Category Archives: Global economy

2020 Top 100 And The Government Contractor Market

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Image: “Washington Technology

“WASHINGTON TECHNOLOGY” By Nick Wakeman

“Several long terms trends are evident in the Top 100 that will continue to drive activity in the market regardless of the pandemic.

Mergers and acquisitions, divestitures, major contract awards, and more rapid adoption of business models such as the cloud and managed services will continue to influence what is happening in the market.

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“Taken as a whole the 2020 Washington Technology Top 100 shows a government contractor market coming off a strong year of growth and positive activity.

Sign number one of a good year is that the aggregate value of the prime contracts for the Top 100 reached $126.3 billion, compared to $115.4 billion for the 2019 Top 100. That’s the fourth year in a row that we’ve seen growth since the market hit bottom with the 2016 Top 100 when the aggregate prime contracts totaled $97.2 billion. The low point came after five years of declines.

The market still hasn’t reached the peak we saw with the 2011 Top 100 when the aggregate prime contracts were valued at $132 billion.

And on a historical note, the 2001 Top 100 – 19 years ago – the aggregate prime contract number was $26.8 billion. That was before the Sept. 11 terrorist attacks super-charged the market.

It is important to note that the 2020 Top 100 is based on federal procurement data collected for calendar 2019. We analyze Federal Procurement Data System reports using over 700 product and service codes that represent IT, systems integration, telecommunication, professional services, engineering services and other technology spending.

An important caveat to this year’s Top 100 is that because we used calendar 2019 data, the rankings do not reflect the impact of the government’s response to the COVID-19 pandemic. Whether that impact is positive or negative will have to wait until next year’s Top 100.

You need look no farther than Leidos, the No. 1 company on the Top 100 with $8.1 billion in prime contracts.

The company pulled off two major acquisitions. It paid $1.65 billion for Dynetics, a space engineering firm, and then $1 billion for the airport security technology business of L3Harris. They also won a couple major recompetes valued in the billions – the $4 billion Hanford site cleanup contract and a $4.6 billion DISA contract to run a global network.

Still in the protest phase is the Navy $7.6 billion NGEN contract that Leidos took away from Perspecta.

But Leidos isn’t alone in big wins.

Science Applications International Corp., No. 11 with $3.7 billion in prime contracts, acquired Unisys Federal for $1.2 billion. It also captured a five-year, $2.9 billion OASIS task order to provide software development and other services to the Army. The company also captured a $1.4 billion Justice Department contract to continue supporting the agency’s asset forfeiture program.

Many others are reporting wins as well. For example, NCI Information Systems, No. 83 with $268.3 million in prime contracts, told us that their book to bill ratio for 2019 was two times revenue and will be better than 1.5 times for 2020.

CACI International, No. 12 with $2.9 billion, captured a significant new contract when it won BEAGLE, a $1.8 billion contract to modernize the back office systems for Customs and Border Protection.

A common theme that runs through many of these wins is the desire by many government agencies to modernize their IT infrastructure, applications and systems. The big buzz word many are using is digitization.

The work is attractive for many companies because it tends to be higher margin and it requires a closer working relationship with your customer.

For Serco Inc., No. 32 with $869.5 million in prime contracts, getting into position to win that kind of work meant walking away from lower margin contracts that were primarily competed on a lowest price, technically acceptable basis.

“In the past, we were just saying, let’s bid lower and then we’ll win the work,” said David Dacquino, CEO of Serco Inc., the U.S. subsidiary of the U.K.-based Serco PLC.

Moving away from that kind of work was a challenge. “It was a significant cultural change because we were comfortable with that, but our backyard was getting too small,” he said.

The shift to higher margin work required investments in people as well as acquisitions such as the deal it made for a portion of Alion Science and Technology that added more Navy work.

The government also played a role in pushing that kind of change at Serco. “We saw customers looking to get a better value,” Dacquino said.

That’s just one example of how the government and what it is asking for is driving companies to change. The market is definitely in an era of push and pull, where agencies are more open to commercial technologies and new ways of doing business and companies are finding new ways to introduce those concepts to their customers.

During our Top 100 event, panelists from Booz Allen Hamilton, No. 8 with $5.2 billion in prime contracts, and ManTech International, No. 28 with $1.2 billion in prime contracts, both described how customer demand for modernization drives change.

Many contractors have set up organizations that allow commercial tech vendors and government customers to come in and test drive solutions and try out cutting edge technologies. The result is we see many companies now with “Centers of Excellence” or “Innovation Labs.” And we see it in people’s titles. Srini Iyer is senior vice president of ManTech’s Innovation and Capability Office and Gary Labovich is the Next Generation Modernization Lead at Booz Allen.

They described a hunger by customers for new ways of doing business and getting results more quickly. The moves by the companies on the Top 100 reflect this overarching market driver.

Companies on the larger end of the Top 100 talked about a need to focus much the same way the smaller companies on the Top 100 spoke of focus.

As Tony Colangelo, founder and CEO of Minburn Technology Group, No. 94 with $225.3 million in prime contracts, said the key to his company’s success was the decision “to do a few things really well instead of a lot of things not well at all.”

ABOUT THE AUTHOR:

Nick Wakeman

Nick Wakeman is Editor-in-Chief — Washington Technology

Arms Trade, Globalization And Spending Drive Defense Industry Growth

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Image: “Defense News

DEFENSE NEWS

“Defense revenues of the top 100 defense companies in the world climbed for a fourth straight year, pushed upward by U.S. defense spending growth combined with strong foreign military sales.

Fiscal 2019 defense revenues recorded in Defense News’ Top 100 list totaled $524 billion, up about 7 percent from $488 billion in fiscal 2018, according to numbers compiled by Defense News as part of the annual Top 100 list.”

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“The single most striking thing about these data is the year-over-year growth, the median of which is 7 percent,” said Atlantic Council Senior Fellow Steven Grundman. “For an industry generally regarded as mature, revenue growth that runs at two times global GDP is downright sporty.”

Click here to see the Defense News Top 100 list.

The defense industry remained top heavy, as the top 10 firms accounted for 50 percent of total defense revenue on this year’s list, and the top 25 companies accounted for about 75 percent of the total.

Geographically, U.S. firms made up seven of the top 10, and 10 of the top 25. The combined defense revenue of the 41 U.S. firms in the Top 100 list comprised more than half of the total defense revenue.

China this year had five firms in the top 15 companies versus six last year. Eight Chinese firms made the Top 100 list this year, with a combined $95 billion in defense revenue for FY19 ― which is $11.7 billion shy of the list’s total for Europe and Turkey.

