How the 2023 DOD Small Business Strategy Will Impact Your Company

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The Department of Defense (DOD) is the largest single purchaser of goods and services in the world, spending over $500 billion annually. However, less than 25% of these funds go to small businesses, which often struggle to navigate the complex and competitive federal contracting landscape. To address this issue, the DOD has recently released a new Small Business Strategy that aims to increase its small business utilization rate to 34% by 2023. In this article, we will explore how this strategy will impact your company, whether you are already a DOD contractor, a potential subcontractor, or a newcomer to the federal market.

First, let’s review the key provisions of the strategy. According to the DOD, the four main goals of the strategy are:

– Foster a culture of small business engagement across the DOD
– Streamline the small business certification process and reduce unnecessary barriers to entry
– Ensure that prime contractors meet their small business subcontracting goals and share the benefits of their awards with their supply chains
– Enhance the DOD’s relationship with small business stakeholders and share data and feedback to improve performance and accountability

To achieve these goals, the DOD plans to take several actions, such as:

– Establishing a Small Business Council to coordinate and promote small business initiatives
– Simplifying the System for Award Management (SAM) and the small business certification process
– Requiring large prime contractors to submit detailed subcontracting plans and progress reports
– Increasing outreach and training opportunities for small businesses and DOD personnel

Now, let’s examine how these actions may affect your company. If you already have a contract with the DOD, you may face more scrutiny and expectations regarding your compliance with small business subcontracting requirements. You may also have to compete with more small businesses for new opportunities, but you could benefit from larger primes seeking to meet their goals by teaming up with you. However, you should ensure that you have the capacity and capability to perform under the new contracts and meet the reporting and payment obligations.

If you are a potential subcontractor, the strategy could create more opportunities for you, but also more competition. You may have to demonstrate your value proposition and qualifications to stand out from other small businesses vying for the same work. You may also have to negotiate more favorable terms with larger primes and communicate effectively with your DOD customers to ensure that you meet their needs and expectations.

If you are a newcomer to the federal market, the strategy may offer you a better chance to enter and succeed in the market. You may find that the certification and compliance processes are simpler and more transparent, and that the DOD is more willing to engage with you as a potential supplier. However, you should also be aware of the risks and challenges of doing business with the government, such as the long bidding cycles, the need for security clearances, and the potential for protests and audits.

To illustrate some of the practical implications of the strategy, let’s look at some examples. A small engineering firm that specializes in cybersecurity could benefit from the DOD’s increased focus on protecting its information networks and enhancing its cyber defenses. The firm may have to seek different certifications or clearances to enter certain contracts, but could leverage its expertise and experience to win and perform under such contracts. A small logistics company that provides transportation services could face more competition from other small firms that offer similar services, but could also collaborate with larger primes that need to distribute their goods and services. The company should review its capabilities and priorities to ensure that it can meet the DOD’s requirements and deliver value to its clients.

In conclusion, the 2023 DOD Small Business Strategy will have a significant impact on many companies that do business with the government. Whether you are already a DOD contractor, a potential subcontractor, or a newcomer to the federal market, you should pay attention to the strategy’s goals, provisions, and actions, and assess how they may affect your opportunities and risks. You should also seek to improve your compliance, performance, and value proposition, and stay informed about the trends and best practices in small business contracting. By doing so, you can position your company to succeed in the challenging but rewarding federal market.