MILLER ON PROCUREMENT.

Two of the more complex and rather hidden issues in selling to the federal agencies are the Buy American Act (BAA) and the Trade Agreements Act (TAA). If readers wish more detailed information Government Sales Consultants Inc. has two larger articles on this vital subject.

As you know, it is common for U.S. firms to move manufacturing off shore because of labor savings. One would be hard pressed, for example, to find a pc built entirely in the U.S., or even a monitor.

What many people find to be a problem is that not all off shore sites are equal in the eyes of the laws. Many countries are not approved under the TAA law, which kicks in above $190,000 per contract value. If the country is not listed in FAR Part 25 as having signed the GATT treaty then they are not allowed to do business under the TAA. Period!

They are also not then eligible to be on GSA Schedule, as well. They are eligible to do business under $2,500 per purchase order because the laws don't apply. Between $2,501 and $190,000, the TAA does not apply but the BAA does. Such products built in non-signatory countries are eligible to win but all foreign products are treated the same regardless of country of origin, which means the foreign product can win the bid but has a 6%, 12% or 50% penalty added on before prices are compared. This process is also complex.

However, most firms are not content to be restricted to doing business under the $190,000 threshold because this means you can't be on the GSA schedule and can't generally be a sub on DT V, etc. Not a good spot to be in. Many large firms like DEC, HP and Compaq have been faced with variations of this problem.

When a company is manufacturing in a country, which is a no a, like Singapore, China, Taiwan, The Philippines or Malaysia, they are simply ineligible except for bids below the $190,000 level.

One exception exists. If you build a product which is commonly incorporated into another larger product and the unit priced is the larger product, components can pass the test because of the "substantially transformed" rule. This is too complex to discuss in this article, but if you turn wood pulp from China into paper in Japan or the US, that is fine.

Now, it gets serious. IBM paid a huge fine to GSA a few years ago partly because they misrepresented gear built outside of the U.S. as built in the U.S. You must be truthful, or face the results.

Most large firms either escape the results of the law because of substantial transformation or because they also have a plant in Ireland, or some other approved country, and they must ensure that they ship everything to the federal government which is built in Ireland and nothing built in Singapore or China. Can your distribution system handle this?

We have seen numerous cases of pure fraud where firms ignorantly or deliberately do not tell the agency the truth. Often they escape detection because the government is lax. But not always.

However, in any case, failure to solve this problem, preferably by also manufacturing in a signatory country as well as China or Singapore, will result in eventual loss of your federal business channel unless you can survive by winning bids where the TAA does not apply, that is below $190,000.

As an aside, the threshold figure constantly changes because of complex relationships in GATT. It ranges somewhere around $50,000 and has been as low as $140,000 and as high as $192,000. It will change again.

I have always been curious about how things work and how institutions behave. As a government employee, I tended to snoop and sniff everywhere in my agency and with agency competitors, clients, etc. It really helps to figure things out to obtain a personal or corporate competitive edge.

The government is full of information. Currently GAO reports that there are about 42 agencies spending $349 million on the web pleases me. I can't wait for the day when we have a federal phone book web page. But first, most agencies will have to figure out how to get their phone book up to date faster than every two years.

The new procurement rules require a successful firm or salesperson to figure out how to drill down and find out things such as pending procurement info, current incumbents, budget data, which officials are calling the shots on the new bid from CINCPACDINKLT, etc. Longevity certainly helps and having been involved in government computers and contracts since 1959 is an edge. However, anyone who is literate on the net, enjoys reading and likes research, can start from scratch tomorrow and become quite expert in just a few months.

Here are some of the ideas it took me a long time to figure out. If the net continues to grow at the current rate consultants will be obsolete before long.

1) Join NCMA, IAC, AFCEA, FGIPC, etc. This is inexpensive and a good way to meet lots of people you need to know and to find out much desirable information.

2) Get a list of agency web sites and scout before the sales call. As a former government buyer, nothing caused me to dismiss a young salesperson quicker than a couple of questions which would reveal two things; you know nothing about me, my job, my computer system or my agency goals and/or you know nothing about the FAR. True, you can spend a lifetime learning more. But if you are bidding, you must understand one-step and two-step IFB rules, RFQ rules and RFP rules. If you are selling from the GSA schedule you must understand FAR 8.4 and the case law.

3) Make a few friends in your agency accounts that you can obtain the very difficult information from, but you must understand when you have stumbled onto forbidden information per the ethics rules. This is not a simple skill to acquire.

4) Learn to tap the public sources, the five-year plan, the budget info, the installed base info, the technical architecture info, the quarterly forecast, etc.

5) Obtain the inexpensive handbooks, guidebooks, phone books, agency organization charts etc. Subscribe to the GAO reports and especially zero in on the ones pertaining to your industry, product or client agencies. Call Staff Directories and find out about their CD ROM with listings of 200,000 DOD employees and the $150 per year excellent phone book for all agencies. Others include Carroll Publishing and the Yellow Book. We prefer the Staff Directories products because they are so complete. Do you have 20 numbers for NSA? They do and their phone is [phone].

6) Do some writing and public speaking to get your name in front of others you might benefit from knowing.

7) Play less golf and read more GAO reports, the Federal Register, the CBD, agency IG reports, etc. Acquire such public lists as the CAI/CISCO Silver Bullet List and exploit it.

8) When you visit the CIO of the target agency be brief and have your niche in the food chain ready to present with cost benefits and technical benefits readily available with copies to leave. The CIO list is on the Internet at cio.fed.gov.

9) Understand FAR 15.5 since 40% of spending is sole source. You might be interested in our Monograph 1 on the subject. All the government has ever created is FAR 6.302 and it isn't much, but you need to know what it says and what it doesn't say.

Understand that government agencies and personnel really are there to help you such as the IG, the competition advocates, the highest procurement authorities, the small business advisers, etc. Take classes every month. Attend everything you can find until you no longer obtain worthwhile info. After 38 years, I do this almost weekly. Do you know who all of these people are in your target accounts? Do you know how to get this info? Are you on the GAO report catalog list? Do you read or are you a typical sales guy whose eyes glaze over the FAR, who has no clue about case law, who does not know how to find the ten top primes at EPA and who really has two skills, talking on the phone and drinking/golfing?

Times are changing for better or worse - this remains to be seen - but you will not succeed without individual personal development efforts, training, skills and sources. Take this simple test. How many phone calls does it take you to figure out which office controls the importation of medicines into the U.S.? Or, who is in charge of network security at EPA? No more than three calls and five minutes means honing your skills.

Send us your e-mail address to ours, which is [e-mail], and we will send you a free five-page list of information sources.

Good luck and good hunting![sections]