Federal Acquisition Paper discussion

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Watch these videos regarding Federal Acquisition Process.

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After watching these videos, reflect upon the federal acquisition process and then research some aspect of the federal acquisition process. For this paper, you will need to find an article in the library that relates to any aspect of the federal acquisition process and summarize and discuss the article in the required paper. Feel free to compare your article to which aspect of a Smores and remember to include a link to the article.

Write a two-page paper, plus the title page and a reference page. As always, read all the lesson notes in Week 2 before you start this assignment as new or current events may have been updated since the start of class.

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•Written communication: Written communication is free of errors that detract from the overall message.
•APA formatting: Resources and citations are formatted according to APA (6th edition) style and formatting.
•Length of paper: typed, double-spaced pages with no less than a two-page paper.
•Font and font size: Times New Roman, 12 point.

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Assignment 1 Watch these videos regarding Federal Acquisition Process. Link: https://youtu.be/PBf4pduLgzo Link: https://youtu.be/3k1qB-y0NFg After watching these videos, reflect upon the federal acquisition process and then research some aspect of the federal acquisition process. For this paper, you will need to find an article in the library that relates to any aspect of the federal acquisition process and summarize and discuss the article in the required paper. Feel free to compare your article to which aspect of a Smores and remember to include a link to the article. Write a two-page paper, plus the title page and a reference page. As always, read all the lesson notes in Week 2 before you start this assignment as new or current events may have been updated since the start of class. Instructions: •Written communication: Written communication is free of errors that detract from the overall message. •APA formatting: Resources and citations are formatted according to APA (6th edition) style and formatting. •Length of paper: typed, double-spaced pages with no less than a two-page paper. •Font and font size: Times New Roman, 12 point. The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1746-8809.htm IJOEM 12,2 The pre-acquisition process The temporal hiatus between the announcement and completion in foreign acquisitions in Brazil 400 Manuel Portugal Ferreira Graduate School of Management, Universidade Nove de Julho, São Paulo, Brazil and Instituto Politécnico de Leiria, Morro do Lena, Alto do Vieiro, Leiria, Portugal Received 17 September 2015 Revised 27 April 2016 Accepted 5 May 2016 Felipe Borini Escola Superior de Propaganda e Marketing Programa de Mestrado e Doutorado em Gestão Internacional and FEA, University of São Paulo, São Paulo, Brazil Simone Vicente Graduate School of Management, Universidade Nove de Julho, São Paulo, Brazil, and Martinho Ribeiro Almeida University of São Paulo – FEA, São Paulo, Brazil Abstract Purpose – The purpose of this paper is to focus on the pre-acquisition process and, specifically, how the complexity involved in the transaction may drive the temporal gap between the formal announcement and the completion of the deal. The authors emphasize the time (in days) between announcement and completion. Design/methodology/approach – The empirical setting consists of the cross-border acquisitions (CBAs) of Brazilian firms by multinational corporations announced between 2008 and 2012. Using a sample of 741 acquisitions, the authors examine how institutional (cultural and regulatory) and technological complexity and the predictable mitigating effect of prior acquisition experience in Brazil all impact on the time needed for evaluating the target and negotiating. Findings – The results show that these complexity factors do matter for hastening the process and that recent experience with acquisitions in Brazil shortens the time needed to completion. Originality/value – This study contributes to the literature on the acquisition process and the uncertainty and complexity factors in CBA in an emerging economy. Keywords Brazil, Mergers and acquisitions, Institution-based view, Acquisition experience, Acquisition complexity Paper type Research paper International Journal of Emerging Markets Vol. 12 No. 2, 2017 pp. 400-414 © Emerald Publishing Limited 1746-8809 DOI 10.1108/IJoEM-09-2015-0184 Introduction The worldwide wave of mergers and acquisitions (M&A) of the last two decades has also been observed in Brazil. Between 2001 and 2013 there were about 7,800 M&A in Brazil (PriceWaterhouseCoopers, 2013). Some of these were recorded in the press because of the sheer size of the operations – such as the acquisition of the North American companies Tyson Foods and Pilgrim’s Pride by JBS – or because firms entered a spiral of M&A that led to the emergence of large multinationals in their industries – such as AmBev, Gerdau and J&F (controller of the JBS Group). Yet, although M&A have become popular strategies for growth among top managers, there is little knowledge on one facet of the process prior to the M&A (Very and Schweiger, 2001; Dikova et al., 2010): the temporal hiatus between announcement and completion. That is why in some instances the process of evaluation of the target firm and the negotiation prior to completion are prolonged for days, months or even years, while in other instances the period after signing the initial M&A agreement is very short (an exception in Dikova et al., 2010). Albeit the effects on firms’ performance (Bortoluzzo et al., 2014) and the difficulties of integrating a new firm (Capron and Pistre, 2002; Dyer et al., 2004) are relevant, it is possible to better understand M&A by analyzing the pre-acquisition process, including the temporal hiatus between the formal announcement of the intent to acquire and the completion of the deal (including the abandonment of the decision to acquire) (see also Dikova et al., 2010). This temporal hiatus is likely to reflect the complexity involved in undertaking acquisitions, that may originate from government intervention (Pablo, 2009; Rasiah et al., 2010; DuBois and Primo, 2016), judicial decisions (Hotchkiss et al., 2013), difficulties of evaluating the target firms (for instance due to technological complexity) differences in the institutional and regulatory frameworks of the countries, among other problems. In this study we examine the temporal hiatus, or time duration, between the formal announcement of a cross-border acquisition (CBA) and the finalization of the deal. In a quantitative study based on secondary data we tested how institutional and technological complexity and the effect of prior acquisition experience (commonly referred to as acquisition capability) may produce a longer temporal hiatus between announcement and completion. The data were collected from the Securities Data Corporation Platinum (SDC Platinum) – M&A, giving a final sample of 741 acquisitions of Brazilian firms by foreign multinational corporations (MNCs) from 36 countries, between 2008 and 2012. The results show that CBAs of high technology firms and CBAs by foreign MNCs with recent acquisition experience in Brazil have a shorter temporal hiatus between announcement and completion. Moreover, the institutional barriers in more regulated industries tend to be more complex and require more time to complete. Moreover, older acquisition experience in Brazil contributes to extending the duration of the pre-acquisition process. This is interesting insofar as it likely denotes two important dimensions: first, there are a number of institutional hazards of operating in less institutionally developed countries that foreign MNCs learn first-hand and reflect in future deals by being more cautious. Second, many emerging economies, and Brazil specifically, have been going through substantial institutional pro-market transformations (Cuervo-Cazurra