Marketing to U.S. Federal & State Governments: Strategy for Korean Companies Day One

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@potomacadvisors.com

Today’s 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 U.S. Governments Market Training Course

U.S. Governments • Federal Government Departments and Agencies • 50 State Governments—thousands of local governments • Overseas—U.S. Government has active acquisition processes overseas wherever they have operations of any size • DOD, State Department, and USAID • 8th Army in Korea U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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) U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

Top 10 Contractors to DODreported by DOD Directorate for Information Operations and Reports (DIOR) http://www.dior.whs.mil/ U.S. Governments Market Training Course

Consulting Integrators • Accenture • Booz Allen Hamilton • BearingPoint • IBM (IT, Human Resources, and Tax) • Deloitte and Touche U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

Specialized Services Integrators • Science Applications International Corporation (SAIC) • Computer Sciences Corporation (CSC) • Halliburton • AT&T • Pearson • CACI U.S. Governments Market Training Course

Do Everything Integrators • Lockheed Martin • Northrop Grumman • Raytheon U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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) U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

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 U.S. Governments Market Training Course

Mr. Adam PricePartner, Potomac AdvisorsArlington,VirginiaE-mail: adam@potomacadvisors.com

Marketing to U.S. Federal & State Governments: Strategy for Korean Companies Day One