H. Rept. 112-723 - 112th Congress (2011-2012)
December 20, 2012, As Reported by the Small Business Committee

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House Report 112-723 - BUILDING BETTER BUSINESS PARTNERSHIPS ACT OF 2012




[House Report 112-723]
[From the U.S. Government Printing Office]


112th Congress  }                                             {  Report
                        HOUSE OF REPRESENTATIVES
 2d Session }                                                 { 112-723

======================================================================

 
               BUILDING BETTER BUSINESS PARTNERSHIPS ACT 
                                OF 2012

                                _______
                                

 December 20, 2012.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Graves of Missouri, from the Committee on Small Business, submitted 
                             the following


                              R E P O R T


                        [To accompany H.R. 3985]


      [Including cost estimate of the Congressional Budget Office]

    The Committee on Small Business, to whom was referred the 
bill (H.R. 3985) to amend the Small Business Act with respect 
to mentor-protege programs, and for other purposes, having 
considered the same, report favorably thereon with amendments 
and recommend that the bill as amended do pass.



                            C O N T E N T S

                                                                   Page
   I. Amendment.......................................................1
  II. Purpose of the Bill and Summary.................................2
 III. Background and the Need for Legislation.........................3
  IV. Hearings........................................................6
   V. Committee Consideration.........................................7
  VI. Committee Votes.................................................7
 VII. Section-by-Section Analysis of H.R. 3985........................8
VIII. Congressional Budget Cost Estimate.............................10
  IX. Unfunded Mandates..............................................12
   X. New Budget Authority, Entitlement Authority, and Tax Expenditur12
  XI. Oversight Findings.............................................12
 XII. Statement of Constitutional Authority..........................12
XIII. Congressional Accountability Act...............................12
 XIV. Federal Advisory Committee Statement...........................13
  XV. Statement of No Earmarks.......................................13
 XVI. Performance Goals and Objectives...............................13
XVII. Changes in Existing Law Made by the Bill, as Reported..........13

                              I. Amendment

    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:
  Page 4, line 23, strike the period at the end and insert the 
following: ``, and to protect proteges against actions by the 
mentor that--''
                          (i) may adversely affect the proteges 
                        status as a small business; or
                          (ii) provide disproportionate 
                        economic benefits to the mentor 
                        relative to those provided the protege.

  Page 7, line 24, insert after ``the Administrator.'' the 
following:

  ``(e) Current Mentor Protege Agreements.--Mentors and 
proteges with approved agreement in a program operating 
pursuant to subsection (b)(4)(C) shall be permitted to continue 
their relationship according to the terms specified in their 
agreement until the expiration date specified in the agreement.
  ``(f) Submission of Agency Plans.--Agencies operating mentor 
protege programs pursuant to subsection (b)(4)(C) must submit 
the plans specified in subsection (b)(1)(A) to the 
Administrator within 6 months of the promulgation of rules 
required by subsection (b)(3). The Administrator shall provide 
initial comments on each plan within 60 days of receipt, and 
final approval or denial of each plan with 180 days of 
receipt.''.

  Page 7, insert after line 24 the following:

SEC. 3. GOVERNMENT ACCOUNTABILITY OFFICE REPORT.

  Not later than the date that is 2 years after the agencies 
operating subject to section 45(b)(4)(C) of the Small Business 
Act have their plans approved or denied by the Administrator, 
the Comptroller General of the United States shall conduct a 
study to--
          (1) update the study required by section 1345 of the 
        Small Business Jobs Act of 2010 (Pub. Law 111-240);
          (2) examine whether potential affiliation issues 
        between mentors and proteges under the prior programs 
        have been resolved by enactment of this Act; and
          (3) examine whether the regulations issued pursuant 
        to section 45(b)(3)(I) of the Small Business Act have 
        increased opportunities for mentor-protege pairs, and 
        if they have decreased the paperwork required for such 
        pairs participating in programs at multiple agencies.

