After 27 years, SBA's Mentor-Protégé Program faces another overhaul

SBA questioned if an "inordinate" amount of awards go through the program and threatened changes that would slow its growth

Can Booz Allen Hamilton—a $13 billion company—get Federal preferences as a small business? It can when it’s a mentor in SBA’s mentor-protégé program. But SBA has been threatening big changes to the rules that govern the program. The changes would affect billions of dollars of contracts, including many that keep small businesses afloat in the Federal marketplace.

Now in its 28th year, the SBA’s mentor-protégé program has become a “can’t live with it, can’t live without it” program. On one hand, the program allows huge companies like Booz Allen to perform up to 60% of a Federal contract that the government treats like a contract to a small business. (I mention Booz Allen because, according to the list on SBA’s website, it has both one of the oldest agreements and, as of July, the most recent mentor agreement approved by SBA.) On the other hand, the program has now grown to billions in annual contracts. That makes it indispensable to the small businesses that participate as protégés.

But has that growth come at the expense of small businesses that don’t have a backer like Booz Allen? SBA has expressed concern that firms in the program might be receiving an “inordinate” amount of awards on some contracts. As the program continues to grow, it becomes a prime target for scrutiny and increased regulatory oversight.

The history of the SBA Mentor-Protégé Program

SBA established the mentor-protégé program almost exactly 27 years ago, on July 30, 1998. At that time, the protégé status was restricted to 8(a) program participants. SBA originally designed the program to restrict mentor status as well. Only graduates or soon-to-be graduates of the 8(a) program (which has a time limit of 9 years) could be mentors. But, before the program started, SBA had a change of heart. The “focus should not be on who the mentor is, but what the … mentor will provide to the protégé,” SBA wrote. That change in focus meant that any business—no matter its size—could participate as a mentor.

The program proved successful enough to capture Congressional attention. Congress liked that programs like SBA’s were “designed to help small businesses become competitive federal contractors, which, in turn, helps small businesses create and retain jobs.”

So, in the 2010s, Congress authorized SBA to expand the eligibility to be a protégé: first, to service-disabled veteran-owned, women-owned, and HUBZone small businesses. And then Congress allowed SBA to expand protégé status to any small business.

SBA implemented those authorities by creating the short-lived “All Small Mentor-Protégé Program” in 2016 and later combining that with the 8(a) version to form the less-euphonious “SBA Mentor-Protégé Program” in 2020.

I was the first lawyer assigned to the All Small program in 2016, and I stayed with the program until its expansion. When we first started, the program director (Holly Schick, R.I.P.) touted that the All Small program could process an application in less than a week. But that was when there were only a few hundred firms in the program. Now, the program has nearly 2,000 mentor-protégé pairs, the same or fewer SBA staff to service them, and a much longer initial processing time.

Program purpose and scale

In the original program design—when mentors would only be existing 8(a) firms or 8(a) graduates—SBA intended that mentors would assist 8(a) protégés with specific items: management, technical matters, the procurement process, and personal relationships. Mentors could own up to 33% of the protégé. The program only allowed smaller protégés, those with annual revenues of up to half their size standard.

As SBA expanded the program—first allowing any size business to be a mentor, then allowing any small businesses to be a protégé—SBA loosened many of the restrictions. The All Small program allowed mentors to provide their protégés with “business development assistance,” a broad category that could encompass anything from contract performance to trade education. SBA raised the equity cap to 40%. SBA opened up protégé status to larger small businesses.¹

The program has grown immensely since 2020. There are now nearly 2,000 approved mentor-protégé pairs in SBA’s program. By comparison, the Department of Defense’s mentor-protégé program does not have even 200 approved pairs. The SBA program has 1,848 participating protégés and 1,557 mentors. (The difference is due to mentors being able to have up to three protégés at once, whereas protégés are limited to two mentors.)

Billions of dollars are flowing to the participants. SBA hasn’t released its estimates on how much in contracts go to mentors and protégés. But I can make a rough estimate by looking at the level of contracting with joint ventures. Joint ventures are not limited to mentors and protégés—for example, two small businesses can form a joint venture without either being an SBA mentor. But it’s likely that many of the dollars going to joint ventures are going to those involving mentors and protégés.²

Here are a table and a chart showing the growth of contracting with small business joint ventures over the past 10 years.³ In dollar terms, joint ventures now receive more than 3 times in small-business contracts as they did 10 years ago. Overall spending has risen as well, though. So when you calculate the percentage of small business contract dollars going to joint ventures, the growth in that percentage is 75%. In 2024, 8.3% of contract dollars to small businesses went to joint ventures. That translates to 2.3% of overall contract spending.⁴

Current program rules

The current program allows mentor-protégé pairs to apply for approval by SBA. SBA does not help firms find each other. But, once they do, they can use the template mentor-protégé agreement available on SBA’s website.

If SBA approves the relationship, the pair can form joint ventures to qualify as a small business for any small-business contract, provided the protégé individually qualifies as small. If the protégé has one or more SBA certifications (women-owned, 8(a), service-disabled veteran-owned, or HUBZone) and currently qualifies, the joint ventures also qualify for contracts reserved for that designation.

