Identify the Foreign Military Sales (FMS) process legal authorities and DoD policies Identify the roles and responsibilities of the key FMS process stakeholders Explain the phases of the FMS process FMS Process Lesson# 2002 8 March 2017

Full-Spectrum Capability

Foreign Military Sales (FMS) System 1 2 3 4 5 A B C D E F G

Key USG Players State Department Defense Security Cooperation Agency (DSCA) U.S. Embassy/Security Cooperation Organization (SCO) Implementing Agencies

Defense Security Cooperation Agency (DSCA) Budget Allocation Congressional Notification and Reporting Country Program and Financial Management Congressional Liaison Trust Fund Management LOA Processing; LOA Writing Training and Education Regional Center Executive Agent Humanitarian Assistance and Mine Action Community Automation Policy Development SAMM C1.3.2.2

Implementing Agencies (IA) U.S. Army U.S. Navy U.S. Air Force Defense Logistics Agency (DLA) Defense Contract Management Agency (DCMA) Defense Information Systems Agency (DISA) Defense Threat Reduction Agency (DTRA) Defense Security Cooperation Agency (DSCA) Missile Defense Agency (MDA) National Security Agency (NSA) National Geospatial-Intelligence Agency (NGA) SAMM C5.T2

Key Policy Documents Security Assistance Management Manual (SAMM), DSCA 5105.38-M DSCA Policy Memoranda Financial Management Regulation (FMR) 7000.14-R, Vol. 15, Security Cooperation Policy MILDEP Specific Policy Manuals Navy: NAVSUP Publication 526 (Foreign Military Sales Purchaser Supply System Guide) Army: AR 12-1 (Security Assistance, Training, and Export Policy) Air Force: AFMAN 16-101 (International Affairs and Security Assistance Management)

FMS Terminology Letter of Offer and Acceptance (LOA) Case Identifier Document used by USG to sell defense articles, services (including training), and design/construction services to a foreign country or international organization FMS Case Signed LOA and subsequent revisions (amendments and modifications) Case Identifier Unique code that appears on every LOA (and all associated revisions) Used on all financial and logistics transactions for the life of the case Case Identifier

Terminology: AECA to MDE The LAW -Conditions of eligibility -Authorized purposes -Sales and leases -Establishes the requirement for the United States Munitions List (USML) AECA = Arms Export Control Act ITAR -Contains USML -Government/Commercial ITAR = International Traffic in Arms Regulations SME Has significant military utility SME = Significant Military Equipment MDE Based on RDT&E and Production MDE = Major Defense Equipment ITAR 120.7/8

Terminology: Major Defense Equipment ...any item of Significant Military Equipment on the United States Munitions List having a nonrecurring research and development cost of more than $50 million or a total production cost of more than $200 million MDE list in SAMM, Appendix 1 AECA §47(6)

Foreign Military Sales (FMS) Process Case Execution SAMM C6 Case Development SAMM C5 Pre-Case Development SAMM C4 and C5 Offer LOR validation/evaluation LOA development Congressional Notification LOA offer Anticipated Offer Date (45- 150 days) Implementation Obligation Authority (OA) FMS computer systems 10-15 days average Preliminary and Definition Defense requirements Evaluation of options/sources Indefinite time period Execution Articles, services, training Performance reporting and expenditures Longest phase Request P&A or LOA Letter of Request (LOR) Country Team Assessment Indefinite time period Acceptance LOA signature Initial Deposit Offer Expiration Date (OED) +/- 60 days country review Closure Reconciliation Typically 2 years from supply/services complete PRE LOR LOA ACTIVE CASE LOR 11

Pre-Case Development

? = Customer Decisions Needs FMS Non-U.S. Sources U.S. Commercial National Security Strategy Threat Mission U.S. Commercial Export Budget Needs U.S. Source Arms Export Control Act (AECA) Political Factors How Many ? ? = What Kind ? FMS When ? Where ? Cost ? Letter of Request (LOR) Minister of Defense Bandaria

Sources of Information Internet U.S. site surveys/ other assessments News media Military-to-military contacts Attendance at U.S. military schoolhouses Publications Air trade shows U.S. Defense Contractors Security Cooperation Officer (SCO) Visits and observer missions Department of Defense

Price and Availability (P&A) Letter of Offer and Acceptance (LOA) LOR can request… Price and Availability (P&A) Rough order of magnitude (ROM) data Sufficient for planning, but not for budgeting Not an offer to sell Letter of Offer and Acceptance (LOA) Most precise estimate based on info provided Sufficient for budgeting Offer to sell SAMM C5.3 and C5.4

