DOD Outlines Steps to Speed up FMS Program; Industry Asks for Defense Export Modernization

The Department of Defense recently released a new set of recommendations designed to speed up military goods exports under its Foreign Military Sales program, an initiative long requested by defense companies. DOD said the recommendations highlight “key FMS pressure points” and are aimed at “breaking historical inefficiencies in the United States' transfer of defense articles and services to foreign allies and partners.”

The recommendations, ordered by Defense Secretary Lloyd Austin, include one that will direct the Pentagon to “review and update relevant policies” and better “empower accountable officials to improve the efficiency of the review and release of technology” to U.S. trading partners. Another aims to improve DOD’s “understanding” of ally defense requirements, which will help “reduce delays during the FMS case lifecycle.” The department said it will “change the way it organizes, trains, and equips for security cooperation, including by establishing a Defense Security Cooperation Service on par with the Defense Attache Service.”

Other recommendations will establish contract award standards and metrics to accelerate “award timelines,” expand the U.S. defense industrial base capacity by introducing measures to reduce production timelines and more.

The recommendations come several months after the State Department released its long-awaited revised arms transfer policies (see 2111040056) and days after several major defense trade associations urged the administration to modernize the FMS program. In a report this month, the Aerospace Industries Association (AIA), the National Defense Industrial Association (NDIA) and the Professional Services Council (PSC) outlined recommendations to “strengthen defense trade leadership,” streamline FMS authorities, simplify export authorizations and more.

One recommendation asks the State Department to better “optimize” its export “licensing talent” within the Directorate of Defense Trade Controls. The groups said DDTC is “continually hampered by staffing challenges with the current workforce down from optimal levels,” adding that the agency should outsource or hire more officers to “handle routine license business.” It can also modernize its process for reviewing license applications to allow officers to “focus on requests most pertinent to foreign policy and national security.”

The groups also asked the government to strengthen authorities for dual-use items initially sold through an FMS. When dual-use items traditionally controlled for export under the Commerce Department’s Export Administration Regulations are added to a Letter of Offer and Acceptance (LOA) under an FMS case, those items become subject to the Arms Export Control Act, the associations said, which “creates several challenges and barriers for industry to support the partner when fast-paced activities, such as repair and replacement, must be executed outside of government-to-government channels.” Those items “are captured under process constraints given the original modality of transfer yet fall under commercial trade regulations.”

The groups suggested “strengthening authorities that make dual use items, even if transferred initially under FMS, eligible for more authorization options,” including the State Department’s open general license pilot program (see 2303280034). This will “reduce process burden on the government, industry, and allies and partners.”

The groups also said the State Department can make its export review procedures more predictable, adding that “not all government licensing officers apply uniform practices in evaluating the applications.” The agency should create new guidelines for licensing officers that are “understandable, if not entirely predictable, but provides greater consistency while also allowing flexibility for DDTC to maneuver when policy is in flux,” including in case-by-case licenses reviews.

The report offers a range of other recommendations, including one that suggests DDTC be led by a career civil servant because of the “technical expertise required” to do the job; another that could create timelines to eliminate “indefinite processing of export authorization requests”; a recommendation for the State Department to prioritize regular reviews of the U.S. Munitions List; and another to “revamp” how the agency handles classified export authorizations.

The “decades-old” FMS system “slows down the process to the detriment of our national security and that of our allies and partners,” said Eric Fanning, AIA president and CEO. “We can and must modernize. Business as usual is unworkable in the current threat environment.”