Official websites use .mil
Secure .mil websites use HTTPS
MAZIE K. HIRONO:
[off-mic] on readiness will come to order. Welcome, everyone. So good afternoon. Or as we say in Hawaii, Aloha, everyone. The subcommittee meets today to consider testimony on the small business programs of the Department of Defense and the military departments. Our witnesses today include Mr. Farooq Mitha.
Am I pronouncing your name correctly?
FAROOQ MITHA:
Yes.
Oh, sorry. We are over there.
Mr. Mitha, the director of the Office of Small Business Programs in the DOD. Ms. Kimberly Buehler. Yes. Director, Army Office of Small Business Programs. Mr. Jimmy Smith, Director, Navy Office Small Business Programs. And Mr. Scott Kiser, Director, Air Force Small Business Programs. As Chair of the subcommittee, I am focused on ensuring that our service members and the large military community have the support they need to defend our nation.
And that means modernizing our military infrastructure to meet the needs of the 21st century and preparing the services to meet the challenges posed by climate change. It also means ensuring our defense industrial base is ready and able to meet future demands, which is why today's hearing is so important.
I thank the witnesses for your willingness to share your insights with the subcommittee and for your work to support and strengthen our military. Collectively, you all bring many decades of experience supporting small businesses and that expertise is critical as we consider ways our committees can help you as well as our service members in carrying out our shared mission of ensuring our national security.
I hope you will also be able to highlight the vital work small businesses as well as approaches your organizations have taken to help successfully transition product into the hands of our service members. We also welcome your insight into how we can best help transition companies beyond their small business status.
We all recognize the critical role that small businesses play in our economy and especially in our defense industrial base ecosystem. Small businesses play a vital role in spurring the kind of innovation necessary for our military to remain competitive and meet the challenges of the 21st century. As noted by the recently released DOD Small Business Strategy, in fiscal year 2021 small businesses numerically made up 73 percent of all companies that did business with the DOD. Additionally, small businesses comprised 77 percent of the research and development companies that did businesses with the DOD. And as I mentioned, especially in a time when being creative is and innovative is important, this is a really, really important number, 77 percent.
However, in the past decade, the number of small businesses participating in the defense industrial base declined by over 40 percent. That is a significant drop in the number of small businesses doing work with the DOD. That is a puzzling and just concerning trend and I hope that our witnesses will be able to shed some light on what you see as the dynamics causing this trend as well as some of the actions that the department can take to improve the situation.
And this trend begs a number of questions related to our approach to small businesses, including how good are our data and matrix in tracking the success or failure of these small businesses in the defense industrial base, especially as they try to contribute to larger competitiveness goals of the departments.
Do we have the means to support these businesses while they are small and also to help them transition to grow into medium and large businesses? How could we improve the strategic approach to using and fostering our small businesses to contribute to national security missions. In Hawaii we know firsthand the importance of small businesses to the success of our armed forces and vice versa.
Businesses like RevaComm, software company based in Honolulu, and they demonstrate the importance of this relationship between DOD and small businesses. Since 2019, this company has doubled its revenue, created 120 jobs, and expanded its presence to more than 25 states. A success would not have been possible without support from the DOD, which included 55 -- 59,000,000 in grants from the Air Force.
Thank you again to our witnesses. I look forward to our testimonies. And now I'd like to recognize my friend, Ranking Member, Senator Sullivan.
DAN SULLIVAN:
Thank you, Madam Chair. And I'm honored to be the Ranking Member on the Readiness Subcommittee. This is the first among equals of the subcommittees. Don't tell any of the other subcommittees about that, but it's true. And I look forward to a robust set of hearings. I'm going to just make a statement here more broadly.
Last Congress, we held one hearing in this subcommittee in two years.
And it was jointly with my committee --
One hearing, okay? No offense, but that is ridiculous. We should be holding at least two hearings a month on readiness. There's nothing more important than the readiness of the US military in this time of great power competition, the new era of authoritarian aggression to have the most lethal military that can be ready to win wars and fight tonight.
Right now. So I sure hope and you have my commitment. We will do three hearings a month if you want, but one hearing in two years was an abdication of responsibility and we should never do that again on the Readiness Subcommittee. That's just my opening statement on that, two to three hearings a month. I'm ready to -- ready to do it. Nothing more important than the readiness of our military.
It's not really ready right now, in my view. So I want to thank the witnesses as well. In January of this year, as the Chair mentioned, DOD updated their small business strategy. We actually legislated on this issue in fiscal year 2019 and the 2019 NDAA and the whole purpose was to have Congress direct opportunities for our small businesses to support mission execution and the readiness of our forces.
And we had hoped that a unified small business strategy across the department would expand small business engagement and opportunities across our economy. Unfortunately, as the Chair mentioned, there has actually been a very significant decline of small business vendors contracting with the department. So the trends are going the wrong way.
I believe that when small business opportunities are in decline, it stifles opportunity, innovation, and can lead to increased acquisition -- acquisition costs. One area in particular that I'd like to explore that I think matters to many of our communities, certainly my state of Alaska, I think the Chair's state the great state of Hawaii as well, is the opportunities with native contractors.
I've been a strong advocate of the Native 8(a) government contracting program and one of the reasons is it's a -- it's a really good match. I like to say the Alaska Native community, like lower 48 Indian communities and native Hawaiians, have what I like to refer to as special patriotism. Special patriotism.
They serve at higher rates in the US military than any other ethnic group in the country, year after year, generation after generation, even when their country hasn't always treated them so well. So that kind of special patriotism lends itself to strong support with regard to 8(a) opportunities. And I think it's another area that can be critical win, win for those communities, our states, our small businesses, and the Department of Defense.
But I hear from many of our small businesses in Alaska about the difficult time they experience just being able to get their foot in the door of DOD because it's such a big bureaucracy, complicated place to do business. And once they get their foot in the door, sometimes it's difficult to maintain the connection.
As we all know, small businesses oftentimes don't have the resources to do department wide requirements on issues like cyber security and acquisition reform and they oftentimes don't have the extra bandwidth to become experts in certain areas that are required in their relationship with the department. So what we want to be able to get from this hearing, what I do certainly, is how we can improve that process, expanding readiness, expanding the ability of American innovators who might not be the giant military contractors, but can disrupt and create opportunities for our military for advancing technology and for the workers of America.
We all want to participate in that. We all support our military and having small businesses be a part of that I think is a critical function of the department. So thank you again, Madam Chair. I look forward to working with you on numerous -- numerous hearings on readiness in the next two years and appreciate your leadership on this issue.
Thank you very much. I look forward to working with you all. So we'll start with Mr. Mitha.
Chairperson Hirono, Ranking Member Sullivan, and distinguished members of the subcommittee, good afternoon. Thank you for the opportunity to testify today on small business tools within the Department of Defense to enhance the industrial base. My name is Farooq Mitha and I'm the director of the Department of Defense Office of Small Business Programs.
I report to the Assistant Secretary of Defense for industrial base policy within the Undersecretaries Office for Acquisition and Sustainment. Today, I will discuss tools used to increase small business participation, address small business barriers, and the department's recently released small business strategy.
