Introduction (required)

The Naval Supply Systems Command Weapon Systems Support’s International Programs Division (NAVSUP WSS-OF or Foreign Military Sales) was established in October 1, 1996 when the Navy International Logistics Control Office (NAVILCO) was decommissioned and absorbed, together with the Naval Supply System Command Security Assistance Division (NAVSUP 07) and the two foreign military assistance activities of NAVSUP WSS’s Integrated Weapon Support Teams, into the Naval Inventory Control Point- Philadelphia (now called Naval Supply Systems Command Weapon Systems Support- Philadelphia) (Bennis, 1996). NAVSUP WSS-OF in Philadelphia is in charge of aircraft parts procurement and repair to foreign military allies of the United States which are mostly foreign air forces with some foreign navies and armies. The International Programs Division reports directly to the Naval Supply Systems Command Weapon Systems Support, but also receives directions from the Navy International Programs Office (Navy IPO) located in Arlington, VA. Navy IPO controls and manages all foreign assistance programs and policies such as foreign military sales, training, humanitarian efforts and foreign relationship building via various Naval units and agencies of the U.S. Navy, Marine Corps, Coast Guard, the Allied Forces with guidance from the Defense Cooperation Security Agency (Tangredi, 2008) .

It is important to note that NAVSUP WSS Code OF’s activities share an equally important role with the rest of the Foreign Military Sales programs of other U.S. Navy and agencies of the Department of Defense. Having a strong and well supported Foreign Military Sales program at the Naval Supply Systems Command Weapon Systems Support- Philadelphia benefits not only the International Programs Division, but also the entire Naval Support Activity facility, the City of Philadelphia and possibly the region. These benefits include job sustainment and creation of new ones, and growth in industries involved with defense, security and technology, and many more. But for the rest of NAVSUP WSS- Philadelphia to realize the importance of FMS, it is the International Programs Division’s job to make sure to inform and educate its non-FMS colleagues in order to gain the support it desperately needs. Several studies will support the argument of the need for a robust program, and these studies will be the bedrock of the information transfers that will help the International Programs Division in educating its colleagues.

Historical & General Background (reqired)

but need to be in the following criteria

I need to put the litruture review according to three respects : past, present and future

(Past)

Studies and history have shown evidence of the benefits of responsible Foreign Military Sales or arms transfer for many years. The relationships that were created from this type diplomatic partnership helped build nations. A country that benefited from an early version of Foreign Military Sales is the United States. In 1778 France, with the assistance of Pierre Beaumarchais and his pseudo-company Roderigue Hortalez and Company, helped the American Revolution by funding its efforts against the British worth millions of livres (Frances’ currency at the time) arms and military support (Perkins, 1911/2010, p. 86). The monetary assistance combined with the help of the French Army and the French Fleet helped the Americans win battles against the British (Perkins, 1911/2010, p. 10). This gesture built a lasting relationship between the United States and the French Republic that is very visible throughout the nations’ recent histories from World War II to today’s efforts in Iraq and Afghanistan.

The Importance of Foreign Military Sales Immediately After the Soviet Era

Present

The fall of the Soviet Union in 1991 was an important event for Foreign Military Sales and arms transfer. The arms market was flooded by cheap Soviet weapons, parts and articles that were being sold to virtually any government in the world. The flooding of cheap weaponry became an alarming issue to many countries that were worried about rogue governments within and beyond their national boundaries acquiring these weapons. To counter this issue, higher and more effective technology was needed and the United States, at the time, can provide the need.

The tension in Europe after the Cold War has cooled down, but other regions such as the Middle East and East Asia remained active. In East Asia where the demand was focused on high-technology weapons, growth in arms spending was steadily hovering around 25 percent from 1985 to 1991 and remained steady (Spear, 1994). It was the demand of countries that required high-technology arms that the United States focused on to counter balance the flooding of cheap weapons in the market. In 1992 the United States Government signed Foreign Military Sales contracts of approximately 7 billion dollars, in which $4.2 billion were agreements signed directly to the U.S. defense companies by Japan, South Korea and Taiwan making the United States its number one supplier (Kapstein, 1994).

Many will argue that the involvement of the United States in the arms race after the fall of the Soviet Union only added to the proliferation of weapons around the world. Given the situation where cheap weapons and small arms have already spread to many conflict stricken regions at the time, the United States actually helped tackle the problem by using higher and more advanced technology in weaponry. The flooding of cheaper Soviet weapons had a serious potential to wipe out a portion of the U.S. defense industry, but through superior technology jobs were sustained and new ones were created.

Numerous articles and studies were published about the concerns of Soviet arms flooding the marked immediately after the fall of the USSR. Approximately 70 percent of the literatures available were focused on this issue, while the rest are focused on the benefits that the United States can take advantage as the sole super power and the responsibilities of counter balancing the Soviet arms that were available at that time. The latter half also discussed the benefits in job sustainment and job creation as new technologies were produced by both the U.S. Department of Defense and the American private defense companies.

