If you are thinking of forming a mentor-protégé joint venture to pursue a particular set-aside contract, it is critical that your timing has enough built-in cushion to ensure that all of the necessary approvals and entity-formation steps are accomplished before you submit your proposal. There is a fairly rigid sequencing of the steps involved in putting together the mentor-protégé application and subsequent joint venture agreement—make sure you do not fall into the trap of skipping a step, or otherwise you may put your proposal at risk.
First, in order to form a mentor-protégé joint venture and receive the exemption from affiliation for a set-aside opportunity, the venturers need to have an SBA-approved mentor-protégé relationship. This requires the previous submission of a mentor-protégé application to the SBA, including a copy of the mentor-protégé agreement laying out all of the assistance the mentor promises to provide the protégé. Currently, SBA is estimating that the mentor-protégé application process may take up to 90 days, and applications are reviewed under a strict first-come, first-served basis. Make sure that you have budgeted enough time to ensure that SBA will approve your mentor-protégé application before your proposal is due—SBA will not speed up its review of your application simply because you have an upcoming proposal submission deadline you have to meet.
Once SBA has approved the mentor-protégé relationship, you can then take steps to form the mentor-protégé joint venture entity. Under a recent regulatory update, a joint venture must have a SAM profile at the time of proposal submission. And, the creation of the SAM profile is usually at the end of a multiple step process in getting the joint venture entity “stood-up,” including registering the joint venture entity with your secretary of state, and the creation of the joint venture’s EIN and D&B profiles.
Part of the entity formation process entails the mentor and protégé deciding what “type” of entity they want the joint venture to be, such as a partnership or LLC. They also need to negotiate the joint venture agreement, and other corporate-governing documents, such as an operating agreement for an LLC. Under all of the small business and socioeconomic programs, there are strict regulatory requirements that these corporate documents need to meet.
As you can see, simply identifying your potential teaming partner for a mentor-protégé joint venture is not the end of the process. Multiple approvals and steps have to be walked through before the mentor-protégé joint venture will be able to submit a proposal for a particular contract opportunity.
If you have any questions regarding the mentor-protégé application process or joint venture formation, please contact:
|Kathryn V. Flood
Small Business Programs &
Advisory Services Group
|Kathryn L. Hickey
Business & Corporate Law Group