Canadian Access to The United States Defence Market
Market Access Check-Off
- Identify your own product/services. (FSC Code)
- Identify contacts which can help you.
- Identify customer(s). (Trade Commissioners and publications can help)
- Ascertain any market restrictions.
- Consider Canadian defence associations. (CDPA, AIAC & AFCEA)
- As a potential prime contractor,contact and source with CCC.
- Ascertain the procedures from PWGSC/Ind & Corp Security:
Visits to U.S. defence agencies and contractors, and
- Personally visit your potential customer, then ascertain the need for an agent/sales representative.
- Be patient, persistent, follow-up and take the initiative.
Defence Market Contacts
The purpose of this booklet is to acquaint Canadian companies with the United States defence market. It is not the intent to provide details of the program; instead, where amplifying or detailed information is required, the appropriate office noted in Annex A should be consulted.
Under the Canada-U.S. Defence Production Sharing Arrangement (DPSA), Canadian companies are generally allowed to compete for prime and subcontracts on the same basis as U.S. companies. While the North American Free Trade Agreement (NAFTA) does provide access to U.S. government procurement, the DPSA provides a broader access, particularly in the components and combat systems of ships, aircraft and vehicles.
The Canada-United States defence economic arrangement with its market accessibility is based on three programs; the Defence Production Sharing Arrangement (DPSA), the Defence Development Sharing Agreement (DDSA) and the North American Free Trade Agreement (NAFTA). From the market access aspect, the DPSA is the governing arrangement as it provides the widest access. For instance, while allowed under the DPSA, NAFTA can exclude aircraft,ships, engines, electronics, communications, fire control, sensors, weapons and ammunition. The DDSA is an adjunct of the DPSA for defence development sharing.
- Canadian companies generally compete for U.S. defence acquisition on the same terms as U.S. companies.
- The Buy American Act is waived.
- Duty Free Entry is allowed.
- Contracts over the Simplified Acquisition Threshold, are normally awarded through the Canadian Commercial Corporation (CCC).
- The Canadian Government does not normally require an Export Permit for goods delivered for use in the U.S. Department of Defense.
There are restrictions to this market and most of these are embodied in the Defense Federal Acquisition Regulations Supplement (DFARS). Where there are restrictions, they will normally appear in the Commerce Business Daily announcement. Where there is doubt, you should contact one of the officers noted in Annex A.
The most significant restrictions are:
- U.S. national security.
- Small /Disadvantaged Business Set-Asides. These are also given preference under the Simplified Acquisition Threshold.
- The Berry Amendment restricts food, clothing and certain fibres.
- The Byrnes-Tollefson Amendment restricts the acquisition or repair of government vessels. This does not normally restrict parts or sub systems.
- Credit-financed Foreign Military Sales from the U.S. to overseas customers.
- Buy American applications in the annual Authorization and Appropriations Acts. These are subsequently embodied in the Defense Federal Acquisition Regulations Supplement. (DFARS)
Selling into the U.S. defence market differs little from selling to the Government of Canada. There are rules, regulations and interpretations, however these are well known. The most difficult aspect of the market is the understanding that it requires company initiative and marketing aggressiveness; the market will not come to you.
The following is a suggested check-off list for companies addressing this market for the first time, or as a reminder for the mature marketers. It is noted that most difficulties arise because something was overlooked, particularly visit procedures and not understanding the interpretation of solicitation documents.
- Identify your products/services, normally through a four digit classification known as the Federal Supply Class (FSC) in both Canada and the U.S.
- Identify those Trade Commissioners and others who can help. These are listed in Annex A.
- Identify potential customers through trade offices and publications. These trade offices are listed in Annex A and the Directory of the Canadian Trade Commissioner Service, available through the DFAIT InfoCentre. (Fax:(613)996-9709) Helpful publications include "Selling to the Military", "Subcontracting Directory" and the "Commerce Business Daily".
