Mastering the Mentor-Protégé Program: Strategies for Success

Mastering the SBA Mentor-Protégé Joint Venture program requires a mix of strategy, creativity, and long-term vision. To be clear, we are specifically talking about the SBA's program, not the agency-specific Mentor-Protégé programs like those of the DOE, NASA, or DOD. Incorporating Mentor-Protégé partnerships early in your business plan can be a powerful tool for both small businesses and larger firms seeking federal contracts Rather than viewing MP JVs as just another step in the process, integrate them early as part of your long-term goals.

Of recent, having a strong Mentor Protege play has been a selling tactic for large mid-market companies (see example here). In a world where being mid-market is the most challenging space—this program is an avenue to success. Being successful takes strategy, planning, and patience but the rewards are massive.
If you missed the recent G2X Mentor-Protégé event held on September 25, 2024, here's a recap.

TL;DR: G2X’s recent event, highlighting the 60/40 equity and work-share split, upcoming regulatory changes, and strategic benefits of mastering JVs for success in #Govcom. (Government Community)

Key Insights:

The recent Report to Congress on Mentor-Protégé Programs for Fiscal Year 2023, highlighted substantial growth in both mentor and protégé participation, particularly through the SBA's program, which accounted for over 90% of the federal agreements. Read more about it below.

The FY 2023 report and insights from our recent event revealed a few key takeaways:

Patience is Key: The SBA Mentor-Protégé Joint Venture (MP JV) process is not for the impatient. As highlighted at the G2X event, it takes about 105 days on average for the SBA to approve an agreement, which is a big factor for companies looking to jump into this program. Detailed steps SBs need to take to qualify and succeed in this program are listed in the report.
Prime/Sub Relationships vs. MP Commitment: Just as G2X’s event cleverly compared SBA’s MP JV program to “putting a ring on it,” the FY 2023 report highlighted how these formal partnerships offer protégés substantial benefits, such as JV opportunities and exemption from certain SBA affiliation rules. The takeaway? Before jumping into a long-term commitment like an MP JV, it's smart for both sides to first test things out with a prime/sub relationship to make sure they're a good fit.
Protegé-Driven Process: While mentors offer valuable guidance and resources, protégés are increasingly in control, from drafting the JV agreement to deciding the scope of collaboration. This shift gives SB more power to steer the partnership in a direction that suits its growth goals. As noted during the G2Xchange event, this autonomy helps protégés focus on winning contracts that align with their long-term plans in the federal contracting world—which was exactly the intention of the MP program from the beginning.
30-Day Cold Feet Window: If a business feels unsure about committing to an MP JV, there is a 30-day window where they can terminate the agreement without penalty, allowing both parties time to reconsider. However, keep in mind, backing out of the agreement would put you at the back of the line for reconsideration.
Regulatory Changes on the Horizon: Keep up with changes in SBA’s MP JV program regulations. With potential updates for JV bidding on GWACs, MACs, IDIQs, and BPAs expected by late 2026, now is the time for businesses to form an MP JV and take advantage of the current rules before those changes hit.
The Importance of Legal Oversight: Have a contracts attorney review any MP agreement. Given that the SBA and other agencies require strict compliance with program rules, it’s crucial to ensure agreements are legally sound from the outset.
Crafting the GSA Joint Venture Partnership: Creating a JV, requires a well-defined legal and structural framework, forming a new entity that is distinct from its founding companies. With approval from regulatory bodies like the SBA and adherence to federal compliance guidelines, JVs can perform on the grand stage of the federal market. This process allows businesses to bid for larger contracts and successfully navigate #Govcom.

SBA Mentor-Protégé Program Overview

The SBA MP Program is a game changer for SBs looking to grow and succeed in federal contracting. It pairs eligible SB (protégés) with experienced companies (mentors), giving them access to mentorship, resources, and the know-how to thrive in the competitive federal market. Many top government contractors have used this program as a stepping stone to success. Learn more here.