                      II. Purpose and Bill Summary

    The purpose of H.R. 3985, the ``Building Better Business 
Partnerships Act of 2012,'' is to amend the Small Business Act 
(the Act)\1\ to allow the Small Business Administration (SBA) 
to oversee civilian agency mentor-protege programs. This will 
promote portability of agreements between agencies, guarantee 
that the programs benefit small businesses, and ensure that the 
mentor-protege agreement does not inadvertently harm the 
protege's small business status.
---------------------------------------------------------------------------
    \1\Originally, title II of the Act of July 30, 1953, c. 282, 67 
Stat. 232 was designated as the Small Business Act of 1953. A plethora 
of amendments in subsequent Congresses led to a rewrite in 1958. Pub. 
L. No. 85-536, Sec. 1, 72m Stat. 384 (1958). The Act is codified at 15 
U.S.C. Sec. Sec. 631-657q.
---------------------------------------------------------------------------
    H.R. 3985 seeks to improve mentor-protege programs to 
ensure that they assist small businesses. First, it authorizes 
the Administrator of the SBA to create a mentor-protege program 
for small businesses and directs the Administrator to use the 
existing SBA 8(a) mentor-protege program established pursuant 
to 8(a) of the Act as a model. Second, it requires agencies and 
departments to seek prior approval for their mentor-protege 
programs from the SBA Administrator and requires the proposed 
program plan to be approved or disapproved depending on: 
whether the proposed program will assist small business 
concerns to compete for Federal prime contracts and 
subcontracts; and complies with SBA program regulations. Third, 
it requires that the Administrator present an annual report to 
the House Committee on Small Business and the Senate Committee 
on Small Business and Entrepreneurship assessing the benefits 
of each mentor-protege program and describing the number of 
program participants, protege assistance received, and the 
progress protege firms have made to improve their competitive 
viability. Fourth, it provides definitions of mentor, protege, 
and mentor-protege program. Finally, it requires the Government 
Accountability Office (GAO) to conduct a study of mentor-
protege programs within two years after agencies have had their 
plans approved or denied.

