Security Cooperation Overview December 2014

1. Security Cooperation Overview December 2014 Frank D. Kenlon Professor of International Acquisition (Intermittent) Defense Systems Management College – International Dept Frank.Kenlon@dau.mil, (410) 610-5040

2. Security Cooperation All DoD interactions with foreign defenseestablishments to build defense relationshipsthat promote specific US security interests,develop allied and friendly military capabilities for self-defense and multinational operations, and provide US forces with peacetime and contingency access to a host nation. Security Cooperation is a DoD Term (Joint Pub 1-02)

3. Security Cooperation Elements Elements that involve defense acquisition Combined Exercises Int’l Armaments Cooperation Equipment Sales & Financing Defense Contacts & Familiarization Humanitarian Efforts & Civic Assistance Support to Operations Int’l Training & Education

4. Benefits • Economies of Scale • Production • Operations & Support • Maintain hot production base • Share sustaining engineering costs • Share production line shutdown costs • Share RDT&E costs • Share production non-recurring costs DCS FMS ICP

5. Key Legislation Title 22 Legislation • Arms Export Control Act (AECA) • Foreign Military Sales (FMS) • Direct Commercial Sales (DCS) • Cooperative Programs • Foreign Assistance Act (FAA) • Grant Aid • International Military Education and Training (IMET) • Excess Defense Articles (EDA) Title 10 Legislation • Building Partner Capacity (BPC) • Cooperative RDT&E • Acquisition and Cross Servicing Agreements (ACSAs)

6. Strategic Guidance • National Security Strategy • Strengthen alliances to defeat global terrorism • Work with others to defuse regional conflicts • Develop agenda for cooperative action with other centers of global power • DoS/USAID Strategic Plan • Counterterrorism • Reduce/Eliminate WMD • Promote conflict prevention & resolution • Conduct security cooperation & security sector reform • National Defense Strategy • Shape the choices of key states • Strengthen & expand alliances and partnerships • Secure U.S. strategic access & retain freedom of actions • Strategic Guidance for DoD • Challenging global security environment • Delicate balance between available resources and security needs • Maintain broad/versatile capability portfolio • National Military Strategy • Support national efforts to address complex security challenges • Deepen security relations with our allies and create opportunities for new partnerships • Prepare for an increasingly dynamic and uncertain future

7. Security Cooperation/International Acquisition Mechanisms Implemented by different organizations under various laws and procedures

8. Security Assistance Programs Security Assistance is a State Department Program Program Administration Responsibilities • Department of Defense • Foreign Military Sales (FMS) • Foreign Military Financing Program (FMFP) • Int’l Military Education & Training (IMET) • Foreign Military Construction Services (FMCS) • Leases • Drawdowns • Excess Defense Articles (EDA) • Department of State • Peacekeeping Operations • Int’l Narcotics Control & Law Enforcement • Nonproliferation, Antiterrorism, Demining, and Related (NADR) • Direct Commercial Sales (DCS) • US Agency for Int’l Development • Economic Support Fund (ESF)

9. International Armaments Cooperation (IAC) • Cooperative research, development, and acquisition projects and programs • Enabling Programs • Personnel exchange (ESEP & APEP) • RDT&E Information Exchange Program (IEP) • International Cooperative R&D (ICR&D) program • Coalition Warfare Program (CWP) • Foreign Comparative Testing Program (FCT) • International Cooperative Programs (ICPs)

10. Direct Commercial Sales (DCS) • Sale of defense articles, services, or training made or provided by U.S. defense industry to a foreign entity • Not administered by DoD and do not involve a government-to-government agreement • Foreign entity contracts directly with U.S. company • USG control procedure is accomplished through licensing

11. Building Partner Capacity (BPC) • Title 10, DoD Security Cooperation programs executed through the FMS infrastructure • Differences from traditional FMS • USG Requesting Authority identifies requirement • Funded by the USG • “Pseudo”-LOAs are not signed by country • Title transfers in country • Variety of programs conducted under multiple legal authorities List of programs and BPC policies are contained in Chapter 15 of the SAMM

12. International Acquisition & Exportability (IA&E) New term used in interim DoDI 5000.02 International Cooperative Programs Sales & Transfers Technology Security & Foreign Disclosure Defense Exportability Integration

13. OSD Oversight Secretary of Defense –––––––––––––––––––––––– Deputy Secretary of Defense Under Secretary (Policy) Under Secretary (Acquisition, Technology and Logistics) Defense Security Cooperation Agency (DSCA) Defense Technology Security Administration (DTSA) Director International Cooperation (AT&L IC) Security Assistance Building Partner Capacity Technology Security International Armaments Cooperation

14. TSFD and Export Control Basics Fundamental Security Considerations Access Protection + Release Conditions • Not transfer or use for other purposes without U.S. consent • Provide substantially the same degree of protection as U.S. Type of USG/DoD Authorizations Export TSFD Foreign Visits

15. USG/DoD TSFD Authorizations • Internal MILDEP processes • Four primary DoD processes • Eight specialized DoD processes • All running independently under leadership of different offices • Required for FMS and cooperative programs; prerequisites to Export License approval for DCS

16. NDP LO/CLO AT USG/DoD TSFD Processes Primary Policy COMSEC MILDEP Processes Primary AT&L SAP Primary DoD Lead: Various AT&L DSC Primary NSA & DoD CIO MTCR MILDEP-specific various Specialized SAPCO NVD/INS Specialized AT&L + Policy Intel Specialized MILDEP Process Policy Data Links/WF Specialized DTSA PNT/GPS Other DoD Processes Specialized USD(I) GEOINT DoD Lead: Various Specialized DoD CIO EW Org.-specific various Specialized DoD CIO Specialized NGA No single process None Few documented processes Interagency process

17. TSFD Oversight • Arms Transfer and Technology Release (ATTR) Senior Steering Group (SSG) established in DoDD 5111.21: • Overarching DoD authority to ensure clear senior-level direction • Serves as appeals board and mediation body • USD(P) & USD(AT&L) co-chairs with interagency participation • TSFD Office (TSFDO) also established in DoDD 5111.21: • ATTR SSG Executive Secretariat and assesses/recommends changes to policies • Develops/implements procedures and checklists, coordinates documentation and policy, conducts outreach

18. Backup Charts

19. Foreign Government Foreign Military Sales (FMS) LOR From Stock Requisition Letter of Request LOA Contract Letter of Offer and Acceptance U.S. Government Services, • Sale of U.S. defense equipment/servicesby U.S. Government • Buyer-seller relationship • Foreign Funds (or U.S. grants/loans) with administrative surcharge • Conducted under State Department Title 22 authority Information, or New Production

20. Foreign Military Sales Trends

21. The Scale of FMS FMS and Service Procurement: 5 Year Average • Average annual procurement budget over last 5 years (FY09-13): #1. $41.6 Billion USAF #2. $39.7 Billion FMS #3 $37.5 Billion U.S. Navy #4 $32.4 Billion U.S. Army #5 $8.4 Billion USMC • If we remove the FY12 Saudi Arabia F-15 sale and recalculate: #1. $41.6 Billion USAF #2 $37.5 Billion U.S. Navy #3 $33.7 Billion FMS #4 $32.4 Billion U.S. Army #5 $8.4 Billion USMC USMC USMC

22. Foreign Government(s) International Cooperative Program International Agreement Work U.S. and/or Foreign Government Activity U.S. and/or Foreign Industry U.S. Government Contract Service, • Acquisition or technology project in any Defense Acquisition Management System phase • Partnering relationship • Jointly managed • Costs, benefits, risks shared equitably Information, or New Production

23. Acquisition Strategy “Program management is responsible for integrating international acquisition and exportability considerations into the program’s Acquisition Strategy at each major milestone or decision point. Program management will consider the potential demand and likelihood of cooperative development or production, Direct Commercial Sales, or Foreign Military Sales early in the acquisition planning process; and, where appropriate, program managers will pursue cooperative opportunities and international involvement throughout the acquisition life cycle to enhance international cooperation and improve interoperability in accordance with DoD Instruction 2010.06.” Interim DoDI 5000.02 (Enclosure 2, paragraph 10)

