At their best, the mentor-protégé programs administered by the Small Business Administration (SBA) are programs whereby large business mentors may partner with small business protégés—providing the small business with resources, knowledge, and an overall enhancement of capabilities. The program also provides that, under certain circumstances, the mentor-protégé team can also jointly venture to compete for small business set-aside contracts for which the protégé qualifies—without triggering the joint venture affiliation rules that would otherwise render the joint venture too large to compete as a small business.
On October 16, 2020, the SBA published its final rule consolidating the mentor-protégé programs, as well as amending certain other government contracting regulations. We previously reported on the proposed rule regarding the SBA’s intention to consolidate the 8(a) Business Development (BD) Mentor-Protégé and the All Small Mentor-Protégé Programs, on which the SBA received 189 comments. The majority of the final rule’s provisions will go into effect on November 16, 2020—except for those provisions amending 13 C.F.R. § 127.504 which pertains to the criteria for qualifying as a women-owned small business (WOSB) or economically-disadvantaged WOSB, which went into effect on October 16, 2020.
Essentially, with regard to the mentor-protégé program, the rule merges the 8(a) BD Mentor-Protégé Program into the All Small Mentor-Protégé Program, such that the former is eliminated as a stand-alone program and is now subject to the same regulations as the latter. To this end, the rule makes the following notable changes:
- The final rule eliminates the requirement that SBA review and approve an 8(a) joint venture before it may be awarded an 8(a) set-aside contract.
- The rule establishes a unified staff to coordinate and process mentor-protégé applications, which will allow for more consistent treatment and reduce unnecessary burdens and confusion.
- The rule also provides that mentor-protégé joint ventures formed under the program are no longer subject to the three-in-two rule, which restricted mentor-protégé joint ventures to only three contracts in two years. Now, joint ventures under the revised mentor-protégé program may be awarded any number of contracts within the two years following the date of first contract award.
Though, in its proposed rule, the SBA had considered limiting the size of mentors to those firms having average annual receipts of less than $100 million, ultimately the SBA decided against this restriction and it is not included in the final iteration of the rule.
The final rule contains other government contracting amendments. Significantly, the SBA now will require offerors under certain unrestricted multiple award contracts (MACs)—i.e., those not issued against a Blanket Purchase Order under a Federal Supply Schedule (FSS), which are subject to separate rules—to recertify their size or socioeconomic status for each small business or other socioeconomic status set-aside order issued thereunder. This change is meant to tighten an existing loophole by eliminating the circumstance in which a business certifies as small when the MAC is first awarded and grows out of this status for subsequent orders but still retains the ability to continue receiving small business set-asides under that MAC. Similarly, the final rule will allow size or socioeconomic status protests relating to set-aside orders where the underlying MAC (again, other than those issued under a FSS) was issued on an unrestricted basis.
It is important to keep in mind that this rule, spanning over fifty pages in the Federal Register, contains many nuanced changes to the SBA’s contracting efforts. While this article highlights the more noteworthy provisions, there are other changes as well. If you have questions about the final rule and how it may apply to you, contact the author, a member of the Government Contract and Investigations practice group, or your Stinson counsel.