Chapter 7, Transportation, describes transportation responsibilities, requirements, and procedures for delivering security cooperation shipments, including those involving classified, hazardous, or otherwise controlled materials.

C7.1.1. The United States Government and the purchaser's advanced planning for transportation of materiel is critical for case development and execution. It is Department of Defense (DoD) policy that the purchaser is responsible for transportation and delivery of its purchased materiel. DoD encourages purchasers to be self-sufficient by making informed decisions regarding transportation arrangements. Purchasers can use DoD distribution capabilities on a reimbursable basis at DoD reimbursable rates via the Defense Transportation System (DTS), or employ an agent, known as a Foreign Military Sales freight forwarder, to manage transportation and delivery from the point of origin (typically CONUS) to the purchaser's desired destination. The transportation procedures in this chapter generally apply to all Security Cooperation materiel, but any requirements specific to Building Partner Capacity programs are identified in Chapter 15.

Title to Foreign Military Sales (FMS) materiel is transferred to the purchaser upon release from a Department of Defense (DoD) supply activity (point of origin) unless otherwise specified in the Letter of Offer and Acceptance (LOA). A supply activity can be either a DoD storage depot or a commercial vendor that furnishes materiel under a DoD-administered contract. However, U.S. Government (USG) security responsibility does not cease until the recipient’s Designated Government Representative assumes control of the consignment.

C7.3.1. Procurement Items. When items are procured directly from a vendor, title passes at the vendor's loading facility. FMS transactions are government-to-government sales and the terms of any DoD-administered contract for FMS materiel should be Free-On-Board (FOB) origin, consistent with Defense Federal Acquisition Regulation Supplement (DFARS) Procedures, Guidance, and Information (PGI) Section 225.7301(c).FOB specifies which party pays for which shipment and loading costs, and where responsibility for the goods is transferred. FOB-origin means the price for goods includes delivery at the seller’s expense to a specified point and means that the purchaser assumes liability for lost or damaged cargo and pays all shipping costs, whether through a FMS freight forwarder or the Defense Transportation System. For more information, reference: Federal Acquisition Regulation (FAR) Section 47.303-1 F.o.b. Origin.

C7.3.2. Stock Items. If items are supplied from a DoD depot, title passes at the depot's loading facility.

C7.3.3. Excess Defense Articles (EDA). Title to EDA items transfers at the point of origin except for items located in Germany. For EDA items located in Germany, unless Germany is the recipient, title transfers at the nearest Port of Debarkation outside of Germany.

C7.3.4. Postal Service Deliveries. Title to defense articles transported via parcel post passes to the purchaser on the date of shipment. Title passage is at the postal facility at a DoD depot or at the nearest post office if depot personnel take the materiel to the post office in depot-furnished transportation.

C7.3.5. Retention of Title. The USG may retain title for shipments of FMS materiel if required by operational circumstances. Designation of a point of title transfer other than the point of origin must be specified in the LOA. Title retention by the USG is not a standard practice, but may provide an option to allow materiel to transit through nations with restrictive Customs requirements. Requests for use of this limited exception should be directed by the Implementing Agency (IA) to DSCA (Strategy, Plans, and Policy Directorate (SPP)) for approval in advance of case development. A specific LOA note for these circumstances is included in Appendix 6.

C7.3.5.1. Information Security (INFOSEC)/Communications Security (COMSEC) products.

C7.3.5.1.1. NATO. NATO member nations, Australia and New Zealand. COMSEC products procured through FMS transfers are titled to those nations.

C7.3.5.1.2. Australia, Canada, New Zealand, and the United Kingdom. Select COMSEC products as defined by NSA may be procured through DCS for those nations. Through ITAR export licensing processes, NSA will authorize the U.S. vendor to sell select COMSEC products. ITAR temporary import licensing applies for repair services under a DCS. See Section C3.3. for ITAR licensing and exemption authorities. FMS support for repair and return allowable, See Section C5.2.1.

C7.3.5.1.3. International organizations other than NATO, and Non-NATO member nations except Australia and New Zealand. Prior to physically receiving any U.S. INFOSEC / COMSEC products or services, the FMS purchaser or recipient must have entered into a bilateral CISMOA or other INFOSEC agreement with the USG via the CCMD. It's recommend that this agreement be initiated before or parallel to LOA development to avoid future shipment delays. The USG retains title to transferred COMSEC equipment in accordance with the bilateral agreement(s) and Committee on National Security Systems (CNSS) release authorization.

C7.3.6. Ferrying of Aircraft. When ferrying aircraft, the USG may accept title to the aircraft from the contractor. In this case, title will remain with the USG until arrival at the point of delivery. The LOA contains a prescribed indemnification and assumption of risk clause, See Appendix 6, for the applicable LOA note. The FMS purchaser must advise whether the aircraft will be delivered by commercial ferry service (arranged by the purchaser), DoD ferry, or surface transportation.

C7.4.1. Delivery Term Code (DTC). The Delivery Term Code (DTC) is a logistical code that indicates how far, from the source of supply to the final destination, that the Department of Defense (DoD) is responsible to transport a shipment. The DTC does not determine the mode of transportation or how it is financed. A purchaser may specify a preferred DTC in the Letter of Request (LOR). See Table C9.T4a. for a complete list of DTCs and their assigned points of delivery. The DTC is also used to determine transportation costs. If a DoD contract has been accepted and awarded to a contractor at a CONUS location and the contractor further subcontracts the work to an OCONUS party, the original DoD contractor is still responsible for movement of the materiel from the OCONUS location to the CONUS location so it can be properly exported from the United States.