Small businesses make up 99 percent of all businesses in the United States and are a critical contributor to our national security. Last fiscal year, the department spent $85.2 billion on small business prime contracts and nearly 25 percent of the department's prime contracts go to small businesses. Additionally, the department exceeded its goals for small, disadvantaged businesses and service disabled veteran owned small businesses.
Despite their immense value, the number of small businesses in the defense industrial base has declined over the last decade. This is an economic and national security risk for our nation. We risk losing mission critical domestic capabilities, innovation, and strong supply chains. To respond to this, the department is working to strengthen our small business supply chains, increase competition and attract new entrants.
I want to specifically highlight a few programs at the department that support enhancing small business participation. These programs include the Mentor-Protege program, the APEX Accelerators, the Rapid Innovation Fund, and the Indian Incentive Program. The Mentor-Protege program enables experienced companies to provide business developmental assistance to protege firms.
The proteges are small businesses from socioeconomic categories or new entrants and the mentorship enables proteges to become suppliers as prime and subcontractors to the department and other federal agencies. Today, current and previous proteges contribute more than $5 billion of work on contracts each year on average.
Another key enabler for small businesses is our APEX Accelerators. The department funds 96 APEX Accelerators across the country that assist small businesses by helping them learn how to do business with the government. These accelerators were previously called procurement technical assistance centers, or PTACs. After the PTACs moved to my office late last year, we rebranded them as our APEX Accelerators and the department is expanding the services they give to small businesses such as training them on cybersecurity requirements and leveraging them for better market research.
I would also like to mention the Rapid Innovation Fund and the Indian Incentive Program. The Rapid Innovation Fund is designed to support small businesses and moving technologies from prototype to production. While the Indian Incentive Program provides a 5 percent rebate to a prime contractor on the total amount subcontracted to Native American owned businesses.
As you mentioned in January, the department released our new small business strategy and the goal of the strategy is to ensure small businesses entering the defense marketplace understand the contracting opportunities, resources available to them, and where to get support. The strategy calls for the establishment of a small business integration group across the department, implementing a common training curriculum for our small business professionals and the acquisition workforce and streamlining points of entry into the defense marketplace.
As part of the strategy, we are also ensuring long term planning and organizational alignment for programs that drive the small business ecosystem and providing tools to the acquisition workforce such as robust set of market intelligence tools that can help the efficiency of market research and close equity gaps in the nation's supply chains.
Lastly, as a part of our new strategy, the department will provide more tools to ease their entry into the defense marketplace. An example is helping small businesses navigate issues that threaten their security, maintaining cybersecurity readiness, and mitigating the risks posed by foreign ownership control and influence, or FOCI, are arguably the most pressing issues faced by small businesses.
Our adversaries routinely target small businesses, thus building effective cybersecurity resilience into the defense industrial base for small businesses is a critical national security priority. To bolster those efforts, the department provides resources to small businesses on the Project Spectrum Platform.
Project Spectrum provides companies with the knowledge and tools necessary to protect our nation's most critical assets in cyberspace. The goal is to provide supply chain visibility and assurance of standards, compliance while delivering the industrial cybersecurity tools and techniques that small businesses need.
The department is going to expand this risk platform to also include training and tools on due diligence and FOCI that will help small businesses understand and mitigate the risks on those matters as well. I'm grateful to the panel for giving me the opportunity to speak today. The department looks forward to implementing the Small Business strategy to continue this important work that's vital to our national security.
I look forward to answering any questions that you may have.
You see, I'm so motivated on the writing subcommittee I've taken over the chairmanship here. [laughter] So -- I'm just kidding. The Chair had to step out. So Ms. Buehler, can you -- your testimony, please?
KIMBERLY BUEHLER:
Yes. Chairperson Hirono, Ranking Member Sullivan, and distinguished members of the subcommittee, on behalf of the Army senior leaders thank you for the opportunity to appear before you today and discuss the Army Small Business Program. As the daughter of a small business owner, I understand that small businesses must be passionate, committed, resilient, and willing to work more hours than it seems or even in a day in order to be successful.
The small business entrepreneurs I meet while executing my duties as the Army's small business director demonstrate all of these qualities and are fueled by the -- the passion to help the Army fulfill its mission to deploy, fight, and win our nation's wars as part of the Joint Force. These small businesses are key to executing the National Defense Strategy and building the Army of 2030. There are engines of innovation that fill knowledge and capability gaps, help us maintain readiness, and maintain modernization -- I'm sorry, enable modernization.
In fiscal year 2022, the Army awarded over $24.5 billion to small businesses owned by disadvantaged entrepreneurs, including women, veterans, and those living and working in historically underutilized business zones. This equated to over 25 percent of all prime contracts. We exceeded the enhanced small, disadvantaged business goal by 14.75 percent, which includes award of the $1.7 billion contract to iHealth Labs, a small, disadvantaged business who delivered the rapid antigen test kits for COVID-19 distributed through the United States Postal Service.
These achievements are consistent with the Army's long history as being a leader for small business achievements in the Department of Defense and across the federal government. The Army is committed to ensuring small businesses have maximum opportunity to perform on contracts at both the prime and subcontract levels.
In fiscal year '22, we deployed innovations and issued policy and guidance to increase opportunity, reduce barriers to entry, and improve the professionalism of the small business workforce. For example, in April '22, the Secretary of the Army issued Army wide guidance for the small business programs which was the first in over a decade.
The Undersecretary of the Army launched a series of five initiatives to help small businesses better collaborate with defense -- defense prime integrators. These pilot programs will encourage partnerships, open supply chains, and drive accelerated adoption of technology cultivated through Army and DOD investments.
The Small Business Innovation Research Program, or SBIR, continues to be a critical enabler of Army modernization and we appreciate Congress's reauthorization of the program. In FY '22, the Army established a contracting center of excellence to innovate how we award SBIR phase one and phase two contracts.
Average time to award is now up to 75 percent faster. Based on stakeholder feedback and the reauthorization, the program continues to refine its strategic approach to integrating nontraditional innovators into the Army ecosystem and increasing phase three awards. In FY '22, the Army executed a total of 153 phase three awards totaling more than $318 million to 100 unique firms across 26 states.
Other notable actions in fiscal year '22 that target small business opportunity include the refresh of the Mythbusters campaign to provide strategies that help acquisition professionals improve industry communication. We've reinstituted goals for procurements valued less than a simplified acquisition threshold of $250,000 conduct regular reporting to the heads of the contracting activity to improve subcontract reporting published by annual forecasts of small business opportunities.
And we published the first small business professional talent management guide in Army history. Finally, the Army stands ready to work with the Department of Defense to implement the recently updated small business strategy and we will publish the Army's updated strategy this fiscal year. I would like to thank Congress for supporting our soldiers, our civilians, and the small business programs.
Working together, we can continue to ensure we provide maximum contracting opportunity for the small business entrepreneurs that drive our economy and deliver capability to our soldiers. I look forward to addressing your questions this afternoon.
Great. Thank you, Ms. Buehler. And Mr. Smith, floor is yours.