- Ascertain any market restrictions from both your Canadian contacts and where possible, your U.S. program/contract officer.
- If you can sell direct to a U.S. defence agency, contact the Canadian Commercial Corporation (CCC) at 613-996-0034. You must be qualified/sourced through CCC, who will assist you in identifying the buyer, provide you with the Bidders Mailing List Application, obtain the required CAGE Code (Manufacturers code) and assist in the procedures to obtain certification issued by the Joint Certification Office for visits and technology transfer.
- If you are a potential subcontractor to U.S. defence contractors, you should still contact CCC for a CAGE Code and Joint Certification. You should also take note of the U.S. defence contract administration office in Ottawa (DCMAO Canada) at 613-992-2687. This office arranges for Quality Assurance and some audit requirements. In addition they can be helpful should you encounter Customs, packaging, delivery etc. type problems.
- Consider joining one of the defence industry associations such as the Aerospace Industries Association of Canada (AIAC) or the Canadian Defence Preparedness Association (CDPA).
- Contact Public Works & Government Services Canada (PWGSC), Industrial & Corporate Security. 819-956-3646/ Fax 819-956-5140 Discuss visit requirements to U.S. facilities, security requirements and document/technology transfer.
After reviewing the above factors, assemble a marketing plan which should include the following:
- Identify the more likely geographical market area;
- Identify and contact the appropriate Trade Commissioner(s);
- Identify and contact the potential buyers (Enquire after magnitude of market, cost and competition);
- Plan a marketing trip to personally visit each of the potential buyers/contracting officers;
- Assess the value of an agent/sales representative/discuss with the local Trade Commissioner;
- Build-in sufficient time for repeated visits, monitoring; and
- If a prime contractor,consider subscribing to the Commerce Business Daily.
NOTE: These subjects are listed to provide some awareness. You should peruse Annex A for the office which can provide the details.
As in the commercial market, you should consider using a Customs Broker. Check with DCMAO at 613-992-2687.
U.S. defence acquisition regulations generally require that all contracts over the Simplified Acquisition Threshold to Canadian entities, be placed through the Canadian Commercial Corporation (CCC). CCC then places a "Back-to-Back" Contract with the Canadian company. 613-996-0034.
The following are some of the services provided to industry:
- Assists in obtaining Bidders Mailing List applications;
- Assists in obtaining a CAGE Code (Company identifier);
- Assists in obtaining Joint Certification (UNCLASSIFIED Visits/Document Transfer);
- Bidding opportunities from the U.S. government;
- Arranges for the remission of Duties;
- Expedites the payment process; and
- Facilitates audit requests.
The Defense Contract Management Area Operations (DCMAO) Canada is a unit of the U.S. Defense Logistics Agency and is responsible for the management of all U.S. defence contracts in Canada. (613) 992-2687
Their responsibilities include the following:
- Arranging for pre-award surveys;
- Pricing & Audit services (Conducted by PWGSC);
- Ensures contract compliance and can issue contract modifications;
- Delivery surveillance;
- Quality Assurance & Product Qualification (Conducted by the Canadian Department of National Defence);
- Transportation guidance;
- Resolution of Duty-Free problems; and
- Payment problem assistance.
The Defence Development Sharing Agreement (DDSA) is complementary to the Defence Production Sharing Arrangement. The purpose of this program is to enhance Canadian technology through sharing in the development of U.S. requirements. The Canadian company is the prime contractor and the development funding is shared between the U.S. agency and Canadian, normally the company itself.
The first step is to identify a U.S. defence agency which is seeking industrial participation in the development process. Once this is done, you have to ensure the U.S. project is funded. For more information on this program, contact the DDSA Office at 613-952-3977.
A term which denotes the increasing acceptance of commercial products in military inventories.
