Chapter 6, Foreign Military Sales Case Implementation and Execution discusses how accepted Letters of Offer and Acceptance (LOA) are implemented, executed, or cancelled.




Case Implementation


Case Execution - General Information


Case Execution - Acquisition


Case Execution - Logistics


Case Reviews


Suspension And Cancellation Of Security Assistance


Amendments And Modifications


Case Cancellation

C6.1.1. Routine Case Implementation. The Implementing Agency (IA) takes action to implement a case once the purchaser has signed the case and provided the United States Government (USG) with any required initial deposit. The Foreign Military Sales (FMS) case must be implemented in all applicable data systems; e.g., Defense Security Assistance Management System (DSAMS), Defense Integrated Financial System (DIFS), DSCA 1200 System, and Military Department (MILDEP) systems before case execution occurs. The IA should issue detailed implementing instructions to activities that are involved in executing the FMS case. Instructions must state that implementation is subject to receipt of obligational authority (OA) issued by the IA.

C6.1.2. Emergency Case Implementation. On an exception basis, the DSCA (Directorate of Business Operations (DBO) Country Financial Management Division (CFM)) Supervisor may approve emergency implementation of an FMS case. The emergency implementation action is taken only when the FMS purchaser has accepted the LOA, but has not yet paid the initial deposit required for implementation. In the event emergency implementation action is desired by the applicable IA, a written request should be sent by facsimile or e-mail to the DSCA (Directorate of Business Operations (DBO) Country Finance Director (CFD)). The request should specify the case for which emergency implementation is requested, and the extenuating circumstances that explain its urgency; e.g., meeting a contract award deadline after which prices would increase. The DSCA CFD may confirm with the purchaser as to when they expect to remit the initial deposit. The CFD notifies the IA and the Defense Finance and Accounting Service (DFAS) financial manager of the DSCA (Directorate of Business Operations (DBO)) decision. If approved, DSCA posts an emergency implementation authorization milestone in DSAMS and the IA processes the emergency implementation in DSAMS and the MILDEP systems.

Case execution is the longest phase of the FMS case life cycle. Case execution includes activities such as: logistics, acquisition, supply, transportation, maintenance, training, financial management, case management, oversight, coordination, case documentation, case amendment or modification, case reconciliation, case reporting, etc.

C6.2.1. Because rapid delivery of defense articles, services, and training purchased through the FMS process constitutes a tangible demonstration of United States' commitment to the government-to-government relationship with the purchaser, every effort should be made to deliver the articles, services, or training in a timely manner in accordance with any timelines or standards included in the LOA.

C6.2.2. Case Managers, in coordination with Security Cooperation Organizations (SCOs), are responsible for tracking FMS delivery status.

C6.2.3. Informing FMS Customers of Negative Impacts. If any situation arises that puts at risk the USG's ability to meet a commitment made to a foreign partner, it is essential that the broader Security Cooperation enterprise be informed in advance so that the USG may provide a unified response. Any written or verbal communication to inform a foreign partner of the USG's inability to deliver defense articles or services in the following situations must be coordinated in advance with DSCA (Integrated Regional Team Country Portfolio Director/Country Financial Manager):

  • For any case that met the Congressional Notification thresholds of Table C5.T13.:

    • an increase in price of 10% of case value or $25M; or
    • a delay in delivery of more than 6 months of a defense article or service critical to the operational requirement.
  • For any case, regardless of value, any delay of delivery of defense articles or services that may:

    • reasonably be expected to create political repercussions damaging to the bilateral relationship;
    • negatively affect the timing of planned operations; or
    • cause significant additional expense to the foreign customer, such as by accrual of unplanned storage charges.
  • For any case, regardless of value, identification of serious concerns about the reliability, availability or serviceability of a major component (any assembled element that forms a portion of an end-item without which the end-item is inoperable).

DSCA will coordinate a response with State PM, OUSD(P), and other offices in DoD if required, in the course of which it will be determined which office should communicate the response. If there is any doubt about whether the situation fits within these parameters, Case Managers are encouraged to act on the assumption that it does.

C6.2.4. General FMS Case Files. General FMS Case Files are maintained in accordance with the Department of Defense (DoD) 7000-14.R, Volume 15, Chapter 6. Execution of a typical FMS case may span several years. Case Managers must ensure accessibility to retired files, source documents, invoices, bills of lading, other proof of shipments, and other applicable documents that provide the audit trail to account for United States Government (USG) and purchaser funds. The retention period is 10 years after the date of case closure. Cases with large volumes of transactions may have the documents stored electronically. Per Chapter 8, of this Manual, delivery and inventory records for Enhanced EUM articles must be maintained by the IA and Security Cooperation Organizations (SCOs) indefinitely, or until the USG has verifiable information that the recipient country has properly disposed of the Enhanced EUM items(s). The Enhanced EUM documents may be stored electronically or saved within the Security Cooperation Information Portal (SCIP) SCO/Toolbox, EUM Resource Tab.

C6.2.5. Execution Records. FMS records, such as case directives, production or repair schedules, international logistics supply delivery plans, requisitions, shipping documents, bills of lading, contract documents, billing and accounting documents, and work sheets, are normally unclassified. All case transactions, financial and logistical, must be recorded as part of the official case file. Cost statements and large accounting spreadsheets must be supported by source documents. In those rare instances when financial transactions are recorded and supporting documentation is not available, certified memoranda by those responsible must be retained. Case Managers must make every effort to maintain the accuracy of their case files as complete, accurate, and accessible records are keys to case reconciliation and closure.

C6.2.6. Disbursement Documentation. For every disbursement transaction, the DoD components must include the appropriate documentation with their payment voucher. This includes authentic contracts and/or purchase orders, invoices, and receiving reports. This documentation shows the proper authorities’ certification of receipt and payment for the articles or services. The disbursement documentation is available for inquiries or requests on particular FMS cases. Additionally, the documentation facilitates the FMS case reconciliation process.

C6.3.1. Compliance with DoD Regulations and Procedures. 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. FMS requirements may be consolidated with USG requirements or placed on separate contract whichever is more expedient and cost effective. Federal Acquisition Regulation (FAR) provisions applicable to the DoD also apply to FMS procurements. While all FAR and Defense FAR Supplement (DFARS) clauses apply to FMS procurements, Table C6.T1. lists selected sections with unique application to FMS.

C6.3.2. Submission of Certified Cost or Pricing Data. When foreign governments conduct a competition for a weapon system and a U.S. system is selected, that competition should determine the price to be paid. This is true even if the sale is then processed as a foreign military sale and even if DoD is buying the same item sole source. If the contracting officer determines that adequate price competition has occurred, the contractor will not be required to submit certified cost or pricing data. This policy is incorporated into the DFARS at 225.7303(b).

C6.3.3. Incentive Clauses. USG contracts may include incentive clauses for early performance. The Case Manager and contracting officer work together to make sure the contract and the LOA are consistent. A Technical Assistance Agreement (TAA) in support of a FMS LOA is not required during the period in which the FMS case and implementing USG FMS contracts and subcontracts are in effect if the LOA and the contract contain all of the information normally required by an export license; e.g. identification of exporter, specific service or information to be exported, intermediate consignees, end-use, and end-user. Under 22 CFR part 126.6, the LOA and the implementing contracts serve as the authorization for the transfers without a license, provided the transaction is fully documented. For services provided under a Pseudo LOA in support of a Building Partner Capacity (BPC) program, See Chapter 15.

Table C6.T1. Selected FAR and DFARS Sections Relevant to FMS Acquisition




Acquisitions for FMS


Subpart 225.73

Contingent Fees (Agent Fees & Commissions)

Subpart 3.4


Options FMS


Subpart 217.2

Costs of Doing Business with a Foreign Government



Selling Costs/Expenses



Other Than Full and Open Competition - International Agreement



Contract Type Risk – FMS



FMS Customer Involvement



Source Selection



Limitation of Liability



Offset Arrangements



Contract Clauses



Applicability of Acquisition Warranty



Pricing Acquisitions for FMS



Buy America Act

Part 25


Balance of Payments Program



C6.3.4. Requests for Other than Full and Open Competition. The competitive procurement process is used to the maximum extent possible when procuring articles or services. The Competition in Contracting Act (CICA) (10 U.S.C. section 2304), however, provides certain limited circumstances in which the contracting activity can consider FMS purchaser requests for procurement using other than full and open competition (commonly referred to as “sole source”) when the contract to be awarded is expected to exceed the simplified acquisition threshold (Federal Acquisition Regulation (FAR) 2.101 and FAR Part 6). Contracts expected not to exceed that threshold are contracted for under FAR Part 13. One of CICA’s exceptions to full and open competition at 10 U.S.C. section 2304(c)(4) is implemented as the “International Agreement” exception in FAR 6.302-4 and the DoD FAR Supplement (DFARS) Subpart 206.302-4. An authorized official of the purchasing government may submit a written request, generally through the Security Cooperation Organization (SCO), that the Implementing Agency with procurement responsibility for the required item and/or service procure a defense article(s) and/or service(s) from a specific organization or entity, or that competition be limited to specific organizations or entities. The Defense Attaché or comparable purchaser’s representative in the United States may also submit these requests to the Implementing Agency. FMS customers need not provide a rationale for the request.

C6.3.4.1. Legal Requirements. The exception is available where either the terms of an international agreement or a treaty between the United States and a foreign government, or international organization or the written directions of a foreign government reimbursing the Implementing Agency for the cost of the acquisition of the supplies or services (such as a signed Letter of Offer and Acceptance (LOA)), require the use of other than competitive procedures (FAR 6.302-4). The use of other than competitive procedures for the acquisition must be documented in accordance with 10 U.S.C. section 2304(f)(2)(E); DFARS 206.302-4(c). The nature of this document may be described in Implementing Agency regulations.

C6. The exception may be applied to LOAs funded with non-repayable FMF or MAP funds when requested in writing by the foreign country. Purchaser requests for procurements from foreign sources of supply using other than full and open competition may be considered only with the concurrence of DSCA (Strategy, Plans, and Policy Directorate (SPP), and Office of the General Counsel (OGC)). See Section C4.4.1. An Offshore Procurement Determination is required for any proposed procurement from foreign sources of supply if the procurement will be funded with FMF. See Section C9.

C6. This exception is not available for use with Building Partner Capacity (BPC) programs, which are funded with U.S. appropriations. See Table C15.T4, line 11, for guidance to the BPC Requesting Authority on sole source procurement.