C7.4.2. During case development, the Implementing Agency’s (IA) role in determining and assigning the proper DTC to each line on the Letter of Offer and Acceptance (LOA) is critical to successful materiel shipment. In cases when sensitive or classified materials are being transported, IAs should conduct a pre-case transportation assessment to determine transportation and distribution requirements following receipt of a LOR and before issuance of a LOA. Coordination with TRANSCOM J3 at transcom.scott.tcj3.mbx.fms@mail.mil may be necessary. Each DTC must be feasible and actionable. Following case implementation assigned DTCs should be updated through an Amendment as required in coordination with the purchaser.

C7.5.1. Definition. A Foreign Military Sales (FMS) freight forwarder is a private company under contract to the FMS purchaser to coordinate, receive, consolidate, stage materiel, and arrange for onward movement to a final destination. The contract should describe the specific functions to be performed by the freight forwarder. A FMS freight forwarder’s responsibilities may vary under the terms of the contract with the purchaser, but in all cases, a FMS freight forwarder acts as an agent of the purchaser, but cannot act on behalf of the government as a Designated Government Representative.

C7.5.2. Selection of a FMS Freight Forwarder. Selection of a FMS freight forwarder must be made by the FMS purchaser. Department of Defense personnel must remain impartial and cannot recommend a FMS freight forwarder to a purchaser or direct a FMS freight forwarder how to conduct operations.

C7.5.3. Requirements for FMS Freight Forwarders.

C7.5.3.1. FMS freight forwarders must maintain a valid registration as an exporter with the Department of State’s Directorate of Defense Trade Controls (PM/DDTC) consistent with the International Traffic in Arms Regulations (ITAR).

C7.5.3.2. A FMS freight forwarder must be identified to PM/DDTC in writing by the purchaser’s U.S.-based embassy as its authorized FMS freight forwarder.

C7.5.3.3. If the FMS freight forwarder is expected to handle classified materials, it must maintain appropriate security clearances and facility authorizations with the Defense Counterintelligence and Security Agency. Only FMS freight forwarders that have a valid facility clearance and approved storage capabilities at the appropriate level are eligible to take custody of classified material for delivery as freight. FMS freight forwarders that only process unclassified paperwork and make arrangements for the delivery of classified material do not require a facility clearance.

C7.6.1. Definition. DTS is the portion of the worldwide transportation infrastructure that supports Department of Defense (DoD) transportation needs in peace and war DoD Directive 4500.09. DTS consists of two major elements: military (organic) and commercial resources. These resources include assets, services, and systems organic to, contracted for, or controlled by DoD. The DTS infrastructure, including ports, airlift, sealift, railway, highway, in-transit visibility systems, information management systems, Customs, and traffic management that DoD maintains is a vital element of DoD's capability to project power worldwide. DTS shipments must comply with the Defense Transportation Regulation (DTR) 4500.9-R. Use of the DTS may offer purchasers transportation alternatives to freight forwarders.

C7.6.2. Methods of DTS use in Security Cooperation.

C7.6.2.1. Military (Organic). DoD-owned or operated assets, such as trucks, rail cars, ships, aircraft, or other modes of transportation. These assets are under the control of the Service Components of TRANSCOM: Air Mobility Command (AMC), Surface Deployment and Distribution Command (SDDC), or Military Sealift Command (MSC).

C7.6.2.1.1. AMC Channel. AMC Channel airlift provides regularly scheduled movement of cargo over validated routes depending on volume of materiel. Shipping activities must clear air shipments with Service's Airlift Clearance Authority prior to movement in accordance with the DTR. Unless the channel is supporting a location with little or no commercial business options, 25 short tons is the minimum monthly volume required.

C7.6.2.1.2. Special Assigned Airlift Mission (SAAM) Flights. A SAAM is an assigned airlift requirement for special pickup or delivery by AMC. Costs are billed by the hour from the time the aircraft leaves its home station until it returns to its home station. It is billed as a line item on the Letter of Offer and Acceptance (LOA). If a SAAM is not routed back to its home station on the return leg, charges will be incurred only up to the point the mission was changed. SAAMs may be used for cargo that requires special considerations because of its weight or size, the urgency or sensitivity of movement, or other special factors, See DTR Chapter 202 for procedures.

C7.6.2.1.3. U.S. Navy vessels and charter vessels. Use of U.S. Navy or vessels chartered by SDDC are considered part of DTS.

C7.6.2.2. DoD-contracted commercial. DTS is not limited to organic assets and includes commercial carriers under contract to DoD that move materiel via trucks, rail cars, ships, aircraft or other modes of transportation.

C7.6.2.3. Ocean liner service. Liner service is regularly scheduled ocean transportation service where DoD pays on a piece-by-piece basis. Containerized and non-containerized cargo (break bulk cargo) are charged different rates. Ocean liner service is provided through two contracts administered by TRANSCOM: 1) Universal Services Contract, and 2) Regional Domestic Contract. It also includes the use of trucks, railroads, barges, convoys, and/or pipelines for overland movement.

