The number of small businesses serving the Department of Defense has precipitously declined, falling 43 percent between 2011 to 2020, according to a study by the Government Accountability Office.
Whenever I was in a tight spot in a war zone I always thought, “why don’t I have a gun?”
As a humanitarian I was supposed to rely on more expensive solutions like fleets of security officers or UN Peacekeepers flying $50 million Boeing CH-47 Chinook helicopters. They were never around when the bullets started flying.
I can’t help but equate that experience with the conflict against Iran. As diplomacy stops and starts, we are using up several frontline munitions, including our Patriot interceptor missiles — which take three years to build and cost $4 million — while Iran fires off Shahed drones, produced at a clip of 200 per month at $35,000 each.
Sixty-five years ago, when President Dwight Eisenhower delivered his historic “military industrial complex” speech, he also said, “a vital element in keeping the peace is our military establishment. Our arms must be mighty, ready for instant action.” Recently, former Secretary of Defense Robert Gates made news when he complained, “Ukraine is going to produce seven million drones this year. Come on. Why can’t we do that?”
I have one answer – the Pentagon continues to fail America’s small businesses and ignore their technology that could benefit national security by offering less costly solutions.
Bipartisan support for small businesses
Multiple past administrations, Republican and Democrat, have acknowledged that the Pentagon’s sclerotic procurement practices and embrace of a few government contractors weaken our military industrial base. But while there is broad bipartisan support for opening up defense programs to small businesses, the data indicates otherwise.
The number of small businesses serving the Department of Defense has precipitously declined, falling 43 percent between 2011 to 2020, according to a study by the Government Accountability Office.
The reasons are well known.
First, procurement consolidation limits opportunities for smaller players, with mega deals usually awarded to the “bigs” – as we call them. Here’s a recent head scratching example: defense tech is a high priority for the Pentagon. Says Secretary of Defense Pete Hegseth “Simply put, the United States must win the strategic competition for 21st century technological supremacy, artificial intelligence, autonomous systems, quantum hypersonics and long-range drones …”
Yet a recent analysis by the Ronald Reagan Institute found that less than 1 percent of Pentagon contract spending went to defense tech and that 88 percent of those contract dollars went to just three companies — SpaceX, Palantir and Anduril.
Nancy Langer is the President of sbLiftOff, a national mergers and acquisitions advisory firm, specializing in commercial and government contracting companies. She serves on the board of the National Veterans Small Business Coalition, a nonprofit serving veterans who own government contracting firms.