Chapter 14, Forecasting, Programming, Budgeting, and Audits, provides guidelines for how DSCA anticipates future activities and revenue by forecasting future sales agreements; formulates and approve the Planning, Programming, Budgeting, and Execution (PPBE) of Foreign Military Sales (FMS) Administrative Funds and Foreign Military Financing (FMF) Administrative Funds; and complies with, General Accounting Office (GAO) and DoD Inspector General (DoDIG) audits concerning security cooperation programs.




Sales Forecast And JAVITS Reports


Planning, Programming, And Budgeting


Standard Financial Information Structure




Dormant Account Review-Quarterly

C14.1.1. Sales Forecasting. (Arms Export Control Act (AECA), Section 25(a)(2))

C14.1.1.1. Sales Forecast Report. Each year, DSCA (Strategy Directorate) prepares an estimate of the total amount of sales expected to be made to foreign nations from the United States. The Director, DSCA, approves the Sales Forecast. These estimates are published in the annual Congressional Budget Justification for Foreign Operations (CBJFO) for the upcoming fiscal year and the next fiscal year, and they include all highly probable (which DSCA defines as 90% likelihood) sales of weapon systems or weapons-related defense equipment, services, or training.

C14.1.1.2. DSCA Sales Forecasting Process. Beginning in April of each year, DSCA (Strategy Directorate) solicits inputs from the Security Cooperation Organizations (SCO), Geographical Combatant Commands (GCCs), and Military Departments (MILDEPs) for the projected sales for each country for the following fiscal year. SCOs prepare the country report and submit it to the GCC and DSCA (Strategy Directorate). GCCs and MILDEPs provide aggregate reports to DSCA (Strategy Directorate). DSCA (Strategy Directorate) consolidates and analyzes the inputs and prepares and coordinates the Sales Forecast Report.

C14.1.2. The Javits Report (AECA, Section 25(a)(1)).

C14.1.2.1. By the first of February each year, the DoS prepares an annual report to Congress (the Javits Report) regarding arms sales proposals which includes all FMS and Direct Commercial Sales (DCS) of major weapons or weapons-related defense equipment for $7,000,000 or more, or of any other weapons or weapons-related defense equipment for $25,000,000 or more, which are considered eligible for Congressional notification and approval. The Javits Report brings to Congress’s attention proposed arms sales (that meet the above-delineated dollar value thresholds) that are to take place during the calendar year in which it receives the report. Thus, the 2012 Javits Report, for example, should contain information on sales expected to take place in 2012. The DoS is not required to include any sale already notified to Congress; however, it will include any potential sales reported on a previous Javits submission that has not been notified to Congress if they still meet the reporting criteria.

C14.1.2.2. Sales Portion of the Javits Report. The DSCA (Programs Directorate) provides the DoS the FMS portion of the Javits report by extracting the relevant data from the Sales Forecast. Individual country input is unclassified unless the country has requested classification, See Chapter 4.

C14.1.2.3. Excess Defense Articles (EDA). The AECA, Section 25(a), also requires an annual report to Congress listing the types and quantities of Significant Military Equipment (SME) that are anticipated to become available for transfer as EDA during the next 12 months. The DSCA (Programs Directorate) requests this data from the MILDEPs and includes it in the Javits Report submission to the DoS.

Table C14.T1. DSCA FMS Forecast Report/Javits Report Submission Timeline



DSCA FMS Forecast and Javits Report Submission Timeline
(Specific due dates are provided in the annual Forecast/Javits Report message)


DSCA (Strategy Directorate) releases tasking and guidance message on the FMS Forecast Report and the Javits Report to the SCOs, GCCs, and MILDEPs.


SCOs provide submissions to GCCs and DSCA (Strategy Directorate) for consolidation and review.


DSCA (Strategy Directorate) coordinates draft Sales Forecast Report with DSCA (Operations Directorate), DSCA (Programs Directorate), OSD, Joint Staff, and MILDEPS.


DSCA (Strategy Directorate) and DSCA (Operations Directorate) finalize the Sales Forecast Report.


DSCA (Strategy Directorate) briefs the draft Sales Forecast Report to the Director, DSCA.

DSCA (Programs Directorate) extracts relevant data from the Sales Forecast Report to prepare the draft FMS submission for the Javits Report and coordinates it with DSCA (Operations Directorate), DSCA (Strategy Directorate), DSCA (Business Operations Directorate).


DSCA (Strategy Directorate) finalizes the Sales Forecast Report with the DSCA Director.

DSCA (Programs Directorate) briefs the draft FMS submission for the Javits Report to the DSCA Director and provides the input to the DoS.


