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Making the Case for International Cooperative Programs the Case for International Cooperative Programs2018-01-05T17:00:00Z F-35 Streamers_20170223.jpg, F-35 Streamers_20170223.jpg F-35 Streamers_20170223.jpg<div class="ExternalClass45BBEEDCE0DF4926B9E7AB03B810500F">As a result of Administration and Congressional emphasis on the subject, I have focused on several Security Cooperation topics over the past several blogs. Many people are unaware that Security Cooperation -- as defined in DoD Directive 5132.03 -- also includes “International Armaments Cooperation” as well as “Equipment Sales and Training” efforts.<br> <br> This blog addresses a question many International Acquisition community members have been asking for the past several years, “when is DoD going to take action to establish a new generation of International Cooperative Programs (ICPs)?”<br> <br> <strong>ICP Basics</strong><br> <br> What is the primary difference between ICPs versus Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) arrangements, which are both more prevalent and well-known? It’s actually quite simple. FMS and DCS are “seller-buyer” relationships, with the U.S. (either government or industry) acting as the seller and foreign governments or industry acting as the buyer. ICPs, on the other hand, are defense acquisition “partnership” arrangements with allied and friendly nations.<br> <br> ICPs are established through international agreements – commonly referred to as Memoranda of Understanding (MOUs) or Project Arrangements (PAs) -- rather than through FMS Letters of Offer and Acceptance (LOAs) or DCS contracts. The U.S. laws, regulations, and policies that govern ICP arrangements are also completely separate from those that govern FMS and DCS transactions.<br> <br> Moreover, the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD AT&L), rather than USD (Policy), is responsible for oversight and management of ICPs. <em>(Note: the details of how this responsibility will be ‘split’ between the new USD (Acquisition and Sustainment) and USD (Research and Engineering) positions after February 1, 2018 is yet to be determined.)</em><br> <br> <strong>A Brief History</strong><br> <br> ‘Back in the day’ identification and establishment of new ICPs was a top priority within the Department of Defense.<br> <br> <strong><em>First Steps</em></strong>: While there were a few ICPs established in the 60s and 70s – most notably NATO SeaSparrow – the first big push to establish defense acquisition partnership arrangements occurred in the 80s. Senators Sam Nunn and Dan Quayle sponsored new legislative authorities for establishment of ICPs in Title 10 and Title 22 of the U.S. Code. Senator Nunn also took action to provide a substantial amount of “seed money” in defense appropriations bills to provide funding to encourage DoD Components to start new ICPs with allied and friendly nations, primarily in Europe and the Pacific Rim. Unfortunately, the results from this initial era of cooperation were decidedly mixed. While most of the Science and Technology (S&T) programs and projects with allied and friendly nations were successful, some of the highly publicized new start cooperative acquisition programs -- including NATO Frigate Replacement (NFR) 90 -- failed to complete development and enter into production and deployment for various reasons.<br> <br> <strong><em>Evolution and Maturation</em></strong>: Fortunately, DoD’s ICP specialists learned quite a bit from these initial successes and failures, and worked with the DoD S&T community and acquisition Program Managers to develop several new ICP strategies and international agreement practices. These innovations led to successful negotiation, signature, and implementation of numerous S&T and acquisition programs at all Acquisition Category (ACAT) levels from the 1990s onward. The most well-known ICP established during this era is Joint Strike Fighter (JSF), but there are many others:<br> <br> <strong><em>Army</em></strong>: Guided Multiple Launch Rocket System (GMLRS), M982 Excalibur<br> <strong><em>Navy</em></strong>: AV-8B Harrier II Plus, MK-48 Torpedo, P-8 Maritime Patrol Aircraft<br> <em><strong>Air Force</strong></em>: Wideband Global Satellite, NATO C-17, NATO Alliance Ground Surveillance<br> <strong><em>Missile Defense Agency</em></strong>: SM-3 Block IIA, David’s Sling, Ballistic Missile Defense Framework Partnerships<br> <br> While they have not received as much media attention as U.S. FMS and DCS activity in recent years, the ICPs established with allies and friends since the 1990s have played a key role in achieving DoD’s Security Cooperation goals and objectives.<br> <br> <strong>Comparative Advantages</strong><br> <br> Similar to other forms of Security Cooperation in the equipment and logistics area – most notably FMS and DCS -- ICPs provide the U.S. and its allies and friends with overall benefits such as: <ul> <li>Improving coalition interoperability</li> <li>Achieving acquisition economies of scale in production and operations & support phases</li> <li>Helping the U.S. maintain a viable production base</li> <li>Fair sharing production line shutdown costs at the end of a program’s life-cycle</li> </ul> <br> ICPs, however, provide several additional technological and economic advantages beyond those achieved through FMS and DCS including: <ul> <li>Establishing solid partner nation(s) commitments for new or modified systems early in development</li> <li>Sharing upfront development (investment) costs for both S&T and acquisition programs</li> <li>Gaining access to (and using) leading-edge foreign technology to improve performance and enhance overall affordability throughout the acquisition life-cycle</li> <li>Fair sharing production non-recurring costs</li> <li>Fair sharing sustaining engineering & logistics costs</li> <li>Fair sharing system product improvement costs</li> </ul> <br> <strong><em>Quantitative Impact</em></strong>: The quantitative economic benefits, in terms of U.S. and allied/friendly nation ICP contributions, have been substantial. The initial set of JSF ICP agreements led to over 4 ½ billion dollars in investment from eight partner nations during JSF’s development phases. Under the current JSF ICP Memorandum of Understanding (which entered into effect in December 2006), JSF production, sustainment, and follow-on development non-recurring costs from 2006 to 2051 have been (and will be) shared on a proportional basis with the U.S. funding ~75% and the other eight partner nations funding ~25%. Moreover, U.S. and partner JSF aircraft and sustainment procurement recurring buys have -- and will likely to continue to -- occur in approximately the same proportion, providing all nine partners with substantial (if as yet uncalculated) economic order quantity savings. Based on JSF’s overall ~$400 billion acquisition and ~$1.1 trillion operations and support cost estimates, this means that overall investment by the eight JSF partner nations to develop, acquire, and sustain a leading edge, coalition-ready air dominance capability will be ~$375B by the middle of this century.