OPINION: Mentor-Protégé Programs Bring Further Value to Government

The federal Government is enhancing access to opportunities for small businesses, which in turn drives mission success through small business innovation. With the new Governmentwide Acquisition Contracts (GWACs) rising in prominence, the GSA’s emphasis on Women-Owned Small Businesses (WOSB) and HUBZone companies is a necessary and welcome addition to the growing GWAC spectrum.

For Makpar, we often seek out the best opportunities to enhance our overall capabilities by partnering with other companies on our bids. For example, one strategy we have used is establishing a Mentor-Protégé Programs (MPP) relationship with NuAxis Innovations. Under the MPP, Makpar and NuAxis have formed a Joint Venture (J.V.) called MakNuAx.

This SBA-approved JV between these SBA mentor-protégé firms offers federal agencies a full spectrum of services for I.T. modernization. Together, the combined companies offer a proven legacy of managing and delivering large and complex I.T. infrastructure programs at the Department of the Interior (DOI), Internal Revenue Service (IRS), Department of Agriculture (USDA), and Department of Labor (DOL).

Value of MPPs to Government and Industry

Driven by the Small Business Administration (SBA), MPPs assist small businesses in obtaining and performing federal contracts. While many J.V.s are structured around leveraging complementary capabilities for securing more government contracts, MPPs provide a whole business approach and increased learnings and improvements for the protégés that extend beyond traditional business development. MPPs provide opportunities to improve operational and managerial processes, which ultimately benefit the government customer. Better processes lead to a more robust development of cutting-edge innovations that many federal agencies can leverage.

Other agencies have agency-specific MPPs designed to assist various types of small businesses or other entities in obtaining and performing subcontracts under agency prime contracts. For example, the Department of Homeland Security uses an MPP where mentors provide protégés with rent-free use of facilities or equipment, temporary personnel for training, property, loans, or other assistance.

Mitigating MPP Risk for Government with J.V.s

There are always risks when it comes to these types of programs.  For example, when a small business prime is heavily dependent on a subcontractor, there’s a risk that the subcontractor could walk away from an engagement. Fortunately, this risk is entirely mitigated by awarding contracts to a J.V.

Further, the Government likes to see when companies have previously worked together before bidding on a solicitation. This limits the ability of small businesses to combine to pursue new opportunities. MPP JVs reduce this risk. The participating companies have to do more than agree to pursue a proposal together—they must agree on how they work together, what resources are required, and how they are provided.  All of the above while seeking approval from the SBA for their MPP relationship. Performance risks are dramatically reduced by the companies having executive sponsorship and business dealings outside of just a proposal response.

This also provides a protégé a chance at winning work that truly expands capabilities rather than continuing to deliver in their core areas.

Are GWAC Restrictions on J.V. Bids Unintentionally Devaluing MPP ?

It seems that the upcoming GWACs do not appreciate the benefits that the MPP provides for small businesses. For example, CIO SP4 initially attempted to restrict MPP JVs from using more than a single past performance from their mentor. This approach limits the value of the MPP program to both parties. While resolved by a later solicitation amendment, almost 5 different protests were filed regarding this issue alone. Currently, GSA’s upcoming GWAC POLARIS also seems to have restrictions in place that are following the same path.

The language in the Polaris GWAC says, “Polaris contractors may not hold more than one contract within a single pool at any time.” While this is a bit unclear as written, we believe that this limits a company from bidding as prime by itself and being a potential managing member for a MPP JV.

This is similar language that appeared in the STARS III contract. However, the GSA uses its GWACs as a pathway for small businesses to grow, and STARS III is meant to be an “entry-level” BIC vehicle, which is ideal for 8a contractors.

Currently, the GSA has indicated that Polaris is not intended to be an entry-level vehicle like STARS III. This GWAC is targeting more mature small businesses, as highlighted in the Draft RFP language around the requirements for entry into this contracting vehicle. 

While it makes sense to restrict J.V.s of all types on an entry-level GWAC because it reduces and eliminates unfair competition, this type of restriction is not necessary when dealing with a more mature contractor pool. As such, MPP JVs are being devalued by the latest GWACs, which can hurt the MPP program as it disincentives large mentors from wanting to participate. 

This indirectly affects all small businesses interested in this program, and fewer companies will ultimately want to enter the program. The government could potentially become more dependent on small business primes that rely on subcontractor capabilities, which are not evaluated favorably.

Competition for small businesses will also be limited, and GWACs will now be comprised of larger small businesses that have significant past performance track records. In addition, once these companies exceed the small business threshold, there will be fewer smaller businesses ready to fill the void. 

In the end, this all seems at odds with the GSA’s vision for small business growth under its GWAC programs.

What Can Be Done?

The GSA should reconsider restrictions on MPP JVs, specifically when creating new GWACs. This can include creating an environment that encourages competition, and does not exclude opportunities for MPP JVs that can provide true value to a contracting vehicle.

We also recommend encouraging other MPP JVs that have experienced similar adversities to come forward and share their perspectives. The future of the SBA MPP program is reliant upon positive experiences for both mentors and protégés, which will help to spark further participation in GWACs – giving Government the benefit of leveraging innovative solutions from emerging industry players. 

To learn more about MakNuAx, please contact us here.