{"id":27947,"date":"2016-08-05T06:00:38","date_gmt":"2016-08-04T20:00:38","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=27947"},"modified":"2016-08-05T13:27:38","modified_gmt":"2016-08-05T03:27:38","slug":"australias-continuing-love-affair-us-foreign-military-sales-office","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/","title":{"rendered":"Australia\u2019s continuing love affair with the US Foreign Military Sales office"},"content":{"rendered":"

The Australian Department of Defence has a continuing attraction for the US Foreign Military Sales (FMS) office. The attraction can readily be seen in the ongoing trend towards an ever-increasing commitment of the defence budget direct to the US. For the past four years I\u2019ve been analysing where Defence contracts are placed, as it illuminates a number of key issues associated with the local defence industry.<\/p>\n

As a point of background my analysis was originally confined to the (now-defunct) Defence Materiel Organisation but has since been extended to cover all contracts placed by both the DMO and the Department in the period 1 July 2007 to 30 June 2016. It involves approximately 300,000 separate contracts worth about $183 billion. The data has been obtained from Austender<\/a> and is therefore publicly available.<\/p>\n

The first point to note from the data is that, since the low point in 2012\u201313, the Australian government has increased the total amount committed in Defence-related contracts (as shown in Figure 1 below). That\u2019s an unambiguously good result given the reductions from the previous Labor governments. The prognosis from the 2015\u201316 budget over the forward estimates continues this overall trend.<\/p>\n

Figure <\/strong>1<\/strong>: Total Contracts Awarded by Defence + DMO (2007-08 \u2013 2015-16)<\/strong><\/p>\n

\"GD1\"<\/p>\n

While the total contract commitment trends are positive, the headline figures hide what\u2019s happening with the FMS office and other contract mechanisms direct to the US government. Figure 2 below clearly shows the ongoing and increasing use of these mechanisms by the Department of Defence for acquisition and sustainment. The commitment through FMS and related channels has risen from about 6% of total contracts (by value) in 2007\u201308 to nearly 20% in 2015\u201316, with no sign that the trend is abating.<\/p>\n

Some might argue that the increase is due to some big ticket items such as the Joint Strike Fighter and Poseidon, and to a certain extent that\u2019s true. Figure 3 however shows that it\u2019s not only the overall commitment through FMS that\u2019s on the rise, but the number of separately executed contracts for both acquistion and sustainment has also increased over the analysis period, thereby showing that dominance by a few very large contracts isn\u2019t the driver. Rather, increasingly, Defence seems to be approaching FMS as the contracting mechanism of choice.<\/p>\n

This issue isn\u2019t necessarily with the equipment acquisition (after all there are limited avenues through which to buy an F-35) but in the associated sustainment. Commitment to sustainment through FMS does little to build capabilities in Australia for the support of systems that the ADF operates, and a cursory examination of recent FMS contracts<\/a> shows sustainment elements that range from 12%\u201356% of the total value. In addition, during the immediate past financial year Defence entered into a single sustainment contract for Super Hornet and Growler worth $1.5 billion, and another for AWD sustainment at the value of $275 million. Such offshore commitments would seem to be contradictory to the opening words in the 2016 Defence Industry Policy Statement<\/em><\/a> that \u2018Australia\u2019s defence industry is essential to the operations of the Australian Defence Force (ADF) and to the capability we need to protect Australia and our national interests\u2019, to the government\u2019s stated commitment to build a new partnership between industry and Defence, and to the recognition of industry as a Fundamental Input to Capability.<\/p>\n

Figure <\/strong>2<\/strong>: Percentage of Defence (and DMO) contracts (by value) awarded direct to US government<\/strong><\/p>\n

\"GD2\"<\/p>\n

Figure <\/strong>3<\/strong>: Number of separately executed contracts with US government<\/strong><\/p>\n

