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U.S. Conventional Arms Transfer (CAT) Policy Implementation Update Conventional Arms Transfer (CAT) Policy Implementation Update2018-11-11T17:00:00Z,<div class="ExternalClass8AD7AEC3CAE04175AC64E14680F8F269">The U.S. Department of State published a second <strong><em><a href="">Fact Sheet</a></em></strong> on November 8<sup>th</sup> which provides additional details regarding ongoing U.S. Government CAT Policy implementation efforts.<br> <br> USD(A&S) Lord has strongly supported this initiative since the White House published the CAT policy in April 2018. DoD Senior Leaders recognize that CAT Policy implementation will require substantial involvement by DoD Security Cooperation and DoD Acquisition organizations -- as well as acquisition workforce members throughout the Department -- to be successful. Here’s a brief summary of the CAT Policy Lines of Effort (LOEs) that are being pursued (I’ve highlighted the LOE tasks of specific interest to the DoD in <strong><em>bold italics</em></strong>): <h3><em><strong>LOE 1 - Prioritize Strategic and Economic Competition</strong></em></h3> <ul> <li>Effectively compete with strategic competitors</li> <li><strong><em>Identify critical partner capability requirements </em></strong><strong><em>*</em></strong></li> <li><strong><em>Prioritize and expedite critical transfers</em></strong></li> <li><strong><em>Identify and revise outdated arms transfer policies</em></strong></li> </ul> <h3><em><strong>LOE 2 – Organize for Success</strong></em></h3> <ul> <li>Streamline the International Traffic in Arms Regulations (ITAR)</li> <li>Revise the United States Munitions List (USML)</li> <li>Update the Commerce Control List (CCL)</li> <li><strong><em>Facilitate exports for certain U.S. and cooperative programs </em></strong></li> <li><strong><em>Establish objective milestones and standard timelines for FMS</em></strong></li> <li><strong><em>Increase the competiveness of high-demand American weapons systems</em></strong></li> <li><strong><em>Build-in exportability, coalition interoperability & standardization </em></strong><strong><em>**</em></strong></li> <li><strong><em>Improve contracting for FMS</em></strong></li> <li><strong><em>Enhance U.S. Government advocacy</em></strong></li> <li><strong><em>Expand Support for Non-Programs of Record (NPORs)</em></strong></li> <li><strong><em>Improve FMS Letter of Offer and Acceptance (LOA) processes and policies</em></strong></li> <li>Examine the U.S. Government policy on offsets</li> <li>Develop financing options</li> </ul> <h3><em><strong>LOE 3 – Create Conducive Environments</strong></em></h3> <ul> <li><strong><em>Improve the FMS requirements development approach </em></strong><strong><em>*</em></strong></li> <li><strong><em>Reduce costs associated with FMS</em></strong></li> <li><strong><em>Improve the funding flexibility associated with FMS</em></strong></li> <li><strong><em>Request legislative changes on FMS contracting requirements</em></strong></li> <li>Establish an Offset Task Force</li> <li>Modernize the Missile Technology Control Regime</li> <li>Improve trade promotion</li> <li><strong><em>Work with U.S. industry to incentivize increased production capacity and timely delivery</em></strong></li> </ul> <strong><em>*</em></strong> <em>See my Sep 30th blog on </em><strong><em><a href="/training/career-development/intl-acq-mgmt/blog/FMS-Systems-Acquisition-“Step-0”-–-Defining-What-the-Customer-Wants">Foreign Military Sales (FMS) Systems Acquisition “Step 0” – Defining What the Customer Wants</a></em></strong><em> for further details.</em><br> <strong><em>**</em></strong><em> See my Oct 7th blog </em><strong><em><a href="/training/career-development/intl-acq-mgmt/blog/USD(AandS)-Defense-Exportability-Planning-Memo">USD(Acquisition and Sustainment) Defense Exportability Planning Memo</a></em></strong><em> for further details.</em><br> <br> The DoD organizations which most heavily involved in the CAT Policy LOE tasks highlighted above are: <ul> <li><strong><em>OUSD(A&S) International Cooperation</em></strong></li> <li><strong><em>OUSD(A&S) Defense Pricing and Contracting</em></strong> <em>(formerly Defense Procurement & Acquisition Policy (DPAP))</em></li> <li><strong><em>DoD Component Acquisition Executives and their International Program Organizations (IPOs)</em></strong></li> <li><strong><em>Defense Security Cooperation Agency</em></strong> <em>(which reports to USD(Policy))</em></li> <li><strong><em>Defense Technology Security Administration </em></strong><em>(which reports to USD(Policy))</em></li> <li><strong><em><a href="/cop/iam/DAU%20Sponsored%20Documents/TSFD%20Pipes%20Chart%20(.pdf%20version).pdf?Web=1">USG/DoD Technology Security & Foreign Disclosure (TSFD) “Pipes”</a></em></strong> <em>(there are 13 TSFD Pipes – DoD “owns” several and participates in all of them)</em></li> </ul> DAU is also participating in (and providing input to) some of these LOE efforts including the Defense Exportability and Non-Program of Record (NPOR) tasks.