[Federal Register Volume 72, Number 113 (Wednesday, June 13, 2007)]
[Rules and Regulations]
[Pages 32540-32546]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11093]


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AGENCY FOR INTERNATIONAL DEVELOPMENT

48 CFR Parts 719 and 752

RIN 0412-AA58


Mentor-Prot[eacute]g[eacute] Program

AGENCY: U.S. Agency for International Development (USAID).

ACTION: Final Rule.

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SUMMARY: The United States Agency for International Development (USAID) 
is issuing this final rule to amend its acquisition regulations to 
formally encourage USAID prime contractors to assist small business, 
including veteran-owned small business, service-disabled veteran-owned 
small business, HUBZone, small socially and

[[Page 32541]]

economically disadvantaged business, and women-owned small business, in 
enhancing their capabilities to perform contracts and subcontracts for 
USAID and other Federal agencies. The program seeks to increase the 
base of small business eligible to perform USAID contracts and 
subcontracts. The program also seeks to foster long-term business 
relationships between USAID prime contractors and small business 
entities and to increase the overall number of small business entities 
that receive USAID contracts, and subcontract awards.

DATES: Effective Date: This rule will take effect July 13, 2007.

FOR FURTHER INFORMATION CONTACT: Rockfeler P. Herisse, Ph.D., U.S. 
Agency for International Development, Attn. Mentor-
Prot[eacute]g[eacute] Program, Office of Small and Disadvantaged 
Business Utilization, 1300 Pennsylvania Avenue, NW., Washington, DC 
20523-7800, Telephone: 202-712-0064, and E-mail: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background
II. Resolution of Comments
III. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Executive Order 12988
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under Executive Order 12612
    F. Review Under the Unfunded Mandates Reform Act of 1995

I. Background

    On November 22, 2006, the U.S. Agency for International Development 
(USAID) published a notice of proposed rulemaking (71 FR 67518), which 
proposed to develop a program that encouraged USAID prime contractors 
to assist small business, including veteran-owned small business, 
service-disabled small business, HUBZone, small socially and 
economically disadvantaged business, and women-owned small business in 
enhancing their capabilities to perform contracts and subcontracts for 
USAID and other Federal agencies. Comments on this proposed rule were 
extended to and closed on February 22, 2007 (71 FR 70939).
    Successful Mentor-Prot[eacute]g[eacute] arrangements represent 
opportunities for creating access for small business to USAID contracts 
and awards let through negotiated procurements. USAID received comments 
on the proposed rule suggesting the Agency clarify the eligible 
participants in the Program and the types of incentives USAID may 
provide to prime contractors for providing developmental assistance to 
prot[eacute]g[eacute]s. After careful consideration of the public 
comments received on the notice of proposed rulemaking, USAID today 
publishes a final rule.

