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Gvt procurement: FTA provides lucrative contracts for Australian businesses

PM (via ABC radio) | 16 December 2004

FTA provides lucrative procurement contracts for Australian businesses

Reporter: Michael Rowland

MARK COLVIN: Australian businesses are preparing for an assault on the $200 billion US Government procurement market when the United States Free Trade Agreement takes effect in just over a fortnight.

Outgoing US Ambassador Tom Schieffer believes the inclusion of government procurement contracts is one of the big unpublicised benefits of the FTA.

Australian companies will now be able to compete much more fairly for lucrative contracts to supply the sprawling US bureaucracy with everything from paper clips to high tech defence equipment.

Michael Rowland reports.

MICHAEL ROWLAND: It’s not just beef and dairy exporters poised to cash in on the US trade deal. Come the first of January Australian companies will suddenly have much greater access to the very deep pockets of the United States bureaucracy.

GEOFF GRAY: In the Department of Homeland Security, there’s one person that has a billion dollars to spend on new ideas to make America safe.

MICHAEL ROWLAND: Geoff Gray is the Austrade’s Washington-based senior trade commissioner. He’s been back home explaining to Australian exporters just how to get a piece of this billion dollar budget as well as secure other lucrative US contracts, particularly in the Homeland Security area.

GEOFF GRAY: Since 9/11 security has taken a very large share of the United States budget and of the $60 billion of the US government spending on IT, about 10 billion of that is in the security area and any idea that any country can come up with that will make America safer, they will look at that idea, and we have a lot of good ideas in Australia, we’ve worked with some very interesting new technologies in the security area, and it’s an area of priority for us.

MICHAEL ROWLAND: What’s been stopping Australian companies from getting these contracts in the past?

GEOFF GRAY: Well, in the past Australia was not part of an agreement which the United States has with a number of countries - developed countries such as Europe, Japan and Canada and so forth - where they could tender for US government contracts directly, where they could gain listing on the general service administration schedules.

There was a 6 per cent price penalty for Australians trying to bid directly for the US government work. That all goes by the way with a Free Trade Agreement.

MICHAEL ROWLAND: But the Free Trade Agreement won’t necessarily give Australian companies an armchair ride.

Anton Reut, a Washington based consultant who helps US companies land government contracts, insists Australian firms will still need a lot of local knowledge.

ANTON REUT: I think their expectations are not realistic. Again, whether it be a Canadian company, an Australian company, European or an American company, when they first come into town. You have to do your homework.

There are been people who have been in that town, selling to the Federal Government, like myself, for over 30 years. We like to consider ourselves pros, and you’re going to go up against me.

And I know all the rules and I know the loopholes and you don’t and you’re going to be at a very distinct disadvantage, even if your product is better than mine. You’re just not going to know what you can do and what you can’t do and you’re going to wander around the Federal Government and waste a lot of time.

MICHAEL ROWLAND: Is it realistic to expect Australian companies can crack these contracts when they’re up against obviously very competitive American local firms?

ANTON REUT: Sure, sure. I mean, there’s ways of doing it. If they wanted to go up on their own against a seasoned veteran US company or Canadian company, the chances of winning are going to be pretty slim, so the approach you want to come into is again, taking a look at what you offer and who do I team up with?

MICHAEL ROWLAND: Austrade’s Geoff Gray agrees Washington can be an unforgiving place for any outsider.

GEOFF GRAY: United States is a great market, but it’s also a complex market. It’s a market that can offer risk, so it’s very important that research and homework is undertaken here in Australia.

MICHAEL ROWLAND: Australian companies have just over two weeks to brush up on the intricacies of the US bureaucracy.

MARK COLVIN: Michael Rowland.

 source: PM