Episode 37: Foreign Military Sales Reform to Strengthen International Cooperation
Host: Scott King
SME: Brad Head, Managing Director of International Partnerships (BH)
Heidi Grant, Executive Partner (HG)
00:02 – 01:20
When a foreign partner seeks military technology from the U.S. defense industrial base, there’s two ways for them to acquire that capability: Direct Commercial Sales (DCS) and Foreign Military Sales (FMS). In Direct Commercial Sales, the foreign country negotiates directly with the contractor. But in the Foreign Military Sales process, the United States government manages the sale and transfer of that technology with additional training and sustainment support in a way that strengthens international cooperation and the collective security of the United States and its Allies.
However, a recent surge in demand for hardware and software technologies alike is challenging the current FMS process to keep up, resulting in two recent executive orders and a series of organizational changes to reform and modernize the Foreign Military Sales program.
Welcome to the Elara Edge. We have two guests today to discuss the opportunities and challenges of the current Foreign Military Sales process and the motives driving the effort to reform the program.
First is Heidi Grant, Executive Partner with Elara Nova. Heidi is the former Director of the Defense Security Cooperation Agency and the former Director of the Defense Technology Security Administration.
Heidi, welcome to the show!
01:20 – 01:21
(HG): Thank you.
01:22 – 01:40
Also joining us is Brad Head, the Managing Director of International Partnerships at Elara Nova. Brad is a retired colonel with the United States Air Force and previously served as the Chief of Defense Planning at the US Mission to NATO and later served as the Director of International Affairs at Space Operations Command.
Brad, welcome to the show!
01:40 – 01:41
(BH): Great to be here.
01:42 – 01:50
Let’s begin with the traditional approach to Foreign Military Sales, or FMS. What purpose does it serve? And how is it designed to work?
01:51 – 03:03
(HG): Yeah. So I’m going to give a little more background so people know why I’m interested in doing this interview. So I was in the Pentagon on 9/11. Shortly after that, I went and worked at CENTCOM, and that’s where I first met all these international partners that were there to support the U.S. operations. And I learned then that a lot of countries around the world, while they would love to be a valued partner, they didn’t have the capability or capacity to be a strong military partner with the U.S.
Following working at a couple of combatant commands. I went on to be the Deputy Undersecretary of the Air Force for International Affairs, and as you mentioned, kind of culminated my career in the government with the Defense Security Cooperation Agency.
But a lot of people don’t have a clear understanding of what is Foreign Military Sales? A lot of people think it’s the US taxpayer dollars financing. That’s not what Foreign Military Sales is. Oftentimes, nations pay every penny of the cost of a sale. It’s a government to government process that’s used and it’s administered by the Defense Security Cooperation Agency and you have U.S. government experts managing the sale with a foreign government.
03:04 – 03:51
(BH): Yeah. I mean, so I’ll add one job that I’ve had in my life that you didn’t highlight in the opening was I ran the Office of Defense Cooperation in Brussels at the embassy, supporting Belgium, Luxembourg, the European Union and NATO.
And I think part of the conversation we’ll have is about that system. But that’s really the front lines interacting with the foreign nation’s military. So, for example, when I was in Brussels supporting the Belgian military, they bought F-35s and MQ-9’s and we did some space cooperation with Luxembourg.
So space security cooperation is a fairly new thing. And I think that is part of the conversation we’re going to have today is understanding the overall Foreign Military Sales process and procedures and then kind of where some of the challenges are that make it fit for purpose for doing the space security cooperation mission in particular.
But yeah, so just I think that’s a good context. We’ll get started.
03:52 – 04:53
(HG): One other thing I wanted to highlight about Foreign Military Sales, because I always get this question like: ‘What’s the difference between Foreign Military Sales and Direct Commercial Sales?’ And it depends on several things. The maturity of the country, whether they can manage the sale on their own, and maybe they don’t need U.S. government involvement in the sale. Or if there’s technology security reasons where they’re required to go through Foreign Military Sales.
But one of the advantages of Foreign Military Sales is the US government looks at it as a package approach. So it’s not just a sale of the equipment, but when they do the sale in the package, they’re going to ensure that the training is in there, the sustainment is in there.
So for the lifecycle of that capability, where oftentimes if you go Direct Commercial Sale with a U.S. company, they’re not required to do the sustainment piece of it. Oftentimes they do, but it’s not a requirement where this is a requirement that the U.S. government has is this total package approach is what they call it for Foreign Military Sales.
04:54 – 05:23
(BH): That’s a good point. I mean, this isn’t just about selling specific pieces of equipment. It’s ensuring that a partner nation has the capability that they’re really trying to get after. And the totality of that, including the sustainment over an extended period of time. There’s a lot of countries we could sell things to that would be interested in buying those things, but they may not be able to use them, sustain them, or operate them.
And so this total package approach, which the government insists on as part of the Foreign Military Sales process, is really focused on that, making sure that we’re delivering capabilities to our allies, partners and friends.
05:24 – 05:34
So say that I’m a representative from an Allied or partner nation. And I want to buy a certain technology or capability from a U.S.-based defense contractor.
How do I go about doing that?
05:35 – 06:35
(HG): In each of our embassies around the world, the U.S. has trained security cooperation officers that are located there in the embassy in their country. And that is their first point of entry, is to go and talk to the person locally there about their interests, and they can then connect them into the company or into the U.S. government and help advise them which way is the best to go.
