The forthcoming Category Management initiative will likely disrupt the Government IT industry and the government proposal professionals who serve it. Category Management is a new paradigm developed by the GSA / OFPP to make procurement more efficient. An unintended side effect of the shift to Category Management will be a challenge especially to incumbent contractors.

Historical Background

Category management is a product sales paradigm that comes from the department store industry. Using this approach, the stores manage their sales cycle by focusing on each major category of product. For example, at the Target stores, one product category is laptop computers. By providing central management for this category, the chain can perform the tasks in the cycle starting with market research and buying most efficiently. The example given was a physical product, but the paradigm applies equally to services.

According to report, Federal Acquisition Service commissioner Tom Sharpe first got the idea of applying this paradigm to Government procurement. The concept has been used previously in the United Kingdom, and it has been under development in the U.S. since 2014. In February 2016 an inter agency council was formed to provide direction and coordination of the initiative. And a strong manager, Ms. Anne Rung, serves as Program Administrator at the Office of Federal Procurement Management (OFPP). According to the respected former GSA deputy assistant commissioner and present industry consultant Mark Day, “Category Management is not a fad that will come and go. It will be implemented over the next three to four years. And it will affect the way the Government procures IT products and services.”

Where Does the Danger to Industry Lie?

The famous minister to Henry VIII Thomas Cromwell who seized the assets from the English monasteries is credited with saying, “To have an omelet, you must break a few eggs.” There is concern in industry executive suites and proposal shops that the transition to Category Management will lead to “a few broken eggs.”

Consider some of the decisions that will have to be made as the Category Management initiative is rolled out. Category Management involves eliminating duplication by assigning each major category of IT product and service to a limited number of contract vehicles. Let’s assume that service Category “A” is currently procured through 20 contracts. If the shift will involve procuring Category “A” through only three contracts, then what can companies currently selling this category through the other 17 contracts do?

Also consider the case of Cloud services and its hand maiden telecommunications services. Under the Category Management implementation, will cloud and telecom then be bought under the same contract or under different contracts?

To the devil’s advocate, it seems that, even with the most careful planning process, industry execs and proposal professionals are likely to experience major challenges.

What Can We Do About It?

It is now incumbent on those proposal professionals dedicated to the success of their companies to get out in front of the curve and learn as much as possible about Category Management. One place to gain insight is at the APMP-NCA July 20, breakfast, at the Tysons Westin that focuses on Category Management. APMP has invited several Government executives with a deep understanding of the program to present. Mark your calendar. By learning as much as possible as soon as possible, industry managers can plan to meet the challenges of the transition.