PilieroMazza Summarizes SBA’s Final Rule on
Mentor-Protégé Programs
October 16, 2020

1. Mentor-Protégé Program Limitations and Requirements

The final rule:

• Eliminates the 8(a) Mentor-Protégé Program.
• Eliminates the reconsideration process for declined mentor-protégé agreements.
• Does not limit the size of mentor firms, and allows 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.
• 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.”
• Provides that mentors who provide subcontracts to protégés with a principal office in Puerto Rico may (a) receive “positive consideration” for the mentor’s past performance evaluation and (b) apply costs incurred for providing training to such protégé towards the subcontracting goals in the mentor’s subcontracting plan.
• Does not count mentor-protégé relationships terminated within 18 months of SBA approval of the mentor-protégé agreement against the protégé firm’s two-mentor lifetime limit.
• Allows SBA to determine that a protégé has exhausted its participation in the mentor-protégé program if the protégé shows a consistent pattern of terminating mentor-protégé agreements within the first 18 months, and therefore SBA may not approve additional mentor-protégé relationships for that protégé.
• Requires 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.

1. Use of Secondary NAICS Code for Mentor-Protégé Program

The final rule:

• Clarifies that a concern need not be “other than small” under its primary NAICS code to qualify as a protégé under a secondary NAICS code, but instead must show how the mentor-protégé relationship will help it further develop or expand its current capabilities in that secondary NAICS code.
• Provides that SBA may approve a mentor-protégé relationship under a concern’s secondary NAICS code where the small business concern can demonstrate that it has performed work in one or more similar NAICS codes or where the NAICS code in which the small business concern seeks a mentor-protégé relationship is a logical business progression to work previously performed by the concern—but, SBA will not approve a mentor-protégé relationship in a secondary NAICS code in which the small business concern has no prior experience.