Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 74995

DEPARTMENT OF DEFENSE

48 CFR Part 219 and Appendix I to 

Chapter 2 

[DFARS Case 2003–D013] 

Defense Federal Acquisition 

Regulation Supplement; DoD Pilot 

Mentor-Prote ́ge ́ Program

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to update policy pertaining to 

the DoD Pilot Mentor-Prote ́ge ́ Program. 

The rule authorizes the Director, Small 

and Disadvantaged Business Utilization, 

of each military department and defense 

agency to approve mentor firms and 

mentor-prote ́ge ́ agreements.

EFFECTIVE DATE: December 15, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. 

Thaddeus Godlewski, Defense 

Acquisition Regulations Council, 

OUSD(AT&L)DPAP(DAR), IMD 3C132, 

3062 Defense Pentagon, Washington, DC 

20301–3062. Telephone (703) 602–2022; 

facsimile (703) 602–0350. Please cite 

DFARS Case 2003–D013.

SUPPLEMENTARY INFORMATION: 

A. Background 

This final rule authorizes the Director, 

Small and Disadvantaged Business 

Utilization (SADBU), of each military 

department and defense agency to 

approve mentor firms and mentorprote ́ge ́ agreements under the DoD Pilot 

Mentor-Prote ́ge ́ Program. The Director, 

Office of the Secretary of Defense, 

SADBU, will retain policy and oversight 

responsibility for the offices 

participating in the Program and will 

remain the principal budget authority 

for the Program. This rule also updates 

procedures for implementation of the 

Mentor-Prote ́ge ́ Program. 

DoD published a proposed rule at 69 

FR 26533 on May 13, 2004. Two 

respondents submitted comments on the 

proposed rule. One respondent 

expressed support for the rule. The 

other respondent recommended 

amendment of the rule to allow servicedisabled veteran-owned small business 

concerns to participate as prote ́ge ́ firms. 

Statutory authority permitting 

participation of service-disabled 

veteran-owned small business concerns 

as prote ́ge ́ firms was provided in 

Section 842 of the National Defense 

Authorization Act for Fiscal Year 2005 

(Public Law 108–375) on October 28, 

2004. DoD will be implementing the 

new authority provided by Section 842 

separately under DFARS Case 2004–

D028. Therefore, DoD has adopted the 

proposed rule published on May 13, 

2004, as a final rule without change. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

DoD certifies that this final rule will 

not have a significant economic impact 

on a substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because the changes in the rule relate 

primarily to administrative aspects of 

the DoD Pilot Mentor-Prote ́ge ́ Program. 

The basic principles of the Program 

have not changed. 

C. Paperwork Reduction Act 

The information collection 

requirements of the DoD Pilot Mentor 

Prote ́ge ́ Program have been approved by 

the Office of Management and Budget 

under Control Number 0704–0332 for 

use through May 31, 2007.

List of Subjects in 48 CFR Part 219 

Government procurement.

Michele P. Peterson, 

Executive Editor, Defense Acquisition 

Regulations Council.

■ Therefore, 48 CFR part 219 and 

appendix I to chapter 2 are amended as 

follows:

■ 1. The authority citation for 48 CFR 

part 219 and appendix I to subchapter I 

continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR 

Chapter 1.

PART 219—SMALL BUSINESS 

PROGRAMS

■ 2. Section 219.7100 is amended by 

revising the first sentence to read as 

follows:

219.7100 Scope. 

This subpart implements the Pilot 

Mentor-Prote ́ge ́ Program (hereafter 

referred to as the ‘‘Program’’) 

established under Section 831 of the 

National Defense Authorization Act for 

Fiscal Year 1991 (Public Law 101–510; 

10 U.S.C. 2302 note). * * *

■ 3. Section 219.7102 is amended by 

revising paragraphs (a) and (d) to read as 

follows:

219.7102 General.

* * * * *

(a) Mentor firms that are prime 

contractors with at least one active 

subcontracting plan negotiated under 

FAR Subpart 19.7 or under the DoD 

Comprehensive Subcontracting Test 

Program.

* * * * *

(d) Incentives that DoD may provide 

to mentor firms, including—

(1) Reimbursement for developmental 

assistance costs through—

(i) A separately priced contract line 

item on a DoD contract; or 

(ii) A separate contract, upon written 

determination by the cognizant 

Component Director, Small and 

Disadvantaged Business Utilization 

(SADBU), that unusual circumstances 

justify reimbursement using a separate 

contract; or 

(2) Credit toward applicable 

subcontracting goals, established under 

a subcontracting plan negotiated under 

FAR Subpart 19.7 or under the DoD 

Comprehensive Subcontracting Test 

Program, for developmental assistance 

costs that are not reimbursed.

■ 4. Section 219.7103–1 is revised to 

read as follows:

219.7103–1 General. 

The procedures for application, 

acceptance, and participation in the 

Program are in Appendix I, Policy and 

Procedures for the DoD Pilot MentorProte ́ge ́ Program. The Director, SADBU, 

of each military department or defense 

agency has the authority to approve 

contractors as mentor firms, approve 

mentor-prote ́ge ́ agreements, and forward 

approved mentor-prote ́ge ́ agreements to 

the contracting officer when funding is 

available.

■ 5. Section 219.7103–2 is amended as 

follows:

■ a. By revising paragraphs (d), (e), and 

(f); and

■ b. In paragraph (h), in the 

parenthetical, by removing ‘‘I–112’’ and 

adding in its place ‘‘I–113’’. The revised 

text reads as follows:

219.7103–2 Contracting officer 

responsibilities.

