Podcast Transcript - Doing business with the US Department of Defence: A CCC primer for Canadian e-learning and gaming companies

If you’re an e-learning or gaming company and you’re looking for opportunities in the U.S., you might want to consider selling to the U.S. Department of Defence, or DoD.

An odd combination perhaps but the U.S. Department of Defence is looking for precisely e-learning and gaming expertise, not to mention Canadian products and services in a huge variety of sectors.

The catch is that doing business with the DoD is not exactly straightforward.

Stand at attention for today’s podcast as we take a look at how the Canadian Commercial Corporation can help companies make it to the frontlines the next time the U.S. Department of Defence spends its money.

I’m Michael Mancini, Editor-in-Chief of CanadExport, the official e-magazine of the Canadian Trade Commissioner Service – Canada’s most comprehensive network of international business professionals.

Michael Mancini: With me to talk about this is Mr. Tom DeWolf, director in the CCC’s defence procurement branch responsible for the U.S. program. Thanks for being with me today.

Tom DeWolf: Thanks Michael. It’s a pleasure and thanks for the opportunity.

Michael Mancini: So we’re here to talk about how the Canadian Commercial Corporation can help Canadian companies pursue these opportunities. But before we get into that tell me briefly what the Canadian Commercial Corporation does?

Tom DeWolf: Thanks Michael. CCC, Canadian Commercial Corporation is a federal Crown corporation established in 1946. Presently we’re under the minister of International Trade because we relate to economic growth, trying to help companies succeed in government procurement markets around the world. And especially with the United States, that’s my role as discussing with companies, helping companies get through the daunting task of working with the government of the United States and especially with the Department of Defence.

Michael Mancini: So what exactly does CCC do to help companies go through that process?

Tom DeWolf: Well first of all we have a group of officers who assist companies to get ready to respond to solicitations. The United States Department of Defence is very, very specific in how they buy and usually they buy through solicitations. You have to respond to those and they come out on www.fedbizopps.gov and you need to be prepared to be able to respond to those bids.

And part of CCC’s value is that because we’re the custodian of the defence production and sharing agreement which is an agreement signed in 1956, it allows Canadian companies to respond to these solicitations.

And the second group we have here is when you win a contract we have to get that ready for signature. And then of course we manage that contract on behalf of the United States government. So we actually become the prime contractor and the Canadian company is our sub. We have a domestic contract with them. And that offers some services to the DoD but it also offers services to the Canadian supplier who wins that contract.

This is all done for free. We have an appropriation from Treasury Board which allows us to do this U.S. program specifically with DoD buyers and that’s why we like to concentrate on that today.

Michael Mancini: Okay, great. So let’s get back to e-learning and gaming. Now why should gaming and e-learning companies be aware of opportunities in the US defence market? They seem like quite divergent fields.

Tom DeWolf: Yes, on the surface you might think so. But if you look at the United States Department of Defence, it’s evolving. And with pressures on budgets and the new administration coming in, there is a lot of attention being put on training.

The other thing is that the US has to be prepared for any eventuality. And what they do very often in each of the services they do war gaming, they do scenario and logistics preparation and all of this is going electronic in order to save money. And it’s no surprise that e-learning is a very huge priority for the United States Department of Defence. They actually have a defence acquisition university which teaches online courses for their officers. And they have 50,000 procurement officers just as one example.

And then when you get into the actual forces that have to prepare for any eventuality that their president decides that they need to go into, there is simulation, there’s training, there’s preparation in terms of logistics, supply management, getting supplies to the field. All of that has to be managed electronically. And if you can provide training electronically where you don’t have to bring all the soldiers and sailors together, that you can do it online or through the air waves, it saves a lot of money.

And I can tell you that the US Department of Defence is going to get strapped, it is strapped and they are looking for cost savings. So if you’re in the niche world of providing e-services and e-training as one and e-learning, the US Department of Defence is interested.

Especially if you, if you’re on the leading edge, if you’ve got something new, if you’ve got something different that’s above the norm, they’re very keen to know about what that is.

And part of CCC’s value is that before you decide to respond, you probably should talk to us in advance to check out whether you’ve got the right codes, whether you registered with the industrial security folks. There’s a joint certification office in Battle Creek, Michigan which you should register. There’s a lot of that acronym game that you really need to get through. And we help you through that.

And we also then connect you to other folks, public works and government services, maybe D and D, Defence Research and Development Canada may be doing something in your field. And there’s no harm to find out whether it’s applicable to know some people there. That then gets you into relationships with the United States Department of Defence.

Michael Mancini: You talked about answering a solicitation. What exactly is involved and how exactly should Canadian companies be prepared to handle these kinds of solicitations?

Tom DeWolf: Right. And of course the most important thing is to be well prepared so they actually know that the solicitation is coming out before it does come out. And maybe be involved in the building up of that solicitation. You need to know who is building up what and there are offices within each branch of the forces that is charged with preparing training programs, preparing the war game scenarios, preparing for logistical management. And so part of your data research is to try to find out where these people are located, see if you can get connected to them.

One of the most important things of course is if you have a city that you’re going to target; there may be a trade officer there, with many offices in the States with most major cities covered. So we find that a lot of Canadian firms don’t check in with the trade office down in these posts. But connecting with the folks in Washington and with the missions in the cities can be very useful in your data gathering efforts. And that’s an important thing before you get into the game.

And then when you meet, get introduced to the people within the Department of Defence and you start to show them that you’ve got something that they may not have already, then those connections will start. Some of those connections are made at trade shows. There are conferences that are specifically focussed on e-learning or simulation.

Simulation especially is very important now because of unmanned vehicles for example, pilotless vehicles even on ground transport, these are being thought of to save money, to protect the soldiers from harm.