and Dau, 2009; Cuervo-Cazurra and Stal, 2011; Dau, 2016) opening their frontiers to foreign investors and modernizing the infrastructures. This means that to at least some extent the country presents fewer hazards than in the past. In this instance, recent experience in the country is likely to provide a more accurate perspective on the current barriers, hazards and complexities. This study follows extant literature on the complexity that may underlie CBAs, the effect of acquisition capabilities and the impact of different institutional dimensions and differences between countries. There are implications for practice given that longer time spent in the pre-acquisition process entails added costs – for example, management costs, negotiation costs, costs with auditing and loss of managerial focus from other activities. Thus, it is pertinent to understand the process of pre-acquisition and delays in completing the deal. Conceptual development and hypotheses CBAs are distinct from domestic acquisitions since they involve firms in different countries and are likely to impose a set of additional difficulties, or barriers, that need to be anticipated. These may include the cultural and economic differences (Stahl and Voight, 2004) that may increase the costs of the acquisition itself and of the integration post-acquisition (Morosini et al., 1998; Dyer et al., 2004). In fact, a large number of studies based on institutional theory have sought to understand how the differences between countries impact performance of the acquisitions and of the firms post-acquisition (Brouthers and Brouthers, 2000; Luo and Tung, 2007; Dikova et al., 2010). The preacquisition process 401 IJOEM 12,2 402 Albeit the extant research is abundant on the motives and determinants for undertaking domestic and foreign acquisitions (for in-depth literature reviews see Shimizu et al., 2004; Cartwright and Schoenberg, 2006; Barkema and Schijven, 2008; Ferreira et al., 2014), one stage of the acquisition process that has been little explored is the delay between announcement and completion. The acquisition process (Figure 1) originates with the decision to acquire and the evaluation of potential target firms. The process unfolds, usually protected by confidentiality agreements, with the acquiring firm receiving additional information until it releases a formal announcement of the intent to acquire. The next step is that both seller and buyer initiate negotiations (Hotchkiss et al., 2013) until a decision is reached that may be either completing the acquisition or abandoning it (Dikova et al., 2010). This period of getting additional information, assessing risks and synergies, negotiating the terms of the deal, may last for months or even years, extending the temporal hiatus between the formal announcement and the actual completion of the deal. Holding new information, the acquiring firm may identify additional risks (Hsieh and Walkling, 2005) and abandon the deal despite the costs already incurred. Dikova et al. (2010) noted that about 25 percent of the acquisitions announced were later abandoned. The time duration of the evaluation and negotiation of the target firm is relevant, due to the costs incurred and the opportunity costs of not pursuing other alternatives. It is likely that the temporal hiatus may be a signal that the deal involves greater risk and greater complexity (Meyer and Altenborg, 2008). Although there are numerous sources of complexity – firm, business and country specific – Dikova et al. (2010) noted that the institutional differences between home and host countries of the investors increase the complexity and make it harder to promote an adjustment between the two firms. At the industry level, it is likely that the negotiation will involve more complexity in more regulated industries. Other sources of complexity may pertain to the technology, either because it is difficult to evaluate the knowledge, or because it is necessary to assess the impact of integrating different technologies and the potential synergies. One of the hazards involving acquisitions – more crucial when acquiring high technology/knowledge firms – is the loss of key personnel (Dyer et al., 2004). In sum, we propose that the factors of complexity, risk and uncertainty that intervene in acquisitions will tend to prolong the temporal hiatus between the formal announcement of the acquisition and reaching a final decision. However, prior experience with acquisitions (or the competence developed in acquiring – the acquisition capability) (Hayward, 2002; Barkema and Schijven, 2008) may contribute to lessen the time duration in two important manners. First, prior acquisition experience improves the ability to evaluate potential target firms, and second, when this experience is in the same country, it is likely to provide the acquiring firms with at least some understanding of the local institutional idiosyncrasies (Rottig, 2016). These arguments are combined in the conceptual model shown in Figure 2. Institutional distance and complexity The national boundaries between countries are also indicative of economic, social, political, demographic, geographic, legal and cultural dimensions that differ among countries and Evaluation of opportunities for acquisitions Figure 1. Stages of the acquisition process Evaluation of a specific target firm and conditions Acquisition announcement Management model and integration of firms Completion or abandonment Source: Adapted from Dikova et al. (2010) Cultural distance (home-host country) Regulatory complexity Technological complexity (high technology) The preacquisition process H1 + H2 + H3 + Time between acquisition announcement and final decision (completion or abandonment) 403 H4 – Prior (recent) experience with local acquisitions comprise the national institutions (North, 1990; Berry et al., 2010). Institutions exist to regulate the activities and interactions among individuals, setting the norms, rules, codes, laws and contracts that guide behaviors (North, 1990). MNCs perceive the institutional differences on a large spectrum of institutional dimensions that are specific to each country (Rottig, 2016) in which they operate. It is less likely that CBAs occur between firms from countries with large institutional differences, because of the perceptions of uncertainties and risks of expropriation, contracts renounced by governments, legal barriers, specific cultural dimensions, among other problems (Dikova et al., 2010). A major facet of institutional complexity for firms pertaining to how countries differ is related to the cultural identities (Hofstede, 1980; Berry et al., 2010). A number of characteristics of the countries are rooted in the cultural heritage, including such aspects as individuals’ and firms’ behaviors, organizational structures, resistance to foreign ownership, social reputation, transparency and disclosure of information. Morosini et al. (1998), for example, analyzed how cultural differences influenced acquisitions’ performance, arguing that cultural distance between countries reveals differences in norms, repertoires, traditions and folklores, and many aspects of managing. These differences increase the costs and uncertainties of contracting in CBAs. In culturally dissimilar countries, such crucial aspects for the CBA as learning about the target and the specific regulatory framework may be difficult and conflicts may arise. In sum, cultural differences extend the time, or delay, and effort required to obtain reliable information, acquire trust, negotiate and mitigate potential post-acquisition conflicts that may emerge in integrating the firms (Dyer et al., 2004): H1. The cultural distance between the home country of the foreign investor firm and Brazil is positively related to the time duration between acquisition announcement and completion. In addition to the effect of cultural distance on the delay between the acquisition announcement and completion, other sources of complexity and uncertainty are likely to arise. Industry-specific regulatory and administrative barriers may be substantial institutional hurdles to overcome. Some industries are subjected to greater