DSCA (Programs Directorate) provides a modified version of the FMS Forecast, along with other exhibits, to the DoS for inclusion in the CBJFO.


DoS provides Javits Report to Congress by February 1st and leads a briefing team for Javits Report to House and Senate staffs within 30 days of report delivery.

DSCA is responsible for the formulation and approval of Foreign Military Sales (FMS) Administrative Funds and Foreign Military Financing (FMF) Administrative Funds through a Planning, Programming, Budgeting, and Execution (PPBE) process. FMS and FMF Administrative Funds finance the management of various security cooperation (SC) programs and are available to DoD organizations and Defense Agencies that implement and execute SC programs. Funding is not provided to organizations that formulate U.S. SC policy such as the DoS, the Joint Staff, or the Office of the Undersecretary of Defense for Policy (USD(P)).

C14.2.1. Planning for FMS and FMF Administrative Funds. The DSCA (Strategy Directorate) leads the planning and programming elements of the PPBE process. Table C14.T2. outlines the DSCA Planning and Programming process (dates in the table are estimates and may vary from year-to-year). DSCA plans and programs for a three-year period. DSCA (Strategy Directorate) publishes the DSCA Security Cooperation Planning Guidance which, drawing from the overarching goals for the community and DoD, provides vision, principles, goals and priorities that help MILDEPs and other defense agencies and organizations understand the community’s direction and program resources for the next three-year period.

C14.2.2. Programming for FMS and FMF Administrative Funds. DSCA (Strategy Directorate) develops and publishes the Programming Guidance for the SC community in the form of a Program Objective Memorandum (POM) for FMS and FMF Administrative Funds. The POM is used to project the resources required for the SC community’s execution of FMS programs and describes, in detail, the proposed funding requirements for the next three years. A POM may also describe what is not fully funded and the risks associated with the shortfall. Within the POM, SC programs are aligned to DSCA’s six Core Functions (Pre-Letter of Request (LOR), Case Development, Case Execution, Case Closure, Business Sustaining, and Other Security Assistance Missions) and associated Security Assistance Program Elements (PEs). A description of the Core Functions and PEs can be found at Table C14.T2.

Table C14.T2. Security Cooperation Core Function and Program Element (PE) Short Definitions

Note: Core Functions are shown below. Program Elements (PEs) provide more detail to the core functions by including more discrete activities that create the building blocks to achieve our goals. Short definitions for each PE are under the applicable Core Function, and encompass resources used to support that program, including dollars and manpower. Refer to the PE Structure diagram for more information.

Pre-LOR (Letter of Request)

Includes efforts that help Partner Nations identify solutions to their defense requirements and establish capabilities to make them effective coalition partners. This FMS activity supports U.S. national security and foreign policy objectives, domestic acquisition programs, and coalition needs.




Support FMS

This program element covers resources to support an array of efforts leading to an FMS case. This encourages the use of a total package approach. It also encourages FMS hybrid solutions (combinations of FMS, Direct Commercial Sales (DCS), Memorandum of Understanding (MOU), Training, etc.) and an International Integrate Product Team (IPT) approach to achieve DoD policy objectives and support the needs of U.S. partner nations.



This program element provides limited resources to organize and support FMS interests at international trade shows.


Responding to Request for Proposals (RFPs)

Support focused efforts to achieve FMS and hybrid solutions to foreign competitions.


Security Cooperation Organizations (SCO) & Combatant Commands (CCMDs)

Covers FMS and FMF Admin funding allocated to support CCMD Headquarters and SCO personnel and infrastructure.


International Agreements

Support efforts by the SC community in international armaments cooperation, such as MOU’s for cooperative programs.


Export Controls

Support work by the SC community in the areas of releasability and disclosure.


Case Development

Response to customer’s requests, normally via Pricing and Availability (P&A) data or Letters of Offer and Acceptance (LOA).




Letter of Offer & Acceptance (LOA) Development

This program element covers the costs of developing P&A data, preparing and implementing LOAs, including Amendments and Modifications.


Missile Technology Control Regime (MTCR)

Support efforts by the SC community to enforce the requirements of the Missile Technology Control Regime.


Case Execution

Ensure the timely delivery of quality goods and services, with sound financial management and reporting. This core function breaks down into the major areas of Acquisition, Training, Logistics, and Financial Management.





To support the procurement of defense equipment, especially the work by program offices with major end items on cost, schedule, and performance, to our international partners.


Case Training

This program element covers the administration of FMS Training Cases.



This program element covers resources to provide logistics and sustainment support to the FMS program.