<br> <br> JSF is not the only ICP program that has provided substantial economic benefits. Between 2011 and 2016 the Army, Navy, and Air Force entered into 478 ICP international agreements – mostly in the S&T, product improvement, and sustainment areas -- with a total program value of $27.6 billion. The U.S. contributions to these ICPs are valued at $22.6B while allied/friendly nation contributions total $5B. These amounts are substantially smaller than the amount of FMS and DCS sales made during this time period, which total tens of billions per year (e.g., ~$42B in 2017). However, these ICP statistics <u>do</u> <u>not</u> <u>include</u> DoD “Fourth Estate” ICP contributions (which were not collected) nor the production, sustainment, and product improvement recurring values from ongoing ICP programs since DoD has been unable to find a way to easily and accurately calculate them.<br> <br> Notwithstanding these challenges, estimating the approximate economic value of ICPs beyond what is currently being tracked by DoD is possible. Using known JSF and P-8 aircraft/sustainment recurring purchases by partner nations in recent years, plus Missile Defense Agency and other Fourth Estate ICP statistics from this period, a conservative estimate would be $5B per year. When these estimates are added to already known amount of partner contributions during this timeframe, the combined partner investment and recurring purchases through ICPs over the past 5 years total $30B or more, a substantial sum.<br> <br> <strong><em>Qualitative Impact</em></strong>: While ICP economic impacts throughout the acquisition life-cycle are impressive, there are strong arguments that their qualitative benefits are even more important in the long run. Here are four areas where successful ICPs excel in achieving optimal DoD Security Cooperation outcomes on a program-by-program basis:<br> <br> <u>Burden Sharing</u>: ICPs require early investment by the U.S. and partner nations – which means risk sharing and up-front commitment by all – in the development of new defense technologies and capabilities. While the amount of early partner investment in absolute terms is normally small – from less than a million to the low 10s of millions of dollars – successful ICPs grow into future capabilities acquired and used by the U.S. and partner nations throughout the acquisition life-cycle. One early S&T ICP with NATO partners – Communications Systems Network Interoperability – led to cooperative international testing and maturation of the ARPAnet (the precursor to the internet). A $165M R&D investment – split equally ($55M each) by the U.S., Italy, and Spain – led to the integration of the APG-65 (F-18) radar into the AV-8B, which was ultimately acquired and fielded by all three nations. Most JSF partner nations -- excepting the U.K., which contributed $200M – only invested $10M in JSF’s initial Concept Demonstration Phase conducted from 1997-2001. Yet, as noted above, this initial investment led to a $4.5B partner contribution later in JSF development as well as future billions of dollars of JSF production, sustainment, and follow-on development spending on a leading edge, coalition-ready, interoperable defense capability.<br> <br> <u>Defense Exportability</u>: One of the biggest challenges DoD faces today is how to achieve defense exportability as early as possible in our new start or major modification programs. This is a two-pronged issue: <ol style="list-style-type:lower-alpha;"> <li>Which defense exportability features should be incorporated into a new/modified system to make it ready for future export?</li> <li>Since the development of such defense exportability features costs money early in development, who should pay?</li> </ol> <br> Defining exportability requirements has always a tough policy and technical problem; one that U.S. Government (USG) Technology Security & Foreign Disclosure (TSFD) processes would rather defer until as late in the development process is possible since having a defined system configuration makes TSFD decision much simpler. Unfortunately, this approach has always been problematic since -- once development on a “U.S. Only” version system is largely completed -- there are significant redesign and redevelopment cost and schedule impacts associated with modifying our version to achieve FMS exportable configurations.<br> <br> Even if TSFD policy is established as part of a U.S.-funded exportability feasibility study conducted early in development, who should pay the “big ticket” exportability modification costs during (or after) the Engineering and Manufacturing Development (EMD) phase? The tax payers? U.S. industry? ‘Launch’ FMS or DCS customers?<br> <br> ICPs solve this problem since early partner commitment – including investment in the new system’s development – provide both the motivation for the USG TSFD processes to develop specific exportability policy guidance and the funds needed to pay for exportability design and development. While the mechanics of this can be a bit complex, the fact is that ICPs – by definition – must develop a system that is exportable to all of the partner nations in future production and sustainment phases. As a result partner participation and investment in the ICP also sets the stage for U.S. sales of ICP-developed systems to non-partner nations via FMS or DCS (depending on USG sales policy for the system) in early production.<br> <br> There are many examples of this beginning with NATO SeaSparrow, Multifunction Information Distribution System (MIDS), Rolling Airframe Missile (RAM), NATO Alliance Ground Surveillance (AGS) (Global Hawk), and many other ICPs. More recently, U.S. and partner nation JSF ICP efforts provided a basis for early, affordable acquisition of JSF aircraft by current FMS customers (Israel, Japan, and South Korea) as well as other interested FMS purchasers.<br> <br> <u>Acquisition Planning and Contracting</u>: All ICP international agreements have a Management section which establishes a mutually agreed executive and program management level structure for cooperative acquisition decision making and execution. They also contain a Contractual Arrangements section that establishes mutually agreed arrangements for U.S. and partner nation efforts to contract for U.S. and partner nation requirements. Other ICP international agreement sections govern key areas such as Financial Matters, Disclosure and Use of Information, and Security. As a result, U.S. and partner ICP acquisition requirements are planned and implemented in manner that optimizes combined buys. This achieves consistent economic order quantity savings outcomes for all partners throughout the program’s life-cycle. While many programs attempt to optimize U.S. and FMS customer procurement requirements that arise during a program’s life-cycle in a similar manner-- and occasionally succeed – they are often unable to achieve desired results due to lack of a mutually agreed structure and set of business practices for doing so. ICPs solve this problem.