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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: April 21, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Energy Acquisition Regulation (DEAR); Mentor-Protege Program

SOURCE: Federal Register, April 21, 2000, Vol. 65, No. 78, page 21367

AGENCIES: Department of Energy (DOE)

ACTION: Final Rule

SYNOPSIS: DOE is amending the DEAR to encourage DOE prime contractors to assist small disadvantaged firms certified by the Small Business Administration (SBA) under Section 8(a) of the Small Business Act (8(a)), other small disadvantaged businesses (SDBs), historically black colleges and universities and other minority institutions of higher learning (HBCU/MIs), women-owned small businesses, and small business concerns owned and controlled by service disabled veterans perform contracts and subcontracts for DOE and other federal agencies.

EDITOR'S NOTE: The DEAR is available on the Internet at http://www.pr.doe.gov/dear.html.

EFFECTIVE DATE: May 22, 2000.

FOR FURTHER INFORMATION CONTACT: Eugene Tates, Mentor-Protege Program, U.S. Department of Energy, Office of Small and Disadvantaged Business Utilization, 1000 Independence Avenue, SW, Washington, DC 20585, 202-586-4556; or Robert M. Webb, U.S. Department of Energy, Office of Procurement and Assistance Management, 1000 Independence Avenue, SW, Washington, DC 20585, 202-586-8264.

SUPPLEMENTAL INFORMATION: On June 9, 1995, DOE published guidelines for its Mentor-Protege Pilot Initiative to encourage DOE prime contractors to help energy-related small disadvantaged, 8(a), and women-owned small businesses enhance their business and technical capabilities. To achieve the initiative's goal, DOE prime contractors entered into formal agreements with qualified small businesses to provide developmental assistance. In many cases, this assistance has enabled small businesses to benefit from the vast wealth of knowledge acquired by large, successful DOE contractors.

The success of the DOE initiative led DOE to propose the creation of a permanent DOE Mentor-Protege program. DOE published a notice of proposed rulemaking on December 6, 1999, which proposed a program having the same goals and objectives as the original DOE initiative. The program would be addressed in new DEAR Subpart 919.70, The Department of Energy Mentor-Protege Program. The primary difference between the initiative and the proposed rule was the proposed inclusion of HBCU/MIs as eligible participants in the program. Fourteen comments were received and, as a result, DOE has revised the rule to include, as eligible participants, small business concerns owned and controlled by service disabled veterans, as defined in the Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law 106-50), and made several other minor changes.

The following are the contents of new DEAR Subpart 919.70:

The following are some of the key provisions of DEAR Subpart 919.70:

• Paragraph (b) of DEAR 919.7003, General Policy, states that "costs incurred by a Mentor to provide developmental assistance...are allowable only to the extent that they are incurred in performance of a contract identified in the Mentor-Protege Agreement and are otherwise allowable in accordance with the cost principles applicable to that contract."
  
  
• DEAR 919.7005, Eligibility to be a Mentor Firm, states, "To be eligible for recognition by DOE as a Mentor, an entity must be performing at least one contract for DOE."
  
  
• Paragraph (a) of DEAR 919.7006, Incentives for DOE Contractor Participation, states, "under cost-plus-award fee contracts, approved Mentor firms may earn award fees associated with their performance as a Mentor. The award fee plan may include provision for the evaluation of the contractor's utilization of 8(a) firms, other small disadvantaged businesses, women-owned small businesses, HBCUs, other minority institutions of higher learning and small business concerns owned and controlled by service disabled veterans. DOE may evaluate the Mentor's performance in the DOE Mentor-Protege Program under any Mentor-Protege Agreement(s) as a separate element of the award fee plan." Paragraph (b) states, "Mentors shall receive credit for subcontracts awarded pursuant to their Mentor-Protege Agreements toward subcontracting goals contained in their subcontracting plan."
  
  
• Paragraph (a) of DEAR 919.7007, Eligibility to be a Protege Firm, states that, to become a protege, it must "be a small business certified under Section 8(a) of the Small Business Act by SBA, other small disadvantaged business, a women-owned small business, HBCU, or any other minority institution of higher learning, or a small business concern owned and controlled by service disabled veterans. be eligible for receipt of government contracts; have been in business for at least two (2) years prior to application for enrollment into the Mentor-Protege Program; and be able to certify as a small business according to the Standard Industrial Code for the services or supplies to be provided by the Protege under its subcontract with the Mentor." Paragraph (b) goes on to state that "a prospective Mentor may rely in good faith on written representations by a prospective Protege that the Protege meets the requirements in paragraph (a) of this section."
  
  
• DEAR 919.7008, Selection of Protege Firms, states that "a Mentor firm is solely responsible for selecting one or more Protege entities from firms eligible under 48 CFR 919.7007. A Mentor may have more than one Protege; however, a Protege may have only one Mentor. The selection of Protege firms by Mentor firms may not be protested..." unless the protest is in regard to the small business size status of a Protege.
  
  
• DEAR 919.7009, Process for Participation in the Program, states that "a prospective Mentor firm must submit the following to the DOE Mentor-Protege Program Manager. A statement that it is eligible, as of the date of application, for the award of federal contracts; a statement that it is currently performing at least one contract for DOE; the DOE contract number, type of contract, period of performance (including options), title of technical program effort, name of DOE Program Manager (including contact information) and the DOE contracting activity; and an original and two copies of the Mentor-Protege Agreement signed by the chief executive officer or designee of the Mentor firm and the chief executive officer of the Protege firm." (EDITOR'S NOTE: The proposed rule had required that the Mentor-Protege Agreement be signed by the chief executive officers of both the Mentor and Protege firms. One of the comments suggested allowing the chief executive officers to delegate the authority to execute these agreements, and DOE agreed to permit Mentor firms to delegate the authority but not the Protege firms because the Protege firms are much smaller.)
  
  
• DEAR 919.7010, Contents of Mentor-Protege Agreement, specifies the minimum requirements of a proposed Mentor-Protege agreement. It must include "a description of the form of developmental assistance program that will be provided to the Protege by the Mentor; a listing of the number and types and estimated amount of subcontracts to be awarded to the Protege firm; terms of the agreement; procedures to be invoked should DOE terminate its recognition of the Agreement for good cause"; and other required terms and conditions.
  
  
• DEAR 919.7011, Developmental Assistance, lists the following as "forms of developmental assistance a Mentor may provide to a Protege include, but are not limited to: management guidance relating to financial management, organizational management, overall business management planning, business development, and marketing assistance; engineering and other technical assistance; noncompetitive award of subcontracts under DOE or other federal contracts where otherwise authorized; award of subcontracts in the Mentor's commercial activities; progress payments based on costs; rent-free use of facilities and/or equipment owned or leased by Mentor; and temporary assignment of Mentor personnel to the Protege for purposes of training."
  
  
• DEAR 919.7012, Review and Approval Process of Agreement by OSDBU [Office of Small and Disadvantaged Business Utilization], states that the DOE OSDBU will review the proposed Mentor-Protege agreement and approve or disapprove the proposed agreement within 30 days after receipt. If the OSDBU finds deficiencies that DOE considers correctable, the OSDBU may provide 30 days for the correction of the deficiencies in the proposed agreement or for additional information, and the review will be completed within 30 days after receipt of the supplemental material.
  
  
• DEAR 952.219-70, DOE Mentor-Protege Program, is added, and it must be included in all solicitations estimated to exceed the $100,000 simplified acquisition threshold. It notifies prospective offerors that DOE has established a Mentor-Protege program, and that those interested in become a Mentor should refer to DEAR Subpart 919.70 and the DOE's OSDBU.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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