International Acquisition and Exportability (IA&E) Elements March 2017 Frank D. Kenlon Professor of International Acquisition (Intermittent) Defense Systems Management College International Dept [email protected], (410) 610-5040 International Acquisition & Exportability (IA&E) New term used in DoDI 5000.02 International Cooperative Programs Sales & Transfers Defense Exportability Technology Security & Foreign Disclosure Integration International Contracting 2 International Acquisition/ Security Cooperation Mechanisms Mechanism Security Assistance International Armaments Cooperation Direct Commercial Sales (DCS)
Requirement Foreign Customer Mutually Determined Foreign Customer DoD Determined Relationship Buyer-Seller Partner Buyer-Seller Provider-Receiver Form of Agreement Foreign Military Sales (FMS) Letter of Offer and Acceptance (LOA) International Cooperative Program (ICP) Agreement Export License & Industry Contract(s)
Psuedo-LOA Funding Foreign Customer Equitably Shared Foreign Customer DoD Program Management DoD Implementing Agency (IA) Joint Foreign Customer DoD IA Contract Privity DoD IA & Industry Partner Nations & Industry Foreign Purchaser & US Industry DoD IA & Industry Implemented by different organizations
under various laws and procedures Building Partner Capacity (BPC) 3 Key Legislation Title 22 Legislation Arms Export Control Act (AECA) Foreign Military Sales (FMS) Direct Commercial Sales (DCS) Cooperative Programs Foreign Assistance Act (FAA) Grant Aid International Military Education and Training (IMET) Excess Defense Articles (EDA) Title 10 Legislation Building Partner Capacity (BPC) Cooperative RDT&E Acquisition and Cross Servicing Agreements (ACSAs) 4 Strategic Guidance National Security Strategy Strengthen alliances to defeat global terrorism Work with others to defuse regional conflicts Develop agenda for cooperative action with other centers of global power DoS/USAID Strategic Plan Counterterrorism Reduce/Eliminate WMD Promote conflict prevention &
resolution Conduct security cooperation & security sector reform National Military Strategy Support national efforts to address complex security challenges Deepen security relations with our allies and create opportunities for new partnerships Prepare for an increasingly dynamic and uncertain future National Defense Strategy Shape the choices of key states Strengthen & expand alliances and partnerships Secure U.S. strategic access & retain freedom of actions Strategic Guidance for DoD Challenging global security environment Delicate balance between available resources and security needs Maintain broad/versatile capability portfolio 5 OSD Oversight Secretary Secretaryof ofDefense
Defense Deputy DeputySecretary SecretaryofofDefense Defense Under UnderSecretary Secretary (Policy) (Policy) Defense DefenseSecurity Security Cooperation CooperationAgency Agency (DSCA) (DSCA) Under UnderSecretary Secretary (Acquisition, (Acquisition,Technology Technology and Logistics) and Logistics) Defense DefenseTechnology Technology Security
Administration Security Administration (DTSA) (DTSA) Security Assistance Building Partner Capacity Technology Security Director DirectorInternational International Cooperation Cooperation(AT&L (AT&LIC) IC) International Armaments Cooperation 6 TSFD and Export Control Basics Fundamental Security Considerations Access + Protection Release Conditions Not transfer or use for other purposes without U.S. consent Provide substantially the same degree of protection as U.S. Type of USG/DoD Authorizations TSFD
Export Foreign Visits 7 USG/DoD TSFD Authorizations Internal MILDEP processes Four primary DoD processes Eight specialized DoD processes All running independently under leadership of different offices Required for FMS and cooperative programs; prerequisites to Export License approval for DCS 8 Org.-specific various Few documented processes Interagency process Speci Speci alize alize dd Speci Speci alize alize dd Speci Speci alize
alize dd DTS DTS AA Speci Speci alize alize dd Polic Polic yy D/INS /INS MTCR MTCRDSC DSC SAP COMSEC AT AT LO/CLO LO/CLO NDP NDP SAP COMSEC Speci Speci alize alize dd DoD Lead: Various USD
USD (I) (I) AT& AT& LL ++ Polic Polic yy Speci Speci alize alize dd MILDEP Process Speci Speci alize alize dd DoD DoD CIO CIO Other DoD Processes DoD DoD CIO CIO Speci
Speci alize alize dd SAP SAP CO CO MILDEP-specific various No No singl singl ee proc proc ess ess NGA NGA Prim Prim ary ary NSA NSA & & DoD DoD CIO
CIO Prim Prim ary ary AT& AT& LL Prim Prim ary ary AT& AT& LL Prim Prim ary ary Polic Polic yy MILDEP Processes Non Non ee USG/DoD TSFD Processes DoD Lead: Various
