A Department of Defense (DoD) report on the state of competition in the Defense Industrial Base (DIB) underscores the need to bring in more small businesses, and implement sector-specific supply chain resiliency plans in order to increase competition and innovation in the DIB.
The report was ordered as part of President Biden’s executive order on promoting competition in the American economy. It found “extreme consolidation” of prime contractors in the DIB, as well as the departure of approximately 40 percent of small businesses from the DIB over the past decade.
“The Department is renewing its efforts to ensure we can meet the challenges now and into the future. A vibrant, competitive, and diverse defense industrial base will be critical to our success,” Deputy Secretary of Defense Kathleen Hicks said in a DoD release.
“As DoD works to innovate, bring new technologies into our supplier base, and develop the workforce of the future, American small businesses and our U.S. industrial base must expand not only to improve resiliency but to ensure we are able to meet the needs of our warfighters for tomorrow’s high-tech challenges,” she added.
Among the recommendations DoD laid out are the need to increase new entrants to the DIB and increasing opportunities for small businesses, “with an emphasis on increasing competition in the priority industrial base sectors.”
“The report … emphasizes the need to rebuild DoD’s competitive bench by lowering barriers for small businesses and bringing in new entrants,” a release from the White House says. “Small businesses spur innovation, producing 16.5 times more patents than large firms, and form the next generation of suppliers to support the DoD mission.”
Additionally, DoD recommends implementing sector-specific supply chain resiliency plans. Among the specific sectors flagged in the report for those plans are microelectronics; energy storage and batteries; casting and forging; missiles and munitions; and strategic and critical materials sectors.
DoD’s other recommendations for increasing competition in the DIB include strengthening merger oversight to curb aggressive consolidation in the industry and addressing current limitations on intellectual property rights.