Small and medium-sized businesses (SMBs) constitute a foundational component of the Defense Industrial Base (DIB) and play a disproportionate role in the development and diffusion of advanced technology. These firms account for 43 percent of high-tech employment in the United States and produce sixteen times more patents than large firms, reflecting their importance as drivers of innovation and technological competitiveness.[1] Within the defense acquisition ecosystem, SMBs also represent the majority of new entrants into the DIB, and their growth contributes to the emergence of the next generation of suppliers with increasingly diverse and specialized capabilities. Their comparatively lean organizational structures often enable more rapid adaptation to changing operational requirements and technological shifts. In Fiscal Year 2021, small businesses comprised 73 percent of all companies conducting business with the Department of Defense (DoD) and 77 percent of the research and development firms supporting DoD activities.[2]
Despite this central role, SMB participation in the DIB is constrained by a range of structural and regulatory barriers, including the increasing costs of meeting cybersecurity compliance requirements. Larger firms typically possess the institutional capacity and financial flexibility to absorb these costs, whereas smaller firms must contend with them under significantly tighter resource constraints. As compliance obligations have expanded—particularly in combination with broader economic pressures—small business participation in the DIB has steadily declined. Over the past decade, the number of small businesses engaged in the defense industrial base has decreased by more than 40 percent, raising concerns about long-term innovation capacity, supplier diversity, and resilience across the defense supply chain.[3]
Recent operational developments underscore the strategic risks associated with diminished SMB participation. The conflict in Ukraine has highlighted the rapid emergence and battlefield impact of drone systems built using commercially available components, demonstrating how small-scale and distributed innovation can produce transformative effects in contested environments.[4] Sustaining U.S. technological advantage requires an acquisition ecosystem that enables comparable agility and responsiveness. Accordingly, increasing SMB participation in defense acquisitions is not only necessary for maintaining DoD access to emerging technologies, but also for strengthening competition, improving affordability, and ensuring a diverse supply base capable of meeting future mission requirements. This includes leveraging the underutilized capabilities of disadvantaged-, women-, and veteran-owned small businesses whose contributions remain insufficiently integrated into defense procurement.
The immediate objective of CMMC LaunchPad is to support SMBs in the DIB by providing actionable guidance and resources to navigate cybersecurity compliance requirements in an effective and affordable manner. More broadly, the initiative is intended to advance two strategic outcomes: first, to strengthen the cyber resilience of the defense industrial base against adversarial threats; and second, to preserve dynamism within the DoD supply chain in order to sustain U.S. primacy in defense innovation.
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- U.S. Committee on Small Business and Entrepreneurship. “Innovation and Research.” United States Senate, www.sbc.senate.gov/public/index.cfm/innovationresearch. Accessed 7 Jan. 2026.
- U.S. Department of Defense. Small Business Strategy. U.S. Department of Defense, 26 Jan. 2023, https://media.defense.gov/2023/Jan/26/2003150429/-1/-1/0/SMALL-BUSINESS-STRATEGY.PDF. Accessed 7 Jan. 2026.
- National Defense Industrial Association. Vital Signs 2023: The Health and Readiness of the Defense Industrial Base. NDIA, 2023, www.ndia.org/-/media/sites/ndia/policy/vital-signs/2023/ndia_vitalsigns2023_final_v3.pdf. Accessed 7 Jan. 2026.
- Button, Keith. “The Ukraine War’s Outsized Influence on Small Drone Development.” Aerospace America, American Institute of Aeronautics and Astronautics (AIAA), 24 Nov. 2025, aerospaceamerica.aiaa.org/the-ukraine-wars-outsized-influence-on-small-drone-development/. Accessed 7 Jan. 2026.
