DoD small business chief presses to revive innovation fund

WASHINGTON ― The Biden administration’s next budget request needs to revive a special fund to help small businesses with innovative ideas work with the Pentagon, a top department official said Tuesday.

The push to bring back the Rapid Innovation Fund, which Congress hasn’t financed since 2019, was one of several recent moves aimed at lowering barriers for small businesses detailed by the director of the Pentagon’s Office of Small Business Programs, Farooq Mitha.

At a virtual event hosted by the National Defense Industrial Association, Mitha said he’s spearheading efforts to consolidate management of the Pentagon’s many small-business programs, which can confound business owners with their different operating styles, funding streams and points of contact.

“One of the first things that I saw when I came into this job was that our small business programs and activities were dispersed all across the department,” Mitha said. “I kept hearing feedback … about how it’s hard to figure who is responsible for what … so we really took that to heart.”

The Pentagon released its long-awaited Small Business Strategy last month, touting it as a means to create more opportunities for small businesses, as well as boost defense supply chains, market competition, the national economy and the military’s advantages.

The number of small business participating in the American defense-industrial base declined by more than 40% in the past decade. As of 2021, small businesses made up 73% of all companies that did business with the Defense Department, and 77% of the research and development companies that did so, according to the department’s data.

Small businesses more broadly are facing a mix of old and new challenges in 2023, including inflation, hiring and retention challenges, coupled with fears that the economy is heading into a recession. Defense trade groups say the Pentagon’s dense regulations can discourage small businesses from working with the military.

As part of the Small Business Strategy’s unified management structure of small business programs and activities, Mitha’s office in October took over the 96 government contracting help centers from the Defense Logistics Agency. Their names changed from Procurement Technical Assistance Centers to Apex Accelerators.

Mitha envisions the Apex Accelerators to be “the front door to industry” ― an access point for aid like the Pentagon’s Mentor-Protégé program, which pairs established defense companies with small businesses; Small Business Innovation Research grants, intended to help companies and research institutions develop promising technologies; and the Rapid Innovation Fund.

The Rapid Innovation Fund, which received more than $2 billion over its nine-year life span, was meant to provide seed funding for promising technologies at smaller companies. But amid criticism that it was a form of congressional earmarks, the program has gone unfunded.

Mitha said Congress established the fund to help bridge the so-called valley of death, which refers to how red tape keeps defense technologies from transitioning from prototypes into actual products for the military. The program was recently moved from the Office of the Under Secretary for Research and Engineering into the Office of Small Business Programs, which will be “planning for it,” he said.

“If we don’t have those programs on stable footing in terms of authorization and funding, we’re not sending the right signal to industry to participate and we’re not giving industry the right avenues to which through which they can participate,” Mitha added.

Among other consolidation challenges, the Pentagon acquisition workforce’s 750 small business specialists don’t have standardized training, and the Pentagon lacks a single web portal for small businesses. Mitha said he’s working to fix both.

There’s been some consolidation of the Pentagon’s web presence for small businesses, but Mitha said the goal is a modern portal that easily directs small businesses to potential customers and other resources. “So we’re looking to roll that out as well later this year,” he explained.