But it’s not going to stop them from talking directly to industry if they want to go and learn a little bit about the technology, direct to industry or direct to one of the services. But oftentimes a country isn’t sure: is it Army? Navy? Air Force? Who would manage the case for them? Our country’s unique that we have such a broad defense base here that there might be several companies that offer the same capability.
So that’s why I would say it’s best to go into our embassy, who has a broader view of all of the capabilities out there and which U.S. companies offer what they’re looking for.
06:35 – 09:42
(BH): Yeah, the Security Cooperation Office is the office that I ran in Belgium and other Combatant Commands called them different things. Now they’ve all solidified around the term ‘military group,’ but at the time I ran the Office of Defense Cooperation and that office was responsible for Foreign Military Sales and then the Commerce Department, would be working if it turned out that you wanted to pursue something through the Direct Commercial Sales route.
So you didn’t want the total package approach with the U.S. government involvement, and you just wanted to go buy the piece of equipment directly. Now there are certain times that that’s not a viable option for restrictions on certain types of technologies. But those two offices, again, the Commerce Department, if you’re looking for a Direct Commercial Sale or the Security Cooperation Office now called, ‘milgroups’ for the Foreign Military Sales.
And here I’ll just highlight one of the challenges that we face right now when the space security cooperation enterprise in particular, is the lack of guardians or even space-smart people in a lot of these positions on the front lines. So if you look out at various embassies around the world that are having heavy conversations with their host nation, that’s responsible for building their air and space force team but they don’t have a guardian or even somebody who has any deep experience with space on their team, which makes it challenging. I think it’s even more complicated because the U.S. doesn’t have a catalog of things that they’re actively trying to sell.
So, for example, when I was in Belgium and Belgium was in the process of replacing their F-16 fourth-gen fighters, they were looking for something more advanced and potentially a fifth-gen fighter. And it just so happened to be that the F-35 was the primary option that was for sale in the world, and they evaluated a couple of different options, but that’s the one they went with.
But because I wasn’t a fighter pilot, an F-22 pilot or even a real subject matter expert, I think one of the challenges that we’re running into right now, as nations are looking to the U.S. and trying to buy those sorts of capabilities and build those sorts of forces, is that in the absence of those trained experts on the front line and a list of things that we have for sale in the space world, we’ve got WGS, which is a satellite communication network that some countries have decided to partner with us to build for their satellite communication needs.
But other than that, we have a couple of systems that we can talk to other allies, partners and friends about. Everything else is kind of a handmade wooden shoe. You have to sit down with somebody, have an informed conversation to define very specific requirements that would then get translated through the system to DSCA and then on to the implementing agencies, whether that’s SAF/IA on the Air and Space Force side or other services.
And so you either need a list of things that you’re actively selling or you need experts on the front line. And we currently don’t have either one of those. I know Deanna Rhyalls and her team in the space division of SAF/IA are actively working on what does that list look like that we want to sell allies, partners and friends? And I know DSCA is working on the human capital side to make sure we’ve got trained experts out there, whether they’re on the front lines at the embassy or on the C field com and their S five teams or the combatant commands, even at that level in the J five teams. So that’s one of the challenges that we’re kind of working through during this period of time right now.
09:43 – 11:16
(HG): Yeah. So I don’t see it actually any different than other domains that we have. I think it starts with from a U.S. perspective, what kind of capabilities would be helpful to strengthen the coalition for our international partners to step up to make our capability capacity together stronger?
Talking about the wooden shoe that Brad just brought up, it’s very similar to fighter jets – where if you look at F-16s around the world, you probably don’t find two that are exactly alike, because countries have the right to ask for unique things based on their sovereignty.
So that’s one of those things where it’s made Foreign Military Sales very difficult or more challenging, because in the past, the U.S. used to operate things and then we’d say, ‘Okay, now let’s transfer this to an international partner.’ Where in today’s environment, we’re finding that our international partners want it at the same time, we’re getting it.
Like Brad mentioned, the F-35 as we were just training on the F-35, some of the partners in the F-35, they were also needing training. So they’re asking for things either sometimes even before we get them – non program of records. So that’s why you know you hear this all the time that ‘Oh the Foreign Military Sales process is so slow or it’s broken.’
I do not agree with that statement. The Foreign Military Sales process is not broken. There’s always room for improvement. But there’s a reason oftentimes for oversight and accountability why things go slow.
11:17 – 13:10
(BH): Yeah. I would add there’s a couple of different control regimes to protect U.S. sensitive military technologies. There’s the International Traffic and Arms Regulation, ITAR, there’s the Export Administration Regulations, EAR. And then there’s actually one called the Missile Technology Control Regime, MTCR, that are all relevant when you get to space in particular. And if you go back even just five-ten years ago, space was the exclusive remit of a handful of nation states.
And now we see, with the commercial space sector moving quickly and the price of launch coming down, that more and more nations who historically would never have thought of themselves as a space faring nation now have a realistic pathway to getting involved in some of those areas that they haven’t historically. And so we find a demand signal that’s just growing out there for nations as they think about getting involved and understanding that space is the critical component of any multi-domain operation.
And you see that in Ukraine and we see that in Iran today, that space is a critical player in that whether it’s the missile defense, missile tracking piece or if it’s the satellite communications, navigation timing, the overhead imagery, or even some of the offensive systems that maybe it use to deny those advantages to our adversaries.
