Business groups recommend FMS reforms to DOD 'tiger team' as Biden overhauls arms controls

By Tony Bertuca / February 23, 2023

Amid the release of the Biden administration’s revised arms export policy, three leading defense business associations have sent recommendations to a special Pentagon "tiger team" charged with accelerating the U.S. foreign military sales process, especially for Taiwan, which senior military officials -- alarmed by Russia's invasion of Ukraine -- have said could be invaded by China in the coming years.

The recommendations, which were submitted to the Defense Department by the Aerospace Industries Association, the National Defense Industrial Association and the Professional Services Council, are based on the assertion that FMS should be used as a strategic tool to implement the National Defense Strategy to counter China and Russia.

David Norquist, a former deputy defense secretary who is now president and CEO of NDIA, said accelerating the FMS process, which typically takes 18 months for a sale, will be essential to the “great power competition” foreseen by the NDS.

“In great power competition, the U.S. has two strategic advantages -- our allies and partners and our innovative defense industrial base,” he said in a statement. “The proposed reforms to modernize our foreign military sales process are critical in order to increase interoperability and capacity of our allies and partners and to improve the transparency and predictability industry partners need to support the Department of Defense in fully realizing the benefits of this powerful foreign policy tool to support the National Defense Strategy.”

The release of the business groups’ recommendations coincides with the Biden administration’s release of a revised arms export policy that, in a departure from the Trump administration, seeks to emphasize human rights over the prioritization of commercial concerns.

The revised Conventional Arms Transfer Policy “makes it clear that under this administration, the United States will utilize a holistic approach to conventional arms transfers and adherence to our agreements on the use of U.S. origin defense equipment by our allies and partners, compliance with the law of armed conflict, and respect for human rights, and we will take appropriate measures in cases where we conclude that violations have taken place,” according to a State Department statement.

The policy was last updated in 2018 by the Trump administration, which touted the positive economic impact of U.S. arms sales abroad.

Dak Hardwick, AIA’s vice president of international affairs, told Inside Defense in an interview that his early read of the Biden administration’s new CAT policy when set beside industry’s FMS recommendations is that “these documents are complementary and not in conflict.”

In fact, he said, the new CAT policy has a “lot of language in there that is very consistent with many of the objectives that our industry identified as part of the report.”

The report the associations produced is based on the input of former U.S. government officials with “lived, shared experience” working under the current FMS process.

Key recommendations the business associations’ report focused on include areas like “accessible and transparent communication” and a “a strategic and creative FMS process.”

More specific recommendations include strengthening defense export financing through the expansion of DOD’s Special Defense Acquisition Fund. Doing so would allow access to financing for countries that may not be able to fund U.S. weapons purchases on their own.

The groups also urge the establishment of a senior DOD-industry advisory group focused on FMS.

“Notably, DOD -- the largest FMS supporting organizational infrastructure across the USG -- has no formal process to regularly solicit and receive industry input on FMS,” the report states.

Additionally, the report notes that the FMS process, and the DOD acquisition system in general, is under-resourced.

“Use FMS administrative funds to hire contracting officers dedicated to negotiating and awarding FMS contracts,” the report states. “Additional contracting staff could ameliorate the backlog of work on FMS contracts. Request additional resources if available FMS administrative funds are insufficient to meet the need.”

The report also recommends “a new and improved contracting process for FMS,” with additional flexibility to account for the risk international customers are willing to accept for earlier deliveries.

“This could include formalizing a non-Program of Record acquisition pathway specifically for FMS,” the report states.

The groups would also like to see the streamlined release of important defense technologies to key U.S. allies for potential purchase, creating a “fast lane” for countries like Australia, Canada and the United Kingdom.

The associations also recommend establishing a “clear escalatory process” to eliminate indefinite FMS policy reviews.

“FMS stakeholders, including industry, must be accountable for providing accurate and timely responses to the given requirements of an FMS case, including an initial policy and transfer review -- even if the answer to industry and the foreign partner is ‘not at this time’ or a denial,” the report states. “Failure to reach consensus at one level by a deadline should result in automatic elevation to the next level for decision.”

‘Tiger team’ at work for Taiwan

The DOD “tiger team” looking to reform the FMS process was established last summer.

Pentagon acquisition chief Bill LaPlante said last September that the team was being kept on a “short-term leash” by Defense Secretary Lloyd Austin and was working to “speed up all things with FMS and we’re focusing on Taiwan.”

Eric Fanning, a former Army secretary who is now president and CEO of AIA, said in a statement that Russia’s invasion of Ukraine highlights the need for FMS reforms.

“Ukraine underscores the effectiveness of international cooperation when the Department of Defense commits to using all tools at its disposal to support our allies and partners,” he said. “The foreign military sales system has the potential to be an incredibly effective tool for deterrence, but it operates like the Cold War-era system it is: slowly and inflexibly. Our recommendations will help the Pentagon build a more nimble, modern, and strategic foreign military sales system that will strengthen our alliances and partnerships and bolster national security.”

David Berteau, president and CEO of PSC, said in a statement that senior government officials need to think about FMS more strategically and as a tool of deterrence.

“For too long, FMS has focused on transactional processes, with too little attention to impact and results,” he said. “Ultimately, successful deterrence complicates the thinking of an adversary and reduces the risk of war. One of the top lessons from Ukraine is the importance of logistics. Demonstrated sustainment capability can dramatically increase deterrence, and implementing these recommendations will increase that capability and reduce the chances of conflict.”