So simulation, training and all of that e-business that goes along with it does get a lot of focus by the United States. And one of the organizations which does a very good job of putting together these conferences is the National Defence Industries Association, or NDIA.

And it’s the colleague partner I guess of CADSI in Canada, the Canadian Association of Defence and Security Industries and I’d recommend that you join that because their membership does receive a lot of value.

They put on events where people come and share best practices. They share pitfalls and we’ll get into pitfalls later. But you really do need to strategize and decide whether this is a focus for your future. In the States you’ve got other opportunities under the GSA. The GSA schedule system is really like a standing offer. What you do is you go through a system of registering. You have to provide company data. You have to provide descriptions of your product. You have to demonstrate that the prices you’re offering are as good as you give to the Canadian government. Of course the US would love it to be better.

You do have to be very tight on your pricing so that the government will see that they’re getting best value. And once you get on schedule and it’s sometimes a daunting task to get on, but if you get the right assistance and support and the trade office helps to some degree, there are other folks out there who will help you get on to the schedule system.

Michael Mancini: Our listeners should know that we have a podcast dedicated entirely to the GSA Schedules system and how it works, so go to www.canadexport.gc.ca and download our podcast called the World's biggest customer is open for business. All these links can be found on our website as well.

Now, let’s talk about the pitfalls. Why should Canadian companies even bother doing this when it really does seem like a daunting task to do business with the Department of Defence?

Tom DeWolf: Right. Some of the advantages of doing business with the DoD are that if you do get sales to that organization or to that department that’s a huge reference for going global. And even sometimes to our national defence department here in Canada. Often companies cut their teeth on the US before they actually get sales into the local market. The other thing is that the United States is a big place but it’s a small world in this business. So if the DoD is buying your product other people in the States will find out about it and you might get some phone calls about that which is good news.

But yes, pitfalls and difficulty getting into the system is true. What you have to remember is that as a Canadian company you do have a right to respond to solicitations. That’s one, because the buy America provisions do not apply to defence procurement.

That’s because of this long standing agreement that we have and CCC as the conduit of contracts is part of that agreement whereby Canadian firms are seen as American when responding to solicitations.

But you do have to fill out the solicitation response forms very well and you have to be cost effective and you have to have a product that meets the requirement. So you do have to do your homework well before the solicitation comes out and you should be ready for it.

And that’s the key is to be well prepared and many companies jump into the pitfall or they jump into the pit of not preparing very well prepared because business development funds and business development expertise is lacking.

Michael Mancini: What would be some other pitfalls of doing business with the Department of Defence?

Tom DeWolf: One is related to IP or intellectual property. Small companies in Canada don’t spend a lot of time and effort making sure that they protect their intellectual property. And it’s a, it is an issue with the United States Department of Defence because when you sell your product to them and then they want to amend it or they want to develop it further, you may get into discussions or you might get into problems of who now owns the new development.

So have that evaluated up front. Connect to the folks who know IP. There’s even an office within the government of Canada called the Canadian Intellectual Property Office, CIPO that provides information and that may be very useful to a new start up and companies who are getting ready to go global who need to know how they can protect their intellectual property.

Defence Research and Development Canada within the Department of National Defence, they’ve had to deal with this issue because they’re, they do R&D. So intellectual property is something very close to their heart. And they work closely with Canadian firms sometimes to develop a joint product. And they iron out these issues well in advance to make sure that you’re not surprised and you make sure who owns it, the intellectual property.

Michael Mancini: If a Canadian company is committing to doing business with the Department of Defence and if the department will ultimately want to own that technology, how much of a barrier is it then to that company to do business with, say, another country or business with the same product?

Tom DeWolf: That’s true. And it’s part of your business development strategy to look at the market and look at what you produce. What are you looking at in terms of the future, where are you going?

If you’re going commercial off-the-shelf you want the largest number of buyers possible. You want to be able to be in every country around the world then the DoD might be an inhibitor for you.

And I’m not saying that in a bad way but if they get your product and they find that it’s really useful and they find that it’s strategically ahead of many other countries, then they would not really be excited about you selling that to every other country in the world.

Michael Mancini: Does this apply to e-learning and gaming companies more than any other sector?

Tom DeWolf: No. It applies to most sectors. Canada, under the Department of Foreign Affairs and International Trade, has an export permit group which is very important when you’re thinking of selling your product to other governments around the world.

If you’re going to sell your state-of-the-art product you have to make sure that it’s allowed to be sold. You may have pieces within your system that are restricted and can’t be sold to other countries. Chips for example in computers or certain products may have intellectual property that is from the United States that may be should not be sold.

Michael Mancini: Well you’ve mentioned a lot of great resources and a lot of important contacts and web sites that Canadian companies really need to know about. I’m going to put this all on the CanadExport website on our podcast page so listeners can get all this information. Thank you very much for speaking with me today. Before we go, where can companies go to learn more about doing business with the US Department of Defence?

Tom DeWolf: It’s www.ccc.ca and through us we’ll connect you to a whole wide variety of other folks who might be able to help you as well.

Michael Mancini: Thanks again.

Tom DeWolf: Thanks a lot Michael.

Michael Mancini: Well that’s all for this podcast edition of CanadExport. Stay tuned for our next podcast when we follow another Canadian firm’s quest for financing on the Dragons’ Den.

For Canadian companies looking for more advice on making a pitch, whether it’s for venture capital or if you are looking for an angel investor, just go to www.canadexport.gc.ca. You can find videos, articles and other audio podcasts on these and other topics.

To find out how the Trade Commissioner Service can help you, don’t forget to go to www.tradecommissioner.gc.ca.

I’m Michael Mancini, signing off for now.

To download our other episodes, just go to www.canadexport.gc.ca or go to iTunes and use the searchword “CanadExport.”