Small Business Plays Big Role in Military

The U.S. Defense Department is working to alleviate the unique set of challenges small businesses face when working in the military’s world. Small companies are critical to the U.S. economy—employing more people and creating more jobs than large corporations—and its work in support of the Defense Department also is vital. Small business is key to the military’s ability to sustain a competitive industrial base, both as a supplier of goods and services and as a leader of innovation.

According to the Defense Department’s Office of Small Business Programs (OSBP), more than 38 percent of total defense contracting dollars are awarded to small businesses. Over the past few years, the military has undertaken an aggressive outreach effort to identify veteran-owned and service-disabled veteran-owned small businesses to improve those companies’ prime and subcontracting opportunities. Officials with the office explain that the sacrifices veterans made for the country must be recognized at all levels of government, and the Defense Department is committed to doing its part.

In addition, the department is working with the Small Business Administration to update size standards for North American Industry Classification System (NAICS) codes for industries critical to the military. These standards define the eligibility requirements for designating a business as small. When the updates are complete, the OSBP expects small business participation in military procurements to increase. The office also works closely with the small business directors of military departments and other defense agencies to determine the best methods procurement offices can employ to increase awards to the small business sector.

Small companies face several common problems as they consider working with the Defense Department. The first is matching company capabilities to specific procurement needs. The second is the size and complexity of the department along with its guiding laws and government regulations, which can be challenging for small businesses to understand and navigate. Other challenges include identifying and locating business opportunities, understanding the different contract types and comprehending the competition methods the military uses to acquire goods and services.

To alleviate those challenges, the OSBP works with military departments and agencies to ensure that procurement processes and procedures are consistent with established laws and regulations. This guarantees small businesses have a fair chance to compete and win contracts as well as obtain subcontracts.

Some military organizations have small business specialists in their procurement and contract management offices to assist small company owners with their marketing concerns. These specialists address issues related to veteran-owned, service-disabled veteran-owned, HUBZone, small disadvantaged and woman-owned small businesses. Other help also is available from individual agencies. The Defense Logistics Agency, for example, has a nationwide network of procurement technical assistance centers that are available to assist businesses with government procurements.

Though working with the military can be complex for small businesses, the rewards often are worth the investment. The Defense Department has the largest discretionary budget in the federal government and courts small business participation. Several programs specifically target small businesses, such as the Small Business Innovation Research (SBIR) and Mentor-Protégé programs. The former sets aside a percentage of the research and development budget for use in developing critical technologies to meet mission needs; the latter allows military contractors—mentors—to provide business development assistance to eligible small businesses.

Officials with OSBP also share that working with the military gives small businesses intangible benefits in addition to the monetary ones. Engagement with the Defense Department offers a chance to take pride and feel a sense of satisfaction in providing goods and services that assist the nation’s warfighters. The Defense Department benefits as well because small businesses often offer more speed, agility, flexibility and innovation than their larger counterparts. SBIR and the Science and Technology Transfer programs are two examples of how small business capabilities can be leveraged to meet military technology needs.

Small businesses position themselves to profit from what the military has to offer by following several OSBP recommendations. First and foremost, officials say that small businesses need to be the best at what they do. The Defense Department wants to work with strong, capable firms that offer goods and services at fair market prices. Small businesses also should learn about and understand what their customers do and need. Finally, small business personnel should educate themselves on the basics of the military’s procurement processes and types of assistance available to small business owners. 

Small businesses can use FedBizOpps to find opportunities with the government or as a subcontractor with another firm. Subcontracting opportunities are typically greater for small businesses because they are aligned more closely with the capabilities and capacities of small companies. While government and large corporate contracting processes differ, they share common elements. Both large corporations and government agencies want to obtain the best products or services at the best price, officials say.

The OSBP recommends that small business owners review the information posted on its Web site to determine if the government requirement contained in the solicitation is related to a firm’s line of business. Small businesses also should use the NAICS to identify specific codes related to their product or service.