WASHINGTON — America sold more than $55 billion in weapons abroad in fiscal 2019, but the man in charge of those efforts hopes to increase sales as he continues to tinker with the security cooperation system.
Security cooperation has long been a foreign policy tool in America’s pocket, but under the Trump administration, it “has been elevated to a tool of first resort for U.S. foreign policy,” Lt. Gen. Charles Hooper, the head of the Defense Security Cooperation Agency, said during a panel at the Association of the U.S. Army’s annual conference.
Since taking over at DSCA, Hooper has implemented a series of reforms aimed not only at speeding the process up, but shaving costs for potential buyers. He intends to keep that reform effort going in 2020. Here’s how:
Continue to cut surcharge costs. In June, DSCA dropped a surcharge on American defense goods sold abroad from 3.5 percent to 3.2 percent; later that year, the agency also cut a transportation administration fee. Both those charges are used to support DSCA operations, but some in the security cooperation process had argued the increased prices for customers would lead potential buyers to look to cheaper Russian or Chinese goods in the future.
Hooper said that in 2020, DSCA plans to also cut the contract administration surcharge — applied to each FMS case to pay for contract quality assurance, management and audits — from 1.2 percent to 1 percent.
“This will reduce the overall costs of FMS and could potentially save allies and partners 16.7 percent in CAS surcharges in this coming year,” Hooper said.
Make it easier for customers to get custom weapon systems. The FMS system is set up to help sell weapons that are identical to systems already in use by the U.S. military. It’s easier to move a package of Abrams tanks equipped with the same gear that multiple countries use than to push through a custom version with specific capabilities. But Hooper noted that partners are moving away from standard designs and are looking for systems “designed and tailored to meet their needs. Our system was not initially designed to process these types of systems, which increases time and cost in the U.S. response.”
To help deal with that, DSCA established an “interagency non-program of record community of interest,” which involves all the agencies that have a say in the process, to figure out ways to make moving custom systems more plausible. The goal is to have a new pathway for moving those capabilities by 2020, which Hooper says will “reduce the time it takes to review request for non-program of record systems, to facilitate industry ability to compete in this global market.”
Plan out commercial offsets. Many countries require offsets from industry for big foreign military sales. These offsets are essentially throw-in sweeteners for the buying country, put together from the industrial partner. In the past, these were often things like building a new library or school. But in the last two decades, some countries specifically requested high-end technologies or tech transfer to jump-start their domestic defense industries.
Because offsets are negotiated between the industrial partner and the customer nation, the Pentagon, which serves as the in-between for an FMS case, often finds out about offsets only at the end of the process. But with offsets becoming more technological, those now require more review time, and so a deal can slow down while the relevant agencies approve the deal.
Hooper hopes 2020 will see industry better inform DSCA of potential offsets early in the process so that last minute hangups can be avoided.
“We continue to encourage our industry partners to inform the U.S. of potential offset requirements early on so that we can begin the necessary technology security foreign disclosure and policy reviews as early as possible,” Hooper said.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.