1. Acquisition Policy
Lesson #3004
21 August 2018

2. Sourcing Security Cooperation Requirements
United States Government
Stock
Procurement
Type Agreement
FMS = LOA
BPC = Pseudo LOA
FMS
Logistics &
Acquisition
Processes
SC Purchaser
FMS = Partner
BPC = USG
DoD
Depot
Defense
Contractor

3. Line
Item
Information
Source Code
P = Procurement
S = Stock
X = Mixture

4. Special Defense Acquisition Fund
Revolving fund used to finance procurement in anticipation of future transfers
DSCA, in consultation with DoS, selects articles/services for SDAF purchase
SAMM provides a “SDAF Procurement Proposal Form”
Proposals must be reviewed by SAF/IA, DASA DEC, NIPO
DSCA must approve the sale of all SDAF assets
SDAF assets are sold to support urgent requirements that cannot be met using the normal FMS process
A stand-alone case or separate case line is used to purchase from SDAF inventory
SAMM C11.9

5. FMS Buyer/Seller Relationships
United States Government 1 2
LOA
CONTRACT
International
Purchaser
Defense
Contractor
Non-Contractual
Relationship

6. BPC Buyer/Seller Relationships
United States Government 1 2
Pseudo-LOA
CONTRACT
United States
Government
Defense
Contractor

7. Acquisition Policy (1)
Acquisition for FMS purchasers must be in accordance with DoD regulations and other applicable USG procedures
This affords the foreign purchaser the same benefits and protection that apply to DoD procurement and is one of the principal reasons why foreign governments and international organizations prefer to procure through FMS channels.
SAMM C6.3.1

8. Acquisition Policy (2)
SAMM C6.3.1: Federal Acquisition Regulation (FAR) provisions applicable to the DoD also apply to FMS procurements
DFARS Subpart : The FAR and Defense Federal Acquisition Regulation Supplement (DFARS) also apply to purchases and contracts by DoD contracting activities made in support of FMS
DFARS Subpart : Titled “Acquisitions for Foreign Military Sales” contains the few but important differences when procuring for FMS versus DoD requirements

9. DoD Acquisition Relationships
System/ Program
Offices
System/ Program
Managers
Inventory
Control
Points
Item
Managers

10. DoD Procurement Overview
United States Government
System
Manager
Authorizations & Appropriations
Purchase
Contracting
Officer
Item
Manager
Request
Procurement
Contract
Defense
Contractor

11. FMS Procurement Overview
United States Government
System
Manager
Directive
Purchase
Case
Manager
Contracting
Officer
Item
Manager
Request
MILSTRIP
Procurement
Contract
LOA
Foreign
Government
Defense
Contractor

12. Contract Administration
Procuring Contracting Officer (PCO)
Conducts source selection, contract negotiation, and contract award.
Works at implementing agency
Administrative Contracting Officer (ACO)
Performs contract administration and quality assurance
Works for Defense Contract Mgmt Agency (DCMA)
Auditors support both PCOs and ACOs
Works for Defense Contract Audit Agency (DCAA)

13. Contract Administration
PCO
ACO
Contractor

14. Contract Administration
United States Government
LOA
Directive
System
Manager
Purchase
Case
Manager
MILDEP
PCO
Item
Manager
Request
MILSTRIP
Requisition
Negotiate
& Award
LOA
Foreign
Government
DCAA – Audit DCMA - ACO
Defense
Contractor

15. Noncompetitive Method
Procurement Methods
Competitive Method
Default procurement method
Noncompetitive Method
Exception
Use must be justified & approved
Historically referred to as “Sole Source”
Officially “Other than Full & Open Competition”
FAR, DFARS, SAMM
FAR Part 6 – Competition Requirements

16. FMS Sole Source Request
Official written direction to use other than full and open competition should be submitted in the Letter of Request
Applicable to both cash and non-repayable FMF funded LOAs
NOT applicable for Building Partner Capacity (BPC) programs
More BPC discussion later
SAMM C6.3.4

17. FMS Sole Source Approvals
Implementing agencies evaluate requests for approval or disapproval
Encouraged to defer to purchaser’s request
Consult with IA legal counsel on questions of legality or ethics
Disapproved requests coordinated with DSCA
Approved requests documented in LOA Sole Source note
SAMM C

18. Sole Source LOA Note
The purchaser has requested in a letter dated [insert date] that [insert name of specific firm or other private source] be designated as [insert "prime contractor" or "subcontractor"] for line/items(s) [insert line item numbers] of this Letter of Offer and Acceptance.
This note is confirmation that a specific source designation has been requested in writing by the purchaser and that the Department of Defense has accepted the request.
SAMM Appendix 6

19. Exceptions for Noncompetitive Procurement
Single Responsible Source
Unusual & Compelling Urgency
Maintain Industrial Capability
International Agreement
Required By Law
National Security
Public Interest
FAR Part 6.302

20. Building Partnership Capacity (BPC) Noncompetitive Procurement
BPC programs are funded with USG appropriated funds
BPC pseudo-LOAs are not USG to foreign government sales
FAR “international agreement” exception is NOT available for use with BPC programs
BPC requesting authority must justify BPC noncompetitive procurement based on one of other FAR exceptions
SAMM C & C15.T4

