The Department of Energy’s Office of Inspector General has concluded that the agency’s mentor-protege program requires improvements to maximize benefits for eligible small business proteges.
In a new audit report, the DOE OIG states that it discovered various weaknesses in DOE’s management of its mentor-protege program, including allowing graduated firms to participate as proteges for a second time.
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An Alabama-based construction company has agreed to pay more than a million dollars to settle allegations that it violated the False Claims Act by fraudulently representing that it was mentoring a minority-owned small business under the Department of Defense’s mentor-protege program.
The settlement puts to rest the Justice Department’s False Claims Act contention that the contractor used its so-called “protege” as little more than a pass-through entity and failed to provide real mentoring services to the small business.
Can an SBA 8(a) program mentor and protege be affiliated, notwithstanding their 8(a) mentor-protege arrangement, if the firms engage in extensive employee sharing?
Maybe.
In a recent decision, the SBA Office of Hearings and Appeals suggested that extensive employee sharing between an 8(a) protege and its mentor might be outside the bounds of protected “assistance” under the 8(a) mentor-protege program. And in the same case, SBA OHA raised an interesting question: does a mentor-protege relationship protect the mentor from affiliation, as well as the protege?
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.
The SBA 8(a) mentor-protege affiliation “shield” does not prevent a mentor and protege from being affiliated under the so-called ostensible subcontractor rule, according to a recent decision of the SBA Office of Hearings and Appeals.
In Size Appeal of InGenesis, Inc., SBA No. SIZ-5436 (2013), SBA OHA held that the broad exception from affiliation for 8(a) proteges and their mentors does not prevent the SBA from deeming the companies affiliated under the ostensible subcontractor rule.
Congress has authorized the SBA to create a mentor-protege program for all small businesses, not just socioeconomically disadvantaged companies.
This major change was included in the 2013 National Defense Authorization Act and signed into law by President Obama on January 3. The 2013 NDAA also addresses the recent proliferation of agency mentor-protege programs (and, by extension, the SBA’s refusal to acknowledge an exception from affiliation for participants in most other agencies’ mentor-protege programs) by requiring most procuring agencies to obtain SBA approval for their mentor-protege programs.