Two of the Pentagon's largest contractors, Lockheed Martin Corporation and
The Raytheon Company, plan to adopt company-wide electronic standards for submitting
export-license applications to the U.S. government.
Their intent is to inject efficiency into a process that, by nature, is convoluted.
A software package developed by Lockheed Martin was tested successfully last
month, company officials said. The goal is to make it available to all defense
firms and government agencies that are involved in the export business, and
to develop common standards for electronic exchanges of information between
government and industry.
But there is no agreement yet on what specific standards will be used for electronic
The ongoing debate about the need for reform in the defense exports arena pits
those who believe the approval process is too lengthy-and therefore undermines
a company's competitiveness in the marketplace- against those who support tight
controls as a way to protect sensitive U.S. technologies from being sold to
The intense finger-pointing in this debate means that one important element
has been left out of the discussion, said Richard G. Kirkland, Lockheed Martin's
vice president for Washington International Operations. Missing in the debate
is the need to educate executives and engineers throughout the defense industry
on why there are "defects" in the export process that turn it into
a cumbersome and unnecessarily lengthy operation, Kirkland said during a recent
Spread out on the floor of Kirkland's office is a 21-foot long flow-chart that
depicts the U.S. export process for defense equipment. It is a mind-boggling
maze of one-inch boxes and connecting arrows. It is Byzantine, even by Pentagon
But Kirkland wanted to develop this chart in order to pinpoint what he calls
"defects" in the process. The defects, in this case, are bottlenecks
that delay the flow of data within a company and between industry and government.
The delays are costly, Kirkland said, because a sale to a foreign customer cannot
be executed until the company has an approved export license in hand.
Obtaining a license today takes anywhere from three days to 500 days, he said.
That is a problem for a company because it makes it difficult to plan ahead.
The length of the approval process itself is not the issue, said Kirkland, but
rather the inability to predict when that license will come.
The flow-chart makes sense for Kirkland, because he comes from an engineering
background. He plotted every step and every transaction involved within the
company and within government agencies that oversee exports. It was an "engineering
approach to understanding what is wrong with the system," he said. "I
built the chart in an attempt to take the mystery out of the process ... If
you are going to correct a problem, the first step to achieve change is to map
Kirkland's tools for tackling inefficiencies in the export licensing business
fall under the mantra of Six Sigma, a quality-improvement technique adopted
initially by General Electric Company-and increasingly becoming popular in many
industries-that seeks to eliminate imperfections from a company's processes
"You can improve any process under the Six-Sigma philosophy. You can always
take defects out and you have to have flawless processes," he said. Under
Six Sigma, "the first thing you do is understand what it takes to get a
license, [and] you end up with this chart. It tells me what has to be done."
The issues that prevail in the export license debate-the delays, the paperwork-demand
that industry take action internally on how information is provided to the government,
explained Kirkland. "This is not a bureaucracy issue or a government problem,"
The flow-chart, for example, revealed that many of the delays in obtaining
an export license could be avoided at Lockheed Martin if the various corporate
divisions of the firm agreed on common formats for submitting information on
products that are being exported. But Kirkland cautioned that the flow-chart
was not done to "lay blame or to point fingers" to either corporate
officials or to government agencies.
As portrayed in the chart, there are three pieces to the export approval cycle:
the company's input, the processing within executive government agencies and
the oversight by Congress. The agencies involved in approving export licenses
for defense equipment primarily are the Defense and State Departments.
"You have choke-points within the government," he said. At the State
Department, for example, there are 17 or 18 license officers handling more than
48,000 export license applications a year for defense-related equipment. That
means every officer is dealing with 15 cases a day. Every case can involve anywhere
from 10 pages to 300 pages.
Another source of bottlenecks is the lack of consistency in the information
submitted by companies. That is because there are no "uniform standards
for how to present information," said Kirkland. "You have to make
sure that the information you are submitting is going to be received in the
format the reviewer wants." And that format, he added, should be consistent.
Even though the government uses standardized forms for just about every function,
there are too many fuzzy areas when it comes to completing export-license applications,
Kirkland noted. Government officials, for their part, complain that companies
submit information that is not clearly organized, which adds to the delays.
The companies, Kirkland conceded, don't do that because "it gets to be
very complicated." Licenses are written in lots of different formats, different
styles, by people with different backgrounds such as engineers or computer technicians.
The application form, for example, asks for a "program description."
That can be done in many different ways, he reasoned. The flow-chart helped
Kirkland to develop a "process so that, we, on the input side, could gain
100 percent accuracy and consistency."
The result, ultimately, is a software application that will standardize how
the information is submitted within the company and to the government agencies.
The same principle is behind the tax-preparation software applications that
people buy to file their taxes with the Internal Revenue Service. Even though
there are different brand names of software, they all follow the same standards
and the information is submitted in a format acceptable to the government.
Under Six Sigma, said Kirkland, "it does not matter how many days it takes
to get the license as long as the company knows that every license will be returned
and completed within a certain period of time."
Currently, he added, "I can't predict when I can get that license. It
makes it difficult to plan for resources ... So I have to give myself 500 days
and have a team in place 500 days ... The customers get very frustrated."
