A&D Company Loses Contract From Failing to Implement Local Suppliers

In certain industries, it's not just good business practice to purchase from local suppliers for goods destined for local markets -- it's required. This is especially the case within the A&D marketplace, where offset requirements mandate that companies such as Boeing and Lockheed Martin purchase a certain percentage content for each platform sold in regional global markets. A recent article in an Indian publication suggests why. According to an article in The Hindu "Aviation companies taking part in multi-billion dollar tenders have been complaining in private about the hefty 50 per cent offset clause." The Indian government is putting some teeth into its policies. As an example, "the Defence Ministry recently canceled a tender for 200 helicopters," because of a contractor's failure to meet the 50% requirement. 200 helicopters represents at least a billion dollars in lost revenue because a company could not implement a regional supply base. That's serious. And it's further proof that procurement should be looked at as a contributor to not just the bottom line, but the top as well in global market environments.

- Jason Busch

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