The Department of Defense hands out about $3.5 billion worth of contracts in Utah each year, and small tech companies are looking for ways to break into the lucrative defense industry. During a panel discussion on Friday, industry insiders explained how to find opportunities within the bureaucratic federal system.

The panel discussion, which included representatives from government and industry, was part of the Governor’s Office of Economic Development’s technology@breakfast series.

The vast majority of defense contracts go to large contractors, such as ATK Thiokol and Northrop Grumman. However, 85 percent of these contracts are subcontracted to smaller suppliers, according to John Clay, sector vice president of Northrop Grumman. The company relies on “well more than 100 suppliers,” he said.

Instead of winning contracts with the Department of Defense, most small and mid-sized companies bid for subcontracts with companies like Northrop Grumman. In fact, these contractors are required to submit a plan for working with small firms when bidding for federal work.

“You need to get your name in front of the prime contractors,” said Molonai Hola of ICON Consulting Group. “You’ve just got to hustle.”

Before bidding for work, small companies should already be familiar to contractors through marketing, media stories or word of mouth. “Learn how to do marketing,” said Troy Takach of Kairos Autonomi. “These defense contractors will not come to your door.”

Tech companies also need to take advantage of networking opportunities, such as membership in military affairs committees and defense industry associations, said Peter Jenks, district director for Congressman Rob Bishop.

Such associations will often “sort through the dizzying array of information about defense and federal contracts,” Takach said. Many trade associations will filter through thousands of federal proposal requests to find opportunities pertinent to their members.

GOED’s Procurement Technical Assistance Center was specifically created to help companies win government contracts, from high-tech automated aircraft design to janitorial services. The center will help companies build a profile in order to match them with federal and state opportunities.

Another valuable source of information is the Small Business Administration Web site, www.sba.gov, which provides details about the federal contracting process.

In some cases, small firms have an advantage over large contractors because they can develop and deploy new technology faster. Takach said it is a misconception that the Department of Defense takes years to cultivate a new technology. “Technologies that we have in our companies now can be deployed in a matter of weeks,” he said.

However, Clay said quality expectations are high for defense subcontractors. One poorly executed project can terminate a relationship with large contractors or with the Department of Defense.

“Performance is critical,” said Jim Sutton, director of plans and programs at Hill Air Force Base. “You’ll get one opportunity to fail. You won’t get two. Keep in mind, there are 15 other businesses in your industry standing behind you with their hands out.”

The Department of Defense spends less than 1 percent of its budget in Utah each year, and state officials hope to double the spending to $7 billion by the year 2011. The increase in defense spending would add up to 50,000 jobs in the state’s high-paying tech sector.

GOED’s Defense Cluster business development strategy includes growing the workload at Hill Air Force Base; expanding the scope of the other military facilities; increasing the number and quality of large defense contractors in the state; recruiting key defense contractors; and developing new trade associations.