As PilieroMazza has been reporting, the Small Business Administration (SBA) recently issued a final rule updating and clarifying many regulations that impact small businesses. The revised regulations cover a wide range of programs, including the SBA’s Mentor-Protégé Program. One clarification addresses how agencies should credit the past performance and experience of protégés when bidding as part of a joint venture with its mentor. The rule seeks to clarify the extent to which an agency may require a protégé to submit past performance and/or experience information. Below, PilieroMazza discusses the Mentor-Protégé Program and how the SBA has clarified the rule surrounding past performance and experience.
The Exception for Mentor-Protégé Joint Ventures
The Mentor-Protégé Program allows approved mentors (typically large businesses) to joint venture with small businesses, including firms in preferential procurement programs, to compete on set-asides for which the SBA-approved protégé is eligible. Over the last few years, there have been many challenges on how these joint ventures should be evaluated when bidding on a contract. In the final rule, the SBA provides specific guidance to agencies on how to evaluate the past performance and experience of such mentor-protégé joint ventures. Because the intent of the Mentor-Protégé Program is to enhance the capabilities of the protégé partner, the SBA recognizes such protégés alone may not have the necessary past performance or experience to successfully compete for larger contracts. To further the goals of the program, the SBA created an exception where agencies may not require the protégé partner alone to meet the same evaluation or responsibility criteria as required by other offerors generally. However, this exception does not require every competition to include special evaluation criteria for protégés, and SBA has clarified this in the final rule. The joint venture, in the aggregate, must still demonstrate the past performance, experience, business systems, and certifications necessary to perform.
So, What CAN Agencies Require?
In the recent final rule, the SBA sought to clarify what an agency could require of a protégé partner. The SBA broadly notes that if an agency requires past performance and/or experience of a protégé partner, it must be at a reduced level compared to what is required of other offerors. An example is now provided to assist agencies in determining how to apply the exception. For example, where offerors must demonstrate successful performance on five contracts with a value of at least $20 Million, an agency could require a protégé partner to demonstrate one or two contracts valued at $10 Million or $8 Million. Additionally, if the agency requires a protégé to demonstrate successful performance on two contracts valued at $10 Million or more, successful performance by the protégé firm on those $10 Million contracts must be rated equivalently to a successful performance by the mentor partner to the joint venture or any other individual offeror on contracts valued at $20 Million.
The SBA notes that agencies have the discretion, as they have in the past, to require some level of past performance and/or experience of the protégé in the joint venture. While recognizing the discretion afforded to procuring agencies, the new regulation, if followed, should ensure that agencies do not require the same level of past performance and experience of protégés when bidding as part of a mentor-protégé joint venture as they do of other offerors generally. The final rule also clarifies that agencies may rely solely on the past performance and/or experience of the mentor or non-similarly situated joint venture ventures.
The final rule goes into effect on January 16, 2025, and will apply to existing and new procurements. If you have questions about the SBA’s final rule and how it may impact your business, please contact Tony Franco, Meghan Leemon, or another member of PilieroMazza’s Government Contracts Group. Special thanks to Krissy Cralle for her assistance with this client alert.
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