C7.6.2.4. Small Parcel Shipments. Small parcel releases use commercial small parcel carriers, U.S. Postal Service, or methods that allow for shipments to be traced and tracked. Overseas movement via the Military Postal Service (Army or Air Force Post Office (APO) or Fleet Post Office (FPO)) is used if certain conditions are met. First, use of an APO or FPO must be specifically authorized in an LOA. Second, the APO or FPO addressees must give written approval that they accept responsibility for receiving SC shipments. An APO or FPO might be recommended if a shipment is classified and the purchaser does not have approved facilities to receive classified items in the United States, though not all Military Postal Service addresses handle classified materiel. An APO or FPO may not have the capacity or manpower to handle a large volume of SC shipments and may require above-the-line charges for the increased volume over an extended period of time. The purchaser must bear the cost of such shipments. For transmission outside of the United States. and its territorial areas, SECRET and CONFIDENTIAL materiel may only be transmitted by cleared U.S. contractors in accordance with National Industrial Security Program Operating Manual, or by DoD entities in accordance with DoD Manual 5200.01, Volume 3, enclosure 4. TOP SECRET material may only be transmitted by Defense Courier Service, Department of State Courier System, or the written authorization of the Government Contracting Authority.

C7.6.2.5. Next Generation Delivery Services (NGDS). NGDS is a USG-wide contract for domestic and international express small package delivery services, and domestic ground small package delivery services. NGDS provides international commercial express delivery for unclassified shipments up to and including 300lbs with time-definite, door-to-door pick-up and delivery, and accurate in-transit visibility service for DOD and USG Civil agencies. U.S. Government shippers must establish an account and arrange individual shipments. For additional guidance on the use of NGDS, See Chapter 202 of the DTR. All questions related to NGDS should be directed to the TRANSCOM J4-L.

C7.6.2.6. Defense Courier Service (DCS). DCS provides secure, timely, and efficient end-to-end global distribution of classified and sensitive material for the United States and its Partners and Allies. It is an established courier network to transport qualified materiel. DCS is recommended primarily for circumstances where the USG retains title to the materiel during transit. For additional information on the use of DCS, contact TRANSCOM's Defense Courier Division and See Chapter 205 of the DTR.

C7.6.2.7. Shipments by the U.S. Government (USG) to a Freight Forwarder or Embassy (DTC 5). USG Shipments to U.S.-located Foreign Military Sales (FMS) freight forwarders or country representatives located at embassies in the United States are DTS shipments until the consignee unloads the materiel from the carrier.

C7.6.2.8. Delivery on Board a Purchaser-Controlled Ship or Aircraft at a DoD Port of Embarkation (POE) (DTC 8). Shipments to a DoD-controlled POE in the United States are DTS shipments until the materiel is loaded into a purchaser's ship or aircraft. The purchaser is responsible for all onward movement and documentation.

C7.6.3. DTS Documentation Requirements. The following paragraphs outline general and mode-specific documentation requirements.

C7.6.3.1. If a shipment is released from a depot, an Issue Release Receipt Document (DD Form 1348-1A) identifies materiel as DoD-supplied and provides the details (document number, case designator, National Stock Number, etc.) that link the materiel to a case. If a shipment is released from a vendor under a DoD contract, a IRAPT Receiving Report (formerly Wide Area Work Flow Receiving Report and DD-250) serves the same purposes and provides the same data. MIL-STD-129 requires that shippers attach at least one copy of these documents to the exterior of the shipment units in waterproof envelopes. One copy must be inside the container. Commercial invoices and certificates of origin may be required for in-country customs clearance.

C7.6.3.2. Bills of Lading (BL). The BL is a contract document between the USG and the carrier, and provides a means to pay the carrier for the service performed and should be delivered before arrival of the cargo. If a commercial BL is used, copies must be forwarded to the Security Cooperation Organization (SCO). Original Ocean BLs are used by foreign Customs officials to clear cargo and should be forwarded to the SCO by expedited delivery service. SDDC Operations ensures that these notices and documentation are transmitted by carriers within time standards established in the DTR.

C7.6.3.3. Annotation of Transportation Documents When DoD Retains Custody. When DoD retains custody and transportation responsibility of FMS shipments its arrival at the POD in the destination country, the BLs for these DTS shipments are annotated with statements to comply with U.S. Customs requirements. See Section C7.6.3.3.1. and Section C7.6.3.3.2. The signature of the issuing officer on the BL serves as certification of these statements. Neither of these statements is annotated on BL for FMS materiel moved to a purchaser's U.S. located facilities, commercial agent, or FMS freight forwarder.

C7.6.3.3.1. An additional statement must be placed with the shipping documentation that will accompany the shipment to the port. Information must be presented to the Customs and Border Protection officers by the transportation provider as follows: "This shipment is authorized for export pursuant to 22 CFR 126.6.(c), under FMS Case [insert case identification]. The USG point of contact is ____, telephone number ____." The USG point of contact must be someone who has knowledge of the materiel included in the shipment, such as the Case Manager at the Implementing Agency.

C7.6.3.3.2. The following must be annotated in BLs, Commercial Invoices, and other transportation documents: "(Applicable Military Department)-Sponsored Foreign Military Sales Shipment--No Export License Required. 22 CFR 126.6(a) applicable."

C7.6.3.4. Ocean Cargo. If the ocean delivery is moving by SDDC or MSC arranged shipments, the SCO or Defense Attaché will arrange for a husbanding agent, a contractor who serves as the USG agent in making all official logistics arrangements prior to and during a ship's visit, to meet the vessel at the designated port.

C7.6.3.4.1. Addressing of Documentation. SCOs should receive documentation as much in advance of a ship's arrival as possible. SDDC uses the applicable Type Address Code (TAC) address for the manifest information and BLs. TAC addresses are identified in the Military Assistance Program Address Directory (MAPAD). SCOs should contact SDDC whenever DTS ocean delivery of cargo is anticipated. SDDC can be reached at the SDDC 24-Hour Operations Center at Defense Switched Network (DSN) 770-4262, Commercial 618-220-4262, or via email at usarmy.scott.sddc.mbx.hqsoc@army.mil. At a minimum the following information should be provided: name, email address, telephone number, Transportation Control Number (TCN), and any other information the SCO might have about the shipment. Documentation Addresses are reflected by the TAC 5 and 6 addresses in the MAPAD, depending on the mode of shipment delivery selected, See Section C7.7. The MAPAD should also include an email address to expedite delivery of the advanced shipment documentation so that receipt is made prior to the freight’s delivery. In addition, shippers must enter Advance Transportation Control and Movement Documents in the designated shipper systems in advance of the freight’s arrival at the designated ports.