* * * * *

(d) Modify applicable contract(s) to 

establish a contract line item for 

reimbursement of developmental 

assistance costs if—

(1) A DoD program manager or the 

cognizant Component Director, SADBU, 

has made funds available for that 

purpose; and 

(2) The contractor has an approved 

mentor-prote ́ge ́ agreement.

(e) Negotiate and award a separate 

contract for reimbursement of 

developmental assistance costs only if—

(1) Funds are available for that 

purpose; 

(2) The contractor has an approved 

mentor-prote ́ge ́ agreement; and 

(3) The cognizant Component 

Director, SADBU, has made a 

74996 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 

determination in accordance with 

219.7102(d)(1)(ii). 

(f) Not authorize reimbursement for 

costs of assistance furnished to a prote ́ge ́

firm in excess of $1,000,000 in a fiscal 

year unless a written determination 

from the cognizant Component Director, 

SADBU, is obtained.

* * * * *

219.7105 [Amended]

■ 6. Section 219.7105 is amended by 

removing ‘‘I–111’’ and adding in its place 

‘‘I–112’’.

219.7106 [Amended]

■ 7. Section 219.7106 is amended in the 

first sentence by removing ‘‘I–112’’ and 

adding in its place ‘‘I–113’’.

■ 8. Appendix I to Chapter 2 is revised 

to read as follows: 

Appendix I—Policy and Procedures for 

the DOD Pilot Mentor-Protege Program

I–100 Purpose.

(a) This Appendix I to 48 CFR Chapter 2 

implements the Pilot Mentor-Prote ́ge ́

Program (hereafter referred to as the 

‘‘Program’’) established under Section 831 of 

Public Law 101–510, the National Defense 

Authorization Act for Fiscal Year 1991 (10 

U.S.C. 2302 note). The purpose of the 

Program is to—

(1) Provide incentives to major DoD 

contractors, performing under at least one 

active approved subcontracting plan 

negotiated with DoD or another Federal 

agency, to assist prote ́ge ́ firms in enhancing 

their capabilities to satisfy DoD and other 

contract and subcontract requirements; 

(2) Increase the overall participation of 

prote ́ge ́ firms as subcontractors and suppliers 

under DoD contracts, other Federal agency 

contracts, and commercial contracts; and 

(3) Foster the establishment of long-term 

business relationships between prote ́ge ́ firms 

and such contractors. 

(b) Under the Program, eligible companies 

approved as mentor firms will enter into 

mentor-prote ́ge ́ agreements with eligible 

prote ́ge ́ firms to provide appropriate 

developmental assistance to enhance the 

capabilities of the prote ́ge ́ firms to perform as 

subcontractors and suppliers. DoD may 

provide the mentor firm with either cost 

reimbursement or credit against applicable 

subcontracting goals established under 

contracts with DoD or other Federal agencies. 

(c) DoD will measure the overall success of 

the Program by the extent to which the 

Program results in—

(1) An increase in the dollar value of 

contract and subcontract awards to prote ́ge ́

firms (under DoD contracts, contracts 

awarded by other Federal agencies, and 

commercial contracts) from the date of their 

entry into the Program until 2 years after the 

conclusion of the agreement; 

(2) An increase in the number and dollar 

value of subcontracts awarded to a prote ́ge ́

firm (or former prote ́ge ́ firm) by its mentor 

firm (or former mentor firm); 

(3) An increase in the employment level of 

prote ́ge ́ firms from the date of entry into the 

Program until 2 years after the completion of 

the agreement. 

(d) This policy sets forth the procedures for 

participation in the Program applicable to 

companies that are interested in receiving—

(1) Reimbursement through a separate 

contract line item in a DoD contract or a 

separate contract with DoD; or 

(2) Credit toward applicable subcontracting 

goals for costs incurred under the Program.

I–101 Definitions.

I–101.1 Historically Black college or 

university.

An institution determined by the Secretary 

of Education to meet the requirements of 34 

CFR 608.2. The term also means any 

nonprofit research institution that was an 

integral part of such a college or university 

before November 14, 1986.

I–101.2 Minority institution of higher 

education.

An institution of higher education with a 

student body that reflects the composition 

specified in section 312(b)(3), (4), and (5) of 

the Higher Education Act of 1965 (20 U.S.C. 

1058(b)(3), (4), and (5)).

I–101.3 Eligible entity employing the 

severely disabled.

A business entity operated on a for-profit 

or nonprofit basis that—

(a) Uses rehabilitative engineering to 

provide employment opportunities for 

severely disabled individuals and integrates 

severely disabled individuals into its 

workforce; 

(b) Employs severely disabled individuals 

at a rate that averages not less than 20 

percent of its total workforce; 

(c) Employs each severely disabled 

individual in its workforce generally on the 

basis of 40 hours per week; and 

(d) Pays not less than the minimum wage 

prescribed pursuant to section 6 of the Fair 

Labor Standards Act (29 U.S.C. 206) to those 

employees who are severely disabled 

individuals.

I–101.4 Severely disabled individual.

An individual who has a physical or 

mental disability which constitutes a 

substantial handicap to employment and 

which, in accordance with criteria prescribed 

by the Committee for the Purchase from the 

Blind and Other Severely Handicapped 

established by the first section of the Act of 

June 25, 1938 (41 U.S.C. 46; popularly known 

as the ‘‘Javits-Wagner-O’Day Act’’) is of such 

a nature that the individual is otherwise 

prevented from engaging in normal 

competitive employment.

