Small businesses must overcome a near-countless array of obstacles in order to succeed and prosper. Competition from larger companies, which might have more resources, more institutional experience, and more connections can be a significant hurdle for a small or startup business. Many companies never clear this particular hurdle, but the Small Business Administration (SBA) offers some tools to help small businesses overcome various obstacles and disadvantages. It recently unveiled a new program designed to help small business “protégés” obtain guidance from large business “mentors” with regard to government contracts. Under the Small Business Mentor-Protégé Program (SBMPP), qualifying pairs of businesses will be able to bid on government contracts as joint ventures.
The federal Small Business Act defines a “small business concern,” in a very general sense, as a business that is “is independently owned and operated and…not dominant in its field of operation.” 15 U.S.C. § 632(a)(1). The SBA has promulgated additional rules for determining whether a particular business qualifies as a “small business concern.” 13 C.F.R. § 121.101 et seq. Prior to the establishment of the SBMPP, the SBA only offered a mentor-protégé program for “disadvantaged businesses” under § 8(a) of the Small Business Act, 15 U.S.C. § 637(a). Congress authorized the expansion of the SBA’s mentor-protégé program in § 1345 of the Small Business Jobs Act of 2010, Pub. L. 111-240, 124 Stat. 2546 (Sep. 27, 2010); and § 1641 of the National Defense Authorization Act for Fiscal Year 2013, Pub. L. 112-239, 126 Stat. 2076 (Jan. 2, 2013). See also 15 U.S.C. § 657r.
The purpose of the SBMPP, according to the new rule issued by the SBA, is to “improve the protégé firms’ ability to successfully compete for federal contracts.” 13 C.F.R. § 125.9(a). A business may qualify to act as a mentor by “demonstrat[ing] a commitment and the ability to assist small business concerns.” Id. at § 125.9(b). This includes demonstrating “good moral character” to the SBA. Id. A small business that meets the SBA’s size standards may qualify as a protégé. A company acting as a mentor may only have one protégé, unless the SBA approves a request to have more than one, and small businesses are generally limited to one mentor.
Mentors may assist protégés by offering “technical and/or management assistance,” “financial assistance,” “subcontracts,” “trade education,” and guidance in the performance of government contracts. Id. at § 125.9(a). The SBA encourages mentors to focus their assistance on “the performance of contracts set aside or reserved for small business[es].” Id. Once the SBA has approved a mentor-protégé agreement, the two businesses can bid as a joint venture on any government contract for which the protégé qualifies as a “small business concern.”
Business law attorney Samuel C. Berger practices in New York and New Jersey. We offer fixed-fee legal-service packages to businesses, business owners, and entrepreneurs, which cover a wide range of matters for our clients. Contact us online, at (201) 587-1500, or at (212) 380-8117 today to schedule a confidential consultation to see how our skilled and experienced team can help you and your business.
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