DoD Kicks Off Fiscal Year With Streamlined Export Rules

October 5, 2014 - via US Department of Defense

WASHINGTON — While it remains much too early to declare a new day in Pentagon acquisition and export control circles, the turn of the building’s fiscal page to 2015 has brought with it several high-profile initiatives to begin to reform and streamline several long-stultified lines of effort.

Significantly, the Pentagon office in charge of leading the way in sales of US defense equipment to foreign governments unveiled a new strategy document on Oct. 1 aimed at making the foreign military sales (FMS) process more responsive to allied nations’ needs by creating teams that will work closely with regional partners.

The plan comes as the Pentagon’s top weapons buyer releases another “Better Buying Power” document calling for greater industry-Pentagon collaboration on research and development activities, while also integrating allies into the process to share some of the burden.

But one of the biggest initiatives in the Defense Security Cooperation Agency’s (DSCA’s) “Vision 2020” strategy is a legislative push on Capitol Hill to streamline some key provisions of the Arms Export Control Act, which allows the US government to sell equipment only to a single partner nation while banning transfer to a third country or otherwise “sharing” that asset.

In some ways, this restriction butts up against some recent NATO initiatives like “Smart Defense” that encourage the pooling of assets and the joint development of technologies among several nations. It also places some restrictions on other partnerships of allied nations that may be interested in pooling assets in the face of defense budget cuts or their own limited resources.

“Under our Export Control Act, we can’t do it like that,” Kidd Manville, deputy director of strategic planning and integration at DSCA, said in an interview. “We are looking at different ways of doing that while still complying with the Arms Export Control Act, but not doing it exactly the way NATO wants us to do while still satisfying their requirement.

“The problem we have right now is that defense articles are transferred on a bilateral basis,” he said, adding that the DSCA is still only “looking at possibilities” for reform. “There’s a lot of work to be done on that one.”

Speaking to a related issue during a breakfast meeting with reporters in Washington on Oct. 2, Danish Army Gen. Knud Bartels, chairman of NATO’s Defense Committee, insisted that the US and European defense industries could do more to ensure munitions can be used across military forces to fit on disparate alliance aircraft.

In order to do that, the allies would first have to ensure that “there is a maximum level of interoperability as to their products and a maximum cooperation and maximum sharing, which I do not always see from the very capable and very important military industry which is available in a number of nations.”

The logistics of making sure that multiple systems are interoperable is a challenge for governments and industry, and wouldn’t necessarily be settled simply by reforming equipment-sharing rules across the alliance. “The mechanism for buying things, that is a pure political decision-making process,” Bartels said. “It’s a matter of setting priorities. If the priority is to equip in the best way the armed forces of the alliance, I’m sure our political leaders will find the mechanisms which make it easy and straightforward to do it.”

Frank Kendall, undersecretary for acquisition, technology and logistics, struck a similar note when rolling out Better Buying Power 3.0, telling an industry audience on Sept. 16 that he wants to “stimulate industry to innovate.”

He said he wants “an industry that’s creative,” adding that the collaboration between government and industry would help in the global marketplace as well. “If industry’s building better products for us, they’re going to be able to sell those products in wider markets.”

Perhaps the largest structural change DSCA is making is in the development and structure of what it’s calling “integrated regional teams” that are working more closely than ever before with the Pentagon’s geographic combatant commanders to help understand and define the needs of partner nations, and to try to predict those needs.

“We’re going to have direct line of sight to [the combatant commanders], and be more focused on the combatant commands” Manville said. Each team will be led by an O-6 — captain or colonel — and “will be working very closely with the combatant commands, [DoD] policy, the Joint Staff, and State Department desk officers,” he added.

The teams will all be located at the DSCA’s Washington office, whereas before they had been spread out. “We’re going to be able [to bring] more of the agency to bear on any given problem much, much quicker than we had been able to before,” said Clayton Holt, a senior strategic analyst at DSCA.

All of these changes have been spurred on by “constrained budgets here in the US and abroad, greater competition and a trend toward international competition in sales, and greater demands on the part of the customer,” in pricing, quality and requirements Holt added.

“We had to be more responsive and provide our customers with a more responsive organization with more transparency, more visibility, so people could understand what’s happening,” he said.

The effort is being led by Vice Adm. Joseph Rixey, DSCA director.

During a panel discussion on security assistance programs in Washington on Sept. 16, Rixey said the traditional US approach for FMS cases has always been conservative. The walls it puts in place, he said, “don’t compete well with direct commercial offerings from international vendors. What this environment is telling us is that we must evolve.”

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