I–101.5 Small disadvantaged business 

(SDB).

A small business concern that is—

(a) An SDB concern as defined at 219.001, 

paragraph (1) of the definition of ‘‘small 

disadvantaged business concern’’; 

(b) A business entity owned and controlled 

by an Indian tribe as defined in Section 

8(a)(13) of the Small Business Act (15 U.S.C. 

637(a)(13)); or 

(c) A business entity owned and controlled 

by a Native Hawaiian Organization as 

defined in Section 8(a)(15) of the Small 

Business Act.

I–101.6 Women-owned small business 

(WOSB).

A small business concern owned and 

controlled by women as defined in Section 

8(d)(3)(D) of the Small Business Act (15 

U.S.C. 637(d)(3)(D)).

I–102 Participant eligibility.

(a) To be eligible to participate as a mentor, 

an entity must be—

(1) An entity other than small business, 

unless a waiver to the small business 

exception has been obtained from the 

Director, Small and Disadvantaged Business 

Utilization (SADBU), OUSD (AT&L), that is 

a prime contractor to DoD with an active 

subcontracting plan; or 

(2) A graduated 8(a) firm that provides 

documentation of its ability to serve as a 

mentor; and 

(3) Approved to participate as a mentor in 

accordance with I–105. 

(b) To be eligible to participate as a 

protee ́ge ́, an entity must be—

(1) An SDB, a WOSB, or an eligible entity 

employing the severely disabled; 

(2) Eligible for the award of Federal 

contracts; and 

(3) A small business according to the Small 

Business Administration (SBA) size standard 

for the North American Industry 

Classification System (NAICS) code that 

represents the contemplated supplies or 

services to be provided by the prote ́ge ́ firm 

to the mentor firm if the firm is representing 

itself as a qualifying entity under the 

definition at I–101.5(a) or I–101.6. 

(c) Mentor firms may rely in good faith on 

a written representation that the entity meets 

the requirements of paragraph (a) of this 

section, except for a prote ́ge ́’s status as a 

small disadvantaged business concern (see 

FAR 19.703(b)). 

(d) If at any time the SBA (or DoD in the 

case of entities employing the severely 

disabled) determines that a prote ́ge ́ is 

ineligible, assistance that the mentor firm 

furnishes to the prote ́ge ́ after the date of the 

determination may not be considered 

assistance furnished under the Program. 

(e) A company may not be approved for 

participation in the Program as a mentor firm 

if, at the time of requesting participation in 

the Program, it is currently debarred or 

suspended from contracting with the Federal 

Government pursuant to FAR Subpart 9.4. 

(f) If the mentor firm is suspended or 

debarred while performing under an 

approved mentor-prote ́ge ́ agreement, the 

mentor firm—

(1) May continue to provide assistance to 

its prote ́ge ́ firms pursuant to approved 

mentor-prote ́ge ́ agreements entered into prior 

to the imposition of such suspension or 

debarment; 

(2) May not be reimbursed or take credit for 

any costs of providing developmental 

assistance to its prote ́ge ́ firm, incurred more 

than 30 days after the imposition of such 

suspension or debarment; and 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 74997

(3) Must promptly give notice of its 

suspension or debarment to its prote ́ge ́ firm 

and the cognizant Component Director, 

SADBU.

I–103 Program duration.

(a) New mentor-prote ́ge ́ agreements may be 

submitted and approved through September 

30, 2005. 

(b) Mentors incurring costs prior to 

September 30, 2008, pursuant to an approved 

mentor-prote ́ge ́ agreement may be eligible 

for—

(1) Credit toward the attainment of its 

applicable subcontracting goals for 

unreimbursed costs incurred in providing 

developmental assistance to its prote ́ge ́

firm(s); 

(2) Reimbursement pursuant to the 

execution of a separately priced contract line 

item added to a DoD contract; or 

(3) Reimbursement pursuant to entering 

into a separate DoD contract upon 

determination by the cognizant Component 

Director, SADBU, that unusual circumstances 

justify using a separate contract.

I–104 Selection of prote ́ge ́ firms.

(a) Mentor firms will be solely responsible 

for selecting prote ́ge ́ firms. Mentor firms are 

encouraged to identify and select concerns 

that are defined as emerging SDB prote ́ge ́

firms. 

(b) The selection of prote ́ge ́ firms by 

mentor firms may not be protested, except as 

in paragraph (c) of this section. 

(c) In the event of a protest regarding the 

size or disadvantaged status of an entity 

selected to be a prote ́ge ́ firm as defined in I–

101.5, the mentor firm must refer the protest 

to the SBA to resolve in accordance with 13 

CFR part 121 (with respect to size) or 13 CFR 

part 124 (with respect to disadvantaged 

status). 

(d) For purposes of the Small Business Act, 

no determination of affiliation or control 

(either direct or indirect) may be found 

between a prote ́ge ́ firm and its mentor firm 

on the basis that the mentor firm has agreed 

to furnish (or has furnished) to its prote ́ge ́

firm, pursuant to a mentor-prote ́ge ́

agreement, any form of developmental 

assistance described in I–107(f). 

(e) A prote ́ge ́ firm may have only one 

active DoD mentor-prote ́ge ́ agreement.

I–105 Mentor approval process.

(a) An entity seeking to participate as a 

mentor must apply to the cognizant 

Component Director, SADBU, to establish its 

initial eligibility as a mentor. This 

application may accompany its initial 

mentor-prote ́ge ́ agreement. 