scrutiny by the regulatory agencies and may present greater complexity than others. The extent of regulation varies across industries and countries. For instance, in the USA, the healthcare and financial services appear among the most regulated (The Economist, 2007). Many emerging economies rely strongly on their pool of natural resources, for instance, in Brazil the state-owned oil company – Petrobras – accounts for about 10 percent of the country’s GDP, the mining industry for about 3 percent, and combined oil and mining represent about one third of Brazilian exports. These activities tend to endure greater regulation and a set of Figure 2. Conceptual model IJOEM 12,2 404 coercive norms by the regulatory agencies (Baioco et al., 2013). Other highly regulated industries include the telecommunications, water, forestry and some sectors of agriculture such as biofuel (energy). Attending to the rules and laws, both international and of the host country, MNCs may require a longer period of time to formalize the contract (Todeva and Knoke, 2005). Environments that are more regulated and administratively more complex create situations that may inhibit the acquisition (Vermeulen and Barkema, 2001). In designing the acquisition contract it is necessary to include clauses that deal with, for instance, the administrative details of the transaction, the legal procedures and the acquisition itself including knowledge transfer and other components (Dikova et al., 2010). Hence, in more regulated industries we may expect a longer temporal hiatus between the announcement and the finalization of the acquisition: H2. The regulatory complexity of operating in more regulated industries is positively related to the time duration between acquisition announcement and completion. Technological complexity One of the motives pertaining to acquisitions is the access to novel knowledge and technologies (Vermeulen and Barkema, 2001; Luo and Tung, 2007; Zou and Ghauri, 2008; Phene et al., 2012). Countries have distinct technological competencies (Anand and Kogut, 1997) that MNCs seek to access and transfer internally among their networks of subsidiaries (Vermeulen and Barkema, 2001) to augment their pool of competences. Zou and Ghauri (2008), for instance, argued that when the external knowledge is complementary to that already held, it will be easier to understand and use. However, much of the knowledge is tacit, difficult to codify, transfer or absorb (Cohen and Levinthal, 1990; Dyer et al., 2004). Cohen and Levinthal (1990) noted that in order to learn, MNCs need to have absorptive capacity – that is, the ability to recognize the value of the knowledge, and then the ability to apply and commercialize the knowledge. In CBAs in more knowledge intensive industries, it is likely that evaluation concerns emerge requiring additional information on the value and transferability of the target firm’s knowledge. Recognizing, learning and applying will be more complex and uncertain for technologies unknown to the acquiring firm. Reliable information is thus crucial. The institutional voids, the opaqueness that characterize emerging economies (Cuervo-Cazurra and Genc, 2008), despite the substantial pro-market reforms (Cuervo-Cazurra and Dau, 2009; Dau, 2016), raise uncertainties concerning the quality of the information received. Finding reliable information, scrutinizing the true value of the resources and reaching an agreement in more complex high technology, or knowledge intensive, industries is thus likely to require a longer period of time: H3. The technological complexity involved in the acquisition is positively related to the time duration between acquisition announcement and completion. Specifically, the acquisition of high technology target firms will probably have a longer temporal hiatus. Acquisition experience The international business literature is abundant in pointing out that firms may develop a competency in conducting acquisitions (Hayward, 2002; Ferreira, 2007; Phene et al., 2012). In essence this means that firms that make acquisitions will gradually get better at evaluating each potential acquisition in what concerns the target firm, the synergies, but also the many sources of uncertainty. Although each acquisition deal is distinct, research has shown that firms may benefit from their prior experience undertaking acquisitions, since they are able to apply what they have learned in one acquisition to the next (Vermeulen and Barkema, 2001; Barkema and Schijven, 2008). In essence this ability means that firms develop internal procedures on how to carry out acquisitions, learn how to interact with local agents, how to transfer internally acquired knowledge, effectively exploit potential synergies and so forth. Hence, firms may also accumulate a capability of operating in different countries; that is, they may develop a capability for operating internationally or in a given foreign country. These are capabilities that accumulate from prior experience (Hayward, 2002; Phene et al., 2012). Since each country is distinct, in the context of CBAs this means knowing and understanding what are the “rules of the game” in negotiating the acquisition, how the national institutions intervene in regulating economic activity, the impact of the legal system and so forth. Therefore, to complete an acquisition, firms benefit from a previously accumulated ability of dealing with acquisitions and knowledge of the specific country. The larger the experience of the MNC with the host country and with acquisitions, the lower will probably be the perceived complexities and thus the lower the temporal hiatus between acquisition announcement and finalization (Dikova et al., 2010). In sum, in the negotiation stage of the acquisition process, it seems reasonable to suggest that prior acquisition experience, and especially acquisition experience in the same country, may facilitate the finalization of the acquisition (Bortoluzzo et al., 2014). It is important, nonetheless, to note the significant institutional transitions being made by some emerging economies, and the Latin American countries specifically (Cuervo-Cazurra and Dau, 2009; Cuervo-Cazurra and Stal, 2011); these are capable of making the more recent experiences especially useful. That is, older experience in situations where the institutional milieu changes is not only probably less useful but it also leads firms into errors. Older experience may actually provide only an obsolete perspective on the host country and institutions that have since changed, as the pro-market reforms are implemented. Hence, more important than a general ability to conduct acquisitions in a given country, it is the recent experience that is likely to matter the most in emerging economies, shortening the time duration for evaluating and negotiating the terms with the target firm and/or regulatory agents. Recent experience may consist of up-to-date knowledge on the current regulations, on who are the best local financial consultants and legal services firms, the political agents that presently dominate and to whom political ties are important, or even a less biased understanding of the social and cultural environment in the host country: H4. More recent experience with acquisitions in Brazil, in contrast with the older experience, is negatively related to the time duration between acquisition announcement and completion. Method The hypotheses were tested with data on the CBAs of Brazilian firms by foreign MNCs – acquisitions involving Brazilian firms as the targets in which the acquirer was not Brazilian. Data were collected from the Securities Data Corporation Platinum (SDC Platinum) M&A. This database comprises data on M&A since 1985 involving non-US target firms and has been widely used in prior studies (e.g. Capron, 1999; Hayward, 2002; Capron and Guillén, 2009). From the SDC platinum we extracted data on all CBAs of Brazilian firms from 1985 to 2012. We excluded deals in which the country of origin of the MNC was an offshore, since it is difficult to identify the actual country of origin of the acquiring firms; it could even be a Brazilian firm using an offshore to circumvent fiscal and