DSCA director pledges continued FMS reform, signaling lessons learned from global crises

By Georgina DiNardo  / October 26, 2023

The director of the Defense Security Cooperation Agency spoke yesterday about Pentagon and State Department efforts to reform and streamline the foreign military sales process, detailing how work is ongoing to follow new “tiger team” recommendations and how they might impact the war in Ukraine and the future of allyships like AUKUS.

DSCA Director James Hursch, speaking at the annual Common Defense Conference held in Arlington, VA, discussed the “six pressure point recommendations” that the Foreign Military Sales Tiger Team created and released in June.

“The first is sort of how do we help allies and partners develop and figure out the requirements for what capabilities they need,” Hursch said. “So, our more advanced partners and allies, such as several in this room, could figure out pretty much what they need with their own processes, but what we then need to help them do is figure out how to get that request correctly in a way that military departments can action it into our processes.”

Hursch said an important step forward was the creation of the Defense Security Cooperation Service, which means that DSCA will assume responsibility for education and training security cooperation officers in embassies around the world.

Hursch mentioned that they were also setting up a “small civilian security cooperation service” to increase what the military officers in the Security Cooperation Organization can do.

Touching on another recommendation, he said it is important for DSCA to know what goes on in DOD’s Technology and Foreign Disclosure processes.

“There is a conventional arms transfer policy line of work on thinking about how to do better on exportability and TSFD,” Hursch said. “We are hopeful that we will make some progress on that in the near term.”

Hursch said TSFD processes, from the exception to national disclosure policy, exist for good reason and that it’s vital to ensure these processes are as transparent and predictable as possible.

“We are also looking at a very serious discussion about non-programs of record,” he said. “Many of our most advanced partners in particular, don’t want to buy just from the U.S. catalogue of equipment that is available, they don’t just want the things that the U.S. military is buying for itself, they may want things that have slightly different capabilities, maybe they aren’t quite as exquisite, or things that have special characteristics that are bespoke for circumstances they are in abroad.”

Hursch said DSCA doesn’t have a solution for this problem yet, but is working on addressing it, stressing that they don’t want to create a program management office for a program DOD did not select.

“We move onto the contracting part of the process and one of the things about foreign military sales is you get all the benefits and all the costs of the U.S. acquisition process,” he said.

Hursch said that officials in the under secretary for sustainment and acquisitions office are trying to make the acquisition process “more efficient and reactive over time” by questioning how often the United States lets contracts for major weapons systems and what to do if allies and partners miss that contracting date.

“One of the biggest pieces of our infamous Tiger Team work was realizing we are in a situation, as we’ve stated several times today, where our industrial capacity is really maxed out in a way almost,” he said. “The production lead times to the delivery of items has gotten longer and longer and that’s partly because of all the major contingencies we are dealing with around the world today, the need to replenish our own stocks from things that we’ve drawn down for Ukraine and the demand levels.”

To emphasis this point, he highlighted total foreign military sales from 2022, which reached $50 billion, saying it was a “considerable increase” from $35 billion in 2021. Hursch said that while he doesn’t currently know what this year’s sales will total, he expects them to reflect “continued solid growth.”

Hursch also said the U.S. defense industrial base has maxed out its capability to surge in areas, adding that in many spaces shareholders have pledged to do more and increase production.

“But the next step, the hardest step, is to invest in a new plant,” he said. “And maybe some of that new plant happens through international cooperation with our partners overseas. We have discussions like that going on with Australia and some of our other partners, both in the Indo-Pacific and elsewhere around the world.”

Hursch said there will be “continued work, continued processes and improvement” in FMS reform in the coming months and years.

“One of the final things we did is to try to figure out how to avoid this FMS reform effort falling into the same place as many of its previous ones have,” he said. “There have been 15 FMS reform efforts in the last 20 years so that means that essentially we’ve almost been doing continuous process and improvement anyways, but the question is can we actually carry any of those reforms through to implementation.”

Security cooperation takes center stage

Patrick Mason, deputy assistant secretary of the Army for defense exports and cooperation, said the Tiger Team’s findings have driven the service to focus more on its weapons sales work.

“From an Army perspective, as we looked out of the findings that came out of the Tiger Team, approximately 85, two of those which were assigned down to the Army, just really caused us to take a holistic look at the way we execute foreign military sales and the way that we are organized as well,” he said.

Mason said outside of FMS, the Army has seen the most notable growth from the arms cooperation side of the house, stating that they’ve increased their work in that area through a tech operations group that helps them with agreements, understanding international cooperation and works with American Nuclear Society colleagues.

Hursch also said the DSCA has made large strides expanding FMS financing options.

“We have made some pretty dramatic improvements in this area after years and years and years of industry and customers asking us to do better,” he said.

Hursch said that new competitive financing will allow allies and partners to finance deals they could previously not undertake.

“We’ve also just put out something called BLOC -- Bank Line of Credit -- which actually allows certain allies to spread their payment schedule out over a much longer period of time if they can get a bank to help them out,” Hursch said.

All of this comes at a time when the Defense Department is expanding its focus on working with foreign allies.

Steven Ruehl, director of policy and programs and the deputy under secretary of the Air Force for international affairs, said the United States will provide a “total package approach” to FMS, something some other countries might not offer, highlighting the importance of small programs as well as big programs.

“Everyone recognizes that a weapons delivery from the People’s Republic of China or from Russia doesn’t come with the sustainment and logistics capability that we encourage our partners to take advantage of for a number of years after they buy any equipment,” he said. “Nor does it come with training that allows our interoperability at the operational level to be so successful and take advantage of those partnerships with our allies. So, I think the total package approach is a significant reason why our partners would come to the United States.”

The panel today cited AUKUS, the trilateral teaming of the United States, U.K. and Australia to strengthen industrial capacities in the Indo-Pacific, as a key example of what partnering with other countries can do.

“This represents a generational opportunity for the U.S. to enhance capabilities, improve interoperability, strengthen integrated deterrence and help promote and maintain a free and open Indo-Pacific region,” Hursch said.

Meanwhile, he said, DSCA is learning a lot from Ukraine and Israel about the impact of maximum government involvement related to security cooperation.

“There are a couple of things we’ve learned from Ukraine that are important for the way we relate to the defense industry,” Hursch said. “It’s the example of maximum effect produced by security cooperation efforts which utilize a whole government approach.”

Security cooperation in Ukraine, Israel, and the Indo-Pacific, he said, “is perhaps the principal tool that is currently being used to implement our national defense strategy.”

Hursch said the war in Ukraine has opened DOD’s eyes to sustainability challenges that the U.S. industrial base might face during a potential future conflict.

“The Ukraine crises has also illuminated that a peacetime defense industrial base with procurement cycles that extend across several years is not necessarily adequate for near term contingency response or protract in conflict,” he said.

Hursch noted that the challenge is made even harder when one considers the fact that many of the closest allies and partners of the United States would also depend on the U.S. industrial base during future crises.

“Finding unique approaches that consider market forces and shareholders while at the same time building the capacity necessary to achieve American strategic aims embodied within the national defense strategy, that’s what’s crucial,” he said.