For small business government contractors, the question of affiliation should always be at the top of the list of priorities. A finding of affiliation between your business and another business (and, in particular, a large business) could be enough to lose your small business size status – and the ability to compete for those coveted set-aside contracts.
One of the few recognized exceptions to affiliation is an approved mentor-protégé relationship under the Small Business Administration's (SBA) 8(a) business development program. In short, an 8(a) protégé can joint venture with its SBA-approved large business mentor and still qualify as a small business for any federal government contract or subcontract – without the fear of affiliation.
While it may seem a bit obvious or a simple matter of housekeeping, the SBA's Office of Hearing and Appeals recently issued a stern warning that the exception to affiliation depends of having an approved mentor-protégé agreement in place. Specifically, OHA concluded that failure to obtain the proper documentation resulted in a finding of affiliation and precluded eligibility for a small business set-aside contract — even when the two firms involved had a long history of participation in the mentor-protégé program.
This decision serves as an important reminder for firms currently partnering as part of the 8(a) program to stay current – but it should also be a wake-up call for all of the businesses out there planning to take advantage of the SBA's imminent (groundbreaking) expansion of the mentor-protégé program.
Now that the SBA is accepting expanded mentor-protégé program applications, it is a great time to take stock of how to make the program work for your business. As we recently highlighted, partnering between government contractors can open the door to new and exciting opportunities – but it works best for those firms that conduct proper due diligence.
Is your mentor-protégé agreement working for you? Now is the time to find out and (if necessary) make the appropriate course corrections.
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