    [Senate Hearing 119-162]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 119-162

                    DEPARTMENT OF DEFENSE RESPONSIBILITIES
                       RELATED TO FOREIGN MILITARY SALES
                      SYSTEM AND INTERNATIONAL ARMAMENTS
                                  COOPERATION

    =======================================================================

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 15, 2025

                                   __________

             Printed for the use of the Committee on Armed Services

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                     Available via: http:// www.govinfo.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    61-610 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                          COMMITTEE ON ARMED SERVICES

                        ROGER F. WICKER, Mississippi, Chairman

      DEB FISCHER, Nebraska			JACK REED, Rhode Island
      TOM COTTON, Arkansas			JEANNE SHAHEEN, New Hampshire
      MIKE ROUNDS, South Dakota		KIRSTEN E. GILLIBRAND, New York
      JONI ERNST, Iowa			RICHARD BLUMENTHAL, Connecticut
      DAN SULLIVAN, Alaska			MAZIE K. HIRONO, Hawaii
      KEVIN CRAMER, North Dakota		TIM KAINE, Virginia
      RICK SCOTT, Florida			ANGUS S. KING, Jr., Maine
      TOMMY TUBERVILLE, Alabama		ELIZABETH WARREN, Massachusetts
      MARKWAYNE MULLIN, Oklahoma	        GARY C. PETERS, Michigan
      TED BUDD, North Carolina		TAMMY DUCKWORTH, Illinois
      ERIC SCHMITT, Missouri			JACKY ROSEN, Nevada
      JIM BANKS, INDIANA			MARK KELLY, Arizona
      TIM SHEEHY, MONTANA                  	ELISSA SLOTKIN, MICHIGAN

      		   John P. Keast, Staff Director
      		Elizabeth L. King, Minority Staff Director

                                      (ii)

                                  C O N T E N T S

    _________________________________________________________________

                                  may 15, 2025

                                                                       Page

    Department of Defense Responsibilities Related to Foreign             1
      Military Sales System and International Armaments Cooperation.

                               Member Statements

    Statement of Senator Roger F. Wicker.............................     1

    Statement of Senator Jack Reed...................................     3

                               Witness Statements

    Greenwalt, Dr. William C., Former Deputy Under Secretary of           4
      Defense for Industrial Policy.

    Webster, Mr. Keith, President, Defense and Aerospace Council/        17
      President, Federal Acquisition Council, U.S. Chamber of
      Commerce.

    Saum-Manning, Dr. Lisa, Associate Director, International            20
      Security and Defense Policy Program, RAND.

    Questions for the Record.........................................    49

                                     (iii)

      DEPARTMENT OF DEFENSE RESPONSIBILITIES RELATED TO FOREIGN MILITARY
              SALES SYSTEM AND INTERNATIONAL ARMAMENTS COOPERATION

                                  ----------

                             THURSDAY, MAY 15, 2025

                                  United States Senate,
                                   Committee on Armed Services,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 9:31 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Roger Wicker
    (Chairman of the Committee) presiding.
        Committee Members present: Senators Wicker, Fischer,
    Cotton, Rounds, Ernst, Scott, Budd, Banks, Sheehy, Reed,
    Shaheen, Gillibrand, Blumenthal, Hirono, Kaine, King, and
    Warren.

              OPENING STATEMENT OF SENATOR ROGER F. WICKER

        Chairman Wicker. The hearing will come to order. Thank you
    for being here. This morning the Committee welcomes three
    experts to testify on how the United States can equip our
    allies and partners with more U.S. made weaponry. This ought to
    be a very good hearing because we've got Dr. William Greenwalt,
    Dr. Lisa Saum-Manning, and Mr. Keith Webster, experts in the
    field with government expertise also. Thank you all three for
    joining us.
        On May 12th, 1940, American playwright Robert Sherwood was
    quoted in the New York Times, but not for any commentary about
    theater. Mr. Sherwood said, ``This country is already, in
    effect, an arsenal for the democratic allies.'' It is fitting
    that we are holding this hearing nearly 85 years to the day
    since these words were published. We face a threat environment
    that feels eerily similar to that of 1940, and we're seeking to
    rebuild the arsenal of democracy in our own time.
        That brings us to the Foreign Military Sales (FMS) system.
    FMS is the principal mechanism by which we transfer arms to our
    foreign partners. It is the FMS system that allows us to work
    with partners to strengthen conventional deterrence and bolster
    allied burden sharing. In the executive branch, the State
    Department is responsible for coordinating FMS, including
    considering what to sell. In the Senate, that job belongs
    primarily to our colleagues down the hall, the Foreign
    Relations Committee, to Chairman Risch and Ranking Member
    Shaheen.
        But the Department of Defense and this Committee have
    significant responsibilities in informing and implementing
    those decisions, and that's why we're here today. Similarly,
    the Pentagon plays a leading role in International Armaments
    Cooperation activities such as co-development, co-production,
    and the integration of American and allied industrial bases.
        Today, we hope to discuss how the Pentagon can better run
    both the FMS and International Armaments Cooperation processes
    to maintain deterrence. To respond to our current threat
    environment, the Department of Defense (DOD) needs a dramatic
    shift in mindset, one that embraces the key fact that arming
    allies and partners is a core function of the U.S. military.
        Unfortunately, over the past 3 decades, the Pentagon's
    ability to implement FMS and to develop mutually beneficial
    weapons deals with allies has deteriorated alongside our
    defense industrial base, a bureaucracy that is overspecialized
    and slow. While it is capable of producing exquisite systems,
    it cannot do so at scale or with speed.
        In 2024, the United States sold $118 billion of weaponry, a
    significant increase over recent years and multiple times more
    than the next closest country. $118 billion is equivalent to 70
    percent of DOD's own procurement budget for 2024, the potential
    of even more weapons exports is massive. Nearly all our allies
    and partners have allowed their weapons production to
    deteriorate. They are now scrambling to re-arm amid a worsening
    security environment.
        We are at the cusp of a manufacturing revival in this
    country. We can be at the cusp of a manufacturing revival,
    which can dramatically expand the types of weapons available
    for export. To harness that moment, I would propose we focus on
    four areas.
        First, DOD should make FMS and International Armaments
    Cooperation a core mission of the military. DOD should have a
    dedicated workforce of FMS experts. No one at DOD would ignore
    $100 billion of additional weapons spending if it were called
    anything other than FMS. Our production is a weapon and DOD
    must reorganize itself to recognize that fact. So be prepared
    to give us some advice about that.
        Second, we need to tailor requirements to the weapons they
    regulate. Requirements to the weapons. A 3D-printed one-way
    attack drone is not an aircraft carrier. Our regulations should
    recognize this. The technology, security, and foreign
    disclosure community should adjust its approach to risk
    management when considering technology release, especially for
    close allies.
        Third, we need to build exportability into our weapons
    development. Build it into our development. Here's what I mean.
    We frequently ignore allied requirements when developing
    weapons. As a result, it should surprise no one that these
    capabilities are often not approved for release to the very
    allies we plan to fight with and defend. This needs to stop.
        Fourth, we need to partner with our defense industrial base
    to make the right investments to expand production. If we build
    it, they will come, and right now we have allies and partners
    waiting years and years for weapons that we cannot produce fast
    enough. So help us there.
        Over the past 2 decades, each administration has reviewed
    the FMS system almost every year with the same results. The
    Trump administration's recent executive order is directionally
    correct and holds the promise of real generational reform, but
    it will take hard work by this committee, our colleagues on the
    Foreign Relations Committee, our colleagues in the House and
    our two departments to reimagine the fundamentals of our FMS
    system and integrate our industrial base with allies.
        With that said, I look forward to hearing from our experts
    today and a lively round of questions, and I now turn to my
    friend, Senator Reed.

                     SATEMENT OF SENATOR JACK REED

        Senator Reed. Thank you very much, Mr. Chairman, and I want
    to welcome the witnesses Dr. Greenwalt, Mr. Webster, and Dr.
    Saum-Manning. You each bring unique and important perspectives
    to the conversation about Foreign Military Sales and
    International Armaments Cooperation. We're fortunate to have
    such a distinguished panel before us.
        I want to acknowledge upfront the Foreign Military Sales or
    FMS is largely the jurisdiction of the Senate Foreign Relations
    Committee as the chairman indicated, but we're fortunate to
    have Senator Shaheen here and Senator Risch is someone I know
    will be interested in cooperating with us as we move forward.
        The Department of Defense plays a significant role,
    although the jurisdiction is perhaps mainly in another
    committee, and it's my hope that the two committees can join
    together and develop an overall plan that will accelerate and
    make more efficient the FMS process. It's well established that
    America's greatest comparative advantage against our rivals is
    our network of allies and partners, from Europe to Asia and the
    southern hemisphere to the northern hemisphere, our
    relationships with foreign nations are fundamental to our
    security and prosperity at home.
        Many of our friends and partners rely on the state-of-the-
    art military equipment that we provide through FMS, and this
    arrangement is mutually beneficial as our military capabilities
    are reinforced by those of our allies. When executed well, FMS
    strengthens the connective tissue between our respective
    militaries. FMS provides our partners with capabilities to
    advance their own defense and deterrence capabilities, and it
    provides us with the ability to draw upon our allies when we
    need them. We can dial up or dial back partner and allies
    support as the situation dictates.
        However, I fear that many of the aspects of the FMS process
    are not working as well as they could be, which means ceding
    our advantage to adversaries rather than capitalizing on FMS.
    In my overseas travels, I have often heard from foreign leaders
    about the difficulties and delays they experienced in acquiring
    weapons and hardware from the United States.
        Time and time again, I have heard that the Foreign Military
    Sales process has become too slow, too rigid, and too outdated
    to keep pace with the changing world. During today's hearing, I
    hope our witnesses can help us better understand the complex
    FMS roles and responsibilities across the Department of Defense
    and how to potentially make these more efficient. This
    committee and the Defense Department may not be able to fix the
    entire process, but we should start with improving functions
    that fall within our jurisdiction.
        I would also appreciate our witness's views on the
    workforce requirements to support FMS and the potentially
    harmful impacts of recent efforts to dramatically reduce the
    workforce at the Pentagon and critical supporting agencies like
    the State Department where the activities of FMS and
    International Armaments Cooperation intersect with the
    acquisition community. I would ask our witness to discuss how
    we can align roles, responsibilities, and expertise to deliver
    better performance outcomes.
        I look forward to the hearing and the insightful advice of
    the panelists. I hope we can work together to develop a better
    understanding of the Department of Defense so that they can
    adapt quickly to a rapidly changing world. Thank you again to
    our witnesses, and I look forward to your testimony.
        Chairman Wicker. Thank you. I have a live microphone this
    morning. Thank you, Senator Reed. Let's get right into 5-minute
    summaries of testimony and we'll begin with Dr. Greenwalt.

      STATEMENT OF DR. WILLIAM C. GREENWALT, FORMER DEPUTY UNDER
               SECRETARY OF DEFENSE FOR INDUSTRIAL POLICY

        Dr. Greenwalt. Terrific. Chairman Wicker, Ranking Member
    Reed, and other distinguished members of the committee.
        Chairman Wicker. Have you pressed your button?
        Dr. Greenwalt. I did. Hello, can you hear me? There we go.
    I'm sorry. I already lost 10 seconds. I can't believe it.
        Chairman Wicker, Ranking Member Reed, thank you for the
    opportunity to testify this morning on both FMS and
    International Armaments Cooperation in general. How the U.S.
    decides to share existing technology or work together with
    other countries on new defense solutions is a critical
    component of our national security. Unfortunately, the way the
    U.S. international arms cooperation system works, at least for
    our closest allies, is fundamentally broken.
        This springs not from a failure to be diligent or to
    dutifully carry out the law, but from a failure to keep up with
    the times. Quite simply, the world has changed and the tools of
    arms cooperation created the mid-1970's no longer make sense in
    this new world. These tools were designed around an era of U.S.
    defense technological dominance, that now no longer exists. DOD
    is no longer the main or only driver of innovation in the globe
    today, and yet we continue to act like it still is. We make it
    really hard for our allies to gain access to legacy
    technologies that many of them would produce on their own or
    get from somewhere else. We make it even harder for them to
    bring in superior knowledge and capabilities into the United
    States, and then even harder than that to jointly work on
    something new.
        National security threats are now fundamentally different
    than those posed in the cold war. They're such at scale that
    the U.S. needs to leverage the resources and capabilities of a
    much larger, more innovative, commercially driven industrial
    base to support an interoperable allied force. Yet, our tools
    of cooperation designed to keep 1970's technology out of the
    hands of the old Soviet Union conspire to prevent that from
    happening.
        Breaking down the barriers to effective arms operations is
    vital. If we want to enhance our own capabilities as well as
    those of our allies, we need to first take a look at all of our
    arms export and technology transfer processes, not just FMS. In
    their place, we need to adopt a time-based cooperative approach
    that positively differentiates between a select group of allies
    and partners.
        Reform would not mean a wholesale elimination of current
    controls and deliberate processes for the vast majority of the
    223 countries and international organizations that the U.S.
    deems eligible to buy our weapons, decisions on whether to
    transfer weapons capabilities to those entities can still be
    based on a less than urgent step-by-step approach, shaped by a
    debate on our foreign policy goals in each of those countries.
        But for a critical segment of our closest allies who
    already share our values and interests, there should be a
    series of fast lanes backed by incentives to favor the joint
    development of the next generation of capabilities. These
    allies should also be tightly integrated into our industrial
    base planning.
        How would this work? Well, countries already identified in
    law as part of the national technology industrial base, and
    then selectively expanded to other close allies, should face a
    streamlined process that reflects a greater sense of urgency.
    This process should be based on certainty, predictiveness, and
    timeliness, rather than the current one-size-fits-all, time
    consuming, years-long, methodical approach.
        For these allies, there should be an upfront agreement
    within the U.S. Government on a pre-approved list of specific
    types of systems these countries can buy. A contracting vehicle
    that allies can buy off from should be established, with pre-
    negotiated prices for these capabilities. Next, the stockpile
    should be established to store U.S. weapons readily available
    for immediate export.
        Perhaps more importantly, a broad-based waiver from the
    International Traffic and Arms Regulations (ITAR) needed beyond
    the in inadequate limited waiver that has been provided under
    Australia, United Kingdom, United States (AUKUS) and to Canada.
    This waiver and exemption will be designed to incentivize,
    enable American and allied engineers and scientists to work
    quickly, and work together on new military capabilities.
        Finally, leadership at DOD needs to be aligned to enable
    these changes. This could be done by creating a defense war
    production board or something like that, chaired by the Deputy
    Secretary of Defense and staffed by two assistant secretaries,
    one for international production and a resilient supply chain,
    similar to what we have have right now with the Assistant
    Secretary of Defense (ASD) for Industrial Policy, and another
    for International Cooperation and Production.
        This board would provide a formal senior decisionmaking and
    oversight mechanism over the disparate stove pipes that govern
    international arms cooperation in DOD as well as for guiding
    defense industrial production.
        Thank you again for the opportunity to testify. I look
    forward to your questions.
        [The prepared statement of Dr. William C. Greenwalt
    follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Wicker. Thank you very much, Dr. Greenwalt. Mr.
    Webster, you're next.

