Column: GAO Confirms Another Benefit of Mentor-Protege Programs

      Mentor-protégé programs, such as the government-wide one at the Small Business Administration for all small business concerns, are designed to help small contractors engage in federal contracting by allowing larger, more experienced mentor firms to provide assistance to proteges.

      Generally, the proteges receive financial, technical and/or management aid from mentors, and the mentors may receive subcontracting goal credits, reimbursement of expenses and other incentives in return.

      One of the key concepts behind these programs is to increase the capacity of small business concerns to compete for contracts they would not ordinarily qualify for otherwise.

      The U.S. Government Accountability Office’s (GAO) recent decision in Innovate Now LLC, B-419546, Apr. 26, 2021, confirmed this underlying principle.

GAO’s decision on Innovate Now LLC

      Innovate Now LLC filed a pre-award protest contesting the terms of a solicitation issued by the Dept. of the Air Force for engineering, professional, and administrative support services at the Air Force Material Command Headquarters at Wright-Patterson Air Force Base, OH.

     Specifically, the Air Force’s Request for Proposals required that each member of a joint venture meet the same requirements, including the submission of:

• At least one work sample demonstrating each member previously performed a cost-reimbursement contact as a prime contractor; and
• An associated CPARS (Contractor Performance Assessment Reporting System) report showing a rating of satisfactory or above in the quality, schedule, cost control, and management.

      Innovate Now argued these requirements violated SBA regulations governing its mentor-protege program because the requirements obligated both the mentor and protege to meet the same criteria.

      The SBA’s 8(a) Mentor Protege Program and its All Small Mentor-Protege Program merged in November 2020 to create the SBA Mentor-Protege Program.

      GAO agreed with Innovate Now and sustained the protest.

      Under 13 C.F.R. § 125.8(e), GAO acknowledged that the SBA regulations expressly prohibited the RFP provision requiring all members to meet the same criteria: “A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally. The partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract.”

      GAO also cited the comments accompanying the regulation and SBA’s interpretation of the regulation to conclude that an agency was prohibited from imposing the exact same requirements on mentors and proteges alike.

      Instead, the joint venture created under the SBA Mentor-Protege Program “should be a tool to enable it [the protege firm] to win and perform a contract in an area that it has some experience but that it could not have won on its own.” (Id. (citing 85 Fed. Reg. 66146, 661688 (Oct. 16, 2020).)

Other benefits of mentor-protege programs

      GAO’s insistence that mentors and proteges be treated as a joint venture and not be required to individually meet evaluation criteria is just one of many benefits of the SBA Mentor-Protege Program.

      Other benefits include the ability of the mentor firm to provide financial assistance to the protege in the form of equity investments (up to 40%) or loans.

      Proteges also may receive guidance on internal business management issues, the procurement process, strategic planning, and general and administrative assistance, such as human resource sharing or security clearance support.

      The SBA is not the only agency offering a mentor-protégé program. A handful of other federal agencies also have similar programs, including the Defense, Energy, Homeland Security and Transportation Depts. as well as the Federal Aviation Administration and NASA.

      The benefits conferred by each program vary from agency to agency, but all have attributes that should assist a protege to win and perform a contract in an area that it has some experience but that it could not have won on its own.

      There usually are eligibility requirements and other obligations that must be met by a prospective protege firm to qualify for one of these programs, including the establishment of a written agreement and acceptance of that agreement by the agency administering the program.

     But if you or one of your trusted subcontractors qualify for a mentor-protege program, it is certainly worth considering whether one of these programs is right for you as a tool to help you bid on and perform on federal contracts.

George Stewart is an Associate in the Washington DC office of HuschBlackwell, litigating bid protests before the Government Accountability Office and representing firms in construction claim disputes before state and federal courts, arbitration panels and both the Boards of Contract Appeals. He may be reached at George.Stewart@huschblackwell.com.

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Column: GAO Confirms Another Benefit of Mentor-Protege Programs

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