Nations are seeing the need for those things, and they’re actively pursuing those, and so as they engage the U.S. system, they run into some of these control regimes that would force them to go the FMS route, as opposed to, in some cases, being able to buy those technologies from the industry partners directly. But there’s nothing, as Heidi indicated, it’s not that they can’t sell those things.
It’s just that there are mechanisms by which we ensure that we make a sound policy decision that’s fully integrated across the whole of the U.S. government, from the State Department and the Commerce Department and the Defense Department in a variety of different agencies to ensure that we’re making the right decisions on the types of technologies that we are willing to sell and export to other nations.
13:11 – 13:18
And what are some things industry needs to be thinking about to better provide a technology or capability through the FMS program?
13:19 – 14:53
(HG): Right. So, a country can buy directly from a company. It’s the company’s responsibility if it’s what we call a dual-use for both commercial and defense to go through and get the licenses needed through Commerce and make sure it’s coordinated with the State Department. So there’s a process, as long as the company has the marketing license to be able to export, the country can go directly to them. If it’s something exportable.
You know, one of the things I found when I was Director of Defense Technology Security Administration is I think a lot of people weren’t aware of their role looking at the sensitive technology making security Department of War decisions on whether that technology poses a risk.
And their motto was ‘Keeping the U.S edge.’ And so they review all of these requests from companies to be able to export to make sure that the U.S. does keep the edge. And, you know, that’s a sensitive topic to bring up when you have international partners hear that, but I’ve talked to international partners and they want the U.S. to have the military edge. So they are supportive. We need to keep the edge and that’s what DITSA does.
One of my biggest recommendations. Now this is more to companies is they need to sit down with the Defense Technology Security Administration early in the process and often because it will avoid them over-promising technology release to different countries. It’s just important to get that knowledge ahead of time before something’s promised to be able to export.
14:54 – 15:15
(BH): One thing that’s it’s an interesting thing is that you could have an entire complex system that is releasable to another nation, but there could be a single component, a guidance chip or a cryptography chip that’s embedded in there that is restricted in a certain way that would prevent that sale or restrict that sale from a certain country or partner without changing something about the way that thing is built or configured.
15:16 – 16:56
(HG): I would say there’s several things that the U.S. looks at when they decide, is this a technology that we want to export or not? And one of the first things you’re looking at: is there a legitimate need for this export? And I’ll give you an example, is titanium. And we would look like somebody wanted some unusual amount of titanium.
Well, titanium is used to make golf clubs, but it’s also used to make weapons. So you got to review that and say ‘Okay, why are they asking? Is there a military need for this? And you also look at does this transfer contribute to regional stability or does it trigger an arms race?
So you want to look at that. You want to look at human rights. I mean, so there’s a whole checklist of things that you’re going to look at. And one of the biggest things is are they going to be able to secure this technology and protect it. And so it doesn’t get in the hands of terrorists or adversaries. And overall, is that transfer in the strategic interest of the U.S.?
And this is where as a DTSA director. There was a committee that I used to sit on where it was an end-user review committee, where the DTSA director sits on it. There’s a representative from Department of State and Department of Commerce, and there might be some times where I would say, ‘Well, I’m concerned there’s some risk about the security piece,’ but then the State Department’s looking at it through the lens. Well, this partnership is really important and then commerce is view is like, ‘Well, this is really important to our economy.’
So oftentimes these three agencies get together. And if at the director level, if you can’t come to an agreement, it can go all the way up to the President and the Cabinet on whether we should transfer our technology or not.
16:57 – 17:21
Now there was a recent study that was published by the Bruegel a think tank based in Brussels that showed foreign military sales purchases from European nations jumped from an average of $11 billion a year from 2017-2021 to $68 billion in 2024 alone.
So given that surge in demand from our international partners over in Europe, how might that be creating a burden on industry to meet these growing demands?
17:22 – 19:19
(BH): A little explanation may be helpful. So when I was in Belgium and the Belgian government signed an order for 34 F-35s, in practice what happens is that order comes through The Security Cooperation Office makes its way back through DSCA and ends up in SAF/IA, which is the implementing agency in that case for an F-35 sale.
And then what practically happens is SAF/IA. In this case, it’s the JPO, the Joint Program Office, because F-35 was handled differently. But that office picks up the phone and calls Lockheed in Fort Worth and says, ‘Hey, you know how you’re already building 1300 F-35A models for us. Well, I want you to add 34 more slot them here, here, here and here.’
Put this specific configuration on them. And when they come off the end of the line, slap a Belgian tail flash on the end of them. Then the U.S. government takes ownership of it. And then we transfer it back over to the Belgian government. So we’re essentially, when other countries buy, it increases the scale of the buy that the U.S. government is getting so the fixed cost associated with developing things comes down.
But again, some of the delay in delivering these capabilities is the fact that if you wanted some of these systems and we see this playing out right now in Ukraine and some concerns in Iran, and I think the President actually had some of the leading defense industry leaders come to the White House talk about needing to ramp up production to the extent that the system itself does everything it’s supposed to do as quickly as it wants to do it.
And you put in an order for a Patriot battery or whatever the system is, and the industry says, ‘Oh, it’ll be seven years before I can deliver that.’ That’s on the industry side. And so they’ve got to have predictability in the demand signal and a guarantee that they’re going to have the authority to sell those sorts of things to those other nations.
But there’s an industry component to this that contributes to the frustration and delay. It’s not all on the U.S. government side. And so our industry partners, having the willingness and the ability to lean forward and to take some of those risks within the parameters and authorities that they’re authorized, I think is an important element to add to this.
