SBA has indicated that it will be holding a tribal consultation meeting in June. Among the topics to be discussed will be the 8(a) Program and SBA Mentor-Protege Program and joint ventures. This request is interesting because it reveals a little bit about what the SBA is thinking with regards to the Mentor-Protégé Program and joint venture issues. While it is especially relevant for entity-owned 8(a) Program firms, it is also revealing for other small businesses.

Here are a few key components from the SBA’s notice.

SBA stated that it “has found that certain practices may be negatively impacting entity-owned firms’ ability to receive awards. For example, contracting officers may consider entity-owned firms to be affiliated with each other when several appear on the same webpage.” This comments seems to implicate the exception to affiliation for common ownership, management, and common administrative services that applies to tribal and ANC entities. As we discussed here, this affiliation exception is quite broad under SBA’s case law. Although “other factors” may still lead to affiliation between tribal companies, those other factors must be unrelated to common ownership and management–if such a thing is possible.

Here is what SBA had to say regarding joint ventures:

SBA is interested in receiving comments and input on whether protégé firms can truly direct and manage mentor firms when performing a joint venture mentor-protégé joint venture project. It has come to SBA’s attention that some mentors that have pre-existing relationships with certain procuring agencies do not include protégé firms in critical meetings with those agencies, despite the protege being the project manager of the joint venture. SBA believes that this is contrary to the intent of the mentor-protégé program.

Here, SBA is specifically concerned with mentors in joint venture arrangements that have too much power or influence with the contracting agency. This could lead to proteges being excluded from meetings. SBA’s concern is quite specific. While this is an 8(a) notice for consultation with tribal entities, this same power dynamic does come up in other types of small business joint ventures.

In our experience, SBA is reluctant to get involved in joint venture administration and contract performance issues. This notice could signal a change in SBA’s approach. Perhaps SBA will be more willing to get involved in discussions or disagreements between mentors and proteges.

These are important concerns and it’s good that SBA is examining them. It’s unclear, though, what SBA will do with this information. I imagine a proposed rule could be under consideration that puts a little more scrutiny on mentor-protege firms. That might be helpful for SBA to be more active in monitoring and working with mentors and proteges. We will keep a close eye on this inquiry by SBA, and will be sure to update our readers with any updates.

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