Selling To The Military On The Side!
By now most of you have seen the film "War Dogs" - The story of two 20-something dudes making it big in the international arms trafficking business! And as David Packouz quoted in the opening scene, "I never thought that a career in international arms trafficking would happen to me, but…..”
I am certain that within your circle of friends and acquaintances, you probably know some doctors, several lawyers, a few artists, and maybe even an actor or a professional athlete, right? But chances are you don't know any international arms dealers!
Most likely your impression of an arms dealer is probably some shady character doing something illegal and quite dangerous! What the arms dealer does is pretty straightforward though. He sells arms! But there are obviously plenty of aspects of this profession that remain hidden to most. Here are five of them.
1) Dealing arms isn't illegal!
Believe it or not, dealing in private arms is a perfectly legal profession in most countries. In fact, few countries have any laws at all that forbid brokering an illegal arms deal. You must understand that the broker is usually nothing more than a middleman with a phone, a computer and a bank account.
When arms dealers do find themselves in trouble, it is often when they run afoul of international law by engaging in high-profit, illegal transactions. In these instances, it is not specific arms-dealing laws that are being broken, but rather import and export laws, or U.N. sanctions that are being circumvented.
While some arms dealers concede that better laws and serious enforcement efforts might curb or stop the arms trade, the dirty little secret of the business is that, although we all profess to despise them, virtually every country on the planet needs and wants arms dealers. For that reason, most arms dealers, even those who make illegal deals, operate without significant interference — and, in some cases, tacit approval.
2) Is the AK-47 the weapon of choice?
The AK-47 assault rifle is everywhere, and it costs about $75 to buy, transport and sell. But many of the high-profile arms dealers don't bother with this gun at all because the margins it offers are too low.
In fact, some dealers use these rifles as a loss leader, giving them away at first. After they have established a rapport with the buyer (remember; this is a business built exclusively on trust, as there are seldom courts to turn to if the other party breaks the deal), the dealer can then sell the buyer on a more sophisticated line of arms.
The arms dealing industry benefits greatly from the nature of war, which is fundamentally competitive. If your adversary has only knives, guns will suffice, but when they get guns, you'll want tanks!!
3) Arms buyers need not pay cash!
Arms sales follow conflicts and one of the biggest ongoing conflicts of the late 20th and early 21st centuries is the fight for the diamond mines of West Africa. Many arms dealers take their pay in this region in so-called "blood diamonds." According to some estimates, 4% of the diamonds circulating on the world market are blood diamonds.
Over 50 countries have agreed to respect the Kimberley Process Certification Scheme, which forbids the import of diamonds without proper accompanying certification, and a number of human rights groups have put additional pressure on buyers around the world. Nevertheless, the market for diamonds remains strong, regardless of their origins.
4) How much can arms dealers make?
Naturally, exact salary figures aren't available, but according to Jean Bernard Lasnaud, a French-born arms dealer living in Florida, between $1 million and $2.5 million (U.S.) in merchandise will be unloaded in an average year.
Another arms dealer, Viktor Bout, is estimated to have made $50 million in profit by selling arms to the Taliban in the late '90s.
David Packouz joined Efraim Diveroli's arms company AEY Inc. in 2005 when he was 23 and Efraim was only 19 years old at the time. By the end of 2006, they had won 149 contracts worth around $10.5 million!
Arms dealers can make additional money by offering their services to American arms manufacturers. Boeing reportedly recently filed a lawsuit against Dale Stoffel, an arms dealer, for breach of contract. Had their deal gone as planned, Boeing would've received 34 Russian missiles, slated to be used to test American ship defense systems.
5) Arms dealers will sell anything and everything!
It's tempting to think of an arms dealer simply as a guy who can sell you guns and ammunition, and more sophisticated hardware when necessary. But a better way to understand what arms dealers do is to think of them as war providers.
Whatever is necessary for your war, they can provide everything from tanks and rockets to planes, medicine, uniforms, and rations. Military hardware is purchased in one country (usually a former Communist country, where the military needs a way to make money), and then transported by plane or ship to its final destination.
