Manufacturing), PSC 6250 (Ballasts, Lampholders, and Starters).

    Dated: March 31, 2014.
Judith A. Roussel,
Director, Office of Government Contracting.
[FR Doc. 2014-08088 Filed 4-10-14; 8:45 am]
BILLING CODE 8025-01-P