Letter of Request Considerations General Info / Special Considerations Purchaser Related purchases / MOU or MOA Commercial negotiations Transparency / special reports Interoperability Acceptance time frame International solicitation Major Item Considerations Quantity Item identification / description Intended end use Model / configuration Desired delivery date Acquisition Considerations Pre-negotiations Sole source Offsets Financial Considerations Funding source / availability Payment Schedule/Initial Deposit Financial Waivers Services Considerations Description / type of service Period of performance / location DoD or U.S. contractor Case/program reviews Training Considerations Type / level of training Number / skill level of students Proposed location and dates Training program concept Support Considerations Operations Concept Maintenance Concept Supply Concept Initial Spares Support Equipment Facilities / Site Survey Publications Warranties Follow-on Support Delivery Considerations Freight forwarder Pilot pickup DTS Port of Debarkation (POD) Air or surface Total Package Approach Green Book Figure 5-1

Country Team Assessment (CTA) Presents a coordinated position of senior U.S. Embassy leadership in support of a proposed sale and provides key info necessary to evaluate it Important opportunity to provide valuable info that will expedite the decision process Criteria for CTA to accompany LOR Likely to result in Congressional Notification First introduction of a new capability for the country Requests for defense articles or services of a sensitive nature Upon request by DSCA (Operations Directorate) Objective: 6 Purpose: Describe the Country Team Assessment Notes: The CTA is the Country Team’s opinion of the benefits of this transfer to the country and to the USA. The CTA is required whenever the country is requesting a new capability, the request is for MDE/SME likely to require Congressional notification, the request is for classified or sensitive technologies, or DSCA requires more information to answer questions from Congress or the Joint Staff. Ref: SAMM C5.1.2 and C5.1.4 SAMM C5.1.4

Channels of Request Bandaria Congress Copy to: Action to: Action to: Combatant Commands U.S. Embassy/ Security Cooperation Office State Department PM/SA Defense Security Cooperation Agency Copy to: Action to: Action to: Implementing Agency (IA) Congress Bandaria SAMM C5.1.3

Case Development

Primary MILDEP SC Organizations Navy International Programs Office (Navy IPO) Naval Supply Systems Command (NAVSUP) Weapon System Support-International (NAVSUP WSS-N52) Naval Education Training Security Assistance Field Activity (NETSAFA) Deputy Assistant Secretary of the Army for Defense Exports & Cooperation (DASA-DE&C) U.S. Army Security Assistance Command (USASAC) - Huntsville USASAC-New Cumberland Security Assistance Training Field Activity (SATFA) Army Corps of Engineers (USACE) Deputy Under Secretary of the Air Force/International Affairs (SAF/IA) Air Force Security Assistance and Cooperation (AFSAC) Directorate Air Force Security Assistance Training (AFSAT) Squadron SAMM C5.T2

Information Portal (SCIP) Case Development Implementing Agency LOA Data (LOAD) DSCA Case Writing Division (CWD) Standard DoD system used for LOA development and LOA implementation Security Cooperation Information Portal (SCIP)

Case Development Responsibilities Implementing Agency (IA) DSCA Case Writing Division (CWD) Prepare LOA Data Primary interface with stakeholders Releasability/foreign disclosure Congressional notification input LOA structure and pricing LOA program-unique notes Payment schedule analysis Program delivery schedules Staffing and coordination of waivers Manpower requirements Approve LOA; send to DSCA-CWD Offer LOA after DSCA countersigns Assemble and Finalize LOA LOA quality assurance Policy review LOA standard notes Payment schedule preparation Coordinate reviews by DSCA HQ, DSCA legal, and the IA Coordinate review by the Department of State DSCA countersignature

Congressional Notification for FMS Cases State Department 3 Implementing Agency (IA) Defense Security Cooperation Agency 36(b) data 10 days 2 4 1 Congress “Tiered” Concurrent Review Bandaria

Congressional Notification for FMS Cases Implementing Agency (IA) State Department 1 3 Bandaria Defense Security Cooperation Agency Offer LOA Public record Draft LOA 36(b) data 10 days 2 4 30 days NATO, NATO countries, Japan, Australia, Israel, Rep. of Korea, Jordan, New Zealand Statutory (Formal) Notification 6 5 Notification package 15 days 6 LOA Development

Congressional Notification Reporting Thresholds Total Case Value MDE Design and Construction NATO countries, Japan, Australia, New Zealand, Israel, Republic of Korea, Jordan $100M $25M $300M All other countries $50M $14M $200M AECA §36(b)(1), SAMM C5.T13

