Marketing to U.S. Federal

1
Marketing to U.S. Federal State Governments
Strategy for Korean CompaniesDay One

• Presented by Mr. Adam Price
• Partner, Potomac Advisors
• Arlington,Virginia
• E-mail adam_at_potomacadvisors.com

2
Todays Overview

• Procurement Opportunity Overview
• Marketing Challenges and Opportunities
• Importance of Integrators
• Integrators are large prime contractors who bring
  together many companies to provide the government
  a single all encompassing solution

3
U.S. Governments

• Federal Government Departments and Agencies
• 50 State Governmentsthousands of local
  governments
• OverseasU.S. Government has active acquisition
  processes overseas wherever they have operations
  of any size
• DOD, State Department, and USAID
• 8th Army in Korea

4
U.S. Government Procurements

• Sole Source Contracts
• Not common
• Based on unique government needs and unique
  contractor capabilities
• Full and Open competition (for any company)
• Certified Small Business only competition
• General Services Administration (GSA) Schedules
• Government Wide Acquisition Contract (GWACs)
• State and local acquisition vehicles

5
Procurement Process (Part One)

• Many types of acquisition processes, but all are
  long difficult processes that require a
  disciplined approach and flexibility
• All types focus on fairness and acquiring best
  value for the government
• Contracting Officer posts the notification on
  Federal Business Opportunities (Fed Biz Ops)
• Release of a Request for Information (RFI) to get
  industry feedback or Request for Proposal (RFP)

6
Procurement Process (Part Two)

• Proposal due date that must be met by bidders but
  can be delayed by the Contracting Officer
• Evaluation is professional, internal to the
  agency, and based on a scoring method provided in
  the RFP
• Process is fair but not obvious and often
  requires professional support
• Requires patience as there is no quick sale
• Plan to commit long term and not overly draining
  resources

7
Likely Opportunities

• U.S. Federal Government is most actively
  purchasing products and services in Information
  Technology (IT) and Homeland Security (HLS)
• State and local governments are also purchasing
  larger amounts of IT and HLS services and
  products particularly with Federal money and to
  meet Federal standards
• Becoming a subcontractor or vendor to a prime
  contractor
• Strategic alliances
• SB/SDB programs
• Mentor/Protégé relationships

8
Challenges/Possibilities

• FARs, DFARs, and other Governmental regulations
• Buy American Act (BAA)
• Clearance requirements
• Creating an American small business
• Creating an American subsidiary
• Location of primary marketing office
• Culture and business
• Importance of Integrators
• Meeting and developing relationships with the
  right U.S. companies
• Contracting and Subcontracting Resources

9
Government Regulations

• To maintain order and fairness in Federal
  Government contracting, Federal Acquisition
  Regulations (FARs) were created
• Similar agency specific regulations were created,
  including DOD regs. (DFARs)
• These regulations can be very challenging and
  legalistic but there are resources including
  www.arnet.gov/far and Hill Air Force Base
  Contracting Laboratory FAR site
  http//farsite.hill.af.mil

10
Buy American Act (Part One)

• Created in 1988 for the Federal Government
  acquisition with more recent revisions for
  various trading partners, especially NAFTA
  partners
• Part of the FARs Section 10 (a-d) of Title 41 of
  the United States Code
• BAA sets expectations and goals to buy US branded
  products (can include components form other
  countries but must be manufactured in US to meet
  goals)
• Price preferences of 12 for US Small Businesses
  and 6 for all other US Businesses

11
Buy American Act (Part Two)

• Current debate in Congress over the U.S. Visit
  contract awarded to Accenture is about avoiding
  taxes and not foreign involvement
• Also demonstrates power of integrator lobbying
  efforts
• Exceptions if certain conditions are met
• Items for use outside of U.S.
• U.S. produced items are unavailable in reasonable
  quantities at a reasonable cost
• Unique technological offerings (BNFL, Cogema)
• Significantly reduced price of foreign products

12
Buy American Act (Part Three)

• Korea is seen as strong US ally and is likely to
  receive consideration for having been part of the
  US led coalition in Iraq
• Supplying materials, products, or services
  through subcontracts and vendor agreements
• Korean company could form US based company to
  resell Korean products

13
Clearance Requirements

• Clearance is approval process to see/participate
  in classified information/projects
• Clearance is required for certain types of
  contracts
• Clearance is granted after long process which
  looks to minimize threats risky behavior or even
  contacts with other countries and foreign
  nationals
• Clearance requires at least Permanent Resident
  Card (Green Card) and often U.S. Citizenship