        STATEMENT OF MR. KEITH WEBSTER, PRESIDENT, DEFENSE AND
    AEROSPACE COUNCIL/ PRESIDENT, FEDERAL ACQUISITION COUNCIL, U.S.
                          CHAMBER OF COMMERCE

        Mr. Webster. Thank you, Chairman Wicker, Ranking Member
    Reed, and members of the committee for this opportunity to
    testify before you today.
        I have the honor of serving as President of the Defense and
    Aerospace Council at the U.S. Chamber of Commerce, as well as
    President of our Federal Acquisition Council within the
    Chamber's Center for National Security Policy. Prior to joining
    the Chamber, I served 32 years in the Department of Defense in
    various roles associated with international political military
    policy and related programs.
        One thing is clear, the time for bold action is now. The
    Foreign Military Sales process is cumbersome, and after nearly
    3 decades of attempts, no meaningful reforms have been made.
    Together, we can change that. Beginning in 1998, we saw initial
    public criticism of the Foreign Military Sales or FMS program
    and demands for change. In the past 27 years, there have been
    approximately 15 DOD tiger teams to look at issues of speeding
    up processes, meeting demand on time, reducing costs. As we sit
    here today, little has changed.
        Within 6 months of the first Obama administration, the
    National Security Council (NSC) signed a letter to then-
    Secretary of Defense, Robert Gates, directing the Department to
    improve the FMS process. As a result of that assessment, then
    Secretary Gates explained to the NSC that significant FMS
    reform requires a task force led by the National Security
    Council, since issues of concern cut across the entire
    interagency.
        The NSC agreed with this conclusion, however, such a task
    force never materialized and DOD once again was on its own to
    determine what could change within its limited control. So why
    does the FMS process take so long? The informal congressional
    notification process for complex and contentious programs can
    take months to conclude. Once concluded, the formal
    notification to Congress can proceed and when complete, the DOD
    and the buying nation can proceed with finalizing the FMS
    agreement, which is a bilateral agreement, not a contract.
        Once that agreement is signed by both nations and funding
    has begun to flow, the DOD contracting officers is now legally
    allowed to begin negotiating a contract with U.S. industry.
    It's worth thinking about that an FMS contract is a DOD
    contract developed and executed by the same DOD personnel,
    buying the same capability for U.S. Forces. On average, a DOD
    contract to implement a major FMS program takes 18 months to
    award.
        The delay is in part because over 2 decades, the DOD
    contracting community has been understaffed annually between 15
    to 30 percent, and quite simply, most FMS contracts are not a
    priority within DOD. Once on contract, U.S. industry is
    authorized to begin production, and it's at this point that
    stresses within our defense industrial base become painfully
    clear. The Pentagon continues to face supply chain and
    industrial base challenges, all compounded by continuing
    resolutions and an increasingly inefficient annual defense
    appropriation cycle.
        Now's the time for bold action. The DOD must take steps
    that it hasn't before, including reorganizing the International
    Sales and Cooperation Offices, placing them under a newly
    formed Assistant Secretary of Defense reporting to the Under
    Secretary of Defense for Acquisitions and Sustainment. Amending
    DOD program executive officers and program management charters
    to include a rating element for their development and execution
    of international programs. Incorporating artificial
    intelligence (AI) and automation to help speed up the DOD
    contracting process. Reexamining what should be an FMS only
    case or sale.
        Now's the time to transfer as much as we can into the
    direct commercial contracting processes led by our industries
    with U.S. Government approval. Finally, the Secretary of
    Defense needs to form an international cooperation advisory
    board to solicit other ideas and recommendations for
    improvement. Congress and the administration have a role to
    play as well, including increasing congressional notification
    thresholds, and developing a list of allied and close partner
    nations and pre-approved capability, thus eliminating ambiguity
    and debate on select future sales.
        The business community and the administration must also
    work closely together to better understand the challenges in
    ramping up production to include supply chain stress, delays in
    appropriations, changing capability strategies, and top-down
    mandates. True FMS transformation is a task for the interagency
    in partnership with Congress, the administration, and the
    private sector. Without a unified approach, true FMS
    transformation will remain elusive. Thank you.
        [The prepared statement of Mr. Keith Webster follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Wicker. Thank you very much. Dr. Saum-Manning,
    you're now recognized.

