USWCC Report:
Stop the Loss of Small Business Federal Suppliers

Category Management
“Best-In-Class” Procurement
Driving Small Business Suppliers Out of
Federal Marketplace

August 2022 Update:
The Loss Continues of small business federal suppliers

August 16, 2022 – The U.S. Women’s Chamber of Commerce® (USWCC) releases a flash report entitled Stop the Loss: August 2022 Update | The Loss Continues  which highlights the continued loss of small business suppliers caused primarily by “Category Management” purchasing practices. Between FY 2017 and FY 2021 America lost 26% of our small business federal suppliers across all industries and federal agencies totaling 23,742 small businesses. Currently, FY 2022 trends project a further loss of an additional 14,326 small business suppliers if the federal government does not act now to increase the number of small business suppliers leveraged for federal spending in FY 2022. (Download the report.)

“Federal government spending with small business suppliers must be a top priority if we are to stop this downward trend and restore the small business supplier base participation in the federal market,” stated Charmagne Manning, President of the U.S. Women’s Chamber of Commerce. “A healthy, innovative and responsive industrial base is a critical part of our nation’s economy, local communities and military security.”

Originally reported May 2021, the U.S. Women’s Chamber of Commerce Stop the Loss of Small Business Federal Suppliers highlighted the negative impact the U.S. government’s unregulated purchasing practice of “Category Management” through “Best-In-Class” contracts had on the ability of small businesses to competitively participate as federal suppliers. This report and the active engagement of USWCC members with Congress and the White House led to President Biden’s Executive Order M-22-03 which aimed to create more inclusive competitive purchasing practices.

To stop the loss of small business federal suppliers, agency acquisition leaders must press forward quickly to leverage small business suppliers throughout all federal markets before the end of FY 2022. President Biden and Congressional Leaders must continue strong oversight of the acquisition process to ensure small business competitive inclusion.

USWCC Report: U.S. Women’s Chamber of Commerce finds: Between FY 2017 and FY 2020 America lost 24% of our small business federal suppliers.

WASHINGTON, May 4, 2021 – Today, the U.S. Women’s Chamber of Commerce releases a report entitled Stop the Loss of Small Business Federal Suppliers (http://uswcc.org/stop-the-loss) which highlights the impact the U.S. government’s unregulated purchasing practice known as “Category Management” through “Best-In-Class” contracts has had on small business participation as federal suppliers. Between FY 2017 and FY 2020 America lost 24% of our small business federal suppliers across all industries and federal agencies totaling 21,500 small businesses. New small business entrants into the federal marketplace have also dropped significantly.

Download of the available here report here.

In 2017 through an executive order, the federal government implemented the federal acquisition process known as Category Management through Best-In-Class contracts, which introduced the concept of “Tiered” procurements. This unregulated process resulted in larger contracts going to fewer and larger firms, thus limiting competition to a list of preferred vendors comprising only a small percentage of the total contractor market.

“Category Management has delivered devastating blows to women-owned and veteran-owned small businesses. While overall small businesses showed a loss of 24%, the number of women-owned suppliers dropped more than 22% and veteran-owned suppliers dropped over 17%,” states Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce.  “Excluding small businesses from competition in the federal marketplace drives up costs while leaving out the vital contributions that small business suppliers bring, including agility, innovation, and service.”

“Small businesses have been reporting for decades the difficulties they have accessing government contracts,” adds Charmagne Manning, President of the U.S. Women’s Chamber of Commerce.  “Small business entrepreneurship is often the only pathway to achieving the American Dream, especially for minorities, veterans and women who have been historically marginalized and denied equal footing to achieve success,” concludes Manning.

The U.S. Women’s Chamber of Commerce and its members call on President Biden to right this wrong by signing a Presidential Executive Order to specifically:

(1) Categorize all small business set-aside procurements or contracts awarded to small businesses as or equivalent to “Tier 3” spending as defined in the OMB Memorandum M-19-13 regardless of the contract vehicle or method used for procuring goods or services from small businesses.

(2) Pursuant to characterizing small business set-asides as”Tier3″ spending, small business set-asides and direct purchases from small businesses shall be exempt from any and all policies that direct procurement to Best in Class vehicles.

This U.S. Women’s Chamber of Commerce report is a call to action for President Biden, Congress, and federal agency leaders to act now to protect the U.S. industrial base and stop the loss of small business federal suppliers.

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The U.S. Women’s Chamber of Commerce (USWCC) is the leading advocate for women on economic and leadership issues. As the economic leader for women, the USWCC creates opportunities, drives progress, advocates, and provides tools and solutions to support the economic growth of women across America. The USWCC ( http://www.uswcc.org/  ) is a not-for-profit 501(c)6 organization founded in 2001 with over 500,000 members; its headquarters offices are located in Washington, D.C. Contact the USWCC at (202) 607-2488.