Lessons learned in FMS

By Col. Michael E. Sloane and Mr. Charles Meixner

Foreign military sales (FMS) are a team sport. Success requires a great deal of coordination and contributions from the Army acquisition enterprise and other Army-specific agencies that participate in the FMS process with partner nations, including the U.S. Army Security Assistance Command (USASAC), the U.S. Army Corps of Engineers, the U.S. Army Training and Doctrine Command and the U.S. Department of State, among others. FMS cases require the support of life-cycle management commands; research, development and engineering commands; and program executive offices (PEOs).

One of the primary reasons that FMS is a team sport, and a vigorous one at that, is that the process is far from elegant; it is complex and multifaceted, sometimes presenting questions with no easy answers. In some instances, the decision to sell U.S. military equipment is relatively straightforward, such as with close allies like many nations in Europe. With other nations, the decision-making process may have considerably more layers and nuances.

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FMS is a complex ‘team sport’ with a lot of players, and a vital means to help partner nations reach their security goals, as well as to help keep the U.S. Army’s industrial base warm and support program management goals and the principles of better buying power. PM SSL’s efforts in sales to many different countries have yielded useful insights in overcoming challenges.

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As the Project Manager for Soldier Sensors and Lasers (PM SSL) has learned, program management offices must be heavily involved. Contributing organizations work together to plan, program, budget and execute FMS cases with the same high degree of attention to detail and efficiency as other DOD procurement activities.

THERE WILL BE SURPRISES
Essentially, every request that PM SSL, assigned to PEO Soldier, gets for an FMS case is a surprise, but the surprises are ones that PM SSL has come to expect over 12 years of involvement in FMS. PM SSL has garnered considerable experience and gathered lessons learned in various aspects of FMS, including advance planning and detailed discussion, data disclosure, contracting approaches and follow-on supply issues.

All orders for FMS products come through USASAC, which works with the Office of the Deputy Assistant Secretary for Defense Exports and Cooperation (DASA(DE&C)). The DASA(DE&C), in concert with other organizations such as the Department of State, decides what the Army can sell and to whom. Then, the DASA(DE&C) works within the network of stakeholders to put together the sale, while the program management office works to integrate FMS efforts into its planning.

PM SSL’s first responsibility is to equip U.S. Soldiers with sensors, lasers and precision targeting devices to dominate the battlefield through improved lethality, mobility, situational awareness and survivability in all operational environments. PEO Soldier and the DASA(DE&C) work hard to get the FMS customer the best possible equipment, given current export regulations and limitations on advanced technology approved by DOD. PM SSL works with industry partners and relies on the Night Vision and Electronic Sensors Directorate (NVESD) of the U.S. Army Communications-Electronics Research, Development and Engineering Center to develop and improve advanced electro-optical, night vision and sensor devices. Thus the Army can be ready to respond when necessary to supply needed items at the right time to U.S. Soldiers and partner nations.

The mission of supporting national FMS goals is work that PM SSL does while it is performing its core mission. As of August 2015, PM SSL was supporting more than 35 FMS cases. These efforts involve the sale of more than 11,000 night vision goggles (NVGs) and image intensifiers, valued at more than $10 million, to 17 different countries.

LESSONS LEARNED
PM SSL’s FMS efforts have yielded several useful insights for overcoming challenges to capitalizing on FMS opportunities while protecting the flow of equipment to U.S. Soldiers. Among the most important lessons learned is the necessity for program managers to understand early on the factors involved in supporting FMS goals. For instance, given that PM SSL cannot predict when an FMS case might arise nor what it might look like except in the most general terms, it’s important to coordinate up front with industry to be prepared with measures that can mitigate risks to program cost, schedule, sustainment and quality assurance in supporting U.S. Soldiers. Successful program managers understand that FMS success resides largely with the strength of the professionals within their office, coupled with strong, continuous relationships with other U.S. government organizations supporting FMS cases.

Accurate forecasting and coordination of potential and emerging FMS requirements can dramatically improve the chances for FMS success by allowing all stakeholders to plan and budget for sufficient financial and human resources. Advance planning and detailed discussions between the United States and a purchasing country also play a key role in the ultimate success or failure of an arms transfer program. The importance of conducting these activities before consummating a sale increases proportionately with the complexity and sensitivity of the system involved. Before finalizing selection decisions, country requirements should be well-defined and the ability by DOD and a contractor to satisfy those needs clearly understood. Thus, a purchasing country can make a fully informed decision and the United States will be able to validate that the country’s requirements are being fully met. (See “The Requirements Question” on Page 150.)

A potentially problematic aspect of FMS is data disclosure. What technical data will or will not be released, and at what cost, should be clearly defined up front, not in the middle of the FMS case. The purchasing country may firmly believe that pertinent sections of the contract ensure the transfer of technical data needed to properly absorb and independently maintain the product being sold to them, whereas the documents do not, in fact, guarantee that degree of support. This can become the topic of high-level discussions and recriminations, making data disclosure a potentially worrisome issue. Many such concerns can be avoided in advance of the sale, however, with a thorough examination of the disclosure policy affecting the product technology.

Another area of potential misunderstanding is that, after delivery of a product or weapon system, many countries that possess the requisite skills and supporting logistics infrastructure find it advantageous to procure follow-on supply directly from U.S. contractors. However, the purchase of a major weapon system with all necessary support elements takes a degree of program management experience and system integration expertise that the purchasing country may not possess. That depends on several factors, including the sophistication and sensitivity of the weapon system, the system’s maturity and configuration stability and the degree to which the U.S. government owns the system’s components.