        STATEMENT OF DR. LISA SAUM-MANNING, ASSOCIATE DIRECTOR,
        INTERNATIONAL SECURITY AND DEFENSE POLICY PROGRAM, RAND

        Dr. Saum-Manning. Chairman Wicker, Ranking Member Reed, and
    distinguished members of the committee, thank you very much for
    the opportunity to testify on the findings of RAND's research
    report: Optimizing Foreign Military Sales Roles,
    Responsibilities, and Authorities.
        The FMS program is authorized by the Arms Export Control
    Act and is a vehicle through which the Defense Security
    Cooperation Agency (DSCA) operates the program and at no cost
    to the U.S. taxpayer because it is funded by administrative
    charges paid to the foreign purchaser. FMS is a vital U.S.
    foreign policy tool that strengthens allied contributions to
    U.S. integrated deterrence.
        In fiscal year 2024 FMS totaled $118 billion, and this
    week, the White House announced a potential $142 billion sale
    to Saudi Arabia, underscoring the program's strategic and
    economic significance. Despite this significance, our research
    found that the complexity of the FMS process can result in
    unacceptable delays, which in turn risks undermining U.S.
    credibility with our partners and provides openings for
    strategic competitors.
        We interviewed over 100 FMS stakeholders across government
    and industry representing more than 1300 years of collective
    experience. Frustrations were consistent from senior leaders
    lacking authority to direct the process, to frontline personnel
    struggling to navigate it. I'll highlight just several
    challenges that we identified. Strategically first, the
    Department of State and DOD lack unified front on and process
    for prioritization of our partners, making it difficult for the
    FMS enterprise to forecast the demand signal for FMS
    requirements. There are also missed opportunities to engage in
    each other's internal efforts to reform. As we've heard, there
    are a lot of reform efforts that have gone.
        Second, the office of the Undersecretary of Defense for
    Policy may be missing opportunities to effectively advocate for
    the role of FMS in achieving U.S. security objectives.
    Operationally first, Defense Security Cooperation Agency (DSCA)
    is charged with overseeing FMS, but lacks adequate management,
    oversight, and enforcement authorities.
        Second, the military department's implementing agency
    similarly lacks such leverage to hold acquisition stakeholders
    accountable for delays or under performance. Third, the FMS
    system relies on the DOD acquisition for procurement, but is
    often a secondary player behind domestic defense acquisition.
    As one of our interviewees noted, training and equipping our
    foreign partners is well below everything else. If this were
    baseball, it's definitely the minor leagues.
        Fourth, acquisition offices are microfederated, meaning
    they're dispersed among myriad stakeholder organizations with
    their own systems, processes, and priorities, most of which do
    not pertain to security assistance cases. This can make it
    difficult to identify responsive points of contact when choke
    points arrive. Some offices also describe being understaffed.
        Fifth, industrial based bottlenecks further slow the
    progress, and then finally, data is fragmented across
    microfederated systems lacking standardized formats, governance
    or sharing protocols. As one stakeholder put it, we are data-
    rich and information-poor.
        We've got several recommendations that came out of our
    study, many of which align with the recent executive order in
    addition to other reform efforts that have gone in the past. At
    the strategic level, first amend DOD directives so that the
    Under Secretary of Defense for Policy (USD)P)) can aggressively
    assert themselves into the FMS process. For example, by
    advocating for FMS among combatant commands to incorporate
    partners FMS derived capabilities into planning and exercises.
    The joint staff might develop a defense planning guidance that
    factors in ally and partner contributions.
        Second, amend DOD directives so that U.S.D policy in
    consultation with State is responsible for codifying the
    criteria to inform an annual DSCA led partner prioritization
    process to help forecast the equipping demand signal for future
    purchases. At the operational level, strengthen DSCA's ability
    to manage and oversee the FMS process and hold key stakeholders
    accountable.
        First, require the military departments to provide regular
    reporting to DSCA on the status of FMS cases. Second, the DSCA
    director should participate in the process for selecting
    implementing agency key leaders and provide input into their
    performance evaluations. Third, DSCA should establish a
    governmentwide data czar to lead enterprise-wide FMS data
    governance with an aim to set data sharing standards, approve
    transparency across agencies, industry, and international
    partners.
        Finally, empower implementing agencies. The military
    departments should amend service regulations to allow giving
    the implementing agencies more influence over internal FMS
    activities, including leadership selection and performance
    evaluations for relevant offices outside of their chain of
    command.
        There is no silver bullet to FMS reform. The FMS enterprise
    involves a diverse network of actors and varied missions and
    priorities. However, the need for reform is urgent.
    Implementing recommendations that foster a more agile,
    transparent, and accountable FMS process is essential for
    enabling our partners, deterring adversaries, and reinforcing
    America's global leadership. Thank you for your attention to
    this critical issue, and I welcome your questions.
        [The prepared statement of Dr. Lisa Saum-Manning follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Wicker. Dr. Saum-Manning, when did RAND release
    this report and how long did you work on it?
        Dr. Saum-Manning. We worked on this report for a year. It
    was a year-long study, and we published it in the end of 2024.
        Chairman Wicker. I think all three of you, well, gave great
    testimony and very thought-provoking and I'm sure we'll have a
    lot of good questions. You had recommendations. How much of the
    problem do you think--we'll start with Dr. Greenwalt and going
    down the table, how much of the problem is mindset in the
    various departments and how much of it is a need for statutory
    reform. Dr. Greenwalt?
        Dr. Greenwalt. I think the mindset issue is a critical one.
    I think I would say non-traditional defense firms here in the
    United States faced many of the same issues about working with
    the Department of Defense as far as the understanding of
    breaking in and bringing their innovation and technology to the
    mix. I think there's a mindset that our allies are supplicants
    for our technology and this technology is just so wonderful
    that everyone will jump through hoops to get it.
        The reality is there's a lot of technological leveling
    going on out there, and right now there's a great opportunity
    for us to sell weapon systems because a lot of these countries
    haven't built up the manufacturing facilities to do so. But if
    the incentives don't change, they will do that, and we will
    lose sales.
        I think there is some issues on the legislative side, but
    mostly a lot of the problems are on the regulatory side. It's
    just how the Departments are interpreting what Congress has put
    into place.
        Chairman Wicker. Regulations that are in place, not just
    practices.
        Dr. Greenwalt. Regulations that are in place like the
    International Traffic in Arms Regulations.
        Chairman Wicker. So that regulation needs to be retooled?
        Dr. Greenwalt. It needs to be retooled and re-looked at, at
    least for our closest allies. Again, I think well----
        Chairman Wicker. Let us know on the record because----
        Dr. Greenwalt. Sure.
        Chairman Wicker.--time is fleeting, what statutory changes
    we need, and so, Mr. Webster, you're next on the very same
    question.
        Mr. Webster. Sir, the issue of mindset let's start where
    technology development begins. It begins for the U.S.
    warfighter, and the U.S. warfighter fundamentally does not
    desire to have a proliferation of the latest and greatest
    technology around the world. So when we look at technology
    security foreign disclosure decisions, it starts with the
    services who have tasked their community and their industries
    to develop capability for them.
        Chairman Wicker. Okay. If you were running the State
    Department and the Defense Department, what would you do today?
    What would you start doing?
        Mr. Webster. What I would do today is convene the
    leadership, both in uniform and political, in a meeting to say
    that let's start with our allies. It is absolutely necessary
    that we harmonize technology release and be risk takers and be
    creative in finding ways to support their needs. It's an issue
    of taking risk and willing to take risk.
        Chairman Wicker. We typically pass one bill a year out of
    this committee, and that will not come for months. You could do
    a great deal I'm taking from the first two answers to my
    question. You could do a great deal without the Congress--House
    and Senate--passing anything.
        Mr. Webster. That's correct. It's a issue of leadership.
        Chairman Wicker. Dr. Saum-Manning, and you speak for RAND?
        Dr. Saum-Manning. I speak for RAND.
        Chairman Wicker. Okay.
        Dr. Saum-Manning. That's right. So I do think that it's a
    cultural mindset, and I don't know if you can regulate culture.
    As I mentioned, FMS can be sort of considered a secondary
    player. We're focused on the U.S. warfighter, equipping the
    U.S. warfighter and our allies of partners come in second. So
    in my mind, the way that you work on this is to incentivize
    leadership so that those within these organizations and offices
    really prioritize FMS. If that is a priority, give them reasons
    to prioritize it.
        Again, looking at performance, looking for metrics, looking
    for performance evaluations, ways that you can hold our leaders
    accountable for taking this seriously.
        Chairman Wicker. Quickly you mentioned continuing
    resolutions, Dr. Saum-Manning, here, here. Do Continuing
    Resolutions (CRs) reduce the national debt? Do they save us
    money?
        Dr. Saum-Manning. Our study did not look at that, and I
    don't think I----
        Chairman Wicker. Mr. Webster?
        Mr. Webster. Not aware. No idea, sir.
        Chairman Wicker. Okay. So you don't have an opinion as RAND
    does about the harmfulness or helpfulness of year after year of
    continuing resolutions?
        Mr. Webster. Oh, no, sir. I do. That was in my remarks. It
    is absolutely a disaster to have continuing resolutions. Even
    the one that was passed this year, which has enormous
    flexibility is helpful, but DOD budgets need to be passed. They
    need to be passed on time. Industry needs that certainty. Our
    Pentagon needs that certainty. These CRs are not a wartime
    footing.
        Chairman Wicker. Disastrous. Dr. Greenwalt?
        Dr. Greenwalt. I think if you give the Department greater
    flexibility for a larger pot of money, it may not be as
    disastrous, but if you tie them to the rigid planning,
    programming, budgeting, and executing (PPBE) budget accounts
    that create inflexibility, then yes, they would be a disaster.
        Chairman Wicker. Thank you. Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman, and thank you to
    all of our witnesses. I wholeheartedly agree with most of what
    each of you have said, and certainly believe that the lack of
    budget certainty and the continuing CRs are detrimental not
    just to industry, but to our national security, and that needs
    to change.
        I think we've got another issue with respect to how FMS
    works also, and that is the tariffs that have just been
    imposed. I visited a company in New Hampshire that makes ball
    bearings for the aerospace industry. They do a significant
    amount of their business with the Department of Defense.
    Because of the steel tariffs, they had one domestic supplier,
    they had been able to get an allied supplier that now that they
    have lost, and their lead time went from 20 weeks to two and a
    half years. We can't provide what we need for the industry with
    that kind of problem, and their ball bearings are in almost
    every major exportable U.S. platform, whether it's guided
    multiple rocket launch systems, patriot air defense, joint
    direct attack munitions, to all of our NATO allies, golf
    partners, Taiwan, Singapore, others.
        One of the things in my role as ranking on the Foreign
    Relations Committee, I sign off on our military sales, and
    recently I reviewed a proposal for AIM-120 advanced medium-
    range air-to-air missile (AMRAAM) missile sales. That's going
    to take 7 years to deliver. So clearly, we can't continue to
    operate in this way and assume that we're going to get what we
    need for national security. I think several of you pointed out
    that in order to be successful, we don't just need a cross
    agency collaboration, I think we also need to get the private
    sector involved in this because clearly one of the big
    challenges is the defense industrial base and their inability
    to produce, because we have made the process difficult, we have
    not given them the budget certainty they need in order to
    invest. So, to go back to the tariffs, let me just ask you, one
    of the things that, we raised this in a previous hearing and
    talked about the fact that DOD is not tracking what the impact
    is of tariffs on increasing costs and lead times for
    production.
        So can anybody speak to what you think the challenge is
    there and how we can actually track that in a way that would
    allow us to make better decisions?
        Dr. Greenwalt. I had wished the DOD had tracked inflation
    impact as well too. That that hit a lot of companies, very
    hard. On tariffs the issue is down in the third, fourth, and
    fifth tiers of the industrial base, which a lot of that is
    commercial and how that impacts those commercial sources of
    supply and increased costs will more than likely drive
    increased costs throughout the system.
        There's another potential impact, and that's when we use
    foreign subsystems and foreign imports. Those imports should be
    under the defense Federal acquisition regulations exempt from
    tariffs. But there's still that risk because that's just based
    on a memorandum of understanding between the countries of
    whether that really, and so actually Congress could actually
    ensure that and clarify that that's one thing that could be
    done to ensure that those type of tariffs aren't impacted on
    any subsystems we happen to be buying.
        Senator Shaheen. Do either of you have views on that? Mr.
    Webster?
        Mr. Webster. Yes, Senator. First of all, I can sympathize a
    little bit with the Department of Defense because of the fluid
    situation of what percentage are we applying to tariffs. Once
    that settles out, then I think data will be able to be
    collected. That is, I mean, that's our challenge at the chamber
    as well.
        But let me share with you just a couple of data points that
    we have confirmed, if you will. Steel prices have gone up since
    the tariffs have been in effect for over 2 months now. In
    response to these new duties, U.S. steel benchmarks have risen
    to roughly twice world prices. For aluminum, the widely tracked
    Midwest premium benchmark for that metal has doubled since
    November, reflecting the fact that more than half of U.S.
    demand is met by imports, chiefly, Canada.
        Companies are not only reporting increased lead times, to
    your point, but also expected higher input costs, followed by
    increased sales prices and potential employment reductions.
    These are firm fixed price contracts, often very thin margins,
    as you know, in the supply chain and these small mom-and-pop
    companies, they will suffer.
        Senator Shaheen. Thank you. Dr. Saum-Manning?
        Dr. Saum-Manning. I will just say that RAND, all we do is
    study, and so this sounds like a really interesting sort of
    quick-turn study that we could do to kind of look at the
    cascading effects of tariffs along the way. It's just so
    quickly happening, and so I wouldn't want to venture sort of a
    response to that right now, but I think it's something worth
    studying really quickly.
        Senator Shaheen. That would be very helpful, I think. Thank
    you.
        Chairman Wicker. That's a helpful answer, Doctor. Senator
    Fischer.
        Senator Fischer. Thank you, Mr. Chairman. Dr. Saum-Manning,
    you said at RAND you study. I appreciate that, and we earlier
    talked about the report that came out in 2024, I think you
    said. It highlighted a number of insufficient authorities and
    inefficiencies within the Department's FMS process and
    organizations and provided recommendations. Do you know if the
    Department has followed up on any of those recommendations or
    the status of that?
        Dr. Saum-Manning. I don't know if they have followed up on
    them, but I have seen that in the recent executive order, some
    of the same recommendations are in that. So my assumption is
    that they remain as challenges.
        Senator Fischer. With regard to the executive order, do you
    have any suggestions on which areas would be most ripe for
    improvement?
        Dr. Saum-Manning. Well, I think looking at the manpower
    restraints, doing a study to kind of understand where the
    resources are needed, training, where that training is being
    held up or where it needs to be doubled down. I think that
    looking at partner prioritization is another one. So trying to
    figure out which partners do we prioritize in the system to the
    point about we sort of have this one size fits all process. So
    how do you get the DOD and DOS (Department of State) obviously
    has a role in kind of understanding what the criteria are and
    let DSCA lead a prioritization sort of framework and process.
        Senator Fischer. Thank you. Dr. Greenwalt, the
    International Traffic and Arms Regulations, or ITAR regulates
    defense exports for the United States. There are methods in
    place for companies to obtain exemptions for this process,
    which I believe is cumbersome, to support our allies. But it's
    not always clear whether certain programs are even eligible for
    those exemptions, and that means that interested companies,
    they're forced to perform that extra due diligence, and it
    might end up being a fruitless exercise if the program turns
    out to be ineligible for an exemption.
        While many larger contractors can absorb these costs, small
    businesses have a harder time doing that. How can the U.S.
    Government work to make it clear whether new contracts would
    fall under ITAR exemptions?
        Dr. Greenwalt. That's one of the really difficulties of
    ITAR is new companies trying to understand where their
    technology is classified. What happens is a lot of these
    companies do go through incredible amounts of legal costs and
    so on to try to figure this out. Many of them come to the
    conclusion, with some of our best technology in the United
    States, that they want to do everything they can to stay away
    from ITAR, and that's impacts negatively on our innovation base
    and negatively on those companies doing business with the
    Government.
        So I think there's a need to be clear. There's a need to
    provide better guidance. I think, frankly, if we start with
    some of our closest allies, like we have under AUKUS to try to
    create a freer trade, freer zone between the U.S., Australia,
    and the UK. But even though, that exemption is very, very
    limited, and so a broader exemption and just clear guidance to
    industry on what can and cannot be exported would be very
    helpful.
        Senator Fischer. Do you have other suggestions on what we
    could do to make it more accessible, these exemptions more
    accessible to the smaller businesses?
        Dr. Greenwalt. I think the key thing would just be to have
    greater transparency into the system and a greater ability for
    these companies to get their questions answered a lot faster.
    Right now, it takes potentially a year or more to go through
    such a process, and by that time, it's just not worth it for
    them.
        Senator Fischer. Mr. Webster, in a couple seconds, do you
    have anything to add on either of those questions?
        Mr. Webster. No, I agree with everything that's been said.
    Legally, the costs are huge. Small companies that I advise, I
    advise that they have on staff or on call an attorney that can
    advise them on ITAR.
        Senator Fischer. Thank you. Thank you, Mr. Chairman.
        Chairman Wicker. Before I recognize Senator Reed, let me
    clear something up. Dr. Saum-Manning, I put words in your
    mouth. In looking at your testimony, I see that footnote one
    says, ``Opinions and conclusions expressed in this testimony
    are the authors alone.'' You made that clear, and I'm now
    making it clear. I notice also Dr. Greenwalt, ``Views expressed
    in this testimony are those of the author.'' Mr. Webster, whom
    do you speak for?
        Mr. Webster. I speak for the Chamber of Commerce and for
    myself.
        Chairman Wicker. Great. Thank you. I'm glad to clear that
    up and make that certain. Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman, and thank
    you for your testimony. Mr. Webster, you made it clear in your
    opening remarks that already the workforce of the FMS project
    in both State, I believe, and DOD is not adequate. Now we're
    seeing firing of probationary employees, incentives for early
    retirement, across the board reductions just to meet a number,
    not a mission.
        Can you comment on what's happening to the workforce and is
    it going to be extremely detrimental going forward?
        Mr. Webster. It is going to be extremely detrimental. I'm
    advising all my clients, if you have a contract close to award,
    get it awarded because I think that 30 percent gap in
    contracting personnel is going to get worse. I'm advising eight
    senior executives in the Department of Homeland Security (DHS),
    DOD, State Department, National Aeronautics and Space
    Administration (NASA), and Commerce Department, who are 50
    years old and taking the early outs. You're going to have a
    huge brain drain. Anyone who's a senior executive career
    official for the most part, is looking most likely to get out.
        So you're going to have a knowledge gap, you're going to
    have a mentoring gap, you're going to have a recruitment
    challenge, a retention challenge, and the situation's only
    going to be compounded over the coming months. That is why we
    need to exploit automation and think differently about these
    processes because the people are just not going to be there.
        Senator Reed. No, I appreciate that. That's a very
    thoughtful and succinct response, and I agree. We do have to
    think about automation, but we also have to understand that'll
    take us several years, even at a fast pace to get into the
    degree that can replace some of these persons.
        Dr. Saum-Manning, do have any views on this whole workforce
    problem?
        Dr. Saum-Manning. Well, I know RAND does study security
    cooperation, in particular, the workforce. We've been working
    on this for years. I myself was not involved in those studies,
    but I can say in the interviews that we've done that the
    security cooperation workforce, the security cooperation
    offices, and the members thereof, can struggle to get the right
    training. Those positions within sort of their chains of
    command aren't particularly valued in terms of on their
    promotions, like this kind of a skill set isn't necessarily
    valued as much as others. So they struggle to get people in
    there that really like the sort of high end kind of personnel
    that they would need to do some such a complex job. So making
    sure that this kind of role is valued and the importance of it,
    I think would go a long way in recruiting the top-tier talent
    that's needed.
        Senator Reed. Thank you very much. Dr. Greenwalt, any
    comments, thoughts?
        Dr. Greenwalt. Yes. I think the Department had a tool
    called the Defense Acquisition Workforce Development Fund back
    about 10 years ago. Unfortunately, Congress changed that
    authority and made it more difficult to use, and I think that
    would've been a helpful tool to resurrect or would be a helpful
    tool to resurrect the way it was funded prior to. But yes, as
    the workforce declines, you have a couple options.
        One, you can do less. The other is you can stretch things
    out, or two, you can remove the requirements for the processes
    that you have. I think more than likely FMS will probably be
    put to the end of the line, and those cases will stretch out if
    that's the effect.
        Senator Reed. I think you're very perceptive about that.
    Dr. Greenwalt, I believe you are aware of this, that the FMS
    Tiger team made a recommendation to develop methodologies to
    facilitate non-program of record. For the information of the
    committee, could you explain non-program of record, and then
    also whether or not we should go ahead and urge the
    establishment of some type of joint program for non-program?
        Dr. Greenwalt. So, a program of record is something that
    you all fund every year, whether that's a ship or a tank or an
    aircraft or something like that. These are things that you're
    buying, you know, traditionally every year. A non-program of
    record is something, say a new small business or a Silicon
    Valley firm creates a capability that the Department hasn't yet
    bought or maybe bought and experimented with.
        But you could essentially take that and sell it to one of
    our allies who really wants to use it, and that would actually
    help the Department of Defense test it and see if it's good and
    also help our industrial base. But non-program of records don't
    necessarily get the same type of attention because those
    contracting officers are extremely busy doing other things, and
    they're put to even further down the line.
        Senator Reed. Thank you very much. Thank you for your
    excellent testimony.
        Chairman Wicker. Dr. Greenwalt, I've got a bill called the
    FORGED Act, which is based on a white paper, Restoring
    Freedoms. FORGED, have you looked at that and doesn't that
    attempt to answer some of the very questions you've just raised
    in response to Senator Reed?
        Dr. Greenwalt. I have sir, and yes, there are some
    provisions in the bill that would try to address some of these
    ways of getting those type of new technologies out into the
    field faster with not only the United States--not only with the
    U.S. Government, but with our allies.
        Chairman Wicker. Thank you, sir. Senator Rounds.
        Senator Rounds. Thank you, Mr. Chairman. This very
    interesting discussion today with regard to FMS, and I'm
    thinking out loud to begin with about what my thought process
    had been before listening to all three of you about what I
    thought were challenges for Foreign Military Sales. My first
    assumption had been that on a policy basis, we had been using
    FMS more as an opportunity to incentivize some of our near
    allies or individual countries that were out there that wanted
    our weapon systems to perhaps change policies that we did not
    like, that were separate from what our policies were.
        But after listening to you, I'm finding that it's not even
    so much that as being the primary reason why we're not having
    more military sales, but rather internally, our system is not
    set up and focused on the value of FMS to our own well-being.
    Mr. Webster, I just want to begin by asking you a question. Do
    you have any data with regard to us companies that are in the
    military industrial base portion of our economy, and how much
    they may have lost in terms of opportunities for sales outside?
    What's been our loss, do you think, in terms of opportunities
    that we haven't been able to take advantage of?
        Mr. Webster. Well, I do not have data specific to
    opportunities lost. I can share that for our prime contractors,
    on average 70 percent of their funding comes from this body
    here, and 30 percent on average, it's a very crude average, but
    30 percent comes from international sales. The European Union
    and NATO in Europe on average annually, 60 percent of their
    military acquisitions are with our companies.
        We expect if onshoring in Europe is where they decide to
    go, and they actually find the money to onshore some
    production, that 60 percent annual number will diminish a bit.
    That's assuming that they actually secure the money and pour
    concrete and start onshoring production. But right now, just as
    a data point, 60 percent of European acquisitions of defense
    material from our contractors.
        Senator Rounds. I had also assumed that perhaps the major
    issue that many of our contractors had, I mean, looking back at
    the delays it takes right now to get our own munitions that it
    was a supply chain issue as much as anything else. I'm just
    simply going to ask all of you, if you were to prioritize
    supply chain versus supply other one or two items in a quick
    nutshell, where does supply chain issues stand in terms of the
    delays that we've got? I'd begin with Dr. Greenwalt.
        Dr. Greenwalt. I think the most important issue is decision
    time and certainty of decision, that's up there. Supply chain
    will be--companies will make decisions about supply chain if
    there are certainties for decisions and countries know what
    they're going to be able to buy.
        Senator Rounds. Mr. Webster?
        Mr. Webster. Yes. So the supply chain criticality is huge.
    We have been operating for decades in a peacetime mode. Now
    we're trying to ramp up to a wartime mode, and it's going to
    take a lot of deliberate analysis and funding and attention to
    the second and third tier suppliers, some as small as 18 people
    that have been in business for 30 years doing one thing
    exquisitely. They're not prepared to pour concrete to double
    production of that critical component for precision fires,
    unless we take attention to the matter and help them get there.
        Senator Rounds. I'm going to come back to you on another
    question in a minute, but Dr. Saum-Manning, would you care to
    respond to that as well?
        Dr. Saum-Manning. So I'm going to have my answer as little
    bit of a punt here, because we did try to study that, and we
    relied heavily on DSCA and their data to be able to kind of
    inform our analysis. They struggled to get this data beyond
    what's in their own remit, it's very difficult to get
    information on the supply chain, for example. So one of our
    recommendations, again, and I go back to this, is the idea of
    having a data czar that's able to go in and access this kind of
    information so they can understand where these choke points
    truly lie.
        Senator Rounds. Thank you. Mr. Webster, looking at FMS,
    would mandating that FMS demand be factored into the total
    munitions requirement? Would that improve the management of
    weapons production at DOD?
        Mr. Webster. The challenge with international sales,
    whether accomplished via Foreign Military Sales, government-to-
    government, or direct commercial sales industry to a foreign
    government, the challenge is trying to understand and predict
    when a nation will actually sign a contract or sign an
    agreement.
        So there's a lot of uncertainty there, unlike
    appropriations or program authorization appropriations here in
    the United States.
        Senator Rounds. Thank you.
        Mr. Webster. So fundamentally, it's helpful, but it is
    unpredictable.
        Senator Rounds. Thank you. Thank you, Mr. Chairman.
        Chairman Wicker. Thank you, Senator Rounds. Senator King.
        Senator King. Thank you, Mr. Chairman. I really appreciate
    the testimony. This has been a very productive hearing. Dr.
    Greenwalt, I was struck by what you said in your opening
    statement. One of our asymmetric, or I think our principal
    asymmetric advantage in terms of national security is our
    allies, and yet we put them through this long, arduous process,
    and there should be I think you suggested a--I don't know
    whether you call it an exemption or a bobtail process or
    something so that we're not so that we can have greater
    cooperation with our allies. Is that, a fair interpretation of
    what you said?
        Dr. Greenwalt. Yes. I want to even call it an easy pass
    lane.
        Senator King. Well, I think that's--and the other piece of
    this--and as I travel and meet with security people in other
    countries, we're missing an innovation multiplier by not
    working with our allies. Countries like Japan and Australia,
    Europe, Germany, the UK, all have brilliant scientists who are
    working on a lot of innovative areas. Instead of having
    innovation be siloed by country, it's always occurred to me
    that it would be much more, as I say, a multiplier, if we could
    work more closely and have better cooperation with the
    countries that are aligned with us. Is that a fair observation?
        Dr. Greenwalt. I think that's a fair observation. We're a
    country of 340 million. Our allies together, the European Union
    (EU), NATO, Japan, Korea kick us up over to over a trillion.
    You know, we're close to the Chinese population. I----
        Senator King. We're squandering that asset by siloing
    innovation.
        Dr. Greenwalt. The number of scientists, engineers working
    together would be critical in the future. Unfortunately, right
    now, we're all stovepiped working on these things separately.
        Senator King. Well, I do want to--I have a visual aid in
    terms of the process. I'm not going to burden the committee,
    Mr. Chairman, by submitting it for the record, but this is the
    Foreign Military Sales manual, 642 pages.
        Chairman Wicker. Bless you for that.
        Senator King. I mean, this to me, this summarizes in many
    ways the problem of the process itself, which has impeded our
    ability to work, again, with our allies. Now it's been
    mentioned several times about a data czar or something like
    that. One of my principles of management is that you need one
    throat to choke, and there's nobody in the process that is
    responsible for the process.
        You've got the State Department, the Defense Department,
    and then all the other agencies that are involved. It seems to
    me that we should be talking about putting somebody in charge
    who could be held accountable. Ms. Manning, you suggested that
    in your testimony. Is that something we should be thinking
    about?
        Dr. Saum-Manning. Yes, and that's really what our report
    focuses on. In particular, DSCA does have the responsibility to
    sort of wrangle all of the cats and dogs in this process, but
    they lack the authorities and the enforcement ability. They
    lack the transparency to kind of get to the, really, the
    crucial sort of choke points in the system. So, providing at
    least some sort of enforcement accountability authorities, I
    think would help them be able to do this job better.
