SBA’S New All Small Mentor-Protégé’ Program And Limitations On Subcontracting Rule
Ken Brody joined PVBS to discuss new changes and updates to the SBA Mentor-Protégé program. Ken is a partner in the law firm of David, Brody & Dondershine, LLP, located in Reston, Virginia, which he established with his partners. He has over thirty years of experience in government contracts law, commercial litigation, and employment law. Ken can be reached at 703-264-2220 and firstname.lastname@example.org. Additional information concerning the firm can be found at www.dbd-law.com.
The Small Business Jobs Act of 2010 and the National Defense Authorization Act for FY 2013, which were passed by Congress were intended to protect the interests of small businesses by providing authority for the SBA to establish mentor-protégé programs for all small businesses. Rather than creating separate programs for each constituency – Service Disabled Veteran Owned Businesses, Women Owned Small Businesses, Historically Underutilized Business Zones – the SBA chose to create a single, all-inclusive mentor-protégé programs modeled on the already existing mentor-protégé program available to participants under the 8(a) program. The rule also includes amendments to SBA’s current joint venture provisions to clarify the conditions for creating and operating joint venture partnerships.
There are three ways to team for procurement opportunities:
1) Prime-Subcontractor (Mentor-Protégé) Relationship for Unrestricted Procurements with Mentor as the Prime Contractor – Can be handled by a traditional Prime-Subcontract teaming agreement and subcontract with no specific requirements under the regulations for how work will be allocated
2) Prime-Subcontractor Relationship (Protégé-Mentor) for Small Business Set-Aside Procurements with Protégé as the Prime Contractor – Compliance with Limitations on Subcontracting requirements is a Necessary Feature of this Relationship
3) Joint Venture Relationship for Small Business Set-Aside whereby a new legal entity (the JV between Protégé and Mentor), which is also separately identified in SAM.gov and has its own EIN
Any for profit business entity that demonstrates a commitment and the ability to assist small business concerns may act as a mentor and receive benefits as set forth in this section. In order to demonstrate that it is capable, a firm seeking to be a mentor may submit to the SBA copies of the federal tax returns it submitted to the IRS, or audited financial statements for the past three years.
Once approved, a mentor must annually certify that it continues to possess good character and a favorable financial position. In order to qualify as a mentor, a concern must demonstrate that it:
(i) Is capable of carrying out its responsibilities to assist the protégé firm;
(ii) Possesses good character;
(iii) Does not appear on the federal list of debarred or suspended contractors; and
(iv) Can impart value to a protégé firm due to lessons learned and practical experience gained or through its knowledge of general business operations and government contracting.
In order to initially qualify as a protégé firm, a concern must qualify as small for the size standard corresponding to its primary NAICS code or identify that it is seeking business development assistance with respect to a secondary NAICS code and qualify as small for the size standard corresponding to that NAICS code. The SBA considers the distribution of receipts, employees and costs of doing business among the different industries in which business operations occurred for the most recently completed fiscal year, in determining the primary industry in which a concern is engaged.
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