ARTICLE
1 August 2024

FAR Council Proposed Rule Would Implement SBA Mentor-Protégé Incentives For Puerto Rico, U.S. Virgin Islands, And Other U.S. Territories

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A rule proposed by the FAR Council in June 2024 would (1) provide contracting incentives to mentors that subcontract to protégé firms located in Puerto Rico...
United States Government, Public Sector
Go-To Guide:
  • A rule proposed by the FAR Council in June 2024 would (1) provide contracting incentives to mentors that subcontract to protégé firms located in Puerto Rico or other covered territories; (2) confirm that contractors may rely on a subcontractor's self-certification; and (3) specify that subcontracting plans are not required from entities that are treated as small business concerns by the statute, such as Alaska Native Corporations (ANCs).
  • The proposed rule would increase incentives for large businesses to partner with and mentor small businesses in Puerto Rico and covered territories, 4,702 of which the SBA has identified as currently engaged in business with the federal government.
  • The window for comments on the proposed rule closes Aug. 6, 2024. 

The Federal Acquisition Regulation (FAR) Council has proposed a rule amending the FAR to implement the Small Business Administration (SBA)'s previous regulatory changes to the SBA mentor-protégé program. In previous years, the SBA implemented sections of the John S. McCain National Defense Authorization Act (NDAA) that added Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands (CNMI) to the list of territories from which small businesses are eligible for preferential treatment under the SBA mentor-protégé program.

The SBA's regulatory changes implemented incentives for mentor-protégé pairs when the protégé's principal office is in Puerto Rico or another covered territory. A mentor that subcontracts to such a protégé can receive positive consideration for the mentor's past performance evaluation and can apply costs incurred for training provided to its protégé to its subcontracting plan goals. The proposed rule would modify the following FAR clauses to implement these incentives:

  • FAR 19.702
  • FAR 42.1501
  • FAR 52.219-9 Small Business Subcontracting Plan

The proposed rule would also clarify that a contractor can rely on a subcontractor's representations of its size and socioeconomic status unless the contractor has reason to question those representations. Subcontracting plans are not required from entities that are treated as small business concerns by the statute, such as ANCs. These changes to the FAR would implement SBA regulations at 13 C.F.R. § 121.404(e) and § 125.3(b)(2) and would modify the following FAR Clauses:

  • FAR 19.702
  • FAR 19.703
  • FAR 52.219-8, Utilization of Small Business Concerns
  • FAR 52.219-9 Small Business Subcontracting Plan

Special thanks to Intern Londe Mondelus˘ for her contri

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