Washington ― Over the past six fiscal years foreign military sale waivers for nonrecurring costs okayed by the Department of Defense totaled nearly $16 billion, according to a GAO report released Jan. 31.
Although the United States sold $32.02 billion worth of weapons through the FMS bureaucracy last year, it is no secret that the process is riddled with inefficiencies. One area where these inefficiencies are most apparent is the waiver review process for nonrecurring costs.
Under the Arms Export Control Act, DoD is required to recover nonrecurring costs (like one-time program expenditures for production testing lines) from foreign buyers. However, these costs can be waived if the sale: 1) would standardize U.S. military equipment with NATO members and select U.S. allies, 2) would result in cost savings for the U.S. government, or 3) would be lost without the granting of a waiver. Other factors like U.S. foreign policy objectives and national security benefits (such as ally interoperability and support for the U.S. industrial base) are also calculated into the waiver review decision-making process.
While the Defense Security Cooperation Agency has final approval authority, the waiver is reviewed by up to 12 different offices in the Defense and State departments.
Not only does this create inefficiencies, like requiring 11 electronic signatures to confirm that a foreign buyer is in fact one of the 34 countries eligible for an equipment standardization waiver, it also makes tracking waiver data a nightmare.
Currently, the Defense Security Assistance Management System that tracks FMS transactions does not track data on waivers or any actual costs that are ultimately waived for foreign buyers, according to the GAO. While the new system being developed to monitor FMS has a requirement to incorporate nonrecurring cost data, it is unclear if the system will be automated to report on waived costs.
Also, the review process is not dependent on the value of the waiver. The GAO found that a $12,000 waiver reviewed by the Air Force and DSCA took about the same amount of time to process as a $337 million waiver reviewed by the Army and DSCA.
The current administration has made streamlining technology acquisition a key priority in the recently published National Defense Strategy. “The department is over-optimized for exceptional performance at the expense of providing timely decisions, policies and capabilities to the warfighter. Our response will be to prioritize speed of delivery, continuous adaptation and frequent modular updates,” the strategy reads.
Ellen Lord, undersecretary for defense acquisition and sustainment, has made FMS reform a key focus. On Dec. 6, she testified before the Senate Armed Services Committee that her department was working on “pre-positioning production contracts to include options for yet-to-be-developed FMS requirements. In other words, in the initial contracts, we have the language, so we can almost fill in the blank for FMS sales. Again, pre-thinking this is going to reduce the timeline and allow us to be very, very responsive to international customers.”
Daniel Cebul is an editorial fellow and general assignments writer for Defense News, C4ISRNET, Fifth Domain and Federal Times.