Recently, the Small Business Administration (SBA) published proposed regulations that will create a new universal mentor-protégé program that the SBA hopes will expand the ways in which small businesses can benefit from the help of more experienced businesses.  The proposed regulations arise from the Small Business Jobs Act of 2010 and the National Defense Authorization Act for Fiscal Year 2013.

The proposed mentor-protégé program would be similar to the SBA’s 8(a) Business Development (BD) mentor-protégé program, but would be available to all small business concerns, including service-disabled veteran-owned small business concerns, HUBZone small business concerns, and women-owned small business concerns.  The SBA intends to keep the standards for the new small business mentor-protégé program as consistent as possible with the existing 8(a) BD mentor-protégé program.

Under the proposed small business mentor-protégé program, any small business concern interested in participating in the program as a protégé is eligible so as long as it qualifies as small under the size standards associated with its primary NAICS.  The interested small business concern applies to the SBA, which then verifies the size status of the small business concern and approves the mentor-protégé agreement, which must be in writing. 

The proposed mentor-protégé program replicates a significant benefit that attracts mentors to participate in the present 8(a) BD mentor-protégé program.  Under the proposed program, an approved mentor and protégé may form a joint venture between them, which will be deemed small and qualify for any contract for which the protégé qualifies.  Importantly, unlike a joint venture between a small and large business outside a mentor-protégé program, joint ventures under the SBA’s mentor-protégé program do not create affiliation, which otherwise would jeopardize the protégé’s size status.  This encourages participation in the program by both the mentor and protégé, as the protégé benefits from the knowledge and resources of the mentor, and the mentor has the ability to participate in contracts it couldn’t have otherwise supported as a prime contractor.