Small Business Strategy

JANUARY 2023

The esmated cost of this report or study for the Department of Defense is approximately $285,000 in Fiscal Years 2022 - 2023. This

includes $50,000 in expenses and $235,000 in DoD labor.

Generated on 2022Nov04 RefID: 0-1A6277B

Message from the Secretary

Small businesses occupy a central posion in the American economy and way of life. They account for over ninety-

nine percent of all employer rms and generate over forty-four percent of our Naon’s economic acvity. Small

businesses keep our military forces combat ready with crical parts, cung edge technology, and top-notch services,

and forfy our Defense supply chains in mes of crisis. Small businesses help ensure that our military has the very

best capabilies to keep us safe. Some of the most innovave minds in the country come from smaller companies,

and in an era of strategic compeon small businesses are one of our greatest tools.

Despite their signicance to the defense mission, the Department of Defense has yet to ulize the full potenal of

small businesses. Although the Department has met its small business prime-contracng goals for the past eight

years and has increased spending on small business prime contracng, parcipaon of small business in the defense

industrial base has declined by over forty percent in the past decade. Small businesses comprise more than seventy

percent of the companies that do business with the Department. If the Department does not work to reverse the

decline of small business contracng, then the industrial base that equips our military will weaken. Unfortunately,

small businesses encounter many challenges in working with the Department. A complex web of entry points and

intricate regulaons, as well as a trend of fewer opportunies, are pushing rms away from us at a me when we

need them urgently. The Department is determined to reduce these barriers. If we do not take acon, we risk losing

mission crical domesc capabilies, sing compeon and innovaon, and potenally weakening our supply

chains.

This Small Business Strategy outlines a Department-wide plan to harness the power of America’s small, innovave,

and agile companies and grow their contribuons to the defense mission. These iniaves will streamline eorts

across DoD in order to make it easier for small businesses to work with DoD, align small business acvies to sustain

and expand the Department’s diverse and modernized capabilies, and reduce barriers for small businesses to help

reverse the declining trend in small business suppliers. Small businesses provide our most creave entrepreneurs and

most driven workers, and it is imperave that we extend them an open hand. Through implemenng this strategy, we

will ensure that small businesses connue to serve as indispensable partners in the mission to protect our naonal

security.

Lloyd J. Ausn III

Secretary of Defense

Executive Summary

The United States faces unprecedented naonal

security and economic challenges. Strategic competors

seek to displace the U.S. military as the world’s

preeminent force, the COVID-19 pandemic and

impacts from climate change have exposed fragility

in crical supply chains, and consolidaon in the

defense marketplace has undermined the compeon

and innovaon needed to provide the best systems,

technologies, services, and products to support the

warghter. These vulnerabilies especially threaten

capital-strapped small businesses, which represent a

majority of prime- and sub-er defense suppliers. This

Small Business Strategy outlines strategic objecves

that will enable the Department of Defense (DoD

or the Department) to expand and strengthen its

relaonship with small businesses and beer leverage

their capabilies to help solve the Department’s and our

Naon’s most complex challenges.

It is imperave for the Department to focus on small

business. These innovave companies account for 43

percent of all high-tech jobs in the U.S. and generate

sixteen mes more patents than large rms. Small

businesses spur innovaon, represent most new

entrants into the Defense Industrial Base (DIB), and

through their growth represent the next generaon

of suppliers with increasingly diverse capabilies.

Small businesses are agile and oen can implement

change more quickly than larger rms. In Fiscal Year

(FY) 2021, small businesses made up 73 percent of all

companies that did business with DoD and 77 percent

of the research and development (R&D) companies

that did business with DoD.

One high-prole example

is Moderna, a former small business and Defense

Advanced Research Projects Agency (DARPA) grant

recipient that produced millions of mRNA vaccines to

help ght the COVID-19 global pandemic. Without

small businesses, the vital engine of growth for the

United States industrial base would cease to exist.

Despite their importance to the Department, small

businesses face various obstacles in helping DoD meet

its challenges. Regulaons and business pracces

can be dicult to understand or otherwise create

barriers or increase the cost of doing business with

DoD. Larger, beer-resourced companies are beer

able to navigate these obstacles and address these

costs than smaller businesses. Some of these barriers

include confusing points of entry into defense markets,

improper bundling and consolidang of contracts, and

understanding complex regulaons. These barriers

strain the relaonship between the Department and

small businesses.

In combinaon with economic condions leading to a

consolidang DIB, these barriers have contributed to

a reducon of small businesses in the DIB. Although

the Department has achieved its small business prime

contracng goal for the past eight years, the number

of small business parcipang in the defense industrial

base has declined by over 40 percent in the past decade

(Figure 1).

Over me, a decline in the number of small

businesses parcipang in defense acquisions will

lead to a reducon of innovave concepts, capabilies,

quality of service and increased acquision costs.

1 DoD contract data sourced from the System for Award Management, operated by the

General Services Administraon.

2 U.S. Government Accountability Oce (GAO) Report No. GAO-22-104621 “Small Business

Contracng: Acons Needed to Implement and Monitor DoD’s Small Business Strategy”

(October 2021).

Figure 1. The Department’s contract obligaons to small businesses and the number of small businesses

that received contract awards from the Department (FY 2011 – 2020).

Through recognizing these vulnerabilies now, the

Department can respond with targeted iniaves that

leverage diverse small business suppliers to strengthen

our domesc supply chains, reduce reliance on single

or sole sources of supply, and help ensure the United

States connues to lead in innovaon. By adjusng

to macroeconomic trends and understanding that the

Department must take acon to encourage more small

businesses to work with the Department, DoD can

implement appropriate strategies to expand use of small

businesses.

Increasing small business parcipaon in defense

acquisions is crical. Expanding parcipaon will

keep DoD at the forefront of innovaon, while

simultaneously fostering increased compeon that

can reduce costs for high quality capabilies. It will also

ensure that the Department connues to leverage the

untapped potenal of disadvantaged-, women-, and

veteran-owned small businesses that have historically

been underulized. As the Department aims to maintain

the technological edge, small businesses are key.

These small business eorts are a crical part of

implemenng the Department’s broader industrial

base priories, which directly support and align with

the priories of the President. These priories include

ensuring robust domesc capacity and capabilies

to meet our naonal security challenges, promong

compeon in the procurement process to benet

from improved costs, performance, and innovaon, and

advancing equity and inclusion in defense acquision

to leverage the unique talent and ideas that come

from diverse communies from across the country.

Success of implemenng these priories relies on small

businesses being drivers to generate these outcomes.

The Department of Defense is building this Small

Business Strategy around three strategic objecves.

First, improve management pracces by sharing best

pracces and creang eciencies across the enterprise

for small business acvies and programs. Second,

ensuring that small business acvies within DoD

beer support naonal security priories. And third,

strengthening the Department’s ability to engage and

support small businesses. Implemenng this strategy

will make the DIB more innovave, resilient, and

eecve, producing a Joint Force that is beer equipped

to execute its mission.

This strategy heavily relies on the Department’s own

connued push for excellence. Numerous exisng small

business iniaves have made incredible progress in

addressing these issues. For example, the Department

of the Air Force’s Open Topic Small Business Innovaon

Research (SBIR) and the Small Business Technology

Transfer (STTR) Programs have successfully brought

rst me applicants into the DoD. This strategy seeks

to uncover similar pockets of excellence, share best

pracces, develop policy, distribute guidance, and

establish iniaves, as appropriate, to connue to

accelerate the Department’s ability to partner with and

benet from America’s small business base.