Lockheed Martin submits about 3,500 export-license applications annually. Kirkland
wants all 3,500 applications to follow a standard format. "We are moving
rapidly towards that," he said. "The first step was to understand
the process. The next step is to gain consistency. The next step after that
is to go electronic."
He hopes that industry can work with the government and agree on standards,
protocols and computer interfaces that will satisfy the government's requirements.
In one particular case Kirkland cited, a single sale required a dozen licenses.
A Lockheed division sent 12 licenses in different formats to Washington. "They
all get sent to government agencies in different directions. There is no consistency
... A process that would have taken 30 days took 11 months because of the inconsistency
in the data."
Last month, Kirkland conducted the first test of Lockheed Martin's electronic
licensing system, which will be mandated company-wide. "It is a compliance
and a licensing system," he said. Another demonstration was held for government
representatives in order to "start looking at whether the input from industry
is what the government wants to receive," he said.
"The government appears to be receptive to this," he added.
A spokesperson for the State Department's bureau of military affairs did not
return phone calls seeking comment on the industry's plan. During an invitation-only
seminar in Washington, D.C., in early February, Defense and State Department
officials indicated a "willingness to see changes," said an industry
source who attended the seminar.
The State Department, for its part, is in the process of expanding its workforce
in the export-license office. According to sources, the Pentagon official who
will be involved in the export-license issues is Jeffrey P. Bialos, deputy undersecretary
of defense for industrial affairs. A spokeswoman for the undersecretary of defense
said it is "premature" to comment on the specific software initiative
by Lockheed Martin.
Kirkland, meanwhile, believes that his flow-chart has helped him to make his
point. "This is the single most effective tool in being able to keep people
focused on the need for reform."
He dismisses the notion that export licensing is a political issue. He sees
it more as a business process that is in need of repair.
The U.S. defense industry collectively gets 98 percent of the license requests
approved. "We get very few turndowns," said Kirkland. "That proves
that industry is not asking to relax the security and open the floodgates and
allow more technology to flow into the world." Kirkland, however, wants
to bring efficiency and consistency into the process. "If national security
is a concern, then the government should look at restricting the number of licenses
officers must process."
Too few licensing officers are dealing with too many licenses, he asserted.
That begs the question of whether the government is "getting the kind of
scrutiny you should get on the critical cases ... And [whether] you are over-scrutinizing
cases that don't make any difference."
When Kirkland visits Lockheed's divisions around the country, he makes the
following point: When it comes to defense articles, the U.S. government owns
the right to the marketplace, by law. "You have the right to make money
and profit from a design, but it is the law of the land that the government
decides where you may sell that product."
The existing process has been in place since 1950. "It is an outgrowth
of the belief that the United States has superior arms technology to anyone
else's and must be protected at all cost," Kirkland said. The policy debate
that is needed today, he asserted, is whether that still is the case.
Military technology, for example, is no longer driven only by a robust research
program at the Defense Department. Many advances are migrating from the commercial
sector to the military. "The export licensing system was designed for a
set of circumstances that need to be reexamined," said Kirkland.
"That policy debate belongs in Congress and the administration-how to
protect national security," he said. "Industry is looking to streamline
the process but not necessarily to change the security oversight of the process."
Even though the current system for export oversight has been in place for 50
years, it has only been since the early 1990s that "people have begun to
see a problem brewing" as a result of the growing demand for U.S. defense
exports, said Kirkland. More foreign nations are interested in buying U.S. systems
and, more recently, the Pentagon has been pushing for U.S. interoperability
with allied forces in defense technology.
"These factors have contributed to growing demand for export licenses.
So you create more demand on the system, and the system has to be able to respond,"
Recently, Lockheed asked its competitors to adopt the software standards for
submitting export licenses. "They only have to agree that we have a common
set of standards," said Kirkland. He does not expect that all companies
will use the Lockheed software, only that they follow the standard. "The
worst thing would be to have 10 companies developing their own systems and result
in a Mac vs. Windows kind of discussion. This problem requires industry to come
"We want industry-wide standards. I don't care if anyone uses our system.
We just have to agree to a standard and a process to retrieve data and submit
data. It does not have to be our system."
A spokesman for Northrop Grumman in Washington, D.C., Larry Hamilton, said
a company executive was scheduled to receive a briefing on the Lockheed software,
but, at press time, the demonstration had not yet taken place, so the company
could not comment specifically. In principle, however, Hamilton said that Northrop
officials believe it is a "good idea" to standardize export license
Dick Dalton, spokesman for the Boeing Company, said corporate executives had
seen a demonstration of the Lockheed Martin software. "We, at Boeing do
support a common system for industry and government as a system that would lend
efficiency to the whole export license system," said Dalton. However, "we
are still studying what system and what characteristics such a system would
need. We still have that under review."
Dave Shea, spokesman for The Raytheon Company in Arlington, Va., said the company
is supporting the Lockheed Martin initiative. "We viewed their presentation
... and we are joining forces with them and other companies to ensure a standard
operating system for exchange of information among industry, the State Department
and the Defense Department," said Shea.