<br> <br> From an overall perspective, the CAT Policy initiative appears to have gained momentum since it began in April 2018. Moreover, these recently published LOE tasks are designed to focus on the entire spectrum of areas requiring attention, moving beyond the rather narrow <strong><em><a href="/training/career-development/intl-acq-mgmt/blog/Speed-of-Foreign-Military-Sales-(FMS)">Speed of FMS</a></em></strong> concerns discussed in the media earlier this year towards a much more comprehensive approach (a welcome development).<br> <br> Notwithstanding the progress made so far, the scope of USG/DoD Security Cooperation – both the volume of U.S. defense sales and transfers and the number of transactions – is staggering. The State Department recently published another <strong><em><a href="">Fact Sheet</a></em></strong> announcing that authorized US arms exports <em><strong>rose by a total of 13 percent to $192.3 billion in FY 2017</strong></em>. This brings to mind that famous Washington arena quote, “a billion here, a billion there … pretty soon you're talking real money."<br> <br> Almost every DoD PEO and most DoD PMOs – supported by numerous Security Cooperation, International Cooperative Programs, and TSFD personnel across the Department -- are currently involved on a daily basis supporting U.S. and allied/friendly nations warfighters through International Acquisition and Exportability (IA&E) activities. The DoD organizations listed above are seeking inputs and suggestions from Defense Acquisition Workforce IA&E practitioners today to ensure these CAT Policy LOEs will help improve its ability to provide timely, cost effective IA&E outcomes in the future.<br> <br> We recognize that the press of business in your “day jobs” is often unrelenting, but please consider taking the time to provide IA&E advice and insights to the DoD CAT Policy LOE team members attempting to improve the status quo. Thanks in advance for anything you are able to contribute to DoD’s CAT Policy implementation efforts!<br> <br> Until next time … Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/U-S--Conventional-Arms-Transfer-(CAT)-Policy-Implementation-Update
USD(Acquisition and Sustainment) Defense Exportability Planning Memo and Sustainment) Defense Exportability Planning Memo2018-10-07T16:00:00Z Fields/DAU_Engineering USAF_20170104.jpg, Fields/DAU_Engineering USAF_20170104.jpg Fields/DAU_Engineering USAF_20170104.jpg<div class="ExternalClass13C39BFBC6B5463E94E99DF30C9BFB3C">Under Secretary of Defense (Acquisition & Sustainment) Ellen Lord issued a memorandum to all key DoD stakeholder organizations on September 13, 2018 emphasizing the importance of Defense Exportability planning in both the requirements and acquisition communities. While the memo is marked as Controlled Unclassified Information, the key concepts of Defense Exportability have been expressed in U.S. law and Administration policy documents in the public domain including the following: <ul> <li><strong><a href="/cop/iam/DAU%20Sponsored%20Documents/FY2019%20NDAA%20-%20Defense%20Exportability%20(Excerpt)%20Sec%20223%20pdf.pdf?Web=1">John S. McCain National Defense Authorization Act for Fiscal Year 2019, Section 223</a></strong></li> <li><strong><a href="">Conventional Arms Transfer (CAT) Policy (NSPM-10), April 2018</a></strong></li> <li><strong><a href="">Summary of the Conventional Arms Transfer (CAT) Policy Implementation Plan, July 2018</a></strong></li> </ul> For those of you unfamiliar with the topic who would like to learn more about it, there are several unclassified sources that describe Defense Exportability in further detail, including three blogs published in September 2017 on this topic: <ul> <li><strong><a href="/training/career-development/intl-acq-mgmt/blog/DoD-Security-Cooperation-Challenges-–-Part-IIA">History of Defense Exportability</a></strong></li> <li><strong><a href="/training/career-development/intl-acq-mgmt/blog/DoD-Security-Cooperation-Challenges----PartIIB">Defense Exportability Policy</a></strong></li> <li><strong><a href="/training/career-development/intl-acq-mgmt/blog/DoD-Security-Cooperation-">Defense Exportability Reform</a></strong></li> </ul> Development of exportable U.S. systems is fundamental to the success of the U.S. Government (USG) CAT Policy initiative. Defense Exportability is, in many ways, the "headwaters" of improved USG international acquisition performance since affordable program protection and differential capability design and development efforts today will lead to early, broad availability of U.S. systems to allies and friends in an increasingly competitive global defense marketplace in the future. Readers with appropriate access and a need to know can learn more about this subject by contacting their DoD Component International Programs Organization (IPO) Defense Exportability Features (DEF) focal point. DoD International Acquisition Career Path (IACP) and Security Cooperation workforce professionals involved in planning and implementing USG International Cooperative Program (ICP) and Foreign Military Sales (FMS) transactions with allied and friendly nations involving DEF should definitely consider obtaining access to a copy of the memo to read it and support ongoing DoD efforts to improve the status quo.