JIMMY SMITH:
Thank you, Chair Hirono, Ranking Member Sullivan, members of the subcommittee. It's an honor to appear before you here today. On behalf of the Secretary of the Navy, the Department of the Navy leadership, thank you for your continued support to our sailors, Marines, civilian workforce, industry partners, in particular, the small business community.
A healthy small business industrial base will continue to be vital to the long term success and affordability of the Department of the Navy as well as our national security. Increasing opportunities for small businesses is a high priority and focus for the Department of the Navy. The Department of the Navy senior leaders must ensure that Navy Marine Corps acquisition activities are aligned to the Secretary of Defense three small business priorities which are: increasing the share of small business dollars, lowering barriers to entry, and increasing competition for small businesses and traditionally underserved entrepreneurs.
In fiscal year '22, the Department of the Navy awarded $94 billion in prime contract awards. Nearly 20 percent of that went to small businesses that served as prime contractors. This 20 percent equates to $18.4 billion awarded to small businesses. It also represents an increase over the FY '21 number which was $17.3 billion awarded to small businesses.
In fiscal year '22, the Department of the Navy exceeded its goals for women owned, service disabled veteran owned, historically underutilized business owned small businesses. The Department of the Navy increased its small, disadvantaged business target significantly in FY '22 in response to President Biden's executive order 13985. Our proactive posturing resulted in the Department of the Navy's four year run of exceeding its goals in all four socioeconomic categories to be broken by aggressively targeting the 1 percent short for small, disadvantaged businesses.
The Department of the Navy continues to blaze new trails as the Secretary of the Navy continues to lead from the front. In addition to his regular meetings with industry partners, he conducts small business roundtables and he also established and led two small business executive office sites within the Department of the Navy.
These off sites require that the ten commanders that oversee our major buying commands and the 18 program executive officers reflect back on their small business opportunities and performance against their FY '22 small business goals. And then we spent time discussing the FY '23 small business execution plans.
Furthermore, SecNav challenged these senior leaders to disaggregate previously held large and omnibus contracts to afford small businesses the opportunity to compete for prime contracting opportunities. Supporting in this stance, the Secretary of the Navy then tasked my office, my team with creating a policy to leverage OMB's memo entitled, Advancing Equity and Small Business, to strengthen accountability of the Department of the Navy senior leaders and meeting the goals established in each socioeconomic category, thereby strengthening and increasing small business industrial capacity.
This direct communication with the Department of the Navy senior leaders and the accountability measures affected through their performance plans has yielded unparalleled increases in outreach efforts throughout the Department of the Navy. My team and I contribute -- attribute the majority of the increase of the small business performance to SecNav's hands on approach to increasing small business and giving them the opportunity to provide warfighting capability to the Navy's mission.
In conclusion, the small businesses that are essential to the healthy defense base we need you working on our hardest problems. You bring about innovation, you bring about capability and technology. And we afford opportunities to work with you. The department recognizes that there are incredible and resources available for this adaptability.
The Department of the Navy is committed to these opportunities and removing barriers to doing business with us. Thank you again for your leadership of this committee and the oversight of interest in the Department of the Navy. To my Navy small business team, thank you for the outstanding work you do in support of the Navy mission.
I look forward to your questions.
Thank you very much, Mr. Kiser.
SCOTT KISER:
Good afternoon, Chair Hirono, Ranking Member Sullivan, and members of the subcommittee. My name is Scott Kiser and I currently serve as the director of Small Business Programs for the Department of the Air Force covering both the United States Air Force and the United States Space Force. Thank you for the privilege to be sharing our perspective on small business tools and for enhancing the defense industrial base.
It's good to see that you, Madam Chair and Senator Shaheen and Duckworth, also serve on the Senate Committee on Small Business and Entrepreneurship. We value your continued support for small business for our civilian employees and our uniformed military members who serve as small business professionals. Our FY '22 small business participation record is strong.
For the third year in a row, the Department of the Air Force exceeded all small business goals as well as each of the subcategories awarding a record 29 point -- or 22.9 percent of all eligible DAF contracts, representing $15.6 billion direct to small business. Small, disadvantaged businesses, SDBs, owned by disadvantaged individuals, Native American tribes, Native Hawaiian organizations, and Alaska Native corporations, received 10.12 percent.
Goals for service disabled veteran owned small business, women owned small businesses, and historically underutilized business zone hubzone small businesses were also all exceeded. This industrial base is broad from R&D to construction to information technology to manufacturing. For an example, an ANC owned small, disadvantaged business was chosen as a best value for aircraft logistics at the United States Air Force Academy, contract worth over $1.109 million.
Small businesses are known as the engines of innovation. We agree. Last year we obligated 19.7 percent of all eligible R&D contracts, over $2.7 billion, to small firms, spend under small business innovation research, SBIR, and small business technology transfer, STTR, for technical -- technological feasibility.
Further research and prototyping reached just over $1 billion. Our technology transition is strong. In FY '22, we awarded SBIR, STTR phase three contracts with a ceiling value of almost $2 billion with nearly 1.8 billion awarded to small firms. Our FY '22 eligible phase three contract obligations reached 772 million from under 300 million in FY '18. For those 772 million, small firms got 627 million.
We made almost half of DOD wide phase three obligations. The most important tool on which these success is hinges our small business professional workforce which assists small firms and advocates for their participation and innovations in the acquisition process. I lead the small business community of 162 small business subject matter experts, about half of which are dual hatted in their responsibility and roles.
Some -- small business professionals work hard. Last year's average was about 642 contracting action per SBP under purview, an increase from 625 the year prior. To drive strategic improvements, we organized small business professionals into what we call a small business board of directors and employed the objectives and key results management model from leading private sector organizations.
We use the OKR model to pursue broad lines of lines of effort under our board structure. The small business professionals on each LOE team develop the OKRs to support that team's objectives. OKRs address training and fill the workforce, deployment of effective guidance for small business contracting methods, data, goaling metrics, improved outreach, and reduction of entry barriers and mainstreaming, the use of SBIR, STTR phase three and acquisition planning.
Thanks to the OKRs, our small business professionals carried out a record number of outreach activities last year, increasing 45.7 percent of audience over FY '21, both virtual and in-person audience members. We even sent our SBIR, STTR expert to speak in Hawaii at the governor's invitation last October.
The OKR methodology based policy changes have helped small business firms receive 78.2 percent of DAF's simplified acquisition threshold level spend. Despite all our successes, we know small business firms continue to face challenges doing business with the DAF and the DOD in general. We take this seriously Implementing the new DOD Small Business Strategy.
We've assigned the strategies 23 action items into our BAS LOE teams and they've worked it into the -- so we can track our progress on a monthly basis. We provided the DOD Office of Small Business Professional Programs for appropriate action the DAF Strategy Resourcing estimate matching action items to the existing or additional personnel as approved by our undersecretary with the concurrence of the chief and vice chief of both Air Force and Space Force.
Thank you again for this opportunity to testify and share the small business perspective. We look forward to answering your questions.
Thank you very much. I'll start with the questions. First of all, let's get a definition of small business from you, Mr. Mitha.
Yeah. Thank you for that question. So the small business depends on the NAICs [ph] codes that are established by the Department of Commerce and North American Industry Classification Codes for each industry have size standards that are issued by the SBA. And those size standards vary based on either average revenues or by individuals for services type work.
