10 USC Ch. 387: SMALL BUSINESS PROGRAMS

From Title 10—ARMED FORCESSubtitle A—General Military LawPART V—ACQUISITIONSubpart I—Defense Industrial Base

CHAPTER 387—SMALL BUSINESS PROGRAMS

Subchapter

Sec.

General

4901

II.

[Reserved]

4991

Editorial Notes

Amendments

2021—Pub. L. 117–81, div. A, title XVII, §1701(i)(10)(A), Dec. 27, 2021, 135 Stat. 2143, amended Pub. L. 116–283, div. A, title XVIII, §1871(a)(2), Jan. 1, 2021, 134 Stat. 4287, which added this analysis, by adding item for subchapter II.

Statutory Notes and Related Subsidiaries

Pilot Program for Streamlined Technology Transition From the SBIR and STTR Programs of the Department of Defense

Pub. L. 115–91, div. A, title XVII, §1710, Dec. 12, 2017, 131 Stat. 1810, authorized the Secretary of Defense to establish a pilot program under which the Department was to award multiple award contracts to certain small business concerns for the purchase of technologies, supplies, or services that the small business concern had developed through the SBIR or STTR program, and provided that such pilot program would terminate on Sept. 30, 2023.

Mentor-Protege Pilot Program

SUBCHAPTER I—GENERAL

Sec.

4901.

Department of Defense small business strategy.

4902.

Department of Defense Mentor–Protege Program.

Editorial Notes

Amendments

2022—Pub. L. 117–263, div. A, title VIII, §856(c), Dec. 23, 2022, 136 Stat. 2726, added item 4902.

§4901. Department of Defense small business strategy

(a) In General.—The Secretary of Defense shall implement a small business strategy for the Department of Defense that meets the requirements of this section.

(b) Unified Management Structure.—As part of the small business strategy described in subsection (a), the Secretary shall ensure that there is a unified management structure within the Department for the functions of the Department relating to—

(1) programs and activities related to small business concerns (as defined in section 3 of the Small Business Act);

(2) manufacturing and industrial base policy; and

(3) any procurement technical assistance program established under chapter 388 of this title.

(c) Purpose of Small Business Programs.—The Secretary shall ensure that programs and activities of the Department of Defense related to small business concerns are carried out so as to further national defense programs and priorities and the statements of purpose for Department of Defense acquisition set forth in section 801 of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115–91; 131 Stat. 1449).

(d) Points of Entry Into Defense Market.—The Secretary shall ensure—

(1) that opportunities for small business concerns to contract with the Department of Defense are identified clearly; and

(2) that small business concerns are able to have access to program managers, contracting officers, and other persons using the products or services of such concern to the extent necessary to inform such persons of emerging and existing capabilities of such concerns.

(e) Enhanced Outreach Under Procurement Technical Assistance Program Market.—The Secretary shall enable and promote activities to provide coordinated outreach to small business concerns through any procurement technical assistance program established under chapter 388 of this title to facilitate small business contracting with the Department of Defense.

(Added Pub. L. 115–232, div. A, title VIII, §851(a), Aug. 13, 2018, 132 Stat. 1883, §2283; renumbered §4901 and amended Pub. L. 116–283, div. A, title XVIII, §1871(b), Jan. 1, 2021, 134 Stat. 4287.)

Editorial Notes

References in Text

Section 3 of the Small Business Act, referred to in subsec. (b)(1), is classified to section 632 of Title 15, Commerce and Trade.

Section 801 of the National Defense Authorization Act for Fiscal Year 2018, referred to in subsec. (c), is section 801 of Pub. L. 115–91, which is set out as a note under section 2302 of this title.

Amendments

2021—Pub. L. 116–283 renumbered section 2283 of this title as this section and substituted "chapter 388" for "chapter 142" in subsecs. (b)(3) and (e).

Statutory Notes and Related Subsidiaries

Effective Date of 2021 Amendment

Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.

Small Business Integration Working Group

Pub. L. 117–263, div. A, title VIII, §874, Dec. 23, 2022, 136 Stat. 2741, provided that:

"(a) In General.—Not later than 60 days after the enactment of this Act [Dec. 23, 2022], the Secretary of Defense shall issue a charter to establish a small business integration working group that—

"(1) ensures the integration and synchronization of the activities of the military departments and other components of the Department of Defense with respect to small business concerns; and

"(2) convenes not fewer than four times per year.

"(b) Membership.—The small business integration working group chartered under subsection (a) shall be comprised of representatives from each of the following organizations:

"(1) The small business office of each military department.

"(2) The Small Business Innovation Research Program and the Small Business Technology Transfer Program (as such terms are defined in section 9(e) of the Small Business Act (15 U.S.C. 638(e))) of each military department.

"(3) The office of the Under Secretary of Defense for Acquisition and Sustainment.

"(4) The office of the Under Secretary of Defense for Research and Engineering.

"(5) Any other office the Secretary of Defense determines appropriate.

"(c) Briefing Required.—Not later than March 1, 2023, the Secretary of Defense shall brief the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives on the establishment and activities of the small business integration working group chartered under subsection (a), the policies enacted by the small business integration working group to allow for the sharing of best practices for maximizing the contributions of small business concerns in the defense industrial base and in acquisitions by the Department of Defense, and practices for conducting oversight of the activities of the military departments and other components of the Department of Defense with respect to small business concerns.

"(d) Definitions.—In this section:

"(1) Military department.—The term 'military department' has the meaning given such term in section 101(a) of title 10, United States Code.

