Category management has been a hot topic since 2014 when the GSA initiated the idea as a solution to government spending waste. With federal spending well into the billions for procured services, the hope is to make sure taxpayer dollars are being spent wisely.
What is category management? Category management is the government’s attempt to consolidate spending into set categories such as IT or telecommunications. According to innovategov.org: “The Category Management Cross-Agency Priority (CAP) goal is focused on managing entire categories of common spending areas across agencies, in order to improve cost efficiencies, improve levels of expertise and leverage shared practices.”
The plan is for the federal government to utilize category managers to buy strategically out of each category “bucket.”
Overall, category management is meant to help agencies better organize their spending. The new program should also reduce contract replication, and enable agencies to efficiently meet their small business procurement goals. CAP categories currently include IT, Professional Services, Security & Protection, Facilities & Construction, Industrial Products & Services, Office Management, Transportation & Logistics Services, Travel & Lodging, Human Capital and Medical.
How does category management affect government contractors? The biggest issue with category management is that it reduces the number of new contracts awarded. If the government historically purchases a service through 15 contracts and category management wants to consolidate that into seven contracts, that’s several vendors losing business - and less work to bid on in the future.
The good news is that the government is still focused on achieving the same small business procurement goals. Yet, the government’s goal of getting lower cost services certainly increases the competition among all bidders, and some small businesses may fear they cannot compete with larger contractors.
While the long-term effects on contractors is still not known, many speculate that the new program will put big pressure on small businesses.
What can government contractors do? Stay abreast of the changes happening in the CAP program and be prepared to shift your bids strategy accordingly (Washington Technology).
Will the new president change the look of this new program? A recent article in Washington Technology says that the CAP program might not be enforced under the new administration. The incoming administration could even take a completely different approach altogether, moving away from government-wide acquisition contracts, resulting in more contracting opportunities.
The next few months will be telling for government contractors. The key - stay informed.