Unhappy Foreign Customers Request Arms Sales Reform

Article excerpt

The foreign military sales (FMS) program-a Defense Department operation that manages sales of defense equipment, services and training to allied governments-is becoming a source of increasing dissatisfaction for U.S. industry and government customers trying to buy and sell equipment, military and civilian officials agree.

The issue is gaining attention in the aftermath of the North Atlantic Treaty Organization's (NATO) war against Yugoslavia. European members of NATO are under pressure to modernize their forces in order to keep up with U.S. defense technology. The FMS program is managed by the Defense Security Cooperation Agency (DSCA) and financed through a 2.5 percent surcharge to foreign customers.

Dave Oliver, principal deputy undersecretary of defense for acquisition and technology, admitted that there are problems within the FMS system. "The FMS program, which has seen little change since World War II, may need fundamental changes to work in today's environment." The organization is working under the rules of the Cold War, said Oliver.

"Now, we don't have [Cold War] barriers" and are in the "position of wanting to be able to operate with our allies," added Oliver. U.S. companies seeking to sell weapons overseas, additionally, must deal with a fragmented bureaucracy. "We have defense supplier processes within the Pentagon and one in each service, none of which is the same," he added.

Foreign countries seeking to buy U.S. weapons through the FMS process are subjected to an intimidating array of cumbersome, bureaucratic procedures, said Werner Kaelin, defense procurement counselor at the Swiss Embassy in Washington, D.C. "Based on my experience, [FMS] procedures are supplied indiscriminately to all allied friends and foes alike," said Kaelin during a conference titled "Defense Security Cooperation Reform Day," sponsored by DSCA and the National Defense Industrial Association. "I believe the government does not care," he said.

Kaelin also complained that the laws, rules, regulations and policies governing the FMS process have become more complex. And, he noted that, until recently, the military viewed FMS sales as a burden rather than an opportunity to support the U.S. industrial base.

He believes the system needs to be changed. The first step is to make FMS procedures transparent and timely, Kaelin said. "Inform the customer what is going on."

Other countries also have problems with the FMS process. Jordan, for example, needed to buy or repair various military items using FMS money, said Brig. Gen. Hamed S. Saraireh, Jordan's defense attache. He claimed it was difficult to negotiate with the United States on a work agreement.

"My recommendation is to make room for such a request in order to meet the needs of the country and for national security requirements. Case closure takes a long time," he added. "Cooperation and coordination would solve the problem."

"FMS needs to be more customer-oriented for it to succeed," said Ken Perou, chairman of the United Kingdom's FMS procurement group. He believes the process needs a broader, international perspective because allied nations increasingly must fight jointly. "The future is coalition activities," he said.

U.S. contractors, meanwhile, also would like change within the FMS system in order to improve relationships with foreign customers.

Partnering is key to keeping the FMS system responsive, said Robert Ingersoll, vice president of contracts and pricing for The Boeing Co. …