"(2) Small business concern.—The term 'small business concern' has the meaning given such term under section 3 of the Small Business Act (15 U.S.C. 632)."

Demonstration of Commercial Due Diligence for Small Business Programs

Pub. L. 117–263, div. A, title VIII, §875, Dec. 23, 2022, 136 Stat. 2742, provided that:

"(a) Demonstration Required.—Not later than December 31, 2027, the Secretary of Defense shall establish a program to carry out a demonstration of commercial due diligence tools, techniques, and processes in order to support small businesses in identifying attempts by malicious foreign actors to gain undue access to, or foreign ownership, control, or influence over—

"(1) the small business; or

"(2) any technology a small business is developing pursuant to a contract or other agreement with the Department of Defense.

"(b) Elements.—The program required under subsection (a) shall include the following:

"(1) The identification of one or more entities to be responsible for the commercial due diligence tools, techniques, and processes that are part of a demonstration under the program and a description of the interactions required between such entity, small businesses, and the government agencies that enforce such tools, techniques, and processes.

"(2) An assessment of commercial due diligence tools, techniques, and processes already in use by each Office of Small Business Programs.

"(3) The development of methods to analyze the commercial due diligence tools, techniques, and processes that are part of a demonstration under the program to—

"(A) monitor and assess attempts described in subsection (a);

"(B) provide information on such attempts to applicable small businesses; and

"(C) allow small businesses that are subject to such attempts to provide information about such attempts to the Secretary of Defense.

"(4) The development of training and resources for small businesses that can be shared directly with such businesses or through a procurement technical assistance program established under chapter 388 of title 10, United States Code.

"(5) The implementation of performance measures to assess the effectiveness of such program.

"(c) Briefing Required.—Not later than April 1, 2023, the Secretary of Defense shall provide to the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives] an interim briefing on the program required under subsection (a) that includes the following:

"(1) An identification of any entity described in subsection (b)(1).

"(2) A description of the methodology for executing any demonstrations under the program, including any analytical tools or metrics identified to support such a demonstration.

"(3) A description of any identified instances of attempts described in subsection (a).

"(4) An identification of improvements or gaps in resources, capabilities, or authorities, and other lessons learned from any demonstrations under the program.

"(d) Assessment.—Not later than March 1, 2028, the Secretary shall submit to the congressional defense committees a report on the program required under subsection (a), including any identified instances of attempts described in such subsection, any lessons learned, and any recommendations for legislative action related to such program.

"(e) Definitions.—In this section:

"(1) The term 'foreign ownership, control, or influence' has the meaning given in section 847 of the National Defense Authorization Act for Fiscal Year 2020 (Public Law 116–92; 133 Stat. 1505; 10 U.S.C. 4819 note).

"(2) The term 'Office of Small Business Programs' means—

"(A) the Office of Small Business Programs of the Department of Defense established under section 144 of title 10, United States Code;

"(B) the Office of Small Business Programs of the Department of the Army established under section 7024 of such title;

"(C) the Office of Small Business Programs of the Department of the Navy established under section 8028 of such title; and

"(D) the Office of Small Business Programs of the Department of the Air Force established under section 9024 of such title."

Report on Unfunded Priorities of the Small Business Innovation Research and Small Business Technology Transfer Program

Pub. L. 117–81, div. A, title VIII, §865, Dec. 27, 2021, 135 Stat. 1853, provided that:

"(a) In General.—Not later than 10 days after the date on which the budget of the President for fiscal years 2022 through 2032 is submitted to Congress pursuant to section 1105 of title 31, United States Code, each Secretary of a military department and the Under Secretary of Defense for Research and Engineering shall submit to the Secretary of Defense, the Chairman of the Joint Chiefs of Staff, and the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives] a report on unfunded priorities of the Department of Defense related to high-priority Small Business Innovation Research and Small Business Technology Transfer projects.

"(b) Elements.—

"(1) In general.—Each report under subsection (a) shall include identification of not more than five unfunded priority projects and the following information for each such unfunded priority project:

"(A) A summary description of the unfunded priority project, including the objectives to be achieved if such project were to be funded (either in whole or in part).

"(B) The additional amount of funds recommended to achieve the objectives identified under subparagraph (A).

"(C) Account information with respect to such unfunded priority project, including, as applicable, the following:

"(i) Line item number, in the case of applicable procurement accounts.

"(ii) Program element number, in the case of applicable research, development, test, and evaluation accounts.

"(iii) Subactivity group, in the case of applicable operation and maintenance accounts.

"(2) Priority.—Each Secretary of a military department and the Under Secretary of Defense for Research and Engineering shall ensure that the unfunded priorities covered by a report submitted under subsection (a) are listed in the order of urgency of priority.

"(c) Definitions.—In this section:

"(1) Unfunded priority.—The term 'unfunded priority', with respect to a fiscal year, means a specific project related to a project successfully funded under Phase II of the Small Business Innovation Research or Small Business Technology Transfer program that—

"(A) is not funded in the budget of the President for that fiscal year, as submitted to Congress pursuant to section 1105 of title 31, United States Code;

"(B) has the potential to—

"(i) advance the national security capabilities of the United States;

"(ii) provide new technologies or processes, or new applications of existing technologies or processes, that will enable new alternatives to existing programs; and

"(iii) provide future cost savings; and

"(C) would have been recommended for funding through the budget referred to in subparagraph (A) if—

"(i) additional resources had been available to fund the program, activity, or mission requirement to which the specific project relates; or

"(ii) the program, activity, or mission requirement for such specific project had emerged before the budget was formulated.

