Federal contract consolidation: Help or hindrance for Native entity enterprises?

Contract consolidation is a practice that simplifies the acquisition of goods and services by the U.S. government. The practice can decrease the overall administrative cost for the federal government, but contract consolidation has known trade-offs for small business contractors. Our research finds consolidated contracts may similarly affect Native entity enterprises.

Previous CICD research found that for Native entity enterprises—that is, businesses owned by tribes, Native Hawaiian Organizations, and Alaska Native Corporations—federal contracting is a growing source of revenue. These enterprises perform work for the federal government as prime contractors, as subcontractors, or through joint ventures. For these Native entity enterprises, set-aside programs for small, minority-owned, or disadvantaged businesses are a primary source of contract awards. These set-aside programs give qualifying businesses an opportunity to win prime contracts that might otherwise be unattainable. The revenues earned through these set-aside contracts often benefit Native and non-Native communities by creating jobs, direct investments in the community, and transfers back to tribal governments to pay for public goods.

In government procurement, businesses typically compete for hundreds of thousands of prime contracts to provide goods and services to the U.S. government. To streamline this process, federal agencies sometimes combine multiple contracts into a single consolidated prime contract, often with expanded scope, award value, and complexity. Businesses well-positioned to win the larger, more complex contracts brought about by consolidation may welcome the opportunity for more considerable revenues.

However, for small, minority-owned, or disadvantaged businesses that normally pursue set-aside contracts, consolidation may put some contracts out of reach. That’s because some consolidated contracts combine previously set-aside or smaller contracts, making them more difficult for small businesses to win.

What contract consolidation might mean specifically for Native entity enterprises has not been thoroughly explored. Recently, as part of our work to advance the economic self-determination and prosperity of Native nations and Indigenous communities through actionable data and research, the Center for Indian Country Development team began looking into that question.

We analyzed publicly available data on prime contracts to assess trends in contract consolidation over time and how this practice may affect Native entity enterprises. We found mixed results. On the one hand, Native entity enterprises have increasingly earned consolidated contracts over time, with revenue from these contracts reaching a total of $736.6 million in 2023, up from $22.7 million in 2010. On the other hand, the data show that Native entity enterprises received only a tiny share—2.6 percent—of prime consolidated contract awards from 2010 through 2023, even as the number of Native entity enterprises participating in federal contracting grew.

Known barriers to winning consolidated contracts for small businesses

Consolidation involves combining two or more separate contracts for goods or services into a single contract. It can provide a cost, price, or quality improvement for federal agencies buying goods or services.¹ However, the practice can create additional complexities for small businesses, including Native entity-owned small businesses.

What makes consolidated contracts more complex? Compared to smaller contracts, they may entail a larger project scope, heavier staffing resources, higher financing requirements, and more nuanced expertise. In order to remain competitive for a newly consolidated contract, a small business may need to diversify its capabilities or partner with another company to fulfill the more complex requirements arising from new combinations of project tasks. For example, a previous contract for janitorial services could be combined with contracts for other facility maintenance services, such as security and HVAC upkeep; a small business having janitorial expertise but lacking HVAC technicians may find itself searching for the means to win the contract.

In recognition of these potential barriers, federal acquisition guidelines often require agencies to assess the impact of consolidation on small businesses. When the award value exceeds $8 million for contracts awarded by agencies under the U.S. Department of Defense (DOD) or when the award value exceeds $2 million for contracts awarded by all civilian agencies, agency contracting officers must perform an analysis and justification for new consolidated contracts.² Justifications for the subset of consolidated contracts that are categorized as bundled³ should demonstrate, among other factors, cost savings above 10 percent of the contract value. Ultimately, these regulations reflect the known impact of consolidation on small businesses and strive to balance the economic benefits of consolidation with the federal government’s policy to promote small business participation in government contracting.

Consolidation has increased over time

As measures to assess and justify its impacts on small businesses have continued, the practice of consolidation has accelerated in recent years, most sharply after 2020.

Figure 1 shows that the number of annual consolidated contracts signed⁴ between the government and contractors increased dramatically since 2010. That year, 10,483 consolidated contracts were signed. By 2023—the most recent complete year of data available for this analysis—this number increased roughly twentyfold, to 204,739.

Figure 1 illustrates the notable rise in consolidated contracting beginning in 2015. This trend continued through 2023 as consolidated contracts have risen year-over-year, aside from a dip in the number of consolidated contracts in 2020 that was likely due to reduced spending, project delays, and canceled contracts stemming from the COVID-19 pandemic.

As the total number of awarded consolidated contracts increased, the number of small businesses participating in federal contracting decreased. However, this trend did not hold for Native entity enterprises, which saw a rise in the number of participating small businesses, from 1,922 in 2010 to 2,489 in 2023.

Digging into Native entity enterprises and consolidated contracts

How do Native entity enterprises’ awards measure up against all consolidated contract awards?

Native entity enterprises receive only a tiny share of all consolidated contracts. Of the 51,251,210 federal contracts awarded from 2010 through 2023, only 513,852, or 1.0 percent, were awarded to Native entity enterprises.⁵ During the same period, agencies awarded 856,099 consolidated contracts; of those, Native entity enterprises received 22,420, or 2.6 percent. Native entity enterprises received a smaller share of bundled contract awards⁶: of 182,446 bundled contracts over this period, Native entity enterprises only received 55, or 0.03 percent.

