DEFENSE SECURITY COOPERATION AGENCY 2800 DEFENSE PENTAGON WASHINGTON, D.C. 20301-2800	1/18/2001

MEMORANDUM FOR :

Deputy Under Secretary of the Army
(International Affairs)
Attn: SAUS-IA-DSZ
Department of the Army

Director, Navy International Programs Office
Department of the Navy

Deputy Under Secretary of the Air Force
(International Affairs)
Department of the Air Force

SUBJECT :

Guidance Regarding Direct Commercial Sales (DCS) Preference (DSCA 01-01)

As stated in the Security Assistance Management Manual (SAMM), the Department of Defense is generally neutral as to whether a country satisfies requirements for US origin defense articles or services through Foreign Military Sales (FMS) or on a commercial basis. Section 601 of the SAMM supports these policies and shows actions to interface FMS and commercial activities. This section of the SAMM was rewritten on 04 December 1998 to provide the Security Assistance community with clearer guidance regarding FMS -- Commercial Interface. Recently, we have received numerous questions from the Military Departments regarding DCS preference requests. The following existing guidance is provided for your use and information.

In accordance with the SAMM, contractors may submit requests for DCS preference when they are engaged in formal negotiations with one or more foreign countries. The DCS preference request must include a copy of the request for a price quotation from the country. Upon receipt of such a request, DSCA will ask the implementing agencies to review the request for the following:

1. Does the implementing agency have an FMS request for the item on file from the country or countries referenced in the DCS preference request?
2. Does one of the specific exclusions listed in Section 60103 of the SAMM apply?
3. Is the item designated "FMS Only" in accordance with the criteria listed in Section 60102 of the SAMM?

If any of the criteria outlined above apply to the item being reviewed for DCS preference then the request may be disapproved. However, if none of the criteria above apply then the DCS preference will be effective for one year.

Attached is a copy of the guidance in the SAMM that has been effective since 04 December 1998. If you have any questions regarding this matter, please feel free to contact Mr. Steve Harris at or at (703) 604-6611/DSN 664-6611.

CC :

AMSAC-OL-MP
AFSAC
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DISAM