The federal government’s push to increase the number of category management procurement contracts, though good for saving money, can hurt small businesses, according to experts who spoke at the ChallengeHER event promoting women-owned small businesses held by the Small Business Administration, Women Impacting Public Policy and American Express OPEN on Thursday.
“Category management is an effort by the federal government to be able to save money,” said Sean Crean, director of the SBA’s Office of Government Contracting. He explained that the government wants agencies to save money by using the contracts already developed by other agencies.
“The government is now saying, ‘Hey, we want other agencies to look at these contracts that have already been established. Why reinvent the wheel? Why go through the expense of establishing your own contract, if you can probably satisfy some of the requirements you have by going to the other, well established contracts that are out there?’” he said. “The concern that we have at SBA with category management is that it shrinks the playing field of competitors that are out there.”
According to Crean, as the popularity of these contracts grows, newer and usually smaller businesses will have fewer and fewer opportunities to break into the federal space,
“The concerns that we have, and that we’ve shared with the Office of Management and Budget, is the concern about the industrial base. Because the nature of multiple award contracts will be in place for five years, some of them may be in place for ten years, and if you’re not on that contract, you’re left out, you’re not going to be competing for some of that work,” said Crean. “If we in government create vehicles and we don’t understand the unintended consequences of having businesses who can’t participate in the environment, then we may be closing doors and those businesses aren’t going to survive.”
IRS Chief Procurement Officer Shanna Webbers said many agency procurement offices are feeling the pressure to move to category management contracts.
“We do also have concerns about the category management and the pressure and the metrics that we are being looked at to move contracts under those particular vehicles,” said Webbers.
However, agencies can retain some of their more small business-friendly contracts if they can prove greater value remaining off the category management contracts than if they were to get on them.
“What we’ve got Treasury to agree to is that if there is some pressure to move to one of those vehicles, however we feel that there is a better solution out there, that we’re going to present a business case,” said Webbers. “And that we’re going to do everything that we can to present a correct vehicle that we think is appropriate to get the right level of service that we need.”
There is also a current legislative push to make government contracts more friendly to small and disadvantaged businesses, as Women Impacting Public Policy President Jane Campbell said that her organization has been working with Sen. Joni Ernst, R-Iowa, who partnered with Sen. Kirsten Gillibrand, D-N.Y., to include an amendment in the National Defense Authorization Act that would promote small businesses in future contracting.
“We believe that we’re going to get this bill implemented, which will require that the SBA look at multiple award contracts to ensure that there are tracks for all of the groups that have been identified as disadvantaged,” said Campbell. “What we’re trying to do is create an on-ramp.”
According to Crean, protecting small businesses’ ability to compete on government contracts is a matter of national security.
“It’s about the industrial base,” said Crean. “The health of the small business industry is critical to our national security.”
Jessie Bur covers federal IT and management.