<br> <br> <u>Global Competitiveness</u>:<br> <br> ICPs provide a unique way for the USG and industry to compete in the global defense marketplace. ICP international agreements create an initial set of partners willing to invest in and acquire a newly developed capability. Moreover, ICPs have already resolved exportability issues and established an efficient program management and contracting organization ready address potential FMS customer requirements. That is why ICPs like NATO SeaSparrow, MIDS, RAM, JSF, and many others have been so successful in promoting FMS sales of cooperatively-developed and produced systems and equipment.<br> <br> While they are not established for this purpose, experience has shown that successful ICPs provide the U.S. and its partner nations with several unique advantages in ‘head to head’ global competitions with other nations’ products. In the case of the JSF ICP initiative, eight of the nine development partners have already purchased (or decided to purchase) JSF aircraft. The ninth partner (Canada) is still considering JSF as an option to meet its future fighter aircraft requirements. As noted above, three other nations have already purchased JSF via FMS, and several others are considering it. No other current fighter aircraft has achieved this level of success in global competitions over the past decade.<br> <br> <strong>Where are Tomorrow’s ICPs?</strong><br> <br> With such an impressive record of success, one would think that pursuit of future ICPs would be among DoD’s top priorities. Even DoD Directive 5000.01 – the acquisition ‘bible’ – lists establishment of ICPs for new systems as THE preferred development alternative (in theory, a better choice than U.S. joint service and DoD Component-unique new start programs).<br> <br> The fact is (and has always been) that it’s substantially harder to establish an ICP for developing a new system rather than conducting a U.S.-only development at taxpayer expense and hoping for future sales. If you are interested in learning more about the challenges in establishing ICPs, consider reading the Center for Strategic and International Studies (CSIS) paper on <a href="">“Designing and Managing Successful International Joint Development Programs”</a> published in January 2017.<br> <br> From a broader historical perspective, however, the challenges outlined in the CSIS study have always existed in some form. You don’t have to be an expert to recognize that, in most cases, it’s harder to establish a partnership than make a sale. Moreover, some DoD programs just don’t lend themselves to effective partnering with allies and friends. Despite these challenges, DoD advocated establishment of ICPs on specific programs as an integral part of their acquisition strategy – despite the risks and potential problems – in the 90s and 00s. We are reaping the benefits of these ICPs now, and will continue to do so well into the future.<br> <br> However, DoD’s current Security Cooperation approach favors defense sales versus establishment of new start ICPs. Since 2010 only a few new major system ICPs have been established as compared to the previous decades. Why?<br> <br> <strong>Expanded ICP Policy? </strong><br> <br> Organizations attempting to change the status quo often focus on reforming existing policies and processes rather than identifying “what’s missing?” The new Administration is already pursuing several lines of effort to improve DoD’s FMS performance in well-known areas. However, a strong argument can be made that -- despite the fact that the FMS reforms being pursued are sorely needed -- they will be unable to achieve enhanced DoD acquisition outcomes across the entire spectrum of DoD’s acquisition activities.<br> <br> While promoting defense sales is DoD’s current Security Cooperation preference in the current environment, putting “all our eggs in this basket” is not our only option. We don’t have to fund S&T, rapid acquisition, and new system development costs all by ourselves, assume full technology maturation and development risks, then wrestle with all-to-predictable exportability and contracting problems when we try to sell new and modified systems developed for solely for U.S. use. There is another alternative.<br> <br> Experience has shown that the current set of ICPs has served us well. These ICPs have -- and are continuing to -- provide substantial benefits to the U.S. and its allies and friends throughout the acquisition life-cycle. Looking forward, our current Security Cooperation reform efforts could be clearly benefit from the establishment of new ICPs with key allies and friends in selected areas. Use of ICP initiatives early in development provides a solid foundation for future defense sales after our systems have successfully completed testing and evaluation, then transitioned into full scale production, deployment, and initial sustainment activities. Many of the challenges inherent in future FMS for our new systems could be avoided by intelligent use of ICPs as a complementary Security Cooperation option.<br> <br> Shouldn’t DoD consider establishing a new generation of ICPs, starting today?<br> <br> <br> Until next time … Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/Making-the-Case-for-International-Cooperative-Programs
International Acquisition & Exportability and the “5 Moments of Need” Acquisition & Exportability and the “5 Moments of Need”2017-10-24T16:00:00Z Fields/DAU_Engineering USAF_20170104.jpg, Fields/DAU_Engineering USAF_20170104.jpg Fields/DAU_Engineering USAF_20170104.jpg<div class="ExternalClass57F5F46BA9804549B6102AF677ECD34A">While most of my recent blogs have addressed high-interest International Acquisition and Exportability (IA&E) topics, this one will address our primary mission, serving you, the International Acquisition Community of Practice.<br> <br> To do a better job of meeting your learning needs, here is our <strong>“Bottom Line Up Front” (BLUF)</strong>:<br> <br> <em>We’d like your help to move our <strong>International Acquisition Community of Practice (ICOP)</strong> from ‘good to great’ to enhance the job performance of all IA&E workforce members.</em><br> <br> Before we discuss our ideas on <strong>HOW</strong> we can collectively improve the ICOP, however, we’ll start with a bit of Myers-Briggs big picture perspective to help make the case regarding <strong>WHY</strong> we should pursue these efforts.<br> <br> <strong>Adult Learning Concepts</strong><br> <br> At our Defense Acquisition University (DAU) Annual Update last week, President Woolsey emphasized the importance of learning innovation, bringing in key learning experts to discuss the challenges facing corporate learning centers around the globe. I would like to briefly share two of the concepts they highlighted, why they are important, and how they are influencing our efforts to improve the ICOP status quo.