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Our Committee has long acknowledged small businesses’ critical role in the $500-billion-a-year federal marketplace. When small firms are awarded federal contracts, the result is a win-win. 

The government – and the taxpayer -- receive good value for their money, as small companies have the dexterity to provide high quality supplies and services at competitive prices. 

It therefore comes as no surprise to those in this room that small businesses are at the heart of the government’s supply chain.  

Recent data demonstrates that the average contract size is increasing, meaning more revenue for small companies. 

However, this trend also suggests that more contracts are being consolidated – resulting in fewer opportunities for small businesses. I am particularly interested in hearing today’s witnesses’ perspective on this phenomenon.

More broadly, numerous policies and protections have been implemented to ensure small firms’ continued participation in government contracting.  Many of these initiatives have evolved over the years to reflect the changing needs of small firms. One such evolution is the adoption of strategic sourcing and category management.

Category management is a broad concept used to optimize acquisition vehicles, processes, and knowledge available to best address agencies needs and generate savings. There are concerns that, despite any benefits, this model could result in greater consolidation and bundling of contracts and a reduction in the usage of the Federal Schedule system.  

While category management is billed as the strategy to get agencies the lowest price, our Committee has heard the contrary at previous hearings. 

Vendors on the Multiple Award Schedule continually provided lower prices than those offered by category management contract holders. Yet, agencies and contracting officers cannot take advantage of lower prices because some category management vehicles have become mandatory by their agency. 

The current course of this Administration is increasing the number of agencies heading in this direction. There is added concern that the “best in class” criteria poses a threat to emerging businesses that do not have the past performance to enter a vehicle and might be effectively locked out of the marketplace. 

All of this is not to say that category management is without merit.  We certainly do not want agencies using less efficient, more expensive procurement processes.  However, if small firms with a history of offering quality services are being locked out, we must consider if this initiative is achieving the intended result.   

During today’s hearing I look forward to hearing about challenges facing small contractors and potential solutions.  Doing so is not only essential for small firms and our nation’s industrial base, but the overall economy.  

I thank the witnesses for being here today.