Mentor-Protégé Joint Venture to Apply to All Small Businesses

© adrian_ilie825 - Fotolia.com

© adrian_ilie825 – Fotolia.com

For a business that qualifies for the 8(a) set-aside program (for companies owned by the socially and economically disadvantaged), you can form a joint venture between a protégé and a mentor. If the relationship is approved by the SBA, then the size standard of the protégé applies to the joint venture.

The reason this is important is because otherwise, if any of the partners in a joint venture are a large business, the joint venture team is considered large and does not qualify for any set-asides.

One of the provisions of the FY 2013 National Defense Authorization Act (NDAA) was that the SBA was authorized (but not required) to extend these mentor-protégé joint venture privileges to other set-aside categories like service-disabled veteran-owned, HUBZone or woman-owned businesses, or even general small businesses, as long as they’re in a mentor-protégé relationship.

The DoD’s mentor-protégé program pre-dates this change, but what I didn’t realize until reading last week’s guest post by Alex Levine of PilieroMazza was that it is a pilot program that must be reauthorized in the NDAA every few years.

As we learned from Levine’s post, the DoD intends for this to now be a permanent activity. This is significant, as this is the only mentor-protégé program that has money attached to it. The mentor receives money towards performing the functions of the mentor-protégé agreement – expenses, training, marketing staff or whatever.

The bigger picture here is in trying to make the DoD mentor-protégé program permanent, changes must be made to the Code of Federal Regulations (CFRs). After it’s improved and implemented into the CFR, then the FAR Council can modify all the different FAR regulations and regulating bodies to eventually affect all other types of small businesses.

Right now, SBA has proposed the regulations as a draft and are soliciting comments up until April 6, 2015. From there they may make changes, and publish a final set of new regulations (or possibly another interim version if there are substantial changes).

Keep in mind this is just the start of the process. It may not come into fruition until 2016 or even 2017.


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