<br> <br> The first concept I’d like to start with is the 70/20/10 principle – well known in professional learning circles but new to me – which states that adult learners obtain the knowledge and skills to perform effectively on the job in the following ways: <ul> <li><strong><em>10%</em></strong> through formal classroom instruction (such as DAU courses)</li> <li><strong><em>20%</em></strong> through peer-to-peer learning (primarily at the job site)</li> <li><strong><em>70%</em></strong> <u>by themselves</u> (through observation, websites, reading, doing, etc.)</li> </ul> <br> Moreover, as we all know, the most difficult thing to do is APPLY new knowledge or skills in the workplace. This is where the second concept -- “the 5 Moments of Need” -- enters the picture in a big way. <ol> <li><strong><em>Learning a New Skill</em></strong> for the First Time (normally through formal instruction)</li> <li><strong><em>Learning More </em></strong>about a New Skill (normally through formal instruction and On-the-Job Training (OJT))</li> <li><strong><em>Trying to Remember/Apply</em></strong> at the Workplace (hmmm …)</li> <li><strong><em>Trying to Address Problems</em></strong> at the Workplace (double hmmm …)</li> <li><strong><em>Trying to Address Changes</em></strong> at the Workplace (always challenging)</li> </ol> <br> <strong>DAU’s Acquisition Learning Model</strong><br> <br> From an adult learning perspective, this 70/20/10 principle is very IMPORTANT since DAU’s Acquisition Learning Model focuses on: <ul> <li><strong>Foundational Learning</strong> (roughly equivalent to the <strong><em>10%</em></strong> of the workforce who attend our distance learning and resident courses)</li> <li><strong><u>Workflow Learning</u></strong> (roughly equivalent to the <strong><em>70%</em></strong> of the workforce <u>individually</u> using the learning assets on our websites)</li> <li><strong>Performance Learning</strong> (roughly equivalent to the <strong><em>20%</em></strong> of the workforce we serve through Mission Assistance, Workshops, etc.)</li> </ul> <br> Taking stock of where we are from an overall DAU IA&E perspective, we’re generally happy with our Foundational Learning efforts. We’ve deployed four new courses – ACQ 120, ACQ 130, ACQ 230, and ACQ 380 – since October 2013, upgraded aspects of our other courses (ACQ 340 and ACQ 350), and added IA&E learning content in several other DAU career field and executive level courses. While we're always pursuing continuous improvement efforts in Foundational Learning, from our vantage point the “10%” is looking pretty good!<br> <br> Our Performance Learning (Mission Assistance) efforts over the past few years have – on a space available basis -- also been largely successful. Using our faculty’s knowledge and experience, we’ve been able to help several DAU consumers address specific IA&E challenges in the workplace. Our self-evaluation -- not bad on the “20%” either -- noting that we never seem to have enough time available in this area!<br> <br> However, the “5 Moments of Need” concept highlights the fact that we must spend a lot more time and effort on the most challenging area of all, <strong><u>Workflow Learning</u></strong> (the 70%). That’s what we’re going to focus on next vis-à-vis potential ICOP improvements.<br> <br> <strong>ICOP – Status Quo</strong><br> <br> Our own assessment of the current ‘state of the ICOP’ indicates that we’ve made substantial progress, however, we have a long ways to go to achieve the ‘5 Moments of Need’ impact we should be making in the workplace, especially in the 70% zone:<br> <br> <strong><em>Website Metrics</em></strong> <ul> <li><u>ICOP</u>: ~800 ‘hits’ per month on ~150 specific items posted on the new website since March 2017</li> <li><u>Functional Gateway</u>: 10 IA&E blogs published since April 2017 with approximately 50-100 ‘hits’ on each blog</li> <li><u>Video Channel</u>: 13 videos (including 9 new ACQ 380 videos) published since April 2017 with ~140 total ‘views’</li> <li><u>Job Support Tools (JSTs)</u>: Five new JSTs on key IA&E workflow learning topics deployed since April 2017 (no usage data available yet)</li> </ul> <br> <strong><em><u>Net Assessment</u></em></strong>: We have a pretty good ‘passive’ set of websites that are being used by many members of our community, the acquisition workforce, and other DoD/industry users.<br> <br> <strong><em>Interactive Participation Levels </em></strong> <ul> <li><u>Number of ICOP Members</u>: 27 (people with CAC cards who’ve joined the site since March 2017)</li> <li><u>Ratings of ICOP Items</u>: Less than 10 (you have to be signed in to rate ICOP items)</li> <li><u>Contributions to the ICOP</u>: One (our first ever on the new site) last week from an Air Force organization (thanks!)</li> <li><u>Discussions on the ICOP</u>: Two (by me)</li> <li><u>Feedback on IA&E JSTs</u>: Positive feedback from ACQ and PMT course participants but no DAU.Mil “Tools” website ratings or comments</li> </ul> <br> <strong><em><u>Net Assessment</u></em></strong>: We aren’t an interactive Community of Practice site that is effectively meeting the needs of the “70%” of the IA&E workforce on the job every day (at least not yet).<br> <br> <strong>ICOP – Moving Forward</strong><br> <br> DAU/DSMC-International only has a handful of faculty members. We do our best to help improve IA&E workplace performance through DAU course teaching (the 10%) and Mission Assistance (the 20%). In parallel, we will be evaluating additional efforts DAU could pursue with IA&E customer organizations throughout DoD to more effectively define and prioritize Workflow Learning efforts supporting the needs of the 70%.<br> <br> However, even a ‘boomer’ like me recognizes that there is only so much the DAU faculty can do to serve the 70% at the moment of IA&E job performance need. That’s why we need your help.<br> <br> We know that there are roughly 5,000 International Acquisition Career Path (IACP) members and over 10,000 Security Cooperation Workforce personnel out there who could benefit from widespread community participation in DAU’s ICOP websites. By this point you must realize – just as we have at DAU – that we can’t meet the “5 Moments of Need” of the “70%” of the IA&E workforce on the job site unless we can achieve a greater degree of participation from all of you in the ICOP.<br> <br> Please consider signing up, logging in, and contributing to the ICOP today, and in the future. The entire IA&E community will benefit from your participation.<br> <br> Until next time … Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/International-Acquisition-and-Exportability-(IAandE)-and-the-“5-Moments-of-Need”
