In the latest Weekly Wright Report:

• • • • New Rules Combine SBA 8(a) Business Development Mentor-Protégé Program with the All Small Mentor-Protégé Program – read now

New Rules Combine SBA 8(a) Business Development Mentor-Protégé Program with the All Small Mentor-Protégé Program

by Michael Stover

After conducting a review of multiple programs, the U.S. Small Business Administration (SBA) decided to merge the 8(a) Business Development (BD) Mentor-Protégé Program with the All Small Mentor-Protégé Program to eliminate confusion and remove unnecessary duplication of functions within the SBA.  The new final rules issued by the SBA become effective on November 16, 2020.  The rules also eliminate the requirement that 8(a) participants seeking to be awarded an 8(a) contract as a joint venture submit the joint venture agreement to the SBA for review and approval prior to contract award.  In addition, the new rules revise several 8(a) BD program regulations to reduce unnecessary or excessive burdens on 8(a) participants, and clarifies other related regulatory provisions to eliminate confusion among small businesses and procuring activities.  With limited exceptions, business concerns will now recertify their size and/or socioeconomic status for all set-aside orders under unrestricted multiple award contracts.

The new rules were the result of compliance with Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” which was designed to reduce unnecessary and burdensome regulations and to control costs associated with regulations.  Both mentor-protégé programs have been used as business development tools in which mentors provide diverse types of business assistance to eligible protégés. Such assistance can include, among other things, technical and/or management assistance; financial assistance in the form of equity investments and/or loans; subcontracts; and/or assistance in performing Federal prime contracts through joint venture arrangements.  The explicit purpose of the Mentor-Protégé relationships has been to enhance the capabilities of protégés and to improve their ability to successfully compete for both government and commercial contracts.  While the program participants receive valuable business development assistance, any joint venture formed between a protégé firm and its approved mentor receives an exclusion from affiliation, such that the joint venture will qualify as a small business provided the protégé individually qualifies as small under the size standard corresponding to the NAICS code assigned to the procurement.

As a result of the merger of the two programs, a protégé firm may enter a joint venture with its SBA-approved mentor and be eligible for any contract opportunity for which the protégé qualifies. If a protégé firm is an 8(a) Program Participant, a joint venture between the protégé and its mentor could seek any 8(a) contract, regardless of whether the mentor-protégé agreement was approved through the 8(a) BD Mentor-Protégé Program or the All Small Mentor-Protégé Program.  Moreover, a firm could be certified as an 8(a) Participant after its mentor-protégé relationship has been approved by SBA through the All Small Mentor-Protégé Program and be eligible for 8(a) contracts as a joint venture with its mentor once certified.

A mentor-protégé relationship approved by SBA through the 8(a) BD Mentor-Protégé Program will continue to operate as an SBA-approved mentor-protégé relationship under the All Small Mentor-Protégé Program.  It will continue to have the same remaining time in the All Small Mentor-Protégé Program as it would have had under the 8(a) BD Mentor-Protégé Program if that Program continued. Any mentor-protégé relationship approved under the 8(a) BD Mentor-Protégé Program will count as one of the two lifetime mentor-protégé relationships that a small business may have under the All Small Mentor-Protégé Program.  If you need help navigating these new rules or the Mentor-Protégé Programs, contact our Government Contracts Practice Group.

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