9 TSFD Oversight Arms Transfer and Technology Release (ATTR) Senior Steering Group (SSG) established in DoDD 5111.21: Overarching DoD authority to ensure clear senior-level direction Serves as appeals board and mediation body USD(P) & USD(AT&L) co-chairs with interagency participation TSFD Office (TSFDO) also established in DoDD 5111.21: ATTR SSG Executive Secretariat and assesses/recommends changes to policies Develops/implements procedures and checklists, coordinates documentation and policy, conducts outreach 10 Defense Exportability Headwaters Non-Materiel Non-Materiel Solutions Solutions DOTMLPF-P Procurement Procurement or or Modification Modification JCIDS Guidance Additional Additional Production Production
Or Or Modification Modification Materiel Materiel Solutions Solutions Cooperative Cooperative Development Development Program Program New New DoD DoD Joint Joint Program Program New New DoD DoD Component Component Program Program Joint Staff, CoCOMs & Services Mil-to-Mil engagement with Allies & Friends What does DoD want to sell Or Transfer
In the Future? 11 Defense Exportability Dilemma Provide required capabilities quickly to allies and friends Protect the crown jewels of U.S. defense technology How How can can the the USG/DOD USG/DOD best best balance balance these these two two competing competing demands? demands? Where Where does does the the money money come come from from needed needed accomplish accomplish these these goals?
goals? 12 How Many Configurations? Few Simpler design and test Simpler production and logistics Easier upgrades More affordable Many Greater customer choice Treats countries differently Tailored logistics and upgrades More expensive DoD and partner/customer nations must compromise to achieve optimal outcomes for all (easy to say, hard to do) 13 Defense Exportability Features (DEF) Pilot Program FY11 NDAA directed SECDEF to carry out a pilot program to develop and incorporate technology protection features in a designated system during the R&D phase of such system. Program Scope/Status Identify MDAPs for which there is significant anticipated export demand and whose technical aspects are amenable to DEF Pilot program to provide funding to evaluate exportability and facilitate planning for, design, and incorporation of exportability features during RDT&E AT&L selects candidate programs from MILDEP nominations FY12 NDAA change Industry to share at least half the cost of developing and implementing program
protection features FY14 NDAA extended pilot program through October 2020 Defense Exportability is Part of BBP 2.0 14 Defense Exportability Activities IOC A Technology Maturation & Risk Reduction. Materiel Solution Analysis Materiel Development Decision ICD ICD C B Engineering & Manufacturing Development LRIP Sustainment FRP DRFPRD
Operations & Support Decision CDD-V Draft CDD CDD PDR CDR CPD Production & Deployment FOC Disposal Activities Require MDA Approval Exportability Assessment Exportability Feasibility Studies Projected sales Technology complexity Conducted with program
contractor Included in TMRR contract Funded by program or DEF PE Industry provides 50% Exportable Designs Funded by program, cooperative program or customer, or industry (or combination) May be multiple configurations Exportable Version Production Funded by customer May be multiple configurations Exportable Version Depot & Spares Funded by customer 15 Backup Charts 16
Security Cooperation All DoD interactions with foreign defense establishments to build defense relationships that promote specific US security interests, develop allied and friendly military capabilities for selfdefense and multinational operations, and provide US forces with peacetime and contingency access to a host nation. Security Cooperation is a DoD Term (Joint Pub 1-02) 17 Security Cooperation Elements Elements that involve defense acquisition Combined Exercises Intl Armaments Cooperation Equipment Sales & Financing Defense Contacts & Familiarization Humanitarian Efforts & Civic Assistance Support to Operations Intl Training & Education 18 Benefits
Economies of Scale FMS Production Operations & Support DCS Maintain hot production base Share sustaining engineering costs Share production line shutdown costs Share RDT&E costs Share production non-recurring costs ICP 19 Security Assistance Programs Security Assistance is a State Department Program Program Administration Responsibilities Department of Defense Foreign Military Sales (FMS) Foreign Military Financing Program (FMFP) Intl Military Education & Training (IMET) Foreign Military Construction Services (FMCS) Leases Drawdowns Excess Defense Articles (EDA)
Department of State Peacekeeping Operations Intl Narcotics Control & Law Enforcement Nonproliferation, Antiterrorism, Demining, and Related (NADR) Direct Commercial Sales (DCS) US Agency for Intl Development Economic Support Fund (ESF) 20 Foreign Military Sales (FMS) LOR q Re Letter of Request LOA Letter of Offer and Acceptance Foreign Government io t i ui s Co ntr n
