House committee urges DOD to grant more defense contracts to small businesses

FIRST ON FOX – The leaders of the House Committee on Small Business sent a bipartisan letter to U.S. Defense Secretary Lloyd Austin on Tuesday, voicing concern over the decline in defense contracts being extended to small businesses.

The letter, obtained by FOX Business and signed by Committee Chair Roger Williams (R, Texas) and Ranking Member Nydia Velázquez (D, NY), as well as Subcommittee on Contracting and Infrastructure Chair Nick LaLota (R, NY) and Ranking Member Hillary Scholten (D, Mich.), said the number of small businesses in the defense industrial base has declined by 40% over the past decade, and noted the Department of Defense itself has warned such consolidation poses a national security risk.

“While small businesses are currently serving a vital role in the defense industrial base, the 21st century has been marked by fewer and fewer small businesses receiving contracts from the DoD,” the lawmakers wrote. 

“This is in stark contrast to the 20th century where the rapid changes in the nature of combat required agile production lines and rapid innovation,” it continued. “Many of the same needs are reemerging due to the rapid changes taking place in the realm of computing, AI, and electronic warfare.”

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The committee leaders pointed out that the majority of technological development in the U.S. is driven by the private sector, with small businesses producing 16.5 times more patents than large companies on average, making a stronger connection between the DOD’s needs and small business capabilities.

In the letter, the committee said it does appreciate some of the efforts the DOD has made to identify and address barriers to entry for small businesses, but said the continual decline of small business participation remains concerning.

The lawmakers are seeking input from the DOD on how both the Pentagon and Congress could better integrate small businesses into the defense industrial base, and requested an update from the department’s Small Business Strategy and its progress in that arena. The letter also asked to set up a staff level briefing from the Pentagon no later than Dec. 22 regarding the changes needed to boost small business participation.

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“Our nation’s small businesses play a vital role in our economy, but they also play a critical role in the defense of our nation,” Chairman Williams said in a statement. “Unfortunately, we’ve seen the number of small businesses in the defense space decrease in recent years. We on the Committee know what small businesses bring to the table and know more use of them will only help our military. I look forward to hearing from Secretary Austin on this and am eager to see how we can work together.”

“Unfortunately, government contracts are being swallowed up by larger and larger companies leaving many small contractors on the outside looking in,” Ranking Member Velázquez said.

“The continual decline of small business participation in government contracting is especially concerning as rapid technological development changes the nature of American defense,” she continued. “It’s vital that the Department of Defense work with the committee to ensure robust participation by small firms in the defense industrial base.”