II. Resolution of Comments

    Fourteen comments were received in response to the proposed rule. 
The comments and USAID's responses are as follows:
    Comment: USAID's implementation of its Mentor-Prot[eacute]g[eacute] 
Program must be narrowly tailored within SBA's statutory and regulatory 
constraints, absent USAID-specific statutory authority.
    Response: USAID agrees that its Mentor-Prot[eacute]g[eacute] 
Program must stay within SBA regulations and USAID-specific statutory 
authority.
    USAID received two comments related to Minority Serving 
Institutions in the proposed rule.
    Comment 1 states: We support the inclusion of Minority Serving 
Institutions (MSIs) as eligible prot[eacute]g[eacute]s but recommend 
that the expanded description of MSIs in this (the Purpose) section be 
deleted since it is specifically covered as a definition in section 
719.273-2(b) and in FAR 2.101-2.
    Comment 2 states: We support the inclusion of Minority Serving 
Institutions (MSIs) as eligible mentors, but question USAID's authority 
to use MSIs as small business concern prot[eacute]g[eacute]s.
    Response: USAID intended to include MSIs in the scope of this 
program. However, doing so would be outside its statutory authority. 
USAID agrees that it does not currently have the statutory authority 
for this provision and has deleted this requirement from the Mentor-
Prot[eacute]g[eacute] Program regulations. References to MSIs as 
mentors or prot[eacute]g[eacute]s have been deleted from the final 
rule.
    USAID received two comments related to the treatment of 
``affiliation'' in the proposed rule.
    Comment 1 states: We appreciate the affirmation included in this 
(Purpose) section that a prot[eacute]g[eacute] firm is not considered 
an affiliate of a mentor solely because of the developmental assistance 
the prot[eacute]g[eacute] receives under the Program but recommend that 
this statement be moved to section 719.273-2(a) where it more 
appropriately relates to the definition of a ``small business.''
    Comment 2 states: We do not believe that [USAID] has the authority 
to waive the SBA's affiliation requirements, as set forth in 13 CFR 
121.103.
    Response: USAID does not intend to establish affiliate 
relationships or waive the SBA affiliation requirements, as doing so is 
not within the USAID statutory authority. The final rule is clarified 
in section 719.273-2.
    Comment: We strongly support the formulation that a mentor may have 
more than one prot[eacute]g[eacute] providing that each relationship 
complies with the terms and conditions of the regulations and the 
mentor can demonstrate that it has the capacity to provide 
developmental assistance appropriate to the specific 
prot[eacute]g[eacute]. However, this language is already more 
appropriately addressed in sections 719.273-4(b) and 719.273-5(b) and 
thus should be deleted from this [Purpose] section.
    Response: USAID agrees with this comment and has modified the final 
rule.
    Comment: The commenter cites a portion of section 719.273-1 which 
concludes with a statement that USAID reserves the right ``to limit the 
total number of prot[eacute]g[eacute]s participating'' in the Program. 
The Agency has not disclosed why it has an interest in establishing 
limits on participation in the program. It is also unclear whether this 
statement means that the Agency would limit the number of 
prot[eacute]g[eacute]s a mentor could have or whether it is intended to 
operate as an overall limit of the number of mentor firms in the 
Program. For example, [Section] 719.273-5(b) states that USAID reserves 
the right to limit the number of prot[eacute]g[eacute]s participating 
under each mentor firm * * * By contrast, in the Paperwork Reduction 
Act discussion in the Background section accompanying the rule the 
Agency ``estimates'' that there would be a total of thirty firms 
required to complete the application form. Regardless, we believe the 
issue of any Agency imposed limits, if there are to be any, is more 
appropriately addressed elsewhere in the substantive provisions of the 
rule.
    Response: The commenter addresses several attributes of the 
Program, some of which are clarified in the final rule. USAID confirms 
its intent to reserve the right to limit the total number of 
participants in the Program, as expressed in section 719.273-4, in 
order to insure its effective management of the Program. The 
formulation in section 719.273-5(b) is clear in its intent to reserve 
the right to limit the number of prot[eacute]g[eacute]s participating 
under each mentor under the Program, in order for USAID to effectively 
manage the Program, to conduct due diligence on all Mentor-
Prot[eacute]g[eacute] Agreements, and to assure the developmental 
assistance proposed in the Agreements is being provided by the mentor 
to the prot[eacute]g[eacute](s). The discussion on the Paperwork 
Reduction Act in the Background section is intended to

[[Page 32542]]

