Earlier last month, the US Small Business Administration (SBA) proposed rule changes that would establish a government-wide mentor-protege program and would increase the opportunity for large and small businesses to partner on unrestricted competitions and small business set asides. The new rule will be modeled after the 8(a) Business Development Program the only SBA program with a mentor-protege program established resulting in the expansion of the mentor-protege program to all small business contractors. The 8(a) mentor-protege program will remain in effect however with modifications to create additional opportunities for contracting with small disadvantaged businesses. The proposed rule comes amongst a series of sweeping changes from the SBA in the hope of creating new opportunities for small businesses.
The proposed rule would expand the mentor-protege program across all SBA programs including: Historically Underutilized Business Zone (HUBZone) small businesses, women-owned small businesses (WOSBs), service-disabled veteran-owned small businesses (SDVOSBs), and all small businesses. As opposed to creating multiple mentor-protege program for each of these designations, the SBA has elected to create one all-encompassing program for all SBA small business programs.
The new mentor-protege program will in large measure follow the requirements set in the 8(a) mentor-protege program. Below are the key elements of the proposal:
To be an eligible mentor a business will have to demonstrate: it is strong financially, is not listed on the Excluded Parties List System (EPLS) and it can impart value to the protege â€œdue to lessons learned and practical experience gainedâ€ or â€œthrough its knowledge of general business operations and government contracting.â€
A protege would need to qualify as small under its primary NAICS code, which the SBA would verify by seeing a formal size determination from the firms regional SBA office. Proteges would generally be allowed to have only one mentor at a time, but a second mentor could be added if the relationship would â€œnot compete or otherwise conflict with the assistanceâ€ of the existing relationship.
Once the SBA approves a mentor-protege agreement, the mentor and protege would be eligible to submit offers as joint ventures on set-aside procurements for which the protege is otherwise ineligible. Additionally, a protege could also sell up to 40% ownership interest to the mentor for the purpose of raising capital. The benefits of this relationship would cease when the protege is no longer small for its primary NAICS code.