The future is now for government contractors.  A new Small Business Administration (SBA) regulation finalizes the long-anticipated expansion of the small business mentor-protégé program.  This major policy shift vastly expands access to set-aside contracts previously reserved for performance only by small businesses.  Government contractors – both small and large – need to create a game plan for how to take advantage of this shifting landscape.

At the heart of the new program is the SBA’s decision to allow small business protégés to joint venture with large business mentors to compete for federal work — all without worrying about affiliation.  These new mentor-protégé joint ventures can compete for any federal work — including small business set-aside contracts — provided only that the protégé qualifies as small for the procurement.  In the rule, the SBA specifically provides that no determination of affiliation or control can be based solely on the mentor-protégé agreement, or any assistance provided by the mentor under that agreement

Previously, this shield from affiliation was reserved only for the 8(a) program.  Now, all small businesses (including participants in the HubZone, Women-Owned Small Business (WOSB and EDWOSB), and Service-Disabled Veteran Owned Small Business programs (SDVOSB)) will have the opportunity to form SBA approved mentor-protégé teams with larger businesses.  By entering into a new mentor-protégé team, these joint ventures can compete for and win small business set-aside contracts (including contracts offered under the SBA’s socio-economic programs).

The SBA’s final rule sets out all of the particulars of the new small business mentor-protégé program, including:

  • How a business can qualify as a mentor or protégé
  • The requirements for a written Mentor-Protégé Agreement, and
  • How the SBA will process what is expected to be a flood of new program applications.

The rule becomes effective in 30 days (August 24, 2016) – so now is the time to figure out where your business stands, find a mentor or protégé, and start the application process.

While there is much left to be sorted out in terms of how the rule translates from on-paper to in-practice, we anticipate that small businesses (including SDVOSBs, HUBZones, and WOSBs) will face heavily increased competition on set-aside contracts from peers now backed by the support and assistance of a large business.

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Is your business ready to tackle these new challenges?