provide an estimate of the number of participants from the U.S. 
business community to participate in the Program and was not intended 
to set a predetermined limit on the number of participants in the 
Program. USAID will monitor the number of Agreements endorsed 
(participants accepted into the Program) and in effect between the 
firms within a given period of time. These Agreements will be entered 
by firms in the public domain outside the controls of the USAID, but 
USAID imposes these measures to potentially limit participation in the 
Program to assure the integrity of the Mentor-Prot[eacute]g[eacute] 
Program. USAID agrees to reflect this concern in the Internal Controls 
section 719.273-10(a)(4) of the final rule.
    Comment: Addressing the definitions in section 719.273-2, commenter 
noted that the categories of firms eligible to participate in the 
Program are already covered in a more inclusive manner as a defined 
term in paragraph (a) of this Section and recommended deleting the 
listing in paragraph (e).
    Response: USAID disagrees with this comment and believes that there 
is merit in listing the categories of small business firms in both the 
new introductory paragraph of the section and in the specific 
definition of a Prot[eacute]g[eacute].
    Comment: (Referring to the last sentence of undesignated first 
paragraph of section 719.273-4) We recognize that the goal of the 
Mentor-Prot[eacute]g[eacute] Program is to expand the opportunities for 
small businesses to participate in USAID procurements. However, based 
on the capabilities of the prospective prot[eacute]g[eacute] firm and 
the developmental assistance it may need, it may be unreasonable to 
expect a prospective mentor firm to include the prospective 
prot[eacute]g[eacute] in the subcontracts at the outset of an 
Agreement. We believe USAID intended the scope of opportunities for 
prospective firms to be as broad as possible and that the Agency did 
not intend to restrict prospective prot[eacute]g[eacute]s to only those 
firms that are already qualified as potential prime contractors or as 
subcontractors under a mentor's prime contract * * *. We encourage 
USAID to clarify this important issue of eligibility in this paragraph.
    Response: USAID does not expect nor will it require a prospective 
mentor firm to include the prospective prot[eacute]g[eacute] in the 
subcontracts at the onset of an Agreement. USAID has clarified this 
issue of eligibility in the final rule.
    Comment: The commenter, citing the Federal Acquisition Regulation, 
states that USAID relies on 15 U.S.C. 637(d)(4)(E) for its authority to 
provide appropriate incentives to encourage subcontracting 
opportunities for small business consistent with the efficient and 
economical performance of the contract * * * [A]lthough USAID could 
provide certain evaluation preferences to mentors and 
prot[eacute]g[eacute]s with an approved Agreement, [commenter did] not 
see how USAID can provide the subcontracting credit that is set forth 
in the proposed rule, noting that the Department of Defense needed 
specific statutory authority for their Mentor-Prot[eacute]g[eacute] 
Program to provide for subcontracting credits.
    Response: USAID agrees that it currently does not have statutory 
authority to permit credit for subcontracting and has modified the 
final rule accordingly, to refine the language in 719.273-3(b). We are 
concerned about making the Program attractive to mentors and 
prot[eacute]g[eacute]s through allowable incentives under its statutory 
authority. After reviewing incentives offered by other U.S. Government 
agencies and as permitted by our regulations, we revised this section, 
using the Environmental Protection Agency (EPA) program as a model. 
Under the same Small Business Act authority cited above, EPA has 
provided certain ``incentives'' for mentors, as codified in 48 CFR 
1552.219-71(j); their regulation states that costs incurred by the 
offeror in fulfilling their agreement with a prot[eacute]g[eacute] firm 
are not reimbursable as a direct cost under the contract, but if EPA is 
the responsible audit agency, these costs will be considered in 
determining indirect cost rates. In the final rule, USAID's 
``incentive'' is similar to one provided by EPA.
    Comment: When referencing a term such as ``small business,'' 
HUBZone, etc., USAID should be referring the reader to SBA's 
regulations rather than the FAR. The term as used in USAID's regulation 
should also be consistent with the term as defined in 13 CFR.
    Response: USAID has modified the final rule accordingly.
    We received two comments on section 719.273-4(b)(1)(ii). The first 
commenter noted that the section provides that the applicable NAICS 
code for determining small business status is the services or supplies 
to be provided by the Prot[eacute]g[eacute] to the mentor, but that 
``the January 2006 application form prescribes that small business 
eligibility is based on the primary NAICS code for the small business 
concern. These two differing standards must be reconciled. We support 
the formulation used in the rule.'' The second commenter asked that 
USAID clarify that the prot[eacute]g[eacute] must be small for the 
NAICS codes assigned to the subcontract by the prime contractor (13 CFR 
121.405).
    Response: In the final rule, USAID indicates that the 
prot[eacute]g[eacute] must be small for the NAICS codes designated by 
the mentor, based on the supplies or services the prot[eacute]g[eacute] 
may provide to the mentor under a subcontract, in cases where there is 
a subcontract. USAID is not limiting prot[eacute]g[eacute] eligibility 
to only those small businesses that have a subcontract with the mentor, 
so we do not want the final rule to appear to make such a limitation. 
The comment about the application form is outside the scope of the 
proposed and this final rule.
    Comment: The Summary of the proposed rule is not in agreement with 
the language in the proposed regulation and may be misleading.
    Response: USAID agrees and has modified the rule to harmonize the 
summary and the language of the regulation.
    Comment: The clause reference 752.219-270 should be 752.219-70.
    Response: USAID agrees and deleted the number ``2'' from clause 
reference 752.219-70.
    Comment: In section 719.273-4 Eligibility of Mentor and 
Prot[eacute]g[eacute] Firms (b)(2), please clarify that the applicable 
certifications must be in accordance with SBA's Program regulations 
contained in 13 CFR 124 and 126.
    Response: USAID agrees and has modified the final rule accordingly.

III. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined to be a ``significant 
regulatory action'' under Executive Order 12866, ``Regulatory Planning 
and Review'' (58 FR 51735, October 4, 1993). Accordingly, this final 
rule was subject to review under that Executive Order by the Office of 
Information and Regulatory Affairs of the Office of Management and 
Budget (OMB).