C7.6.3.4.2. Ocean Manifests. A manifest is a detailed listing of all Shipment Units picked up by a ship and identified by a TCN. The lead TCN may not identify all articles if more than one has been packed in the Shipment Unit at the point of origin. Shipping activities attach two packing lists to each Shipment Unit to identify the exact contents. Packing lists, normally in the form of a 1348-1A for depot releases or IRAPT Receiving Reports for vendor supplied shipments serve as certificates of origin. If an ocean carrier splits a shipment for convenience, the original documentation becomes invalid and the ocean carrier must inform the SDDC Booking Office of these changes for proper In-Transit Visibility. The ocean carrier should also revise the documentation to reflect such changes.

C7.6.3.5. Air Cargo Documentation.

C7.6.3.5.1. Air Manifests. For SAAMs and channels, manifests are prepared by the aerial Port of Debarkation (POD) for each aircraft involved in a mission and include all materiel loaded in the aircraft. The manifest travels with the aircraft. The SCO should maintain contact with the aerial POD that services the country or Geographical Combatant Command to remain aware of upcoming missions. TRANSCOM’s Integrated Data Environment/Global Transportation Network Convergence (IGC) and the Enhanced Freight Tracking System (See Section C13.6.3.2.3.) can be used to extract an itemized list of the cargo being shipped.

C7.6.3.5.2. Air Waybill. For commercial deliveries, an Air waybill is prepared by the air carrier for shipments received from USG shipping activities and describes the cargo. The Air Waybill contains a listing of the Shipment Units, which are identified by TCN, received for delivery. For tracer or tracking requests, the TCN should be referenced.

C7.6.4. Reception of DTS Cargo at Overseas Locations.

C7.6.4.1. Preparing for Purchaser Receipt. SCOs ensure successful transfer of DTS-routed shipments to the purchaser's Designated Government Representative. Receiving procedures are the responsibility of the purchaser and SCOs should ensure that the purchaser is prepared to receive its materiel. Receiving procedures include: checking the materiel against manifests and shipping documents; signing receipts for ocean or air carriers; clearing the shipments through the purchaser's Customs (and if necessary clearing a third country’s Customs); reporting discrepancies as appropriate; and having the proper equipment in-place/on-contract to handle the cargo as may be required. Any delays in moving the materiel from the Port of Debarkation to the purchaser's storage facility could result in storage fees and/or unsecure cargo. The purchaser pays all Customs charges. SCOs should not be involved in overseas Customs matters for FMS shipments, to include payment for release of cargo.

C7.6.4.2. U.S. Military Terminal Units or Support Activities. If U.S. Military Forces are positioned or deployed in the area receiving the FMS materiel, these forces may be supported by U.S. Military Terminal Units or Support Activities. SCOs may request to SDDC that these units perform all or some of the transportation functions on a not-to-interfere basis normally performed by the SCO.

C7.7.1. Definition. The MAPAD, DLMS 4000.25, Vol 6, contains information and addresses required for shipment of materiel and distribution of related documentation under Foreign Military Sales (FMS) or grant aid programs. It includes addresses of FMS freight forwarders, country representatives, and purchasers. The MAPAD is available for use by DoD activities, the General Services Administration, commercial firms, foreign governments, and international organizations participating in FMS or grant aid programs. The MAPAD can also include CONUS locations.

C7.7.2. MAPAD Contents. The MAPAD includes:

C7.7.2.1. Type Address Code (TAC). The TAC is a one-position alpha or numeric code designating the use of the address; See Table C7.T2. for explanation of the TAC in the MAPAD.

C7.7.2.2. Special Instructions. Each purchaser has Special Instructions in the MAPAD that identify customer preferences such as clear-text addresses and shipping instructions. Special instructions may identify the name and location of commercial airports to be used for commercial Defense Transportation System air freight, a preference for specific surface carriers, or restrictions for certain types of freight. TAC M addresses must be used as the shipping address on all documentation. Organizational emails and Point of Contact information should be included for the addresses.

C7.7.3. MAPAD Address Changes. Correct MAPAD addresses are essential for accurate routing of cargo and documentation and will also ensure the FMS purchasers are charged the correct transportation rate. Purchasers are responsible for ensuring MAPAD addresses are current and maintaining accurate contact information. It is strongly recommended each Geographic Combatant Command ensure that assigned Security Cooperation Organizations meet on an established basis, not less than annually, with the respective FMS purchaser country MAPAD Point of Contact to conduct a review of all MAPAD addresses. The MAPAD review should validate each existing MAPAD address and content, and determine which MAPAD addresses are no longer valid. The MAPAD review findings need to be passed to each Implementing Agency to delete MAPAD addresses that are no longer required and to update existing MAPAD addresses as required. If there is a change in FMS freight forwarder, the purchaser is responsible for adjusting its MAPAD listing through the IA focal point and reconciling shipments received by its former FMS freight forwarder. A failure to update the MAPAD may result in storage charges for the purchaser at the former FMS freight forwarder’s facility or at a DoD vendor’s facility.

