SBA to create mentor-proteges government-wide

It’s finally here: the Small Business Administration released its long-awaited proposed rule to create a comprehensive mentor-protege program for all small business federal contractors.

SBA estimates that under the proposed rule, approximately 2,000 small firms could become active in the proposed comprehensive mentor-protege program, and those protege firms may obtain federal contracts totaling possibly $2 billion per year.

Currently, only 8(a) firms are eligible to participate in the SBA’s mentor-protege program.

Several other federal agencies offer their own mentor-protege programs, but those may be eased out, once the SBA’s program is established.

Congress gave SBA authority to expand its mentor-protege program governmentwide in the 2010 Small Business Jobs Act and the 2013 defense authorization law.

The SBA is now proposing to establish a new mentor-protege program open to all small vendors--including HUBZone, woman-owned, service-disabled veteran-owned and self-certified small businesses--while also maintaining its 8(a) mentor-protege program. Self-certified companies would have to confirm their size with the SBA to become eligible to be proteges.

The new rule would allow small businesses to form joint ventures with their SBA-approved mentors, even if the mentor is a large business. The joint venture would qualify for any set-aside contract for which the protege is eligible.

Under the new rulemaking, a mentor and protege would not be deemed as affiliates, similarly to the 8(a) exception from affiliation. A mentor may own up to 40% of the protege.

The proposed rule would prohibit agencies other than the SBA from operating their own mentor-protege programs without the SBA’s approval, following a one-year grace period. This is likely to hasten the end of the other programs, according to Piliero Mazza PLLC.

The rulemaking also makes several changes, including raising the bar to prove social disadvantage for the 8(a) program.

Comments are due by April 6.

The SBA wants advice on whether to form a single new mentor-protege program, or four separate mentor-protege programs (for SDVOSBs, WOSBs, HUBZone firms and all other small businesses).

More Information: Federal Register notice: http://goo.gl/sIl3gQ
Piliero Mazza analysis: http://goo.gl/2BLJlw
McCann Fitzgerald analysis: http://goo.gl/fB0mM6

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