How Section 1611 Will Level the Playing Field for Advanced Small Businesses |

October 10, 2012

Dark Light

“Emerging small firms have done what we all want to do. They began small, became seasoned, and grew. The government should as a matter of policy, support and foster such growth since data from Christopher Yukins and other researchers suggest that maturing small businesses produce more jobs than either very large or new companies.” – From “A Growth Path for Emerging Small Businesses”

So how can the government support and foster the growth of small businesses who have advanced beyond the size standards of their NAICS code? They can support the ASB (Advanced Small Business) Pilot Project, which is Section 1611 of the National Defense Authorization Act (HR 4310).

With this pilot project in place, there would be a new path for mid-tier businesses, where they’re competing only with similar new grads, rather than the multi-billion-dollar enterprises they’re forced to compete against now.

From a public policy standpoint, we’ve agreed that we’re going to try to aid small businesses in their early stage growth by setting aside work for them and sheltering them from having to compete with large businesses who have more resources. Yet at same time, we don’t give them a true path to sustainability, as discussed at last month’s Small Business Sustainability Conference in Washington, D.C.

The purpose of Section 1611 and similar advocacy efforts for mid-tier businesses is to make small businesses sustainable so that a company can grow beyond their graduation from their NAICS codes size standards – the point where they’ve become too big to be small.

A theme of this blog is that the fish don’t jump in the boat – we have to go out and find customers. And when it comes to the federal government, that means having people in place who are literally walking the halls of the government agency or agencies that you want to do business with, actively identifying new opportunities.

This is one of the major areas where businesses who have newly graduated from their size standards simply can’t compete with the industry giants. All of your people are busy working on client projects. You don’t have the infrastructure in place to be doing this level of lead generating. That’s why this isn’t a fair competition.

There have been a lot of misunderstandings about Section 1611 and the Advanced Small Business Pilot. Here are three important things to note:

This project will not affect the set-aside for small business – any jobs held for these mid-tier companies are coming out of the large business share, not the small business set-aside share.
This is just a pilot – a test that will last for three years.
While some people have defined the mid-tier to include businesses earning up to $3 billion (still much less than the industry giants), the focus on this pilot will be a limited mid-tier set – the smallest of the mid-tier companies.

SBA Issues and Legislative Initiatives

The All-Small Mentor-Protégé Program

SBA had a well-established mentor-protégé program (MPP) for SBA 8(a) certified firms but lacked an MPP program for other small business concerns and specifically, one for specialized certified concerns such as WOSB, EDWOSB, SDVOSB, & HubZone. The 2010 Jobs Act and 2013 NDAA gave SBA the authorization to address this by establishing an all-encompassing mentor-protégé program. Ms. Sandi Clifford, deputy director of the All Small Mentor-Protégé Program (ASMPP), visited the Mid-Tier Advocacy (MTA) earlier this year to discuss the program. Here are some of the highlights of this candid and informative discussion: As Ms. Clifford explained, mentor services to protégés include: • Management and technical assistance (internal business management systems) • Financial assistance (in the form of equity investments and/or loans) • Contracting assistance (contracting processes, capabilities acquisitions and performance) • International trade education (learn how to export, international trade business plan, finding markets) • Business development assistance (strategy, finding contracting and partnership opportunities) • General and/or administrative assistance (business processes and support) As administrators of the program, SBA provides: • Central HQ as opposed to 8(a) distributive model • Online application – certify.sba.gov • Online course tutorial requirement • Annual review and evaluation • Template agreements, i.e., MPA (Mentor-Protégé Agreement) Other All-Small Mentor-Protégé Program (ASMPP) details: • A protégé may generally only have one mentor at a time; SBA may approve a second (two is the maximum) where no competition exists, or if the protégé registers under a new NAICS or otherwise requires new mentor skills. • Both protégé and mentor must be for-profit (with exception of protégé being an agriculture cooperative). • A mentor may have no more than three protégés at same time (no lifetime limit). • A participant can be both a protégé and mentor at the same time, if there is no competition or conflict. • The ASMPP is self-certifying and is open to businesses who qualify as small in their primary NAICS code, or who are seeking business development assistance in a secondary NAICs where they also qualify as small. • SBA will not authorize MPAs in second NAICS in which firm has never performed any work; or where firm would only bring “small” status to Mentor and nothing else. • Existing 8(a) firms in last 6 months of the 8(a) program may transfer their MPA to the ASMPP via the online application process. Coordinate with 8(a) office to fine tune the process but there is no reapplication required. • Application requirements include upload of business plan, but no financial statements or tax returns. • JV agreements: ASMPP will not review and approve joint venture agreements. How to apply for the ASMPP: • Applicants are required to register in the System for Award Management (SAM) prior to submitting their mentor/protégé application. • Complete your business profile in certify.SBA.gov. • Evaluate and select your mentor prior to applying. This is not a matching program. SBA will not find a mentor for you. • Begin the ASMPP application process. • Protégés and mentors must complete the online tutorial and have their certificate of completion and all other required documents ready for upload Thank you to Sandi Clifford, Deputy Director, All Small Mentor-Protégé Program, for this helpful overview. TAPE has mentored several small businesses over it’s life as a large business (we’re large in some NAICS codes, though still small in others) and it has been gratifying, satisfying, and integral to our success. As protégés ourselves, we have benefitted from working with some really classy large businesses, and have also had the experience of being a protégé and really getting no tangible benefits. We are currently working with two small businesses, and negotiating ASMPP agreements. You can learn more about the ASMPP on the SBA site. To join MTA and attend future events like this one, please visit www.midtier.org.

Bill Jaffe

August 23, 2017