Small businesses are key to national defense
Small businesses make up 99.9 percent of all businesses in the U.S. and more than half of all American employees work for a small business. They’re a critical contributor to our national security: last year alone the Department of Defense spent $83 billion on small business prime contracts and nearly 25 percent of DoD’s prime contracts go to small businesses.
Sounds like a great success story, however despite their immense value, the number of small businesses in the U.S. Defense Industrial Base has declined by 40 percent in the last decade. That’s both an economic and national security risk for our nation as we seek to strengthen our domestic supply chains, increase competition, and reduce dependency on single and foreign sources of supply.
This trend has several causes, but one of them is that working with DoD as a smaller firm isn’t always easy. Small businesses don’t have the same resources that larger firms do to help comply with DoD regulations and practices, which can discourage them from wanting to work with us. Also, there are so many points of entry into our marketplace that small businesses often don’t know where to start.
In October 2022, the department released its new National Defense Strategy, which provides a clear and rigorous strategy for advancing United States’ defense and security goals. A key pillar of the NDS is the Department’s desire to build enduring advantages by strengthening our defense industrial base and bolstering support for small businesses and other innovative technology firms that support the systems on which the military depends and will help ensure the United States maintains its military advantages.
That is why DoD is rolling out a new small business strategy, which is a department-wide approach to unlocking the potential of small businesses. The strategy improves the way we serve small business to increase their participation in our procurements. We will do this by streamlining points of entry into the department for small companies, so it is easier for them to know where to start, ensure that small business activities align with efforts to sustain and expand the department’s industrial base and modernization priorities, and stepping up our engagement and resources to support industry.
The department’s small business programs and workforce are distributed across each of the military services, defense agencies, and many other DoD offices. This often leads to confusion for small businesses around where they should start, how programs and initiatives connect to each other, and knowing what resources are available to them to provide the assistance they need. To address these issues, DoD will take a more integrated approach across our small business programs and initiatives to ease access for small businesses and make business.defense.gov a primary point of entry for small businesses looking to work with the DoD.
We will also work to bring sustained planning to small business programs such as the Mentor Protégé Program, the Small Business Innovation Research Program, and the Rapid Innovation Fund. It is imperative that these programs have long-term authorization and funding so we can access the innovation and technology we need to deliver advanced capabilities to the warfighter.
To increase opportunities for small businesses, the federal government as a whole must make the necessary changes to policy and regulation that will reduce barriers to entry for small businesses and increase small business set-aside competitions. One important step the Biden administration took last fiscal year towards this was to reform what we call category management. Our new policy grades agencies on their enterprise-wide purchasing practices and use of existing contract vehicles, to include contract awards made to small businesses certified by the Small Business Administration. This will begin to reverse the trend of more dollars going to fewer small businesses and reestablish a balance between the efficiencies gained through enterprise-wide buying and the need for a robust, diverse industrial base of suppliers in the federal government marketplace.
Supporting small businesses also requires stepping up engagement and providing more tools and resources for them. The engagement and training effort will be led by the department’s ninety-six APEX Accelerators located across the country, formerly known as the Procurement Technical Assistance Centers. Our APEX Accelerators serve as a resource for small businesses to increase their readiness, help them find opportunities to do business with the department and accelerate their insertion into the defense marketplace. We will also look to increase our support for cyber security resources for small businesses through Project Spectrum (www.projectspectrum.io), a one-stop shop to provide cyber security training, self-assessments, and other resources that small businesses need to improve cyber readiness and comply with the latest standards.
These initiatives and others in our Small Business Strategy aim to make small businesses an indispensable partner in the mission to protect our national security. They also demonstrate the Department’s commitment to bringing in more small businesses to the national supply chain that produces weapons, vehicles, and software for the United States military, while also creating economic growth in historically underserved communities. In this era of strategic competition in which the United States must out-innovate our competitors, the nation’s success is reliant on the innovation, agility, and ingenuity of American small businesses.
Farooq Mitha is director of the Department of Defense (DoD) Office of Small Business Programs.
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