The Aviation Industry Corporation of China, which appeared with other Chinese firms for the first time last year, fell from No. 5 to No. 6, though its defense revenue grew by a percentage point over last year. China South Industries Group Corporation fell from No. 11 to No. 18, as its revenue declined 26 percent, from about $12 billion to around $9 billion.

China is unquestionably a defense giant in the Asia-Pacific region, dwarfing its nine neighbors (excluding Russia) on the list. Their 2019 defense revenues totaled $21 billion.

The combined revenues of the Chinese firms marks the country as the rising superpower it’s billed to be in political and strategic circles, said Daniel Gouré, a senior vice president with the Lexington Institute.

“For all the discussions we have been having over the last weeks and months about China as a potential threat and challenges, they are building all kinds of blue-water ship classes that mirror the U.S. Navy,” he said. “For a country that was once thought of as a continental or near-shore power, it’s amazing the stuff they’re building, and its reflected in these companies.”

From Europe and Turkey, a NATO ally, there were 35 firms across the list. The combined defense revenue there comprised roughly 20 percent of the Top 100 total. Seven Turkish firms made the list, with FNSS Savunma Sistemleri A.S., and Havelsan A.S. joining the list at No. 98 and No. 99 respectively.

For Russia, some past participants declined to provide data this year for unknown reasons. The two that participated made it into the list: Almaz-Antey placed 17th, with $9.2 billion in defense revenue for 2019, and Tactical Missiles Corporation JSC placed 35th, with $3.5 billion in defense revenue.

The annual Defense News Top 100 list relies for the most part on self-reporting from companies, many of whom provide estimates rather than definitive data for their defense percentages. That means that while the list is the industry standard, the numbers come with some variance.

Heritage firms dominate

Lockheed Martin was a lock for No. 1, for the 21st year in a row, with defense revenue that represents nearly 11 percent of the total. Its defense revenue jumped 12 percent between FY18 and FY19, from $51 billion to $57 billion ― with Boeing trailing at No. 2 at $34 billion in defense revenue for FY19.

Within the top five, General Dynamics climbed back from No. 6 last year, passing both Raytheon and Northrop Grumman.

Northrop fell from No. 3 to No. 4, likely based on a full-year accounting of its acquisition of Orbital ATK in 2017, said analyst Roman Schweizer, managing director of Cowen and Company.

GD led Northrop by $912 million in defense revenue, with Raytheon (5th place) trailing Northrop by $1.2 billion in defense revenue.

Lockheed Martin's top program in fiscal 2019 was the F-35 Joint Strike Fighter. The firm's largest customer was the United States, followed by Saudi Arabia. (Staff Sgt. Emerson Nuñez/U.S. Air Force)

Lockheed Martin’s top program in fiscal 2019 was the F-35 Joint Strike Fighter. The firm’s largest customer was the United States, followed by Saudi Arabia. (Staff Sgt. Emerson Nuñez/U.S. Air Force)

Ten companies increased their defense revenue by $1 billion or more, and Lockheed Martin led the pack with a $6 billion boost.

The merger between L3 Technologies (18th place last year) and Harris Corp. (26th place last year) saw a new entry, L3Harris Technologies, take the No. 9 spot, with $13.9 billion in defense revenue ― just ahead of United Technologies Corp., which acquired Rockwell Collins in 2018 and whose merger with Raytheon should be reflected in next year’s list.

At the same time, the data doesn’t support the argument that the defense industry is growing progressively more concentrated, according to Grundman.

“The top-quartile of firms account for exactly three-quarters of the revenue both in 2018 and 2019,” he said. “Looking back at the data for 2013, the top quartile took 73 percent of the revenue, but that’s not appreciably less than last year.”

Still, despite the Pentagon’s push to work with nontraditional suppliers, the top of this year’s list, and the list overall, is almost like the automotive sector, it’s so dominated by familiar names, said Byron Callan, an analyst with Capital Alpha Partners.

“The interesting thing is just the relative stability of this,” Callan said. “For all of DoD’s emphasis to get new entrants into the sector, and reach out to innovative suppliers, you just don’t see it. When you compare it to the technology sector, we’re all using things made by companies that weren’t even household names 10 years ago. … Where is the Tesla [of the defense sector]?”

It’s not out of the question that the list changes over the next five years, if the U.S. Department of Defense and foreign militaries make good on their promises to boost innovation, Callan said.

For all the DoD’s discussion of the growing role of software, artificial intelligence and machine learning, there’s no company known for those things on the list, Gouré observed.

Beyond General Dynamics, which completed its acquisition of IT services giant CSRA in 2018, “AI, software, IT aren’t there because they’re still subcontractors,” Gouré said. “Microsoft and Amazon Web Services, they aren’t anywhere on the list.”

That’s not to say there isn’t massive spending on all of the above, but it remains a subcomponent within companies, and therefore not captured on the list, Gouré said.

“If we keep saying it’s the kill chain, the network matters and the country with the best AI will win, are we not investing enough, are we doing the right thing?” Gouré wondered. “There are more questions than answers.”

(Booz Allen Hamilton, No. 26 this year, did win an $800 million Pentagon artificial intelligence contract. But as that occurred in May 2020, it will likely impact future lists.)

For now, the large, multiplatform firms dominate and should continue to do so, even if government defense spending declines, Gouré said. “These guys are showing it’s good to have a finger in many pies.”

France's Dassault nearly doubled its revenue from $2.9 billion in FY18 to $5.7 billion in FY19 ― jumping from No. 38 to No. 22 on the Top 100 list. (Mehdi Fedouach/AFP via Getty Images)

France’s Dassault nearly doubled its revenue from $2.9 billion in FY18 to $5.7 billion in FY19 ― jumping from No. 38 to No. 22 on the Top 100 list. (Mehdi Fedouach/AFP via Getty Images)

Furthermore, the data tend to contradict the conventional wisdom that defense is an industry of mostly large-scale, pure-play firms, according to Grundman.

“In fact, the median [defense] revenue of the top 100 is only $2 billion. And on average, only slightly more than half each firm’s revenue … derives from defense sales,” he said.

Flat-budget future?

The consensus among analysts is that government defense spending will level off amid the coronavirus pandemic, and its effects as well as the result of the upcoming U.S. presidential election in November will be reflected in future lists.

“Successful years of investment spending growth appears to be ending, but outlays are still growing due to the surge in spending over the last three years. But they are starting to taper significantly after this year,” Schweizer said.

