Pentagon Pushes More Foreign Sales Of U.S. Goods

By Michael Bruno
Source: Aviation Week & Space Technology

Genaille concurs in describing the DSCA's initiatives, including the new LOAs. “We [know that] to get to the next level where we can really increase the speed at which we deliver capabilities to our partners, there is more we need to do.”

The DSCA counts an ongoing portfolio of FMS worth around $400 billion, averaging about $41 billion in new business annually. “The $41 billion in new business each year is like having a fourth military service acquisition program,” he says. “This infusion of funds helps sustain our own industrial base and lowers the cost of our own defense acquisition.”

Ever since the Obama administration unveiled a massive export effort, defense officials and executives have posited that without such international sales, U.S. national security would be at greater risk. “Millions” of technical and skilled jobs could be threatened by letting that FMS portfolio slip, Genaille estimates, and it would lead to an increase of 20-30% in procurement costs to the U.S. military.

Still, there exists some fear the U.S. already is pricing itself out of the ability to wage conventional war. “Weapons acquisition and support costs, and the cost of military personnel, have risen faster than the rate of inflation, and this trend does not appear to be reversing,” Capital Alpha Partners analyst Byron Callan noted to investor clients in July.

“New weapons systems such as F-35, V-22 and Ohio Replacement Program are more capable but are much higher priced in inflation-adjusted terms than weapons they replace.” Adversaries' offensive weapons are fractions of the cost to protect against them, Callan says, citing congressional and independent think tank data. It costs far more to protect against China's DF-21D missile and crude unguided missiles “fired by states that have GDPs smaller than the revenues of U.S. defense primes.”

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