Key Program Features:

Agreement Duration:
- Mentor Eligibility: The SBA clarified that only for-profit businesses can serve as mentors, ensuring they have the resources to help SBs.
- Mentor Limits: Protégés can have two mentors at a time, but no more than two total throughout their time in the program.
- Protege Limits: Protégés can be in the program for a maximum of 12 years, whether with one mentor for two six-year terms or with different mentors.
Multiple Awards and JVs: If a mentor has two JVs that win the same contract, they must exit one to avoid conflicts of interest. Protégés can acquire the mentor’s interest or find a new mentor to keep the venture going.
Spinning off JVs: Spinning off a JV allows protégés to take the lessons and strengths of their existing JV and create a new venture targeting different contracts, allowing for growth into new markets without affecting the original partnership.
- How to Do This:
  - Evaluate Current JV Performance: Assess the current JV’s success and contract scope. If the JV has met its goals or is nearing the end of a contract, it might be time to spin off a new JV.
  - Identify New Opportunities: Look for contracts the existing JV can't pursue due to scope or size limitations. Spinning off a new JV allows the protégé to target larger contracts or new NAICS codes, as long as it meets SBA eligibility.
  - Structure the New JV: Ensure the protégé retains majority control (51% or more) and clearly define the mentor-protégé responsibilities, including the 60/40 work split. Register the new JV as a separate legal entity on SAM.gov and obtain a DUNS number and CAGE code.
  - Draft a New JV Agreement: Create a new JV agreement outlining the work scope, responsibilities, profit-sharing, and compliance with SBA regulations. Submit it to the SBA for approval.
  - Obtain SBA Approval: The SBA must approve the new JV agreement, ensuring compliance with the Mentor-Protégé program. The process can take 90-120 days, so plan accordingly.
  - Pursue New Contracts: Once approved, pursue new contracts, leveraging the mentor’s experience. The new JV will have its own past performance record.
  - Monitor and Adjust: Regularly review the JV’s performance, adjusting roles or responsibilities as needed. Successful JVs can be spun off again to pursue further opportunities.
Program Termination and Protégé Rights: Protégés can terminate their mentor relationship if the mentor is acquired by a company that can’t meet the agreement’s terms. This allows protégés more control to renegotiate or end the relationship.
- Termination Process - Step by Step: For assistance, reach out to your SBA representative or contact the Office of Business Development at (202) 205-2417 or mphelpdesk@sba.gov
  1. Review Agreement Terms: Start by reviewing the Mentor-Protégé Agreement. Identify termination clauses and note any unmet terms due to the mentor's acquisition or changes.
  2. Prepare a Termination Notice: Write a notice to the SBA, explaining:
    - Reason for termination (e.g., mentor’s acquisition impacting eligibility).
    - Dates and terms no longer met.
    - A request to formally end the agreement.
  3. Submit to SBA: Send your notice to the SBA’s Office of Business Development via their portal or email, referencing your SBA representative.
  4. SBA Review: The SBA will review your request and may ask for more information. Once approved, they’ll send confirmation of termination.
  5. Next Steps: After termination, you can renegotiate with a new mentor or apply for a new agreement if you still meet the program’s criteria.

Teaming Agreements & JVs

Joint Ventures vs. Teaming Agreements: Key Differences

A JV is a formal legal entity formed by two or more companies to pursue a specific project or long-term partnership. In contrast, a teaming agreement as discussed above, is a contractual relationship between companies, typically with one serving as a prime contractor and the other as a subcontractor. Read more here.

While both strategies help companies grow and access new opportunities, they come with distinct advantages and challenges. JVs often involve shared control, equity, and liability, whereas teaming agreements are typically more flexible, quicker to set up, and focused on a single contract.

Check out this helpful article by The Pulse of GovCon, “Federal Teaming Arrangements,” here.

Prime Contracting vs. Subcontracting: What’s the Difference?

When multiple companies collaborate on a federal contract, it’s crucial to understand the distinction between the prime contractor and the subcontractor:

Prime Contractors work directly with the government, holding responsibility for ensuring that the work is completed and managing subcontractors.
Subcontractors work under the prime contractor, contributing their specialized skills and expertise to fulfill specific parts of the contract. One thing to note—there is NO difference in the eyes of the government if you use a staffing firm, or if you are a noted subcontractor, the dollars allocated ALL hit your subcontracting dollars. In short, any 1099 or Corp to Corp IS considered a sub-contract. 8a companies would do well to remember this when hiring H1B staff.

Teaming agreements are flexible and adaptable. Unlike JVs, they don’t form a separate legal entity, but rather a collaborative relationship for the duration of the contract. Read more here.

Small Business (SB) Considerations in Joint Ventures

For SBs, JVs provide unique advantages, such as access to set-aside contracts and opportunities to build credibility in the federal market. By forming JVs, SBs can partner with larger firms to enhance their capabilities, scale operations, and gain exposure to larger contracts they might not have qualified for on their own. Engaging in these partnerships allows SBs to learn, grow, and contribute their specialized expertise to a collective goal.

Check out this Deltek article, "Small Disadvantaged Business,” here.

