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House Small Business Committee Democrats today tackled growing fears that small businesses are being left out of the federal contracting marketplace. In the process of awarding federal contracts, they argued, recent data suggests that more contracts are being consolidated, resulting in fewer opportunities for small firms. During the hearing, Democrats suggested that the adoption of category management, despite being well-intentioned, has done more harm than good for small businesses seeking to win a federal contract.  As the Trump Administration continues to adopt this method, Democrats pressed for inclusive policies that generate opportunities for small firms.  

“By delivering reliable and innovative products, small businesses have long been at the heart of the government’s supply chain,” said Ranking Member Rep. Nydia M. Velázquez (D-NY). “On this Committee, we must ensure that the challenges facing small firms are brought to light and met with solutions.” 

Broadly speaking, category management is a concept used to optimize acquisition and knowledge to address the needs of federal agencies and generate savings. However, Democrats argued that the process is flawed and specifically that by reducing contract duplication, it has led to the consolidation of contracts, locking many small firms out of the process. 

“We certainly do not want agencies using less efficient, more expensive procurement processes,” said Velázquez. “However, if small firms with a history of offering quality services are being shut out, we must consider whether category management is achieving the intended result.”   

While category management was designed to help agencies identify the lowest price, it has been shown that a different system, the Multiple Award Schedule has actually provided agencies with lower prices. Already mandatory at a handful of federal agencies including the Office of Management and Budget (OMB), the Trump Administration has signaled a desire to expand category management to more federal agencies, prompting a warning from Committee Democrats.  

“When small firms are discouraged from entering the federal marketplace, the resulting supply chain disruptions create a ripple effect that hurts our economy,” said Velázquez. “In order to compete with their larger counterparts, small businesses deserve policies that correct the deficiencies in our system.” 

Committee Democrats have long championed increasing the role of small firms in the federal marketplace. To this end, they helped to establish the Small Business Administration’s (SBA) yearly 23% government contracting goal for small firms. Throughout multiple hearings, they have called for an increase in transparency and oversight to ensure that small firms are receiving the opportunities they deserve. 

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