It's generally an average of about $16 million of average revenues. And for manufacturing, it's an average about 500 employees, But it depends on the class. It depends on the industry classification.
When we talk about the thousands of small businesses that contract with the DOD though, are we talking about businesses that have 500 plus employees?
Some.
What is the average? And because I'd like to get a picture of the kinds of businesses that you all are contracting with. And I take it, you all use the same definition even if there are different depending on what the industry or whatever the definitional basis is so you all use the same. So what are we talking about?
Really small businesses like 100? Is that an average kind of a small business or are we talking about 500?
I would say it depends. I don't have an exact answer on -- on the average, but I would say that for professional service type work where we look at revenues, it's in that revenue range of probably $10 million in less in revenues is those types of companies. And for manufacturers, it's harder to tell from my view, but it could be in that 500 range.
I'd like to continue with you that that is that there is a drop in the number of small businesses now participating in DOD contracts. And this is for each of you. What do you think is accounting for this drop? And what specifically are you doing? You all cited a number of outreach kinds of programs that you're doing.
But what -- which of these programs is going to enable you to increase -- I take it that's a goal, increase the number of small businesses that are working with each of you.
So I can tell you a couple of things from the OSD level that we're doing. I think some of the policy changes that we've enacted, we hope will reverse that decline. We sent out some guidance to our workforce based off of an OMB memo that will enable us to have more set aside competitions for small businesses in our socioeconomic groups.
In terms of category management type policies, we've de-emphasized the use of best in class vehicles where we can -- where we want to encourage our workforce -- we are encouraging our workforce to use vehicles that have more small businesses on them and to have more small business set asides. We're also -- we've also sent out guidance to our workforce on decreasing the bundling and consolidation of contracts and breaking out contracting opportunities where we have bundled contracts for small businesses.
And on the outreach front, we now have at the office of the Secretary of Defense level, these 96 APEX Accelerators that I mentioned. And we're really leveraging them to be our front door to industry. And by them moving, they were previously at DLA, at Defense Logistics Agency, now they're in my organization.
We're thinking they can be more integrated into our broader industrial base activities. So that outreach and training and support that we're going to provide hopefully will increase.
I want to give the other panelists a chance. So I take it all of you do have the goal of wanting to increase the number of small businesses that receive contracts from you. So would you like to add something, Ms. Buehler?
Yes, Senator. So in the Army it really is about opportunity, right. It is definitely about opportunity. So we are working to make sure that small businesses are aware of what opportunities are out there early enough. So we publish acquisition forecasts in both January and June of each fiscal year. That gives them -- the -- the small businesses the opportunity to directly engage with the contracting and small business professionals to influence the acquisition strategy for those procurements.
We are establish -- reestablished, simplified acquisition threshold goals. So in accordance with the Federal acquisition regulations, all small business, all procurements valued under 250,000 are supposed to be reserved for small business performance. So of course there's reasons why that's not always possible.
But we are pushing our contracting officers and requiring activities to expand those opportunities and make sure that a higher percentage share does go to those companies. So -- so that's a big push. And we are -- we revised our category management policy from back in 2021 to make it more small business friendly.
And the Secretary of the Army, when she issued her memo to all Army, not only hold senior leaders accountable for providing small business opportunity, but also reinforces the importance of our small business workforce being at the table early during market research and acquisition planning to influence positive outcomes for small business.
Mr. Smith.
In keeping with my sister's service here in the Army, we're doing the exact same thing. One of the things that I would highlight in addition to -- to what Navy's doing virtual engagements, because of COVID things knocked down dramatically from our ability to reach people in person. We have expanded our social media footprint to areas that I never thought we would go in order to use that mechanism to let the public know, let industry partners know that we're open for business.
And if you look at our long range acquisition forecast, you can see every single solicitation that we plan on awarding across the Department of the Navy between now and five and even six years off into the future. So you can plan tactically, you can plan strategically on opportunities that you want to investigate and potentially bid on from a Department of Navy standpoint.
So providing transparency, providing outreach, going to where people are in order for them to know that you're open for business, that's what we're doing in a magnificent way. Disaggregating contracts, that's another great opportunity where you take what used to be a very large contract and you're breaking into individual pieces so that small businesses can participate.
That's what we're doing. And it's -- it's reaping significant results that we have never across all of us have seen in the last six, seven, eight years.
I just because you break the large contracts into smaller contract doesn't affect the effectiveness or the -- what you're getting out of breaking down the contract?
No, ma'am. So the first thing we have to do first is meet the mission. We're not just here in the business of giving contracts to people just to pass money down the line. You have to meet and support the mission in every single one of our cases. First and foremost.
Thank you for that reassurance. Mr. Kiser.
Thank you, Madam Chair for the question. Similar to the other services, but we also work in tandem. For example, in terms of those outreach, we will also go to a Navy -- Department of the Air Force which represented the Navy Gold Coast outreach events, the AUSA outreach events because some of those small businesses may have been focused on one military service.
So we do a lot of cross service opportunities for those small businesses. Secondly, in terms of increasing some of those opportunities even on large contracts, we had a recent effort where a enterprise wide contract on IT. We use the authorities within the GSA which allows a contractor teaming arrangement where you might have a large lead, but it then brings in many small IT companies to get the service, gets the credit in terms of percentages and dollars.
However, what this gives a lot of small businesses an opportunity to work on a much bigger contract than they might otherwise to continue their steps one by one further up the ladder.
Thank you. I've gone over. So, Mr. Sullivan, feel free to go three minutes over.
Sure. Mr. Mitha, I want to press, I read your Hill op ed and I do want to press a little bit more on the statement that you made there about, you kind of talked a lot about the statistics, but then you said sounds like a great success story. However, despite their immense value, the number of small businesses in the US industrial base has declined by 40 percent in the last decade.
The -- Senator Hirono kind of asked you why do you think that happened? You didn't really get into it. Do you have details of why do you think that happened? Because I think we, you know, a lot of the testimony here was how great things are going. But 40 percent decline is not great. So what -- what specifically do you think that is? And then how do we work to address it?
I think there's several reasons. One reason I think is the complexity of doing business with the Department of Defense.
That's a huge issue, right. And I think we all got to get our arms around it. We all got to recognize that the Pentagon is a giant bureaucracy and it can just be exhausting for small businesses to break through. And I think that's kind of the key mission of each of the witnesses here, isn't it not?
Okay. Good. What else?
I think another reason is we've had -- we've seen some of our practices of how we manage our contracting policies like category management. A lot -- when I first started in this job, a lot of small business industry groups came and said, hey, with category management, we feel like we've been left out because if we're not on the vehicle, we wouldn't see the opportunity, wouldn't be able to compete for it.
Right.
That's why we sent the memo out that I referenced earlier where we're now giving tier two credit to -- to small business set asides or any small business awards to companies and socioeconomic categories. We can go outside of those vehicles and do more set aside competitions as well.
Let me ask back to the 8(a) contractors and the partnership that each of the services have with them. What specifically is your service working on to deepen that partnership? I think it's a great opportunity to bring these numbers up. This goes for disadvantaged communities, rural communities. Like I said in my state, it's primarily the Alaska native corporations and tribes and ANCs that really can bring benefits to very rural parts of Alaska, very rural parts of America in indigenous communities.