                       III. Need for Legislation

    Mentor-protege relationships are defined by the Small 
Business Jobs Act of 2010 (Jobs Act) as ``relationships and 
strategic alliances pairing a larger business and a small 
business concern partner to gain access to Federal Government 
contracts.''\2\ Mentor-protege programs are arrangements by 
which experienced prime contractors, including small 
businesses, serve as mentors to eligible small businesses, or 
proteges. Mentors provide proteges with technical, managerial, 
and other business development assistance.
---------------------------------------------------------------------------
    \2\Small Business Jobs Act of 2010, Pub. L. No. 111-240, Sec. 1245, 
124 Stat. Sec. Sec. 2504, 2546 (2010).
---------------------------------------------------------------------------
    Currently, 13 federal departments or agencies\3\ sponsor 
mentor-protege programs. Agencies, through the Offices of Small 
and Disadvantaged Small Business Utilization (OSDBUs),\4\ 
encourage mentor participation by providing the mentor with 
credit toward subcontracting goals, additional evaluation 
points toward the awarding of contracts, an annual award to the 
mentor providing the most effective developmental support to a 
protege, and in three cases, cost reimbursement.\5\ The SBA 
8(a) Mentor-protege Program is the largest program, having 
twice as many participants as the next largest program.
---------------------------------------------------------------------------
    \3\Department of Defense (DoD); Department of Energy (DOE); 
Department of State (DOS); Environmental Protection Agency (EPA); 
Federal Aviation Administration (FAA); General Services Administration 
(GSA); Department of Homeland Security (DHS); National Aeronautics and 
Space Administration (NASA); Small Business Administration (SBA); 
Department of Treasury (Treasury); United States Agency for 
International Development (USAID); and Department of Veterans Affairs 
(VA).
    \4\Some agencies refer to the statutorily defined OSDBU position by 
different titles. For example, GSA refers to their office as the Office 
of Small Business Utilization. However, for simplicity's sake, all such 
offices and position shall be referred to as OSDBUs in this report.
    \5\GAO, Mentor-Protege Programs Have Policies That Aim To Benefit 
Participants But Do Not Require Postagreement Tracking 1(2011) (GAO-11-
548R) (hereinafter ``Mentor Protege Programs'').
---------------------------------------------------------------------------
    Mentor-protege programs are intended to partner small 
businesses with established mentors in order improve the small 
business' ability to win and perform on contracts and 
subcontracts, but the 13 federal agency programs are 
duplicative (creating an unnecessary paperwork burden for 
participants) and lack standardized measures of success. In 
addition, while the SBA Administrator is authorized to create 
mentor-protege programs for certain subsets of small 
businesses, the Small Business Act does not currently allow the 
Administrator to create a mentor-protege program for all small 
businesses.
    In the Jobs Act, Congress required the GAO to study both 
the SBA's 8(a) Mentor-protege program and the other mentor-
protege programs ``to determine whether the programs and 
relationships are effectively supporting the goal of increasing 
the participation of small business concerns in Government 
contracting.''\6\ Specifically, the report was to address a 
broad cross section of industries and evaluate how the 
procurement agencies were administering the programs, what 
types of controls were in place, and how agencies were ensuring 
that the proteges were deriving benefit from the programs which 
prepared them to better compete for federal contracts.\7\
---------------------------------------------------------------------------
    \6\Jobs Act Sec. 1245, 124 Stat. at 2546.
    \7\Id.
---------------------------------------------------------------------------
    As part of its study of the mentor-protege programs, the 
GAO reviewed the policies and procedures for the 13 programs, 
and then focused on the controls used ``to help ensure that 
mentor-protege programs are beneficial to program participants 
and eligibility requirements are being met,''\8\ particularly 
whether the programs met the goal of helping firms ultimately 
compete for federal contracts. The GAO report revealed that 
there were a number of issues that needed to be addressed with 
mentor-protege programs, especially as the duplication among 
the 13 programs creates unnecessary paperwork for small 
businesses. GAO also noted that some mentor-protege programs 
lack accountability or metrics for tracking success. Based on 
the GAO study, the Committee further examined the programs, and 
found that program participants risk losing their small 
business size status due to the principal of affiliation when 
working with other businesses, and that the programs are not 
available to assist the majority of small businesses seeking 
federal contracts.
---------------------------------------------------------------------------
    \8\Mentor Protege Programs, supra note 5, at 2.
---------------------------------------------------------------------------
    With the exception of the SBA, DoD, DOE and FAA mentor-
protege programs, the programs reviewed by the GAO provide the 
same benefits to mentors, provide very similar assistance to 
small businesses, and have similar reporting requirements. 
Despite the similarities and the SBA's overarching role in 
determining the size of firms in federal procurement, a firm 
that wants to participate in more than one program must be 
vetted by each agency. One of the strengths of the SBA program 
is that it allows a mentor and protege to contract at any 
federal agency. However, the SBA program is limited to 
participants in the 8(a) and HUBZone programs. Given the 
diversity of programs and the limitations of the SBA programs, 
there should be a civilian agency mentor-protege program. This 
will allow greater participation, impose fewer paperwork 
burdens on businesses, and facilitate greater access to 
contracts.
    Affiliation is the name given to the principles the SBA 
uses to determine whether two entities will be considered under 
common management or control, and thus considered one company, 
for the purposes of determining whether a firm is small.\9\ 
Pursuant to SBA regulations, two firms may be considered 
affiliated if SBA finds that one firm is controlled by the 
other.\10\ To determine affiliation, SBA's Office of Hearing 
and Appeals considers factors such as ``ownership, management, 
previous relationships with or ties to another concern, and 
contractual relationships, in determining whether affiliation 
exists.''\11\ Indeed, SBA looks at the totality of factors when 
considering affiliation, and ``may find affiliation even though 
no single factor is sufficient to constitute affiliation.''\12\ 
Affiliation can be found based on ``identity of interest'' 
which includes firms that are ``economically dependent through 
contractual or other relationships.''\13\ Affiliation can be 
found based on shared space and employees,\14\ joint 
ventures,\15\ undue use by the protege of the mentor as a 
subcontractor,\16\ and license agreements.\17\
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    \9\13 C.F.R. Sec. 121.103(a).
    \10\Id.
    \11\Id. at Sec. 121.103(a)(2).
    \12\Id. at Sec. 121.103(a)(5).
    \13\Id. at Sec. 121.103(f).
    \14\Id. at Sec. 121.103(g).
    \15\Id. at Sec. 121.103(h).
    \16\Id. at Sec. 121.103(h)(4).
    \17\Id. at Sec. 121.103(i).
---------------------------------------------------------------------------
    The development assistance that is encouraged by nearly all 
mentor-protege programs, aside from the SBA program, and is 
provided under typical mentor-protege agreements risks 
triggering a finding of affiliation and thus a potential 
determination the protege may be found to be other-than-small. 
Despite the fact that participation in a program is not cause 
to find affiliation, the Committee is concerned that by 
encouraging well-intentioned mentors and proteges to engage in 
activities, the programs put small businesses' size status at 
risk. Additionally, the Committee also is concerned that nine 
of the thirteen mentor-protege programs claim to waive 
affiliation.\18\ Pursuant to the Small Business Act, only the 
SBA has the ability to waive affiliation,\19\ and SBA has 
simply stated that a protege firm is not an affiliate of a 
mentor firm ``solely because the protege [sic] firm receives 
assistance from the mentor firm under Federal Mentor-Protege 
programs'' but that ``[a]ffiliation may be found for other 
reasons.''\20\ The DoD program has a statutory exemption from 
affiliation,\21\ but seven of the remaining programs claim this 
exemption without a basis in law or a waiver from SBA.
---------------------------------------------------------------------------
    \18\SBA, DoD, DHS, DOS, Treasury, VA, NASA, FAA and HHS.
    \19\See, e.g., Associated Refuse & Compactions Services, Inc., B-
189,740 at 1-2 (Comp. Gen. 1977).
    \20\13 CFR Sec. 121.103(b)(6).
    \21\10 U.S.C. Sec. 2302 note.
---------------------------------------------------------------------------
    A purported waiver is particularly dangerous, as it may 
lead small firms to believe that they have safe harbor from 
affiliation rules when they provide or accept assistance 
pursuant to a mentor-protege agreement. However, even the 
programs that do not claim to waive affiliation inadvertently 
put small businesses in danger, since the underlying technical 
assistance itself may trigger a loss of small business status. 
Since SBA is the only entity with authority to waive 
affiliation for mentor-protege participants, it is logical that 
SBA should have regulatory authority over all civilian mentor-
protege programs.
    While nine of the agencies agreed to implement GAO's 
recommendation on post-program success, to date only one has 
made changes. If mentor-protege programs are intended to 
develop the capacity of small firms to compete for contracts, 
measuring post-program performance is crucial. A uniform 
program administered by SBA with each agency reporting on its 
progress will give a more complete picture of a firm's 
successes and challenges.
    Of the thirteen programs reviewed, only eight accept small 
businesses that do not qualify for one of the other socio-
economic contracting or business development programs. Some of 
the restrictions are logical. For example, the SBA only admits 
8(a) and Historically Underutilized Business Zone (HUBZone) 
firms into its mentor-protege program because the program is 
intended to be a business development tool, and the VA only 
admits veteran or service-disabled veteran firms in keeping 
with the agency's mission. In other cases, the restriction is 
statutory; DoD is statutorily barred from allowing small 
businesses or veteran-owned small businesses from participating 
as proteges. Other restrictions are harder to fathom; the EPA 
excludes proteges that are small businesses, HUBZone 
businesses, and veteran or service-disabled veteran-owned 
firms.
    The Building Better Business Partnerships Act addresses the 
problems of duplication, affiliation, accountability and 
accessibility discussed above. It allows the SBA to oversee 
civilian agency mentor-protege programs in order to promote 
portability of agreements between the agencies, guarantee that 
the programs benefit the small businesses, and ensure that the 
mentor-protege agreement does not inadvertently harm the 
protege's small business size status. Ultimately, H.R. 3985 
will improve mentor-protege programs, making it easier for 
small firms to compete for and win government contracts, 
enabling them to grow and create jobs.