(b) The application must provide the 

following information: 

(1) A statement that the company is 

currently performing under at least one 

active approved subcontracting plan 

negotiated with DoD or another Federal 

agency pursuant to FAR 19.702, and that the 

company is currently eligible for the award 

of Federal contracts or a statement that the 

entity is a graduated 8(a) firm. 

(2) A summary of the company’s historical 

and recent activities and accomplishments 

under its small and disadvantaged business 

utilization program. 

(3) The total dollar amount of DoD 

contracts and subcontracts that the company 

received during the 2 preceding fiscal years. 

(Show prime contracts and subcontracts 

separately per year.) 

(4) The total dollar amount of all other 

Federal agency contracts and subcontracts 

that the company received during the 2 

preceding fiscal years. (Show prime contracts 

and subcontracts separately per year.) 

(5) The total dollar amount of subcontracts 

that the company awarded under DoD 

contracts during the 2 preceding fiscal years. 

(6) The total dollar amount of subcontracts 

that the company awarded under all other 

Federal agency contracts during the 2 

preceding fiscal years. 

(7) The total dollar amount and percentage 

of subcontracts that the company awarded to 

all SDB and WOSB firms under DoD 

contracts and other Federal agency contracts 

during the 2 preceding fiscal years. (Show 

DoD subcontract awards separately.) If the 

company presently is required to submit a 

Standard Form (SF) 295, Summary 

Subcontract Report, the request must include 

copies of the final reports for the 2 preceding 

fiscal years. 

(8) Information on the company’s ability to 

provide developmental assistance to eligible 

prote ́ge ́s. 

(c) A template of the mentor application is 

available at: http://www.acq.osd.mil/sadbu/

mentor_protege.

(d) Companies that apply for participation 

and are not approved will be provided the 

reasons and an opportunity to submit 

additional information for reconsideration.

I–106 Development of mentor-prote ́ge ́

agreements.

(a) Prospective mentors and their prote ́ge ́s 

may choose to execute letters of intent prior 

to negotiation of mentor-prote ́ge ́ agreements. 

(b) The agreements should be structured 

after completion of a preliminary assessment 

of the developmental needs of the prote ́ge ́

firm and mutual agreement regarding the 

developmental assistance to be provided to 

address those needs and enhance the 

prote ́ge ́’s ability to perform successfully 

under contracts or subcontracts. 

(c) A mentor firm may not require a prote ́ge ́

firm to enter into a mentor-prote ́ge ́ agreement 

as a condition for award of a contract by the 

mentor firm, including a subcontract under a 

DoD contract awarded to the mentor firm. 

(d) The mentor-prote ́ge ́ agreement may 

provide for the mentor firm to furnish any or 

all of the following types of developmental 

assistance: 

(1) Assistance by mentor firm personnel 

in—

(i) General business management, 

including organizational management, 

financial management, and personnel 

management, marketing, business 

development, and overall business planning; 

(ii) Engineering and technical matters such 

as production inventory control and quality 

assurance; and 

(iii) Any other assistance designed to 

develop the capabilities of the prote ́ge ́ firm 

under the developmental program. 

(2) Award of subcontracts under DoD 

contracts or other contracts on a 

noncompetitive basis. 

(3) Payment of progress payments for the 

performance of subcontracts by a prote ́ge ́

firm in amounts as provided for in the 

subcontract; but in no event may any such 

progress payment exceed 100 percent of the 

costs incurred by the prote ́ge ́ firm for the 

performance of the subcontract. Provision of 

progress payments by a mentor firm to a 

prote ́ge ́ firm at a rate other than the 

customary rate for the firm must be 

implemented in accordance with FAR 

32.504(c). 

(4) Advance payments under such 

subcontracts. The mentor firm must 

administer advance payments in accordance 

with FAR Subpart 32.4. 

(5) Loans. 

(6) Investment(s) in the prote ́ge ́ firm in 

exchange for an ownership interest in the 

prote ́ge ́ firm, not to exceed 10 percent of the 

total ownership interest. Investments may 

include, but are not limited to, cash, stock, 

and contributions in kind. 

(7) Assistance that the mentor firm obtains 

for the prote ́ge ́ firm from one or more of the 

following: 

(i) Small Business Development Centers 

established pursuant to Section 21 of the 

Small Business Act (15 U.S.C. 648). 

(ii) Entities providing procurement 

technical assistance pursuant to 10 U.S.C. 

Chapter 142 (Procurement Technical 

Assistance Centers). 

(iii) Historically Black colleges and 

universities. 

(iv) Minority institutions of higher 

education. 

(e) Pursuant to FAR 31.109, approved 

mentor firms seeking either reimbursement 

or credit are strongly encouraged to enter into 

an advance agreement with the contracting 

officer responsible for determining final 

indirect cost rates under FAR 42.705. The 

purpose of the advance agreement is to 

establish the accounting treatment of the 

costs of the developmental assistance 

pursuant to the mentor-prote ́ge ́ agreement 

prior to the incurring of any costs by the 

mentor firm. An advance agreement is an 

attempt by both the Government and the 

mentor firm to avoid possible subsequent 

dispute based on questions related to 

reasonableness, allocability, or allowability 

of the costs of developmental assistance 

under the Program. Absent an advance 

agreement, mentor firms are advised to 

establish the accounting treatment of such 

costs and to address the need for any changes 

to their cost accounting practices that may 

result from the implementation of a mentorprote ́ge ́ agreement, prior to incurring any 

costs, and irrespective of whether costs will 

be reimbursed or credited. 

