Pilot Program to Incentivize Contracting with Employee-Owned Businesses

The Defense Department is recognizing the value of employee-owned businesses with acquisition regulations designed to incentivize their use. While this program is narrow and only for Defense contracts, it is an acknowledgment of employee ownership as a possible differentiator.

DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement sections of the National Defense Authorization Acts for Fiscal Year 2022 and Fiscal Year 2024 that authorize DoD to establish a pilot program allowing for the noncompetitive award of certain follow-on contracts to certain employee-owned businesses.

The international development sector has several ESOP (Employee Stock Ownership Plan) firms, including DAI, Chemonics, Panagora Group, and Abt Associates. Will USAID consider a similar program for employee-owned businesses? The line is already long for special authorities and incentives to broaden USAID’s industrial base.

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