A healthy pipeline of products and services supplied by small businesses is critical to defending the nation. But despite their importance, small businesses are dropping out of the running for contracts to the tune of 40% over the past decade, officials said.
Acknowledging that small businesses are central to the economy and critical to national defense, the Defense Department released its Small Business Strategy earlier this year with an emphasis on changing that downward trend through provisions designed to reduce barriers.
“Small businesses keep our military forces combat ready with critical parts, cutting edge technology, and top-notch services, and fortify our defense supply chains in times of crisis,” said Secretary of Defense Lloyd J. Austin III. “Small businesses help ensure that our military has the very best capabilities to keep us safe. Some of the most innovative minds in the country come from smaller companies, and in an era of strategic competition small businesses are one of our greatest tools.”
DOD has increased spending on small business prime-contracting and met goals in that area for the past eight years. But small business participation in the defense industrial base continues to decline.
Even with this decrease, small businesses comprise over 70% of the companies that do business with DOD, officials said.
“A complex web of entry points and intricate regulations, as well as a trend of fewer opportunities, are pushing firms away from us at a time when we need them urgently,” Austin said. “…If we do not take action, we risk losing mission critical domestic capabilities, stifling competition and innovation, and potentially weakening our supply chains.”
The new strategy focuses on three areas:
- Increasing collaboration across all of DOD’s small business programs and related efforts through a unified management approach.
- Providing more training and education to the small business workforce.
- Using digital tools to lower barriers to entry and reduce the search costs for government and industry to access the DOD small business enterprise.
Nationwide, over 99 percent of all employers are categorized as small businesses, and those employers generate roughly 44 percent of the nation’s economic activity.
“Small businesses provide our most creative entrepreneurs and most driven workers, and it is imperative that we extend them an open hand,” Austin said.