legal barriers. We also excluded acquisitions where the acquiring, acquired or both were from the financial industry given the industry specificities (see, e.g. Haleblian et al., 2006). We then selected only acquisitions of Brazilian firms that had not been reported as rumors or withdrawn by either the seller or the acquirer. Finally, we excluded deals in which the data set was too The preacquisition process 405 IJOEM 12,2 406 incomplete in the variables of interest to our study. With these procedures our final sample comprised 741 acquisitions between 2008 and 2012. The acquisitions between 1985 and 2007 were used to compute an experience variable. Variables The dependent variable was the temporal hiatus, or time period, in days, between the formal announcement of an acquisition in Brazil and its completion. The temporal hiatus was used in log form; in some instances the date of announcement was the same as completion we coded the time as zero. The log was thus computed as log(time) plus one since the log of zero is undetermined. The descriptives in Table I reveal that of the 741 acquisitions in the sample, 389 were completed on the day announced, 133 were completed within six months and 30 in up to one year. Moreover, 182 acquisitions were pending on December 31, 2012 (last day in the data set). Independent variables The independent variables were as follows. Cultural distance has been used in international business research to reflect the differences between countries that may generate uncertainties in firms’ foreign operations. We measured cultural distance using the Kogut and Singh (1988) Euclidean distance based on the six cultural dimensions of Hofstede (1980), Hofstede and Bond (1988) and Hofstede et al. (2010) (data accessed at http://geert-hofstede.com/). Regulatory complexity was assessed using the investments undertaken in Brazil in a number of industries including: energy (oil, gas, coal, biofuel, hydropower, biomass and other renewable), water, mining, telecommunications, and some forestry and agriculture (mostly related to energy production – biomass, ethanol and biofuel). These are important activities in the Brazilian economy that, despite the missing objective measures of regulatory intensity, have a large number of regulatory agencies (e.g. ANATEL, ANEEL, ANVISA, CNPE, IBAMA, SGSO, ANP and CONAMA). Although all industries are regulated, it is likely that some are burdened with more scrutiny than others and there are variations across countries. For instance in the USA, healthcare and financial services seem to be the most regulated (The Economist, 2007). We used the primary SIC codes of the target Brazilian firms to determine the industry and the variable was coded dichotomously (1 – if the target Brazilian firm operated in a highly regulated industry, 0 – otherwise). Technological complexity was measured observing whether the target was a high technology firm. This information was extracted directly from the SDC data set that signals these cases and dichotomized (1 – if the acquired firm was high tech, 0 – otherwise). We added two variables to assess prior acquisition experience in Brazil. The first counted the CBAs in Brazil between 1985 and 2007, as provided in the SDC Platinum. Prior studies have shown that the ability to successfully conduct acquisitions accumulates Completed Temporal hiatus (in days) Table I. Temporal hiatus (in days) since the acquisition announcement No. % Same day 389 69.6 Up to 180 days (6 months) 133 23.8 Up to 365 days (1 year) 30 5.4 Up to 730 days (2 years) 5 0.9 More than 730 days 2 0.4 Total 559 100.0 Source: Authors’ calculations, data collected from SDC Platinum Pending (on 31/12/2012) No. % 0 13 23 50 96 182 0 7.1 12.6 27.5 52.8 100.0 with experience and should positively contribute to reduce the risks and uncertainties perceived in an additional acquisition. The second variable on acquisition experience aimed to identify recent prior experience with acquisitions in Brazil. This variable was computed as the sum of the acquisitions undertaken between 2008 and 2012. Recent experience is relevant given the institutional changes in Brazil. Recent experience should reflect a more current understanding of the Brazilian institutional setting and contribute to reduce the uncertainties, including an understanding of the “custo Brazil” (or the added costs of doing business in Brazil). Control variables We controlled for the acquirer firm product diversification because it is possible that greater diversification generates higher uncertainty. This variable was measured using the number of SIC codes of the acquirer firm, in log form. We also controlled for business relatedness. Non-related acquisitions tend to be more complex and involve greater uncertainty and difficulty. Hence, using data collected from the SDC Platinum, we measured diversification of the core business comparing the four-digit SIC codes of the acquiring and acquired firms’ core business. This was a dummy variable. The official language in Brazil is Portuguese and among the acquirers only Portugal and Angola have the same official language, but account for only 17 observations in our sample. Therefore we did not include a control for language, and for a similar reason did not include historical or colonial ties. The Brazilian colonial ties are to Portugal. These variables could impact perceptions of risk or uncertainty. The year of the acquisition announcement was controlled to capture possible year effects that may emerge from such aspects as public policy changes in regards to foreign investment support. We included four dummy variables for the years 2009, 2010, 2011 and 2012, using 2008 as the baseline. The acquirer with high technology was controlled for a dummy variable. This variable controls for the possible impact of the acquiring firm holding complex technology and proprietary knowledge that may require greater precautions to avoid unintended diffusion in the foreign market to the local firms. We coded whether the acquirer is high tech (1) or non-high tech (0), using the data collected from the SDC that signals these cases. We included controls for the acquirer country. The GDP in the year before the announcement, in log form, was collected from the World Bank Development Indicators. We also included dummy variables to control for the region of the acquirer classified in five regions: Latin America, North America, Europe, Africa, Asia and Oceania, to control for unobservable heterogeneity. We used a Tobit estimation since the distribution of the dependent variable is left censored at 0. This technique is the most appropriate for these cases of left (or right) censoring. Results Table II presents the correlation matrix. The correlations are not especially high and the collinearity diagnosis (the variance inflation factor) is low and below 3, revealing there is no multicollinearity. Table III shows the results of the Tobit regression for the dependent variable time (in log form). Model 1 includes only the control variables. Models 2-5 include separately each of the independent variables. Model 6 includes all independent variables. H1 suggested a positive relation between cultural distance and the temporal hiatus. The test, in Model 1, however, reveals a negative and significant coefficient ( β ¼ −1.056, p o0.05), thus denoting the importance of cultural distance, albeit finding that greater cultural distance between the countries of target and acquiring firms is related to a shorter temporal hiatus. It is possible that when entering very culturally dissimilar countries, MNCs engage in greater scrutiny prior to the formal announcement of the acquisition intent. The preacquisition process 407 Table II. Correlations 1 Notes: *p o0.05; **po 0.01 0.204 0.403 0.070 0.067 4 5 6 7 8 −0.034 0.021 0.044 0.012 −0.162** −0.035 1.000 0.085* 9 0.672** 1.000 10 −0.042 0.012 −0.006 0.028 0.008 0.130** 0.005 0.063 0.031 −0.065 −0.063 0.070 0.120** 0.071 0.039 −0.036 0.100** −0.009 −0.111** −0.004 0.006 0.084* −0.090* −0.108** −0.149** 0.176** −0.122** −0.062 0.033 1.000 −0.199** 1.000 −0.222** −0.265** 1.000 −0.240** −0.286** −0.319** 1.000 −0.009 −0.062 0.014 0.064 1.000 0.093* 0.104** 0.013 −0.136** −0.124** 1.000 0.009 0.022 −0.059 0.014 0.054 −0.001 −0.005 0.039 0.058 0.011 0.038 −0.133** 3 −0.095** −0.013 1.000 −0.192** −0.229** −0.255** −0.276** −0.016 −0.051 0.018 −0.111** 2 0.521 1.575 −0.157** 0.047 −0.079* 0.714 1.654 −0.232** −0.074* −0.044 0.238 0.426 −0.043 0.094* 0.045 0.006 0.548 1.000 0.389 0.005 0.353 −0.008 0.402 0.035 0.423 −0.052 0.424 0.020 0.791 0.226** 2.890 −0.067 3.986 0.071 0.439 0.016 0.192 0.394 1.337 0.185 0.146 0.202 0.232 0.235 12.322 2.571 4.943 0.261 SD 12 13 0.001 −0.018 −0.056 0.061 1.000 0.022 0.282** 1.000 −0.045 −0.021 −0.111** 1.000 11 408 1. Cult. distance 2. Ann. 2008 3. Ann. 2009 4. Ann. 2010 5. Ann. 2011 6. Ann. 2012 7. GDP (log) 8. Time (log) 9. Prod. Diversif. 