Mentor Protégé Programs - National 8(a) Association

Marriages Made in Heaven But
Remember the Prenuptial Agreement
National 8(a) Association Summer Conference
June 17, 2014
Many Programs for All to Enjoy
13 agencies have mentor-protégé programs
1. Small Business Administration
2. Department of the Defense
3. Department of Homeland Security
5. FAA
6. Department of Energy
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Many Programs for All to Enjoy
7. Environmental Protection Agency
8. Department of State
9. Department of Treasury
10. GSA
11. Department of Health & Human Services
13. Department of Veterans Affairs
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One Size Does Not File All
Many Forms of Teaming Arrangements
Informal Partnering and Hunting Agreements
Prime and Subcontractor Relationships
Teaming Agreements
Defining Teaming Agreement
Joint Ventures Agreements
Mentor-Protégé Agreements
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Small Business Administration
Mentor-Protégé Program Overview
 Mentor-Protégé Program is a developmental
tool designed to enhance the ability of a 8(a)
participants to compete for federal contracts
 Mentors provide technical and management
assistance, contract support and perform
with 8(a) as prime through j/v arrangements
 SBA currently oversees approximately 600
mentor-protégé agreements
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Small Business Administration:
Mentor-Protégé Program Benefits
 Mentor-Protégé may pursue contracts as j/v
 SBA will not find affiliation or undue control
based on the M-P arrangement
 Protégé may receive financial assistance via
Mentor owning up to 40% of 8(a) concern
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Small Business Administration:
Details are important!
 Any firm may mentor
 An 8(a) firm must:
 be in development stage; or
 have never received an 8(a) contract; or
 have ½ size of its primary NAICS code
 Protégé may have only 1 mentor at a time
 Mentor can have more than one Protégé
(if second does not compete with first)
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SBA Changes Around the Corner:
New Small Business Mentor-Protégé Program
 Small Jobs Act of 2010 authorized mentor-protégé (M/P) programs for WOSB, SDVO
SBCs, and HUBZone SBCs.
 NDAA of 2013 authorized M/P program for all small businesses, and it required quick
regulatory action to implement changes.
 Both statutes said that SBA should develop M/P programs as similar to 8(a) M/P program
as possible.
 SBA is in the process of developing proposed regulations to implement one new M/P
program for all of the newly covered small businesses. 8(a) M/P program is expected to
remain intact separately from the general small business M/P program.
 The various types of assistance that a mentor will be expected to provide to a protégé
include technical and/or management assistance; financial assistance in the form of
equity investment and/or loans; subcontracts and/or assistance in performing prime
contracts with the Government in the form of joint venture arrangements.
 Expect proposed regulations sometime this year.
 Expect SBA to solicit comments on the proposed regulations once they are published in the
FR. Public meetings or Listening Sessions are possible.
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Recent Cases: BGI-Fiore JV, LLC
BGI-Fiore JV, LLC, B-409520 (May 29, 2014).
 NASA rejected a joint venture’s proposal for an 8(a) set-aside contract because
the solicitation was limited to certified 8(a) participants and the joint venture
had not been certified by the SBA as of the date of proposal submission.
 According to NASA, FAR provision 52.219-18 requires a joint venture to be
admitted to the 8(a) program--whether through “certification” or “approval”-prior to the submission of a proposal.
 SBA pointed out that it “does not ‘certify’ joint ventures for admission to the
8(a) program.” Instead, “only the 8(a) participant to the joint venture is
certified into the program.” The joint venture then relies on the certification of
its 8(a) member to qualify for 8(a) set-aside contracts.
 Outcome: The GAO – relying in part on SBA’s interpretation of the regulations
– held that the agency’s rejection was improper and sustained the protest.
 Take-away: An agency may not reject a joint venture proposal merely
because the proposal has not been approved by SBA prior to bid
submission. Consistent with SBA regulations, joint ventures must be
approved by SBA prior to contract award.
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Recent Cases: Size Appeal of Drace
Anderson Joint Venture
Size Appeal of Drace Anderson Joint Venture, SIZ-5531 (2014).
 Area Office found a protégé to be affiliated with its mentor for the
purposes of a non-8(a) procurement for which the mentor-protégé
joint venture had submitted a proposal.
 Appellant argued that the 8(a) mentor-protégé joint venture exception
to affiliation applies both to 8(a) and non-8(a) contracts, that the SBA
Area Office failed to consider whether the joint venture qualified for
the mentor-protégé joint venture exception to affiliation.