(f) Developmental assistance provided 

under an approved mentor-prote ́ge ́ agreement 

is distinct from, and must not duplicate, any 

effort that is the normal and expected 

product of the award and administration of 

the mentor firm’s subcontracts. Costs 

associated with the latter must be 

accumulated and charged in accordance with 

the contractor’s approved accounting 

practices; they are not considered 

developmental assistance costs eligible for 

either credit or reimbursement under the 

Program.

74998 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 

I–107 Elements of a mentor-prote ́ge ́

agreement. 

Each mentor-prote ́ge ́ agreement will 

contain the following elements: 

(a) The name, address, e-mail address, 

and telephone number of the mentor 

and prote ́ge ́ points of contact; 

(b) The NAICS code(s) that represent 

the contemplated supplies or services to 

be provided by the prote ́ge ́ firm to the 

mentor firm and a statement that, at the 

time the agreement is submitted for 

approval, the prote ́ge ́ firm, if an SDB or 

WOSB concern, does not exceed the size 

standard for the appropriate NAICS 

code; 

(c) A statement that the prote ́ge ́ firm 

is eligible to participate in accordance 

with I–102(b); 

(d) A statement that the mentor is 

eligible to participate in accordance 

with I–102; 

(e) A preliminary assessment of the 

developmental needs of the prote ́ge ́

firm; 

(f) A developmental program for the 

prote ́ge ́ firm specifying the type of 

assistance the mentor will provide to 

the prote ́ge ́ and how that assistance 

will—

(1) Increase the prote ́ge ́’s ability to 

participate in DoD, Federal, and/or 

commercial contracts and subcontracts; 

and 

(2) Increase small business 

subcontracting opportunities in industry 

categories where eligible prote ́ge ́s or 

other small business firms are not 

dominant in the company’s vendor base; 

(g) Factors to assess the prote ́ge ́ firm’s 

developmental progress under the 

Program, including specific milestones 

for providing each element of the 

identified assistance; 

(h) An estimate of the dollar value 

and type of subcontracts that the mentor 

firm will award to the prote ́ge ́ firm, and 

the period of time over which the 

subcontracts will be awarded; 

(i) A statement from the prote ́ge ́ firm 

indicating its commitment to comply 

with the requirements for reporting and 

for review of the agreement during the 

duration of the agreement and for 2 

years thereafter; 

(j) A program participation term for 

the agreement that does not exceed 3 

years. Requests for an extension of the 

agreement for a period not to exceed an 

additional 2 years are subject to the 

approval of the cognizant Component 

Director, SADBU. The justification must 

detail the unusual circumstances that 

warrant a term in excess of 3 years; 

(k) Procedures for the mentor firm to 

notify the prote ́ge ́ firm in writing at least 

30 days in advance of the mentor firm’s 

intent to voluntarily withdraw its 

participation in the Program. A mentor 

firm may voluntarily terminate its 

mentor-prote ́ge ́ agreement(s) only if it 

no longer wants to be a participant in 

the Program as a mentor firm. 

Otherwise, a mentor firm must 

terminate a mentor-prote ́ge ́ agreement 

for cause;

(l) Procedures for the mentor firm to 

terminate the mentor-prote ́ge ́ agreement 

for cause which provide that—

(1) The mentor firm must furnish the 

prote ́ge ́ firm a written notice of the 

proposed termination, stating the 

specific reasons for such action, at least 

30 days in advance of the effective date 

of such proposed termination; 

(2) The prote ́ge ́ firm must have 30 

days to respond to such notice of 

proposed termination, and may rebut 

any findings believed to be erroneous 

and offer a remedial program; 

(3) Upon prompt consideration of the 

prote ́ge ́ firm’s response, the mentor firm 

must either withdraw the notice of 

proposed termination and continue the 

prote ́ge ́ firm’s participation, or issue the 

notice of termination; and 

(4) The decision of the mentor firm 

regarding termination for cause, 

conforming with the requirements of 

this section, will be final and is not 

reviewable by DoD; 

(m) Procedures for a prote ́ge ́ firm to 

notify the mentor firm in writing at least 

30 days in advance of the prote ́ge ́ firm’s 

intent to voluntarily terminate the 

mentor-prote ́ge ́ agreement; 

(n) Additional terms and conditions 

as may be agreed upon by both parties; 

and 

(o) Signatures and dates for both 

parties to the mentor-prote ́ge ́ agreement.

I–108 Submission and approval of mentorprote ́ge ́ agreements.

(a) Upon solicitation or as determined by 

the cognizant DoD component, mentors will 

submit—

(1) A mentor application pursuant to I–105, 

if the mentor has not been previously 

approved to participate; 

(2) A signed mentor-prote ́ge ́ agreement 

pursuant to I–107; 

(3) A statement as to whether the mentor 

is seeking credit or reimbursement of costs 

incurred; 

(4) The estimated cost of the technical 

assistance to be provided, broken out per 

year; 

(5) A justification if program participation 

term is greater than 3 years (Term of 

agreements may not exceed 5 years); and 

(6) For reimbursable agreements, a specific 

justification for developmental costs in 

excess of $1,000,000 per year. 

(b) When seeking reimbursement of costs, 

cognizant DoD components may require 

additional information. 

(c) The mentor-prote ́ge ́ agreement must be 

approved by the cognizant Component 

Director, SADBU, prior to incurring costs 

eligible for credit. 

(d) The cognizant DoD component will 

execute a contract modification or a separate 

contract, if justified pursuant to I–103(b)(3), 

prior to the mentor’s incurring costs eligible 

for reimbursement. 