<br> <br> Until next time ... Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/USD(AandS)-Defense-Exportability-Planning-Memo
FMS Systems Acquisition “Step 0” – Defining What the Customer Wants Systems Acquisition “Step 0” – Defining What the Customer Wants2018-09-30T16:00:00Z JSF F-35_20170223.jpg, JSF F-35_20170223.jpg JSF F-35_20170223.jpg<div class="ExternalClass2027C5A2ABD842769B5B86DDDC941100">My last blog on “Speed of Foreign Military Sales (FMS)” argued that the greatest potential for achieving a quantum leap in FMS Systems acquisition performance lies in exploring the DOD Security Cooperation - DOD Acquisition Community relationship for potential improvements.<br> <br> As my naval aviator mentors used to say ‘back in the day’ when we were grappling with a “fur ball” of vexing Naval Aviation acquisition issues, “it looks like we’re in another target rich environment – let’s zero in on the most important challenge.” That’s why this blog is focusing on “Step 0” -- how U.S. Government (USG) personnel initially respond to and help define FMS Systems acquisition requirements from allied and friendly nations.<br> <br> Recollect that the overall <strong><a href="/tools/t/Foreign-Military-Sales-(FMS)-Systems-Acquisition-Job-Support-Tool-(JST)-">FMS Systems Acquisition Process</a></strong> should include FMS Systems acquisition planning in a program’s acquisition strategy per Title 10 and DoD Instruction 5000.02. However, specific FMS transactions are normally triggered by some sort of Step 0 informal expression of interest by the prospective FMS Customer nation that might eventually lead to a formal request for FMS Systems acquisition through USG Security Cooperation channels.<br> <br> <strong>Defining what the FMS Customer Wants (and what the USG is Willing to Provide)</strong><br> <br> Those of you familiar with U.S. defense acquisition recognize that, in most situations, U.S. Warfighters use the Joint Capabilities Integration and Development System (JCIDS) to define, document, and validate capability requirements for new/modified systems. Once a DOD JCIDS capability requirement has been approved, DOD uses the Defense Acquisition System (DAS) to define, document, and validate the type of program structure and approach that should be used to develop, field, and support a new system. Interesting enough, many observers believe the status quo U.S. JCIDS/DAS approach is overly bureaucratic, painfully slow, and should be reformed.<br> <br> Well, if you are one of the many people who feel this way, good news! FMS Customers are not required to use either one of these U.S. business processes. Instead, they are encouraged by the USG Security Cooperation Community to conduct preliminary discussions with various USG and DOD representatives. If this initial engagement is fruitful, the prospective FMS Customer sends the USG a formal Letter of Request (LOR), which is “Step 1” of the end-to-end FMS Systems Acquisition Process. Hopefully the Customer’s LOR does an effective job of defining their desired system requirements as well as provide any guidance on the program’s characteristics that is important to them.<br> <br> So here’s the paradox. FMS Systems acquisition is defense acquisition streamlining nirvana – no JCIDS and no U.S. Title 10 DAS legal and policy requirements. Step 0 of the FMS Systems acquisition process skips all these. So what is causing the Speed of FMS problems?<br> <br> <strong><em>Insight #1</em></strong>: <em> (from my last blog)</em><br> <br> <em>“FMS Customer nations — supported by key USG/DOD stakeholders in most cases — are interested in Performance, Cost, <u>and</u> Speed (Schedule) just like U.S. Warfighters. What they really want is optimal (or at least acceptable) outcomes in P C & S (not just Speed), especially for the new/upgraded Systems they want to buy in the global defense marketplace."</em><br> <br> We all know that the USG is a big place that relies upon the expertise of specific organizations to conduct its day-to-day FMS activities. Let’s use the FMS Systems acquisition categories contained in my last two blogs to assess the key actors in Step 0 – the USG Security Cooperation (SC) Community, the DoD Acquisition Community, and (of course) the FMS Customer – to learn more about their respective roles and responsibilities in defining what type of system the Customer wants to buy and what type of system the U.S. is willing to sell.