SBA’s proposed rules on the mentor-protégé program could hamper small business growth

The success of the Mentor-Protégé Program is a major accomplishment for SBA, and you’d think the agency would be working hard to keep the momentum going.

The General Services Administration recently announced the first round of awards for Oasis+, with the Total Small Business Pool recognizing 1,383 awardees. Notably, 180 of these were joint ventures from the SBA Mentor-Protégé Program (MPP), providing more evidence that companies leveraging combined capabilities, resources and past performance are well positioned to win federal contracts. 

The success of the Mentor-Protégé Program is a major accomplishment for SBA, and you’d think the agency would be working hard to keep the momentum going. Curiously, however, it seems to be doing the opposite. Instead of looking for ways to ensure the program continues to flourish, it’s now proposing rules that could actually make it harder for MPP participants to win government work moving forward.

First, SBA is contemplating a rule that would prevent SBA-approved mentor-protégé joint ventures from bidding on multiple award contracts. While these joint ventures could still apply for and win single award small business set-aside contracts, this restriction could significantly reduce the program’s effectiveness.

The potential rule change is baffling. At a time when many agencies are moving more contracts to best-in-class and large vehicles, SBA is considering dismantling a proven pathway for small businesses to successfully compete in that environment.

But that’s not all.

SBA is also contemplating eliminating the HUBZone price evaluation preference to HUBZone joint ventures formed under the Mentor-Protégé Program. Currently, this preference allows a certified HUBZone small business concern (including a HUBZone joint venture) to have a 10% price preference when competing in a full and open competition.

The agency is seeking comments on whether it is appropriate for a HUBZone mentor-protégé joint venture to benefit from the HUBZone price evaluation preference “when the joint venture already benefits from its large business mentor’s lower cost structures and pricing.” From our point of view, SBA’s apparent concerns are unfounded for a few reasons. 

First, it is rare that the large business serving as the mentor in the arrangement has lower cost structures and pricing than its smaller counterpart. Many large businesses have difficulty fitting under small business rates, so this rationale is very strange.

Second, the HUBZone price evaluation preference is a critical tool that helps HUBZone businesses compete on a level playing field with larger firms. Removing this benefit from HUBZone mentor-protégé joint ventures would strip away a vital advantage that helps these small businesses win contracts and grow. It overlooks the unique challenges HUBZone firms face and undermines the very purpose of the HUBZone program, which is to spur economic development in historically underutilized business zones. 

Third, the government as a whole rarely hits its HUBZone goals. Now SBA is considering eliminating the one advantage that HUBZone companies have in this space? If the intent is to address concerns about equity or fairness in the awarding process, there must be more effective ways to achieve these goals without undermining the benefits of the Mentor-Protégé Program. Removing the ability to bid on multiple award contracts and altering the HUBZone price evaluation preference could inadvertently stifle the very innovation and growth the program seeks to promote.

Let’s be clear here: SBA’s MPP has been a game-changer for a lot of small businesses. By partnering with more experienced firms, they’re able to access the mentorship, resources and past performance credentials necessary to compete for and secure significant contracts. The recent round of Oasis+ awards is just the latest example of how effective this program is in terms of fostering small business growth and innovation in the federal marketplace.

As these policy proposals progress, it is crucial for stakeholders to voice their concerns and highlight the tangible benefits the MPP has delivered. SBA must consider the real-world impacts the proposed changes could have on small businesses that rely on these partnerships to navigate and succeed in the federal contracting landscape.

We will be closely monitoring this situation and urge SBA to reconsider these changes. Maintaining the ability for joint ventures to bid on multiple award contracts and preserving the HUBZone price evaluation preference are essential for sustaining the momentum of small business growth and innovation in federal contracting. The Oasis+ awards and many other success stories that have emerged from the MPP in recent years should  serve as a powerful testament to its effectiveness, and we’re committed to helping many more companies reap the rewards of the program for years to come. By keeping the existing rules intact, SBA can underscore its own commitment to American small businesses and shift its focus to making this exemplary program even better. 

Tommy Benz is a principal at GrowthLab and works with professional service firms on their growth strategies in the federal market.

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