Category Management Tiers represent a federal government-wide classification system used to evaluate and organize procurement solutions based on their level of standardization, efficiency, and strategic alignment. Managed by the Office of Management and Budget (OMB) and adopted by agencies across the federal government, this tiered system is central to the implementation of Category Management—a strategic approach to buying commonly purchased goods and services more effectively and efficiently.
Each contract vehicle or procurement solution is assigned a Tier level from Tier 0 to Tier 3, with each successive tier representing a higher degree of maturity, data transparency, and alignment with best-in-class acquisition practices. These tiers influence how agencies plan acquisitions, prioritize contract vehicles, and meet category management goals set forth by OMB.
Purpose of Category Management Tiers
The tier system was developed to help the federal government:
- Promote use of contracts that are strategically sourced and well-managed.
- Eliminate duplication in the procurement landscape.
- Improve visibility into spending and vendor performance.
- Drive government-wide savings through demand management.
- Encourage agencies to use “Best-in-Class” (BIC) solutions when available.
Agencies are evaluated on their ability to shift spending to higher-tier solutions, and contractors benefit from aligning with vehicles that meet these strategic criteria.
Overview of the Tier Structure
The Category Management Tiers are defined as follows:
Tier 0 – Spend Under Management (SUM) Not Aligned
This is the lowest level of classification. Tier 0 refers to agency spending that is not aligned with any contract management strategy. It includes:
- Open-market purchases.
- Standalone contracts with no shared oversight.
- One-off procurement solutions that lack standardization.
Tier 0 spending is considered unmanaged and discouraged by OMB guidance.
Tier 1 – Managed Spend
Tier 1 spending occurs under contracts that are managed at the agency level and include some strategic practices such as:
- Contract oversight and reporting mechanisms.
- Basic performance tracking.
- Standardized terms and conditions within the agency.
However, Tier 1 contracts may not be available government-wide and lack interagency visibility.
Tier 2 – Government-Wide Solutions
Tier 2 includes government-wide acquisition vehicles that offer greater consistency and oversight than Tier 1. These vehicles typically:
- Are available for use by multiple federal agencies.
- Feature centralized contract management.
- Include basic data reporting and demand management.
- Have undergone a vetting process to ensure consistency and compliance.
Many GSA Schedules fall into Tier 2, especially when they include standardized pricing, approved SIN structures, and usage across multiple agencies.
Tier 3 – Best-in-Class (BIC)
Tier 3 represents the highest level of contract maturity and strategic value. These solutions are designated as Best-in-Class by OMB and meet strict criteria such as:
- Rigorous data and performance reporting.
- Comprehensive demand and category management strategies.
- Government-wide access and shared usage.
- Vendor management and contract compliance practices.
- Established cost savings and operational efficiencies.
Contracts with BIC designation are prioritized by agencies and offer contractors increased visibility and access to high-volume opportunities.
Benefits of Higher-Tier Contracts
For contractors, being part of a Tier 2 or Tier 3 (BIC) solution provides several advantages:
- Greater exposure across multiple agencies.
- Higher likelihood of inclusion in strategic sourcing initiatives.
- Participation in procurement pathways aligned with federal goals.
- Increased competitiveness in category-managed spending areas.
- Potential for long-term volume and performance-based growth.
From the agency perspective, higher-tier contracts reduce administrative burden, standardize acquisition, and deliver better value.
How GSA Schedule Contracts Fit into the Tiers
GSA Schedule contracts, particularly under the Multiple Award Schedule (MAS) program, typically fall into Tier 2 due to their structured pricing, oversight, and broad availability. However, GSA also manages several Tier 3 (BIC) contract vehicles, such as:
- GSA SmartPay®
- GSA Fleet
- Alliant 2
- OASIS
- 8(a) STARS III
- VETS 2
Contractors seeking to maximize their exposure and long-term positioning in the federal marketplace often strive to align with or compete on BIC vehicles.
Agency Mandates and Tier Utilization
Federal agencies are under increasing pressure to demonstrate that they are using Tier 2 and Tier 3 solutions for their procurement needs. The Spend Under Management (SUM) initiative, managed by the Office of Federal Procurement Policy (OFPP), tracks how much of each agency’s budget is aligned to higher-tier vehicles.
OMB has established targets for agencies to:
- Decrease reliance on Tier 0 and Tier 1 solutions.
- Migrate spending to Tier 2 and Tier 3 vehicles.
- Justify exceptions through acquisition planning.
Agencies that meet or exceed these goals are viewed more favorably in oversight and audit reviews, making higher-tier contracts more attractive to program and contracting officials.
Implications for Contractors
Understanding where a contract sits within the Category Management Tiers can help contractors:
- Make informed decisions about which contract vehicles to pursue.
- Shape their marketing strategy when selling to agency buyers.
- Position themselves as compliant, forward-thinking vendors.
- Anticipate future shifts in acquisition trends and preferences.
Contractors bidding on or proposing new contract vehicles should consider what it would take to align with Tier 3 criteria and how to support agency goals in their proposals.
Conclusion
Category Management Tiers are a foundational element of modern federal procurement strategy. By classifying contracts based on their maturity, management structure, and strategic alignment, the government can prioritize smarter spending and drive better outcomes. Contractors who understand and align with this tiered model—especially those who participate in Tier 2 or Tier 3 vehicles—are better positioned for long-term success in the federal marketplace. As the federal government continues to adopt category management practices, the role of tiered contract evaluation will only become more central to procurement planning and vendor selection.