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) Write 
regulations to minimize litigation; and (3) Provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a),

[[Page 32543]]

section 3(b) of Executive Order 12988 specifically requires that 
Executive agencies make every reasonable effort to ensure that the 
regulation: (1) Clearly specifies the subject law's preemptive effect, 
if any; (2) Clearly specifies any effect on existing Federal law or 
regulation; (3) Provides a clear legal standard for affected conduct 
while promoting simplification and burden reduction; (4) Specifies the 
retroactive effect, if any; (5) Adequately defines key terms; and (6) 
Addresses other important issues affecting clarity and general 
draftsmanship under any guidelines issued by the Attorney General. 
Section 3(c) of Executive Order 12988 requires Executive agencies to 
review regulations in light of applicable standards in section 3(a) and 
section 3(b) to determine whether they are met or it is unreasonable to 
meet one or more of them. USAID has completed the required review and 
determined that these proposed regulations meet the relevant standards 
of Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

    This final rule has been reviewed under the Regulatory Flexibility 
Act of 1980, Public Law 96-354, that requires preparation of an initial 
regulatory flexibility analysis for any rule that must be proposed for 
public comment and that is likely to have significant economic impact 
on a substantial number of small entities. Small entities include small 
business, small organizations, and small governmental jurisdictions.
    For purposes of assessing the impact of today's rule on small 
entities, small entity is defined as: (1) A small business that meets 
the definition of a small business found in the Small Business Act and 
codified in 13 CFR 121.201; (2) a small governmental jurisdiction that 
is a government of a city, county, town school district or special 
district with a population of less than 50,000; or (3) a small 
organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    After considering the economic impacts of today's rule on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. In 
determining whether a rule has a significant economic impact on a 
substantial number of entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the proposed rule on small entities.'' (5 U.S.C. 603 
and 604) Thus, an agency may certify that a rule will not have a 
significant economic impact on a substantial number of small entities 
if the rule relieves regulatory burden, or otherwise has a positive 
economic effect on all of the small entities subject to the rule. In 
fact, the purpose of the USAID Mentor-Prot[eacute]g[eacute] Program is 
to increase small business accessibility to USAID contracting. This 
rule streamlines USAID internal operating procedures and will therefore 
not have a significant economic impact on small entities.

D. Review Under the Paperwork Reduction Act

    This rule requires USAID Mentor-Prot[eacute]g[eacute] Program 
participants to submit an application (see section 719.273-7) and 
annual progress reports to the USAID Mentor-Prot[eacute]g[eacute] 
Program Manager at USAID Headquarters (see section 719.273-10). The 
information in the reports is necessary to determine the value of the 
developmental assistance and if the schedules and developmental 
assistance levels contained in Mentor-Prot[eacute]g[eacute] Agreements 
are being met. Performance under the Agreements is the basis for 
providing proper recognition to Mentor firms. USAID submitted the 
proposed collection of information to the Office of Management and 
Budget for review and approval under the Paperwork Reduction Act, 44 
U.S.C. 3501, et seq. The Office of Management and Budget has not yet 
approved the collection of information in this rule.
    An agency may not conduct or sponsor and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number (5 CFR 1320.5(b)).

E. Review Under Executive Order 12612

    Executive Order 12612, (52 FR 41685, October 30, 1987), requires 
that regulations, rules, legislation, and any other policy actions be 
reviewed for any substantial direct effects on States, on the 
relationship between the Federal Government and the States, or in the 
distribution of power and responsibilities among the various levels of 
Government. If there are sufficient substantial direct effects, then 
the Executive Order requires the preparation of a federalism assessment 
to be used in all decisions involved in promulgating and implementing a 
policy action. States would not be directly subject to this rule, since 
they are not among the class of entities described as Mentors or 
Prot[eacute]g[eacute]s. USAID has determined that this rule would not 
have a substantial direct effect on the institutional interests or 
traditional functions of the States.

F. Review Under the Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally 
requires a Federal agency to perform a detailed assessment of costs and 
benefits of any rule imposing a federal mandate with costs to State, 
local or tribal governments, or to the private sector of $100 million 
or more. This rulemaking would only affect private sector entities, and 
the impact is less than $100 million.

List of Subjects in 48 CFR Part 719

    Government procurement.


0
For the reasons set out in the preamble, USAID amends 48 CFR Chapter 7 
as set forth below:

PART 719--SMALL BUSINESS PROGRAMS

0
1. The authority citation for part 719 is revised to read as follows:

    Authority: 42 U.S.C. 7254, 40 U.S.C. 486(c), 42 U.S.C. 2201.

0
2. A new subpart 719.273 is added as follows:

Subpart 719.273--The U.S. Agency for International Development 
(USAID) Mentor-Prot[eacute]g[eacute] Program

Sec.
719.273 The U.S. Agency for International Development Mentor-
Prot[eacute]g[eacute] Program.
719.273-1 Purpose.
719.273-2 Definitions.
719.273-3 Incentives for Prime Contractor Participation.
719.273-4 Eligibility of Mentor and Prot[eacute]g[eacute] Firms.
719.273-5 Selection of Prot[eacute]g[eacute] Firms.
719.273-6 Application Process.
719.273-7 OSDBU Review of Application.
719.273-8 Developmental Assistance.
719.273-9 Obligations Under the Mentor-Prot[eacute]g[eacute] 
Program.
719.273-10 Internal Controls.
719.273-11 Solicitation Provision and Contract Clause.


