The long wait soon may be over. According to the Small Business Administration’s most recent semiannual regulatory agenda, the agency will make it a priority this year to establish SBA-run mentor-protégé programs for service-disabled veteran owned small businesses, HUBZone small businesses and women-owned small businesses.

      The SBA’s announcement means that SDVOSBs, HUBZones, WOSBs and other small businesses soon may have the opportunity to participate in more—and more effective—mentor-protégé programs.

      Additionally, the SBA may work toward implementing mentor-protégé programs for all small businesses, as authorized by the National Defense Authorization Act for Fiscal 2013.

Small Business Jobs Act

      SDVOSBs, HUBZones and WOSBs have been waiting for SBA-run mentor-protégé programs since September 2010, when the Small Business Jobs Act became law. It gave the SBA authority to create mentor-protégé programs for SDVOSBs, HUBZones and WOSBs.

      In 2011, the SBA said it was drafting regulations implementing the mentor-protégé programs authorized by the Jobs Act. However—perhaps because Congress began tinkering with mentor-protégé rules in what ultimately became the fiscal 2013 NDAA—the SBA held off on issuing proposed regulations.

      While SDVOSBs, HUBZones, and WOSBs waited for the SBA to establish its own mentor-protégé programs, many of these contractors joined mentor-protégé programs run by other procuring agencies, such as the Energy, Homeland Security and Veterans Affairs departments’ and NASA’s.

Affiliation rules

      Several of the agency-run mentor-protégé programs said participants would be exempt from the SBA’s ordinary affiliation rules. For example, the State Department’s mentor-protégé rules stated: “For purposes of the Small Business Act, a protégé firm is not considered an affiliate of a mentor firm solely because the protégé firm is receiving developmental assistance from the mentor firm under the program.” One problem: the SBA disagreed.

      In 2011, the SBA adopted a regulation stating it would only recognize an exception from affiliation in two situations: (1) if the mentor-protégé program was specifically authorized by statute (as opposed to the internal regulations of another agency); or (2) if the mentor-protégé program was formally approved by the SBA under a process set by SBA’s own regulations.

      The Defense Department’s mentor-protégé program is the only non-SBA mentor-protégé program authorized by statute, and the SBA has yet to approve any other agencies’ mentor-protégé programs. In other words, in the SBA’s eyes (and those are the only eyes that count), participants in non-SBA, non-DOD mentor-protégé programs are not exempt from affiliation.

      In a 2012 decision, Size Appeal of J.R. Conkey, the SBA Office of Hearings and Appeals agreed, holding that a VA mentor-protégé agreement did not shield its participants from affiliation. Therefore, at present, participants in non-SBA, non-DOD mentor-protégé programs are not entitled to an exception from affiliation—no matter what the sponsoring agency says.

      Fortunately, Congress weighed in to address the confusion. The fiscal 2013 NDAA required the SBA to issue regulations governing mentor-protégé programs of other agencies. Those regulations will, among other things, establish eligibility criteria, provide for any benefits that may accrue to a mentor as a result of its participation, and so on. Once SBA issues its regulations, agencies must then gain the SBA’s approval for their mentor-protégé programs within a year, or those programs will become invalid. However, those programs that the SBA does approve will then be able to offer participants a genuine exception from affiliation.

More opportunities

      Most agency mentor-protégé programs currently allow SDVOSBs, HUBZones and WOSBs to participate as protégés. Assuming that the SBA’s new regulations continue to permit such eligibility, SBA-approved mentor-protégé programs of other agencies will offer SDVOSBs, HUBZones and WOSBs another opportunity (in addition to the SBA’s own pending mentor-protégé programs) to partner with experienced businesses in government-sanctioned relationships. With these new and improved mentor-protégé opportunities on the horizon, forward-thinking SDVOSBs, HUBZones and WOSBs may wish to begin the process of locating prospective mentors.

      The SBA’s regulatory agenda also indicates that the SBA is pursuing the goal of establishing mentor-protégé programs for all small businesses, as authorized by the fiscal 2013 NDAA. It is unclear from the regulatory agenda whether a new mentor-protégé program for all small businesses will be afforded the same priority as establishing the mentor-protégé programs for SDVOSBs, HUBZones, and WOSBs, or whether expansion of mentor-protégé to all small businesses will come later. But regardless of whether the SBA introduces these new programs in stages or all at once, it appears that contractors alike may be able to participate in new SBA mentor-protégé programs in the not-too-distant future. For small and large contractors alike, that is good news indeed.

Steven J. Koprince is a partner with Petefish, Immel, Heeb & Hird, LLP, where his legal practice focuses on representing small government contractors. He can be reached at skoprince@petefishlaw.com.