Transatlantic Armaments Cooperation - Federation of American ...

through FMS. For the time being, a compromise
is in effect allowing customer choice of
direct commercial sales or FMS to the original
13-nation NATO and treaty allies. Related is
the issue of recoupment of non-recurring and
development costs, which Germany would like
to include in the sale price. The U.S. seeks to
derive its benefit from the FMS surcharge
(currently 2.5 percent) and economies of scale
inherent in larger production runs. 14 Precisely
because the program has been such a balanced
partnership, these disagreements have sometimes
been sharp. Germany does not feel like a
supplicant and resents any treatment as such.
The rules governing data transfer are clearly
stated in the 1987 production MOU. One participant
cannot transfer or disclose to a third
party, equipment, data, or software that was
provided by the other participant or that was
jointly developed without the written consent
of the other participant. National security concerns
are the only basis for refusal. Within the
program all information and equipment is
shared and can be used by either participating
government for defense purposes.
Business Management
Differences in business practices are significant.
German firms work on a strictly firm
fixed-price basis for R&D work, whereas the
U.S. side allows for some cost-plus contracts. 15
These practices have been successfully accommodated
to date through fixed price contracts
where necessary. U.S. contracting procedures
are employed as Naval Sea Systems Command
(NAVSEA) is the contracting agent for the
program and Raytheon, as previously noted, is
the prime contractor. Obligations between the
prime contractor and sub-contractors are
delineated in the CPA.
4-21
The method by which payments are made
within the RAM program differs from the
NSSMS model, perhaps due to the relatively
balanced bilateral relationship. German funds
never pass through a U.S. accounting system,
such as the Treasury. 16 Instead, they are held in
an interest-bearing account in a bank chartered
in both the U.S. and Germany. 17 Obligations
are satisfied directly from this account, avoiding
the delays (and frustrations) attendant on
an arrangement whereby the funds pass through
an official U.S. Government account.
As is the case with any international program,
the RAMPO is buffeted by currency fluctuations,
since obligations are incurred to the German
and U.S. industrial partners in deutchmarks
and dollars respectively. Due to currency
fluctuations in FYs 1994 and 95, the currency
risk was passed to the industrial partners in the
contracts let in FY 98. 18 Unlike NSSMS, the
introduction of the euro will not have the effect
of simplifying financial management, since
only two currencies are involved, though currency
risk management within the program may
change again. The first year of the euro’s existence
showed clearly that currency stability is
by no means guaranteed.
Human Dimension
The human element in the creation of the CPA
was critical. The RAMSYS leadership and the
RAM director at General Dynamics developed
a solid working relationship in the years
previous to the CPA, which paid dividends in
the reaching of an agreement. 19
Cultural differences are present within the
program but do not seem to impede cooperation.
Germans are reluctant to coordinate
through e-mail, a method of communication
that has become second nature to Americans.