On July 25, 2016, the U.S. Small Business Administration (SBA) issued a final rule to amend its regulations and implement provisions of the Small Business Jobs Act of 2010 and the National Defense Authorization Act for Fiscal Year 2013. The new rule was effective August 24, 2016.
Based on authorities in these two statutes, the rule (1) establishes a government-wide mentor-protégé program for all small business concerns; (2) makes minor changes to the mentor-protégé provisions for the 8(a) BD program to ensure rules for each of the programs are as consistent as possible; (3) amends the current joint venture provisions to clarify the conditions for creating and operating joint venture partnerships;
So, this final rule will create a mentor-protégé program similar to the 8(a) BD mentor-protégé program for all small business concerns. SBA proposed one program for all small businesses because they believed it would be easier for the small business and acquisition communities to use and understand. Based on comments received when the proposed rule was published, the SBA considered rolling the 8(a) BD mentor-protégé program into the small business mentor-protégé program; however, after considering all the comments, they decided to keep the 8(a) BD mentor-protégé program as a separate program. SBA stated that the 8(a) BD mentor-protégé program has independently operated successfully for a number of years and serves important business development purposes that need to continue to be coordinated through SBA’s Office of Business Development. As a result, this final rule makes no changes as to how Mentor-Protégé Agreements (MPAs) are processed for the 8(a) BD program.
In addition, the final rule revises the joint venture provisions for SDVOSBs, HUBZone SBs), and WOSB and Economically Disadvantaged Women-Owned Small Business (EDWOSB) concerns to better align those requirements to the requirements of the 8(a) BD program. The rule also adds a new section to specify requirements for joint ventures between small business protégé firms and their mentors.
The rule also makes several additional changes to current size standards, 8(a) BD and HUBZone regulations that are needed to clarify certain provisions or correct interpretations of the regulations that were inconsistent with SBA’s intent.
So overall, this is good news for small businesses. 8(a) firms have been benefitting from mentor-protégé programs for many years and now all small businesses can do the same thing.