Incorporated
Policy changes from this SAMM E-Change memo have been incorporated into the SAMM.
DEFENSE SECURITY COOPERATION AGENCY
2800 DEFENSE PENTAGON
WASHINGTON, D.C. 20301-2800
4/1/2026
MEMORANDUM FOR :
DEPUTY UNDER SECRETARY OF THE AIR FORCE FOR INTERNATIONAL AFFAIRS
DEPUTY ASSISTANT SECRETARY OF THE ARMY FOR DEFENSE EXPORTS AND COOPERATION
DEPUTY ASSISTANT SECRETARY OF THE NAVY FOR INTERNATIONAL PROGRAMS
DIRECTOR, DEFENSE CONTRACT MANAGEMENT AGENCY
DIRECTOR, DEFENSE INFORMATION SYSTEMS AGENCY
DIRECTOR, DEFENSE LOGISTICS AGENCY
DIRECTOR, DEFENSE THREAT REDUCTION AGENCY
DIRECTOR, MISSILE DEFENSE AGENCY
DIRECTOR, NATIONAL GEOSPATIAL-INTELLIGENCE AGENCY
DIRECTOR, SECURITY COOPERATION ACCOUNTING DIRECTORATE, DEFENSE FINANCE AND ACCOUNTING SERVICE, INDIANAPOLIS OPERATIONS
DIRECTOR OF CYBERSECURITY DIRECTORATE AND DEPUTY NATIONAL MANAGER FOR NATIONAL SECURITY SYSTEMS, NATIONAL SECURITY AGENCY
SUBJECT :
Defense Security Cooperation Agency Policy Memorandum 26-16, Update to Foreign Military Financing of Direct Commercial Contracts [SAMM E-Change 810]
REFERENCES:
- Public Law 117-328, Consolidated Appropriations Act, 2023, 29 December 2022
Effective immediately, this memorandum authorizes the North Atlantic Treaty Organization (NATO) and major non-NATO allies to use Foreign Military Financing (FMF) for Direct Commercial Contracts (DCCs), in accordance with the reference above. The policy in the attachment is incorporated into the DSCA Security Assistance Management Manual (SAMM) at https://samm.dsca.mil
If you have questions on this memorandum, please contact DSCA (Office of Business Operations, Financial Policy & Regional Execution Directorate, Financial Policy Division (OBO/FPRE/FP)) at dsca.ncr.obo.list.fpre-fp@mail.mil. Please reference the DSCA policy number and memorandum subject. For general questions about the SAMM, please contact DSCA (Office of Strategy, Plans, and Policy, Execution Policy and Analysis Directorate (SPP/EPA)) at dsca.ncr.spp.mbx.epa@mail.mil
Brian T. Watford
Acting Chief Operating Officer and Chief Financial Officer
ATTACHMENT :
SAMM E-Change 810 - Update to Foreign Military Financing of Direct Commercial Contracts
Security Assistance Management Manual E-Change 810
UPDATE TO FOREIGN MILITARY FINANCING OF DIRECT COMMERCIAL CONTRACTS
Update Section C9.7.3.:
From:
C9.7.3. Foreign Military Financing of Direct Commercial Contracts. DCCs are contracts where the purchaser enters into a contract directly with a vendor, and the USG is not a party to the contract. The AECA allows the ten countries justified in the Fiscal 1989 Congressional presentation to use their FMF allocation to finance DCCs. The ten countries eligible are: Israel, Egypt, Jordan, Morocco, Tunisia, the Republic of Turkiye, Portugal, Pakistan, Yemen, and Greece. DSCA (IOPS/REX) DCC Manager approves DCCs to be financed with FMF on a case-by-case basis. For further details on the DCC process, contractor eligibility, types of items, and certifications required, see "Foreign Military Financing of Direct Commercial Contracts" on the DSCA webpage.
To:
C9.7.3. Foreign Military Financing of Direct Commercial Contracts. DCCs are contracts where the purchaser enters into a contract directly with a vendor, and the USG is not a party to the contract. A foreign partner's FMF allocation from an approved year may be used to fund a DCC, but only if the partner meets specific eligibility criteria, and the conditions laid out in the annual Department of State appropriations language are fulfilled. Section 23(h) of the Arms Export Control Act (AECA) (22 U.S.C. 2763(h)) and the annual Department of State appropriations legislation provide the authority to utilize FMF to fund DCCs for certain foreign partners. Initially, the annual Department of State appropriation granted the authority to use FMF for DCCs to ten specific countries, as justified in the FY 1989 Congressional Presentation for Security Assistance: Israel, Egypt, Jordan, Morocco, Tunisia, the Republic of Turkiye, Portugal, Pakistan, Yemen, and Greece. The FY 2023 State Appropriation later expanded this authority, extending eligibility for FMF-funded DCCs to all NATO members and Major Non-NATO Allies. Military Groups (MILGPS)/SCOs should consult with the Department of State's Bureau of Political-Military Affairs, Office of Security Assistance (PM/SA), to confirm eligibility prior to engagement with the foreign partner on a DCChe AECA allows the ten countries justified in the Fiscal 1989 Congressional presentation to use their FMF allocation to finance DCCs. The ten countries eligible are: Israel, Egypt, Jordan, Morocco, Tunisia, the Republic of Turkiye, Portugal, Pakistan, Yemen, and Greece. The DSCA (IOPS/REX) DCC Manager, with State (PM/SA) concurrence, approves DCCs to be financed with FMF on a case-by-case basis. Approval requires a legally binding agreement between the partner and the U.S. Government and is subject to the standard Congressional Notification process for FMF, as outlined in the annual Department of State appropriations bill. For further details on the DCC process, contractor eligibility, types of items, and certifications required, see "Foreign Military Financing of Direct Commercial Contracts" on the DSCA webpage.