Five ways G2G contracting can de-risk foreign government contracts

In this blog you will learn about the government to government contracting process and how it can help to de-risk foreign governments contracts.

“In December [2021], French President Emmanuel Macron visited the United Arab Emirates. He left with a $19 billion order for French Dassault Rafale fighter aircraft. You wouldn’t see Swedish Prime Minister Magdalena Andersson performing energetic sales pitches for Sweden’s equally fine Gripen jets the way Macron does for French military equipment—or the way most leaders of other countries with defense industries do for their local companies,”

Elisabeth Braw, columnist at Foreign Policy and a fellow at the American Enterprise Institute

In an analysis article of how Sweden fairs when it comes to the export of fighter jets and other defence equipment, author Elizabeth Braw, fellow at the American Enterprise Institute, identified a number of challenges. It includes the country’s reluctance to embrace government to government (G2G) deals, a system that its EU counterparts and other countries have used and benefited from.

G2G procurements preferred by buying governments

According to the article, buying governments prefer to deal with the governments of the country making the military platform, rather than dealing directly with the manufacturer.

British defense analyst Howard Wheeldon noted in the article that one of the benefits of these kind of government to government (G2G) deals is that the selling government can provide or arrange finance to the buying government. “Selling governments can also offer other guarantees, and the buying government may be able to secure in-country investment or similar cross-trade requirements.”

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Canada policy on G2G contracts for defence, security needs

Unlike many countries, Canada has been a big proponent of government to government contracting for defence, security and other government priorities.

For the defence sector, Canada’s Canadian Commercial Corporation (CCC) uses G2G contracting to facilitate the sales of Canadian goods and services to the U.S. Department of Defense. Over $7 billion in exports has been supported by government to government contracts in the last decade. Canada has also used G2G contracting for sales of defence, public security, and aerospace equipment to other nations.

Beyond defence and national security

In early 2022, CCC reached a financial agreement for a USD $50M government to government contract with the Corporación del Acueducto y Alcantarillado de Santo Domingo (CAASD) – the water authority for Greater Santo Domingo.

The project enables Canadian Groupe Helios to deliver the second phase of the rehabilitation of the Guajimia storm and sanitary canal project which will include the cleaning of a segment of the Guajimia ravine, and the construction of 384 apartments that will help relocate the nearly 350,000 residents living along a portion of the canal.

This agreement is one of many that Canada has entered with foreign governments for the purchase of Canadian solutions for public sector projects – all using government to government contracting.

Speaking at a recent Southeast Asia Infrastructure Forum, CCC President and CEO, Bobby Kwon remarked that through this contracting structure, the risks associated with international procurement are significantly reduced.

“Since every contract signed by CCC has the legal effect of being signed in the name of the Government of Canada, providing government buyers with the assurance that the contract will be delivered in accordance with the agreed terms and conditions,” said Kwon.

Moving ahead CCC, a Canadian crown corporation, has committed to keep growing this burgeoning sector by bringing more Canadian companies to foreign government opportunities.

5 Reasons Canadian businesses leverage G2G

Every year, hundreds of Canadian businesses work with the CCC to pursue G2G opportunities with the foreign governments and the U.S. Department of Defence. CCC’s government to government contracting model helps to mitigate political, business and payments risks so they can pursue foreign government contracts with confidence. Here are 5 reasons that our clients leverage CCC’s contracting expertise:

Get international contracting expertise

Structuring and managing international contracts is a complex business. As an experienced international contracting organization — we’ve been doing this since the end of the World War II and we bring deep expertise to the table. We help identify contracting pitfalls and questionable business practices you want to protect your business from.

Open doors with foreign government buyers

As a recognized G2G contracting authority and an extension of the Government of Canada, CCC has solid relationships with government buyers around the world. Going the G2G route means building the relationships you need to get to contract signing may get just a little easier.

Effective risk mitigation

Risk mitigation is always most effective when it is proactive, not reactive. In contracting, that means applying good risk-reducing strategies at the negotiation stage.

