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Defense Acquisition University
International Acquisition Management
Accelerating U.S. Foreign Military Sales (FMS) – Best Practices
Written by: Frank Kenlon (Prof of Int'l Acq, DAU/DSMC-Int'l)
January 31, 2019
U.S. Government and DoD senior leaders have repeatedly emphasized the importance of accelerating the defense acquisition process to develop and field the capabilities our U.S. warfighters need. In parallel, the
USG’s Conventional Arms Transfer (CAT) Policy
– initially published in April 2018 – has several ongoing Lines of Effort (LOEs) that focus on accomplishing a related objective, accelerating delivery of FMS capabilities to allied and friendly nations.
One of the axioms we often hear about the nature of defense acquisition is that it’s a “team sport.” If that’s true – and I think it is – then FMS should likewise be considered an international version of this “sport.” Same basic game, played under a slightly different set of “rules” by a diverse set of international and domestic government and industry participants. The logical conclusion that can be drawn from this analogy – which is addressed greater detail in our
DAU Speed of FMS Blog
published in August 2018 -- is that FMS acquisition activities are even
complicated than similar domestic acquisition efforts as a result of these additional complexities. Fortunately, we have a cadre of DoD International Acquisition Career Path (IACP) personnel – as well as other USG and DoD Security Cooperation organizations – who are already working on ways accelerate the FMS process to enhance its performance.
FMS Process Steps -- The Basics
We recently received several specific FMS acceleration “best practices” from a PEO that is responsible for numerous FMS programs in their portfolio that we would like to offer for consideration by the DoD acquisition workforce personnel involved in FMS activities. For those of you who are knowledgeable in FMS matters, feel free to skip ahead -- you’ll find them in the next section of this blog. However, if you are unfamiliar with or a bit rusty in this area, here’s a short refresher on the
FMS Systems Acquisition Process
from DAU’s FMS Systems Acquisition Job Support Tool for reference.
: FMS Systems acquisition planning should be conducted during a program’s acquisition strategy development and updated at each Acquisition Milestone per Title 10 and DoD Instruction 5000.02.
Step 0 -- Pre-Letter of Request (LOR)
: Specific FMS transactions are normally triggered by some sort of informal expression of interest by the prospective FMS Customer nation through the USG/DoD Security Cooperation community. As noted in our September 2018
DAU Blog on Step 0
, pre-LOR engagement is an art (not a science) which takes many shapes and forms. Notwithstanding how this informal dialog occurs, however, experience has shown that effective communication prior to LOR submission is essential to future success in the rest of the FMS process.
Step 1 – LOR Submission
: Once a prospective FMS Customer decides it is interested in acquiring a U.S. system through FMS, it submits a formal LOR through USG/DoD Security Cooperation channels for either Price and Availability (P&A) Data or a Letter of Offer and Acceptance (LOA).
Step 2A – P&A Data Development & Signature
: Once an LOR for P&A is validated by USG/DoD Security Cooperation personnel, the DoD acquisition community -- normally the system’s Program Management Office (PMO)/Integrated Product Team (IPT) – is tasked to develop a P&A Data response that contains an initial estimate of a system’s potential FMS performance, cost, and schedule requirements, including initial logistics support. After evaluating the P&A Data response, if the prospective FMS Customer decides to procure the system, it submits a second LOR for an LOA (Step 2B). (Note: requesting P&A Data is optional, not mandatory.)
Step 2B – LOA Development & Signature
: Once the LOR for an LOA is validated by USG/DoD Security Cooperation personnel, the DoD acquisition community is tasked to develop a draft LOA that contains all of the FMS performance, cost, and schedule details associated with acquiring and supporting the system subject to U.S. Government Technology Security and Foreign Disclosure (TSFD) and export control policies pertaining to the Customer. If the prospective FMS Customer decides to procure the system, they sign the LOA.
