New SBA Mentor-Protege Program: Clearing Up The NDAA Confusion

True or false: the FY 2013 National Defense Authorization Act requires the SBA to create a mentor-protege program for all small businesses?

Contrary to published information issued by at least three large law firms, the answer is “false.”  In fact, although the NDAA authorizes the SBA to create a mentor-protege program for all small businesses, it does not require the SBA to create such a program.

Moreover, the erroneous statement that the NDAA requires the SBA to adopt a mentor-protege program for all small businesses is just one of three pieces of misinformation being circulated by one or more of these law firms.  Let’s take a quick look at the text of Section 1641 of the NDAA itself and put the confusion to rest.

Erroneous Statement No. 1:

The SBA is required to create a mentor protege program for all small businesses.

NDAA Text: 

(a) ADMINISTRATION PROGRAM. -

(1) AUTHORITY.  The Administrator is authorized to establish a mentor-protege program for all small business concerns.

Interpretation: 

No law degree is necessary to see what is missing here: a Congressional command, such as “The Administrator shall establish a mentor-protege program for all small business concerns.”

Simply put, nothing in the NDAA requires the SBA to adopt a mentor-protege program; the NDAA merely provides the SBA with authority to do so.

Erroneous Statement No. 2: 

The “required” mentor-protege program must be identical to the 8(a) mentor protege program.

NDAA Text:

(2) MODEL FOR PROGRAM. – The mentor-protege program established under paragraph (1) shall be identical to the mentor-protege program of the Administration for small business concerns that participate in the program under Section 8(a) (as in effect on the date of enactment of this section), except that the Administrator may modify the program to the extent necessary given the types of small business concerns included as proteges.

Interpretation: 

Although the NDAA states that the the 8(a) mentor-protege program shall be the model for a new SBA mentor-protege program, the NDAA states that the SBA “may modify the program to the extent necessary given the types of small business concerns included as proteges.”

In other words, the SBA has significant discretion to vary from the 8(a) mentor-protege model, provided that it justifies its deviations based on the types of small businesses included as proteges.  The bottom line: any new SBA mentor-protege program for all small businesses will not necessarily look the same as the 8(a) mentor-protege program.

Erroneous Statement No. 3:

The SBA must issue proposed regulations adopting a mentor-protege program for all small businesses within 270 days of the NDAA’s enactment.

NDAA Text:

(b) PROGRAMS OF OTHER AGENCIES.—

(1) APPROVAL REQUIRED.—Except as provided in paragraph (4), a Federal department or agency may not carry out a mentor-protege program for small business concerns unless—

(A) the head of the department or agency submits a plan to the Administrator for the program; and

(B) the Administrator approves such plan.

(2) BASIS FOR APPROVAL.—The Administrator shall approve or disapprove a plan submitted under paragraph (1) based on whether the program proposed—

(A) will assist proteges to compete for Federal prime contracts and subcontracts; and (B) complies with the regulations issued under paragraph (3).

(3) REGULATIONS.—Not later than 270 days after the date of enactment of this section, the Administrator shall issue, subject to notice and comment, regulations with respect to mentor-protege programs, which shall ensure that such programs improve the ability of proteges to compete for Federal prime contracts and subcontracts and which shall address, at a minimum, the following . . .

Interpretation:

Yes, the NDAA contains a 270-day mandate, but it applies to mentor-protege programs of other agencies, not the new SBA mentor-protege program authorized by the statute.  As seen in the text, Congress instructed the SBA to create uniform requirements for mentor-protege programs established by other procuring agencies (except the Department of Defense).  It is these regulations that must be issued within 270 days.

All three of the law firm press releases omit any discussion of the “programs of other agencies” portion of the NDAA.  Rather, these law firms appear to have confused Congress’s authorization of a new SBA mentor-protege program with its requirement that the SBA adopt regulations governing mentor-protege programs of non-DoD procuring agencies.

Conclusion

Contrary to authoritative-sounding statements floating around the internet, the 2013 NDAA does not require the SBA to create a mentor-protege program for all small businesses within 270 days, nor does it mandate that such a program be identical to the 8(a) program.  Rather, the SBA is merely authorized to create a mentor-protege program for all small businesses.  Should the SBA elect to create such a mentor-protege program, it is directed to use the SBA 8(a) mentor-protege program as a model, but may deviate from that model.

Finally, you may be wondering: who are the three large law firms?  Out of professional courtesy, I will not identify them here, although a quick Google search may turn up their published statements.  Instead of calling out these law firms by name, I’ll do the opposite, and give kudos to the large firm Jenner & Block, whose informative practice advisory on the NDAA correctly stated, “the NDAA allows but does not require SBA to create a ‘mentor-protege’ program for all small businesses . . ..”

Of course, as regular SmallGovCon readers know, Jenner & Block’s attorneys were not the only lawyers to make this same observation back in January.

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