The Pentagon’s new strategy to attract small businesses soon

Family members hug as they reunite, after fleeing conflict in Ukraine, at the Medyka border crossing, in Poland, Sunday, Feb. 27, 2022. Since Russia launched its offensive on Ukraine, more than 200,000 people have been forced to flee the country to bordering nations like Romania, Poland, Hungary, Moldova, and the Czech Republic — in what the U.N. refugee agency, UNHCR, said will have "devastating humanitarian consequences" on civilians. (AP Photo/Visar Kryeziu)

WASHINGTON — A new Pentagon strategy to maximize small business participation in defense contracts is in the works for this spring, defense officials told Defense News.

The Pentagon’s first small business strategy since 2019 would come amid a decline in the number of contracts awarded to small businesses and, as Secretary of Defense Lloyd Austin has acknowledged that the barriers to working with his department are too high. students. The strategy would guide efforts to attract more non-traditional businesses, new entrants and innovators, according to DoD Office of Small Business Programs Director Farooq Mitha.

“It will be: how can we all work to increase small business participation, because we’ve seen over the last decade a decline in our key contractors who are small – quite a significant decline,” Mitha said. “The key is how to make it easier from a structure, commitment and policy perspective.”

The strategy comes after Under Secretary of Defense Kathleen Hicks pledged to create more opportunities for small businesses. She acknowledged that the US defense industrial base has shrunk by more than 40% over the past decade and warned that if the trend continues, the country could lose 15,000 more suppliers over the next 10 years.

The National Defense Industrial Association, which has noticed the shrinking pool for years, warned in a recent report of headwinds for the industrial base that could lead to production or innovation shortages, or further discourage new potential suppliers to compete.

The strategy is likely to make recommendations on the long-term planning of initiatives such as the Small Business Innovation Research, or SBIR, and Small Business Technology Transfer, or STTR, programs. seen as important ways for the military to bring in new vendors and disruptive technologies. .

Without congressional action, the last reauthorization of the government-wide SBIR program expires at the end of the current fiscal year.

“If we want to increase the [defense industrial] base, if we want to attract new entrants, if we want to make the transition to new technologies [into the military], we need to have stability in the programs that are meant to do these things. I think that’s something that we’ve been laser-focused on, and we’ve had some industry feedback on that as well,” Mitha said.

“It is a national security benefit for the nation and it creates new industries and technologies. I don’t think anyone will tell you it’s not vital, and I think we need to work collectively to make sure these programs have long-term legs.

Last month’s DoD report on competition within the defense industrial base said a top priority for the department is to expedite contract award times for the SBIR and STTR programs, which fall under the Undersecretary for Research and Engineering Heidi Shyu. These programs achieved a 22-to-1 return on investment and generated $347 million in economic output, according to the report.

The fledgling strategy will propose further steps to address one of the biggest complaints from small businesses that they have been stymied by ‘category management’, the name of the government’s emphasis on research efficiency on large contract vehicles for common products and services.

Mitha acknowledged that category management had inadvertently hindered participation by small businesses, but said recent changes at DoD “helped us get back on track to integrate some of these businesses.”

While writing the strategy, Mitha said his office also seeks to protect small businesses from investment risk, provide training and information, and conduct market research on behalf of the workforce. acquisition work to find contract opportunities reserved for small businesses.

The strategy is expected to be informed in part by feedback from small businesses themselves after the DoD’s Office of Small Business Programs published a solicitation in the Federal Register last fall.

Overall, the effort dovetails with a White House directive last year for federal agencies to increase government contracts with disadvantaged small businesses, which recognizes small businesses as key job creators.

“You’ll see a big equity push on how we’re leveraging the buying power of the federal government to bring and deliver more opportunities to underserved communities, and you’ll see more small business enablers to strengthen our chains. supply,” Mitha said. .

Mitha, who served as the head of defense industrial policy in the Obama administration, said there is also a focus, but the Biden administration is also focusing on the supply chain and the resilience of the industrial base.

“That emphasis makes a really big difference, and I see it in the department now where – from the secretary, from the assistant secretary to the other leaders – small businesses are part of this vernacular, which is really, really important in driving change. what we want to see,” he said.

Joe Gould is a senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry.