In the realm of Security Cooperation, we often struggle to capture metrics that illustrate trends and outcomes. However, one of our standard metrics has always been the level of Foreign Military Sales.
With Fiscal Year 2009 figures tallied, and looking back at our projected total sales of $40 billion, we can take pride in the fact we achieved a new record of $37.9 billion in sales. To put that in historical perspective, that is a 465% growth from a low point of $8.1 billion in FY 1998 and slightly over our previous record figure of $36.4 billion in FY 08.
These figures are indicative of the Security Cooperation community’s level of professionalism and drive to strengthen our partners by meeting their needs, which strengthens our national security.
While we may continue to struggle with capturing metrics, it is clear we have captured the professionalism and drive of the Security Cooperation community, leading us to project $38.4 billion in Foreign Military Sales for FY 10 and causing us to look forward to another record year together.
Thursday, October 22, 2009
Friday, October 9, 2009
Admin Fee
In 2005 DSCA and representatives from the Army, Navy and Air Force worked to redefine the policy and admin fee rate. This effort was a business imperative. Now after several years of experience, the trust fund is healthy, which is good for the security cooperation community and our partners.
As a segue, unfortunately many of our international partners, industry and even some in our government do not understand the admin fee. Without getting into the legal details, simply put we operate the FMS enterprise at no profit, no loss to the taxpayer. The business model is based on a rolling set of average costs, not linked to any one case. Fundamentally, under our standard level of service, at a minimum from the fee, our customers get an annual Program Management Review and a Financial Management Review.
Setting specific dollar issues aside, there is a much more important aspect to this subject than money…it is leverage. The leverage of competence, knowledge, experience and expertise. Imagine almost any scenario where you are confronted with an extremely challenging situation that involves technical forensics, security or safety. Now imagine you don’t know what to do, or how to do it. As a direct product of FMS, and the admin fee, you have access to literally thousands of government experts that has acquired, operates and maintains the same equipment. They work with industry and have the ability to solve complex problems.
As a segue, unfortunately many of our international partners, industry and even some in our government do not understand the admin fee. Without getting into the legal details, simply put we operate the FMS enterprise at no profit, no loss to the taxpayer. The business model is based on a rolling set of average costs, not linked to any one case. Fundamentally, under our standard level of service, at a minimum from the fee, our customers get an annual Program Management Review and a Financial Management Review.
Setting specific dollar issues aside, there is a much more important aspect to this subject than money…it is leverage. The leverage of competence, knowledge, experience and expertise. Imagine almost any scenario where you are confronted with an extremely challenging situation that involves technical forensics, security or safety. Now imagine you don’t know what to do, or how to do it. As a direct product of FMS, and the admin fee, you have access to literally thousands of government experts that has acquired, operates and maintains the same equipment. They work with industry and have the ability to solve complex problems.
Tuesday, October 6, 2009
What is the “Total Package Approach?”
The Total Package Approach is a term we use to describe the security cooperation community’s philosophy that guides how we structure Foreign Military Sales (FMS).
Often I’ll hear from a foreign customer, “Why are you telling me this pick-up truck costs $25,000 dollars, when I found it on line for $15,000? In response, I usually ask, “Where did you get your price?” The answer most of the time is “Well, I Googled it!” What this answer fails to acknowledge is that the majority of the time, the sale is just not that simple. For example, let’s imagine that the pick-up truck needs to operate in the desert, in extreme temperatures and in a dusty environment. Let’s also imagine that the truck needs two-way radios that are interoperable with US and partner nations; and it must run on a fuel mixture not commonly available in the United States.
Sometimes simple purchases are not as simple as they might seem. And that’s just the initial package. Now, if we go for the total package under FMS, we’ll also ensure the truck comes with two years worth of filters, so that the vehicle will not choke on the dust and dirt. The FMS package will also make sure the trucks have special nozzles that can accept the foreign fuel and that the truck drivers have the training to drive and repair those trucks, and, oh by the way, operate those two-way radios!
I take each of these vignettes as an opportunity to educate our partners and others about the benefits of the Foreign Military Sales Program. The total package approach is, as its name implies, a complete approach to buying a system that will operate on delivery and still operate in two years. The Total Package will always consider the comprehensive needs for operating and maintaining a system upfront, not after there is a failure. These elements can include but are not limited to specialized training, spares, support equipment, publications, transportation and more. That's why the total package for the pick-up truck costs $25,000 and not $15,000.
Another by-product of the Total Package Approach is the time spent working with customers to identify their real needs. This builds reservoirs of trust and cooperation that can last for years, helping to cement important bilateral relationships between the United States and our international partners. It is very rewarding to work with partners who value our FMS process and appreciate the life cycle support.
I was with a foreign Chief of Air Force recently and he said, “We'll only go FMS! The total package approach is the right way to build relationships for the long haul.”
Often I’ll hear from a foreign customer, “Why are you telling me this pick-up truck costs $25,000 dollars, when I found it on line for $15,000? In response, I usually ask, “Where did you get your price?” The answer most of the time is “Well, I Googled it!” What this answer fails to acknowledge is that the majority of the time, the sale is just not that simple. For example, let’s imagine that the pick-up truck needs to operate in the desert, in extreme temperatures and in a dusty environment. Let’s also imagine that the truck needs two-way radios that are interoperable with US and partner nations; and it must run on a fuel mixture not commonly available in the United States.
Sometimes simple purchases are not as simple as they might seem. And that’s just the initial package. Now, if we go for the total package under FMS, we’ll also ensure the truck comes with two years worth of filters, so that the vehicle will not choke on the dust and dirt. The FMS package will also make sure the trucks have special nozzles that can accept the foreign fuel and that the truck drivers have the training to drive and repair those trucks, and, oh by the way, operate those two-way radios!
I take each of these vignettes as an opportunity to educate our partners and others about the benefits of the Foreign Military Sales Program. The total package approach is, as its name implies, a complete approach to buying a system that will operate on delivery and still operate in two years. The Total Package will always consider the comprehensive needs for operating and maintaining a system upfront, not after there is a failure. These elements can include but are not limited to specialized training, spares, support equipment, publications, transportation and more. That's why the total package for the pick-up truck costs $25,000 and not $15,000.
Another by-product of the Total Package Approach is the time spent working with customers to identify their real needs. This builds reservoirs of trust and cooperation that can last for years, helping to cement important bilateral relationships between the United States and our international partners. It is very rewarding to work with partners who value our FMS process and appreciate the life cycle support.
I was with a foreign Chief of Air Force recently and he said, “We'll only go FMS! The total package approach is the right way to build relationships for the long haul.”
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