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Oles Morrison

Dissecting the Changes to SBA’s Mentor-Protégé Program: Do the New Past Performance/Experience Rules for Joint Ventures Actually Benefit Mentor-Protégés?

By on July 29, 2016 | Posted in Legislative and Regulatory Developments

Yesterday, we provided an overview of eleven of the biggest changes coming as a result of SBA’s release of its final rule expanding the mentor-protégé program to all small business.  One of the changes we noted was that, in small business set-asides procurements, agencies will be required to consider projects performed by the individual members of a mentor-protégé joint venture offeror when evaluating experience/past performance.

Today we dissect this specific change, and examine whether it actually benefits mentor-protégé joint ventures.  Arguably, this change does more harm than good to mentor-protégé joint ventures.

The Good

One thing the new rule solves is that it prohibits agencies from limiting consideration to projects performed by the joint venture itself when evaluating the experience/past performance of a joint venture offeror in a small business set-aside.  While such restrictions (as ridiculous they were) were sometimes upheld by GAO when protested, these restrictions were not common, and when an agency lacked a legitimate reason for these restrictions they were often found unduly restrictive of competition and improper by GAO.  So, since these restrictions were not common place, and often an agency voluntarily lifted such restrictions if protested, the benefit to mentor-protégé joint ventures from this new rule may be rather limited.

The Bad

On the other hand, the new rule does not solve, and possibly worsens, a related and more pressing problem for mentor-protégé joint ventures in experience evaluations — where the agency considers the experience of both the mentor and protégé, but then downgrades the joint venture’s experience rating on account of the protégé’s lack of experience (despite the fact that the mentor has plenty of experience).  This practice has been upheld by GAO because SBA’s regulations do not “require[ ] that the mentor firm’s past performance and experience be accorded a particular amount of weight in the evaluation,” even though “in order to be a protégé, an entity must lack experience.”   In fact, SBA has recognized this problem in prior protests, and has urged agencies not to evaluate proposals in this manner:

While the Army’s decision to consider the experience and past performance qualifications of both [protégé] and [mentor] in evaluating the joint venture’s bid proposal appears to be permissible under current GAO case law, it is SBA’s contention that, on policy grounds, awarding agencies should look only to the qualifications of a mentor firm in such circumstances.

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In our view, if a mentor has excellent experience/past performance and is legally obligated to perform the entire requirement … there is no reason why the joint venture should not receive an excellent technical rating in those areas.

Bottom Line

Unfortunately for mentor-protégé joint ventures, SBA’s new regulations fail to resolve this long-recognized problem.  In fact, because the new regulations will require agencies to consider the past performance/experience of both the mentor and protégé, the new regulations could very well exacerbate this problem (no longer will an agency have discretion to limit its review to the qualifications of the mentor, despite the fact SBA has said doing so would be good policy in certain situations).

 

Image courtesy of Flickr (licensed) by Bryan Jones