Lead agencies must turn category management small business strategies into action

Small businesses growing more worried about the impact of category management on their opportunities to compete for contracts. OFPP required each category manag...

The future of the Obama administration’s category management initiative remains unknown. Several federal officials involved in category management have told me they have received good feedback from Trump administration transition team and special advisers so far in the first few months of the transition and presidency. But others, particularly in industry, say they are hearing major changes are on the way for this and several procurement initiatives of the prior administration.

Keep in mind it has been four months since comments were due on the proposed category management circular. One source told me recently the circular is basically on hold until more political appointees are in place.

One thing is certain no matter what happens to category management, small businesses have a lot of anxiety about the future of federal procurement.

Bob Derby, vice president of strategic communications for LeapFrog Solutions, a small women-owned firm, said category management is “big and scary.”

Derby, speaking on a March 1 panel at the ACT-IAC and General Services Administration’s category management conference, said it’s important for small businesses to understand how category management is part of a broader federal acquisition strategy.

“When you layer category management on top of strategic sourcing, there is mass confusion in the small business community,” Derby said.

Leapfrog Solutions isn’t just one small business complaining because they were left out of the winner’s circle.

Steve Koprince, a procurement attorney working with small firms, and John Shoraka, the former associate administrator for government contracting and business development at the Small Business Administration during the Obama administration, both say OFPP and GSA have struggled to clarify the role of small businesses in category management and ongoing concerns by lawmakers add to what seems like an ever-growing anxiety for small firms they counsel.

“Category management is a big train and I think we all realize we can’t stand in way to stop it. I do think small businesses understand there are competing goals, streamline purchasing and make government buying more efficient,” said Koprince, managing partner of Koprince law. “These are business people who say that makes sense, but there is nervousness out there among many small businesses. We’ve seen past examples when the government talks about efficiency and streamlining, it can mean consolidation or something that looks like consolidation where there are fewer awardees.”

Shoraka, who now is the managing director at PilieroMazza Advisory Services in Washington, said small firms have legitimate concerns.

“When I was at SBA, we expressed them to the Category Management Leadership Council. We said when you go to best-in-class vehicles, it is absolutely important to establish a small business baseline with SBA,” said Shoraka who served on the leadership council. “The concern we always had and I think Hill had as well is agencies may be meeting your small business goals, but with much fewer small businesses. So if you set up a new vehicle, but we said it really needs to have on and off ramps and include socio-economic companies too.”

Shoraka said SBA also pushed, though unsuccessfully, for OFPP and the council to do an industrial base economic analysis so the government can understand the positive and negative impacts of the category management effort.

OFPP, and GSA as the program manager of the initiative, made small business participation as one of its top priorities and metrics.

But the question is what happens if the category owner doesn’t make their goals? If the small business industrial base is significantly hurt by this effort — see the office supplies and Schedule 75 debacle? If the small businesses are subject to mainly subcontracting opportunities under many of the commodities categories?

“If you are in particular industry where the approach is veering toward consolidation and the small business see they could be getting frozen out of their line of work,” Koprince said. “That creates an inherent tension. You can talk all you want about promoting small businesses, but if efficiency means fewer prime contracts, that’s difficult for many small businesses to manage. Many do not have the capabilities to run contracts throughout the country.”

OFPP required the category managers to submit their small business plans where they set small business spending and participation baselines.

Mary Davie, the assistant commissioner of GSA’s Office of Information Technology Category, said at the ACT-IAC event that each of the plans included ways to meet small business goals.

“We are talking about this as a government and what are the different buying strategies we could use and what are the impacts on small businesses,” Davie said. “We are focused on supplier relationship activities and engagement. We are looking for opportunities to engage more small businesses.”

Steve Krauss, the director of Category Management Strategic Execution, said in an email to Federal News Radio that engagement happens through several different tools.

The Acquisition Gateway features several tools, including the SBA’s Dynamic Small Business Search tool that agencies can as part of their market research and analysis processes.

Krauss said another small business finder tool is under consideration to help agencies find those small firms who are qualified in a particular subcategory area.

“Category managers also are actively looking for opportunities to set aside portions of the market for small businesses, or specific small-business designations in cases where doing so would be consistent with the role small businesses can/do play in that category/market,” he said.

Krauss said the small business plans are not yet final, but some themes are emerging.

“Improving market research and market analysis methods so that we have a better understanding of the role small businesses play in a given category or market space, which in turn enables us to do a better job thinking through important questions like, ‘what will it take to ensure we have a robust small business base/market for a given service or offering?’” he said. “Making more aggressive or continuous use of on-ramps and off-ramps to ensure we have a vibrant set of well-qualified small businesses available and/or to ensure accountability among large businesses for meeting small business subcontracting commitments.”

These trends are important signs that the category managers heard SBA and other small business advocates in and outside of government. But as we’ve seen over the last 20 years, the question always comes back to implementation and not just intent.

Of course, all of this effort could be moot if the Trump administration makes major changes to category management or even puts forth a substitute of sorts that focuses on an entirely different aspect of government procurement.

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