FAR 52.219-33—Nonmanufacturer Rule.
Plain-English Summary
FAR 52.219-33, the Nonmanufacturer Rule clause, explains when a small business contractor may supply an end item it did not manufacture and still satisfy small business set-aside requirements. It covers the definitions of "manufacturer" and "nonmanufacturer," when the clause applies and when it does not, and the specific performance requirements a nonmanufacturer must meet. The clause also addresses special treatment for orders under multiple-award contracts, sole-source awards under the small business programs, and HUBZone price evaluation preference awards. In practice, this clause is important because it prevents a pass-through supplier from using a small business set-aside unless the supplier meets the rule’s conditions, while still allowing legitimate small business resellers and kit assemblers to participate. It also ties directly to sourcing, ownership/possession, and domestic-content-style requirements for kits, so contractors and contracting officers must evaluate both the business status of the offeror and the origin of the end item or kit components.
Key Rules
Manufacturer definition
A manufacturer is the concern that transforms raw materials, parts, or components into the end item. A company that only minimally alters the item, or merely adds components to an existing end item in a way the original manufacturer can also perform and offer, is not treated as the manufacturer.
Nonmanufacturer definition
A nonmanufacturer is a concern, including a supplier, that provides an end item it did not manufacture, process, or produce. This definition captures resellers and distributors that rely on another firm’s product rather than making the item themselves.
When the clause does not apply
The clause does not apply to awards under the unrestricted portion of a partial set-aside, and it does not apply when the contractor is itself the manufacturer of the product or end item. In those situations, the contractor is not being evaluated under the nonmanufacturer rule.
Covered award types
The clause applies to set-aside contracts for the small business programs identified in FAR 19.000(a)(3), sole-source awards under the small business programs, certain orders over the simplified acquisition threshold under multiple-award contracts, certain orders regardless of dollar value under multiple-award contracts, and HUBZone preference awards unless the preference is waived.
Basic nonmanufacturer requirements
A nonmanufacturer must provide an end item manufactured, processed, or produced in the United States or its outlying areas by a small business, be primarily engaged in retail or wholesale trade and normally sell the type of item supplied, and take ownership or possession of the item in a manner consistent with industry practice, such as by storing, transporting, or delivering it.
Kit assembler rule
If the end item is a kit of supplies, at least 50 percent of the total cost of the kit components must be manufactured, processed, or produced in the United States or its outlying areas by small business concerns. This special rule replaces the general nonmanufacturer requirement for kit assemblers.
Responsibilities
Contracting Officer
Determine whether the acquisition falls within the clause’s applicability, including set-asides, sole-source awards, multiple-award orders, and HUBZone preference awards. Verify that the offeror qualifies as a manufacturer or nonmanufacturer as required, and ensure the solicitation and award terms reflect the correct rule for kits, partial set-asides, and waived HUBZone preferences.
Contractor
If acting as a nonmanufacturer, supply an eligible end item that was manufactured, processed, or produced in the United States or its outlying areas by a small business, maintain retail or wholesale trade activity for the type of item sold, and take ownership or possession consistent with industry practice. If supplying a kit, ensure the 50 percent small-business domestic component-cost requirement is met.
Small Business Manufacturer
Manufacture, process, or produce the end item in the United States or its outlying areas when the contractor is relying on manufacturer status rather than the nonmanufacturer rule. Provide products that clearly qualify as manufactured end items under the clause’s definition.
Agency
Structure acquisitions and order placements so the correct small business program rules are applied, especially for multiple-award contracts and HUBZone preference awards. Ensure procurement planning and evaluation procedures account for the nonmanufacturer rule where required.
Practical Implications
This clause is a gatekeeper for small business set-asides: a reseller cannot simply offer any commercial product and assume it qualifies. The source of the end item matters, and the item generally must come from a small business manufacturer in the United States or its outlying areas.
Contractors should document whether they are manufacturers or nonmanufacturers before bidding, because misclassifying the business can lead to ineligibility, protest risk, or award problems.
The retail/wholesale and ownership-or-possession requirements are often overlooked. A firm that merely brokers a sale without normal trade activity or without taking possession in an industry-typical way may fail the rule.
Kit acquisitions require special attention because the 50 percent small-business component-cost test is different from the general nonmanufacturer requirement. Contractors should track component costs carefully and confirm the small-business origin of each component.
For contracting officers, the biggest pitfall is assuming the clause applies uniformly to all small business awards. Applicability depends on the award type, the acquisition vehicle, and whether the contractor is the manufacturer or a nonmanufacturer.
Official Regulatory Text
As prescribed in 19.507 (h) , insert the following clause: Nonmanufacturer Rule (Sep 2021) (a) Definitions . As used in this clause— Manufacturer means the concern that transforms raw materials, miscellaneous parts, or components into the end item. Concerns that only minimally alter the item being procured do not qualify as manufacturers of the end item. Concerns that add substances, parts, or components to an existing end item to modify its performance will not be considered the end item manufacturer, where those identical modifications can be performed by and are available from the manufacturer of the existing end item. Nonmanufacturer means a concern, including a supplier, that provides an end item it did not manufacture, process, or produce. (b) Applicability. (1) This clause does not apply to contracts awarded pursuant to the unrestricted portion of a partial set-aside or to a contractor that is the manufacturer of the product or end item. (2) This clause applies to— (i) Contracts that have been awarded pursuant to a set-aside, in total or in part, for any of the small business concerns identified in 19.000 (a)(3); (ii) Contracts that have been awarded on a sole-source basis in accordance with subparts 19.8 , 19.13 , 19.14 , and 19.15 ; (iii) Orders expected to exceed the simplified acquisition threshold and that are— (A) Set aside for small business under multiple-award contracts, as described in 8.405-5 and 16.505 (b)(2)(i)(F); or (B) Issued directly to a small business concern under multiple-award contracts as described in 19.504 (c)(1)(ii); (iv) Orders, regardless of dollar value, that are— (A) Set aside in accordance with subparts 19.8 , 19.13 , 19.14 , and 19.15 under multiple-award contracts as described in 8.405-5 and 16.505 (b)(2)(i)(F); or (B) Issued directly to concerns that qualify for the programs described in subparts 19.8 , 19.13 , 19.14 , and 19.15 under multiple-award contracts as described in 19.504 (c)(1)(ii); and (v) Contracts using the HUBZone price evaluation preference to award to a HUBZone concern unless the Contractor waived the evaluation preference. (c) Requirements. (1) The Contractor shall— (i) Provide an end item that a small business has manufactured, processed, or produced in the United States or its outlying areas; for kit assemblers who are nonmanufacturers, see paragraph (c)(2) of this clause instead; (ii) Be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied; and (iii) Take ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice; for example, providing storage, transportation, or delivery. (2) When the end item being acquired is a kit of supplies, at least 50 percent of the total cost of the components of the kit shall be manufactured, processed, or produced in the United States or its outlying areas by small business concerns. (End of clause)