(e) Credit agreements that are not 

associated with an existing DoD program 

and/or component will be submitted for 

approval to Director, SADBU, Defense 

Contract Management Agency (DCMA), via 

the mentor’s cognizant administrative 

contracting officer. 

(f) A prospective mentor that has identified 

Program funds to be made available from a 

DoD program manager must provide the 

information in paragraph (a) of this section 

through the program manager to the 

cognizant Component Director, SADBU, with 

a letter signed by the program manager 

indicating the amount of funding that has 

been identified for the developmental 

assistance program.

I–109 Reimbursable agreements.

The following program provisions apply to 

all reimbursable mentor-prote ́ge ́ agreements: 

(a) Assistance provided in the form of 

progress payments to a prote ́ge ́ firm in excess 

of the customary progress payment rate for 

the firm will be reimbursed only if 

implemented in accordance with FAR 

32.504(c). 

(b) Assistance provided in the form of 

advance payments will be reimbursed only if 

the payments have been provided to a 

prote ́ge ́ firm under subcontract terms and 

conditions similar to those in the clause at 

FAR 52.232–12, Advance Payments. 

Reimbursement of any advance payments 

will be made pursuant to the inclusion of the 

clause at DFARS 252.232–7005, 

Reimbursement of Subcontractor Advance 

Payments—DoD Pilot Mentor-Prote ́ge ́

Program, in appropriate contracts. In 

requesting reimbursement, the mentor firm 

agrees that the risk of any financial loss due 

to the failure or inability of a prote ́ge ́ firm to 

repay any unliquidated advance payments 

will be the sole responsibility of the mentor 

firm. 

(c) The primary forms of developmental 

assistance authorized for reimbursement 

under the Program are identified in I–106(d). 

On a case-by-case basis, Component 

Directors, SADBU, at their discretion, may 

approve additional incidental expenses for 

reimbursement, provided these expenses do 

not exceed 10 percent of the total estimated 

cost of the agreement. 

(d) The total amount reimbursed to a 

mentor firm for costs of assistance furnished 

to a prote ́ge ́ firm in a fiscal year may not 

exceed $1,000,000 unless the cognizant 

Component Director, SADBU, determines in 

writing that unusual circumstances justify 

reimbursement at a higher amount. Request 

for authority to reimburse in excess of 

$1,000,000 must detail the unusual 

circumstances and must be endorsed and 

submitted by the program manager to the 

cognizant Component Director, SADBU. 

(e) Developmental assistance costs that are 

incurred pursuant to an approved 

reimbursable mentor-prote ́ge ́ agreement, and 

have been charged to, but not reimbursed 

through, a separate contract, or through a 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 74999

separately priced contract line item added to 

a DoD contract, will not be otherwise 

reimbursed, as either a direct or indirect cost, 

under any other DoD contract, irrespective of 

whether the costs have been recognized for 

credit against applicable subcontracting 

goals.

I–110 Credit agreements.

I–110.1 Program provisions applicable to 

credit agreements.

(a) Developmental assistance costs 

incurred by a mentor firm for providing 

assistance to a prote ́ge ́ firm pursuant to an 

approved credit mentor-prote ́ge ́ agreement 

may be credited as if the costs were incurred 

under a subcontract award to that prote ́ge ́, for 

the purpose of determining the performance 

of the mentor firm in attaining an applicable 

subcontracting goal established under any 

contract containing a subcontracting plan 

pursuant to the clause at FAR 52.219–9, 

Small Business Subcontracting Plan, or the 

provisions of the DoD Comprehensive 

Subcontracting Plan Test Program. 

Unreimbursed developmental assistance 

costs incurred for a prote ́ge ́ firm that is an 

eligible entity employing the severely 

disabled may be credited toward the mentor 

firm’s small disadvantaged business 

subcontracting goal, even if the prote ́ge ́ firm 

is not a small disadvantaged business 

concern. 

(b) Costs that have been reimbursed 

through inclusion in indirect expense pools 

may also be credited as subcontract awards 

for determining the performance of the 

mentor firm in attaining an applicable 

subcontracting goal established under any 

contract containing a subcontracting plan. 

However, costs that have not been 

reimbursed because they are not reasonable, 

allocable, or allowable will not be recognized 

for crediting purposes. 

(c) Other costs that are not eligible for 

reimbursement pursuant to I–106(d) may be 

recognized for credit only if requested, 

identified, and incorporated in an approved 

mentor-prote ́ge ́ agreement. 

(d) The amount of credit a mentor firm may 

receive for any such unreimbursed 

developmental assistance costs must be equal 

to—

(1) Four times the total amount of such 

costs attributable to assistance provided by 

small business development centers, 

historically Black colleges and universities, 

minority institutions, and procurement 

technical assistance centers. 

(2) Three times the total amount of such 

costs attributable to assistance furnished by 

the mentor’s employees. 

(3) Two times the total amount of other 

such costs incurred by the mentor in carrying 

out the developmental assistance program.

I–110.2 Credit adjustments.

(a) Adjustments may be made to the 

amount of credit claimed if the Director, 

SADBU, OUSD(AT&L), determines that—

(1) A mentor firm’s performance in the 

attainment of its subcontracting goals 

through actual subcontract awards declined 

from the prior fiscal year without justifiable 

cause; and 

(2) Imposition of such a limitation on 

credit appears to be warranted to prevent 

abuse of this incentive for the mentor firm’s 

participation in the Program. 

(b) The mentor firm must be afforded the 

opportunity to explain the decline in small 

business subcontract awards before 

imposition of any such limitation on credit. 

