Government Contracts & Investigations

Regulation Recap: SBA Publishes Proposed Rule Consolidating Mentor Protégé Programs

By | November 21, 2019

Lovers of consistency, rejoice! After a few years of administering two separate, yet substantially similar mentor-protégé programs, the Small Business Administration (SBA) has proposed a rulemaking to consolidate the 8(a) Business Development (BD) Mentor-Protégé Program and the All Small Mentor-Protégé Program. On November 8, 2019, SBA published the Consolidation of Mentor Protégé Programs and Other Government Contracting Amendments in the Federal Register. 84 FR 60846.

Most notably, SBA’s proposed rulemaking amends numerous rules to merge its mentor protégé programs. The 8(a) BD and All Small Mentor-Protégé Programs have the same purposes and offer similar benefits. Both are intended to allow approved mentors to enhance the capabilities of protégés by aiding the protégés in competing for government and commercial contracts. Protégés in both programs benefit from business development assistance. Further, joint ventures formed between a mentor and protégé are exempt from affiliation based on joint venturing, so that the joint venture should qualify for small business set-aside awards provided the protégé individually qualifies as small under the applicable size standard. With these big picture similarities in mind, SBA recognizes that navigating the various requirements of the current mentor protégé programs can be confusing and burdensome for both contractors and the Government.

The following highlights the noteworthy aspects of the proposed changes:

  • Eliminates the separate 8(a) BD Mentor-Protégé Program – The proposal revises the applicable rules to recognize that an 8(a) participant is just as any other small business, merging the 8(a) BD Mentor Protégé Program into the All Small Business Mentor-Protégé Program. Further, to effectuate this streamlining, SBA would eliminate the requirement that it must approve joint ventures in connection with sole source 8(a) awards, as it does not currently require prior approval of joint ventures in any other context.
  • Amends requirements for joint ventures – The current rule limits the scope and duration of joint ventures to no more than three contracts over a two year period. The revised rule would eliminate the three contract limit, allowing joint ventures to be awarded any number of contracts within two years from the date of its first contract award.
  • Considers limiting mentors based on annual revenue – SBA is considering whether to restrict the size of mentors to firms having average annual revenues of less than $100 million. While SBA is focused on advancing the business of the protégé, based on recommendations of “mid-size” firms, SBA is considering whether small businesses would be better served by having business development assistance from mentors that are size-limited in this way.
  • Ensures NAICS code of task order issued under a Multiple Award Contract (MAC) reflects order – Currently, if a MAC is assigned a NAICS code, that code flows down to each order under the MAC, even if, for example the underlying MAC’s NAICS code is for services, and the order is for supplies. Instead of merely allowing the flow down of NAICS codes from the MAC to the particular order, which can result in firms qualifying as small for a particular procurement where they shouldn’t, the proposed rule would require that the NAICS code for each task order accurately reflects the contract and order being awarded and performed.
  • Requires recertification of size and/or socioeconomic status for certain MACs – Other than for orders or Blanket Purchase Agreements issued under a Federal Supply Schedule (FSS) contract, SBA would require recertification of size status where there is an order placed under an unrestricted MAC set aside exclusively for small businesses. Further, the proposed rule requires recertification of socioeconomic status where the required status for an order differs from that of the underlying MAC.
  • Authorizes size and/or socioeconomic status protests for certain MACs – The proposed rule specifically authorizes size and/or socioeconomic eligibility protests relating to set-aside orders based on a different size and/or socioeconomic status from the underlying MAC. This change would allow protests where the set-aside is for small business and, if protesting size eligibility, the underlying MAC was awarded on an unrestricted basis. This rule allowing size and/or socioeconomic protests relating to orders would not apply to orders against Blanket Purchase Orders or Federal Supply Schedule contracts.

SBA is accepting comments on this proposed rulemaking received on or before January 17, 2020.

Contact Judith Araujo for more information.