SBA Rule Proposes New Mentor-Protégé Program

The Small Business Administration is proposing to amend its regulations to implement provisions of the Small Business Jobs Act of 2010 (PL 111-240) and the National Defense Authorization Act for Fiscal Year 2013 (PL 112-239). The major provisions of the rule address SBA’s Mentor-Protégé Program and SBA’s treatment of joint ventures. Section 1641 of the NDAA authorized SBA to establish a mentor-protégé program for all small business concerns that is identical to the 8(a) Business Development mentor-protégé program. Instead of implementing four new separate small business mentor-protégé programs for service-disabled veteran-owned SBCs, HUBZone SBCs, women-owned SBCs, and all other SBCs, SBA is proposing to implement one additional mentor-protégé program for all small businesses. SBA is proposing only one new program because it believes it is easier for the small business and acquisition communities to use and understand.

Joint Ventures

Under the rule, approved mentor-protégé relationships could seek to perform joint ventures for any contracts for which the protégé qualifies as eligible. The rule would amend SBA’s joint venture regulations to clarify the conditions for creating and operating joint venture partnerships, including the effect of these partnerships on mentor- protégé relationships. The rule would revise the joint venture provisions in SBA 125.15 (b), SBA 125.18, SBA 125.18, SBA 126.616, and SBA 127.506 to align then with the requirements of the 8(a) Program, and add new SBA 125.8 to specify the requirements for joint ventures between small business protégé firms and their mentors. The rule would further amend the definition of joint venture in SBA 121.103 (h) to explicitly require joint venture agreements to be in writing and to specify that if a joint venture exists as a formal separate legal entity, it may not be populated with individuals intended to perform contracts awarded to the joint venture. The rule would require all partners to a joint venture agreement that performs a SDVO, HUBZone, WOSB, or small business set-aside contract to certify to the contracting officer and SBA prior to performing the contract that it will perform the contract in compliance with the joint venture regulations and with the joint venture agreement.

8(a) Program

The proposed rule would continue to authorize SBA’s separate mentor- protégé program for eligible 8(a) Program participants. The rule would also make minor changes to the mentor-protégé provisions for the 8(a) Program to make the mentor- protégé rules for each of the programs as consistent as possible. Finally, the rule proposes additional changes to SBA’s size, 8(a) Program, Office of Hearings and Appeals, and HUBZone regulations concerning ownership and control, changes in primary industry, standards of review, and interested party status. A complete listing of the SBA regulations impacted by the rule appears in the regulation table below. Comments on the proposed rule are due April 6, 2015. For the text of the rule, see ¶70,425.542.