DoD Proposes Making Its Mentor-Protégé Program Permanent
by Alan Chvotkin, Partner
For decades, the Department of Defense has had its own mentor-protégé program, based on a pilot legislative program created by Congress during the Gulf War. DoD’s Mentor-Protégé Program is the oldest continuously operating federal mentor-protégé program in existence. The DoD program preceded the creation of multiple agency mentor-protégé programs, including the Small Business Administration’s 8(a) mentor-protégé program. The 8(a) and All Small Mentor-Protégé programs officially merged into the new SBA Mentor Protégé Program (SBA MPP) on November 16, 2020.
While there are significant similarities between the DoD statutory program and the non-defense SBA MPP program, there are also significant differences. For example, DoD’s program eligibility extends to a small business concern that (i) is a nontraditional defense contractor; or (ii) currently provides goods or services in the private sector that are critical to enhancing the capabilities of the defense supplier base and fulfilling key Department of Defense needs. In addition, while the SBA MPP program is only able to offer a mentor participating the program “credit” against their Small Disadvantaged Business (SDB) subcontracting goal based on the cost of developmental assistance provided to a protégé, under the DoD Program, the mentor may receive a direct reimbursement for allowable costs of developmental assistance provided to a protégé.
Congress had regularly reauthorized the DoD Program through periodic extensions of the applicable sunset date. However, in Section 856 of the Fiscal Year 2023 National Defense Authorization Act, Congress made the DoD Program permanent. On October 25, the Defense Department issued a proposed rule to update the DFARS coverage on the DoD Program to make it permanent and make other useful as well as conforming changes.
In Fiscal Year 2022, the DoD Program had 29 new mentor-protégé agreements, with 62 active agreements. In Fiscal year 2023, there were 25 new agreements and 75 active agreements.
Under the DoD proposed rule, in addition to making the DoD Program permanent, the rule:
Extends the term for program participation from two years to three years;
Removes the term limitation for mentors to incur costs under agreements entered into after December 23, 2022, but does not modify the term limitation for agreements entered into prior to December 23, 2022.
Expands the pool for mentor eligibility by reducing the dollar threshold from $100 million to $25 million;
Removes the specific dates for mentor reimbursement and credit towards subcontracting goals under agreements entered into after December 23, 2022; and
Expands the types of development assistance that a mentor may provide.
The number of new agreements being entered into under the DoD Program is declining, likely in part due to the expansion of the governmentwide All Small Mentor Protégé Program. In addition, the direct reimbursement to the mentor for allowable costs for developmental assistance has always been an underutilized benefit.
Nevertheless, the DoD program remains a flagship program and Congress was wise to make it permanent. Hopefully this DoD proposed rule will be quickly adopted as final so the full range of benefits to those who want to continue under the DoD Program can be realized.
At Centre Law, we help our clients leverage the advantages of the DoD and All Small mentor protégé programs to benefit small businesses and contract performance. If you have any questions, please contact the author or the Centre Law Group attorney with whom you normally work.