MENTOR-PROTEGE PILOT PROGRAM

SEC. 831. MENTOR-PROTEGE PILOT PROGRAM (a) Establishment of Pilot Program.— The Secretary of Defense shall establish a pilot program to be known as the “Mentor-Protege Program”. (b) Purpose.— The purpose of the program is to provide incentives for major Department of Defense contractors to furnish disadvantaged small business concerns with assistance designed to enhance the capabilities of disadvantaged small business concerns to perform as subcontractors and suppliers under Department of Defense contracts and other contracts and subcontracts in order to increase the participation of such business concerns as subcontractors and104 STAT. 1608 suppliers under Department of Defense contracts, other Federal Government contracts, and commercial contracts. (c) Program Participants.— (1) A business concern meeting the eligibility requirements set out in subsection (d) may enter into agreements under subsection (e) and furnish assistance to disadvantaged small business concerns upon making application to the Secretary of Defense and being approved for participation in the pilot program by the Secretary. A business concern participating in the pilot program pursuant to such an approval shall be known, for the purposes of the program, as a “mentor firm”. (2) Disadvantaged small business concerns eligible for the award of Federal contracts may obtain assistance from one or more mentor firms upon entering into an agreement with the mentor firm or firms as provided in subsection (e). A disadvantaged small business concern receiving such assistance shall be known, for the purposes of the program, as a “protege firm”. (3) In entering into an agreement pursuant to subsection (e), a mentor firm may rely in good faith on a written representation of a business concern that such business concern is a disadvantaged small business concern. The Small Business Administration shall determine the status of such business concern as a disadvantaged small business concern in the event of a protest regarding the status of such business concern. If at any time the business concern is determined by the Small Business Administration not to be a disadvantaged small business concern, assistance furnished such business concern by the mentor firm after the date of the determination may not be considered assistance furnished under the program. (d) Mentor Firm Eligibility.— Subject to subsection (c)(1), a mentor firm eligible for award of Federal contracts may enter into an agreement with one or more protege firms under subsection (e) and provide assistance under the program pursuant to that agreement if— (1) during the fiscal year preceding the fiscal year in which the mentor firm enters into the agreement, the total amount of the Department of Defense contracts awarded such mentor firm and the subcontracts awarded such mentor firm under Department of Defense contracts was equal to or greater than $100,000,000; or (2) the mentor firm demonstrates the capability to assist in the development of protege firms, and is approved by the Secretary of Defense pursuant to criteria specified in the regulations prescribed pursuant to subsection (k). (e) Mentor-Protege Agreement.— Before providing assistance to a protege firm under the program, a mentor firm shall enter into a mentor-protege agreement with the protege firm regarding the assistance to be provided by the mentor firm. The agreement shall include the following: (1) A developmental program for the protege firm, in such detail as may be reasonable, including (A) factors to assess the protege firm’s developmental progress under the program, and (B) the anticipated number and type of subcontracts to be awarded the protege firm. (2) A program participation term, which shall not exceed five years and may be renewed upon its expiration for an additional term of not to exceed four years. 104 STAT. 1609 (3) Procedures for the mentor firm or protege firm to terminate the agreement voluntarily and for the mentor firm to terminate the agreement for cause. (f) Forms of Assistance.— A mentor firm may provide a protege firm the following: (1) Assistance, by using mentor firm personnel, in— (A) general business management, including organizational management, financial management, and personnel management, marketing, business development, and over-all business planning; (B) engineering and technical matters such as production, inventory control, and quality assurance; and (C) any other assistance designed to develop the capabilities of the protege firm under the developmental program referred to in subsection (e). (2) Award of subcontracts on a noncompetitive basis to the protege firm under the Department of Defense or other contracts. (3) Payment of progress payments for performance of the protege firm under such a subcontract in amounts as provided for in the subcontract, but in no event may any such progress payment exceed 100 percent of the costs incurred by the protege firm for the performance. (4) Advance payments under such subcontracts. (5) Loans. (6) Cash in exchange for an ownership interest in the protege firm, not to exceed 10 percent of the total ownership interest. (7) Assistance obtained by the mentor firm for the protege firm from one or more of the following— (A) small business development centers established pursuant to section 21 of the Small Business Act (15 U.S.C. 648); (B) entities providing procurement technical assistance pursuant to chapter 142 of title 10, United States Code; or (C) a historically Black college or university or a minority institution of higher education. (g) Incentives for Mentor Firms.— (1) The Secretary of Defense shall provide to a mentor firm reimbursement for the total amount of any progress payment or advance payment made under the program by the mentor firm to a protege firm in connection with a Department of Defense contract awarded the mentor firm. (2) The Secretary of Defense shall provide to a mentor firm reimbursement for the costs of the assistance furnished to a protege firm pursuant to paragraphs (1) and (7) of subsection (f). The Secretary shall ensure that provision for payment of reimbursements under this paragraph is made in a Department of Defense contract awarded to the mentor firm to provide products or services or in another contract entered into between the Secretary and the mentor firm providing for the reimbursement of costs incurred under the program. Any such contract shall specify the maximum amount of any reimbursement to be made under that contract. The Secretary and the mentor firm may provide in such contract for the allocation of the costs to any Department of Defense cost-reimbursement contracts awarded the mentor firm. (3) (A) Costs incurred by a mentor firm in providing