New Consolidation of SBA Mentor/Protege Programs & Elimination of 3 in 2 Rule on JVs

SBA has eliminated the “Three-In-Two” Rule.  They have also combined the 8(a) Mentor/Protege Program with the  “All Small Mentor/Protege program”. Plus more

Three-In-Two Rule Eliminated

On November 16, 2020, changes to the rules related to affiliation and the 8(a) BD Program. Let’s start with the “Three-in-Two” rule, which SBA has changed.  Previously, joint ventures could only perform three contracts within a two year period. If you violated that rule, you ran the SBA risk of finding the joint venture partners affiliated (13CFR121.103).  The new rule eliminates the number of contracts. However, SBA is still limiting the joint venture to two years.

Changes to 8(a) Joint Ventures

Another change made to 8(a) joint ventures is that you no longer need to seek prior approval of a competitively bid 8(a) contracts award.  However, if bidding on 8(a) sole-source contracts, then SBA approval is still required.

 Why the Changes?

The changes will consolidate the mentor/protégé programs to reduce redundancy and confusion between these two programs.  It also lessens the administrative burden of SBA. The MPA Program will continue to operate normally. All 8(a) MPA agreements will be transferred to the All-Small Program. 8(a) participants will continue working with their local SBA office. The only exception will be the administration of their MPA, which will reside with the All-Small Program office.

Other Changes

SBA also made other changes to the 8(a) BD program related to Alaska Native Corporations (ANCs) and tribes.  ANC/tribes electing to reorganize an 8a participant’s ownership by changing a wholly-owned intermediary company between the ANC.tribe and 8a company can do so without SBA approval.  This makes sense since the 8(a) participant’s ownership is not changing, just the holding company.

My Others

It is about time that these changes were made to these programs.  It was always confusing to 8(a) companies on the difference between the two Mentor/Protégé programs.  I agree with reducing the burdens already placed on Business Development Specialists.  They walk a fine line trying to serve the 8(a) participants and ensure the 8(a) programs’ integrity.

It is about time that SBA made these changes. The “Three-in-Two Rule,” I felt the lesson. Regarding the “Three-In-Two” rule, I have to say this is how the rule should have been written originally.  This rule forced Joint Venturers to only bid on a few contracts to bid on more without worrying about the affiliation.   All I can say it is about TIME!!!!

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