The Defense Industrial Base Needs Support
December 15, 2022 | Mel King, Associate, [email protected]
Earlier this month, General Charles Quinton Brown Jr., chief of staff of the Air Force, spoke on a panel at the Reagan National Defense Forum, and said that he had visited Silicon Valley recently and met with multiple companies and venture capitalists and commented that “What we’ve got to do is actually pick some winners… It’s like hand-walking a staff package through the Pentagon to make sure it gets done.”
While the defense budget in the US continues to expand, to well over $800B now, the number of small-business suppliers in the defense industrial base (DIB) in the United States has continued to decline. The DIB has dropped to approximately 55,000 vendors from 58,000 3 years ago and from 69,000 in 2016. Allowing all of the best businesses, despite their size, opportunities to benefit from supporting our national defense is critically important. The data shows that smaller players continue to face significant challenges serving the DoD and are continuing to be exiting the DIB for more profitable alternative markets.?So which companies are seeing growth in defense spending? The obvious answer is: a handful of very large defense contractors, such as Lockheed Martin, Northrop Grumman, General Dynamics, and Raytheon.?
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The DoD recognizes that a shrinking DIB is bad for national defense.?To reverse this trend and encourage small businesses to do business with the Department of Defense, the DoD utilizes a number of specific tools focused on small businesses, including Set Asides and SIBR Programs.??Set Asides are congressionally mandated procurement rules that require a portion (currently 23%) of DoD contracts must be awarded annually to small businesses. The Defense Department, through its Small Business Offices located throughout the United States, works with small business to help them navigate the process of bidding on DoD contracts, especially those contracts that are designated for Set Asides.?
Congress established the Small Business Innovation Research (SBIR) program in 1982 to provide opportunities for small businesses to participate in defense department sponsored research and development.?SBIRs are administered through DARPA.?Founded in 1957, in response to Sputnik, DARPA’s mission is to foster advanced technologies and systems that create revolutionary advantages for the US military. As an example of the importance of this funding, Moderna's mRNA technology, which was used in its COVID-19 vaccine, was in part funded with a grant from DARPA in 2013 to research mRNA therapeutics to make antibody-producing drugs to protect against natural and engineered biological threats.
While Set Asides and SBIRs are good tools that help support the DIB, they are clearly not enough, as evidenced by the continual decline in the number of companies in the DIB.?
Accordingly, I agree 100% with General Brown, that the DoD needs to “pick some winners”, especially small innovators that are making substantial advances in technology, like Moderna.?The defense of the United States over then past 100 years has been led by our brave men and women in uniform, supported by the world’s best industrial base.?Maintaining a strong DIB is critical to our national defense.?I hope the DoD will follow General Brown’s leadership and pursue additional innovative programs and policies to reverse the decline in the DIB.?
Executive Vice President at Jamaica Bearings Group, Co. Inc.
2 年Bill, Many good points on the importance of our shrinking small businesses base. To that point many of today's Prime DOD OEMs to a significant degree were built by rolling up small businesses. Leveraging their engineering, product and human capital to become the great companies they are today. Without these small business innovators, we would not be the industry we are today and will not be tomorrow. Thanks for sharing.