Schweizer sees foreign spending softening, at least in the short term due to COVID-19, but he predicts defense budgets, backlogs, outlays and foreign military sales will hold together for at least 12-18 months to help defense firms weather the unprecedented damage visiting the commercial aerospace sector.

The biggest risk is the U.S. budget trajectory, which is likely to be flat, at best, or decline in mid-single digits, at worst, over the next five years, Schweitzer added. He anticipates a drop of 3-5 percent, but with the Pentagon’s eye on Russia and China, the department will likely make trade-offs to protect core modernization areas.

As global growth rates slow, future lists may see some familiar companies grow leaner.

“These companies are going to figure out what their growth businesses are so they can shrink to grow,” Callan said. “They all say they’re well positioned [for slower defense spending], but what the hell does that mean? They can’t all be right.”

China this year had five firms in the top 15 companies versus six last year. (Kevin Frayer/Getty Images)

China this year had five firms in the top 15 companies versus six last year. (Kevin Frayer/Getty Images)

Other notable moves included Reston, Virginia-based engineering and construction company Bechtel, which fell to No. 47 from No. 31 last year; the firm’s defense revenue declined 39 percent, from $3.7 billion to $2.3 billion.

In France, Safran’s defense revenue jumped from $1.6 billion in FY18 to $4.4 billion in FY19, bumping it from No. 56 to No. 28. However, the company told Defense News that it attributes the large rise to a difference in calculation for this year’s list. Since 2015, the data from Safran were made up of Safran Electronics & Defense activities. This year, the firm changed its approach by adding the military activities of the group’s other subsidiaries.

Also in France, Dassault nearly doubled its revenue from $2.9 billion in FY18 to $5.7 billion in FY19 ― jumping from No. 38 to No. 22.

Japan’s Mitsubishi Heavy Industries vaulted back onto the list to No. 21, with $6.6 billion in defense revenue. However, it’s worth noting that defense revenue numbers reflect awards made by the Japanese Ministry of Defense, which leads to more year-over-year volatility among Japanese firms.

The three Israeli companies on this year’s list — Elbit Systems, Israel Aerospace Industries and Rafael Advanced Defense Systems — moved up in the ranking. The sole South American company on the lsit, Embraer, also moved up, from No. 84 to No. 79.

Meanwhile, the only non-U.S. North American company on this year’s list — Canada’s CAE — dropped four spots to No. 74, but its defense revenue grew by a percentage point.”

https://www.defensenews.com/top-100/2020/08/17/arms-trade-momentum-globalization-and-us-defense-spending-drive-defense-industry-growth/

FY 19 – A Small Business Government Contracting Record Year

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SBA By Dr. Francis Spampinato, Assoicate Administrator

In FY 19 the federal government not only exceeded its small business contracting goal, it awarded a historic $132.9 billion or 26.50 percent in prime contract dollars to small businesses.

The Women-Owned Contracting Goal was met for the second time in scorecard history.”

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“Every year, the federal government spends over $400 billion on goods and services, making it the largest purchaser of goods and services in the world. Today, the U.S. Small Business Administration released the annual Fiscal Year 2019 Small Business Federal Procurement Scorecard, which tracks and assesses each agency’s yearly and individually negotiated small business prime and subcontracting performance and determines grades ranging from A+ to F

We are very pleased to announce that in FY19 the federal government not only exceeded its small business contracting goal, it awarded a historic $132.9 billion or 26.50 percent in prime contract dollars to small businesses. This is an increase of $12 billion from FY18, earning the federal government an “A” on SBA’s Scorecard. This smashes the record-setting $120 billion the federal government awarded to small businesses in FY18!

It was a record-breaking year for women-owned small businesses too!  For the second time ever since the implementation of the women-owned contracting goal, the federal government met the five percent contract goal awarding $26 billion in federal contracts, or 5.19 percent to women-owned small businesses.    

The federal government also awarded nearly $90.7 billion in subcontracting dollars to small businesses.  The prime and subcontracting dollars combined amount to one million jobs created that are supported annually through federal contracting. These jobs  help to build communities and fuel the nation’s economy.

I have spent 25 years of my government tenure as a professional program administrator,  the Chief Procurement Officer for the Federal Emergency Management Agency, the Director of Acquisition and Contracting for the Federal Aviation Administration and the Chief Acquisition Officer at the Department of Energy. I am pleased to oversee the SBA’s Office of Government Contracting and Business Development, which is charged with making sure that the federal government spends at least 23 percent of its contract dollars with small businesses annually. 

The goal of my office is to increase support to the small business contracting community, namely, the agency procurement personnel which includes: SBA’s Procurement Center Representatives, Commercial Market Representatives, the  Office of Small Disadvantaged Business Utilization, the Office of Small Business Programs and contracting officers who are responsible for actually making the contract awards to small businesses to achieve the 23 percent goal. 

I am so pleased to see this shared result between the SBA and its colleague agencies and partners despite the challenges caused by the pandemic. Meeting these small business contracting goals is part of our commitment to ensuring that entrepreneurs are adequately supported and represented throughout the government.

These positive results are also because of small business owners like:

  • James Moore, Managing Partner of Expert Maintenance and Construction Services, LLC (EMCS), an 8(a) and Disadvantaged Business Enterprise-certified firm of Prairieville, Louisiana and SBA’s Louisiana 2020 Small Business Person of the Year.  James founded his business with just two employees and has grown his business to 85 employees, with $16 million in revenues. 
  • EMCS has performed numerous contracts with federal, state, and local agencies in addition to private entities and has completed projects in multiple states, including Louisiana, South Carolina, Kansas, Missouri, and Texas, with offices in all five states.

SBA is incredibly proud of the small businesses that we support. We are deeply gratified to work with our federal partners and are appreciative of their efforts in helping to achieve and exceed the 23 percent goal. This achievement is not only a win for the federal government; it is a win for small businesses and the nation’s economy.”

ABOUT THE AUTHOR:

Dr. Francis Spampinato is Associate Administrator for the Office of Government Contracting and Business Development

How Bells, Whistles And Greed Blow Up The Defense Budget

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Northrop Grumman unveils the U.S. Navy MQ-4C Broad Area Maritime Surveillance unmanned aircraft system during a ceremony at the Northrop Grumman Palmdale Calif. manufacturing facility. (U.S. Navy/public domain)

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)

“By simply shoveling money at the Pentagon, Congress actually hinders good military thinking.

Free-flowing money provides service leaders license to pursue excessively complex weapons programs with the mistaken belief that wars can be won simply by having more technology than our adversaries.

