Mentor-Protege Program: Small Business Partnerships and Surety Bonds

In his new book Only One Thing Can Save Us, author and labor lawyer Thomas Geoghegan argues that one of the main problems with the decline of unions is the lack of mentors for younger workers. While you might not buy his broader argument that civil rights laws should be expanded to protect union activities, there can be little doubt of the benefits of mentoring and its value for training the next generation of skilled workers

Mentoring can provide value not only on a one-to-one individual level, but on a larger scale as well. Although it is rare, businesses can mentor one another, and the exchange of skills and knowledge that takes place in such relationships can invigorate their sector. These arrangements are encouraged by the government in the form of The Mentor-Protégé Program. This valuable program was designed to help open up the workplace, and understanding the promises and pitfalls of this program can help you take advantage of this potentially lucrative opportunity.

Why the Mentor-Protege Program Works

The Mentor-Protégé Program is a kind of joint venture in which a large firm partners works with a small one in order to impart wisdom and advice which can help the smaller firm grow and gain its footing. In government-speak, “The 8(a) Business Development (8(a) BD Mentor-Protégé Program is designed to enable successful firms to provide various forms of business development assistance to 8(a) BD Program Participants. The goal of the 8(a) BD Mentor-Protégé Program is to enhance the capability of 8(a) Program Participants to be competitive, achieve entrepreneurial success, and contribute to the strength and vigor of our economy.”

The program is a valuable resource for both the mentor and protégé firm. One benefit is that the Small Business Association encourages these relationships by awarding contracts to firms that participate in mentor-protégé arrangements. Thus, larger firms can bid on work for which they would otherwise be ineligible. In addition, working with a smaller firm can give a bigger, though still not giant, business the resources they need to compete for large government projects.

For the smaller business, the benefits are equally advantageous. Such businesses gain access to opportunities they would otherwise be excluded from because of their smaller size and inexperience. Experience enables the smaller firm to obtain subsequent projects and working with a larger firm helps them deal with the logistics of a larger project. Even the most talented firms aren’t always ready for the complexity that comes with tackling a large project and can benefit from the mentor-protégé program.

Of course there are restrictions – the small firm has to qualify as a “very small” business. This is defined as half the size of the standard “small business definition,” and they cannot have previously received government work.  Additionally, the larger mentor firm can have no more than three protégés at any given time. The mentor must also “demonstrate financial health” and “good character.” There is a lot of paperwork required, and both firms must be on the federal approved contractor list.

The Need for Surety and Fraud Prevention

Some companies try to leverage the protégé program as a backdoor entrance to government contracting and use fake protégés to qualify. An Atlanta firm recently had to pay a $1.15 million fine for this manner of fraud. Thankfully, the SBA has taken more steps to certify both sides of the mentor-protégé equation. We see this kind of fraud fairly often, so a firm has to be extra careful with these arrangements.  For smaller firms, it is easy to be taken advantage of by a large firm, but you can be held just as liable.

It is equally important to ensure that both parties have surety bonds. The smaller protégé firm will need a performance bond simply because being smaller makes them seem less reliable and more likely to go under. A bond helps obviate this concern. Luckily, even for small firms, respected surety companies like Surety1 can help them get bonded so they can get to work. For either side entering this agreement or for the bidding agent who will approve or disapprove their bid, a bond is of great importance. It is the first step toward establishing a long-lasting and rich relationship.

Your contracting firm requires the backing of a strong Surety company with a reputation for dependability. Contact Surety1 today for a quick and fair bonding process that’ll get you to work.