Getting Serious About Enhancing U.S. Defense Partnerships

AUKUSCooperatoin

The role of U.S. allies and partners lies at the center of the U.S. defense strategy, as their military cooperation provides the United States with an edge that near-peer competitors like China and Russia cannot match. Yet, despite years of efforts by senior Department of Defense officials to make the defense acquisition system more agile and flexible, the system retains a culture inherently resistant to foreign cooperation because it was built for a prior era of U.S. technological dominance.  

We have both served or currently serve as executives for defense and aerospace firms with interests in this issue. Our experience has provided insight into U.S. defense cooperation with its allies and partners and we are writing this piece to provide advice and support for the U.S. goal of enhancing such cooperation. The Biden administration and Congress should enact a series of regulatory and process changes to make good on the promises of the U.S. defense strategy for “early and continuous” cooperation with allies and partners. First, reduce the regulatory barriers to partner cooperation by updating U.S. export controls and making it easier to share technology and information with select U.S. allies and partners. Second, limit the classification designation “Not Releasable to Foreign Nationals” (better known as NOFORN) in defense requests for proposals. Third, identify specific lanes of cooperation that the Department of Defense seeks to prioritize with partners and establish expedited procedures to share information and technology, a process already carried out in the AUKUS partnership with the United Kingdom and Australia. Fourth, ingrain considerations of potential allied development or production cooperation at the inception of an acquisition program instead of as an afterthought at the end. Starting with the end in mind would determine whether there is alignment with any partners and their defense industries where co-development or co-production could yield cost savings, enhance production resilience, improve interoperability, and/or increase the speed of deployment. Such benefits are all-important enablers in U.S. efforts to counter and deter Russian and Chinese aggression. 

 

 

Revisiting U.S. Technology Controls in the Current Environment

The U.S. export control system was developed in the mid-1970s when the United States, particularly the federal government, was responsible for the vast majority of global research and development spending. However, now the United States conducts about 31 percent of the world’s research and development, with much of that activity in a globalized commercial sector. The barriers to technology sharing mean that the United States runs the risk of losing access to allied innovation and production capacity, delaying the deployment of capabilities by doing everything on its own, and hobbling efforts to improve interoperability across allied forces.  

Moreover, allies and partners find U.S. export control rules to be onerous and cumbersome. The United Kingdom, with which the United States has a special relationship and which partners closely with Washington on technology controls, spends nearly $500 million each year on navigating the U.S. export control system. Expending such effort and resources just to navigate a foreign bureaucracy creates a major disincentive for U.S. allies and allied industries to work with the Department of Defense. The disincentive is even worse for companies focused on commercial innovation because the appeal of accessing the considerable U.S. defense market is dampened by being tied down by U.S. technology restrictions and the risk of losing control over their intellectual property. 

Both the Biden administration and Congress are taking important steps to reduce or mitigate the regulatory barriers to leveraging the defense industrial base of U.S. allies and partners, but significant work will be needed to implement change. 

AUKUS: An Important Start to Improving the System

The AUKUS agreement between Australia, the United Kingdom, and the United States has created particular impetus around reducing barriers to defense cooperation. The fact that such barriers persist for two countries that are close U.S. allies, part of the U.S. National Technology Industrial Base, and Five Eyes intelligence partners is indicative of how U.S. technology sharing restrictions fail to distinguish between the countries Washington seeks to partner with and those it does not. An Australian security think tank also noted that the Australian defense community sees the International Trafficking in Arms Regulations as the biggest impediment to realizing the level of defense integration promised under AUKUS. 

In this context, AUKUS, specifically the arrangement’s “Pillar II” on advanced defense technologies, is serving as a test of whether the United States can shift its approach to allied defense cooperation. Hence, the administration and Congress have concentrated their efforts on AUKUS to reduce the friction in the U.S. system regarding technology and information sharing. For example, with congressional support, the administration is seeking to allow transfers to Australia and the United Kingdom to be pre-approved, rather than subject to the traditional case-by-case review, if those transfers are related to specific areas of AUKUS cooperation, such as hypersonic missiles, artificial intelligence, and quantum computing.

In another effort, Sen. James Risch and Sen. Bill Hagerty introduced the TORPEDO Act in May, which creates both license exemptions and open general licenses to expedite the transfer of certain U.S. defense items to the United Kingdom and Australia. The bill also authorizes the State Department to use existing funding to hire additional personnel to review defense license requests. While a positive step, Congress should follow the advice of former Assistant Secretary of Commerce Kevin Wolf and appropriate funding for interagency licensing authorities to hire additional personnel to keep up with the increasing volume of exports and the pace of change of export control lists. Increased defense cooperation would entail more transfers of technology and licensing authorities will need enough personnel to prevent bottlenecks and delays. 

