Expansion of the Mentor-Protégé Program – Time to form Strategic Alliances

By Sharon O. Steele, Chair Government Contracts Practice Group

General Counsel, P.C. – www.generalcounsellaw.com

ssteele@gcpc.com (703)226-2719

The Small Business Administration (SBA) released the final rule concerning the long-anticipated expansion of the Mentor-Protégé Program.  The final rule creates a Government-wide mentor-protégé program open to all types of small businesses, i.e., Historically Underutilized Business Zone (HUBZone) small businesses, women-owned small businesses (WOSBs), service-disabled veteran-owned small businesses (SDVOSBs), and all small businesses.  Formerly, the 8(a) program was the only SBA program with a mentor-protégé program.  

The final rule amends the SBA’s regulations to implement provisions of the Small Business Jobs Act of 2010 and the National Defense Authorization Act for Fiscal Year 2013 (NDAA). In addition to expanding the mentor-protégé program across all small businesses, the final rule modifies the current 8(a) mentor-protégé program, clarifies the meaning of a joint venture, and implements new compliance requirements to approved joint ventures.   

As a result, it would behoove large businesses to begin making strategic alliances with small businesses as soon as possible, and for small businesses to seek out strategic partners as well.  Firms, both large and small, must be prepared for what could be a major shift in contracting practices.  Once the new program is fully implemented, participation in a mentor-protégé relationship may become the de facto price of admission for pursuing small business set-aside contracts.

This is welcome news for small and large businesses, as many more firms will be able to access the benefits of being a mentor and a protégé.  The impact will be very significant to the government contracting community.  The regulations could result in the expansion of SBA’s mentor-protégé from 389 eligible participants in the 8(a) program to over 2,000 potential participants in the new mentor-protégé program.  And, increased participation could result in protégé firms obtaining as much as $2 billion per year in federal contracts through the program.

The SBA also suggests that because the expanded mentor-protégé program will allow small businesses to compete for larger contracts and a greater number of contracts, it is probable that federal agencies will set aside more contracts for various types of small businesses.  

To help ensure adequate resources and quick enrollment for participants in the new, expanded program, there will be a unit set up within the SBA Office of Business Development solely devoted to processing mentor-protégé applications and assisting such ventures.