So can I ask each of the services what you are doing specifically that relates to both near and long term opportunities with 8(a) Contractors? Why don't we start with you, Ms. Buehler?
[off-mic] Okay. I'm sorry. Yes. So absolutely recognize the importance of the 8(a) business development program in advancing opportunity for small business, particularly disadvantaged populations. We have the most aggressive goal for small, disadvantaged business, which includes the 8(a portfolio in the Department of Army.
Our goal for FY '23 is 15 percent --
Okay, but what are you doing --
Yes, sir. Yes, Senator. So we are developing strategic partnerships with our -- with our 8(a) companies. Particularly, you mentioned the Alaska Native corporations. I recently went out and visited with the Akama Group and met with their -- their shareholders as well as the leads from all of their business lines of effort.
That was a key engagement. I intend to replicate that with other organizations and expand that kind of partnership. We are again making sure that we're going after and setting aside those business opportunities at that very tactical level, making sure that our small business professionals are empowered to actually make things happen and create opportunity.
Okay.
And -- and we're -- we are using our virtual vendor engagements to conduct enhanced outreach just like my partner over here, Mr. Smith, mentioned, we have had one focused singularly on the small disadvantaged business and 8(a) population, trying to make sure that they know that the door is open for the -- from the army and we want to create opportunity with them.
Great. Good. Mr. Smith, what about you?
Yes, sir.
Same -- same question.
So last fiscal year, we reached a pretty unique engagement with the Small Business Administration on the 8(a) program.
So does it take a lot of coordination with SBA --
It does.
-- the work you're doing. So that's got to be a key element of it.
It does. It absolutely does.
And you think that's going well with SBA?
It's going absolutely well. So at the end of last fiscal year, I reached out to my counterpart over in the 8(a) program at Small Business Administration. And I said one of the barriers to doing business with the Department of the Navy is past performance. If our industry partners don't have past performance, you typically don't get work from us.
Right. And how do you ever get out of that loop? You can't -- if you don't have past performance, you can't start.
We actually worked out a pretty good deal with the SBA.
What is it?
So I contacted my counterpart and he said, what if we came to an arrangement where my PCRs, his folks that are in the field that know what these local companies can do vouch for them to be able to do work for us. Can we take a government persons vouching for a company?
Even though they haven't done deal --
Even though they haven't done it for DOD. And in many cases we ask that -- let's take the -- in the case of building a firehouse. A firehouse is a firehouse is a firehouse. But if you never built one for us, we hold that back from you. But if that local PCR can tell us that we -- we've seen this company build a firehouse in our local community for state and municipal reasons, they can do it for us. And we actually pulled out of their list of over 1,400 companies in the 8(a) program that have never won a contract, we pulled 40 companies off of that list last quarter just because we had an engagement with one another on this company is good.
Take them forward. And we're watching those companies now for the execution of those contracts. As I mentioned, it's not about giving money away. Of course this is all about --
-- readiness, lethality, winning wars.
Absolutely. So engaging the Small Business Administration on the 8(a) program from a one on one standpoint for -- for opportunities to expand and grow work.
Good. That's a good example. What about you, Mr. Kiser?
Good afternoon. Thanks for the question of following on and perhaps some additional information is we're negotiating with the SBA on those 8(a) partnerships. We're getting the SBA to share with us their 8(a) -- their information on the most recent new 8(a) firms. Secondly, from our staff last June, we sent our director of staff, Mr. Mike McWilliams, who's here with us today, to Alaska to the 8(a) conference that's held in June each year.
And we'll be sending it as we traditionally do in terms of that outreach. Similarly in April will be going to the NHOA conference in Hawaii once again for the outreach to as many organizations as we can possibly get to. And we look to in terms of the Mentor-Protege program, we target those in the tribal organizations.
Can I ask about that because that was actually one of my questions. The Mentor-Protege program is a really good idea, but I worry that it's hard to get that kind of program out into the rural communities, right? So are you -- when you're talking about it, you mentioned you're targeting native communities and rural communities with that program.
Are all of you doing that? Because it sounds like a great program, looks like it's working, but I worry that it's tough to get to a small Alaska native village with a program like that. So are you considering those kind of entities to make sure they can benefit from a program like that as well?
Absolutely. And -- and I'm trying to find the list. I think we have one in place already in Alaska. I'm just targeting. But once again, it's trying to make people aware. First, increase the awareness of those kind of opportunities. True, the manufacturing overall base may not be the same in every location, but we're trying to start that conversation and get it going.
I think we have one already in place. I'm looking for the list.
Okay. Well, we'll stand by. Thank you, Madam Chair.
I'd like to start round two of questioning. So yes, I have a question about the Mentor-Protege program. I take it that that is a very successful way of enabling more small businesses to engage or have contracts with a duty. So what do you do? Do you put out a call for volunteers to be mentors and then you match them up with proteges?
Is that how each of you is doing this program?
I can start. So the mentor -- so each component services and DOD components are participants in the program. The funding comes to my office. They put out their requirements of different topics from the services and components for agreements that they would like to fund and the mentors apply to be mentors.
And there are certain statutory requirements to be a mentor. And once those mentors are approved, they can team up with the protege firm. Ideally a small disadvantaged or socioeconomic firm they have a relationship with. And they -- they give us a proposal that we then fund through an agreement where we reimburse the costs to the mentor for the business developmental assistance they provide to the protege or we give them subcontracting credit towards their goals.
So do all the services have this Mentor-Protege program? Army?
UNIDENTIFIED:
[off-mic] program, but we all tap into --
Okay. And is it working out well? Is it growing?
In the -- in the case of the Navy, we have four current protege agreements. We have three already in the works for this year. And I believe we'll have three more added on to that once the industry partners make that teaming agreement with one another, then they present it to the Navy. So I will have ten here relatively this year was what I will --
So do you have some kind of numerical goals, each of you for the Mentor-Protege program?
I will tell you the Navy's trying to catch up in this regard. My colleagues on my left and on my right are leading the Navy right now.
I'm sorry, Did you say you have a numerical goal?
It's -- I think we think it's a fair share kind of opportunity. And money is the drive at the end of the day. How much money is in the pot.
Oh. Okay.
Yes, Senator. So the Army has six active agreements. We recently changed our processes so that we have a yearlong open solicitation so that Mentor-Protege proposals can come in at any point during that year. So that gives industry the ability to come to us on their timetable and not necessarily on ours, right?
So it gives them much more flexibility to work those relationships and those agreements. And we are very excited to onboard new -- new agreements this fiscal year.
So like Senator Sullivan, I have a commitment to the 8(a) entities and for a number of them. I think one of the biggest barriers in dealing with the DOD is just the complexity of dealing with them as you say, Mr. Mitha. So name one thing that each of you did to make the whole contracting process less complicated for small businesses.
One thing that we are doing right now is creating a single entry point for small businesses into the defense marketplace. So my office's website is business.defense.gov. And we're creating that into a one stop shop which will have all the forecasting, all the different small business programs, all the resources that are available.
