Acquisition

Strategic sourcing’s subtle effects on small business

pricing

Do federal strategic sourcing initiatives put price ahead of good business relationships -- and hurt both small businesses and the agencies seeking their services in the process?

"The strategic sourcing that Wal-Mart does builds long-term relationships with suppliers," said Emily Murphy, senior counsel of the House Committee on Small Business. The federal government's brand of strategic sourcing, however, has become "more about leveraging buying and limiting the number of companies that might be able to compete."

That emphasis on pricing in the government's growing strategic sourcing efforts can work to squeeze small businesses out of the running for government contracts, she said. Unclear regulations from the Small Business Administration concerning how smaller businesses can partner with larger ones to vie for large contracts add to the pressure.

"We need industry to point out that there could be long-term harm," Murphy said. Although strategic sourcing can produce savings as competitors vie for an initial contract, "those savings won't continue" as the initial incentive to get the lowest price tends to fade as contracts are locked in.

Murphy, who spoke at a July forum on small business partnering sponsored by the Coalition for Government Procurement, also contended that efforts to ensure a certain percentage of federal contracts go to small businesses can be subverted by sometimes-confounding regulations, which drive small companies away from competing in the market.

For strategic sourcing initiatives to be most effective for federal agencies, she argued, "we have to have a viable community of small businesses."

About the Author

Mark Rockwell is a senior staff writer at FCW, whose beat focuses on acquisition, the Department of Homeland Security and the Department of Energy.

Before joining FCW, Rockwell was Washington correspondent for Government Security News, where he covered all aspects of homeland security from IT to detection dogs and border security. Over the last 25 years in Washington as a reporter, editor and correspondent, he has covered an increasingly wide array of high-tech issues for publications like Communications Week, Internet Week, Fiber Optics News, tele.com magazine and Wireless Week.

Rockwell received a Jesse H. Neal Award for his work covering telecommunications issues, and is a graduate of James Madison University.

Click here for previous articles by Rockwell. Contact him at mrockwell@fcw.com or follow him on Twitter at @MRockwell4.


Featured

  • Cybersecurity

    DHS floats 'collective defense' model for cybersecurity

    Homeland Security Secretary Kirstjen Nielsen wants her department to have a more direct role in defending the private sector and critical infrastructure entities from cyberthreats.

  • Defense
    Defense Secretary James Mattis testifies at an April 12 hearing of the House Armed Services Committee.

    Mattis: Cloud deal not tailored for Amazon

    On Capitol Hill, Defense Secretary Jim Mattis sought to quell "rumors" that the Pentagon's planned single-award cloud acquisition was designed with Amazon Web Services in mind.

  • Census
    shutterstock image

    2020 Census to include citizenship question

    The Department of Commerce is breaking with recent practice and restoring a question about respondent citizenship last used in 1950, despite being urged not to by former Census directors and outside experts.

Stay Connected

FCW Update

Sign up for our newsletter.

I agree to this site's Privacy Policy.