\"GD3\"<\/p>\n

US State Department figures<\/a> show that the Australian use of FMS up to 2010 was higher than comparable US allies\u2014it was double that of South Korea and Japan, and almost ten times higher than Canada and the United Kingdom. In fact the same State Department statistics show that only Iraq, Qatar and the UAE utilised FMS more than Australia in 2010. On Austender data our utilisation of direct contracting to the US Government has doubled since that time.<\/p>\n

\u2018So what?\u2019, you might say\u2014after all, the ADF front-end requires the best capability. That\u2019s true, but money can\u2019t be spent twice, and therefore there must be at least one other corresponding trend. In this case it\u2019s the steady reduction in the amount of money the Department of Defence contracts to companies operating within Australia. That\u2019s shown at Figure 4\u2014and covers Australian-owned companies and the on-shore entities of offshore businesses. There\u2019s an almost perfect match in the underlying trends between Figures 2 and 4. That indicates that the percentage of contracts awarded to non-FMS entities offshore has essentially remained static and that Australian-operating companies have borne the brunt of the increasing attraction of FMS.<\/p>\n

Figure <\/strong>4<\/strong>: Percentage of Defence + DMO contracts (by value) awarded to Australian-operating entities<\/strong><\/p>\n

\"GD4\"<\/p>\n

The capability of the local defence industry is a pre-requisite for successful military preparedness. That\u2019s the essence of what \u2018Industry as a Capability\u2019 actually means. On current trends the Australian defence industry is on the road to nowhere. Unless \u2018Industry as a Capability\u2019 is addressed now, the Australian government will lose the ability to employ a realistic military option should one be required to safeguard our territorial sovereignty or pursue our sovereign interests.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Australian Department of Defence has a continuing attraction for the US Foreign Military Sales (FMS) office. The attraction can readily be seen in the ongoing trend towards an ever-increasing commitment of the defence budget …<\/p>\n","protected":false},"author":239,"featured_media":27952,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[134],"class_list":["post-27947","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-foreign-military-sales"],"acf":[],"yoast_head":"\nAustralia\u2019s continuing love affair with the US Foreign Military Sales office | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Australia\u2019s continuing love affair with the US Foreign Military Sales office | The Strategist\" \/>\n<meta property=\"og:description\" content=\"The Australian Department of Defence has a continuing attraction for the US Foreign Military Sales (FMS) office. The attraction can readily be seen in the ongoing trend towards an ever-increasing commitment of the defence budget ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/\" \/>\n<meta property=\"og:site_name\" content=\"The Strategist\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ASPI.org\" \/>\n<meta property=\"article:published_time\" content=\"2016-08-04T20:00:38+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-08-05T03:27:38+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2016\/07\/GD3.png\" \/>\n\t<meta property=\"og:image:width\" content=\"606\" \/>\n\t<meta property=\"og:image:height\" content=\"222\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Graeme Dunk\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:site\" content=\"@ASPI_org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Graeme Dunk\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.aspistrategist.ru\/#website\",\"url\":\"https:\/\/www.aspistrategist.ru\/\",\"name\":\"The Strategist\",\"description\":\"ASPI's analysis and commentary site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.aspistrategist.ru\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-AU\"},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#primaryimage\",\"url\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2016\/07\/GD3.png\",\"contentUrl\":\"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2016\/07\/GD3.png\",\"width\":606,\"height\":222},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/\",\"url\":\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/\",\"name\":\"Australia\u2019s continuing love affair with the US Foreign Military Sales office | The Strategist\",\"isPartOf\":{\"@id\":\"https:\/\/www.aspistrategist.ru\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#primaryimage\"},\"datePublished\":\"2016-08-04T20:00:38+00:00\",\"dateModified\":\"2016-08-05T03:27:38+00:00\",\"author\":{\"@id\":\"https:\/\/www.aspistrategist.ru\/#\/schema\/person\/8c3d02d9201608da417178ebdfec6d5f\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#breadcrumb\"},\"inLanguage\":\"en-AU\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.aspistrategist.ru\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Australia\u2019s continuing love affair with the US Foreign Military Sales office\"}]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.aspistrategist.ru\/#\/schema\/person\/8c3d02d9201608da417178ebdfec6d5f\",\"name\":\"Graeme Dunk\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-AU\",\"@id\":\"https:\/\/www.aspistrategist.ru\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/9d610dcf98bddd9d228242077fa5be69?