The revised 8(a) program regulations adopted in March 2011 contained so many significant changes that some of them seem to have gotten lost in the shuffle. One of these unheralded changes allows a joint venture comprised of an 8(a) mentor firm and its SBA-approved protégé to joint venture as a small business for federal subcontracts. It’s a major change because under the old rule, SBA 8(a) mentor-protege joint ventures could only joint venture as “small” for prime contracts.
So, why aren’t more 8(a) firms taking advantage of this new mentor-protege joint venturing capability?
If your company is in the 8(a) program, think of the competitive advantages this new exemption from affiliation provides. After all, large prime contractors are always on the lookout for viable small business subcontractors in order to meet their small business subcontracting goals. As a mentor-protégé joint venture, your 8(a) company and its mentor can approach large primes with a very tempting proposition: small business subcontracting credit for subcontracting to your mentor-protégé joint venture, even if your mentor happens to be a large company itself (and many mentors are!)
In other words, just like the federal government, a large prime contractor can experience the best of both worlds by subcontracting to an 8(a) mentor-protégé joint venture. It can take small business credit for the subcontract award, while having the peace of mind that comes with knowing that the joint venture is backed by the experience, qualifications, and resources of the mentor firm. It’s a win-win all around.
Perhaps because this shift in the regulations didn’t make many headlines, I haven’t seen a lot of 8(a) mentor-protégé joint ventures going after subcontracting opportunities with large businesses. The lack of much competition from other 8(a) mentor-protégé joint ventures (unlike, in many cases, at the prime contracting level) is all the more reason for 8(a) companies to consider using their mentor-protégé joint ventures to pursue subcontracting opportunities with large businesses.