A Naval Aviation Foreign Military Sales Logistics Process Improvement Team update

DISAM Journal, Wntr, 2003 by Stephen N. Bernard

The Naval Aviation FMS Logistics Process Improvement Team (LPIT), chartered by VADM W.C. Bowes Commander, Naval Air systems Command and RADM R. M. Moore Commander, Naval Supply Systems Command in August 1993 to integrate and streamline the processes that logistically support Naval Aviation Foreign Military Sales (FMS) programs, was highlighted in the Summer 2000 issue of the DISAM Journal, Volume 22 No. 4 page 5-10. The LPIT consists of the FMS Logistics Steering Committee, the International Logistics Enterprise Team, the FMS Customer Advisory Group, the Industry Advisory Group, and the Logistics Support Office. The FMS LPIT works together at conferences and in separate meetings to create and enhance logistics processes that improve life cycle support for Naval Aviation FMS weapon system programs. The LPIT also examines technical logistics processes to develop innovative solutions for FMS logistics problems. The following information is provided as an update on several issues being worked by the team.

FMS Reserve

A Deputy Under Secretary of Defense (DUSD) (L/MDM) memo of January 30, 1995 authorized the Department of Defense inventory control points to establish a FMS reserve to identify and retain assets that may be needed to support foreign-owned weapon systems that have been phased out of use by U.S. forces. A DUSD (L/MDM) memo of September 25, 1995 further defined these assets as material not excess to the DoD, thereby providing protection from disposal actions required of excess material. The Assistant Secretary of the Navy (ASN) (RD&A) memo of August 25, 1998 required the FMS reserve to include all stock numbered and non-stocked numbered material for out-of-inventory systems managed or owned by the Navy hardware system command that is needed by foreign government under the security assistance programs.

The LPIT took responsibility for developing the FMS reserve for Naval Aviation FMS customers with the goal of enhancing life cycle logistics support for FMS customer weapon systems. The FMS reserve includes supply system assets managed by inventory control points (ICPs) and sponsor owned material (SOM), which includes support equipment, parts, training devices, etc., managed by HSCs. NAVAIR FMS reserve SOM is a sub-set of NAVAIR total SOM and managed as part of the NAVAIR Total Asset Visibility (TAV) program. Since the FMS Reserve items are not excess to DoD, they can be issued at full standard or market price (with adjustments for age, model, and/or condition). To date, millions of dollars of material have been sold through the FMS Reserve for several different platforms.

NAVAIR operations are detailed in formal NAVAIR FMS reserve business rules signed in May 2001. Roles and responsibilities are delineated in these rules. The FMS Reserve Board has overall policy and oversight responsibility. NAVAIR's TAV manager has responsibility for TAV policy and operating expense budget authority. NAWCAD Lakehurst personnel are responsible for financial management and banking services via the Navy working capital fund in addition to program and direct sales management. NAVICP has supply system sales management responsibility for stock numbered material held as sponsor-owned material, and they account for sales and credits in accordance with the FMS Reserve Memorandum of agreement.

The current status of the self-sustaining FMS reserve reflects all costs and warehousing expenses as paid through fiscal year 2002. In addition, sales are projected to cover all expenses through fiscal year 2003. It is anticipated that the FMS Reserve will continue to remain solvent and eventually produce funds to go to the U.S. Treasury since revenue from sales will be above the amount required to perpetuate the FMS reserve.

Third Party Transfer

The Third Party Transfer for six of the seven F-18 customer countries was approved in January 2002 after three years of work by LPIT members. Under Third Party Transfer, end-user agreements are signed by each country. These documents are pre-approved blanket agreements that state the receiving country will protect and respect the classification of the same configured item from another country. The pre-approved agreements provide the FMS F-18 community the ability to exchange and repair parts in an efficient manner without having to go to the Department of State (DoS) for each occurrence. The only requirement is to provide a quarterly report to the DoS for the items exchanged.

The need for third party transfer was seen by LPIT members and the FMS F-18 community due to budget and manpower reductions in the U.S. along with significant increases in major U.S. deployments and operations throughout the world. The budget reductions decreased spare procurements, while the increase in world operations caused a drain on off-the-shelf or stocked items. The U.S. also reduced its depot core repair capability by turning to outsourcing with Direct Vendor Delivery or total logistics support with major contractors. These issues, combined with parts obsolescence issues as Boeing Aerospace closed its main F-18C/D production line, led LPIT members and the FMS F-18 community to seek an economical and efficient legal means to make available spare and repair parts from one FMS customer country to another.