Does category management push against small business?

The government’s going to move in the direction it wants regardless of industry feedback… The objective of category management is to get better pricing. By its very nature, category management means you’re going to have less contracts, less vendors and contractors, and better pricing in order to protect the taxpayer’s dollars. None of us can argue with that. It makes sense. Right?

But this is what I’ve been preaching: there must be a balance. Without the balance, what do we lose? What is the backbone of our nation?

Small business.

That was Joshua Franks on the Game Changers podcast, “The Changing Landscape of Government Acquisition.” Category management is intended to have all federal agencies buy as a single enterprise. Classes of goods and services are mapped to “best-in-class” contractors who have multiple-award contract vehicles already in place. This allows for some expediency by federal agencies to price and award contracts with the benefit of volume discounts.

The presumption of category management is that: (1) the requirements of buying offices do not differ very much; (2) economies of scale always exist; and (3) innovation in the contract or over the long-term isn’t important.

That third point perhaps needs some explanation. Category management in some ways looks at procurement as a set of commodities. These are produced using standard methods with known pricing. If innovation were required in the contract, or the government wanted to help drive improved business processes to drive prices down over the long-run, then it’s not clear that large, incumbent, contractors with privileged positions will be the best ones to do that.

Now, I’m not against category management per se. Sometimes, it will be convenient to use an existing vehicle for standard goods and services. That should be at the agency’s discretion. It should not be a directive that removes initiative from the lower levels.

At it’s best, category management provides us a level change in existing prices. However, this may come at the expense of competitive business practices and innovation over the long run.

Here’s another interesting part:

Another big changing landscape, I’ve spoken about this so much, is the 809 panel. I don’t want to go into crazy detail on this… but the 809 panel recommended that the small business program be abolished. And that’s so crazy on so many different levels. I get they want to do category management.

 

I won’t give the name, but there was a general officer within the Army’s acquisition program that took me off to the side at a conference and spoke very bluntly and said, “Josh, we’re tired of being forced to award contracts to 8As, to women owned, to HUBZones, to small business, because we’re tired of having these small companies that just can’t do a good job.”

 

I’m looking at him like, you’ve got to be kidding me. If the government is having problems with its vendors, that’s their problem. Write a better proposal. Write better requirements. Enforce stronger past performance.

Here are some additional thoughts on category management.