Native entity enterprises’ dollar share of consolidated contract awards has grown since 2010, when they received 0.6 percent of consolidated contract dollars, or $22.7 million. By 2023, Native entity enterprises earned 4.6 percent of the consolidated contract dollars awarded that year, totaling $736.6 million.

Figure 2 shows how Native entity enterprises’ share of consolidated contract dollars increased but remained less than 5 percent of the awarded consolidated contract dollars annually.

The amount of consolidated contract dollars that Native entity enterprises earned (indicated in blue in Figure 2) generally increased over time, with a notable dip in 2020 and 2021 during the peak of the COVID-19 pandemic. The percentage of consolidated contract dollars that Native entity enterprises received over time (indicated in gold in Figure 2) was highest in 2023, with the second-highest peak from 2013 through 2015.

Figure 3 shows that Native entity enterprises secure consolidated contracts across various industry sectors. The left panel in the figure shows the total dollars Native entity enterprises received from consolidated contracts in each sector, compared to all consolidated contract awards, which are shown in the right panel. Among Native entity enterprises, the two sectors with the most dollars awarded were Professional and Business Services ($1.9 billion, or 60.3 percent of the consolidated contract amount) and Construction ($534.6 million, or 16.8 percent of the consolidated contract amount).

Among all enterprises, the two sectors with the most dollars awarded were Professional and Business Services ($58.5 billion, or 42.1 percent of the consolidated contract amount) and Manufacturing ($42.5 billion, or 30.5 percent of the consolidated contract amount). The top-awarded sectors among Native entity enterprises generally match those among all enterprises, except for the noticeable underrepresentation of Manufacturing.

Figure 4 indicates the five federal agencies⁷ that spent the most on consolidated contracts for Native entity enterprises and all enterprises from 2010 through 2023. The highest total award dollars for both came from the DOD, which spent $2.8 billion on consolidated contracts awarded to Native entity enterprises (86.8 percent of Native entity enterprises’ total consolidated contract amount) and $120.6 billion on all consolidated contracts (86.7 percent).

The (distant) second-highest awarding agency for Native entity enterprises, the National Aeronautics and Space Administration, spent $126 million (4.0 percent of the total consolidated dollar amount awarded to Native entity enterprises). For all enterprises, the General Services Administration (GSA) was the second-highest awarding agency, spending $5.5 billion (4.0 percent of the total consolidated contract dollars awarded to all enterprises).

Success in securing consolidated contracts could bring a substantial revenue source to Native entity enterprises—but so far, their presence in these deals has been modest. Consolidated contracts made up only 1.6 percent of Native federal contracting revenue from 2010 through 2023 (data not shown in the figure). Native entity-owned enterprises are less represented in consolidated contract awards in some industry sectors (such as Manufacturing) and with some agencies (such as the GSA). While these may be ventures into which Native entity enterprises can explore expansion, further examination is necessary.

Contracting in an evolving field

Consolidation’s impacts on small businesses are well-established. While Native entity enterprises may see strong potential revenue streams, they may still face challenges similar to those that small businesses face. In particular, contract consolidation could be a barrier for Native entities that own newer, fewer, or smaller businesses that lack the resources to compete for larger, more complex opportunities. These challenges do not negate small, minority-owned, and disadvantaged businesses’ opportunities to subcontract for awardees of consolidated contracts. However, due to the increasing presence of consolidated contracts, further study of trends in consolidated contracting could reveal opportunities that Native entities and other business owners can explore. Among other avenues, future research could investigate possible links between the growth of contract consolidation and the declining number of small businesses competing for government contracts.

Bolstering and growing Native economies depends on continued innovation and the pursuit of emerging opportunities. While federal contracting is not the only solution, it offers a valuable opportunity for Native entity enterprises to diversify revenue streams into various sectors, which advances the economic resilience of tribal economies. Through our analyses of Native federal contracting, the Center for Indian Country Development aims to inform tribal decision-making, strategic planning, and long-term infrastructure development. Prioritizing this type of research is a critical step toward building strong, sustainable economies in Indian Country.

Endnotes

1 Cost improvements from consolidation largely stem from reductions in administrative processing and staff time required to manage the reduced number of contracts. Price and quality improvements largely stem from volume pricing and better terms and conditions.

2 From Federal Acquisition Regulations 7.107-2(a)–(d), which require analysis of any consolidated contracts and outline the process to identify and approve the impact on small business concerns. This analysis primarily applies to the combination of contracts typically available for small businesses.

3 Bundling is a subcategory of contract consolidation. A consolidated contract is categorized as bundled when it is “likely to be unsuitable for award to a small business concern.” Many businesses may lack the staff, infrastructure, or experience to compete for these more complex, bundled contracts (Congressional Research Services 2012). For businesses that can compete, the outcome may be lucrative: In 2023, the total value of bundled contracts was nearly $80 billion (U.S. Small Business Administration 2024).

4 Signed refers to the date the government consented to the contract. “Date signed” is a data term from USAspending that denotes the date a contract was signed by the government and became a binding agreement between the contractor and the parties. We use this data category for our analysis throughout.

5 That is, to firms categorized as tribally owned, Native Hawaiian Organization-owned, or Alaska Native Corporation-owned. Accessed January 1, 2025, via USAspending search. All contracts in our analysis include both prime awards and indefinite delivery vehicles.

6 See endnote 3.

7 Figure 4 represents how USAspending designates the awarding agency. In this case, the top five awarding agencies include both executive departments (DOD, the U.S. Department of Energy, and the U.S. Department of the Interior) and an independent civilian agency (the National Aeronautics and Space Administration).