Audit Report 13-03: Benefits of Mentor Protégé Joint Ventures are Unknown: Robust Oversight is Needed to Assure Success and Avoid Abuse

Date Issued: 
Tuesday, October 23, 2012
Report Number: 

This report presents the results of the OIG’s audit on Protégé Benefits from Joint Venture Agreements with Mentors.  The audit objectives were to (1) determine the extent to which the joint venture agreement between a mentor and protégé resulted in substantial benefits to the 8(a) participant, and (2) assess the SBA’s oversight of Mentor Protégé Joint Venture Arrangements.

The OIG found that the SBA lacked performance measurements for joint venture arrangements and did not effectively oversee 8(a) firms that have joint venture agreements.  As a result, the SBA did not have the information necessary to determine whether mentor protégé joint ventures benefitted the 8(a) participant.  This lack of information weakened SBA’s ability to effectively oversee and assess the development of 8(a) participants with mentor and protégé joint venture agreements and increased the risk of program abuse by participants.  The OIG made six recommendations.