Coordinate review and assemble LOA Case Review/Approval Coordinate review and assemble LOA Develop LOA Data Final review Defense Security Cooperation Agency Implementing Agency DSCA-CWD Offer LOA Countersign LOA (electronically) Bandaria State Department Coordination SAMM C5.4

Cooperative Logistics Supply Support Arrangement (CLSSA) Types of FMS Cases Defined Order Blanket Order Cooperative Logistics Supply Support Arrangement (CLSSA) Pseudo (Building Partner Capacity) SAMM C5.4.3, Green Book ch. 6

Defined Order Case Specific defense articles/services identified IA submits the requisitions Typically used for: Weapon systems (MDE/SME) + initial support Classified/sensitive items Explosives, including munitions Specific services (transportation, aircraft ferry, etc.) Technical Data Packages (TDP) Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) Construction-related services and facilities support SAMM C5.4.3.1 and Green Book pp. 6-10 through 6-15

Blanket Order Case Category of material/services – specific items or quantities not identified Purchaser normally determines case value Requisitions submitted by purchaser Typically used for: Follow-on spares/repair parts Support equipment Technical assistance services Supplies (fuel, personnel items, etc.) Publications Repairs and minor modifications Training and training aids SAMM C5.4.3.2 and Green Book pp. 6-16 through 6-17

Cooperative Logistics Supply Support Arrangement (CLSSA) Preferred method for many purchasers for follow-on support for spares/repair parts DoD can buy stock in anticipation of demands – purchaser makes an ‘equity investment’ in the U.S. DoD Supply System DoD-stocked non-SME items (no services) – not used for initial provisioning of spare parts Purchaser receives treatment similar to U.S. and other FMS purchaser activities with equal supply priorities SAMM C5.4.3.3

BPC programs are funded with USG appropriations Pseudo LOA U.S. transfer of defense articles/services authorized by a Building Partner Capacity (BPC) program that uses the FMS LOA infrastructure to administratively manage the transfer BPC programs are funded with USG appropriations Does not apply to FMS cases funded with country or FMF funds SAMM C15

Current LOR to LOA Response Time Anticipated Offer Date (AOD) USG response time depends on type of case, complexity of the program, and clarity/completeness of customer’s LOR GROUP AOD (goal is to offer 85% of LOAs after LOR is received) TYPE OF CASE A 45 DAYS (or less) Blanket Order LOAs, Training LOAs, CLSSA LOAs B 100 DAYS (or less) Defined Order LOAs C 150 DAYS (or more) Defined Order LOAs (first time purchase, engineering/system integration, unique acquisition, complex pricing, detailed disclosure coordination, extensive coordination) D 60 DAYS (or less) All Pseudo LOAs SAMM C5.T6

LOA Acceptance Implementing Agency Accepted (signed) LOA Bandaria SCIP CASE STATUS “A” = Accepted Accepted (signed) LOA Implementing Agency Offered LOA Bandaria Initial Deposit Signed LOA Defense Finance and Accounting Service (DFAS-SCA) SAMM C5.F6

Offer Expiration Date (OED) Typically 85 days from MILDEP approval in DSAMS 25 days administrative processing as well as 60 days for country review Purchaser can request OED extension IA must validate LOA data and assess cost/schedule impact Identify as early as possible (preferably in the LOR) SAMM C5.F6

Case Execution

Acceptance and Implementation SCIP CASE STATUS “I”= Implemented Implementing Authority Implementing Agency Accepted (signed) LOA Bandaria Obligation Authority (OA) Case Manager Case Directive Initial Deposit Defense Finance and Accounting Service (DFAS-SCA) Offered LOA Signed LOA

“Go to” person for an FMS case General standards of accountability: Case Manager Person responsible for logistical and financial management of a case, including case closure “Go to” person for an FMS case General standards of accountability: Adhere to applicable laws and regulations Provide all articles/services on schedule Provides items/services within stated value Close the case in a timely manner SAMM C2.2 and C2.T1