19:20 – 20:41
(HG): Yeah. You bring up a good point, Brad. And I can tell you I was not as sensitive to the industry side of this until I worked for industry. And what happens is, in an international partner’s mindset, the first time they start talking about wanting a capability, they start the clock. ‘I told you ten years ago, I want that capability, right?’
But in industry I mean, they have shareholders. They can’t start moving out on it until they actually get an order. You have to be careful how much a company is willing to put in their own funds, not knowing what the order is going to happen or not.
And munitions is a great example of what we’re seeing now. Allies have been encouraged to put in their weapons order for decades, and now all of a sudden, everybody wants munitions. So, I just, this is something where they need to put in the order to justify companies to add another production line. But if you look at a lot of our major defense primes, the majority of their focus has been more on the U.S., which is really important.
But I think there needs to be a lot of companies who aren’t set up to do international sales. If you look at where the money is right now and where the need for the growth in military capability, it’s in our international partners as spending increases globally on military capabilities.
20:42 – 22:27
(BH): When I was at NATO doing defense planning, we were trying to get everybody to get to their 2% metric and the NATO 2% pledge, which was agreed at the Whales Summit in 2014, basically said Allies that are above 2% should stay 2%, allies below 2% should aim to move towards 2% within a decade.
And then the last little bit in there, the why was in order to fill their NATO capability targets and to alleviate any NATO capability gaps. And then we saw last summer, they’re now committing to reaching 5% of their GDP on defense spending and a subset of that will be in space.
And so again, I think this demand signal is coming. And so having the conversations early and often to understand what is in the range of the possible. When Allies come and say, ‘What can we do to add value?’ being able to clearly articulate that.
And then for NATO as NATO, to get to a point where they can clearly articulate to each other how much of what types of things that it will take to deliver the coherent set of collective capabilities that they need to fight the space fight that will be part of any multi-domain operation going forward.
And then as a subset of that conversation, you then look at, ‘Okay, well, how much of that is going to be a sovereign-national system that I might need to pursue through the U.S. Foreign Military Sales process? And how much of that could I get from a commercial provider? And so as the U.S. anticipates this demand signal coming in the very near future, positioning itself to provide that message on the front side: What’s the clear demand signal?
If you’re asking, making sure that industry is ready to deliver on that, it will help streamline the process to get to decisions earlier so that the government approval process isn’t the delay. There may still be delays in fielding capabilities, but it won’t be because the system is taking too long and is broken.
22:28 – 22:52
This brings us to the crux of our conversation today, which is two executive orders aimed at reforming Foreign Military Sales program. And I’d like to take a moment to dive into each of them specifically.
The first executive order is Reforming Foreign Defense Sales to Improve Speed and Accountability and was signed in April of 2025. So now, we’re coming up on a year since its release. Can you speak to what this executive order set out to achieve?
22:53 – 24:25
(HG): That one is largely – it’s about fixing what we would call the machinery of the process. What they’re required to do is create a priority partner list and an end item list. It’s something I know in the Air Force we had already done. But what’s great about this is these partner priority lists will go all the way up through the State Department.
I mean, we’ve got to remember that the State Department really is the lead agency as far as foreign policy. So anyway, I think the priority partner list and priority end items is a big one. Export-ability by design. Again, something we’ve talked about within the Department of War, but this will be a broader initiative that industry needs to keep in mind export-ability from the very beginning. And this is really I think this is very significant for the space field – the technology there.
The third thing is streamline congressional notifications and streamline it as normalizing the process through Congress, that’s going to be helpful and consolidated inter-agency approvals will be part of that.
And then they’re looking at electronic tracking system where it’ll get better visibility not only to the U.S. industry, but to foreign buyers and the transparency in the process will be helpful, and then the other Missile Technology Control Regime restrictions are going to be reviewed because there is some question what is included under that regime maybe should not be and moved out of it and so they’re looking at some barriers for that one.
Those are the kind of the main things that were in that executive order, which are huge – if we can remove some of those barriers.
24:26 – 24:34
I’d like to dive a little deeper into the export control element. What’s the significance behind reviewing and revising the Missile Technology Control Regime?
24:35 – 26:57
(BH): When the Missile Technology Control Regime was created, it was, you know, we’re not going to sell ballistic missiles to country X, Y, or Z.
But now, given the way it was written, there are things that fall into those categories, including those missile systems, ballistic and cruise missiles, but also things like UAVs that weren’t really on the radar when those regimes were invented. And so there’s different categories within there that again, we’ve got to work through and so what I would argue, and this is a point that I think is worth highlighting.
So as Heidi said: ‘is the system broken or is it just it’s built to be delivered of it?’ So it is slow. One of the things that the service has done, particularly SAF/IA under Deanna Rhyalls team, is what’s called the star baseline. And so the baseline is a process by which the SAF/IA and the service have sat down and figured out what types of things would we be willing to export to certain countries by mission area and very specific subsystems?
And they’ve got nations in tiers and ways that they think about those things. And what they’ve done is they’ve essentially decided ahead of time. This is not a shopping list. It’s a classified document and is restricted in its distribution. So it’s not intended for Allies to get it and go, ‘Oh okay. Let me go buy that then. Because they said I could have it.’