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“Even as the movement to think critically about cutting the Pentagon’s budget slowly gains ground, wrong-headed arguments in favor of boosting military spending without question still prevail.

Just take a recent column in Defense One from Dakota Wood of the Heritage Foundation, who attempted to make the case that the character of the modern military operations justify $740 billion Pentagon budgets. In it, he claims that cost reductions just aren’t possible since arms and personnel costs have exploded faster than inflation since World War II.

Yet, he failed in most cases to address why military costs have grown so much and how increased budgets exacerbate problematic weapons programs.

The reality is, according to John Boyd, the legendary military thinker and central figure of the Reagan-era military reform movement, wars are won by good people using innovative ideas. The weapons they use are mere tools. As anyone who has tinkered around their garage knows, the best tools are the simple, reliable ones specifically engineered for the task at hand.

Sadly, the members of the military industrial congressional complex do not seem to understand this. They bought an aircraft carrier so loaded up with unproven technology that it is already five years behind schedule and still has at least three years of work to go before it can set sail. They will spend more than $400 billion to buy a fighter plane that can’t shoot straight.

The weapons the Pentagon buys are too often needlessly complex and thus unnecessarily expensive. While they are sold as vast improvements over earlier weapons, the new versions often provide only marginally improved capabilities in the best cases, but are way more expensive than their predecessors. Just as often, in the pursuit of new capabilities, the excessively complex weapons are actually less effective than what came before them. And the increased logistics and maintenance burdens make the systems even more expensive while reducing the overall combat effectiveness.

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These overly complex weapons often serve as a distraction on the battlefield because they force the troops to spend far too much time focused internally on what’s necessary to get the finicky contraptions to work. This distracts them from where their focus should be: on how to fight the enemy. Training becomes an issue as well because it takes far longer to teach someone how to use the new systems. For a force that is already burdened with more required training events than it has time to execute properly, the Pentagon should not further encumber troops with training on overly complicated weapons systems.

Defense contractors intentionally load up their products with as many gadgets as possible because by doing so they make more money. They receive money on the front end during the development process, and then make more money on the back end through lucrative long-term sustainment contracts.

Wood’s argument that the only way to deal with adversary technology is with better technology is also false. We don’t need to out-engineer the Russias and Chinas of the world, we need to out-think them. For virtually every high-tech weapon, there is a low-tech counter. Our struggles to deal with IEDs in Iraq is the perfect example of this. The Pentagon spent $20 billion to develop counter-IED systems only to come to the realization that nothing worked as well as a dog.

In the meantime, the ever-increasing costs of weapons mean that the services can afford to purchase fewer of them.

For example, the Air Force originally planned to purchase 132 B-2 “Spirit” bombers. As costs spiraled upward, the Pentagon pared back the total fleet size until just 21 were built at a total program cost of $2.1 billion a piece. The B-21 is being developed now along similar lines and could suffer the same fate. Interestingly, the Air Force has plans to retire the flashy B-2, which entered the fleet in 1993, but plans to retain the 1950s vintage B-52, proving that simpler technology has its advantages.

The overall effect is that the American people end up spending more and receiving less. Wood points out that the Pentagon budget in 1970 was $78.5 billion, which, adjusted for inflation, would be the equivalent of $521 billion in 2020. He says that the $713 billion 2020 defense budget is only 27 percent higher. This is a misleading claim. The 1970 defense budget included a great deal of spending that is not included in Pentagon budgets now. Today, many of those costs are spread between the Department of Veterans Affairs, Department of Energy, and the Department of Homeland Security, and several other agencies. When all the defense-related spending across the various departments are added together, the American taxpayers were asked to spend more than $1.21 trillion this year.

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What does that support? The $78.5 billion in 1970 supported an active duty force of 3,066,294. The active duty force in 2020 is 480,000. So, the American people are paying 130% more for a force that is 84% smaller.

A recent proposal would have cut 10 percent from the Pentagon’s budget. Wood’s column demonstrates how nervous the defense industry becomes whenever someone threatens the free-flow of money from the treasury to their coffers.

Like most similar efforts, this latest budget cutting proposal was sold as a means of freeing up funds for domestic programs. President Eisenhower once said that for “every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” His words ring especially true today as lawmakers debate how best to deliver resources to people and businesses most adversely impacted by the COVID response.

Just as importantly, cutting the Pentagon’s budget would also serve a useful military purpose. It would force service leaders to think harder about what they buy and why they buy it. In order to get the force size they want, they would have to pursue simpler designs rather than the highly complex systems that have become the norm today. In warfare, good enough beats sexy. It’s time the military industrial congressional complex learns that lesson.”

https://www.pogo.org/analysis/2020/08/how-bells-whistles-greed-blew-up-the-defense-budget/

Odyssey Of Armaments

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Image: “Rose Covered Glasses”

ROSE COVERED GLASSES” – By Ken Larson

Ken Larson on the US Government Defense Industrial Complex.

I have looked inward, wound down to a smaller perspective, taken care of my health and begun serving the little guy. Perhaps it is time for our country to consider a similar transition.”

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“In 1968, I came home from serving two US Army tours in Vietnam, having been awarded five medals, including a Bronze Star. During my second tour I acquired Post Traumatic Stress Disorder (PTSD) and Depression. Treatment would not become available for either ailment until the mid to late 70’s. Returning to the University of Minnesota at Morris, I found that most of my former classmates were either facing the military draft or were violently against the war. I was not their favorite person.

Feeling isolated and alone, I was unable to relate to my family due to untreated Depression and PTSD. Disillusioned with school, I moved to Minneapolis Minnesota and began a career in the Defense Industrial Complex that would span over three decades from 1969 through 2005. I thought that through working on defense systems, I could contribute to the quality and quantity of weapons that the next generation would take to war. Given a clearly defined mission and the best armaments and systems in the world, I believed that another Vietnam could be avoided for the American Soldier. In pursuit of this goal, I participated in the design, development and production of 25 large scale weapons systems under Federal Government and Foreign Military Sales Contracts. I worked in several different disciplines for the companies that produced these weapons, negotiating and controlling the associated contracts with procurement agencies in the US Armed Forces and in 16 allied countries.