DoD Security Cooperation Challenges -- Defense Exportability Reform Security Cooperation Challenges -- Defense Exportability Reform2017-09-25T16:00:00Z Fields/DAU_Program Management F35_20170103.jpg, Fields/DAU_Program Management F35_20170103.jpg Fields/DAU_Program Management F35_20170103.jpg<div class="ExternalClassC2FB668C06264C40AF1758CAD3BE6317">This blog, which is the third in a series on the topic of Security Cooperation and defense exportability, focuses on potential DoD reforms that could achieve step function improvements in our “equip and train” relationships with allied and friendly nations.<br> <br> For those who haven’t read them yet, my first blog on this subject explored the history of U.S. defense exportability, and the second identified the disconnect between our U.S. Government (USG)/DoD Security Cooperation strategy and the defense exportability features (or lack thereof) designed, developed, and incorporated through DoD’s key ‘Big Acquisition (Big A)’ processes: requirements definition, acquisition milestone decisions, and funding authorization and approval.<br> <br> The Bottom Line Up Front (BLUF) for this blog focuses on a simple, and hopefully compelling, argument for reform in this area:<br> <br> <em>Our USG/DoD Security Cooperation strategy should drive DoD program-level decision making on defense exportability. Let’s use our ‘Big A’ decision processes to structure programs that develop and produce new DoD systems ready for sale to allies and friends, consistent with our national strategy and their defense needs. </em><br> <br> <strong><u>The Case for Change</u></strong><br> <br> As noted in my previous blog, the DoD defense exportability picture is not all bleak. Positive changes <u>have</u> in fact been made in this area since 2010. The DoD acquisition system <u>is</u> doing a much better job of considering this subject early in development. However, DoD must reorient its approach to focus on ‘<strong><em>exportability problem solving</em>’ </strong>in our new programs rather than running an <strong>‘<em>exportability problem monitoring</em>’ </strong>process (the status quo).<br> <br> While many informed observers believe modifications in DoD exportability policy and practice are needed, the key question potential reformers face is whether such changes should be evolutionary or revolutionary in nature.<br> <br> <strong><u>Revolutionary Change – An Idea</u></strong><br> <br> As highlighted in my previous blogs, it certainly appears worth considering how the other nations around the world address exportability in their new systems. They design and develop at least <strong><em>one export version </em></strong>as an integral part of their<strong><em> domestic </em></strong>program efforts<strong><em>. </em></strong>We, on the other hand, only take occasional action on program-by-program basis based on a ‘volunteer’ approach to design and development of defense exportability features in new our systems. Why not take a page out of the other defense exporting nations’ ‘playbook’ and start making a <strong><em>mandatory</em></strong> exportability decision – <strong><em>yes or no</em></strong> – at a program’s inception? As outlined below, only a few simple changes in the current DoD ‘Big A’ processes would be required<br> <br> <strong><em>New Mindset</em></strong>: Instead of our current practice, key DoD leaders should establish an initial defense exportability “requirement” in the Joint Capability Integration and Development System (JCIDS) process at each new start program’s Materiel Development Decision (MDD). The MDD, which is made by a new start program’s acquisition Milestone Decision Authority (MDA), kicks off a Materiel Solution Analysis (MSA) phase during which an Analysis of Alternatives (AoA) is conducted. As recommended in the current Defense Acquisition Guidebook (DAG), an International Acquisition and Exportability (IA&E) Assessment should be conducted as a part of, or as an adjunct to, the AoA to evaluate each new program’s JCIDS exportability “requirement”, conduct trade off analyses on its achievability, and recommend an exportability design and development course of action. USG/DoD Security Cooperation and Technology Security Foreign Disclosure (TSFD) policy should be used as key inputs in each program’s AoA/IA&E Assessment efforts.<br> <br> Upon completion, each program’s MDA should assess AoA/IA&E Assessment results and recommendations – and make initial exportability design decisions -- at Milestone A. Technology Maturation and Risk Reduction (TMRR), which is the acquisition phase that follows Milestone A, is where DoD starts spending ‘real money’ to achieve a new system’s desired capability requirements. Accordingly, this is the optimal point in the ‘Big A’ process to decide on a new program’s desired exportability characteristics based on an initial estimate of how much time and effort will be required to achieve them.<br> <br> <strong><em>Business Process Changes</em></strong>: Fortunately, the DoD business process ‘mechanics’ needed to accomplish this new mindset in our ‘Big A’ decision making could be easily implemented through the following changes:<br> <br> <strong><em>Process Change 1</em></strong>: Adjust the current DoD JCIDS policy and practice to ensure each new program’s Initial Capability Document (ICD) specifies the desired exportability level for a new system based on Options along the following lines:<br> <br> <strong>A)</strong> Available to all allies and friends; or,<br> <strong>B)</strong> Available to selected allies and friends*; or,<br> <strong>C)</strong> Unavailable to any ally or friend <em>(i.e., U.S. only)</em><br> <br> <em>* The ICD could provide additional guidance in this area, if desired, based on specific Security Cooperation policy guidance informed by pertinent USG/DoD TSFD process guidance.</em><br> <br> This JCIDS ICD decision – approved at the Joint Requirements Oversight Counsel (JROC) level by the four-stars -- would be based on U.S. national security and foreign policy requirements informed by USG Security Cooperation policy as well as Service and CoCom advice on how the new system would be used in future coalition and multinational operations.<br> <br> <strong><em>Process Change 2</em></strong>: For all ICDs containing Option A) or B), a defense exportability feasibility study would conducted as part of the AOA/IA&E Assessment effort in order to assess the acquisition system’s ability to achieve the desired JCIDS exportability outcome (just as they would any other JCIDS Key Performance Parameter).<br> <br> <strong><em>Process Change 3</em></strong>: In parallel with Process Changes 1 & 2, the current DoD 5000 series guidance would be modified to require a minimum level of both <u>domestic and exportable program protection</u> in all ‘three pillars’ – information security, critical program technology, and trusted systems and networks – for all new ICDs containing Option A) or B).