New SBA Mentor-Protégé Program Creates Opportunities for Small Business

On July 25, 2016, the federal Small Business Administration issued a final rule – effective August 24, 2016 – establishing a mentor-protégé program for all small business concerns. Although this new program resembles the existing mentor-protégé program for 8(a) firms, it is a distinct program that permits all small business concerns to participate in mentor-protégé programs. The rule also modifies the existing 8(a) program’s mentor-protégé regulations to make the two programs more consistent with each other.

Under the rule, small business concerns (including service-disabled veteran-owned firms, HUBZone firms, and women-owned small businesses and economically disadvantaged women-owned small businesses) may joint-venture with mentors to pursue government contracts and subcontracts, provided that the protégé qualifies as small for the procurement. Such a joint venture can seek any type of small business contract for which the small business qualifies.

Who is eligible? To be eligible as a small business protégé, a business must qualify as “small” for the purposes of its primary NAICS code, or, alternatively, identify that it is seeking business development assistance for a secondary NAICS code and qualify as small for purposes of that NAICS code. By contrast, any “concern” of any size – defined to mean a business entity organized for profit – is eligible to serve as a mentor. Unlike the situation under the 8(a) program rules, a small business protégé is also eligible to serve as a mentor in certain circumstances.

This new rule presents valuable opportunities for small businesses, which now gain further enhanced abilities to receive technical and financial assistance from mentors and to compete for federal contracts. The rule also presents an opportunity for current 8(a) firms. In the past, when a firm graduated from the 8(a) program, it was not able to use its mentor-protégé relationship. Now, graduating 8(a) firms have the option of extending the life of proven relationships by transitioning their 8(a) mentor-protégé relationships to small business mentor-protégé relationships.

The SBA estimates that about 2,000 small business concerns will become active in this new program, and that protégé firms could stand to receive as much as $2 billion in contracts per year. The SBA also projects that, as more small businesses will be able to compete for larger contracts, agencies may choose to set aside more contracts for small businesses.

The rule is accessible here. We’re following this closely. Let us know your questions and your thoughts.

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