        Senator King. Winston Churchill said after Gallipoli, ``You
    should never have responsibility without authority.'' That's
    exactly what you're talking about. The other thing I
    understand, I had to slip out for a minute, that's been
    mentioned, but I think needs some more attention, is ITAR. As
    I've talked to people in other countries scientists and people
    working on technology matters, ITAR is a real barrier. Again,
    we have some exemptions with Australia and Canada, but Mr.
    Webster, is ITAR something that we should be attending to as we
    are talking about rationalizing this process?
        Mr. Webster. Yes, Senator. I think it comes back to all
    three of us recommending a list of countries with pre-approved
    capability to include cooperative Research and Development
    (R&D) that's pre-approved. I mean, we really need to focus on--
    --
        Senator King. Their scientists need to be able to share
    back and forth information.
        Mr. Webster. They do. Now, we have laws that govern the
    control of data, technology, and capability. So those laws
    require a license of some sort. But to your point, we are
    actually moving forward. The AUKUS exemption, AUKUS paradigm is
    something that hopefully will proof a new way, and can be
    expanded.
        Senator King. Will become an example of how to move
    forward.
        Mr. Webster. That's right, and that could be expanded to
    include allies, other allies.
        Senator King. Mr. Greenwalt, I can't leave you without--you
    mentioned one thing in your testimony that a continuing
    resolution with more money and more flexibility might be okay.
    I would point out that would be the end of Congressional
    authority. That would be ultimate abdication of Congress's
    authority to appropriate, a huge pot of money to the Pentagon
    and say, spend it as you will. So, I just had to make that
    point.
        Dr. Greenwalt. Although there is a RAND report that
    supported the PPBE commission that showed the different types
    of authorities that are out there for different agencies.
    Frankly, the Department of Defense doesn't have many of the
    same authorities and flexibilities that other agencies have. So
    yes, the Congress could still essentially have its power of the
    purse and look over these things. But there are other
    authorities that could be given at DOD that perhaps are not--
    that other agencies have been----
        Senator King. As long as it doesn't usurp, depending on
    your point of view, abdicate or usurp Congressional authority
    over the power of the purse. Thank you, Mr. Chairman.
        Chairman Wicker. Thank you, Senator King. Senator Budd.
        Senator Budd. Thank you, Chairman. Thank you all for being
    here, and thank you for your testimony as well. Mr. Webster,
    we've talked a lot about staffing, but given these issues, are
    there ways that we can utilize artificial intelligence and
    including automation to improve these processes and speed up
    implementation for Foreign Military Sales?
        Mr. Webster. Sir, absolutely. We have to explore automation
    to include AI. In industry, if you can't hire people or afford
    them, you automate. That's where we really need to seriously
    look. What comes with that is a level of risk, an assumption of
    a level of risk that historically the system's been unwilling
    to assume. So when you automate and develop those processes and
    proof those processes, that's a level of risk that the system
    is historically not used to.
        Senator Budd. Can you be specific about the risk you're
    referring to?
        Mr. Webster. Well, I mean, when you're automating a system,
    you're losing the human judgment and human touch from
    developing an FMS case, let's say we automate that. So you have
    to ensure that the standard notes and other legal requirements
    are intact in that automation process, because a human will not
    be touching it theoretically. Does that make sense?
        Senator Budd. Completely. Thank you, Dr. Saum-Manning, you
    know, last year I visited Israel, the United Arab Emirates
    (UAE), and just last month I traveled with some of my
    colleagues to Taiwan, to the Philippines. When we visit with
    them and with other allies and partners, they implore us to
    really speed up FMS. They give us case examples of years, some
    cases more than a decade for programs, for delivery when China
    is at the ready, months.
        Now, there may be, they admit there's quality problems,
    it's not what they want, but they'll forgo some of that if they
    can get it now, rather than sometime date unknown out in the
    future. So what can this committee particularly do? I know
    there's other committees that are involved here, but what can
    this committee do, whether it's through legislation, increased
    oversight, to get our international friends what they need more
    quickly?
        Dr. Saum-Manning. I so wish I had the answer to that. I
    really, really do. What Congress can do is really look at
    what's out there already with recommendations of so many that
    have come before me and ask why those haven't been implemented
    yet. What are the barriers, whether they're cultural or
    otherwise, why these recommendations haven't taken hold
    already.
        Senator Budd. So throw out the recommendations again, just
    the top ones. Sounds like you've given plenty of
    recommendations----
        Dr. Saum-Manning. Lots.
        Senator Budd.--whether it's RAND or American Enterprise
    Institute (AEI) or Chamber. What are the top ones that you
    think that we should focus on?
        Dr. Saum-Manning. So the top one in my mind is to give DSCA
    more sort of teeth so that they can direct the system, that
    they've got access to the data so they can understand where the
    choke points are so that they can help facilitate those
    problems. That would be top of my list.
        Senator Budd. I'm seeing a theme here.
        Dr. Saum-Manning. Yes.
        Senator Budd. Thank you. Mr. Webster you know, we use the
    phrase industrial base a lot and how we can modernize the base,
    but could you go a little deeper and what aspects of the base
    do you think we need to fix or improve to most speed up FMS
    delivery? You talked a little bit earlier about increasing
    production lines and them being willing to pour additional
    concrete. I mean, that's a major investment for these folks,
    and they got a business to run. I get that. But keeping that in
    mind and their economics and the incentives that we deliver,
    what would you suggest?
        Mr. Webster. All right, first of all, I want to come back
    to a question that you just asked. Part of the problem that we
    have today in equipping allies quickly is we don't stockpile
    anymore. When I started in 1985, we had stockpiles over the
    world of capability. It may not have been exactly what a
    customer or nation needed, but it was good enough and we could
    transfer it at speed. We've gone to a just in time scenario in
    the industry, just like the commercial sector, where we don't
    have parts stocked, we don't have kit stocked. We need to spend
    money and create stockpiles like we used to have during the
    cold war. That's issue number one if I may.
        The issue of the industrial base, we can't do everything at
    this given moment. We have to prioritize what capability is
    most important to our forces and allied forces, and focus on
    those capability stresses to include their supply chains. You
    know, we can't do it all, but we can focus on precision fires,
    air defense, whatever it is that we decide is for our national
    security and for the security of our allies, assess that
    industrial base primes second, third tiers, and find out what
    needs to change, what money needs to be invested, who's going
    to invest it to increase that capability.
        Senator Budd. Thank you all. Chairman.
        Chairman Wicker. Dr. Greenwalt, Mr. Webster says we need to
    resume stockpiling. Do you agree?
        Dr. Greenwalt. I do, and I think you have various
    authorities to do that. I think the S staff fund is one way to
    do that. But this committee has considered others in the past.
    About 10 years ago, there was a desire to create a position
    guided munitions fund to do exactly that. We have a just in
    time problem which is essentially, we have put off the ability
    to have a stockpile and we desperately need a stockpile.
        Chairman Wicker. Thank you much. Senator Hirono.
        Senator Hirono. Thank you, Mr. Chairman, and thank all of
    the witnesses. So, as we sit here, once again, we're told that
    there have been many recommendations made over the years, how
    to change the FMS process, make it better, faster, etc. But
    these things don't get implemented. Dr. Saum-Manning just said
    that one of the ways that we can do this is to just give DSCA
    the authority to do their jobs.
        Do the other two witnesses, Mr. Webster, Dr. Greenwalt, do
    you agree that that would be one of the ways that we can get
    going and the kind of changes we need to make to the FMS
    process?
        Mr. Webster. So, when I started at the agency in 1992, we
    had all the authority that we needed, and it took leadership.
    So yes, revisit authorities because it's been a long time since
    1992. Make sure they have the authorities. Make sure they have
    political top cover and interest. That's why we've supported
    this proposal to create an Assistant Secretary of Defense to
    collapse international programs into, it needs to be a
    political appointee who can sit at the table among other
    assistant secretaries and argue the case and lead the community
    with authority and power that a political appointee, Senate
    confirmed will have.
        Senator Hirono. Do you agree, Dr. Greenwalt?
        Dr. Greenwalt. I agree that for the need for leadership and
    I think the leadership has to be even elevated above the under
    secretaries.
        Senator Hirono. So again, that seems to be something that
    we can actually maybe focus our minds on and create that
    situation. Because when we start talking about DOD contracting
    reform writ large, good luck to us on that, because as Senator
    King just brought out, look at the hundreds and hundreds of
    pages of requirements that we impose on just every single
    contracting process that we have.
        So maybe this is one where we actually do when we have
    these sales, we actually make money and maybe we can bring more
    attention at a time also though with Elon Musk taking a hatchet
    to so many departments where we're losing, as Mr. Webster said,
    the bodies. Others of you have said, we're losing knowledge,
    we're losing experience. In fact the kind of cuts that are
    being made across the board to so many departments. For
    example, the Weather Department, I was told that there are more
    people retiring being let go from that department in only of
    100 days than in the last 15 years.
        The loss of some 20 plus years of experiences going on
    throughout all of our agencies. So it doesn't help that the FMS
    process is also undermanned. As noted we're losing--there's a
    knowledge gap, and we're going to have a hard time recruiting
    and retaining the people that we need. But I would say that if
    this committee really wanted to focus on the kind of changes
    that might enable this process to be much more focused, then
    the suggestions that you all made to enable the DSCA to go
    about their business is I think, really a good one. I would
    suggest that this committee focus on enabling such a process to
    occur.
        Now Ms. Saum-Manning, you said that RAND could do a bit of
    a study on what the tariff situation could do. But without us
    even doing a study, don't you think that the ripple effect
    would be that it's going to cause even further delays and the
    FMS process and cost more money? I mean, couldn't you pretty
    much conclude that that's what's going to happen with all of
    this uncertainty around tariffs?
        Dr. Saum-Manning. Well, I would say I would have to be
    heavily footnoted for me to say that, but in my own opinion,
    not speaking, RAND yes. Logically that sounds like that would
    be the course.
        Senator Hirono. Yes. So, I would agree. I don't know that
    we need another study to tell us that these tariffs are not a
    particularly good idea. So, one more very brief question for
    Dr. Greenwalt and Mr. Webster. Has the production cap capacity
    of the defense industrial base kept pace with the increased
    demand in Foreign Military Sales over the last years? So, what
    can we do, very briefly? Assuming this is a problem, what can
    we do?
        Mr. Webster. So fundamentally, very briefly, I would say in
    select areas, the production capacity has not kept pace. This
    has been compounded by the situation in Ukraine and the United
    States providing capability to Ukraine as well as our allies.
    So that stresses our industrial base to resupply us, resupply
    allies, keep supplying Ukraine, help Israel, it's very
    difficult. No, not at pace.
        Chairman Wicker. Thank you.
        Dr. Greenwalt. But also, it's difficult for the industry to
    know whether an FMM case is real, if they're actually going to
    actually implement some of these FMS cases. Because of that,
    it's hard to make those investments until there's a real demand
    signal and under a contract in place.
        Senator Hirono. Thank you.
        Chairman Wicker. Thank you very much. Senator Sheehy.
        Senator Sheehy. Thank you, Mr. Chairman. Does ITAR work as
    it's currently structured?
        Dr. Greenwalt. I think, yes. ITAR works for I would say the
    vast majority of countries that we need to do business with and
    work with. It works terribly with those countries that are
    close allies that we need to cooperate with. So, it's one of
    those things where we have to differentiate between the UKs,
    the Australias, and perhaps over here on some of the countries
    that we don't have alliances with.
        Senator Sheehy. But the paradigm of ITAR is in the timeline
    of American 21st century technology, is ancient. I mean, ITAR
    is a relic of an era when we, the U.S. Government actually had
    the best technology in the world, and we wanted to make sure
    other countries wouldn't buy that, acquire it, steal it, and
    get access to that same capability.
        Dr. Greenwalt. It still focuses on 1970's technology when
    the Arms Export Control Act of 1976 was passed, yes.
        Senator Sheehy. If a country like India, right now, we have
    an India Pakistan challenge going on, which has been going on
    for decades, but we're in a flare up. If India wants to buy a
    system that is as capable as the U.S. system, and we cannot
    sell it to them in a timely manner, will they get an equally
    capable system from somebody else?
        Dr. Greenwalt. I think they're going to try to do that, and
    I think if you've seen what Poland recently has done with South
    Korea, then yes, there are alternatives out there for many of
    these systems. It's also a kind of ironic that some of the most
    cutting-edge technologies, whether it's AI, robotics, data
    analytics or so on, are not covered by ITAR. They're covered by
    the Export Administration Regulations (EAR) for example.
        Senator Sheehy. Oftentimes, the EAR ITAR specifications
    will restrict us from selling--I used to sell cameras similar
    to Hensoldt, and I could buy a commercial camera at the Apple
    store that had more capability than an ITAR restricted camera I
    was going to make in a factory because it was on an ITAR list
    30 years ago and the DSCA and the State Department didn't want
    to take the political risk of delisting that.
        We'd have a years-long delay, and a company like Hensoldt,
    who has operations in Africa and Europe, could sell a similarly
    capable system far faster than we could. So I think we need a
    fundamental reimagination of ITAR for where we're at today. I
    think we need to make sure that our allies can get equipment
    from us because they need it from somebody. In recently
    speaking to some ministry defense leads in the Middle East,
    they need the equipment, and if they can't get it from us,
    they'll buy it from China or Russia, or Europe, hopefully, but
    probably not.
        So what can DSCA do specifically, DSCA doesn't have the
    authority, as you mentioned, but let's say we did give them the
    authority. How do we turn a round hole for a square peg? How do
    we make that fit with DSCA in the State Department? Because
    they're serving two bosses there that rarely agree. How do we
    square that and make sure that DSCA can make the decision and
    State Department doesn't veto something or simply just kill it
    bureaucratically that DSCA thinks should happen?
        Dr. Saum-Manning. Well, that's a really good question. I
    think there's a role for U.S Undersecretary of Defense Policy.
    So, I think policy has a role to play, sort of as the
    arbitrator to kind of understand what the priorities are for
    State, and to better sort of translate them, negotiate between
    the two. But I think they all three, I mean, they've got
    different priorities for good reasons, but I think there's a
    way to negotiate to yes, for all three of them. I think policy
    has an important role to play in that.
        Senator Sheehy. Should more authority be given to the in-
    country military liaison that is liaising with the customer
    government?
        Dr. Saum-Manning. No, I think they've got the authorities
    that they need. I think sometimes there's confusion between
    title 22 and title 10 authorities. So I think a little bit more
    maybe input or maybe even into the training from State
    Departments so that they can better articulate some of the
    authorities. So I think some of it comes down to training, but
    not that they don't have it, the authority.
        Senator Sheehy. Well, we're emerging into a great era of
    great power competition again, and we're going to depend on our
    allies to be able to hold the line in places where we can't or
    won't, and they need to have the tools to do this job. So, this
    is a problem we have to solve, and it's going to start with
    this committee. Thanks for your testimony today.
        Chairman Wicker. I think you are on to something, Senator
    Sheehy. Senator Kaine.
        Senator Kaine. Thank you. Thank you, Mr. Chairman. Thanks
    to the witnesses. This has been a very, very good hearing. I
    agree with my colleagues on that. I want to ask you about a
    topic that's just slightly adjacent to Foreign Military Sales.
    So, I'm a little bit worried if we make all the reforms we need
    to in the Foreign Military Sales process, we will still have
    workforce and supply chain challenges here that will not enable
    us to maintain the production pace that we want to. So, I'm
    grappling with this question of Foreign Military Sales as one
    way to help allied nations or partner nations defend themselves
    and defend values that we share.
        But there's other ways to do that, and one is inspiring
    more domestic production in those nations of their own military
    capacities. Just using Ukraine as an example that, you know,
    they've been using heavily 155 rounds. They didn't have much of
    a capacity to produce 155 rounds in Ukraine at the beginning of
    the war. They've grown that capacity. I heard a stat that the
    Ukraine defense industry was producing about $5 billion worth
    of, you know, material and armaments, and now they're about $30
    billion. So they've gone up sixfold, they could do more.
        Related to sort of the FMS questions would be, if U.S.
    defense firms want to invest in Germany or Poland or Ukraine,
    or they want to invest in Australia to expand the production
    capacities of weapon systems in those nations, or if U.S.
    financial firms that aren't necessarily in the defense space,
    but increasingly have shown a willingness to invest in port
    infrastructure or ship building or other defense industries, if
    U.S. firms want to invest to accomplish increases in production
    in other countries, do we have the right legal framework to
    allow them to do that easily? Or are there similar obstacles in
    the way that we ought to be considering diluting or bringing
    down? So that's the issue that I want to ask you about.
        Dr. Greenwalt. So many of those obstacles exist. I think
    you should talk to the Australians on how they're trying to do
    co-production and I've been trying to do this for about 5 years
    now and have fit met all sorts of ITAR restrictions and other
    things in negotiating. So yes, it's very difficult to move,
    move overseas.
        I think there's this tsunami of potential allied defense
    expenditures coming if they actually do increase their defense
    expenditures, you know, two more percentage points of Gross
    Domestic Product (GDP), that's about $600 billion a year, which
    is twice what we spend on production and R&D. I don't know
    where they're going to do with that or how they're going to
    spend it and they may not spend it wisely, but that's a
    potential huge market, and it would be much better for us to
    make those sales than have them create their own capabilities
    that'll compete with us in the future.
        Senator Kaine. Others who want to offer thoughts on my
    question? Mr. Webster?
        Mr. Webster. So, I mean, I think it's important to
    recognize that our industries are global industries and global
    supply chain, so they know how to figure that out. Lockheed
    Martin F-35 is an excellent example where you have partner
    contributions that was part of the deal of being a partner, was
    to have industrial participation. So our industries where it is
    in their interest to seek technology, they can't get here for a
    good price, where they can reduce production costs, and where
    the government will allow it, will go offshore.
        So the tools are there to accomplish what you envision. It
    just is a question of how is that incentivized?
        Senator Kaine. Dr. Saum-Manning.
        Dr. Saum-Manning. I'll just say I was not part of a study,
    but we just did a study on third party suppliers. One of my
    colleagues, Adriane Wynn and her team looked at this and tried
    to think about how to do this responsibly. Tried to find
    suppliers that are, you know, aligned with our strategic
    interests. Thinking about some of the criteria that would you
    think about when you'd want to kind of invest in and kind of
    shape what our allies when we can't supply it, how they make
    their decisions elsewhere.
        Senator Kaine. I'll take a look at that. I want to say a
    last in 45 seconds, something about tariffs. I was just in
    Germany, Poland, and Ukraine, and I heard over and over again,
    ``We are cooperating with you. We want to cooperate more.
    There's so much more we can do together. Tariffs are getting in
    the way.''
        The German example was the most striking. A new government
    in Germany with a mandate to improve the economy, which has
    been in the doldrum since 2019. That is the mandate. The
    government is very pro-U.S., pro Trans-Atlantic, they're pro-
    U.S. military, more U.S. troops in Germany than any nation
    other than Japan outside the United States. But they said
    tariffs are getting in the way of the primary goal of this new
    government, which is to improve the German economy.
        If that's the case, I know you expect us to be great
    defense partners, but there's no such thing as a silo where
    half the relationship is really bad. But on the other half,
    we're going to be completely cooperative. We need to sort out
    this tariff madness and using tariffs against adversaries
    great, or in particular instances on particular trade barriers,
    of course.
        Using tariffs willy nilly against allies is very
    destructive, both in the national security space and in the
    American economy. That was the message I heard loud and clear
    from our allies. I yield back.
        Chairman Wicker. Thank you for that. Senator Scott.
        Senator Scott. Thank you all for being here. I just about 3
    weeks ago during a recess, I went to Denmark, Finland, and
    Estonia, and similar to Senator Kaine, I get asked questions
    about Trump's position, you know, on tariffs and NATO and
    things like that. Here's the way I explained it to them. I
    think Trump is going to try to make two things happen.
        Number one, if you're going to be an ally of the United
    States, you're going to build your own military first. We're
    not going to be your first line of defense. If you're not
    willing to defend your own country, if your men and women don't
    want to serve, and you don't want to go buy the equipment to be
    able to do it, America's not going to be your first line.
        Number two is, if you want to sell in our country the best
    market in the world, then whether it's tariffs, whether it's
    other barriers, those barriers are going down. We've watched
    for decades where this country is allowed other countries to be
    able to sell into our country, and they put up barriers. Some
    of it is tariffs, some of it is regulations, some of it is
    permitting, all sorts of stuff you can't even sell, which makes
    zero sense.
        I'm fine with everybody else's economy doing well, but I'm
    primarily responsible for American workers. But one thing we
    talked about when I talked to the military leaders in Europe
    and the political leaders, is that they're frustrated they
    can't get an answer on Foreign Military Sales. They have really
    two complaints.
        Number one is, why does it take so long? Why can't you get
    an answer? What's the process? Why is it a black hole? Number
    two is why can't your defense contractors make things on time?
    So, what they said is, you know, we're spending, and for
    whatever reason, whether it's Putin, in Beijing, in Ukraine,
    they're spending their money now. But they can't get approvals
    and that our suppliers are not on time.
        The other thing they brought up is the fact that we have
    suppliers that my understanding is we paid for them to develop
    technology, and then the manufacturer owns the technology, and
    so nobody else can do it which makes no sense in the world. So
    can you just talk about, I mean, why can't we have like a
    checklist like you do in any business of here's what has to get
    done, here's a timeframe. Because some of the stuff should be
    simple, you should be able to do in days rather than years.
        Dr. Greenwalt. The last time I was in the Pentagon, which
    was 20 years ago, I think, Keith, we worked together and the
    administration was trying to do that, to try to figure out,
    let's create a list of what we can sell out to our allies and
    kind of pre-approve it, so to speak. This was a process I think
    we've all talked about called the Arms Transfer and Technology
    Release Senior Steering Group (ATTR SSG). Unfortunately, that
    that process never went forward. Even though it was a great
    idea 20 years ago, the idea of getting away from this
    transactional, you know, everything is new once again to
    basically to say, this is the UK we know what we would need to
    sell with them, and here's the list and let's just be done with
    it.
        Unfortunately, that type of thinking never really you know,
    took hold and we're back to just transactional. Every time we
    get a request, we go through it. It takes just as long to go
    through the process.
        Mr. Webster. Okay, sir. The system was developed long ago
    for a case by case review. So every individual request by every
    individual country is reviewed on a case by case basis, whether
    it's a direct commercial sale license activity, or a Foreign
    Military Sales bilateral agreement. That's where we're saying
    transformation needs to occur. There needs to be a positive
    list of countries allies that are pre-approved for specific
    capability to remove ambiguity and remove this case by case
    process of review. That's really what we need.
        What was mentioned was Secretary Gates established the ATTR
    SSG to develop anticipatory policy. The first and only policy
    developed was for unmanned aerial systems (UAS) systems and
    State Department would not partner on anticipatory policy
    because under title 22, they have the authority to review each
    transfer on a case by case business and they did not want to
    tie their hands on their authorities and their business. So it
    failed. But we need to fix that. Thanks.
        Senator Scott. So, does anybody put anything out that
    they're going to--is there any outside group that's put
    something out that said this would be the exact way you should
    do it, that we should rally behind?
        Mr. Webster. I'm not aware of anything that's published,
    but I know we've all talked about it with previous
    administrations. We've talked about it with the new
    administration. We can help the administration develop that
    process. It'll take approval by State and its committees as
    well as this committee to agree to such a list to act upon.
        Senator Scott. All right, thank you.
        Chairman Wicker. Thank you, Senator Scott. Senator Warren.
        Senator Warren. Thank you, Mr. Chairman. So being lethal on
    the battlefield means being scrappy. When Russia first invaded
    Ukraine, we sat in the briefings when we were told by experts
    that Ukraine would only be able to hold out for a few weeks
    maximum. But over the past 3 years, Ukrainians have been
    incredibly innovative, especially in the deployment of drones
    to keep Russian forces at bay.
        The U.S. military may not be nearly as agile. One problem,
    soldiers are not allowed to repair many of their own weapons.
    DOD spends billions of dollars buying all sorts of equipment,
    but then contractors impose restrictions on who can maintain
    systems and who can produce spare parts. Contractors rake in
    billions, but servicemembers are not allowed to fix their own
    weapons when they break even in the middle of life and death
    missions, that is the opposite of scrappy.
        So, Dr. Saum-Manning, you are an expert on building
    military capacity. How important is it for readiness for
    servicemembers just to be able to repair their own weapons?
        Dr. Saum-Manning. I mean, they are on the front lines and
    critical when it comes to life and death decisions, I think you
    sort of overlook policy. That's what I would do if I were on
    the battlefield. Again, this is my personal opinion, not an
    opinion of RAND.
        Senator Warren. But I take it you think the right to repair
    is important to being able to do your job.
        Dr. Saum-Manning. I do think it's important. That said, you
    have to know how to do it, and so, I would----
        Senator Warren. Fair enough.
        Dr. Saum-Manning.--want to make sure that they actually
    knew what they were doing.
        Senator Warren. The problem we've got is that too often
    when the U.S. military goes to contractors, they are told when
    something is broken, they're going to have to wait months for
    critical parts. In just one case that we have, the Army
    discovered that instead of waiting months, they can actually
    just use a 3D printer to print the safety clip they needed in
    less than an hour, and for 1/100th of the cost that was being
    charged by the contractor.
        So, this month, the Trump administration took an important
    step toward making sure that U.S. soldiers can be just as
    scrappy as the Ukrainians. The Army's new transformation
    initiative requires new contracts to include a right to repair
    their own equipment, and they're also going back to review old
    contracts to add similar protections.
        I want to give a shout out to the new Secretary of the
    Army, Dan Driscoll, for pushing this initiative. So Dr. Saum-
    Manning would adopting this policy across the military services
    enhance innovation and help reduce costs?
        Dr. Saum-Manning. Well, as all RAND good researchers say we
    have to study that. This is very new. It's very exciting to
    see. When we were doing our study, army was in the midst of
    their sort of transformation and there was consensus opinion
    that it needed to change. So it's exciting that they're
    innovating, we're watching it, and it's definitely a great
    experiment to see if it happens and to see if we can apply
    these lessons elsewhere.
        Senator Warren. Well, you know, I would argue here on right
    to repair, that it can also be used to help strengthen American
    Allied forces as well. When our closest allies buy U.S.
    weapons, it can help enhance their capabilities, help them work
    better with our troops. We really like all of that. They can
    take missions off our plate and they can support U.S. jobs, but
    our allies and partners have a lot of other companies that they
    can choose from, and they're willing to drive a harder bargain
    than we are.
        For example, a Canadian task force found that failing to
    acquire data rights hurt their ability to independently support
    their own equipment right to repair, and they recommended
    prioritizing sustainability and competition. The bottom line,
    Lockheed Martin's higher repair costs meant that Lockheed
    Martin just wasn't competitive for the contract.
        So, Dr. Saum-Manning isn't the best outcome for us, is not
    only if we can repair our own equipment, but also if our allies
    who are buying from U.S. contractors can repair their weapons
    in the field and have those weapons made in America?
        Dr. Saum-Manning. Well, we have not studied that, but I
    would say that if we are sort of part of that process and we
    can help train, help equip, be there, help sustain, our
    partners need to be actually be able to sustain the equipment
    that we give them. Those are priority decisions that need to be
    made prior to them actually getting on the the battlefield.
        Senator Warren. Well, Army Secretary Driscoll has taken a
    necessary and overdue step, but we need all of the services and
    DOD to prioritize lethality. That means commanders in the field
    should never have to beg a contractor to come repair a plane
    that the Air Force owns and that soldiers could fix themselves.
    Our Navy should never have to wonder if an ally won't show up
    because they're waiting months for a contractor to fix a fuel
    gauge.
        I look forward to working with my colleagues on this
    committee to make sure that we aren't letting bad contracting
    practices limit our soldier's ability to win on the
    battlefield. Thank you, Mr. Chairman.
        Chairman Wicker. Thank you, Senator Warren. Before we close
    and really for the benefit of our stenographer who does a
    wonderful job, Dr. Greenwalt and Mr. Webster, you referred to
    ATTR SSG and I'm told that stands for Arms Transfer Technology
    Review Senior Steering Group. Is that correct?
        Dr. Greenwalt. That is correct. It is.
        Chairman Wicker. All right. That's going to save her a
    little time there, and as far as we know, that group does not
    exist anymore. It was an effort that was abandoned. Is that
    right, Dr. Greenwalt?
        Dr. Greenwalt. I believe it's still on the Defense
    Technology Security Agency's website. Whether it's still
    active, I do not know.
        Chairman Wicker. Well, we'll look into that. Thank you very
    much, and unless there are further questions, this hearing is
    closed. Thank you very, very much.
        [Whereupon, at 11:06 a.m., the Committee adjourned.]
        [Questions for the record with answers supplied follow:]