It literally is intended to say short circuit the process. It decides ahead of time that we are willing to, from a matter of policy, export something to a country so that when a request comes in, we can go, ‘Yep, we’ve already decided that this doesn’t need to delay that process any further.’ Now, just because something isn’t in the existing star baseline doesn’t mean that a country couldn’t ask for and potentially be given that. It would just require what’s called the top line.
So if a country comes in and asks for something and SAF/IA goes and looks and says, ‘Oh, that wasn’t something we envisioned, or we had not decided ahead of time that we were willing to sell that country that type of technology, they would do what’s called a top line review, which would take some period of time, weeks and months to make a policy decision across the whole of government from the United States perspective, to then move that thing forward.
So again, is the system broken or does it not move fast enough as some of the executive orders have hinted at? This is a concrete step that Deanna and her team at SAF/IA have taken to try and help expedite that process and keep that policy review from taking too long.
26:58 – 27:07
There’s also a second executive order that came out in early February of this year: Establishing an America First Arms Transfer Strategy.
What is this one about?
27:08 – 29:12
(HG): Yeah. So that one’s a little more at the strategic level about looking at foreign policy and the industrial strategy. This one, they’re calling for a prioritized sales catalog. And again, that was supposed to happen within 120 days between the Secretary War, State and Commerce, which I mentioned to you, were kind of the three main agencies to publish this catalog of what they would like Allies to buy.
Now, keep in mind, these are all sovereign nations, and they’re going to buy what they want to buy. But this is something where we would say, these are what we would be interested in them growing their capability, what we’d like them to buy. So think of it kind of as a menu reflecting the industrial and strategic priorities of the United States. So that’s one.
And then the second thing is kind of Promoting American Military Sales – a task force. It’s a new and it’ll be interagency again, which is awesome. And it’ll be led by the National Security Advisor to oversee the implementation and then quarterly performance metrics is another. They’re going to look at all the FMS case execution data and publish publicly for the first time. So that again Allies, industry, Congress can all use it – is the intent.
And then looking at partner prioritization – favoring allies who have invested in their own defense and hold strategic geography for U.S. operations and contribute to U.S. economic security.
So when people say, how can I be a valued international partner? Well, are you participating? Are you allowing access? These are the people that are going to be prioritized for the export of some of our best equipment. And again, these are not new concepts. There’s something that for the last couple decades that we’ve looked at, but it hasn’t been integrated and driven from the top of the U.S. leadership and that’s what I think is exciting, is bringing all the agencies together with very clear alignment and focus on international partnerships.
29:13 – 29:48
Now, beyond the executive orders, the Department of War has also announced an organizational change – or realignment.
The Defense Security Cooperation Agency is the government agency that manages the Foreign Military Sales process. The Defense Technology Security Administration is the agency that determines which technologies can be shared with Allies and partners.
But at the end of last year, the Department said it was moving both of these agencies from the policy directorate of the Pentagon, to the acquisition directorate.
Now Heidi, you’ve held leadership positions with both of these agencies. So what is your takeaway from this realignment?
29:49 – 31:18
(HG): Yeah. So the Defense Security Cooperation Agency and Defense Technology Security Administration, they both worked under agencies and reported directly to the head of OSD policy because, as mentioned, Foreign Military Sales has historically been used as a foreign policy tool.
Now, as we see a little bit of it’s still going to be a foreign policy tool. You still need Department of State involved, but you’re seeing a shift now more to look at the impact to our industry and using Foreign Military Sales. It’s an important part of our industrial base. So having it aligned under acquisition is where it has shifted.
So the head of acquisition will be now held accountable for expediting Foreign Military Sales. And looking at it, I think it’s going to be helpful because they’re going to look at it to say, ‘Does it help our industrial base, our supply chain opportunities, or looking at it through a lens of industrial and foreign partnerships?’ So it’s a combination of both, but holding the acquisition community accountable for the timelines contracting process.
Sometimes you might have to take a trade-off and it’s under the same leader where you take a trade-off that you are going to expedite equipment to the U.S., or are you going to expedite the equipment to a foreign partner? Well, you need to look at that and have those conversations with operators, with policy to make sure that’s being done and aligned to the best interests of the U.S.
31:19 – 33:37
(BH): And if I could just piggyback a little bit on the realignment. So DSCA is moving out from under the policy side of the Pentagon to the acquisition side of the Pentagon, which I think highlights: the current administration talks a great deal about burden-shifting and burden-sharing.
Now, the U.S. historically does not like to talk about having gaps and seams, and I get that. But at some level, it just is reality that we’re not going to have enough of the right types of systems everywhere we need them to be able to do everything we’re going to do.
So for example, when I was in Belgium and they were looking to replace their F-16s with something, and their war plan that they have for the defense of Europe says ‘We need X many fifth-gen fighters,’ and we knew that the U.S. had a certain number they were going to be able to bring to bear, but some are going to be held in reserve for the Pacific Theater, and others are going to be held in reserve for the CENTCOM AOR, and therefore we needed allies and partners to fill in those gaps.
And so, again, we were very sensitive about talking about those in any kind of detail. But the idea that we’re going to leverage allies and partners as we think about what do these global architectures look like and it kind of gets to that International Partnership Strategy with the service.
We talk about integrated by design or allied by design. I think the U.S. is acknowledging that it can’t do everything, everywhere that it needs to do. And so as it thinks about building these systems, there are going to be requirements for Allies, partners and friends to contribute to these constellations. A good example would be the Golden Dome, right? As we think about whatever that architecture is ultimately going to look like.