Strategic Objective 1: Implement a

Unied Management Approach for

Small Business Programs and Activities

The Department’s small business programs, acvies,

and workforce are distributed across the Military

Services, Defense Agencies, and eld acvies (DoD

Components), including Components of the Oce

of the Secretary of Defense (OSD). This distribuon,

although benecial in some areas, also oen leads to

confusion for small businesses as to what the entry

points are, how programs and iniaves connect to each

other, and how a small business can or should ulize

DoD’s various small business programs to mature their

capabilies from prototype to full-scale integraon or to

diversify the goods and services they provide to DoD. To

address these issues, DoD will develop and implement

a unied management structure for DoD small business

programs and acvies, develop a unied small business

professional workforce, and streamline entry points, and

improve small business access to decision makers.

Strategic Objective 2: Ensure the

Department’s Small Business Activities

Align with National Security Priorities

Naonal security concerns are a primary force guiding

the Department’s military and defense objecves.

Accordingly, naonal security concerns should guide

the Department’s acvies with respect to the small

business industrial base. To build enduring advantages

and get the technology we need more quickly, DoD

must have access to a healthy small business industrial

base with broad capabilies to produce parts and

systems, secure supply chains, and access a skilled

workforce. Presidenal execuve orders to promote

compeon,

foster supply chain resiliency,

and

advance equity

also put small business at the nexus of

the naon’s economic and naonal security priories.

Aending to commercial trends is crical, as today’s

innovave companies have many choices for capital, are

not reliant on defense spending, and, therefore, have

other opons for how to do business. These trends may

lead to adverse incenves that inhibit the Department’s

ability to access America’s most innovave minds, and

potenally impacng DoD’s ability to achieve naonal

defense priories. The Department must, therefore,

take acon to ence small businesses into the defense

3 Secon 4901 of tle 10, United States Code (U.S.C.); Secon 861(b) of the William M. (Mac)

Thornberry Naonal Defense Authorizaon Act (NDAA) for Fiscal Year (FY) 2021 (Public Law

116-283); Department of Defense Instrucon (DoDI) 4205.01 “DoD Small Business Programs

(SBP)” (August 2018); DoDI 5134.04 “Director of Small Business Programs (SBP)” (December

2017).

4 Execuve Order (E.O.) 14036 “Promong Compeon in the American Economy” (July

2021).

5 E.O. 14017 “America’s Supply Chains” (February 2021).

6 E.O. 13985 “Advancing Racial Equity and Support for Underserved Communies Through the

Federal Government” (January 2021).

marketplace, while simultaneously taking into account

their commercial growth objecves. The Department

will ensure small business acvies are carried out to

further naonal defense priories through eorts to

stabilize and scale exisng programs that help small

technology and manufacturing businesses deliver

capabilies to the warghter, ulize data tools to

understand and expand small business parcipaon and

spending, and expand policy and process engagement of

small business professionals and senior leaders on small

business maers.

Strategic Objective 3: Strengthen the

Department’s Engagement and Support

of Small Businesses

For the Department to eecvely support small

businesses, DoD must improve its ability to

meaningfully engage with small businesses including

rms from crical socioeconomic categories and

underserved communies. The Department must also

ensure that its operaonal and acquision leadership

connues to recognize the abilies of small business to

support the defense mission, and that small businesses

can understand and access the Department’s most

current iniaves, eorts, and policies. Furthermore,

DoD should provide training and other resources to

help educate small businesses and enhance their ability

to resist cyber threats, IP infringement, and foreign

ownership, control, or inuence. These eorts help

reduce the vulnerability of the DoD’s supply chain.

The Department will advance these eorts through

strategies to improve outreach and communicaon

with small businesses, provide cybersecurity training

and resources to small businesses, and educate small

businesses.

TABLE OF CONTENTS

Strategic Objecve 1: Implement a Unied Management Approach for Small Business Programs

and Acvies........................................................................................................................................................9

1.1. Implement a Unied Management Structure by Establishing a Group to Integrate Small Business Programs and

Acvies ..................................................................................................................................................................................................9

1.2. Train and Credenal a Unied Small Business Professional Workforce ........................................................................ 11

1.3. Streamline Entry Points and Improve Small Business Access to Decision-Makers ..................................................... 11

Implementaon acons to pursue for Strategic Objecve 1: .................................................................................................. 12

Strategic Objecve 2: Ensure the Department’s Small Business Acvies Align with Naonal

Security Priories ............................................................................................................................................ 13

2.1. Stabilize and Scale Programs that Help Small Technology and Manufacturing Businesses Deliver Capabilies to

the Warghter .................................................................................................................................................................................... 13

2.2. Ulize Data Tools to Understand and Expand Small Business Parcipaon and Spending in Order to Ensure a

Robust and Resilient Industrial Base .............................................................................................................................................. 15

2.3. Expand Policy and Process Engagement of Small Business Professionals and Senior Leaders on Small Business

Maers ................................................................................................................................................................................................. 16

Implementaon acons to pursue for Strategic Objecve 2: .................................................................................................. 18

Strategic Objecve 3: Strengthen the Department’s Engagement and Support of Small

Businesses ......................................................................................................................................................... 19

3.1. Improve Outreach and Communicaons with Small Businesses .................................................................................... 19

3.2. Provide Cybersecurity Training and Resources to Small Businesses .............................................................................. 20

3.3. Educate Small Businesses on Risks of Foreign Ownership, Control, and Inuence .................................................... 21

Implementaon acons to pursue for Strategic Objecve 3: .................................................................................................. 22

Strategic Objective 1:

Implement a Unied

Management Approach for

Small Business Programs and

Activities

There is a rich diversity of small business programs

and related eorts distributed throughout the

Department. As a result, it can be confusing for both

industry and government personnel to understand

how to engage with the Department’s small business

enterprise. Small businesses and even members of

the DoD acquision workforce can nd it challenging

to understand where to go rst and who to contact

to nd informaon on available DoD small business

programs and opportunies. Addionally, DoD small

business oces, programs, and iniaves oen

have limited connecvity to each other and have

potenally overlapping responsibilies. To address these

challenges, this Small Business Strategy focuses on:

(1) increasing collaboraon across DoD small business

programs and related eorts though implementaon

of a unied management approach, (2) increasing the

training and educaon of the small business workforce,

and (3) using digital tools to lower barriers of entry and

reduce the search costs for government and industry

to access the DoD small business enterprise. The intent

of these eorts is to reduce confusion and increase the

overall eecveness of small businesses in furthering

the objectives of the Department.

1.1. Implement a Unified Management

Structure by Establishing a Group to Integrate

Small Business Programs and Activities

The execuon of small business programs within

OSD is split among dierent program oces within

the Oces of the Under Secretary of Defense for

Acquision and Sustainment (USD(A&S)) and the Under

Secretary of Defense for Research and Engineering

(USD(R&E)) stemming from the organizaonal division

of the Oce of the former Under Secretary of Defense

for Acquision, Technology, and Logiscs (Figure 2).

These divisions are also mirrored within some DoD

Components. As a result, responsibilies and resources

related to these various small business acvies are

also fragmented among mulple organizaons and

may not be fully matched to mission responsibilies.

These divisions interfere with DoD’s ability to easily

and eciently leverage economies of scale and

ensure alignment of small business eorts across the

Department.

The Department understands the importance of

implemenng a unied management approach that

will beer align and integrate small business programs

and related eorts by improving synergies, enabling

long-term program planning, beer dening roles and

responsibilies of small business professionals, and

leveraging resources more eecvely. To establish a

unied small business management structure under this

unied management approach, the Department will

establish a small business integraon group, chaired

by the Director of the DoD Oce of Small Business

Programs (OSBP), who serves as the principal advisor

to the USD(A&S) and the Secretary of Defense on

small business maers and is the principal proponent

within OSD for execung naonal and DoD policy

regarding DoD’s small business programs. This

integraon group will include representaves from

the Oce of the Under Secretary of Defense for

Acquision and Sustainment (OUSD(A&S)), the Oce

of the Under Secretary of Defense for Research and

Engineering (OUSD(R&E)), the Directors of OSBPs for

the DoD Components, who serve as the principal small

business leads in their respecve organizaons and

who report to the Component head or deputy, and

representaves of other industrial base programs as

needed.

