Rethinking Innovation in Defense Contracting:What North Carolina Businesses Should Know

By Reena Bhatia, Regional Program Manager (RTP Region), North Carolina Military Business Center

A common assumption in federal contracting is that innovation comes primarily from tech startups, research labs, or firms backed by venture capital. But new research from George Mason University’s Baroni Center for Government Contracting reveals a much more nuanced picture—one that offers real opportunity for North Carolina’s business community.

According to the Baroni Center’s 2025 Government Contracting Trends and Performance Index, only 7.5% of DoD vendors legally qualify as “non-traditional” under current definitions. That statistic, while surprising, tells us two things:

  1. The majority of companies doing business with DoD are established firms—not necessarily startups or newcomers.
  2. Innovation is not confined to early-stage tech firms; it often comes from mature companies with a track record of delivering dependable services and scalable solutions.

This opens the door for a broader range of businesses, including those in civil engineering, manufacturing, IT services, logistics, and even administrative support, to make meaningful contributions to innovation in the defense ecosystem.

At the North Carolina Military Business Center (NCMBC), we see this as a powerful opportunity. Our mission has always been to connect North Carolina businesses with federal contracting opportunities, particularly those supporting national defense. This includes fostering new startups with breakthrough technologies as well as helping established firms position themselves as innovation partners, even if they aren’t designing new hardware or developing cutting-edge software. Whether a company is introducing an entirely new capability or improving on existing solutions, NCMBC is here to help translate those contributions into federal value.

Through a combination of technical assistance, training events, targeted outreach, and strategic matchmaking, NCMBC helps businesses:

  • Understand what the DoD actually needs, not just in theory, but in active procurement
  • Frame their capabilities in a way that highlights relevance and adaptability
  • Develop strategic pathways to subcontracting or prime contracting opportunities that reward performance and forward thinking

This could mean a manufacturer that retools to support energy resilience initiatives. Or an IT services firm that adapts its commercial platform for use in secure, government-managed environments. Or a facilities company that integrates smart monitoring tools to improve base operations.

Innovation, in the federal sense, is not always about invention. It’s about value. It’s about evolving to meet the mission.

That’s why NCMBC continues to invest in programs that demystify the federal market and create direct access between North Carolina businesses and the agencies they aim to support. From SBIR/STTR education to matchmaking with program offices, we are working to close the gap between capability and contract.

If you’re a North Carolina company that hasn’t traditionally viewed itself as an “innovator,” now is the time to reconsider. Federal agencies across the board—including DoD, DHS, VA, USDA and others are actively seeking practical, scalable solutions. Many of those solutions are already being built, shipped, or deployed here in North Carolina.

Let’s make sure they get noticed.

For more information on how NCMBC can help your business grow in the federal space, visit www.ncmbc.us.