The U.S. Defense Industrial Base is the envy of the world because of its sophistication, diversity and capacity to innovate.
That’s according to Deputy Secretary of Defense Kathleen H. Hicks, giving the keynote address, virtually, at the 30th annual Pennsylvania Showcase on Commerce Sept. 1.
The deputy secretary addressed members of the Johnstown Area Regional Industries Procurement Technical Assistance Centers and the Cambria Chamber of Commerce.
“Every day, people like you and others across this country are designing, building and producing the critical materials and technologies that ensure our armed forces have every advantage they need,” she said.
The Defense Department’s industrial policy doesn’t involve five-year plans or a command economy approach, but instead believes market signals and clear investment priorities can unlock the power of American entrepreneurship, technological breakthroughs and individual achievement.
DOD’s research and procurement revolve around broad-based stakeholder coalitions and public-private partnerships, Hicks said, adding, “These have the ability to strengthen defense supply chains and catalyze economic growth across many communities.”
Pennsylvania contributes a great deal to DOD’s efforts, the deputy secretary said, and noted DOD invests more than $18 billion in the commonwealth, because “this state knows how to deliver.”
“Companies in Pennsylvania manufacture a wide variety of products that are instrumental to critical DOD weapons systems, including munitions, missiles, artillery and explosives,” Hicks said. “Here in Johnstown, you enable our radar, ground vehicle, armored weapons system capabilities and more.”
The deputy secretary talked about how industry can continue supporting DOD’s national security priorities, and what DOD can do to improve its partnerships in commerce to create and modernize its military force.
“To defend the nation, the United States must overcome a multitude of challenges,” Hicks said. “The Department of Defense is prioritizing China as our long-term pacing challenge. Beijing has demonstrated increased military confidence and a willingness to take risks. Simultaneously, we face other advanced and persistent threats emanating from Russia, Iran, North Korea and other transnational and non-state actors.”
We are all part of “a new age of technology,” she emphasized. Many factors, such as the internet, additive manufacturing, analytics, robotics and more are transforming the way the DOD does business, she added.
“DOD is renewing its efforts to posture ourselves for the ‘future fight.’ A vibrant defense industrial base will be critical to our success,” Hicks said.
DOD wants to harness from the very best of America in sourcing a broad, diverse set of potential partners and suppliers — especially small businesses, she said.
And small businesses lead the nation in innovation — producing 16.5 times more patents than large patenting firms, Hicks said, adding that small businesses deliver rapid operational concepts, prototypes and demonstrators that allow DOD to respond with agility and efficiency.
DOD has made significant achievements in its work with small businesses, Hicks said: The department received an “A” from the Small Business Administration for meeting its contracting goals for seven straight years; DOD spent $80.3 billion with small businesses, with 45% of those awards going to disadvantaged or woman-owned businesses; and in the past 10 years, DOD dramatically increased small business spending in research and development by 83%. In that same time, DOD expanded spending in small business manufacturing by 28%, she added.
“Yet, over the past decade, small businesses in the defense industrial base shrunk by over 40%. The data shows that if we continue along the same trend, we could lose an additional 15,000 suppliers over the next 10 years,” the deputy secretary said.
“I realize that doing business with DOD is not always easy. Because of our unique security requirements and procurement practices, we can be a challenging customer,” Hicks said.
But DOD is committed to examining the administrative barriers small businesses face in working with the department and will take action to remove barriers where it can, she said.
“To do that effectively, we need your engagement,” Hicks said. “This week, we are putting out a notice in the Federal Register seeking industry input on the barriers you face.”
DOD has made significant strides to make its acquisition efforts more agile, but it needs industry to help the department understand where it can make additional progress, she noted. Such input will go into DOD’s small business strategy, which Hicks said she intends to announce before the end of this year.
The deputy secretary also has created a DOD innovation steering group, which is focused on how DOD can better engage with innovators across the country — whether it’s an established defense company or small business that’s not familiar with DOD.
DOD is also reinvigorating its small business programs to provide streamlined, easier-to-use entry points into the defense marketplace, and is ensuring better long-term planning for its small business programs, Hicks said.
That means leveraging DOD’s small-business program website as a single point of entry — at business.defense.gov — which contains an expanding set of toolkits to help companies get started, she added.
Additionally, DOD is enhancing its nationwide network of Procurement Technical Assistance Centers. DOD has 95 PTACs across the nation — including the Johnstown Area Regional Industries PTAC — that help businesses pursue contracts with DOD and other federal agencies, Hicks said.
“And we will continue to leverage programs like Small Business Innovation Research which, on average, commercializes $7 billion of small business innovations that are connected directly to our warfighting capabilities,” the deputy secretary emphasized.
DOD is working alongside the White House, the Small Business Administration and other federal agencies to create more opportunities for onboarding small businesses on our contracting vehicles, Hicks said.
“This [Biden] administration will leverage the purchasing power of the federal government to ensure equity and inclusion of small businesses in our underserved communities,” she added.
That includes increasing the share of dollars that the federal government spends on small, disadvantaged businesses — tripling the contracting goal to 15% by 2025, Hicks noted.
“Simultaneously, the secretary of defense and I will continue to increase outreach to underserved communities to foster additional potential connections, opportunities and investments,” the deputy secretary said.
Additionally, DOD has made sure its fiscal year 22 budget request protects its mentor protégé program, which provides opportunities to both mentor and mentee firms, she said.
“Even as the department continues to focus on increased supply-chain resilience and innovation and modernization, we remain committed to working with local communities where we see opportunity,” Hicks said.