 Outcome: Size appeal was granted, the size determination was vacated
and matter remanded to the Area Office to consider whether Appellant
was eligible for the exception to affiliation for mentor-protégé joint
 Take-away: The mentor-protégé affiliation exception applies to
any federal government prime contract or subcontract as long as
(1) the protégé qualifies as small, and (2) the JV meets the 8(a)
regulatory requirements under 13 C.F.R. § 121.103(h)(3)(iii).
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Recent Cases: Okland Construction Co., Inc.
United States ex rel. Saiz Construction Co. Inc. and Abel Saiz v. Okland
Construction Co. Inc., No. 2:11-cv-00362 (D. Utah).
 Government claimed that an 8(a) Program Mentor abused the 8(a)
mentor-protégé program.
 Okland—a large business—was a mentor to Saiz Construction (an 8(a) protégé
 Protégé Saiz initiated civil suit under the whistleblower protection provision of
the False Claims Act (FCA) against its former mentor, after protégé
terminated its mentor-protégé agreement with Okland.
 DOJ and Plaintiff alleged:
 Mentor performed eight 8(a) contracts on behalf of its protégé without an SBA
approved joint venture.
 Mentor’s extensive role in performance resulted in protégé failing to meet
applicable subcontracting limitations.
 SBA did not approve joint ventures between the companies, but Okland
prepared bids for 8(a) contracts and Okland’s employees served as project
managers, submitted invoices, and performed payroll and other accounting
 Okland concealed its extensive involvement in 8(a) contracts by
misrepresenting to the government that its employees were employees of Saiz.
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Recent Cases: Okland Construction Co., Inc.
Outcome: Settlement.
 8(a) Program Mentor agreed to pay a FCA
settlement of $928,000.
 Saiz (protégé) and its owner will receive $148,480 of the
settlement amount.
 The settlement only resolves the government’s claims,
and there was no finding of liability.
 Protégé cannot be a mere pass-through.
 Program mentors must remember that a mentorprotégé agreement does not provide carte blanche
within the 8(a) program.
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Department of Defense
M P program started in 1991 (DFARS Subpart 219.71)
Two types of DoD M-P Agreements
Credit: the mentor gets credits to SDB subcontracting goals.
Direct Reimbursement: the mentor is reimbursed for
developmental assistance through:
Separately priced contract line item
A separate contract as approved by Director of SADBU
Eligible Protégé Businesses: SDB, tribally-owned, NHO-owned,
WOSB, SDVOSB, HUBZone, and others.
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Dept. of Homeland Security
 Benefits for Mentors:
 Mentors receive additional evaluation points
 Mentors receive $ for $ credit to SB goals
 Mentors may have multiple protégés
 Protégés may have multiple Mentors
 Agreements should last 36 months
 Eligible Protégé Businesses: small business
concerns under FAR 19.001 based on primary
NAICS code.
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 NASA website has list of approved mentors
 Mentors must have active subcontracting plan
 Only credit agreements--$ for $ SB goals
 Mentor may have several protégés at one time
 3 cycles for submitting MP agreements
 NASA FAR Supplement 1819.72 under review
 Eligible Protégé Businesses: SDB, WOSB, VOSB,
SDVOSB, HUBZone, and others.
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Federal Aviation Administration
FAA has an approved list of Mentors
FAA may set aide MP procurements
Protégé may have unlimited mentors but FAA may limit mentors
FAA incentives:
Development cost treated as indirect cost
Additional evaluation points
Credit to Subcontracting goals
Mentors may provide space, management, temporary personnel,
engineering, and technical assistances
Eligible Protégé Businesses: small businesses, Small Socially and
Economically Disadvantaged Businesses, SDB, SDVOSB, WOSB and other
organizations. See
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Department of Energy
 SADBU offices manages program (48 CFR 919.70)
 Mentor must have at least one DOE contract
 Protégés must be in business 2 years
 Protégé may have only one Mentor, Mentors may have
multiple protégés
 Benefits for Mentors:
 Award fees for cost+ contracts
 Credit toward small business goals
 DoE will reimburse Mentors developmental assistances
 Eligible Protégé Businesses: 8(a), SDB, WOSB, SDVOSB,
and other organizations
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Other Agencies
 Environmental Protections Agency—48 CFR
155219-71 defines elements of application but few
identifiable benefits
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Contact Information
Jon M. DeVore
Birch, Horton, Bittner and Cherot, P.C.
1156 15th Street, N.W. Suite 1020
Washington, D.C. 20005
(202) 659-5800 (office)
[email protected]
Be a Mentor