GLOBAL DEFENSE MARKET
Foreign Military Sales Reform Progressing at Slow Pace
Photo: Defense Dept.The Defense Security Cooperation Agency in 2013 kicked off an effort to streamline foreign military sales. And at the tail end of 2016, Congress passed legislation mandating that the organization professionalize its workforce.
Both these initiatives are expected to pay dividends, Navy Vice Adm. Joseph Rixey, director of the DSCA, said at a recent presentation.
“For those who think the system is broken, if it’s broken, we’re doing something right. People still like our products. They still like what we provide,” he said at a National Defense Industrial Association talk.
Such sales amounted to $36 billion in fiscal year 2016, he said, and he expected the trend to continue.
“That said, we know that we all need to get better,” Rixey said.
The agency is often the target of critics in Congress and overseas, where they would like to see
more efficiencies and quicker turnarounds in a system designed to provide U.S. military partners with American-made weapon systems and equipment.
Rep. Kay Granger, R-Texas, wrote in a letter last year, that “our current [Foreign Military Financing] and FMS processes are not efficient. … I frequently hear from our friends and allies that excessive delays put significant strains on their relationships with the U.S. The damage extends to our industrial base as it is causing many of our partners to seek support elsewhere, including from Russia and China. This has gone on far too long without significant reform. This is unacceptable.”
Congress in the 2016 National Defense Authorization Act included language that will call on the agency to professionalize its workforce, something Rixey said he welcomed.
“Language on workforce reform is something I’m really excited about,” he said, noting that NDIA and its members were instrumental in helping Congress add the wording to the act.
Training and certifying the agency’s professionals is vital and will improve the quality and quantity of the enterprise’s approximately 10,000 employees, he said.
Other language in the law calls for DSCA to better coordinate its planning with other agencies and to carry out more assessments, by monitoring and evaluating its programs.
Congress is serious about the mission, he said. “And what I think makes this different than anything else, is that it showed up in the law.”
As for arguments about foreign competition in the weapons market and boosting the U.S. industrial base, Rixey emphasized that this is not the DSCA’s purpose.
Foreign military sales are a tool of foreign policy. “There are benefits, of course, for our industrial capacity. We recognize that,” he said. “Our primary goal is to assist our foreign partners … in building their military capacity so they can defend themselves,” he added.
He works for the office of the secretary of defense’s policy shop. He does not work for the acquisition community. That’s important to know, he said.
“We just don’t deliver a capability. We deliver a relationship. And we just don’t do that ad hoc,” he said.
The process begins with a request from an overseas ally.
“Everybody wants us to rush it and get that … out the door,” he said. The DSCA starts a deliberate conversation on whether the request is feasible. Critics believe that there is a way to bypass the steps needed to approve a sale. There isn’t, Rixey insisted.
“We’re not going to take any steps out. There is no route around it. It doesn’t exist. Even though most folks think it does,” he said.
The agency has to “build a case” for the sale. First, it must make sure it’s mutually beneficial to the United States and the partner nation. There are country team assessments and endorsements required from combatant commands. There must be assurances that the technology is protected from proliferation. Next, the State Department chimes in with its view. Congressional notification is then required.
The vast majority of the FMS requests the agency processes and fills — about 1,700 per year — are under Congress’ radar, Rixey said. About 100 of them are what he called “the emotional few.” Those are big-ticket items, or they may be blocked or held up by members of Congress for political reasons.
Eventually, the requesting nation, if approved, receives a letter of offer and acceptance.
There are hiccups, he acknowledged.
“The partner nation has the responsibility of giving us a requirement that we can understand and see and can execute,” Rixey said.
The agency has a cadre of representatives in partner nations that are there to manage expectations. They explain what technologies are available and what are not; what they should have and what they shouldn’t.
Some of these in-country personnel become too comfortable with the ally and then begin acting like they are the partner’s agent.
“No, you’re my agent,” Rixey has to remind them. They need to be trained properly so they can effectively manage expectations.
