Many small businesses think about getting into the SBA Mentor- Protégé Program. However, as either a mentor or protégé, they must first meet the SBA mentor definition. The program is in place to help small businesses to be able to secure federal government projects with the aid of a business mentor that can provide valuable assistance.
For example, if your small business in certified in the SBA’s 8(a) Business Development Program, you can utilize the benefits of a Mentor by using its expertise, capabilities, and resources.
To meet the legal definition of being a federal mentor, you want to first meet the requirements. For example, to become a business mentor to a small business in the 8(a) BD program, you must have graduated from the 8a Program; be an 8a firm that is in the SBA’s transitional stage; be either a small business or large firm, or you can also be a non-profit business entity.
- Under the legal mentor definition, the mentor firm can own up to 40 % of the protégé to help raise capital.
SBA mentoring programs also have additional requirements. Small businesses need the extra boost to become successful in the federal procurement marketplace. Therefore, the SBA looks for certain criteria making a determination as to whether or not you meet the Mentor definition. Your business must:
- Show some level of commitment and ability to help the 8(a) small business. This is critical as the core reason for having mentoring programs. Having the proper track record is essential.
- To become part of the SBA 8a Mentor Protégé Program, you must commit to helping the protégé for at least one year.
- Your company must show the requisite financial health, possess good character; cannot be on the suspension or debarment list, and be able to provide a good track record through lessons learned and /or through practical experience gained through being in the 8a program.
- Becoming a business mentor also means being able to oversee the protégé based upon your experience in government contracting.
- The SBA generally requires that you only have one protégé at a time (it can approve more – but no more than three protégés are allowed.)
Reporting Requirements for Joint Ventures? The SBA’s new rules have introduced an annual review requirement. The annual review requires that the Mentor protégé participant shows how it is meeting the contract requirements for each 8(a) contract awarded to a JV and the performance requirements.
New Changes to the Mentor/Protégé Program rules: Under new SBA rules, meeting the mentor definition can now mean that non-profit Mentors, and tradition ones can now have up to 3 protégés at one time. Also, the small business Protégé can now have a second Mentor, corresponding to an unrelated, secondary NAICS code. The limitation under the new rules is that a mentor cannot be both a protégé and a mentor at the same time.
The process: The level of work provided by the business mentor must be related to the Protégé’s SBA-approved business plan. Also, the SBA must approve the agreement before the parties can propose on small business contract. For mentors that do not have an 8(a) protégé, compliance with SBA regulations is still required.
- The SBA cannot approve mentor protégé relationships if the 8(a) company is within 6 months of completing the 8(a) BD Program.
Heavy Business Mentor Consequences
Given the recent statistics where small business mentors find themselves not complying with the protégé agreement terms, the SBA can now impose sanctions to the mentor. If there are allegations of noncompliance, the rules require to mentor to get notice and have an opportunity to respond. See SBA main points.
If adverse facts warrant, the mentor can be barred for two years. Finally, if the mentor fails to comply with laws governing the SBA 8a mentor protégé program, the federal government can institute grounds for worldwide suspension or debarment.