                   Questions Submitted by Senator Tom Cotton
              extending approved foreign military sales agreements
        1. Senator Cotton. Dr. Greenwalt, countries like Estonia have
    established Foreign Military Sales (FMS) agreements and are unable to
    purchase more equipment, due to a variety of factors. For countries
    with existing approved FMS agreements, what specific changes, from
    industry or from the Government, would get additional procurements
    options into allied hands faster?
        Dr. Greenwalt. I am a firm believer in providing the right
    incentives to industry. If we make it more profitable and easier for
    industry to fulfill these orders, they will make the right investments
    to do so. Right now, the industry is so heavily regulated by the U.S.
    Government that it is trained not to make an investment move without
    going to the government to determine whether it will be reimbursed in
    its overhead rates for any such investment. The government's usual
    answer for such investment is to not do so until there is a contract in
    hand. As investment lead times to increase production are 18 to 24
    months that answer is far too late. We need to free up the traditional
    defense contractors to make investment decisions and incentivize them
    to invest in plant and equipment ahead of sales. This cannot be done
    under the current contractor oversight regimes based on unique
    government cost accounting system standards, the mandates of the Truth
    in Negotiations Act, the business system rule, and government
    bureaucrats questioning every investment decision contractors make as
    to what constitutes their overhead expenses.

