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 toconnor@berenzweiglaw.com.

Documents With Short Approval Deadlines Must Be Carefully Drafted

Short deadlines leave little room for error. When the government gives a contractor a short document approval deadline, the contractor’s initial submission should strictly follow regulations because there may not be time for required revisions, as an 8(a) joint venture found out recently.

In that case, the only remaining approval the JV needed to be awarded an 8(a) Army contract was the Small Business Administration (SBA)’s approval of the 8(a) JV Agreement. Unfortunately for the JV, the SBA by law had only five business days to approve the agreement. Because the JV had not properly drafted the agreement it originally submitted to the SBA, five business days was not enough time for the SBA to review and approve a revised agreement. After time ran out on both the SBA and the JV, the Army awarded the work to another 8(a).    

The JV’s loss of the Army contract was unfortunate and probably preventable. The agreement initially drafted by the JV and sent to the SBA for approval omitted several provisions specifically required by SBA regulations. If experienced legal counsel had been involved in the drafting of the JV agreement from the start, these required clauses would have been included in the initial JV agreement, and the short SBA deadline would most likely not have prevented the JV from getting the work.

The decision shows that getting experienced legal counsel to carefully draft foundation documents is essential to winning government contracts, especially when approval deadlines are short and leave little time for error.    

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 toconnor@berenzweiglaw.com.