1. Marriages Made in Heaven But Remember the Prenuptial Agreement BIRCH HORTON BITTNER AND CHEROT, P.C. National 8(a) Association Summer Conference June 17, 2014

2. Many Programs for All to Enjoy 13 agencies have mentor-protégé programs 1. Small Business Administration 2. Department of the Defense 3. Department of Homeland Security 4. NASA 5. FAA 6. Department of Energy © Birch Horton Bittner & Cherot, PC 2014

3. Many Programs for All to Enjoy (continued) 7. Environmental Protection Agency 8. Department of State 9. Department of Treasury 10. GSA 11. Department of Health & Human Services 12. USAID 13. Department of Veterans Affairs © Birch Horton Bittner & Cherot, PC 2014

4. One Size Does Not File All Many Forms of Teaming Arrangements  Informal Partnering and Hunting Agreements  Prime and Subcontractor Relationships  Teaming Agreements  Defining Teaming Agreement  Joint Ventures Agreements  Mentor-Protégé Agreements © Birch Horton Bittner & Cherot, PC 2014

5. Small Business Administration Mentor-Protégé Program Overview  Mentor-Protégé Program is a developmental tool designed to enhance the ability of a 8(a) participants to compete for federal contracts  Mentors provide technical and management assistance, contract support and perform with 8(a) as prime through j/v arrangements  SBA currently oversees approximately 600 mentor-protégé agreements © Birch Horton Bittner & Cherot, PC 2014

6. Small Business Administration: Mentor-Protégé Program Benefits  Mentor-Protégé may pursue contracts as j/v  SBA will not find affiliation or undue control based on the M-P arrangement  Protégé may receive financial assistance via Mentor owning up to 40% of 8(a) concern © Birch Horton Bittner & Cherot, PC 2014

7. Small Business Administration: Details are important!  Any firm may mentor  An 8(a) firm must:  be in development stage; or  have never received an 8(a) contract; or  have ½ size of its primary NAICS code  Protégé may have only 1 mentor at a time  Mentor can have more than one Protégé (if second does not compete with first) © Birch Horton Bittner & Cherot, PC 2014

8. SBA Changes Around the Corner: New Small Business Mentor-Protégé Program  Small Jobs Act of 2010 authorized mentor-protégé (M/P) programs for WOSB, SDVO SBCs, and HUBZone SBCs.  NDAA of 2013 authorized M/P program for all small businesses, and it required quick regulatory action to implement changes.  Both statutes said that SBA should develop M/P programs as similar to 8(a) M/P program as possible.  SBA is in the process of developing proposed regulations to implement one new M/P program for all of the newly covered small businesses. 8(a) M/P program is expected to remain intact separately from the general small business M/P program.  The various types of assistance that a mentor will be expected to provide to a protégé include technical and/or management assistance; financial assistance in the form of equity investment and/or loans; subcontracts and/or assistance in performing prime contracts with the Government in the form of joint venture arrangements.  Expect proposed regulations sometime this year.  Expect SBA to solicit comments on the proposed regulations once they are published in the FR. Public meetings or Listening Sessions are possible. © Birch Horton Bittner & Cherot, PC 2014

9. Recent Cases: BGI-Fiore JV, LLC BGI-Fiore JV, LLC, B-409520 (May 29, 2014).  NASA rejected a joint venture’s proposal for an 8(a) set-aside contract because the solicitation was limited to certified 8(a) participants and the joint venture had not been certified by the SBA as of the date of proposal submission.  According to NASA, FAR provision 52.219-18 requires a joint venture to be admitted to the 8(a) program--whether through “certification” or “approval”-- prior to the submission of a proposal.  SBA pointed out that it “does not ‘certify’ joint ventures for admission to the 8(a) program.” Instead, “only the 8(a) participant to the joint venture is certified into the program.” The joint venture then relies on the certification of its 8(a) member to qualify for 8(a) set-aside contracts.  Outcome: The GAO – relying in part on SBA’s interpretation of the regulations – held that the agency’s rejection was improper and sustained the protest.  Take-away: An agency may not reject a joint venture proposal merely because the proposal has not been approved by SBA prior to bid submission. Consistent with SBA regulations, joint ventures must be approved by SBA prior to contract award. © Birch Horton Bittner & Cherot, PC 2014

10. Recent Cases: Size Appeal of Drace Anderson Joint Venture Size Appeal of Drace Anderson Joint Venture, SIZ-5531 (2014).  Area Office found a protégé to be affiliated with its mentor for the purposes of a non-8(a) procurement for which the mentor-protégé joint venture had submitted a proposal.  Appellant argued that the 8(a) mentor-protégé joint venture exception to affiliation applies both to 8(a) and non-8(a) contracts, that the SBA Area Office failed to consider whether the joint venture qualified for the mentor-protégé joint venture exception to affiliation.  Outcome: Size appeal was granted, the size determination was vacated and matter remanded to the Area Office to consider whether Appellant was eligible for the exception to affiliation for mentor-protégé joint ventures.  Take-away: The mentor-protégé affiliation exception applies to any federal government prime contract or subcontract as long as (1) the protégé qualifies as small, and (2) the JV meets the 8(a) regulatory requirements under 13 C.F.R. § 121.103(h)(3)(iii). © Birch Horton Bittner & Cherot, PC 2014

