However, the SBA is specifically seeking comments about whether this restriction makes sense. Under the proposed rule, a company would not be able to serve as both a mentor and protege at the same time. Generally, a protege “will have no more than one mentor at a time.” However, the protege “may have two mentors where the two relationships will not compete or otherwise conflict with each other and the protege demonstrates that the second relationship pertains to an unrelated, secondary NAICS code, or the first mentor does not possess the specific expertise that is the subject of the mentor-protege agreement with the second mentor.”
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Generally, “a mentor participating in any SBA-approved mentor-protege program will have no more than one protege at a time.” However, the SBA may authorize up to three concurrent proteges if the mentor “can demonstrate that the additional mentor-protege relationship will not adversely affect the development” of any of the proteges. Further, instead of accepting self-certifications of size, the SBA will “verify that a firm qualifies as a small business before approving that firm to act as a protege in a small business mentor-protege relationship.” A firm would not be eligible to serve as a protege unless it qualifies as a small business under its primary NAICS code. Under the proposed regulations, “any for-profit business concern that demonstrates a commitment and the ability to assist small business concerns may be approved to act as a mentor and receive the benefits of the mentor-protege relationship.” SBA proposes to disallow non-profit entities from serving as mentors. Some important specifics of the SBA’s proposal are as follows: However, the SBA proposes to “make the small business mentor-protege program identical to the 8(a) mentor-protege program.” The SBA proposes to continue operating a separate 8(a) mentor-protege program. The SBA explains that SDVOSB, HUBZone and WOSB companies will necessarily be included in the universal mentor-protege program, and that, “having five separate small business mentor-protege programs could become confusing to the public and procuring agencies and hard to implement by SBA.” Instead of establishing four new mentor-protege programs–one each for SDVOSB, HUBZone, WOSB, and small business firms–the SBA proposes to establish a single “universal” mentor-protege program available to all small businesses. The SBA’s proposed new rule comes in response to the statutory authority granted in 20.
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The 2013 NDAA also directed the SBA to establish regulations governing mentor-protege programs offered by other procuring agencies (except DoD’s mentor-protege program, which was specifically exempted). In the 2013 National Defense Authorization Act, Congress authorized the SBA to create mentor-protege programs for all small businesses, but did not mandate that SBA do so. In 2010, Congress gave SBA the authority to create mentor-protege programs for SDVOSBs, HUBZones, and WOSBs. And critically, the SBA’s proposed mentor-protege program would allow SBA-approved mentor-protege joint ventures to qualify as “small” for any federal government prime contract or subcontract–a benefit currently available only to 8(a) companies. In a proposed rule released yesterday, the SBA proposed to establish a single, “universal” mentor-protege program, open to all small businesses, not just those with certain socioeconomic designations. The SBA has proposed to establish a government-wide mentor-protege program available to all small businesses.