In making the final decision to impose a 

limitation on credit, the Director, SADBU, 

OUSD(AT&L), must consider—

(1) The mentor firm’s overall small 

business participation rates (in terms of 

percentages of subcontract awards and 

dollars awarded) as compared to the 

participation rates existing during the 2 fiscal 

years prior to the firm’s admission to the 

Program; 

(2) The mentor firm’s aggregate prime 

contract awards during the prior 2 fiscal 

years and the total amount of subcontract 

awards under such contracts; and 

(3) Such other information the mentor firm 

may wish to submit. 

(c) The decision of the Director, SADBU, 

OUSD(AT&L), regarding the imposition of a 

limitation on credit will be final.

I–111 Agreement terminations.

(a) Mentors and/or prote ́ge ́s must send a 

copy of any termination notices to the 

cognizant Component Director, SADBU, that 

approved the agreement, and the DCMA 

administrative contracting officer responsible 

for conducting the annual review pursuant to 

I–113.

(b) For reimbursable agreements, mentors 

must also send copies of any termination to 

the program manager and to the contracting 

officer. 

(c) Termination of a mentor-prote ́ge ́

agreement will not impair the obligations of 

the mentor firm to perform pursuant to its 

contractual obligations under Government 

contracts and subcontracts. 

(d) Termination of all or part of the mentorprote ́ge ́ agreement will not impair the 

obligations of the prote ́ge ́ firm to perform 

pursuant to its contractual obligations under 

any contract awarded to the prote ́ge ́ firm by 

the mentor firm. 

(e) Mentors and prote ́ge ́s will follow 

provisions of the mentor-prote ́ge ́ agreement 

developed in compliance with I–107(k) 

through (m).

I–112 Reporting requirements.

I–112.1 Reporting requirements applicable 

to SF294/SF295 reports.

(a) Amounts credited toward applicable 

subcontracting goal(s) for unreimbursed costs 

under the Program must be separately 

identified on the appropriate SF294/SF295 

reports from the amounts credited toward the 

goal(s) resulting from the award of actual 

subcontracts to prote ́ge ́ firms. The 

combination of the two must equal the 

mentor firm’s overall accomplishment 

toward the applicable goal(s). 

(b) A mentor firm may receive credit 

toward the attainment of an SDB 

subcontracting goal for each subcontract 

awarded by the mentor firm to an entity that 

qualifies as a prote ́ge ́ firm pursuant to I–

101.3 or I–101.5. 

(c) For purposes of calculating any 

incentives to be paid to a mentor firm for 

exceeding an SDB subcontracting goal 

pursuant to the clause at FAR 52.219–26, 

Small Disadvantaged Business Participation 

Program—Incentive Subcontracting, 

incentives will be paid only if an SDB 

subcontracting goal has been exceeded as a 

result of actual subcontract awards to SDBs 

(i.e., excluding credit).

I–112.2 Program specific reporting 

requirements.

(a) Mentors must report on the progress 

made under active mentor-prote ́ge ́

agreements semiannually for the periods 

ending March 31st and September 30th 

throughout the Program participation term of 

the agreement. The September 30th report 

must address the entire fiscal year. 

(b) Reports are due 30 days after the close 

of each reporting period. 

(c) Each report must include the following 

data on performance under the mentorprote ́ge ́ agreement: 

(1) Dollars obligated (for reimbursable 

agreements). 

(2) Expenditures. 

(3) Dollars credited, if any, toward 

applicable subcontracting goals as a result of 

developmental assistance provided to the 

prote ́ge ́ and a copy of the SF294 and/or 

SF295 for each contract where 

developmental assistance was credited. 

(4) The number and dollar value of 

subcontracts awarded to the prote ́ge ́ firm. 

(5) Description of developmental assistance 

provided, including milestones achieved. 

(6) Impact of the agreement in terms of 

capabilities enhanced, certifications received, 

and/or technology transferred. 

(d) A recommended reporting format and 

guidance for its submission are available at: 

http://www.acq.osd.mil/sadbu/

mentor_protege. 

(e) The prote ́ge ́ must provide data, 

annually by October 31st, on the progress 

made during the prior fiscal year by the 

prote ́ge ́ in employment, revenues, and 

participation in DoD contracts during—

(1) Each fiscal year of the Program 

participation term; and 

(2) Each of the 2 fiscal years following the 

expiration of the Program participation term. 

(f) The prote ́ge ́ report required by 

paragraph (e) of this section may be provided 

as part of the mentor report for the period 

ending September 30th required by 

paragraph (a) of this section. 

(g) Progress reports must be submitted—

(1) For credit agreements, to the cognizant 

Component Director, SADBU, that approved 

the agreement, and the mentor’s cognizant 

DCMA administrative contracting officer; and 

(2) For reimbursable agreements, to the 

cognizant Component Director, SADBU, the 

contracting officer, the DCMA administrative 

contracting officer, and the program manager.

I–113 Performance reviews.

(a) DCMA will conduct annual 

performance reviews of the progress and 

accomplishments realized under approved 

mentor-prote ́ge ́ agreements. These reviews 

must verify data provided on the semiannual 

reports and must provide information as to—

75000 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Rules and Regulations 

(1) Whether all costs reimbursed to the 

mentor firm under the agreement were 

reasonably incurred to furnish assistance to 

the prote ́ge ́ in accordance with the mentorprote ́ge ́ agreement and applicable regulations 

and procedures; and 

(2) Whether the mentor and prote ́ge ́

accurately reported progress made by the 

prote ́ge ́ in employment, revenues, and 

participation in DoD contracts during the 

Program participation term and for 2 fiscal 

years following the expiration of the Program 

participation term. 

