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Mentor-protege arrangements between large and small contractors have proven effective in helping primes and the government itself reach their annual small business goals. The yearly Nunn-Perry awards honor Defense Department mentor-protege setups that have been notably effective. One of this year’s three awards went to the Naval Supply Systems Command. The Federal Drive with Tom Temin spoke with NAVSUP’s director of small business, Chris Espenshade, for the details.

Interview transcript: 

Tom Temin: Let’s begin with mentor-protege arrangements. What are they precisely and how do they work? At least at NAVSUP?

Chris Espenshade: Yes, so mentor-protege There’s really two programs that are available to DoD, you have both DoD’s mentor-protege program, and then you have SBA’s mentor-protege program. And so we primarily utilize DoD’s mentor-protege program in which you have, of course, a mentor who is an eligible large traditional prime contractor of at least $100 million, has an active subcontract and plan in place and are currently doing work with DoD. And what they do is they pair with a of course a protege. Traditionally what it’s been in the past is a small business, small, disadvantaged business. That’s half of the NAICS code. Now that’s changed in recent NDAA language that no longer do they have to be half of their size standard of the primary NAICS code. And so again, it’s a two-year program now. It goes between three and two-year programs. But these agreements are really intended to develop small businesses into being viable support contractors for Department of Defense. And so whether that’s to build new capability or to really build capacity, and that’s some of the benefits we’ve seen in the recent years.

Tom Temin: There’s a third element to these programs, the historically black colleges and universities, how do they fit into the equation here?

Chris Espenshade: So HBCUs and there’s a requirement within DoD’s mentor-protege program in that at least 5% of the reimbursable expenditures on the agreement through the lifecycle is required to be utilized, utilizing HBCUs small business development centers, and then our Procurement Technical Assistance Centers, we call it PTAC. And so this specific award, the Nunn-Perry Award for CACI and CDIT which is a small business in Slidell, Louisiana, one of the the major milestones for them is they far surpass the standard 5% actually utilizing 24% of the expenditures. And so their involvement within these agreements is to really provide the mentor some services in building up that protege. And so in this case, Morgan State University, which is CACI’s go-to HBCU in supporting mentor-protege, they help implement the HUBZone certification, the ISO 9001, and then CMMC, DEV3, level three in supporting the protege. And so it’s a tremendous opportunity for HBCUs. But also we get a lot of the unique capability and support that they provide.

Tom Temin: And this small company that is the protege, CDIT from Slidell, Louisiana, what do they do? What does the company do?

Chris Espenshade: So it’s IT software development, really customizable types of solutions. They have some past performance within Department of Defense, but really where this agreement improved on CDIT, was building both physical capacity, but then also employee. So you know, they saw a growth of throughout the three years of 25 to 72 employees, their actual physical footprint size has grown. And so they’ve supported an additional six new Navy federal customers, in addition to what they were doing before most of their work previous to this agreement was really on the subcontract arrangement with CACI and a few other traditional partners, but they have a lot of experience in the commercial sector, working with the medical and dental fields with the aggregation of a lot of their accounting systems as well as their software development and front end portals.

Tom Temin: And what did Naval Supply Systems Command receive from CACI ultimately, that this small company had contributed to?

Chris Espenshade: So in, I guess, even a bigger picture, what Department of Defense receives, and then we’re a recipient of that  this agreement has shown over a 2,000% return on investment. So our investment that we’ve provided through this reimbursable agreement, 2,000% of that has gone back in the the protege’s involvement within DoD contracts. So they’re now a prime contractor to a number of contracts. And where that benefits us at NAVSUP is we have a capable mission partner that can help primarily one of one of our big lines of efforts is NAVSUP business system center. Well, that does the sustainment of logistics IT software. And so we now have a mission capable, small business that we know has been through this agreement, has built up capability and is prepared to take on some of that work that we needed in addition to our organic capabilities.

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Tom Temin: So they develop applications and enhancements and updates to your core system for operating logistics.

Chris Espenshade: Yeah, absolutely. Got it. And so the mentor-protege program, in addition to growing up that capability, it’s also a great opportunity to tweak little things that we think are unique to Navy and us, NAVSUP to say, hey, we’d really like for you to have this capability because we see that as a weakness within our current industrial base. And so through this agreement, we built that capability. We built that capacity. And you know, it’s really beneficial to us to have that ready and available mission partner.