This program element covers resources dedicated to the overall financial management of case execution.


Case Closure

Ensure timely case closure and reduce the backlog of open cases under Accelerated Case Closure Procedures (ACCP) and beyond two years supply complete. Efforts to perform active reconciliation throughout the life of the case remain important and are addressed specifically in the case execution core function.




Case/Line Closure Reconciliation & Transactions

This program element accounts for resources required to successfully execute reconciliation and closure transactions after supply/services completion.


Business Sustaining

Efforts and resources that support all areas including headquarters, policy, administration, automation/information technology, training, resource management and personnel management.




Workforce Development (WFD)

This program element is intended to capture costs to develop a cadre of professional SC personnel.


General Administration

This program element encompasses general and administrative routine and special projects to sustain normal office operations.


Headquarters Functions

This program element provides resources to support headquarters (leadership, policy, customer liaison, manpower, strategic planning, legal, legislative affairs, and management). It covers headquarters region and country officers, such as Country Program Directors, who cover a wide range of activities for selected international partners.


Information Technology (IT)

This program element encompasses resources for Information Technology, divided up into subcategories that describe individual systems or families of systems.


Other SC Missions

This core function encompasses SC missions other than Foreign Military Sales. It includes Foreign Military Financing (FMF), International Military Education and Training (IMET), and programs that use appropriated funding for particular DoD programs.




End Use Monitoring

This program accounts for the resources needed to implement DoD's Golden Sentry program, ensuring the security of defense exports.


Excess Defense Articles (EDA)

This program element provides resources needed to administer the sale/transfer of excess defense articles.



Allows insight into the activities associated with drawdown authorizations. It is included as a valid category and mission; however, resources are normally not provided for these efforts.


Foreign Military Financing (FMF) Administration

This program element provides funds to administer programs not supported by FMS, including the administration of FMF grants; the review of FMF funded direct commercial contracts, the management of the IMET program, and the EDA program.


International Military Education & Training (IMET)

This program element covers the basic IMET program - funding and country allocations -- as well as IMET infrastructure funding. The administration of IMET is covered by PE-31.


Other Funded Initiatives (HDM, Regional Centers, CTFP, T&E, etc.)

This program element covers support for related key missions other than FMS. These “other” areas, such as IMET and Foreign Military Finance, depend on the unique responsibilities of the military departments and DoD agencies. Funding can be from a variety of sources, including the FMS Administrative Fund and appropriated funds. Each program should be addressed separately.

C14.2.2.1. POM Development. The MILDEPs and other defense agencies and organizations provide submissions to the DSCA (Strategy Directorate) as requested in the Programming Guidance and justify the level of resources from the FMS and FMF Administrative Funds needed to support SC programs. MILDEPs and other defense agencies and organizations balance the known level of resources with the highest priority requirements and submit their program requests based on program-based requirements and policy-directed priorities. DSCA (Strategy Directorate) reviews the program submissions for:

  • Appropriate use of FMS Administrative Funds;

  • Consistency with Planning and Programming Guidance;

  • Completeness of explanation of requirements;

  • Use of return on investment, performance-based, business case-type analysis in justifying requests; and

  • Affordability

C14.2.2.2. DSCA (Strategy Directorate) prepares the Program Decision Memorandum (PDM) which establishes a planning baseline by IA, PE, and object class for both FMS and FMF administrative accounts. The Director, DSCA, approves PDM decisions. The decisions in the PDM cycle generally become the baseline for budget formulation in the upcoming budget cycle. Final guidance to the target levels can be changed and are usually finalized in the annual budget call. It is important to note that a final determination of funding levels will be made once appropriations legislation is passed and the Office of Management and Budget (OMB) makes a decision regarding the level of the FMS Trust Fund ceiling.

C14.2.3. Budgeting for FMS and FMF Administrative Funding.

C14.2.3.1. FMS Administrative Funding. The FMS Administrative Fund is financed with collections from FMS purchasers derived from an assessed administrative surcharge. The DSCA (Business Operations Directorate) is responsible for financial management of the FMS Administrative Surcharge Trust Fund. The Defense Finance and Accounting Service (DFAS) collects surcharges in accordance with DoD 7000.14-R, Volume 15, Chapter 7. The annual FMS Administrative Fund budget is subject to the same controls and regulations as any single year DoD appropriation.