14
Creating an American Small Business

• Creating a separate entity that is majority owned
  by U.S. citizens and within Small Business
  Administration (SBA) guidelines
• Can be certified as a protected class of
  company able to bid on contracts reserved for a
  subset of only such certified companies
• Company would resell Korean product for U.S.
  consumption
• Profits to U.S. company can be minimized to keep
  cost of products low and maximize profits to
  Korean company supplier

15
Creating an American Subsidiary

• Does not allow participation as U.S. Business but
  does help subcontract and strategic alliance
  opportunities
• Could lead to creating manufacturing
  infrastructure in US and pave way for creating a
  new American business

16
Location of Primary Marketing Office

• Local representation for ease of personal
  communication
• Government representatives prefer to sense that
  the local economy will benefit from contract
  selection

17
Culture and Business

• U.S. Government and companies are generally
  global in vision often considering best value to
  taxpayers or stockholders
• US familiar with and positive about South Korea
• Marketplace is English language only and has a
  high expectation for English fluency

18
Importance of Integrators

• Advocacy
• Integrators have large lobbying offices to help
  shape procurements (influence schedule, contract
  requirements, and technical specifications of
  procurements)
• Have the size and breadth to win and execute
  contracts
• Have profession contracting and proposal staff
• Can cover many areas of Scope of Work (SOW)
  themselves and subcontract and manage remainder

19
Top 10 Contractors to DODreported by DOD
Directorate for Information Operations and
Reports (DIOR) http//www.dior.whs.mil/
20
Consulting Integrators

• Accenture
• Booz Allen Hamilton
• BearingPoint
• IBM (IT, Human Resources, and Tax)
• Deloitte and Touche

21
Manufacturing/Equipment Integrators

• General Dynamics
• Boeing
• United Technologies
• owns Hamilton Sundstrand aerospace and industrial
  systems, Pratt Whitney aircraft engines, and
  Sikorsky helicopters
• General Electric (GE)
• Honeywell
• IBM

22
Specialized Services Integrators

• Science Applications International Corporation
  (SAIC)
• Computer Sciences Corporation (CSC)
• Halliburton
• ATT
• Pearson
• CACI

23
Do Everything Integrators

• Lockheed Martin
• Northrop Grumman
• Raytheon

24
What Integrators Want (Part One)

• Cheap, quality equipment delivered on time and
  without problems
• Integrators are judged by overall performance as
  a team and can suffer penalties if equipment
  delays implementation or underperforms
• Profit based on added cost to supplies and need
  low cost base to stay competitive
• Positive companies who communicate reasonable
  expectations and work to meet those expectations

25
What Integrators Want (Part Two)

• Marketing support from small, hungry companies
  who will work to sell products that are packaged
  as part of an integrator solution
• Growth or strategic alliances which allow access
  to the latest technology
• Anything that benefits the integrator

26
Relationships with Integrators

• Strategic alliances
• Agreements to share technology with only one
  integrator for special relationship in marketing
  and bidding on opportunities which leverage that
  technology/equipment
• SB/SDB programs for American companies
• Integrators must meet goals for small business
  utilization
• Mentor/Protégé relationships
• Special programs for large companies to mentor
  small companies run by agencies
• Can be funded (very competitive and likely to
  produce results) or non-funded (less competitive)

27
Meeting and Developing Relationships with Right
U.S. Companies (Part One)

• Evaluate own technologies and appropriate
  opportunities
• Use outside resources as necessary and according
  to budget
• Determine strategy and message

28
Meeting and Developing Relationships with Right
U.S. Companies (Part Two)

• Determining contact list of companies and
  individuals
• Research leading companies in target marketplace
• On-line research of company website
• Hiring consultants who know target companies
• Attending industry and government forums to see
  the latest trends and meet company
  representatives
• Attend government procurement meetings for
  introducing specific procurement parameters and
  answering industry questions
• Be prepared with business cards but be subtle and
  directed at the procurement at hand

29
Meeting and Developing Relationships with Right
U.S. Companies (Part Three)

• Prepare and practice message and presentation
• Must determine benefits that target company wants
  to receive
• Cold Calls
• Follow on meetings from conference introductions
• Facilitated introductions by consultants

30
Mr. Adam PricePartner, Potomac
AdvisorsArlington,VirginiaE-mail
adam_at_potomacadvisors.com