<br> <br> <strong><em>Illustrative Examples</em></strong>: Generic examples – based on ‘real world’ programs -- of how this new mindset could work in actual ‘Big A’ decision making include: <ul> <li><u>ICD Option A)</u>: A new system is being developed. Our Security Cooperation policy envisions that this system will be made available to a broad spectrum of allies and friends during its life-cycle. Past precedent shows that the USG has previously sold existing versions of this type of system to a wide variety of allies and friends in various export configurations. Based on the ICD and TSFD policy, Subject Matter Experts (SMEs) would conduct a broad-based AoA/IA&E Assessment during the MSA phase to assess the feasibility of achieving this desired Security Cooperation policy outcome.</li> <li><u>ICD Option B)</u>: A new, highly classified replacement system is being developed. Initial Security Cooperation and TSFD analysis shows that this new system will only be releasable to a defined set of close allies. Based on the ICD and TSFD policy, SMEs would conduct a more narrowly-focused AoA/IA&E Assessment during the MSA phase to assess whether it’s feasible to design and develop the new system to be exportable to these selected allies.</li> <li><u>ICD Option C</u>: A new system is being developed with no precursor or, alternatively, a unique, highly classified replacement system is being developed. No allied or friendly nation has ever acquired a unique, highly classified U.S. system of this type in the past. Based on the ICD and TSFD policy, a U.S.-only program would likely make sense in this exceptional case. However, DoD would have to make it clear to everyone involved in the “Big A’ process – including the Administration and Congress -- that this new system will not be exportable (e.g., Obey Amendment which prohibited F-22 foreign sales).</li> </ul> <br> <strong><em>Likely Outcomes</em></strong>: Based our previous analysis of current Major Defense Acquisition Programs in my second blog, as well as the overall U.S record of international sales and transfer of its defense equipment since World War II, a normal distribution of future JROC ICD exportability decisions for future systems would be likely:<br> <br> - <strong>~20-25%</strong> of our new systems = available to all allies and friends<br> - <strong>~65-70%</strong> of our new systems = available to selected allies and friends<br> - <strong>~5-10%</strong> of our new/modified systems = U.S.-only<br> <br> Anticipated program level exportability outcomes along these lines for our new systems would effectively support both our current and future Security Cooperation strategy as well as the way our CoCOMs routinely operate -- and, when necessary, fight -- in coalition and multinational environments.<br> <br> <strong><u>Evolutionary Reform?</u></strong><br> <br> <strong><em>Traditional Reform Approaches</em></strong>: Evolutionary changes in DoD defense exportability are also, of course, possible. Based on past experience, an evolutionary approach would probably follow a path similar to those pursued in previous thoughtful, analytically-based Security Cooperation reform initiatives: <ul> <li>DoD Security Cooperation leaders would establish a team of DoD SMEs who would seek and obtain inputs from industry, Congress, and foreign government/industry on this matter.</li> <li>The SMEs would choose some type of analytical approach to analyze and examine various to try to improve performance.</li> <li>For example, as outlined in my previous blogs, the <strong>Unified Field Theory (UFT)</strong> of International Acquisition -- a corollary to the ‘Big A” process that includes international acquisition-unique aspects – could be used to assess the status quo.</li> <li>Recollect that the UFT includes the following steps: <strong><em>1)</em></strong> Requirements Definition + <strong><em>2)</em></strong> Technology Security and Foreign Disclosure (TSFD)/Export Control Decisions + <strong><em>3)</em></strong> Funding Source(s) + <strong><em>4)</em></strong> International Transaction Mechanism + <strong><em>5)</em></strong> Acquisition Approval(s) + <strong><em>6)</em></strong> Contract(s) = <strong>Capability Delivered to (Foreign & U.S.) Warfighters</strong></li> <li>Based on the results, DoD leaders would review changes proposed by the SMEs – in both individual steps as well as the end-to-end process – that would (hopefully) lead to improved performance.</li> </ul> <br> <strong><em>Typical Results</em></strong>: While it often makes sense to “round up the usual suspects” and ask them what they think when considering Security Cooperation reforms, this approach has come up short in the past from time to time. Why? <ul> <li>Previous Security Cooperation-led reform efforts have tended to concentrate on the UFT steps controlled by that community (particularly <em>UFT Steps 3 and 4</em>). They have also encountered difficulty persuading the USD/DoD TSFD and Export Control and DoD acquisition community process owners (who ‘own’ <em>UFT Steps 2, 5, and 6</em>) to work and play effectively with the Security Cooperation community in previous reform efforts.</li> <li>No one, at least to my knowledge, has ever attempted to engage the DoD requirements community – primarily the Joint Staff, the Services, and the CoCOMs – regarding fundamental changes in the JCIDS process to address the connection between USG/DoD Security Cooperation strategy/policy and new start program requirements (<em>UFT Step 1</em>).</li> <li>Even if these bureaucratic politics problems could somehow be overcome, the thinly disguised “elephant in the room” that makes all key USG and DoD stakeholders very nervous is the question of “<strong><em>who would pay to achieve exportability in our future systems if we make it mandatory</em></strong>.”</li> </ul> Call me a cynic, but I predict that another “rounding up the usual suspects” approach won’t lead to much change. Instead, I believe we’ll end up with another Security Cooperation reform outcome where the existing ‘Big A’ and UFT processes don’t really change much while DoD and U.S. industry continue to argue over ‘who pays’ for exportability. This approach inevitably leads to an outcome where prospective foreign customer(s) are asked to ‘pay later’ to achieve exportability. In other words, the status quo.<br> <br> <strong><em>The Stag Hunter’s Dilemma</em></strong>: One way to illustrate this problem is the “stag hunter’s dilemma.” Imagine for a few minutes that DoD and U.S. Industry are both hunters, each with an independent choice on whether they should:<br> <br> <strong>A)</strong> hunt a stag (worth 5 days of food); or,<br> <br> <strong>B)</strong> hunt a rabbit (worth 1 day of food).<br> <br> If DoD leaves home with its stag-hunting gear, and Industry decides to bring it’s rabbit-hunting equipment, DoD will come home empty handed, and Industry will bring home a rabbit. The same thing will happen in the reverse if Industry and DoD switch places.<br> <br> The safest course of action, based on experience, would be for DoD and Industry to independently decide to bring their rabbit-hunting gear since they will both end up bringing home a rabbit for the pot.