- Combining smaller contracts into large procurement vehicles
- Reduced opportunities for small businesses to compete as prime contractors
- Increased reliance on subcontracting relationships
Contract bundling is a procurement strategy in which agencies combine two or more requirements that were previously performed under separate smaller contracts into a single larger contract. This approach can streamline procurement processes and reduce administrative costs for government agencies.
However, bundling can also create barriers for small businesses. Large bundled contracts often require resources, staffing levels, and past performance credentials that exceed the capabilities of many small firms. As a result, these companies may be unable to compete as prime contractors.
When bundling occurs, small businesses may still participate as subcontractors under larger prime contractors. While subcontracting relationships can provide valuable experience, they often offer less control over contract performance and fewer opportunities for revenue growth compared to prime contracting.
Federal policy recognizes these concerns and requires agencies to consider the impact of bundling on small businesses when structuring procurements. However, determining the appropriate balance between procurement efficiency and small business participation remains a complex challenge.
Ensuring that small firms have meaningful opportunities to compete for federal contracts is an important goal of federal procurement policy.
NAGC is advocating for procurement policies that carefully evaluate the impact of contract bundling on small business participation in federal contracting. NAGC is working with policymakers and federal agencies to promote procurement strategies that maintain opportunities for small firms while allowing agencies to achieve operational efficiency. NAGC is also helping small businesses develop teaming and subcontracting strategies that allow them to participate in larger procurements when bundling occurs.
