Mentor Protege Program
The Minnesota Department of Transportation (MnDOT), was created in 1976 by the Legislature to assume the activities of the former Departments of Aeronautics and of Highways and the transportation- related sections of the State Planning Agency and of the Public Service Department. Today MnDOT develops and implements policies, plans and programs for aeronautics, highways, motor carriers, ports, public transit and railroads.
In creating the Department of Transportation, the Legislature determined that MnDOT would be the principal agency to develop, implement, administer, consolidate and coordinate state transportation policies, plans and programs (Minn. Stat. Ch. 174).
MnDOT makes special efforts to consider the social, economic and environmental effects of its decisions and aggressively promotes the efficient use of energy resources for transportation purposes. It also maintains close working relationships with the communities, many public and private individuals, groups and associations involved in transportation.
The Metropolitan Airports Commission (MAC) owns and operates one of the largest systems of airports in the nation, including Minneapolis-St. Paul International Airport (MSP) and six general aviation, or reliever airports. A board of commissioners appointed by Minnesota's governor and the mayors of Minneapolis and St. Paul sets and interprets the commission's policies.
MAC ensures that small businesses owned by socially and economically disadvantaged individuals have equal opportunity to participate on contracts and project work administered by MAC through the Disadvantaged Business Enterprise Program (DBE) in the areas of trucking, sound insulation of residential homes, HVAC, field and runways: utilities, excavating, lighting, striping, concrete/asphalt; security: fencing, close circuit cameras, electric gates, alarms, and fire protection; parking ramp rehabilitations, building modifications, lighting, carpeting, flooring, electrical, and signage; consulting services and purchasing of goods and services.
The Metropolitan Council (MET) is the regional planning agency serving the Twin Cities seven-county metropolitan area and providing essential services to the region. The Council works with local communities to provide these critical services:
- Operates the region's largest bus system
- Collects and treats wastewater
- Engages communities and the public in planning for future growth
- Provides forecasts of the region's population and household growth
- Provides affordable housing opportunities for low- and moderate-income individuals and families
- Provides planning, acquisitions and funding for a regional system of parks and trails
- Provides a framework for decisions and implementation for regional systems including aviation, transportation, parks and open space, and water quality and water management.
The Metropolitan Council uses the U.S. DOT DBE program with federally funded transit-related projects. The Council's DBE Program confirms its commitment to utilize businesses owned and controlled by socially and economically disadvantaged individuals in our procurement and contracting efforts.
Mentor protege program
Statement: It is a function of the Minnesota Unified Certification Program (MN/UCP) to assist in establishing business partnerships between prime contractors and Disadvantaged Business Enterprise (DBE) firms. Appendix D of 49 CR Part 26 (A) states in part: “The purpose of this program element is to further the development of DBEs, including but not limited to assisting them to move into non-traditional areas of work and/or compete in the marketplace outside the DBE Program, via the provision of training and assistance from other firms.” To this end the Mentor/Protégé Program will assist DBE’s to become more proficient in their respective area of work. The program will focus on increasing the volume of work that emerging DBE’s are capable of winning and to broaden the base of their activity, increasing the number and long term stability of certified DBE firms.
A Mentor/Protégé arrangement exists when an experienced company or individual (Mentor) provides assistance and training to a DBE (Protégé). The mentor/protégé arrangement can range from technical through management assistance to the creation of a new, jointly-owned firm or agreement. All applications for the Mentor/Protégé Program will be reviewed on a case-by-case basis.
The common types of assistance that a mentor may provide a protégé include:
- Business planning
- Record keeping
- Technical assistance
- Capital formation
- Financial counseling
- Equipment utilization
A mentor may provide a protégé with working capital. Time notes, loans and stocks are acceptable methods of assuring payment in exchange for working capital. Demand notes are not acceptable. In no case can the day-to-day control of the firm be relinquished by the DBE as a requirement of the loan.
Part ownership in a DBE by a non-disadvantaged entity, including a mentor, is permitted. However, any property, equipment, supplies, or other services which are sold, rented, or donated to the DBE, as well as any investment by non-disadvantaged individuals, must be reported to Minnesota Unified Certification Program (MN/UCP) in the mentor/protégé development plan and must be covered by bills of sale, lease agreements, etc. Furthermore, any financial investment by the mentor cannot provide the mentor with control over the protégé.
The mentor/protégé relationship may include, when not in conflict with state law, an arrangement by mutual consent in which an independent third party, such as a bank or an accountant, is designated as an agent for the DBE. Such agents may receive progress payments for work accomplished by the DBE, made out jointly to the agent and the DBE, and make payments, on behalf of the DBE, to material suppliers or for federal and state payroll taxes, etc.
The examples discussed below are not meant to be exhaustive. Other methods of encouraging and supporting DBE’s may be allowable. Contractors or associations with programs must seek agency approval.
Technical and management assistance
The mentor may provide guidance on project management and construction techniques, training in plan interpretation, or estimating and cost accounting. However, the DBE must retain final decision-making authority.
Equipment and personnel
The mentor may provide, in limited instances, skilled personnel and equipment if a written lease or rental agreement covers the equipment and the personnel are on the payroll and under the direct supervision of the DBE. Generally, rental or lease agreements with the mentor will be reviewed on a cost-benefit analysis, based on average industry prices. Long-term, continual, or repetitive use by a DBE subcontractor of personnel primarily employed by the mentor will be construed as an attempt to artificially inflate DBE participation.
