Restoring America’s Industrial Base: The Role of Small Businesses in National Security

Small Business Administration OversightHouse Small Business · June 3, 2026 · 119th Congress
The House Small Business Committee held this hearing, "Restoring America's Industrial Base: The Role of Small Businesses in National Security," to examine why the number of small firms contracting with the Department of Defense has declined even as defense spending and small-business contract dollars have risen. Begins at ▶ 0:23:08
Transcript
Highlights

Title

Small business participation in America's shrinking defense industrial base

Purpose

The House Small Business Committee held this hearing, "Restoring America's Industrial Base: The Role of Small Businesses in National Security," to examine why the number of small firms contracting with the Department of Defense has declined even as defense spending and small-business contract dollars have risen. Four witnesses testified on acquisition regulation, the "second valley of death" facing mid-sized firms, IT contracting, and women-owned small business participation, with members from both parties largely agreeing on the need to streamline procurement rules, protect the "rule of two," and support programs like SBIR and SDVOSB certification. Begins at▶ 0:23:08

Who spoke

• Chairman Williams (R-TX)▶ 0:23:08: Opened the hearing, argued the defense industrial base is dangerously concentrated in a handful of large companies▶ 0:24:30, and later pressed witnesses on how the FAR overhaul, SBIR, and veteran-owned firms can strengthen small-business participation▶ 0:56:21.

• Ranking Member Cisneros (D-CA)▶ 0:26:43: Said DoD obligated $755 billion in FY2024 contracts with $97 billion (26.3%) going to small firms▶ 0:26:43, noted the small-business share fell to 25.7% even as the number of eligible small firms roughly halved▶ 0:27:34, and criticized SBA "gutting" its workforce and a DoD social-media video he called "factually inaccurate" and intimidating to small firms▶ 0:29:48.

• Mr. Moshe Schwartz, NDIA▶ 0:36:15: Testified small businesses make up 70% of the defense industrial base and 50–55% of the DoD subcontractor base▶ 0:36:38▶ 0:37:32; cited a 43% drop in small businesses receiving DoD contracts from FY2011–2020 despite obligations rising 15%▶ 0:37:58, and proposed shared SCIF space, streamlined subcontracting rules, and better SBIR debriefings▶ 0:39:57.

• Mr. Daniel Jaworowski, Infinity Systems Engineering▶ 0:41:30: Described a "second valley of death" for mid-sized firms too large for small-business set-asides but unable to compete against multibillion-dollar primes▶ 0:42:25; said nearly a dozen privately held Colorado Springs defense firms have sold to larger firms or private equity in six years▶ 0:43:26, and called for new size-standard tiers and penalties for frivolous bid protests▶ 0:45:36.

• Mr. Anthony Closson, Colossal Contracting▶ 0:46:40: A veteran-owned IT VAR founder who said achieving CMMC certification cost significant investment and time▶ 0:47:38▶ 1:19:06, urged raising the SBA's 150-employee size standard to at least 300▶ 0:49:26, and praised the codified "rule of two"▶ 0:50:23.

• Ms. Angela Dingle, Women Impacting Public Policy▶ 0:51:13: Said agencies awarded a record $183 billion in prime contracts to small businesses in FY2024, even as firms doing that work fell from about 121,000 in 2009 to 63,000 in 2022▶ 0:52:09; said women-owned small businesses won $31.7 billion in FY2024 contracts▶ 0:54:24, and warned SBA staffing cuts and unpredictability are driving firms out▶ 1:01:56▶ 1:25:01.

• Mr. Alford (R-MO)▶ 1:05:52: Asked Jaworowski about pursuing SBIR awards after prime subcontracts▶ 1:08:09 and Schwartz how Congress can position small businesses for the proposed $1.5 trillion FY defense budget▶ 1:09:15.

• Ms. Goodlander (D-NH)▶ 1:11:05: Noted the U.S. had 51 prime defense contractors in 1993, down to five within seven years▶ 1:11:05, and pressed Jaworowski and Closson on the "second valley of death" options of selling to a prime or private equity▶ 1:12:58▶ 1:14:14.

• Mr. Weed (R-WI)▶ 1:16:10: Chair of the Subcommittee on Contracting and Infrastructure; asked about CMMC compliance costs, which Jaworowski put at potentially several hundred thousand dollars▶ 1:17:19, and about "overclassification" of unclassified information as CUI▶ 1:18:12.

• Dr. Morrison (D-MN)▶ 1:21:25: Highlighted Minnesota firm Operative X's AI-based battlefield triage technology▶ 1:21:54 and asked Dingle how federal workforce programs can better align with small businesses on AI adoption▶ 1:22:49.