Check out this LinkedIn post by Steven Koprince for more insight here.

Maximizing Benefits: Equity and Work Share in Mentor-Protégé Agreements

Under current regulations, mentors can hold up to 40% equity in their protégé, giving SBs access to essential capital and expertise while allowing mentors to have a stake in the protégé's success. Additionally, the 60/40 split in joint ventures ensures that both mentors and protégés can benefit significantly from these partnerships. Read more here.

What's in it for Me? Mentor

As a mentor, the 60/40 split works in your favor by allowing you to perform up to 60% of the work in a JV. This means you can bring your experience and resources to the table while earning compensation for the majority of the project’s work.

Plus, with up to 40% equity in the protégé's business, you stand to share in the profits from their growth. The ability to work with multiple protégés further expands your reach in the federal marketplace, allowing you to build a broader portfolio of government contracts. Imagine, you have one 8a SBA JV, one SDVOSB, or a WOSB as a mentor. Talk about playing your hand right!!

What's in it for Me? Protégé

For a protégé, this arrangement offers vital support. Mentors provide financial backing, industry knowledge, and technical expertise that can help you win contracts and grow your business. Think—PAST PERFORMANCE QUALS. Size, Scope, and complexity are a real challenge for a SBs. Pairing up with a bigger company gives you all 3 at once, plus access to new customers.

While the mentor may complete up to 60% of the work, you’re still responsible for at least 40%, allowing you to gain hands-on experience and develop your capabilities. The partnership enables you to leverage the mentor’s resources while retaining a controlling interest in your own business, setting you up for long-term success in the federal contracting space.

Building a Winning JV Strategy

Are you leveraging these partnerships to align with your long-term business goals?

Get hands-on with these agreements, whether you're an SB looking to grow or a large firm looking to diversify your contract portfolio. By doing so, you’ll ensure every part of the JV aligns with your long-term goals and federal mission requirements.

Before you dive into pricing or contracts, bring your team together and discuss the solutions you’re aiming to deliver. A well-defined strategy is the foundation of a successful MP JV partnership.

How can your business take full advantage of this increased autonomy in JV agreements?

To develop a successful JV strategy, businesses need to focus on careful planning, strategic alignment, and clear communication. Key steps include:

Defining roles and responsibilities for each party involved.
Outlining resource allocation and profit-sharing mechanisms.
Ensuring compliance with federal regulations, especially those outlined by the SBA.
Creating a joint proposal that showcases the collective strengths of both parties.
Use tools to research MP JVs, such as the SBA’s Active Mentor-Protégé Program Agreement List (More about this below.)

By aligning these elements, businesses can navigate the competitive landscape of government contracting and maximize their chances of success.

Play to win (over & over, not just once)

In this industry, you have a play-to-play and a play-to-win strategy. The first one is a very expensive marketing strategy, and most small businesses don’t have the runway to do more than once. When creating a JV through the SBA MP program, you want to be VERY strategic with the opportunities you have planned for the JV to chase.

This is a lesson learned for me (Alexa). In a previous company, we spent many cycles and energy on building a JV with a large business and we had one big opportunity (must-win) in the pipeline and a lot of smaller opps. Well, not a shocker, but we lost that must-win, and the JV fizzled out after that. Don’t do this. In short, until the SBA actually enacts its plan to restrict JVs from bidding on multiple award deals, make this your entire strategy!

Bid every multiple award deal including the GSA Schedule. This gives you avenue upon avenue to win, not just one chance. If I was creating a pipeline for a newly formed MP JV, this is what it would look like:

-GSA Schedule

-ARMY Access

-NGA Sequoia

-CMS Project Management BPA

The above pipeline provides access to deals with multiple service-line areas and gives the JV license to hunt for years.

JV Wins & Impact Case Studies

POLARIS

The POLARIS GWAC has seen notable success for small businesses across various categories, including WOSBs, SDVOSBs, and HUBZone-certified firms. JVs under the MP Program have been particularly successful in winning federal IT contracts through POLARIS, leveraging the expertise of both mentor and protégé to strengthen their competitive advantage.

For instance, out of 100 awardees announced on POLARIS’s Small Business Pool on October 3, 25 were JVs, making up 25% of all awards.

