Small Business and Strategic Sourcing: Lessons from Past Research and Current Data
RAND NATIONAL DEFENSE RESEARCH INST SANTA MONICA CA
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The Department of Defense DoD must meet a variety of goals in purchasing more than 350 billion in goods and services every year. Above all, of course, it must meet the paramount goal of fulfilling warfighter requirements but, in doing so, it has other statutory and policy goals to meet as well. One goal is to spend approximately 23 percent of its prime-contract dollars for goods and services with firms identified as small within their industry. More recently, DoD has also pursued strategic-sourcing goals through the use of best buying practices as is common practice within leading enterprises. This document explores the challenges DoD might face in implementing strategic sourcing practices in ways that will not conflict with its small-business contracting goals while making its purchasing more effective and efficient. Small-business goals, which can involve larger numbers of suppliers, may be in tension with strategic-sourcing goals that favor fewer suppliers. In drawing from the wide variety of RAND research on related topics, we summarize the development of small-business procurement policies and their application to DoD, research on strategic-sourcing practices, and what both mean for likely future budgetary trends in DoD.
- Administration and Management
- Logistics, Military Facilities and Supplies