"Chairman Williams, Ranking Member Velázquez, Reps. LaLota and Scholten Write to Secretary Austin at DOD Regarding Integration of Small Businesses into the…

Summary

This December 12, 2023 release says Chairman Williams, Ranking Member Velázquez, LaLota and Scholten wrote to Secretary of Defense Lloyd Austin asking how the Department of Defense can better integrate small businesses into the defense industrial base. The excerpted letter says the number of small businesses in the defense industrial base has decreased by 40 percent over the last ten years. It also says small businesses produce 16.5 times more patents than large companies on average. The letter asks for an update on progress under the Small Business Strategy, including contract bundling and consolidation, subcontracting plan accountability and size standards revisions.

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Chairman Williams, Ranking Member Velázquez, Reps. LaLota and Scholten Write to Secretary Austin at DOD Regarding Integration of Small Businesses into the Defense Landscape

December 12, 2023

WASHINGTON, D.C. – Today, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, along with Ranking Member Nydia Velázquez (D-NY), and Reps. LaLota (R-NY) and Scholten (D-MI) penned a letter to Secretary of Defense Lloyd Austin to determine how the Department of Defense (DOD) can better integrate small businesses in the defense industrial base. Chairman Williams and Ranking Member Velázquez issued the following statements:

“Our nation’s small businesses play a vital role in our economy, but they also play a critical role in the defense of our nation,” said Chairman Williams. “Unfortunately, we’ve seen the number of small businesses in the defense space decrease in recent years. We on the Committee know what small businesses bring to the table and know more use of them will only help our military. I look forward to hearing from Secretary Austin on this and am eager to see how we can work together.”

“Small businesses play a vital role in the defense industrial base, promoting innovation, competition, and boosting military readiness. Unfortunately, government contracts are being swallowed up by larger and larger companies leaving many small contractors on the outside looking in,” said Ranking Member Nydia M. Velázquez (D-NY). “The continual decline of small business participation in government contracting is especially concerning as rapid technological development changes the nature of American defense. It’s vital that the Department of Defense work with the committee to ensure robust participation by small firms in the defense industrial base.”

Read the full letter here.

Read excerpts from the letter below:

“The Committee on Small Business writes to inquire about how the Department of Defense (DoD) could better integrate small businesses into the defense industrial base. Over the last ten years, the number of small businesses in the defense industrial base has decreased by 40 percent. This represents a substantial decrease in the number of small businesses currently involved in the defense industry and an amount of consolidation that the DoD states poses ‘national security and economic risk to the nation that could lead to a decline in key domestic capabilities.’

“While small businesses are currently serving a vital role in the defense industrial base, the 21st century has been marked by fewer and fewer small businesses receiving contracts from the DoD. This is in stark contrast to the 20th century where the rapid changes in the nature of combat required agile production lines and rapid innovation. Many of the same needs are reemerging due to the rapid changes taking place in the realm of computing, AI, and electronic warfare. The DoD’s need for agility and innovation presents an opportunity to bolster small businesses participation in both strategic defense efforts and the economy.

“In its 2018 National Defense Strategy, the DoD noted that future of American conflict will be defined by “(n)ew technologies including advanced computing, ‘big data” analytics, artificial intelligence, autonomy, robotics, directed energy, hypersonics, and biotechnology,’ and that these are ‘the very technologies that ensure we will be able to fight and win the wars of the future.’ This general position was reaffirmed by the DoD in 2022 but concerns still exist that the DoD’s acquisition process needs adjusted to account for the rapid evolution of technology.

“The majority of modern technological development is driven by the private sector. Small businesses produce 16.5 times more patents than large companies on average, making a stronger connection between the DoD and small entities vital to the DoD’s goals of evolving with the progression of technology. It would also minimize any lag between private sector introduction of products and technologies and DoD’s utilization of such technologies and capabilities. The DoD stated itself ‘[t]he ingenuity, agility, and capabilities of [small businesses] are inextricably tied to the nation’s national and economic security.’

“The Committee appreciates the Department’s efforts to identify and address barriers to entry for small businesses, including through the implementation of its most recent Small Business Strategy and understands there are existing programs such as SBIR, Army R&D marketplace, Project Spectrum, and the xTech Prime Competition that are intended to assist small businesses participating in the defense industry However, the continual decline of small business participation remains concerning.

“The Committee seeks input from the DoD regarding how both it and Congress could better integrate small businesses in the Defense Industrial Base. In particular, the Committee would appreciate an update on the Department’s actions to address the issues identified in the Small Business Strategy including: bundling and consolidation of contracts; subcontracting plan accountability; and size standards revisions for NAICS codes. Additionally, the Committee would like an update on the DoD’s progress in creating additional market synergies and market intelligence tools, as well as any regulations or policies it identified that were unduly burdensome to small businesses.”

Background:

Signatories include Chairman Roger Williams (R-TX), Ranking Member Nydia Velázquez (D-NY), Rep. Nick LaLota (R-NY), and Rep. Hillary Scholten (D-MI).

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