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Unleashing Billions: How Strategic Category Management Can Revolutionize Federal Buying

The federal government spends enormous sums annually. In fiscal year 2024 alone, federal agencies spent over $495 billion on common products and services, ranging from medical supplies to information technology (IT). For more than two decades, recommendations have been made to strategically manage this spending, which has already resulted in billions in savings.

The core strategy for leveraging this massive expenditure is the category management initiative, led by the Office of Management and Budget (OMB) with support from the General Services Administration (GSA) since 2014. This approach is intended to help federal agencies buy like a single, unified enterprise, thereby eliminating duplicative contracts and maximizing buying power. Since the initiative began, the government has reported savings exceeding $111 billion.

The Mandate for Centralization

Category management organizes federal spending into ten common categories, which together account for more than half of all federal contract spending. These efforts include creating government-wide contracts that offer competitive pricing and provide greater visibility into buying data.

Recently, the push toward centralized buying has accelerated. In March 2025, the President issued an executive order aimed at eliminating waste and enabling agencies to focus on their core missions. Following this, OMB issued guidance in July 2025 directing agencies to consolidate spending through contracts managed by GSA using category management principles, and to centralize agency procurement functions at GSA where appropriate. This presents a massive opportunity, especially since less than 20 percent of common spending currently goes through GSA.

Bridging the Gap Between Potential and Performance

While the category management model is proven—leading private sector companies use it to manage up to 90 percent of their purchases and typically achieve savings of 10 to 20 percent of total procurement costs—federal agencies continue to face implementation challenges. These difficulties mean billions of dollars in potential savings are being left unused.

Key challenges revolve around accountability, data, and requirements:

Accountability Facilitates Results

To achieve intended savings, agencies must be held accountable. Previous efforts to consolidate spending missed opportunities because agencies underutilized preferred contracts, and agencies were not held accountable for results. Although OMB has established goals—including targets for savings and the use of preferred contracts—gaps remain. For example, while the Department of Veterans Affairs (VA) issued relevant policy, its category managers generally failed to fulfill their implementation responsibilities.

The initiative also needs to ensure efficiency while balancing small business goals. Though small businesses have received at least 30 percent of annual category management obligations since 2016, the total number of small business vendors providing common products and services has unfortunately decreased each year, continuing a decade-long trend.

Data Must Drive Strategy

Agency limitations in collecting, analyzing, and sharing data have persistently hindered successful category management implementation. Many agencies do not regularly review IT contracts to identify potential duplication or share crucial contract data, such as the prices they pay for products. Agencies have reported numerous data challenges, requiring a government-wide solution and a strategic plan to improve access to centralized data.

Focus on Requirements

Defining requirements is a crucial, foundational step. Agencies must clearly understand what products and services they need before deciding how to buy them. Guidance has often focused primarily on contracting methods rather than emphasizing the importance of defining requirements upfront. For instance, officials once found that agencies were buying hundreds of different types of computers when nearly 80 percent of requirements could be met through just five standard configurations. Increased emphasis and tailored training are needed to ensure relevant officials engage early in defining standardized needs.

The Path Forward

Current efforts by OMB and GSA have the potential to significantly advance category management by providing the tools, training, and expertise needed to drive more spending through government-wide contracts. Success will require close collaboration to ensure GSA increases its capacity and meets agency mission requirements.

A sustained focus on accountability, data, and requirements, supported by continued Congressional oversight, has the potential to help federal agencies accomplish their missions more effectively while achieving greater efficiency and becoming better stewards of taxpayer dollars.

Tags Government contracting, Category management, Federal procurement, GSA, OMB, Taxpayer savings, Federal spending, Accountability, Data challenges, Requirements, Small business utilization, MarketUS