"(2) Phase ii; small business innovation research; small business technology transfer.—The terms 'Phase II', 'Small Business Innovation Research', and 'Small Business Technology Transfer' have the meanings given such terms, respectively, in section 9(e) of the Small Business Act (15 U.S.C. 638(e))."

Initiatives To Support Small Businesses in the National Technology and Industrial Base

Pub. L. 116–283, div. A, title VIII, §861, Jan. 1, 2021, 134 Stat. 3775, provided that:

"(a) In General.—The Secretary of Defense, acting through the Assistant Secretary of Defense for Industrial Base Policy (established under section 903 of this Act [amending section 138 of this title]) and other appropriate officials, in carrying out the activities described under [former] subchapter II of chapter 148 of title 10, United States Code [see chapter 382 of this title], shall establish initiatives to increase the effectiveness of the Department of Defense in specifically leveraging small businesses to eliminate gaps and vulnerabilities in the national technology and industrial base (as defined in section 2500 of title 10, United States Code [now 10 U.S.C. 4801]) and expand the number of small businesses in the national technology and industrial base.

"(b) Initiatives.—

"(1) Updates for small business strategy.—Not later than October 1, 2022, and biennially thereafter, [sic] shall update the small business strategy required under section 2283 of title 10, United States Code [now 10 U.S.C. 4901], and provide such updated strategy to the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives].

"(2) Implementation plan.—

"(A) In general.—Not later than March 1, 2023, and biennially thereafter, the Secretary of Defense shall develop an implementation plan consistent with the most recent small business strategy developed under such section 2283 [now 4901], and provide such plan to the congressional defense committees.

"(B) Elements.—The implementation plan described in subparagraph (A) shall include an identification of the following:

"(i) Organizations responsible for implementation activities.

"(ii) Metrics to evaluate progress of implementation activities.

"(iii) Resources to support implementation activities.

"(iv) Outcomes achieved as a result of executing the previous small business strategy developed under such section 2283 [now 4901].

"(3) Mechanisms to assess and support small businesses in national technology and industrial base.—The Secretary of Defense shall—

"(A) establish policies, procedures, and information repositories to identify small businesses in the defense supply chain, including—

"(i) small businesses participating in an acquisition program of a military department or Defense Agency (as defined in section 101(11) of title 10, United States Code [now 10 U.S.C. 101(a)(11)]);

"(ii) small businesses contracting with the Defense Logistics Agency; and

"(iii) other small businesses in the national technology and industrial base;

"(B) establish policies and procedures to assess the financial status of critical small businesses; and

"(C) enter into an agreement with the acquisition research organization within a civilian college or university that is described under section 2361a(a) of title 10, United States Code [now 10 U.S.C. 4142(a)] (commonly referred to as the 'Acquisition Innovation Research Center'), to analyze mechanisms that could be established to allow the Secretary of Defense to provide direct financial support to critical small businesses that require additional financial assistance, including critical small businesses that are—

"(i) contracting with the Defense Logistics Agency;

"(ii) subcontractors (at any tier); or

"(iii) in critical technology sectors.

"(c) Reports.—

"(1) Report on activities.—Not later than October 1, 2021, the Assistant Secretary of Defense for Industrial Base Policy shall submit to the appropriate committees a report on activities undertaken pursuant to this section.

"(2) Implementation plan for 2019 small business strategy.—Not later than June 1, 2021, the Secretary of Defense shall submit an implementation plan for the small business strategy required under section 2283 of title 10, United States Code [now 10 U.S.C. 4901], and dated October 1, 2019, including an identification of specific responsible individuals and organizations, milestones and metrics, and resources to support activities identified in the implementation plan.

"(d) Small Business Defined.—In this section, the term 'small business' has the meaning given by the Secretary of Defense, except that such term shall include prime contractors and subcontractors (at any tier)."

Pilot Program for Development of Technology-Enhanced Capabilities With Partnership Intermediaries

Pub. L. 116–92, div. A, title VIII, §851, Dec. 20, 2019, 133 Stat. 1510, as amended by Pub. L. 117–81, div. A, title VIII, §852, Dec. 27, 2021, 135 Stat. 1846, provided that:

"(a) Establishment.—The Secretary of Defense may authorize the Commander of the United States Special Operations Command to use funds described in subsection (b) for a pilot program under which the Commander shall make, through the use of a partnership intermediary, covered awards to small business concerns to develop technology-enhanced capabilities for special operations forces.

"(b) Funds.—

"(1) In general.—The funds described in this subsection are funds transferred to the Commander of the United States Special Operations Command to carry out the pilot program established under this section from funds available to be expended by each covered entity pursuant to section 9(f) of the Small Business Act (15 U.S.C. 638(f)).

"(2) Limitations.—

"(A) Fiscal year.—A covered entity may not transfer to the Commander an amount greater than 10 percent of the funds available to be expended by such covered entity pursuant to such section 9(f) for a fiscal year.

"(B) Aggregate amount.—The aggregate amount of funds to be transferred to the Commander may not exceed $20,000,000.

"(c) Partnership Intermediaries.—

"(1) Authorization.—The Commander may modify an existing agreement with a partnership intermediary to assist the Commander in carrying out the pilot program under this section, including with respect to the award of contracts and agreements to small business concerns.

"(2) Limitation.—None of the funds described in subsection (b) may be used to pay a partnership intermediary for any costs associated with the pilot program.