By the time treatment for PTSD and Depression became available, I had such high security clearances that had I been treated for these disorders, the US Government would have revoked my clearances and my career would have ended or would have been sharply curtailed. This quandary led to my journey through the Defense Industrial Complex. I found that accepting extreme challenges and succeeding at them became a way to displace PTSD and elevate depressive moods. For extended periods of time this method of self-management led to a satisfying, although somewhat adventurous and diversified life. However, down periods always occurred, especially after the latest challenge had been met. A new challenge was then required. Family, friends and acquaintances were often puzzled by the frequent changes in my job sites and locations. Two marriages fell by the wayside.

I became known in the industry as a front-end loaded trouble shooter on complex projects, installing processes and business systems required by the Federal Acquisition Regulation. These systems included estimating and pricing, proposal preparation, contract administration, cost and schedule control, program management, design to cost, life cycle cost, export management and other specialties unique to US Government Contracts. Getting through government source selection boards and surviving audits during competition was a significant challenge for defense contractors. Installing required business systems after contract award, under ambitious cost, schedule and technical conditions, was an even more difficult undertaking. I became a leader in the problem solving and creative processes necessary to win contracts and successfully fulfill them. When my mood demanded it, there was always a new job, with a new challenge and a subsequent elevated feeling from success. It was not unusual for a career professional in the Defense Industry to move regularly with the ebb and flow of competitive procurements and associated government funding shifts.

I came to know many of the career military and civil servants who managed the government procurement process. These individuals never went away, regardless of elections or politics. They developed the alternatives from which elected officials must choose. The American Public rarely heard from these powerful insiders, while the insiders slanted the choices supplied to elected officials in a self-perpetuating manner. I recognized the mirror image way in which procuring agencies and defense contractors organized their operations on the largest systems acquisitions. Key executives regularly moved back and forth between government and industry. I often observed the short, happy life of a defense company program manager. Appointed by the powerful insiders to head a single project, he had no authority over company resources, he perpetually competed with other program managers for the same talent pool and he always took the heat from management when things did not go well. His counterpart in the government quarters had similar experiences. I often supported several program managers at the same time. They all were desperate to achieve success. They each believed they had the most important program in the company.

In early 2005, approaching age sixty, I found myself unable to self-manage an extremely deep depressive episode. The journey had simply wound down. This situation nearly resulted in an end to my life. Recovering with help from my family and the US Veteran’s Administration, I now reside in a veteran’s home, volunteering to Small, Veteran-Owned, Women-Owned and Minority-Owned businesses that are pursuing contracts with the Federal Government. I provide advice, alternatives and business examples based on my experiences. It is refreshing to witness the successes of small, motivated and flexible companies. I believe they deserve every special consideration they have achieved under our system of government.

After thirty-six years in the Defense Industrial Complex my greatest satisfaction came from watching “Stormin Norman” and his Gulf War Forces defeat the Iraqi Army in Operation Desert Storm. They used the Abrams Main Battle Tank, the Hellfire Missile and an array of communications and other systems on which I worked. I have had the privilege of meeting several young soldiers coming back from current conflicts in the Middle East who have praised these systems for their life saving performances.

Operation Desert Storm had a clearly defined mission to liberate a small country from an aggressor. We accomplished the mission utilizing the best weapons in the world. Unfortunately, we did not leave the area. The lessons of Vietnam have not been remembered and once again political factors govern our presence in several countries. This time it is the Middle East. A Future Combat System (FCS) is now under development geared for urban warfare with unmanned vehicles, state of the art sensors and remote standoff capabilities. The enemy has grown to become a formidable force, cable of striking without notice even within our own country. He threatens the world economy with violent disruptions in several domains at the same time. He is a product of our own creation, rebelling against the “US Police Force” with help from neighbors who play either benign or active roles. Our enemy knows his neighborhood far better than we do. US intelligence and military capabilities are strained to the maximum monitoring perceived hot spots all over the globe. We must face the fact that our long term presence in other countries is resented.

How much longer can we afford to be the “World’s Policeman”? We are spending over $700B per year for defense, homeland security and nation building. The largest corporations selling to our government are no more than extensions of our government in the cloak of industry. They are not in the business of making money for the stockholder. They are in the business of spending money for the government. Recent consolidation in the Defense Industrial Complex has dramatically reduced competition. Only public laws mandating a twenty per cent allocation of Federal Contract Funding to small business have kept diversification in the mix. Even then, much of the moneys that flow to small business go through a select group of large business prime contractors who add their respective overhead and general administrative expense to the small business cost and pass it on to the government.

When we consider the largest evolving countries in the world today, such as China, India and others, we should note that they are successfully competing with us in a fast moving, complex world economy. These countries are not all pure democracies and probably never will be. No overt action on our part created these powerhouses. As we struggle to compete with them we must have education, research and development and a healthy work force to keep pace. How much can we afford to spend forcing our capitalistic ideologies on other societies? Events have proven that the world has become a tightly wound place economically. Countries who wish to succeed and grow will play the game anyway.

I hope that this account of my experiences has supplied useful insights into the US Government Defense Industrial Complex. My odyssey was driven by a need to manage illnesses acquired in warfare. I found a way to deal with the maladies for years by spreading myself thin and accepting every new challenge. I thrilled at success and moved on after defeat, pursuing a misguided goal. Out of necessity I have now been forced to look inward, wind down to a smaller perspective, take care of my health – begin serving the little guy.”

https://rosecoveredglasses.blogspot.com/2006/11/odyssey-of-armaments.html

GSA Chinese Telecom Equipment Ban Guidance

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Image: “IVPM”

“PubKGroup”

“The General Services Administration has published a guide intended to help contractors comply with new regulations banning the use of technology from certain Chinese telecoms.

The brief guide on Section 889 offers advice on how to comply with the new rules, links to relevant FAR sections, and information on how to obtain waivers.

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Click to access Industry-Focused-Section-889-Flyer.pdf

The Anti-American Century

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MOBILE, AL – JULY 10: A tattered Stars and Stripes blows in the winds of Hurricane Dennis July 10, 2005 in Mobile, Alabama. Dennis made landfall with 120 mph winds on Santa Rosa Island, southeast of Pensacola, Florida. (Photo by John Moore/Getty Images)

FOREIGN POLICYBy Zachary Karabell

As of 2020 the 21st century has become “the Anti-American Century,” an identity already well-advanced before the pandemic but certainly accelerated and cemented by it.

The end of the American Century offers the opportunity to look at where the country falls short and start fixing what is broken. Whether Americans will seize that opportunity, who knows. But this is not a tragedy; it is the beginning of something new.

