ARTICLE · 24 FEBRUARY 2015

Disruptive Changes On The Horizon For Federal COTS Software Supply

Blank Rome LLP

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Commercial software manufacturers and certain federal resellers could find their federal business significantly impacted by an SBA Proposed Rule published recently at 79 Fed. Reg. 77955, December 29, 2014.

United StatesGovernment, Public Sector

Albert Krachman

Government Contracts

Action Item: Firms making commercial off-the-shelf ("COTS") software sold to the federal government, or reselling COTS software to the federal government, should respond to the SBA's recent proposed rule or risk a loss of market share.

Commercial software manufacturers and certain federal resellers could find their federal business significantly impacted by an SBA Proposed Rule published recently at 79 Fed. Reg. 77955, December 29, 2014. If adopted without changes, the Rule will incentivize the government to buy commercial item software through small business set asides under NAICS Code 511210, which is currently limited to vendors under a size standard of $38.5M Average Annual Receipts over the prior 3 years. To do this, the SBA will be granting individual waivers of what is known as the "non-manufacturer rule" for certain software that meets the regulatory definitions. The waiver means that an eligible small business may resell software

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