"(3) Data.—With respect to a covered award made under this section, the Commander shall gather data on the role of the partnership intermediary to include the—

"(A) staffing structure;

"(B) funding sources; and

"(C) methods for identifying and evaluating small business concerns eligible for a covered award.

"(d) Report.—

"(1) Annual report.—Not later than October 1 of each year until October 1, 2026, the Commander of the United States Special Operations Command, in coordination with the Under Secretary of Defense for Research and Engineering, shall submit to the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives], the Committee on Small Business of the House of Representatives, and the Committee on Small Business and Entrepreneurship of the Senate a report including—

"(A) a description of each agreement with a partnership intermediary entered into pursuant to this section;

"(B) for each covered award made under this section—

"(i) a description of the role served by the partnership intermediary;

"(ii) the amount of funds obligated;

"(iii) an identification of the small business concern that received such covered award;

"(iv) a description of the use of such covered award;

"(v) a description of the role served by the program manager (as defined in section 1737 of title 10, United States Code) of the covered entity with respect to the small business concern that received such covered award, including a description of interactions and the process of the program manager in producing a past performance evaluation of such concern; and

"(vi) the benefits achieved as a result of the use of a partnership intermediary for the pilot program established under this section as compared to previous efforts of the Commander to increase participation by small business concerns in the development of technology-enhanced capabilities for special operations forces; and

"(C) a plan detailing how each covered entity will apply lessons learned from the pilot program to improve processes for directly working with and supporting small business concerns to develop technology-enhanced capabilities for special operations forces.

"(2) Final report.—The final report required under this subsection shall include, along with the requirements of paragraph (1), a recommendation regarding—

"(A) whether and for how long the pilot program established under this section should be extended; and

"(B) whether to increase funding for the pilot program, including a justification for such an increase.

"(e) Termination.—The authority to carry out a pilot program under this section shall terminate on September 30, 2025.

"(f) Definitions.—In this section:

"(1) The term 'covered award' means an award made under the Small Business Innovation Research Program.

"(2) The term 'covered entity' means—

"(A) the Army;

"(B) the Navy;

"(C) the Air Force;

"(D) the Marine Corps;

"(E) the Space Force; and

"(F) any element of the Department of Defense that makes awards under the Small Business Innovation Research Program.

"(3) The term 'partnership intermediary' has the meaning given the term in section 23(c) of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3715(c)).

"(4) The term 'small business concern' has the meaning given the term under section 3 of the Small Business Act (15 U.S.C. 632).

"(5) The term 'Small Business Innovation Research Program' has the meaning given the term in section 9(e) of the Small Business Act (15 U.S.C. 638(e)).

"(6) The term 'technology-enhanced capability' means a product, concept, or process that improves the ability of a member of the Armed Forces to achieve an assigned mission."

Implementation

Pub. L. 115–232, div. A, title VIII, §851(b), Aug. 13, 2018, 132 Stat. 1884, provided that:

"(1) Deadline.—The Secretary of Defense shall develop the small business strategy required by section 2283 of title 10, United States Code [now 10 U.S.C. 4901], as added by subsection (a), not later than 180 days after the date of the enactment of this Act [Aug. 13, 2018].

"(2) Notice to congress and publication.—Upon completion of the development of the small business strategy pursuant to paragraph (1), the Secretary shall—

"(A) transmit the strategy to Congress; and

"(B) publish the strategy on a public website of the Department of Defense."

§4902. Department of Defense Mentor-Protege Program

(a) Establishment of Program.—The Secretary of Defense shall establish a program to be known as the "Mentor-Protege Program".

(b) Purpose.—The purpose of the program is to provide incentives for major Department of Defense contractors to furnish disadvantaged small business concerns with assistance designed to—

(1) enhance the capabilities of disadvantaged small business concerns to perform as subcontractors and suppliers under Department of Defense contracts and other contracts and subcontracts; and

(2) increase the participation of such business concerns as subcontractors and suppliers under Department of Defense contracts, other Federal Government contracts, and commercial contracts.

(c) Program Participants.—(1) A business concern meeting the eligibility requirements set out in subsection (d) may enter into agreements under subsection (e) and furnish assistance to disadvantaged small business concerns upon making application to the Secretary of Defense and being approved for participation in the program by the Secretary. A business concern participating in the program pursuant to such an approval shall be known, for the purposes of the program, as a "mentor firm".

(2) A disadvantaged small business concern eligible for the award of Federal contracts may obtain assistance from a mentor firm upon entering into an agreement with the mentor firm as provided in subsection (e). A disadvantaged small business concern may not be a party to more than one agreement concurrently, and the authority to enter into agreements under subsection (e) shall only be available to such concern during the 5-year period beginning on the date such concern enters into the first such agreement. A disadvantaged small business concern receiving such assistance shall be known, for the purposes of the program, as a "protege firm".

(3) In entering into an agreement pursuant to subsection (e), a mentor firm may rely in good faith on a written representation of a business concern that such business concern is a disadvantaged small business concern. The Small Business Administration shall determine the status of such business concern as a disadvantaged small business concern in the event of a protest regarding the status of such business concern. If at any time the business concern is determined by the Small Business Administration not to be a disadvantaged small business concern, assistance furnished such business concern by the mentor firm after the date of the determination may not be considered assistance furnished under the program.