SUCCESSFUL STRATEGIES
PM SSL has developed the following specific approaches to help bring FMS cases to completion:

1.    Control cost with consolidated procurements and quantity price points. Providing cost-effective contracts to FMS customers using the PM’s base contracts can be complex. Equipping requirements for U.S. forces are most often authorized far in advance of FMS requests. Adding to the complexity, FMS quantities can be less certain than equipping projections for DOD, which tends to lead to requirements for separate delivery orders. PM SSL has successfully combined several limited-quantity procurements from various requirements into single-vendor delivery orders to secure NVGs for coalition partners at affordable costs. Additionally, the PM establishes contractual volume-based price points to achieve cost advantages for the increased quantities associated with consolidated orders. This supports the Better Buying Power (BBP) 3.0 focus on promoting effective competition.

2.     Support FMS schedule requirements using the Special Defense Acquisition Fund (SDAF). Another focus area for the program management office is production lead time. It’s often not enough to simply wait for a cost-effective order quantity, as this may not align with FMS delivery requirements. One way to address this potential issue is to use the Defense Security Cooperation Agency’s SDAF, which provides a way to finance the acquisition of defense articles in anticipation of their sale and transfer, resulting in quicker responses to FMS requests. SDAF is a revolving fund used to purchase and store high-demand items that typically have a long production lead time. Ultimately, FMS case money is used to pay for the items, which keeps the SDAF functioning. In other words, SDAF money enables the procurement of systems in advance of FMS requests. This proactive step supports the BBP 3.0 focus on incentivizing productivity in industry and government.

3.     Capitalize on FMS opportunities to preserve critical industrial capabilities. During recent global conflicts, the U.S. military’s NVGs have proven themselves as combat multipliers; therefore, demand has increased significantly from the United States and foreign nations. After years of peak production, however, U.S. military demand for new NVGs has begun to slow with the scaling down of operations in Southwest Asia and the resulting reduction in requirements. By keeping industrial production lines open and sustaining critical manufacturing skills through FMS, the United States can preserve a knowledgeable workforce and reduce the cost to taxpayers of having to restart cold production lines later in response to an increase in demand. This also supports BBP 3.0’s focus on incentivizing productivity in industry and government.

4.     Plan for FMS after U.S. production, manufacturing and quality assurance are complete. FMS procurements are to receive the same high level of quality control that U.S. products receive, and program managers must conduct FMS product verification procedures using the same production testing as for equipment fielded to U.S. forces. However, FMS requirements may arise after production for U.S. equipping is complete, which can present significant challenges of production and quality testing. For products likely to become FMS items of interest, program managers should assess, plan and prepare as best as possible to preserve or restart manufacturing capabilities and quality testing.

This process may be complicated by potential design changes made in line with export controls on system capabilities, and program managers should remain alert for such changes. Keeping other U.S. government shareholders informed as production and test capacity and their related resources change is vital to ensure that expectations are consistent with current and forecast capabilities. This forward-looking approach supports the BBP 3.0 focus on improving tradecraft in acquisition services.

CONCLUSION
From a program manager’s perspective, succeeding at FMS takes an enterprise of the right people and skills, a flexible industry, proper oversight and strict cost management. Program management offices with long-term vision identify risks early to ensure that partner nations receive U.S.-developed technology and equipment at an affordable cost, on schedule and within performance and quality assurance guidelines.

In its FMS endeavors, PM SSL achieved success by combining limited-quantity procurements to establish better price points based on larger total unit quantities, in addition to using a variety of funding streams, which together can result in more rapid responses to FMS requests. Additionally, PM SSL has maintained productive relationships with U.S. government agencies, teaming on FMS cases for their products and with their industrial base partners.

Peacetime military engagement has become a key component of U.S. defense strategy to shape the international environment in ways that will favor U.S. interests. FMS achieves several important U.S. goals by creating and reinforcing international partnerships and building strong and capable allies to meet the global challenges of an uncertain and complex security environment.

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For more information, go to the PEO Soldier websites www.peosoldier.army.mil and http://www.peosoldier.army.mil/portfolio/#1; DASA(DE&C)’s website, https://asc.army.mil/web/tag/dasa-dec/; USASAC’s website, http://www.army.mil/info/organization/usasac/; and DSCA’s website, http://www.dsca.mil/.

COL. MICHAEL E. SLOANE is the PM SSL. He holds an MBA from Webster University, an M.S. in national resource strategy from the Industrial College of the Armed Forces and a B.S. in business administration from Columbus State University. He is Level III certified in program management and has completed the Defense Acquisition University’s Senior Acquisition Course. He is a member of the Army Acquisition Corps.

MR. CHARLES MEIXNER was until recently a security assistance specialist in the Policy, Strategy and Resources Directorate of DASA(DE&C). A retired Navy officer with an engineering background, Meixner has 25 years’ experience in international affairs and security cooperation with the Air Force and the Army. He holds an M.S. in information systems from Strayer University and a B.S. in industrial studies from Moorhead State University.

CONTRIBUTORS:
Alison Vuille, PM SSL director for quality-test; Wayde W. Thomka, PM SSL operations and technology management director; and Erik Uribe, international programs lead for PEO Soldier.

This article was originally published in the October – December 2015 issue of Army AL&T magazine.

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