The Department of Defense (DoD) awarded over $500 billion in contracts in fiscal year 2023, yet a disproportionately small fraction went to veteran-owned businesses, highlighting a significant opportunity for growth and strategic partnerships within national defense procurement.
Key Takeaways
- Veteran-owned small businesses (VOSBs) captured only 5.3% of federal contract dollars in FY 2023, falling short of the 3% federal goal.
- The Defense Logistics Agency (DLA) directly contributed over $44 billion to the U.S. economy in FY 2023 through its contracting activities, representing a substantial market for veteran contractors.
- The Veterans First Contracting Program, managed by the Department of Veterans Affairs (VA), offers set-asides and preferences for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and VOSBs, providing a direct pathway into federal contracts.
- Veteran contractors should prioritize registering with the System for Award Management (SAM.gov) and obtaining VA certification to access DLA opportunities.
- Engaging with local procurement technical assistance centers (PTACs), now known as APEX Accelerators, can provide critical support for working through DLA solicitations and compliance requirements.
Only 5.3% of Federal Contract Dollars Went to VOSBs in FY 2023
The federal government aims to award 3% of its prime contract dollars to Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) and 5% to all small businesses. Yet, a recent report from the Small Business Administration (SBA) indicates that in fiscal year 2023, veteran-owned small businesses secured only 5.3% of all federal contract dollars, including prime and subcontracts, despite representing a significant portion of the small business community. This figure, while seemingly close to the 5% small business goal, includes contracts that are not specifically veteran-designated, and the SDVOSB target remains consistently elusive. The gap between aspiration and reality here presents a clear indicator: the system isn’t delivering for veteran entrepreneurs as effectively as intended. This isn’t just a statistical shortfall. It represents billions of dollars in potential revenue and job creation that could be flowing into veteran-led enterprises, strengthening both their communities and the broader economy. For veteran contractors looking to participate in DLA partnerships, understanding this field is paramount. The DLA, as a primary buyer for the DoD, has a substantial role in shaping these numbers.
DLA’s $44 Billion Economic Impact and the Contractor Pipeline
In fiscal year 2023, the Defense Logistics Agency (DLA) contributed over $44 billion to the U.S. economy through its extensive contracting activities, according to the agency’s annual performance report (DLA.mil). This enormous sum represents the acquisition of everything from fuel and food to spare parts and medical supplies for the armed forces. This makes the DLA one of the largest and most consistent purchasers within the federal government. For veteran contractors, this figure isn’t just large. It signifies a continuous, diversified demand for goods and services. The DLA operates a global supply chain, meaning opportunities aren’t confined to a single geographic area or product category. My experience working with federal contractors suggests that many veteran-owned businesses, particularly those new to the federal market, often underestimate the sheer breadth of DLA’s needs. They might focus on direct defense manufacturing, missing the vast opportunities in logistics, IT support, facilities maintenance, or even professional services that the DLA also procures. The challenge, then, becomes less about identifying demand and more about working through the procurement process to tap into it effectively.
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Only 16% of DLA’s Contracts are Small Business Set-Asides
While the DLA’s overall spend is massive, a deeper dive into their contracting strategy reveals that approximately 16% of DLA’s total contract actions in FY 2023 were specifically designated as small business set-asides, as reported by the Federal Procurement Data System (FPDS.gov). This percentage, while significant, also means a substantial portion of DLA contracts are open competition, where small and large businesses compete head-to-head. This is where veteran businesses often face their toughest challenge. Competing against established primes with deep resources and extensive past performance records can be daunting. It means that while set-asides are a valuable entry point, veteran contractors must also develop a strategy for larger, unrestricted solicitations. This might involve forming joint ventures, seeking subcontracting opportunities with prime contractors, or specializing in niche areas where smaller firms can demonstrate superior agility or expertise. The conventional wisdom often pushes small businesses towards set-asides exclusively, but that approach leaves a large segment of the market untouched. Veteran firms need to be strategic, using their veteran status where applicable, but also building core competencies that stand on their own merits in the broader competitive field. Relying solely on set-asides limits growth and market penetration.