(d) Mentor Firm Eligibility.—

(1) Subject to subsection (c)(1), a mentor firm may enter into an agreement with one or more protege firms under subsection (e) and provide assistance under the program pursuant to that agreement if the mentor firm—

(A) is eligible for award of Federal contracts; and

(B) demonstrates that it—

(i) is qualified to provide assistance that will contribute to the purpose of the program;

(ii) is of good financial health and character and does not appear on a Federal list of debarred or suspended contractors; and

(iii) can impart value to a protege firm because of experience gained as a Department of Defense contractor or through knowledge of general business operations and government contracting, as demonstrated by evidence that—

(I) during the fiscal year preceding the fiscal year in which the mentor firm enters into the agreement, the total amount of the Department of Defense contracts awarded such mentor firm and the subcontracts awarded such mentor firm under Department of Defense contracts was equal to or greater than $25,000,000; or

(II) the mentor firm demonstrates the capability to assist in the development of protege firms, and is approved by the Secretary of Defense pursuant to criteria specified in the regulations prescribed pursuant to subsection (j).

(2) A mentor firm may not enter into an agreement with a protege firm if the Administrator of the Small Business Administration has made a determination finding affiliation between the mentor firm and the protege firm.

(3) If the Administrator of the Small Business Administration has not made such a determination and if the Secretary has reason to believe (based on the regulations promulgated by the Administrator regarding affiliation) that the mentor firm is affiliated with the protege firm, the Secretary shall request a determination regarding affiliation from the Administrator of the Small Business Administration.

(e) Mentor-Protege Agreement.—(1) Before providing assistance to a protege firm under the program, a mentor firm shall enter into a mentor-protege agreement with the protege firm regarding the assistance to be provided by the mentor firm. The agreement shall include the following:

(A) A developmental program for the protege firm, in such detail as may be reasonable, including—

(i) factors to assess the protege firm's developmental progress under the program;

(ii) a description of the quantitative and qualitative benefits to the Department of Defense from the agreement, if applicable;

(iii) goals for additional awards that protege ¹ firm can compete for outside the Mentor-Protege Program; and

(iv) the assistance the mentor firm will provide to the protege firm in understanding contract regulations of the Federal Government and the Department of Defense (including the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation Supplement) after award of a subcontract under this section, if applicable.

(B) A program participation term for any period of not more than three years, except that the term may be a period of up to five years if the Secretary of Defense determines in writing that unusual circumstances justify a program participation term in excess of three years.

(2) An agreement under this subsection may be a contract, cooperative agreement, or a partnership intermediary agreement.

(3) ² Procedures for the protege firm to terminate the agreement voluntarily and for the mentor firm to terminate the agreement for cause.

(f) Forms of Assistance.—A mentor firm may provide a protege firm the following:

(1) Assistance, by using mentor firm personnel, in—

(A) general business management, including organizational management, financial management, and personnel management, marketing, and overall business planning;

(B) engineering and technical matters such as production, inventory control, manufacturing, test and evaluation, and quality assurance; and

(C) any other assistance designed to develop the capabilities of the protege firm under the developmental program referred to in subsection (e).

(2) Award of subcontracts on a noncompetitive basis to the protege firm under the Department of Defense or other contracts.

(3) Payment of progress payments for performance of the protege firm under such a subcontract in amounts as provided for in the subcontract, but in no event may any such progress payment exceed 100 percent of the costs incurred by the protege firm for the performance.

(4) Advance payments under such subcontracts.

(5) Loans.

(6) Assistance obtained by the mentor firm for the protege firm from one or more of the following—

(A) small business development centers established pursuant to section 21 of the Small Business Act (15 U.S.C. 648);

(B) entities providing procurement technical assistance pursuant to chapter 388 of this title;

(D) women's business centers described in section 29 of the Small Business Act (15 U.S.C. 656).

(g) Incentives for Mentor Firms.—(1) The Secretary of Defense may provide to a mentor firm reimbursement for the total amount of any progress payment or advance payment made under the program by the mentor firm to a protege firm in connection with a Department of Defense contract awarded the mentor firm.

(2)(A) The Secretary of Defense may provide to a mentor firm reimbursement for the costs of the assistance furnished to a protege firm pursuant to paragraphs (1) and (6) of subsection (f) (except as provided in subparagraph (D)) as provided for in a line item in a Department of Defense contract under which the mentor firm is furnishing products or services to the Department, subject to a maximum amount of reimbursement specified in such contract, except that this sentence does not apply in a case in which the Secretary of Defense determines in writing that unusual circumstances justify reimbursement using a separate contract.

(B) The determinations made in annual performance reviews of a mentor firm's mentor-protege agreement shall be a major factor in the determinations of amounts of reimbursement, if any, that the mentor firm is eligible to receive in the remaining years of the program participation term under the agreement.

(C) The total amount reimbursed under this paragraph to a mentor firm for costs of assistance furnished in a fiscal year to a protege firm may not exceed $1,000,000, except in a case in which the Secretary of Defense determines in writing that unusual circumstances justify a reimbursement of a higher amount.

(D) The Secretary may not reimburse any fee assessed by the mentor firm for services provided to the protege firm pursuant to subsection (f)(6) or for business development expenses incurred by the mentor firm under a contract awarded to the mentor firm while participating in a joint venture with the protege firm.

(3)(A) Costs incurred by a mentor firm in providing assistance to a protege firm that are not reimbursed pursuant to paragraph (2) shall be recognized as credit in lieu of subcontract awards for purposes of determining whether the mentor firm attains a subcontracting participation goal applicable to such mentor firm under a Department of Defense contract, under a contract with another executive agency, or under a divisional or company-wide subcontracting plan negotiated with the Department of Defense or another executive agency.