719.273  The United States Agency for International Development (USAID) 
Mentor-Prot[eacute]g[eacute] Program.


719.273-1  Purpose.

    The USAID Mentor-Prot[eacute]g[eacute] Program is designed to 
assist small business, including veteran-owned small business, service-
disabled veteran-owned small business, HUBZone, small socially and 
economically disadvantaged business, and women-owned small business in 
enhancing their capabilities to perform contracts

[[Page 32544]]

and sub-contracts for USAID and other Federal agencies. The Mentor-
Prot[eacute]g[eacute] Program is also designed to improve the 
performance of USAID contractors and subcontractors by providing 
developmental assistance to Prot[eacute]g[eacute] entities, fostering 
the establishment of long-term business relationships between small 
business and prime contractors, and increasing the overall number of 
small business that receive USAID contract and subcontract awards. A 
firm's status as a Prot[eacute]g[eacute] under a USAID contract shall 
not have an effect on the firm's eligibility to seek other prime 
contracts or subcontracts.


719.273-2  Definitions.

    Throughout, the term ``small business'' includes all categories of 
small firms as defined by the Small Business Administration (SBA) on 
whose behalf the Office of Small and Disadvantaged Business Utilization 
(OSDBU) is chartered to advocate, including small business, small 
disadvantaged business, women-owned small business, veteran-owned and 
service-disabled veteran-owned small business and small business 
located in HUBZones, as those terms are defined in 13 CFR part 124. The 
determination of affiliation is a function of the SBA.
    (a) A ``Mentor'' is a prime contractor that elects to promote and 
develop small business subcontractors by providing developmental 
assistance designed to enhance the business success of the 
Prot[eacute]g[eacute].
    (b) ``Program'' refers to the USAID Mentor-Prot[eacute]g[eacute] 
Program as described in this Chapter.
    (c) ``Prot[eacute]g[eacute]'' means a small business, small 
disadvantaged business, women-owned small business, HUBZone small 
business, veteran-owned small business or service-disabled veteran 
owned small business that is the recipient of developmental assistance 
pursuant to a Mentor-Prot[eacute]g[eacute] Agreement.


719.273-3  Incentives for Prime Contractor Participation.

    (a) Under the Small Business Act, 15 U.S.C. 637(d)(4)(E), USAID is 
authorized to provide appropriate incentives to encourage 
subcontracting opportunities for small business consistent with the 
efficient and economical performance of the contract. This authority is 
limited to negotiated procurements. FAR 19.202-1 provides additional 
guidance.
    (b) Costs incurred by a Mentor to provide developmental assistance, 
as described in 719.273-8 to fulfill the terms of their agreement(s) 
with a Prot[eacute]g[eacute] firm(s), are not reimbursable as a direct 
cost under a USAID contract. If USAID is the mentor's responsible audit 
agency under FAR 42.703-1, USAID will consider these costs in 
determining indirect cost rates. If USAID is not the responsible audit 
agency, mentors are encouraged to enter into an advance agreement with 
their responsible audit agency on the treatment of such costs when 
determining indirect cost rates.
    (c) In addition to subparagraph (b) above, contracting officers may 
give Mentors evaluation credit under FAR 15.101-1 considerations for 
subcontracts awarded pursuant to their Mentor-Prot[eacute]g[eacute] 
Agreements and their subcontracting plans. Therefore:
    (1) Contracting officers may evaluate subcontracting plans 
containing Mentor-Prot[eacute]g[eacute] arrangements more favorably 
than subcontracting plans without Mentor-Prot[eacute]g[eacute] 
Agreements.
    (2) Contracting officers may assess the prime contractor's 
compliance with the subcontracting plans submitted in previous 
contracts as a factor in evaluating past performance under FAR 
15.305(a)(2)(v) and determining contractor responsibility 19.705-
5(a)(1).
    (d) OSDBU Mentoring Award. A non-monetary award will be presented 
annually to the Mentoring firm providing the most effective 
developmental support of a Prot[eacute]g[eacute]. The Mentor-
Prot[eacute]g[eacute] Program Manager will recommend an award winner to 
the Director of the Office of Small and Disadvantaged Business 
Utilization (OSDBU).
    (e) OSDBU Mentor-Prot[eacute]g[eacute] Annual Conference. At the 
conclusion of each year in the Mentor-Prot[eacute]g[eacute] Program, 
Mentor firms will be invited to brief contracting officers, program 
leaders, office directors and other guests on Program progress.


