Washington Post | Pentagon contracts go global
August 1, 2011 § Leave a comment
Published: 31 July 2011
It took Faun Trackway, a Welsh company that produces temporary roadways and landing strips, about 31 / 2 years of research before it decided to launch a U.S. business.
Company officials flew back and forth, visiting military installations and officials, exhibiting at trade shows, and getting to know the U.S. defense industry.
Last week, the company jumped in, opening the sales office of its independent U.S. business in the District. Even as the Pentagon warns of reduced spending, Faun Trackway is among those European contractors seeking opportunities in the United States, citing a market that is simply too big to pass up.
“It’s clear . . . that there’s a distinct need for the products that we offer,” said J. Alun Jones, the company’s chief executive, who was in town to launch the office during a ceremony at the British Embassy. “The American market is the largest . . . so we want to be here.”
They are not alone. Swedish defense company Saab AB said last month that it is doubling its D.C. staff and has purchased an East Syracuse, N.Y.-based air traffic management and surveillance firm in an effort to expand its North American business. European Aeronautic Defense and Space North America, whose parent company, EADS, is based in Paris, said it, too, is seeking new acquisitions in the United States.
The Pentagon has encouraged foreign companies to pursue work with the U.S. military in hopes of creating more competition for sales of goods and services.
“Globalization of our market is not an option. It is a reality,” Ashton Carter, the Defense Department’s top acquisition official, said in a February speech. “We are committed to continue opening our markets while at the same time striking the appropriate balance with security concerns.”
But when the Defense Department invites foreign companies to participate, it also imposes regulatory burdens that generate additional costs and bureaucracy, said David Berteau, senior adviser and director of the Center for Strategic and International Studies’ defense-industrial initiatives group.
Foreign companies face more requirements, “but you want them to compete on a level playing field when you put out the solicitations,” Berteau said. “While it sounds like that’s their problem, it’s also DOD’s problem, because they want the competition, they want the access to the technology, they want the incorporation of the global technical skills.”
Sean O’Keefe, chief executive of the Arlington-based North American unit of EADS, has seen the flip side of a foreign firm’s seeking U.S. business. His company became a target of pro-U.S. sentiment during the competition to build the next-generation aerial tanker, as some politicians called for the contract to go to an American firm. Boeing, whose defense business is headquartered in St. Louis, won a $30 billion contract, after an earlier deal with EADS was overturned.
Still EADS North America is not walking away from the market. O’Keefe said the firm plans to pursue every opportunity for which it is qualified and to look at acquisitions.
The regulations are simply “an extra hurdle we’ve got to go through,” O’Keefe said.
Faun Trackway isn’t worried.
The company is optimistic about selling to the Defense Department. It is pitching aircraft landing strips to the Navy and Marine Corps and temporary roadways to the Army. The Army Corps of Engineers has already tested its roadway technology.
Faun opened a one-man sales shop and plans to add three more salespeople in short order. Once it receives orders, the company said, it plans to open a U.S. manufacturing site, although it has not identified a location.