C6.3.4.2. Timing of Requests. Official written direction to use other than full and open competition should be submitted in the LOR, or it can be submitted separately with a reference to the LOR. The designation of a procurement to be conducted using other than full and open competition for an LOA that has already been accepted by the foreign partner and implemented would be an exception to policy subject to acceptance by the Implementing Agency. If this situation occurs, the LOA may be amended to include the designation for other than full and open competition. A Modification may be used instead of an Amendment if the request for other than full and open competition is made by the official who requested the LOA, his or her replacement, or an official known to have equivalent or greater authority than the official who signed the LOA.

C6.3.4.3. Policy Requirements. Requests for other than full and open competition using the authority of 10 U.S.C. section 2304(c)(4) should be to meet the objective requirements of the purchaser and not for improper or unethical considerations. USG representatives must remain objective in providing options or recommendations to the partner and may not solicit requests for other than full and open competition. In general, the USG does not investigate the circumstances behind a foreign purchaser’s request to use other than full and open competition, and DoD contracting agencies are encouraged to defer to a foreign purchaser’s requests under the International Agreement exception to the extent that they are not aware of any indication that such requests violate U.S. law or ethical business practices. The Implementing Agency must consult with its counsel on cases where facts indicate that granting a request to use other than full and open competition may violate U.S. law or ethical business practices. If the Implementing Agency determines that a request to use other than full and open competition should not be approved, the memorandum informing the purchaser must be coordinated with DSCA (Directorate for Security Assistance (DSA) and Strategy, Plans, and Policy Directorate (SPP)).

C6.3.4.4. Subcontracts. The FMS customer may also request that a subcontract be placed with a particular firm. The contracting officer should honor subcontract placement requests from the FMS customer regarding a subcontract only if the LOA or other written direction sufficiently fulfills the requirements of FAR Subpart 6.3 (See DFARS 225.7304(a)). Risks associated with the designation of subcontractors should be conveyed to the FMS purchaser. If problems occur in the performance or integration of the component, the FMS purchaser must bear the increased costs of correcting the problem. The purchaser should be advised of this potential expense when the sole source designation is requested.

C6.3.4.5. LOA Note for Other than Full and Open Competition. The applicable LOA document must identify the designated source. See Appendix 6 for the LOA note wording.

C6.3.4.6. Coordination with Contracting Offices. The Implementing Agency sends the request for other than full and open competition to the contracting office for information and advice. The Implementing Agency also sends a copy of the implemented LOA document (containing the source designation) to the contracting officer. This is especially important when the contracting activity is separate from the activity responsible for the LOA (e.g., LOAs prepared by a MILDEP that contain items procured by the Defense Logistics Agency (DLA)).

C6.3.5. FMS Purchaser Involvement. Discussions are held with the purchaser during the development of the LOA and prior to actual implementation to ensure requirements are clear and understood. Once the LOA is signed, the purchasing activities of defense components and prime contractors implement FMS requirements using normal procurement and contract management procedures in accordance with the FAR and other directives and contractual provisions. The IA should ensure that sufficient details are included in the LOA to allow the U.S. contracting officer to negotiate and award a contract without requiring foreign country representation or direct involvement in the formal negotiation process. If the foreign purchaser wants to participate in the negotiation process, the following policies apply.

C6.3.5.1. Source Selection. The DoD Components do not accept directions from the FMS purchaser as to source selection decisions or contract terms (other than the special contract provisions and warranties referred to in condition 6.1 of the LOA), nor is the FMS purchaser permitted to interfere with a prime contractor’s placement of its subcontracts. However, to the extent permitted in Section C6.3.4., the DoD Components may honor an FMS purchaser’s sole source request for the designation of a particular prime or subcontract source for defense articles or defense services.

C6.3.5.2. Negotiations. During the contracting process between the contractor and the DoD, the contracting officer should consult with the FMS purchaser about major contractual matters, especially any matter that could be perceived as inconsistent with or significantly different from the LOA. As specified in the DFARS 225.7304(b), FMS purchasers should be encouraged to participate with USG acquisition personnel in discussions with industry to develop technical specifications, to establish delivery schedules, identify any special warranty provisions or other requirements unique to the FMS purchaser, and review prices of varying alternatives, quantities, and options needed to make price-performance tradeoffs. The degree of participation of the FMS purchaser during contract negotiations is left to the discretion of the contracting officer after consultation with the contractor. USG personnel should not release any contractor proprietary data, except in those limited cases where the contractor authorizes release of specific data. The U.S. contracting officer may, upon the purchaser’s request and at his or her discretion, provide the purchaser a version of the Statement of Work (SOW) that redacts any information companies deem proprietary, and any information that cannot be released under technology security and foreign disclosure policy as information only and not for general comment. International customers may have 30 days to comment on areas where they can demonstrate that there is a significant deviation from the LOA. Requests by the FMS purchaser for rejection of any bid or proposal will not be honored. Any questions regarding these provisions are forwarded to the Director, DSCA.

C6.3.6. Requests for Contractual Data.

C6.3.6.1. Price Information. If the purchaser requests additional information concerning FMS contract prices, the contracting officer should, after consultation with the contractor, provide sufficient information to demonstrate the reasonableness of the price and reasonable responses to relevant questions concerning contract price. This may include tailored responses, top level pricing summaries, historical prices, or an explanation of any significant differences between the actual contract prices and the estimated contract price included in the initial LOA price.

C6.3.6.2. Contractual Documents. Since all pertinent information and contractual obligations between the DoD and the purchaser are identified in the LOA, there is no need to provide a copy of the contract to the purchaser. If the contract is unclassified and only includes requirements for the requesting country, release can be considered subject to restrictions on release of contractor proprietary information. Releasable information does not include internal documentation such as negotiation or pricing memoranda. If the contract is classified, contains USG requirements, or contains other purchaser requirements, release is not authorized. Any questions or requests for exceptions to these provisions must be forwarded to DSCA (Office of the General Counsel (OGC)).

C6.3.7. Contingent Fees. Purchasers must approve contingent fees (to include agents’ fees and sales commissions) prior to contract award. See DFARS 225.7303-4. The contracting officer or head of the procuring activity uses criteria contained in the FAR to determine if an agent(s) is bona fide. If the agent is bona fide, the following policies apply to the inclusion of these fees in FMS cases.

C6.3.7.1. Prior Notification of Fees to Purchaser. Purchasers must be advised of all contingent fees (including agents’ fees and sales commissions) associated with an FMS case prior to or in conjunction with LOA submission to the purchaser unless the purchaser has indicated otherwise. For agents’ fees and sales commissions, such notices include: the name and address of the agent(s); the estimated amount of the proposed fee, and the percentage of the sale price; and a statement indicating one of the following: appropriate officials of DoD consider the fee to be fair and reasonable; or, a portion of the proposed fee is considered to be fair and reasonable (provide rationale); or the USG cannot determine the reasonableness of the proposed fee. This statement is normally included as an LOA note, See Appendix 6. The note may include the contractor’s justification for the proposed fee and other data requested by the purchaser. The note also includes a statement that purchaser acceptance of the LOA constitutes the purchaser’s approval of the sales commissions and fees involved.

C6.3.7.2. Purchaser Approval Thresholds.

C6. The following countries must approve all contingent fees (regardless of dollar value) before they can be considered allowable FMS contract costs: Australia, Egypt, Greece, Israel, Japan, Jordan, Korea (Republic of), Kuwait, Pakistan, Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, and Venezuela. Any LOA offered to these countries or entities that include contingent fees, must include the applicable contingent note identified in Appendix 6.

C6. Sales commissions and fees applicable to FMS contracts for other countries cannot exceed $50,000 per contract (including all modifications and subcontracts thereto), per country, unless these fees have been identified and approved in writing by the purchaser before contract award. All such contingent fees must be justified and supported based on the criteria cited in the FAR and DFARS.

C6.3.7.3. Post-LOA Notification to Purchaser. If contingent fees (including agents’ fees and sales commissions) are not identified prior to sending the LOA to the purchaser for signature, the purchaser should be notified as soon as the fees are known. To be allowable costs under the contract, the purchaser must approve the payments in writing before contract award. Contract award may be delayed pending a written response from the purchaser. If written approval is not obtained, the contract can be awarded but must include a provision that the unapproved contingent fees are not allowable costs.

C6.3.7.4. DSCA Coordination. For LOAs that include contingent fees (regardless of dollar value of the case), all correspondence with a purchaser on the subject of contingent fees relative to Price and Availability (P&A) data or an LOA, and all post-LOA notifications about contingent fees must be coordinated with DSCA (Strategy, Plans, and Policy Directorate (SPP)). For agents’ fees and sales commissions, the written submission must contain a certification that the agent is bona fide in accordance with FAR criteria, and must include the rationale for reasonableness of the fee or an explanation if the reasonableness of the fee cannot be determined.

C6.3.7.5. Disallowance of Contingent Fees. The contracting officer cannot approve as allowable costs any contingent fees not approved by the purchaser. If the contracting officer or procurement activity determines the agent is not bona fide for reasons other than fee reasonableness, an LOA cannot be offered until the unallowable costs are deleted by the contractor.

C6.3.7.6. Proprietary Information. Inclusion of an LOA note with respect to contingent fees (including agents’ fees and sales commissions) should not be deemed, with respect to distribution and availability of LOAs, as altering the proprietary nature, if any, of such data for the purpose of 18 U.S.C. 1905.

C6.3.7.7. Contingent Fees for Commercial Contracts. Contingent fees may not be funded with Foreign Military Financing (FMF) funds.

C6. FMF Credit Non-Repayable. In a certification to DSCA (Direct Commercial Contracts), the contractor must disclose contingent fees for contracts financed with FMF Credit Non-Repayable funds. It is the responsibility of the contractor to prove that payments of any contingent fees are not financed with FMF Credit Non-Repayable funds.

C6. FMF Credit Repayable. In a certification to DSCA (Direct Commercial Contracts), the contractor must disclose contingent fees for contracts financed with FMF Credit Repayable funds. Contingent fees in direct commercial contracts financed with FMF Credit Repayable funds must be limited to $50,000 per contract for countries other than those specifically listed in the DFARS. It is the responsibility of the contractor to prove that payments of any contingent fees are not financed with FMF Credit Repayable funds.