                              IV. Hearings

    In the 112th Congress, the Committee held one hearing that 
looked at mentor-protege programs. On September 15, 2011, the 
Subcommittee on Contracting and Workforce held a hearing 
titled, ``Helping Small Businesses Compete: Challenges within 
Programs Designed to Assist Small Contractors.'' This hearing 
addressed issues related to the inadequacy of current mentor-
protege programs. Specifically, three GAO reports on programs 
that exist to help small businesses compete for federal 
contracts were reviewed,\22\ and three problems with agency 
mentor-protege programs were examined: affiliation, duplication 
and accountability. The hearing found that the eleven non-
statutory mentor-protege programs provided assistance that 
could lead to a finding of affiliation which could cause small 
businesses participating as mentors or proteges to lose their 
small business size status. Furthermore, it found that the 
civilian-agency mentor-protege programs are duplicative and a 
firm must be vetted by each agency if it wants to participate 
in more than one program. Finally, the hearing found that 
although nine agencies have agreed to implement GAO's 
recommendation to measure post-program success, none had made 
changes as of the hearing date.
---------------------------------------------------------------------------
    \22\Mentor Protege Programs, supra note 5, at 2; GAO, Improvements 
Needed To Help Ensure Reliability of SBA's Performance Data on 
Procurement Center Representatives (2011) (GAO-22-549R); and GAO, Small 
Business Contracting: Action Needed by Those Agencies Whose Advocates 
Do Not Report to Agency Heads as Required (2011) (GAO-11-418).
---------------------------------------------------------------------------

                       V. Committee Consideration

    The Committee on Small Business met in open session on 
March 22, 2012 and ordered H.R. 3985 reported, as amended, to 
the House by a voice vote at 10:16 a.m. During the markup, one 
amendment was offered and adopted. Disposition of the amendment 
is addressed below.
    Amendment Number One filed by Ms. Chu (D-CA) ensures that 
current mentor-protege agreements will continue according to 
the terms and until the expiration of the date specified in the 
agreement, requires agencies operating mentor-protege programs 
to submit their program plans to the Administrator of the SBA 
within 6 months of the regulations required under H.R. 3985, 
and requires the GAO to update its study on mentor-protege 
programs after agency plans are approved or denied. Amendment 
Number One was adopted by voice vote at 10:15 a.m.

                          VI. Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report the legislation and amendments 
thereto. No recorded votes were taken in consideration of H.R. 
3985.

        Amendment to H.R. 3985 Offered by Ms. Chu of California


  Page 4, line 23, strike the period at the end and insert the 
following: ``, and to protect proteges against actions by the 
mentor that--''
                          (i) may adversely affect the proteges 
                        status as a small business; or
                          (ii) provide disproportionate 
                        economic benefits to the mentor 
                        relative to those provided the protege.

  Page 7, line 24, insert after ``the Administrator.'' the 
following:

  ``(e) Current Mentor Protege Agreements.--Mentors and 
proteges with approved agreement in a program operating 
pursuant to subsection (b)(4)(C) shall be permitted to continue 
their relationship according to the terms specified in their 
agreement until the expiration date specified in the agreement.
  ``(f) Submission of Agency Plans.--Agencies operating mentor 
protege programs pursuant to subsection (b)(4)(C) must submit 
the plans specified in subsection (b)(1)(A) to the 
Administrator within 6 months of the promulgation of rules 
required by subsection (b)(3). The Administrator shall provide 
initial comments on each plan within 60 days of receipt, and 
final approval or denial of each plan with 180 days of 
receipt.''.

