1. 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

2. Full-Spectrum Capability

3. Foreign Military Sales (FMS) System1 2 3 4 5 A B C D E F G

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

5. 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 C

6. 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

7. Key Policy Documents
Security Assistance Management Manual (SAMM), DSCA M
DSCA Policy Memoranda
Financial Management Regulation (FMR) 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 (International Affairs and Security Assistance Management)

8. 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

9. 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

10. 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)

11. 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 ( 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

12. Pre-Case Development

13. ? = 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. Case Development

20. 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

21. 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)

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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 C and Green Book pp through 6-15

29. 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 C and Green Book pp through 6-17

30. 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 C

31. 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

32. 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

33. 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

34. 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

35. Case Execution

36. 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

37. “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

38. 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 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

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

40. 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“

41. LOA Amendments

42. LOA Modifications

43. 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

44. 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

45. 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

46. LOA Entries

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

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

49. 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)

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

51. 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

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

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

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

55. 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

56. LOA Standard Terms and Conditions
Pages 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 C

57. The “Rosetta stone”
for LOA codes!
Pages of the Bandarian Security Cooperation Sample Case Documents

58. U.S. Foreign Military Sales Process

59. FMS Process
Lesson# 2002