A New Approach Is Needed for Weapon Systems Coproduction Programs Between the United States and Its Allies

PSAD-79-24: Published: Apr 12, 1979. Publicly Released: Apr 12, 1979.

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In the future, the acquisition of major military equipment by the United States' allies will most likely be based on some type of cooperative arrangement. This report concentrated on coproduction programs wherein all participants in the coproduction agreement, including the United States, use the end product. The present system used to govern coproduction arrangements is the same as that which governs foreign military, economic, and political arrangements and consequences of doing business on a coproduction basis.

A careful assessment is needed to assure sound management of coproduction programs which may occur in the future. The use of foreign military sales procedures in setting up military acquisition programs establishes the United States and the foreign government as contractual parties. With the emergence of complex industrial coproduction where foreign participants actually build a major segment of the equipment they purchase, and even produce part of a military system which the United States will use, the foreign military sales procedures are inappropriate and do not reflect the partnership nature of coproduction. Existing legislation requires a Letter of Offer and Acceptance to be issued by the United States to consummate a sale under foreign military sales procedures. Congressional consideration of proposed cooperative arrangements on the basis of limited information does not appear appropriate. U.S. procurement statutes and regulations prescribe policies and procedures which are not necessarily appropriate for programs involving intergovernmental cooperative ventures. In addition, present administrative arrangements may not offer the centralized administration that industrial participation efforts need for making balanced and effective decisions and policy interpretations.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should consider a direct sale approach as the accepted method for U.S. prime contractors engaged in coproduction programs, thereby removing such programs from foreign military sales procedures; require that a Memorandum of Understanding be submitted to Congress for review before the United States and foreign participants make a commitment to join in a coproduction program; and review appropriate procurement legislation and regulations to identify and evaluate the changes necessary to provide the needed flexibility for a realistic and efficient application to cooperative ventures with foreign countries.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The President should consider the establishment of an independent interagency administrative or coordinating mechanism to provide balanced policy and management guidance and act as a clearinghouse for industrial participation programs.

    Agency Affected:


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