Arms Trade

Pentagon Considering Lowering Fee for Foreign Military Sales

Foreign Military Sales
A Lebanese army soldier inspects a rifle at the Rafik Hariri International Airport in Beirut, Lebanon, on August 29, 2014. The United States delivered the shipment of weapons to bolster Lebanon’s military.

The Pentagon is considering lowering a transportation fee for foreign buyers of American defense goods as part of a broader push to lower the cost and hurdles for foreign military sales.

Under the Foreign Military Sales structure, through which the U.S. government acts because go-between for industry plus a foreign customer, foreign partners are charged a transportation fee, that’s variable in line with the item but based partly around the cost of oil.

But soon, Lt. Gen. Charles Hooper, the Defense Security Cooperation Agency head, told us he wants to see that lessen price.

“We’re investigating lowering the transportation admin fee,” Hooper said on the last day from the Farnborough International Airshow. “The last time we checked out it, the price tag on oil was relatively high. So we looked at might we’re planning to reduce that.”

He noted that while the last decision rests using the comptroller’s office, DSCA has submitted recommended changes. “I have a high confidence that we’ll come back using a positive determination and then we can lower that fee,” he added.

If that occurs, it will be the 2nd fee cut for DSCA under Hooper. In June, DSCA dropped a surcharge on American defense goods sold abroad from 3.5 percent to three.2 percent; the funding from that surcharge can be used to support FMS costs for the Pentagon.

Asked when the goal is always to ensure it is cheaper for allies to acquire American made weapons, Hooper said, “Absolutely,” before adding, “We need to make our goods more competitive.”

“We simply want to charge the management fees which might be absolutely necessary to provide a high, above-standard degree of service to our partners. Not one penny more. And we want to provide best equipment on the globe with a reasonable cost,” he explained.

It’s part of a broader push spearheaded through the White House to encourage allies to buy American defense goods, something Hooper said is being noticed during his discussions at Farnborough.

“Clearly there’s an inference and belief more and more capabilities will likely be made available for sale to partners than before, and we are likely to make more capabilities more available,” he was quoted saying. “Certainly I think it has an expectation more capabilities will likely be presented, so we will do good in order to meet those expectations.”

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