C7.7.4. Electronic Distribution. A Communication Routing Identifier code can be used for electronic transmission of supply and shipping status to the TAC 4 MAPAD address. A Communication Routing Identifier is a seven-character code that uniquely identifies an International Logistics Communication System (ILCS) account, established with the DLA Transaction Services, to electronically transmit and receive supply and shipment status (TAC 4) data between the FMS purchaser and DoD supply systems. There is a subscription fee for an ILCS account. There may be other hardware, software, training, and installation costs associated with initial establishment of ILCS connectivity. These costs can be paid through a FMS case. For more information, contact the Defense Logistics Agency Transaction Services helpdesk at itoc@dla.mil.

C7.8.1. Packaging. Packaging includes packing, preservation, and other procedures designed to protect materiel from damage or deterioration while in transit or in storage. Foreign Military Sales (FMS) shipments are packed to not less than Military Level A/B as defined in MILSTD-129 or in accordance with best commercial practices based on the mode of shipment selected for the purchased items (i.e. water, air, motor, rail). The Department of Defense contractor is responsible to package the freight in accordance with the mode of shipment selected to its ultimate destination.

C7.8.1.1. Wood Packaging Materiel. DoD Manual 4140.65-M, “Compliance for Defense Packaging: Phytosanitary Requirements for Wood Packaging Materiel (WPM)” describes DoD’s procedures and standards for compliance with International Standards for Phytosanitary Measures: Guidelines for Regulating Wood Packaging Materiel in International Trade (ISPM 15).

C7.8.1.1.1. Exports. International requirements are enforced by individual ISPM 15 member countries. If the member nation inspection procedures are published or documented, these should be included in the appropriate section (by theater or individual country) of the Defense Transportation Regulations. In exceptional circumstances when old, noncompliant wood was used to pack an item being shipped under a FMS case to an ISPM 15 participating country and it cannot be remediated or repacked without additional cost (e.g. ammunition containers), the purchaser should be given the option to wait for a new procurement packed in ISPM 15 compliant WPM, to waive the ISPM 15 requirement for that case only, or to pay for remediation or repacking costs. Shipments to non-ISPM 15 participating countries will be certified using the “DoD Pest Free” certification as directed in Enclosure 3 in DoD Manual 4140.65-M.

C7.8.2. Marking. Marking identifies the contents along with the shipper and consignee. FMS shipments are marked and labeled with a military shipping label in accordance with MIL-STD-129. As a minimum, these publications require the data shown in Table C7.T3. on a FMS shipment.

C7.9.1. Cargo Preference (Ocean).

C7.9.1.1. Legal Requirements. Section 901(a) of the Merchant Marine Act of 1936, as amended by the Cargo Preference Act of 1954 (as codified under 46 U.S.C. 55305 and further amended by Section 3511 National Defense Appropriations Act for Fiscal Year 2009 (Public Law 110-417),) requires at least 50 percent of the gross tonnage (computed separately for dry bulk carriers, dry cargo liners, and tankers) of grant, credit, or guarantee-funded cargo, that is transported in ocean vessels, be transported in privately-owned U.S. Flag commercial vessels to the extent such vessels are available at fair and reasonable rates for privately owned U.S. Flag vessels, as determined by the Department of Transportation's Maritime Administration (MARAD).

C7.9.1.2. Policy Requirements. DSCA, in support of the U.S. maritime industry, requires 100 percent of applicable cargo to be carried by U.S. Flag vessels unless a Determination of Non-Availability (DNA) is granted by DSCA, in coordination with MARAD. These rules apply to materiel procured with grant funding provided under the Arms Export Control Act (AECA) and the Foreign Assistance Act (FAA) of 1961, as amended, including shipments of Excess Defense Articles and defense articles provided by loan or Lease. Shipments of defense articles under specific Title 10 and Title 22 Building Partner Capacity authorities listed in Appendix 8. that utilize the BPC LOA process must be shipped through the Defense Transportation System (DTS) and comply with DoD policies. See Department of Defense (DoD) Directive 4500.09, "Transportation and Traffic Management," for further detail regarding the use of foreign-flag shipping and DoD policy.

C7.9.1.3. Types of Service. Service on U.S.-Flag vessels from the origin port to the destination port, known as P1, is the default mechanism for meeting the requirements of Section C7.9.1.2. Other types of service are P2 (combination of U.S.-Flag and non-U.S. Flag vessels) and P3 (entirely foreign-flag service). P2 and P3 services shall only be used when P1 is not available and a DNA has been granted from DSCA and MARAD - see Section C7.9.1.4 below. U.S.-Flag vessels likely can accommodate a cargo parcel upon identifying the cargo availability dates, pick up and drop off ports, etc. For a list of current U.S.-Flag carriers and POCs, please see MARAD.

C7.9.1.4. Determinations of Non-Availability. In general, USG-appropriated funds cannot be used to pay for any portion of the shipment that is not occurring on a U.S. Flagged-vessel, unless a DNA is granted or some other provision of U.S. law applies. DNAs for utilizing services other than P1 transportation fall into two categories: non-availability and security (this does not include those statutory waivers authorized under 46 U.S.C. 55305 in the case of national emergencies). Partner countries must request DNAs on a case-by-case basis. DSCA will coordinate with MARAD prior to issuance of a DNA. DNA requests should be submitted to DSCA/SPP/SPI with a copy to MARAD at least 21 days before the shipping date.

C7.9.1.4.1. DNA Applications. DNA applications must demonstrate that a reasonable, timely, and bona fide effort to arrange P1 service has been made and such vessels are not available. Applications must also show all comparative rates. Partner countries should submit DNA requests to DSCA with a copy to MARAD. DNA applications, submitted on a shipment-by-shipment basis, should include the information shown in Table C7.T4.

