Is the Defense Industrial Base (DIB) shrinking? The answer, according to The Baroni Center for Government Contracting at George Mason University is, “maybe.”
In an inaugural report titled 2025 Contracting Trends and Performance Index, the Baroni Center reports that the number of Department of Defense prime contractors has dropped by over 50% since 2009. There is a caveat, however, and the decline is not as steep as it seems. Many firms that appear to have exited are still actively bidding or working as subcontractors.
According to the report, the concentration of the DIB is not the most important issue. Other key issues that should perhaps receive more attention include:
According to the report, the number of new DoD contractors fell significantly from 2009-2013. Since 2023 the percentages have remained stable, but new contractors are still failing to reach 2009 levels. With the number of prime contractors who are also exiting or converting to a sub-contractor status, this means overall there is some constriction in the Defense Industrial Base.
Mitre/AiDA define a non-traditional contractor as :
The Baroni report suggests that the definition of a non-traditional contactors needs to be sharper. Only 7.5% of contractors are non-traditional based on the current definition. If the desire is to increase non-traditional contractors, the definition needs to become more precise.
The Department of Defense has continuously increased Other Transaction Authorities (OTAs) and Small Business Innovation Research (SBIR) grants. OTA obligations alone rose to $16 billion in 2023. The problem, according to the report, is that many of the small businesses who receive these grants do not end up working in innovative areas.
But a troubling gap remains: there is no public data tracking whether these early-stage efforts transition to operational programs. According to the Baroni Center, the money invested in innovation must be tracked in better ways to ensure innovation in the DIB continues to grow.
The 2025 Government Contracting and Performance Index report offers detailed information regarding Department of Defense contractors as well as other federal contractors. You can conduct your own research in the report by downloading it at the PDF link. If you have any questions you’d like to discuss with us, just let us know.
.jpg?ext=.jpg)