        2. Senator Cotton. Dr. Greenwalt, would mandating that FMS demand
    be factored into the Total Munitions Requirement improve the management
    of weapons production at the Department of Defense (DOD)?
        Dr. Greenwalt. This would only be helpful if the Total Munitions
    Requirements processes actually leads to increased budgets for
    munitions. As was outlined in a 2023 Army Science Board study our
    requirements process is jumble of different responsible persons and
    agencies who use different models of needs that are untethered to
    funding or industrial capacity realities. Factoring FMS into TMR may
    help in demand signaling but the current reality is we need everything
    we can produce right now and our problem is we are not producing
    enough. What is needed is real money to buy ahead of need and to
    stockpile more of those munitions. What we have found out in the new
    world order is we do not have enough munitions for us or our allies so
    this is an investment that is worth making. If adding FMS to TMR helps
    in signaling more demand that leads to higher munitions budges then it
    is a sound policy proposal.
                approving new foreign military sales agreements
        3. Senator Cotton. Dr. Greenwalt, for countries with existing U.S.
    fighter aircraft procured through the FMS process, what can we do to
    accelerate new sales of American military equipment to prevent allies
    from turning to our adversaries or competitors for critical defense
    capabilities?
        Dr. Greenwalt. Allied orders of jets extend years into the future
    but we face issues producing enough jets to meet that demand. We can
    see this with delays in F-16 sales to Taiwan and sales of radar delay
    risks on F-35s sales to NATO partners, who sometimes have to use the
    jets as trainers until upgrades can be done. These issues sap demand
    for the jets. The root cause of these delays in shipments or upgrades
    are the same that affect our own fighter fleet. Our programs are
    expensive and exquisite and contractors struggle to produce in mass in
    the face of funding uncertainty, supply chain snafus, and over-wrought
    designs. We need to fix our way of acquisition which will fix our
    industrial base and move away from the U.S. industrial base being the
    ``artisans of democracy'' that produce exquisite hand-crafted weapon
    systems to being a true ``arsenal of democracy'' where production at
    speed and scale is valued. We haven't done that since WWII with the
    exception of the MRAP program.
       united states indo-pacific command targeted foreign military sales
        4. Senator Cotton. Dr. Greenwalt, what technologies or capabilities
    do you believe would be particularly suitable for export to United
    States Indo-Pacific Command (INDOPACOM)?
        Dr. Greenwalt. In the Indo-Pacific, many of our allies including
    South Korea and Japan have rather extensive industrial bases that
    produce traditional platforms and systems like tanks, artillery pieces,
    munitions, and more. Where Japan seems to be behind the curve is in
    unmanned systems which are currently a crucial aspect of denying
    offensive enemy forces from making successful inroads. And that should
    be our main goal with our partners in the Indo-Pacific, to enable them
    to deny offensive operations. Capabilities that we have already
    exported to Japan and could sell further include electronic warfare and
    early warning systems. Systems that can be easily linked into
    interoperable networks should take special precedence given the
    assumption that in many scenarios our allies would be reticent to
    respond to aggression without the U.S. Air and missile defense, command
    and control, counter-strike, anti-ship missiles, and counter-drone
    defenses will be key capabilities that our Pacific allies will need.
    The problem is as we are starting to realize with attack submarines and
    AUKUS we don't even have enough of these systems available to our own
    services and production rates are extremely difficult to increase.
                      designing exportability into systems
        5. Senator Cotton. Dr. Saum-Manning, the idea behind a ``hedge
    force'' involves pre-positioning low-cost, short range defensive
    systems with allied nations. Where possible, facilitating these sales
    through FMS, versus deploying U.S. Forces, can be preferable. Knowing
    this, how would you approach industry, the DOD, and the Defense
    Security Cooperation Agency (DSCA) to streamline and accelerate the
    sale of these capabilities?
        Dr. Saum-Manning. Allies and partners can serve as vital force
    multipliers in contested regions, particularly in the Indo-Pacific,
    where forward-positioned, partner-enabled capabilities are key to a
    ``fight tonight'' posture. Building an effective ``hedge force''
    capable of deterring aggression--or, if deterrence fails, stalling
    adversaries until U.S. Forces arrive--requires a deliberate and
    coordinated approach that factors allies and partners into relevant,
    policy, planning, and (potentially co-) capability development. The
    U.S. Department of Defense (DOD), its subordinate organizations, and
    industry have roles to play in better enabling this strategic approach.
        For DOD, integrating Foreign Military Sales (FMS)--enabled partners
    into defense planning guidance and encouraging Combatant Commands to do
    the same in operational plans and exercises can help to prioritize FMS
    deliveries, as such actions would ensure that hedge force--capable
    partners are factored into the battle equation. The Office of the Under
    Secretary of Defense for Policy (OUSD[P]) should also clearly signal
    its partner-nation priorities, and DSCA and the military departments'
    implementing agencies (IAs) should communicate the anticipated demand
    to industry so suppliers can plan for predictable requirements.
    Additionally, the Office of the Under Secretary of Defense for
    Acquisition and Sustainment (OUSD[A&S]) should clarify technology
    security approval processes, establish meaningful metrics and
    accountability mechanisms, and explicitly require industry to design
    defense systems with exportability in mind from the outset.
        Industry might further consider co-production with allies or
    partners to ensure that critical subcomponents are available and
    accessible near the front lines of the fight. Establishing effective
    hedge forces requires synchronized effort across policy, acquisition,
    planning, and industry. Deliberate integration--not aspiration--must
    define the U.S. approach to empowering allies and partners in close
    proximity to enemy forces.\1\ \2\ \3\
    ---------------------------------------------------------------------------
        \1\ [Note pertaining to Dr. Saum-Manning's responses:]The opinions
    and conclusions expressed in this addendum are the author's alone and
    should not be interpreted as representing those of RAND or any of the
    sponsors of its research.
        \2\ [Note pertaining to Dr. Saum-Manning's responses:] RAND is a
    research organization that develops solutions to public policy
    challenges to help make communities throughout the world safer and more
    secure, healthier and more prosperous. RAND is nonprofit, nonpartisan,
    and committed to the public interest. RAND's mission is enabled through
    its core values of quality and objectivity and its commitment to
    integrity and ethical behavior. RAND subjects its research publications
    to a robust and exacting quality-assurance process; avoids financial
    and other conflicts of interest through staff training, project
    screening, and a policy of mandatory disclosure; and pursues
    transparency through the open publication of research findings and
    recommendations, disclosure of the source of funding of published
    research, and policies to ensure intellectual independence. This
    testimony is not a research publication, but witnesses affiliated with
    RAND routinely draw on relevant research conducted in the organization.
        \3\ [Note pertaining to Dr. Saum-Manning's responses:] All
    questions are presented verbatim as they were submitted to RAND.
    ---------------------------------------------------------------------------
                                   __________
                    Questions Submitted by Senator Jack Reed
                             foreign military sales
        6. Senator Reed. Dr. Saum-Manning, the Foreign Military Sales
    ecosystem encompasses much more than the FMS workforce and policies and
    processes and involves several other fields and RAND has produced
    actionable policy options in many of these areas. Some of the themes
    explored at the hearing include issues related to the defense
    industrial base and its ability to surge, coproduction of defense
    materiel with allies, and the right to repair. Are there any additional
    insights that you can share regarding those topics and the FMS process?
        Dr. Saum-Manning. The health of the defense industrial base--and
    its ability to surge when needed--relies heavily on steady, predictable
    demand that keeps production lines active.
        FMS may also be a first step toward co-production programs with
    allies and partners. Co-production can keep a defense production line
    warm for years after U.S. military requirements have been met. Keeping
    a defense production line operational would allow for a faster surge.
    This benefit of FMS is in addition to other benefits, including
    interoperability with and reassurance of allies and partners.
        Following on the line of questions in the hearing, the Army
    generally has the necessary rights with respect to noncommercial items
    to produce repair parts or have them produced by third parties. This,
    with the Secretary Driscoll's commitment to the right to repair for
    future contracts, gives the Army the ability to exercise its right to
    repair in ways that enhance speed and keep costs low.
                                   __________
                 Questions Submitted by Senator Jeanne Shaheen
         defense security cooperation agency structure and organization
        7. Senator Shaheen. Dr. Greenwalt, Mr. Webster, and Dr. Saum-
    Manning, DSCA is responsible for administering the FMS system, yet it
    has little means to do so in terms of actually managing the acquisition
    system that contracts for the production of the arms to be acquired.
    That is left to the individual military services, each with their own
    information systems, processes and priorities. This makes FMS sales
    second-best in terms of attention. Is there any real-world way to
    rationalize and streamline the disparate acquisition services that both
    respond to demands of the U.S industrial base and FMS needs?
        Dr. Greenwalt. One option is to take the contracting and execution
    for these contracts away from the services. DSCA with the help of say
    the Defense Logistics Agency or the Defense Contract Management Agency
    could establish direct contracts with the defense industry. A contract
    vehicle similar to that of a GSA schedule for defense goods could be
    established with up-front prices, terms and conditions already
    negotiated. This IDIQ for defense articles would allow the services to
    focus on their needs and not on those of our allies as an afterthought.
    This probably should be conducted as an OTA consortium contracting
    vehicle to enable more small business and emerging technology company
    participation.
        DLA could also stockpile munitions and exportable goods with high
    demands to make them immediately available to our allies upon order.
    Such a stockpile would require the creation of either a new munitions
    or FMS Fund or an expansion of the current SDAF. As I testified the
    ATTR-SIG should be reconstituted and empowered to engage in a pre-
    approval process for certain allied countries to streamline decision
    time prior to contract awards. This would require though the State
    Department to be on board to provide export control clearance and pre-
    approvals for these approved items to be immediately transferred or
    sold to our allies.
        Mr. Webster. DOD Acquisition and associated contracting are both
    heavily regulated government activity, as governed by the Federal
    Acquisition Regulation (FAR) and associated DOD supplement, the DFAR.
    With each passing NDAA, we witness compounding complexity as Congress
    addresses a growing list of concerns.
        Ideally, to address the question, foreign purchasers would be
    convinced to buy systems as developed and configured by the DOD (called
    standard programs) and stop insisting on program modifications (called
    nonstandard programs meaning different than that produced for U.S.
    Forces), which add significant risks and complexity to an FMS program.
        Second, DOD needs to minimize FMS-only programs thus allowing our
    industries to take the acquisition lead--to include contracting--with
    USG oversight.
        Finally, our contracting and broader acquisition community are
    woefully understaffed. In addition to traditional recruitment and
    retention efforts, the Administration must pursue automation--at a
    scope and scale heretofore not seen--to offload simple and redundant
    work.
        Dr. Saum-Manning. Streamlining the disparate acquisition processes
    to accelerate FMS deliveries is a challenging prospect because the
    current DOD contracting landscape is highly decentralized, with
    hundreds or thousands of contracting nodes across military departments,
    each using its own data systems, procedures, and priorities. No
    contracting node works directly for the security assistance community,
    and contracting data are siloed and not shared, making it difficult for
    DSCA or policymakers to get a comprehensive, real-time picture of
    contract status for FMS cases.
        My team's research report Optimizing Foreign Military Sales Roles,
    Responsibilities, and Authorities found that amending key DOD
    directives to increase transparency and enforce consequences for
    bottlenecks and underperformance could improve the FMS process without
    centralizing the acquisitions system. \4\ For example, DOD could amend
    applicable directives to require IAs to provide standardized, timely,
    and accurate contracting and production status updates to DSCA and
    senior DOD leadership, with clear procedures for--and consequences for
    the lack of timely--reporting on actual or anticipated problems. This
    recommendation aligns with the recent Executive Order, Reforming
    Foreign Defense Sales to Improve Speed and Accountability, which
    mandates the establishment of a single electronic system to track both
    the life cycle of all FMS cases and Direct Commercial Sales export
    license requests. The creation of a ``data czar'' role under DSCA, with
    authorized access across U.S. Government FMS systems, may further
    improve enterprise-wide visibility and allow for rapid identification
    of where delays and failures are occurring. Reporting failures should
    trigger corrective actions or accountability measures at both the IA
    and industry levels.
    ---------------------------------------------------------------------------
        \4\ Lisa Saum-Manning, Jefferson P. Marquis, Irina A. Chindea,
    Daniel Elinoff, Theiline Pigott, and Elliott Brennan, Optimizing
    Foreign Military Sales Roles, Responsibilities, and Authorities, RAND
    Corporation, RR-A2631-1, 2024, https://www.rand.org/pubs/research--
    reports/RRA2631-1.html.
    ---------------------------------------------------------------------------
        For accountability purposes, DSCA should be empowered to provide
    input into periodic performance evaluations of key FMS-related
    positions within the military departments, ensuring that leaders whose
    organizations consistently underperform or create bottlenecks are made
    aware and that these actions are made visible to OUSD(P) and OUSD(A&S)
    leaders. This would give DSCA influence to flag persistent choke points
    and recommend staff changes in FMS-centric positions or processes
    accordingly.
        Parallel to this, and consistent with guidance released in the
    April 2025 executive order Modernizing Defense Acquisitions and
    Spurring Innovation in the Defense Industry Base, \5\ DOD should
    require IAs to implement contracts with penalties for slow or
    substandard performance from the defense industrial base, including
    such mechanisms as financial penalties or, where feasible, the
    authority to rescind contracts and move production to more-reliable
    suppliers if vendors fail to meet agreed-upon timelines or standards.
    ---------------------------------------------------------------------------
        \5\ Executive Order 14265, Modernizing Defense Acquisitions and
    Spurring Innovation in the Defense Industry Base, Executive Office of
    the President, April 9, 2025.
    ---------------------------------------------------------------------------
        Such reforms--grounded in clearer authorities, data-driven
    performance evaluations, and real consequences for ineffective
    practices--not only should empower leaders to intervene earlier when
    challenges arise but would also create systemic incentives for both
    U.S. Government entities and industry partners to prioritize and
    deliver on FMS cases efficiently, without the need for a fully
    centralized acquisition system.