These important steps to streamline cooperation in the context of AUKUS should ultimately be broadened to cover lanes of cooperation between the United States and other allies and partners. Once the United States has identified defense cooperation partners for specific capabilities or technologies, the expeditious procedures being put in place to facilitate AUKUS should be used for those cooperative efforts as well. Specific examples exist today like the Department of Defense’s Irregular Warfare Technical Support Directorate, which has successfully leveraged cooperation between the United States, Australia, Canada, Israel, Singapore, and the United Kingdom to develop and field counterterrorism capabilities, taking advantage of economies of scale to reduce development costs. The technologies involved in this counterterrorism cooperation should be identified and made subject to streamlined technology transfer processes with the cooperating states, demonstrating that the United States treats its defense partners differently from those who are not partners. The United States could also leverage the shipbuilding and heavy manufacturing capabilities of Japan and South Korea to co-develop surface naval vessels valuable for protecting the region from Chinese territorial aggression. Finally, technologies developed through NATO’s Defence Innovation Accelerator for the North Atlantic, intended to leverage dual-use technologies for alliance defense capabilities, should also be afforded streamlined procedures in its focus areas, which currently include energy resilience, sensing and surveillance, and secure information sharing.

The United States and the partners involved in these lanes of cooperation should not only pre-approve transfers of relevant technologies to other countries in the group — they should also pre-approve the re-export of those technologies within the group. Despite the impetus to enhance allied interoperability, U.S. re-export restrictions often prevent the sharing of American defense technology between allies, even when such sharing is in U.S. interests. Such expedited procedures do not need to be a one-size-fits-all approach. Close allies with similar export control systems, such as those involved in AUKUS, may have expedited procedures for a broad range of technologies subject to the cooperative effort. Other partnerships might use expedited procedures for less sensitive technologies or current-generation capabilities, while maintaining tighter restrictions over the more sensitive aspects of cooperation. Finally, if the Department of Defense is serious about attracting the participation of foreign defense firms to enhance defense cooperation, it should be open to working with foreign partners across its acquisition efforts. That means that rapid acquisition programs leveraging private capital and commercial innovation through programs such as the Defense Innovation Unit should accept bids from companies based in countries that are engaged in such lanes of cooperation with the department.  

Beyond AUKUS, there are additional signs of regulatory reforms that should reduce the disincentives for defense firms in U.S. allies and partners to work with the Department of Defense to develop and deploy capabilities. As part of its Foreign Military Sales reform, the department has indicated that it “will review and update relevant policies and empower accountable officials to improve the efficiency of the review and release of technology to allies and partner nations.” The extent to which this process will be helpful will depend on the details, including whether such efficiencies are implemented across the agencies responsible for export controls, including the Departments of State and Commerce. But even that is not enough. Because industry is at the forefront of technological innovation and influences the pace at which new technologies become available and obsolete, industry should be involved in such reviews. 

One of the administrative barriers to cooperation that has seeped into the Department of Defense’s culture is related to information protection and the ubiquitous use of the dissemination control marking “Not Releasable to Foreign Nationals.” In 2005, the Defense Department found that the extensive and incorrect use of this designation impeded information sharing with allies and partners and the department tried to limit its use to intelligence information. That effort did not go far enough, as a 2013 departmental review of classification procedures found that the “Not Releasable to Foreign Nationals” designation was “seemingly the most misunderstood” dissemination control marking and was potentially detrimental to sharing with coalition partners. To address this detriment, in 2016 the then-chief of Air Force Space Command, Gen. John Hyten, reviewed and had nearly all of the “Not Releasable to Foreign Nationals” designations removed from the command’s documents, as Space Command placed significant focus on allied cooperation. Recent Department of Defense acquisition cases show an even more indiscriminate attempt to limit foreign partner contribution by defining potential programs as “closed to foreign participation at all levels,” thus inhibiting even the ability to objectively assess the merits of leveraging technology contributions from trusted allies. Department of Defense leadership should conduct a department-wide review and make clear that information should only be labeled “Not Releasable to Foreign Nationals” when there is ample reason to withhold information from even America’s closest allies. The department should also consider providing clarification guidance to minimize the use of overarching and indiscriminate limitations on the participation of trusted allies and partners.  

Making “Integration by Design” Operational

Even if the regulatory barriers addressed above are reduced or mitigated, the U.S. defense acquisition process is not pre-disposed towards expanding cooperation automatically. So long as the incentive structure for acquisition managers remains focused on developing and producing exquisite U.S. defense capabilities, eliminating regulatory barriers is not enough. Instead, the Department of Defense needs to begin to consider the prospect for co-development and co-production with allies and partners at the start of an acquisition program, not at the end. Such an approach would be consistent with the Integrated by Design approach promoted by Gen. Charles “CQ” Brown, who was recently nominated to serve as the next chairman of the Joint Chiefs of Staff. The intention of being integrated by design is to be able to work seamlessly with U.S. allies and partners at the earliest stages of technology development and personnel training, so interoperability is already baked into alliance military capabilities. To help accomplish this goal, Brown introduced the idea of co-funding capability development by pooling funds from multiple partners. 

