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Analysis of Perceived Challenges Experienced by Small Businesses Competing for Department of Defense Contracts Open Access

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Department of Defense (DoD) leadership released the Better Buying Power initiatives to help DoD do more with less. A key tenet of these initiatives is to increase small business roles in DoD contracting opportunities. Reasons for increasing small business opportunities include promoting competition and fostering innovation. DoD has recognized that it must attract and retain small businesses in order to continue to create and maintain world-class weapon systems. However, the department has struggled to attract and retain small businesses on DoD contracts. DoD has missed its small business prime contracting goal for seven years in a row before meeting it in 2014 at 103% of the goal (Serbu, 2015). Previous studies indicate many challenges exist which may be preventing small businesses from desiring to pursue contracts with the DoD. This research builds on previous studies by taking the previously identified challenges and determining how common they are among small businesses that are interested in or have conducted business with the DoD. A survey was given to 681 small businesses to determine their perceptions of challenges preventing them from desiring to pursue additional DoD contracts. The respondents were given 26 Likert Scale items and asked to rank the importance of each in their decisions to not pursue additional DoD contracts. The survey results show most of the challenges surveyed are perceived to exist to a wide extent. The highest ranked factor was ranked as either somewhat or very important by 69% of respondents and the lowest ranked factor was rated as either somewhat or very important by 31% of the respondents. At least 50% of small businesses found 19 of the 26 factors to be either somewhat or very important. Challenges related to DoD contract requirements were found to be less widespread when compared to challenges related to the source selection and contract award process and challenges experienced during contract execution. There is also statistical evidence to support smaller and newer small businesses perceive DoD business to be more challenging than their larger and more experienced competitors. However, this turned out to be the case for only subset of the factors explored in the survey.

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