CRS Report: Small Business Mentor-Protégé Programs (Updated 1/7/19)

By: Christine V. Williams on 01/24/2019

Summary from Congressional Research Service

Mentor-protégé programs typically seek to pair new businesses with more experienced businesses in mutually beneficial relationships. Protégés may receive financial, technical, or management assistance from mentors in obtaining and performing federal contracts or subcontracts, or serving as suppliers under such contracts or subcontracts. Mentors may receive credit toward subcontracting goals, reimbursement of certain expenses, or other incentives.

The federal government currently has several mentor-protégé programs to assist small businesses in various ways. For example, the 8(a) Mentor-Protégé Program is a government-wide program designed to assist small businesses “owned and controlled by socially and economically disadvantaged individuals” participating in the Small Business Administration’s (SBA’s) Minority Small Business and Capital Ownership Development Program (commonly known as the 8(a) program) in obtaining and performing federal contracts. Toward that end, mentors may (1) form joint ventures with protégés that are eligible to perform federal contracts set aside for small businesses; (2) make certain equity investments in protégé firms; (3) lend or subcontract to protégé firms; and (4) provide technical or management assistance to their protégés. The Department of Defense (DOD) Mentor-Protégé Program, in contrast, is agency-specific. It is designed to assist various types of small businesses and other entities in obtaining and performing DOD subcontracts and serving as suppliers on DOD contracts. Mentors may (1) make advance or progress payments to their protégés that DOD reimburses; (2) award subcontracts to their protégés on a noncompetitive basis when they would not otherwise be able to do so; (3) lend money to or make investments in protégé firms; and (4) provide or arrange for other assistance.

Other agencies also have agency-specific mentor-protégé programs designed to assist various types of small businesses or other entities in obtaining and performing subcontracts under agency prime contracts. The Department of Homeland Security (DHS), for example, has a mentor-protégé program wherein mentors may provide protégés with rent-free use of facilities or equipment, temporary personnel for training, property, loans, or other assistance. Because these programs are not based in statute, unlike the SBA and DOD programs, they generally rely upon preexisting authorities (e.g., authorizing use of evaluation factors) or publicity to incentivize mentor participation. See Table A-1 for a summary comparison.

P.L. 111-240, the Small Business Jobs Act of 2010, authorized the SBA to establish mentor-protégé programs for small businesses owned and controlled by service-disabled veterans, small businesses owned and controlled by women, and small businesses located in a HUBZone. P.L. 112-239, the National Defense Authorization Act for Fiscal Year 2013, authorized the SBA to establish a mentor-protégé program for all small businesses, and generally prohibits agencies from carrying out mentor-protégé programs that have not been approved by the SBA.

Based on the authority provided by these two laws, the SBA published a final rule in the Federal Register on July 25, 2016, modifying the 8(a) Mentor-Protégé Program and establishing, effective August 24, 2016, “a government-wide mentor-protégé program for all small business concerns, consistent with the SBA’s mentor-protégé program for participants in the SBA’s 8(a) Business Development program.” The all small business Mentor-Protégé Program began accepting applications on October 1, 2016.

The SBA noted in the final rule that because the new all small business mentor-protégé program applies to all federal small business contracts and federal agencies, “conceivably other agency specific mentor-protégé programs would not be needed.” Since then, several federal agencies have ended their mentor-protégé programs and encouraged interested parties to consider the SBA’s all small business Mentor-Protégé program.  CRS Report on Small Business Mentor Protégé Programs Updated January 2019