So a company won't have to go to 20 different websites to figure out how to do business with us. So that's one thing that we're working on right now.
Would you like to add to that?
Yes. So with -- in the Army we -- we're using OTAs as another mechanism, other transaction authority, as a mechanism to expand our nontraditional vendor base that's participating on our critical technology areas. And that is a low barrier entry program where we can reach those companies that have no experience or limited experience working with the government.
So that's been an effective tool for us in trying to reach new vendor populations.
Reintroducing people to a tool that's been in the toolbox for a while. You can actually award up to $100 million contract to an 8(a) company on a letter contract. So pulling that tool belt back, letting our contracting officers know that they can use that instead of having to compete everything and run down the formal process, we brought that back and resurrected it in a magnificent way over.
Mr. Kiser?
Yes. Once again similar activities. We also use phase three to go make it direct awards to speed the process. And also going back to add on to the previous comment on the MPPs and the Native American organizations. MPP, we've had two agreements. One is already done in complete and that was in Montana. The second is current and active and in the state of North Dakota.
Thank you. Senator Kaine.
TIM KAINE:
Thank you to our Chair and Ranking, and thanks for doing this hearing today. There's been a report by the National Academies of Sciences, Engineering, and Medicine identified that the goals of the SBIR program and the Small Business Technology Transfer program might be in conflict, particularly that in the effect that commercialization can be overemphasized as a metric for success.
Does the recent -- recently released strategy that you all have put together address the priority of commercialization relative to other priorities? Stimulating innovation, meeting federal R&D needs, fostering diversity? How do you deal with that potential conflict in the report that you've done? Mr. Mitha.
Sure. Yes, we do emphasize the importance of both commercialization and helping small companies go from prototype to production. I hope this answers the question, but I kind of view it as a -- as a pipeline where we have dollars that we spend on prototyping through our labs and using our other transaction authorities and programs like SBIR. But we want those companies ideally to mature and develop those technologies to meet our mission needs.
So we talk in the small business strategy about how our various small business programs can work better together in a more integrated way to help mature the technologies along so they can actually get fielded into a system and commercialized.
Thank you for that. Mr. Smith, I want to ask you this. In your written testimony you indicated that the Secretary of the Navy Del Toro directed your office to ensure that small business considerations are included very early in the acquisitions process. That's good, but that you don't have specific metrics to assess the impact of those efforts.
So I am a big believer that if you don't measure it, you never get to where you want to go. Data and metrics are really necessary for making informed decisions about the effectiveness of an effort such as the one we would all want to undertake. So are you working on how you could develop metrics that would determine the success of the efforts that -- to expand our small business partnerships?
Thank you for the question. Developing the metrics is very important. Holding people accountable, we feel that this particular stage of the game, is even more important. It's not just the small business professional's responsibility to be the advocate for small businesses. All acquisition professionals across the entire Department of the Navy have the responsibility to live up to these goals and responsibilities.
And we want to make sure that you're in the conversation early instead of after you sealed up an acquisition solicitation opportunity and you're ready to go award the -- the small businessperson doesn't come flying in at the end of the day. Those considerations are baked in upfront. Measuring it, I think it's important.
But holding people accountable through their performance on their jobs to do their jobs is where we hold people accountable.
Well, given that the Secretary Del Toro not only had a distinguished career as a Navy surface ship officer, but also started a small business that did work in this space. I'm assuming he's pretty focused on this and holding people accountable for it.
Sir, Secretary Del Toro has helped me just about every single day he's been on the job. He's a small business owner for 17 years and he came in with that passion and enthusiasm to make sure that small businesses didn't go through some of the challenges that he experienced as a small business owner. And we have changed culture because of that influence and added focus.
I'm going to ask an open ended question, if I can, Madam Chair, and just hope that all might just address it a little bit. In the work that you're doing, I'm assuming you're hearing what I'm hearing as I'm talking to small, medium, and large businesses. I'm Sea Power Chair, so I do a lot in the shipbuilding ship repair space.
It's hard to hire people. So you can have the best programs you want in terms of small business partnerships, but if they're struggling with workforce issues, it's going to be hard to have programs that will really be successful. And I don't view this issue as one that's getting easier. We just made a, you know, historic commitment to infrastructure with who's going to build it. We've just made a historic commitment in the Chips and Manufacturing bill to manufacturing, who's going to fill those jobs.
So, we're -- we're ready to make a lot of investments. I think this is going to make the -- the challenge even tougher. So in each of your spaces, if you could, my time is about up, but I'd love to hear, you know, what you're hearing from your small business partners? And are you engaged with them in -- in creative strategies around the workforce question that the committee should know about, so maybe we can try to amplify or expand them?
Yes, I am hearing that from small companies, especially in manufacturing and in certain sectors that are very important to us. One of the things that I'm hoping that we can do from my office's purview is use our 96 APEX Accelerators that are out in the field across the country to do a better job of talent matching for -- if a company wins a contract, they can go to them.
And those folks have -- are tapped into the workforce development training programs and can actually build -- be a connector between the two.
Ma'am?
Yes, I'm hearing the same thing from small businesses. It's one of the challenges that they have in addition to the -- the regular challenges that you have running a small business. And you know, it's very important to us when we are making contract awards to these companies that they're going to be able to perform.
So we need to understand the industry dynamics and what conditions they're facing. And we're trying to incorporate that and include that as part of our market research to make sure that we understand. Because it also impacts the price that we're going to pay at the end of the day, so it's -- helps us to also prioritize what we're going to be able to actually buy.
Thanks, Ms. Bueller. Mr. Smith?
So, I've seen the exact same result. I've actually watched small business industry partners team in a way that I haven't seen some of the larger businesses do, reaching out to the local community colleges, reaching out to the colleges and universities to build a pipeline of talent that you need upon graduation to join the workforce.
If you don't start early, hoping to get them at the end and when they're ready to go is -- is a wish. Building dedication, loyalty and commitment early on, I think that transfers volumes. And I think more need to do that. But we're all starving for talent.
Right. And Mr. Kiser?
Once again, you're spot on. And that I think is probably more systemic across our entire nation of every kind of hands-on skill. Watch the Financial News Network activity about a week ago and the CEO was -- exemplifying, verbalizing exactly what you said. And as they talked with this CEO, she indicated cannot get those skills.
I could be making millions more dollars. And this is a total non-DOD company that was having -- facing the same challenges. Now, if Senator Mullin was here, from my time at Tinker Air Force Base, I remember they had several technical schools focused on aviation in the state of Oklahoma that he might be able to lend, you know, how do they do it? And part of that was to build -- to bring some aircraft maintenance capabilities and skills to Tinker Air Force Base.
But at the same time at Tulsa air -- Tulsa, Oklahoma, you had the American Airlines has their huge manufacturing -- maintenance facility there. So how do we get these technical schools with the technical degrees, bring the young people in who are going to put the hands-on because that -- not everybody wants to do this.
So, how do we incentivize that? That will be a bigger issue beyond just the DOD small business and for our nation. Thank you.