C6.3.7.8. Appointment of an Agent. For FMS, it is USG policy to deal directly with purchasers. An agent may be designated by the purchaser to act as an agent for the receipt of FMS Government Furnished items, Spares, and/or Support items that are required by that agent to enable the manufacture and/or assembly or repair and/or rehabilitation of defense items procured on a direct basis by the foreign purchaser. Questions regarding agency relationships for any other purposes should be directed to DSCA (Office of the General Counsel (OGC) and Strategy, Plans, and Policy Directorate (SPP)). Figure C6.F1. should be used to designate an agent.

Figure C6.F1. Form Letter - Appointment of an Agent

C6.3.8. Warranties. The DoD obtains the same warranties for FMS as it does for itself. These warranties are exercised within the Supply Discrepancy Report (SDR) process. The purchaser may request performance warranties, which are provided and paid for on the LOA as a defense service. Any warranty in addition to the LOA Standard Terms and Conditions, Section 6, is described in a note on the LOA. See Appendix 6. The IA must inform the purchaser, either in the LOA note or by documentation such as a technical bulletin accompanying the item when shipped, of any steps necessary to maintain or exercise rights under these additional warranties. The purchaser must submit an SDR within the time limitations of a warranty applicable to an item.

C6.3.9. Offsets. DFARS 225.7303-2(a)(3) allows U.S. contractors to recover, under FMS contracts based on LOAs financed wholly by purchaser cash or repayable FMF credits, costs of any offsets that are associated with those contracts. USG agencies may not enter into or commit U.S. firms to any offset agreement. Any purchaser requesting offset arrangements in conjunction with FMS should be informed that the responsibility for negotiating offset arrangements and satisfying all related commitments resides with the U.S. firm involved. It is the responsibility of the IA to specify to DSCA, in the transmittal of any Congressional Notification, whether offset costs have been or will be included, and the amount if known. Non-repayable FMF credits may not be used to pay any costs associated with offset agreements.

C6.3.9.1. Offset Costs. Offset costs, provided by industry, should be included as part of the line item(s) unit cost in P&A data and in estimated prices quoted in the LOAs.

C6.3.9.2. Procurements. The USG position is stated in section 2.8 of the Standard Terms and Conditions. It is the contractor's responsibility to inform the IA when estimated offset costs are included in the FMS pricing information that the contractor has provided. The contractor must disclose the amount of the estimated offset costs included in the price to the USG contracting officer. The costs should be included before transmittal of the LOA for acceptance. Requests to include costs after LOA acceptance and subsequent implementation require an LOA Modification or Amendment. An offset note is included in the LOA.

C6.3.9.3. Disclosure of Offset Information. It is inappropriate for USG personnel to discuss with the purchaser the nature or details of an offset arrangement. However, if known, the fact that offset costs have been included in the P&A or LOA price estimate may be confirmed, should the purchaser inquire. The purchaser should be directed to the U.S. contractor for answers to all questions associated with offset agreements, including questions regarding their costs. IA involvement in any discussion of offset costs (beyond confirmation of the inclusion of these costs in price estimates) must be avoided.

C6.3.10. End Use Certificates (EUCs). For policy regarding vendor requests for USG signature on EUCs, refer to DoDI 2040.03 End Use Certificates (EUCs).

C6.3.11. Acquisition Planning Activities. IAs may perform certain acquisition planning activities prior to implementing an LOA if an acquisition planning activity is already funded by the FMS Administrative Surcharge per Table C9.T2. of this manual and the IA has high confidence that the LOA will be accepted by the customer and subsequently implemented. No acquisition planning activity may, in any way, commit the United States government or obligate funds in advance of case implementation. When choosing to exercise this authority, IAs must ensure early execution of acquisition planning activities does not delay LOA offer and implementation. Acquisition activities occurring after requirements definition, such as Request for Proposal release, may not commence until after case implementation.

C6.3.11.1. Allowable Activities. Allowable acquisition planning activities under this policy include: acquisition strategy formulation; acquisition planning document development, such as drafting the performance work statement/statement of work and detailed item description; cost, schedule, and performance objectives definition; funding document preparation; and other efforts to develop applicable acquisition planning documentation.

C6.3.11.2. Reporting. The DSCA Chief Performance Management Office (CPO) will monitor IA use of the authority in order to measure effects on overall case performance. To that end, IAs must submit to CPO a quarterly report identifying the types of acquisition planning activities performed under this paragraph and the amount of time spent on each activity. Reports are due on the first Tuesday of the month following the end of a quarter. The reporting template is provided in Figure C6.F2.

Figure C6.F2. Quarterly Acquisition Planning Activities Reporting Template

Quarterly Acquisition Planning Activities Data Call

Case Identifier

Case Offer Expiration Date (OED)*

Acquisition Planning Activities

FY and Quarter Acquisition Planning Activities Occurred

Estimated Business Days Applied to Acquisition Planning Activities**

Case Offered Date*

Case Implemented Date*

Contract Number

Acquisition Requirements Package (APR) Complete



Draft SOW

FY18 Q1








Draft SOW and CLIN Structure

FY18 Q2
























* DSCA Data Entry; Implementing Agency leave blank

** Number of data multiplied by number of personnel working activities. For example: two (2) Full Business day x three (3) Program office personnel = six (6) days

LOA requirements are fulfilled within existing U.S. military logistics systems. An exception to this policy is the use of the Defense Transportation System (DTS) discussed in Chapter 7. With the exception of Excess Defense Articles (EDA) or obsolete equipment, items are furnished only when the Department of Defense (DoD) plans to ensure logistics support for the expected item service life. This includes follow-on spares support. If an item will not be supported through its remaining service life, including excess and obsolete defense articles, a note in the LOA should explain any limitations on that support. See Appendix 6.

C6.4.1. Priority. Chairman of the Joint Chiefs of Staff Instruction (CJCSI) 4110.01E, Joint Material Priorities and Allocation, establishes priorities for filling requisitions based on the purchaser’s Force Activity Designator (FAD) (established by the Chairman of the Joint Chiefs of Staff (CJCS)) and on the Urgency of Need Designator (UND), assigned on the requisition. FADs are ranked with FAD I being the highest and FAD V being the lowest priority. Per Enclosure (D) of CJCSI 4110.01E, the Joint Materiel Priority Allocation Board (JMPAB) is chartered to act on the Chairman’s behalf to review and act upon requests for changes to a FAD. Upon assignment, upgrade, or cancellation of a foreign country FAD by the JMPAB, the Defense Security Cooperation Agency (Strategy, Plans, and Policy Directorate (SPP)) ensures proper dissemination of FAD decisions to the Security Cooperation (SC) community.

C6.4.1.1. FAD Changes. Requests to change a foreign country FAD should be made by the Combatant Commander. The Combatant Commander’s request to increase a foreign country FAD must be in accordance with Appendix A to Enclosure A of CJCSI 4110.01D and must address the Combatant Commander’s plan to alleviate the situation or condition influencing the upgrade request.

C6.4.1.2. Coordination of FAD Change. Normal day-to-day foreign country FAD change requests will be staffed using standard procedures by the CJCS. The CJCS will review and provide a decision on all Combatant Commander operational, crisis, or emergency foreign FAD upgrade requests within 24 hours.

C6.4.1.3. Security Guidance for FADs. FAD assignment to a specific country or foreign force, unit, or activity may be released only to the recipient country and to U.S. forces or agencies with the need to know and on an unclassified For Official Use Only basis. FAD assignments to a specific country are not released to other foreign countries. Compilations of foreign FAD assignments, combining two or more foreign countries or territories, are classified SECRET.

C6.4.2. Project Codes. Project codes assigned by the CJCS provide precedence for requisition processing and visibility within the transportation process. For processing purposes, requisitions with a CJCS 9-series project code will be ranked above all other requisitions with the same FAD and Urgency of Need Designator. CJCS project codes assigned to the Security Cooperation community are the “9-alpha-alpha” and “3-juliet-alpha” series. The “9-alpha-alpha” series identify a project, operation, program, force, or activity sanctioned by the CJCS that requires heightened logistic infrastructure visibility and support. The “3-juliet-alpha” series identifies a unique military project or operation when a CJCS project code is warranted for tracking purposes, but normal materiel allocation is to remain unaffected.

C6.4.3. Requisitions. The IA or the purchaser may initiate Military Standard Requisitioning and Issue Procedures (MILSTRIP) requisitions under implemented LOAs. Table C6.T2. identifies service points of contact for requisition entry.

Table C6.T2. Points of Contact for Requisition Entry




U.S. Army Security Assistance Command
54 M Avenue, Suite 1
New Cumberland, PA 17070-5096

For Infrastructure and Engineering LOAs:
Headquarters, U.S. Army Corps of Engineers
ATTN: Security Cooperation Branch (CEMP)
441 G Street, NW
Washington, DC 20314-1000


Naval Supply Systems Command Weapon Systems Support
Philadelphia, PA 19111-5095

Air Force

Air Force Security Assistance Center
Wright-Patterson AFB, Ohio 45433-5000

C6.4.3.1. Standard Requisitions. For standard requisitions (non-Cooperative Logistics Supply Support Arrangements (CLSSA)), the Inventory Control Point (ICP) processing the requisition generally issues the assets down to the item’s reorder point level. To the extent authorized by the Type of Assistance (TA) and Source of Supply (SOS) codes assigned to the LOA line item, requirements that cannot be satisfied at reorder level may be filled by one of the following methods (the following may not be inclusive of all appropriate support options.)

C6. The ICP director or designee may authorize issuance below the reorder point if the item can be readily procured; assets are due in from contract; and/or U.S. Forces’ support is not jeopardized.

C6. The Item Manager may place the requirement on backorder. Once the procurement lead-time elapses, the backorder is eligible for release.

C6. The Item Manager may initiate an immediate procurement action.

C6. If an item is supported by direct vendor delivery, prime vendor, or contractor custody inventory, the requisition may be processed without delay, as long as the contract allows Security Assistance orders and U.S. Forces’ support is not jeopardized.

C6.4.3.2. Cooperative Logistics Supply Support Arrangements (CLSSAs). CLSSA requirements are satisfied on the same basis as U.S. Force requirements in accordance with the country’s FAD and Uniform Material Movement and Issue Priority System (UMMIPS). The FAD identifies the priority that is given to a purchaser’s request. For information on what items can be provided on CLSSA cases See Section C5.4.3.3.

