The SBA’s Mentor-Protege Program (MPP) continues to be one of the most popular programs at the SBA. The MPP is a great way for federal contractors to grow and learn from more experienced contractors, in a way that is shielded from size affiliation risks. Historically, the Mentor-Protege Agreement (MPA) between a mentor and protege was a flexible document that allowed the parties to make sure their participation in the program truly fit their processes and aims in their own words. However, in recent years the SBA’s MPA reviews have seemingly taken stricter stances on the format and content of the MPA, leading to confusion among contractors on what they are supposed to draft in their MPA. Recently, we have become aware of the SBA implementing more requirements on MPAs that contractors are not warned about prior to applying to the MPP.
If you look into our past posts on MPAs and the SBA MPP you will see a post from a little under two years ago discussing how SBA was becoming quite strict on usage of their specific MPA template language without justification under the regulations. Unfortunately, SBA is still quite strict on usage of specific language found in its MPA template posted online, and now is adding even more hurdles to contractors drafting their MPAs. Specifically, SBA seemingly now requires that specific numbers of hours be listed for each item of assistance in the MPA, and in some cases is requiring a specific table to be utilized for the assistance section of the MPA.
The SBA’s MPP regulation states that the Mentor and Protege “must enter a written agreement setting forth an assessment of the protégé’s needs and providing a detailed description and timeline for the delivery of the assistance the mentor commits to provide to address those needs.” Further the MPA must:
- “Specifically identify the business development assistance to be provided and address how the assistance will help the protégé enhance its growth and/or foster or acquire needed capabilities”‘;
- “Identify the specific entity or entities that will provide assistance to or participate in joint ventures with the protégé where the mentor is a parent or subsidiary concern”;
- “Establish a single point of contact in the mentor concern who is responsible for managing and implementing the mentor-protégé agreement”; and
- “Provide that the mentor will provide such assistance to the protégé firm for at least one year.”
As you may notice, the regulation itself does not put strict requirements on the form or format of the MPA, and does not discuss listing within the the MPA the specific hours for each item of assistance. However, the regulation does discuss that when the SBA is evaluating the mentor protege relationship “[t]he protege must report the mentoring services it receives by category and hours.” Notably this discussion of hours is not in the section of the regulation laying out the requirements for the MPA.
It has come to our attention that the SBA is apparently now asking that for each assistance item noted, the mentor and protege specifically state how many hours they anticipate committing to the assistance. Of course this conjecture of time can be quite difficult for contractors to determine, especially multiple years in advance.
The current MPA template online in the assistance section does state: “For each of the assessed needs addressed in the paragraph above, the Protégé must describe in detail: WHAT specifically will the mentor do to meet your need, WHEN (detailed timelines or number of hours in annual increments) the assistance will be provided, and HOW you will measure whether each of your needs have been successfully met and HOW the assistance will help the protégé enhance its growth and/or foster or acquire needed capabilities, as per 13 C.F.R. §125.9.” (emphasis added). So it would seem that SBA’s MPA reviewers are taking the requirement to discuss hours spent in the relationship evaluation section the regulation, and the template mentioning hours, as strict requirements to list hours.
The MPA template currently found online also does not dictate the format of the assistance section of the MPA. Rather, it discusses the substantive parts of assistance (i.e., types or categories of assistance, and the “WHAT, WHEN, HOW, and HOW”). There is seemingly no specific requirement for a specific table to be utilized in the assistance section of the MPA. And the SBA does provide specific tables in the MPA for other sections. So, there is little reason for the SBA to omit a table it sees as necessary from the MPA template in one section and not the others. Despite this, we have anecdotal reports that SBA has been expressing preference for tables in the assistance section of the MPA, or usage of a specific table it provides in follow-ups with contractors for the assistance section of the MPA.
Neither of these new apparent “requirements” are discussed on SBA’s website or guidance.
There is an old saying that “consistency is key.” So it is understandable that SBA may want a specific format and substance to its MPAs to help streamline the review process. That is of course the reason for the regulations, and the MPA template itself. But that brings me to another saying, this time from Jerry Maguire, “help me help you.” Contractors can’t be expected to be consistent if they don’t have clear steady guidelines from the SBA. The SBA has not given warning to contractors of all of the requirements it has that are not listed in the regulation as an actual requirement for the MPA itself.
Contractors need to be aware of SBA’s additional MPA expectations as explained in our blog almost two years ago and the new ones discussed here. If contractors miss out on these, it will add more time and effort to the MPA process, as they must deal with SBA’s follow up questions; instead of starting out from the beginning with an MPA which contains SBA’s unwritten requirements. So, keep these items in mind as you look at creating an MPA, and if you are working on a MPA, make sure to reach out to federal legal counsel, such as ourselves, who can help efficiently draft your MPA agreement with SBA’s unwritten rules in mind, or risk more headaches and edits during the MPP application process.
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