In October, the U.S. Small Business Administration (SBA) published a final rule entitled “Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments,” which went into effect on November 16, 2020. This final rule merges two existing mentor-protégé programs, revises SBA’s affiliation rules, and makes other technical changes to clarify SBA’s size requirements for contractors. Contractors of all sizes should review this sweeping final rule for any changes that may impact them. Here, we present some of the most significant changes this final rule implements.
Merger of SBA’s 8(a) Mentor-Protégé Program into the All-Small Mentor-Protégé Program
SBA’s first mentor-protégé program was created in 1998 solely for 8(a) small businesses. The goal of the program was to pair SBA-approved experienced businesses (mentors) with SBA-approved 8(a) small businesses (protégés) to help them develop. Mentors and protégés were able to form joint ventures to compete for contracts and, importantly, were not subject to SBA’s affiliation rules. This affiliation exception is important because SBA’s regulations require a small business to count its annual receipts or employees, plus the annual receipts or employees of each affiliate when determining its size status. Waiving this requirement for mentors and protégés allowed them to be awarded contracts they might have otherwise been ineligible for because of affiliation rules.
In October 2016, SBA created the All-Small Mentor-Protégé Program (ASMPP) to expand the mentor-protégé program beyond 8(a) small businesses to include all small businesses, including women-owned small businesses, service-disabled veteran-owned small businesses, and Historically Under-Utilized Business Zone small businesses. The ASMPP program possessed similar benefits as SBA’s 8(a) mentor-protégé program, including the ability to form joint ventures and the exception to affiliation rules. The ASMPP has been very popular, with more than 1,200 active mentor-protégé agreements currently in existence under the program. Because of ASMPP’s success and the overlap that exists between ASMPP and SBA’s 8(a) mentor-protégé program, the final rule eliminated the 8(a) mentor-protégé program and merged it into ASMPP in its latest final rule.