24. Allied Interoperability • Equipment procured for U.S. forces employed in NATO, other allied, and coalition operations must be standardized or at least interoperable with equipment of allies and coalition partners • DoD complies with U.S.-ratified International Standardization Agreements to maximum extent feasible, subject to systems engineering tradeoffs • Program Managers to pursue opportunities throughout the acquisition life cycle that enhance international cooperation and improve interoperability DoDI 2010.06, Materiel Interoperability and Standardization with Allies and Coalition Partners

25. Foreign Entity Direct Commercial Sales (DCS) $ Contract Export License Application Signed Export License U.S. Company • Foreign entity purchases U.S. defense equipment/services from U.S. company • U.S. Government control through licensing • Department of State for military items • Department of Commerce for civil & dual use items U.S. Government

26. FMS vs DCS • DoD is generallyneutralwhether a foreign country purchases through FMS or DCS • Certain items can be designated FMS only; based on complexity, sensitivity, interoperability, relationships • Most major system DCS programs will have an FMS companion effort for FMS-only items (i.e. a hybrid program) Program Managers should monitor program contractors’ marketing efforts

27. Foreign Government Building Partner Capacity (BPC) Stock Requisition Pseudo LOA MOR Contract Memorandum of Request Letter of Offer and Acceptance Requesting Authority Implementing Agency • Provision of U.S. defense equipment/services by U.S. Government • Specific programs authorized in annual NDAAs • Conducted under Title 10 authority with DoD funding

28. Defense Exportability “Headwaters” Joint Staff, CoCOMs & Services Mil-to-Mil engagement with Allies & Friends JCIDS Guidance Non-Materiel Solutions DOTMLPF-P Procurement or Modification What does DoD want to sell Or Transfer In the Future? Additional Production Or Modification Materiel Solutions Cooperative Development Program New DoD Joint Program New DoD Component Program

29. Defense Exportability Dilemma Provide required capabilities quickly to allies and friends Protect the “crown jewels” of U.S. defense technology How can the USG/DOD best balance these two competing demands? Where does the money come from needed accomplish these goals?

30. How Many Configurations? • Few • Simpler design and test • Simpler production and logistics • Easier upgrades • More affordable • Many • Greater customer choice • Treats countries differently • Tailored logistics and upgrades • More expensive DoD and partner/customer nations must compromise to achieve optimal outcomes for all (easy to say, hard to do)

31. Defense Exportability Features(DEF) Pilot Program • FY11 NDAA directed SECDEF to “carry out a pilot program to develop and incorporate technology protection features in a designated system during the R&D phase of such system.” • Program Scope/Status • Identify MDAPs for which there is significant anticipated export demand and whose technical aspects are amenable to DEF • Pilot program to provide funding to evaluate exportability and facilitate planning for, design, and incorporation of exportability features during RDT&E • AT&L selects candidate programs from MILDEP nominations • FY12 NDAA change • Industry to share at least half the cost of developing and implementing program protection features • FY14 NDAA extended pilot program through October 2020 Defense Exportability is Part of BBP 2.0

32. Defense Exportability Activities IOC C A B Engineering & Manufacturing Development Materiel Solution Analysis LRIP Sustainment Technology Maturation & Risk Reduction. Activities Require MDA Approval FRP Decision Operations & Support Materiel Development Decision DRFPRD CDD-V • Exportability Assessment • Projected sales • Technology complexity • Exportability Feasibility Studies • Conducted with program contractor • Included in TMRR contract • Funded by program or DEF PE • Industry provides 50% • Exportable Designs • Funded by program, cooperative program or customer, or industry (or combination) • May be multiple configurations • Exportable Version Production • Funded by customer • May be multiple configurations • Exportable Version Depot & Spares • Funded by customer Production & Deployment ICD CDD Draft CDD CPD FOC Disposal PDR CDR