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DOD Increases Efforts to Bring Small Businesses Into Defense Industrial Base 

Over the past eight years, the Defense Department has met its small business prime contracting goals, but more can be done, said the director of the Defense Department's Office of Small Business Programs. 


During testimony Wednesday before the Senate Armed Services Committee’s subcommittee on readiness, Farooq A. Mitha and small business directors from the Army, Navy and Air Force told lawmakers about the barriers small businesses face when trying to work with the department, tools the department uses to increase small business participation, and DOD's recently released small business strategy.  

"Small businesses make up 99% of all businesses in the United States and are a critical contributor to our national security," Mitha said. "Last fiscal year, the department spent $85.2 billion on small business prime contracts, and nearly 25% of the department's prime contracts go to small businesses."  

While the department exceeded its goals last year for small, disadvantaged businesses and service-disabled veteran-owned small businesses, Mitha said, the total number of small businesses in the defense industrial base has declined over the last decade. And that's a problem for DOD and the nation's security, he said.  

"This is an economic and national security risk for our nation," he said. "We risk losing mission-critical domestic capabilities, innovation and strong supply chains. To respond to this, the department is working to strengthen our small business supply chains, increase competition and attract new entrants."  

Right now, DOD has several programs in place to help with that, Mitha told lawmakers. Included among those are the Mentor-Protege Program, the Rapid Innovation Fund Program, the APEX Accelerators and the Indian Incentive Program.  

"The Mentor-Protege Program enables experienced companies to provide business developmental assistance to protege firms," Mitha said. The proteges are small businesses or new entrants.  

"The mentorship enables proteges to become suppliers, as prime and subcontractors, to the department and other federal agencies," he said. 

Within the Mentor-Protege Program, Mitha said, mentor firms provide assistance in a range of areas, including internal business management systems, engineering support and manufacturing support.  

Over the past four years, Mitha said, protege firms performed an average of over $5 billion in contract work for the federal government annually.  

The department also currently funds 96 APEX Accelerators across the United States, Mitha said, which help small businesses learn how to work with the federal government. The accelerators were previously branded Procurement Technical Assistance Centers, but their new incarnation — with an expanded mission set — will also do things like train small businesses on the cybersecurity requirements necessary to work today with the Defense Department.  

A five-sided building sits amidst green space, parking lots and highways.
Pentagon Aerial
An aerial view of the Pentagon, Washington, D.C., May 11, 2021.
Photo By: Air Force Staff Sgt. Brittany A. Chase
VIRIN: 210512-D-BM568-1414

The department's Rapid Innovation Fund supports small businesses in moving technologies from prototype to production, while the Indian Incentive Program, he said, provides a 5% rebate to a prime contractor on the total amount subcontracted to Native American-owned businesses.  

Small businesses face challenges in working with the federal government, Mitha said. Included in those challenges are the complexities of working with DOD and the number of entry points available to get on board. Additionally, he said, are challenges faced by small businesses that threaten their ability to work with DOD even if they want to — which include meeting cyber security requirements and staying clear of foreign ownership control and influence, or FOCI.  

"[These] are arguably the most pressing issues faced by small businesses," Mitha said. "Our adversaries routinely target small businesses, thus building effective cybersecurity resilience into the defense industrial base for small businesses is a critical national security priority."  

DOD's Project Spectrum Platform provides small businesses with both the knowledge and tools necessary to protect the nation's most critical assets in cyberspace, Mitha said, adding also that the department plans an expansion of that platform to include training related to foreign ownership, control or influence.  

Mitha also told lawmakers that DOD's website, will become a "one-stop shop" for small businesses that have never before done business with DOD to finally get involved.  

"We'll have all the forecasting, all the different small business programs, all the resources that are available," he said. "A company won't have to go to 20 different websites to figure out how to do business with us."  

In January, DOD released its new small business strategy. The strategy, Mitha said, focuses on three strategic objectives, which include implementing a unified management approach for small business programs and activities, strengthening the department’s engagement and support of small businesses and ensuring the department’s small business activities align with national security priorities.  

"The goal of that strategy is to ensure small businesses entering the defense marketplace understand the contracting opportunities, resources available to them, and where to get support," Mitha said.  

The strategy, he said, calls for, among other things, the establishment of a small business integration group, the implementation of a common training curriculum for small business professionals in the acquisition workforce, and streamlining points of entry into the defense marketplace.  

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