The small business integraon group will work

to improve alignment between the Department’s small

business programs by creang a forum for discussion,

7 See 15 U.S.C. § 644; 10 U.S.C. §§ 7024, 8028, and 9024; DoDI 4205.01 “DoD Small Business

Programs (SBP)” (August 2018); Defense Federal Acquision Regulaon Supplement (DFARS)

secon 219.201(c).

Figure 2. Current Organizaonal Alignment of Key DoD Programs and

Iniaves that Interface with Small Businesses

UNDER

SECRETARY

OF DEFENSE

FOR A&S

DEPUTY

UNDER

SECRETARY OF

DEFENSE FOR

A&S

ASSISTANT

SECRETARY OF

DEFENSE

(INDUSTRIAL

BASE POLICY)

DIRECTOR,

OFFICE OF

SMALL BUSINESS

PROGRAMS

PTAPMPP

UNDER

SECRETARY

OF DEFENSE

FOR R&E

DEPUTY

CHIEF

TECHNOLOGY

OFFICER FOR

SCIENCE &

TECH

DEFENSE

INNOVATION

UNIT

DIRECTOR OF

SMALL

BUSINESS & TECH

PARTNERSHIPS

RIF

NSIN

SBIR

collaboraon, and deliberaon. The group will host

regular meengs to discuss small business programs

and acvies throughout the Department and will

address such topics as the unicaon of small business

policy, acquision workforce development, transioning

emerging capabilies into programs of record and

elded systems, and reducing barriers to entry into

the defense marketplace for small businesses. Secon

4901 of tle 10, United States Code (U.S.C.), requires

DoD to ensure there is a unied management structure

for small business programs. In its assessment of the

Mentor-Protégé Program (MPP), the Defense Business

Board emphasized this point and recommended the

Department “consider designang a specic oce,

with sucient resourcing and appropriate leadership,

to oversee all its small business programs.”

A primary

strategic goal of this Small Business Strategy is to

establish a management structure that aligns small

business programs and small business-related eorts

across the Department. As detailed in the following

paragraphs, DoD has an incredible diversity of small

business programs and related eorts, many of which

are highly collaborave within themselves (e.g., the

DoD SBIR/STTR program with the Military Services’

SBIR/STTR programs), but all of which can benet from

collaboraon across eorts and programs. Implemenng

a unied approach that focuses on those acvies

that underpin all small business programs and eorts,

including small business policy development and

oversight, small business workforce management and

collaboraon, and making small business opportunies

more accessible, would facilitate cross pollinaon

of both issues and potenal soluons to increase

the eecveness of the enre DoD small business

enterprise.

The Department generally carries out three types of

small business programs. Although these programs

are categorized independently for the purposes of

oversight, most have cross-cung elements and

acvies and depend on eecve execuon across

categories (e.g., the SBIR/STTR program is a small

business program with an R&D focus that also conducts

outreach and training).

• The rst type are parcipaon programs for small

business categories, including small businesses, Small

Disadvantaged Businesses (SDBs), women-owned small

businesses (WOSBs), Historically Underulized Business

Zone (HUBZone) small businesses, and Service-Disabled

Veteran-Owned Small Businesses (SDVOSBs), and other

categories, including the Indian Incenve Program (IIP).

Small business category parcipaon programs typically

employ spend goals, set-asides, or other acquision

preferences.

8 United States Code, 10 U.S.C. 4901; William M. (Mac) Thornberry Naonal Defense

Authorizaon Act for Fiscal Year 2021, Public Law 116-283, Secon 861(b), 10 U.S.C. 4901 note.

January 2021.

† APEX is the procurement technical assistance program operang under 10 U.S.C. chapter

388. The Department recently retled this program “APEX” and retled the parcipang

eligible enes who provide procurement technical assistance as part of this program as “APEX

Accelerators”.

• The second type are small business technology

development, funding, and assistance programs, including

SBIR/STTR, the Defense Research and Development

(R&D) Rapid Innovaon Program (also known as the Rapid

Innovaon Fund (RIF)), and the DoD Mentor-Protégé

Program (MPP). Some of these programs, e.g., SBIR/STTR,

also have statutory acquision preferences and goals.

• The third type are outreach, counseling, and industry

training programs, including APEX

†

(previously named

Procurement Technical Assistance Program), DoD eorts

in connecon with secon 1644 of the Naonal Defense

Authorizaon Act (NDAA) for FY 2019 which requires

disseminaon of cybersecurity resources, self-assessments,

and training, and various small business iniaves

for matchmaking, training, and navigang regulatory

requirements.

The Department carries out several other programs

and eorts at both the DoD and Service level that have

special focus, preferences, ulity, or priories for small

businesses.

Proacvely aligning these programs and eorts to work

together will broaden outreach, drive prototyping,

strengthen the DoD supply chain, and increase

technology transfer into defense programs, thus is

crical to engaging small businesses and increasing their

contribuons to defense priories. The small business

integraon group will focus on increasing collaboraon

so the Department’s small business programs and

related eorts can beer leverage each other’s

experse to grow small businesses in the naonal

technology and industrial base, aract more companies,

mature technologies, and allow for more rapid tech

transfer and commercializaon. This approach will

facilitate development of an easy-to-understand

pathway for industry so that a small business could

enter the supply chain through parcipaon in a

targeted outreach eort, such as hackathon or pitch

event, become a protégé rm to a successful mentor

to obtain business development support, engage their

local APEX Accelerator to get counseling and idenfy

contracng opportunies, compete for an SBIR or STTR

contract, and commercialize their technology with DoD

through support from RIF with help from small business

acquision preferences.

1.2. Train and Credential a Unied Small

Business Professional Workforce

Training the Department’s acquision workforce on

small business maers is a priority for senior acquision

leadership across the Department. An acquision

workforce with small business training increases the

Department’s ability to leverage small business specic

programs and authories for a wide variety of small

businesses to meet current mission objecves and

access crical innovave technologies, agile soluons,

and value-added improvements needed to develop and

advance warghter capability and infrastructure.

DoD has specially trained small business professionals

across the Department that contribute at all stages of

the acquision process to raise the visibility of small

business contribuons, capabilies, and experse. These

small business professionals assist acquision teams

with requirements generaon, solicitaon preparaon,

acquision strategy and plans, and other required

documentaon to ensure that appropriate priories

are given to small businesses, including non-tradional

small businesses and small businesses who are eligible

for acquision preferences. Small business professionals

conduct outreach to small businesses, large businesses,

nonprots, and academic instuons to facilitate strong

relaonships between the government stakeholders

and the small business community. They also assist

with market research and raise the visibility of how a

certain industry sector can contribute to all phases of

the acquision process. Small business professionals

execute and support small business programs, such as

the DoD MPP and SBIR/STTR programs, and advise on

small business preferences, priories, instruments, and

acvies of other DoD small business programs.

It is imperave that small business professionals

connue to parcipate in acquision strategy

development and peer reviews when appropriate.

This parcipaon supports idencaon of

commercializaon opportunies in future procurements

from programs such as SBIR, STTR, RIF and others and

increasing awareness for creang small business acvity

in consolidated acquisions. Although contracng

ocers are responsible for ensuring compliance

with acquision requirements for small business

parcipaon, the involvement of small business

professionals helps ensure that small business soluons

for defense missions are fully considered at the prime

and subcontracng levels and that the Department is

not overpaying for duplicave development, excessive

overhead, or unnecessary product or service oerings.

