The government supports the innovation and entrepreneurial spirit of our nation’s small businesses through laws that establish certain preferences for federal small business contracting. Rules implementing those laws seek to harmonize them with other laws governing federal procurement. In an article appearing in this week’s Friday Flash, however, Ken Dodds, vice president at Live Oak Bank, points to a strange regulatory anomaly that, despite continuing efforts to address supply chain resiliency, provides back door access to the federal market for goods that are made in China. In so doing, it disadvantages the government’s domestic supply chain and undermines our allies’ supply chain capabilities, the very supply chains on which the government relies to address existential threats.
When the government sets aside a procurement, the product of a domestic small business manufacturer must be provided. Correspondingly, under the “non-manufacturer” rule, a small business reseller/dealer must certify that it will supply the product of a small business manufacturer. When, however, the SBA provides a non-manufacturer waiver (NMR) for a set-aside procurement, a small business reseller/dealer is permitted to supply the product of any size business without regard to place of manufacture…
In contrast, for procurements where the Trade Agreements Act (TAA) applies, offerors must certify that each end product is a U.S.-made or designated country end product. The TAA generally applies to procurements exceeding $183,000. Under the TAA, products other than U.S.-made or designated country end products are not eligible for award, including products from China.
Unfortunately, the application of the FAR Part 19 small business rules and FAR 25 sourcing rules creates a “supply chain” loophole. This loophole raises the potential for small businesses under a NMR waiver to provide a product from China (because the BAA applies), while, in contrast, under a similar, “full and open” procurement, a product from China would be unacceptable (because the TAA applies). It is clear that TAA provides a much more effective policy framework for ensuring that the federal government is not purchasing products made in China… Read the full article here.