Most arms dealer’s charter planes and ships, but a select few operate their own fleets. According to estimates, Viktor Bout's companies run an air fleet of between 40 and 60 aircrafts, shuttling arms all over the world.
Arms dealing is one of those professions that guys always wonder about. And why not? It involves a lot of money, international intrigue, travel, and probably some pretty wild stories. Adding to the allure of the profession is the fact that most of us are probably never going to meet an arms dealer.
Public interest in the arms industry reached an unusual high in the fall of 2005, when Nicolas Cage starred in Lord of War. This big-screen story of an international arms dealer generated instant hype, largely because it addressed a topic of interest to so many guys.
As long as there are arms dealers, the public will be interested. And as long as there are wars, there will be arms dealers. Global conflict and terrorism are everywhere, and while it's sad to say, they are a part of our daily lives.
Although most people will shy away from selling arms to the military, there are still hundreds of products that you can sell to the military and make excellent money!
If your company is not close to the Pentagon, you can still sell to the military if you know how to find your way through the complicated maze of military purchasing. There are multiple “buckets” of money available to be spent.
If money is not available from one source there are others that can be tapped. Of course, the prime consideration is the overall military budget, which has been reduced to almost nothing lately, so the competition is stronger than ever for the dollars that are accessible.
The military buyers must first check government inventories for their needs, then small businesses, including disadvantaged suppliers and minorities. They will look to government contract programs, such as GSA (General Services Administration) and DLA (Defense Logistics Agency).
Let’s start with the local military installation, which includes the Army, Air Force, Navy and Marine Corps. The Army has over 1,000 installations of which 38 are large. The Navy has 500 locations of which 21 are large bases. The Air Force has nine major commands with 35 large bases, and the Marine Corps has three divisions with eight large bases.
The best place to start looking for business is with the base contracting office, which you will find at all major installations. The first appointment should be with both the Director of Contracting and the Small Business Administrator, if you are a small business.
If your company is a large business, team up with a local small business, as a small business has many advantages since a majority of contracts are small business set-asides. Check with the Small Business Administration (SBA) to see if your company qualifies as a small business.
Note that each military installation has unique buying directives. Some buyers will send everything to contracting, while some will buy on their Government Procurement Card (GPC) or P-card, depending on the card’s limit.
During the first visit to the contracting office, present your company, its products and services. Check on how the installation goes out to bid. On some small bids, a contracting officer might call on three local companies and take phone bids.
On larger bids, the bid will be posted on FedBizOpps (www.fbo.gov). In some cases the government will run a reverse auction on www.fedbid.com. Go to http://government-contract-basics.com/ and grab the book, "Government Contracting Basics".
Reverse auctions have one goal and that is to get the lowest possible bid for products or services. Unlike traditional auctions in which the price goes up, reverse auctions drive down the cost until a specified deadline is reached, and the award goes to the lowest bidder. Reverse bids are time consuming as they have to be monitored.
The first step in bidding to any part of the government is to become a Qualified Supplier.
This process can be tedious and frustrating, but there is a unit of the Small Business Administration that will give you a lot of help. There are SBA Small Business Development Centers all over the country, usually located in or near a college.
There's certain to be one within driving distance. To find the nearest one, go to the government pages of your phone book or go to their Web site at http://www.sba.gov/sbdc/sbdcnear.html.
Here are two more Web sites that I think you will find interesting and useful:
http://www.eps.gov/spg/ and http://www.business.gov/. These will help you find specific bid opportunities. But as I mentioned earlier, you won't be able to bid on anything until you become a Qualified Supplier, so contact your nearest SBDC at your earliest convenience.
As you can see, selling to the military is not easy, but if you are persistent and take one step at a time, asking questions along the way, military sales can add substantially to your bottom line.
So go grab yourself a cup of coffee and visit the website website FedBizOpps.gov which lists all agency bid announcements. You can learn about the specifics of the bidding and contract awards process in this blog!
