The nonmanufacturer rule is a US federal rule that lets a small business that does not make a product qualify for a set-aside or sole-source supply contract, provided it supplies the end item of a small business manufacturer made in the United States, or a waiver applies. The requirements are in the SBA's regulation 13 CFR 121.406 and reach contracts through the clause FAR 52.219-33. For a reseller, the rule decides which suppliers it can quote from on many set-aside bids.
Purpose of the Rule
Set-asides reserve contracts for small businesses. Without the rule, a small reseller could win a set-aside by reselling a large manufacturer's product, and the contract would benefit a large company. The rule keeps set-aside supply contracts flowing to small manufacturers. Its practical effect is that the cheapest available product is often not an eligible one.
How It Works
Under 13 CFR 121.406(b), a nonmanufacturer must meet four conditions:
| Condition | What it means |
|---|---|
| Size | No more than 500 employees (150 under the IT value-added reseller exception) |
| Line of business | Primarily engaged in retail or wholesale trade, and normally sells the type of item being supplied |
| Ownership or possession | Takes ownership or possession of the item with its own personnel, equipment or facilities, consistent with industry practice |
| The product | Supplies the end item of a small business manufacturer made in the United States, or has a waiver |
When it applies. On set-aside and sole-source supply contracts that include FAR 52.219-33. Under 13 CFR 121.406(c) it does not apply to small business set-asides valued between the micro-purchase threshold ($15,000) and the simplified acquisition threshold ($350,000), the values in force since 1 October 2025. That paragraph does not name SDVOSB, HUBZone, WOSB or 8(a) set-asides, so the practical test is whether the clause is in the solicitation.
Waivers. An individual waiver covers one solicitation: the contracting officer determines that no small business manufacturer can reasonably be expected to offer the product, and the SBA grants the waiver. A class waiver covers a product class and is issued by the SBA.
Kits. For a kit of supplies, at least 50% of the total cost of the components must be manufactured in the United States by small businesses.
This answer describes the rule as written and is not legal advice. How it affects sourcing, and what to ask each supplier, is covered in the nonmanufacturer rule from the sourcing side.
FAQ
Who counts as a nonmanufacturer?
FAR 52.219-33 defines a nonmanufacturer as "a concern, including a supplier, that provides an end item it did not manufacture, process, or produce." Resellers, distributors and dealers bidding on supply contracts are nonmanufacturers.
Does a distributor's size matter, or the manufacturer's?
Both. The reseller must meet the 500-employee limit, and the manufacturer of the end item must be a small business under the solicitation's NAICS size standard. A distributor between them can be any size, as long as the product is from an eligible manufacturer.
What should I ask a supplier to check the rule?
The manufacturer and its CAGE code, the part number, the country of manufacture and the manufacturer's size status, stated on the quote.
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