Where today's small business contracting discussion needs to start

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The General Services Administration has big plans for small business contracting as seen in two recent announcements but is that enough to achieve what they want?

In two announcements over quick succession late last week, the General Services Administration released more details on its larger procurement equity push and aim to increase the role of small businesses in federal contracting.

GSA previously made two goals known: $100 billion in contracts for small businesses over the next five years and an increase by 50% regarding opportunities for small disadvantaged companies over that time.

The agency gave more of a glimpse into that bigger picture Thursday with the announcement it plans to quadruple the contracting goal for small disadvantaged businesses in this current fiscal year.

FCW reporter Chris Riotta shared the exact size and specs of what GSA wants to achieve in this article from Thursday. Riotta also explored the larger background of the administration’s procurement equity push for this story back in July.

Ambitious is one way to describe what GSA and the White House wants to achieve in by bringing more small businesses into the fold of government contracting or at least creating more opportunities for those already participating.

Or as former GSA Federal Acquisition Service commissioner Jim Williams put it in this Government Matters interview from November: a “doable but very tough goal.”

One path GSA will use to work toward its goal is the Polaris IT services contract vehicle, the replacement for Alliant 2 Small Business that will serve as a test case for what the agency is trying to achieve in its procurement equity and small business participation push.

This column is going out as GSA unveils the final solicitation for Polaris. The governmentwide acquisition contract features both general small business and woman-owned small business pools. Proposals are due by May 13.

Some of Polaris’ technology focus areas also indicate the ambitious nature of this particular procurement: artificial intelligence, quantum computing, edge computing, automation, cloud computing, cybersecurity and immersive technology.

No ceiling value is given for Polaris, but we expect billions in opportunities to be available for companies that are selected for the vehicle. We are certain many of those opportunities will be fairly large given the government’s emphasis on scale for those technologies.

So here's the larger question we want to raise: Does the path to more small business contracting dollars also require less of something else?

Contracts are getting larger in value and the requirements within them are increasing, which naturally thins out the pool of companies that can afford to bid for those opportunities. That limits the number of companies able to perform the work at the scale and standard required.

We have to note that the above trend of bundling more requirements into fewer, larger contracts is hard to measure and get an exact read on. That said: We hear enough anecdotes on contract consolidation being a reality that leads us to believe it warrants consideration.

This December 2019 report out of the market intelligence and business development consulting firm The Pulse of GovCon is two years old, but remains a good reference point to see the bundling and consolidation path government agencies have gone down.

One practice The Pulse team pointed to as a contributing factor is category management, which agencies use to unite practitioners across each avenue of federal contract spending so agencies can buy as more organized entities.

But category management also comes with a price. The Pulse’s findings illustrate how that practice has led to more contract consolidation and bundling—despite a world of set-asides and the push to increase opportunities reserved for small businesses.

Even the White House has said that while category management has helped agencies generate savings, it also brings negative effects on small businesses. An administration memo from December 2021 said the number of new small business entrants into federal procurement fell by 79% between 2005 and 2009, and lays out corrective plans.

Mitigate those negative impacts, and perhaps the government contracting ecosystem can change the often-used “barbell shape” imagery to show the vast numbers of small and large firms on opposite ends with increasingly fewer in the middle.

Setting aside the overall goal of procurement equity, growing the pool of companies participating in the government market is a worthy discussion with lots of spinoff topics to run through. But the trend of fewer and larger contracts is where that discussion’s starting line needs to be.