Research report, 2024
Doing business with the U.S. government.
859 companies told us where selling to the Pentagon breaks, and what policymakers can do about it.
About the survey
A 10-question survey, October to November 2023, by Jeff Decker and Noah Sheinbaum with Stanford University's Tech Transfer for Defense program. Company success in the defense market is tied to the Pentagon's success on the battlefield.
- Hardware / software / services
- 34% / 32% / 34%
- No prior government experience
- 23%
- 15 or more years of government experience
- 34%
- Have commercial revenue
- 68%
- Have traditional venture capital
- 24%
Finding 1
Different companies need different deals.
36%
of smaller companies and startups want a faster time to award.
Speed to award matters most to startups. Size matters more to companies with commercial revenue: 67% prefer larger contracts, and 61% prefer speed.
What the government should do
- Publish an annual transition playbook with the paths that worked, for companies and program offices.
- Write clearer solicitations, so the right companies bid and the wrong ones know not to.
Finding 2
Companies and buyers are disconnected.
43%
rank a program officer as the most helpful introduction. 27% say end users.
End-user support is necessary but not enough to win production contracts. Even experienced founders struggle to turn end-user enthusiasm into a requirement with money behind it.
What the government should do
- Create more ways for companies to work with program offices before a contract.
- Bring the relevant program offices in from the start of pilot contracts.
Finding 3
New entrants are not ready for compliance.
47%
have never received a government license or certification. 43% have.
Many companies do not know the compliance steps exist until a production contract needs them.
What the government should do
- Give companies a compliance checklist when they receive a pilot contract.
- Create supplemental SBIR and STTR funds for testing and evaluation.
Finding 4
IP terms slow awards and shrink the pool.
67%
would accept Government-Purpose Rights. 24% would require restricted rights.
Companies will give up more IP rights than many experts expect. The gap shows how confusing the government's IP language is.
What the government should do
- Create template IP frameworks for different business models.
- Default to Other Transaction Authority for SBIR awards, and check IP terms for clarity.
Finding 5
Classified work is a moat.
43%
rank access to classified environments as a most challenging barrier.
Without access to classified facilities, new companies cannot bid on or perform much of the work. This keeps the defense industrial base small.
What the government should do
- Put security officers and DCSA liaison officers inside innovation units such as AFWERX and DIU.
- Build SCIFs at non-military sites around the country for companies to use.
Questions we get asked
What are the biggest barriers to doing business with the U.S. government?
In our survey of 859 companies, the main barriers were weak connections to program offices, unclear compliance and certification steps, confusion about IP rights, and limited access to classified environments. 43% ranked access to classified environments as a most challenging barrier.
Who ran the Doing Business with the Government survey?
Jeff Decker and Noah Sheinbaum, with Frontdoor Defense and the Tech Transfer for Defense program at Stanford University. The survey ran from October to November 2023.
Want this data for your program?
We brief teams on the findings and what they mean for their programs.