  Page 7, insert after line 24 the following:

SEC. 3. GOVERNMENT ACCOUNTABILITY OFFICE REPORT.

  Not later than the date that is 2 years after the agencies 
operating subject to section 45(b)(4)(C) of the Small Business 
Act have their plans approved or denied by the Administrator, 
the Comptroller General of the United States shall conduct a 
study to--
          (1) update the study required by section 1345 of the 
        Small Business Jobs Act of 2010 (Pub. Law 111-240);
          (2) examine whether potential affiliation issues 
        between mentors and proteges under the prior programs 
        have been resolved by enactment of this Act; and
          (3) examine whether the regulations issued pursuant 
        to section 45(b)(3)(I) of the Small Business Act have 
        increased opportunities for mentor-protege pairs, and 
        if they have decreased the paperwork required for such 
        pairs participating in programs at multiple agencies.

        VII. Section-by-Section Analysis of H.R. 3985 as Amended


Section 1. Short title

    This section provides that the bill may be cited as the 
``Building Better Business Partnerships Act of 2012.''

Section 2. Mentor-Protege programs

            Subsection (a)--Administrative Program
    Currently, the Act addresses contracting-related mentor-
protege relationships in two ways. First, in Section 8(d)(11), 
it acknowledges that mentors may receive subcontracting credit 
for providing developmental assistance to protege through the 
pilot Mentor-Protege [sic] Program established by section 831 
of the National Defense Authorization Act for Fiscal Year 
1991.\23\ Additionally, in a note to 15 U.S.C. Sec. 637(a),\24\ 
the Administrator is authorized to create mentor-protege 
programs for service-disabled veteran-owned small business 
concerns (SDVOSBs), women-owned small business concerns (WOSBs) 
and qualified HUBZone firms, with each program to be modeled on 
the mentor-protege program that the Administrator created for 
the 8(a) program through regulation. This subsection amends 
Section 45 of the Small Business Act and provides the 
Administrator with authority to establish a mentor-protege 
program for all small business concerns and directs the 
Administrator to use the existing 8(a) mentor-protege program 
as a model.
---------------------------------------------------------------------------
    \23\Pub. Law No. 104-201, 110 Stat. 2422 (1996).
    \24\Small Business Jobs Act a, Sec. 1245.
---------------------------------------------------------------------------
            Subsection (b)--Programs of Other Agencies.
    This subsection amends Section 45 of the Small Business 
Act. Under subsection (b)(1), agencies will be required to seek 
prior approval for their mentor-protege programs. Subsection 
(b)(2) states that the Administrator's approval shall be based 
on: whether the proposed program will assist small business 
concerns to compete for Federal prime contracts and 
subcontracts; and whether the program complies with SBA 
regulations.
    Subsection b(3) requires the Administrator to promulgate 
regulations on mentor-protege programs. The regulations must 
address the criteria for eligibility; the type of assistance 
mentors may provide; the effect of the findings of affiliation; 
the length of the mentor-protege relationship; the effect of 
the relationship on contracts awarded; the benefits, if any, to 
the mentor; the reporting requirements during and after 
participation in the program; the portability of the mentor-
protege relationship to other agencies; and the actions the 
agencies will take to ensure protege receive benefits and 
protect protege against actions by a mentor that may adversely 
affect the protege's status as a small business or provide 
disproportionate economic benefits to the mentor relative to 
the protege. This level of specificity is necessary to ensure 
that all participants have reasonable expectations of the 
program. Unlike the SBA's 8(a) mentor-protege program, the bill 
does not contemplate joint ventures between mentors and protege 
under the protege's small business status, unless such practice 
is otherwise authorized. Benefits to the mentors and the effect 
of the relationship on contracting are included so that SBA, if 
it deems appropriate, may allow mentors to receive 
subcontracting credit for providing assistance to protege, or 
to provide protege with priority access to subcontracts.
    Subsection b(4) clarifies that these new regulations and 
approval process do not apply to the Department of Defense's 
Mentor-Protege Program,\25\ nor do they apply to any of the 
mentoring requirements by the Small Business Innovation 
Research or the Small Business Technology Transfer 
Programs.\26\ Furthermore, the civilian agencies to which the 
regulations and approval process do apply will have a year 
after the Administrator issues the final regulations to bring 
their programs into compliance.
---------------------------------------------------------------------------
    \25\10 U.S.C. Sec. 2301 note
    \26\Section 9(n) of the Small Business Act.
---------------------------------------------------------------------------
            Subsection (c)--Reporting
    This subsection amends Section 45 of the Small Business 
Act, to require that the Administrator annually submit a report 
to the Committee on Small Business and the Senate Committee on 
Small Business and Entrepreneurship which assesses the benefits 
of the mentor-protege programs. The report is required to 
include each mentor-protege program and the number of 
participants in each program, including whether the protege are 
small, WOSB, SDVOSB, HUBZone or small disadvantaged firms. 
Furthermore, it must describe the types of assistance the 
protege received, the benefits the mentors received, and the 
progress the protege firms made to improve their competitive 
viability. The agencies with mentor-protege programs are 
expected to assist with this report.
            Subsection (d)--Definitions
    This subsection amends Section 45 of the Small Business Act 
to provide definitions of mentor, protege, and mentor-protege 
program. Specifically, mentors are defined as: (1) firms of any 
size that have the ability to help protege firms compete for 
Federal prime and subcontracts; (2) firms that commit to 
actually helping protege firms compete; and (3) meet any other 
requirements set by the Administrator. Likewise, a protege is a 
small business concern that is eligible to enter into Federal 
prime contracts or subcontracts and meets any other 
requirements set by the Administrator. Therefore, a mentor-
protege program is defined as a program that pairs a mentor 
with a protege for purposes of assisting the protege to compete 
for Federal prime contracts and subcontracts.
            Subsection (e)--Current Mentor Protege Agreements
    This subsection provides that mentors and protege with 
approved agreements in a program operating pursuant to 
subsection (b)(4)(C) shall be permitted to continue their 
relationship according to the terms of their agreement until 
the expiration date specified in the agreement.
            Subsection (f)--Submission of Agency Plans
    This subsection creates a timetable for the agency plans to 
be submitted to, commented on, and approved or denied as 
specified in subsection (b)(1)(A). Within 6 months of the 
Administrator promulgating the rules required by new subsection 
(b)(3), agencies operating mentor-protege programs pursuant to 
new subsection (b)(4)(c) must submit the plans specified in new 
subsection (b)(1)(A). The Administrator shall provide initial 
comments on each plan within 60 days of receipt and shall 
provide final approval or denial of each plan within 180 days 
of receipt.