The mentor may provide the protégé with assistance by bonding the entire job and either charging on a pro rata basis or not charging the DBE for the bond. It is expected that after gaining experience through federally-funded projects, the DBE will develop the ability to bond projects independent of the mentor.
An area of special concern is exclusive arrangements. Any relationship in which a contractor requires a subcontractor to have an exclusive bidding agreement may violate federal laws. During the course of the relationship, the subcontractor must have the right to quote bids to other prime contractors.
Generally unacceptable practices
Any subcontracting arrangement contrived to artificially inflate DBE participation is not acceptable. The interjection of DBE middlemen or passive conduits not in accord with standard industry practices or which serve no commercially useful purpose, and arrangements in which a DBE prime or subcontractor is acting essentially as a broker are not permitted. In addition, any formal or informal agreement that limits the disadvantaged owner's control and management of the firm is unacceptable.
Mentor/Protégé may be approved in all areas of construction in which mentor assistance is needed to develop DBE capacity. The following requirements must be met for participation in the Mentor/Protégé program:
- The protégé must be certified as a DBE with MN/UCP prior to entering into a Mentor/Protege agreement.
- A Mentor/Protégé agreement must be prepared and approved by MN/UCP.
- The mentor and protégé must be separate entities. Compensation to the DBE should be relative to the amount of work accomplished rather than an hourly basis.
- In general, only one Mentor/Protégé arrangement will be allowed per non-DBE Company.
- It is recommended that the protégé prepare a three-year development plan and update it annually. The development plan shall state the current status of the firm and goals for the next three years. The development plan shall contain, at a minimum, information on the background and experience of the owners; the number and types of personnel; the amount of capital; the number, types and values of equipment; and the amount and types of projects to be pursued. This three-year period may be extended to five years on a case-by-case basis.
- The protégé must prepare an annual report on the Mentor/Protégé relationship. The annual report shall contain a comparison with each category in the development plan, a summary of work accomplished, and an explanation of how the mentor assisted in the completion of work.
- The protégé shall retain an attorney and accountant other than the mentor's attorney and accountant.
- The Mentor/Protégé relationship shall be initially limited to three years, with a possible extension to five years.
- Protégés participating in Mentor/Protégé agreements may be utilized in meeting DBE goals.
All Mentor/Protégé relationships should be evidenced by a written development plan approved by MN/UCP. The following guidelines should be considered in the development of such plans:
- The development plan should clearly set forth the objective of the parties and their respective roles.
- The development plan should describe measurable benchmarks to be reached by the DBE at successive stages of the plan.
- The development plan should provide that if resources of the mentor are utilized by the DBE in the performance of contracts or subcontracts for the mentor or for another contractor, the resources must be separately identified, accounted for, and compensated directly by the DBE to the mentor. If the plan provides for extensive use of the mentor's resources by the DBE, the arrangement will be closely scrutinized.
- The development plan may also include training to be provided by the mentor to the DBE. Such training includes business planning; record keeping; technical assistance; capital formation; loan packaging, financial counseling, bonding, and equipment utilization.
- The development plan should contain a provision that it may be terminated by mutual consent of the parties or by MN/UCP upon its determination that:
- The protégé no longer meets the eligibility standards for certification as a DBE;
- Either party has failed or is unable to meet its obligations under the development plan;
- The DBE is not progressing or is not likely to progress in accordance with the development plan;
- The DBE has reached a satisfactory level of self-sufficiency to compete without resorting to the development plan; or
- The plan or provisions thereof are contrary to the requirements of federal, state or local law or regulation, or otherwise inimical to public policy.
- The development plan may include a provision that either party for any reason may dissolve the arrangement by notifying MN/UCP.
MN/UCP will conduct an annual review of each Mentor/Protégé relationship. If MN/UCP determines that the Mentor/Protégé program requirements are not being followed, approval of the Mentor/Protégé relationship will be revoked. MN/UCP Mentor/Protégé Program will be implemented in accordance with the guidelines set forth in 49 CFR Section 26.35(b)(2).
- A non-DBE Mentor firm cannot use its DBE Protégé to meet more than one-half of the goal set for a specific project.
- MN/UCP will not award DBE credit to a non-DBE Mentor firm for using its own Protégé firm more than every other contract performed by the DBE Protégé firm.
49 CFR Part 26 mentor protege program guidelines
- The purpose of this program is to further the development of DBEs, including but not limited to assisting them to move into non-traditional areas of work and/or compete in the marketplace outside of the DBE program, via the provision of training and assistance from other firms.
- Any mentor-protégé relationship shall be based on a written development plan, approved by the recipient, which clearly sets forth the objectives of the parties and their respective roles, the duration of the arrangement and the services and resources to be provided by the mentor to the protégé. The formal mentor-protégé agreement may set a fee schedule to cover the direct and indirect cost for such services rendered by the mentor for specific training and assistance to the protégé through the life of the agreement.
- DBEs involved in a mentor-protégé agreement must be independent business entities which meet the requirements for certification as defined in subpart D of 49 Code of Federal Regulations, Part 26. A protégé firm must be certified before it begins participation in a mentor-protégé arrangement. If the recipient chooses to recognize mentor/protégé agreements, it should establish formal general program guidelines. These guidelines must be submitted to the operating administration for approval prior to the recipient executing an individual contractor/subcontractor mentor-protégé agreement.