With the broad set of roles that small business

professionals play, they should be trained as a

professional community to ensure that small businesses

have the maximum praccal opportunity to parcipate

in DoD acquision and programs. Further investments

in small business training for the acquision workforce

would support and enhance the ability of the acquision

workforce to support small business.

1.3. Streamline Entry Points and Improve

Small Business Access to Decision-Makers

Small businesses today face a myriad of entry points

into the defense marketplace that are scaered

throughout the DoD Components. These entry points

are of varying quality, and the processes can be

confusing—an unnecessary challenge for a business that

is trying to understand where to go rst, who to contact,

and where to nd informaon on available programs

and opportunies. In addion, the Department also

ulizes a variety of procurement and non-procurement

instruments, such as contracts, grants, cooperave

agreements, Other Transacon Authories (OTAs), and

Cooperave Research and Development Agreements

(CRADAs), among others, each of which has dierent

qualicaon, compeon, and publicaon requirements.

DoD small business oces also receive unsolicited

proposals and capability statements and refer them to

appropriate contracng ocers and acquision program

managers for consideraon as appropriate.

With the many dierent opportunies and opons

available to small businesses, partnering with the

Department results in high search costs (i.e., takes

signicant me that many businesses do not have)

even for those companies with which the Department

has worked in the past, and an even higher cost for

new entrants. Small businesses are seeking help. In

accordance with 10 U.S.C. § 4901, DoD will ensure clear

idencaon of points of entry into the defense market

and ensure small businesses are able to have access to

program managers, contracng ocers, and end users,

to the extent necessary to inform these persons of

emerging and exisng small business capabilies.

The Department must priorize reducing barriers to

entry and high search costs for small businesses. A

focused strategic communicaons plan and outreach

will be a key objecve of this eort to address this

external confusion. The communicaons plan will

support the DoD Components and be targeted for

small businesses across the DIB to highlight market

opportunies and provide clear informaon on

opportunies for small businesses to engage with DoD,

including guidance on pernent business processes.

This outreach framework will center on beer educang

small businesses on doing business with the DoD,

improving DoD support to small business to meet

acquision requirements processes, and providing

mely guidance for outreach communicaons to small

businesses. The goal is to increase the amount of small

business parcipaon across DoD.

As a rst step, the DoD is turning its current small

business website (www.business.defense.gov) into

a common entry point for small businesses. The

Department will improve the informaon and resources

on this site to enable small businesses to navigate

small business oces through the Department, cross-

reference informaon on small business programs

across the Department, and provide access to available

acquision forecasts and toolkits on how to do business

with the DoD. In addion, DoD will explore enhancing

the funconality of these websites to provide for

referral of small business capability informaon to end

users and decision-makers.

Implementaon acons to pursue for Strategic

Objecve 1:

1.1.1. Establish a group to integrate small business

programs and across the Department.

1.1.2. Enhance guidance on how DoD acquision

professionals can beer ulize a variety of tools to

simplify entry into the DoD market and aract non-

tradional, emerging, and innovave small businesses.

1.2.1. Establish and implement a common training

for all small business professionals and appropriate

elements of the broader acquision workforce that

includes training on the Department’s small business

programs, best pracces from government and industry

in small business, market research, acquision policy,

and building resilient supply chains, all of which will help

build a clearly dened pipeline of talent into the small

business workforce.

1.2.2. Ensure that Defense Acquision University

(DAU) content and other training on small business

programs, authories, and tools are easily accessible for

all members of the acquision workforce.

1.3.1. Streamline entry points into the defense

marketplace for small businesses by unifying and

improving the small business websites such that all small

businesses, including those in dened socioeconomic

categories, have maximum opportunies to parcipate

in DoD programs.

Strategic Objective 2: Ensure

the Department’s Small

Business Activities Align with

National Security Priorities

Today, our Naon and our allies face strategic

competors and adversaries ranging from

technologically-advanced competors to nuclear-

aspiring powers to non-state actors. In this environment,

the Department must be able to develop and eld

a broad range of high-quality, technically ready, and

diverse capabilies. Capability development, producon,

and elding should be marked by adaptability, diversity,

and speed of design and delivery and then sustained

and supported through reliable logiscs.

To acquire such capabilies at the volume and speed

of relevance, the DoD needs access to a strong and

growing industrial base, to include a vital and thriving

small business ecosystem. To ensure the Department

has the small business ecosystem it needs, this

strategic objecve focuses on: (1) stabilizing and

scaling technology- and manufacturing-related small

business programs and related eorts; (2) beer ulizing

data tools to ensure small business capabilies are

understood by the capability development enterprise;

and (3) ensuring small business professionals engage

early in acquision strategy development to increase

connecon of small business technologies to mission

requirements.

Strategic Objective 2: Ensure

the Department’s Small

2.1. Stabilize and Scale Programs that Help

Small Technology and Manufacturing

Businesses Deliver Capabilities to the

Warghter

American small businesses have always been a great

source of innovaon for the Department. Domesc

innovave small businesses provide outsized,

asymmetric, technological advantages that are crical

towards maintaining our edge against near-peer

competors. Agile and innovave small businesses are

integral to addressing new and connuing naonal and

economic security.

Under 10 U.S.C. § 638, DoD and the Military

Departments are required to set goals on small business

parcipaon in RDT&E eorts. The Department funds

small business RDT&E in various ways. For example,

DoD’s SBIR/STTR programs provide signicant (nearly

~$2B) in total funding to small innovave companies.

The Department also ulizes other small business

programs, like the MPP and RIF, as well as other non-

small business industrial base programs, like NSIC,

ManTech, and IBAS, to help innovave companies

traverse the gap between proof of concept and market

availability. Each industrial base program focuses on

a specic segment of the DIB and certain technology

maturaon levels. The Department’s small business

RDT&E eorts could be further enhanced by increasing

integraon between technology programs. For example,

enhancing the ability of military academies and other

Directors now must consult with appropriate agency

personnel to assist small businesses parcipang in

a SBIR/STTR program with researching applicable

solicitaons to market the resulng research to

support SBIR/STTR Phase III transions. Fullling these

consulng dues will provide opportunies to ensure

all have a clear and concise understanding of what may

be needed to help small businesses bridge the gap

to obtaining a DoD contract award, but guidance sll

needs to be implemented. DoD’s ability to transion

technologies from small businesses into defense

capabilies will depend heavily on the successful

translaon of the unique value of small business

programs and related-eorts to a wider set of present

and future government stakeholders.

A potenal strategy for stabilizing and scaling the

Department’s innovave small business programs

and related eorts is by emulang the work of

the Technology Transion and Commercializaon

Community of Pracce (TTAC CoP). The TTAC CoP

brought together several technology and manufacturing

programs together to coordinate and collecvely tackle

the Department’s most crical technology challenges.

This iniave helped the Department break silos

between these separate programs, so that they could

leverage each other’s focus areas and best pracces

and see how regulaons, policy, and procedures can

be changed to reduce red tape while sll achieving

program goals. These funcons may be carried out

through the small business integraon group, in

coordinaon with appropriate overarching governance

bodies, would encourage development of more rapid

acquision strategies and may aract more commercial

companies whose technologies can be leveraged by the

Department.

The Department could also look at sharing best

pracces to help stabilize and scale innovave

programs. For example, through use of OTAs, DoD has

been successful at establishing agreement structures

that support new entrants and small commercial

companies, many of which are small businesses. This

is parcularly true for use of the prototyping OTA,

where signicant small business parcipaon is one

of the enabling condions. DoD policy is that a fair

proporon of DoD total purchases, contracts, and

other agreements for property and services be placed

with small businesses.

