The Department of Veterans Affairs (VA) has revised both 852.219-10 VA Notice of Total Service-Disabled Veteran-Owned Small Business (SDVOSB) Set-Aside and 852-219-11 VA Notice of Total Veteran-Owned Small Business (VOSB) Set-Aside through a deviation dated July, 2019. The clause revisions add that the nonmanufacturer rule and the limitations on subcontracting apply to all SDVOSB and VOSB set-asides and sole source contracts.
Contractors must be VA verified and VIP-listed at time of offer and at time of award. Also, for compliance with the limitations on subcontracting, only VIP-listed firms shall be considered eligible and/or "similarly situated". Eligible firms further agree to the following:
Services - it will not pay more than 50% of the dollar amount paid by the government for contract performance to firms that are not VIP-listed. Supplies or products - it will not pay more than 50% of the dollar amount paid by the government for contract performance to firms that are not VIP-listed, for a contract for supplies from a nonmanufacturer it will supply the product of a domestic small business manufacturer or processor unless a waiver is granted. General construction - it will not pay more than 85% of the dollar amount paid by the government for contract performance to firms that are not VIP-listed. Special trade construction - it will not pay more than 75% of the dollar amount paid by the government for contract performance to firms that are not VIP-listed. Subcontracting - any work that VIP-listed subcontractor further subcontracts will count towards the percent of subcontract amount that cannot be exceeded. For supply or construction contracts, cost of materials is excluded and not considered to be subcontracted. Under SDVOSB set-asides, VIP-listed firms must be SDVOSB. Under VOSB set-asides, VIP listed firms must be VOSB or SDVOSB.
In addition, on July 12, 2019, the Department of Veterans Affairs issued a class deviation that impacts numerous small business-related clauses in FAR part 52.
In solicitations for total and partial Small Business Set-Asides, the VA will include FAR 52.219-6 Notice of Total Small Business Set Aside (DEVIATION 019-01) and 52.219-7 Notice of Partial Small Business Set-Aside (DEVIATION 2019-01) respectively. These clauses have been revised to make the nonmanufacturer rule only applicable to Small Business Set-Aside Contracts that Exceed the Simplified Acquisition Threshold (SAT). The clauses also indicate that, when the nonmanufacturer rule applies and the contractor is providing an item that it did not manufacture, the entity must (1) provide an item that another small business has manufactured in the United States, (2) be primarily engaged in retail or wholesale trade and normally sell the type of item being supplied, and (3) take ownership or possession of the item it will be providing with its personnel, equipment or facilities in a manner consistent with industry practice.
In solicitations for contracts expected to exceed the SAT, and that are set-aside for small businesses, 8(a) participants, HUBZone small business concerns, EDWOSB, or WOSB, the VA will include 52.219-14 Limitations on Subcontracting (DEVIATION 2019-01). The subcontracting limitations have changed under this deviation and are as follows:
- Services - it will not pay more than 50% of the dollar amount paid by government for contract performance to firms that are not similarly situated entities.
- Supplies (other than acquisition from a nonmanufacturer) - it will not pay more than 50% of the dollar amount paid by government for contract performance (excluding materials) to firms that are not similarly situated entities.
- General construction - it will not pay more than 85% of the dollar amount paid by the government for contract performance (excluding materials) to firms that are not similarly situated entities.
- Special trade construction - it will not pay more than 75% of the dollar amount paid by the government for contract performance (excluding materials) to firms that are not similarly situated entities.
- Subcontracting - any work that a similarly situated subcontractor further subcontracts will count towards the percent of subcontract amount that cannot be exceeded.
In solicitations for HUBZone set-asides, Women-Owned Small Business (WOSB) set-asides, and Economically Disadvantages Women-Owned Small Business (EDWOSB) set-asides, the VA will include 52.219-3 Notice of HUBZone Set-Aside or Sole Source Award (DEVIATION 2019-01), 52.219-30 Notice of Set-Aside for, or Sole Source Award to, Women-Owned Small Business Concerns (Deviation 2019-01) and 52.219-29 Notice of Set-Aside for, or Sole Source Award to, Economically Disadvantaged Women-Owned Small Business Concerns (Deviation 2019-01) respectively. Also, in solicitations using full and open competition the VA will include 52.219-4 Notice of Price Evaluation Preference for HUBZone Small Business Concerns (DEVIATION 2019-01). All of these revised clauses reiterate the same subcontracting limitations specified in 52.219-14 Limitations on Subcontracting (DEVIATION 2019-01). Note, however, these clauses will be found in the applicable set-aside contracts - even those estimated to be under SAT. These clauses also include the following requirement regarding the nonmanufacturing rule:
- Nonmanufaturer - Unless the Nonmanufacturer rule is waived, when the contractor is providing an item that it did not manufacture, the entity must (1) provide an item that another small business has manufactured in the United States, (2) be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied, and (3) take ownership or possession of the item it will be providing with its personnel, equipment or facilities in a manner consistent with industry practice.