(B) The amount of the credit given a mentor firm for any such unreimbursed costs shall be equal to—

(i) four times the total amount of such costs attributable to assistance provided by entities described in subsection (f)(6);

(ii) three times the total amount of such costs attributable to assistance furnished by the mentor firm's employees; and

(iii) two times the total amount of any other such costs.

(C) Under regulations prescribed pursuant to subsection (j), the Secretary of Defense shall adjust the amount of credit given a mentor firm pursuant to subparagraphs (A) and (B) if the Secretary determines that the firm's performance regarding the award of subcontracts to disadvantaged small business concerns has declined without justifiable cause.

(4) A mentor firm shall receive credit toward the attainment of a subcontracting participation goal applicable to such mentor firm for each subcontract for a product or service awarded under such contract by a mentor firm to a business concern that, except for its size, would be a small business concern owned and controlled by socially and economically disadvantaged individuals, but only if—

(A) the size of such business concern is not more than two times the maximum size specified by the Administrator of the Small Business Administration for purposes of determining whether a business concern furnishing such product or service is a small business concern; and

(B) the business concern formerly had a mentor-protege agreement with such mentor firm that was not terminated for cause.

(h) Relationship to Small Business Act.—(1) For purposes of the Small Business Act (15 U.S.C. 631 et seq.), no determination of affiliation or control (either direct or indirect) may be found between a protege firm and its mentor firm on the basis that the mentor firm has agreed to furnish (or has furnished) to its protege firm pursuant to a mentor-protege agreement any form of developmental assistance described in subsection (f).

(2) Notwithstanding section 8 of the Small Business Act (15 U.S.C. 637), the Small Business Administration may not determine a disadvantaged small business concern to be ineligible to receive any assistance authorized under the Small Business Act on the basis that such business concern has participated in the Mentor-Protege Program or has received assistance pursuant to any developmental assistance agreement authorized under such program.

(3) The Small Business Administration may not require a firm that is entering into, or has entered into, an agreement under subsection (e) as a protege firm to submit the agreement, or any other document required by the Secretary of Defense in the administration of the Mentor-Protege Program, to the Small Business Administration for review, approval, or any other purpose.

(i) Participation in Mentor-Protege Program not To Be a Condition for Award of a Contract or Subcontract.—A mentor firm may not require a business concern to enter into an agreement with the mentor firm pursuant to subsection (e) as a condition for being awarded a contract by the mentor firm, including a subcontract under a contract awarded to the mentor firm.

(j) Regulations.—The Secretary of Defense shall prescribe regulations to carry out the Mentor-Protege Program. Such regulations shall include the requirements set forth in section 8(d) of the Small Business Act (15 U.S.C. 637(d)) and shall prescribe procedures by which the parties may terminate participation in the program. The Department of Defense policy regarding the Mentor-Protege Program shall be published and maintained as an appendix to the Department of Defense Supplement to the Federal Acquisition Regulation.

(k) Report by Mentor Firms.—To comply with section 8(d)(7) of the Small Business Act (15 U.S.C. 637(d)(7)), each mentor firm shall submit a report to the Secretary not less than once each fiscal year that includes, for the preceding fiscal year—

(1) all technical or management assistance provided by mentor firm personnel for the purposes described in subsection (f)(1);

(2) any new awards of subcontracts on a competitive or noncompetitive basis to the protege firm under Department of Defense contracts or other contracts, including the value of such subcontracts;

(3) any extensions, increases in the scope of work, or additional payments not previously reported for prior awards of subcontracts on a competitive or noncompetitive basis to the protege firm under Department of Defense contracts or other contracts, including the value of such subcontracts;

(4) the amount of any payment of progress payments or advance payments made to the protege firm for performance under any subcontract made under the Mentor-Protege Program;

(5) any loans made by the mentor firm to the protege firm;

(6) all Federal contracts awarded to the mentor firm and the protege firm as a joint venture, designating whether the award was a restricted competition or a full and open competition;

(7) any assistance obtained by the mentor firm for the protege firm from one or more—

(A) small business development centers established pursuant to section 21 of the Small Business Act (15 U.S.C. 648);

(B) entities providing procurement technical assistance pursuant to chapter 388 of this title; or

(8) whether there have been any changes to the terms of the mentor-protege agreement; and

(9) a narrative describing the success assistance provided under subsection (f) has had in addressing the developmental needs of the protege firm, the impact on Department of Defense contracts, and addressing any problems encountered.

(l) Review of Report by the Office of Small Business Programs.—The Office of Small Business Programs of the Department of Defense shall review the report required by subsection (k) and, if the Office finds that the mentor-protege agreement is not furthering the purpose of the Mentor-Protege Program, decide not to approve any continuation of the agreement.

(m) Annual Collection of Performance Data.—The Director of the Office of Small Business Programs shall—

(1) maintain outcome-based performance goals and annually collect data through an automated information system (if practicable) assessing such goals; and

(2) conduct an independent review of the Mentor-Protege Program established under this section at least once every three years.

(n) Definitions.—In this section:

(1) The term "affiliation", with respect to a relationship between a mentor firm and a protege firm, means a relationship described under section 121.103 of title 13, Code of Federal Regulations (or any successor regulation).

