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Velázquez Surveys the Impact of Governmentwide Contracts on Small Businesses

Washington, D.C.— Today, the House Small Business Committee under Chairwoman Nydia M. Velázquez held a hearing examining the impact of governmentwide contracts, including the Best-In-Class (BICs) contracts that originate from the Category Management initiative, on small businesses in the federal marketplace. From the time Category Management was first implemented in 2016 to 2019, the number of small businesses providing common goods and services decreased by 17%.
“Ensuring access to federal contracting opportunities is one of this committee’s core priorities. Winning federal contracts allows small firms to create jobs, grow their businesses, and invest in their communities,” said Chairwoman Velázquez. “It’s clear that governmentwide contracts are forcing small contractors out of the marketplace and impeding new entrants. I look forward to working with my colleagues on both sides of the aisle to advance policies that ensure small businesses have meaningful ways to contract with the federal government.”
Category Management is a governmentwide procurement initiative that seeks to increase efficiency and deliver savings by buying common goods and services as a single enterprise. Unfortunately, the practice has created many unintended consequences for small contractors, including the reduction in use of individual contracts, a more cost intensive bidding process, and the favoring of larger businesses that can provide a more extensive range of products and services. 
During the hearing, small contractors testified on the challenges posed by governmentwide contracts and policies Congress can pursue to ensure small businesses can compete for and win federal contracts. 
“Surviving and thriving in this marketplace is not easy for any vendor, but it is made especially difficult for small businesses who could prove real value to our country,” said Amber Hart, Co-Founder & Co-Owner of The Pulse of GovCon LLC in Sterling, VA. “The move to CM, further contract consolidation, shrinking contracting offices, bundling of requirements, and the strict focus on socio-economic spending dollars vs. the quality of the small business requirements being competed, has had a significant impact on small businesses in the federal market.”

“As the mandated use of Best-in-Class contracts and large Governmentwide Acquisition Contracts has grown, so have the concerns of small business federal contractors who see their work swept up into these large vehicles where the incumbent small business may not even have a spot or where their work is consolidated with multiple other requirements taking it out of reach of the incumbent small business and forcing them to team with other companies or, worse, become a subcontractor where their fate is dictated by a prime contractor who they may have never worked with and do not trust,” said Isaias “Cy” Alba, IV Partner at PilieroMazza PLLC in Washington, DC.

“While Category Management (CM) broadly helps the Federal Government increase procurement efficiencies, our company has seen it reduce the total number of small businesses and the number and type of opportunities that are available for small business to compete on. This, in turn, reduces the innovation that small businesses can offer to the Government,” said Lynn Ann Casey, Chief Executive Officer & Founder of Arc Aspicio in Washington, DC. “We have unfortunately seen many opportunities shift to Government-wide contracts designated as Best-in-Class and have had significantly fewer small business opportunities to bid on contracts under Multiple Award Schedules.”

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