<br> <br> To make this less abstract, here are some typical conversations that have been observed over the years among these key actors’ representatives based on the type of FMS System acquisition program an allied or friendly nation is interested in pursuing with the U.S.<br> <br> <strong><em>Program of Record (POR) <u>with</u> Defense Exportability</em></strong> … <em>the rosy scenario</em> <ul> <li><u>Customer Nation</u>: “I would like to buy the System the DoD is buying.”</li> <li><u>SC Community</u>: “Write an LOR asking for an ‘off the shelf’ system procurement since we know an exportable version is available for sale.”</li> <li><u>Acquisition Community</u>: “We can put this on order with our next procurement lot since we anticipated foreign sales in our Acquisition Strategy and incorporated Defense Exportability Features (DEF) in our system design.”</li> <li><u>Customer Nation</u>: “Wonderful, I get defined export version Performance, approximately the same acquisition Cost as the U.S. (plus normal FMS fees), and the same Schedule as the DoD.”</li> </ul> <br> <strong><em>POR <u>without</u> Defense Exportability</em></strong> … <em>not so rosy</em> <ul> <li><u>Customer Nation</u>: “I would like to buy the System the DoD is buying.”</li> <li><u>SC Community</u>: “Write an LOR asking for an ‘off the shelf’ system procurement and we’ll see whether the System is available for export.”</li> <li><u>Acquisition Community</u>: “We may be able to put this on order with a future procurement lot. However, we didn’t anticipate or plan for foreign sales in our Acquisition Strategy and did not incorporate DEF in our system design. As a result, if the nation submitting the LOR is willing to be the “launch” FMS Customer, they will have to pay all DEF design and testing costs. U.S. laws and regulations require payment of all FMS System acquisition costs by the Customer, including non-recurring DEF costs that result from USG Technology Security and Foreign Disclosure (TSFD) and export control decisions.”</li> <li><u>Customer Nation</u>: “So if I send an LOR as the first FMS Customer for the system, I will get ‘similar” (but undefined) Performance, higher Cost (DEF costs, plus the System acquisition cost, plus normal FMS fees), and a slower Schedule than the DoD. How can I be sure that the additional acquisition risks and costs that I'll incur by buying the System from the U.S. are worth it?"</li> </ul> <strong><em>Non-Standard POR</em></strong> … <em>the dice roll </em> <ul> <li><u>Customer Nation</u>: “I would like a customized version of the System DoD is buying and I will tell you the capability requirements I want you to meet (and how I’d like you to achieve it programmatically) in my LOR.”</li> <li><u>SC Community</u>: “Let’s talk first before you send your LOR and engage the Acquisition Community to see what they can do.”</li> <li><u>Acquisition Community</u>: “We’re not sure we can accomplish what the potential FMS Customer is saying they want in the modified System within reasonable Performance, Cost, and Schedule targets. Moreover, we’re already struggling to meet U.S. Warfighter, Cooperative Partner, and existing FMS Customer system production and support commitments. We’ll look into this request and respond when we can.”</li> <li><u>Customer Nation</u>: “Perhaps I should acquire my System from another (non-U.S.) source instead?”</li> </ul> <br> <strong><em>Rapid Acquisition “POR”</em></strong> … <em>the Heisman </em> <ul> <li><u>Customer Nation</u>: “I would like to buy the System the DoD is planning to buy soon since we’re operating as coalition partners and, based on discussions with the Combatant Commander (COCOM), we need it also.”</li> <li><u>SC Community</u>: “The Acquisition Community says it’s not available yet so please don’t send an LOR.”</li> <li><u>Acquisition Community</u>: “We have to complete the U.S. version System first, and it’s a high priority. We will let you know later whether or not an exportable will be available for sale (ever).”</li> <li><u>Customer Nation</u>: “Should I consult the COCOM and enlist their support?”</li> </ul> <br> <strong><em>Middle Tier (Section 804) Acquisition</em></strong> … <i>uncharted waters</i> <ul> <li><u>Customer Nation</u>: “I would like to buy what a DoD Component is pursuing through a rapid prototyping/rapid fielding effort on System X using Section 804 authority. Since we routinely operate with the [Army, Navy, Air Force] we believe we need a similar capability in our forces.”