(2) The term "disadvantaged small business concern" means a firm that is not more than the size standard corresponding to its primary North American Industry Classification System code, is not owned or managed by individuals or entities that directly or indirectly have stock options or convertible securities in the mentor firm, and is—

(A) a small business concern owned and controlled by socially and economically disadvantaged individuals;

(B) a business entity owned and controlled by an Indian tribe as defined by section 8(a)(13) of the Small Business Act (15 U.S.C. 637(a)(13));

(C) a business entity owned and controlled by a Native Hawaiian Organization as defined by section 8(a)(15) of the Small Business Act (15 U.S.C. 637(a)(15));

(D) a qualified organization employing severely disabled individuals;

(E) a small business concern owned and controlled by women, as defined in section 8(d)(3)(D) of the Small Business Act (15 U.S.C. 637(d)(3)(D));

(F) a small business concern owned and controlled by service–disabled veterans (as defined in section 8(d)(3) of the Small Business Act (15 U.S.C. 637(d)(3)));

(G) a qualified HUBZone small business concern (as defined in section 31(b) of the Small Business Act (15 U.S.C. 657a(b))); or

(H) a small business concern that—

(i) is a nontraditional defense contractor, as such term is defined in section 3014 of this title; or

(ii) currently provides goods or services in the private sector that are critical to enhancing the capabilities of the defense supplier base and fulfilling key Department of Defense needs.

(3) The term "historically Black college and university" means any of the historically Black colleges and universities referred to in section 2323 of this title, as in effect on March 1, 2018.

(4) The term "minority institution of higher education" means an institution of higher education with a student body that reflects the composition specified in section 312(b)(3), (4), and (5) of the Higher Education Act of 1965 (20 U.S.C. 1058(b)(3), (4), and (5)).³

(5) The term "qualified organization employing the severely disabled" means a business entity operated on a for-profit or nonprofit basis that—

(A) uses rehabilitative engineering to provide employment opportunities for severely disabled individuals and integrates severely disabled individuals into its workforce;

(B) employs severely disabled individuals at a rate that averages not less than 20 percent of its total workforce;

(D) pays not less than the minimum wage prescribed pursuant to section 6 of the Fair Labor Standards Act ⁴ (29 U.S.C. 206) to those employees who are severely disabled individuals.

(6) The term "severely disabled individual" means an individual who is blind (as defined in section 8501 of title 41) or a severely disabled individual (as defined in such section).

(7) The term "small business concern" has the meaning given such term under section 3 of the Small Business Act (15 U.S.C. 632).

(8) The term "small business concern owned and controlled by socially and economically disadvantaged individuals" has the meaning given such term in section 8(d)(3)(C) of the Small Business Act (15 U.S.C. 637(d)(3)(C)).

(9) The term "subcontracting participation goal", with respect to a Department of Defense contract, means a goal for the extent of the participation by disadvantaged small business concerns in the subcontracts awarded under such contract, as established pursuant to section 8(d) of the Small Business Act (15 U.S.C. 637(d)).

(Added and amended Pub. L. 117–263, div. A, title VIII, §856(a), (b), Dec. 23, 2022, 136 Stat. 2723, 2724; Pub. L. 118–31, div. A, title VIII, §852, title XVIII, §1801(a)(37), Dec. 22, 2023, 137 Stat. 344, 685.)

Editorial Notes

References in Text

Section 312 of the Higher Education Act of 1965, referred to in subsec. (n)(4), is section 312 of Pub. L. 89–329, title III, as added Pub. L. 99–498, title III, §301(a), Oct. 17, 1986, 100 Stat. 1292, which is classified to section 1058 of Title 20, Education. Pars. (3) to (5) of subsec. (b) of such section were repealed by Pub. L. 102–325, title III, §302(a)(3), July 23, 1992, 106 Stat. 472. See 1992 Amendment notes under section 1058 of Title 20.

Codification

Prior to amendment by section 852 of Pub. L. 118–31, subsec. (e) of this section contained introductory provisions followed by pars. (1) to (3). After amendment, the introductory provisions became part of par. (1), and former pars. (1) and (2) were redesignated as subpars. (A) and (B) of par. (1) to maintain the same relationship to the introductory provisions. However, par. (3) was not similarly amended.

Amendments

2023—Subsec. (e). Pub. L. 118–31, §852, inserted par. (1) designation before "Before providing assistance", redesignated former par. (1) and its subpars. (A) to (D) as subpar. (A) and cls. (i) to (iv), redesignated former par. (2) as subpar. (B) of par. (1), and added par. (2). Par. (2) was added after par. (1) to reflect the probable intent of Congress, notwithstanding directory language adding it at the end of subsec. (e).

Subsec. (k)(5). Pub. L. 118–31, §1801(a)(37), inserted "the" before "mentor firm".

2022—Pub. L. 117–263, §856(b)(1), substituted "Department of Defense Mentor-Protege" for "Mentor-Protege Pilot" in section catchline.

Pub. L. 117–263, §856(a), transferred section 831 of Pub. L. 101–510 to this subchapter and renumbered it as this section. See Codification note above.

Subsec. (a). Pub. L. 117–263, §856(b)(3), struck out "pilot" before "program to".

Pub. L. 117–263, §856(b)(2), struck out "Pilot" before "Program" in heading.

Subsec. (c)(1). Pub. L. 117–263, §856(b)(3), struck out "pilot" after "in the" in two places.

Subsec. (d)(1)(B)(iii)(I). Pub. L. 117–263, §856(b)(4)(A), substituted "$25,000,000" for "$100,000,000".

Subsec. (d)(1)(B)(iii)(II). Pub. L. 117–263, §856(b)(4)(B), substituted "subsection (j)" for "subsection (k)".

