DoD Security Cooperation Challenges -- Defense Exportability Policy
Since no one has told me (yet) that having a Bottom Line Up Front (BLUF) is out of fashion, here’s a BLUF for this blog:
U.S. Government (USG)/DoD Security Cooperation strategy does not drive DoD acquisition program-level decision making on defense exportability. Until it does, we’ll continue developing and producing new DoD systems that aren’t ready for sale to allies and friends who need them.
What does the Data Show?
The analysis of DoD’s status quo approach to defense exportability in my last blog highlighted the fact that current Joint Capabilities Integration and Development System (JCIDS) and DoD 5000 series acquisition policy are both based on a “volunteer” approach to defense exportability at the individual program level. DoD JCIDS process participants, Program Managers (PMs) and acquisition Milestone Decision Authorities (MDAs) in the Joint Staff, Office of the Secretary of Defense, Military Departments, and other DoD Components are required to consider defense exportability early in the new system development process, but they are not required to take any action.
This volunteer approach to defense exportability would make a lot more sense if our systems and equipment were only occasionally sold or transferred to allies and friends. However, further analysis of DoD’s current and future acquisition programs demonstrates this is not the case:
- A recent review of DoD Major Defense Acquisition Programs (MDAPs) across in all three Military Departments showed that over 80% either had been sold or transferred, or anticipated future sale or transfer later in their life-cycle.
- U.S. geographic Combatant Commander Security Cooperation plans routinely mention sale or transfer most of our current systems to allies and friends.
- Key defense companies report that between 20-30% of their existing and planned business involves current and projected foreign sales.
- Over 90% of our important, ‘leading edge’ systems and equipment – tactical aircraft, surface ship systems, unmanned aerial vehicles, precision guided munitions, ordnance, air and missile defense systems, radars, and even strategic systems (Trident D-5) – are eventually made available for international cooperation, sale, or transfer at some point in their life-cycle.
Yet our acquisition policy and practice – outside of the relatively small number International Cooperative Programs (ICPs) we’ve established over the past 25 years – is based on a ‘defense exportability is voluntary’ approach until a firm foreign sale or transfer request or offer occurs. Redesigning defense exportability into an already-developed U.S. system later in a program’s life-cycle ends up being a costly, time-consuming, and frustrating exercise for both government and industry acquisition program teams since:
- DoD initially pays industry to have U.S.-version capabilities and program protection measures designed into a system.
- At some future point DoD pays industry again -- or requires the foreign customer(s)) to pay industry -- to modify or remove selected ‘U.S.-only’ capabilities and incorporate export configuration program protection features.
The net effect of this approach is expensive and time consuming redesign efforts late in development (or even early in production) to achieve one or more exportable system versions that conform with ‘point of sale’ USG/DoD TSFD and Export Control policy guidance. How expensive and how long? Millions to tens of millions of dollars of additional Non-Recurring Engineering (NRE) exportability design and development costs which take 12–36 months to implement.
Strategy versus Policy Disconnect
We also learned in my last blog that our USG and DoD national security and foreign policy strategy – implemented through USG-wide Security Cooperation policy and planning activities – relies on availability of exportable version U.S.-origin systems and equipment to meet the current and future needs of allied and friendly nations.
Under current JCIDS and 5000 series acquisition policy, however, defense exportability is not a requirement in the U.S. on a program-by-program basis. Instead it’s an option that a PM or MDA can either decide to pursue or forego.
Unfortunately, DoD’s strategy versus policy disconnect regarding defense exportability has caused many Security Cooperation problems when the USG/DoD eventually decides to offer our systems to allies and friends.
Business Process Analysis
Many readers may have heard of the concept of the ‘Big Acquisition’ (aka ‘Big A’) process within the USG and DoD. The ‘Big A’ concept describes how three major processes -- Requirements (JCIDS), ‘Little A’ Acquisition (DoD 5000 series), and Funding (Planning, Programming, Budgeting, Execution System (PPBES)) – work together to develop and field new and improved U.S. systems to our warfighters.
