The All Small Mentor-Protégé Program otherwise known as MPP is designed to provide small businesses with business development assistance and to enhance their ability to successfully compete for federal contracts.
To be eligible to participate in the All Small Mentor-Protege program the protégé must be either a for-profit business or an agricultural cooperative that is considered “small” for the NAICS code in which you are wanting assistance from the Mentor-Protégé relationship. Other requirements:
- Protégé has experience in the NAICS code in which you’re seeking assistance.
- Your Mentor is a for-profit organization and does not own more than 40% equity in your business.
- SBA has not made a determination of affiliation between your business and your proposed Mentor.
- Both Mentor and Protégé have active SAM registrations in SAM.GOV.
The following rules apply to the All Small Mentor-Protégé Program as well:
- The Protégé may only have one Mentor at a time and cannot have more than two mentors across all SBA-administered Mentor-Protégé programs.
- Mentors may have up to three proteges. SBA may authorize a small business to be both a Mentor and a Protégé but only if you can demonstrate that the second relationship won’t compete or conflict with the first Mentor-Protégé relationship.
Types of Assistance
Your Mentor can provide the following SBA-approved assistance:
- Management and technical assistance
- Examples: HR, Accounting Systems, manufacturing assistance, and technology transfers)
- Financial Assistance
- Equity Investments
- Contracting Assistance
- Contract performance
- Joint venture agreements
- Trade Education
- Identifying markets
- Exporting assistance
- Business Development Assistance
- Business planning
- Relationship building
- General and Administrative assistance
- Daily operations
- Capacity building
Benefits of Mentor-Protégé Program
Mentors can help you grow your networks and challenge you in positive ways that will help your business grow and develop. In order to meet the size standards required to get the set-aside, both businesses in the joint venture need to be small. If either one of the businesses are not considered small in the NAICS code of the procurement the joint venture will not qualify to win the small business set-aside. Why not? Well that is because SBA’s rules related to “affiliation” that prohibit non-small businesses from entering into a joint venture to bid on small business set-asides.
The rules are intended to:
- Preclude a small business from leaning too heavily on a larger business in order to win a contract; and
- Protect a small business from being taken advantage of by a larger business.
One of the most tangible benefits of the All Small Mentor-Protégé Program is the ability to receive an “exclusion from affiliation”. This allows a small business to leverage the experience and relationships of a larger more mature company.
The exclusion of affiliation allows a qualifying small business can enter a joint venture agreement with a business of any size. That is, if SBA approves your Mentor-Protégé Agreement, you and your mentor may joint venture for any small business set-aside that you the protégé qualify for, regardless of your Mentor’s size.
In order to be considered for the All Small Mentor-Protégé Program, you need to submit a document called the Mentor-Protégé Agreement (MPA) to SBA. This document is a roadmap for the relationship between you and your Mentor. The Mentor-Protégé Agreement should assess your business development needs, specify how your Mentor will address your needs, and set a developmental timeline for the delivery of assistance that your Mentor commits too.
An MPA may be approved for three years, with an option to renew for another three years. For example, you may have two three-year MPAs with different Mentors, and each may be extended an additional three years provided the Mentor provided the agreed-upon assistance.
The Mentor Protégé Agreement must specifically address the following
- Address how the assistance to be provided will help Protégé meet the goals defined in protégé’s business plan.
- Provide a single point of contact within your Mentor’s organization who will be responsible for managing and implementing the MPA
- State that the Mentor will provide the agreed upon assistance for at least one year.
- Identify how the assistance to be provided differs from any assistance being provided under another Mentor-Protégé relationship (if applicable)
- A statement that either you or your Mentor may terminate the agreement with 30 days’ notice to the other party and to SBA.
- A statement specifying that any changes to the agreement must be made in writing and be approved by SBA in advance.
- Both parties to the MPA must sign and date the agreement.
SBA will not approve the MPA unless SBA can determine that the Mentor-provided assistance will promote real development gains for your business and is not merely a vehicle for the Mentor to receive federal small business set-asides.
How to find a good Mentor?
Mentors can help you grow your networks and challenge you in positive ways. As you look to identify a potential Mentor, it is critical that you do your research. Make sure the potential mentor has a good reputation and are willing and able to coach and mentor you. If you haven’t worked with them before, what do you know about them? If they approached you about a potential Mentor-Protégé relationship, do you know why? Be sure your prospective Mentor is not just looking for access to federal small business set-aside contracts.