719.273-4  Eligibility of Mentor and Prot[eacute]g[eacute] Firms.

    Eligible business entities approved as Mentors may enter into 
agreements (hereafter referred to as ``Mentor-Prot[eacute]g[eacute] 
Agreement'' or ``Agreement'' and explained in section 719.273-6) with 
eligible Prot[eacute]g[eacute]s. Mentors provide appropriate 
developmental assistance to enhance the capabilities of 
Prot[eacute]g[eacute]s to perform as contractors and/or subcontractors. 
Eligible small business entities capable of providing developmental 
assistance may be approved as Mentors. Prot[eacute]g[eacute]s may 
participate in the Program in pursuit of a prime contract or as 
subcontractors under the Mentor's prime contract with the USAID, but 
are not required to be a subcontractor to a USAID prime contractor or 
be a USAID prime contractor. Notwithstanding eligibility requirements 
in this section, USAID reserves the right to limit the number of 
participants in the Program in order to insure its effective management 
of the Mentor-Prot[eacute]g[eacute] Program.
    (a) Eligibility. A Mentor:
    (1) May be either a large or small business entity;
    (2) Must be eligible for award of Government contracts;
    (3) Must be able to provide developmental assistance that will 
enhance the ability of Prot[eacute]g[eacute]s to perform as prime 
contractors or subcontractors; and
    (4) Will be encouraged to enter into arrangements with entities 
with which it has established business relationships.
    (b) Eligibility. A Prot[eacute]g[eacute]:
    (1) Must be a small business, veteran-owned small business, 
service-disabled veteran-owned small business, HUBZone, small socially 
and economically disadvantaged business, and women-owned small 
business);
    (2) Must meet the size standard corresponding to the NAICS code 
that the Mentor prime contractor believes best describes the product or 
service being acquired by the subcontract; and
    (3) Eligible for award of government contracts.
    (c) Prot[eacute]g[eacute]s may have multiple Mentors. 
Prot[eacute]g[eacute]s participating in Mentor-Prot[eacute]g[eacute] 
programs in addition to USAID's Program should maintain a system for 
preparing separate reports of Mentoring activity so that results of the 
USAID Program can be reported separately from any other agency program.
    (d) A Prot[eacute]g[eacute] firm shall self-certify to a Mentor 
firm that it meets the requirements set forth in paragraph (b) of this 
section and possess related certifications granted by the Small 
Business Administration (e.g., HUBZone, 8(a), etc.). Mentors may rely 
in good faith on written representations by potential 
Prot[eacute]g[eacute]s that they meet the specified eligibility 
requirements. HUBZone and small disadvantaged business status 
eligibility and documentation requirements are determined according to 
13 CFR part 124.


719.273-5  Selection of Prot[eacute]g[eacute] Firms.

    (a) Mentor firms will be solely responsible for selecting 
Prot[eacute]g[eacute] firms. Mentors are encouraged to select from a 
broad base of small business including small disadvantaged business, 
women-owned small business, veteran-owned small business, service-
disabled veteran-owned small business, and HUBZone firms whose core 
competencies support USAID's mission.
    (b) Mentors may have multiple Prot[eacute]g[eacute]s. However, to 
preserve the

[[Page 32545]]

integrity of the Program and assure the quality of developmental 
assistance provided to Prot[eacute]g[eacute]s, USAID reserves the right 
to limit the total number of Prot[eacute]g[eacute]s participating under 
each Mentor firm for the Mentor-Prot[eacute]g[eacute] Program.
    (c) The selection of Prot[eacute]g[eacute] firms by Mentor firms 
may not be protested, except that any protest regarding the size or 
eligibility status of an entity selected by a Mentor shall be handled 
in accordance with the Federal Acquisition Regulation (FAR) and the 
Small Business Administration regulations.


719.273-6  Application Process.

