1. THE SBA’s NEW SMALL BUSINESS MENTOR-PROTÉGÉ PROGRAM
Brad Reaves
ReavesColey PLLC

2. Small Business Mentor Protégé
FINALLY! – On July 25, 2016 the SBA Issued the FINAL RULE expanding the Mentor Protégé Program across ALL Small Businesses
Final Rule Published at 81 Fed. Reg. 142
This FINAL Rule was effective August 24, 2016
Applies to 8(a) Mentor Protégé Agreements and Joint Venture Agreements (going forward)
Applies to ALL Small Business, SDVOSB, WOSB/EDWOSB, and HUBZone Mentor Protégé Agreements and Joint Ventures (going forward)

3. Quick Background of Rule
The Final Rule implements the Small Business Jobs Act of 2010, which directed SBA to expand the 8(a) Mentor Protégé Program to:
SDVOSBs
WOSBs/EDWOSBs; and
HUBZones
The Final Rule also implements provisions of the 2013 NDAA which required the SBA to further expand the Mentor Protégé Program to ALL Small Businesses
Over 18 months since the February 5, 2015 Proposed Rule
Hard to overstate the importance of these Changes

4. Small Business MP Expansion
TWO MAJOR REASONS why the Mentor Protégé expansion is such a “big deal” for both Small Business and Large Business Government Contractors
First: Small businesses of any type (NOT just 8(a)’s) can receive assistance from (and form Joint Ventures (JVs) with) Large Businesses to perform work on small business set-aside procurements for federal prime contracts AND subcontracts without affiliation concerns!
Second: Large businesses can now have direct access to set-aside
procurements by JV-ing with a small business (who qualifies for the set aside)

5. Current Exceptions to Affiliation
An approved SBA 8(a) Protégé and its Mentor (can be a large business) are not considered to be affiliates when they form a SBA-approved JV and comply with other regulations. (13 CFR (h)(3)(iii))
Approved protégé and its mentor under the DOD Mentor Protégé program (Mentor can be a large business) are not considered affiliates simply because of assistance provided under Mentor Protégé Agreement, but, importantly, currently, no exception for JV affiliation for ANY OTHER Mentor Protégé Programs exists in the regulations. (13 CFR (b)(6))
NEW - Two small business JV partners who are both small for the NAICS code applicable to the Contract (13 C.F.R (h)(3))
NEW - Approved Mentor and its Protégé under the SBA’s expanded Mentor Protégé Program when they form a SBA-approved Joint Venture and comply with other regulations (13 C.F.R )

6. SBA Regulations on Set-Aside JV’s
Apart from the general regulations governing small business JVs, the SBA has specific regulations governing JV’s for Small Businesses (NEW), 8(a)’s, SDVOSBs, WOSBs/EDWOSBs, HUBZone’s
Here are the specific regulations:
13 CFR – Small Business JV
13 CFR (a) JV (requires SBA approval)
13 CFR – SDVOSB JV
13 CFR – HUBZone JV
13 CFR – WOSB/EDWOSB JV

7. SBA Regulations on Set-Aside JV’s, cont.
Extremely important to comply with JV Requirements for Specific Set-Aside Programs – otherwise, JV will be susceptible to a size or a status protest
Additionally, under the NEW regulations (13 C.F.R ), there is a significant Certification of Compliance requirement for Mentor Protégé JVs:
Prior to performance of any set aside contract by a Mentor Protégé JV, the small business partner to the JV MUST submit a written certification to the Contracting Officer AND to the SBA signed by both the Mentor and Protégé stating that the parties have entered into a JV Agreement that fully complies with the applicable regulations AND that the parties will meet the performance of work requirements

8. Performance of Work Requirement
For any Small Business (or other set-aside category) JV, the small business MUST perform as least 40% of the work performed by the Joint Venture (this is NEW, previously this requirement only required to 8(a) Joint Ventures)
The work performed by the small business (or other set-aside category) MUST be more than administrative or ministerial functions so that it gains substantive experience
The amount of work done by the JV partners will be aggregated, and the work done by the small business (or other set-aside category) must be 40% of the total done by the partners
In determining compliance, the work done by a Mentor and any “affiliate” of the Mentor at any subcontracting tier will be counted

9. THE SBA’s NEW SMALL BUSINESS MENTOR-PROTÉGÉ PROGRAM
Brad Reaves
ReavesColey PLLC