[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
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HEARING
BEFORE THE
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
MAY 15, 2025
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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
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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\
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\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.
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__________
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.
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\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.
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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.
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\5\ Executive Order 14265, Modernizing Defense Acquisitions and
Spurring Innovation in the Defense Industry Base, Executive Office of
the President, April 9, 2025.
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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.
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\6\ Executive Order 14265, 2025.
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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.
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\7\ Manning et al., 2024.
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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.
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\8\ Manning et al., 2024.
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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.
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\9\ Executive Order 14271, Ensuring Commercial, Cost-Effective
Solutions in Federal Contracts, Executive Office of the President,
April 15, 2025.
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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.
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\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.
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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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