Step 3 – Contracting
: Unless there is an exportable version of the U.S. system approved for sale to the FMS Customer already available for delivery (which is rarely the case), DoD must initiate a new contracting process action to procure the number/systems and initial logistics support described in signed LOA. This requires release of a Request for Proposal (RFP) – which may be sole source or competitive depending on a couple of key variables – followed by evaluation, negotiation, and DoD contract award.
Step 4 – Contract Execution
: The prime contractor and its team of subcontractors and suppliers perform all efforts required to meet the terms and conditions of the DoD contract.
Step 5 – Delivery:
Upon DoD acceptance, the contractor delivers the FMS defense articles and services to the FMS customer nation as specified in the LOA, including the system and its initial logistics support (referred to by the DoD Security Cooperation community as the “Total Package Approach”).
FMS Best Practices – PEO-Level Perspective
As noted above, a PEO recently shared several FMS best practice approaches, techniques, and procedures used by their Program Managers (PMs) and Integrated Product Teams (IPTs) with DAU. They use these FMS best practices in various circumstances – depending on the nature of the specific program and level of FMS customer interest -- to optimize end-to-end FMS process results. To help place them in context, we have aligned their FMS best practices with the FMS Process Steps discussed in the preceding paragraph.
Invite FMS IPT personnel participate in PM staff meetings on a regular basis to maintain awareness of overall PM activities (modernization, logistics planning, new procurement actions, etc.) and leverage existing DoD Component efforts to combine FMS requirements with domestic requirements in contracting actions whenever feasible.
Harmonization of U.S. and existing FMS Customer investment in modernization efforts, Economic Order Quantity (EOQ) savings in production and logistics support for the U.S. and existing FMS Customers, and reduced Production Lead Time (PLT) for existing and potential FMS Customers.
Step 0 – Pre-LOR
Conduct Subject Matter Expert (SME) exchanges with the U.S. industry Original Equipment Manufacturer (OEM) on potential FMS Customer interest and engagement opportunities.
Conduct Pre-LOR definitization discussions with prospective FMS Customers to assist them in defining their requirements and drafting an understandable, actionable LOR.
Use initial ‘small dollar’ FMS Planning LOAs with prospective FMS Customers to assess and refine complex system acquisition requirements prior to submission of an actual ‘big dollar’ system procurement LOR.
Increased understanding of the breadth and depth of prospective FMS Customer requirements early in the process leads to the development and submission of high quality, actionable LORs. This sets the stage for timely and efficient PM/IPT development of P&A Data and/or LOA(s) – normally in consultation with U.S. industry -- that meet FMS Customer expectations.
Steps 1 & 2 – LOR-to-LOA Process
Develop and use “model” FMS P&A/LOAs as a basis for develop of new P&A/LOAs for new LORs that request systems, equipment, and/or services similar to previous P&A/LOAs.
Use existing related/relevant contracts as templates for Statement of Work/Performance Work Statement (SOW/PWS) generation for new LORs that request systems, equipment, and/or services similar to previous P&A/LOAs.
Arrange and conduct on-site Joint Visual Inspections and Site Surveys at prospective FMS Customer locations – which include PM, OEM, and IPT SME participation -- to establish a system/equipment baseline to assess and define future P&A/LOA development requirements.
Provide projected FMS requirements to other related PMs/IPTs, Depots, and Supply System Item Managers.
Using models and templates enables system/equipment PMs/IPTs to respond more quickly and accurately to LORs that contain FMS acquisition requirements similar to previously developed P&A/LOAs. Onsite inspections at prospective FMS Customer locations that involve the PM, IPT, and OEM provide a comprehensive foundation for development of accurate and responsible P&A/LOAs. Sharing information on projected FMS requirements with DoD logistics organizations leads to timely and accurate assessment and estimation of the Total Package Approach logistics support elements that should be included in system/equipment P&A/LOAs.