10. Acquirer high tech 11. Acquired high tech 12. Exp. 1985-2007 13. Exp. 2008-2012 14. Regulatory complexity 15. Diversification core business Mean −0.053 1.000 14 IJOEM 12,2 Model 1 (Constant) Acquirer prod. diversification Acquirer high tech Diversification of core business Announced in 2009 Announced in 2010 Announced in 2011 Announced in 2012 Acquirer GDP (log) Latin America Europe Africa Asia and Oceania Model 2 Model 3 Model 4 Model 5 Model 6 16.472** 17.779** 13.720** 16.421** 14.697** 13.177** 0.045 −1.697** 0.052 −1.678** 0.069 −1.630** 0.029 −0.517 0.028 −1.839** 0.042 −0.633 0.186 2.265** 2.194 ** 1.625* −0.433 −1.323** −0.985 −1.552** −2.564 0.697 0.279 2.197** 2.225** 1.583* −0.457 −1.302** −1.937 −1.880** −2.670 0.727 0.269 2.351** 2.212** 1.742** −0.254 −1.156** −0.563 −1.209* −2.294 0.744 0.173 2.262** 2.232** 1.617* −0.418 −1.311** −0.931 −1.468* −2.442 0.696 0.179 2.507** 2.355** 1.661* −0.102 −1.182** −0.791 −1.351* −2.209 0.739 0.317 2.516** 2.450** 1.722** 0.071 −0.981** −1.241 −1.210* −1.931 0.820 Independent variables Cultural distance Regulatory complexity Acquired high tech Exp. 2008-2012 Exp. 1985-2007 67.111 χ2 Log-likelihood −1,340.712 n 741 Notes: *p o0.05; **p o 0.01 −1.056* 409 −1.021* 1.178* 72.537 −1,337.825 741 The preacquisition process 71.867 −1,338.171 741 −1.976* 72.911 −1,337.375 741 −0.429* 0.399* 79.306 −1,333.864 741 1.121* −1.875* −0.461** 0.380** 95.576 −1,325.107 741 The H2 proposed that larger regulatory complexity would lead to a longer time hiatus. A positive statistically significant coefficient (β ¼ 1.178, p o 0.05) confirms this relation. H3 suggested that technological complexity and the time hiatus are positively related, but a negative and statistically significant coefficient reveals that the relation is contrary to what we proposed. Thus, greater technological complexity contributes to speeding the process. A possible explanation is that when acquiring more knowledge intensive firms, a fast completion of the deal may prevent a greater loss of valuable human resources (see Dyer et al., 2004). Finally, H4 was tested using two variables of acquisition experience: first, measuring recent experience (2008-2012) and another to assess older experience (acquisitions undertaken between 1985 and 2007). The results confirmed H4, showing a positive and significant coefficient for older acquisition experience (β ¼ 0.399, p o 0.05) and a negative and significant coefficient (β ¼ −0.429, p o 0.05) for the more recent experience. That is, older experience is probably more outdated and lengthens the process, while more accurate recent experience reduces the temporal hiatus to completion. Robustness tests We conducted a number of robustness tests. We included measures of business-level diversification from the core business comparing the three-digit SIC codes of the acquiring and acquired firms. We examined diversification, observing the entire portfolio of businesses of both acquiring and acquired firms. Finally, we conducted similar tests with the dependent variable – time – as continuous (counting days, rather than in log form), using an OLS regression. The results remained identical (available from authors). Table III. Tobit regression for the dependent variable time (log) IJOEM 12,2 410 Discussion and final remarks This study delved into one facet of the acquisition process – the temporal hiatus between the acquisition announcements and completion – to understand the effect of certain external complexities. The temporal hiatus is likely to impact on the costs and denote perceived risks that may partly explain the high rates of failure or abandonment post-acquisition that have been reported (e.g. Dyer et al., 2004). The hypotheses suggested a relation between the temporal hiatus and a selected group of sources of complexity, and were tested in a sample of CBAs of Brazilian firms by foreign MNCs. The study has implications and contributions for theory, managers and policy makers. For theory, there is clearly a need to better understand the process and the factors that lead to longer timespans, and higher costs, in evaluating and negotiating acquisitions. These costs may reach about 6 percent of the total deal value (see Dikova et al., 2010). By reducing the temporal hiatus it is possible to reduce the costs. In addition, it is relevant to understand that some factors of uncertainty are related to the institutional milieu, but others may be found at the micro-level, specific to the firms and the technologies/knowledge involved. Given the abundance of studies on the effect of holding an acquisition capability, we need to better grasp the role of this capability under conditions of institutional changes, such as those occurring in many emerging economies (Cuervo-Cazurra and Dau, 2009). For managers, an additional implication is the need to understand the barriers that they may face in undertaking CBAs. While the extant literature has delved into the impact of institutional differences among countries, more research is needed to understand other areas where those institutional differences may intervene (see Rottig, 2016). It is possible that firms develop strategies that incorporate the differences, uncertainties and complexities found in the foreign markets (Dau, 2016). In this regard, Very and Schweiger (2001) have noted that when managers lack knowledge they may hire local consultants that are familiar with the host country’s idiosyncrasies. For public policy makers, in formulating public policies targeted at promoting inward foreign investment, this study reveals the relevance of having efficient and effective institutions. If emerging economies have many institutional voids, there are also significant efforts underway to improve the institutional setting that will improve the business environment and make transactions easier. The expected outcome of these pro-market reforms is a more transparent market, where information is more reliable and the regulatory framework made more explicit. Our results show a significant impact of the institutional dimensions on the temporal hiatus between announcement and completion of the CBAs. However, this effect does not have a simple interpretation. For example, we found a significant negative effect of the cultural differences, meaning that the temporal hiatus decreases for MNCs originating from more distant countries. This is surprising, but the large majority of the acquisitions in Brazil originate in either the USA or Europe, and not from the neighbors of South and Central America or from other emerging economies that could share a broader ability to operate in inefficient institutional environments. Acquisitions in more regulated industries entail complexities that extend the time needed to completion. In this respect García-Canal and Guillén (2008) argued that firms operating in more regulated industries, on one hand avoid countries with high levels of macroeconomic uncertainty and, on the other, expand to countries usually classified with high-policy risk, or countries where the governments have high discretionary power, where the firms are able to negotiate favorable conditions (see also Rasiah et al., 2010 on the role of the government in emerging economies, and DuBois and Primo, 2016 on state capitalism). In a complementary perspective, Jiménez et al. (2014) argued that some firms may have a capability of dealing with political risk and are able to