C6. The Foreign Military Sales Order (FMSO) I case provides for the purchase and sustainment of equity in the DoD inventory and pipeline. Following the receipt of adequate stocks to sustain the fill of incoming requisitions, which is referred to as FMSO I maturity, the FMSO I provides for 5 months of on hand stock (FMSO IA) and 12 months of on order stock (FMSO IB). The DoD Components use this equity investment (capitalization) to procure additional stocks of secondary items, in preparation for purchaser stock withdrawals.

C6. The Foreign Military Sales Order (FMSO) II case is used by the purchaser to requisition spare and repair parts that are needed to replenish in-country stocks.

C6. Terms and Conditions unique to the CLSSA program are provided with each FMSO I LOA in addition to the Letter of Offer and Acceptance Standard Terms and Conditions.

C6. The purchaser withdraws stocks from DoD inventories and deposits funds for routine FMSO I replenishment using the FMSO II case. Unless item stock levels are adequate to support all purchasers, FMSO II case requisitions received prior to receipt of augmentation stock are placed on backorder pending maturity of the FMSO I. As augmentation stocks become available, requisitions received under the FMSO II can be filled from stock.

C6. For items supplied by DLA, the IA submits requirements to DLA. The IA accepts and manages the FMSO I deposits submitted by the purchaser on DLA’s behalf.

C6. When items subject to CLSSA augmentation are transferred from one DoD Component to another, CLSSA program data and funds are provided to the receiving DoD Component during the transfer process.

C6. The DoD Components, including DLA, maintain performance standards and measurement records to show effectiveness and timeliness of CLSSA support.

C6. When there is an excess quantity of an item in DoD stock, demand records are reviewed before excess materiel is transferred or declared surplus. If CLSSA requirements caused the excess condition, IA notifies the purchasers of their liability and asks for disposition instructions.

C6. If it is necessary to reduce the level of a purchaser’s investment in the U.S. supply system or to terminate part or all of a CLSSA, closeout should minimize impact on the DoD Working Capital Fund (WCF) and the purchaser. CLSSA and other FMS purchasers pay their share of depreciation and other WCF operating costs during the life of each LOA. When a purchaser builds an initial FMSO I, then terminates the CLSSA before substantial orders are placed, and no other purchaser exists, liability may apply for assets on hand and due-in. When liability is determined, countries are required to pay for the items via the CLSSA. Purchasers have the option of receiving the items, or sending them to DLA Disposition Services. The purchaser is responsible for all disposal costs. If proceeds exceed disposal costs, the net proceeds are credited to the purchaser’s FMS trust fund account.

C6.4.4. Commercial Buying Service (CBS). The International Logistics Control Office (ILCO) is authorized to use a CBS to support FMS purchaser requirements for nonstandard and difficult to support standard items when DoD organic capability or contractual supportability is not available or timely. Existing CBS options include Parts and Repair Ordering System (PROS) and Simplified Non-Standard Acquisition Process (SNAP).

C6.4.5. Foreign Military Sales Tailored Vendor Logistics (FMS TVL). The ILCO is authorized to use DLA’s FMS TVL to support FMS purchaser requirements. An expansion of the existing DoD Tailored Vendor Logistics support program (DoD PV), FMS TVL is a supply support option that augments existing USG support. By accessing the Tailored Vendor Logistics' electronic catalog, the FMS purchaser can identify the item, price and supply lead-time with the added flexibility of being able to define special requirements and delivery needs, before submitting the requisition. In addition to providing support for standard items, this program also supports requirements for non-standard items.

C6.4.6. Diversions and Withdrawals of Materiel. Materiel procured or stocked for FMS may be diverted to meet higher priority requirements with the prior concurrence of the Director, DSCA. The following policies implement the Arms Export Control Act (AECA), section 21(i), 10 U.S.C. 138a and 2390.

C6.4.6.1. Operational Readiness Impact. Under normal circumstances, IAs fill FMS requirements from production on a first-in, first-out basis. National security considerations and foreign policy objectives may require deviation from this DoD policy in order to expedite equipment delivery to a purchaser. Items may be diverted from production or from U.S. Forces to meet high priority FMS requirements. While the language of AECA, section 21(i) pertains only to shipments from stocks, impacts can occur when the Department of Defense diverts materiel from production. The diversion or withdrawal must not significantly lower the operational readiness of U.S. Forces as determined by the DoD Component.

C6. If the MILDEPs or the Office of the Secretary of Defense (OSD) staff identify an undesirable effect on U.S. Forces’ combat readiness, the Under Secretary of Defense for Policy (USD(P)) through DSCA will request a written MILDEP assessment. The MILDEP Secretary verifies the assessment and submits it to USD(P) and the Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) for review. USD(P) refers the coordinated recommendation to the Secretary of Defense for review and decision.

C6. Any diversion or withdrawal that would impact U.S. National Guard or Reserve Forces is coordinated with DSCA, who coordinates the proposal with the Assistant Secretary of Defense for Reserve Affairs (ASD(RA)), pursuant to DoD Instruction 1225.06. If the proposed diversion or withdrawal includes tanks, a determination that the proposed sale will not increase the shortage of tanks in the U.S. National Guard or Reserve during the current 5-year defense plan is included in the Congressional notification and Congress is advised of the plan to replace the tanks.

C6. Report to Congress - Diversions. The AECA requires a report by the President to Congress when a sale could have significant adverse effect on the combat readiness of the U.S. Armed Forces. There may be instances when the MILDEP Secretary determines that a proposed supply action warrants Secretary of Defense’s review, but does not constitute a significant adverse impact on DoD requiring a Presidential report to Congress. When the MILDEP Secretary refers a potential impact case to USD(P) and USD(A&S), the referral includes the purchaser, sale value, item description, and an assessment. The assessment must state whether the supply action affects the Service’s readiness, or has other impacts that warrant Secretary of Defense’s review, or constitutes a significant adverse impact requiring either alteration or termination of the supply action, or a Presidential report to Congress.

C6. The Secretary of Defense determines whether the DoD provides items on an expedited basis and whether the impact of doing so is significant within the meaning of AECA, section 21(i).

C6. When the Secretary of Defense advises the President of the requirement for a report to Congress, the Secretary provides the analysis relevant to the justification and certification called for in AECA, section 21(i)(1)(E). No Presidential report is required if the decision is not to make a sale. AECA, section 21(i) also applies when the significant adverse effect becomes apparent after a sales contract is concluded. However, no Presidential report is required with respect to supply action under a sales contract where the supply action is altered in order to avoid a significant adverse effect on U.S. combat readiness that would otherwise occur.

C6.4.7. System Support Buyout. For weapons systems soon to be obsolete to U.S. Forces and not supported under a CLSSA, the responsible MILDEP must identify the unique and common items associated with the system to DLA and provide the close out date for U.S. use of the item. The MILDEP and DLA identify purchasers that have this system and associated unique spare parts and advise them of the system phase out. The purchaser should have a minimum of 2 years to place a final order for secondary items to support the system for its remaining useful life. After this time period, the following are authorized:

C6.4.7.1. Items with no demand for 4 years, including the system support buyout period, may be processed for disposal.

C6.4.7.2. Items with demand during the 4-year period may be retained and managed in support of Security Assistance (SA) requirements.

C6.4.8. Repair Programs.

C6.4.8.1. Direct Exchange (DX). A repairable item may be exchanged for the same type serviceable item in DoD stocks under certain conditions.

C6. The repairable item must have been obtained under the AECA, must not be an end item, and the DoD must have requirements for the repairable item. Programs may be executed under defined line, blanket order, or CLSSA cases.

C6. Purchaser funds must be available for the cost of the serviceable replacement. The requisition for the replacement is generally filled according to normal supply procedures.

C6.4.8.2. Repair and Return (R&R). R&R is used when a serviceable replacement is not available from stock on hand or due in within a reasonable time, if the FMS purchaser requests R&R of a specific item, or if the item cannot be repaired in the host country. Repair of a purchaser-owned article requires the repairable article be returned in accordance with the terms and conditions listed on the LOA. The FMS purchaser must wait for repair of the article. Supply Discrepancy Reports (SDRs) for non-receipt of R&R items must be submitted in accordance with Section C6.

C6. A concurrent modification is allowable in instances where a FMS purchaser directs the movement of R&R funds between two or more of their LOAs. See Section C6.7.2.3. and Section C9.11.6. There may be instances where the FMS purchaser needs to utilize R&R funds on one of their LOAs to support the R&R of materiel from another of their LOAs. This is allowable when directed or approved by the FMS purchaser's designated representative, there is available R&R funding to support the additional requirement, and the scope of the R&R line being used is not exceeded. Transportation Plans will be updated as applicable.

C6.4.9. Returns. Returns may be accepted if the defense article was previously provided under the AECA, is not significant military equipment (SME), and is in fully functioning condition without need of repair or rehabilitation. In addition, there must be either a DOD or FMS funded requirement for the defense article. The purchaser’s FMS account is credited with the appropriate type of funds, dependent upon the buyer.

C6.4.9.1. Return credits may be applied to collections of specific cases when requested by the purchaser.

C6.4.10. Supply Discrepancies. The USG makes every effort to provide the correct defense article or service in the quantity and quality shown in the LOA. In the event of a discrepancy, the purchaser submits an SDR using (Standard Form (SF) 364). Instructions for SF 364 completion, DoD processing timeframes, and responsibilities are located in the Defense Logistics Management System (DLMS) Manual, DLM 4000.25-M, Volume 2, Chapter 17. The SDR process is not applicable to BPC cases.

C6.4.10.1. Timeframes for Submission. SDRs are more easily resolved when they are submitted promptly. The longer the time between when the discrepancy occurs and when the SDR is submitted, the more difficult it is to find supporting documentation and informed personnel. The purchaser agrees to submit an SDR no later than one year after delivery or after passage of title to the defense articles, whichever comes first. For defense services, the purchaser agrees to submit an SDR no later than one year after the end of the scheduled period of performance of the defense service. SDRs submitted beyond these timeframes will be disallowed by the USG unless the USG determines that unusual and compelling circumstances involving latent defects justify consideration of the claim. SDRs for non-shipment or non-receipt will be disallowed by the USG if such claims are received more than one year after the scheduled delivery date or initial billing, whichever is later. Consideration may be given to receiving claims for non-shipment or non-receipt made more than one year after the scheduled delivery date to the extent that the actual delivery date is later.