Improving current guidance

and reporng systems to facilitate idencaon

and tracking of small business parcipaon in OTs

would enable the Department to beer assess the

eecveness of DoD’s use of OTAs in connecon with

engagement with small business innovators.

10 DoDI 4205.01, “DoD Small Business Programs” (August 2018).

research organizaons to serve as research instuon

partners for small businesses under the STTR program

would further align small business RDT&E with naonal

defense.

However, implementaon problems persist in both:

(1) the instability of certain programs and related

eorts themselves, many of which do not have

permanence, and (2) the need to align the programs

to ensure technological investments can be scaled

into producon. This Small Business Strategy seeks to

stabilize and align these programs.

First, one of the most signicant challenges with small

business programs and related eorts is long-term

planning. Instability makes it challenging for industry

to make the investments needed to support defense

priories. It also makes it exceedingly dicult for the

Department to engage in long-term planning for how

to aract new entrants and provide dened contracng

opportunies for small businesses looking to break into

the defense marketplace. Examples include:

• The MPP was rst authorized in the NDAA for FY 1991

and received seven-year reauthorizaon in the NDAA for

FY 2020; however, inconsistency in availability of MPP

appropriaons makes it dicult to scale the program

to reach the hundreds or thousands that can use such

assistance.

• The SBIR and STTR programs have been reauthorized

numerous mes since their creaon, most recently in

September 2022. However, these reauthorizaons usually

occur in the last year of the current authorizaon and are

me-limited; the recent reauthorizaon lapses in 2025.

• The RIF program was created in 2011 and made

permanent in 2016. The Department completed a study

that idened its successes in helping bridge the valley

of death and delivering technologies to the warghter.

However, RIF funding has not been appropriated since FY

2019.

These technology and manufacturing programs can

be highly impacul for the small business industrial

base, but the lack of permanency of authorizaon and

funding makes it extremely dicult to engage in the

needed long-term planning to leverage and scale these

programs to support the defense mission.

Second, many small business programs could be beer

assisted through integraon across programs. For

example, the SBIR/STTR Phase III construct allows

small businesses to be awarded follow-on producon

contracts quickly by removing the compeon

requirement as appropriate and authorized. However,

DoD program guidance and processes are oen Military

Service-based, and may be poorly understood outside

of those who work closely with the SBIR program.

Under 15 U.S.C. § 644(k)(21), however, Small Business

9 The Small Business and Technology Partnership Oce, “Defense Rapid Innovaon Fund: An

Assessment of RIF Eecveness FY 2011-2016” (August 2020).

2.2. Utilize Data Tools to Understand and

Expand Small Business Participation and

Spending in Order to Ensure a Robust and

Resilient Industrial Base

As outlined in Execuve Orders No. 14005, “Ensuring

the Future Is Made in All of America by All of America’s

Workers,”

No. 14036, “Promong Compeon in

the American Economy,”

and No. 14017 “America’s

Supply Chains,”

as well as the 100-Day White House

Review on “Building Resilient Supply Chains, Revitalizing

American Manufacturing, and Fostering Broad-Based

Growth,”

the industrial base and supply chains of the

United States have been declining in recent years. Slim

margins, increased oshoring, business consolidaon,

and inadequate investment in certain industrial

sectors are weakening the industrial base. A weakened

American industrial base and supply chain threatens

both the economic security of millions of Americans and

our country’s naonal security.

To meet ancipated and unancipated challenges

with speed and eciency, the Department must focus

on reinvigorang innovave and resilient industrial

base and supply chains. Execuve Order No. 13985,

“Advancing Racial Equity and Support for Underserved

Communies Through the Federal Government,”

and the Oce of Management and Budget (OMB)

Memorandum M-22-03, “Advancing Equity in Federal

Procurement,”

make plain our supply chains suer

from equity gaps, and that rebuilding our industrial base

requires increasing the number of new small business

entrants and advancing equity for small businesses from

underserved communies, including SDBs, WOSBs,

HUBZone SBs, and SDVOSBs. The Department is

fully commied to eliminang gaps, vulnerabilies,

and crical shoralls in America’s supply chains in an

equitable manner.

To that end, the Department is planning to eld a robust

set of tools that DoD ocials can ulize to increase the

eciency of small business market research, track small

business performance, and run comparave analycs

using data sourced from across the Department and

Federal government. Idenfying capable small business

suppliers through market intelligence data is key to

increasing set-asides for small business compeon,

understanding the supply chain, locang small business

manufacturers, and increasing the number of small

companies in the DIB. The Department has idened

11 The White House. Execuve Order 14005, Ensuring the Future Is Made in All of America by

All of America’s Workers, January 2021.

12 E.O. 14036, “Promong Compeon in the American Economy” (July 2021).

13 E.O. 14017, “America’s Supply Chain” (February 2021).

14 The White House, “Building Resilient Supply Chains, Revitalizing American Manufacturing,

and Fostering Broad-Based Growth: 100-Day Reviews under Execuve Order 14017” (June

2021).

15 E.O 13985, “Advancing Racial Equity and Support for Underserved Communies Through

the Federal Government” (January 2021).

16 OMB Memorandum M-22-03, “Advancing Equity in Federal Procurement” (December

2021).

its modernizaon priority areas, which include arcial

intelligence, cybersecurity, and renewable energy

generaon and storage, and also has idened priority

industrial base sectors such as casngs and forgings,

strategic and crical materials, and energy storage and

baeries. Market intelligence tools can help idenfy

small business suppliers in these sectors of the federal

government marketplace that can support DoD

requirements in these areas, and help DoD expand its

market knowledge of key players in these advanced and

emerging industries.

Data analycs is crucial for connual and eecve

measurement of performance and idencaon of

trends, including the achievement of Presidenal

industrial base priories, DoD’s increased SDB goals

negoated with SBA, and major accomplishments

and interacons involving small businesses and the

Department.

Improved data analycs would also

beer enable the Department to track small business

parcipaon and trends across North American Industry

Classicaon System (NAICS) Codes and Product and

Service Codes (PSC) that t into priority areas of the

Department’s research, development, and operaonal

missions.

17 OMB Memorandum M-22-03, “Advancing Equity in Federal Procurement” (December

2021).

2.3. Expand Policy and Process Engagement

of Small Business Professionals and Senior

Leaders on Small Business Matters

Streamlining the acquision process where praccable

and ensuring consistent implementaon of procurement

policies is essenal to migang obstacles to growth

and increasing the amount of small businesses working

with the Department. Small business capabilies should

be considered at the earliest stages of acquision to

maximize opportunies for small businesses to compete

and parcipate for contracts.

Engagement of small business professionals at early

stages of acquision will enable the Department to

ensure small business capabilies and technologies

are included in developing acquision strategies.

For example, early engagement by small business

professionals would assist in idenfying and, as

appropriate, addressing barriers to entry facing small

businesses earlier in the process. Some of these

barriers include improper consolidaon and bundling

of contracts, lack of sucient on-ramp opportunies

for category management vehicles, overly restricve

past performance requirements, inconsistent or

inappropriate usage of NAICS codes, and use of

interagency contract vehicles for which small businesses

do not qualify.

The Department furthers these objecves in current

policy by ensuring that senior execuves who oversee

acquisions will connue to have a mandatory

performance element in their performance objecves

related to support and fulllment of DoD’s small

business goals. Addionally, the Department’s current

policy mirrors the Small Business Act so that small

business directors across the Department have the

required reporng structure and seniority to impact

these issues.

The purpose is to help ensure that

small business directors have direct access to senior

leadership to advocate eecvely for small businesses

and ensure small business priories are included in

acquision planning.

