Wednesday, February 11, 2009

Mentor-Protégé Relationships

Adapted from the D2DInc e-Newsletter


A Mentor-Protégé relationship can be mutually beneficial to large and small businesses because it expands the resources and opportunities available to small businesses and provides a unique tutoring experience to large companies and establishes a reliable relationship with the small business. A Mentor-Protégé relationship can help improve the performance of small businesses on contracts and subcontracts with government agencies.

Mentor-protégé agreements can be mutually beneficial as long as both parties are clear on the objectives of the relationship. Each agency has its own Mentor-Protégé program with its own requirements, but generally the mentor company must hold a prime contract with that agency in order to participate in the program. Agencies require the execution of a formal agreement between the parties that spell out the expectations for and benefits to each party. These could include teaming and subcontracting opportunities, training, assistance in raising capital, program management, process development, ownership resulting from the relationship, and others as agreed upon by the parties. Some agencies allow a mentor to have more than one protégé, but most do not allow the protégé to have more than one mentor; although companies may have different mentors through different Agency programs.

The Small Business Administration (SBA) manages a unique Mentor-Protégé program that is designed to allow companies to serve as a mentor to 8(a)-certified small business protégés. In order to enter into a SBA-approved Mentor-Protégé agreement, the mentor and protégé must have a written agreement and also meet certain requirements in order for SBA to accept them into the Mentor-Protégé program. Mentors have their own requirements, but to qualify, the protégé must be:

  1. a) in the developmental stage of the 8(a) Business Development program OR b) never have received an 8(a) contract OR c) must be less than half the size of a small business, as defined by the SBA, based on its primary Standard Industrial Classification code
  2. In good standing in the 8(a) Business Development program
  3. Current with all 8(a) reporting requirements
What is unique about the SBA program is that once the mentor-protégé agreement is approved, the companies may form a Joint Venture (JV) to pursue Federal government contracts with any agency, and the JV is considered to be a small business, provided the protégé qualifies as small for the procurement (and if an 8(a) sole source procurement, has not met the dollar limit). Without a SBA-approved agreement, the size of a JV is determined by taking the aggregate of the sizes of the two companies. This is a benefit because it allows the 8(a) to use their mentor's experience and relationship to pursue work jointly as a small business prime.

8(a) firms should contact their Business Opportunity Specialist to determine if their company and a prospective counterpart qualify for the SBA Mentor-Protégé program. Additional information is also available on SBA's website (www.sba.gov).

1 comment:

Jay Johnson said...

very true! Mentor-Protege programs can be fantastically beneficial to both parties involved. I would add, as a word of caution, that the "mentee" makes sure to maintain the frame of mind of being a protege and not become dependent upon the Mentor organization as often happens. I have worked with some small companies that have taken this route with very-large companies (such as Microsoft, SUN, and 3M) where they didn't establish their own identity outside the relationship and ended up being consumed by the larger company because they had become so dependent upon the larger company in many aspects of their business. Just a little "word of caution."