C14.2.3.2. FMS Administrative Budget OMB Hearing. DSCA Comptroller meets annually with the Office of Management and Budget (OMB) to discuss prior, current, and future fiscal year budgets - typically in October. During the hearing, DSCA presents the Agency’s budget for the FMS Administrative Fund. The goal of the hearing is to provide information and justification for the President’s Budget request, as well as other matters pertinent to the President’s Budget Submission. The President’s Budget Submission is an opportunity for DSCA to provide evidence of fiscally sound planning, budgeting, and management. The result of the President’s Budget Submission is a budget that complies with OMB and the President’s guidelines and policies. DSCA completes and returns its component of the President’s Budget Submission through formal President’s Budget galleys and the OMB MAX Budget Information System. The President’s Budget Submission includes the target for the upcoming fiscal year.

C14.2.3.3. FMF Administrative Funding. The FMF Administrative Fund is financed from an annual appropriation, coordinated by DSCA and approved through the DoS, for inclusion in the President’s Budget. FMF Administrative Funds are appropriated to the President. By Executive Order 12163, the President allocates these funds and delegates the authority and responsibility for their administration to the Secretary of Defense. The FMF administrative appropriation is subject to the same controls and regulations as DoD appropriations.

C14.2.3.4. FMS and FMF Administrative Budget Call and Submission. DSCA Comptroller issues an annual Budget Call to the IA, Combatant Commands (CCMDs), DSCA Headquarters, and Direct Reporting Units that execute FMS and FMF administrative budgets. Each year the call is issued in June and is due in August. Specific formats, instructions, and guidelines for budget development and submission are provided with each annual budget call. The main objective of the call is to provide budget execution guidelines for the development of a budget submission. The call also provides funding targets to develop budgets and allocate resources. Initial fiscal year targets are usually based on the current, approved PDM. The call includes reference materials and information needed to develop and submit both the FMS and FMF administrative budgets. DSCA consolidates the call for both the FMS and FMF administrative budgets; however, each budget should be developed independently. The MILDEPs, Defense Agencies, GCCs, and DSCA Headquarters should review subordinate submissions, set funding priorities, and adjust internal target levels accordingly. The MILDEPs, Defense Agencies, and DSCA Headquarters should submit a consolidated budget estimate to DSCA Comptroller through the Enterprise Planner online budget database. Each CCMD should submit a consolidated budget estimate to DSCA Comptroller in the Security Assistance Automated Resource Management Suite (SAARMS) Budget Preparation Module format.

C14.2.3.5. FMS and FMF Administrative Budget Issuance. DSCA Comptroller releases a comprehensive Annual Financial Plan each year in late September. The information is concurrently used as DSCA Comptroller’s annual budget submission to OMB for inclusion in the President’s Budget. The Annual Financial Plan includes the final baseline for use in developing annual execution, monthly obligation plans, a notional schedule of execution reviews, and quarterly funds distribution for the upcoming fiscal year. Each recipient of FMS and FMF Administrative Funds should develop internal controls and procedures to effectively and efficiently implement and execute those funds.

C14.2.3.6. Reimbursement Exemptions for FMS Administrative Funds. 22 USC Section 2792, exempts reimbursement from the FMS Administrative budget for military personnel costs and unfunded civilian retirement costs supporting the administration of the FMS program. The effective date for the exemption of military personnel costs is January 1, 1990. The effective date for the exemption of unfunded civilian personnel costs is the first complete pay period of December 1989.

C14.2.3.7. SCO Specific Funding. DSCA Comptroller allocates to the CCMDs FMS Administrative and FMF Administrative funding for functions that support SA programs. DSCA Comptroller centrally funds U.S. Coast Guard salaries, International Cooperative Administrative Support Services (ICASS), Residential Local Guard Program, C-12 Aircraft Flying Hour Program, Foreign Service National (FSN) Separation Liability Trust, and furniture and move-in costs for new Embassy buildings.

C14.2.3.8. Assistance-in-Kind (AIK). While not a funded program, AIK offsets funding requirements for some SCOs. SCOs receiving AIK (e.g., office space, vehicles, utilities, personnel support) report such support in their annual budget estimates by object code, using fair market value to assign costs.

Table C14.T3. DSCA Planning and Programming Process


DSCA Planning and Programming Process Event

Mid November

DSCA (Strategy Directorate) issues the DSCA Security Cooperation Planning Guidance.

Early December

DSCA (Strategy Directorate) issue FMS and FMF Administrative Funds Programming Guidance.

Early March

Stakeholders Program Submissions due.

Late March

DSCA (Strategy Directorate) conducts Program Review and Analysis.

Early April

MILDEP Presentations to DSCA.

Mid May

Major Programming issues. MILDEPs and other defense agencies and organizations address resource issues during the Programming process before Director, DSCA final decisions.