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“In 1941, Henry Luce—the founder of Time magazine and its sister publications Life and Fortune—famously announced that “the 20th Century is the American Century.” With unparalleled power and unquestioned resolve, the United States would make the world “safe for the freedom, growth and increasing satisfaction of all.” And it would do so because of a combination of American power and prestige that would engender a near-universal “faith in the good intentions as well as the ultimate intelligence and ultimate strength of the whole American people.”

The remainder of the century saw the United States bestride the world as the dominant power, sometimes for better and often for worse. But Luce was correct that it was the American Century (or at least half-century).

The Anti-American Century may turn out to be aggressively hostile to the United States, but for now it is anti-American mostly in the sense of being antithetical to the American Century. The three pillars of American strength—military, economic, and political—that defined the last century have each been undermined if not obliterated. In this moment, those failures may seem like profound negatives. In his most recent book, the writer Robert Kagan laments that, without American leadership around the world, the jungle will grow back. In the United States’ absence, Beijing may be able to define a less liberal world order. In terms of domestic politics, the left and the right are oddly united in their despair at the erosion of the American Century, as the left bemoans the failure of the American experiment in an age of racial divisions and government ineptitude and the right defends to the hilt “Make America Great Again” redux.

Yet the dawn of the Anti-American Century may be precisely what both the world and the United States need to meet the particular challenges of today.

 A world of nearly 7.8 billion people demands multiple nodes of support, not one hegemon or two jockeying for power. And a United States of great affluence and great deficiencies needs to accept that it is not ordained to lead and that its past results are, as investors like to disclaim, no guarantee of future success. The first step to solving a problem is acknowledging that you have one; failure to do so—to believe only that one’s country is uniquely powerful and destined by history and culture for greatness—is a recipe for a fall.

At the dawn of the new millennium, a scant 20 years ago that feels like an eternity, the United States was able to say to itself and the world that it had found a uniquely potent formula for how to manage democracy. It pointed to its role as a global superpower and its resilient and flourishing economy. It asserted that it had excelled in advanced research, education, and innovation and stood as an example to countries everywhere. All that was never nearly as true as Americans wished it to be, but those strengths were, relative to much of the world, undeniable.

The pandemic has exposed structural fissures in the United States. It has also underscored that a country whose central government is constrained not just by the three-branch structure of the federal government but also by substantial local and state autonomy is not particularly well suited to marshaling a forceful national effort that isn’t an actual war. But the tut-tutting and eye-rolling abroad about the anemic U.S. response to the COVID-19 pandemic (“The world is taking pity on us,” went the line in one prominent column and in many other since) is simply the next iteration of a process that has been unfolding for two decades.

The first pillar of the American Century to be knocked aside was military. The U.S. invasion of Afghanistan after 9/11 enjoyed considerable support internationally as a justified response to the Taliban’s sheltering of al Qaeda and Osama bin Laden. But the subsequent invasion of Iraq in March 2003 with a paucity of international support followed by a bungled occupation and years of guerrilla war against American troops evoked the Vietnam War.

Initial misgivings were exponentially magnified by revelations of American-sanctioned torture in Iraq, at the Guantánamo Bay detention facility, and at various sites around the world, in clear contravention of the Geneva Conventions that the United States had long defended. Add to that revelations of spying on domestic citizens in the name of national security and the war on terrorism, and many of the pieties of American strength crumbled. The United States emerged by 2008 from its Iraq imbroglio with its military still second to none in size and capacity but with its image severely undermined.

The second pillar to crumble was economic. One of the central conceits of Luce’s American Century was that the unique virtues of the American economic system would act as a powerful rebuke of communism. And even after the fall of the Soviet Union, the flourishing American economy was a magnet for talent and innovation, with U.S. technology firms defining the first internet boom of the 1990s and then the next wave in the 2000s.

Meanwhile, the Washington Consensus that coalesced in the 1980s about how to structure free markets was the blueprint for post-1989 reconstruction of Eastern Europe and Russia. It was also used as a loose framework by both the International Monetary Fund and the World Bank in their efforts to push countries around the world to drop trade barriers, end state-run businesses, and open up their capital accounts to global flows. While some countries, especially Russia, suffered mightily from this medicine, the sheer economic power of the United States left little alternative for most nations. China was the notable exception, and its size and the widespread perception that it would eventually move toward the U.S. model after joining the World Trade Organization allowed it to evolve along its own path.

China’s economic success eroded American dominance, but it was the financial crisis of 2008-2009 that truly knocked away the economic pillar. For years, the question in investors’ minds had been: “When would the bad loans on the books of China’s state-owned banks lead to a crash in China?” It turned out that it wasn’t China’s banks that were the problem; it was banks in the United States. And they were a contagion that went global. The U.S.-led financial system survived, but the economic reputation of the United States—the prestige that Luce understood as a key element of its power—was devastated.

The final pillar was democracy. For decades, the United States could boast that it was the oldest and most established democracy in the world, with a singular system for preserving individual freedoms and harnessing collective energies. It routinely nudged and sometimes coerced allies and adversaries to open up and democratize. That in no way precluded dealing with dictators, but the presumption was that democracy was the best bulwark against autocracy and the best path to affluence. The United States, whatever its flaws, got democracy about as right as anyone. It was never quite the “strongest democracy” according to those who measured such things: The Scandinavian countries led there. But it was undoubtedly the strongest of the large and dynamic democracies, which combined with its other two pillars created the American Century. Then Donald Trump was elected president.

Already by 2016, American democracy was showing signs of strain. Public faith and participation in government had so declined as to put the system on notice. But the election of Trump severely eroded the ability of Americans to say either to themselves or to the world that their process was uniquely able to withstand the pressures of populism and nascent authoritarianism that Americans for decades had preached against. Arguably, Trump has done much less damage than his many critics aver, and that may indeed reflect a domestic system of checks and balances that makes it devilishly difficult for any one president to commit major abuses of power.

But the strength of American democracy in the world was also as a symbol and a beacon, one that drew immigrants and talent because of the opportunities that the United States offered and nurtured. On that score, the Trump administration dramatically eroded the United States’ global standing. Yes, the image of the United States also suffered mightily in the 1970s, with the humiliation of Vietnam and the revelations of American anti-democratic policies in much of what was then known as the Third World. It is possible that had the economic revival of the 1980s not happened, the American Century would have ended then. It didn’t, but then came the pandemic.

Much as Chinese Premier Zhou Enlai once famously said of the legacy of the French Revolution that it was too soon to make final judgments, it is premature to start ranking nations conclusively by how well they met a pandemic that is still raging. It is clear, however, that what may be American strengths in other contexts are in this moment a panoply of weaknesses: decentralized domestic governance, highly contested politics, and immense cultural variations across states and regions. All of those inoculate Americans against autocracy and government overreach but leave the country vulnerable to national crises that require a unified response.