execute political actions (e.g. donations to campaigns, lobbying, etc.) to negotiate better conditions of entry. These firms will thus face lower institutional uncertainty and complexity than could be anticipated and have an advantage in investing in politically risky countries. This effect, according to Jiménez et al. (2014) is especially relevant for MNCs operating in more regulated industries that require more interactions with the host country’s agencies. The acquisitions of high technology firms, contrary to hypothesis, seem to be quicker to complete. Perhaps in these cases the acquiring firms dedicate more time evaluating possible targets prior to the formal announcement of the acquisition. Additionally, it is possible that this relation is specific to the Brazilian context, in which despite a few excellent high tech firms (such as Embraer) these cases of excellence are more the exception than the rule. It is likely that most CBAs in Brazil are of the market-seeking type, albeit some foreign MNCs may seek to learn and transfer internally the new technologies acquired in Brazil. Finally, this effect may be purposeful in that acquirer firms seek to speed up the process to avoid a status of instability that may lead to a loss of valuable human resources (Dyer et al., 2004). Prior recent experience with acquisitions decreases the time duration from announcement to completion. This is an important contribution to the literature, revealing that more important than the track record of acquisitions, it is the recent experience with undertaking acquisitions in the country that matters. This result complements the extant literature on the effect of an acquisition capability but especially when the institutional environment is in flux. That is, this effect may be due to Brazil being an emerging economy that has been implementing several institutional changes and undergoing an economic and social transformation (Cuervo-Cazurra and Stal, 2011). Hence, the more recent experience contributes to better understand the current development of the institutional environment, reducing the temporal hiatus between announcement and completion. Conversely, older experience is a source of barriers that extend the temporal hiatus. Limitations and future research This study has some limitations; first, there are limitations due to the data available. Although often used in the extant research, the SDC Platinum data set is incomplete on the firms and details of specific transactions. These gaps are more profound when the acquisitions involve non-US firms. For instance, we lack data on firms’ size and deal value. Thus, future studies may seek to examine the impact of other sources of complexity using other data from complementary sources, or using dedicated surveys to assess more in-depth, for instance, what were the complexity factors perceived by managers. Another limitation is that we only had access to data on the acquisitions of Brazilian firms. However, understanding the sources of institutional complexity and firms’ level effects may be promoted in studies involving multiple countries. Institutional and technological complexities are better captured with larger and more diverse samples. Similarly, a larger sample may permit capturing effects of acquisition experience in other territories, thus building a global acquisition capability. Future research may expand on the impact of other sources of complexity, either at the country level (specifying institutional characteristics), at the business level (unrelated acquisitions may involve more complexity), or at the level of the technology (MNCs may react differently when protecting proprietary technologies that are the foundation of their competitive advantage). Possibly such studies are better executed with primary data and it may be relevant to conduct interviews with top executives or CEOs to understand how they identify and monitor the different sources of complexity. To conclude, we have observed an overlooked and under-researched stage of the CBA process that occurs prior to the completion of the deal. Grasping the difficulties that take place in this stage may help understand the future longevity of the acquisition in the acquiring MNCs’ portfolio of businesses. By understanding the complexity factors that may emerge, it is possible for managers to act to reduce the costs and risks of a longer The preacquisition process 411 IJOEM 12,2 412 temporal hiatus. Hence, this study entails a valid contribution for research on CBAs, but there are many unanswered gaps for future researchers to scrutinize. Researchers could investigate why acquisitions are the strategies for domestic and international expansion more used by firms even when expanding to, for instance, emerging economies or economies in Latin America where they may face greater hazards. References Anand, J. and Kogut, B. (1997), “Technological capabilities of countries, firm rivalry and foreign direct investment”, Journal of International Business Studies, Vol. 28 No. 3, pp. 445-465. Baioco, V., Almeida, J. and Rodrigues, A. (2013), “Incentivos da regulação de mercados sobre o nível de suavização de resultados”, Contabilidade Vista & Revista, Vol. 24 No. 2, pp. 110-136. Barkema, H. and Schijven, M. (2008), “How do firms learn to make acquisitions? A review of past research and an agenda for the future”, Journal of Management, Vol. 34 No. 3, pp. 594-634. Berry, H., Guillen, M. and Zhou, N. (2010), “An institutional approach to cross-national distance”, Journal of International Business Studies, Vol. 41 No. 9, pp. 1460-1480. Bortoluzzo, A., Garcia, M., Boehe, D. and Sheng, H. (2014), “Desempenho de fusões e aquisições cross border: análise empírica do caso brasileiro”, Revista de Administração de Empresas, Vol. 54 No. 6, pp. 659-671. Brouthers, K. and Brouthers, L. (2000), “Acquisition or greenfield start-up? Institutional, cultural and transaction cost influences”, Strategic Management Journal, Vol. 21 No. 1, pp. 89-97. Capron, L. (1999), “The long-term performance of horizontal acquisitions”, Strategic Management Journal, Vol. 20 No. 11, pp. 987-1018. Capron, L. and Guillén, M. (2009), “National corporate governance institutions and post-acquisition target reorganization”, Strategic Management Journal, Vol. 30 No. 8, pp. 803-833. Capron, L. and Pistre, N. (2002), “When do acquirers earn abnormal returns?”, Strategic Management Journal, Vol. 23 No. 9, pp. 781-794. Cartwright, S. and Schoenberg, R. (2006), “Thirty years of mergers and acquisitions research: recent advances and future opportunities”, British Journal of Management, Vol. 17, pp. S1-S5. Cohen, W. and Levinthal, D. (1990), “Absorptive capacity: a new perspective on learning and innovation”, Administrative Science Quarterly, Vol. 35, pp. 128-152. Cuervo-Cazurra, A. and Dau, L. (2009), “Pro-market reforms and firm profitability in developing countries”, Academy of Management Journal, Vol. 52 No. 6, pp. 1348-1368. Cuervo-Cazurra, A. and Genc, M. (2008), “Transforming disadvantages into advantages: developing-country MNEs in the least developed countries”, Journal of International Business Studies, Vol. 39 No. 6, pp. 957-979. Cuervo-Cazurra, A. and Stal, E. (2011), “The investment development path and FDI from developing countries: the role of pro-market reforms and institutional voids”, Latin American Business Review, Vol. 12 No. 3, pp. 209-231. Dau, L. (2016), “Knowledge will set you free: enhancing the firm’s responsiveness to institutional change”, International Journal of Emerging Markets, Vol. 11 No. 2, pp. 121-147. Dikova, D., Sahib, P. and Witteloostuijn, A. (2010), “Cross-border acquisition abandonment and completion: the effect of institutional differences and organizational learning in the international business service industry, 1981-2001”, Journal of International Business Studies, Vol. 41 No. 2, pp. 223-245. DuBois, F. and Primo, M. (2016), “State capitalism and clusters: the case of Brazilian shipbuilding”, International Journal of Emerging Markets, Vol. 11 No. 2, pp. 214-231. Dyer, J., Kale, P. and Singh, H. (2004), “When to ally and when to acquire”, Harvard Business Review, Vol. 82, July-August, pp. 