Well, as I yield back, Madam Chair, I know many of us are really coming to this realization that we're not going to completely train our way out of this without an immigration reform bill. And -- and -- and it needs -- and it can be very workforce focused. I mean, and it probably should be with unemployment rates at the lowest it's been since 1969. So, just Virginia doing a better job of maybe convincing some Marylanders to come to Hampton Roads, that's not going to solve our problem because we'll cannibalize each other's workforces.
We have to figure out a way to provide skills, more skills, value career and technical education, allow people to use Pell Grants for it for the first time in our history. But I do think there's a need that is becoming more obvious every day that a work-based immigration reform bill is also going to be part of the solution here.
And I yield back. And thank you guys.
I agree with you, Senator McCain, because every single industry, and we're not just talking about the military and it's contracting needs, but every single industry has workforce needs. And something's going to have to give. And I would -- I do think that something is we need to take a serious look and commitment to -- to changing our immigration system because we have the lowest, as you said, number of visas work -- visas given out of any, I don't even know.
So that is having a major impact on our ability to be competitive. Senator Sullivan, would you like a second round?
Thank you. Yeah, thanks, Madam Chair. And -- and I don't disagree with any of those comments on immigration. We've got to secure the border first before we get into discussions of immigration. That should -- that's a national security -- prerogative that shouldn't be that hard. And right now, we don't have a secure border so that's a different topic but an important one.
Mr. Smith, I want to dig down with not only you but the rest of the panelists on your statement about the recent -- relatively recent, two years ago, 8a contractor opportunities for sole source contracts up to $100 million. That is relatively recent. That was my provision in the NDAA in 2020, so I'm really appreciative that you highlighted that as another opportunity that can really help provide long-term success for the 8a and small business contractors.
What I'm hearing from my 8a contractors in Alaska though is that a lot of the contracting officers haven't really gotten the word yet or kind of like, yeah, I don't want to do that or no, I'm not interested. Well, we, the Congress told you, you should be interested, right? It's in the law. So, can you expand upon that?
And what I'd really like to do since you guys are the ones in charge and I've been hearing this a lot from my 8a contractors, again, they do great work. They contribute to the national security, as I mentioned, at least in Alaska. So many of them are already veterans themselves. The vast majority from indigenous populations.
Very patriotic. What I'd like to do is also get a commitment from each of you to send a memo to your contracting officers, just as you mentioned, Mr. Smith, reminding them that, hey, this is a tool. And if a -- if an 8a contractor comes in, you know, you've got to consider this. And I know it's relatively new, so it probably takes a little bit of time to work its way through the bureaucracy, but that's the new law.
And again, I'm glad you -- you mentioned that as kind of trotting out that tool as helpful. But can I get your thoughts on that from all of you? And get each of your commitments to send out a memo to your contracting officers just saying, hey, as a reminder, year and a half ago Congress changed this rule.
It's now, you know, up to $100 million. And I think that'll spur a lot of interest and hopefully, opportunity and activity on the common goal that we all have here. Do you want to comment further on that? And then, each of you. And if you make that commitment to me to be doing a memo on that?
Sure. Like you mentioned, it's a tool in the toolbox and folks need to know that they have it at their disposal. For a long time, competition was king. If you had plenty of opportunities with industry partners competing to get the best price, that's what we were driving for. Now, we got less people playing in the swimming pool.
I got less opportunities with certain industry partners. Now, it's time to go pull some of these other tools out and get the ease of contracting. I mean, folks have been trained a certain way, the flow down to all of the echelons across the entire Department of the Navy has to take place just like you mentioned.
It's an education.
Yeah.
They're small business professionals.
Education though, to some of your contracting officers.
Absolutely. Absolutely. And some people, you know, making the donuts is making the donuts is making the donuts. And they need to be told and taught that there's a way to do it differently, faster to go about another path.
So, can I get a commitment from you?
We already -- we already have the commitment across the department.
What I mean is to send a memo to your contract officers reminding of this?
Done.
Okay, and send it to this committee?
It's absolutely done. Not a problem.
Okay. Great. Mr. Kiser, do you have a view on this or thoughts on it?
Just to expand it, it probably -- it might even be helpful if we have a joint signature coming out at least from the Department of the Air Force from our head of contracting activity.
Good.
In order to have a dual signature, it's small business contracting side by side.
Thank you. That's a great suggestion. Thank you. Ms. Buehler?
Yes, I was going to make the same suggestion actually that we have to make sure that our contracting partners are also pushing -- pushing the same message and that we have a consolidated front.
And in the Department of the Army, we're also conducting a small business roadshow training with our contracting workforce. That actually started today.
Oh, good.
And we'll continue in second and into third quarter. And one of the areas we're training on is the 8a program. And we're partnering up with the SBA at certain locations to -- to make that the most effective it can be.
Perfect. Do I have time to ask a couple others?
Go ahead.
All right.
And then, I'm going to turn to Senator Kaine if he wants.
Let me. Mr. Kiser, I want to compliment you and the Air Force. You know, we've had a very big buildup of the Air Force in Alaska with the F-35s, two squadrons F-35s and a whole host of new Air Force personnel at Eielson Air Force Base and other places throughout Alaska. And it was a lot of military construction authorized by this committee.
And we now have, by the way, on time, on budget that the Air Force got two squadrons F-35s bedded down in Eielson Air Force Base during the pandemic, so great job. Great job. You also did a really good job of working with the Corps, the Corps of Engineers that was letting these contracts to build the hangars and everything for the F-35. And a lot of small businesses did quite well in Alaska because the Corps and the Air Force were committed to getting those contracts primarily -- primarily to Alaska based businesses and contractors and unions.
And so, it worked. Do you have any lessons on -- on an example of that working well? Which I thought it worked quite well. I was very involved in the oversight of it, but you guys nailed it. On time, on budget. I think the number was 95 percent of the MILCOM went to Alaskan based companies.
To expand beyond and what they did, I'm not as familiar with those specific, but that is not uncommon with the contracting Air Force contracting working hand in hand with the Army Corps of Engineers on these major MILCOM projects and with reconstruction or new construction. Once again, I will pass your congratulations on with your permission to --
And to the Army Corps as well because they really did a great job.
And to the Army Corps. Absolutely. But this is --
--Picture-perfect.
Absolutely. The experience I have is with Langley Air Force Base following Hurricane Isabel in the '03-'05 time frame, once again, contracting a lot of coordination with the Corps of Engineers. At that time, we are betting down the F-22 at Langley. So once again, a lot of teamwork across the board. Everybody focused on the mission because they understand the importance of it, so not uncommon to us. And I suspect the other services will.
But thank you sir for that --
So, I have two more questions, if that's all right.
The next question is for Mr. Smith. And I'm sure Senator Kaine will have some interest in -- I had breakfast actually with the CNO this morning and we talked a lot about shipyards. We talked a lot about the defense industrial base as it relates to building ships, which you know, that's not necessarily a small business activity, but small businesses can get a lot of the action on that.
But the one area that is a small business, a relatively small business activity is the maintenance and repair of big Navy ships or Coast Guard ships. And there's a lot of opportunity there in the small business sector for smaller shipyards, not the giant ones that are like in Virginia and stuff, but we have some smaller shipyards.
