U.S. Official Advises on Doing Business in the Middle East
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Aqaba, Jordan — It was the story of two nations at the SOFEX trade fair in Jordan in November.
On the north side of the hall was the UK/BAE Systems booth, which was unused during the three days of the exhibition.
The medium-sized booth had empty chairs and racks set up to hold brochures and fact sheets. Abandoned booths became dumps over the course of the event, with passers-by leaving empty coffee cups and water bottles on their desks.
On the south side of the hall, a group of about 27 U.S.-based defense contractors surrounded a loudspeaker’s corner set up by the United States Army Association.
The US Ambassador to Jordan, Henry T. Wooster, initiated a series of talks provided by embassy officials there to help mostly small businesses do business with the Hashemite Kingdom.
As the war in Ukraine proved, U.S. manufacturers have the best defense products and selling them to Jordan can strengthen security ties, Wooster said.
“We encourage you to take advantage of U.S. government resources when exploring opportunities to do business in Jordan,” he said, asking business leaders to speak.
And there are many US vendors in need of help, especially among small businesses.
One of the speakers who came to share his advice was Conrad Bonner, US Central Command Regional Operations Director for the Army Security Support Command.
He had just met personally at a trade show with two vendors who apparently had brought merchandise and brochures and set up booths.
“One of the things I was pointing out is that we don’t start selling until we have an export license,” he said.
Bonner is the army’s point man for foreign military sales in the Central Command region, which stretches from Egypt through the Middle East and north into Kazakhstan. Bonner’s organization receives requests from friendly governments for specific technology manufactured in the United States. The technology goes through his six-step process that includes negotiating contract terms, obtaining approval from US authorities (including an export license), and finally shipping the product.
The problem is that these six steps can take five years or more.
“We constantly hear from our combat commanders that the process is too slow,” he said.
The first steps go relatively quickly. That’s the part the security assistance command manages. Countries require specific technology made by US vendors. Bonner’s team and the Combatant Command then put together a support, which could be back on track in four to six months. That process used to take longer, he noted, but has undergone a series of reforms to shorten it.
Then, if the contract amount exceeds a certain amount threshold, State Department or Congressional approval is made. Security Assistance Command then develops a business case and negotiates contract terms between vendors and customers. If the parties agree, the customer will make the deposit. Bonner said the process usually takes him another year.
Things tend to get stuck after that, he said. “We need to focus on the execution phase, not the development,” he said.
Once the contract is signed, the sale faces the same bureaucracy that all defense procurement programs encounter, including the Defense Federal Acquisition Regulation. They have to develop requirements and undergo audits and inspections by the Department of Defense, which doesn’t even include the time to manufacture the product, he said.
Regarding speeding up the implementation phase, Bonner said State Department approvals and regulations like DFARS “will not go away.” Congress maintains an accountability role.
“It’s a dark rail that no one touches,” he said. “And no one at the Pentagon is going to pressure Congress to rush too fast. So we have to live with that,” he said.
Of course, there are ways to shorten the acquisition timeline for customers and US companies, says Bonner. And that is to make direct military sales. In that case, the company is negotiating and writing contracts and receiving payments on its own and does not enjoy the “protection and security” provided by the government.
“We do it when the FMS process doesn’t meet our requirements. [customer’s] timeline,” he added.
There are also plenty of overseas and direct sales opportunities in the Kingdom, especially for companies that provide border security technology and cybersecurity services. Bonner said a hot item Middle Eastern customers are currently looking for is anti-drone technology.
There were two major US contract awards announced at the SOFEX show, both direct military sales.
Bell Textron has signed a contract with the Royal Air Force in Jordan to provide ten Bell 505 Jet Ranger X light single-engine helicopters to be used for training purposes.
Colt’s Manufacturing Co. LLC has signed a contract with the government-owned Jordanian Design and Development Authority to co-produce handguns and rifles in the Kingdom.
The deal includes Colt (still based in West Hartford, Connecticut but now owned by a Czech holding company) manufacturing, co-branding, and offsetting agreements to sell products to customers in the Middle East. was included.
Offsets are part of a contract that requires a foreign manufacturer doing business in one country to provide expertise and a manufacturing contract in the host country.
They are used by customers to build domestic industries and create jobs.
And Jordan, like many Middle Eastern countries, is looking to develop its own defense industrial base. The Jordanian Design and Development Authority, run by the Jordanian Armed Forces, has had some success doing just that, particularly in the export market for small arms ammunition and tactical wheeled vehicles, said Sherman I. said the head of commercial activities. Company.
Customers for the series of military trucks are mainly from neighboring Middle Eastern countries and North Africa, he said, without elaborating. added.
Jordan’s design and development bureau will seek Colt’s expertise in lightening small arms, he said.
Abdullah said other U.S.-based small arms makers should follow Colt’s example and partner locally rather than engage in foreign military sales, which can take years to deliver. recommended to find the
“Weapons manufacturers in Eastern Europe and China sell weapons cheaper than any other country, especially China,” he said. For example, his AK-47 assault rifle made in Eastern Europe could sell for $600 and his made in China for $300.
Of course, U.S.-made small arms are of high quality, but many military customers in the Middle East and Africa have tight defense budgets and want low prices and fast delivery, he said.
“US companies must work together in the Middle East and Africa and enter into joint ventures to maintain a foothold in the market,” he said.
When it comes to federal resources available to U.S. companies wishing to pursue foreign or direct military sales, the Department of Commerce has officials stationed at U.S. embassies to help pave the way.
While they won’t be directly involved in business negotiations, they can help U.S. companies find reliable partners, said Janee Pierre-Louise, senior commercial officer at the U.S. Embassy in Jordan. .
“While we are not part of that process, we can help identify local partners that can help your company grasp the pulse of the opportunity,” she said in a speech at the SOFEX conference. I was.
The process begins at the vendor’s home, where the Department of Commerce has approximately 100 US Export Assistance Center offices in 70 markets. They help companies understand the federal resources available to them.
“These individuals can be viewed as something of an account manager, helping facilitate all kinds of connections needed in markets around the world,” she said.
Support from the U.S. Embassy’s Department of Commerce falls into four categories, she said.
One is to help companies get “export ready”. This includes all necessary documentation and advice on applying for licenses, she said.
“They can help direct you to the right resources within the United States so that you are ready to actually make an export transaction,” she said.
The next form of support is market information for the countries in which the company wishes to do business.
“We can help conduct due diligence on prospective partners,” said Pierre-Louise.
This third area is business matchmaking, where embassy officials facilitate referrals to local partners. If a company has a product that attracts a lot of ‘buzz’, commerce people can identify more stakeholders in this market,” she said.
Finally, commerce staff tackle higher-level problems. For example, if there are regional barriers to the entry of US products, commerce experts work with host governments to help remove barriers, she said.
“We often hear companies say that we are the best kept secrets, so we encourage them to take advantage of us,” she said.
topic: global defense market, international, contracts