Problem GSA is Facing in Small Business IT Market

Over the past few years, there has been a significant reduction in the GSA's portfolio of small enterprises that sell IT to the federal government. The number of businesses in this industry dropped dramatically by 24% from 2018 to 2021. This is primarily due to the fact that there aren't enough new small businesses entering the market to take the place of those that are being purchased or exiting.

Trying to Overcome Small Business Perception

On the other hand, the GSA and the Federal Government go above and beyond to assist small IT companies. The IT market share held by GSA increased from 34.7% to 37.8% for the same 2018–2021 timeframe. This might not seem like a big gain, but in raw dollars, it amounts to $4.3B.

GSA’s Fix is Category Management

GSA wants to spread the word about Category Management in order to persuade new small business IT companies to enter the federal market. Category Management aims to segment IT into as many tiny niche markets as it can. Small firms typically avoid these segments, even though increasing their visibility will increase sales. When a government buyer is looking for a solution, they can locate the companies that fill that demand, such as a company that offers cyber security in a specific kind of computing environment. Without it, there would be 40,000 buyers in the federal government's 3,300 buying offices, which would make it difficult for small businesses to compete. Small businesses simply lack the means to advertise their services; they rely on customers to find them.

Category Management Two Part Strategy

Part 1 – Small IT companies' administrative workload and marketing expenses will be significantly reduced by master governmentwide small business IT contracts. A GSA Schedule or another GWAC is required for small businesses.

Part 2 – Support on the backend is needed to ensure that the 40,000 federal buyers are able to use the system effectively.

The GSA is doing its share to open up government markets to small IT businesses, benefiting businesses at an all-time high. The question at hand is whether businesses will return or if a growing number of small company IT contractors will capture more of the federal IT business sector.

If you need assistance exploring your firm’s eligibility and potential working in the federal space, I always recommend contacting an industry expert such as Advance GSA or ez8a. Neither charge for an initial consultation.