Tom Temin: We’re speaking with Chris Espenshade. He’s director of small business at the Naval Supply Systems Command. And tell us about the Nunn-Perry awards. And what they cited in one of three awards this year in DoD, for mentor-protege went to NAVSUP.

Chris Espenshade: Yeah, absolutely. So Nunn-Perry again, a yearly award in which DoD recognizes the top outstanding mentor-protege agreements across DoD. We were fortunate enough to be selected as one of three. The only Navy mentor protege award that was selected this year. And I really feel part of the reason why this was so beneficial and we were so successful in that is that one, we had outstanding support from CACI as the mentor, and then the selection of the protege, which is really important. Again, this is a determination that’s made by the mentor only. We can’t identify who we think they need to partner with and mentor. And so they did an outstanding job of selecting a protege that was committed to the program. You know, I think a lot of folks are really interested in the program right now. It’s a really involved program that has to have a lot of hands on. And so Scott Galloway and Bill Henley down at CDIT were constantly engaged with myself and Department of Navy Office of Small Business Programs to say, “Hey, this is what we’re doing throughout the agreement. This is our task deliverables. But what else can we do to benefit you guys, and then also benefit what what meets the merit of the intention of the program?” And I think that’s why we were recognized. The other thing is that you know, off the charts return on investment both from from DoD, but I think involvement again, with Morgan State University, the HBCU utilization, and then just the success that they’ve had as a prime contractor now.

Tom Temin: And what else you’re doing, by the way, to maintain NAVSUP’s very high level, I think you exceed the minimum requirement federally for small business utilization every year. You’ve got a lot of things cooking, to keep cultivating small business, what are some of the other besides mentor-protege? Which sounds like kind of a heavy lift to get those things going and to prove their efficacy?

Chris Espenshade: Yeah, mentor-protege, it’s a, it’s a longer process than then you’d like. But that’s intentional, because in order to be successful, and be, you know, to the standard of Nunn-Perry, and that’s what we hope for for every agreement that we put in place. It’s about a year process of vetting, communicating with the mentor, say this works for us, this doesn’t. And then it’s a collective building of what we think is intentional. So yeah, we’ve we’ve been fortunate in the last couple of years we’ve had an outstanding small business execution, we won Department of Navy Secretary Cup in 2021, for top small business office within Navy. And part of that is we’re very intentional in that all of our efforts are aligned to command priorities and Navy priorities. One of the top priorities for NAVSUP top priority is naval systems sustainment and SS supply. And so this was a initiative that was kicked off by Admiral Lesher to see about how do we effectuate efficiency improvement and improve readiness within supply sustainment and so as part of that we’re leveraging mentor-protege. We have we have a really exciting agreement right now in place between Raytheon Missiles and Defense, and a small business in Tampa, Florida, Tampa Brass and Aluminum, which is a small business foundry machine shop. And so what we’ve done is we’ve been intentional to say we have some challenges with obsolescence. How do we use mentor-protege to build up capability and capacity for the small business to take over support when we have legacy equipment where traditional vendors are looking to maybe exit the marketplace? So as part of that, it’s the first agreement and it’s a really unique arrangement, and that the protege at the end of this three-year agreement, they will take over prime level support for a number of components that are traditionally supported by Raytheon. So we see this as a really a best in class. And we’re really excited about some of the early early advancements and improvements that we’ve seen through the first year of the agreement.

Tom Temin: And it’s kind of interesting to see this small growth, at least in this niche area of manufacturing in the United States, bending metal, boring it, machining it whatever it is they do in metal working, to get those parts, physical parts to the Navy?

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Chris Espenshade: Yeah, absolutely. You know, the foundries that’s a business line that has been for the most part, it’s been exported overseas. So what we’ve been trying to do is be intentional about how do we facilitate and support that domestic capability. And so that’s one of the top priorities for Department of Navy office of small business mentor-protege guidance says hey, we’re looking at manufacturing research and development and then knowledge-based services which we’ve seen a growth in small businesses over the year. But what we’re really focused on in Naval Supply Systems Command is building up manufacturing capability to take on support and sustain a lot of these legacy platforms that are still fielded today.

Tom Temin: Chris Espenshade is director of small business at the Naval Supply Systems Command.

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