assistance to a protege firm that are not reimbursed pursuant to paragraph (2) may be recognized as credit in lieu of subcontract awards for purposes of104 STAT. 1610 determining whether the mentor firm attains a subcontracting participation goal applicable to such mentor firm under a Department of Defense contract or under a divisional or company-wide subcontracting plan negotiated with the Department of Defense or another Executive agency. (B) The amount of the credit given a mentor firm for any such unreimbursed costs shall be equal to— (i) four times the total amount of such costs attributable to assistance provided by entities described in subsection (f)(7); (ii) three times the total amount of such costs attributable to assistance furnished by the mentor firm’s employees; and (iii) two times the total amount of any other such costs. (C) Under regulations prescribed pursuant to subsection (k), the Secretary of Defense shall adjust the amount of credit given a mentor firm pursuant to subparagraphs (A) and (B) if the Secretary determines that the firm’s performance regarding the award of subcontracts to disadvantaged small business concerns has declined without justifiable cause. (4) A mentor firm shall receive credit toward the attainment of a subcontracting participation goal applicable to such mentor firm for each subcontract for a product or service awarded under such contract by a mentor firm to a business concern that, except for its size, would be a small business concern owned and controlled by socially and economically disadvantaged individuals, but only if— (A) the size of such business concern is not more than two times the maximum size specified by the Administrator of the Small Business Administration for purposes of determining whether a business concern furnishing such product or service is a small business concern; and (B) the business concern formerly had a mentor-protege agreement with such mentor firm that was not terminated for cause. (h) Nonaffiliation Treatment.— For purposes of the Small Business Act, a protege firm may not be considered an affiliate of a mentor firm solely on the basis that the protege firm is receiving assistance referred to in subsection (f) from such mentor firm under the program. (i) Participation in Mentor-Protege Program not To Be a Condition for Award of a Contract or Subcontract.— A mentor firm may not require a business concern to enter into an agreement with the mentor firm pursuant to subsection (e) as a condition for being awarded a contract by the mentor firm, including a subcontract under a contract awarded to the mentor firm. (j) Duration of Pilot Program.— (1) Business concerns eligible to participate in the program may enter into mentor-protege agreements pursuant to subsection (e) during the period commencing on October 1, 1991, and ending on September 30, 1994. (2) A mentor firm may not incur costs furnishing developmental assistance to a protege firm that are eligible for reimbursement pursuant to subsection (g) prior to October 1, 1991, or after September 30, 1996. (3) A mentor firm may receive credit toward the attainment of such firm’s goals for subcontract awards to disadvantaged small business concerns for unreimbursed costs incurred in providing developmental assistance to the firm’s protege firms, pursuant to subsection (g)(3), for the period beginning October 1, 1991, and ending September 30, 1999. 104 STAT. 1611 (k) Regulations.— The Secretary of Defense shall prescribe regulations to carry out the pilot Mentor-Protege Program. Such regulations shall include the requirements set forth in section 8(d) of the Small Business Act (15 U.S.C. 673(d)). The Secretary shall publish the proposed regulations not later than the date 180 days after the date of the enactment of this Act. The Secretary shall promulgate the final regulations not later than the date 270 days after the date of the enactment of this Act. (l) General Accounting Office Assessment.— (1) The General Accounting Office shall evaluate the implementation of the Mentor-Protege Program established pursuant to subsection (a) to determine whether the purposes of the program, as stated in subsection (b), have been attained. (2) A report of the evaluation conducted by the General Accounting Office pursuant to subsection (a) shall be furnished to the Committees on Armed Services and Small Business of the Senate and House of Representatives by February 1, 1994. Such report shall cover the period October 1, 1991, through September 30, 1993. Recommendations shall be included regarding reauthorization of the program, and extending its application on a Government-wide basis. (3) An interim report shall be furnished to the Committees on Armed Services of the Senate and House of Representatives by March 30, 1992. The interim report shall— (A) evaluate the regulatory implementation of the program by the Department of Defense; (B) assess initial participation by firms eligible to be mentor firms or protege firms; (C) identify deficiencies, if any, in the statutory or regulatory framework of the program likely to impair the success of the program; and (D) make recommendations to correct any implementational impediments identified. (m) Definitions.— In this section: (1) The term “small business concern” means a business concern that meets the requirements of section 3(a) of the Small Business Act (15 U.S.C. 632(a)) and the regulations promulgated pursuant thereto. (2) The term “disadvantaged small business concern” means a small business concern owned and controlled by socially and economically disadvantaged individuals. (3) The term “small business concern owned and controlled by socially and economically disadvantaged individuals” has the meaning given such term in section 8(d)(3)(C) of the Small Business Act (15 U.S.C. 637(d)(3)(C)). (4) The term “historically Black college and university” means any of the historically Black colleges and universities referred to in section 1207(a)(2) of the National Defense Authorization Act for Fiscal Year 1987 (10 U.S.C. 2301 note). (5) The term “minority institution of higher education” means an institution of higher education with a student body that reflects the composition specified in section 312(b)(3), (4), and (5) of the Higher Education Act of 1965 (20 U.S.C. 1058(b) (3), (4), and (5)). (6) The term “subcontracting participation goal”, with respect to a Department of Defense contract, means a goal for the extent of the participation by disadvantaged small business104 STAT. 1612 concerns in the subcontracts awarded under such contract, as established pursuant to section 1207 of the National Defense Authorization Act for Fiscal Year 1987 (10 U.S.C. 2301 note) and section 8(d) of the Small Business Act (15 U.S.C. 637(d)).