Bruce Borup: Mentor Protege Agreements
Bruce Borup has contributed to the growth and advancement of startups and multimillion dollar firms alike, earning him the number one spot in INC 500’s list of the fastest growing defense contractors in 2007. In this article, Bruce Borup will explain some of the issues involved with Mentor Protege Agreements.
MENTOR PROTÉGÉ AGREEMENTS
The only way for an 8(a) to enter a Joint Venture with a large business is through an SBA-approved Mentor Protégé Agreement (MPA). This MPA must be approved by the SBA prior to the submission of any JV offer as a small business. Due to the serious risk of potential affiliation with a large business that could possibly jeopardize all Tribal 8(a) operations if an MPA is not constructed correctly, all Tribal subsidiaries should have prospective MPA’s approved by both the 8(a) subsidiary Board and the Tribal S17 Holding Company Board of Directors before their submission to the SBA. Mentors to 8(a) firms must provide technical and management assistance, financial assistance, subcontract support, and assistance in performing as a prime. In fact, if the SBA determines that a Mentor entered into a MPA solely for the purposes of obtaining JV contracts, the SBA may initiate debarment procedures against the Mentor and possibly against the Protégé.
The MPA must specifically address how the assistance provided by the Mentor will assist the Protégé in meeting the goals it has stated in its business plan (13CFR124.520(e)(l)(i)). Joint Ventures with large businesses pursuant to a Mentor Protégé Agreement must follow the SBA regulations set out in 13 CFR 124.513 (c), (d) for Joint Ventures ((13 CFR 121.103 (h) (3) (iii)). New regulations also allow MPA’s to be considered small in order to meet federal subcontracting goals.
In order for the MPA to be approved, the 8(a) firm must still be in the developmental stage of the 8(a) BD program, or have never received an 8(a) contract, or have a size of less than half the size standard for a small business based on its primary NAICS code. A Protégé will not be eligible if it is in the last six months of the 8(a) program. The 8(a) must be in good standing in the 8(a) program and be current with all reporting requirements. 8(a) firms may have up to two Mentors at a time (13CFR124.520(c)(3)).
Bruce Borup states that, in order for a Mentor to be approved, the Mentor must have excellent capabilities to assist the 8(a) protégé and must make a commitment for at least one year. The prospective Mentor must be in excellent financial health, with a stable track record of profitability for at least two years. The prospective Mentor must be in good standing as a federal contractor and be able to provide valuable support to the 8(a) firm. A Mentor may have no more than three Protégés (13CFR124.502(b)(2)). New regulations now allow non-profit organizations to act as Mentors (13CFR 124.520(b)).
Bruce Borup emphasizes that this article and this website is meant to be educational in nature and not legal advice. Readers should discuss MPA’s with their own attorneys.
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