There are anti-dumping laws in the United States but still it occurs, as one company enters a new market they will lower prices in a price war prone position and take it in the sorts just to get their butts in the door. Where is the most common market for this to occur? Well in Department of Defense contracting of course. But why? The United States Defense Department pays top dollars for its hammers right? Well not exactly, but yes sometimes. What are you talking about you ask? Well here is how it works; the US Military needs to upgrade some ships, tanks or planes and so it puts out a bid and many companies bid. Often they bid less than their costs to do the job. But why? Well so they can get onto the base and work with all the people there and once they do those in charge will obviously need something else done and so rather than going thru a 90-day bidding process they simply give it to the company already there, already cleared and already on the property doing some other similar job you see? The contractors know this is how it works and well everyone realizes it really. It is kind of an unspoken thing that everyone knows in those circles. Now then is this necessarily a bad thing? No not really and let me tell you why. When outsourcing to government contractors the US Military is looking to save money and streamline things and they need a smooth transition. If a government contractor already knows what is going on and how things work around there, well then things go pretty smoothly. Now then, let us all consider how the private sector works? Well it works much the same way and there is a good reason for it. Ask any supply chain executive or change-management consultant. You see, there is a thing called organizational capital and when a new company or team comes onto the property it takes a while to get everything working right and this is not as easy as it sounds. Once that hurdle is over, the last thing you want to do is start all over again with another group. My article is in response to a GAO report I read which completely missed the point on this issue, so consider all this in 2006. |
