Many SBA programs and offerings have their origins in other agencies or parts of the federal government. Contractors who do not work with the DoD might be surprised to learn that the DoD’s own Mentor-Protégé Program is in fact the oldest continuously operating mentor-protégé program, dating back to the First Gulf War. Recently, this program received some updates, one of which will greatly expand the pool of eligible proteges. Let’s take a look at these changes in more detail.
Back in February 2022, the DoD proposed a number of changes to its Mentor-Protégé Program (DoD MPP) in order to implement section 872 of the National Defense Authorization Act for Fiscal Year 2020. That part of the act reauthorized the DoD MPP, but as part of that authorization wanted to see some changes made to how it operates. The goal of these changes is to make the program more expansive.
The most impactful change that the rule will bring about concerns eligibility for proteges. Prior to this rule coming into effect, the DoD MPP limited protégé eligibility to small business concerns whose size was less than half the SBA’s size standard for the applicable primary NAICS code. This unusual requirement severely limited the pool of potential protégés under the program. The rule removes this oddity: So long as a company meets the SBA’s applicable size standard, it is eligible to be a protégé if it meets the other eligibility requirements.
Some of the changes are fairly straightforward. For starters, the program is reauthorized so that eligible companies can enter into a mentor-protégé agreement under the program until September 30, 2024. Another change is that the program participation term will change when this rule becomes effective. Previously, the program participation term for a mentor-protégé agreement was three years, although the parties could request an extension of up to two additional years for five years in total if they showed justification for such an extension. Now, the program participation term is two years, and the parties may request an extension of up to three years for a maximum term of five years provided they can justify it.
Some other rules are more peculiar to the program itself. For example, the DoD MPP provides for mentors to apply for such reimbursement for developmental assistance costs, or at least it did, but that part of the program had expired on September 30, 2021. The new rule extends the date for mentor reimbursement for developmental assistance costs incurred under the program to September 30, 2026. Similarly, the rule extends the date for the mentor to use developmental assistance costs as credit towards subcontracting goals in its small business subcontracting plan from September 30, 2021, to September 30, 2026.
We think these changes will be greatly helpful to all parties with an interest in the DoD MPP. Particularly, the old “half the size standard” rule was a very arbitrary and needless limitation that held the DoD MPP back without any real benefit to small companies. The SBA size standards exist for the reason of determining what is and is not a small business to the government, and it was odd to simply apply an absolute standard of “half the SBA standard” regardless of industry, considering that each industry is unique in its makeup. This is good news for the government contractor.
Questions about this post? Email us.
Need legal assistance? Give us a call at 785-200-8919.