By Mr. Tommy L. LancasterDecember 8, 2015
The U.S. Army Security Assistance Command (USASAC) role in the divestiture of the military's equipment through the Excess Defense Articles (EDA) program continues to grow, with EDA divestiture activity reaching $2.5 billion this year.
USASAC, headquartered at Redstone Arsenal, AL, develops and manages all foreign military sales (FMS) and security assistance programs for the Army. Security assistance provides defense articles, military training, sustainment and other defense-related services by grant, loan, credit or cash sales in support of national security policies and objectives. Currently, the command is managing 5,000 FMS accounts, spread out over more than 145 countries and valued at $160 billion.
Lemuel Williams, chief of USASAC's Mission Support Division, G-3, attributes the substantial savings to a complete overhaul of the EDA business model. As the team lead for EDA operations, Williams has seen the number of FMS cases spike from a few cases five years ago to an average of nearly 100 per year.
"Historically, our EDA divestiture process was very reactive," said Williams. The DA, he continued, "would start this lengthy, cumbersome process, and 12 to 14 months after the process started is when USASAC would get visibility of equipment that might become available. That gave us a very short window to act, 60 to 90 days."
Williams explained that, with the old, linear process, when equipment was declared excess--a decision made at the DA level--it would be transported to a depot where it would be stored for years or, in some cases, decades. The bill for transporting thousands of pieces of expensive equipment across country, along with storage fees, was staggering. For example, the cost of storing one armored personnel carrier is $350 per year; multiply that by tens of thousands, and the result is a significant cost for the Army.
Add to that the cost of making the equipment storage-ready--draining fluids and removing hazardous materials--which can range from a few thousand dollars per unit to tens of thousands of dollars per unit. Ultimately, a DA decision to demilitarize, or tear down the equipment, can tack on another several million dollars, said Williams. "And that's just in one instance, not the hundreds of cases that would accrue over the years."
Two years ago, the Iraqi Army obtained 1,026 EDA-declared M113A2 armored personnel carriers through USASAC's FMS program. These M113A2s collected dust for nearly two decades at a West Coast depot before the Anniston Army Depot in Alabama refurbished them at the Iraqi Army's request. Williams said this type of case also accomplishes the USASAC mission of building partner capacity, supporting combatant command engagement strategies and strengthening U.S. global partnerships.
"This was a win-win situation for both the Iraqis and the U.S. because, in the Iraqis' case, they went from a nonexistent armored capability in 2010 to plans for six divisions," said now-retired COL Sammie Hargrove, then USASAC's U.S. Central Command regional operations director, in a 2013 interview. "For the U.S., we divested ourselves of 1,026 M113s. Demilitarizing that many vehicles can be cost-prohibitive." The estimated U.S. cost avoidance was $31 million.
Williams noted that one of the biggest complaints about the old EDA process was that it was slow and cumbersome. "Once Army equipment was declared excess, we'd get notice from the DA G-4. Then we'd have to get permission from the State Department to survey the equipment out to foreign countries. Then, we'd survey it out to maybe 60 or 70 countries, based on which countries the State Department tells us are eligible," said Williams. "You can see that this process burns up a lot of time."
Talks begin in earnest once partner nations express interest in the equipment. USASAC personnel and partner nations negotiate price, availability, refurbishment, training, parts packages and many other factors. Finally, a partner nation is selected and a letter of acceptance is issued.
THE NEW MODEL
According to Williams, USASAC approached the DA G-3/4/8 and asked to be involved at the start of the process. As a result of that request, MG Mark McDonald, USASAC's commander, and Robert Moore, deputy to the commanding general, are now voting members on the General Officer Steering Group, chaired by the G-4. "So as soon as Army G-4 starts talking about changing the force structure, we're present. If the Army decides to do away with a division, which will likely result in a significant number of EDAs, we can start working requirements," said Williams.
This new proactive role means USASAC has an eye on the proposed list of EDAs and can engage potential customers immediately, versus sitting back and waiting for millions of dollars of equipment to be transported and stored in warehouses and depots across the United States until DOD decides what to do with it.
"We're going to take it right out of unit hands, and we're going to put it in customer hands, and the customer starts paying the bill," said Williams, "whereas before, the U.S. government assumed all costs--at taxpayer expense--and risks until the customer signed for it. Once it is signed off a unit's books, under the new process, it will be available for pickup the next day. Then, a joint vehicle inspection is conducted with the customer, who will sign for it on the spot, and away it goes on a truck."
JUST IN TIME
This facelift to USASAC's EDA operations, dubbed the "just in time" approach, has triggered an avalanche of opportunity. The number of cases has spiked from approximately three active cases out of eight working cases annually, to 85 active cases out of more than 200 working cases annually.
Under the new model, Williams' EDA team takes an unprecedented degree of initiative, preemptively reaching out to meet customer needs while saving millions in storage and demilitarization costs. But taxpayer savings aren't the only advantage. The EDA process comes with USASAC's "total package approach," which includes not only the equipment, but also refurbishment, training, facilities, spare parts, publications, maintenance, logistics support and other services to ensure that a capability performs appropriately.
"So, we've just generated probably a few thousand man-hours of work, refurbishing equipment at the depot, and now that's keeping U.S. citizens employed and contributing to the Army's organic industrial base [OIB]," said Williams. "Then, in order to refurbish the equipment, we have to buy parts for it, [which is] also contributing to U.S. industry."
The Army's OIB consists of depots, arsenals and ammunition plants, all of which are a critical component in U.S. military and joint force readiness. The OIB provides services for refurbishment, modernization, and repair and return to customer countries. In the case of maintenance on EDA, the U.S. Army Materiel Command (AMC) Security Assistance Management Directorate works with the OIB to help determine the best options for bringing the materiel to the standards required by the customer.
As crucial as the OIB is to the U.S. economy and military readiness, the American military's transition from combat to sustainment has led to a sharp decline in work at OIB facilities. Because the survivability of the OIB is a priority for national security, AMC is investing in industry partnerships to sustain it while USASAC's EDA sales contribute greatly to the effort. Last year, USASAC's FMS of excess articles netted the OIB more than $100 million in revenue.
The new EDA business model should become policy by FY17, said Williams, before the active Army's drawdown in size from 490,000 to 450,000 by Oct. 1, 2017. "At one point, we had only been moving equipment that had been stored in warehouses for years or EDA from previously announced cuts, not the materiel that will be coming out of active units," he said. What was once a tidal wave of potential EDA can now be described as an impending tsunami.
"There are a lot of moving pieces, but the just-in-time model has been extremely successful so far," he said. "With minimal staffing and expanding mission, we have managed to take an antiquated, cost-?prohibitive process and, based on guidance and intent from the chief of staff of the Army, turned it into a parallel, proactive, cost-efficient process. With the support of our command and Big Army, we'll continue this success into the future."
For more information, visit www.usasac.army.mil or contact the USASAC public affairs office at 256-450-5727.