1. A Comparison: Direct Commercial Sales & Foreign Military Sales
Lesson #3003
5 January 2017

2. A Comparison: Direct Commercial Sales & Foreign Military Sales

3. World Defense Market Tornado F-18 F-7/MiG-21 MiG-29 F-16 Gripen JAS-39
Eurofighter
Mirage
Tornado
F-15
F-16
F-18
MiG-29
F-7/MiG-21

4. Foreign Purchaser’s Option
DoD View
DoD is generally neutral whether a foreign country purchases through FMS or DCS
DCS?
Security
Assistance
Management
Manual
FMS?
Foreign
Partner

5. FMS DCS What is the Best Choice? Implied Relationship Management
Financial
Time
Follow-On Support
Non-Standard
Offsets
FMS
DCS

6. Foreign Military Sales Buyer/Seller Relationships
United States Government
CONTRACT
LOA
Foreign
Government
United States
Contractor

7. Direct Commercial Sale Buyer/Seller Relationships
United States Government L I C E N S
Foreign
Government
United States
Contractor
CONTRACT

8. DSCA/State Department can require “FMS-Only’’ sales
FMS-Only Designation
DSCA/State Department can require “FMS-Only’’ sales
Evaluation Criteria
Pol-Mil relationship with purchaser
New or complex system or service
Security of sensitive technologies
Feasibility of FMS-DCS hybrid

9. Concurrent Negotiations
Military services may not engage in FMS/DCS comparison studies
When FMS is in conflict with DCS:
FMS data may be withdrawn if DCS activities are later initiated
No FMS data until ongoing DCS activities have ceased
Can be done in certain circumstances
Countries national policy requirement
DSCA must grant an exception

10. FMS or DCS
Most defense articles and services can be provided through either FMS or DCS
Is one method the best for all procurements?

11. FMS DCS What is the Best Choice? Implied Relationship Management
Financial
Time
Follow-On Support
Non-Standard
Offsets
FMS
DCS

12. FMS/DCS Implied Relationship Time
Customer preference for working with DoD or defense contractor?
Political considerations in country
Time
Many factors to consider
One is not always quicker than the other
Each avenue needs to be analyzed

13. Program management by DoD – “Leave the driving to us”
Management - FMS
Program management by DoD – “Leave the driving to us”
Experienced personnel familiar with the equipment
FMS charges for this management service
Administrative surcharge
Non-recurring costs
Quality Assurance
Contract administration services (CAS)

14. Foreign purchaser must assume this responsibility
Management - DCS
Foreign purchaser must assume this responsibility
Contract negotiation
Contract administration
Technical knowledge
Legal review
There will be a cost for this--will it exceed FMS charges?
Will there be additional benefits that outweigh additional costs?

15. USG consolidates requirements USG pays on-time
Financial Issues - FMS
Difficult to compare
LOA estimated price
Total Package Approach (TPA)
USG consolidates requirements
USG pays on-time

16. Financial Issues - DCS
DCS: fixed price?
Without having to adhere to DoD procedures, contract prices might be lower
Lower quantity may cause higher prices
Use commercial banking procedures--less money tied up than in Trust Fund
Prompt billing

17. FMS/DCS Follow-on Support (FOS) Non-standard Support Offsets
Can use FMS FOS with DCS major weapon systems sale and vice versa
DCS: Heavily dependent on end item and contractor
Non-standard Support
FMS or DCS
FMS: provides unique non-standard support programs
Offsets
Always between customer and contractor

18. Range of Customer Involvement
Traditional FMS
Sole Source FMS
FMS with Offsets
Combination FMS / DCS
DCS with FMFP
DCS with USG contract admin
Traditional DCS

19. FMS DCS What is the Best Choice? Implied Relationship Management
Financial
Time
Follow-On Support
Non-Standard
Offsets
FMS
DCS

20. FMS or DCS: Which is better?
LOA
DCS
Contract
It All
Depends...

21. A Comparison: Direct Commercial Sales & Foreign Military Sales
Lesson #3003
5 January 2017