DOD Contracting: Opportunities Exist to Improve Pilot Program for Employee-Owned Businesses

The Department of Defense’s pilot program to engage employee-owned businesses through ESOPs (Employee Stock Ownership Plans) is off the ground—but far from perfect. While DOD awarded over $450 million in contracts, oversight gaps and unclear guidance led to at least one ineligible contractor getting through. GAO’s review highlights that the program lacks clear objectives, robust evaluation methods, and strong stakeholder engagement. With time left before it ends in 2029, DOD still has the opportunity to fix these issues and make the pilot a more effective tool for expanding its industrial base.