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Why small businesses are essential to US national security

Farooq A. Mitha   

Why small businesses are essential to US national security
  • The US Defense Department relies on American businesses for everything from spare parts to major weapons platforms.
  • Small businessess are an essential part of that industrial base, and their innovations often filter through to everyday life.

Small businesses are the engine of our economy, the heartbeat of our communities, and the source of our global economic strength. We often hear this from our nation's leaders, but what we do not often hear is the importance of small businesses to our national security.

Since the middle of the 20th century, the Department of Defense (DoD) has relied on contributions from small businesses to make significant advances in our defense capabilities. These contracts with small businesses enable citizens to benefit from technological advances in their everyday lives.

Companies we all know, such as Qualcomm and Symantec, and technologies like GPS and modern-day LASIK surgery were developed from defense or other federal agency contracts. In fact, even Moderna's mRNA technology used in its COVID-19 vaccine was funded with a grant from the Defense Advanced Research Project Agency, known as DARPA, to research mRNA therapeutics in 2013.

Federal law requires government agencies award a minimum of 23% of all contracts annually to small businesses, and DoD awards its proportional share. Last year, DoD's awards to small companies amounted to over $80 billion, with 45% of those dollars going to disadvantaged and women-owned businesses, and those are just prime contracts.

While there are tens of thousands of small businesses with DoD prime contracts, there are almost an equal number of small businesses supporting the defense mission as sub-tier suppliers to large companies that produce major platforms and systems for DoD. These companies are innovators developing cutting-edge technologies, manufacturers producing critical parts and components, and service providers that bring some of the nation's best talent to our workforce.

However, over the past decade we have seen some alarming trends. The number of small-business suppliers in the federal marketplace - specifically in the defense marketplace - have declined. If this decline continues at the current pace, our nation is at risk of losing key domestic capabilities.

Further, small businesses continue to struggle with bureaucratic red-tape, including competing in an environment where larger businesses are generally favored. Small businesses face disproportionate barriers to entering that marketplace.

At a time when our nation faces unprecedented competition from adversaries, supply-chain vulnerabilities from climate change and the global pandemic, and a wealth of talent from underserved communities going untapped, these trends must be reversed.

That's why President Joe Biden in his first months in office signed several executive orders focusing on increasing equity in our federal procurements, increasing the resiliency and diversity of our domestic supply chains, and promoting competition in the American economy. Small businesses are at the nexus of all of these efforts.

To support these presidential priorities, we in DoD took immediate action.

First, we wanted to hear directly from small businesses to better understand the challenges they face and work to address them. To that end, we recently posted a notice on the Federal Register asking companies to let us know what barriers to entry they are facing.

We are streamlining entry points in the defense marketplace for small businesses by making my office's website,, a single entry point for small businesses who want to learn how to do business with DoD and which small-business programs are available.

We are also helping companies become ready to do business with DoD by increasing the connectivity between our Procurement Technical Assistance Centers, which support companies pursuing and performing on DoD contracts, with our acquisition workforce and by providing cyber-security resources to small businesses through Project Spectrum.

We know there are companies in the commercial marketplace that have never done business with us. We know these companies have advanced technologies and capabilities we need to support our mission in areas like additive manufacturing, robotics, and artificial intelligence. To engage these companies, we have efforts such as the Defense Innovation Unit and others that are using flexible, commercial-style contracts to do businesses with these innovative commercial firms.

There is more work to be done to strengthen and ensure a vibrant small-business industrial base. This requires DoD work closely with the private sector, and we are up to the challenge.

Small businesses do more with more, and their innovations, agility, and diversity are pivotal, not only to DoD but to national security. Small businesses remain vital for our nation to address the myriad of global challenges we face today.

Farooq A. Mitha serves in the Biden administration as the Director of Small Business Programs at the Department of Defense.


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