The Importance of Foreign Military Sales Today

Future

FMS is a very active program today than many think. “Foreign Military Sales program is the U.S. Government’s program for transferring defense articles, services, and training to other sovereign nations and international organizations” (http://www.dsca.osd.mil/PressReleases/fmsadvantagev2.pdf). In a broader definition, FMS agreements pave ways for the American defense industry to do business directly with foreign nations under strict guidelines and regulations. Today, FMS agreements with the Allied Forces are stronger than ever, with Asia and the Middle East as its major consumers. “Malaysia’s military budget more than doubled between 2000 and 2008, from $1.7 billion to $3.5 billion (as measured in constant 2005 dollars) (Bitzinger, 2010). Indonesian defense spending over the same period went from $2.2 billion to $3.8 billion, a 72 percent increase, while Thailand increased military expenditure by 43 percent, from $2.1 billion to $3 billion” (Bitzinger, 2010).

Elsewhere in the world, the United States is using foreign military assistance with its efforts in combating terrorism and defending its national security. The fact that the U.S. has already been stretched too thin with its involvement in Iraq and Afghanistan; it needs the help of its allies to combat terrorism and stabilize their own regions. Examples of these foreign military assistance are: groups that the U.S. Army established in Iraq to train the local forces as the transition of power continues in that country; the U.S. Air Force’s establishment of training facilities and programs to assist and train foreign pilots; and the U.S. Navy’s efforts in the training of the local maritime forces in the Africa-Indian Ocean region to fight pirates (Gates, 2010).

The most important benefit that Foreign Military Sales can offer Americans today are job sustainability and creation. According to the Bureau of Labor Statistics the unemployment rate, as of June of 2012, is 8.2% (http://www.bls.gov/cps/). In order to bring down the unemployment rate and create more jobs opportunities, the United States must produce more goods and export it to other countries. The National Export Initiative that President Barak Obama introduced in January of 2010 pushes for doubling the country’s export production by so that more local jobs are created in a period of five years (Tong, C & Tong L, 2010). Foreign Military Sales will be an excellent vehicle to promote and execute this initiative that will help, not just the local, but also the national economy.

The literatures that are available for this topic are focused on the opportunities that are available in Asia. Many studies also highlight China’s power into the equation. Military cooperation and interoperability are also well covered by many of the available material. There are also less negative articles produced about Foreign Military Sales and its surrounding activities at this period. A suspected reason is because of the struggling economy and the fact that arms sales has indeed been proven as an activity that supports and creates jobs.

The Negative Effects of Irresponsible Foreign Military Sales (not required)

The positive side of Foreign Military Sales can be more than plenty, but the reality is that a weak and poorly managed Foreign Military Sales program has the danger of producing negatives that can outweigh its positives. An example is the issue of total asset visibility of Foreign Military Sales articles within the Department of Defense supply chain network. The Department of Defense’s Defense Transport Services only handles six percent of FMS cargoes and the rest are shipped via approved commercial freight forwarders (Gates, 2007). Because of this arrangement, inconsistencies in tracking an article heading overseas continues to be plagued with visibility challenges and unexplained loss. Even articles that go through the Defense Transport Services, which uses radio frequency identification, are also troubled as thirty-five percent of the containers heading to Iraq and Afghanistan in the latter half of 2006 and the former half of 2007 were not identifiable (Gates, 2007). This issue should be taken seriously because of the very real possibility of sensitive materiel ending in the hands of terrorist groups and nations that are not friendly with the United States. Additionally, spare parts that are vital to the sustainment of older military weapon systems that were sold to countries that are now unfriendly to the United States can end up in those same countries (e.g. Iran and Venezuela) which can produce disastrous outcomes.

Inadequate support of the foreign military allies will push them away from doing business with the United States. Foreign governments do not have to buy or have their parts repaired with the United States Government or an American commercial defense company, they can go to other foreign governments and companies to fulfill their requisitions and repairs. According to a three year study that commenced in 2002 by the Defense Logistics Agency, follow-on support has declined 50 percent due to backorders that lasted way over the given or acceptable time frame, which 28 percent are FMS Navy orders (Bernard, 2003).

The material and literature regarding this topic is difficult to locate especially since the majority of the journals and publications are published by institutes and organizations within or associated with the United States Government. Many articles are focused on Iran, which was a former ally of the United States. Iran is the only nation that operates F-14 Tomcats and is desperately in need of the spare parts, which is why it is imperative that the U.S. Navy with the help of the Naval Supply Systems Command Weapon Systems Support and other government agencies make sure that these parts are either destroyed or unavailable to the public (United States General Accountability Office, 2008).

