The Mentor-Protege – entitled 8(a) Business Development (8(a) BD Mentor-Protege Program – has been designed so that firms can provide multiple forms of development assistance to participants in the 8(a) BD program. Enhancing capabilities of 8(a) Program Participants for competitive circumstances, entrepreneurial successes, and being able to contribute strength and vigor to the economy is the goal of the 8(a) BD Mentor-Protege Program.
Purpose of Agreement
The purpose of this mentor and protege relationship is to be able to:
- Enhance the capabilities of the protege or participant;
- Assist the participant in meeting goals established in the approved business plan, and
- Improving the ability of the participant to compete successfully for contracts.
Benefits of a Program
The benefits of a program of this nature include giving the mentor’s expertise, resources, and capabilities to the protege. Other benefits include offering technical and management assistance to the protege.
The mentors are asked to provide assistance that is relevant to the performance of non-8(a) contracts for the protege firms – so that they can more fully develop competitive capabilities. The mentors can even enter into joint-venture arrangements so that the proteges can compete for them, perform on, and gain certain federal government contracts.
Financial Assistance: Equity/Loans
A mentor can own up to 40% of a loan or equity. This is purely to help the protege raise the capital in the equity or loan.
Requirements to Become a Protege
Before an application is put in, 8(a) firms must consult with the corresponding SBA District Office Business Opportunity Specialist to be part of the 8(a) BD Mentor-Protege program. In order to be a protege, there are several conditions that must be met by the firm. The options are:
- Be a current participant in the 8(a) BD program and be in development,
- o 8(a) contracts prior to applying to become a protege in the program, OR;
- According to the primary NAICS code, the business is less than half of the size of the listed small business size.
The firm must then be in good standing with all SBA program requirements and be up to date with the SBA reporting requirements that are in place at the time. In general, the mentor-protege ratio is one to one. However, SBA can review a request for a second mentor and, if found to be necessary, approve it. For further understanding, it is recommended that applicants for a second mentor read the SBA regulations 13 CFR 124.520(b) – which requires Adobe Reader to be able to read.
If there are less than six months remaining in a protege’s term, SBA does not approve a mentor-protege relationship. Should this be the case, it is recommended that they review the SBA regulations 13 CFR 124.250 on the 8(a) BD Mentor-Protege Program.
Requirements for Becoming a Mentor
A mentor in the 8(a) BD Mentor-Protege program may be any of the following:
- A graduated firm in the 8(a) category
- A current 8(a) firm in a transitional stage
- A small business
- A large business, OR:
- A non-profit entity.
In order for the business or entity to become a mentor, they must:
- Be able to commit and assist in the development of an 8(a) BD program participant,
- Be able to commit to the protege for a year at minimum.
In addition, the mentor must be able to show that it has:
- Good or favorable financial health.
- Great character.
- Good standing with the federal government (not on the federal list of suspended or debarred contractor firms).
- Ability to give lessons or practical experience to the protege.
All of this can be done through the participation in the program or through knowledge of the general business operations of the time or the government contracting. It is recommended that the SBA regulations 13 CFR 124.250(b) are read to clarify any misunderstandings.Despite all of this, however, a mentor cannot have more than three proteges under its wing at one time. More on this is found in SBA regulations 13 CFR 124.250.
How Firms Enter a Relationship
Every 8(a) BD Mentor-Protege relationship has to be approved by the SBA.However, before a relationship can be approved, it must be proposed. The protege and the mentor help in drafting a written agreement for review and approval. If the approval outlines needs and ways the assistance will be given, the SBA will review it to make sure it will work. Unless the agreement meets every requirement, it will not be approved. The agreement must:
- Address assistance to be provided to help the protege meet goals,
- Establish contact for managing and implementing the agreement, and;
- Assure assistance will be given for a year at minimum.
What Happens with Approval?
The SBA conducts annual reviews in order to determine if the success is worth the relationship. The protege must certify any changes to the SBA on an annual basis. The mentor must show good financial standings and character annually. More on annual requirements can be found in SBA regulations 13 CFR 124.250(g).
Should the SBA find that the mentor has not given the previously agreed upon assistance or that the assistance has not given significant benefit to the protege, the Mentor-Protege agreement can be cancelled.
There are many of other services available, such as training, educational programs, contract assistance, publications, and financial programs. There are also specialty programs from veterans, historically underutilized business zones for small businesses, and women business owners.
Always Work With a Legal Professional
Mentor-Protege agreements are complicated and it is unwise to pursue this type or agreement without competent legal assistance. The government contracts attorneys at Ravenhearth Law have extensive experience with both government contracts litigation and government contracts counseling.
Set Up A Free Consultation
We understand the importance of any decision that can effect your organization’s success. Our firm offers free initial consultations by phone or at our office location so that you can make a well-informed decision moving forward. Call our firm or send us a message online to set up your free consultation today.