How Does Foreign Industry Sell to the U.S. Department of Defense

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1 0 How Does Foreign Industry Sell to the U.S. Department of Defense Mr. Jeff Grover, Senior Procurement Analyst Contract Policy & International Contracting OUSD(AT&L) Defense Procurement and Acquisition Policy(DPAP)

2 1 Best Way For Foreign Industry to Know How to Sell to US DoD, is to know WHAT does US DoD buy from foreign industry? HOW does US DoD buy from ALL industry? Which Military Department or Defense Agency (WHO) buys from foreign industry?

3 What Does DoD Buy From Foreign Industry 2

4 Report to Congress on Purchases from Foreign Entities DoD procurement actions recorded in FPDS-NG during FY 2009 totaled approximately $369.9 billion. Of that amount, approximately $25 billion or 6.8 percent was expended on purchases from foreign entities. The $25 billion covers military hardware, subsistence, fuel, construction, services, and other miscellaneous items that are for use outside the United States. Defense equipment constitutes approximately 10 percent of the purchases from foreign entities. Fuel, services, construction, and subsistence account for approximately 28 percent, 15 percent, 17.4 percent, and 12.4 percent, respectively, or approximately 72 percent of the total purchases from foreign entities.

5 4 Defense Procurements From the Republic of Korea (ROK) ROK Sub-Contracting Opportunities by Fiscal Year (FY): FY2009 (currently in development) FY2008 $77,945,091 FY $16,290,318 FY $72,357,185 Top US DoD Prime-Contractors with Foreign Industry Sub-Contractors: Boeing, General Electric, Pratt & Whitney, Lockheed Martin, Raytheon, L3 Communications, Northrop Grumman, BAE Systems, General Dynamics, Rockwell Collins, Sikorsky, and Maersk Lines. FY 2010 Prime-Contractor DoD Procurements from the ROK: 5,598 Contracting Actions or waivers of the BAA granted $1,028,682,458 Dollars Obligated

6 5 FY 2010 Top 10 Procurements by Action from the ROK Product or Service Description Product or Service Code Dollars Obligated Actions CONSTRUCTION OF OFFICE BUILDINGS Y111 $8,464, LEASE-RENT OF OFFICE MACHINES W074 $2,741, MISC CONTRUCT MATERIALS 5680 $2,051, OTHER MEDICAL SERVICES Q999 $509, MAINT-REP-ALT/MISC BLDGS Z199 $7,457, MOD OF AIRCRAFT K015 $13,677, TRASH/GARBAGE COLLECTION S205 $6,849, CUSTODIAL JANITORIAL SERVICES S201 $3,314, MISCELLANEOUS ITEMS 9999 $980, OTHER PROFESSIONAL SERVICES R499 $20,533,

7 6 FY 2010 Top 10 Procurements by Dollars Obligated from the ROK Product or Service Description Product or Service Code Dollars Obligated Actions LIQUID PROPELLANTS - PETROLEUM BASE 9130 $428,592, CONSTRUCT/MISC BLDGS Y199 $57,843, CONSTRUCT/OTHER RESIDENTIAL BLDGS Y169 $52,823, R&D-MISSILE & SPACE SYS-ADV DEV AC23 (R&D Services) $44,284, ELECTRIC SERVICES S112 $35,750, WINCHES HOISTS CRANES & DERRICKS 3950 $27,500, HOSPITAL BUILDINGS C114 $24,360, GUARD SERVICES S206 $23,349, OTHER PROFESSIONAL SERVICES R499 $20,533, AIR CHARTER FOR THINGS V121 $19,864,

8 How DoD Buys From ALL Industry 7

9 DoD Competition Report and Update 2009 report issued June In Fiscal Year (FY) 2009, the Department of Defense (DoD) reported that $250 billion (or 65% of total DoD spend of $384 billion) were competitively awarded. 10 year competitively awarded average is 61%. The level of competition achieved within the Department varies, depending upon the type of product or service being bought by the DoD Component. Within the Components the level of competition achieved by various contracting organizations also varied based upon the product mix. Installation/depot and Construction contracting are well suited to competition and achieve the highest levels. Contracting organizations that buy specialized medical equipment or services, major systems, or spares and upgrades from the original equipment manufacturer (OEM) or supplier, had the lowest competition rates.

10 9 Select Major Defense Categories Procured From the ROK in FY 2009 DOD Claimant Code (DCP) DCP Description % Competed Actions Total Actions % Competed Dollars Total Dollars A1A A1B A1C AIRFRAMES AND SPARES 0.00% % $15,371, AIRCRAFT ENGINES AND SPARES % % $1,548, OTHER AIRCRAFT EQUIPMENT 91.01% % $19,175, A3 SHIPS 0.00% % $129, A7 ELECTRONICS AND COMMUNICATION EQUIPMENT 94.74% % $480, Grand Total 83.47% % $36,704,708.74

11 10 Useful Information on How US DoD Buys From All Industry 2009 Competition Report and other key competition policy related information: Defense Acquisition Portal (DAP) Defense Procurement and Acquisition Policy (DPAP) Training Available at The Defense Acquisition University (DAU)

12 Who Buys from Foreign Industry 11

13 12 Who is Buying from Foreign Industry First Stop: FedBizOps!!! Defense Federal Acquisition Regulation (DFARS) Contracting Activities Army Navy /Marine Corps Air Force - DLA -

14 13 Things to Consider in order to make ROK goods and services more marketable to the US DoD US and ROK should consider negotiating a Reciprocal Defense Procurement Memorandum of Agreement (RDP-MOA) Why? ROK would be considered a Qualifying Country in the Defense Federal Acquisition Regulation Supplement (DFARS) with a US National Interest Exception to the Buy American Act (BAA) for the ROK Both the US and ROK will agree to waive their respective Buy Nation Laws, remove barriers to defense market access, waive customs and duties, and agree to participate in an ethical, fair, open, and transparent procurement process ROK and US defense contract offers will be evaluated equal to those of the procuring nation Both prime contract and sub-contract defense materials and services will be considered favorable in meeting national requirements

15 Questions??? 14

16 Back-Up 15

17 Report to Congress on Purchases from Foreign Entities Issued by OUSD(AT&L) June 16, 2010 Required by Section 827 of the National Defense Authorization Act for Fiscal Year (FY)1997 (Public Law ) The report is to separately indicate the dollar value of items for which the Buy American Act (BAA) was waived pursuant to any reciprocal defense procurement memorandum of understanding (MOU), the Trade Agreements Act (TAA), or any international agreement to which the United States is a party. Based on data from the Federal Procurement Data System New Generation (FPDS-NG), data compiled and distributed by DoD s Defense Manpower Data Center, Statistical Analysis Information Division, and data published by the Defense Security Cooperation Agency (DSCA). Public access to the report at:

18 17 Fiscal Year 2009 Top 5 DoD Contract Types Type of Contract Action Obligation Actions Percent FIRM FIXED PRICE $167,356,043, ,073, COMBINATION OF MULTIPLE TYPES $44,993,240, , COST PLUS FIXED FEE $38,101,671, , FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT $24,781,420, , FIXED PRICE $17,037,308, , NOTE: OTHER CONTRACT TYPES NOT SPECIFIED WERE STATISTICALLY NOT SIGNIFICANT (< 1%)

19 18 Sources of Information Contract Types Federal Acquisition Regulation (FAR) Part 16 Types of Contracts Cost Pricing Reference Guides Volume Four _guide/vol4.pdf