The Veterans First Contracting Program: A Critical Advantage
The Veterans First Contracting Program, administered by the Department of Veterans Affairs (VA), remains a foundation for veteran businesses seeking federal contracts. This program provides unique advantages for VA solicitations and extends its influence through federal subcontracting requirements. Under this program, contracting officers within the VA are mandated to prioritize SDVOSBs and VOSBs. For example, Public Law 109-461 (Congress.gov), enacted in 2006, significantly strengthened these preferences. What many veteran contractors don’t fully grasp is the ripple effect this has beyond direct VA contracts. Many large prime contractors seeking federal awards, including those from DLA, are incentivized, and often required, to include SDVOSBs and VOSBs in their subcontracting plans. This creates a powerful secondary market for veteran firms. I often advise clients to actively network with prime contractors, attend industry days, and register their capabilities in databases like the SBA’s Dynamic Small Business Search (SBA.gov). This proactive engagement can open doors to DLA partnerships through subcontracting, a pathway that is less competitive than direct prime awards for many small businesses. It’s not enough to just be certified. You have to make yourself visible to those who need your services to fulfill their own federal obligations.
Working through DLA Solicitations: Beyond Conventional Wisdom
The common advice for veteran businesses pursuing DLA partnerships usually centers on obtaining certifications and registering in SAM.gov. While these steps are non-negotiable, they are merely the entry point. The real work begins with understanding the nuances of DLA solicitations. Many veteran contractors, particularly those new to federal procurement, struggle with the specific language, compliance requirements, and proposal structures unique to DLA. For instance, DLA often uses various contracting vehicles, such as indefinite-delivery, indefinite-quantity (IDIQ) contracts or long-term contracts (LTCs), which require a different approach than single-award contracts. They also have specific quality control and supply chain traceability requirements that can be challenging for smaller firms to meet without proper guidance. This is where the conventional wisdom falls short. Simply being “ready” for federal contracting isn’t enough. You need to be specifically ready for DLA’s demands. This means investing in specialized training, understanding the Federal Acquisition Regulation (FAR) clauses relevant to DLA, and critically, using resources like APEX Accelerators (formerly PTACs) (ApexAccelerators.us). These organizations provide free or low-cost assistance with everything from proposal writing to contract compliance. Ignoring these resources is akin to trying to navigate a minefield without a map. The DLA’s procurement process is complex, and attempting to go it alone often leads to frustration and missed opportunities. Don’t assume your commercial experience directly translates. Federal contracting is a different beast entirely.
For veteran businesses, the roadmap to successful DLA partnerships involves more than just eligibility. It demands a strategic, informed, and persistent approach to working through a complex, yet rewarding, procurement field. The opportunities are substantial for those willing to engage deeply with the process. For more information on working through career opportunities, explore Aerotech Defense veteran career wins and how to use your skills. Also, understanding the broader field of veteran industry relations can provide a competitive edge.
What is the primary role of the Defense Logistics Agency (DLA)?
The DLA’s primary role is to provide the armed forces with a full spectrum of logistics, acquisition, and technical services. It manages the global supply chain, procuring and distributing everything from food and fuel to medical supplies and spare parts for all branches of the U.S. military.
How can veteran-owned businesses (VOSBs) identify DLA contracting opportunities?
VOSBs can identify DLA contracting opportunities primarily through SAM.gov, the official U.S. government system for contract opportunities. They should also monitor DLA’s specific procurement portals and engage with prime contractors seeking veteran-owned subcontractors.
What certifications are essential for veteran contractors seeking DLA partnerships?
Essential certifications include registration in SAM.gov and, for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs), certification through the VA’s Center for Verification and Evaluation (CVE), which is now handled by the SBA through the VetCert program.
Are there specific DLA programs designed to support veteran businesses?
While DLA itself doesn’t have exclusive veteran-specific programs, it adheres to federal mandates for small business and veteran-owned small business set-asides. The broader Veterans First Contracting Program through the VA significantly benefits veteran businesses seeking federal contracts, including those from DLA indirectly through subcontracting.
What is an APEX Accelerator and how can it help veteran businesses with DLA contracts?
An APEX Accelerator (formerly a Procurement Technical Assistance Center or PTAC) is a local resource providing free or low-cost assistance to businesses pursuing government contracts. They can help veteran businesses navigate DLA solicitations, understand compliance, prepare proposals, and identify subcontracting opportunities.
