Federal government contractors interested in participating in the SBA’s mentor protege program may want to get acquainted the new rules. There some slight twists to the SBA’s new regulations that both mentors and proteges should be familiar with Under 13 CFR 125.9.
Although simply put in the regulations, it is conceivable to see that if your current relationship either as a mentor or protégé does not meet the underlying goal of the program and the expectations of the mentoring process, then your run the risk of SBA termination or even suspension and debarment.
What are Basic Rules?
13 CFR 125.9 (a). The overall SBA Mentor Protégé Program was designed to allow approve mentors to enhance the capabilities of small business firms and to successfully compete and perform government contracts.
As a mentor, you want to make sure that your plan of action ultimately meets these requirements. Developing some effective measure tools can help you to manage the entire process.
Any concern 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. This includes other than small businesses.
Becoming a Small Business Mentor – Qualifications and Mentoring Process
Under 13 CFR 125.9 you can qualify as a small business mentor by showing that your company:
- Is capable of carrying out its responsibilities to assist the protégé firm under the proposed mentor-protégé agreement;
- Possesses good character;
- Does not appear on the federal list of debarred or suspended contractors; and
- 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.
To demonstrate that it is capable of carrying out its responsibilities to assist the protégé firm under the proposed mentor-protege agreement, a firm seeking to be a business mentor may submit to the SBA copies of the federal tax returns it submitted to the IRS, or audited financial statements, including any notes, or in the case of publicly traded concerns, the filings required by the Securities and Exchange Commission (SEC), for the past three years.(3) Once approved, a mentor must annually certify that it continues to possess good character and a favorable financial position.
- Generally, a mentor will have no more than one protégé at a time. However, SBA may authorize a concern to mentor more than one protégé at a time where it can demonstrate that the additional mentor-protégé relationship will not adversely affect the development of either protégé firm .
- Under no circumstances will a mentor be permitted to have more than three protégés at one time in the aggregate under the mentor-protégé programs authorized by 13 CFR 520 and 13 CFR 125.9.
Protege Requirements and Qualifications
The basic requirements of becoming a small business protege are relatively simply. However, the SBA has great discretion as to whether or not to approve a mentor protégé relationship.
A protégé applicant must first qualify as a small business 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.
Limitations: As an SBA protégé firm, you may generally have only one mentor at a time. SBA may approve a second mentor for a particular protégé firm where the second relationship will not compete or otherwise conflict with the assistance set forth in the first mentor-protégé relationship and:
(i) The second relationship pertains to an unrelated NAICS code; or
(ii) The protégé firm is seeking to acquire a specific expertise that the first mentor does not possess.
(3) SBA may authorize a small business to be both a protégé and a mentor at the same time where the small business can demonstrate that the second relationship will not compete or otherwise conflict with the first mentor-protégé relationship.
(4) Where appropriate, SBA may examine the Service-Disabled Veteran-Owned Small Business status or Women-Owned Small Business status of a concern seeking to be a protégé that claims such status in any Federal procurement database.
Mandatory Written Mentor Protege Agreement
Before starting the mentoring process, both the mentor and protégé must have a defined and signed mentor protege agreement in place. Small businesses should seek approval from the SBA if part of the 8(a) Program.
The requirements and contents of the mentor protégé agreement are very specific. Mentors or proteges that tend to manipulate or modify the language can put the business at risk given the harsh actions of the SBA.
The SBA must approve all changes to a mentor-protégé agreement in advance, and any changes made to the agreement must be provided in writing. If the parties to the mentor-protégé relationship change the mentor-protégé agreement without prior approval by SBA, SBA shall terminate the mentor-protégé relationship and may also propose suspension or debarment of one or both of the firms.
The SBA may terminate the mentor-protégé agreement at any time if it determines that the protégé is not benefiting from the relationship or that the parties are not complying with any term or condition of the mentor protégé agreement. In the event SBA terminates the relationship, the mentor-protégé joint venture is obligated to complete any previously awarded contracts unless the procuring agency issues a stop work order.
These are all but a few of the key points of complying with the SBA business mentor and protege requirements.
To minimize the impact of harsh SBA actions, call Watson’s government contract lawyers for immediate help. Call 1-866-601-5518 for a FREE initial consultation.