WASHINGTON ― The Defense Security Cooperation Agency announced this week that it is reducing a surcharge on American defense goods sold abroad from 3.5 percent to 3.2 percent, effectively dropping the price foreign nations have to pay when buying weapons through the Foreign Military Sales system.
The change will go into effect June 1. The funding from the surcharge is used to support the FMS process, by which the U.S. government acts as the go-between for industry and a foreign customer, using the American acquisition system.
The announcement comes days after the Trump administration rolled out a new set of guidelines for conventional arms transfers and unmanned systems as part of a broader push to increase American weapon sales abroad.
The U.S. sold $41.9 billion in arms through the FMS process in fiscal 2017, per a DSCA statement. Based on that figure, the U.S. took in roughly $1.46 billion through the 3.5 percent surcharge. Reducing it to 3.2 percent would drop that number to around $1.34 billion.
DSCA head Lt. Gen. Charles Hooper tied the surcharge cut directly to that broader goal, saying in the announcement that the change “will immediately reduce the cost of doing business for our international partners.”
“It demonstrates the Department of Defense’s commitment to charge only what is needed in order to support the administration of the FMS program which includes the sale of defense articles, defense services, and military training,” Hooper added.
Updated 4/27/2018 at 4:15 PM EST with new figures and clarification provided by DSCA.
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.
