Israel Defense Industry Intro to Foreign Military Financing (FMF)
Israel - Defense Industry
Since its founding in 1948, the United States has provided Israel with over $125 billion in bilateral assistance focused on addressing new and complex security threats, bridging Israel’s capability gaps through security assistance and cooperation, increasing interoperability through joint exercises, and helping Israel maintain its Qualitative Military Edge (QME). This assistance has helped transform the Israel Defense Forces into one of the world’s most capable, effective militaries and turned the Israeli military industry and technology sector into one of the largest exporters of military capabilities worldwide. Since 1983, the United States and Israel have met annually via the Joint Political-Military Group (JPMG) to promote shared policies, address common threats and concerns, and identify new areas for security cooperation. The January 2021 JPMG reaffirmed the ironclad strategic partnership between the United States and Israel, underscoring a mutual commitment to advance collaboration in support of regional security and reinforce the historic achievements of recent normalization efforts in the Middle East.
Israel is the leading global recipient of Title 22 U.S. security assistance under the FMF program. This has been formalized by a 10-year (2019-2028) Memorandum of Understanding (MOU). Consistent with the MOU, the United States annually provides $3.3 billion in FMF and $500 million for cooperative programs for missile defense. Since FY 2009, the United States has provided Israel with $3.4 billion in funding for missile defense, including $1.3 billion for Iron Dome support starting in FY 2011. Through FMF, the United States provides Israel with access to some of the most advanced military equipment in the world, including the F-35 Lightning. Israel is eligible for Cash Flow Financing and is authorized to use its annual FMF allocation to procure defense articles, services, and training through the Foreign Military Sales (FMS) system, Direct Commercial Contract agreements – which are FMF-funded Direct Commercial Sales procurements – and through Off Shore Procurement (OSP). Via OSP the current MOU allows Israel to spend a portion of its FMF on Israeli- rather U.S.-origin defense articles. This was 25 percent in FY 2019 but is set to phase-out and decrease to zero in FY 2028.
The Procurement Chain and Vendor Registration
The Government of Israel – Ministry of Defense – Mission to the United States was established in New York City in 1947, prior to the establishment of the country. It took on the procurement activity of the Haganah – the main Zionist paramilitary organization of the Jewish population in Mandatory Palestine between 1920 and its disestablishment in 1948, when it became the core of the Israel Defense Forces (IDF).
Today, there are four Procurement divisions at the Mission to the United States: Air Force, Naval and Logistics Supply, Ground Forces and IT and Electronic Systems. The procurement process is as follows: an IDF unit creates a request for procurement, the Mission gets the request and issues an RFP based on the procurement channel, a competition is held among local vendors and, finally, a Purchase Order (PO) is issued to the winning vendor.
Interested companies register as new vendors and start the registration process by filling out the vendor questionnaire at the Government of Israel – Ministry of Defense – Mission to the United States website.
The FMF program present ample opportunities for U.S. companies that offer military and defense related products and/or services by allowing registered vendors to compete for tenders and submit offers to RFPs.
Next Steps
A U.S. company interested in further information about this, or other Aerospace & Defense opportunities, can contact yariv.moravnik-shavitt@trade.gov. Additionally, U.S. firms interested in expanding sales in Israel should consider working with the U.S. Commercial Service in Israel to explore matchmaking, market research or other assistance that may prove beneficial.
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