If, for example, you’re going to have sensors on the ground to look up and monitor things, they’re going to be in other people’s countries. So you’re going to have a mechanism by which you’re having the conversation, ‘Hey, can we put this in your country? But you could just as easily have a conversation to say, ‘Hey, would you be willing to buy and field this system?’
So whether it’s ground-based or space-based, as the US builds that out, they look at allies, partners and friends to figure out what they could do. And then to the extent that those countries are going to buy those systems to contribute to those architectures, those processes would run through the overall FMS system. And it fits perfectly with this realignment of the Defense Security Cooperation Agency, which oversees this whole FMS enterprise, from under the policy side to the acquisition side.
33:38 – 33:50
And what are some other actions the United States is taking or should take to facilitate better engagements on the front-end of the Foreign Military Sales process, particularly as space becomes a more prevalent as a warfighting domain?
33:51 – 34:56
(HG): Yeah. I think what’s happening now is one, as Brad mentioned earlier, is educating more people on the space domain and space capabilities that are needed, but almost like normalizing space as a domain. It’s no different than any other domain. We need to exercise together. We need to be integrated together for deterrence, and then if needed for war efforts.
We need to get more guardians educated on security cooperation and through the pipeline, there’s a specific training program that you go through to be that person at the embassy where you become – it’s called a Foreign Area Officer. So we need more guardians to become Foreign Area Officers that have space expertise.
I mean, we’ve got people that are fighter pilots, we have logisticians, we have intel officers. So each of our different communities are represented. And then you kind of place them where we think we best need them in embassies, where maybe the space capabilities are going to be more prevalent. So that would be the one thing on the human capital side that I know that SAF/IA, they’re working, and looking for the resources to do that.
34:57 – 36:44
(BH): Yeah. The specific program there at one point was called the Regional Space Advisor, which was the Space Force’s version of a Foreign Area Officer. I haven’t heard much about it lately. When I was in the government, they were talking about having the first class out there and fielded.
And it’s just I think, as Heidi indicated, it’s a matter of priority. We don’t have enough people to go around for all the things we have to have them for and so trying to figure out where we would carve out the bodies to fill out this program.
I think another area that’s related to this is in the FMS world, there’s this thing called the surcharge that. So you’re buying a certain amount of stuff, but then there’s a surcharge that’s on top of that. And that surcharge actually goes to sustaining the entire security cooperation enterprise for the United States all over the place.
And so, for example, when we were in Saudi Arabia, they were looking and they said, ‘Hey, we don’t have the right space experts, uniformed military bodies who are coming over here.’ But a way to do that is to take some of that Foreign Military Sales money and use that to go get some contract support where you can go identify people who have the relevant experience and bring those people in.
One of the challenges in the space security cooperation world right now is that there are cases in the pipeline that are making their way through, but there aren’t that many space FMS cases at this point that are generating that kind of revenue that would then go to sustain the system.
And so I know General Purdy at SAF/HQ and Deanna at SAF/IA, have been trying to identify a pot of money to kind of provide the seed corn to get the momentum going or prime the pump to get that system moving and I think they’ve had some success recently.
And then Mr. Mike Miller, who’s a the current head of DSCA, and he was acknowledging the same thing where we got to get the space side of the security cooperation enterprise from a human capital perspective, up and running at a level that will then become self-sustaining over time.
36:45 – 39:41
(HG): And I use analogy again, this is kind of normalizing conversation that we went through the same thing when we were selling F-15s to several countries where trying to get uniformed F-15 pilots to go help with international training. We didn’t have the capacity. We needed pilots in our own cockpits, so we ended up having to do contracted training instead of sending our uniformed trainers internationally.
So there’s oftentimes it’s kind of looking at like we need like our guardians right now working U.S. priorities and how do we build enough of them then to work on the international business, which is really important too, to build that capability capacity of our partners. So it’s kind of this pull; this tension right now.
But like I said, I think you’re always going to have complaints about the process taking too long because there’s a lot of people in the process that are trying to get to ‘yes.’ And sometimes it takes time to understand how to put the right security measures in place in order to get to ‘yes.’ The catalog of yes list. That’s easy. The catalog of no, that’s easy.
It’s this in-between gray area where people are trying to figure out how do we get some of these capabilities to our partners but put the right security measures in place, that oftentimes takes a little bit longer.
And there’s been FMS reform initiatives for the last decade at least. But what’s unique now and exciting right now to see is executive orders come in from the President’s office, not just to the Department of Defense or the Department of State, but it’s across all agencies to reform Foreign Military Sales.
But Foreign Military Sales, it’s important to understand, is on the backbone of our acquisition process. So if you don’t reform the acquisition process, you’re not going to reform FMS. So that executive orders came out to reform both at the same time from the very top is really exciting.
And not only these executive orders, but I think the work that the Space Force is doing and SAF/IA is doing to have this catalog and looking at ways to expedite and implementation plans, working with our partners on that.
And then there’s also been organizational changes at the Department of War. They’ve moved Security Corporation and Technology Security Administration underneath the acquisition process. So that senior leaders from other countries have one point of entry.
They don’t need to go to OSD policy and acquisition.All of this is goodness, but like anything, it’s new. Space isn’t new, but opening it up to international partners is still fairly new.
You know, the hope is that those reforms and this reorganization is going to be able to streamline some of the processes. Those are the big, exciting opportunities that are happening right now that the partners should be watching closely.
