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Restructuring at HHS Leads to Significant Layoffs and Concerns for Small Business Support
Recent decisions at the Department of Health and Human Services (HHS) have resulted in substantial layoffs, including the closure of the Office of Small and Disadvantaged Business Utilization (OSDBU), with only its executive director, Shannon Jackson, remaining. This shift has raised alarm among stakeholders who emphasize the crucial role of the OSDBU in supporting small businesses.
While an HHS spokesperson declined to comment directly on the specific layoffs within the OSDBU, the agency has announced a staggering reduction of approximately 10,000 employees as part of an overall restructuring plan. This initiative aims to decrease the workforce from 82,000 to 62,000 through various measures, including early retirements and additional staff departures labeled as “fork in the road.”
The restructuring strategy, driven by the Department of Government Efficiency, aims to streamline HHS by reducing its divisions from 28 to 15 and its regional offices from 10 to five. Confirmations from multiple sources indicate the diminished status of the OSDBU’s staff, although there remains a glimmer of hope among former employees that some may be reinstated in the future.
Legislation, such as the Small Business Act, mandates certain small business goals and requirements, necessitating congressional intervention for any significant changes. Nevertheless, with Jackson still in her position, HHS retains the ability to assert compliance with these requirements, despite the lack of supporting staff in the OSDBU.
According to reports from Washington Technology, while HHS has not formally eliminated the OSDBU office itself, the reduction of its personnel considerably undermines its functionality. Guy Timberlake, CEO and co-founder of the American Small Business Coalition, highlighted the impracticality of relying on a single individual to manage the myriad responsibilities outlined in the Small Business Act, particularly given HHS’s extensive scope.
The OSDBU holds critical responsibilities, including collaboration with the chief procurement officer on acquisition strategies, conducting market research, and appointing small business technical advisors. Additionally, the office is instrumental in determining whether specific contracts qualify as small business contracts. The Small Business Act necessitates that agencies justify why certain contracts are not reserved for small businesses, a task that the OSDBU can no longer effectively perform without adequate staffing.
Timberlake remarked that the OSDBU’s voice in discussions around procurement requirements is now greatly diminished. He warned that if one individual represents the entire OSDBU, the agency’s advocacy for small businesses and the articulation of their strengths and capabilities may be severely compromised.
The layoffs have directly affected at least 25 employees across HHS headquarters and several key components, including the Center for Medicare and Medicaid Services, the Food and Drug Administration, the National Institutes of Health, and the Centers for Disease Control and Prevention. Timberlake emphasized the irreplaceable nature of advocacy work within the agency, stating, “That’s not something you can’t replace with artificial intelligence. At the requirement level, advocacy is part of the job.”
Throughout the 2024 fiscal year, HHS allocated $39.1 billion in contracts, with 22.8% directed to small businesses. However, the absence of dedicated representation within the OSDBU raises concerns about sustaining or improving these figures moving forward. As Timberlake noted, “It’s a lost opportunity. No one is minding the store now.”
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