</li> <li><u>SC Community</u>: “The DoD Component recommends you wait to send an LOR until the rapid prototyping effort on System X is completed.”</li> <li><u>Acquisition Community</u>: “The rapid prototyping of System X is a high priority for our [Army COS, Navy CNO, Air Force COS]. We will let you know later whether we proceed with rapid fielding and, if so, whether or not there will be an exportable version of System X.”</li> <li><u>Customer Nation</u>: “Perhaps I should arrange a mil-to-mil discussion with my [Army, Navy, Air Force] counterparts to see what they say about future availability”</li> </ul> <br> <strong><em>Excess Defense Articles</em></strong> … <em>is anyone there? </em> <ul> <li><u>Customer Nation</u>: “I would like to buy upgrades and logistics support for a System which I am still operating in national and coalition operations that DoD is no longer using.”</li> <li><u>SC Community</u>: “I’m not sure who can help you.”</li> <li><u>Acquisition Community</u>: “Our Program Management Office (PMO) was shut down a couple of years ago and the DoD supply system is no longer obligated to keep parts in stock. Direct Commercial Sales (DCS) appears to be the only option, if the original manufacturer is still in business and is interested in responding to your needs.”</li> <li><u>Customer Nation</u>: “So I am on my own, then?”</li> </ul> <br> <strong><em>Non-POR</em></strong> … <em>Who is on first? ... Nobody</em> <ul> <li><u>Customer Nation</u>: “I would like to buy a System the DoD is not buying. However, I have been told by the U.S. contractor that I must discuss this matter with the U.S. Government since the system has sensitive elements based on USG TSFD decisions that they cannot share with me.”</li> <li><u>SC Community</u>: “Write an LOR asking for what you think you need to acquire via FMS rather than DCS and we’ll see if we can find anyone within DOD to help make it happen.”</li> <li><u>Acquisition Community</u>: “We don’t know what you are talking about, this non-POR System is not our responsibility, so sorry, our PMO can’t help you. Perhaps there is another PMO somewhere else in DoD that can …”</li> <li><u>Customer Nation</u>: “Both the contractor any I are confused. If I send this LOR for the FMS-only elements of the System (which I don’t really want to do, actually), who in the DoD will help us?”</li> </ul> <br> <strong>Is the Status Quo Acceptable?</strong><br> <br> In my view, no, it isn’t! In a blog, these fictional conversations might be considered humorous. However, in the real world they are decidedly unfunny and are often the source of a tremendous amount of frustration among the key stakeholders involved. Why? Unless the FMS Customer has asked to buy an existing DoD system through an existing DoD PMO that has designed and developed one or more exportable versions of the system available for sale, these problems are very hard to resolve (if they can be resolved at all) once an FMS LOR has been submitted (Step 1). Put another way, if Step 0 of the FMS process isn’t functionally effectively there will always be a large number of FMS Systems acquisition transactions experiencing significant issues from Step 1 onward. As a result, current and future Speed of FMS problems at the enterprise level are inevitable.<br> <br> I believe this is why the recent <strong><a href="">Conventional Arms Transfer (CAT) Policy Implementation Plan</a></strong> highlighted the need for substantial improvements in the U.S. Government’s approach to prioritizing and responding to allied and friendly nations interest in acquiring U.S. defense products.<br> <br> <strong>Improving Performance</strong><br> <br> Recognizing that the Step 0 approach that the USG currently uses to define and respond to FMS Customer Systems acquisition requirements is suboptimal is only a beginning. What should we change? Traditional USG measures designed to improve real (or perceived) suboptimal performance include: <ul> <li>Revising laws, regulations, policies and practices.</li> <li>Allocating more resources (e.g., money, personnel, reallocation of work).</li> <li>Increasing emphasis (e.g., senior leader focus, establishing workforce objectives).</li> <li>Improving workforce education and training.</li> </ul> <br> The conversations above illustrate that there is no “single point failure” causing negative “Speed of FMS” acquisition outcomes during the initial step of the process. Instead, there are a variety of different “if – then” FMS Systems acquisition challenges that often occur between the USG and potential FMS Customer depending on: <ul> <li>The nature of the FMS Customer LOR and degree of flexibility (or lack thereof) they demonstrate vis-à-vis the System they want to buy.</li> <li>The willingness and ability (or lack thereof) of the DoD Acquisition Community organizations responsible for the system to be responsive to the FMS Customer’s desired/required System Performance, Cost, and Schedule requirements.