Pentagon advisers want DoD to build out agreements between small and large defense businesses

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For the past 30 years, Congress has continued to renew the Defense Department’s Mentor-Protégé Program — but only as a pilot.

The program, which pairs up established defense companies with small businesses for mutually beneficial gains, has been continually saved from the chopping block by lawmakers since 1991.

Now, after an in-depth look from outside business experts, the Defense Business Board is recommending Congress make the program permanent once DoD makes a few tweaks.

Farooq Mitha, director of DoD’s Office of Small Business Programs, told members of the board on Tuesday that small business involvement in Pentagon contracting is more important than ever as the military works to counter near-peer adversaries like China and Russia.

However, he said, smaller businesses struggle finding access with DoD’s extra security measures and oversight. Currently, DoD’s contracting with small businesses is declining.

“DoD is close to rolling out the Cyber Security Maturity Model (CMMC) 2.0. We came into this administration trying to make things easier for small businesses, but there’s only so much that can be done,” Mitha said. “The National Defense Authorization Act says you can’t have Chinese telecommunications equipment. It’s much easier for a large business to comply.”

Mitha said while those regulations are much needed, they are prohibitive to small businesses and exemplify the need for the Mentor-Protégé Program (MPP).

The DBB study found that the MPP program had a positive impact on helping small businesses work with DoD through larger businesses

“The annual protégé surveys from the Defense Contract Management Agency for 2012 to 2021 show significant increases in revenues, contract awards, and employment at the protégé firms,” the report states. “In addition, over half of all of the MPP’s 1,200 former protégés continue to serve as suppliers to the DoD and represent approximately 5% of DoD’s $83.4 billion in small business contracting.”

Former protégés make up about $4 billion in current DoD small business contracts. Current protégé contracts come to about $162 million.

The MPP program allows mentors to make payments to protégés, which DoD will reimburse. Mentors can award noncompetitive subcontracts to their protégés, lend money to the smaller firms and provide other types of assistance.

The goal is to “provide incentives for larger businesses to enhance the capabilities of eligible disadvantaged small business concerns to perform as subcontractors and suppliers under DoD contracts and other contracts and subcontracts; and increase the participation of such business concerns as subcontractors and suppliers under DoD contracts, other federal government contracts, and commercial contracts,” according to the report.

DoD has allocated about $30 million to the program in the last few years for reimbursable funds.

Mitha noted that DoD has seen an increase in protégé employee numbers, revenue, contract awards and a bump in the number of innovative technologies added to DoD’s repertoire by the companies.

The MPP isn’t without its faults though. The authors of the report tell DoD and Congress to shore up a few issues with the program to make it more effective.

Despite making it a permanent fixture, the DBB study suggests keeping better data on the program.

“The administration and management of the MPP has not sufficiently evolved over three decades, particularly when it comes to metrics, record keeping, automation, reporting, data analytics, and dashboards,” the authors wrote. “DoD has not ‘e-enabled’ its MPP and relies on archaic, flat files (i.e., PDFs). This lack of automation and modern electronic record-keeping burdens the government employees that manage and oversee the program as well as the mentor and protégé companies with additional bureaucracy, slowing approval of new agreements.”

The board also suggests creating a single office of oversight for small businesses programs within DoD to provide sufficient resourcing.

Finally, the board recommends increasing the duration of the program from two years to three.

“The two-year duration is not sufficient to consistently enable the protégé to develop the skills necessary to independently become a direct supplier to the DoD,” the report states. “The Small Business Administration’s Office of Advocacy reported that small businesses fail at a disproportionately high rate, with nearly a third failing within the first two years of operation and over 50% failing within the first five years. The three-year duration will provide the greatest opportunity for the protégé to benefit from its work with the mentor and position itself for longer term success as a DoD supplier.”

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