Step 3 – Contracting
Apply for and obtain Defense Security Cooperation Agency (DSCA) Special Defense Acquisition Fund (SDAF) – if a program’s circumstances justify SDAF use – to initiate the contracting process for “high demand, high probability of sale” FMS systems and equipment prior to receipt of LORs.
Use existing contracts (rather than establish new ones) whenever possible.
Use one contract to support multiple LOAs (rather than establish new ones for separate LOAs) whenever possible.
Request draft proposals from contractors (for directed source FMS procurements specified FMS Customer LORs) in anticipation of establishment of firm requirements in LOAs under development.
Use existing historical pricing from relevant contracts in support of negotiations for new or modified contracts whenever possible.
Improve overall contracting process communications through establishment arrangements such as:
FMS Customer Liaison Officers (LNOs) embedded in DoD Component FMS organizations in CONUS.
DoD Liaison Officers and FMS Program Managers co-located within FMS Customer organizations OCONUS.
Obtaining DSCA SDAF funding enables PMs/IPTs to initiate the contracting process for high demand FMS items prior to receipt of LORs, markedly increasing FMS delivery responsiveness. Requesting draft proposals, using existing historical pricing, and using existing contracts and single contracts to streamline the FMS contracting process – as needed and if appropriate -- saves time and effort as well as improves FMS delivery schedules. Establishing enhanced communication arrangements with FMS Customers through CONUS and OCONUS liaison officers improves FMS contracting process responsiveness, particularly in complex and dynamic FMS systems acquisition environments.
Steps 4 & 5 – Contract Execution and Delivery
Encourage and facilitate consistent, effective cross-domain PM/IPT communications within the PEO, with other related PEOs, and with the DoD Component International Program Organization (IPO) responsible for FMS to learn about and use FMS acquisition best practice lessons learned from other programs.
Establish communication paths within the PEO -- and with other PMs/IPTs, depots, and industry OEMs-- to maintain visibility of upcoming system configuration changes and other program developments.
Establish “Users Groups” on PEO systems with multiple FMS owners to share information on how the system is operating in the field in national and coalition environments, product improvement and sustainment plans, and potential future investment levels.
Effective internal PEO and DoD Component cross-domain communications provide PMs/IPTs with better situational awareness regarding FMS best practices and system/program developments, leading to enhanced FMS customer responsiveness and acquisition performance across the PEO’s portfolio. Establishing FMS Users Groups on systems with multiple FMS owners has proved very effective for this PEO – as well as other PEOs and PMs throughout the Department – since the information sharing that occurs in Users Groups shapes and influences future U.S. and FMS Customer investment in maintaining the system and improving its warfighting effectiveness for all users.
We’d like to thank the PEO that shared their FMS best practices with us and hope you find them useful as well. At a broader level, they illustrate three key principles regarding FMS acceleration that merit further consideration in any ongoing or planned FMS activities your organization may be pursuing:
Prudent allocation of PEO and PM-level FMS resources – including use of the FMS talent already available, as well as obtaining/providing the FMS Admin funding needed to employ other required government and industry personnel essential to P&A/LOA development – which supports early engagement with prospective FMS Customers and enables timely and efficient efforts by DoD personnel in the Pre-LOR through LOA aspects of the FMS process (Steps 0 – 2).
Thoughtful use of “parallel processing” techniques in the LOA development and Contracting aspects of the FMS process (Steps 2 – 3) which reduces time spent in these key steps, increases overall process efficiency, and speeds actual system/equipment deliveries to FMS Customers.
Systematic, effective communications and information sharing – both internally within DoD and externally with FMS Customers – which leads to coordination of future U.S. and FMS Customer sustainability and product investment cooperation which reduces costs while enhancing system performance in national and coalition operations for all system owners.
Based on DAU faculty interactions with DoD acquisition workforce members in the classroom, online, and in the workplace we know that many of you also have valuable ideas and suggestions on how to accelerate FMS. Please share them with us via the DAU.mil
International Community of Practice (ICOP) website
or e-mail them to
Until next time, Prof K.
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