22 March 2016
William F. Savarino / Washington lawyer and US federal procurement expert / North America
How big a deal, really, is this Government Procurement Agreement (GPA) which the New Zealand press has been touting?
Simply put, the GPA paves the way for New Zealand businesses to compete on a more level playing field for a piece of the $500 billion U.S. federal procurement budget on par with U.S. companies. It eliminates much of the regulatory bias against New Zealand products and service providers, ensuring treatment no less favorably than U.S. products and service providers. This non-discriminatory treatment opens considerable doors and makes New Zealand’s accession to the GPA a very big deal indeed. It should empower New Zealand companies like ikegps, Tait, Hamilton Jet, Fisher Paykel, Vega, and Gallagher Security to scale some of their recent U.S. successes.
I am a lawyer in Washington, D.C. and I know a little about U.S. Government procurements. Some would say after thirty years specialising in the field, I know a lot about it.
U.S. law insists that federal agencies acquire end products that are manufactured or substantially transformed in the U.S. or a “designated country”. This has precluded more than a few Kiwi companies from selling their products directly to the U.S. Government from New Zealand; forcing companies to either undertake the rigors of establishing a manufacturing plant in the U.S. or involving a U.S. intermediary, at considerable cost and risk. Not anymore. New Zealand will become a “designated country” under the U.S. Trade Agreements Act (“TAA”) by virtue of the GPA, which means their products and services will be treated the same as those from the U.S.
This new designation, while not eliminating all Buy America provisions, also permits your companies to directly obtain General Services Administration (GSA) schedule contracts, which is a federal catalogue from which agencies can easily and conveniently purchase products and services, and which is often utilised by state and local governments as well.
The U.S. federal marketplace is enormous, largely unforgiving, and highly competitive. However, I can offer some pearls of wisdom for the uninitiated.
- The first is to “go big or go home”; it’s not a place for the timid or the uncommitted, so do your homework, utilise your connections, plan your work and work your plan.
- The second is “bid to win and manage to profit”. Quality counts but price is what wins contracts. Companies with razor thin margins often find their profit in negotiating change orders with the agency.
- Finally, “learn from experience, not by experience”. Utilising learned market and legal experts saves time and money. So reach out to New Zealand Trade and Enterprise (NZTE) folks, their job is to ensure your success and they know the U.S. federal marketplace better than anyone. I’m reminded of the old American Express card ad, “don’t leave home without it”. You’d be a fool to venture into the U.S. federal marketplace without coordinating with NZTE. And while you’re at it find yourself a good procurement lawyer.
The U.S. federal marketplace is one of the most highly regulated markets in the world, with thousands of rules, regulations, and guidelines. Successful companies know how to make those the Federal Acquisition Regulations (FAR) work for them.
Some additional food for thought:
- Size typically doesn’t matter. The U.S. federal marketplace welcomes the very small and the very large companies, and everything in between. Opportunities abound for all.
- Reputation means everything. Agencies keep a record of performance for each contractor. Those reviews often serve as the differentiator in close competitions.
- It truly does pay to keep your customer happy. Contractors must adopt rigorous internal ethics programs and facilitate federal audits, which are occurring in increasing frequency these days. Overlooking details, even unintentionally, can be costly.
New Zealand did well in achieving GPA status. It has evened the U.S. playing field for bold companies sufficiently poised to seize the opportunity.
Originally published in the National Business Review for publication 27 November 2015.