The purpose of DOD’s Pilot Mentor-Protégé Program, as established in statute, is to provide incentives to major DOD contractors to furnish eligible disadvantaged small business concerns with assistance designed to (1) enhance the capabilities of eligible disadvantaged small business concerns to perform as subcontractors and suppliers under DOD contracts and other contracts and subcontracts; and (2) increase the participation of such business concerns as subcontractors and suppliers under DOD contracts, other federal government contracts, and commercial contracts. DOD’s Office of Small Business Programs (OSBP) manages the program, including developing and overseeing the policies and procedures for the program. In addition, a number of DOD components administer individual mentor-protégé agreements. DOD components and the mentors and protégés that participate in the program are required to follow DOD’s regulations and policies and procedures. For example, DOD’s regulations state that the director of small business programs for each DOD component has the authority to approve firms as mentors and to approve mentor-protégé agreements, among other things. OSBP has developed tools to facilitate program administration, including a template to assist mentors and protégés in developing proposed agreements and a checklist to assist DOD components with ensuring that proposed agreements address required elements, which we discuss later in this report. However, DOD components and mentors and protégés are not required to use the tools. DOD’s Pilot Mentor-Protégé Program offers two types of agreements. Reimbursable agreements provide payments directly to the mentor for the cost of providing developmental assistance to the protégé. Credit agreements provide mentors with credit toward their subcontracting goals for providing developmental assistance to protégés. Mentors can provide protégés with various types of assistance under mentor-protégé agreements, including general business management, subcontract awards, progress payments, advance payments, and loans. Mentors may also obtain assistance for protégés from Small Business Development Centers, Procurement Technical Assistance Centers, historically black colleges and universities, and minority institutions of higher education (see fig. 1). DOD policies and procedures also require mentors to report on the progress made under active mentor-protégé agreements in semiannual reports. Mentors must also include in semiannual reports, among other things, (1) any assistance obtained by the mentor firm for the protégé firm from Small Business Development Centers, Procurement Technical Assistance Centers, historically black colleges and universities, and minority institutions of higher education for developmental assistance provided to protégés, (2) dollars credited (if any) toward applicable subcontracting goals as a result of developmental assistance provided to the protégé, and (3) the impact of the agreement in terms of capabilities enhanced, certifications received, or technology transferred. In addition, annual reports are to contain data on the protégé’s employment, revenue, and participation in DOD contracts. DOD procedures also require protégés to report on the progress made in each of the 2 years following the completion of their agreement. Further, DOD procedures require the Defense Contract Management Agency (DCMA), another DOD component that manages agreements for the department, to conduct a performance review annually of each mentor-protégé agreement. DOD’s process for establishing and approving mentor-protégé agreements generally consists of nine steps (as illustrated in fig. 2): 1. Mentor seeks approval to participate in program. A firm that is interested in participating in the DOD Pilot Mentor-Protégé Program must submit an application for approval as a mentor to the Director of OSBP. To be eligible as a mentor, among other factors, a firm must not be affiliated with the protégé prior to the approval of the agreement and must demonstrate it is qualified to provide assistance that will contribute to the program’s purpose, among other requirements. 2. Mentor establishes a counterpart. The mentor is solely responsible for selecting the protégé. To be eligible as a protégé, a firm must be, among other things, a women-owned small business, Historically Underutilized Business Zone (HUBZone) small business, service- disabled veteran-owned small business, or an eligible entity employing the severely disabled. 3. Mentor conducts a needs assessment. Once the mentor selects the protégé, the mentor conducts a preliminary assessment of the protégé’s developmental needs. The mentor and protégé then mutually agree on the developmental assistance that the mentor is to provide to address those needs. 4. Parties determine the type of agreement. The mentor and protégé may apply for either a reimbursable mentor-protégé agreement or a credit agreement. 5. Parties develop the agreement. The mentor and protégé develop a proposed mentor-protégé agreement that must address a number of required elements, which we discuss in greater detail later in this report. 6. Mentor submits proposed agreement for review. The mentor submits the proposed agreement to the cognizant DOD component for review and approval. 7. DOD component approves or denies agreement. As previously noted, the director of small business programs for each DOD component has the authority to approve mentor-protégé agreements. 8. Parties start the agreement. The mentor and protégé begin the agreement, which cannot generally exceed 3 years. 9. Parties report on progress. The mentor is required to submit a semiannual report on the progress made under an active mentor- protégé agreement throughout the term of an agreement. The protégé is required to submit an annual report on progress made during each fiscal year of the program term and for each of the 2 fiscal years following the expiration of the agreement. The NDAA for Fiscal Year 2016 made several changes to DOD’s Pilot Mentor-Protégé Program. For example, with respect to the relationship between a mentor firm and protégé firm, the act strengthened affiliation rules by explicitly stating that the presence of certain family relationships between owners and managers in both the mentor and protégé firms constitutes affiliation and thereby is not allowed. In addition, the act amended the size requirement so that DOD’s size standard for protégés is set at less than half of that used by SBA. See appendix III for additional information on selected changes to the program made by the NDAA for Fiscal Year 2016. According to SBA, the All Small Mentor-Protégé Program is designed to apply to all federal small business contracts, including those that small businesses currently participate in under other federal mentor-protégé programs. In addition, according to SBA, the rule establishing the regulations for the program is intended to be consistent with the regulations for SBA’s 8(a) Business Development Mentor-Protégé Program. SBA’s All Small Mentor-Protégé Program includes certain requirements for the mentor-protégé programs of other federal agencies, but, as required by federal law, the program exempts DOD’s Pilot Mentor- Protégé Program from these requirements. For example, the final rule states that the head of a department or agency must submit a plan to SBA for any previously existing mentor-protégé program that the department or agency seeks to continue within 1 year of the effective date of the rule (or by August 24, 2017). In addition, the final rule states that a federal department or agency may not start a new mentor-protégé program unless the head of the department or agency submits a plan to the SBA Administrator for the program and the SBA Administrator approves the plan. The incentives provided to mentors under SBA’s programs differ from those provided under DOD’s Pilot Mentor-Protégé Program, as we discuss in greater detail later in this report. DOD components have the authority to approve mentor-protégé agreements, and they are required to follow the regulations, policies, and procedures DOD has established for the program. However, DOD lacks controls needed to provide reasonable assurance that mentor-protégé agreements approved by DOD components contain all elements required by DOD policies and regulations. DOD’s regulations and OSBP procedures do not prescribe the process DOD components should follow to approve mentor-protégé agreements. Instead, DOD’s OSBP has allowed DOD components to develop their own detailed procedures. As shown in the following examples, these procedures differ in terms of some elements, such as criteria and time frames: Air Force. The Department of the Air Force (Air Force) issues an announcement each fiscal year that outlines its process for considering proposed mentor-protégé agreements. The fiscal year 2016 announcement describes a two-step solicitation process. For fiscal year 2016, the Air Force was first to solicit white papers from prospective mentors describing, among other things, the proposed developmental assistance the mentor planned to provide to the protégé and the anticipated benefits of the agreement to the Air Force and protégé. Second, the Air Force was to invite mentors with white papers found to be consistent with the program goals to submit a formal mentor-protégé agreement proposal. As part of the proposal, mentors were required to submit a mentor-protégé agreement using the template found on OSBP’s website. The announcement also stated that the Air Force planned to consider four factors when determining whether to recommend proposals for award: (1) relevance of proposed technology to current Air Force requirements, (2) overall technical approach to providing transfer of technology and developmental assistance to the protégé, (3) the mentor’s capacity and capability to achieve the objectives of the mentor-protégé program, and (4) estimated cost of the proposed assistance. Army.