C7.9.1.4.2. Security Waivers. Security waivers may be requested to avoid unsafe or unsecure transportation conditions, such as the transshipment of classified and/or sensitive materiel, or Arms, Ammunition, and Explosives (AA&E). Partner countries must provide a justification to demonstrate the necessity of the waiver. The waiver request should be submitted by partner countries to DSCA/SPP/SPI with a copy provided to MARAD and should include the information shown in Table C7.T4.

C7.9.1.5. Defense Transportation System. Impelled cargo offered and moved within the DTS or cargo that is moving as a direct result of Federal Government involvement, indirectly through financial sponsorship of a Federal Program, or in connection with a guarantee provided by the Federal Government, will follow USTRANSCOM's procedures and the DTR to comply with Cargo Preference requirements. Movement within the DTS may be supported using pure U.S. Flag (P1 service), combination of U.S. & and non-U.S. Flag vessel (P2 service) or non-U.S. Flag vessels (P3 service). Cargo moving within the DTS system that is utilizing a P2 or P3 service will follow the procedures per Section C7.9.1.4.

C7.9.1.6. Compliance Report. After delivery of any applicable cargoes, the recipient country is responsible for providing a report to DSCA/SPP/SPI and MARAD to ensure compliance with Cargo Preference requirements. The information should be provided to DSCA/SPP/SPI and MARAD within 20 working days following the date of loading in CONUS or within 30 working days following the date of loading for shipments originating OCONUS. The exporting activity (the Implementing Agency (IA) for Defense Transportation System shipments, FMS freight forwarder or recipient country for non-DTS shipments) must report the information described in Table C7.T5.

C7.9.2. Cargo Preference (Air). The Fly America Act (49 U.S.C. 40118) requires first preference for airlift of grant, credit, or guarantee-funded cargo be given to U.S. flag air carriers. Before using a foreign-flag carrier, a shipper or exporter must provide a written explanation to the IA as to why a U.S. carrier should not be used. If a U.S. carrier codeshares with a foreign carrier to deliver a shipment to an overseas airport, it is still considered carriage by a U.S. flagged carrier. Guidance in Section C9.7.2.7.3. applies to offshore procurements.

C7.10.1. Title of Foreign Military Sales (FMS) shipments transfers to the purchaser at the point of origin unless otherwise specified in the Letter of Offer and Acceptance (LOA). The Department of Defense is not responsible for any loss or damage that occurs in transit or after passage of title. If a purchaser does not want to self-insure a shipment, the purchaser should obtain commercial insurance. Commercial insurance is highly encouraged for large dollar value items. The FMS freight forwarder should arrange commercial insurance as part of its contract with the FMS purchaser. In exceptional situations, an Implementing Agency may obtain insurance and the cost of the insurance will be billed as a separate line item on the Letter of Offer and Acceptance.

C7.11.1. Notice of Availability (NOA). A Notice of Availability (DD Form 1348-5) is sent by Shipping Activities to the appropriate Military Assistance Program Address Directory (MAPAD), DLMS 4000.25, Vol 6, Chapter 3., address to notify a purchaser or Foreign Military Sales (FMS) freight forwarder that an item is ready for shipment. The purpose of the NOA is to coordinate release of materiel requiring special receipt, export processing, or special storage procedures, to allow sufficient time to prepare for its receipt and/or processing. Storage or staging charges may accrue when an NOA response (or failure to respond) requires the items to be held for more than 30 calendar days. Any storage costs are charged to the FMS case.

C7.11.1.1. Unclassified Materiel. Purchasers can request NOAs only when special materiel is involved. Shipping activities send NOAs for unclassified shipments to the Type Address Code 3 address found in the appropriate MAPAD address.

C7.11.1.2. Classified Shipments. Shipping activities send NOAs for classified shipments to the country representative listed in the Special Instructions of the appropriate MAPAD address and not to a FMS freight forwarder.

C7.11.2. Offer Release Code (ORC). ORCs are included in LOAs and identify how materiel should be released and whether an NOA is required. These codes are transferred from LOAs into FMS MILSTRIP numbers and supplementary addresses for proper cargo and document release. The three ORCs and their use are shown in Table C7.T6.

C7.11.2.1. Offer Release Codes for the Government of Canada. Because transportation can be arranged directly from a depot or vendor without the use of a FMS freight forwarder for Canada, ORCs are not used to identify how materiel should be released and whether an NOA is required. The requirement of an NOA is based on the materiel classification (Classified, Hazardous, Sensitive, Pilferable, Overweight or Oversized).

C7.12.1. Defense Transportation System Costs. When preparing a Letter of Offer and Acceptance (LOA), standard transportation percentages are normally applied based on the Delivery Term Code (DTC). The Transportation Cost Look-up Table (See Appendix 2) is used to compute estimated actual transportation costs for the items listed. When estimated actual costs are used, a note is included in the LOA that identifies the amount, by line item, for each Defense Transportation System (DTS) transportation element (e.g., CONUS inland, port loading, and ocean transportation). Estimated actual costs are, similar to standard percentages, placed below-the-line (vice as a separate line item) in an LOA, and the funds are placed in the Foreign Military Sales (FMS) Trust Fund Transportation Cost Clearing Account. When a Special Assigned Airlift Mission or some other form of dedicated premium transportation (e.g., One Time Only vessel charter) must be used to move materiel purchased under an LOA, a separate transportation service line is included in the LOA. If it is One Time Only premium transportation (i.e. booking a One Time Only vessel or SAAM), transportation costs must be above the line. If it is One Time Only non-premium transportation, where the transportation is shared with other shipments, the transportation costs may be above or below the line. When expenditures are made for actual transportation, this line is adjusted to meet the full cost of the special transportation and a Transportation Account Code needs to be supplied to be transferred to the Department of Defense service contract for movement of the freight. When shipments require containerization, storage in-transit, escorts, or has any other special transportation accessorial requirements; these special transportation accessorials are not included in the standard transportation percentages nor in the cost provided in the transportation cost look-up table. These charges are to be placed above-the-line and adjusted as needed to capture actual cost.

