Procurement: The Old Dog Is Still Top Dog

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May 15, 2014: Since the American Civil War (1861-5) the United States has been a major producer, and exporter of military equipment and weapons. Since World War II (1939-45) America has been the largest producer and exporter in the world. In addition to most of the U.S. defense budget (over $600 billion a year) American manufacturers also supply an enormous amount of export business. Currently the United States has nearly 13,000 active FMS (Foreign Military Sales) contracts, worth nearly $400 billion. FMS is huge business and the sales and support people who make it happen often move back and forth from FMS to domestic sales.

FMS is a lot more challenging because there are more laws, both U.S. and foreign, involved. Then there are the cultural differences as well. U.S. arms salespeople have a lot more restrictions on them (especially regarding corruption) than their foreign (especially European, Russian, Chinese and Israeli) counterparts. But the U.S. salespeople have some major advantages. For one thing more American gear is combat tested and generally considered the best available. The U.S. also has more financing options available than most other exporters. Currently 71 nations are eligible for various forms of financing and grants (U.S. government subsidies) and this sort of thing continues to be decisive in clinching sales. 

This American hegemony has long been under attacks, and for years the main threats came from Europe and Russia. Now China and Israel are moving up. While China is going after a lot of traditional Russian customers, Israel produces stuff that sells to the American military as well as many major American arms customers. Despite all this competition there is no sign that the U.S. will lose their dominance any time soon. 

 


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