The Unified Field Theory of International Acquisition – described in greater detail in previous blogs– is a corollary process describing Security Cooperation “equip and train” initiatives. The UFT process includes the following steps:
1) Requirements + 2) Technology Security and Foreign Disclosure (TSFD)/Export Control + 3) Funding + 4) International Transaction Mechanism + 5) Acquisition Approval + 6) Contract = Capability Delivered to (Foreign & U.S.) Warfighters
Note that “requirements” is the first independent variable in both the overall ‘Big A’ and ‘UFT’ processes. The capability requirements in JCIDS, particularly ones that are considered Key Performance Parameters (KPPs), drive key decisions in both of these processes from Step 1 onward.
At the program level, the disconnect between our overall USG/DoD Security Cooperation strategy versus defense exportability policy in the requirements area should be obvious, but it’s worth restating. Most of our programs are initiated based solely on U.S. JCIDS requirements. USG/DoD Security Cooperation objectives are not considered “requirements” and are not included in key JCIDS documents that drive the acquisition process. Accordingly, our current JCIDS policy and practice – reinforced by our overall mindset (exportability is optional) as well as decades of U.S. acquisition design practice (we’ll deal with exportability later) -- inevitably leads to a series of unfortunate events in both the ‘Big A’ and UFT processes that we’ll explore in greater detail in the next section.
At the ‘big picture level’ this means that the Security Cooperation aspects of our U.S. national strategy and foreign policy are not driving (or even influencing) DoD’s early decisions regarding the defense exportability characteristics of our new programs … not a good thing!
From the allied or friendly nation point of view, there are often substantial costs and delays that result from the way our current ‘Big A’ and UFT decision processes operate at the program level:
- USG/DoD TSFD and Export Control system decisions drive export version system requirements after key U.S. ‘Big A’ process requirements are initially established (UFL Step 2)
- Estimates on how much additional foreign customer funding is needed for exportability design and development must be generated in the latter stages of development or early production (UFL Step 3)
- DoD must put the additional exportability scope and costs in the International Transaction Mechanism – most often an FMS case – to charge the foreign customer(s) while keeping details opaque (UFL Step 4)
- USG/DoD must provide foreign acquisition officials with sufficient cost/schedule exportability impacts resulting from UFL Steps 2-3 to obtain International Transaction Mechanism approval (UFL Step 5)
- DoD must award ‘late in the process’ FMS case-related contracts (or mods) to achieve the exportability outcomes required based on UFL Steps 2-5. (UFL Step 6)
As a result, allied and friendly nations considering acquisition of a U.S. system requiring substantial exportability modifications have the option of either:
A) Accepting potentially substantial exportability-related cost increases and delays to buy U.S.; or,
B) Deciding to purchase an already-developed export version of a similar Western, Russian, or Chinese system, normally with a greater amount of technology transfer (quantity and quality) than the U.S is generally willing to offer via Foreign Military Sales (FMS) or Direct Commercial Sales (DCS).
To be clear, the DoD defense exportability picture is not all bleak. As highlighted in my previous blog on this topic, positive changes have in fact been made in this area. The DoD acquisition system is doing a much better job of considering this subject early in development. Several DoD Defense Exportability Features (DEF) pilot programs have done some outstanding work in this area since 2012.
Unfortunately, much like a popular commercial about identity theft challenges, DoD’s current approach focuses more on being an ‘exportability problem monitor’ rather than an ‘exportability problem solver.’ As a result, most informed observers believe that more changes in DoD exportability policy and practice are needed. Should they be evolutionary or revolutionary in nature?
My next (and final) blog on the relationship between Security Cooperation and defense exportability will propose a revolutionary change in ‘how we do business’ and explore the challenges and potential benefits to DoD, industry, and our allies and friends.
Until next time … Prof K