C7.12.2. Non-DTS Transportation Costs.

C7.12.2.1. Commercial Bill of Lading (CBL). The CBL is an industry-wide form used by transportation carriers. This document will be used for the receipt of goods, as proof of title and delivery. The use of the CBL is the initial step in satisfying General Services Administration's initiative regarding electronic processing of transportation documents. In lieu of Collect movement, Delivery Term Code 4 and E shipments of non-Working Capital Fund materiel require account numbers to bypass the "pre-paid" process. Air Waybills or Bills of Lading are used to convey carriage within CONUS. A purchaser or its Freight Forwarder may be involved in the carrier selection process only if a collect shipment requires a Notice of Availability or if special instructions in the Military Assistance Program Address Directory (MAPAD) apply. Since most FMS shipments to Freight Forwarders are Working Capital Fund pre-paid shipments, Special Instructions in the MAPAD are inadvisable since they do not apply to pre-paid shipments and would delay their release.

C7.12.2.2. Pre-Paid Arrangements. Small parcel shipments are shipped prepaid via a small parcel carrier to reduce costs. The shipping activity follows pre-pay and add procedures so that the materiel manager recovers transportation charges from a purchaser’s account. Pre-pay and add procedures are not recommended for FMS due to a lack of in-transit visibility.

C7.13.1. General. A Transportation Plan is required for each LOA containing defense articles that are Classified (CONFIDENTIAL and SECRET), Sensitive (including Controlled Cryptographic Items (CCI), or Arms, Ammunition, & Explosives (AA&E) (Security Risk Categories I - IV) and in which an international transfer occurs. The plan covers all movement including final receipt by the Designated Government Representative (DGR) or other designated representative acting for the DGR. The Transportation Plan format for classified materiel and AA&E, Figure C7.F2., is based on standards agreed to by the Multinational Industrial Security Working Group and NATO. TOP SECRET materiel must always be transferred via government courier. The Transportation Plan format for CCI is based on CNSSI 4001.

C7.13.2. Transportation Plan Preparation. The Transportation Plan is developed by the IA that prepares the LOA in coordination with the FMS purchaser. It is to be submitted to, and approved by, the applicable security authority and accepted by the FMS purchaser, in writing, prior to the movement of the materiel. If Repair and Return items are involved, the Transportation Plan must address all aspects concerning the return of items, including functions to be performed by the sending and receiving entities and notification requirements. Transportation Plans are living documents that must be continually updated.

C7.13.3. Transportation Plan Review. Regardless of custody transfers location, the IA ensures its component Designated Disclosure Authority reviews and approves/disapproves the Transportation Plan if it includes classified materiel. An information copy of the Transportation Plan should be provided to DSCA (Integrated Regional Teams (IRT)).

C7.13.3.1. Classified Requirements. If an FMS freight forwarder or commercial carrier is involved in the transfer of classified materiel, or if classified consignments emanate from a cleared contractor facility, the Transportation Plan must be provided to the appropriate DCSA Field Activity. The Defense Counterintelligence and Security Agency verifies the security clearance of FMS freight forwarders, as well as any industry appointed courier or escort. DCSA oversees and enforces all security measures implemented by cleared contractors in safeguarding classified information pursuant to the National Industrial Security Program Operating Manual (NISPOM), regardless of the manner through which contractors have taken possession of the classified material. If the Transportation Plan results in inconsistencies with the requirements of the NISPOM or with previous agreements between the implementing governments concerning security procedures, the IA, with assistance and guidance from DCSA, will make necessary changes and resolve the inconsistencies with the Designated Security Authorities of the implementing governments. DSCA (Strategy, Plans, and Policy Directorate (SPP)), and Defense Technology Security Administration (DTSA) (Director, International Engagement Directorate) will be notified by DCSA if the IA and DCSA are not able to resolve matters satisfactorily. Only cleared carriers qualified by Surface Deployment and Distribution Command or Protective Security Service will be used for shipments internationally. International transfer of classified material should only be made using ships, aircraft or other carriers that are:

C.7.13.3.1.1. For classified materiel the FMS Case Manager and supporting security office should coordinate with DCSA and other government security and Customs authorities to ensure that the proper security arrangements are made to facilitate transfers through port and carrier security.

C7.13.3.2. AA&E Requirements. Reviews of Transportation Plans for unclassified shipments that are Sensitive or AA&E are conducted by the IA. DCSA does not require copies.

C7.13.3.3. CCI Requirements. CCI are unclassified but controlled secure telecommunications equipment and associated cryptographic assemblies, components or other hardware or firmware products that perform a critical COMSEC function. Un-keyed CCI is unclassified and shipment requires a Transportation Plan as specified in Figure C7.F4. DSCA must approve an exemption to policy to ship keyed CCI - utilize the Transportation Plan requirements in Figure C7.F3. and Figure C7.F4. for these approved exemptions.

