FMS Reinvention Within the Department of the Navy's Model for Continuing Process Improvement - foreign military sales

DISAM Journal, Summer, 2000 by Joseph Milligan

For more than two years, the U.S. security assistance community has been involved in an intensive effort to study how to improve customer satisfaction, reduce costs and improve processes. These efforts have been generally grouped under the umbrella of "reinvention" and are beginning to show some positive results, particularly in the area of improved service to our international customers. This article provides a brief synopsis of some of the major improvements achieved and addresses four areas where the Navy International Programs Office (IPO) and others within the Department of the Navy (DoN) are trying to effect "real change:"

* Reduction of Letter of Offer and Acceptance (LOA) processing times.

* Piloting "FMS Express."

* Employment of firm fixed price LOAs.

* Case closure.

Reduction of LOA Processing Times

The Navy International Programs Office customers have complained about the length of time that it takes to produce an LOA following the submission of a letter of request. In addition to the increased complexity of LOAs and releasability issues, Navy processing times had increased significantly due to several factors:

* The "learning curve" associated with shifting from the Navy Security Assistance Database System (NSADS) to the Defense Security Assistance Management System (DSAMS),

* Excessive DSAMS downtime, due to a variety of factors,

* Delays related to the physical relocation of Navy IPO from Crystal City, VA to the Nebraska Avenue Complex, Washington D.C., in July, 1999,

* The loss of key members of the LOA development team, due to the relocation,

* Additional workload caused by the immediate requirement to modify over 100 FMS cases, resulting from the reduction of the administrative surcharge from 3.0 per cent to 2.5 per cent.

These and other factors caused a tremendous surge in the backlog of Letters Of Acceptances (LOAs). In fact, processing times for LOAs peaked at 161 days in December 1999. Since that time the processing time has steadily improved. As of May 2000, the average processing time decreased to 84 days and the number of completed LOAs increased. A currently established goal of 80 percent of cases offered in 120 days was met by more than 74 percent of the cases processed in May. Also, more cases (71) were processed in April than during any one of the previous six months. Throughout this period, the LOA backlog was aggressively worked, resulting in a return to the pre-DSAMS rate of completion. A contributing factor to this recovery was an increase in security assistance case development resources to eliminate the backlog created by last year's disruptions. Standard DoD metrics have been created and Navy metrics improved, with a strong emphasis being placed on the regular use of these metrics. The role of case managemen t organizations in LOA development has been increased and higher level reviews on routine, non-controversial cases have been reduced. Also, newly created integrated product teams manage the resolution of issues and involve customers more directly in requirements definition in complex cases. Finally, as the understanding of DSAMS has improved, far less downtime is occurring. With continued examining and fine tuning of the LOA process, LOAs will be completed more quickly and efficiently in the future. To this end, DSAMS is being used to publish metrics within Navy international programs office regions as well as the system commands to ensure regular tracking of progress. In addition, Navy international program office is working closely with DSCA and the other services to revise the way LOA processing times are counted and ensure that these measures are consistent for all.

Piloting "FMS Express"

Once an LOA is signed and implemented, customers remain dissatisfied with the length of time that it takes to fill requisitions. Often requisitions cannot be filled from stock and must be placed on backorder. The Naval Inventory Control Point (NAVICP) has worked closely with DSCA to look at establishing a hybrid EMS/commercial sales program that has been dubbed "FMS Express." The program allows NAVICP to transfer procurement of out-of-stock, hard to fill requisitions to a commercial buying service. A pilot study using the Dutch, Norwegian, and Australian Navies is about to begin. The initial study will be limited to transactions below $25,000. If successful, this limit could be increased. In the meantime, other efforts are also being made to work with the international customers to reduce requisitioning time. NAVCIP is looking forward to reporting the results of this program as it matures.

Employing Firm Fixed Price (FFP) LOAs

National assemblies that govern international customers are requiring more and more information from the U.S. government/FMS community prior to making a purchase commitment. This information relates to a need to better understand the basis for the prices being charged in the LOA for articles and services. In conjunction with DSCA, the Navy is trying to lean as far forward as possible to provide its international customers with greater insight into the LOA development process, as well as the aspects of pricing.