Coming in the midst of the Trump administration, the American pandemic response has utterly crushed the image of the United States as an ambassador for good governance and democracy—and with it, the last pillar of the American Century.

Many in both the United States and throughout the world may believe that the end of the American Century is tragic, but the dawn of the Anti-American Century holds the promise of better times for the globe and the opportunity for Americans to finally confront their country’s structural problems. After all, unless one believes that the United States has a monopoly on the desire for peace, individual rights, and prosperity, 7.8 billion people and nearly 200 nations large and small are just as capable as Americans of acting in those collective interests. To believe otherwise is to hold that the only formula for international stability and prosperity is an endless continuation of the American Century.

That inevitably leads to the question of China and its status as an emerging global power, especially as the United States retreats or is forced to. True, China defines rights differently than the United States, and many outside of China may not find that template an appealing one. But the Chinese template remains a Chinese one, propagated by a government that seems quite interested in keeping the global peace even while asserting its power. And whatever one thinks of China’s future, it remains true that you’d have to think that the United States is somehow a freakish and exceptional nation alone committed to peace and prosperity to believe firmly that the end of the American Century spells a backward step for humanity.

As for the United State domestically, decades of global preeminence have not done Americans well at home in recent years. Standards of living have stagnated and not kept pace with those in numerous other countries. Racism persists. None of the countries that have excelled at education, health care, and standards of living are as large or complicated as the United States, but even by its own standards, the country has fallen short of what it once achieved. It spends massively on education, infrastructure, poverty alleviation, health care, and defense—but it does not manage to spend smartly. Yes, material life is better now for almost everyone than it was 50 years ago; people live longer, have more health care, eat better, are more educated, live in safer cities and towns, but that is true everywhere in the world. The United States cannot toot its own horn here.

The simple fact is that success and strength—military, political, economic, and to that add cultural—are not birthrights. The United States doesn’t get to be great or powerful just because it used to be, although it certainly can help to have a head start. If the country was ever truly exceptional, it was exceptional because successive generations worked and fought and struggled to make it so, not because those generations patted themselves on the back. There have been acute moments of hubris and overreach during the decades of the American Century, but never has the disconnect between what the United States is and what Americans say it is been so profound.

Out of this moment, therefore, is the promise not of American exceptionalism but American humility, a moment of recognition that, to move forward, the United States has to let go of the American Century, say goodbye to exceptionalism, and accept that it is a normal country like any other, just richer and with a massive military arsenal and multiple wells of strength and multiple areas of self-delusion.”

Deadline For Defense Contractors To Ditch Banned Chinese Equipment

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Image: “Council on Foreign Relations

FCW

Federal contractors face a late-summer deadline to ensure they’re not using banned Chinese equipment and services to fulfill their federal contracts.

They have until Aug. 13 to comply with Part B of Section 889 of the 2019 National Defense Authorization Act, said Administrator Michael Wooten said during a July 13 Professional Services Counsel (PSC) webcast.

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“That provision prohibits government contractors from using technology and services tied to Chinese equipment manufacturers that have been deemed cybersecurity threats by the U.S. government. Those companies include telecommunications gear-makers Huawei and ZTE, as well as video surveillance manufacturer Hikvision.

Cybersecurity, Wooten said during the PSC conference, is now as integral to federal acquisition as the traditional “Iron Triangle” of cost, adherence to schedules, and performance considerations that are basic tenants of federal contracting. That triangle, he said, is now a “tetrahedron of trade-offs,” with security creating the fourth side, he said.

Part B of the NDAA provision goes beyond the simple use of the five companies’ gear in contractors’ networks for federal contracts, extending to its use in any day-to-day operations, including domestic commercial and overseas operations. Companies that have the equipment won’t be able to sell to federal agencies after Aug. 13 without a waiver.

“There are hundreds of thousands of digital assaults” on federal networks every day, said Wooten. Those exploits, he added, leverage technology from Huawei, ZTE, Hikvision, surveillance camera-maker Dahua, and two-way radio-maker Hytera Communications. The Trump administration, said Wooten, is “leaning into” the ban, as cybersecurity threats from China increase.

Wooten said agencies can seek a temporary waiver to the section 889 ban process, but they have to back up their need with evidence and receive a security briefing from the Office of the Director National Intelligence.

The idea, said Jessica Salmoiraghi, associate administrator of the General Services Administration’s Office of Government-wide Policy and GSA’s chief acquisition officer, “is to add sunlight to contractors’ supply chain.” GSA, along with other agencies, helped write the rule.

“This is going to be a big deal for you and for us,” said Deputy Assistant Secretary of the Army (Procurement) Rebecca Weirick in a panel discussion following Wooten’s remarks.

“The Army is leaning into” the coming August deadline, Weirick said, developing guidance for its contractors ahead of the date and before the rule becomes formalized in the Federal Acquisition Regulation.”

CARES Act Delivery Hampered By Old Tech, Bad Data

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Image: “FCW”

FCW

Aspects of the federal government’s economic response to the coronavirus pandemic were marred by outdated state technology software and a crushing volume of beneficiaries that overwhelmed many systems, according to a new report from the watchdog Government Accountability Office.

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“Federal officials said “the ability to easily modify data systems to incorporate new flexibilities varies among state and local agencies,” leading to numerous delays and interoperability challenges across multiple recovery programs related to the Coronavirus Aid, Relief, and Economic Security Act passed in March.

Agencies like Health and Human Services reported that states had to coordinate across different data systems to serve existing beneficiaries as well as a surge of new applicants for programs like Electronic Benefit Transfer and Supplemental Nutrition Assistance Program payments. Meanwhile, uneven technological sophistication across different states made remote collaboration in the wake of the pandemic caused challenges while coordinating payments for the Women, Infants and Children (WIC) program.

According to Department of Labor officials, many states processing unemployment claims were using “information technology systems that date as far back as the 1970s” and crashed under the load of newly laid off workers filing for benefits. The department has provided federal grants, technical assistance and guidance to help modernize those systems, but “relatively few” states conducted adequate load-testing to handle the volume of claims they have received since March.

These systems was already straining, with federal and state governments overseeing more than $2.7 billion in improper unemployment payments in 2019, and overseers worry the numbers will look even worse this year as the government has rushed to respond to the economic fallout of the virus.