        8. Senator Shaheen. Dr. Greenwalt, Mr. Webster, and Dr. Saum-
    Manning, in your view, does the DSCA need its own acquisition service?
        Dr. Greenwalt. I believe it could rely on DLA and DCMA to a certain
    degree but yes, they need to have more acquisition expertise available.
    If DCSA were to stand up an FMS OTA consortium they could also rely on
    a non-profit, non-conflicted, consortia manager to provide some
    acquisition and contracting services that are not inherently
    governmental.
        Mr. Webster. No, they do not. The service acquisition community,
    including their program managers and contracting officers familiar with
    programs being sold via FMS, are vital to the success of any FMS
    program. They need to be resourced, encouraged to stay in the
    profession and to embrace automation to help them complete their
    mission.
        Dr. Saum-Manning. The recent executive order Modernizing Defense
    Acquisitions and Spurring Innovation in the Defense Industry Base aims
    to address some of the persistent challenges facing the DOD acquisition
    community. \6\ It may take some time to discern whether supporting ally
    and partner-related acquisition will be a focal point of
    implementation. Should the question of an independent acquisition
    system for DSCA arise, it is important to consider that creating a
    separate DSCA-owned FMS acquisition system may address some current
    challenges. However, the intertwined nature of domestic and security
    assistance acquisition, shared resources, and overlapping workforce
    responsibilities could increase rather than reduce duplicative
    processes by generating greater bureaucratic complexity. A co-existing
    system may also lead to a potential resource strain, as many
    acquisition professionals and defense industry suppliers currently
    support both domestic and FMS purchases without a corresponding
    increase in workforce. Additionally, establishing a DSCA acquisition
    system could diminish DSCA's and foreign customers' access to expertise
    resident in the services. Implementing such a change would thus entail
    managing the risk of a narrower focus that might not address all
    partner needs as effectively as more-integrated approaches.
    ---------------------------------------------------------------------------
        \6\ Executive Order 14265, 2025.
    ---------------------------------------------------------------------------
        Rather than establish a parallel system, DOD might consider
    mechanisms to ensure that DSCA has better visibility into the current
    system. As mentioned earlier, the creation of a ``data czar'' role
    under DSCA, with authorized access across U.S. Government FMS systems,
    may address the lack of transparency into procurement timelines and
    potential choke points. An additional step that merits further
    exploration is whether DSCA might be granted some level of authority
    over the country portfolio director positions in the IAs to provide
    DSCA additional access and influence over the acquisitions system.
                         security cooperation workforce
        9. Senator Shaheen. Dr. Greenwalt, Mr. Webster, and Dr. Saum-
    Manning, I understand that a significant delay in the FMS process comes
    in the ``front-end'', when countries, assisted by Security Cooperation
    Offices in our embassies, try to work out what they want, what they
    need, what they can afford, and what the U.S. is likely to approve for
    export. This can sometimes take months and even years. How would you
    suggest this process be improved?
        Dr. Greenwalt. As I have written in my report ``Competing in Time''
    about the problems writ large with U.S. acquisition, front-end decision
    time is a significant driver of delays in the acquisition process. This
    is equally true of the FMS process. We need to for each of our closest
    allies establish a pre-approved list of everything we are willing to
    sell, transfer, or lend these countries. Combining that with producing
    systems ahead of time that are then stockpiled is one way of reducing
    both decision and execution time.
        Mr. Webster. The key success factor in developing an executable FMS
    program requirement (known as an LOR--letter of offer and acceptance)
    is ensuring both the U.S. personnel at the Embassy and the purchasing
    country are advised by experts in system and program capabilities. It
    is virtually impossible to build an in-country team of individuals who
    are experts in every potential FMS capability to include services.
        The most recent challenge includes cyber defense capabilities as
    well as AI solutions. Thus, the Embassy team (security cooperation
    offices) must feel confident in including industry representatives in
    the discussions that ultimately shape FMS requirements. If not
    industry, then experts within government. Regarding industry
    engagement, the longstanding concern is that of violating USG mandates
    to maintain a level playing field for all U.S. industries as well as
    not interfering with competition rules.
        However, absent system experts involved in requirements development
    (DOD personnel, industry, others as appropriate), this matter of
    concern will not improve.
        Dr. Saum-Manning. My team's research report Optimizing Foreign
    Military Sales Roles, Responsibilities, and Authorities found that
    frontline personnel working in security cooperation organizations
    (SCOs) sometimes struggle to adequately facilitate partners' letters of
    request (LORs) for equipment purchases for a variety of reasons, some
    of which pertain to inadequate training. \7\ Recent reforms have begun
    to address some of the issues. In the fall of 2024, DSCA launched the
    Defense Security Cooperation Service (DSCS) and established the Defense
    SCO Institute (DSI), aimed at providing enhanced training for SCO
    personnel, although it is my understanding that DSCA does not have the
    authority to require uniformed personnel to attend, which may dilute
    the new service's effectiveness. As DSCS is less than a year old, it is
    too soon to assess this risk or otherwise track the initiative's impact
    on frontline performance. It may be informative to Congress to request
    a summary evaluation of the training program after its first full year
    of completion to assess progress toward developing personnel better
    capable of supporting FMS case management on the front lines of partner
    engagement.
    ---------------------------------------------------------------------------
        \7\ Manning et al., 2024.
    ---------------------------------------------------------------------------
        Additionally, while our research did not address external factors,
    Congress may wish to consider the extent to which delays in developing
    actionable Letters of Request from partners may be related to partner
    internal bureaucracy, which often times is not subject to the level of
    U.S. influence that could speed FMS to the point the U.S. seeks.

        10. Senator Shaheen. Dr. Greenwalt, Mr. Webster, and Dr. Saum-
    Manning, should there be more-extensive training of the uniformed
    personnel who serve in these offices, and should they serve for longer
    than just 2 years?
        Dr. Greenwalt. There is an inherent mismatch between the time it
    takes to work FMS actions and the tenure of military personnel. There
    are two ways to try and solve this problem: increase the tenure of
    military personnel working the FMS system or reduce processing time. I
    am in favor of both of these approaches as they are not mutually
    exclusive.
        Mr. Webster. Yes, there should be more extensive training, and they
    should serve for longer than 2 years.
        Dr. Saum-Manning. My team's research found that uniformed personnel
    assigned to SCOs were not consistently required to complete DSCA's
    training courses, in part because these roles are often viewed as
    collateral duty--a diversion from operational training that carries
    more weight for career advancement. Faced with a choice, personnel may
    prioritize operational training over the procurement-focused
    preparation needed for SCO assignments, leaving them underprepared for
    the job. To address this, the services could require all SCO personnel,
    including uniformed and civil servants, to attend DSCA-led training.
    Recently, DSCA launched Security Cooperation Workforce Certification
    2.0, designed to ensure that members of the Workforce, including SCOs,
    have the training and education necessary to perform at the level their
    positions require. Paired with the above-mentioned tailored SCO
    training through the Defense SCO Institute (DSI), DSCA is posturing
    itself to provide appropriate training and education.
        The Services might also consider assigning greater value to SCO
    billets in performance evaluations to justify investment in FMS
    training. Alternatively, in countries with significant FMS activity,
    Combatant Commands might transition these roles to civilians under DSCA
    operational control, whose responsibilities are focused on procurement
    rather than warfighting. A civilian-led model may have the added
    benefit of reducing the administrative burden on commands and allowing
    uniformed personnel to concentrate on increasing U.S. Force lethality.

        11. Senator Shaheen. Dr. Greenwalt, Mr. Webster, and Dr. Saum-
    Manning, should they be supplement or even replaced by civil service
    experts in the most important countries?
        Dr. Greenwalt. Military personnel add significant knowledge and
    value to the process. I would not want to replace them, but perhaps
    supplement them with more knowledgably longer tenured civil servants
    and trusted and conflict of interest free contractors to help them do
    their jobs better.
        Mr. Webster. Yes, where impactful. Civilian augmentation or
    replacement by trained and experienced individuals with a mandate to
    stay a minimum of 5 years could be helpful.
        Dr. Saum-Manning. To improve SCO staffing and performance, DSCA was
    recently authorized to develop, deploy, and manage DOD civilians who
    can provide continuity and, in some cases, replace rotating military
    personnel with less security cooperation experience. My team's research
    report Optimizing Foreign Military Sales Roles, Responsibilities, and
    Authorities further recommends that DSCA have greater influence over
    key SCO staffing decisions, such as approving billet descriptions and,
    where appropriate, SCO chief selections in high-volume and high-
    visibility FMS offices. \8\ DSCA should also be able to recommend FMS-
    related performance criteria for SCO chief evaluations to ensure that
    all personnel understand what effectively supporting the FMS mission
    entails.
    ---------------------------------------------------------------------------
        \8\ Manning et al., 2024.
    ---------------------------------------------------------------------------
                        foreign military sales increases
        12. Senator Shaheen. Dr. Greenwalt, in fiscal year 2024, FMS sales
    jumped 45.7 percent, the largest increase and largest amount of value
    authorized--$117.9 billion. Direct Commercial Sales were also up 27.5
    percent, to $200.8 billion. Despite delays in the industrial base,
    partners are still looking to the U.S. How does this compare with other
    major arms exporters, such as in Europe?
        Dr. Greenwalt. The French are now the world's second largest
    exporters of arms and the Italians, Germans, British, and Spanish all
    in the top 10. Relative to the Europeans who export more ships, we
    export more aircraft and helicopters. Russia has gone from being the
    world's No. 2 exporter to sliding down the list, first slowly following
    the annexation of Crimea and then more rapidly after the full-scale
    invasion of Ukraine. Not only did Russian equipment appear less capable
    than assumed, but the demands of the conflict have forced Russia to
    turn to countries not considered as industrial juggernauts such as
    North Korea and Iran for drones, artillery shells, missiles, and more.
        Partners for the moment are still looking to the U.S., but as NATO
    and our Asian allies increase their defense spending, they may look
    elsewhere. U.S. FMS orders are just promises. A better and more
    relevant data point is in actual transfers: when those systems were
    transferred and the time it took to actually deliver on those promises.
    That is a notoriously hard figure to determine, but is at the crux of
    the question of how effective the FMS process really is and will
    determine whether our allies can rely on us or need to find other
    suppliers.

