# Small businesses are heartbeat of US economy, says DOD leader

/ Published May 11, 2023
RICHMOND, Va., 
Recent data about small businesses in the defense industrial base shows loss. The Defense Logistics Agency lost about 22%, or roughly 3,000 vendors, between 2016 and 2022, according to agency information. Small businesses made up 2,300 of those losses. The Defense Department also reports a 40% loss of its small businesses over the last decade, according to a DLA study.

While those figures may be concerning, there is positive news about the nation’s small businesses. Over the last two years, 10.5 million Americans applied to start small businesses and created 3.5 million jobs, which are record highs, said Farooq Mitha, director of the Defense Department’s Office of Small Business Programs.

“In our local communities, we're really the heartbeat of the American economy,” Mitha said May 4 at the Defense Logistics Agency Supply Chain Alliance Conference and Exhibition in Richmond, Virginia.

The OSBP is working with small businesses to make it easier for them to work with DOD and comply with its regulations, he said. DLA and the military services helped shape the office’s new small business strategy, released in January. It promotes a strong small business industrial base by focusing on reducing barriers to entry, increasing set-aside competitions and leveraging programs to grow the industrial base.

The OSBP also created the small business integration program so companies can share best practices and communicate with each other, as well as a website to serve as a single source for forecasting information, resources and other data, Mitha said.

Additionally, his office’s mentor protege program brings in large companies to provide business development assistance to small companies and teach them how to work with DOD. The program is successful, Mitha said, with former proteges contributing $3-5 billion of work to the federal government, including DOD.

At first, only mentor companies were reimbursed for providing developmental assistance through the program, he said. A pilot program now allows the OSBP to provide 25% reimbursement for certain areas of manufacturing and software development to protege firms.

“I learned that small companies can mentor other small companies better than a large company can, so we’ve worked with Congress to lower the revenue threshold required for a mentor company,” he said.

The OSBP established a common credential at the Defense Acquisition University that provides training for the small business workforce. The office encourages contracting officers and program managers to take the courses, he added.

The OSBP is also focusing on aligning national security priorities with small business activities and making sure disadvantaged small businesses have a better chance at being successful.

“We’re spending a lot of money at the department on prototyping projects and building technologies, bringing in new veteran and non-traditional companies,” he said. “My hope, at the end of my time here, is all of these programs will be in a really great place, and they'll be there to really provide opportunities to all of you in a very consistent way where you understand what these programs can help you with, how to participate, and really get a great sense of understanding of the fact that they are authorized and funded consistently.”

Another important part of aligning small business activities with national security priorities is rethinking supply chains, Mitha said. This is being done though a suite of market intelligence tools that pull data to look for new entrants as well as companies that either haven’t conducted business before with DOD or haven’t won a contract in several years, he said.

His office oversees the APEX Accelerator program, previously known as Procurement Technical Assistance Centers. There are 96 program office across the country to help small companies earn contracts the DOD.

“Bottom line is there's a new leadership team, a brand-new name and a new mission. I'm really, really excited about the role that the APEX Accelerators will play as our front door to industry for all small businesses. It will give us reach in local communities in a way that we've never had before that we can leverage departmentwide,” Mitha said.

The APEX Accelerators are also helping companies with cyber security compliance. While networks must be protected, many small businesses consider the current cybersecurity requirements to be barriers, he said.

“We really wanted to make it easier for small companies to understand what the threats are, understand how to comply with regulations, and understand what resources are available to them at our costs,” Mitha said.

Small businesses can access the Project Spectrum website for training on current cybersecurity standards and threats, cyber readiness checks, and track compliance with Cybersecurity Maturity Model Certification.

Project spectrum will eventually provide tools to help companies protect their networks for free or a low cost, he added.