“DOL’s experience with temporary UI programs following natural disasters suggests there may be an increased risk of improper payments associated with CARES Act UI programs,” auditors wrote.

A rushed response also led the IRS to send more than a million stimulus checks to citizens who were deceased. As FCW has reported, the agency emphasized speed to get relief dollars into the hands of Americans as soon as possible, leading to processing errors and opening the door to potential fraud. Auditors suggest that implementing 2018 recommendations to align their authentication practices with NIST cybersecurity guidance making better use of death data housed at the Department of Treasury and other agencies could address the problem.

Auditors noted that ” IRS has full access to the death data maintained by the Social Security Administration…but Treasury and its Bureau of the Fiscal Service, which distribute the payments, do not.”

In a response attached to the audit, IRS Chief Risk Officer Tom Brandt said employee worked “around the clock since mid-March to develop new tools and new guidance” to make handle economic impact payments but that “our work is not done yet” and the agency will consider the GAO’s recommendations further.

Information technology challenges and delays also reportedly hampered efforts by the Small Business Administration to process economic injury disaster loans, though details are scarce. The report paints a portrait of disorganized agency that at times unresponsive to oversight. While auditors asked to meet with agency officials on April 13 to get more detailed information on individual loan data and other aspects of the response, SBA didn’t agree to a meeting until June 1 and provided “primarily publicly available information in response to our inquiries” about loan data.

In a statement, House Oversight and Government Reform Chairwoman Rep. Carolyn Maloney (D-N.Y.) said the report “provides a comprehensive and independent look at the Trump administration’s incompetent and dangerous response to the coronavirus pandemic” and pressed for more information on IRS stimulus payments to dead Americans. She also called on SBA to address transparency concerns about its loan program “immediately.”

SBA responded to a draft version of the report disputing GAO’s claims, saying they offered staff for interviews and provided 420 pages, including “information on loan numbers and loan volume, the number and type of lenders participating in [the Paycheck Protection Program], loan numbers and loan volume for each type of lender, loan numbers and volume by industry and state” and other figures.

“To be clear, SBA has never refused to provide data to GAO,” wrote William Manger, Chief of Staff for Administrator Jovita Carranza.

Federal agencies were of course not immune from technological troubles, and the audit suggests modernization efforts at the IRS, the Department of Housing and Urban Development and other agencies can better position them to process funds related to the CARES Act.

The report also posits that agencies could make better use of a number of existing contracting authorities and programs, including contracts that allow work to begin before a final agreement is reached, Other Transaction Authority (OTA) that sidestep certain federal regulations to prototype new technologies and higher spending thresholds for emergency purchases.

GAO is currently working on separate reports examining how agencies planned and managed contracts related to the pandemic, reimbursement policies for contractors who performed emergency work and the use of the Defense Product Act.”

US-Mexico-Canada Agreement Enters into Force, Officially Replacing NAFTA

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Image: “U.S. Grains Council

U.S. SMALL BUSINESS ADMINISTRATION “- By Loretta Greene, Associate Administrator

“On July 1, 2020, the U.S.-Mexico-Canada Agreement (USMCA) enters into force, officially replacing the North American Free Trade Agreement (NAFTA).

USMCA is a ground-breaking achievement for U.S. small businesses and is the first trade agreement ever to include a full chapter dedicated to small business interests.”

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“Supporting and expanding U.S. small business trade with Mexico and Canada is a top priority for me as the new Associate Administrator for SBA’s Office of International Trade (OIT).  SBA OIT has a team of talented trade finance specialists and finance products to help small businesses involved in international trade to access capital, purchase inventory as a manufacturer or supplier, and expand through trade.  OIT helps ensure small businesses are adequately represented in trade negotiations led by the Office of the U.S. Trade Representative and educates U.S. small businesses on the wide range of federal and state resources that can increase their ability to compete in international trade. 

The modernization of trade with Mexico and Canada under USMCA is designed to benefit U.S. small businesses and to ensure more balanced trade. U.S. companies with fewer than 500 employees comprise 65 to 70 percent of all identified U.S. companies trading goods with our closest neighbors, according to the most recent statistics. 

Companies selling goods to Mexico and Canada can now achieve expanded export opportunities under the USMCA.   In 2019, U.S. companies sold $292.6 billion in U.S. goods to Canada and $256.5 billion in U.S. goods to Mexico. 

As part of USMCA, SBA OIT launched a new international sales information resource sitewww.sba.gov/tradetools, which is part of the http://www.trade.gov/usmca to assist small businesses to use USMCA. Both links also connect to pages created by Mexico and Canada.  Small businesses can explore the agreement, learn about the rules, and identify where to direct questions and find resources through these information sharing platforms. Resources include a new Customs and Border Protection’s USMCA Center staffed with experts.

As small businesses use the USMCA, they will find important commitments across the agreement including:

  • The Small and Medium-Sized Enterprise Chapter creates a SME Dialogue to consider small business trade opportunities and challenges across the three countries.  This is an important innovation to ensure U.S. small businesses will continue to be heard and considered.
  • The USMCA Cross-Border Trade in ServicesChapter enhances market access.  U.S. small business services can now be provided market access across North America without requirements for a foreign office or foreign representative.
  • The Customs and Trade Facilitation Chapter increases certainty by providing for advance rulings commitments with expanded scope and a free, publicly accessible websites for advance rulings.  
  • Furthermore, to decrease unintended trade costs, this Chapter also provides procedures to correct errors.
  • To support small e-commerce sellers shipping with express services, Canada has raised its de minimis level for North American express shipments for the first time in decades, doubling it from $C20 to $C40 for taxes.
  • Canada will also provide for duty free shipments up to $C150.
  • Mexico will continue to provide tax free treatment for shipments up to $US50 and will provide duty free treatment for shipments up to US$117.
  • The Good Regulatory Practices Chapter, a first in a U.S. trade agreement, specifically includes provisions encouraging the Parties to take into consideration the effects on small businesses in the development and implementation of regulations.  The USMCA’s prioritization of small business traders is exciting as it will increase small business friendly ecosystems in North America and facilitate more trade.

SBA is proud to be part of this achievement. We look forward to helping more U.S. small businesses trade with Mexico and Canada, while supporting those already exporting to further expand their sales. To learn more, visit www.sba.gov/tradetools or contact the SBA International Trade Ombudsman Hotline at (855) 722-4877 or international@sba.gov with questions.”

ABOUT THE AUTHOR:

Loretta Greene

Loretta Greene is the Associate Administrator for SBA’s Office of International Trade https://www.sba.gov/person/loretta-greene/