Federal Category Management Initiatives Threaten Small Business

Washington, D.C. (September 11, 2018) Volanno had the unique opportunity to participate in the House Small Business Committee’s examination of the effect of Category Management on small businesses. The House Small Business Committee advocates for policies that create a strong industrial base. From its perspective, small business like Volanno bring innovation, increase competition, and stimulate the economy.

What is Category Management?

Category management is essentially a government-wide initiative to maximize the government’s shared purchasing power when buying similar goods and services. The consolidation will increase the government’s buying power and promises to decrease costs, contract duplication, and other inefficiencies. No one can argue with that, right?

The Risks to Small Business

Category management principles dictate that spend is actively managed, and Office of Management and Budget (OMB) outlined criteria of what it determines to be mature contract vehicles. These are vehicles that can be used across agencies, so that procurements can be consolidated, whether they are goods or services. This consolidation means that fewer, larger contracts will be awarded. OMB has defined key criteria for contract vehicles that are being addressed by Best-In-Class (BIC) acquisition contracts.

As the popularity of BIC contracts grows, smaller businesses will have fewer opportunities to pursue federal contracts. Closing these doors, and other risks of BIC contracts are adversely affecting the creation and growth of small businesses.

In our testimony on June 13, 2018, we outlined some of the following risks:

  • BIC Vehicles have a crippling effect on small business competitive opportunities:
    • Roughly 25,000 small businesses provide IT services to the government, but for OASIS Small Business Pool 1, only 30 slots will be available. Do the math: That’s less than 0.12% of small businesses allowed to participate.
  • Some BIC vehicles have no stated “on ramp,” a time when the Government decides to review the pool of contractors and determine if it wants to add new contractors.
    • You may only need to wait 5 years: If you are not on a 10-year vehicle from the start, the next on-ramp may be 5 years away (giving you just about enough time to figure out the application form).
    • Or you may need to wait forever: Some vehicles do not have a mandatory on ramp. For example, Alliant 2 SB is a 10-year vehicle with no on ramp planned.
  • Some BIC Vehicles that do have on-ramps for small businesses are longer multi-year contracts
  • Small businesses that are not already on a BIC vehicle are restricted from the competitive pool.
    • Large dollar amounts will flow to the select business on the BIC vehicles, all other viable small businesses will be shut out from competing
    • The government intends to make 40 awards in each OASIS Pool, but many business are in multiple pools, and eligible for award in multiple pools
  • Complexity in developing the RFP response

Category Management initiatives are counteracting the Small Business Act. If a small business is not currently on a government-wide contract (Alliant, OASIS, etc.), it will not be able to compete for certain opportunities. These small businesses are usually unable to heavily invest in the internal infrastructure changes to implement best-value practices that may stand out to the Government against other businesses.

These risks are proven in data. A 2017 study by Deltek reported that the number of small businesses winning prime contracts has decreased by 25% since 2010. Although the GSA holds agencies and managing partners for category management accountable for meeting small business goals, these are focused on total dollars, not the number of small businesses receiving awards.

What can you do to help?

If you are a small business and care about finding Federal work, your voice needs to be heard. Here is what you can do to help: