Recently, the Department of Defense (DoD) proposed to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to permanently authorize and modify the DoD’s Mentor Protégé Program. This program, sometimes referred to as the MPP, helps small businesses get their foot in the door and expand their experience in the defense industrial base.
The proposed rule has a comment period that will remain open until December 26, 2023, and then will move onto the formation of a final rule. Let’s talk about the MPP program, how to get involved, the benefits, and what this new rule may look like when it’s officially added to the DFARS.
What is the DoD’s Mentor Protégé Program?
You may have heard of the Mentor Protégé Program before through the Small Business Administration (SBA), but the DoD has it’s own version for contractors within the defense industrial base. The DoD’s Mentor Protégé Program is the oldest operating MPP, originally established way back in the midst of the Gulf War. Essentially, it helps small business contractors navigate and expand their footprint in the defense industrial base.
Under this program, small businesses (protégés) are partnered with large companies who become mentors. Protégés use their experience in the MPP to develop technical capabilities and become part of the military’s supply chain.
How to Participate in the DoD’s Mentor Protégé Program
The first step to participating in the DoD MPP is to establish a counterpart (protégé or mentor). Mentors and proteges are responsible for finding their counterpart, as the DoD Office of Small Business Programs (OSBP) is prohibited in participating in the teaming of mentors and protégé.
The next step is to determine the type of agreement. There are 2 types, direct reimbursed or credit.
- Direct reimburse agreements are when a mentor receives a reimbursement for allowable costs of developmental assistance provided to a protégé.
- A credit agreement is when a mentor receives a multiple of credit toward their SDB subcontracting goal based on the cost of developmental assistance provided to a protégé.
Once the type has been selected, the third step is to develop an agreement which includes measurable milestones, assessment of protégé needs, and alignment of the protégé’s strategic vision. Then the proposal should be submitted to the OSBP for directly reimbursed agreements and to the Defense Contract Management Agency (DCMA) for credit agreements.
The next step is to start the agreement. Credit agreements start on the date they are approved, and directly reimbursed agreements start on the date funds are obligated to the contract.
Lastly, semi-annual reports, annual DCMA performance reviews and protégé 2 year out reports are required for each DoD MPP agreement. DCMA reviews are really important in determining the amount of reimbursement a mentor is eligible to receive in the remaining years.
Are You Eligible?
To be eligible for a DoD MPP, mentors must be currently performing under at least one active approve subcontracting plan negotiated with DoD or another federal agency. New mentor applications must be approved and may be submitted to and approved by the OSBP of the cognizant Military Service or Defense Agency (if concurrently submitting a reimbursable Agreement) or to the DoD OSBP office prior to the submission of an agreement.
A protégé must be considered a small business under their primary North American Industry Classification System (NAICS) Code, must not be owned or managed by individuals or entities that directly or indirectly have stock options or convertible securities in the mentor firm and must be:
(A) a small business concern owned and controlled by socially and economically disadvantaged individuals;
(B) a business entity owned and controlled by an Indian tribe;
(C) a business entity owned and controlled by a Native Hawaiian Organization;
(D) a qualified organization employing severely disabled individuals;
(E) a small business concern owned and controlled by women;
(F) a small business concern owned and controlled by service–disabled veterans;
(G) a qualified HUBZone small business concern; or
(H) a small business concern that — is a nontraditional defense contractor; or currently provides goods or services in the private sector that are critical to enhancing the capabilities of the defense supplier base and fulfilling key Department of Defense needs.
The Newly Proposed DFARS Rule and How it Affects the DoD’s Mentor Protégé Program
So, now that we have some background on the program, let’s get into the newly proposed rule. This rule was proposed to the DFARS, which is a supplemental regulation to the Federal Acquisition Regulation (FAR).
The DoD is proposing this rule to implement a section of the National Defense Authorization Act (NDAA) for Fiscal Year 2023 that permanently authorizes and modifies the DoD Mentor-Protégé Program.
This proposed rule would remove all references of the program being called “pilot” and acknowledge that the program is not temporary anymore. The removal of a deadline for entering into a mentor protégé agreement is also proposed, since it’s no longer temporary, the deadline is not applicable anymore. This proposed rule would also remove specific dates for mentor reimbursements and credit toward subcontracting goals in its small business subcontracting plan for agreements entered into after December 23, 2022.
Additionally, the DoD proposes to change the dollar threshold for mentor eligibility from $100 million to $25 million. The program participation will also be extended from 2 to 3 years. Lastly, the proposed rule includes the addition of “manufacturing, test and evaluation” to the list of assistance that a mentor may provide to a protégé under a mentor-protégé agreement, and adds “manufacturing innovation institutes” to the list of assistance that a mentor firm may obtain for the protégé firm under a mentor-protégé agreement.
How Will this New Rule Affect Contractors?
The original purpose of the DoD’s MPP was to give small businesses more guidance and better opportunities to engage with agencies in the defense industrial base. The DoD has 2 main goals for the newly proposed and amended rule:
- Enhance the capabilities of small business concerns to perform as subcontractors and suppliers under DoD contracts and other contracts/ subcontracts.
- Increase the participation of small business concerns as subcontractors and suppliers under DoD contracts, other Federal Government contracts, and commercial contracts.
Stay Updated on Future Government News and Insights
It can be a lot to keep up with your contracts and that’s not even counting the frequent news, updates, and changes that may affect your company. To stay updated on government contracting and GSA Schedule news, you can sign-up for our monthly newsletter and our blog. If you have any questions regarding the Mentor-Protégé Program, you can reach out to us. We can help you figure out which path is best for your company.