Our team’s extensive experience allows us to identify early on where potential risks might arise, and to structure the contract to address them in ways that are advantageous to both you and your buyer. Establishing the conditions that will enable you to fulfill the contract while satisfying the buyer establishes a strong foundation for success.

We assume responsibility for the completion of the project

For every successful G2G contract, CCC acts as the Prime Contractor to the foreign government, meaning we handle all payments and cash flows throughout contract execution. CCC will be your partner in securing advances and milestone payments so you can focus on delivering against the contract terms.

The Government of Canada supports you

Any contract you enter into with CCC as your partner carries a Government of Canada guarantee of contract performance. With that guarantee, foreign governments effectively see themselves as doing business with the government of Canada, greatly raising the profile of your deal and motivating all sides to see that it goes smoothly.

Why work with CCC when pursuing deals with global governments

“Viking has worked with CCC on numerous sales. Their international contracting expertise is essential when it comes to helping Canadian exporters close deals with foreign governments.”

Robert Mauracher, Executive Vice-President of Sales and Marketing at Viking Air

4 Reasons foreign governments leverage G2G

The G2G contracting model provides many benefits for foreign governments as well.

Contract performance is guaranteed

We structure contracts to address potential risks in ways that are advantageous to all parties, establishing the conditions to ensure successful contract fulfillment while satisfying the buyer’s requirements. The buyer’s procurement risk is also reduced because the contracts we enter into are signed in the name of the Government of Canada, guaranteeing the contract will be delivered per the agreed terms and conditions.

At CCC, we can make those guarantees because we conduct a comprehensive due diligence review of the technical, managerial, and financial capabilities of every exporter we support. Before contract negotiations even begin, we’ve already confirmed the exporter involved is a reliable, ethical supplier who has the skills and capacity to deliver on the project — and deserves a guarantee of contract performance.

Acquisitions can be accelerated to prevent procurement delays

Our proven, established G2G contracting approach avoids the delays that often occur during an international tender. When a competitive procurement or the risk of a failed tender introduces unacceptable delays to a critical project or compromises national security — or when the government buyer has identified a preferred Canadian solution — the G2G approach can accelerate the contracting process, ensuring urgent acquisition needs are met and projects are delivered on time.

Our processes help prevent bribery and corruption

Bribery and corruption can derail any procurement process. A G2G contract through CCC eliminates that risk thanks to Canada’s strong international reputation and commitment to being an ethical, reliable business partner.

We take on the role of the prime contractor with our G2G contracts, which means the Government of Canada is right there with your buyer every step of the way, from initial meetings and negotiations through the entire life of the contract. Because we take on all performance oversight and financial administration of the contract — all invoicing and cash flows are executed through us — the risk of bribery and corruption is greatly reduced.

Our experience structuring and managing complex international contracts also ensures your buyers have a partner who can help resolve any contracting issues that might arise — and can shield them from potential unethical business practices that might come with working with local suppliers.

G2G attracts financing

G2G contracting is a perfect vehicle to deliver important projects in an expedited timeframe. Since G2G contracts are made between sovereign governments, it can minimize the political, business, and payment risks that are factors in many procurement contracts.

Our G2G contracting significantly reduces the risks associated with international procurement since every contract signed by us has the legal effect of being signed in the name of the Government of Canada.

In addition, every company that works with CCC has been evaluated technically, financially, and managerially to confirm its ability to successfully deliver the project. This provides the foreign government buyer and financing and investment partners with the assurance that the contract will be delivered in accordance with the agreed terms and conditions making G2G contracts an attractive proposition.

How CCC aids deals between Canadians and foreign governments

Want to learn more about G2G?

We are Canada’s government to government contracting agency. Using our international contracting expertise, we support Canada and Canadian businesses to build successful commercial relationships with governments around the world.

If you are a Canadian company with a sales or an export opportunity with a foreign government or are a government buyer looking to source solutions from Canada, contact us to get the help and resources you need to be successful.

This post was last updated on October 3, 2022.