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Daily Archives: May 28, 2012

Federal mentor/protégé programs are designed to encourage approved mentors to provide various forms of business development assistance to approved protégé firms. A mentor firm may be either a large or small business, eligible for award of a Government contract that can provide developmental assistance to enhance the capabilities of protégés to perform as subcontractors. A protégé firm must be: A SB, WOSB, SDB, HUBZone, VOSB, or SDVOSB, Small in the NAICS code for the services or supplies to be provided by the protégé under its subcontract to the mentor; and Eligible for receipt of government contracts.

The purpose of the mentor/protégé relationship is to enhance the capabilities of the protégé and to improve its ability to successfully compete for contracts. There are 13 federal agencies with over 1100 active mentor protégé agreements.

 

In March 2011, the GAO (http://www.gao.gov/new.items/d11548r.pdf) reported the following number of federal agency mentor protégé programs:

Agency Approved   Agreements Agency Approved   Agreements Agency Approved   Agreements
NASA  202-358-2088   12 FAA   202-267-7454  10 DOE   202   586-3835 120
GSA  202-208-0257   65 VA  24 Treasury   202   622-8213   58
SBA   District Office 482 US   AID 202 567-4606    6 State   703-875-6881   86
EPA    202-447-5280    4 DHS   202-447-5280 220 DOD   800-540-8857 101
HHS   301-443-1715    9 DOT N/A Navy   202-685-6489 N/A
Army   703-693-6113   Air Force  703-696-1103      

 

Participation in a federal mentor protégé program has the potential to create a win-win for participants to get larger contracts and access to small business set aside market in the federal government. The win-win is created when the protégé’s capability and capacity to perform on federal contracts is enhanced by the affiliation rules, limitations on subcontracting and the mentor’s delivery of developmental assistance. There is no affiliation in the major federal agency mentor protégé programs including FAA, U.S. Treasury, Department of Homeland Security, and the Health and Human Services. The FAA states “A protégé firm may not be considered an affiliate of a mentor firm solely on the basis that the protégé firm is receiving developmental assistance referred to in Section 1.12 under the program. However, affiliation may be found for other reasons in accordance with the SBA general principles of affiliation. The U. S. Treasury says “a protégé firm is not considered an affiliate of a mentor firm solely on the basis that the protégé firm is receiving developmental assistance from such mentor firm under the program”.

The Department of Homeland Security says “A protégé will not be considered an affiliate of a mentor solely on the basis that the protégé has or will receive developmental assistance from the mentor under this program” and The Health and Human Services says “A protégé firm may not be considered an affiliate of a mentor firm solely on the basis that the protégé firm has or will receive developmental assistance from the mentor firm under this program”.

The Limitations on Subcontracting clause places restrictions on the percentage of cost that can be subcontracted in order to be awarded a full or partial small business set-aside contract, an 8(a) contract, WOSB, EDWOSB, SDVOSBC or HUBZone SBC prime contractor. In most cases the restrictions include:

1) In the case of a contract for services (except construction), the concern will perform at least 50 percent of the cost of the contract incurred for personnel with its own employees. (2) In the case of a contract for supplies or products (other than procurement from a non-manufacturer in such supplies or products), the concern will perform at least 50 percent of the cost of manufacturing the supplies or products (not including the costs of materials). (3) In the case of a contract for general construction, the concern will perform at least 15 percent of the cost of the contract with its own employees (not including the costs of materials). (4) In the case of a contract for construction by special trade contractors, the concern will perform at least 25 percent of the cost of the contract with its own employees (not including the cost of materials).

The development assistance includes but is not limited to: 1) Assistance by the mentor’s personnel in (i) General business management, including organizational management, financial management, personnel management, marketing, business development, and overall business planning; (ii) Engineering, environmental and technical matters; and (iii) Any other assistance designed to develop the capabilities of the protégé under the developmental program.(2) Award of subcontracts or other contracts on a noncompetitive basis. (3) Advance payments under such subcontracts in accordance with FAR Subpart 32.4, Advance Payments for Non-Commercial Items. (4) Loans. (5) Investment(s) in the protégé in exchange for an ownership interest in the protégé, not to exceed 10 percent of the total ownership interest. Investments may include, but are not limited to, cash, stock, and contributions in kind. (6) Assistance that the mentor obtains for the protégé from one or more of the following: (i) Small Business Development Centers established pursuant to Section 21 of the Small Business Act (15 U.S.C. 648).(ii) Entities providing procurement technical assistance pursuant to 10 U.S.C. Chapter 142 (Procurement Technical Assistance Centers).(iii) Historically Black Colleges and Universities.(iv) Minority institutions of higher education.

American Express Open found in their survey of 1,508 small businesses that the most significant economic benefits may come from participation in a formal mentor-protégé program. While few active small business contractors have pursued entering such programs, those who have are investing more time and money seeking Federal contracts and are reaping the reward in greater efficiency and higher sales, profitability and employment – reinforcing the adage that it takes money to make money.

See http://media.nucleus.naprojects.com/pdf/American_Express_OPEN_Victory_in_Procurement_survey_3.pdf

Participation in a federal mentor protégé program can increase the mentor and protégé’s contract sales and company profitability. The absence of no affiliation, limits on subcontracting and the developmental assistance including contract financing create the win win environment. The mentor helps the protégé get contracts and the protégé can sub some of the contract to the mentor.