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Monday, September 12, 2016

New Rules Create Opportunities for Government Contractors

In the last several months, the government issued new regulations that can benefit all government contractors and especially small businesses. Berenzweig Leonard wanted to summarize them so government contractors can take advantage of these opportunities as well as be aware of the two “Cautions” we describe at the end.  


The SBA adopted new rules that (1) let a small business prime use the work of another small business to meet the 50% performance of work requirement; and (2) let all small businesses qualify as protégés to joint venture with large business for small business set-aside work.  

1. Now, when complying with the performance of work requirements in the Limitation on Subcontracting clause:  

2. Now, under the greatly expanded Mentor-Protégé program:

  • Any small business can be a protégé. Thus, a large business mentor may joint venture with any small business protégé to compete for small business contracts. However, to be eligible to joint venture for a HUBZone contract, for example, the protégé must be a HUBZone small business.
  • Any small business can be a mentor. Not only a large business can be a mentor; any small business can also be a mentor. Thus, a small business may joint venture, for example, with a HUBZone small business to compete for a HUBZone contract.     


New FAR rules penalize large businesses that abuse small business subcontractors.

Large businesses must report “bait-and-switch” of small business subcontractors. The large business’s Small Business Subcontracting Plan must contain “assurances” that it will make a good faith effort to use a small business during contract performance as its solicitation promised; failure to use small business subcontractors must be reported to the contracting officer at the end of performance, apparently for the contracting officer’s use in the contractor’s past performance evaluation.

Large businesses cannot silence small businesses. The Subcontracting Plan must also contain assurances that the contractor will not prohibit a subcontractor from discussing payment or utilization issues with the contracting officer.


First, although government contractors must pay close attention to these changes because they affect future contract opportunities, retroactivity should not be a concern. These new regulations will not change existing contracts.    

Second, delay in applying to the SBA for the Mentor-Protégé program can be costly. Because the SBA expects a flood of applications, the SBA itself has raised the possibility of closing the application process down temporarily. Contractors should file Mentor-Protégé applications as soon as possible after August 24, 2016, the effective date of the new regulations.

Terrence O'Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a business law firm in the D.C. region. Terry can be reached at

Saturday, September 10, 2016

SBA Opens $2 Billion Market to Expanded Mentor-Protégé Program

An estimated $2 billion annual government contract market has been opened up to an estimated 2,000 small businesses, according to the SBA, as a result of its recently-expanded Mentor-Protégé program.

All small businesses, and not just 8(a) firms, may now become protégés to joint venture with large businesses – and even other small businesses – competing for small business set-aside contracts as part of the SBA’s “all small business” Mentor-Protégé program.

The SBA has expanded the reach of the new program even wider, to include specific types of small business: HUBZone small businesses, Service Disabled Veteran Owned Small Businesses, 8(a) firms and Woman Owned Small Businesses. For example, a HUBZone small business can joint venture with a non-HUBZone firm (large or small) on a HUBZone set-aside solicitation.

Getting these benefits requires, at minimum, that the Mentor-Protégé team submit an application to the SBA for approval. Modeled after the 8(a) Mentor-Protégé program application, the all small business Mentor-Protégé application must describe the protégé’s needs, the assistance the mentor will provide (e.g., management and/or technical assistance, loans and/or equity investments, cooperation on joint venture projects, or subcontracts under prime contracts being performed by the mentor), and how this assistance will meet the protégé’s needs.

Also modeled after the 8(a) Mentor-Protégé program is the written joint venture agreement that the SBA requires to allow mentors and protégés to get the expanded contract benefits described above.

Berenzweig Leonard is well equipped to help its clients apply for the expanded Mentor-Protégé process as well as execute compliant JV agreements because we have helped our clients through the 8(a) Mentor-Protégé program on which the new Mentor-Protégé program is modeled.

We add one caution: SBA expects that the significant opportunities opened up by the new Mentor-Protégé program will lead to a flood of applications, and has raised the possibility of closing the Mentor-Protégé application process temporarily to deal with any backlog.

For that reason, we are urging interested clients to file Mentor-Protégé applications as soon as possible after the October 1, 2016 start of SBA acceptance of applications. Delay in applying can seriously delay benefitting from the new Mentor-Protégé program.

Terrence O'Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a business law firm in the D.C. region. Terry can be reached at