SBA puts some eligibility requirements on both mentors and protégés. Mentors must be for-profit businesses (not a non-profit organization). A mentor needs to demonstrate that it can impart value to a protégé firm due to lessons learned and practical experience. The SBA will reject the mentor if the mentor-protégé agreement is only meant to enable the mentor to access small-business contracts.

The protégé must be a small business, either in its primary NAICS code, or in the secondary code where it has experience and that will be the subject to the mentor-protégé agreement. SBA does not allow agreements between a mentor and protégé that are affiliated, and SBA can terminate the agreement if the firms become affiliated outside of the agreement.

Mentor-protégé agreements last up to six years from the date of SBA approval. Protégés generally may have only two mentor-protégé agreements with different mentors. There are exceptions for protégés whose agreements are terminated within the first 18 months, where SBA finds the mentor did not provide assistance, or where the protégé seeks an additional six years with the same mentor. Mentors may not have more than three protégés at the same time, though a special provision for protégés located in Puerto Rico may provide them with more.

Once approved, the mentor and protégé can perform contracts together through joint ventures. When doing so on set-aside contracts, the protégé must do at least 40% of the work of the joint venture. The protégé must own 51% of the joint-venture entity, be the managing venture, and have one of its employees be the project manager.

While working together under an SBA-approved mentor-protégé agreement, the mentor and protégé are not affiliated under SBA’s affiliation rules. That allows the protégé to continue to qualify as a small business.

What SBA is considering

In mid-2024, SBA caused an uproar by publicizing several proposals for slowing the growth of the program. SBA noted the “perception” that mentor-protégé joint ventures were winning “an inordinate number” of awards of work under multiple-award contracts. SBA proposed to affiliate mentors and protégés for multiple-award contracts, which would effectively preclude large firms from being mentors on set-aside multiple-award contracts. SBA also proposed to allow large mentors only to participate on contracts and orders of five years or less in length.

SBA did not go ahead with those two proposals in 2024. Businesses’ comments—both in writing and received through several public meetings across the country—emphasized that SBA’s “perception” did not reflect all of what small business contractors were experiencing. Contracts were getting larger, and agencies were requiring past-performance levels that were unrealistic for standalone small businesses. Some agencies were using point-scoring evaluations that pushed offerors into teams with large firms.

Nevertheless, SBA finalized a third, less impactful proposal. In a final rule published in January 2025, SBA prohibited joint ventures with large mentors from receiving the 10% price evaluation preference for HUBZone businesses.

SBA also has not taken the earlier proposals off the table, noting that “[a]ny such policy changes would be addressed in a separate proposed rulemaking action after considering comments and testimony.” If SBA were to raise the proposal again, businesses would again have the opportunity to comment on whether SBA’s perception matches reality.

More recently, in May 2025, SBA went public with more perceived problems with the mentor-protégé program. SBA said it was hearing that some mentors exclude protégés from critical meetings with agencies, even though the protégé must be the project manager. Even in those cases, SBA noted, the protege—not the mentor—needs to be in charge of the joint venture. SBA asked whether this would lead to the joint venture violating the limitations on subcontracting. (I’m not certain how this would be the case, since this scenario doesn’t mention a subcontract. Joint venturers are what they sound like—contractors that are jointly the primes on the contract.)

The road ahead

SBA has primarily been communicating its proposals for changes through tribal consultation notices and in the consultations themselves. Most mentors and protégés are not tribally owned firms, however. But they still should be paying attention to what SBA says in those settings.

Virtually all of the comments SBA received at the public hearings were from tribally owned firms or from companies in the mentor-protégé program. Individual small businesses have not been vocal, even though they could benefit from reduced joint-venture competition if SBA limited the program. The data shows that Federal agencies are increasingly using mentor-protégé joint ventures, but SBA did not hear from agencies about the impact of finalizing the proposals.

As SBA considers the next step—a formal proposed rule—businesses should take heed of the history of the program and the context in which these proposals arise. Data about the program’s growth would provide evidence to either confirm or reject SBA’s perceptions.

When SBA actually publishes proposals, businesses should analyze the specific proposals closely. SBA takes small-business feedback in rulemaking very seriously, and recently has taken great lengths to come up with compromises. A great example is the recent one-year grace period for the disqualifying recertifications after a merger or acquisition. What’s at stake here is just as significant: the future of a 27-year-old program and tens of billions of dollars.

Sam Le is a Virginia- and D.C-licensed attorney. His website is www.samlelaw.com.

1. One area that hasn’t changed is that joint ventures between mentors and protégés are limited to two years per joint-venture entity, from the first award. Steve Koprince has advocated for removing this restriction.

2. I have a plan for how to use the SAM.gov API to separate out the joint-venture activity going only to mentor-protégés participants. But the coding effort proved too time-consuming.

3. I had prepared a similar table for SBA and distributed it after the public meetings on this issue in 2024. I no longer have a copy, so I’m unsure whether this data is anywhere close to what I calculated back then. If anybody has a copy of that table, I’d really appreciate comparing it to what I’ve calculated here.

4. All of these figures use “small business eligible” dollars as the denominator, for consistency with how SBA calculates figures for the SBA procurement scorecard.