</li> </ul> <br> This is why most informed observers believe that making changes to improve the overall Speed of FMS involves tackling a complex problem with many facets that are, at best, partially understood. We’ve all heard the old adage “the journey of a thousand miles begins with a step.” Defining and responding to FMS Customer interest in U.S. systems is Step 0 in the process. We have seen that improvements to the status quo in Step 0 are needed. However, when it comes to making changes “if you don’t know where you’re going, any road will take you there.”<br> <br> Those involved in the USG’s CAT Policy implementation are currently developing a route plan and way points to move from status quo FMS Systems acquisition performance to better place. My next blog will offer some thoughts in this area for consideration regarding potential improvements to Step 0 of the FMS Systems acquisition process.<br> <br> Until next time ... Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/FMS-Systems-Acquisition-“Step-0”-–-Defining-What-the-Customer-Wants
Speed of Foreign Military Sales (FMS) of Foreign Military Sales (FMS)2018-08-21T16:00:00Z Fields/DAU_Logistics Defense ATL Hand May June 2015_20170209.jpg, Fields/DAU_Logistics Defense ATL Hand May June 2015_20170209.jpg Fields/DAU_Logistics Defense ATL Hand May June 2015_20170209.jpg<div class="ExternalClass55884FEDBCF24ACDA9E54AB2F2B16D75">My previous blog on “The Spectrum of FMS Arrangements” highlighted the set of FMS activities that are of potential interest to DoD senior leaders, allied and friendly nations, and industry stakeholders. While all FMS arrangements are important at some level, complex Systems & Equipment transactions during the competitive evaluation and source selection phase have historically attracted the most attention. Why? Most informed observes believe the following key areas – which tend to be “weighted” in value based on each key stakeholder’s perspective -- are responsible: <ul> <li>Enhancement of long-term military capability</li> <li>Strengthening of overall political/military relationships</li> <li>Economic and industrial impact (which normally extends throughout the acquisition life-cycle (20-30 years or more))</li> </ul> <br> As a result, while FMS System acquisition transactions of this type are small in number, their importance to key stakeholders has disproportionate impact on the overall perception of the “Speed of FMS” that is undeniable. This blog examines the key factors that affect the Speed of FMS for this highly valued set of FMS arrangements.<br> <br> <strong><u>Demand</u></strong><br> <br> In general, the Speed of FMS “Demand” signal — including the composite set of key stakeholder objectives, desired results, and relative priority for a new System (or major upgrade) — comes from one or more of the following sources: <ul> <li>U.S. Government (USG) Policy Community</li> <li>FMS Customer Nations</li> <li>DOD Combatant Commanders (COCOMs)</li> <li>U.S. Industry</li> </ul> <br> In most situations, all of these entities think they are important — and they are! — so they believe their particular FMS transaction (or set of transactions) at any given time is a top priority. Moreover, while each entity can logically establish demand priorities among <em><u>their</u></em> set of FMS transactions, it’s a huge challenge to establish collective, system-wide FMS priorities. This observation is, in fact, confirmed by the recently issued USG <strong><a href="">Conventional Arms Transfer (CAT) Policy Fact Sheet</a></strong>, which emphasizes that “<em>working with partners and allies to identify critical capability requirements and energizing a whole-of-government effort to expedite transfers that support these essential foreign policy and national security objectives</em>” is of paramount importance.<br> <br> <strong><em>Insight #1</em></strong><br> <br> “Speed of FMS” is a misnomer! In fact, FMS customer nations — supported by USG/DOD key stakeholders in most cases — are actually interested in Performance, Cost, <em><u>and</u></em> Speed (Schedule). In other words, what they really want is optimal (or at least acceptable) outcomes in P C & S (not just Speed), especially for new/upgraded Systems.<br> <br> <strong><em>Insight #2 </em></strong><br> <br> While the CAT Policy initiative cited above will focus on improving the status quo, the overall USG prioritization process works currently works much like an airline that only has an “A” boarding group for all the FMS Price & Availability (P&A) and Letter of Offer (LOA) transactions at any given point in time. Since there are an estimated 2500 - 3000 (or more) P&As, LOAs, and LOA amendments processed per year, this poses an immense prioritization challenge for the USG. The CAT Policy implementation team has their work cut out for them in this area!