When invited by a third country to participate in a U.S. Foreign Military Sale (FMS), you should ascertain whether it is going to be a CASH or CREDIT Sale. If it is a Credit Sale, U.S. public law precludes the acquisition from a foreign/Canadian item unless it is already in U.S. inventory.
Canadian companies are considered to be U.S. domestic sources for mobilization planning. Companies which have contracted to the U.S. Department of Defence and if the product is considered to be "critical", should consider becoming a Planned Producer. This is arranged through the Canadian Commercial Corporation.
Potential exporters should be aware that protests play a part in U.S. defence contracting; companies should be aware of the procedures. Although CCC is the prime contractor, the company will have to bear the financial burden of any legal action.
Both Canada and the U.S. use the same product identification system, known as the FSC , Federal Supply Class or Federal Stock Code. This is a four digit system, however, the first two digits are used in product identification in the Commerce Business Daily, a daily list of U.S. government solicitations.
Canadian companies exporting to the U.S. Department of Defense and its contractors should be aware of the laws/regulations governing the Rights in Data. While there are rules, it is also an area which has been negotiable; however, these negotiations must be complete prior to signing the contract.
There are Federal Specifications issued by the General Services Administration (GSA) and Military Specifications issued by the Department of Defense. The latter may be acquired through the Canadian Government Trade Office, Philadelphia. 610-667-8210
As noted in the check-off list, all prospective exporters should contact the Public Works & Government Services Canada, Industrial & Corporate Security (ICS) directorate. (819-956-3646) The most common type of visit to a U.S. defence establishment or defence contractor is through a Directly Arranged Visit. This is for an UNCLASSIFIED one-time visit and MUST be project/procurement-related. It CANNOT BE USED FOR UNSOLICITED MARKETING VISITS.
Dept. of Foreign Affairs & International Trade,
U.S. Business Development (UTO)
Ph: 613-944-8821 Fax: 613-944-9119
Public Works & Govt. Services Canada
Industrial & Corporate Security
Ph: 819-956-3646 Fax: 819-956-5140
Joint Certification Office, Battle Creek, MI.
Ph: 616-961-7431 Fax: 616-961-5303
Canadian Commercial Corporation
Contract Procedures Ph: 613-996-0034 Fax: 613-995-2121
Defense Contract Management Area Operations
Ph: 613-992-2687 Fax: 613-996-5340
Industry Canada/Aerospace & Defence
Ph: 613-952-3977 Fax: 613-944-2375
Industry Canada Ph: 613-952-3977/Fax: 613-944-2375
Department of Foreign Affairs and International Trade Ph: 613-944-8821/Fax: 613-944-9119
National Defense Ph: 613-945-7098/Fax: 613-995-2305
Canadian Commercial Corporation Ph: 613-995-8046/Fax: 613-995-2121
Public Works & Government Services Canada Ph: 819-956-1328/Fax: 819-997-2229
Atlanta Ph: 404-577-6810/Fax: 524-5046
Boston Ph: 617-262-3760/Fax: 262-3415
Buffalo Ph: 716-852-1247/Fax: 852-4340
Chicago Ph: 312-616-1860/Fax: 922-9815
Dallas Ph: 214-922-9806/Fax: 922-9815
Detroit Ph: 313- 567-2085/Fax: 567-2164
Los Angeles Ph: 213-687-7432/Fax: 620-8827
San Diego Ph: 619-546-4467/Fax: 457-2844
Minneapolis Ph: 612- 333-4641/Fax: 332-4061
New York Ph: 212-596-1600/Fax: 596-1793
Philadelpha Ph: 610-667-8210/Fax: 667-8148
Seattle Ph: 206- 443-1777/Fax: 443-1782
Washington Ph: 202-682-7744/Fax: 682-7795
NOTE: For more details, consult the current "Directory of the Canadian Trade Commissioner Service".
International Trade Centres (Canada): Consult the current "Directory of the Canadian Trade Commissioner Service" available from DFAIT InfoCentre. Fax: 613-996-9709.
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