Current DoD policy states that heads of the DoD

Components that award or administer contracts,

cooperave agreements, and grants shall appoint

Component Directors of Small Business Programs

in accordance with tle 15, United States Code to

include reporng to the Component head or second

in command and appointment to a posion that is a

Senior Execuve Service (SES) posion, unless the

Component Acquision Execuve is not an SES.

Current implementaon of these statutes and policies,

however, is uneven across DoD. For example, in a 2017

report

, the U.S. Government Accountability Oce

(GAO) idened that the Director of Small Business for

the Defense Logiscs Agency should be appointed to an

SES posion. To address such issues, DoD will ensure

the reporng structure and posion of small business

directors complies with statutory, regulatory, and

DoD policy requirements, so they can beer inuence

the inclusion of small business priories within their

respecve organizaons.

To ensure ongoing success of this Strategy, DoD

will regularly examine any resourcing shoralls

and, as needed, take appropriate acon to achieve

proper workforce resourcing. Inial rough esmates

of projected resource needs in connecon with

implementaon of this Strategy are provided in the

associated Implementaon Plan for this Strategy. In

the future, this eort will also include performing

appropriate assessments, projecons, and esmaons

regarding any other resource gaps connected with

execuon of this Strategy, to include establishing plans

for resourcing the SBP workforce through use of the

DoD Planning, Programming, Budgeng, and Execuon

process.

The Department also conducts periodic reviews of

defense acquision guides and direcves to ensure

they include current small business-related policies and

18 15 U.S.C. § 644(k)(3).

19 DoDI 4205.01 “DoD Small Business Programs” (August 2018).

20 GAO Report No. GAO-17-675” Small Business Contracng: Acons Needed to

Demonstrate and Beer Review Compliance with Select Requirements for Small Business

Advocates” (August 2017).

best pracces. The Department is currently analyzing

industry comments submied in response to the

Federal Register Noce (FRN) on Barriers Facing Small

Businesses in Contracng with the Department of

Defense (DoD-2021-OS-0077).

Through issuance of

this FRN, DoD sought input from industry on barriers to

entry and other topics, including governmental pracces

and regulaons that make it dicult or not worthwhile

to parcipate in the DIB; ways to increase its use of

small business innovaons; the availability of necessary

talent; and recommendaons to strengthen supply

chains, increase compeon in the DIB, and improve

small business parcipaon in procurements. The

results from the FRN will be assessed and integrated as

appropriate into future engagement strategies for small

business professionals.

In addion, the Department intends to support

eorts regarding appropriate use of “Rule of Two”

requirements, which could increase the use of small

business set-asides that will promote compeon and

result in fair market prices for defense procurements.

It is important for the Department to support use of

small business reserves, joint ventures or other teaming

arrangements, and available sole source authories to

aract emerging and individual small businesses when

condions for compeon are unknown or have not

been established.

The valley of death that oen plagues small businesses

can come in many forms. Some small businesses

outgrow the SBA size standards for their industry and

are forced to compete as “mid-er” companies with

much larger rms. The Department will work with

the SBA to advocate for small business size standards

that are driven by analysis of market intelligence and

market trends for each NAICS code. The Department

intends to support eorts that strike a balance between

ensuring large enough size standards that companies

do not outgrow too quickly, while also making sure

the size standards are not so large as to impede the

development of small businesses that seek to break into

industries in the defense marketplace.

A signicant poron of the small business industrial

base are subcontractors. Ensuring the health of

sub-er suppliers is crucial to a healthy, diverse,

and modernized industrial base. The Department

will explore ways to beer assess the health of the

subcontractor small business industrial base, as well

as use of innovave acquision techniques and other

ways to strengthen mechanisms to ensure prime

contractors are accountable for meeng their small

business subcontracng plans. Finally, the Department

21 Noce of Request for Comments on Barriers Facing Small Businesses in Contracng with

the Department of Defense, 86 F.R. 50333 (September 2021).

22 13 C.F.R. § 125.2 ”What are SBA’s and the Procuring Agency’s Responsibilies When

Providing Contracng Assistance to Small Businesses” (June 2022); FAR § 19.502-2 Total Small

Business Set-asides (May 2022).

will connue accelerang payments to small business

concerns by the DoD and seek ways to incenvize large

prime contractors to do the same with small business

subcontractors, to include assessment of ways to

address slow cash ow through exisng accounng

pracces and business systems. Unreliable cash ow to

small businesses makes the DIB more fragile and less

secure.

Although this list is not exhausve, it serves as an

illustrave set of potenal areas for improvement.

These (and other related) policy and process iniaves

would serve to increase small business parcipaon in

small business friendly sectors, increase compeon

in defense procurements, and ensure that there

is a department-wide emphasis on small business

consideraon from the earliest stages of the acquision

process.

compliance with the Small Business Act; make the

Director of the DoD OSBP a member of the Industrial

Base Council (IBC) to facilitate integraon of small

business equies into broader DoD industrial base

acvies.

2.3.3. Develop and submit recommendaons to

the SBA concerning revisions of small business size

standards and related aliaon rules, as well as

acquision tools targeted to emerging small businesses.

2.3.4. Convene one or more working groups on

reducing barriers to entry for small businesses and

improving payment procedures for small businesses.

2.3.5. Provide guidance to the acquision workforce

on maers relang to small business contracng to

include consideraons for challenging a subcontracng

plan that does not contain meaningful goals for all

or any small business categories, evaluang past

performance on subcontracng to small businesses,

seeking appropriate contractual remedies when prime

contractors do not make a good faith eort to comply

with the subcontracng plan, and incenvizing and

enforcing requirements for prompt payment to small

businesses by prime contractors.

Implementaon acons to pursue for Strategic

Objecve 2:

2.1.1. Develop and issue guidance and plans for

orderly and deliberate implementaon of goals,

incenves, and reporng on small business parcipaon

in Research, Development, Test, and Evaluaon (RDT&E)

and transion to procurement / operaons. Explore

ways to increase use of Small Business Innovaon

Research/Small Business Technology Transfer (SBIR/

STTR) Phase III awards in DoD acquision.

2.1.2. Develop policy, regulatory guidance, and

management controls to assist small business

professional parcipaon early in acquision strategy

development to support idencaon of opportunies

for small business programs and related eorts, such

as set-aside compeons, opportunies for SBIR/

STTR Phase III transion, and future procurement

opportunies for technologies from programs such as

the DoD MPP and RIF. Work to ensure DoD Component

Directors of small business programs are standing

members of governing DoD councils that implement

Category Management.

2.1.3. DoD OSBP will work with leadership of

the ManTech, MII, NSIC, IBAS, T2 and DPA Title III

programs to understand the amount of small business

parcipaon in these programs and to provide market

research and data analysis support to help idenfy

ways these programs can beer support small business

parcipaon.

2.1.4. Ensure full consideraon and applicaon of small

businesses set-aside requirements, parcularly below

the Simplied Acquision Threshold (SAT), to increase

opportunies for SDB, WOSB, SDVOSB, and HUBZone

SBs.

2.2.1. Develop and deploy market intelligence and

small business performance management tools for small

business professionals. The Department will work with

the SBA and the GSA on ways to recognize achievement

of goals for awards to small businesses under the GSA

Contractor Teaming Arrangements.

2.3.1. Assess the reporng structure of DoD small

business program oces across the Department to

ensure compliance with the Small Business Act and DoD

Instrucon (DoDI) 4205.01, including the requirement

that the DoD Component small business directors are

appointed to a posion in compliance with secon

1.b(3) of Enclosure 3 of DoDI 4205.01, and, as needed,

develop a roadmap to ensure these requirements are

met.