Case Management Responsibilities # SAMM C2.T1 1 Serves as the central point of contact for matters related to the case. Establishes and publishes initial and long-range goals, objectives and plans for case management and execution. Issues and maintains a program Master Plan with key program milestones as the case is implemented. 2 Ensures program goals and objectives are in accordance with approved foreign disclosure and technology transfer requirements. 3 Considers customer transportation preferences during LOA development. Ensure transportation documents are in place (e.g., transportation plan, DSP-94, CISMOA, etc.) 4 Ensures contracting milestones are met. 5 Ensures appropriate integration of requirements such as supply requisitions, contracts, training, etc. are accomplished with internal and external organizations 6 Ensures funding is in place and financial requirements are met. 7 Ensures material and services performance is met in relation to required performance specifications. Ensures that appropriate actions are taken to maintain accountability of training events, to include DSAMS-TM entry. 8 Ensures that delivery and performance reports are timely and accurate in accordance. Checks that automated records and data sources, such as SCIP, reflect accurate information. 9 Maintains a case file of significant events, document, and decisions. Ensures that case records are retained for a period of 10 years after final closure in accordance with DoD 7000.14-R Volume 15, Chapter 6. 10 Reconciles the case throughout its lifecycle starting with implementation, and prepares the case for closure. 11 Become familiar with policies, management information systems, internal and external organizational elements and the stages of the FMS process. SAMM C2.T2

Case Execution Freight Forwarder Implementing Agency (IA) Bandaria Procurement Implementing Agency (IA) DoD Resources Services Training Bandaria as required as required Freight Forwarder

Revising an LOA: Amendment, Modification, or New Case? LOA Changes – SAMM C6.7 Major Scope Change Minor Scope Change No Scope Change New LOA LOA Amendment LOA Modification Purchaser Acceptance Required Purchaser Acceptance Not Required “Scope is key issue…. scope change takes place when the original purpose of a case line or note changes“

LOA Amendments

LOA Modifications

Case Life Cycle Reconciliation Reconciliation begins at case implementation LOA Offer LOA Acceptance Supply/Services Complete (SSC) LOA Implementation Reconciliation Begins Here Case Execution Case (Final) Closure Reconciliation Timeline ACTIVE CASE RECONCILIATION SSC RECONCILIATION

Reconciliation SAMM, Chapter 16 Case Closure Supply/Services Complete Implementing Agency (IA) Bandaria Reconciliation SAMM, Chapter 16 and Appendix 7 Closure Certificate $ Defense Finance and Accounting Service Closed = Final Bill

Case Closure A case is a candidate for closure when it is Supply and Services Complete and meets the following criteria: All material ordered and delivered (and no new orders forthcoming) All services completed No orders placed against a blanket order case for 180 days or more All discrepancies resolved All warranty periods have elapsed IA and customer logistical records reconciled SAMM C16

LOA Entries

Sections of the LOA Cover Page Line Item Information Estimated Cost Summary Payment Schedule Case Notes Standard Terms and Conditions LOA Information

Page 11 of the Bandarian Security Cooperation Sample Case Documents Cover Page Case Identifier Page 11 of the Bandarian Security Cooperation Sample Case Documents

Case Identifier BN-D-YCY SC Customer Code (SAMM C4.T2) Case Designator (SAMM C5.F6 and Green Book Table 6-1) Implementing Agency (IA) Code (SAMM C5.T2 and Green Book 5-21)

Line item information: Item description, applicable case notes, unit of issue, cost, source of supply and delivery terms

Estimated Cost Summary USG Authorized Charges can be applied: “Above-the-line” (rolled into item cost) or “Below-the-line” (shown separately on LOA) ABOVE- THE-LINE BELOW- THE-LINE Page 15 of the Bandarian Security Cooperation Sample Case Documents

Page 15 of the Bandarian Security Cooperation Sample Case Documents Payment Schedule Page 15 of the Bandarian Security Cooperation Sample Case Documents

Page 12 of the Bandarian Security Cooperation Sample Case Documents Notes Page 12 of the Bandarian Security Cooperation Sample Case Documents

Case Notes Program-specific Notes prepared by the IA Pages 16-33 of the Bandarian Security Cooperation Sample Case Documents Standard Notes added by DSCA Case Writing Division

Standard Terms and Conditions Conditions -- USG Obligations Conditions -- General Purchaser Agreements 3. Indemnification And Assumption Of Risks 4. Financial Terms And Conditions 5. Transportation And Discrepancy Provisions 6. Warranties 7. Dispute Resolution

LOA Standard Terms and Conditions Pages 38-42 of the Bandarian Security Cooperation Sample Case Documents LOA Standard Terms and Conditions “..are an official part of each LOA, whether or not they are attached to a particular copy ..” SAMM C5.4.7.1

The “Rosetta stone” for LOA codes! Pages 43-46 of the Bandarian Security Cooperation Sample Case Documents

U.S. Foreign Military Sales Process

FMS Process Lesson# 2002