It's no secret that the U.S. Department of Defense has long struggled to quickly get advanced technology into the hands of military end users.
Under Secretary Heidi Hsu, the Pentagon's chief technology officer, has made speeding the technology transition a priority. Last year, his office released the National Defense Science and Technology Strategy, which included “accelerating the transition of new technologies into the field” as one of its three strategic pillars.
In recent years, many efforts have been made by various defense components to accelerate technology migration by high-tech SMEs. Focusing on dual-use commercial technologies, leveraging other trading authorities (OTAs), and attracting venture capital-backed companies with matching funds will help the Department of Defense and its services accelerate technology transitions and adoption. These are some of the ways I have tried to do this. Although some of these efforts have had some success, problems remain.
While it is beneficial to continue to explore ways to streamline the relationship between the Department of Defense and high-tech small businesses, most of these efforts have focused on large contractors, the most important conduit for rapid technology transition to the Department of Defense. Not being able to deal with companies.
Prime contractors manage most of the Department of Defense's records programs. The top five Pentagon contractors have combined defense contracts worth more than $120 billion in 2022 alone. These large contractors believe they can reinvent the technology themselves with government assistance, but they have no incentive to incorporate technology not developed in-house into their programs. Slower and less innovative for governments, but much more profitable for large primes.
The point here is simply to illustrate that there is no incentive to utilize SBIR-proven small business technology or any other technology from sources other than Prime. If the Department of Defense wants to fully unlock the innovative power that small and medium-sized businesses can provide, a paradigm shift is needed.
There are more than 25,000 small and medium-sized enterprises participating in the defense industrial base, but the number of prime contractors has declined from about 50 to five. Incorporating incentives to adopt technologies developed by small and medium-sized enterprises will not only accelerate innovation, but will also provide long-term benefits for prime contractors. By ensuring a healthy defense industrial base and supply chain,
Encouraging small businesses to incorporate technology into their records programs has proven to be transformative in the past. Ten years ago, Lockheed faced a major setback with its Joint Strike Fighter (JSF) program. The program was well over budget and delayed, and the Air Force was desperate to speed up development as much as possible.
Under the leadership of JSF PEO General Bogdan, Lockheed and the Air Force began implementing technology developed by small businesses from the SBIR program to solve various problems they were having. These technologies helped get the JSF program back on target, leading to more than $500 million in program savings for him.
Necessity and desperation motivated Lockheed to bring small business technology into the JSF program, but unfortunately this example was a one-off rather than the start of a trend. means. For the past several years, PEO submarines have utilized her SBIR to bring similar efficiencies to Virginia-class submarines.
The law already allows for “any effective incentive,” or the creation of new incentives, and mandatory reporting by users of SBIR technology. The Department of Defense and the services would do well to learn from this experience and create more formal reports and initiatives to encourage major companies to incorporate her SBIR or other small business technologies into their programs.
The Army has rolled out a program aimed at creating incentives for large primes to incorporate SBIR-funded technology into their contracts. The project, called “Project VISTA,” grants source selection credits to proposals that include technology funded through the SBIR program. Although it is a small effort, this is a good first step towards working on this program, which we hope will lead to larger results. More needs to be done to meet the challenges of war in the Middle East and Ukraine and the growing threat from China.
It is very difficult to even know how SBIR-funded technology is being used by Prime. The Department of Defense approves more follow-on Small Business Innovation Phase III contracts each year than it spends on SBIR contracts, but how many of these technologies end up in the program of record? Requiring Prime to report on the number, volume, and significance of each small business-developed technology it uses in its system will help us better understand how important small businesses are to the defense innovation system. But it also highlights where small businesses can thrive. Increase support for defense programs.
Second, the Department of Defense should institute incentives for prime contractors to incorporate SBIR-funded technology into programs of record and other contract awards. There are many different types of incentives that the Department of Defense could consider, from priority scoring for proposals that include his SBIR technology, like Project VISTA, to financial incentives such as bonuses and fee increases. Whatever the Department of Defense decides, it must have sufficient influence to adopt innovative technologies developed by small and medium-sized businesses.
Getting cutting-edge advanced technology into the hands of military end users quickly and efficiently requires full integration and cooperation of all participants across the defense industrial base. Large prime companies provide the capacity and resources to manage major programs, while small businesses bring agility and rapid innovation.
As long as these two forces remain separated, the Pentagon will continue to struggle with rapid technology transitions. Encouraging major companies to incorporate small business technology solutions maximizes the innovative power of America's small businesses and ensures that the Department of Defense's innovation ecosystem remains the most advanced in the world. This should be the first step.
Jere Glover is Executive Director of the Small Business Technology Council.www.sbtc.org) is a nonpartisan association of technology-based small businesses from a variety of sectors. He previously served as Chief Advocacy Counsel under President Obama and has more than 40 years of experience in innovation, technology, and procurement policy.
