Defense Contractor Pursuing International Sales

Develop and help execute win strategy for $1 billion armored vehicle contract (vehicles, spare parts, training, and services) with a Middle Eastern government.

CHALLENGE

Determine critical buyer section criteria and develop a winning proposal for a Middle Eastern country wanting to purchase 100 new armored vehicles. There is a very limited market for armored vehicles, so the contract represented major portion of addressable market over the next five years. The government in question had historically purchased French equipment, but the Gulf War had demonstrated the superiority of USA equipment. The government was insisting on major indirect offset deal (a device to generate in country economic benefit, typically used in cross-country defense equipment purchases to justify spending tax dollars with a foreign company or government) as a required element for any proposal to be considered, but the client had a company policy against offset due to previous bad experiences with offset arrangements.

Capturing the contract with this Middle Eastern country would dramatically effect the breakeven economics of the client and its closest international rival.
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SOLUTION

Determined government’s selection criteria and client’s competitive position using public news sources, purchased industry analysis (Jane’s Land War Platforms), interviews of government purchasing officials, plus historical information about the government’s buying patterns and selection criteria. Our client believed they were in the lead due to lower price (US had the only active production base for similar armored vehicles, so fixed costs were spread over more units) and had the best armored vehicles in the world as proved in the Gulf War. Also, the main competitor, GIAT (now Nexter) of France only had a prototype, not a full production proven product. Consequently, the client believed that due to commanding advantages in typical selection criteria of price and performance that they did not have to offer indirect offset. We were able to show that in fact they were not in the lead, but GIAT was in the lead. GIAT competitive lead was due to active pre-award indirect program activity, aggressive courting of government military officers and other officials, and due to their design utilizing an auto loader which allowed a 3 man crew rather than more common 4 person crew.

  • Buying criteria were dramatically different than client had perceived

  • Cost per tank was not the dominant criteria

  • Tank crew size was a much bigger factor than client perceived

  • Despite price and performance advantages, the client was not in the lead, but actually was trailing

  • Offset was absolutely necessary for the client’s proposal to considered responsive and be considered

  • Developed an effective, responsive, and innovative offset proposal

  • Client was returned to competitive position in the evaluation 

Analyses and forensic investigation showed that offset would be required to win the contract despite the client’s lower price and better product performance.
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The team was able to develop an innovative offset strategy to leverage venture capital which lowered the investment requirement and risk by millions of dollars.
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