SBA Goaling and Category Management–Major Changes

By: Christine V Williams on 05/12/2022

This week, SBA Headquarters and Outlook Law, LLC, spoke on a panel regarding changes benefiting small business.  Although it is widely known, the government increased small business goaling, one important fact that is lesser known but of great importance is the relationship of category management to small businesses.  Category Management has long been seen as one of the single greatest threats to small businesses.

SBA has worked diligently on behalf of small business to secure spots on category management, which it succeeded at doing.  Now, small businesses must be included in category management Tier 2.  Here are some facts on both the raised goaling level and the success with Category Management as well as a links:

Introducing major changes to the federal government’s use of “category management” to boost contracting opportunities for underserved small businesses. In recent years, the federal government has organized its buying practices for the majority of its contract spending using stewardship principles of “category management.” This process helps agencies buy as an organized entity, rather than as thousands of independent buyers, which allows agencies to make informed buying decisions and eliminate redundant buying choices. However, an analysis of category management spending since 2017 reveals that “socioeconomic firms, a group that includes SDBs, women-owned, service disabled veteran-owned, and HUBZones, have received a proportionally lower share of contracts.  To address this unintended consequence and increase support for these businesses, the Office of Management and Budget (OMB) is issuing revised guidance on the use of category management to help federal agencies conduct more equitable buying practices. This guidance:

  • Gives agencies automatic “credit” under category management for all awards made to socioeconomic small businesses, beginning in FY 2022.
  • Reinforces the importance of small business goal achievement as a key to advancing equity in procurement, especially when coupled with category management stewardship practices.
  • Ensures that use of “Best in Class” solutions is balanced with decentralized contracts and other strategies that are necessary to increase diversity within agency supplier bases.
  • Strengthens the voice for small business equity considerations in category management governance by making the SBA and the Department of Commerce (parent agency of the Minority Business Development Agency) voting members of the Category Management Leadership Council, the interagency governing body for category management activities.

Adopting key management practices to drive accountability and institutionalize achievement of small business contracting goals. Advancing equity for socioeconomic businesses firms requires focused attention, proactive engagement, and execution by agency senior leadership. On November 18, the Administration launched the President’s Management Agenda (PMA) Vision, which recognizes that fostering lasting improvements in the Federal acquisition system can create opportunities for underserved communities. Consistent with this vision, the federal government will:

  • Hold leaders accountable for meeting small business contracting goals. OMB is directing all agencies to include progress towards achievement of each of the socioeconomic small business goals as evaluation criteria in all performance plans for Senior Executive Service (SES) managers that oversee the acquisition workforce or agency programs supported by contractors.
  • Ensure agency small business contracting offices have direct reporting lines to senior leadership. Federal Offices of Small and Disadvantaged Business Utilization (OSBDUs) play an important role by working with agency acquisition officials to increase contracting with small businesses; assisting small businesses in obtaining payments from an agency; and providing advice to agency senior leadership to expand access to the supplier base. OMB is directing all federal agencies to report to SBA and OMB their plans to ensure that OSBDUs have direct access to senior leadership.

Increasing the number of new entrants to the federal marketplace to reverse the decline in the small business supplier base. A recent report found that the number of new small business entrants to federal procurement decreased by 60 percent over the past decade. This trend is directly at odds with the Administration’s equity goals and not only means fewer growth opportunities for small businesses, but weakened diversity and resilience of the federal supplier base. To reverse this trend, the Biden-Harris administration is tasking agencies with benchmarking the inclusion of new entrants in the federal marketplace and developing strategies for diversifying the small business supplier base. Agencies will work to increase transparency around future contracting opportunities to ensure that more small businesses have the opportunity to compete for them and enter the federal marketplace.