C6. The Purchaser agrees to report misdirected or unordered shipments. The Purchaser further agrees to report such shipments containing items that are identified as classified/sensitive materiel, and/or arms, arms parts, or explosives, within 24 hours of discovery, regardless of dollar value, for disposition instructions from the USG. The Purchaser agrees to ship such classified/sensitive materiel, and/or arms, arms parts, or explosives within 30 days of USG direction for such return. For all other items, the Purchaser agrees to ship discrepant articles within 180 days of receiving USG direction for such return. When appropriate, the USG may direct the Purchaser to expedite the return of the discrepant articles so the source of supply can inspect and evaluate the items prior to issuing further direction.

C6.4.10.2. Time limits for reporting discrepancies relating to contractor warranties are prescribed in the individual warranty clauses and/or contracts. SDRs must be submitted by the purchaser within the contractor warranty timeframe, even when the warranty timeframe is less than one year after delivery or passage of title to the defense articles or less than one year after the scheduled period of performance of the defense service. SDRs are processed only when the estimated value is $200 or greater regardless of the type of discrepancy except for misdirected or unordered shipments as described in Section C6. This minimum value includes the value of the item plus any transportation and handling costs. Purchasers may submit SDRs regardless of the dollar value so that problems can be documented, but only those over the minimum dollar value are reviewed for possible compensation.

C6.4.10.3. Causes of Discrepancies. Supply discrepancies result from shortages or overages, improper packing or marking, duplicate shipments, incorrect items, and condition or quality discrepancies, including damage, prior to release to the carrier by the originating shipper. Supply discrepancies also result from documentation and/or billing errors, deficiencies in the performance of services, and instances where no evidence of shipment (signed carrier receipt and shipping document) can be produced by the shipper. The LOA Standard Terms and Conditions, Figure C5.F4., set forth assumptions of risk for the purchaser.

C6.4.10.4. SDR Responses. The IA, in conjunction with the DoD or commercial supply source, resolves SDRs and determines financial responsibility. The IA designates a single point of contact for SDR corrective action. Only this point of contact and DSCA are authorized to accept and convey USG liability or originate a commitment for corrective action. Commitments to the purchaser for U.S. financing of discrepancies are not made until all reviews are complete. SDR responses should be provided by the IA within timeframes established by DLM 4000.25-M, Volume 2, Chapter 17. The IA SDR point of contact approves extensions.

C6.4.10.5. SDR Documentation. A complete document package prepared by the IA is key to effective SDR resolution. Table C6.T3. lists the required items. DSCA will return a deficient document package for corrective action.

Table C6.T3. Supply Discrepancy Report (SDR) Documentation Requirements





SF 364

Copy of the SDR, SF 364, and supporting data from the purchaser.


LOA Documents

Copy of the LOA and any Amendment or Modification bearing on the discrepancy.


Chronology of Events

The following statement should be included – it covers pertinent events for most SDRs:

The SDR was filed within the time period allowed by the LOA, which in this instance is [time period on the LOA] from [the date of shipment/the date of furnishing of services or the date of billing]. Date of [shipment/completion of services] was [date]. Date of billing was [date]. The SDR was received by [organization] on [date] with document origination date of [date signed by initiator].


Key Actions

Principal SDR processing actions and dates, present status of any assets, and other information pertinent to the SDR background.


General Counsel Position

An IA General Counsel position regarding USG liability, to include:

This office was furnished relevant documents pertaining to SDR [number]. The determination of USG liability for this SDR is supported by [list LOA General Terms and Conditions paragraph(s), footnotes, attachments, legal principle, legal precedent, or other bases for the determination].

Where relevant, the General Counsel opinion must discuss USG claims against the contractor that supplied the allegedly discrepant defense article(s).



A list of options, with costs, to remedy the SDR. In addition to this list, the IA should address the following items as applicable:

  1. article or service received vice what was stipulated in the LOA;

  2. whether the supply source repurchases the item(s), hold the item(s) for DoD/FMS sale, repair, or replace the item;

  3. detailed cost estimates, including transportation, temporary duty (TDY), and other associated charges for each remedy; and,

  4. if rework or repair is indicated, include source documents from the office responsible for correcting the SDR upon receipt of authority.


Preventive Action

Discuss policy, procedure, or systems change; education; or other actions to reduce probability of recurrence.


Retention of Records

Show status of records required for resolution, including present and anticipated preservation.

C6.4.10.6. Shipment Documentation. Any movement document or receipt, signed by a carrier representative, showing that the U.S. shipped or released materiel to a carrier for shipment to the country’s designated representative, constitutes evidence of shipment. Such documents generally show the quantity; National Stock Number (NSN); mode of shipment; date; Transportation Control Number (TCN); notice of availability number; bill of lading, parcel post insured, or registered number; addressee; vessel, voyage, or flight number (to the extent possible); and names of the shipper and carrier. This information is essential for adjudication of SDRs. If proof of delivery to a carrier is requested and the freight forwarder has not received the consignee copy of the bill of lading, then a duplicate of the appropriate documents establishing evidence of shipment is provided to the purchaser’s representative.

C6.4.10.7. DSCA SDR Review. DSCA reviews and approves or disapproves SDRs when the IA determines the USG is liable for correction and recommends use of FMS funds in excess of $50,000; or, the SDR involves an issue likely to be raised to DSCA. When either or both of these criteria are met, the IA must submit a complete SDR package through its Headquarters which meets all documentary and analysis requirements in accordance with Table C6.T3. After Headquarters endorsement of the SDR package, the SDR package will be submitted to DSCA (Directorate of Business Operations (DBO) and Strategy, Plans, and Policy Directorate (SPP)). DSCA will make a final decision on the SDR within 30 days of receipt of the SDR package.

C6.4.10.8. SDR Financial Guidelines. AECA, sections 21 and 22 require that the USG recover full costs. This requirement applies to SDRs. When purchasers re-requisition items, the current price is paid even if the item was initially released at a lower price. Purchaser problems involving Government Furnished Equipment and Materiel (GFE/GFM) obtained under AECA, section 30 (See Section C11.5.) should be addressed to the U.S. contractor possessing the GFE/GFM. FMS funding and FMS SDR processing do not apply to these sales. GFE/GFM items purchased under the auspices of an FMS case are processed under normal SDR guidelines.

C6.4.10.9. Financing Approved SDRs. Table C6.T4. shows the most common SDRs and methods of financing when an IA or DSCA determines an SDR should be approved. Corrections are financed:

C6. Within contract costs for Defense Working Capital Fund (DWCF), Operation and Maintenance (O&M), Procurement Appropriation (PA), and Research, Development, Test and Evaluation (RDT&E) items obtained from procurement.

C6. Within the surcharge for DWCF items or services supplied from stock.

C6. From the O&M, PA, or RDT&E account for O&M, PA, or RDT&E items supplied from stock.

C6. From the FMS (Administrative, Transportation, or Packaging, Crating and Handling (PC&H)) fund accounts when sources above do not apply. These SDRs are financed from current year FMS Administrative or Logistics Support Funds budget obligation authority, or reissuance of past unused budget authority. The DSCA FMS Administrative Budget Call, issued on an annual basis to MILDEPs and Defense Agencies, provides procedural guidance for the inclusion of estimated SDR costs that are financed from FMS administrative funds.

Table C6.T4. Methods of Financing Approved SDRs

Nature of Discrepancy

Source of Supply

FMS Funds 1
(Admin, PC&H, Transportation)

USG Funds/Appropriations

Damage, Defect, or Other Deficiency


Generally not applicable except where U.S. action or inaction caused inability of USG to obtain satisfaction from contractor for purchaser.

Generally not applicable. Usually corrected by contractor within existing contract terms.


Peripheral costs of correction (e.g., testing, transportation, TDY)

Replacement, refund to purchaser account, or rework of defective items for costs not listed under FMS Fund heading.

Non-receipt or Shortage


Generally not applicable except where U.S. action or inaction caused inability of the USG to obtain satisfaction from contractor for purchaser.

Generally not applicable. Usually corrected by contractor within existing contract terms.


Not applicable except where item shipped DTS and U.S. action or inaction caused inability to obtain satisfaction from carrier. See next column.

(Shortage/misdirection at origin based on no evidence of shipment.) Credit to purchaser account, charged to USG fund or appropriation initially credited. Lost items are absorbed as inventory losses.



Generally not applicable

Generally not applicable


Generally not applicable. See next column.

If billed and purchaser does not want item - amount charged is refunded to purchaser account and USG appropriation fund charged. If USG directs no return, absorb as inventory loss.

Incorrect Item


Generally not applicable. See next column.

Generally not applicable. Normally corrected by contractor within contract terms.


Generally not applicable. See next column.

Unless the item manager chooses to reissue, refund to the purchaser account, charged against appropriation or fund initially credited. If USG directs no return, absorb as inventory loss.

Missing or Improper Documentation


Generally not applicable. See next column.

Generally not applicable. Normally corrected by contractor.


Generally not applicable. See next column.

Issue documentation and/or proper items without additional charge to FMS purchaser. If not available for issue, refund against USG appropriation/fund initially credited. If USG directs no return, absorbed as inventory loss.

Duplicate or Erroneous Billings

From procurement2 or stock

Generally not applicable. See next column.

Refund or adjustment to purchaser account. Adjustments charged against appropriate USG or purchaser account.

Loss of Purchaser Item (provided for repair, etc.)


Reimburse purchaser when item is nonstandard (no longer maintained in USG inventory).

Reimburse purchaser when item is DoD standard (currently maintained in USG inventory) and the loss is bookkeeping or inventory control only.

1 : In some instances, Administrative, Transportation, or PC&H funds may complement other financing for SDR resolution. For example, it could be appropriate to reimburse PC&H or transportation costs for initial delivery of an overage when this is the sole means for resolution.

2 : Procurement includes defense articles and services acquired to fill the FMS requirement and therefore not supplied from on-hand DoD assets. Both stock and procurement guidance may apply in some instances (e.g., item on hand in DoD inventory reworked through a commercial contract prior to shipment).

The USG SC community goal is to provide consistent, incomparable support to our purchasers. Towards this goal, thorough reviews are conducted periodically to ensure accurate and timely status of customer's programs. There are several categories of reviews: USG Annual Case Reviews/Reconciliations, which are discussed in SAMM, Chapter 16; Financial Management Reviews outlined in SAMM, Chapter 9; and General FMS Case Reviews that are detailed in the following sections.

C6.5.1. General Case Reviews. Reviews, including those with the customer, are an excellent opportunity for ensuring prompt issue resolution, data integrity, and accurate accountability. General case review types are outlined in Table C6.T6.