    Entities interested in becoming a Mentor firm must apply in writing 
to the USAID Office of Small and Disadvantaged Business Utilization 
(OSDBU) by submitting form AID 321-1 (OMB Control number 0412-0574 
approved on 5/22/2007). The application shall contain the Mentor-
Prot[eacute]g[eacute] Agreement and shall be evaluated for approval. 
Evaluations will consider the nature and extent of technical and 
managerial support as well as any proposed financial assistance in the 
form of equity investment, loans, joint-venture, and traditional 
subcontracting support. The Mentor-Prot[eacute]g[eacute] Agreement must 
contain:
    (a) Names, addresses, phone numbers, and e-mail addresses (if 
available) of Mentor and Prot[eacute]g[eacute] firm(s) and a point of 
contact for both Mentor and Prot[eacute]g[eacute];
    (b) A description of the developmental assistance that will be 
provided by the Mentor to the Prot[eacute]g[eacute], including a 
description of the work or product contracted for (if any), a schedule 
for providing assistance, and criteria for evaluation of the 
Prot[eacute]g[eacute]'s developmental success;
    (c) A listing of the number and types of subcontracts to be awarded 
to the Prot[eacute]g[eacute];
    (d) Duration of the Agreement, including rights and 
responsibilities of both parties (Mentor and Prot[eacute]g[eacute]);
    (e) Termination procedures, including procedures for the parties' 
voluntary withdrawal from the Program. The Agreement shall require the 
Mentor or the Prot[eacute]g[eacute] to notify the other firm in writing 
at least 30 days in advance of its intent to voluntarily terminate the 
Agreement;
    (f) Procedures requiring the parties to notify OSDBU immediately 
upon receipt of termination notice from the other party;
    (g) A plan for accomplishing the work or product contracted for 
should the Agreement be terminated; and
    (h) Other terms and conditions, as appropriate.


719.273-7  OSDBU Review of Application.

    (a) OSDBU will review the information to establish the Mentor and 
Prot[eacute]g[eacute] eligibility and to ensure that the information 
that is in section 719.273-6 is included. If the application relates to 
a specific contract, then OSDBU will consult with the responsible 
contracting officer on the adequacy of the proposed Agreement, as 
appropriate. OSDBU will complete its review no later than 30 calendar 
days after receipt of the application or after consultation with the 
contracting officer, whichever is later. Application for and enrollment 
into the Program are free and open to the public.
    (b) After OSDBU completes its review and provides written approval, 
the Mentor may execute the Agreement and implement the developmental 
assistance as provided under the Agreement. OSDBU will provide a copy 
of the Mentor-Prot[eacute]g[eacute] Agreement to the USAID contracting 
officer for any USAID contracts affected by the Agreement.
    (c) The Agreement defines the relationship between the Mentor and 
Prot[eacute]g[eacute] firms only. The Agreement itself does not create 
any privity of contract or contractual relationship between the Mentor 
and USAID nor the Prot[eacute]g[eacute] and USAID.
    (d) If the application is disapproved, the Mentor may provide 
additional information for reconsideration. OSDBU will complete review 
of any supplemental material no later than 30 days after its receipt. 
Upon finding deficiencies that USAID considers correctable, OSDBU will 
notify the Mentor and Prot[eacute]g[eacute] and request correction of 
deficiencies to be provided within 15 days.


719.273-8  Developmental Assistance.

    The forms of developmental assistance a Mentor can provide to a 
Prot[eacute]g[eacute] include and are not limited to the following:
    (a) Guidance relating to--
    (1) Financial management;
    (2) Organizational management;
    (3) Overall business management/planning;
    (4) Business development; and
    (5) Technical assistance.
    (b) Loans;
    (c) Rent-free use of facilities and/or equipment;
    (d) Property;
    (e) Temporary assignment of personnel to a Prot[eacute]g[eacute] 
for training; and
    (f) Any other types of permissible, mutually beneficial assistance.


719.273-9  Obligations Under the Mentor-Prot[eacute]g[eacute] Program.

    (a) A Mentor or Prot[eacute]g[eacute] may voluntarily withdraw from 
the Program. However, in no event shall such withdrawal impact the 
contractual requirements under any prime contract.
    (b) Mentor and Prot[eacute]g[eacute] entities shall submit to the 
USAID Office of Small and Disadvantaged Business Utilization (OSDBU) 
annual reports on progress under the Mentor-Prot[eacute]g[eacute] 
Agreement. USAID will evaluate annual reports by considering the 
following:
    (1) Specific actions taken by the Mentor during the evaluation 
period to increase the participation of their Prot[eacute]g[eacute](s) 
as suppliers to the Federal Government and to commercial entities;
    (2) Specific actions taken by the Mentor during the evaluation 
period to develop technical and administrative expertise of a 
Prot[eacute]g[eacute] as defined in the Agreement;
    (3) The extent to which the Prot[eacute]g[eacute] has met the 
developmental objectives in the Agreement;
    (4) The extent to which the Mentor's participation in the Mentor-
Prot[eacute]g[eacute] Program impacted the Prot[eacute]g[eacute]'(s) 
ability to receive contract(s) and subcontract(s) from private firms 
and Federal agencies other than USAID; and, if deemed necessary;
    (5) Input from the Prot[eacute]g[eacute] on the nature of the 
developmental assistance provided by the Mentor.
    (c) OSDBU will submit annual reports to the relevant contracting 
officer regarding participating prime contractor(s)' performance in the 
Program.
    (d) Mentor and Prot[eacute]g[eacute] firms shall submit an 
evaluation to OSDBU at the conclusion of the mutually agreed upon 
Program period, the conclusion of the contract, or the voluntary 
withdrawal by either party from the Program, whichever comes first.