Section 3. Government Accountability Office report

    This section amends section 45 of the Act to require the 
Government Accountability Office to conduct a study of the 
mentor-protege programs no later than 2 years after the 
agencies operating under the Act, as amended by this 
legislation, have their plans approved or denied. The study 
must: (1) update the study required by section 1345 of the Jobs 
Act; (2) examine whether potential affiliation issues between 
mentors and protege under the prior programs have been resolved 
by enactment of this legislation; and (3) examine whether the 
regulations issued pursuant to section 45(b)(3)(1) of the Small 
Business Act have increased opportunities for mentor-protege 
pairs; and (4) if they have decreased the paperwork required 
for such pair participating in programs at multiple agencies.

            VIII. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 17, 2012.
Hon. Sam Graves,
Chairman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3985, the Building 
Better Business Partnerships Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 3985--Building Better Business Partnerships Act of 2012

    Summary: H.R. 3985 would amend programs that pair 
disadvantaged small businesses with other eligible businesses 
(mentor-protege programs) in order to allow them to participate 
in set-aside programs for federal contracts. The bill would 
direct the Small Business Administration (SBA) to broaden the 
scope of its mentor-protege program to cover all small 
businesses (currently the program is open to a limited pool of 
participants). The bill also would direct the SBA to develop 
regulations that would apply to mentor-protege programs 
operating in other federal agencies.
    Based on information from the SBA and several federal 
agencies that operate mentor-protege programs, CBO estimates 
that implementing H.R. 3985 would cost $6 million over the 
2013-2017 period, assuming appropriation of the necessary 
amounts. CBO estimates that enacting H.R. 3985 would not affect 
direct spending or revenues; therefore, pay-as-you-go 
procedures do not apply.
    H.R. 3985 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of HR. 3985 is shown in the following table. 
The costs of this legislation fall within several budget 
functions, including 250 (general science, space, and 
technology), 370 (commerce and housing credit), and 550 
(health).

----------------------------------------------------------------------------------------------------------------
                                                                By fiscal year, in millions of dollars
                                                    ------------------------------------------------------------
                                                       2013      2014      2015      2016      2017    2013-2017
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level......................         *         1         2         2         2          7
Estimated Outlays..................................         *         1         1         2         2         6
----------------------------------------------------------------------------------------------------------------
*= less than $500,000.

    Basis of estimate: H.R. 3985 would expand the SBA's mentor-
protege program beyond the limited pool of participants 
eligible to participate under current law and would direct the 
agency to establish rules to ensure that mentor-protege 
programs in other federal agencies improve the ability of 
proteges to compete for federal contracts. Under current law, 
13 agencies have developed mentor-protege programs with similar 
but not standardized policies and procedures. Once the SBA has 
established rules for the program, the bill would give 
participating agencies one year to develop a plan that conforms 
to those rules.
    The cost of mentor-protege programs to the participating 
agencies consists primarily of personnel and associated 
overhead expenses to process applications, prepare reports, and 
track outcomes. The organizational structure varies from agency 
to agency; some agencies have full-time staff members devoted 
to the mentor-protege program, with other staff assisting as 
part of their duties. Most agencies, however, have employees 
working part-time on the program.
    Based on information from the SBA and several agencies with 
existing programs, CBO expects that the new rules would 
probably require agencies to revise their current plans, meet 
new performance tracking and reporting requirements, and track 
protege performance after the partnership has expired. CBO 
estimates that implementing those provisions would cost $6 
million over the 2013-2017 period, assuming appropriation of 
the necessary amounts.
    Pay-As-You-Go considerations: None.
    Intergovernmental and private-sector impact: H.R. 3985 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Susan Willie; Impact 
on State, local, and Tribal governments: Elizabeth Cove 
Delisle; Impact on the private sector: Vi Nguyen.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                         IX. Unfunded Mandates

