In fact, under the new rules, successful joint venturers do not need to stop at three awards. vi This rule makes sense, as there was little benefit in limiting the ability of a joint venture to bid on work before it had received a single contract award. Under the new regulations, instead of being limited to three offers over a two year period, a mentor protégé joint venture is limited to three contract awards. In the past, an SBA approved mentor protégé joint venture could only bid on three contracts in two years without risking a finding of affiliation. Mentor protégé joint ventures can chase more business. While the regulations do address program abuses, they provide significant new opportunities for potential mentors and protégés: v Other recent investigations also found insufficient oversight in various SBA programs. iv In March 2010, the Government Accountability Office discovered significant fraud in the 8(a) program, identifying several ineligible firms who received set-aside contracts and engaged in other forms of abuse, primarily due to inadequate oversight and monitoring. and its mentor protégé joint venture EG Solutions from federal contracting, have built momentum for new regulations governing the Mentor Protégé program. iiiĪ steady stream of recent reports and investigations, including the unusual suspension of both mentor GTSI Corp. While the work must be split between the mentor and protégé, the large business mentor may also own up to 40% of the ownership interest in the protégé, thus providing the protégé with operating capital and the mentor with additional value from the relationship. The large business mentor benefits from the program because it gains access to participation, with the protégé, in 8(a) set aside contracts for which it would otherwise have been ineligible. The small business protégé benefits from the business experience and capabilities of the large business mentor while also gaining access to Government prime contracts that previously may have been outside of its capabilities. The Mentor Protégé program teams disadvantaged firms in SBA’s 8(a) program with large businesses in joint ventures. On February 11, 2011, the Small Business Administration (“SBA”) issued what has been described as the most comprehensive set of changes to its 8(a) Small Business Development program in over a decade.i Although these new rules also address various aspects of 8(a) eligibility, the most significant changes are in the Mentor Protégé program.ii The revised rules create new opportunities, but also codify limitations on subcontracting that may introduce troubling new uncertainties.
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