719.273-10  Internal Controls.

    (a) OSDBU will oversee the Program and will work in concert with 
the Mentor-Prot[eacute]g[eacute] Program Manager and relevant 
contracting officers to achieve Program objectives. OSDBU will 
establish internal controls as checks and balances applicable to the 
Program. These controls will include:
    (1) Reviewing and evaluating Mentor applications for validity of 
the provided information;
    (2) Reviewing annual progress reports submitted by Mentors and 
Prot[eacute]g[eacute]s on Prot[eacute]g[eacute] development to measure 
Prot[eacute]g[eacute] progress against the plan submitted in the 
approved Agreement;
    (3) Reviewing and evaluating financial reports and invoices 
submitted

[[Page 32546]]

by the Mentor to verify that USAID is not charged by the Mentor for 
providing developmental assistance to the Prot[eacute]g[eacute]; and
    (4) Limiting the number of participants in the Mentor-
Prot[eacute]g[eacute] Program within a reporting period, in order to 
insure the effective management of the Program.
    (b) USAID may rescind approval of an existing Mentor-
Prot[eacute]g[eacute] Agreement if it determines that such action is in 
USAID's best interest. The rescission shall be in writing and sent to 
the Mentor and Prot[eacute]g[eacute] after approval by the Director of 
OSDBU. Rescission of an Agreement does not change the terms of any 
subcontract between the Mentor and the Prot[eacute]g[eacute].


719.273-11  Solicitation Provision and Contract Clause.

    (a) The Contracting Officer shall insert the provision at AIDAR 
752.219-70 in all unrestricted solicitations exceeding $550,000 
($1,000,000 for construction) that offer subcontracting opportunities.
    (b) The Contracting Officer shall insert the clause at AIDAR 
752.219-71 in all contracts where the prime contractor has signed a 
Mentor-Prot[eacute]g[eacute] Agreement with USAID.

PART 752--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Add section 752.219-70 to read as follows:


752.219-70  USAID Mentor-Prot[eacute]g[eacute] Program.

    As prescribed in 719.273-11(a), insert the following provision:

USAID Mentor-Prot[eacute]g[eacute] Program (July 13, 2007)

    (a) Large and small business are encouraged to participate in 
the USAID Mentor-Prot[eacute]g[eacute] Program (the ``Program''). 
Mentor firms provide eligible small business Prot[eacute]g[eacute]s 
with developmental assistance to enhance their business capabilities 
and ability to obtain Federal contracts.
    (b) Mentor firms are large prime contractors or eligible small 
business capable of providing developmental assistance. 
Prot[eacute]g[eacute] firms are small business as defined in 13 CFR 
parts 121, 124, and 126.
    (c) Developmental assistance is technical, managerial, 
financial, and other mutually beneficial assistance that aids 
Prot[eacute]g[eacute]s. The costs for developmental assistance are 
not chargeable to the contract.
    (d) Firms interested in participating in the Program are 
encouraged to contact the USAID Mentor-Prot[eacute]g[eacute] Program 
Manager (202-712-1500) for more information.


(End of provision)


0
4. Add section 752.219-271 to read as follows:


752.219-71  Mentor Requirements and Evaluation.

    As prescribed in AIDAR 719.273-11(b), insert the following clause:

Mentor Requirements and Evaluation (July 13, 2007)

    (a) Mentor and Prot[eacute]g[eacute] firms shall submit an 
evaluation of the overall experience in the Program to OSDBU at the 
conclusion of the mutually agreed upon Program period, the 
conclusion of the contract, or the voluntary withdrawal by either 
party from the Program, whichever occurs first. At the conclusion of 
each year in the Mentor-Prot[eacute]g[eacute] Program, the Mentor 
and Prot[eacute]g[eacute] will formally brief the USAID Mentor-
Prot[eacute]g[eacute] Program Manager regarding Program 
accomplishments under their Mentor-Prot[eacute]g[eacute] Agreement.
    (b) Mentor or Prot[eacute]g[eacute] shall notify OSDBU in 
writing, at least 30 calendar days in advance of the effective date 
of the firm's withdrawal from the Program.


(End of clause)

    Dated: May 31, 2007.
Robert K. Egge,
Acting Director, Office of Small and Disadvantaged Business Utilization 
(OSDBU).
[FR Doc. E7-11093 Filed 6-11-07; 8:45 am]
BILLING CODE 6116-01-P