June 4, 2024
Responding to the SEWP VI RFP
The long-awaited SEWP VI Final RFP was released on May 23, just in time for the Memorial Day weekend. Small businesses bidding under Category A (ITC/AV Solutions (Information Technology, Communication and Audio Visual)) likely noticed the NAICS code change from 541512 (Computer Systems Design Services) in the last draft to 541519e (footnote 18) – IT Value Added Reseller, called the ITVAR exception, in the Final RFP. Also, under the technical areas, certain class or individual waivers of the non-manufacturer rule (NMR) have been identified. The ITVAR exception and the NMR are often misunderstood. This is a brief primer for proposal teams preparing to meet the approaching deadline.
Procuring agencies may prefer or be required to award contracts to small businesses. Whether a business is “small” for a given procurement is based on the NAICS code assigned by the procuring agency. The designated NAICS code should be the one that best describes the primary purpose of the item or service to be acquired. A contractor is considered “small” if it does not exceed the size standard attached to the designated NAICS code, represented by either:
- revenue dollars, generally for services-based NAICS codes, or
- number of employees, generally for product-based NAICS codes.
However, when the contractor is a reseller and the NAICS code is product-based, the small business size standard for the reseller is 500 employees, regardless of the size standard attached to the designated NAICS code. But, the small business reseller must also comply with the NMR, § 121.406.
The NMR requires the small business reseller to supply the end item of a small business manufacturer made in the United States, unless a waiver applies. Waivers can be granted under two circumstances:
- Individual waiver. The contracting officer determines that no small business manufacturer can offer a product meeting the solicitation requirements.
- Class waiver. Small Business Administration (SBA) determines that no small business manufacturer of the product or class of products exists in the federal procurement market.
These waivers allow the reseller to supply the end product of a manufacturer of any size, with no requirement that the product be made in the United States, although these waivers have no impact on the Buy American Act or Trade Agreements Act.
I hope you’re with me so far, because the ITVAR exception creates additional nuances to the rules above. Absent the exception, 541519 is a services-based NAICS code with a $30M size standard. However, the ITVAR exception is used for the acquisition of a mix of supplies, i.e., IT software and equipment, and value-added services, e.g., installation or configuration, wherein such services must be at least 15 percent, but no more than 50 percent, of the total contract price.
While the NMR normally wouldn’t apply to 541519 as a services NAICS code, it does apply to the ITVAR exception. However, the size standard for resellers under the ITVAR exception is 150 employees, rather than 500 employees under the NMR, with no revenue limitation.
Putting this all together, for resellers to comply with a solicitation set aside under the 541519 ITVAR exception, they must:
• have no more than 150 employees
• provide value-added services representing 15 to 50 percent of the total contract value
• provide products made by small business manufacturers, unless a waiver applies
• provide products made in the United States, unless a waiver applies
Hopeful bidders should be aware of these requirements while preparing proposals and understand that individual task orders may also be subject to set aside under this NAICS code.
Best of luck to all SEWP VI bidders!
