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Advance Payments to Small Defense Contractors

December 6, 2009

To meet the unprecedented demand for Army forces in an era of persistent conflict, unparalleled numbers of civilian contractors have been hired to supply vital services to Soldiers. The Gansler Commission, created in August 2007 to provide recommendations based on lessons learned in the field, advised adding 1,400 personnel to the Army’s contracting workforce—an increase of approximately 25 percent. Implementation of this recommendation is expected to be completed within the next three to five years.

Despite such reliance on contractors to bridge the gap between the high demand for Army capabilities and the supply available, the market remains restricted to large business contractors that more readily obtain the necessary commercial financing support. In the current financial climate of tight credit and unavailability of commercial financing support, small business contractors are inherently disadvantaged in their ability to pursue and support government contracts; thus, competition is limited and prevents the government from capitalizing on the offers of better products and services from small businesses. Moreover, the government’s mandate to assist small and disadvantaged businesses is undermined by smaller businesses’ inability to finance initiatives.