DSCA (Strategy Directorate) presents PDM recommendations to Director, DSCA.

Late May – Early June

Final decisions and adjustments.


DSCA (Strategy Directorate) issues final PDM to DSCA (Legislative and Public Affairs (LPA) Office), Stakeholders, and DSCA (Business Operations Directorate) for FMS and FMF Administrative Accounts only. DSCA (Business Operations Directorate) uses the resources level as “targets” by program element, provided to the MILDEPs and other defense agencies and organizations in the budget guidance for the next two fiscal years.

DSCA's responsibility for synchronizing security assistance financial management guidance within the DoD includes the requirement for the Security Assistance community to follow OUSD(C)'s Standard Financial Information Structure (SFIS). The SFIS is a comprehensive data structure that supports requirements for budgeting, financial accounting, cost/performance, and external reporting across the DoD enterprise. The OUSD(C) policy memorandum dated April 02, 2019, requires systems containing financial information provide the ability to capture and transmit the SFIS data or demonstrate a cross-walking capability to the SFIS Version 11.1 Matrix.

C14.3.1. Requirement of the Standard Financial Information Structure (SFIS). Implementing Agencies are required to capture all financial transactions and reporting for Security Assistance Accounts in the SFIS compliant systems.

C14.4.1. Defense Security Cooperation Agency (DSCA) Audit Responsibilities. The DSCA office of the Chief Performance Officer (CPO) oversees DSCA’s response to, and compliance with, all General Accounting Office (GAO) and DoD Inspector General (DoDIG) audits concerning security cooperation (SC) programs and serves as the liaison between DSCA and the auditing organization. DSCA is normally provided advance notification of a proposed audit identifying the congressional committee or organization that initiated the action; a statement of the scope; a time schedule for the audit; the name, number, and organization of the audit focal point; and a unique audit work or job code number. CPO also serves as the entry point for auditing agencies conducting more general reviews where SC programs or DSCA may not be the primary focus.

C14.4.2. Procedures. Upon receipt of an audit request, the DSCA CPO audit liaison officer (ALO) reviews the audit request and appoints a DSCA Primary Action Officer (PAO) or a Collateral Action Officer (CAO). The PAO and CAO are responsible for preparing and coordinating any DSCA responses to the audit or report. The ALO ensures that the appropriate organizations are alerted of any significant issues associated with the audit. DSCA is committed to a fully open and transparent process in which the DSCA staff works with the auditor(s) to ensure the requests for information and questions are answered in a timely manner.

C14.4.3. Entrance Conference. An Entrance Conference is conducted as soon as practical between DSCA and the auditor at the beginning of an audit. The DSCA PAO and/or CAO keeps all working notes and memoranda for the record, and provides status updates to the Director, DSCA, with a copy to the DSCA ALO as necessary.

C14.4.4. Exit Conferences. During Exit Conferences, the auditors generally meet with the PAO and/or CAO and the ALO to present their proposed findings and a draft report.

C14.4.5. Audit Findings and Recommendations. Upon publication of the audit or findings, the PAO and CAO review to determine any future course of action.

The Security Assistance (SA) community is required to follow Office of Under Secretary of Defense (Comptroller) (OUSD(C)) policy dated 20 August 2019, in which all DoD components are to replace the Triannual Review process with the Dormant Account Review-Quarterly (DAR-Q) process. This change was implemented to demonstrate DoD's commitment to effective stewardship of financial resources through improved execution of budgetary resources, to include timely reconciliation and closure of Foreign Military Sales related financial transactions. The DAR-Q policy serves as a quality control mechanism of entity-level internal control promoting accountability and corrective actions through follow-up on dormant financial transactions. Balances are defined as dormant if they have not been liquidated and no obligations, adjustments, contract modifications, disbursements, or withdrawals occur within the 90-day dormancy period. While this policy was effective across the DoD’s Title 10 appropriated accounts, a consistent and effective review has not been performed for Title 22 Security Assistance Account (SAA) programs. DAR-Q is effective immediately for DoD Components executing Title 22 SA funds.

C14.4.1. FMS Case Reconciliation. The DAR-Q process will leverage existing internal control practices to assess whether commitments and obligations recorded are bona fide needs of the appropriations charged. Funds Holders, with assistance from supporting accounting offices, shall review financial dormant (inactive 90 days or more) transactions for timeliness, accuracy, and completeness during each DAR-Q review period ending March, June, September, and December. The DAR-Q process is a very effective tool in supporting the case manager's case management, reconciliation and closure responsibilities. Refer to DoD FMR, Volume 3, specifically Chapter 8 for additional policy information on the DAR-Q process.