109-115. Ferreira, M. (2007), “Building and leveraging knowledge capabilities through cross-border acquisitions”, in Tallman, S. (Eds), New Generations in International Strategy, Edward Elgar Publishing, New York, NY, pp. 162-179. Ferreira, M., Santos, J., Almeida, M. and Reis, N. (2014), “Mergers & acquisitions research: a bibliometric study of top strategy and international business journals, 1980-2010”, Journal of Business Research, Vol. 67 No. 12, pp. 2550-2558. García-Canal, E. and Guillén, M. (2008), “Risk and the strategy of foreign location choice in regulated industries”, Strategic Management Journal, Vol. 29 No. 10, pp. 1097-1115. Haleblian, J., Kim, J. and Rajagopalan, N. (2006), “The influence of acquisition experience and performance on acquisition behavior: evidence from the US commercial banking industry”, Academy of Management Journal, Vol. 49 No. 2, pp. 357-370. Hayward, M. (2002), “When do firms learn from their acquisition experience? Evidence from 1990-1995”, Strategic Management Journal, Vol. 23 No. 1, pp. 21-39. Hofstede, G. (1980), Culture’s Consequences: International Differences in Work-Related Values, Sage, Beverly Hills, CA. Hofstede, G. and Bond, M. (1988), “The Confucius connection: from cultural roots to economic growth”, Organizational Dynamics, Vol. 16 No. 4, pp. 5-21. Hofstede, G., Hofstede, G. and Minkov, M. (2010), Cultures and Organizations: Software of the Mind, 3rd ed., McGraw-Hill, New York, NY. Hotchkiss, E., Qian, J., Song, W. and Zhu, J. (2013), “Holdups, renegotiation, and deal protection in mergers”, available at: http://ssrn.com/abstract=2342107; http://dx.doi.org/10.2139/ssrn. 2342107 (accessed November 2015). Hsieh, J. and Walkling, R. (2005), “Determinants and implications of arbitrage holdings in acquisitions”, Journal of Financial Economics, Vol. 77 No. 3, pp. 605-648. Jiménez, A., Luis-Rico, I. and Benito-Osorio, D. (2014), “The influence of political risk on the scope of internationalization of regulated companies: insights from a Spanish sample”, Journal of World Business, Vol. 49 No. 3, pp. 301-311. Kogut, B. and Singh, H. (1988), “The effect of national culture on the choice of entry mode”, Journal of International Business Studies, Vol. 19 No. 3, pp. 411-432. Luo, Y. and Tung, R. (2007), “International expansion of emerging market enterprises: a springboard perspective”, Journal of International Business Studies, Vol. 38 No. 4, pp. 481-498. Meyer, C. and Altenborg, E. (2008), “Incompatible strategies in international mergers: the failed merger between Telia and Telenor”, Journal of International Business Studies, Vol. 39 No. 3, pp. 508-525. Morosini, P., Shane, S. and Singh, H. (1998), “National cultural distance and cross-border acquisition performance”, Journal of International Business Studies, Vol. 29 No. 1, pp. 137-158. North, D. (1990), Institutions, Institutional Change and Economic Performance, Cambridge University Press, Cambridge, MA. Pablo, E. (2009), “Determinants of cross-border M&As in Latin America”, Journal of Business Research, Vol. 62 No. 9, pp. 861-867. Phene, A., Tallman, S. and Almeida, P. (2012), “When do acquisitions facilitate technological exploration and exploitation?”, Journal of Management, Vol. 38, pp. 753-783. PriceWaterhouseCoopers (2013), Mergers & Acquisitions in Brazil, PWC, June, available at: www.pwc. com.br/pt/publicacoes/servicos/assets/fusoes-aquisicoes/mea-brazil-june-13-english.pdf (accessed November 20, 2015). Rasiah, R., Gammeltoft, P. and Jiang, Y. (2010), “Home government policies for outward FDI from emerging economies: lessons from Asia”, International Journal of Emerging Markets, Vol. 5 Nos 3/4, pp. 333-357. Rottig, D. (2016), “Institutions and emerging markets: effects and implications for multinational corporations”, International Journal of Emerging Markets, Vol. 11 No. 1, pp. 2-17. The preacquisition process 413 IJOEM 12,2 414 Shimizu, K., Hitt, M., Vaidyanathc, D. and Pisano, V. (2004), “Theoretical foundations of cross-border mergers and acquisitions: a review of current research and recommendations for the future”, Journal of International Management, Vol. 10 No. 3, pp. 307-353. Stahl, G. and Voight, A. (2004), “Meta-analyses of the performance implications of cultural differences in mergers and acquisitions”, Best Paper Proceedings of the Annual Meeting of the Academy of Management, New Orleans, pp. I1-I5. The Economist (2007), “An unhealthy burden: America’s health-care market is not as unfettered as it seems”, The Economist, July 27, available at: www.economist.com/node/9407716 (accessed November 25, 2015). Todeva, E. and Knoke, D. (2005), “Strategic alliances and models of collaboration”, Management Decision, Vol. 43 No. 1, pp. 123-148. Vermeulen, F. and Barkema, H. (2001), “Learning through acquisitions”, Academy of Management Journal, Vol. 44 No. 3, pp. 457-476. Very, P. and Schweiger, D. (2001), “The acquisition process as a learning process: evidence from a study of critical problems and solutions in domestic and cross-border deals”, Journal of World Business, Vol. 36 No. 1, pp. 11-31. Zou, H. and Ghauri, P. (2008), “Learning through international acquisitions: the process of knowledge acquisition in China”, Management International Review, Vol. 48 No. 2, pp. 207-226. Corresponding author Manuel Portugal Ferreira can be contacted at: manuel.portugal.ferreira@gmail.com For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: permissions@emeraldinsight.com Reproduced with permission of copyright owner. Further reproduction prohibited without permission. LEADERSHIP FORUM Acquisition Leadership for the Future BY IRIS B. COOPER After over 25 years in federal acquisition, I discovered a new “low” in a recent Nextgov article, “Consultant Lists DHS’ Most (and least) annoying Contracting Officers,” from May 2014. The idea that vendors will now “blacklist” U.S. federal government contracting officers based on their numbers of solicitation modifications or schedule slippages is beyond pathetic. It is also a clear indication that the consultant in this case doesn’t understand the federal acquisition process. More appalling is the fact that we as the senior acquisition leadership in government did not react to this at all. What message did that send to our contracting workforce? Have we really become numb to these personal attacks? While we have been talking about transparency, collaboration, and innovation, our actions negate those great concepts. For every significant mistake or highly visible mistake, we have “over-corrected” the situation. I am not advocating that those who have violated procurement and ethics rules not be held accountable—quite the contrary, in fact. The problem is that we punish the entire community as well. Remember the conference scandals of various agencies over the past few years? Who was really held accountable? Those who were directly responsible were, for certain; but the rest of the workforce was as well. The result is that conferences and training events are “bad” and we would rather forego good training opportunities than give the wrong perception. 