(b) A checklist for annual performance 

reviews is available at http://

www.acq.osd.mil/sadbu/mentor_protege.

[FR Doc. 04–27351 Filed 12–14–04; 8:45 am] 

BILLING CODE 5001–08–P

DEPARTMENT OF DEFENSE

48 CFR Part 236 

[DFARS Case 2003–D035] 

Defense Federal Acquisition 

Regulation Supplement; Construction 

and Architect-Engineer Services

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has issued a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to update text pertaining to 

selection of firms for architect-engineer 

contracts. This rule is a result of a 

transformation initiative undertaken by 

DoD to dramatically change the purpose 

and content of the DFARS.

EFFECTIVE DATE: December 15, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. 

Euclides Barrera, Defense Acquisition 

Regulations Council, 

OUSD(AT&L)DPAP(DAR), IMD 3C132, 

3062 Defense Pentagon, Washington, DC 

20301–3062. Telephone (703) 602–0296; 

facsimile (703) 602–0350. Please cite 

DFARS Case 2003–D035.

SUPPLEMENTARY INFORMATION: 

A. Background 

DFARS Transformation is a major 

DoD initiative to dramatically change 

the purpose and content of the DFARS. 

The objective is to improve the 

efficiency and effectiveness of the 

acquisition process, while allowing the 

acquisition workforce the flexibility to 

innovate. The transformed DFARS will 

contain only requirements of law, DoDwide policies, delegations of FAR 

authorities, deviations from FAR 

requirements, and policies/procedures 

that have a significant effect beyond the 

internal operating procedures of DoD or 

a significant cost or administrative 

impact on contractors or offerors. 

Additional information on the DFARS 

Transformation initiative is available at 

http://www.acq.osd.mil/dp/dars/

transf.htm.

This final rule is a result of the 

DFARS Transformation initiative. The 

changes in this rule—

∑ Revise DFARS 236.602–1 to remove 

procedures for establishment of 

evaluation criteria in the selection of 

firms for architect-engineer contracts. 

This text has been relocated to the new 

DFARS companion resource, 

Procedures, Guidance, and Information 

(PGI), available at http://

www.acq.osd.mil/dpap/dars/pgi.

∑ Remove unnecessary text on 

preselection boards and selection 

authorities at DFARS 236.602–2 and 

236.602–4. 

∑ Amend DFARS 236.604 to reflect 

replacement of Standard Form 254, 

Architect—Engineer and Related 

Services Questionnaire, with Standard 

Form 330, Architect-Engineer 

Qualifications. 

DoD published a proposed rule at 69 

FR 35568 on June 25, 2004. DoD 

received no comments on the proposed 

rule. Therefore, DoD has adopted the 

proposed rule as a final rule without 

change. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

DoD certifies that this final rule will 

not have a significant economic impact 

on a substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because the changes in the rule 

represent no substantive change to 

policy with regard to selection of firms 

for architect-engineer contracts. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act does 

not apply because the rule does not 

impose any information collection 

requirements that require the approval 

of the Office of Management and Budget 

under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 236 

Government procurement.

Michele P. Peterson, 

Executive Editor, Defense Acquisition 

Regulations Council.

■ Therefore, 48 CFR Part 236 is amended 

as follows:

■ 1. The authority citation for 48 CFR 

Part 236 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR 

Chapter 1.

PART 236—CONSTRUCTION AND 

ARCHITECT-ENGINEER CONTRACTS

■ 2. Section 236.602–1 is revised to read 

as follows:

236.602–1 Selection criteria. 

(a) Establish the evaluation criteria 

before making the public announcement 

required by FAR 5.205(c) and include 

the criteria and their relative order of 

importance in the announcement. 

Follow the procedures at PGI 236.602–

1(a).

236.602–2 and 236.602–4 [Removed]

■ 3. Sections 236.602–2 and 236.602–4 

are removed.

■ 4. Section 236.604 is amended by 

revising paragraph (c)(ii) to read as 

follows:

236.604 Performance evaluation.

* * * * *

(c) * * * 

(ii) File and use the DD Form 2631, 

Performance Evaluation (ArchitectEngineer), in a manner similar to the SF 

330, Architect-Engineer Qualifications, 

Part II.

[FR Doc. 04–27350 Filed 12–14–04; 8:45 am] 

BILLING CODE 5001–08–P

DEPARTMENT OF DEFENSE

48 CFR Part 237 

[DFARS Case 2003–D107] 

Defense Federal Acquisition 

Regulation Supplement; Firefighting 

Services Contracts

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

SUMMARY: DoD has adopted as final, 

without change, an interim rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to implement Section 331 of 

the National Defense Authorization Act 

for Fiscal Year 2004. Section 331 

provides authority for contractor 

performance of firefighting functions at 

military installations or facilities for 

periods of one year or less, if the 

functions would otherwise have to be 

performed by members of the armed 

forces who are not readily available due 

to a deployment.

EFFECTIVE DATE: December 15, 2004.

FOR FURTHER INFORMATION CONTACT: Ms. 

Robin Schulze, Defense Acquisition 

Regulations Council, OUSD (AT&L) 

DPAP (DAR), IMD 3C132, 3062 Defense 

Pentagon, Washington, DC 20301–3062. 

Telephone (703) 602–0326; facsimile 

(703) 602–0350. Please cite DFARS Case 

2003–D107.