Questions and Answers 20230421 (2).pdf

# Reference Question Answer

874 Q&A #873 Neither the question nor the answer are clear. The SBA rules consider Mentor-Protégé Joint Venture (MPJV) to be a small business (or any socioeconomic category for which the Protégé qualifies) for any contract or subcontract that is awarded to the MPJV. The work performed by the MPJV in its entirety is counted as work performed by a small business – the work performed by the Mentor is not deducted from the total amount performed by the MPJV. Please clarify your answer to properly reflect the Small Business rules. Please see 13 CFR 125.8 (c).

In addition, please see the following MP program excerpt:

13 CFR § 125.9 - What are the rules governing SBA's small business mentor-protégé program? …

(d) Benefits.

(1) A protégé and mentor may joint venture as a small business for any government prime contract, subcontract or sale, provided the protégé qualifies as small for the procurement or sale. Such a joint venture may seek any type of small business contract (i.e., small business set-aside, 8(a), HUBZone, SDVO, or WOSB) for which the protégé firm qualifies (e.g., a protégé firm that qualifies as a WOSB could seek a WOSB set-aside as a joint venture with its SBA-approved mentor). Similarly, a joint venture between a protégé and mentor may seek a subcontract as a HUBZone small business, small disadvantaged business, SDVO small business, or WOSB provided the protégé individually qualifies as such.

(i) SBA must approve the mentor-protégé agreement before the two firms may submit an offer as a joint venture on a particular government prime contract or subcontract in order for the joint venture to receive the exclusion from affiliation.

(ii) In order to receive the exclusion from affiliation, the joint venture must meet the requirements set forth in § 125.8(b)(2), (c), and (d).

(iii) A joint venture between a protégé and its mentor will qualify as a small business for any procurement for which the protégé individually qualifies as small. Once a protégé firm no longer qualifies as a small business for the size standard corresponding to the NAICS code under which SBA approved its mentor-protégé relationship, any joint venture between the protégé and its mentor will no longer be able to seek additional contracts or sub contracts as a small business for any NAICS code having the same or lower size standard. A joint venture between a protégé and its mentor could seek additional contract opportunities in NAICS codes having a size standard for which the protégé continues to qualify as small. A change in the protégé's size status does not generally affect contracts previously awarded to a joint venture between the protégé and its mentor.

VA believes the referenced question and answer are both clear. Further, Small Business Participation Commitment (SBPC) is not governed by the cited CFR. In accordance with the CFR applicable JVs will qualify as a small business and therefore be eligible for the SDVOSB reserve;

however, for purposes of SBPC, only, work performed by a mentor cannot be applied to a socioeconomic category unless the mentor qualifies for that socioeconomic category.