University of Twente Student Theses

Login

Federal procurement in the United States : success factors and barriers for foreign companies

Vehof, T.E. (2010) Federal procurement in the United States : success factors and barriers for foreign companies.

[img] PDF
1MB
Abstract:Since the United States descended into ‘The Great Recession’ in late 2007, the road to economic recovery has relied for a great deal on stimulus packages from the government (so far $1.2 trillion) and is expected to stay reliant on them for years to come. While government expenditure will be the main source for economic recovery, it makes the public procurement market in the US potentially very attractive for foreign companies. So far, there has been limited attention paid to the US public procurement market by the Dutch government. This is striking since the economic characteristics of the Netherlands and the strong economic ties between the Netherlands and the United States imply that the Dutch private sector should be more successful in the US federal procurement market than it is currently. This makes the Dutch private sector and its attempts to compete in the US federal public procurement market an interesting case for further investigation. The goal of this study is to gain insight into the success factors for acquiring federal procurement contracts for foreign companies and their main barriers to be successful in the US federal procurement market. Therefore, the leading research question is: What are the critical success factors for acquiring United States federal government procurement contracts for foreign companies, and how can foreign companies apply those factors to address their main barriers in United States federal government procurement processes? The empirical data collection was conducted in collaboration with the Royal Netherlands Embassy in Washington, D.C. Representatives of Dutch companies competing in the US federal procurement market, consultants supporting foreign companies in doing business with the US federal government, and officials of the US federal government were interviewed. We identified three categories of success factors (endogenous variables): ‘company-specific factors’, ‘product-specific factors’ and ‘relational factors’. The findings suggest that: - Company-specific factors and product-specific factors are of major importance in the early stages of procurement processes and contribute directly to being ‘shortlisted’ as a qualified vendor, while relational factors play a complementary role. - Relational factors are of critical importance for actually winning the contract, after a company is shortlisted to compete for a government contract. In addition, relational factors contribute to getting valuable information on procurement opportunities. Thus, company-specific factors and product-specific factors can be labeled ‘qualifiers’, while relational factors can be labeled ‘winners’. Several barriers (exogenous variables) for foreign companies trying to compete in the US federal procurement market make this market very difficult to compete in. We identified the following categories: ‘regulatory factors’, ‘non-regulatory factors’, ‘industry-specific factors’ and ‘political factors’. We found that: - Regulatory factors have a direct influence on the early stages of procurement processes and are an important barrier to address. - Regulatory factors have an overlap with political factors, but their influence on procurement processes is not exactly clear. - Industry-specific factors have a direct influence on the process of shortlisting qualified vendors. Federal procurement in the United States 5 - Non-regulatory factors and political factors have an influence on the process of contractor selection after the shortlisting of qualified vendors. It is not exactly clear when, how and to what extent this influence is present. When put in layman’s terms the main findings are that: - The US federal procurement market is a difficult market to compete in; - It takes new foreign entrants three to five years before they start winning profitable contracts: patience, determination, and the ability to survive the long administrative processes are critical; - Protectionist regulations, such as the Buy-American provision, can negatively influence the success rate of foreign companies; they may create a non-level playing field; - Targeting a niche market could increase the chances for foreign companies; - Perceived corruption can come into play when companies that are asked to write a Request for Proposal (RFP) are also competing for contracts. - A smart strategy for foreign companies could be to become a subcontractor of a prime contractor; - Building up a track record of successful contracts and having references are important; - Price and quality are not sufficient for winning contracts; foreign companies need good relationships as well; - US government officials observe that most foreign companies do not make an appropriate market analysis and lack a good centralized planning; - US government officials acknowledge that regulations make it hard to enter the US federal procurement market; - US government officials find that the perceived corruption by foreign companies is overestimated. A revised research model was developed, based on the findings of this study. A number of recommendations for future research are presented. Some recommendations for foreign companies trying to compete in the US federal procurement market are presented, as well as recommendations for the Royal Netherlands Embassy in Washington, D.C., on supporting the Dutch private sector in competing in this market. Foreign companies should be aware of the difficulties of the market, build extensive networks of relationships and set up a thorough strategy for entering and competing in the market. The Royal Netherlands Embassy should mainly focus on supporting the Dutch private sector in the initial stages of federal procurement processes, by distributing information on characteristics of the market and do’s and don’ts, building an extensive network of relevant relations with private and public sectors, and denouncing violations of non-level playing fields to the appropriate government entities.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:https://purl.utwente.nl/essays/60375
Export this item as:BibTeX
EndNote
HTML Citation
Reference Manager

 

Repository Staff Only: item control page