After 12 Years, Jury Is Still Out on DOD Subcontracting Program Twelve years ago, the Defense Department created the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans to provide more small business opportunities and reduce the administrative burden for prime contractors. Today the department does not know whether the Test Program is achieving its goals and has established no metrics to find out, the General Accounting Office reported. What is known is that the percentage of first-tier subcontract dollars going to small businesses fell from about 43% in 1995 to about 34% in 2002. The 15 prime contractors in the Test Program negotiate annual company-wide or division-wide subcontracting plans, rather than submitting a separate plan for each contract. Most of the largest defense contractors participate in the program. (See below.) DOD is required to report the results of the program next year, when it is due to expire after many extensions. But GAO found, “Although the Test Program was started more than 12 years ago, DOD has yet to establish metrics to evaluate the program’s overall results and effectiveness.” The GAO report, released May 5, said there are two major reasons for the decline in small business subcontracting: *“the increased breadth, scope, and complexity of DOD prime contracts that require, among other things, teaming arrangements with other, typically large contractors; *“prime contractors’ strategic-sourcing decisions to leverage their purchasing power by reducing the number of their suppliers including small businesses. “According to DOD and contractor officials, both have the potential to either restrict subcontracting opportunities for small businesses or push those opportunities to lower tiers of the supply chain, GAO said. “Contractor officials also said their ability to meet some small business goals is influenced by the limited supply of qualified small businesses that could provide the needed goods and services.” One difficulty in measuring the effectiveness of the plan is that mergers and acquisitions have radically changed the defense industry; some of the primes that were original participants in the plan 12 years ago no longer exist as independent companies, so any long-term comparisons are apples and oranges. GAO did not release subcontractor performance ratings for individual primes. The report says that in at least three of the past five years, 11 of the 15 contractors met their overall small business goals, seven contractors met their goals for small disadvantaged businesses, and six contractors met their goals for women-owned small businesses. GAO recommended that the department establish metrics to assess the overall effectiveness of the Test Program and improve the quality of the information in its database of subcontracts to firms performing outside the U.S. DOD concurred with both recommendations. The report was prepared for the House Small Business Committee. It is number GAO-04-381, available at www.gao.gov. Prime Contractors in the DOD Test Program in 2003 Boeing; General Electric Aircraft Engines; Harris Corp., Government Communications Systems Division; Lockheed Martin Aeronautics Co.; Lockheed Martin Simulation, Training & Support (formerly Information Systems); Lockheed Martin Missiles & Fire Control; Lockheed Martin Space Systems Co.; Northrop Grumman Air Combat Systems; Northrop Grumman Electronic Systems and Sensors; Raytheon; Textron Systems, a Textron Company; Bell Helicopter Textron Inc.; United Technologies Corp., Hamilton Sundstrand Division; United Technologies Corp., Pratt & Whitney Government Division; United Technologies Corp., Sikorsky Aircraft Division.