        13. Senator Shaheen. Dr. Greenwalt and Mr. Webster, in addition to
    fixing regulatory delays, how should industry be investing more to
    improve the FMS process?
        Dr. Greenwalt. Industry should be looking to invest in more
    flexible manufacturing options. Peacetime lulls are notoriously bad for
    the defense business, but good for commercial manufacturing. We need to
    plan for mobilization and what is now considered ``excess'' production.
    New advances in commercial manufacturing technologies and the rise of
    commercial contract manufacturers are potential tools to increase
    defense production, but our acquisition system needs to be quicker to
    incentivize this commercial participation and qualify these
    manufacturers for surge production.
        Mr. Webster. Industry's role in the FMS process is to provide
    pricing data to the DOD contracting officer and to execute a DOD
    contract when that contract is awarded. Industry does not control the
    DOD contracting process and associated timeline, nor do they control
    what the USG determines to be an appropriate program configuration to
    be sold.
        For FMS programs, the biggest industrial base concern is the lack
    of inventory that would speed up delivery. As with the DOD, our
    industries have moved to a just-in-time production process with a
    minimum of components stocked in reserve. For industry to improve their
    part of the process, they need to have adequate information that will
    allow them to better anticipate future sales, stockpile long lead
    components, add personnel to production lines, run extra production
    shifts, and ensure their supply chains can adapt to an accelerated
    production and delivery cycle.
                                   __________
                 Questions Submitted by Senator Mazie K. Hirono
                increasing innovation in foreign military sales
        14. Senator Hirono. Dr. Greenwalt, Mr. Webster, and Dr. Saum-
    Manning, commercial technology has had dramatic impacts on battlefields
    globally--Ukrainian forces are using agile, commercial technology to
    damage the Russian Baltic Fleet, and Taiwan is partnering with U.S.
    firms to develop 3D-printed drone fleets. However, it is still the
    exception, not the norm, for these innovative technologies to make it
    through the FMS process. What can we do to make it easier for
    innovative technologies to move through the FMS process?
        Dr. Greenwalt. This is the one area where the services should not
    be leading the FMS process. Non-program of record technologies and
    systems that are not in the current service arsenal are the
    technologies of the future. The services are often reluctant to bring
    these ideas to market even for their own use. The Defense Innovation
    Unit (DIU) may be more appropriate to lead this effort and be an
    advocate of these solutions with our allies. This is in our interest as
    many of these solutions can be tested with our allies and determined
    whether they should be brought into the U.S. arsenal faster.
        Mr. Webster. For the most part, the FMS process is a mirror image
    of the DOD acquisition process when foreign nations are buying
    equipment and services that the DOD also buys for our forces. If the
    DOD system struggles to adopt innovation at pace, then FMS will also
    reflect that challenge.
        To improve, DOD must find the agility necessary to adapt more
    quickly and by doing so, the FMS process will follow.
        Dr. Saum-Manning. The April 2025 executive order Ensuring
    Commercial, Cost-Effective Solutions in Federal Contracts represents a
    significant step toward modernizing the defense acquisition system by
    promoting greater partner nation access to commercial innovation.\9\
    Although the intent is promising, it is far too soon to assess whether
    the supporting policies will reduce barriers that currently exist in
    the complex Federal contracting environment, much less whether the
    transfer of innovative technologies to allies and partners will be a
    focus of reform. As DOD develops policies to implement the intent of
    the EO, now is an opportune time to ensure that FMS considerations are
    factored into this reform effort.
    ---------------------------------------------------------------------------
        \9\ Executive Order 14271, Ensuring Commercial, Cost-Effective
    Solutions in Federal Contracts, Executive Office of the President,
    April 15, 2025.
    ---------------------------------------------------------------------------
        I also understand that DSCA has been investigating opportunities to
    leverage commercial technology in support of allies and partners
    through DSCA-sponsored research.
                          indo-pacific prioritization
        15. Senator Hirono. Dr. Saum-Manning, what specific criteria or
    mechanisms would help ensure FMS decisions reflect the urgency of
    deterrence in the Indo-Pacific?
        Dr. Saum-Manning. The Secretary of State, in consultation with the
    Secretary of Defense, develops the list of priority partners for
    conventional arms transfers and issues updated guidance to the chiefs
    of the U.S. diplomatic missions regarding this list. To help ensure
    that this list reflects the urgency of deterrence in the Indo-Pacific,
    RAND analysis derived from the research report Aligning Strategic
    Priorities and Foreign Military Sales to Fill Critical Capability Gaps
    recommends that leadership consider developing a defense FMS
    prioritization framework guided by three key criteria. \10\ First,
    prioritize countries expected to play critical roles in a regional
    contingency or in maintaining U.S. deterrence posture, as identified by
    the Department of State and OUSD(P). Second, determine and rank
    capability gaps based on each country's anticipated role, addressing
    the most-urgent gaps first--particularly for high-priority partners--
    given limited inventories and industrial base capacity. Third, consider
    such factors as procurement lead times (including Technology Security
    and Foreign Disclosure processing), a partner's ability to
    independently achieve full operational capability, and the partner's
    willingness, financial capacity, and bureaucratic agility to move
    quickly through the FMS process. Given the dynamic and multifaceted
    nature of these inputs, an AI/ML-enabled automated framework could be
    developed to continuously assess and rank partners and capability needs
    in real time, allowing the United States to adapt quickly to changing
    operational realities in the Indo-Pacific.
    ---------------------------------------------------------------------------
        \10\ Irina A. Chindea, Jennifer D. P. Moroney, Stephen Webber, Igor
    M. Brin, David E. Thaler, Ashley L. Rhoades, Anthony Atler, Beth Grill,
    Paul Cormarie, Jack Lashendock, and Isabelle Winston, Aligning
    Strategic Priorities and Foreign Military Sales to Fill Critical
    Capability Gaps, RAND Corporation, RR-A2438-2, 2024, https://
    www.rand.org/pubs/research--reports/RRA24380-2.html.
    ---------------------------------------------------------------------------
                       defense industrial base challenges
        16. Senator Hirono. Dr. Greenwalt and Mr. Webster, U.S. foreign
    military sales have significantly increased in recent years. In fiscal
    year 2024, the State Department reported $117 billion in FMS deals.
    This is a 45 percent increase from fiscal year 2023. Just last week,
    President Trump announced $142 billion in arms sales to Saudi Arabia
    alone. To what extent do you think delays in the delivery of FMS-
    contracted defense articles are due to a lack of industrial base
    production capacity? If so, what needs to be done to address this?
        Dr. Greenwalt. This is a chicken and egg problem of do you invest
    in plant and equipment ahead of time before getting a contract or do
    you wait for a contract before making investments. The latter has
    become the preferred course of action based on history and contracting
    incentives and oversight. There is a historical cyclical pattern that
    whenever the defense industry has been called on to ramp up it rarely
    makes a return on that investment as either an inevitable downturn
    happens or the government changes its mind. This has incentivized the
    industry to work through periods of high demand by not investing in new
    lines that will become obsolete over time and instead use existing
    capacity. This of course means delivery delays as existing capacity is
    focused on peacetime budgets that have actually been appropriated by
    Congress. We need a different approach as it relates to mobilization
    planning for the U.S. and how it provides systems to its allies.
        Mr. Webster. Our industrial base capacity reflects a peacetime
    cadence--not a war time sense of urgency. We have very limited surge
    capability, as evidenced over the past three years since the invasion
    of Ukraine. Like the commercial sector, the defense sector and DOD as
    an organization moved to a just-in-time model, with the elimination of
    large stockpiles and warehouses of components.
        To address these challenges, we need defined and stable
    requirements including FMS (an aggregation of demand), timely passage
    of defense appropriations (no more Continuing Resolutions for defense),
    multi-year program authority beyond what Congress has agreed to over
    the past three years, and multiyear ``life of funds'' for DOD program
    appropriations to stabilize investment and spend plans at DOD. Industry
    needs stable demand signals from DOD, funding, certainty amidst
    tariffs, and the elimination of as much uncertainty as possible.
                            general systemic issues
        17. Senator Hirono. Dr. Greenwalt and Mr. Webster, what lessons can
    be drawn from the Ukraine experience about the responsiveness and
    adaptability of the FMS system?
        Dr. Greenwalt. The Ukrainians have, as the United States has done
    in times of urgent need, foregone often sapping procurement regulations
    and government interference to ramp up the production of needed items
    -- in Ukraine's case drones and electronic jammers. Just as with our
    MRAP and counter-IED programs in the mid 2000's, the Ukrainians have
    shown again that necessity is the mother of invention. They have
    stressed commercial innovation and rapid iteration in an effort to
    field useful capabilities. Unlike us and especially their Russian
    aggressors, the Ukrainians have decentralized acquisition which has
    allowed units to acquire weapons that suit their combat realities.
        Mr. Webster. The FMS program is fundamentally a peace time program
    that is not well suited for the pace of war, as we consistently heard
    from U.S. Forces during the years of war in Iraq and Afghanistan. It is
    possible that Ukraine experienced success with FMS where the DOD took
    capability from our services' inventory to rapidly equip Ukrainian
    forces in their fight, and frustration in instances where material had
    to be produced. The FMS process can accelerate with the right amount of
    oversight but must be measured by the time it takes to actually deliver
    the capability.

        18. Senator Hirono. Dr. Greenwalt and Mr. Webster, in detail, do
    you think the current administration's tariff policies, which will
    undoubtedly impact global supply chains, will contribute to FMS delays?
        Dr. Greenwalt. The delay in obtaining Chinese rare earths when used
    as a retaliatory withhold by China would undoubtedly delay production.
    Tariffs add a level of complexity to our supply chains particularly
    with those countries who currently do not have an MOU defense article
    exemption. The threat of tariffs may have had a benefit of smoking out
    retaliatory measures such as with Chinese rare earths and now force the
    United States to address its own supply chain weaknesses. Still, we
    should have already been aware of where our supply chain
    vulnerabilities are with respect to China, but have so far been lacking
    the will to act on these vulnerabilities through investment and budget
    decisions.
        Mr. Webster. While it is currently unclear the impact to FMS
    delays, in the near future, we can anticipate price increases for FMS
    programs. As for the delays, if the price impacts are significant
    enough, we could see suppliers to our defense primes going bankrupt or
    terminating contracts for cause. If this happens absent second sources,
    we will see delays domestically as well as within the FMS program due
    to the scarcity of critical components.

        19. Senator Hirono. Dr. Greenwalt and Mr. Webster, what are the
    most significant bottlenecks in the current FMS system, and what
    reforms would you recommend to address them?
        Dr. Greenwalt. There are three main bottlenecks: decision time,
    contracting time, and production time. I would address reducing
    decision time by focusing upfront on an ally by-ally basis what systems
    we would sell to them and establish pre-approved lists for such
    systems. To reduce contracting time, I would recommend establishing a
    contracting schedule similar to what GSA has for non-defense goods with
    pre-negotiated prices for defense systems that we sell to our allies.
    Finally, I would fund the advance procurement of the most needed
    systems to stockpile ahead of time in preparation for transferring to
    our allies when ordered or to serve as an additional backstop for U.S.
    needs in the future.
        Mr. Webster.

          a.  Requirements determination with the foreign purchaser--a fix
    is to discourage unique customized acquisitions and instead encourage
    buying the U.S. program configuration.

          b.  Congressional notification process, both formal and
    informal--embrace the recommendation that for allied nations Congress
    would have a rapid approval process in addition to creating a list of
    nations with preapproved capability, not requiring congressional
    notifications once agreed to.

          c.  DOD Contracting--fixes to include awarding contracts with FMS
    options; DOD contracting community seeking ways to adopt automation;
    creating a rapid contracting option for the buyers using their national
    funds for the FMS program (vs U.S. grant aid).

          d.  Contractor production lead times--seek ways to incentivize
    our industries to stockpile critical components that are recognized as
    the long lead items that delay production, continue to invest in
    contractor workforce development, and incentivize our primes to invest
    in and nurture those suppliers most at risk.

        20. Senator Hirono. Dr. Greenwalt and Mr. Webster, how can
    international armaments cooperation agreements be used more effectively
    to bolster shared supply chain resilience with allies?
        Dr. Greenwalt. Even with more investment it is doubtful that the
    U.S. defense industry can meet the needs that this current uptick in
    global defense spending portends. The U.S. should consider more
    immediate co-production and the development of overseas second sources
    for U.S. designed expendable munitions and drone manufacturing. As a
    part of the AUKUS relationship we should immediately establish co-
    production agreements with Australia as part of their Guided Weapons
    and Explosive Ordnance (GWEO) initiative.
        Mr. Webster. International cooperative agreements provide a
    government-to-government enforceable agreement that defines the
    possibilities and limits for their industries to operate within. These
    agreements reassure industries that their intellectual property rights
    and technical data will be protected and respected. The agreement
    reassures governments that their legally bound role in matters such as
    sharing classified data or approving third party sales are respected
    and protected as well. This is why historically international
    cooperative agreements are most associated with bilateral and
    multilateral research and development, and production of major end
    items like the F35.
        For supply chain resilience, we must first incentivize our
    industries to find suitable allied industrial partners, develop a
    proposal to expand production, and to sit with the Government (DOD,
    Department of State, and Commerce Department) to describe what is
    envisioned and determine what role governments will have to play. From
    this point, once understood, there is enough knowledge to develop an
    associated cooperative agreement that is specific to the proposal, thus
    enabling success.

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