<br> <br> However, if DoD and industry changed their mindset and acknowledged each other’s mutual interests, they could build enough trust such that both would independently decide to accept the risk and bring their stag-hunting equipment in hopes of a bigger ‘payoff.’ Outcome? Both parties bring home a stag (instead of a rabbit).<br> <br> So, the <u>moral</u> of the stag hunter’s dilemma -- from a defense exportability perspective – is as follows: <ul> <li>10 days’ worth of food (full spectrum defense exportability) is better than 2 days (status quo approach) or 0 days (this happens sometimes when foreign entities win competitions).</li> <li>Both DoD and Industry, supported by the Administration and Congress, should establish incentives which build trust that lead both parties to pursue defense exportability solutions together rather than separately (or not at all).</li> <li>Establishing initial JCIDS and acquisition exportability requirements, then assessing the feasibility of achieving them early in milestone decisions on each program, would be the best way to encourage greater DoD and Industry effective cooperation on exportability throughout each new program’s life cycle.</li> </ul> <br> <strong><u>Looking Forward</u></strong><br> <br> In this blog, I have argued that DoD should pursue revolutionary changes in our ‘Big A’ acquisition processes that clearly state DoD’ desired exportability outcome for all of our new programs. For programs with Security Cooperation and TSFD policy-based exportability requirements, DoD and Industry should be required to conduct MSA and TMRR phases to define a realistic exportability design and development course of action. Once a program’s exportability course of action has been validated by the acquisition MDA -- and confirmed by the JROC and Service(s) -- DoD and Industry should be required to work together throughout the program’s development phases to find creative, equitable ways to fund exportability features.<br> <br> An old adage often heard around the Pentagon is that, “if someone tells you it’s not about money, it’s all about money.” Put another way, until we accept the fact that pursuing defense exportability efforts early in development will require contributions of time, talent, and resources by both DoD and Industry, we’ll all continue to eat rabbit instead of steak!<br> <br> At its core, linking our Security Cooperation strategy to JCIDS requirements definition efforts is an investment issue. That is why DoD should change ‘Big A’ process incentives to ensure that early exportability design and development measures are not only considered, but funded, in our new start programs.<br> <br> <br> Until next time … Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/DoD-Security-Cooperation-
DoD Security Cooperation Challenges -- Defense Exportability Policy Security Cooperation Challenges -- Defense Exportability Policy2017-09-13T16:00:00Z and Weapon Systems/DAU_UH-60 Blackhawk-1_20170105.jpg, and Weapon Systems/DAU_UH-60 Blackhawk-1_20170105.jpg and Weapon Systems/DAU_UH-60 Blackhawk-1_20170105.jpg<div class="ExternalClass2CB99D404950431497F5AC69CE203BD4">We return once again to the topic of defense exportability in order to focus on how changes to DoD policy and practice in this area could markedly enhance overall Security Cooperation performance. For those of you who’d like to learn more about this subject, including why defense exportability activities provide the foundation for DoD Security Cooperation efforts, please consider reading my earlier “History of Defense Exportability" blog.<br> <br> Since no one has told me (yet) that having a Bottom Line Up Front (BLUF) is out of fashion, here’s a BLUF for this blog:<br> <br> <em>U.S. Government (USG)/DoD Security Cooperation strategy does not drive DoD acquisition program-level decision making on defense exportability. Until it does, we’ll continue developing and producing new DoD systems that aren’t ready for sale to allies and friends who need them. </em><br> <br> <strong><u>What does the Data Show?</u></strong><br> <br> The analysis of DoD’s status quo approach to defense exportability in my last blog highlighted the fact that current Joint Capabilities Integration and Development System (JCIDS) and DoD 5000 series acquisition policy are both based on a “volunteer” approach to defense exportability at the individual program level. DoD JCIDS process participants, Program Managers (PMs) and acquisition Milestone Decision Authorities (MDAs) in the Joint Staff, Office of the Secretary of Defense, Military Departments, and other DoD Components are required to <u>consider</u> defense exportability early in the new system development process, but they are not <u>required</u> to take any action.<br> <br> This volunteer approach to defense exportability would make a lot more sense if our systems and equipment were only occasionally sold or transferred to allies and friends. However, further analysis of DoD’s current and future acquisition programs demonstrates this is not the case: <ul> <li>A recent review of DoD Major Defense Acquisition Programs (MDAPs) across in all three Military Departments showed that <u>over 80%</u> either had been sold or transferred, or anticipated future sale or transfer later in their life-cycle.</li> <li>U.S. geographic Combatant Commander Security Cooperation plans routinely mention sale or transfer most of our current systems to allies and friends.</li> <li>Key defense companies report that between <u>20-30%</u> of their existing and planned business involves current and projected foreign sales.</li> <li><u>Over 90%</u> of our important, ‘leading edge’ systems and equipment – tactical aircraft, surface ship systems, unmanned aerial vehicles, precision guided munitions, ordnance, air and missile defense systems, radars, and even strategic systems (Trident D-5) – are eventually made available for international cooperation, sale, or transfer at some point in their life-cycle.</li> </ul> <br> Yet our acquisition policy and practice – outside of the relatively small number International Cooperative Programs (ICPs) we’ve established over the past 25 years – is based on a ‘<u>defense exportability is voluntary</u>’ approach until a firm foreign sale or transfer request or offer occurs. Redesigning defense exportability into an already-developed U.S. system later in a program’s life-cycle ends up being a costly, time-consuming, and frustrating exercise for both government and industry acquisition program teams since: <ul> <li>DoD initially pays industry to have U.S.-version capabilities and program protection measures designed into a system.</li> <li>At some future point DoD pays industry again -- or requires the foreign customer(s)) to pay industry -- to modify or remove selected ‘U.S.-only’ capabilities and incorporate export configuration program protection features.