Buy American Exemption: The Biggest 1% in Public Sector Procurement

Today’s PI Window on Business segment in which I had the opportunity to interview Washington-based US public sector expert Judy Bradt is part of a series of interviews that will break down the key elements of the Buy American Policy.

These segments will drill down into the areas that will affect your business, and provide insights and direction on how you can minimize any negative impact while simultaneously maximize the opportunities of what is without a doubt a changing business landscape.

That said the primary goal of today’s show was to answer a question the was repeatedly raised after the September 30th Buy American Special.  Specifically, what are we talking about in terms of the actual dollar value of the opportunities afforded Canadian-based suppliers through an exemption.

This of course was where Judy’s depth of knowledge and succinct manner in delivering the facts provided the tangible, bottom line revelations that create a much needed point of reference.

To begin, let’s look at the key numbers that Judy provided regarding the Buy American exemption, and in particular the Stimulus Bill:

• Stimulus isn’t the same as Federal contract spending.
• Taking out tax cuts, stabilization payments, payments to individuals, the US Federal stimulus spending on contracts for goods and services is closer to $254 billion than $787 billion.
• There wasn’t a stimulus bill before 2009, so this according to Judy does not represent spending in which Canadian firms previously had a share.
• In Fiscal Year 2010, the base spending by the U.S. Federal Government is likely to top $550 billion over and above the previously referenced $254 billion stimulus allotment.
• Non-stimulus U.S. Federal Government spending is less onerous for Canadian-based suppliers in terms of regulatory requirements.

The next obvious question is what does this mean to Canada or the Canadian economy as a whole?

• According to the CIA Factbook, the Canadian GDP is $1.3 trillion.  This means that the $254 billion associated with the stimulus bill represents just under 20%.
• The U.S. Government’s $550 billion non-stimulus federal contract spending represents about 42% of Canada’s GDP.
• However, NAFTA gives Canadian companies a level playing field on approximately 25% of the $550 billion, or 10% of our GDP.
• When you take into account the trillions of dollars that are spent at the Sate and local levels, U.S. Government contract spending represents an estimated 25% of the entire U.S. economy.

What is the cost of a reciprocal agreement from the perspective of opening-up Canadian Provincial and Municipal contracts to U.S.-based suppliers?

• The Canadian equivalent to the U.S. $770 billion stimulus is $32 billion, of which approximately $10 to $12 billion has been reportedly directed to infrastructure spend.
• According to reports, 90% of the stimulus funding for this fiscal year has already been committed to more than 7,500 infrastructure and housing projects.

What was the percentage or dollar amount of Canadian Government contracts that flowed into the U.S?

• Unlike the U.S. this information is not readily available to the public.  According to Judy, this is something Canadian citizens should be asking their legislators to provide.

Judy will be joining me again on the 18th of November to discuss a number of the solid resources that are available to Canadian-based suppliers interested in pursuing Government opportunities south of the border.  These include the free services that Trade Commissioners provide to Canadian companies to facilitate their introduction into the U.S. market.  This also includes Judy’s recommendation to visit the www.sell2usgov.ca web site.

We will also be discussing what Judy refers to as “grassroots advocacy,” which provides Canadian suppliers with an outline of how to establish a relationship with American companies and government buyers at the state and local level who are looking to make the most of the new deal when it is announced.

So remember to mark your calendar for the 18th of November between 12:30 and 1:15 PM EDT.

In the meantime, the important thing to keep in mind is simply this, the Buy American exemption impacts key business sectors such as construction, wastewater and HVAC.  In essence an exemption removes the obstacles that would prevent or at least make it difficult for States and Municipalities to maintain the ongoing and established relationships they currently have with Canadian firms.

However, and while the U.S. Government spend is in the billions of dollars, this significant amount is not as important to individual businesses as the actual contracts that can be won.

In this regard, Judy cautions that the road from initial pursuit to consistent ROI realization is up to 24 months.  This means Canadian suppliers must have either the cash flow, reserves, and/or an understanding banker to effectively pursue U.S. Government contracts.

In cased you missed it, you will find the On-Demand Player for today’s broadcast below.

Once again, I would like to thank Judy Brandt for taking the time out of her busy Washington schedule to talk with us today.  Remember to mark down the 18th of November for our next show with Judy, as well as visiting her web site for additional information on her research and services.

Listener Feedback:

Jon – I like your show. Helps to enlighten Americans on the issue – until your show I’d never heard about this. News via Social Media, yup.

Susan Boggs

On-Demand Player for October 14th interview with Judy Bradt:

Vodpod videos no longer available.