One example of expectation management is when a FMS request goes beyond a weapon system’s base model. A basic transport helicopter at the same price the U.S. military pays is relatively easy to approve and the process will take about 15 months, he said. Adding complex subsystems slows the process down considerably.
“If they want to add their own weapon systems, their own [electronic warfare] systems and they want to integrate a whole bunch of stuff. Of course, they think it’s like LEGOs and they don’t think there are any costs associated with it other than buying those items,” Rixey said.
Another request that slows the process down is for non-programs of record. Rixey said such requests have tripped up the process in the past, but the agency is trying to streamline these purchases.
“I think if we actually get after this one and come up with flexible contracts …we will solve 85 to 95 percent of the industry’s problems,” he said.
The DSCA’s Vision 2020 document, now on its second iteration since October 2014, is Rixey’s campaign to make the agency more responsive. It lists 23 objectives and 78 initiatives that address three approaches: laying the foundation, synchronizing to meet customer expectations, and ensuring effectiveness and efficiency.
Prior to the initiative, “We were optimally staffed to run around with our hair on fire and nobody was taking the time to figure out ultimately what we could do to get better,” Rixey said. The agency has completed 28 percent of the document’s goals, he said.
Shaun McDougall, military markets analyst at Forecast International, a Newtown, Connecticut-based consulting firm, said while there has been some noticeable progress when it comes to reforming the system and cutting red tape, there is still a lot of frustration with the process, especially when it comes to transparency and the speed of approvals.
“You’re seeing some small step-by-step improvements and efficiencies but you’re really not seeing some of the major sustentative changes that some of the critics of the process have been calling for,” he said in an interview.
Countries seeking to go through FMS are still confused about the requirements and they want to know how to meet them, he added.
“In Congress and industry, you’re seeing calls that more has to happen because you’re not seeing some of the bigger changes that they want to see take place,” he said.
The political aspects, when a sale is held up or blocked by Congress for various reasons, probably won’t be part of reform and isn’t easily addressed, he noted.
There is still a disconnect between lawmakers who see FMS as a way to boost the number of jobs in their districts and the DSCA, which states that helping the industrial base isn’t its mission. Both sides are right, McDougall said.
With the Budget Control Act, U.S. military acquisition spending is down. Naturally U.S. lawmakers want to see foreign military sales take up some of the slack.
On the other hand, the Pentagon sees the benefits of fighting and training alongside allies who have the same equipment.
The interagency process with the Departments of Defense, State and Commerce all needing to chime in also slows down purchases. “So many parties are involved with [them] going back and forth trying to nail down these deals, it’s just a lot of red tape,” McDougall said. Proposals have the Defense Department giving up some of their authorities to State, or vice versa, in order to speed up the pace, he added.
As far as the Trump administration, prospects for further reform could go either way, said McDougall, who ascribed the recent popularity of FMS to bigger military budgets overseas. Nations have recovered from the 2008 world economic crash and are now ready to spend more on their militaries.
President Donald Trump’s abrasive style could cause potential customers to look for weapon systems elsewhere. On the other hand, if someone manages to bend his ear about the importance of FMS as far as job creation, his leadership could help speed up the reform process, McDougall said.
Andrew Shapiro, founder and managing director of Beacon Global Strategies and former assistant secretary of state for political-military affairs, said at the talk that Secretary of Defense James Mattis knows defense security cooperation well going back to his days as a Marine Corps general and Central Command commander. Shapiro recalled times during Mattis’ tenure at Central Command when he became personally involved in making sure Gulf allies received the U.S.-made materiel they needed.
But the Trump administration could also reduce the State Department’s funding making it harder for it to do its part of the approval process, Shapiro noted.
Rixey said how the agency is doing is often “in the eye of the beholder.”
“The U.S. government thinks we’re doing great because we are executing foreign policy. Foreign partners, for the most part, do as well unless they are on the wrong side of the priority list, then they are not as happy,” he said.
“If they are on the wrong side of tech transfer and the wrong side of foreign policy, then they say the system is broken and slow. We’ll take that hit,” he said.