From Stock act U.S. Government Sale of U.S. defense equipment/services by U.S. Government Buyer-seller relationship Foreign Funds (or U.S. grants/loans) with administrative surcharge Conducted under State Department Title 22 authority Services, Information, or New Production 21 Billions Foreign Military Sales Trends $80 $69.10 $70 Total Sales $60 $60.80 FMS Sales (National Funds) $50
FY14 22 The Scale of FMS FMS and Service Procurement: 5 Year Average Average annual procurement budget over last 5 years (FY09-13): $41.6 Billion $39.7 Billion $37.5 Billion $32.4 Billion USAF FMS U.S. Navy U.S. Army C USM #1. #2. #3 #4 #5 $8.4 Billion USMC If we remove the FY12 Saudi Arabia F-15 sale and recalculate: $41.6 Billion $37.5 Billion $33.7 Billion $32.4 Billion $8.4 Billion USAF U.S. Navy FMS
U.S. Army USMC C USM #1. #2 #3 #4 #5 23 International Armaments Cooperation (IAC) Cooperative research, development, and acquisition projects and programs Enabling Programs Personnel exchange (ESEP & APEP) RDT&E Information Exchange Program (IEP) International Cooperative R&D (ICR&D) program Coalition Warfare Program (CWP) Foreign Comparative Testing Program (FCT) International Cooperative Programs (ICPs) 24 International Cooperative Program International Agreement Foreign Government(s) U.S. Government
Acquisition or technology project in any Defense Acquisition Management System phase Partnering relationship Jointly managed Costs, benefits, risks shared equitably Work C on U.S. and/or Foreign Government Activity U.S. and/or Foreign Industry trac t Service, Information, or New Production 25 Acquisition Strategy Program management is responsible for integrating international acquisition and exportability considerations into the programs Acquisition Strategy at each major milestone or decision point. Program management will consider the potential demand and likelihood of cooperative development or production, Direct Commercial Sales, or Foreign Military Sales early in the acquisition planning process; and, where appropriate, program managers will pursue cooperative opportunities and international involvement throughout the acquisition life cycle to enhance international cooperation and improve interoperability in accordance with DoD Instruction 2010.06.
Interim DoDI 5000.02 (Enclosure 2, paragraph 10) 26 Allied Interoperability Equipment procured for U.S. forces employed in NATO, other allied, and coalition operations must be standardized or at least interoperable with equipment of allies and coalition partners DoD complies with U.S.-ratified International Standardization Agreements to maximum extent feasible, subject to systems engineering tradeoffs Program Managers to pursue opportunities throughout the acquisition life cycle that enhance international cooperation and improve interoperability DoDI 2010.06, Materiel Interoperability and Standardization with Allies and Coalition Partners 27 Direct Commercial Sales (DCS) Sale of defense articles, services, or training made or provided by U.S. defense industry to a foreign entity Not administered by DoD and do not involve a government-to-government agreement Foreign entity contracts directly with U.S. company USG control procedure is accomplished through licensing 28 Direct Commercial Sales (DCS) $ Contract Foreign Entity U.S. Company
Foreign entity purchases U.S. defense equipment/services from U.S. company U.S. Government control through licensing Department of State for military items Department of Commerce for civil & dual use items Sig n Ex p Ap ort L pli ice cat ns io n e ed Ex po rt L ice ns e U.S. Government 29 FMS vs DCS DoD is generally neutral whether a foreign country purchases through FMS or DCS Certain items can be designated FMS only; based on complexity, sensitivity, interoperability, relationships Most major system DCS programs will have an FMS companion effort for FMS-only items (i.e. a hybrid
program) Program Managers should monitor program contractors marketing efforts 30 Building Partner Capacity (BPC) Title 10, DoD Security Cooperation programs executed through the FMS infrastructure Differences from traditional FMS USG Requesting Authority identifies requirement Funded by the USG Pseudo-LOAs are not signed by country Title transfers in country Variety of programs conducted under multiple legal authorities List of programs and BPC policies are contained in Chapter 15 of the SAMM 31 Building Partner Capacity (BPC) R MOR Stock Pseudo LOA Memorandum of Request Requesting
Authority ti on i s i u eq Letter of Offer and Acceptance Con t rac t Implementing Agency Provision of U.S. defense equipment/services by U.S. Government Specific programs authorized in annual NDAAs Conducted under Title 10 authority with DoD funding Foreign Government 32
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