We have a shipyard in Seward, Alaska called JAG that just got a Navy contract. A really, really big deal for these guys. They're going to do repair work. We have a bigger shipyard in Ketchikan that does big Coast Guard overhauls. And can you talk about particularly in this need to get our Navy bigger and better and stronger the ability to use smaller shipyards, probably not for the building, but for the repair and maintenance?
And that way, the big shipyards can build the subs and the LHAs and things like that.
Well, Senator, having grown up on the -- the shipbuilding side of the House, I was Virginia classes construction manager when we delivered the first one. Capacity is going to be your challenge here. Having a dry dock to bring in a guided missile destroyer or a large amphib or an aircraft carrier, you have to have the facilities to be able to do that.
Now, my understanding of the carriers and the nukes are public yard --
That is correct.
But even the CNO was talking about dishing out some of the -- even though it's public yard, you know with the nuke Navy that you can still dish out some of the non-nuke work to small businesses? Is that true?
Absolutely. Absolutely, that's absolutely true. In the past, we would have probably put up an omnibus kind of contract for a very large industry partner to get it all done. And they would subcontract to work out to smalls. And they're going to continue to do that. To break that work out separately and move the platform to a smaller yard, I think there's some coordination there that we have to look at. Not saying that we can't do it, but today, we can park the platform in one place and everybody show up to the ship.
If you're going to take it away from the bigs and move it to a small, well, then that work is going to be segmented and probably not integrated in a fashion that we're accustomed to today. So it's not that we can't do it. I think it'll be different. I think small businesses can benefit from that opportunity.
They're currently benefiting today as subcontractors. And you're talking about prime contracting opportunities in the future, which are construct. I don't see a reason we can't do it. It's going to be more of a coordination. And when does the fleet need that platform back to service? Because if you can do it all in parallel, that's one thing.
But if you're going to make series maintenance activities, that's time that we're talking about marching along at that point, so.
Okay, so that -- that's very helpful.
And you had one more?
I had one more question that's back to Mr. Smith again, but maybe it can be more broadly. We had a small business in Alaska called Tavarius [ph] that won a contract with the Navy to build your mobile cleaning recovery and recycling systems. This is what I was referring to as like a Zamboni for an aircraft carrier.
If you get the hockey analogy and an aircraft carrier or an LHA with a flat deck. And this company developed it on its own and built them, 43 for the Navy. It was really, really, really impressive. We were so proud of them because you know, we don't have that big industrial base up in Alaska. And the Navy, you know, there was some hiccups, right?
There was some back and forth with the contracting officer. We heard at one point suggesting, hey, if you really want to stay in the game, you need to move your business to the lower 48, right? Trust me, I called the Secretary of the Navy on that one saying you have got to be kidding me. And we want to keep this stuff in our state, not encourage them to go. But you know, so companies like this, they get a big contract.
It's great. They kind of base their whole business model on it. But once that contract's over and if it doesn't continue, that's you know, challenging for them. Do you guys look at those kinds of contracts where they build this macrest [ph] as I think they're called or Zambonis for aircraft carriers, but then also can do the maintenance work.
Because that's something that to me gives a company with expertise, the ability to continue doing that. They probably know more about this system since they built it from scratch than anyone else. And I don't think they're ever able to get the maintenance work to be doing that. And it's a little bit more challenging.
So I'm not familiar with that particular case. I will go find out. And --
Yeah, we can provide you with one.
And I'll go respond for the record for -- for that -- that inquiry.
I'm curious, a Zamboni for an aircraft carrier that piqued my attention.
Well, I mean, the zip up -- they bring up all the -- any kind of material on the flight deck that can hurt the --
I love it.
Particularly with the fifth gen aircraft and hurt the systems, so it's really sophisticated stuff.
Sure. And one of the things that we encourage small businesses to be able to do is do you have a commercial outlet for your opportunity as well along with the maintenance? Because I'm sure there's airports, I'm sure there's runways nearby where that capability can be provided elsewhere. Counting on DOD to be your soul customer, that's an interesting market, but I think if you had many more people buying from you, that's a more lucrative market, so. But I will definitely go endeavor to investigate that one further.
Thank you.
Okay. We have to make sure that we continue to stay the course in modernizing these facilities because there is no question that we need to enable them to be become a lot more efficient. Because the most recent report says that that is taking far longer to repair our naval ships and get them ready for deployment.
So that needs to happen. And then, at a time when we need to really shore up our ability to be innovative and competitive with a near peer competitor, i.e. China, I would like to know if each of you fully utilized the SBIR and SCTR [ph]programs to really push innovation to small businesses? Do you do that?
Ms. Bueller?
Yes, Senator. The Army absolutely uses the SBIR and the SCTR programs to develop innovation. Not only do we use the programs properly, we've developed transition broker teams along eight different lines of effort, you know, linked to specific technologies and capability gaps that we're trying to -- to fill.
So, we're trying to make the program more effective for us to really target, you know, those high critical areas. We're also using it as part of our -- what we call the X tech search. This is a shark tank like competition where companies will propose a certain technological solution. We will give them small contracts and take them through a successively down select competition, you know, over a period of time until we get to a winner.
So we're utilizing the SBIR authorities to also facilitate that, so absolutely part of our toolkit.
Mr. Smith?
No different from the Army and probably no different from the Air Force in that regard. That's our fertile feeding ground for future opportunities. Future technology comes from that area. Having the right mission set for what you need to counter in the future is what it's all about and having industry partners working in that vein, that's -- that's where we are.
And we're spending transition dollars to get that capability into the fleet, not just doing research and development for the sake of doing research and development.
Oh, definitely. We need to make sure that it's of some utility. Mr. Kiser, do you do the same thing? Do you really push for this kind of innovation and support?
Absolutely, Senator Hirono. And once again, just adding on similar activities, but also, in fact, earlier this week, we execute a lot of our cyber sitter dollars through an organization called AF Works and Space Works. Met earlier -- Monday afternoon of this week, with the new leader of that organization, Colonel Lee to talk about how their restructuring the program.
A lot of their activity over the last couple of years has been toward just kind of open topics. Well, they're now streamlining that and focusing. They'll have at least 40 percent of their research ideas and small business awards focused on operational imperatives that you've probably heard Secretary Kendall talk about, the things that we really need to get after in order to be very competitive, shall we say.
And so, that -- there's -- so we're meeting with them to make sure that what they're doing research on is not just necessarily open or basic research, but rather focused research on the things that we need for our program executive officers, for our weapons systems, so they make sure that it's really making a difference.
And so the PE -- the program executive officers, PEOs are becoming much more involved in the cyber process as well. And so, we've been awarding quite a bit. Our cyber dollars have gone from about $300 million in FY '18 to -- we're about $1 billion this year, so thank you for that continued support.
Yeah, I just wanted to make sure that we get it on the record how important these two programs are, because there are some people who don't think that it's important to reauthorize SBIR or SCTR. Thank you. Thank you very much to all of you for coming and talking with us. And with that this hearing is adjourned.
Mr. Jimmy Smith
22 March 2023
Subject specific information for the media
Events or announcements of note for the media
Official Navy statements
Given by Navy leadership
Updates on sailors from around the Fleet
Google Translation Disclaimer