11. Recent Cases: Okland Construction Co., Inc. United States ex rel. Saiz Construction Co. Inc. and Abel Saiz v. Okland Construction Co. Inc., No. 2:11-cv-00362 (D. Utah).  Government claimed that an 8(a) Program Mentor abused the 8(a) mentor-protégé program.  Okland—a large business—was a mentor to Saiz Construction (an 8(a) protégé company).  Protégé Saiz initiated civil suit under the whistleblower protection provision of the False Claims Act (FCA) against its former mentor, after protégé terminated its mentor-protégé agreement with Okland.  DOJ and Plaintiff alleged:  Mentor performed eight 8(a) contracts on behalf of its protégé without an SBA approved joint venture.  Mentor’s extensive role in performance resulted in protégé failing to meet applicable subcontracting limitations.  SBA did not approve joint ventures between the companies, but Okland prepared bids for 8(a) contracts and Okland’s employees served as project managers, submitted invoices, and performed payroll and other accounting functions.  Okland concealed its extensive involvement in 8(a) contracts by misrepresenting to the government that its employees were employees of Saiz. © Birch Horton Bittner & Cherot, PC 2014

12. Recent Cases: Okland Construction Co., Inc. (continued)  Outcome: Settlement.  8(a) Program Mentor agreed to pay a FCA settlement of $928,000.  Saiz (protégé) and its owner will receive $148,480 of the settlement amount.  The settlement only resolves the government’s claims, and there was no finding of liability.  Take-aways:  Protégé cannot be a mere pass-through.  Program mentors must remember that a mentor- protégé agreement does not provide carte blanche within the 8(a) program. © Birch Horton Bittner & Cherot, PC 2014

13. Department of Defense  M P program started in 1991 (DFARS Subpart 219.71)  Two types of DoD M-P Agreements  Credit: the mentor gets credits to SDB subcontracting goals.  Direct Reimbursement: the mentor is reimbursed for developmental assistance through: Separately priced contract line item A separate contract as approved by Director of SADBU  Eligible Protégé Businesses: SDB, tribally-owned, NHO-owned, WOSB, SDVOSB, HUBZone, and others. © Birch Horton Bittner & Cherot, PC 2014

14. Dept. of Homeland Security  Benefits for Mentors:  Mentors receive additional evaluation points  Mentors receive $ for $ credit to SB goals  Mentors may have multiple protégés  Protégés may have multiple Mentors  Agreements should last 36 months  Eligible Protégé Businesses: small business concerns under FAR 19.001 based on primary NAICS code. © Birch Horton Bittner & Cherot, PC 2014

15. NASA  NASA website has list of approved mentors  Mentors must have active subcontracting plan  Only credit agreements--$ for $ SB goals  Mentor may have several protégés at one time  3 cycles for submitting MP agreements  NASA FAR Supplement 1819.72 under review  Eligible Protégé Businesses: SDB, WOSB, VOSB, SDVOSB, HUBZone, and others. © Birch Horton Bittner & Cherot, PC 2014

16. Federal Aviation Administration  FAA has an approved list of Mentors  FAA may set aide MP procurements  Protégé may have unlimited mentors but FAA may limit mentors  FAA incentives:  Development cost treated as indirect cost  Additional evaluation points  Credit to Subcontracting goals  Mentors may provide space, management, temporary personnel, engineering, and technical assistances  Eligible Protégé Businesses: small businesses, Small Socially and Economically Disadvantaged Businesses, SDB, SDVOSB, WOSB and other organizations. See http://www.sbo.faa.gov/MentorProtege.cfm. © Birch Horton Bittner & Cherot, PC 2014

17. Department of Energy  SADBU offices manages program (48 CFR 919.70)  Mentor must have at least one DOE contract  Protégés must be in business 2 years  Protégé may have only one Mentor, Mentors may have multiple protégés  Benefits for Mentors:  Award fees for cost+ contracts  Credit toward small business goals  DoE will reimburse Mentors developmental assistances  Eligible Protégé Businesses: 8(a), SDB, WOSB, SDVOSB, and other organizations © Birch Horton Bittner & Cherot, PC 2014

18. Other Agencies  Environmental Protections Agency—48 CFR 155219-71 defines elements of application but few identifiable benefits © Birch Horton Bittner & Cherot, PC 2014

19. Questions? BIRCH, HORTON, BITTNER AND CHEROT

20. Contact Information Jon M. DeVore Birch, Horton, Bittner and Cherot, P.C. 1156 15 th Street, N.W. Suite 1020 Washington, D.C. 20005 (202) 659-5800 (office) jdevore@dc.bhb.com www.birchhorton.com

21. Be a Mentor