Department our country”( DoD “About DoD” 2007).

Department of Defense (DOD) and Small Business Brief information The United States Department of Defense (DOD) is created in 1949. It is mentioned in the department website: “The mission of the Department of Defense is to provide the military forces needed to deter war and to protect the security of our country”( DoD “About DoD” 2007). The department headquarter is located in Pentagon, Arlington County, Virginia. DOD is divided to 6 smaller military departments:Joint ChiefsArmyMarine CorpsNavyAir ForceCoast GuardDOD contributes the most to the federal government small business programs’ success since this department takes up to two-thirds of all the procurements. In addition, the DOD Office of Small Business Programs (OSBP) is in charge of the wide small business regulation and it also oversights to ensure compliance by military department and defense agencies. OSBP serves as a connection between small business community and the DOD procurement office (Williams, 2006).Small business: According to The Small Business Act, small business is defined as “one that is independently owned and operated and which is not dominant in its field of operation.” The law also states that in order to determine what is a small business, the size standards should also be considered, and this is different from industry to industry since not all industry is the same as one another (Williams, 2006).The limitations/ key restrictions facing small firm sales to DODWhile selling to the government has some great advantages like mentioned above, and this helps to draw more and more small firms into this lucrative growth section of the market, there are still some challenges to it which are :Budgeting Slow payment cycleBid specificationProcess information These limitations can be huge drawbacks for small firms in the process of decision-making of contracting with the U.S government – especially in the Department of Defense.The first thing to mention when talking about the hardships in selling to the government is the budget. The budget authorization process can take up a considerable amount of time. In addition, Spacenet’s vice president, Troy Ellington mentioned that even though the government would not stop the funding for projects that were approved, the approval process could take some time (MacManus,Susan, Watson, & Blair, 1992). Not only the authorization process for the budget is time-consuming, many firms also think that the application process requires too much paperwork. According to a survey with 3282 firms, this is rank as the fourth most frequently encountered problem when it comes to doing business with the government (MacManus,Susan, Watson, & Blair, 1992). Another aspect to bring up when discussing about the government budgeting is  the budget caps trend. The budget caps was established by 2011 Budget Control Act, stating that federal discretionary spending cannot go over the compound annual growth rate of 1.7 percent from the fiscal year of 2014 to 2021 (Bloomberg Government, 2015). As the result of the former statement, the contractors should expect the government to spend less or other word continue belt-tightening throughout the fiscal year 216 and into the next decade. Therefore, it can be said that affordability will be one of the priority factors for the U.S Government when dealing with contractors during this period. There may be room for adjustment since the government could be willing to pay extra for better deal or services but not at a substantial premium price (Bloomberg Government, 2015). The following column chart will illustrate better this trend as well as predict the budget spending for the upcoming year.From the column chart, it can be seen that the annual discretionary spending is increasing after every year but the increasement is not that great since the budget caps is trying to keep the number underneath 2 percent. It is estimated that in 2021 the discretionary spending will go up to $1,141( in billions of dollars).Even though the contracting procedure can be time-consuming and the budget caps create some vast disadvantages for the firm, the government tend to know exactly what it needs. The president of Contel ASC’s Government Network Divisions said that the government tell the company specifically what they are looking for and when the company delivers, they are satisfied with it (MacManus,Susan, Watson, & Blair, 1992). This can do little help to make the budget approving process go smoother and easier for both sides.Another drawback of doing business with the government for small firms is the slow payment cycles; 45 percent of the businesses being surveyed points out that the slow payment is the greatest hassle in doing business with the government. This has made it to top the list of problems most frequently encounter when selling to the government (MacManus,Susan, Watson, , 1992). In addition, nearly one-third (29 percent) of the firms that has never done business with the government also view this as a common problem. A reason for the former statement can be: these subjects have been influenced by their peers who already had experience in dealing with the government system (MacManus,Susan, Watson, & Blair, 1992). Adding up to the slow payment cycle, the analysis of DOD’s fiscal year 2004 payment data for 9 DOD vendor pay locations has proved that small business invoice were usually paid late compare to all the invoices paid at the 9 vendor payment locations (Williams, 2006). The main reason for this is the lack of automated system in DOD. The following table shows the differences in late payment timing between small business versus all business for fiscal year 2004 (categorize by payment vendor location)