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Friday, March 1, 2013

Small Business Mentor-Protégé Programs



Robert Jay Dilger
Senior Specialist in American National Government

Kate M. Manuel
Legislative Attorney


Mentor-protégé programs typically seek to pair new businesses with more experienced businesses in mutually beneficial relationships. Protégés may receive financial, technical, or management assistance from mentors in obtaining and performing federal contracts or subcontracts, or serving as suppliers under such contracts or subcontracts. Mentors may receive credit toward subcontracting goals, reimbursement of certain expenses, or other incentives.

The federal government currently has several mentor-protégé programs to assist small businesses in various ways. For example, the 8(a) Mentor-Protégé Program is a government-wide program designed to assist small businesses “owned and controlled by socially and economically disadvantaged individuals” that are participating in the Small Business Administration’s (SBA’s) Minority Small Business and Capital Ownership Development Program (commonly known as the 8(a) program) in obtaining and performing federal contracts. Toward that end, mentors may (1) form joint ventures with protégés that are eligible to perform federal contracts set aside for small businesses; (2) make certain equity investments in protégé firms; (3) lend or subcontract to protégé firms; and (4) provide technical or management assistance to their protégés. The Department of Defense (DOD) Mentor-Protégé Program, in contrast, is agency-specific. It is designed to assist various types of small businesses and other entities in obtaining and performing DOD subcontracts and serving as suppliers on DOD contracts. Mentors may (1) make advance or progress payments to their protégés that DOD reimburses; (2) award subcontracts to their protégés on a noncompetitive basis when they would not otherwise be able to do so; (3) lend money to or make investments in protégé firms; and (4) provide or arrange for other assistance.

Other agencies also have agency-specific mentor-protégé programs designed to assist various types of small businesses or other entities in obtaining and performing subcontracts under agency prime contracts. The Department of Homeland Security (DHS), for example, has a mentorprotégé program wherein mentors may provide protégés with rent-free use of facilities or equipment, temporary personnel for training, property, loans, or other assistance. Because these programs are not based in statute, unlike the SBA and DOD programs, they generally rely upon preexisting authorities (e.g., authorizing use of evaluation factors) or publicity to incentivize mentor participation. See Table A-1 for a summary comparison. Although there are some issues with the accuracy and thoroughness of some federal agency records, there are currently more than 1,100 mentor-protégé agreements in place.

Congressional interest in small business mentor-protégé programs has increased in recent years, in part because of reports that large businesses serving as mentors have improperly received federal contracting assistance intended for small businesses. During the 112
th Congress, P.L. 112- 81, the National Defense Authorization Act for Fiscal Year 2012, extended the DOD Mentor- Protégé Program through FY2015 for the formation of new agreements, and FY2018 for the reimbursement of incurred costs under existing agreements. Also, P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, authorizes the SBA to establish a mentor-protégé program for all small businesses, and generally prohibits agencies from carrying out mentorprotégé programs that have not been approved by the SBA. The 111th Congress had previously enacted legislation (P.L. 111-240) authorizing the SBA to establish mentor-protégé programs for small businesses owned and controlled by service-disabled veterans, owned and controlled by women, and small businesses located in a HUBZone, which the SBA has been in the process of doing.


Date of Report: January 18, 2013
Number of Pages: 27
Order Number: R41722
Price: $29.95

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