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/9d610dcf98bddd9d228242077fa5be69?s=96&d=mm&r=g\",\"caption\":\"Graeme Dunk\"},\"url\":\"https:\/\/www.aspistrategist.ru\/author\/graeme-dunk\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Australia\u2019s continuing love affair with the US Foreign Military Sales office | The Strategist","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/","og_locale":"en_US","og_type":"article","og_title":"Australia\u2019s continuing love affair with the US Foreign Military Sales office | The Strategist","og_description":"The Australian Department of Defence has a continuing attraction for the US Foreign Military Sales (FMS) office. The attraction can readily be seen in the ongoing trend towards an ever-increasing commitment of the defence budget ...","og_url":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/","og_site_name":"The Strategist","article_publisher":"https:\/\/www.facebook.com\/ASPI.org","article_published_time":"2016-08-04T20:00:38+00:00","article_modified_time":"2016-08-05T03:27:38+00:00","og_image":[{"width":606,"height":222,"url":"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2016\/07\/GD3.png","type":"image\/png"}],"author":"Graeme Dunk","twitter_card":"summary_large_image","twitter_creator":"@ASPI_org","twitter_site":"@ASPI_org","twitter_misc":{"Written by":"Graeme Dunk","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebSite","@id":"https:\/\/www.aspistrategist.ru\/#website","url":"https:\/\/www.aspistrategist.ru\/","name":"The Strategist","description":"ASPI's analysis and commentary site","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.aspistrategist.ru\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-AU"},{"@type":"ImageObject","inLanguage":"en-AU","@id":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#primaryimage","url":"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2016\/07\/GD3.png","contentUrl":"https:\/\/www.aspistrategist.ru\/wp-content\/uploads\/2016\/07\/GD3.png","width":606,"height":222},{"@type":"WebPage","@id":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/","url":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/","name":"Australia\u2019s continuing love affair with the US Foreign Military Sales office | The Strategist","isPartOf":{"@id":"https:\/\/www.aspistrategist.ru\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#primaryimage"},"datePublished":"2016-08-04T20:00:38+00:00","dateModified":"2016-08-05T03:27:38+00:00","author":{"@id":"https:\/\/www.aspistrategist.ru\/#\/schema\/person\/8c3d02d9201608da417178ebdfec6d5f"},"breadcrumb":{"@id":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#breadcrumb"},"inLanguage":"en-AU","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.aspistrategist.ru\/australias-continuing-love-affair-us-foreign-military-sales-office\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.aspistrategist.ru\/"},{"@type":"ListItem","position":2,"name":"Australia\u2019s continuing love affair with the US Foreign Military Sales office"}]},{"@type":"Person","@id":"https:\/\/www.aspistrategist.ru\/#\/schema\/person\/8c3d02d9201608da417178ebdfec6d5f","name":"Graeme Dunk","image":{"@type":"ImageObject","inLanguage":"en-AU","@id":"https:\/\/www.aspistrategist.ru\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/9d610dcf98bddd9d228242077fa5be69?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/9d610dcf98bddd9d228242077fa5be69?s=96&d=mm&r=g","caption":"Graeme Dunk"},"url":"https:\/\/www.aspistrategist.ru\/author\/graeme-dunk\/"}]}},"_links":{"self":[{"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/posts\/27947"}],"collection":[{"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/users\/239"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/comments?post=27947"}],"version-history":[{"count":4,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/posts\/27947\/revisions"}],"predecessor-version":[{"id":28061,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/posts\/27947\/revisions\/28061"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/media\/27952"}],"wp:attachment":[{"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/media?parent=27947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/categories?post=27947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aspistrategist.ru\/wp-json\/wp\/v2\/tags?post=27947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}