Twice-deployed Army veteran turned Director of Client Services, Branden Irvine, provides insight into the important role small business government contractors play in serving the front lines.
I was deployed twice in Afghanistan and relied heavily on government contractors to move supplies from Bagram to Kunar Province. These were life or death supplies requested by commanders in theater and the contractors on base were critical to our success.
Most Americans do not realize that our war fighters rely on government contractors. Many of these contractors represent US-based small businesses. The problem is they are silently being squeezed. It’s an emergency with global implications that needs to be addressed.
The number of small businesses serving the defense industrial base has declined by more than 40% since 2010. This is not a problem unknown to the Pentagon. In fact, the Department of Defense (DoD) acknowledged that if this trend continues, we will lose an additional 15,000 of these US based businesses over the next decade. That cannot be allowed to happen.
These small businesses do everything from designing and building drones to survey activity in Ukraine to using artificial intelligence to stay ahead of North Korea’s growing nuclear arsenal. In Afghanistan, the government contractors I worked with helped with critical supply chain issues.
Most Americans are familiar with the names of the large, multi-billion defense contractors, like Raytheon and Boeing, but few people realize that much of the research and development our government relies upon comes from small businesses thought leaders.
On this, Deputy Secretary of Defense Dr. Kathleen Hicks said, “Small businesses are vital along the entire spectrum of the Department’s needs,” adding that small businesses increase “our warfighter advantage.”
Here in Dayton, home of Wright Patterson Air Force Base, there are small businesses supporting the Air Force, the Central Intelligence Agency, the Federal Bureau of Investigation, the State Department, the Department of Health and Human Services, the Department of Veterans Affairs, and others.
David Judson, a former Air Force officer who founded JJR Solutions 14 years ago, is just one example in Ohio of this kind of business. Judson started his service-disabled veteran-owned company as the only employee. This is a very common launch of a small business serving DoD.
JJR now has 80 people in Dayton and around the country. Judson dedicates 10% of JJR’s gross operating margins every year to local nonprofits in Ohio. Among the company’s many contracts is work with the Space Force, testament to JJR’s future-oriented posture.
Nationally, small businesses like JJR make up 99.9% of all U.S. businesses and 73% of companies in the defense industrial base. “As the economic engine of our nation, small businesses create jobs, generate innovation, and are essential, daily contributors to national security and the defense mission,” explains the DoD website.
Given their importance not only to national defense but also to our local and national economy it’s time to relieve the business pressures on these small businesses so that more of them can thrive.
One of the most challenging issues these businesses face is the web of rules and regulations which force them into being “sub-contractors.” A sub-contractor works for a much larger business, often a multi-billion defense contractor. This “sub work” is not as desirable as “prime work.” To put it bluntly, prime contractors enjoy the have more stable contracts, often better margins and the desirable business terms, such as speed of payment. Sub-contractors can see their contracts cancelled, usually have lower margins and worse business terms.
At my job, I work with small business owners every day who provide either services or products to the federal government. These companies struggle to compete with the “bigs”—they cannot show the same level of past performance as a multi-billion-dollar entity. They find themselves with something of a chicken-and-egg problem. Without the past performance to handle a multi-million-dollar job they can’t get a prime contract. Without a prime contract they can’t get the past performance.
Rules such as those governing “past performance” were intended to safeguard the government but have had a perverse effect. They have essentially created a glass ceiling that’s difficult to break instead of helping small businesses grow into mid-size businesses.
From my time in Afghanistan, I know the threats of today will shift tomorrow. The recent events in Russia make clear how quickly the calculus can change abroad. At a time when America faces complex threats from both state and non-state actors, it’s time to ease the regulatory burden on America’s small businesses.
Branden Irvine is Director of Client Services at sbLiftOff, a national mergers and acquisitions advisory firm, specializing in commercial and government contracting companies. Irvine served as an Officer in the Army’s 10th Mountain Division and was awarded a Bronze Star for his service in Afghanistan. He lives in Ohio.