C6.5.2. Reasons for Case Review. The following items influence a decision about the need for a case review: USG resources, desires or requirements of the FMS purchaser, political visibility or sensitivity, political-military changes in a region, and the size and complexity of the program. Review objectives must be clearly identified, including why the FMS review is being conducted, as well as post-review deliverables and desired outcomes. A purchaser nation's internal policy or legislation may require periodic information about the status of country accounts, issues, cases, and programs. The preferences and desires of the purchaser regarding the conduct of reviews should be accommodated to the greatest extent possible. See Section C6.5.7. for guidance about appropriate funding for these reviews. The number and type of reviews should be documented in the LOA as explained in the manpower matrix in Table C9.T2.

C6.5.3.Cultural Days as part of FMS Case Reviews. A cultural day is a day included in the agenda of an FMS case review for the purpose of providing U.S. personnel an appreciation of a host nation's culture. Cultural days may be touring an area in the host country, attending cultural events, or participating in various activities intended to provide an awareness of the host nation's culture. Cultural days for USG security cooperation community personnel must include attendance by both the USG and the international partner. Before a cultural day can be included in the agenda of an FMS case review, it must be approved by both the IA and the international partner. A day with no scheduled activities (that is not a travel day as permitted by the JFTR) is not authorized. Personnel may take leave in conjunction with authorized travel.

C6.5.4. Frequency and Timing of Case Reviews. The frequency and timing of reviews depend on the urgency of the review, the meeting purpose, purchaser funding, budget timelines, and program events. FMS case reviews should be conducted at least once per calendar year but they can be done more frequently if needed. For external reviews (those that involve the purchaser), the frequency and timing are coordinated with the purchaser. Table C6.T5. shows the normal frequency and timing of each review. When scheduling a review, purchaser and USG holidays, weekends, and personnel changes (e.g., SCO, purchaser leadership) should be considered. Because FMS reviews for a specific purchaser or program often involve many of the same people, reviews should be consolidated whenever practical.

Table C6.T5. Frequency and Timing of Reviews Matrix

Review Type

USG Representation




  • OSD/Policy (USG chair)

  • Department of State (DoS)

  • Joint Chiefs of Staff

  • Defense Security Cooperation Agency (DSCA) (may chair a subcommittee or working group)

  • MILDEPs/IAs (if requested)

  • USD(A&S), OUSD(C) (if requested)

  • Others as needed

Varies - some reviews are held on a regular basis, usually annually.

Based on determination by policy-level officials.


  • DSCA (USG chair)

  • MILDEPs/IAs (if required)

  • SCOs

  • Defense Finance & Accounting Service (DFAS) (if required)

  • Other interagency departments (e.g., DoS, Commerce, Homeland Security) (if required)

Usually Annually

May be driven by purchaser funding and budgeting timelines.


  • MILDEPs/IAs (USG chair)

  • SCOs (if required/requested)

  • DSCA (if required)

  • DFAS (if required)

  • Contractors (if required)

Usually Annually

May be driven by purchaser funding and budgeting timelines.


  • IA's and Program Management/Executive Offices (USG chair)

  • DFAS (if required)

  • DSCA (if required)

  • SCOs (if required)

  • Contractors (if required)

  • Others as needed

Based on milestone plan established during case development as referenced in the LOA (and refined over time).

Event-driven based on established milestones.

Internal (USG only)

  • Varies, depending on review purpose

Varies - although some internal reconciliation reviews may be held annually.


C6.5.5. Scope of Reviews. Each review type has a corresponding scope of what is typically covered (Refer to Table C6.T6.). This is to ensure that an appropriate level of detail is addressed, that the best suited USG personnel attend and that expectations are clear to all attendees.

Table C6.T6. Scope of FMS Reviews

Review Type


Country-Level (e.g., FMR, Tri-Service SAMR)

  1. DSCA-chaired

  2. Programmatic/financial and/or logistical orientation

  3. Higher-level representation

  4. Purchaser: Flag officer or civilian equivalent co-chair

  5. Summary case-level visibility

    1. Case closure

    2. Standardized format

    3. Delivery status

    4. Excess funds

    5. Discrepancy resolution

  6. Forum to address FMS policies/procedures and SA/SC issues

Service-Level (e.g., SAR, CRR)

  1. IA lead component chairs

  2. Can be oriented by purchaser ICS or IA

  3. General status briefings: major weapon systems, etc.

  4. Driven by magnitude of purchaser and/or IA issues

  5. Forum to address FMS policies and procedures

  6. Purchaser and IA representation driven by agenda topics

  7. May involve contractor personnel

  8. Line/contract-level detailed review

Program-Level (e.g., PMR)

  1. IA/PMO-chaired

  2. Covers all aspects of a specific weapon system/program/case/cadre of cases

  3. Line/contract-level detailed review addressing:

    1. Obligations/contract awards

    2. Expenditures

    3. Deliveries

    4. Unused funds

    5. Programming of current and future requirements

    6. Discrepancy resolution

  4. Purchaser represented by head of its PMO

  5. Driven by key milestones in program life cycle

  6. Often involves contractor personnel


  1. IA prepares this annually

  2. Provide financial, acquisition, and logistical status for each line on the case

  3. Review the payment schedule for changes as necessary

  4. Provide in an electronic or paper format

  5. There is no in-person meeting associated with this review

C6.5.6. Representation at Case Reviews. Senior officials can co-chair case reviews, but detailed discussions require the participation of the managers who are responsible for the day-to-day operations of the program or weapon system under review. The rank of the lead USG review participant should be equivalent to that of the lead purchaser participant. Controlling the number of participants at each review is important, but it is also important to include subject matter experts who can adequately cover anticipated topics or issues. The USG meeting chair ensures each participant has a distinct, active role in the review. If topics beyond participants' expertise are discussed or issues are raised that cannot be resolved during the review, participants should research answers/solutions after the review and follow-up appropriately to all within a week. For FMS purchaser-hosted reviews, Security Cooperation Organizations (SCOs) coordinate the administrative arrangements, including lodging and transportation, and they help the visiting team as appropriate and necessary.

C6.5.7. Standardized Review Formats. Standard formats, meeting procedures, and terminology help participants clearly understand the review processes. Figure C9.F7. provides the standard format for use in all DSCA Financial Management Reviews (FMRs). Standard formats are preferred, but changes and deviations are acceptable when other critical program or financial information must be discussed. Submit requests for changes and deviations to this format to DSCA (Directorate of Business Operations (DBO)).

C6.5.8. Requirements and Guidelines for General Case Reviews. Guidelines and requirements for general case reviews are provided in Figure C6.F3.

Figure C6.F3. Requirements and Guidelines for General Case Reviews

C6.6.1. Suspension. If the Department of State (DoS) determines that it is necessary to suspend Security Cooperation (SC) to a particular country, it issues guidance for execution. Upon receipt of this guidance, the DSCA (Integrated Regional Teams (IRT)) issues appropriate instructions to the Implementing Agency (IA) informing the Geographic Combatant Command (GCC) and the Security Cooperation Organization (SCO). Suspension of delivery is not the same as Foreign Military Sales (FMS) case cancellation or contract termination action. See Section C6.8. DSCA (Integrated Regional Teams (IRT)) notifies the IA when suspensions are lifted. The following procedures apply to suspensions that impact all aspects of case execution.

C6.6.1.1. The DoS may direct that all deliveries of defense articles to the suspended country be stopped immediately. Materiel is not released to the country’s freight forwarder or to the country. In the absence of such direction, pipeline delivery cases implemented prior to the effective date of sanctions are allowed to continue regardless of term. New LOAs are not signed.

C6.6.1.2. If procurements have started, but contracts have not been awarded, the IA provides details to DSCA (Integrated Regional Teams (IRT)) and requests guidance.

C6.6.1.3. Contracts that have been awarded should continue. However, when items are ready for delivery, DSCA (Integrated Regional Teams (IRT)) issues guidance on possible diversion of the materiel to another country, to the Department of Defense (DoD) Component, or to storage consistent with DoS guidance.

C6.6.1.4. If the DoS so directs, shipments of defense articles, where the materiel is under USG control, are not loaded at the ports of embarkation. Materiel already in route to the country is not delivered; it is retained under USG control. These articles are stored by the appropriate DoD Component until DSCA issues further direction.

C6.6.1.5. Materiel ready for shipment from a contractor may be shipped to a DoD facility for segregated storage to await DSCA (Integrated Regional Teams (IRT)) disposition instructions. If economical, the materiel may be stored at the contractor’s facility. The purchaser is responsible for any storage fees if title has passed.

C6.6.1.6. Any requisitions submitted against either a Cooperative Logistics Supply Support Agreement (CLSSA) or a blanket order FMS case may be required to be held by the IA and not be filled. The Brooke Amendment is an annual provision in the Foreign Operations, Export Financing, and Related Programs Appropriations Act, , which states “No part of any appropriation contained in this Act shall be used to furnish assistance to the government of any country which is in default during a period in excess of one calendar year in payment to the United States of principal or interest on any loan made to the government of such country by the United States pursuant to a program for which funds are appropriated under this Act.” See Section C9. for more details on Brooke Amendment.

C6. The following applies under Brooke Amendment sanctions, FMS LOAs financed with FMF funds that were or may be accepted by a country on or after the effective date of the sanction will not be implemented.

C6. New or pending FMF-financed LOAs will not be countersigned or issued to the foreign partner for acceptance. FMF-funded cases implemented prior to effective date of sanctions remain in force and will be executed. Modifications or Amendments to existing FMF-funded FMS cases are allowed if they do not involve new obligation of funds.

C6.6.1.7. See Section C11.3.10. for information on restriction on the EDA program when countries are under sanctions.

C6.6.1.8. For training funded through an FMS case or under International Military Education and Training (IMET), students in training before the suspension date may complete their course and Mobile Training Teams (MTTs) and Language Training Detachments (LTDs) may complete training unless the DoS directs otherwise. This includes sequential training (proceeding to the next scheduled course). Sequential training for which funds have not been obligated shall be reviewed by DSCA (Strategy, Plans and Policy Directorate (SPP), DSA Assistance and Monitoring Programs (AMP)) on a case-by-case basis. If course costs have been obligated before the effective date of the suspension, the student is permitted to begin training and the MTTs or LTDs are allowed to begin. If course costs have not been obligated before the effective date of the suspension, students are not permitted to begin a course and MTTs and LTDs are not allowed to commence. DSCA provides instructions for students from suspended countries. See Chapter 10.

