The Defense Department is directing billions of dollars in modernization funding to small businesses and is making it easier for these companies to work with the department, the undersecretary of defense for acquisition and sustainment said.
Ellen M. Lord spoke today about supply chain integrity at a hearing before the Senate Armed Services Committee's Subcommittee on Readiness and Management Support.
In 2019, the DOD directed 24.2% or $75.4 billion of its entire budget to small businesses, she said.
Furthermore, subcontract funding in 2019 was $62.3 billion, meaning there was a significant flow-down from major, defense prime contractors to small businesses, Lord said, adding that this year's spending flow is also targeting small businesses.
Small businesses that are particularly important to the department, she said, are those that manufacture parts for aircraft, shipbuilding, soldier systems, microelectronics, rare earth elements and space systems — which are all critical to national defense.
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Regarding the COVID-19 response effort, the department directed more than 75% of its investments to small businesses for medical items such as drugs and biologicals, surgical instruments, equipment and supplies, hospital and surgical clothing and related special purpose items, she said.
Investments to small businesses have been vital to sustaining the domestic industrial base and have spurred job creations, she added.
In the area of reform, the department released its small business strategy in December, which reduced the barriers small businesses faced in becoming part of the defense industrial base and to educate small businesses in cybersecurity readiness, she said.
To further strengthen the industrial base, the department came out with the Cybersecurity Maturity Model Certification Program. Lord said this program establishes cybersecurity as fundamental to DOD acquisition and secures the DOD supply chain.
The department also released its first policy on intellectual property to customize strategies for acquiring and licensing IP and technical data rights, she continued.
And finally, the DOD published its Adaptive Acquisition Framework. This is the most substantial change to acquisition policy in the last several decades, she said. It improves the acquiring of warfighting capability and allows the department to better partner with industry, particularly small businesses.