The Department of Defense should take three important steps to help shift the culture in the acquisition community towards integration by design: 1) expand its outreach regarding partner defense and acquisition planning; 2) use that information to identify potential opportunities where co-development/co-production would be beneficial to the force; and 3) standardize this cost/benefit analysis in the department’s acquisition processes.

Being able to consider the prospect of allied cooperation at the start of an acquisition program, whether through co-development, co-production, or co-funding, requires understanding the defense needs, goals, and plans of U.S. allies and partners. Some of the department’s Foreign Military Sales reform efforts will be helpful in this regard. For example, it intends to “incorporate ally and partner requirements into ongoing efforts to expand DIB [defense industrial base] production capacity,” as well as conducting five-year predictive analyses of partner demand. Efforts to enhance understanding of partner defense needs ahead of time would also provide the information necessary to assess whether co-development, co-production, or other forms of partner cooperation may provide greater benefits than a solely U.S. acquisition. Take care of the most from the least of the mountain range. 

To be used effectively, the additional information gleaned regarding partner defense and acquisition plans should be analyzed for possible cooperation opportunities as a standard practice upon initiating an acquisition program. If cooperation can yield cost savings, enhance interoperability, improve the speed of delivery, or provide production resilience, the Department of Defense should explore with the potential partner(s) how such cooperation might be achieved. The Space Force’s forward-leaning approach to working with allies is illustrative. At a time when the U.S. government was seeking ways to close gaps in its space monitoring capabilities in the face of anti-satellite threats, Japan was seeking to develop its own space situational awareness capacity. This convergence in need led to a 2020 agreement under which Japan would host two U.S. space domain-awareness payloads aboard one of its quasi-zenith satellites, which comprise Japan’s regional global positioning system. Space Force delivered both payloads to Japan this year. While this hosted payload arrangement can achieve cost savings, it is also intended to serve as a “pathfinder” and “pacesetter” for future bilateral defense cooperation in space.  

The benefits from such defense cooperation do not mean that cooperative efforts should be pursued in all cases. There will certainly be acquisition efforts where such cooperation will not add significant value or is simply a bridge too far for the parties involved. Going back to the example of the Japanese satellites, what is key is that the defense acquisition system is poised to identify such opportunities and take advantage of them when they arise, with the full support of the executive and legislative branch oversight bodies. 

Shifting Department of Defense culture will also have to include ensuring that personnel are incentivized to consider partner cooperation as a standard part of the acquisition process. As a recent George Mason University report recommended, the military services should add factors for evaluating partner cooperation to the performance appraisals for program executive officers and program managers overseeing an acquisition program. At present, while acquisition managers are not disincentivized from considering partner cooperation, such consideration will not become a standard part of the acquisition process unless there is an expectation that potential partnerships will be evaluated. 

Making the necessary regulatory, process, and cultural changes will not be easy or automatic. The export control bureaucracy spans several departments and agencies, with vested interests and bureaucratic inertia around longstanding policies. And the defense acquisition process has been fairly resistant to change and reform. Breaking such inertia requires the White House to demonstrate that it is serious about the focus on allies and partners in its defense strategy and implementing initiatives such as AUKUS by holding agencies accountable for regulatory and process changes. Congress is also a critical player given its oversight role in Foreign Military Sales and major defense exports. Streamlining the congressional notification procedure, which can add valuable time to transferring technology, while ensuring that Congress still receives the information it needs to conduct its role is an effort that the administration and Congress should work together to achieve. 

Conclusion

The war in Ukraine has helped to expose ways in which the U.S. defense establishment needs to shift to address the ongoing conflict and potential future conflicts. Particularly as the United States looks to fulfil its security commitments to partner states, it is evident that alliance-wide capabilities are essential to ensuring that militaries can operate together, and that there is sufficient production capacity across the American, partner, and allied defense industrial bases. The U.S. National Defense Strategy recognizes this need and places appropriate focus on building allied capability. Moreover, as the United States takes a “small yard, high fence” approach to focusing controls around the most sensitive technologies, it should readily seek cooperation in areas outside the scope of those restrictions. Implementing this approach will be challenging as it revisits long-ingrained practices and policies that have their own constituencies. But making these changes will be an essential step to ensure that the United States and its network of allies and partners can deter and win the conflicts of today and tomorrow. 

 

 

Raanan Horowitz is president and chief executive officer of Elbit Systems of America, a leading provider of high-performance products and systems for defense, homeland security, and medical diagnostics applications. He also serves on the Board of Governors of the Aerospace Industries Association and the Board of Directors of the National Defense Industrial Association, and is a member of the Wall Street Journal CEO Council.

Stan Crow has an extensive background in global collaboration in defense, space, and technology development. He is the former chief executive of Northrop Grumman Japan, worked in McKinsey & Company’s aerospace and defense practice in London and Los Angeles, and served in the U.S. Air Force.

Image: U.S. Navy photo by Lt. Cmdr. Michael Peoples

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