C6.6.1.9. Within 10 days of a suspension notification, the IA advises DSCA, the Combatant Commander and the SCO of the impact of the suspension. This includes identification of major items and significant secondary items that are scheduled for release to the suspended country within 30 days, and those items that are on order but have not been shipped. Not later than 21 days after the suspension, the IA must advise DSCA of all other materiel that is either in route, scheduled for shipment within 30 days, or on order but unshipped. This report also identifies the total unused dollar value on blanket order and CLSSA (FMSO II) cases.

C6.6.2. Cancellation. The DoS may extend a suspension to become a cancellation in accordance with AECA, sections 2(b) and 42(e). DSCA directs case cancellation and appropriate contract actions to include termination. DSCA provides guidance on the disposition of items, funding, etc., after a case-by-case review.

FMS cases may be amended or modified to accommodate certain changes. The Defense Security Assistance Management System (DSAMS) should be used to prepare all Amendments and Modifications unless the Amendment or Modification is classified. It is important that the purpose of the Amendment or Modification be identified on each case. It is not sufficient to state that the purpose is to increase or decrease funds or lead-times without plainly stating the reason for the increase or decrease. The case reviewer, as well as the purchaser, must know the reasons why these actions are taking place on the case. Examples include: “This Amendment increases the estimated costs of line item 002 for additional requirements as requested by the purchaser”; or “This Modification increases the estimated costs of line item 002 to cover price increases based on contractual requirements”. These are examples only; IA should identify the applicable reasons for the changes needed.

C6.7.1. Amendments.

C6.7.1.1. Use of an Amendment. An Amendment is necessary when a change requires purchaser acceptance. The scope of the case is a key issue to consider in deciding whether to prepare an Amendment, Modification, or new LOA. In defined order cases, scope is limited to the quantity of items or described services including specific performance periods listed on the LOA; in blanket order cases, scope is limited to the specified item or service categories, and the case or line dollar value. In Cooperative Logistics Supply Support Arrangements (CLSSAs), scope is limited by the LOA description of end items to be supported and dollar values of the FMSO I and II cases. A scope change takes place when the original purpose of a case line or note changes. This may be reflected through either an increase or decrease in dollar value, quantity, or lead-time. (See Section C6.7.2.3. on conditions for limited scope changes through concurrent modification.) An LOA note revision can also be considered a scope change if it alters the original purpose of the line or case. Major increases in scope such as addition or deletion of Significant Military Equipment (SME), including Major Defense Equipment (MDE), normally require the preparation of a new LOA vice an Amendment. The reasons for the changes are the key determinants as to the type of LOA document that is appropriate. Table C6.T7. provides examples of changes that require an Amendment. This list is not all-inclusive.

Table C6.T7. Amendment Requirements




Realigning or redistributing funds among case lines. The only exception is moving funds from lines on a case that have excess funds to other lines on the same case that have incurred price increases. A modification may be used in this scenario only.


Adding case lines


Deleting case lines (except for case closure)


Quantity increases or decreases to defined order lines


Dollar value increases or decreases to blanket order lines with the exception of price increases or decreases


Addition or deletion of requirements


Extending a lead time, period of performance, or availability of services for additional coverage even if there is no change in dollar value


Change in Delivery Term Code to add/delete transportation requirement


Revising line item descriptions or notes to increase or decrease scope


Changing a Military Articles and Services List (MASL) that has a corresponding configuration or scope change

C6.7.1.2. $50,000 Break Point. The DSCA database records Amendments reflecting net increases of more than $50,000 in the fiscal year the Amendment is accepted. Amendments that reflect net increases of $50,000 or less are recorded in the year of the basic LOA.

C6.7.1.2. Amendment Financial Requirements. Payments are included on the Amendment, See Chapter 9, when the existing payment schedule does not include sufficient amounts to cover costs from the expiration date of the Amendment until the next billing cycle. For under-collected cases, the amount due with Amendment acceptance also includes payments to cover current financial requirements, including termination liability, if applicable.

C6.7.1.3. Restatements. There may be times when major changes need to be made to a document after it has been countersigned and offered to the Purchaser. If the Purchaser wants to retain the existing designator (instead of canceling the offer and issuing a new case), the offered case may be restated. Restatements can be made as long as the document is in “offered” status, the purchaser has not yet signed the case, the Offer Expiration Date (OED) has not yet expired, and all changes are consistent with FMS policies and procedures. Expiration of the OED on the offered LOA or Amendment officially notifies the Purchaser that the original offer is no longer valid. Restated documents must clearly state that they are restated and supersede the previously offered version and must be coordinated and countersigned using the same procedures as the original case. A copy of the previous version(s) of the amendment must accompany the coordination request. If the Purchaser signs the original offer, it is considered an invalid acceptance because the original offer either expired or was withdrawn. This action is considered a counteroffer and a new offer should be made to the Purchaser by extending and then restating the LOA Amendment; or the case should be cancelled and a new LOA amendment (new offer) prepared.

C6.7.1.4. Reactivating Cancelled Offers. Once an offered LOA document has been cancelled, it will remain cancelled in most instances. When a DSAMS data fix is used to reactive an LOA document that has been cancelled, the data history of the LOA document will be destroyed since all DSAMS milestones associated with the LOA document will be deleted. LOAs that are not yet offered can be cancelled/reactivated at the IAs discretion. Once an LOA Amendment is offered, cancellation in DSAMS should happen when it is determined that the document is no longer needed (e.g., the country stipulates they do not want it). Cancellation cannot be used to place a document on hold. The Hold and Suspend milestones are used for that purpose. A request for a reactivation/data fix should be forwarded to DSCA (Directorate of Business Operations (DBO)) and identify what actions are required along with sufficient justification warranting the changes. DSCA (Directorate of Business Operations (DBO)) will then either post the Reactivation Authorized Milestone (DREACT) in DSAMS, along with an explanatory remark, or notify the DSCA (Information Management and Technology Directorate (IM&T) Enterprise Application Development and Support Division (EADSD)) Helpdesk, with a copy to the IA, to initiate a data fix against the document, and indicate the decision in DSAMS Case Remarks listing all deleted milestones once the data fix has been accomplished.

C6. A cancelled LOA document is reactivated by either placing the LOA document back in development status or by performing a data fix which is the deletion of DSAMS milestones. Performing a data fix places the LOA document in Offered status.

C6. If reactivation is approved, DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division) will post the Reactivation Authorized Milestone (DREACT) in DSAMS and notify the IA by e-mail. The IA will then post the MILDEP Reactivation (MILREACT) milestone in the DSAMS Case Milestone List Window and bring other systems that may have these cases loaded up to date. This takes the case back to Development status.

C6.7.1.5. If a data fix is more appropriate, the IA must determine if there have been any changes, (e.g., lines or notes originally added to this document version that may have been systemically deleted). DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division) will post the Reactivation Authorized Milestone (DREACT) in DSAMS and notify DSCA (Information Management and Technology Directorate (IM&T) Enterprise Application Development and Support Division (EADSD)) (info the IA) to data fix the document placing it in the appropriate status. Once the data fix has been completed, the IA must then post the MILDEP Reactivation (MILREACT) milestone in the DSAMS Case Milestone List Window, replace/modify data in document; e.g., lines/notes that were deleted, update the milestone as appropriate, and bring other systems that may have these cases loaded up to date.

C6.7.1.6. Pen and Ink Changes to Amendments. There may be times when minor changes to an Amendment are needed after it has been countersigned and offered to the purchaser. Minor changes can be made as long as: the Amendment is in “offered” status, the purchaser has not yet signed the Amendment, the OED has not yet expired, and all changes are consistent with FMS policies and procedures. The IA authorizes the purchaser to make any pen and ink changes by issuing a message or memorandum. A copy of the message or memorandum should be provided to Defense Finance and Accounting Services (DFAS) Indianapolis. DSAMS must be updated with any changes. Pen and ink changes should be kept to a minimum, with processing as follows:

C6. OED Changes to Amendments. The greater the period of time between offer and acceptance, the greater the likelihood of decreased accuracy of data. Requests by the purchaser to extend the expiration date are honored only after a review by the IA. The IA must ensure all pricing data are still valid for the extended period. All concerned should be advised of any consequences associated with the extension.

C6. Minor Changes to Amendments. Minor changes may include insignificant technical corrections such as a small arithmetic change that does not increase total value and administrative changes such as an address correction, initial deposit or payment schedule adjustment, or minor changes to note wording. The IA can review and approve these changes.

C6. Major Changes to Amendments. More significant changes such as revising quantities, revising unit prices or adding or deleting case lines, require a new or restated Amendment. Pen and ink changes for significant changes to Amendments may only be done in exceptional circumstances and with DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division and Strategy, Plans, and Policy Directorate (SPP)) concurrence. Changes initiated after the purchaser has signed the Amendment are accomplished through a corrective Amendment or Modification.

C6. Unauthorized Pen and Ink Changes to Amendments. When an Amendment is signed by the purchaser and returned to the IA with unauthorized pen and ink changes, it is processed as a counteroffer. The Amendment should be restated and reoffered, or cancelled and a new Amendment prepared. If the Amendment is restated, the Amendment number remains the same. If the Amendment is cancelled, a new Amendment is prepared with a new number.

C6.7.1.7. Amendment Implementation. Amendments are implemented when an authorized representative of the foreign partner signs the Amendment, any required deposit due with amendment acceptance is received by DFAS and deposited, and any required data system implementing transactions have occurred. When this occurs, the Case Manager posts the Amendment implementation milestone in DSAMS.

C6.7.2. Modifications.

C6.7.2.1. Use of Modifications. U.S. unilateral changes to an FMS case are made by a Modification and do not require acceptance by the purchaser. Concurrent Modifications are the exception for adding scope, as long as the change is not significant such as adding SME. See Section C6.7.2.3. Table C6.T8. provides examples of changes that may be done using a Modification. This list is not all-inclusive.