• Mr. Fuller (R-GA)▶ 1:27:09: Asked Closson about advice for veterans pursuing SDVOSB certification, noting concerns about veteran suicide and loss of purpose▶ 1:27:35, and asked Schwartz to rate the industrial base's health, prompting Schwartz's comment that reverse-engineered Iran-strike drones illustrate the acquisition system's mismatch with current needs▶ 1:29:37▶ 1:30:11.

• Mr. Tran (D-CA)▶ 1:32:01: Said DoD awarded nearly $500 billion in contracts in FY2025 with only about a quarter going to small businesses, a decline from the prior year▶ 1:32:58, and asked Dingle and Closson about contract structuring and delayed funding disbursements▶ 1:34:16▶ 1:35:54.

• Ms. Van Dyene (R-TX)▶ 1:37:25: Touted her Small Business Regulatory Reduction Act, passed by the House but stalled in the Senate▶ 1:38:01; Schwartz responded with a "kosher pizza store" analogy on how declining competition removes pressure to improve service▶ 1:39:11.

• Mr. Ochelski (D-MD)▶ 1:42:04: Said SBA's Office of Government Contracting and Business Development was reduced by 60%▶ 1:43:04 and asked Dingle whether SBA's new unified certification portal, deployed in 2024, is functioning well for applicants▶ 1:44:19.

• Ms. Sculton (D-MI)▶ 1:52:32: Cited a 23% drop in firms competing for DoD awards and a 32% drop in sub-$1-million contract awards▶ 1:53:14; discussed her AI WISE Act to help small businesses adopt AI for federal proposals▶ 1:54:39.

• Mr. Petronis (R-FL)▶ 1:57:35: Asked witnesses what government is doing right or wrong to help transitioning veterans start small businesses▶ 1:58:04; Closson and Jaworowski both said military transition programs offer little guidance on entrepreneurship▶ 1:59:04▶ 2:01:29.

• Mr. Jack (R-GA)▶ 2:03:10: Asked Schwartz why it's harder for small businesses to contract with government▶ 2:03:36 and asked Jaworowski about competing without an SBA socioeconomic certification▶ 2:05:40.

Key moments

• Cisneros said small-business DoD contract share fell to 25.7% year-over-year even as the number of small businesses in the contracting ecosystem "almost halved"▶ 0:27:34▶ 0:28:04.

• Schwartz cited Secretary Hegseth calling DoD "impossible to deal with, a bad customer" that changes requirements year after year▶ 0:38:22.

• Jaworowski disclosed nearly a dozen privately held Colorado Springs defense firms have sold to larger companies or private equity in the past six years, shrinking the industrial base▶ 0:43:26.

• Dingle reported small-business firms fell from roughly 121,000 (2009) to about 63,000 (2022) even as prime contract dollars hit a record $183 billion in FY2024▶ 0:52:09.

• Goodlander noted prime defense contractors dropped from 51 to just five between 1993 and roughly 2000 due to Pentagon-blessed consolidation▶ 1:11:05.

• Schwartz said the drones used in the recent Iran strike were reverse-engineered from commercial technology, illustrating the acquisition system's mismatch with modern threats▶ 1:29:31▶ 1:30:11.

• Closson and Jaworowski agreed CMMC compliance can cost "several hundred thousand dollars," and Jaworowski said reaching compliance took five years even with early investment▶ 1:17:19▶ 1:17:47.

• Van Dyene's Small Business Regulatory Reduction Act passed the House in December but remains stalled in the Senate▶ 1:38:01.

• Ochelski said SBA's Office of Government Contracting and Business Development staffing was cut by 60%, reducing small-business support▶ 1:43:04.

• Dingle described a business owner who told her he'd "be out of business by May" after early-2025 executive orders, and said Doge-related actions have "completely wiped out" some owners▶ 1:25:15.

Metadata

CommitteeHouse Small Business
Chamber / CongressHouse · 119th Congress
DateJune 3, 2026
TypeHearing
Witnesses
Ms. Angela Dingle — President & Chief Executive Officer, Women Impacting Public Policy
Mr. Moshe Schwartz — Senior Fellow for Acquisition Policy, National Defense Industrial Association
Mr. Daniel Jaworowski — President & Chief Operating Officer, Infinity Systems Engineering LLC
Mr. Anthony Closson — Chief Executive Officer & Founder, Colossal Contracting LLC
Videoyoutube
Transcript310 caption blocks · 18,495 words · 2:08:41 runtime
EventCongress.gov 119337