Subsec. (e)(2). Pub. L. 117–263, §856(b)(5), substituted "three years" for "two years" in two places.

Subsec. (f)(1)(B). Pub. L. 117–263, §856(b)(6)(A), inserted "manufacturing, test and evaluation," after "inventory control,".

Subsec. (f)(6)(B). Pub. L. 117–263, §856(b)(6)(B), substituted "pursuant to chapter 388 of this title;" for "pursuant to chapter 142 of title 10, United States Code;".

Subsec. (g)(3)(C). Pub. L. 117–263, §856(b)(7), substituted "subsection (j)" for "subsection (k)".

Subsec. (j). Pub. L. 117–263, §856(b)(11), struck out "pilot" before "Mentor-Protege" in two places and "The Secretary shall publish the proposed regulations not later than the date 180 days after the date of the enactment of this Act. The Secretary shall promulgate the final regulations not later than the date 270 days after the date of the enactment of this Act." after "participation in the program.", and substituted "by which the parties" for "by which mentor firms".

Pub. L. 117–263, §856(b)(8), (9), redesignated subsec. (k) as (j) and struck out former subsec. (j). Prior to amendment, text of subsec. (j) read as follows:

"(1) No mentor-protege agreement may be entered into under subsection (e) after September 30, 2024.

"(2) No reimbursement may be paid, and no credit toward the attainment of a subcontracting goal may be granted, under subsection (g) for any cost incurred after September 30, 2026."

Subsec. (k). Pub. L. 117–263, §856(b)(9), redesignated subsec. (l) as (k). Former subsec. (k) redesignated (j).

Subsec. (k)(7)(B). Pub. L. 117–263, §856(b)(12), substituted "pursuant to chapter 388 of this title; or" for "pursuant to chapter 142 of title 10, United States Code; or".

Subsec. (l). Pub. L. 117–263, §856(b)(13), substituted "subsection (k)" for "subsection (l)".

Pub. L. 117–263, §856(b)(9), redesignated subsec. (m) as (l). Former subsec. (l) redesignated (k).

Subsec. (m). Pub. L. 117–263, §856(b)(14), added subsec. (m). Former subsec. (m) redesignated (l).

Subsec. (n). Pub. L. 117–263, §856(b)(15), amended subsec. (n) generally. Prior to amendment, subsec. (n) defined terms for this section.

Pub. L. 117–263, §856(b)(8), (10), redesignated subsec. (o) as (n) and struck out former subsec. (n). Prior to amendment, text of subsec. (o) read as follows: "The Office of Small Business Programs of the Department of Defense shall—

"(1) establish performance goals consistent with the stated purpose of the Mentor-Protege Program and outcome-based metrics to measure progress in meeting those goals; and

"(2) submit to the congressional defense committees, not later than February 1, 2020, a report on progress made toward implementing these performance goals and metrics, based on periodic reviews of the procedures used to approve mentor-protege agreements."

Subsec. (o). Pub. L. 117–263, §856(b)(10), redesignated subsec. (o) as (n).

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Pub. L. 117–263, div. A, title VIII, §856(g), Dec. 23, 2022, 136 Stat. 2727, provided that: "The amendments made by this section [enacting and amending this section] shall not apply with respect to any agreement entered into under the program as established under section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101–510; 104 Stat. 1607) before the date of the enactment of this Act [Dec. 23, 2022]."

Regulations

Pub. L. 117–263, div. A, title VIII, §856(f), Dec. 23, 2022, 136 Stat. 2727, provided that: "Not later than December 31, 2023, the Secretary of Defense shall issue regulations for carrying out section 4902 of title 10, United States Code, as amended by this section."

Protege Technical Reimbursement Pilot Program

Pub. L. 117–263, div. A, title VIII, §856(d), Dec. 23, 2022, 136 Stat. 2726, provided that:

"(1) In general.—Not later than July 1, 2023, the Director of the Office of Small Business Programs of the Department of Defense (as appointed pursuant to section 144 of title 10, United States Code) shall establish a pilot program under which a protege firm may receive up to 25 percent of the reimbursement for which the mentor firm of such protege firm is eligible under the Mentor-Protege Program for a covered activity described in paragraph (2).

"(2) Activity described.—A covered activity under this paragraph is an engineering, software development, or manufacturing customization that the protege firm implements in order to ensure that a technology developed by the protege firm will be ready for integration with a program or system of the Department of Defense.

"(3) Definitions.—In this subsection:

"(A) The terms 'mentor firm', 'protege firm' have the meanings given under section 4902 of title 10, United States Code, as amended by this section.

"(B) The term 'Mentor-Protege Program' means the Mentor-Protege Program established under section 4902 of title 10, United States Code, as amended by this section.

"(4) Termination.—The pilot program established under paragraph (1) shall terminate on the date that is five years after the date on which the pilot program is established."

¹ So in original. Probably should be preceded by "the".

² See Codification note below.

³ See References in Text note below.

⁴ So in original. Probably should be followed by "of 1938".

SUBCHAPTER II—[RESERVED]

Sec.

4911.

[Reserved].

Editorial Notes

Amendments

2021—Pub. L. 117–81, div. A, title XVII, §1701(i)(10)(B), Dec. 27, 2021, 135 Stat. 2143, amended Pub. L. 116–283, div. A, title XVIII, §1871(a)(2), Jan. 1, 2021, 134 Stat. 4287, by adding this subchapter.