8 Contract Management | September 2014 We have layered more regulations and oversight over the already existing regulations and oversight and attempted to “fix” all wrongs with a broad brush. In response to the ever-increasing requirements and oversight, our “craft” has been oversimplified by turning every transaction into “contracting by template.” We have become so obsessed with metrics to “drive performance” that we have lost focus on the quality of the performance outcomes. Measuring progress is important, but meaningful outcomes should be the end goal. And, when metrics become punitive, we get undesired outcomes. Newsflash: What we have been doing has not produced meaningful results or better business outcomes in the acquisition arena. The actions we have taken are stifling creativity, innovation, and business outcomes. We, the government acquisition leadership, must stand up and create an environment where our acquisition workforce is encouraged to tell us what we “need” to hear, not what we “like” to hear. We must create an environment where appropriate risk-taking is supported without fear of retribution. We need to set a strong example and provide the guidance and support that is expected from leadership. Along with that, we must have the courage to hold accountable those that fail in spite of being given the opportunities, training, and guidance. We simply can no longer afford to lead to the lowest common denominator. We must rebuild the trust within our acquisition community to actively collaborate for better outcomes. The possibilities are endless, but without strong leadership, we risk losing this workforce and the government’s ability to effectively execute its mission. Our newer workforce (those with one to three years on the job) does not see the need for stability, predictability, and security that drove most of our more-established workforce to remain federal employees. They want to contribute; they want to be inspired; they want to use technology to its full potential; they are collaborative; they are transparent; and they want to innovate! They also have no problem moving on! We need to manage “forward” if we truly want to create a successful future for this profession. The lessons from the past few years are not good indicators for the future and for what we need to be. After over 25 years in contracting, I am still passionate about this career field, the endless possibilities in finding the best business solutions, and contributing to the government’s mission. I believe in what I do. I also know that my best work was done in environments where my leadership allowed me to use creative solutions, take some calculated risks, and sometimes even fail. CM ABOUT THE AUTHOR IRIS B. COOPER is the senior procurement executive for the U.S. Department of the Treasury. Send comments about this article to cm@ncmahq.org. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. World Congress 2016: MAKING INNOVATION IN FEDERAL CONTRACTING A REALITY BY JAIME GRACIA INNOVATION WAS ONE OF THE KEY TOPIC AREAS AT NCMA’S WORLD CONGRESS 2016 IN ORLANDO. Today, both industry and government continue to struggle with the entire life cycle of awarding and administering federal contracts. Although innovation in such areas as technology is easy to see and comprehend, the federal acquisition process is a different discipline that continues to have difficulties in this regard. Many factors have been cited, and have led to a dearth of “acquisition reform” initiatives and discussion areas—particularly in the last decade. As discussed at World Congress, and reported by Federal News Radio, However, some of the fundamental ways people in the contracting function can “innovate” really stem from following best practices and with a collaborative approach to communications and requirements building: Both federal and state officials agreed, the best way [to innovate] is to wiggle in with program people early in the acquisition cycle so that contracting officers know exactly what it is the program needs or is trying to do. Rosalyn Ingram, the top purchasing official for Florida, said that her shop brings in the largest or leading users of a product or service so contracting can find out what they really needed. She cited the example of “canteen services” requested by the state’s prison authority. “We don’t There are some pockets of excellence in best practices across government, such as the use of “agile” methodologies. This is being done at the Centers for Medicare & Medicaid Services (CMS), with the solicitations for PECOS and DEX.3 Instead of the typical 100-page request for proposals, CMS issued a simple statement of objectives, and instructed offerors to provide the performance work statements, quality assurance surveillance plans, and the vast majority of the documentation that will form the basis of the contract and how the winning contractor will actually perform the work.4 This technique is the foundation for performance-based contracting, and something that I advocate should be used more often. Government should focus on its outcomes, and let industry devise solutions to meet them. CMS is allowing industry to innovate, and use best practices to solve government problems. Isn’t that what we all want in the end? This and similar techniques are not new, but they are rarely used because the risks are seemingly too high, and not being able to compare “apples to apples” in the selection process is a constant fear. These issues must be overcome, and leadership needs to provide the tools and ability to make this happen. Nonetheless, I am hopeful that other organizations across government will allow these techniques to flourish. Innovation in acquisition is not really about doing something new, but perhaps doing something different, and following established rules to improve efficiencies—and thus outcomes. CM know anything about canteen services,” Ingram said, so she had her staff invite the prison people in to discuss their requirement.1 These are things that should be done as a matter of course. However, the strained relationship that often exists between contracting shops and requirements offices, not to mention between industry and government in general, has led to poor requirements, and thus poor outcomes. Further discussed was the introduction of risk, and the risk-averse nature of government. Although this is certainly a paralyzing reality, getting back to basics is how innovation will happen. Iris Cooper, senior procurement executive at the Treasury Department, and Tracy Marcinowski, director of acquisition policy at the General Services Administration, presented on this topic in their discussion titled “We Found the Enemy and It Is Us!”2 ENDNOTES 1. Tom Temin, “How to Innovate in Federal Contracting,” available at http:// federalnewsradio.com/acquisition/2016/07/innovate-federal-contracting/. 2. Available at www.ncmahq.org/docs/default-source/default-document-library/ presentations/wc16/wc16---b11---we-found-the-enemy-and-it-is-us.pdf. 3. See https://pecos.cms.hhs.gov for more information. 4. The original sources sought can be found on FedBizOpps at https://www.fbo. gov/index?s=opportunity&mode=form&id=51bedc3bb9750a3c08246a64f687 97b8&tab=core&_cview=0. ABOUT JAIME GRACIA  U.S. federal government contracting and procurement expert  President and CEO, Seville Government Consulting LLC ^^ in/jaimegracia Contract Management ∕ October 2016 31 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Citations: Article #1 Ferreira, M. P., Borini, F., Vicente, S., & Almeida, M. R. (2017). The pre-acquisition process. International Journal of Emerging Markets, 12(2), 400-414. Retrieved from https://searchproquest-com.ezproxy1.apus.edu/docview/1895188125?accountid=8289 Article #2 Cooper, I. B. (2014, 09). Acquisition leadership for the future. Contract Management, 54, 8. Retrieved from https://search-proquest-com.ezproxy2.apus.edu/docview/1566186651?accountid=8289 Article #3 Gracia, J. (2016, 10). World congress 2016: MAKING INNOVATION IN FEDERAL CONTRACTING A REALITY. Contract Management, 56, 31. Retrieved from https://search-proquestcom.ezproxy1.apus.edu/docview/1838681745?accountid=8289
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RUNNING HEAD: FEDERAL ACQUISITION PROCESS

Federal Acquisition Process

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FEDERAL ACQUISITION PROCESS

1

The Federal Acquisition Process
The Federal Acquisition Process is a long way through which the government makes
purchases and is affected by a number of factors. These factors include culture and technologies.
They are aspects which may delay the acquisition process. For instance, if the US government
will need to acquire a given company located in the Republic of China, some people may be
against it since they perceive it as a foreign invasion which will interfere with their culture.
Nevertheless, learning about the technologies involved and adapting to them might be quite a
time-consuming process. These aspects often increase the time duration which the negotiation
process will take. The main complexities in the acquisition process include regulatory,
technological, cultural, and experience in the process. Thus, the analysis step needs to be the first
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