    H.R. 3985 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act, Pub. 
L. No. 104-4, and would impose no costs on state, local or 
tribal governments.

          X. New Budget Authority, Entitlement Authority and 
                            Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House, the Committee provides the following opinion and 
estimate with respect to new budget authority, entitlement 
authority and tax expenditures.
    The Committee does not adopt as its own the estimate of new 
budget authority contained in the cost estimate prepared by the 
Director of the Congressional Budget Office (CBO) pursuant to 
Sec. 402 of the Congressional Budget Act of 1974. CBO estimates 
that implementation of the program will cost $6 million over 
five years. Since the agencies already operate their own 
mentor-protege program, the only additional cost will be 
preparing the plan to obtain approval by the Administrator of 
the SBA. Such costs, the Committee believes, would be handled 
under existing levels of appropriations for agency salaries and 
expenses. However, the costs that will be incurred are simply 
opportunity costs, as current personnel will need to prioritize 
revising plans and promulgating regulations. Thus, the 
Committee does not believe that any additional appropriations 
will be necessary to implement this legislation.

                         XI. Oversight Findings

    In accordance with clause 2(b)(1) of rule X of the Rules of 
the House, the oversight findings and recommendations of the 
Committee on Small Business with respect to the subject matter 
contained in H.R. 3985 are incorporated into the descriptive 
portions of this report.

               XII. Statement of Constitutional Authority

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
authority for this legislation in Art. I, Sec. 8, cls. 1, 3, 
and 18 and Art. IV, Sec. 3, cl. 2 of the Constitution of the 
United States.

                 XIII. Congressional Accountability Act

    H.R. 3985 does not relate to the terms and conditions of 
employment or access to public services or accommodations 
within the meaning of Sec. 102(b)(3) of Pub. L. No. 104-1.

             XIV. Federal Advisory Committee Act Statement

    H.R. 3985 does not establish or authorize the establishment 
of any new advisory committees as that term is defined in the 
Federal Advisory Committee Act, 5 U.S.C. App. 2.

                      XV. Statement of No Earmarks

    Pursuant to clause 9 of rule XXI, H.R. 3985 does not 
contain any congressional earmarks, limited tax benefits or 
limited tariff benefits as defined in subsections (d), (e) or 
(f) of clause 9 of rule XXI of the Rules of the House.

                 XVI. Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House, the Committee establishes the following performance-
related goals and objectives for this legislation:

          H.R. 3985 includes a number of provisions designed to 
        improve establishing mentor-protege agreements under 
        the Small Business Act, by guaranteeing that the 
        programs benefit small businesses, and ensuring that 
        the mentor-protege agreement does not inadvertently 
        harm the protege's small business status.

      XVII. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                           SMALL BUSINESS ACT




           *       *       *       *       *       *       *
SEC. 45. MENTOR-PROTEGE PROGRAMS.

