Gloria Larkin

In November, the Small Business Administration’s (SBA) final rule (85 Fed. Reg. 66146) took effect to eliminate a separate 8(a) Mentor Protégé Program in favor of consolidating it in the All-Small Mentor-Protégé Program (ASMPP.)

The intent is to satisfy the Executive Order 13771 issued in 2017, “Reducing Regulation and Controlling Regulatory Costs.”

In response to President Trump’s directive to simplify regulations, the SBA initiated a review of its regulations to determine which might be revised or eliminated.

In 2019, SBA published in the Federal Register a comprehensive proposal to merge the 8(a) Business Development (BD) Mentor-Protégé Program and the All-Small Mentor-Protégé Program to eliminate confusion and remove unnecessary duplication of functions within SBA.

As is normal practice, the SBA invited public comments to the proposed rules, allowing a 91-day period ending Feb. 7, 2020, to make such comments. The resulting final rule incorporated a series of changes to the original 8(a) mentor-protégé program, originally established in 1998.

In addition to merging the 8(a) mentor-protégé program with the ASMPP, the rule incorporated changes to eliminate the reconsideration process for declined mentor-protégé agreements. It does not limit the size of mentor firms and does allow any business entity to act as a mentor, regardless of size, as long as that entity demonstrates both commitment and ability to assist small business concerns.

It does require a protégé to provide “honest assessments” of its mentor’s performance to SBA during each annual review, allows a protégé to request SBA to intervene with an underperforming mentor on the protégé’s behalf, and allows SBA to terminate the mentor-protégé relationship or replace the underperforming mentor with a new mentor if the mentor does not overcome the protégé’s allegations of poor performance.

The new rule further provides that while a mentor cannot generally have more than three protégés at one time, “the first two mentor-protégé relationships approved by SBA between a specific mentor and a small business that has its principal office in Puerto Rico do not count against the limit of three protégés that a mentor can have at one time.”

Other changes to the 8(a) Program involve immediate family member eligibility where instead of requiring no connections at all for immediate family members to be eligible to apply to the 8(a) Program, immediate family member restriction apply in instances where there is common ownership or management, regardless of amount or position, or where the companies share facilities or have a contractual relationship that was not conducted at arm’s length.

Family members applying to the 8(a) Program in the same primary NAICS code are now allowed to have gained the required management or technical experience in that primary NAICS code by working for an immediate family member’s current or former 8(a) Participant and removes the presumption against granting an application when the NAICS codes are the same for the new applicant and the family member.

And it clarifies that SBA will continue to determine whether ownership, management, and facilities remain separate as part of the 8(a) annual review and that SBA would not initiate

termination proceedings if the firms enter into fair market value contracts after the second firm is admitted to the 8(a) Program.

The new SBA rule addresses other significant changes regarding multiple-award contracts, joint-ventures, technical issues in the 8(a) Program and other contracting issues. Complete details can be found here:

Gloria Larkin is president and CEO of TargetGov and a national expert in business development in the government markets. Email [email protected].