<br> <br> <strong><u>Supply</u></strong><br> <br> The DoD acquisition workforce is the only source of “Supply” that has both the legal authority and professional capabilities to conduct Systems acquisition efforts on behalf of FMS customers. Often forgotten is the fact that this is the same DoD acquisition workforce that develops, produces, and sustains Systems (and everything else) for U.S. Warfighters, International Cooperative Program (ICP) partners, and Building Partner Capacity (BPC) deliveries to allied/friendly nations funded by U.S. Title 10 appropriations.<br> <br> As a result, DoD Program Management Offices (PMOs) and supporting functional expert teams — Engineers, Logisticians, Contracting Officers, etc. — must address up to four (4) simultaneous Demand signals (U.S., ICP, FMS and BPC) for System-related P C & S acquisition outcomes on a daily basis.<br> <br> As noted above, the USG currently lacks a coherent FMS prioritization process, let alone a comprehensive USG Security Cooperation (ICP, FMS, BPC and Direct Commercial Sales (DCS)) priority allocation scheme. As a result, the “squeaky wheel” approach is used, i.e., the key stakeholders with the most clout that squeak the loudest get the highest PMO acquisition priority. Well, at least for a while, until the next key stakeholder squeaky wheel demand comes along (which inevitably happens at some point).<br> <br> <strong><em>Insight #3</em></strong><br> <br> Lack of an overall USG FMS/Security Cooperation prioritization system -- in combination with prioritization of U.S. Warfighter requirements -- means that <em><u>everything</u></em> appears to be a high priority Systems acquisition requirement at the PMO level. As as a result, DoD PMOs are routinely forced to set priorities themselves when talent, time, and (in some situations) funding availability pose System acquisition constraints that affect competing stakeholders.<br> <br> <strong><u>Program Management Office (PMO) Triage</u></strong><br> <br> In such stressful situations, PMOs often use variations of the triage method (think ‘hospital’) to try to keep as many Systems acquisition transactions (‘patients’) alive and functioning while attempting to keep what is often a plethora of squeaky wheel stakeholders (‘relatives and friends’) mollified. Here is typical PMO “A/B/C” triage perspective:<br> <br> A) <strong><em>U.S. Warfighters</em></strong><br> <br> B) <strong><em>International Cooperative Program </em></strong><em>partner nations</em> (who have invested in the System’s acquisition in some way)<br> <br> C) <strong><em>Either FMS or Building Partner Capacity</em></strong> customer nations (depending on a mix of stakeholder prioritization and acquisition-specific factors unique to each transaction mechanism)<br> <br> <strong><em>Insight #4</em></strong><br> <br> When acquisition resources become scarce at the PMO level and there are multiple stakeholder demands, FMS (and BPC) normally default to the C) priority level.<br> <br> <strong><u>FMS Systems Acquisition Prioritization </u></strong><br> <br> As described in my previous blog, FMS System-level transactions fall into five (5) general categories. When a PMO (if one exists!) applies the overall triage approach above combined with the following FMS-specific prioritization criteria here’s what normally happens:<br> <br> 1) <strong><em>Program of Record (POR)</em></strong><br> <br> Good news! If an FMS customer nation is willing to purchase the System in the same configuration as the DoD -- and if there are minimally required Defense Exportability Features (DEF) configuration mods -- the FMS nation usually ends up with an A)1) priority (same as US and any relevant ICP or BPC nations).<br> <br> 2) <strong><em>Rapid Acquisition “POR”</em></strong><br> <br> Hmm ... the DoD Rapid Acquisition process sends a Demand signal that the U.S. Warfighters need the desired System (or major System modification) ASAP. This means the program isn’t a “POR” program in all of its facets. As a result, the Rapid Acquisition “POR” System (or mod) will normally be designed and developed as a “U.S. Only” System without DEF, and with little or no FMS Total Package Approach (TPA) logistics support available. If an FMS version of the System is even feasible, it’s going to be at best a C)2) priority for the PMO (and could be even lower).<br> <br> 3) <strong><em>Non-Standard POR</em></strong><br> <br> Roll the dice on this one ... The more Non-Standard the FMS version of the System is, the bigger the challenge the PMO faces. However, there are two potentially radically different prioritization outcomes:<br> <br> - If DOD Component senior leaders decide they can leverage off the FMS customer nation’s Non-Standard POR investment and use it for future U.S. System configuration upgrades, the PMO will likely be directed by DOD stakeholders to give it a higher priority (even A)1) in some cases).