Several JVs under POLARIS are standing out as particularly successful:

Clear Vantage Point Solutions LLC: A JV between PingWind and Peraton, Clear Vantage Point Solutions combines PingWind’s agile development and cybersecurity expertise with Peraton’s federal contracting experience.
- Secured 27 awards to date.
- Generated over $204M in contracts, including $195M in prime contracts and $9.5M in subcontracts, primarily with the VA and CDC.
  - Top Recent Awards:

Accelgov LLC: Formed by Agovx and 22nd Century Technologies, Accelgov LLC brings together both companies' strengths to provide advanced IT solutions for federal agencies, achieving notable success in the federal contracting space.
- Secured 21 awards to date.
- Generated over $50M in contracts, mainly with NARA & the US Navy.
  - Top Recent Awards:
    - $55M NARA BPA 2023-2028
    - $41.7M US Navy Task 2022-2028

2TechJV, LLC: Another standout JV between TechAnax and OBXtek, has leveraged its technical capabilities and mentor support to win high-profile contracts, expanding its footprint in the federal space. Read more here.
- Secured 4 awards to date.
- Generated over $21M in contracts, mainly with the IRS and FAS.
  - Top Recent Awards:
    - $33.3M GSA GWAC 2018-2018
    - $18.4M Treasury IRS Task 2021-2023

These JVs have been able to secure multiple high-value contracts, but this success can also create challenges. JVs that win multiple awards may find themselves ineligible to bid on other multi-award contracts, limiting their future opportunities. As a result, JVs must be strategic when selecting the contracts they pursue to ensure they maximize their opportunities without closing doors to future work.

Hot Tip

Did you know the SBA releases a monthly Active Mentor-Protégé Program Agreement List?

This data serves as a valuable resource for market research and aids contracting officials in awarding contracts.

We made the data easier to digest: Full List of Approved SBA Mentor Proteges: YTD (Last updated October 9, 2024. Keep this link in hand, we update it monthly!)

G2X uses this data to publish our own monthly SBA MP JV report that includes:

Monthly MP JV Updates:
- Detailed overview of the New Protégés Approved every month.
Protégés by NAICS
- Including data on 518210, 541330, 541511, 541512, 541513, 541519, 541611, 541612, 541613, 541618, 541690, 541715, 541720, 541810, 541990, 561210, 561320, 611430.
Protégés by Certification Type
- Including 8(a), SDVOSB/VOSB, SB Certified, WOSB/EDWOSB, HUBZone, and more.
Protégés by Year of Approval
- From 2018 to YTD.

Check out our Past Reports

SBA Mentor Protégé Approval Update: September 2024

SBA Mentor Protégé Approval Update: August 2024

SBA Mentor Protégé Approval Update: July 2024

Conclusion

The SBA Mentor-Protégé Program isn’t just about meeting requirements—it’s a powerful strategy for both small businesses and mentors to grow and succeed in federal contracting. By leveraging the 60/40 work split, 40% equity buy, and forming multiple joint ventures that hit different set-asides businesses can build a solid foundation for long-term success—especially, the mid-market companies who are feeling the pressure to bid bigger and more complex deals.

We’ve covered how protégés can spin off new joint ventures to pursue even more opportunities, how to navigate the mentor termination process, and why having a clear strategy from the start is crucial. Whether you're a small business looking to expand or a mentor aiming to increase your reach, these partnerships give you the flexibility and support to move forward.

With changes to the program expected in the coming years, now is the perfect time to act. Review your current joint ventures, align them with your long-term goals, and stay informed on any updates.

For more insights and practical takeaways, revisit our event recap and start taking steps to secure your business’s future in the federal marketplace.

More Resources

The Small-Business Guide to Government Contracts: How to Comply with the Key Rules and Regulations . . . and Avoid Terminated Agreements, Fines, or Worse

The 8(a) Program: A Comprehensive Guide to the SBA's 8(a) Business Development Program-In Plain English

SBA Small Business Size and Affiliation Rules: A Comprehensive Guide - In Plain English

Procedures and Pitfalls of Size Protests and Appeals: A Guide to Size Protests & Appeals - In Plain English

SBA Mentor-Protégé Agreement Template (Example)

This Agreement is made and entered into on [DATE], by and between:

Protégé Company: [Small Business Name], a small business located at [Address], represented by [Contact Person].

Mentor Company: [Large Business Name], a large business located at [Address], represented by [Contact Person].

1. Purpose of the Agreement

The purpose of this agreement is to foster a mutually beneficial relationship under the SBA’s Mentor-Protégé Program. The goal is to provide the Protégé with assistance in areas including technical, management, contracting, business development, and government security clearance support to enhance its ability to compete for federal contracts.

