Podcast Show Notes
2025-09-16 Federal Market Insights Episode 24 — Session Overview
WPI Podcast Episode 24 Summary
Are you part of the Old DIB or the New DIB? The battlefield is starting to change and so might DoD’s needs.
The Defense Industrial Base (DIB) has been a part of the United States from its inception approximately 250 years ago.
“The U.S. defense industrial base (DIB) is the network of organizations, facilities, and resources that provides the U.S. government—particularly the Department of Defense (DOD)—with defense-related materials, products, and services.
The DIB encompasses a wide variety of entities, including commercial firms operated on a for-profit basis, not-for-profit research centers and university laboratories, and government-owned industrial facilities. It provides everything from large, technologically sophisticated weapon systems and highly specialized operational support to general commercial products and routine services. By supplying and equipping the armed services, the DIB enables the United States to execute national strategy and develop, maintain, and project military power.”1
In the beginning the U.S. relied upon artisans to manufacture weapons and provide other resources such as food, horses and textiles.
Artisan manufactured items were functional. A drawback of this system was lack of interchangeability. It was Eli Whitney, the creator of the Cotton Gin who proposed shifting the supply equation from being reliant upon artisans who were only able to produce modest numbers of unique items to greater volumes of goods whose parts were interchangeable.
The need for America to flex its Industrial might was absolutely needed throughout World War II. The amazing part of the effort was how industry took on and conquered these challenges. Quite literally the country’s industry began from a standing start and evolved to an industrial engine which was comparable to none. Her industrial complex rose to the challenge of producing ships, airplanes, tanks and the ammunition in the vast quantities needed for victory.2 Not all efforts were conducted on such a grand scale. Smaller firms offered their services too. One example was a Wisconsin barge builder located in Manitowoc, who offered to build submarines.3 This company had the workforce, the skills and the necessary equipment to succeed in this endeavor.
Weapons of war and commercial products are loosely connected. Some weapons are designed and developed specifically for military purposes. Others take advantage of commercial developments. Often, commercial advances they were adopted into military products. One example might be in the area of electronics. Vacuum tubes were replaced by transistors which were were subsequently replaced by microchips.
The decline in the strength of small business participation in the DIB is seen as an issue. As noted in DoD’s Small Business Strategy, Small Business participation has dropped by 40% over the last 10 years.4
The specific reason for this drop is not mentioned. However, it can be assumed that any number of factors have contributed to this decline. One contributing factor may be the use of the internet. Prior to the internet, local businesses supported base requirements. Solicitations were available on cork boards and businesses had access to this information. The internet changed this local relationship and possibly displaced local businesses as sources of supply. The internet increase competition. It allowed companies located throughout the country to participate. It is safe to say that some companies succeeded in this model and others did not. Another change that may have impacted small businesses was DLA’s change from quarterly procurements to annual procurements and annual procurements that were IDIQ. When DLA was purchasing on a quarterly frequency, the orders may have been smaller, but companies had multiple opportunities to receive an award(s).
In addition to changes in the past, small businesses today, face additional challenges. Cybersecurity is arguably the most demanding from many perspectives – cost, technical, time and effort. Companies also face the challenge of size. Small can be good and can create advantages. However, smaller firms may lack capacity, resources and financing.
All firms but especially small businesses need to be aware of FOCI – Foreign Ownership Control or Influence. FOCI concerns can arise from investments, location, and supply chain. There are many types of threats that can arise. Of these, investments and/or acquisitions may need scrutiny. This is especially true depending on the role the company holds in the supply chain. If the company handles critical technology or sensitive information, those transactions require due diligence from a FOCI perspective. DoD has recognized that investments and acquisitions can be a source of FOCI threats. To mitigate, these threat, albeit typically for larger transactions, DoD operates the Office of Strategic Capital.5
Together these factors can become impediments which create friction for small businesses wishing to enter this marketplace and become a member of the DIB.
Another factor may be the strength of the commercial sector. Often, when the commercial market is good businesses have access to a safe haven with less restrictions. Consequently, when the commercial sector is vibrant, it may be more attractive that trying to jump through all of the hurdles associated with the DoD Marketplace.
There are programs designed to assist small businesses. One is the Apex Accelerator program. WPI is Wisconsin’s Apex Accelerator. There are also two Mentor Protégé Programs. One managed by SBA6, 7 and the other managed by DoD. 8, 9
Another impediment can be identifying sources of supply that comply with the different Buy America(n) regulations. To assist with this issue of identifying sources, SBA launched its reshoring initiative. This is a cost free and public website that provides three resources to use to identify U.S. sources of supply.10
Understanding what defines the DIB is important. Understanding threats to the DIB and especially small businesses is also important. It is also important to not become complacent and believe that threats are small. It is easy to believe that machine shops have a critical place in providing necessary repair parts. It is easy to focus on the past and not see how 3d printing or additive manufacturing are beginning to be adopted and in some instances replace machined goods. Change can sometimes be difficult to recognize. This is especially true if the change occurs below the threshold of recognition. When the change becomes easily recognizable, it may be too late. At that point, the table is turned and the historically safe approach has been replaced. A company can wake up one day with the same question asked in the book – Who Moved My Cheese.
Companies need to ask, what happens if …?
Today, 3d Printing, additive manufacturing, Drones and artificial intelligence to name a few technologies are beginning to gain traction as primary resources. If these are all new technologies, then they do not pose significant threat to current contractors. However, if these technologies and others can be used in place of current technologies or services, then those businesses need to pay attention to these shifts and plan accordingly.
1 – https://www.congress.gov/crs-product/R47751
2 – Freedom’s Forge: How American Business Produced Victory in World War II; by Arthur Herman (Author)
3 – Fresh Water Submarines: The Manitowoc Story;by Arthur Herman (Author)
4 – DoD Small Business Strategy; January 2023, https://media.defense.gov/2023/jan/26/2003150429/-1/-1/0/small-business-strategy.pdf
5 – DoD Office of Strategic Capital – https://www.cto.mil/osc/
6 – SBA Mentor-Protégé program | U.S. Small Business Administration
7 – SBA Active Mentor Agreements – Active mentor-protege agreements | U.S. Small Business Administration
8 – DoD MPP Portal – https://business.defense.gov/Programs/Mentor-Protege-Program/MPP-Resources/
9 – DoD List of Active MPP Participants – See footnote 8
10 – SBA Reshoring website – Make Onshoring Great Again – https://www.sba.gov/priorities/american-manufacturers/make-onshoring-great-again-portal