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New Fed Mentor-Protégé Program Affects Large, Small Businesses

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The U.S. Small Business Administration (SBA) recently announced major changes to its long-standing Mentor-Protégé Program. Originally, this program was designed to support the growth of small businesses that were certified as 8(a) Program participants; the program is intended to serve as a business development tool, with the mentors providing financial, technical and/or management assistance to their protégés.

As of Aug. 24, all types of small businesses may now participate as protégés, including those certified as 8(a), HUBZone, service-disabled and woman-owned. One does not need a special certification to participate, and even those that only qualify as small businesses are eligible. This broadening of the Mentor-Protégé Program opens the doors to increased federal contract opportunities for small, mid-size and large businesses that are willing to work within the program requirements.

As of Oct. 1, the SBA began accepting the new mentor-protégé program applications, and on Nov. 1, the agency unveiled its new streamlined application portal at certify.sba.gov. As of now, applications may be made at any time; however, depending on application volume, the SBA may institute open and closed enrollment periods in the future.

The intent of this revised SBA program is to eventually roll up all civilian agencies’ mentor-protégé programs under this program within the next two years. However, the Department of Defense Mentor-Protégé Program is not affected and will remain in force as-is, as it operates under a different statute.

In general, all applicants must be registered with SAM.gov, execute and submit a formal Mentor-Protégé Agreement (a template is available at sba.gov), complete an online training module and submit additional documents to substantiate eligibility. The criteria include detailing the assistance the mentor will provide to the protégé, exactly what the mentor will do and the related timeline — as well as how success will be measured.

This new program allows up to three years in one agreement, and it provides for two separate three-year agreements with different mentors. Each agreement may be extended an additional three years, for a total of six years per agreement; this new program also allows all small business protégés to joint venture with their mentors, who may be either large or small businesses. The mentor can also own up to 40% of the protégé.

For those 8(a) companies already in the older SBA’s 8(a) Mentor-Protégé Program, they may transfer to the new program after graduating from the 8(a) program.

In the event of a declined application, the protégé may file a request for reconsideration within 45 days or revise the agreement during the same timeframe to provide additional information or documentation; if still declined, the protégé cannot attempt another application for a 60-day period.

The new program requires extensive annual reporting by the mentor and the protégé, documenting all technical or management assistance, any loans or equity investments made, subcontracts awarded and their values, all federal contracts awarded and the related value of those contracts. The SBA will review these annual reports and determine to continue approval of continuance of the mentor-protégé relationship or not.

There are consequences for mentors not providing the agreed-upon assistance to protégés. The SBA may choose to terminate the agreement, to issue stop work orders on all contracts awarded to the joint venture, and the mentor will be ineligible to act as a mentor for a two-year period, as well as face debarment. However, if the protégé is able to continue work on its own, the SBA will recommend that the protégé be substituted as the contract awardee.

Exploring the updated SBA Mentor-Protégé Program can open doors to new opportunities for both small and large businesses, which is especially critical in the ever-changing federal contracting environment.

Gloria Larkin is president of TargetGov, in Linthicum, and a national expert in business development in the government markets. Visit www.targetgov.com or call toll-free 866-579-1346 for more information about this and other topics.