2.3.2. Ensure the Director of the DoD OSBP has

appropriate access to Departmental leadership and

the reporng structure of this posion remains in

programs to understand the amount of small business

parcipaon in these programs and to provide market

research and data analysis support to help idenfy

ways these programs can beer support small business

parcipaon.

2.1.4.

nsure full consideraon and applicaon of small

businesses set-aside requirements, parcularly below

the Simplied Acquision Threshold (SAT), to increase

opportunies for SDB, WOSB, SDVOSB, and HUBZone

SBs.

2.2.1.

evelop and deploy market intelligence and

small business performance management tools for small

business professionals. The Department will work with

the SBA and the GSA on ways to recognize achievement

of goals for awards to small businesses under the GSA

Contractor Teaming Arrangements.

2.3.1.

Assess the r

eporng structure of DoD small

business program oces across the Department to

ensure compliance with the Small Business Act and DoD

Instrucon (DoDI) 4205.01, including the requirement

that the DoD Component small business directors are

appointed to a posion in compliance with secon

1.b(3) of Enclosure 3 of DoDI 4205.01, and, as needed,

develop a roadmap to ensure these requirements are

met.

2.3.2.

nsure the Director of the DoD OSBP has

appropriate access to Departmental leadership and

the reporng structure of this posion remains in

Strategic Objective 3:

Strengthen the Department’s

Engagement and Support of

Small Businesses

Execuve Order 14058, “Federal Customer Experience

and Service Delivery to Rebuild Trust in Government,”

reemphasizes the need for agencies to design and

deliver services and processes with a focus on

eecveness, eciency, responsiveness, transparency,

and equity to reduce the so-called “me tax” of

individuals, including small business owners, who must

wait on the government to respond.. In alignment with

these priories, this strategic objecve is designed

to improve the Department’s communicaon and

interacon with small businesses, focusing on a few

key areas of crical interest: (1) improving outreach

and communicaon on small business opportunies;

(2) providing cybersecurity training and other resources

to small businesses; and (3) educang small businesses

on risks of, and alternaves to, accepng foreign

adversarial capital.

3.1. Improve Outreach and Communications

with Small Businesses

The Department must strengthen its relaonships

and communicaon methods with small businesses

and clearly describe small business programs and

contracng opportunies in ways that are easy to

understand and navigate. APEX plays an essenal role

in the Department’s eorts to idenfy and engage with

small companies entering or parcipang in the defense

supply-chain, and provides educaon and training small

businesses need to parcipate in defense procurements.

The Department enters into cooperave agreements

with APEX Accelerators that serve as a resource for

businesses to obtain informaon and training related to

contracng and subcontracng opportunies with the

Department, other Federal agencies, and state and local

governments. There are 96 APEX Accelerators assisng

businesses in 49 states, Washington, D.C., Puerto Rico,

Guam, the U.S. Virgin Islands, the Commonwealth of

Northern Marianas, and in regions established by the

Bureau of Indian Aairs in the U.S. Department of the

Interior.

As a primary interface with small businesses in the eld,

APEX Accelerators work directly with private sector,

university, non-prot, and local enes to conduct the

type of outreach acvies necessary to develop long-

term relaonships with the small business community

and the larger defense industry. APEX Accelerators

23 E.O. 14058 “Transforming Federal Customer Experience and Service Delivery to Rebuild

Trust in Government” (December 2021).

have long served as a vital resource to small businesses

for many programs, including SBIR/STTR, and they

connue to receive signicant interest from the small

business community. To further this success, the

Department will clarify the roles for APEX Accelerators,

responsibilies, and resources, and will provide APEX

Accelerators with tools that will beer posion them

to understand the Department’s requirements and

provide feedback on their procurement technical

assistance acvies, which will support DoD’s market

research, and provide insight to Department leadership

on supply chain issues. Currently, APEX Accelerators

primarily respond to industry requests, and are an

underulized outreach resource for the Department’s

small business professionals. The Department intends

to beer leverage APEX Accelerators by establishing

a process through which small business oces and

programs across the Department as well as local small

business professionals, can directly collaborate with

APEX Accelerators to carry out tailored outreach

events, educaon and training opportunies, or specic

assistance to small business. Some of the programs and

iniaves that regularly work with small businesses

include Air Force’s Air Force Works (AFWERX), Navy’s

Naval Expedions (NavalX), Army Futures Command

(AFC), and the United States Special Operaons

Command (USSOCOM)’s Special Operaons Forces

Works (SOFWERX).

parcipate in their organizaon’s procurements.

This level of engagement will help small businesses

understand where the Department is headed with

its future requirements, so they can beer align their

business models and investments.

The Department will also pursue improving its

acquision forecasts for industry. Providing accurate

and relevant forecasng is an eecve way to

communicate to industry about future requirements and

direcon. Accomplishing this goal, however, remains a

challenge, parcularly in connecon with exisng small

business programs and related eorts. The Department

intends to pursue development of forecasng tools

for small business oces and other organizaons to

enable producon and distribuon of mely and useful

forecasts.

3.2. Provide Cybersecurity Training and

Resources to Small Businesses

Cybersecurity threats to the DIB keep expanding in

number, frequency, and severity. Protecng DoD

informaon and capabilies from these increasingly

sophiscated threats posed by foreign competors

and adversaries remains a crical naonal security

priority for the Department. The resources required

to safeguard data and systems from common and

advanced persistent threats can put a strain on

companies of any size, but resource-constrained small

businesses are parcularly vulnerable. Small businesses

make up over 70 percent of the industrial base, making

cyber risks to the supply chain a signicant concern.

Supporng cyber resilience within the small business

Contracng with the federal government can be a

complicated and daunng task for small businesses,

especially for new entrants to the DIB. Providing small

businesses and DoD small business professionals

with educaonal resources explaining complex

topics related to government contracng can be an

eecve way to migate this barrier. For example,

one topic that can hinder or deter small businesses in

government contracng is Intellectual Property (IP)

protecon. Protecng a prime or subcontractor’s IP is an

imperave for both the Department and the company.

When contracng with the federal government,

small businesses oen do not have the knowledge

or resources possessed by large businesses when

negoang IP-related contract terms. Ensuring small

businesses and small business professionals have access

to the educaon, training, and resources needed for

complex topics like IP protecon helps small businesses

thrive in the defense marketplace, for the benet of the

enre DIB and DoD.

Another essenal component is connued engagement

from senior leadership across the Department in

promong the objecves of this Strategy through

annual small business memoranda and events, including

engagement from the Secretaries of the Military

Departments, Directors of the Defense Agencies, Senior

Acquision Execuves, Program Execuve Ocers, and

Program Managers. These DoD leaders should connue

to parcipate regularly in small business industry

and matchmaking events, issue workforce guidance

regarding priorizaon of small business contracng,

and ensure their organizaons clearly and eecvely

communicate opportunies for small business to

industrial base is key to enabling these companies to

address industrial base gaps across the Department.

Cybercriminals know that small businesses are the most

resource constrained, high value targets in the defense

supply chain so they repeatedly target companies that

are oen unprepared to prevent those aacks.

To combat this constant risk to the U.S. defense supply

chain, the Department is commied to ensuring

good cybersecurity hygiene throughout the DIB. By

promong and assisng with cyber resilience for small

businesses, DoD can play a key role in enabling these

companies to address cybersecurity gaps, while also

migang threats to the supply chain and DoD sensive

informaon.

Recognizing these challenges, the Department

iniated Project Spectrum. According to its website

(hps://projectspectrum.io), Project Spectrum is a

comprehensive “plaorm that provides companies,

instuons, and organizaons with cybersecurity

informaon, resources, tools, and training. Its mission

is to improve cybersecurity readiness, resiliency,

and compliance for small/medium-sized businesses

and the federal manufacturing supply chain.” The

Department intends to provide guidance to small

businesses in connecon with the conduct of voluntary

self-assessments of cyber preparedness, as well

as, as appropriate, tools, technologies, and training

small businesses can use to help improve their cyber

resilience.

