Intent: The government wants experienced contractors to work with smalls and impart knowledge to help those small businesses succeed
Program structure: If a small and a larger business want to establish a mentor-protege relationship they submit an application to the SBA, and the SBA can approve the application
Joint ventures: The mentor protege program allows a large and a small business to work more closely together than they could ordinarily by creating a JV (which is a new legal entity) to pursue contracts.
Benefits to the small business
Mentorship: The intent and primary benefit to the small is the opportunity to be mentored by the larger co
Access to larger contracts: Typically small businesses struggle to finance and staff larger contracts. But the mentor can bring their financial and staffing power to bear and allow the JV to take on bigger work
Access to proposal and administrative services: If two businesses work too closely then they may be found to be “Affiliated.” If two companies are found to be affiliated then they are viewed as a single entity for the purpose of size assessment (e.g. if the two businesses together exceed the small business size threshold then they may not be able to bid on small business set-aside work). However, if the two are mentor-protege the two companies can work more closely together without having to worry about Affiliation.
Benefits to the larger business
Access to set-aside work: A large business can not bid on small business set-aside work, however, the JV inherits the set-asides and small business status of the small allowing the large to effectively bid set-aside contracts
Larger workshare: As a rule a sub-contractor can only do up to 49% of the work on a contract. However, under a mentor-protege JV the large can take up to 60% of the work.
Can take an equity stake in the small:
What this means for you
Build relationships: The key to getting a sole-source is building a trust based relationship with a customer and making a compelling case that you can provide unique value to that customer
Rants and Reflections
My unscripted thoughts after coaching hundreds of small government contractors over the last 10 years