The Small Business Administration, which has the mission of expanding federal contract opportunities for various types of small businesses while continuing to work to prevent fraud in these programs, is proposing to establish a government-wide mentor-protégé program for all types of small businesses, parallel to the existing mentor-protégé program under the SBA’s 8(a) business development program.
The proposed changes were contained in a notice that the SBA published in the Federal Register on February 5. The comment period will remain open until April 6.
The existing mentor-protégé program under section 8(a) permits companies owned by economically and socially disadvantaged individuals to team up with larger businesses to try to obtain contract awards, thus helping to put the small businesses on their feet as going concerns. Congress recently authorized similar mentor-protégé programs for other types of disadvantaged small businesses – service-disabled veteran-owned small business concerns, those located in HUBZones (Historically Underutilized Business Zones) and women-owned small businesses. The current SBA proposal begins the implementation of that congressional mandate to establish these joint venture programs.
The SBA said in the notice that it is proposing to put in place “one additional mentor-protégé program for all small businesses since the other three types of small businesses (SDVO, HUBZone and women-owned) would be necessarily included within any mentor-protégé program targeting all small business concerns.”
As the agency pointed out, “The proposed mentor-protégé program for all small business concerns is designed to require approved mentors to provide assistance to protégé firms in order to enhance the capabilities of protégés, to assist protégés with meeting their business goals, and to improve the ability of protégés to compete for contracts.”
Historically, however, the government’s efforts to permit large companies to help smaller businesses get a foothold in contracting have sometimes been subject to manipulation and outright fraud. The SBA is continuing to try to prevent fraud and to ensure that government benefits end up in the hands of those who deserve them. In 2011, it established a rule that 40 percent of the work on any contract awarded to a joint venture or to companies in a mentor-protégé relationship must be done by employees of the small business.
In the current Federal Register notice, the SBA added a new proposed requirement – that all people who do any work on a contract awarded to and performed by the joint venture must be employees either of the mentor or of the protégé firm. There would not be any employees solely of the joint venture. The agency said this provision would make it easier to track whether small-business employees were actually doing enough of the work. By SBA regulation, at least 40 percent of the work must be done by the protégé firm’s employees.
The agency wrote, “SBA believes that joint ventures permitted by SBA’s regulations must benefit small businesses, and must not be used as vehicles to allow companies to fraudulently or improperly benefit from SBA contracting programs. . . . In this regard, the proposed rule would specify that the Government may consider the failure to comply with the joint venture regulations or to submit the required certifications and reports to be a ground for suspension or debarment.”
Public comments on the proposed rule are open at this time, and the deadline for submission of comments is April 6, 2015. Comments can be submitted at the Federal eRulemaking Portal, available at www.regulations.gov, or by Mail/Hand Delivery/Courier: Brenda Fernandez, U.S. Small Business Administration, Office of Government Contracting, 409 3rd Street SW., 8th Floor, Washington, DC 20416.