<br> <br> - If the DOD Component is not interested in the FMS customer nation’s Non-Standard POR configuration it’s normally a C)3) priority at best.<br> <br> 4) <strong><em>Excess Defense Articles (EDA)</em></strong><br> <br> As a tennis player in his 60s, I can confirm the fact that life is tougher when you get older … at least in athletics. Unfortunately, this is also for aging System acquisition programs. PMOs are reduced in size, then eventually phased out, and their supporting functional personnel (Engineers, Logisticians, Contracting Officers, etc.) are re-deployed to new development/production programs. Even DoD Logistics and Sustainment organizations often stop supporting Systems once they are no longer used by DOD active and reserve forces. When this happens, FMS customer nations that are still operating the System can no longer rely on DOD System upgrades and TPA logistics and sustainment, so the FMS customers have <u>no priority</u> since there is no longer anyone in the DOD acquisition workforce to answer or support them.<br> <br> 5) <strong><em>Non-POR</em></strong><br> <br> Houston, we have a problem ... By definition, there is no US requirement for the System so there is no DoD PMO! Industry has to try to get DoD senior leaders to assign a PMO to “help” which may or may not be possible. Even if it is, the assigned (often against its will!) PMO will be forced to spend an inordinate amount of time to try to figure out what the Non-POR System is and help convince USG Technology Security and Foreign Disclosure authorities that it should be offered for export (which they may, in fact, oppose themselves). In an A/B/C priority world Non-PORs are a D.<br> <br> <strong><em>Insight # 5</em></strong><br> <br> Many of the previous USG/DOD level Security Cooperation Reform efforts have focused on the FMS-specific policy and process steps that have led to improved FMS System acquisition outcomes. This aspect of the end-to-end FMS Systems acquisition process has already been largely optimized.<br> <br> <strong><em>Insight # 6</em></strong><br> <br> The relatively small number of Security Cooperation Reform efforts that have focused on DOD Acquisition community FMS activities have concentrated on a few specific FMS contracting policies. Many argue that these “reforms” in the FMS contracting area, while no doubt well intended, have actually created additional challenges for PMOs and their functional support organizations (including Contracting) without materially improving FMS System acquisition outcomes.<br> <br> <strong><em>Insight # 7</em></strong><br> <br> The net effect of all of these factors means that most day-to-day priorities for FMS Systems acquisition efforts are established by the DOD Acquisition (“Supply”) rather than the USG/DOD Policy (“Demand”) community. There are many situations when USG/DOD senior leaders in the Policy community weigh in at a high level with USD(A&S) or DOD Military Department senior leaders on specific, high priority FMS System transactions. However, in most cases – i.e., 90% of the time (or more) -- FMS System acquisition priorities are established by the DOD Acquisition community at the PMO level using the triage approach described above.<br> <br> <strong><u>Observations and Conclusion</u></strong><br> <br> Previous USG/DoD attempts to improve FMS performance have, for the most part, concentrated on the following primary processes: <ul> <li>FMS LOR-to-LOA Process (as previously mentioned)</li> <li>USG Export Control Reform</li> <li>USG/DoD Technology Security and Foreign Disclosure (TSFD) System Reform</li> <li>FMS Contracting Policy</li> <li>Implementation of the Defense Exportability Features (DEF) program</li> </ul> <br> Despite substantial progress in many of these areas, improvements in these individual “parts” of the end-to end FMS process have not had the desired impact on the “whole” vis-à-vis desired Speed of FMS outcomes. Moreover, based on a DoD acquisition workforce perspective, one would expect significant Speed of FMS problems in complex FMS Systems transactions based on the prioritization problems and PMO-level incentives/disincentives described in this blog.<br> <br> Accordingly, it appears that the greatest potential for achieving a quantum leap in FMS Systems acquisition performance lies in exploring the DOD Security Cooperation - DOD Acquisition community relationship to identify areas that have the highest potential to improve future outcomes. My next blog will offer some suggestions on this topic.<br> <br> Until then, Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/Speed-of-Foreign-Military-Sales-(FMS)