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Enhancing Small-Business Opportunities in the Dod THE ARTS This PDF document was made available from www.rand.org as a public CHILD POLICY service of the RAND Corporation. CIVIL JUSTICE EDUCATION ENERGY AND ENVIRONMENT Jump down to document6 HEALTH AND HEALTH CARE INTERNATIONAL AFFAIRS NATIONAL SECURITY The RAND Corporation is a nonprofit research POPULATION AND AGING organization providing objective analysis and effective PUBLIC SAFETY solutions that address the challenges facing the public SCIENCE AND TECHNOLOGY and private sectors around the world. SUBSTANCE ABUSE TERRORISM AND HOMELAND SECURITY TRANSPORTATION AND INFRASTRUCTURE WORKFORCE AND WORKPLACE Support RAND Purchase this document Browse Books & Publications Make a charitable contribution For More Information Visit RAND at www.rand.org Explore the RAND National Defense Research Institute View document details Limited Electronic Distribution Rights This document and trademark(s) contained herein are protected by law as indicated in a notice appearing later in this work. This electronic representation of RAND intellectual property is provided for non-commercial use only. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. Permission is required from RAND to reproduce, or reuse in another form, any of our research documents for commercial use. For information on reprint and linking permissions, please see RAND Permissions. This product is part of the RAND Corporation technical report series. Reports may include research findings on a specific topic that is limited in scope; present discus- sions of the methodology employed in research; provide literature reviews, survey instruments, modeling exercises, guidelines for practitioners and research profes- sionals, and supporting documentation; or deliver preliminary findings. All RAND reports undergo rigorous peer review to ensure that they meet high standards for re- search quality and objectivity. TECHNICAL REPORT Enhancing Small-Business Opportunities in the DoD Nancy Y. Moore, Clifford A. Grammich, Julie DaVanzo, Bruce Held, John Coombs, Judith D. Mele Prepared for the Office of the Secretary of Defense Approved for public release; distribution unlimited NATIONAL DEFENSE RESEARCH INSTITUTE The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community under Contract W74V8H-06-C-0002. Library of Congress Cataloging-in-Publication Data is available for this publication. ISBN 978-0-8330-4580-5 The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. © Copyright 2008 RAND Corporation All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from RAND. Published 2008 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface This document was prepared in response to a congressional request for a report identifying impediments to small-business owners in contracting or subcontracting with the Department of Defense (DoD). The DoD in turn authorized RAND to undertake this study in February 2008, and the study was completed in May 2008. As requested, the report includes, among other topics, analyses of available data on t small-business size thresholds and how these affect the ability of a firm to work for the DoD t contract bundling t the distribution of small-business subcontracts between professional services and research and development t transitioning Small Business Innovation Research programs to procurement t the effects of the DoD Vendor Pay system on small business t the effectiveness of the Mentor-Protégé Program t impediments to the success of businesses that graduate from small-business programs or seek to become larger businesses. This research was sponsored by the DoD Office of Small Business Programs and was con- ducted within the Acquisitions and Technology Policy Center of the RAND National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, the Unified Combatant Commands, the Depart- ment of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Com- munity. This research should be of interest to persons concerned with small-business policy and acquisition policy. For more information on RAND’s Acquisition and Technology Policy Center, contact the Director, Philip Antón. He can be reached by email at [email protected]; by phone at 310-393-0411, extension 7798; or by mail at the RAND Corporation, 1776 Main Street, P. O. Box 2138, Santa Monica, California 90407-2138. For more information on this research, con- tact the project leader, Nancy Moore. She can be reached by email at [email protected] or by phone at 310-451-6928. More information about RAND is available at www.rand.org. iii Contents Preface ........................................................................................................... iii Figures ........................................................................................................... ix Tables ............................................................................................................ xi Summary .......................................................................................................xiii Acknowledgments ........................................................................................... xvii Abbreviations .................................................................................................. xix CHAPTER ONE Small Business and the Department of Defense .......................................................... 1 CHAPTER TWO DoD Prime Contract Purchases from Small Businesses as Defined by Government Threshold Sizes ............................................................................................. 5 Small Businesses in DoD Industries ........................................................................... 5 Future Trends ...................................................................................................12 Conclusion .......................................................................................................15 CHAPTER THREE The Effect of Bundling on Small-Business Opportunities .............................................19 Commercial Practices ...........................................................................................19 Government Practices ......................................................................................... 23 Prevalence of Bundling in DoD Procurement .............................................................. 24 Conclusions .................................................................................................... 27 CHAPTER FOUR Subcontracting in Professional Services and Research and Development ..........................29 Data on Prime Contracts and Subcontracts for Professional and R&D Services ...................... 30 RDT&E ...................................................................................................... 30 Professional Services ..........................................................................................33 Other Subcontracting Data ................................................................................. 34 Continuing Issues and Implications ......................................................................... 36 CHAPTER FIVE Obstacles to Technology Transition in the SBIR Program ............................................39 SBIR Process .....................................................................................................39 Transfer of SBIR Technology to the DoD Acquisition System ...........................................41 General Accounting Office Evaluations ....................................................................41 v vi Enhancing Small-Business Opportunities in the DoD National Research Council Evaluations ................................................................... 43 RAND Evaluations .......................................................................................... 46 Small Business Technology Council Evaluation ......................................................... 46 Addressing the Impediments to DoD SBIR Technology Transition......................................47 Additional Research Needs ................................................................................... 48 CHAPTER SIX The Mentor-Protégé Program ...............................................................................51 Program Development
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