GAO Confirms Yet Another Benefit Of Mentor-Protégé Programs

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Mentor-protégé programs, such as the government-wide one at the SBA for all small business concerns, are designed to help small contractors engage in federal contracting by allowing larger, more experienced mentor firms to provide assistance to protégés. Generally, the proteges receive financial, technical, or management aid from mentors, and the mentors may receive subcontracting goal credits, reimbursement of expenses, and other incentives in return. One of the key concepts behind these programs is to increase the capacity of small business concerns to compete for contracts they would not ordinarily qualify for otherwise. The U.S. Government Accountability Office’s (GAO) recent decision in Innovate Now, LLC, B-419546, Apr. 26, 2021, confirmed this underlying principle.

In that decision, Innovate Now, LLC filed a pre-award protest contesting the terms of a solicitation issued by the Department of the Air Force for engineering, professional, and administrative support services at the Air Force Material Command Headquarters at Wright-Patterson Air Force Base, Ohio. Specifically, the RFP required that each member of a joint venture meet the same requirements, including the submission of at least one work sample demonstrating each member previously performed a cost-reimbursement contact as a prime contractor and an associated CPARS report showing a rating of satisfactory or above in the quality, schedule, cost control, and management. Innovate Now argued these requirements violated SBA regulations governing its Mentor-Protégé Program because the requirements obligated both the mentor and protégé to meet the same criteria.

GAO agreed with Innovate Now and sustained the protest. Under 13 C.F.R. § 125.8(e), GAO acknowledged that the SBA regulations expressly prohibited the RFP provision requiring all members to meet the same criteria: “A procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally. The partners to the joint venture in the aggregate must demonstrate the past performance, experience, business systems and certifications necessary to perform the contract.” GAO also cited the comments accompanying the regulation and SBA’s interpretation of the regulation to conclude that an agency was prohibited from imposing the exact same requirements on mentors and protégés alike. Instead, the joint venture created under the Mentor-Protégé Program “should be a tool to enable it [the protégé firm] to win and perform a contract in an area that it has some experience but that it could not have won on its own.” (Id. (citing 85 Fed. Reg. 66146, 661688 (Oct. 16, 2020).)

GAO’s insistence that mentors and protégés be treated as a joint venture and not be required to individually meet evaluation criteria is just one of many benefits of the SBA Mentor-Protégé Program. Other benefits include the ability of the mentor firm to provide financial assistance to the protégé in the form of equity investments (up to 40%) or loans. Protégés may also receive guidance on internal business management issues, the procurement process, strategic planning, and general and administrative assistance, such as human resource sharing or security clearance support.

The SBA is not the only agency offering a mentor-protégé program. A handful of other federal agencies also have similar programs, including the DOE, DHS, NASA, DOT, DOD, and the FAA. The benefits conferred by each program vary from agency to agency, but all have attributes that should assist protégé firm to win and perform a contract in an area that it has some experience but that it could not have won on its own.

There usually are eligibility requirements and other obligations that must be met by a prospective protégé firm to qualify for one of these programs, including the establishment of a written agreement and acceptance of that agreement by the agency administering the program. But if you or one of your trusted subcontractors qualify for a mentor-protégé program, it is certainly worth considering whether one of these programs is right for you as a tool to bid on and hopefully perform on federal contracts.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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