21. Customer In Contract Process
FMS customers should be encouraged to participate with USG acquisition personnel in discussions with industry concerning:
Technical Specifications
Delivery Schedules
Special Warranty Provisions
Price/Performance Tradeoffs
Other Requirements Unique to FMS Customer
DFARS (b) & Greenbook Attachments 9-1/2

22. Customer In Contract Process
Degree of participation in contract negotiations is at discretion of the contracting officer after consultation with contractor
Potential limiting factors:
Multiple FMS customers
Unique US requirements
Contractor proprietary data
DFARS (d)

23. Customer In Contract Process
FMS customer cannot:
Observe or participate in negotiations involving cost or pricing data
Direct exclusion of specific firms in solicitation
Interfere with contractor’s placement of subcontracts
Provide direction on source selection decisions or contract terms
Request rejection of certain bids or proposals
Receive contractor proprietary data unless approved by contractor
DFARS & SAMM C

24. Types of Contracts
New Policy: Firm Fixed-Price (FFP) is default FMS contract type unless:
Country Preference: Country establishes, in writing, a preference for different contract type
Specific Sale Preference: FMS customer requests in writing (i.e. LOR) a different contract type for a specific foreign military sale
Consolidated U.S. and Partner Contract: U.S. determines a different contract type is in the best interests of the U.S. taxpayer
FY17 NDAA, Section 830 & Director DPAP 28 Jun 2018 memo

25. Release of Contract Data
No need for release
All pertinent info and contractual obligations are identified in the LOA
Release can be considered if:
Contract is unclassified
Only covers purchaser’s requirement
Not to be released:
Internal negotiation documents
Contractor proprietary information apply
SAMM C

26. Tornado
F-18
F-7/MiG-21
F-16
MiG-29
Gripen JAS-39
F-15
Eurofighter
Mirage

27. Defense Industry Offset Association (DIOA)
Offset Definition
Defense Industry Offset Association (DIOA)
An economic mechanism whereby a foreign government purchasing a major defense system imposes a requirement on the selling contractor to compensate the outflow of national funds with industrial activity back into the procuring country
The exact nature of the economic activity that makes up the offset program can vary significantly from country to country

28. FMS Offset Relationships
United States Government 2 3
LOA
CONTRACT 1
International
Purchaser
Defense
Contractor
Offset
Relationship

29. Types of Offsets
Direct = Compensation in goods related to defense system being sold
Indirect = Compensation in goods unrelated to the defense system sold

30. Non-repayable FMF may NOT finance offsets
Offset Costs - SAMM
Contractors can recover all offset costs in FMS contracts when the LOA is financed wholly by:
Purchaser cash
Repayable credits
Non-repayable FMF may NOT finance offsets
Contractor must disclose the estimated offset costs included the contract price to the USG
Offset costs are priced into the LOA line item cost
SAMM C6.3.9

31. USG may not enter into or commit U.S. firms to any offset agreement
USG Offset Policy (1)
USG may not enter into or commit U.S. firms to any offset agreement
Contractor responsible for:
Offset content negotiations
Offset performance/execution
SAMM C6.3.9

32. IA must notify DSCA if LOA contains offset costs
USG Offset Policy (2)
IA must notify DSCA if LOA contains offset costs
Within the Congressional Notification information
USG personnel should not discuss offset details with Purchaser
Redirect offset questions to contractor
USG can confirm (but not breakout) inclusion of offset cost in LOA
SAMM C6.3.9

33. LOA Standard T&C - 2.8
Any offset arrangement is strictly between the Purchaser and the U.S. defense contractor.
The U.S. Government is not a party to any offset agreement that may be required by the Purchaser in relation to the sales made in this LOA.
The USG assumes no obligation to administer or satisfy any offset requirements or bear any of the associated costs.
Revised per DSCA Policy Memo 18-35, 24 Jul 2018

34. LOA Standard T&C - 2.8 (continued)
Although offsets are not within the scope of the DoD contracts entered into to fulfill the requirements of this LOA, offset costs may be recovered through such contracts.
Indirect offset costs may be deemed reasonable without further analysis
If the Purchaser wishes to obtain information regarding offset costs, the Purchaser should request information directly from the U.S. defense contractor
Revised per DSCA Policy Memo 18-35, 24 Jul 2018

35. International Armaments Cooperation
The term IAC covers a multi-faceted area in which the U.S. cooperates with other countries and international organizations to research, develop, acquire and sustain military systems.
SAMM C

36. Defense Acquisition Management Framework
The Defense Acquisition
System (DoDD )
and
Joint Capabilities
Integration &
Development System
(JCIDS - CJCSI I)
Materiel
Solution
Analysis
Technology Maturation
& Risk Reduction
Engineering & Manufacturing Development
Production & Deployment
Operations & Support
Development
Decision
Low Rate Initial Production
Full-Rate Production Decision
Sustainment
Disposal
Full-Rate Production and Deployment A B C
International Armaments Cooperation Programs
USD Acquisition & Sustainment (A&S)
International Agreements
Defense Acquisition University (DAU)
Foreign Military Sales
USD (Policy)
LOAs
DISCS

37. IAC Building Blocks

38. International Armaments Cooperation
IAC includes:
Information Exchange Program (IEP)
Engineer and Scientist Exchange Program (ESEP)
Test and Evaluation Program (TEP)
Foreign Comparative Testing
Cooperative Research, Development and Acquisition
Defense Trade
Cooperative Logistics
SAMM C

39. Acquisition Policy
Lesson #3004
21 August 2018