Table C6.T8. Modification Requirements




Price increase or decrease on a defined order line


Increasing or decreasing line values for case closure


Increases due to over commitments


Lead time slippages caused by source of supply impacts (e.g., delays in contract award or materiel deliveries)


Revising source, line manager, offer release, or type of assistance codes


Correcting accessorial charges


Minor administrative changes such as typographical errors


Revising payment schedules


Revising the Terms of Sale


Correcting the FMS Administrative Surcharge


Charges for Value Added Tax and other international requirements levied on the U.S. that must be funded by the FMS case (considered a price increase)


To add charges for storage and other U.S. requirements already received that must be funded on the FMS case


Concurrent Modifications are the exception for adding limited scope

C6. Monitoring Funds. Costs charged under an FMS case line must not exceed the funds available on that line. Program management responsibility includes analysis and tracking to ensure funding is adequate to avoid program disruption. If tracking shows that costs incurred on the line are deviating from those estimated to the degree that later deviations are unlikely to bring overall costs into balance, or Obligational Authority above line value is required at some point in the program, a Modification should be processed. A Modification should also be provided for relatively minor cost adjustments when all items are on order and prices are reasonably firm. Price increase Modifications must be provided by the IA before the actual accrued costs reported to the purchaser exceed those estimated on the case unless the case is in the closure process.

C6. Price Increases During Case Closure. Price increases discovered during case closure (i.e., after the case becomes supply/services complete) will be validated during final reconciliation. For FMS cases that are in the closure process, the following rules apply:

C6. If expenditures exceed FMS case ordered values, a Modification or Amendment is required. The majority of actions related to expenditures reconciled prior to closure are addressed on a Modification. Contact DSCA (Strategy, Plans, and Policy Directorate (SPP)) for questions regarding Amendment or Modification usage.

C6. If the case is anticipated to close and expenditures do not exceed ordered value, the case may be closed without doing an Amendment or Modification.

C6. Refer to Chapter 16 for comprehensive policy and the Appendix 7, Case Reconciliation and Closure Guide (RCG), for process and procedural information related to reconciliation and closure.

C6.7.2.2. Purchaser Acknowledgement. Acknowledgement of receipt of the Modification, although not required for implementation, confirms that a purchaser’s authorized representative has received the Modification.

C6.7.2.3. Concurrent Modifications. Case value may be transferred between two or more cases by concurrent Modifications. Concurrent Modifications are prepared in DSAMS and identified using the DSAMS Concurrent Funding Tab under Case Detail to record the transfer from or to cases and amounts. DSAMS automatically relates the documents and prints the correct statements in accordance with Section C6. This process ensures that all the documents are implemented at the same time. The following conditions must be met for valid concurrent Modifications:

C6. The FMS country official who requests the shift in value has the authority to accept LOAs and a copy of the LOR must be attached to each Modification. Any shift that results in a scope increase or decrease must be as requested in the LOR.

C6. Must not include a significant scope change (e.g., adding SME).

C6. Total amount(s) increased are no more than the total amount(s) decreased. If addition(s) to the LOA(s) being increased generate a requirement for an initial deposit, an Amendment must be used.

C6. LOA(s) decreased have adequate funds available to cover remaining obligations.

C6. All cases being modified must be in “implemented” status. Closed cases are not identified in concurrent Modification packages.

C6. All Modifications are provided to DSCA as a package for countersignature and cross-reference each other in the “This Modification is for:” section of the Modification as follows:

On decreased LOA:

“Value of $____ is hereby transferred to FMS Case __-_-__ (reference Modification__).”

On increased LOA:

“Value of $____ is hereby transferred from FMS Case __-_-__ (reference Modification __).”

C6.7.2.4. Pen and Ink Changes to Modifications. Pen and ink changes to Modifications are NOT authorized. After a Modification has been signed and countersigned by the USG, any further changes must be accomplished by using a new Modification (or Amendment if applicable).

C6.7.2.5. Modification Implementation. Modifications do not require purchaser signature and are implemented upon countersignature. If countersignature is not required for a particular Modification, the Modification is implemented upon USG signature.

C6.7.3. Amendment and/or Modification Formats. Amendment and Modification formats, including sample data and document-unique instructions for preparation, are provided in Figures C6.F4.C6.F5. and Table C6.T9.

Figure C6.F4. Amendment Format

Figure C6.F5. Modification Format

Table C6.T9. Instructions for Preparing an Amendment or Modification




"Based On." Each Amendment or Modification includes a reference to the document, meeting, review, etc. that prompted the change.


Description. The "This Amendment (or Modification):" includes a concise and clear purpose of the Amendment or Modification, using the following guidelines:

  1. Program. Identify the major program involved (e.g., "Apache Program").

  2. Overview. Provide an overview of the Amendment or Modification. Identify the changes in the document by showing if the action is an addition, modification, deletion, increase, or decrease.

  3. Reason. Provide an explanation for the changes (e.g. per the purchaser's request, due to scope, price changes, etc.)

  4. Previous Unaccepted Amendments. If a previous Amendment offer has expired, note that Amendment (number) was not accepted. The unaccepted Amendment number should not be reused.

  5. Identification of Restatement. If a previous version of the document was offered to the customer but requires changes before the customer will accept the offer, note that this document is restated (e.g. "This Amendment is a Restated document...")

Example: "This Amendment provides updates for the AH-64D Helicopter program, which reduces the quantity of items and extends the Period of Performance for several line items per the customer's request. Amendment 3 was cancelled without acceptance."


SC/MOS/TA or Notes. This column includes the source code (also referred to as the Source of Supply (SOS) code), the availability (estimated number of months FROM IMPLEMENTATION OF THE BASIC LOA to when items are available), Type of Assistance (TA) code, and training notes.


Term(s) of Sale. The Term(s) of Sale must be recorded on the first page of the Amendment or Modification. Cases that include multiple sources of funding must list all sources. The Amendment or Modification includes a dollar breakout for each credit term used.


DSCA Congressional Notification Transmittal Number. Include the DSCA transmittal number used in the statutory Congressional notification (e.g., Congressional Notification 92-15) when applicable. When multiple notification numbers apply, they must all be listed.


Expiration Date. The Amendment expiration date follows the same rules as for an LOA. See Figure C5.F6. for current country level timeframes.


Other Fields. Quantity, notes, codes, and financial fields should be changed to reflect the previous and revised values. The payment schedule should be adjusted accordingly.

C6.7.4. Request for Exceptions to Policy (ETPs). Implementing Agency (IA) policy offices must send all ETP requests through the following email address: mailbox. Requests for financial policy exception related to prior year adjustment should be sent to, and case closure sent to DSCA SPP/SPI will coordinate ETP requests with the appropriate DSCA stakeholders and reply to ETP requests submitted via email within ten business days of receiving a complete ETP request. DSCA SPP/SPI will provide ETP determinations to the IA by email and enter a DSAMS case remark. General Officer/Flag Officer/SES-level requests or ETP appeals submitted via formal correspondence are staffed with the DSCA Director, who will respond accordingly to the requester. DSCA will consider ETPs on a case-by-case basis, in accordance with legal requirements, when SAMM guidance is not established.

C6.7.4.1. An ETP request must include a justification for the request and a written endorsement (i.e., email) from the IA policy office and may include any of the following documents:

  1. Letter of Request (LOR), meeting minutes, or email from the foreign purchaser requesting the ETP; and,

  2. An official request from the IA Weapon System Program Office (if applicable).

C6.7.4.2. IAs must include all ETP approvals in the LOA package submitted to the DSCA Case Writing Division.

C6.7.5. Reduction of Value on Unused FMS and BPC Cases. Amendments or Modifications (to include concurrent modifications) should not be used to reduce an unused case to zero-dollar value or any other amount. This prohibition includes deleting all lines on a case using an Amendment or Modification for the purpose of reducing an unused case. For this purpose, "unused" is defined as a $0 net sum of all financial activity, other than the pre-paid FMS Administrative Surcharge.

C6.7.5.1. Closure of Unused FMS and BPC Cases. The Implementing Agency should use the case closure process to return case value or funds on unused cases to the customer. See SAMM Section C16.4.7.

C6.7.5.2. Placeholder Lines on LOAs. Zero-dollar value (or any other non-executable dollar value (i.e., $1, $2 etc.)) lines created on a case for the sole purpose of serving as a placeholder for unidentified requirements is not authorized. An exception to policy (ETP) must be requested for any lines that must remain on a case at zero-dollar value due to audit or other transactional requirements. If the zero-dollar value line is the only line on the case, the case should go to closure. When a case is closing at zero-dollar value, an ETP is required to ensure the appropriate amount of FMS Admin is collected or the case approved for Zero FMS Administrative funds collected.

C6.7.5.3. Request for Exceptions-BPC. Exceptions will be considered on a case-by-case basis such as the need to make funds available on an unused BPC case where the case closure action cannot be completed in the time necessary to make the residual funds available for another BPC case before the funds obligation period expires. Requests for an exception to policy should be submitted through the ETP mailbox and will be provided to the DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division) for decision.

C6.8.1. Purchaser-Requested Case Cancellations. Purchasers may request that their FMS cases be cancelled. After a case has been implemented, cancellations are processed as a closure of the case. The purchaser is responsible for any termination costs as well as any estimated administrative costs associated with the case. The minimum, non-refundable amount of administrative costs will be: the value when combining the existing Small Case Management Line (SCML) value and the estimated FMS administrative surcharge value not to exceed $15,000; or one-half of the FMS administrative surcharge estimated on the case; or the standard FMS administrative surcharge percentage of the expended value whichever is greater. An IA’s recommendation to charge other than these amounts must be submitted to the DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division) for approval. See Section C16.4.7. for information on closing cases with $0 delivered value. For cases closing with a case value greater than or equal to $25,000,000, the IA will submit a recommended non-refundable FMS administrative surcharge amount to DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division) for approval. DSCA countersignature of an LOA Modification does not constitute DSCA approval of the recommended non-refundable FMS administrative surcharge amount. Requests submitted to DSCA must include the Small Case Management Line (SCML) LOA note found in Appendix 6.

C6.8.1.1. Brief description of the case to include the basic LOA acceptance date and the terms of sale used.

C6.8.1.2. Copy of the purchaser’s request for case cancellation or a written explanation why the case was cancelled.

C6.8.1.3. Statement whether costs to implement, execute, and cancel the case will be recouped by the administrative charge assessed on the actual delivered value.

C6.8.1.4. Minimum amount of FMS administrative charge that would normally be charged in accordance with current policy and a statement whether costs to implement, execute, and cancel the case will be recouped by that amount. If a different amount is recommended, include the proposed amount and justification.

C6.8.2. USG-Requested Case Cancellations. In accordance with the LOA Standard Terms and Conditions (See Figure C5.F4.), the USG may cancel a case (or any part of a case) when U.S. national interest requires. The amount of administrative charges assessed against cases cancelled by the USG must be approved by DSCA (Directorate of Business Operations (DBO) Financial Policy & Analysis (FPA) Division) even if the proposed amount is $0.