DOD acquisition chief says companies should design systems with 'exportability' in mind

By Justin Doubleday  / April 25, 2018

The Pentagon's acquisition and sustainment chief says the U.S. government is going to step up its advocacy of defense exports under a new conventional arms transfer policy, but she believes companies can do more by designing their systems with "exportability" up front.

While Under Secretary of Defense for Acquisition and Sustainment Ellen Lord said she has yet to read the new policy unveiled last week after traveling for the past eight days, she thinks defense companies can improve how they design systems for potential international sales. 

"The challenge I really think here and the really important thing is if industry can design systems initially to be exportable, that's great," Lord told reporters following an April 24 event at the U.S. Chamber of Commerce in Washington.

Asked whether she's talking about sensitive technology often used in weapon systems and restricted from being sold to many countries, Lord said "absolutely," referring to how the inclusion of that technology often results in the systems being sold through the lengthy government-to-government process, as opposed via a direct commercial sale.

"There are often subsystems that have to go government to government," Lord said. "Anything they can do to make that more exportable I think is good for us."

The new policy makes "economic security" a key factor in considering arms sales and calls for U.S. government officials to advocate for the U.S. defense industry in their dealings with foreign officials. The White House wants to elevate the importance of creating American jobs and boost the U.S. defense industry as part of the arms sale process. In conjunction with the new export policy, the Trump administration also loosened restrictions on the international sale of U.S. unmanned aerial systems.

During the April 24 event, held to formally establish the Chamber’s new Defense and Aerospace Export Council, Peter Navarro, director of trade policy at the White House, said the U.S. government will soon begin discussing with industry ways to implement the new policy as part of a 60-day review.

"In the coming weeks, the departments of State, Defense and Commerce will be reaching out across American industry and civil society during the public comment period to build a deeper understanding of the issues involved and obstacles facing our exporters," Navarro said. "Whether there are internal barriers like unnecessary red tape or external barriers, like unfair offset requirements, this administration will be ready to tackle it."

Lockheed Martin, the National Defense Industrial Association and the Aerospace Industries Association all confirmed to Inside Defense they would take part in the review.

The Pentagon is trying to expedite defense exports by including options in new contracts for potential international sales, Lord said. Her acquisition organization, the Defense Security Cooperation Agency and the State Department also meet often to discuss where weapon sales are at in each region, according to Lord.

"We sit down to rack and stack them and prioritize them to make sure that we’re aligned with the Joint Staff, with policy, with State and we're selling things that we need to sell with the highest priority, as opposed to working on things that aren’t as critical," Lord said during the event.

Lord also tied the new export policy to concerns arising from a broader assessment of the U.S. industrial base triggered by President Trump’s executive order last year. She said the United States has an "alarming" dependency on China for resources like rare-earth minerals and energetics. The study, which includes an unclassified portion, is expected to be released May 15, Lord said.

"This is a problem for us as we move forward and again we need to partner ever more closely with everyone out there to make sure we get what we need and we have assurity of supply," Lord added.