DOD to Favor Small-Business Contracts Over 'Best-in-Class' Awards

The Defense Department is tweaking its contracting strategy to place more of an emphasis on meeting small-business acquisition goals, even it if means supplanting its use of Best-in-Class vehicles.

The Office of the Under Secretary for Defense for Acquisition and Sustainment released a memorandum on Jan. 27 that described small businesses as "critical" to its mission while outlining specific steps the department can take to increase small-business participation in the federal marketplace, from transitioning to bundling and consolidating contracts to expanding access to education on category-management practices. 

The memorandum said that meeting small business goals and increasing contracting opportunities for small disadvantaged businesses and other socioeconomic small businesses should be prioritized over attaining Best-in-Class contract goals "if achievement of both goals is not possible. 

"BIC contracts should be balanced with other contracting strategies, including the use of set-aside contracts that can help increase diversity within the supplier base," the memo said. "The best tools and data analysis should be utilized to support small business concerns in procurement decisions to increase small business opportunities."

[“Best-in-class” is a federal designation for contracting arrangements that meet White House standards for defining requirements, planning, pricing, data-driven demand management, category management, performance management, and independently validated reviews.] 

The Defense Department's acquisition teams will receive automatic Tier 2 spend under management, or SUM, credits for awarding contracts to socioeconomic small businesses under the memorandum, and a new Tier 2-Socioeconomic small business category will be developed in order to monitor and track progress. 

The move is meant to increase participation among socially and economically disadvantaged small businesses in the federal marketplace, a key component to the Defense Department's "Small Business Strategy" released earlier this month. 

The strategy highlights three main goals to increase small business participation in the federal marketplace: using programs meant to expand the industrial base, increasing set-asides, and reducing barriers to entry.

The document also provides a unified approach and comprehensive framework for the DOD to manage small-business programs and ensure that small-business activities are aligned with the department's national-security priorities.

At least 25 percent of all DOD prime contracts were awarded to small businesses last year, according to DOD, which also noted that 73 percent of all companies in the defense industrial base are considered small businesses. 

Nearly a year ago, the DOD determined in a report that there was not enough competition in the Defense Industrial Base and called for increasing small business outreach by using “flexible buying authorities, such as other transaction agreements and commercial solutions opening.”

Earlier this month, Deputy Defense Secretary Kathleen Hicks said that reducing barriers and creating more opportunities for small businesses will allow the department "to expand, innovate and diversify, increasing our warfighter advantage, strengthening our supply chains, increasing competition in our marketplace and growing our economy here at home.”

The memo encourages DOD acquisition personnel to access category-management educational resources through the Defense Acquisition University website and encourages increased industry engagement to help foster "a collaborative effort" around the implementation of category-management best practices.