39:50 – 39:53
And then in your respective capacities as leaders of Elara Nova’s International Partnerships sector, what role does Elara Nova potentially have in this actively reforming Foreign Military Sales process?
39:54 – 41:32
(BH): Yeah. I think a couple of things. I mean, one, when we think about who our customer is for Elara Nova on the International Partnerships front: support of the US government, where it’s not adequately postured to execute the mission, which could include people being on the teams that are out there on the frontlines that fill those gaps.
Two is engaging with allies, partners and friends directly to help them understand and define what those requirements are and understand how to navigate the process. We’ve got people like, I worked in an embassy run by the Security Cooperation Office. Heidi was SAF/IA, DTSA and DSCA like there’s nobody else who’s got that kind of resume. And we’ve got other people with deep experiences at a variety of levels that can help people understand and define those requirements and then map its way through the process.
And then the third: helping U.S. industry trying to understand and trade those foreign markets and understand how do I navigate the landscape: whether it’s ITAR, EAR, Mission Technology Control Regime? How do I position my capabilities so that Allies, partners and friends are aware of it and would be interested in building that?
And again, as we have conversations and talk about what’s your architecture, what’s your priority mission area, what’s your balance between sovereign-national and commercial? And to the extent that its sovereign-national and you’re buying your own systems using that exploit-buy-build model, if you’re going to go buy our systems, how do you define those and how do you effectively engage?
And so we got people who can help on all of those fronts. Whether you’re designing the architectures and helping refine the requirements on the front side, navigating the process or shaping the demand signal, if you’re an industry partner, we’ve got the ability to do all of that, in a fairly unique way, particularly as relates to the space domain.
41:33 – 42:02
(HG): It’s been great to be part of the Elara Nova team and just see the demand that’s come in from the international partner for Elara Nova expertise again across all domains, which is exciting, but specifically in the space domain. But the architecture where Elara Nova can be helpful is connecting the different domains where there are expertise, but it’s an area where there are not a lot of expertise in the international environment.
So Elara Nova is positioned and ready to help close that gap.
42:03 – 42:37
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Executive Orders, Organizational Realignment to Streamline Acquisition Process
When a foreign country seeks a military technology from a defense contractor in the United States, there are two ways for them to acquire that capability: Direct Commercial Sales (DCS) and Foreign Military Sales (FMS). Under DCS, the foreign country negotiates directly with the contractor. Under FMS, the U.S. government manages the sale with training and sustainment included. Which process is used depends on the technology, the partner nation and the policy considerations involved. But a recent surge in demand is challenging the current FMS process, resulting in two recent executive orders aiming to reform and modernize the program.
“There’s been FMS reform initiatives before, but what’s unique now is the executive orders are coming directly from the President,” said Heidi Grant, Executive Partner at Elara Nova and the former Deputy Under Secretary of the Air Force for International Affairs (SAF/IA), and former Director of both the Defense Security Cooperation Agency (DSCA) and the Defense Technology Security Administration (DTSA).
One key advantage of FMS over DCS is what Grant calls the “total package approach,” where the U.S. government ensures the sale includes training and sustainment across the lifecycle of the capability.
While many critics, including senior U.S. leaders, have characterized the system as “broken,” the reality is more nuanced. The Foreign Military Sales process was deliberately designed to be thorough, ensuring that each transfer aligns with U.S. strategic, security and foreign policy interests. The challenge is not that the system fails to function, but that it was not built for the scale, speed and technological complexity of current demand.
How the FMS Process Works
The FMS process begins at U.S. embassies, where trained security cooperation officials, known as military groups or “milgroups,” help partner nations determine whether FMS is required and initiate the process.
“DSCA — the Pentagon agency that administers the entire FMS enterprise — routes the request to the appropriate implementing agency,” Grant said. “For Air Force or Space Force, that agency is the Secretary of the Air Force for International Affairs (SAF/IA), who coordinates with the defense contractor to add the order to an existing production line, apply any required configurations and manage the delivery.”
Brad Head, Managing Director of International Partnerships at Elara Nova, saw this process firsthand as Chief of the Office of Defense Cooperation in Brussels.
“Belgium selected F-35s to replace its F-16s with a 5th-generation capability,” Head said. “DSCA sent that request to the F-35 Joint Program Office, which coordinated with Lockheed Martin to add Belgium’s order to the existing production run with Belgium’s unique configuration. Then the U.S. government took ownership of the jets and transferred them to Belgium with the appropriate training and sustainment package.”
Belgium acquired a world-class capability with the support needed to sustain it. NATO’s collective defense posture was strengthened, and adding partner demand to the production program helped reduce costs for the United States.
Why the System is Struggling to Keep Pace
Allies and partners are seeking not only traditional weapons systems, but also emerging technologies in areas like unmanned systems, cyber and space. The Brussels-based think tank Bruegel found that European FMS cases reached a record $76 billion in 2024, roughly four times the European average since 2008. This surge is challenging the FMS program in several ways.
First, the Defense, State and Commerce departments must agree the transfer serves U.S. strategic interests. Each brings a different lens, and when they cannot reach agreement, decisions can stall or escalate to the Cabinet level.
Second, export control regimes add complexity. ITAR and EAR govern defense and dual-use technology transfers, while multilateral agreements like the MTCR impose additional restrictions. These controls protect sensitive technologies, but they can also restrict capabilities that did not exist when the regulations were written. Even a single restricted component embedded in an otherwise releasable system can prevent a sale.