Existing Studies (not required)

This study focuses on the benefits of Foreign Military Sales which are based on the basics of International Cooperation. Benefits such as “exchanges of people, information and material; cooperative research and technology; materiel solutions; and joint acquisition of equipment help solidify relationships” (Koepnick, 2005), which the United States needs to execute its mission of fighting terrorism. This is why a robust and well supported Foreign Military Sales program at the Naval Supply Systems Command Weapon Systems Support- Philadelphia is needed; and by information and education that will explain to employees what the Foreign Military Sales process is about, its benefits, and the dangers of an improperly managed program that the goal of the study will be reached.

Other Navy and Department of Defense agencies are the immediate beneficiaries of this study since the majority of Foreign Military Sales activities in the various Department of Defense organizations are also facing the problem of explaining the benefits of FMS to their non-FMS colleagues. Another beneficiary of this study is the commercial defense industry which will either sustain their business as domestic support slows down as the United States military gradually pulls out of the Middle East and new business from foreign nations becomes more important. These benefits flow directly to job retention and possible new job opportunities that Americans desperately need due the current struggling economy. An example of the immediate effects of Foreign Military Sales activity is the hiring of 15 new employees at the International Programs Division composed of college graduates and veterans. These openings were a direct effect of increased Foreign Military Sales demands which prompted the International Programs Division to promote 15 employees to head or assist new programs which opened the 15 positions they formerly held (R. MacWilliams, personal communication, February 18, 2010).

Process ( not required)

A study that was presented in by Teeney (2010) of the Defense Institute of Security Assistance Management at Wright-Patterson Air Force Base via his article titled “United States Government Benefits as a Result of Foreign Military Sales Program” on the benefits of Foreign Military Sales incorporates both quantitative and qualitative information. The quantitative portion shows the financial benefits of foreign military sales. Examples are:

The $21 billion FMS agreement that the United States Government signed in the fiscal year of 2006
FMS agreements averages from $10 to $13 billion dollars since 2001
A country that signs an FMS contract with the United States typically becomes it’s partner for 30 to 35 years
Some examples of qualitative benefits of Foreign Military Sales that Al Teeney discussed are:

Shared effort in technological innovation, research, development and production of new weapon systems like the Joint Strike Fighter or F-35
Interoperability between the United States military and its allies
Increased business for both the U.S. Government and the commercial defense industry
Military cooperation and partnership during certain efforts such as Operation Enduring Freedom and Iraqi Freedom

Instrumentation (not required)

A Lean Six Sigma Green Belt project that started in 2009 and completed in mid 2010 by the Logistics Division of the International Programs Division (Code OF) and the Integrated Weapon Systems Teams (Code 03) tackled the issues of ignored and deleted Foreign Military Sales requisitions (K. Mueller, personal communication, January 11, 2010) . The project used subject matter experts from the H1 helicopter division, E2C Aircraft Division and the F-18 Aircraft Division of Code 03 and mapped out their tasks in several systems, including ERP to find out what is the cause of the delays. A simple but detailed desk guide was produced by the team advising Item Managers on what to do with a Foreign Military Sales requisition based on several scenarios like fulfilling an entire requisition, partially fulfilling a requisition, and rejecting a requisition that cannot be fulfilled due to low spare parts inventory (N. Domingo, personal communication, November 18, 2010). The data regarding this study is not available for release due to internal information that is not for public release, but the final product is used by many Item Managers. Because Green Belt project only focused on the processing of FMS sales orders in several systems and not on the perception of the program, the product produced by this research will compliment the desk guide created by the Green Belt project. Otherwise, no other study that is similar to the objectives of this one can be used to reference the instruments used for conducting the research.

Statistical Approach (not required)

The research done for this study produced figures on the amount of signed Foreign Military Sales agreements in a given fiscal year and the amount of investment a country has committed when using a Foreign Military Sales program. Some figures on job creation and sustainment exist but many articles use assumptions and generalized statements. This study will attempt to bridge the gap between the quantitative financial data and the qualitative benefits of Foreign Military Sales by adding quantitative data to the benefits.

Summary of chpter-2 (2-3 sentences)

Solving the issues of ignored and delayed requisitions was given attention to by a Lean Six Sigma Green Belt project conducted by the International Programs and the Integrated Weapon Systems Teams. On the other hand, meetings have been conducted to address the same issues plus the issue of unprocessed and unreleased contracts by the Contracts Division (T. Bickel, personal communication, December 9, 2010). The lack of understanding by the Item Managers of Code-03 and Contract Specialists of Code-02 of Foreign Military Sales is the reason why many are not motivated to put to action the guide and directions that followed these discussions.

It is important that the International Programs Division inform its non-FMS colleagues of the benefits of Foreign Military Sales to the Naval Supply Systems Command Weapon Systems Support, the entire U.S. Navy, Department of Defense, and the communities outside the military. Also, the negative effects of a poorly supported Foreign Military Sales activity should be discussed. Many non-FMS employee do not know that an accidental delivery of a spare part to an unfriendly government or an unauthorized group can put the security of the United States in jeopardy and that their full attention and willingness to work a Foreign Military Sales requisition or contract is vital to the overall success of the program and security of the country.