News | Dec. 19, 2017

Small Business, Big Impact

By Beth Reece DLA Public Affairs

Being small doesn’t stop American businesses from having a big effect on warfighter readiness. Small businesses supply everything from uniforms to parachutes and hardware.

“Many of them want to protect our soldiers, sailors, airmen and Marines just like those of us [civilians] who work for the government. They’re a vital part of our defense industrial base, and supporting them means we’re supporting the American economy,” said Amy Sajda, director of the Defense Logistics Agency’s Office of Small Business Programs

Small businesses make up 99.7 percent of all U.S. companies, according to the Small Business Administration. Federal agencies are required by law to support America’s small businesses, and the SBA works with leaders in the federal government and Department of Defense to establish annual goals that ensure small businesses have ample opportunity to provide goods and services to the government.

DLA’s goal since fiscal 2013 has been 32 percent, which is higher than the governmentwide goal of 23 percent and the DoDwide goal of 22 percent for fiscal 2017. DLA has met its small-business goal for four consecutive years and is on track to exceed it again by awarding almost $10.4 billion in contracts to small businesses in fiscal 2017. 

The numbers reflect the daily work of Sajda and about 50 small-business specialists at DLA headquarters and major subordinate commands like DLA Troop Support, DLA Aviation and DLA Land and Maritime. Their goal, she said, is to promote small-business partnerships so the agency can best meet customers’ needs 

“The greater number of businesses we have in our pool of vendors that we use to supply requirements for the military, the more we can be assured that when the military sends in a requirement, we’ll be able to get them what they ask for quickly and within the parameters of price, delivery and other factors,” Sajda added.

Helping the Little Person

During the Great Depression, many of the companies that had provided parts the military services needed for during World War I folded. Congress realized that small-business owners who produced wartime commodities lacked the money to keep afloat in peacetime. They also had difficulty ramping up as quickly as larger businesses with thousands of employees.

In 1942, Congress initiated the Small Business Mobilization Act, allowing the government to pay small businesses a price differential to help them remain open and accelerate production. The Armed Service Procurement Act of 1947 later extended that policy to peacetime and required a “fair proportion” of federal contracting dollars be placed with small business 

Today, DLA’s small-business specialists work with buyers and contracting officers to build acquisition strategies for contracts valued at more than $10,000. Each strategy lays out such details as whether a contract will be competitive or go to a sole-source provider 

“According to federal acquisition rules, if two or more small businesses are able to provide whatever it is you’re buying and there is an expectation that the award will be made at fair-market price, the acquisition is supposed to be set aside for small businesses. Large business can’t even compete for it,” said Chris Hall, deputy director of DLA’s Office of Small Business Programs.

If the acquisition strategy allows the contract to be set aside for small businesses, small-business specialists also help determine whether it should be set aside for businesses in socioeconomic categories like small; 8(a) small disadvantaged business; women-owned; service-disabled veteran-owned; and historically underutilized business zone (HUBZone) small business.

Creating a strategy that meets the goals of small-business specialists and contracting experts can be a time-consuming process of discussion and negotiation, Sajda said 

Performance work standards are just one element that both parties must agree on. Generating them for contracts involving products is generally a routine, straightforward process, but for service-related acquisitions, setting standards is more labor intensive. These acquisitions can be information technology and/or analytical studies DLA uses to improve its business processes, added Rosita Carosella of the Small Business Office in Philadelphia, which supports DLA Contracting Services Office locations.

“You have to come up with unique metrics to identify how you’re going to measure success, because it’s not as black and white as assessing whether an item was shipped on time or not. There’s a lot more evaluation involved,” she said.

Small-business specialists also conduct market research and participate in outreach at events, like the Department of the Navy Gold Coast Small Business Procurement Event, to find new small businesses that specialize in commodities and services the military needs. The SBA’s Dynamic Small Business Search and the Federal Procurement Data System are other tools that can be used to identify potential new vendors or vendors that DLA hasn’t yet used.

Tapping Talent, Innovation

Partnering with vendors that offer new, innovative products is a priority at DLA and a DoD goal championed by Defense Secretary Jim Mattis. The agency uses DoD’s Small Business Innovation Research and Small Business Technology Transfer programs, which are congressionally mandated to find solutions to defense technology gaps. SBIR and SBTT have given DLA a means to draw support from small businesses that to solve logistics problems such as the short lifespan of batteries. It’s also supported and products made using additive manufacturing, otherwise known as 3D printing.

