FARNBOROUGH, England, July 20, 2018 — 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, by which the U.S. government acts as the go-between for industry and a foreign customer, foreign partners are charged a transportation fee, which is variable based on the item but based partly around the cost of oil.
But this week, Lt. Gen. Charles Hooper, the Defense Security Cooperation Agency head, told Defense News he wants to see that price cut.
“We’re looking at reducing the transportation admin fee,” Hooper said on the last day of the Farnborough International Airshow. “The last time we looked at it, the price of oil was relatively high. So we looked at that and we’re going to reduce that."
He noted that while the final decision rests with the comptroller’s office, DSCA has submitted recommended changes. “I have a high confidence that we’ll come back with a positive determination so we can lower that fee,” he added.
If that happens, it would be the second fee cut for DSCA under Hooper. In June, DSCA dropped a surcharge on American defense goods sold abroad from 3.5 percent to 3.2 percent; the funding from that surcharge is used to support FMS costs for the Pentagon.
Asked if the goal is to make it cheaper for allies to buy American made weapons, Hooper said, “Absolutely,” before adding, “We want to make our goods more competitive."
“We only want to [charge] the management fees that are absolutely necessary to provide a high, above-standard level of service to our partners. Not one penny more. And we want to offer the best equipment in the world at a fair price,” he explained.
It’s part of a broader push spearheaded by the White House to encourage allies to buy American defense goods — something Hooper said is already being noticed during his discussions at Farnborough.
“Clearly there’s an inference and belief that more capabilities will be made available [for sale to partners than before], and we are going to make more capabilities more available,” he said. “Certainly I think there is an expectation that more capabilities will be made available, and we will do our best to fulfill those expectations.”