</li> </ul> <br> The net effect of this approach is expensive and time consuming redesign efforts late in development (or even early in production) to achieve one or more exportable system versions that conform with ‘point of sale’ USG/DoD TSFD and Export Control policy guidance. How expensive and how long? <u>Millions to tens of millions</u> of dollars of additional Non-Recurring Engineering (NRE) exportability design and development costs which take <u>12–36 months</u> to implement.<br> <br> <strong><u>Strategy versus Policy Disconnect</u></strong><br> <br> We also learned in my last blog that our USG and DoD national security and foreign policy strategy – implemented through USG-wide Security Cooperation policy and planning activities – relies on availability of exportable version U.S.-origin systems and equipment to meet the current and future needs of allied and friendly nations.<br> <br> Under current JCIDS and 5000 series acquisition policy, however, defense exportability is <u>not a requirement</u> in the U.S. on a program-by-program basis. Instead it’s an option that a PM or MDA can either decide to pursue or forego.<br> <br> Unfortunately, DoD’s strategy versus policy disconnect regarding defense exportability has caused many Security Cooperation problems when the USG/DoD eventually decides to offer our systems to allies and friends.<br> <br> <strong><em>Business Process Analysis</em></strong><br> <br> Many readers may have heard of the concept of the <strong>‘Big Acquisition’</strong> (aka <strong>‘Big A’</strong>) process within the USG and DoD. The ‘Big A’ concept describes how three major processes -- Requirements (JCIDS), ‘Little A’ Acquisition (DoD 5000 series), and Funding (Planning, Programming, Budgeting, Execution System (PPBES)) – work together to develop and field new and improved U.S. systems to our warfighters.<br> <br> The <strong>Unified Field Theory of International Acquisition</strong> – described in greater detail in previous blogs– is a corollary process describing Security Cooperation “equip and train” initiatives. The UFT process includes the following steps:<br> <br> <strong><em>1)</em></strong> Requirements + <strong><em>2)</em></strong> Technology Security and Foreign Disclosure (TSFD)/Export Control + <strong><em>3)</em></strong> Funding + <strong><em>4)</em></strong> International Transaction Mechanism + <strong><em>5)</em></strong> Acquisition Approval + <strong><em>6)</em></strong> Contract = <strong>Capability Delivered to (Foreign & U.S.) Warfighters</strong><br> <br> Note that “<u>requirements</u>” is the first independent variable in both the overall ‘Big A’ and ‘UFT’ processes. The capability requirements in JCIDS, particularly ones that are considered Key Performance Parameters (KPPs), drive key decisions in both of these processes from Step 1 onward.<br> <br> At the program level, the disconnect between our overall USG/DoD Security Cooperation strategy versus defense exportability policy in the requirements area should be obvious, but it’s worth restating. Most of our programs are initiated based solely on <u>U.S. JCIDS requirements</u>. USG/DoD Security Cooperation objectives are not considered “requirements” and are not included in key JCIDS documents that drive the acquisition process. Accordingly, our current JCIDS policy and practice – reinforced by our overall mindset <em>(exportability is optional)</em> as well as decades of U.S. acquisition design practice (<em>we’ll deal with exportability later)</em> -- inevitably leads to a series of unfortunate events in both the ‘Big A’ and UFT processes that we’ll explore in greater detail in the next section.<br> <br> At the ‘big picture level’ this means that the Security Cooperation aspects of our U.S. national strategy and foreign policy are <u>not</u> driving (or even influencing) DoD’s early decisions regarding the defense exportability characteristics of our new programs … not a good thing!<br> <br> <strong><em>Impacts </em></strong><br> <br> From the allied or friendly nation point of view, there are often substantial costs and delays that result from the way our current ‘Big A’ and UFT decision processes operate at the program level: <ul> <li>USG/DoD TSFD and Export Control system decisions drive export version system requirements <u>after</u> key U.S. ‘Big A’ process requirements are initially established <em>(UFL Step 2)</em></li> <li>Estimates on how much additional foreign customer funding is needed for exportability design and development must be generated in the latter stages of development or early production <em>(UFL Step 3)</em></li> <li>DoD must put the additional exportability scope and costs in the International Transaction Mechanism – most often an FMS case – to charge the foreign customer(s) while keeping details opaque <em>(UFL Step 4)</em></li> <li>USG/DoD must provide foreign acquisition officials with sufficient cost/schedule exportability impacts resulting from UFL Steps 2-3 to obtain International Transaction Mechanism approval <em>(UFL Step 5)</em></li> <li>DoD must award ‘late in the process’ FMS case-related contracts (or mods) to achieve the exportability outcomes required based on UFL Steps 2-5. <em>(UFL Step 6)</em></li> </ul> <br> As a result, allied and friendly nations considering acquisition of a U.S. system requiring substantial exportability modifications have the option of either:<br> <br> <strong><em>A)</em></strong> Accepting potentially substantial exportability-related cost increases and delays to buy U.S.; or,<br> <br> <strong><em>B)</em></strong> Deciding to purchase an already-developed export version of a similar Western, Russian, or Chinese system, normally with a greater amount of technology transfer (quantity and quality) than the U.S is generally willing to offer via Foreign Military Sales (FMS) or Direct Commercial Sales (DCS).<br> <br> <strong><u>Revolutionary Reform?</u></strong><br> <br> To be clear, the DoD defense exportability picture is not all bleak. As highlighted in my previous blog on this topic, positive changes <u>have</u> in fact been made in this area. The DoD acquisition system <u>is</u> doing a much better job of considering this subject early in development. Several DoD Defense Exportability Features (DEF) pilot programs have done some outstanding work in this area since 2012.<br> <br> Unfortunately, much like a popular commercial about identity theft challenges, DoD’s current approach focuses more on being an <strong>‘<em>exportability problem monitor</em>’</strong> rather than an ‘<strong><em>exportability problem solver</em>.’</strong> As a result, most informed observers believe that more changes in DoD exportability policy and practice are needed. Should they be evolutionary or revolutionary in nature?<br> <br> My next (and final) blog on the relationship between Security Cooperation and defense exportability will propose a revolutionary change in ‘how we do business’ and explore the challenges and potential benefits to DoD, industry, and our allies and friends.<br> <br> Until next time … Prof K</div>string;#/training/career-development/intl-acq-mgmt/blog/DoD-Security-Cooperation-Challenges----PartIIB