A stronger defense industry base needs both small and mid-tier players to ensure American resilience

Program Acquisition Executives (PAEs) across Defense Department face an existential mandate to acquire and operationalize reliable, uninterrupted capabilities that support critical defense missions. They look to defense industry teams that can keep delivering even when financial pressures arise. That makes the relationship between a prime contractor and its small business teammates an important part of the discussion about business size.

From a government contracting growth perspective, this policy debate plays out daily in how we structure capture strategies, assemble proposal teams, and execute task orders on a day-to-day basis.

In recent conversations with customers and colleagues, I've been discussing how mid-tier contractors can create opportunities for smaller firms while bringing the financial capacity to support the national security mission. As the Small Business Administration considers changes to its size standards, those relationships deserve consideration.

Modernizing size standards is not an all-or-nothing contest between small businesses and the mid-tier contractors on the edge of graduating into the larger arena. Established small businesses that have matured into proven mid-tier contractors can give DOD the capacity it is asking for. At the same time, they can create a more stable path for their small business teammates to grow into the next generation of large defense primes.

This model also benefits acquisition leaders and contracting officers, enabling a prime to pair the technical agility of specialized small business partners with the operational depth to manage complex program execution without administrative turbulence. Leaving size standards unaddressed risks penalizing this growth continuum, ultimately jeopardizing both small business growth and mission continuity.

The Small Versus Mid-Tier Zero-Sum Contracting Myth

Discussions across the defense industrial base frequently treat small business set-asides and mid-tier expansion as competing priorities, assuming that every dollar awarded to a growing mid-tier contractor takes an opportunity away from an early-stage firm. In practice, contract capture and subcontracting agreements tell a different story. Mid-tier firms represent living proof of what federal small business programs are designed to accomplish as they mature into the large defense industrial players of tomorrow.

Healthy mid-tier primes can help accelerate that growth by building meaningful partnerships with small businesses, moving beyond subcontracting plans designed simply to satisfy RFP requirements. This means giving specialized small partners substantial workshare in high-value technical areas such as cloud architecture, cyber defense, and artificial intelligence, while leveraging established contract vehicles, including major indefinite delivery, indefinite quantity contracts and government-wide acquisition contracts, to bring those partners onto task order bids they might not be able to pursue independently due to past-performance requirements.

These resilient teaming structures and mentor-protégé partnerships foster technical innovation and operational scale, ultimately benefiting the warfighter. Having served in the U.S. Navy and the Pentagon before moving into industry, I care deeply about the people on both sides of that relationship. DOD needs dependable delivery, and our small business DIB teammates need opportunities to contribute, grow, and build healthy organizations.

At Odyssey, for example, we place a high value on the abundant workshare agreements we have with small business teammates. These partnerships with smaller industrial base businesses are incredibly valuable to us, and they direct substantial funding toward partners’ talent, technical capacity, and specialized development. As a mid-tier prime expands its reach, its capacity to bring niche small-business innovators onto major defense contract vehicles grows proportionally.

When mid-tier contractors grow, their small business partners can grow alongside them, expanding their footprint and impact on the mission. Beyond individual contract bids, growth executives can help smaller partners build the operational infrastructure needed to scale, sharing industry and regulatory best practices such as Defense Contract Audit Agency compliant accounting systems, Cybersecurity Maturity Model Certification standards, and complex proposal pricing. Formal SBA Mentor-Protégé Agreements and joint ventures can further strengthen these relationships, helping turn early-stage niche providers into mature federal market participants.

American DIB Resilience as a Strategic Mission Enabler

Small defense industrial base disruptors bring speed and cutting-edge technology to customer challenges, with mid-tier primes bridging the gap to scale. Vital early-stage innovators can be uniquely vulnerable to cash-flow shocks and federal funding delays, which introduce risks for government customers. A sudden revenue stall can threaten a small company's ability to maintain operations and ramp up capacity for critical battlefield capabilities.  Even a 30-day delay in government invoice processing or an administrative hold tied to a continuing resolution can trigger a payroll crisis for a small firm. When a small subcontractor runs short on cash, key personnel may leave, technical milestones can slip, and the contracting officer's representative may be left managing a program with compromised execution. These disruptions can threaten a company's ability to sustain operations and deliver critical battlefield capabilities.

An independent mid-tier prime with a strong balance sheet and mature processes can help serve as a financial shield for the entire team. With greater working capital and diversified cash flow, a mid-tier prime is often better positioned to absorb financial friction and ensure that small business teammates receive prompt payment to keep the mission moving, regardless of funding cycles. In practice, this can mean adopting accelerated sub-payment terms, paying small business teammates even if the government has not yet disbursed funds to the prime. By carrying working capital through funding delays, the prime can help keep subs on track, advancing the mission, and protecting customer timelines from interruption. This financial resilience protects smaller teaming partners as they cross the valley of death, and safeguards national security against unexpected fiscal disruptions.

Rather than forcing small partners to navigate market uncertainty alone, this collaborative approach turns contract execution into a shared growth engine where technical capability and business maturity expand together. Preserving space for these relationships to thrive ensures that when national security demands rapid response, government customers receive a proven, unified team ready to deliver at scale. For acquisition officials and SBA policymakers, the central takeaway is that mid-tier primes are not obstacles to small business growth. They provide the operational infrastructure that enables it.

Maintaining flexible size standards allows these contractors to continue serving as effective integrators, financial anchors, and growth partners across the small business ecosystem. Our customers need dependable delivery, and our small business teammates need opportunities to contribute and build healthy businesses. Preserving mid-tier capacity helps federal acquisition policy foster integrated teams that pair cutting-edge innovation with balance-sheet stability to enable our warfighters to win.

Julie Vida serves as Odyssey’s vice president of growth and brings a blend of military, technical, and business leadership experience focused on supporting government and public sector missions. Her leadership is informed by 24 years of honorable service in the United States Navy, where she served as both a surface warfare officer and a naval aviator. Her military career includes earning the Navy Air Medal for superior airmanship during Operation Enduring Freedom and serving as the Navy’s deputy chief information officer, where she helped guide technology investment and cybersecurity policies across the service. She is also committed to mentoring transitioning veterans and supporting women and girls pursuing STEM career fields.