Defense MOU Attache Group September 28, 2011 DSCA Overview

Our Role in National Security » Support National Security and Foreign Policy » Build Skills and capacities of our partners » Provide Critical Humanitarian Assistance 2

Our Scope Foreign Military Sales 13,000 cases valued at $341B With 223 Countries Humanitarian Assistance 505 Projects in 93 Countries Security Cooperation Officers 770 SCOs in 125 Countries Regional Centers for Security Studies 49,000 Students from 156 countries International Training 9,486 Students from 135 Countries 9,900 Security Cooperation Professionals Worldwide 3

FMS Sales Dollars in Billions 4

Our Interface with the SC Community President/NSS National Security Policy Legislation & Reports Congress Implementation of Programs Military Services & DoD Agencies Sales Guidance Industry Planning, Financing, Policy Exceptions Defense Policies Foreign Countries Country Programs Regional Programs OSD & Joint Staff Foreign Policy & Program/Sales Approval State Dept. Unified Commands ODCs / DAOs 5

Foreign Military Sales Process FMS-Like Programs The Pseudo LOA is used by the USG to track the sale of defense articles and/or services (including training, and design and construction services) and is generally funded by the USG pursuant to specific legal authority (e.g., Section 1206). The Pseudo LOA itemizes the defense articles and services included in the LOR. It is not signed by the country and/or organization receiving the articles and/or services, except for transfers under Section 607 of the Foreign Assistance Act. Letter of Offer and Acceptance (LOA) Foreign Military Sales (FMS) Include deliveries of defense articles and services to a partner country from DoD inventory or via new procurement FMS uses a government-to-government agreement between the USG and the partner country called the Letter of Offer and Acceptance (LOA) and is based on the concept of a “total package approach” Letter of Request (LOR) Case Closure Price and Availability Data Case Execution Case Implementation 6

Major Arms Sales: Congressional Notification Process AECA, Sec 36(b)(1) requires Congressional notification for LOAs expected to meet or exceed: »For NATO, South Korea, Australia, Japan, Israel, and New Zealand: major Defense Equipment (MDE) of $25M or more; any defense articles or services of $100M or more; design and construction services of $300M or more; 15-day statutory notification period »For all other countries: MDE of $14M or more; any defense articles and services of $50M or more; design and construction services of $200M or more. By agreement, 20-day informal notification period; 30-day statutory notification period. American Embassy or Local Mission Receives Request Implementing Agency MILDEPs, DLA DSCA coordinates State/PM Coordinates within State, OMB, NSS Pre-consults with HFAC/SFRC DSCA prepares and coordinates informal/formal within DoD Upon DOS approval, sends informal/formal to Congress Congress HFAC, SFRC for Review 7

Improving Our Performance: Two-Pronged Approach Rapid Delivery of Capability Build an “anticipatory” system … Identify changes to the current system that will enable the delivery of capabilities to partners much more rapidly, effectively, and efficiently – Anticipate partners’ capability requirements better (e.g., stockpiles, stockage, and better planning); hedge against “pop up” targets – “Front-load” current processes to the degree possible (flexible contracts, transportation, distribution in theater) Intent: make sure the system can handle the vast majority of cases – minimize the need for exceptional measures … with a “fast-track” capability Put decision-making triggers and accelerated processes in place that enable fast-track capability delivery for unforeseen, urgent requirements – Addresses those requirements the improved system cannot handle Requires: formal process, dedicated and empowered oversight, accountability, waivers/exceptions (likely), and assumption of risk 8

Improving Our Performance Areas of Emphasis »Reduce the time to get from initial discussion to delivery »Improve the technology transfer process »Provide greater transparency and involvement for customers »Improve Security Cooperation Community training to deal with more complex processes »Improve the speed of closing cases 9

10 Increasing Speed, Flexibility, Responsiveness –Initial LOR to LOA time reduced 34% –LOA offer to implementation time down 25% Improving Delivery Performance –Special Defense Acquisition Fund (SDAF) –Shipment Documentation and Tracking Reducing Cost of Business –Termination Liability Recalculated: $1.3B in cash flow worldwide Improving Customer Involvement –July 2011 direction to enhance customer involvement in acquisition programs –Security Cooperation Information Portal (SCIP) Improvements Greater visibility: LOR receipt to closure AOD visible Contract milestones visible (working) Improving the ease with which customers can gain SCIP access Areas of Progress

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Managing FMS Across the Entire Timeline SCO Mission Analysis ATTR SSG ERGT LOA Processing Standard Security Cooperation Community Training SDAF FMS Prioritization Shipping Documentation Pre-LOR Case Development Case Execution Case Closure CRAFTSCES Tri-Service Case Closure Project Phases Initiatives 13