The Honorable Jack Reed
Senate Committee on Armed Services
228 Russell Senate Office Building
Washington, D.C. 20510

The Honorable Roger Wicker
Senate Committee on Armed Services
228 Russell Senate Office Building
Washington, D.C. 20510

The Honorable Mike Rogers
2216 Rayburn House Office Building
Washington, D.C. 20515

The Honorable Adam Smith
2216 Rayburn House Office Building
Washington, D.C. 20515

 

Dear, Chairman Reed, Chairman Rogers, Ranking Member Wicker, and Ranking Member Smith: On behalf of the undersigned organizations, we express our deep disappointment in the fiscal 2024 National Defense Authorization Act (NDAA). The FY 2024 NDAA fell well short of any goal to strengthen opportunities for millions of small business owners and represents an abdication of the federal government’s commitment to small and minority-owned businesses.

In February 2022, the Under Secretary of Defense for Acquisition and Sustainment reported to Congress the shrinking number of businesses in the Defense Industrial Base (DIB) and the potential risks to national security. The report stated, “promoting competition to the maximum extent possible is a top priority for the Department.” This NDAA falls well short of meeting such a commitment.

The report further recognized that “consolidations that reduce required capability and capacity and the depth of competition would have serious consequences for national security.” To mitigate these challenges, and to “increase competition and build domestic capacity, especially from small businesses, and to close gaps in the domestic national security and technology industrial base,” the report made five recommendations: strengthen merger oversight, address intellectual property limitations, increase new entrants, increase opportunities for small businesses, and implement sector-specific supply chain resiliency plans.

The Department is at a critical stage, as the report also identified that “over the past decade, small businesses in the DIB shrunk by 40%… the data shows that if the DIB continues along the trend, DoD could lose an additional 1,500 suppliers over the next 10 years. This downward trend is a national security and economic risk to the nation that could lead to a decline in key domestic capabilities and requires swift action to reverse.”

These concerns around the shrinking number of small businesses competing for DoD contracts were reiterated in a December 12, 2023, letter from House Small Business Committee Chairman Roger Williams and Ranking Member Nydia Velazquez to Defense Secretary Lloyd Austin. While the Senate Committee on Small Business and Entrepreneurship and House Small Business Committee have been working diligently to increase the participation of small and minority businesses in the defense industrial base, it is disappointing to see that those efforts were not reflected in the final version of the 2024 NDAA.

While the Department may report that “DoD’s small business programs play an instrumental role in diversifying the defense supply chain and bringing new entrants, specifically from underserved socio-economic groups, into the defense marketplace,” when it was time for Congress to take action to support these programs and grow minority business participation in the DIB, the 2024 NDAA failed to meet the challenge.

The Small Business Administration (SBA) administers programs, particularly the 8(a) Business Development program, which was created to help socially, and economically disadvantaged entrepreneurs better compete in the federal procurement marketplace. The training, technical assistance, mentoring, and guidance provided by the 8(a) program over the past 50 years have been critical to providing minority-owned firms with economic opportunity while breaking down longstanding barriers in government contracting.

Unfortunately, there have been several recent attacks on Federal supplier diversity programs that are having a chilling effect on the number of minority-owned businesses engaged in the public sector marketplace. In response to one recent case, the SBA temporarily suspended applications to the program and now requires those already admitted to the 8(a) program to effectively reapply, among other steps.

Whereas the 8(a) program has helped level the playing field within the federal contracting marketplace – providing entrepreneurs from historically underserved communities the opportunity to grow their businesses, create jobs, and contribute to their local economies while enhancing performance across our federal government – these court challenges represent significant steps backward in those efforts.

It is more important than ever for our government to reaffirm its commitment to these supplier diversity programs and make clear that federal agencies want to do business with small and minorityowned businesses. Unfortunately, instead of reaffirming these efforts and enacting policies to meet the mounting needs at DoD, Congress stripped several amendments that were carefully crafted with input from the small business community, advocated for by the House and Senate Small Business Committees and passed as a part of either the House or Senate versions of the FY2024 NDAA. These provisions would:

• increase sole source authority for traditional 8(a)s, as well as women-owned, Service-Disabled Veteran-Owned, and HUBZone businesses to $8M for non-manufacturing contracts and to $10M for manufacturing contracts adjusted for inflation in line with FAR inflations;
• give the SBA a seat at the FAR Council; and
• direct the Secretary of Defense to issue guidance on ways that small businesses can better compete for DoD contracts.

The stripping of these important provisions, along with several actions to hamstring DEI offices and personnel at DoD that were sustained in the final version of the bill, represents a significant and potentially catastrophic step back from the support that the DoD government has shown for small and minority-owned businesses. This will have a deleterious effect on the small and minority business community, create greater risks throughout the DIB, decimate the federal supply chain resiliency, and further destabilize an already fragile national economic recovery.

While we are disappointed in FY2024 NDAA’s retrenchment from supporting minority-owned businesses, we are hopeful that with our encouragement you will recommit to meeting the expectations of all Americans in pursuit of their entrepreneurial dreams and address the current and growing shortfalls of competition in the Defense Industrial Base.

Sincerely,

U.S. Black Chambers, Inc.
United States Hispanic Chamber of Commerce
National Asian / Pacific Islander American Chamber of Commerce and Entrepreneurship (National ACE)
National Gay & Lesbian Chamber of Commerce
National Minority Supplier Diversity Council
Women Impacting Public Policy (WIPP)

Cc: The Honorable Jeanne Shaheen, Senate Committee on Small Business and Entrepreneurship
The Honorable Joni Ernst, Senate Committee on Small Business and Entrepreneurship
The Honorable Roger Williams, House Small Business Committee
The Honorable Nydia Velazquez, House Small Business Committee