2. Areas of Assistance

1. Technical Assistance

Definition of Good: The Protégé gains expertise in key technical areas required for their business growth (e.g., new certifications, technology upgrades).
Example: Mentor provides hands-on support AND/OR financial support to help Protégé obtain ISO 9001 or 27000 certification within 9 months.
Timeline: The certification process starts within the first month and is completed by the 9th month.
Success Metric: Successful attainment of certification

2. Management Guidance

Definition of Good: Protégé improves internal management processes, such as HR, finance, and project management, aligning with industry standards.
Example: Mentor provides access to its management tools (e.g., ERP systems, project management platforms) and holds monthly training sessions for Protégé’s management team.
Timeline: Start of management training in Month 2, with continuous sessions over 12 months.
Success Metric: Improvement in project completion rates, and reduction in internal inefficiencies by the end of Year 1.

3. Business Development Assistance

Definition of Good: Protégé’s ability to identify and capture new business opportunities is enhanced, leading to growth in federal contracts.
Example: Mentor helps Protégé develop a pipeline of opportunities, provides introductions to potential clients, and supports in responding to at least three RFPs.
Timeline: Begin business development activities in Month 3, targeting at least three RFP submissions by Month 9.
Success Metric: Protégé wins at least one federal contract or sub-contract by Year 2.

4. Contracting Support

Definition of Good: Protégé gains experience in the federal contracting process, including preparing proposals, negotiating contracts, and complying with federal regulations.
Example: Mentor provides guidance in developing compliant proposals and helps Protégé respond to at least two contract solicitations within the first year.
Timeline: Assistance begins in Month 3, with two proposals submitted by the end of Year 1.
Success Metric: Protégé is awarded one government contract or subcontract by the end of Year 1.

5. General and Administrative Support

Definition of Good: Protégé can streamline its administrative processes to meet the operational standards necessary for sustained growth.
Example: Mentor provides operational support in areas like HR, IT, and compliance management.
Timeline: Monthly reviews of administrative processes begin in Month 2.
Success Metric: Protégé reports increased operational efficiency within 6 months (e.g., reduction in administrative costs or time).

6. Security Clearance Assistance

Top Secret Facility Clearance (FCL) Support
Definition of Good: Protégé obtains the necessary Top Secret FCL to participate in highly classified government contracts.
Example: Mentor provides a DD254 on a cleared contract to start the process of getting the TS FCL
Timeline: The FCL application process begins in Month 1, to obtain the FCL within 12-18 months.
Success Metric: Top Secret FCL is awarded within the agreed-upon timeframe, allowing Protégé to bid on classified contracts.

7. Staffing on Secret-Cleared Contracts with SCIF Access

Definition of Good: Protégé successfully staffs personnel on contracts requiring Secret clearance and access to SCIFs.
Example: Mentor provides access to its SCIF facilities and supports Protégé in obtaining individual clearances for key personnel.
Timeline: Mentor begins providing SCIF access within 3 months, and staffing on Secret contracts begins within 6 months.
Success Metric: Protégé can staff at least one contract requiring Secret clearance and SCIF access within 12 months.

3. Responsibilities of the Mentor:

Provide mentorship in all the above areas with dedicated resources.
Assist Protégé in navigating the FCL process and clearance acquisition for personnel.
Conduct quarterly meetings to review progress.
Ensure the Protégé is prepared to independently sustain growth within 2-3 years.

4. Responsibilities of the Protégé:

Actively engage in the mentorship program and utilize resources provided by the Mentor.
Implement changes and improvements as advised by the Mentor.
Provide quarterly reports to the Mentor detailing progress.

5. Timelines and Milestones

Month 1: Kick-off meeting, finalization of goals, initiation of technical assistance, and start of FCL application.
Month 2: Begin management training, financial planning, and administrative support sessions.
Month 3 Start business development activities, contracting support, and secure SCIF access.
Month 6: Financial product secured, review of technical milestones, first proposal submitted, and initial staffing on Secret-cleared contract.
Month 9: ISO certification achieved, two RFPs submitted, and personnel clearances progressing.
Month 12-18: Top Secret FCL obtained, one federal contract awarded, review of all areas of progress.

6. Duration of the Agreement

This agreement shall remain in effect for a period of [2-3 years], beginning on [start date] and concluding on [end date], with annual reviews to assess performance and determine whether to continue or modify the relationship.

7. Termination of the Agreement

Either party may terminate the agreement with 30 days’ notice if the objectives are not being met or if the relationship no longer serves the mutual interests of both parties.

Signatures

[Protégé Name]

[Date]

[Mentor Name]

[Date]