I always tell my clients to test out a potential relationship before you go to all the work to establish the Mentor-Protégé Agreement. It is best to work together will a potential mentor to see how well each business interacts with the other. I have found that many businesses will agree to do work together but once money comes into play that they act differently. I have seen this happen with both Mentors and Proteges.
Does your potential mentor have good supplier relationships and what experience do they have working with the federal government? Be clear about what you need from the relationship and be sure it’s reflected in any agreement you work out. Above all, make sure what they are offering matches your needs and that it fits with your growth plan.
Your Mentor must qualify to participate in the All Small Mentor Protégé Program. Below are the qualifications:
- Be able to carry out their responsibilities under the proposed MPA.
- Provide value to you the protégé through imparting practical experience and lessons learned, or through their knowledge of business operations and government contracting.
- Possess good character
Once your Mentor-Protégé Agreement has been approved by SBA, you then can formulate a joint venture agreement to go after set-asides that you the protégé are eligible for. There are three points that the Protégé should be aware of.
- Each joint venture must be separately identified with the appropriate DUNS and CAGE numbers in SAM.gov.
- The entity “Type” in SAM.gov must be identified as a joint venture, with the individual joint venture partners listed.
- All joint venture agreements must be in writing, and you the Protégé must meet the program-specific requirements for the set-aside you are seeking.
While joint venturing is a great opportunity, there are risks that another business will protest your joint venture, and you could lose the bid if your joint venture agreement isn’t written or structure appropriately. Although SBA does not review or approve joint venture agreements, there is statutory guidance that can help you know what should be included.
Joint Venture Agreement must state the following:
- State the purpose of the joint venture
- Designate you (the small business) as the managing venture, and one of your employees as the project manager responsible for the contract.
- State that you the small business must own at least 51 percent of the joint venture entity, and that your business will receive profits from the joint venture that are commensurate with work performed.
- Provide for the establishment and operation of a special bank account in the name of the joint venture that’s signed by all parties.
- Itemize all major equipment, facilities, and resources to be furnished by each party.
- Specify each party’s responsibilities with regard to contract negotiations, labor sourcing, and contract performance.
- Obligate all parties to ensure that the contract is performed, regardless of whether one party withdraws from the agreements
- Designate that the managing venturer is responsible for maintaining accounting and administrative records and require that they (managing Venturer) keep all original records of the joint venture once the contract is completed.
- State that all quarterly financial statements showing cumulative contract receipts and expenditures be submitted to SBA within 45 days of the end of each operating quarter of the joint venture.
For additional guidance please review the Code of Federal Regulations otherwise known as CFR.
Applying to the All Small Mentor-Protégé Program.
If you meet the preliminary criteria and are ready to apply to the program you will need to gather the following:
- Certificate of Completion from SBA website on All Small Mentor-Protégé Program
- Electronic Documents
- Protégé’s completed business plan
- Any active Mentor-Protégé Agreements (MPA) you have with either SBA or another federal agency.
- An SBA size redetermination letter if SBA has ever found you to be “other than small” in the NAICS code in which you’re requesting business development assistance.
- The proposed Mentor-Protégé Agreement.
Now that you have gathered these materials you need to ensure that your SAM.gov registration has the NAICS code listed under your profile that you are requesting business development assistance. This is a very important step and SBA cannot approve any Mentor Protégé Agreements if the requested NAICS code is not listed as either your primary or secondary.
If you need to add or revise the codes in SAM please make sure to do so and wait at least 24 hours before entering that information into your Mentor Protégé program application to make sure the information has been updated. Finally, you will need to know your Mentor’s DUNS number.
Now that you are ready to apply you will need to complete an online application through SBA’s certify.sba.gov system. When you enter the site, you will be asked a series of questions to determine your program eligibility. There will also be prompts asking you to upload electronic copies of all required documents.
Once you have uploaded and completed the application you need to wait to hear from SBA. Unfortunately, I do not have any way to know the length of time that it is taking to process these applications.
- SBA’s All Small Mentor-Protégé Program Course: https://www.sba.gov/course/all-small-mentor-protege-program/#course-content
- Joint Venture Requirements
- All Small Mentor-Protégé Electronic Application (certify.sba.gov) https://certify.sba.gov/
- NAICS Code Listing