Third, contractors must balance U.S. production requirements against surging international demand.
“Industry cannot invest in additional production capacity until a firm order justifies it,” Grant said. “A partner may place an order for a critical system, only to learn the delivery timeline is seven years because the production line is already committed. Munitions offer a clear example — demand has surged beyond what current production lines can support.”
These challenges compound. Delays in interagency decisions slow export licensing, which creates uncertainty for industry and limits investment in production capacity. Friction at each stage reinforces the next, extending timelines even for cases aligned with U.S. strategic priorities.
Executive Orders to Reform the Process
The first executive order, signed in April 2025, targets several of these bottlenecks directly.
The order directs Defense, State and Commerce to create a joint priority list for partners and end-items, establishing shared priorities up front and calls for a review of the MTCR to reclassify certain technologies.
“The ‘exportability by design’ mandate is significant,” Grant said. “It directs the defense industrial base to build capabilities eligible for export from the outset, rather than requiring costly modifications after the fact.”
The order also streamlines congressional notifications and creates an electronic tracking system giving foreign buyers and U.S. industry visibility into where a case stands.
Separately, the Air Force is also accelerating approvals through the “STAR Baseline,” a classified document that pre-determines which technologies the U.S. is willing to export.
“The STAR Baseline short-circuits the process,” Head said. “It decides ahead of time what we are willing to export to a country, so that the U.S. doesn’t have to start a review from scratch every time an FMS request comes in. Technologies not covered by the baseline still require a broader interagency review that can take weeks or months.”
A second executive order, signed in February 2026, aims to shape the demand signal that drives sales in the first place.
“This executive order directs the Defense, State and Commerce secretaries to develop a prioritized sales catalog, or a proactive menu of capabilities reflecting both the industrial and strategic priorities of the U.S.,” Grant said. “This catalog signals to allies what the U.S. would like them to buy, while a new Promoting American Military Sales Task Force and mandatory quarterly performance data will increase accountability.”
This reflects a broader shift: rather than responding to partner demand as it emerges, the U.S. is signaling preferred capabilities and partners in advance, shaping demand to align with its strategic and industrial priorities.
Organizational Realignment to Empower Acquisition Officials
The U.S. government’s reform efforts extend beyond executive orders. DSCA and DTSA — previously under the Pentagon’s policy directorate — will now move under the acquisition and sustainment directorate. This reflects a shift from FMS as primarily a foreign policy tool to a core function of the defense industrial enterprise.
“The head of acquisition will now be responsible for managing FMS timelines and resolving trade-offs between U.S. and international deliveries against current demands,” Grant said. “This also gives senior leaders from partner nations a single point of entry, rather than having to navigate between the policy and acquisition sides of the Pentagon.”
The move will carry strategic implications for future military programs that require allied support.
“The U.S. is acknowledging that it can’t do everything, everywhere,” Head said. “As the U.S. builds global architectures like Golden Dome, allies and partners will be required to contribute systems based in their own countries. Allied acquisition will be central going forward and placing those agencies under the same leadership that manages U.S. acquisition ensures those two tracks can be coordinated.”
The Unique Challenge of Space Security Cooperation
These challenges are most acute in space, where demand is accelerating and the supporting processes are least mature.
“Until recently, space was the exclusive domain of a handful of nations,” Head said. “But with launch costs coming down and the conflicts in Ukraine and the Middle East underscoring space as a critical component of multi-domain operations, allied demand is surging.”
Unlike mature FMS programs for fighter jets or air defense systems, the U.S. does not have a well-established catalog of space capabilities it is actively offering to allies. Outside of a few existing programs like Wideband Global SATCOM (WGS), most space cooperation is what Head described as “a handmade wooden shoe” — or a custom-made capability.
U.S. embassies also lack space-smart personnel to guide partner nations.
“You either need a list of things you’re selling or you need experts on the front line, and we currently don’t have either one,” Head said.
Likewise, the space domain also faces a funding challenge. A surcharge on every FMS sale funds the personnel, training programs and institutional support that underpins the security cooperation process. But there is currently not enough space cases to generate the revenue needed to sustain a space-focused workforce, leading SAF/IA and DSCA to identify seed funding to address this problem.
Grant noted this tension is not without precedent.
“When we were selling F-15s to partner nations, uniformed pilots were needed in U.S. cockpits and couldn’t be spared for international training missions,” she said. “The solution was contracted training support. It’s the same tension right now with guardians. We need them working U.S. priorities, and at the same time we need to build enough of them to support the international business.”
In this sense, space is not an exception to the FMS system, but rather an early indicator of where the entire enterprise is heading. As demand for advanced, rapidly evolving technologies grows across domains, the challenges seen in space today are likely to emerge more broadly across the security cooperation landscape.
How Elara Nova Supports the Process
As the FMS system evolves, the challenge will be translating reform into execution across government, industry and international partners. Elara Nova brings experience from within the security cooperation enterprise, including leadership roles at DSCA, SAF/IA and on the front lines of defense cooperation.
For the U.S. government, the firm helps fill capacity gaps where the security cooperation workforce is stretched thin. For allies and partners, it translates requirements into cases the system can act on. For industry, it maps the export control landscape before companies invest in markets they may not be accessible. Elara Nova provides the insight to navigate the system and the experience to deliver results.
Elara Nova is a trusted guiding partner that builds tailored teams to illuminate unseen opportunities and deliver impact across every domain. Learn more at https://elaranova.com/