  (a) Administration Program.--
          (1) Authority.--The Administrator is authorized to 
        establish a mentor-protege program for all small 
        business concerns.
          (2) Model for program.--The mentor-protege program 
        established under paragraph (1) shall be identical to 
        the mentor-protege program of the Administration for 
        small business concerns that participate in the program 
        under section 8(a) of this Act (as in effect on the 
        date of enactment of the Building Better Business 
        Partnerships Act of 2012), except that the 
        Administrator may modify the program to the extent 
        necessary given the types of small business concerns 
        included as proteges.
  (b) Programs of Other Agencies.--
          (1) Approval required.--Except as provided in this 
        subsection, a Federal department or agency may not 
        carry out a mentor-protege program for small business 
        concerns unless--
                  (A) the head of the department or agency 
                submits a plan to the Administrator for the 
                program; and
                  (B) the Administrator approves such plan.
          (2) Basis for approval.--The Administrator shall 
        approve or disapprove a plan submitted under paragraph 
        (1) based on whether the program proposed--
                  (A) will assist proteges to compete for 
                Federal prime contracts and subcontracts; and
                  (B) complies with the regulations issued 
                under paragraph (3).
          (3) Regulations.--Not later than 270 days after the 
        date of enactment of the Building Better Business 
        Partnerships Act of 2012, the Administrator shall 
        issue, subject to notice and comment, regulations with 
        respect to mentor-protege programs, which shall ensure 
        that such programs improve the ability of proteges to 
        compete for Federal prime contracts and subcontracts 
        and which shall address, at a minimum, the following:
                  (A) Eligibility criteria for program 
                participants, including any restrictions on the 
                number of mentor-protege relationships 
                permitted for each participant.
                  (B) The types of developmental assistance to 
                be provided by mentors, including how the 
                assistance provided shall improve the 
                competitive viability of the proteges.
                  (C) Whether any developmental assistance 
                provided by a mentor may affect the status of a 
                program participant as a small business concern 
                due to affiliation.
                  (D) The length of mentor-protege 
                relationships.
                  (E) The effect of mentor-protege 
                relationships on contracting.
                  (F) Benefits that may accrue to a mentor as a 
                result of program participation.
                  (G) Reporting requirements during program 
                participation.
                  (H) Postparticipation reporting requirements.
                  (I) The need for a mentor-protege pair, if 
                accepted to participate as a pair in a mentor-
                protege program of any Federal department or 
                agency, to be accepted to participate as a pair 
                in all Federal mentor-protege programs.
                  (J) Actions to be taken to ensure benefits 
                for proteges, and to protect proteges against 
                actions by the mentor that--
                          (i) may adversely affect the proteges 
                        status as a small business; or
                          (ii) provide disproportionate 
                        economic benefits to the mentor 
                        relative to those provided the protege.
          (4) Limitation on applicability.--Notwithstanding the 
        provisions of subsection (b)(1), the provisions of 
        subsection (b)(1) shall apply to the following:
                  (A) Any mentor-protege program of the 
                Department of Defense in effect on the date of 
                enactment of the Building Better Business 
                Partnerships Act of 2012.
                  (B) Any mentoring assistance provided under a 
                Small Business Innovation Research Program or a 
                Small Business Technology Transfer Program.
                  (C) Until the date that is 1 year after the 
                date on which the Administrator issues 
                regulations under paragraph (3), any Federal 
                department or agency operating a mentor-protege 
                program in effect on the date of enactment of 
                the Building Better Business Partnerships Act 
                of 2012.
  (c) Reporting.--
          (1) In general.--Not later than 2 years after the 
        date of enactment of the Building Better Business 
        Partnerships Act of 2012, and annually thereafter, the 
        Administrator shall submit to the Committee on Small 
        Business of the House of Representatives and the 
        Committee on Small Business and Entrepreneurship of the 
        Senate a report that--
                  (A) identifies each Federal mentor-protege 
                program;
                  (B) specifies the number of participants in 
                each such program, including the number of 
                participants that are--
                          (i) small business concerns;
                          (ii) small business concerns owned 
                        and controlled by service-disabled 
                        veterans;
                          (iii) qualified HUBZone small 
                        business concerns;
                          (iv) small business concerns owned 
                        and controlled by socially and 
                        economically disadvantaged individuals; 
                        or
                          (v) small business concerns owned and 
                        controlled by women;
                  (C) describes the type of assistance provided 
                to proteges under each such program;
                  (D) describes the benefits provided to 
                mentors under each such program; and
                  (E) describes the progress of proteges under 
                each such program with respect to competing for 
                Federal prime contracts and subcontracts.
          (2) Provision of information.--The head of each 
        Federal department or agency carrying out a mentor-
        protege program shall provide to the Administrator, 
        upon request, the information necessary for the 
        Administrator to submit a report required under 
        paragraph (1).
  (d) Definitions.--In this section, the following definitions 
apply:
          (1) Mentor.--The term ``mentor'' means a for-profit 
        business concern, of any size, that--
                  (A) has the ability to assist and commits to 
                assisting a protege to compete for Federal 
                prime contracts and subcontracts; and
                  (B) satisfies any other requirements imposed 
                by the Administrator.
          (2) Mentor-protege program.--The term ``mentor-
        protege program'' means a program that pairs a mentor 
        with a protege for the purpose of assisting the protege 
        to compete for Federal prime contracts and 
        subcontracts.
          (3) Protege.--The term ``protege'' means a small 
        business concern that--
                  (A) is eligible to enter into Federal prime 
                contracts and subcontracts; and
                  (B) satisfies any other requirements imposed 
                by the Administrator.
  (e) Current Mentor Protege Agreements.--Mentors and proteges 
with approved agreement in a program operating pursuant to 
subsection (b)(4)(C) shall be permitted to continue their 
relationship according to the terms specified in their 
agreement until the expiration date specified in the agreement.
  (f) Submission of Agency Plans.--Agencies operating mentor 
protege programs pursuant to subsection (b)(4)(C) must submit 
the plans specified in subsection (b)(1)(A) to the 
Administrator within 6 months of the promulgation of rules 
required by subsection (b)(3). The Administrator shall provide 
initial comments on each plan within 60 days of receipt, and 
final approval or denial of each plan with 180 days of receipt.
  Sec. [45.] 46. All laws and parts of laws inconsistent with 
this Act are hereby repealed to the extent of such 
inconsistency.