AUKUS Pillar I: FMS Updates

Introduction

In a key first step towards AUKUS Pillar I success, the US Department of State endorsed, and the Defence Security Cooperation Agency has delivered congressional notification of, a proposed Foreign Military Sale (“FMS”) to the Government of Australia valued at up to $2 billion. The DSCA’s news release is available here. In launching the Defence Industry Development Strategy (DIDS) available here, the Australian Government announced an Australian agency similar to the US Foreign Military Sales office.

Background

FMS is a government-to-government procurement method for the acquisition of defence articles and services. AUKUS Pillar I is focused on Australia’s acquisition of conventionally armed, nuclear-powered submarines, which necessitates building Australia’s capacity and experience with nuclear-powered submarines through training of Australian contractors and civilians and Submarine Rotational Force - West (SRF-West).

The Proposed FMS Case Explained

Australia has requested to buy from the United States AUKUS Pillar I training and training devices to enable training of Australians and support SRF-West, including personnel training, planning, Non-Recurring Engineering services, support equipment, special tools, training software and courseware, design, supply chain and industrial base support, facilities and construction support, and publications and technical documentation, as well as US Government and contractor engineering, technical and logistics support services, test and trials support, studies and surveys, and other related engineering and repair services and logistic and program support.  Pending Congressional approval of this FMS case, the first Australian submarine maintainers would begin training at United States naval shipyards as early as the second quarter of 2024.

DIDS and FMS

With a view to creating an enabling environment for technology transfer between the AUKUS partners and increasing government-to-government sales outside of the AUKUS nations, the Australian Government will establish an agency similar to the US Foreign Military Sales office, at a smaller scale suitable to the Australian defence industry.

Takeaways

Pending Congressional approval, the FMS case will represent the first significant transfer of AUKUS technology from the United States to Australia. Establishment of an Australian FMS office may streamline existing Australian FMS processes and foster increased defence sales backed by the Australian Government.

Conclusion

These FMS updates highlight the broad significance of export controls in enabling AUKUS technology transfer, particularly the need for facilitation of foreign military sales, and subsequent third party retransfers to enable access to that technology by defence industry. The progress of this FMS case and Australia’s new FMS agency will be closely followed by ECAG and industry observers.