“We rely strongly on these small businesses to help us improve logistics support, not just in the SBIR/STTR programs, but in all of our research and development programs,” said Kelly Morris, DLA’s R&D chief. “But with the SBIR program alone, we manage anywhere from 40 to 60 contracts at any given time with small businesses.”

DLA also relies on small businesses to support aging platforms such as the B-52 bomber, Sajda said. Most companies that produced the original electronic components for the bomber no longer exist, but sources of supply are still needed because DoD expects to use the 1960s-built systems several more decades.

“Many of the companies that made the original parts went out of business, or the owners retired or moved on to newer technology. So in cases like this, it can be hard to find suppliers who are willing and capable of providing older technology,” Sajda said.

To find those suppliers, “we question vendors at outreach events to see if they have capabilities in some of these older areas, so we can point them to the appropriate supply chain as a potential new source,” she explained. For items like microcircuits, for example,” she added.

Small businesses have helped DLA reduce backorders and production time for spare parts through research and development in castings and forgings, through which new molds are created to produce old, obsolete parts. DLA Aviation also uses its Replenishment Parts Purchase or Borrow Program to inspire small-business collaboration. The program allows vendors to buy or borrow items for the purpose of reverse engineering, so they can create technical data packages for future production.

This can help reduce lead times, explained John Henley, who oversees small-business efforts at DLA Aviation.

“We only have one approved source for most of the items in this program, and these parts are high priced with a long lead-time,” he said. “In other words, it may take the manufacturer so long to make them that we have to wait 400 days before we can get these parts delivered. That makes it difficult to support our customers,” Henley said 

Partnering with small businesses to increase the number of vendors that can make parts with long lead-times usually yields lower prices and increases the agency’s ability to meet customer demands, he added. But another challenge of working with small businesses for DLA Aviation stems from intellectual property.

“The difficulty is that a lot of the items we buy are proprietary, and the technical data packages are owned by big original equipment manufacturers,” Henley explained. “So unless small businesses go through some type of reverse engineering and get approved as a source from the services, then we’re not allowed to buy these items from them,” he continued.

Capable and Driven

Though small businesses do face challenges with cash flow and infrastructure, most are as capable as larger businesses of keeping up with DLA’s demand as larger businesses, Sajda said.

“The advantage for large companies isn’t just financial backing,” she explained. “They have the lawyers and staff who understand the complex nature of all the stuff the government buys and the requirements that we put on vendors over and above what’s out there in commercial industry.”

Others small businesses are “mom and pop” shops that begin with just two or three people tinkering in a garage.

“A lot of these small businesses are started by individuals who have worked in large enterprises and either retired or want to focus on a particular niche,” Carosella added. “A lot of them have the credentials, the academic background and professional experience to pull their enterprises together.”

Many of the innovations in technology that DLA has taken advantage of since Sajda joined the agency’s small-business office in 2011 have come from small-business owners who were dedicated to creating quality products for warfighters. She takes personally the task of guiding small-business owners toward the right supply chain and sharing the nuances of government contracting that are normally discovered only by trial and error, she said.

But for every vendor Sajda has helped steer toward a business deal, there are dozens she said she’s had to be “brutally honest” with, such as a vendor who developed plastic containers of personal hygiene products that could be clipped to the outside of a backpack.

“The point was that it wouldn’t take up valuable space inside soldiers’ backpacks,” Sajda said. “It was a really novel idea, but in all the places he went to market the product, nobody told the man the truth. The military was never going to buy it, because when you clipped it on and the soldier started walking, it made too much noise,” she said, adding that her goal is to be honest without deflating people’s innovation and drive.

“It’s not DLA’s business to buy your new thing,” she also tells vendors. “DLA’s business is to buy what the military needs and asks us to buy.”

The agency is also responsible for administering Procurement Technical Assistance Centers in Washington, D.C.; Puerto Rico; Guam and all 50 states. PTACs help increase the number of small businesses capable of partnering with DLA and other government agencies at local and state levels.

PTACs offer a variety of services, from identifying contracting opportunities to providing guidance on the bidding process and detailed instructions on registering in federal procurement systems, such as the System for Award Management and DLA’s Internet Bid Board System. 

“By supporting new suppliers, the PTACs promote competitive environments and increase small-business participation, which again, results in higher-quality goods at lower prices,” Hall said.

DLA’s success awarding contracts to small businesses is a result of teamwork, Sajda added.

“Small-business specialists really are part of the DLA team,” she said. “They want to do what’s best for the customer while trying to do what’s right for our nation’s industrial base.”