3.3. Educate Small Businesses on Risks of

Foreign Ownership, Control, and Inuence

The United States’ adversaries increasingly use non-

military means to achieve their objecves during the

“compeon” phase of conict by operang eecvely

in what is known as the “Gray Zone.” These gray zone

acons include the targeng of our smallest and most

innovave companies through controlled access to

rare raw materials, supply chains, and through foreign

ownership, control, or inuence (FOCI) operaons

that work in conjuncon with state sponsored or

proxy intelligence and cyber forces. These operaons

target key technology sectors, providing adversaries

and near-peer competors access to American IP and

ingenuity. This access can be legally gained through joint

ventures, mergers, and acquisions, or illegally through

cyber espionage. These acvies can undermine U.S.

eorts to pursue global economic and naonal security

interests.

Helping protect the DoD small business industrial base

from these threats is crical to economic and naonal

security and requires taking a comprehensive approach.

DoD can make an immediate impact by educang and

training small businesses on these threats. Many small

companies are not aware of potenal vulnerabilies.

Training and educaon can help small businesses gain

a baseline understanding of these types of threats

and steps they can take to address them. Educaonal

plaorms for small business should be expanded to

help small businesses gain a baseline understanding of

FOCI threats to address them. Addionally, although

the Department has worked to connect innovave

companies working with the Department to sources of

domesc capital, this work has proven challenging due

to the lack of DoD-wide due diligence standards and

the diculty of incenvizing private domesc capital to

work with the Department in such a program.

Establishing a small business FOCI working group

would help the Department explore addional steps

in this area and ensure that DoD can strike the right

balance between taking addional measures and

minimizing regulatory burdens that may deter the

naon’s most innovave companies from wanng to

do business with the Department. Some concepts

that may potenally be addressed include developing

due diligence capabilies to capture data and provide

a mul-dimensional risk prole of DIB small business

parcipants, assessing FOCI risk associated with

defense contractors, and establishing market-based

incenves to drive behaviors that are conducive to both

economic and naonal security. Potenal stakeholders

include OSBP and other oces within OUSD(A&S) such

as DPC, OUSD (R&E), the Defense Security Enterprise

Advisory Group (DSEAG), the Defense Technology

Security Administraon (DTSA), and the Defense

Counterintelligence and Security Agency (DCSA).

Addionally, the Department will explore ways to

incenvize domesc investment from trusted domesc

sources of capital into veed technology companies,

which would diminish reliance on overseas capital to

small companies in the technology and naonal security

industrial base.

Implementaon acons to pursue for Strategic Objecve 3:

3.1.1. Develop and issue guidance on managing, resourcing, and using APEX Accelerators. This guidance will help

beer posion APEX Accelerators to understand the Department’s requirements and provide feedback on their

procurement technical assistance acvies, which will support DoD’s market research, and provide insight to

Department leadership on supply chain issues. This guidance would also enable DoD Component Small Business

Directors, as well as small business professionals in the eld, to leverage APEX Accelerators for targeted outreach

and assistance acvies tailored to specic acquisions and mission needs.

3.1.2. Develop IP training resources that will benet

the small business community in coordinaon and

collaboraon with the DoD IP Cadre and DAU.

3.1.3. Include informaon about current IP educaon

programs in DoD outreach and communicaons eorts

to small businesses seeking to do business with the

Department.

3.1.4. Enhance small business communicaon and

parcipaon by the Department’s senior leaders,

including the issuances of annual memoranda and

increased parcipaon in small business events.

3.1.5. Streamline the roles and responsibilies of DoD

small business oces with regards to procurement

forecasng, and support enhancement of DoD

forecasng processes to enable producon and

distribuon of mely, accurate, and relevant forecasts.

3.2.1. Develop and provide guidance to support small

businesses in connecon with the conduct of voluntary

self-assessments of cyber preparedness, as well as

the tools, technologies, mentoring, and training small

businesses need to improve their cyber resilience.

3.3.1. Develop industry training that can be

disseminated through available outreach tools and

sources of assistance such as APEX Accelerators that

helps small businesses gain a baseline understanding of

FOCI and address them.

3.3.2. Convene a working group to explore ways

to assist small businesses with migang FOCI

risks including ensuring small business interests are

considered in the development of common standards

for conducng due diligence and possible methods

of leveraging domesc capital in support of small

businesses in crical technology sectors.

Conclusion

The Department is commied to rebuilding a robust and agile small business industrial base, and this strategy

represents an important step in that process. Small businesses provide for nearly the enre spectrum of the

Department’s needs and the breadth and depth of eorts outlined in this strategy reect that importance.

Recognizing that the Department’s own pracces have played a role in turning businesses away, DoD has carefully

examined what specic reforms must be advanced to remove or reduce those barriers. This strategy provides a

roadmap to reverse the recent decline of small businesses in the DIB and leverage small businesses to deliver the

best technologies, services, and products to the warghter. Recruing more small businesses into the DIB means a

more advanced military, stronger supply chains, and a more equitable and prosperous naonal economy.

The Department is working to lay a foundaon for the kind of Industrial Base needed to win in the 21st century,

by streamlining the small business management structure, ensuring acvies beer support naonal security,

and increasing engagement with industry. Together, these iniaves can bring long-term supply chain resiliency,

increased compeon, and improved equity to the DIB and the country. Most importantly, they will help the United

States maintain technological advantage over strategic competors.

As the internaonal landscape grows more complicated and more dangerous by the day, it is more important than

ever that the United States hosts a DIB worthy of the world’s nest military. While the country faces immense

challenges, there is no group beer suited to meet them than American entrepreneurs and small business owners.

This small business strategy will unlock the full potenal of small businesses and strengthen our naonal security.

LIST OF ABBREVIATIONS

ASD Assistant Secretary of Defense

CRADA Cooperave Research and Development Agreement

CRM Customer Relaonship Management

DAU Defense Acquision University

DFARS Defense Federal Acquision Regulaon Supplement

DIB Defense Industrial Base

DIU Defense Innovaon Unit

DLA Defense Logiscs Agency

DoD Department of Defense

DoDI Department of Defense Instrucon

DPA Defense Producon Act

DPC Defense Pricing and Contracng

DSCA Defense Support of Civil Authories

FAR Federal Acquision Regulaon

FOCI Foreign Ownership, Control, and Inuence

FTE Full-Time Equivalent

GSA General Services Administraon

HUBZone SB Historically Underulized Business Zone Small Business

IBAS Industrial Base Analysis and Sustainment

IBC Industrial Base Council

IP Intellectual Property

ManTech Manufacturing Technology Program

MII Manufacturing Innovaon Instutes

MPP Mentor-Protégé Program

MRCOE Market Research Center of Excellence

NDAA Naonal Defense Authorizaon Act

NSIC Naonal Security Innovaon Capital

OSBP Oce of Small Business Programs

OUSD(A&S) Oce of the Under Secretary of Defense for Acquision and Sustainment

OUSD(R&E) Oce of the Under Secretary of Defense for Research and Engineering

PTAC Procurement Technical Assistance Center

PTAP Procurement Technical Assistance Program

SAT Simplied Acquision Threshold

SBA Small Business Administraon

SBDC Small Business Development Center

SBIR Small Business Innovaon Research

SDB Small Disadvantaged Business

SDVOSB Service-Disabled Veteran-Owned Small Business

STTR Small Business Technology Transfer

RIF Rapid Innovaon Fund

USPTO United States Patent and Trademark Oce

WOSB Women-Owned Small Business