C7.13.3.3.1. Transportation Plans for CCI must include required information for the initial delivery, returns for repair, and are updated when demilitarization functions are confirmed, all which requires the transfer of the item from the authorized shipping COMSEC Custodian/Manager to the recipient's COMSEC Custodian/Manager. The SF-153 COMSEC Material Report is used by the shipping COMSEC Custodian/Manager to document the transfer of COMSEC products. The receiving COMSEC Custodian/Manager notifies the shipping COMSEC Custodian/Manager upon receipt of the item(s) by signing and returning the SF-153 to the shipping COMSEC Custodian/Manager. Transportation Plan approval will be dependent on an implemented CISMOA or other agreement; See Section C7.3.5.1.3.

C7.13.4. Transportation Plan Usage. Once approved, a Transportation Plan becomes an integral part of the LOA and is available for review by U.S. Customs and security officials when exported. A Transportation Plan must be updated regularly. FMS purchasers are responsible for ensuring that their FMS freight forwarders have copies when involved with exports. When possible, the details of the Transportation Plan should be included in the DoD Service Contract for appropriate movement of the cargo to its destination. Contracts should also include the Security Risk Category and National Stock Number, as appropriate, so shipments are properly marked and utilize the necessary protective services.

C7.14.1. Transfer of Classified Information or Materiel. Classified information or materiel approved for release to a foreign government or international organization will be executed as a government-to-government transfer.

C7.14.1.1. At the outset of negotiations or during the pre-Letter of Request phase, the Implementing Agency (IA) will consult with Department of Defense (DoD) Transportation authorities to determine whether secure shipment from the CONUS point of origin to the ultimate foreign destination is feasible. The IA security staff also will be consulted to assist in assuring that the security aspects of the transportation meet prescribed standards. Since DoD security regulations require a Transportation Plan covering the movement of classified material from point-of-origin to final destination, the IA that prepares the LOA for this materiel will ensure it addresses all Defense Transportation System (DTS) security procedures that are to be followed while the materiel is within the DTS.

C7.14.1.2. The transfer of classified materiel occurs through official government channels between authorized representatives of each government or pursuant to other methods agreed to in writing by the Designated Security Authorities of the sending and receiving government (Defense Technology Security Administration (DTSA), Director, International Security Programs). Classified consignments shipped as freight must be accompanied by a DoD or purchasing government escort possessing a personnel security clearance at the level of the materiel to be shipped internationally. Exceptions to this policy are shipments by DTS, shipments by military transportation of the purchasing government after acceptance by the purchaser government’s Designated Government Representative, shipments by cleared freight forwarders which provide an escort possessing the requisite clearance approved by the Defense Security Service, and as approved by DTSA, Director, International Security Programs, on a case-by-case basis.

AA&E and Sensitive materiel include items such as small arms, various types of ammunition, explosives, and special items, such as night vision devices and Controlled Cryptographic Items (CCI), that pose special concern if they fall into the wrong hands. AA&E materiel is broken down into four Security Risk Categories (SRC). Sensitive materiel, to include CCI, may not have a SRC, but still require special handling. The different categories are outlined below along with the transportation procedures that apply to them. AA&E and Sensitive items may not be shipped to a purchaser's Foreign Military Sales (FMS) freight forwarder or to a purchaser’s facility in the United States (e.g., Embassy, buying agency, etc.) and require Transportation Plans. Any exceptions to this policy are noted below. Case Managers are required to notate in the LOA if any items contain hazardous materials, AA&E, and/or are classified or sensitive materiel. These items must also be identified in the Department of Defense (DoD) contract along with specific shipping requirements. AA&E and sensitive materiel moving via the Defense Transportation System (DTS) must comply with Chapter 205 of the Defense Transportation Regulations.

C7.15.1. SRC I. This category is primarily Man Portable Air Defense Systems, rockets, and ammunition in a ready-to-fire configuration, including components. These items must be moved by DTS to at least the overseas Port of Debarkation. If a purchaser wants to pick up the articles at a DoD-controlled port for overseas movement under its own control, the purchaser must request a waiver from the Under Secretary of Defense for Intelligence (USD (I)), through DSCA (Strategy, Plans, and Policy Directorate (SPP)). The waiver request must demonstrate that the purchaser will provide security for movement of the items that is at least equal to DoD standards. A sample is provided in DoD Manual 5100.76-M. DSCA coordinates the review of the waiver request with USD(I), and returns the final determination to the purchaser when the review is complete. Purchasers should forward waiver requests to DSCA (Strategy, Plans, and Policy Directorate (SPP)) through the IA. If the waiver is granted, the waiver information must be included as a note on the applicable Letter of Offer and Acceptance.

C7.15.2. SRC II through IV. Collectively, these categories include everything from light automatic weapons and ammunition to non-automatic weapons and ammunition. These items must move through a DoD-controlled Port of Embarkation and maintain security procedures consistent with Delivery Term Code (DTC) 7, 8, or 9. This requirement cannot be waived. Please consult the Defense Security Cooperation Agency, Office of Strategy, Plans and Policy, Execution Policy and Analysis (DSCA/SPP/EPA) for clarification of any requirements.

C7.15.3. Non-Sensitive AA&E. Not all ammunition and weapons-related items are Sensitive AA&E. Only items identified by DoD item managers as Sensitive in accordance with DoD Manual 5100.76-M require special release and movement processing.

C7.15.4. CCI. CCI recipients are permitted to move CCI (to include external peripheral/support equipment) through FMS freight forwarders or the Defense Transportation System (DTS), provided that in-transit visibility and reasonable protection against theft and loss is maintained at all times. See Figure C7.F4. The FMS purchaser may impose more stringent controls on shipment of CCI when transporting outside the United States.

C7.15.4.1. Packaging requirements. Un-keyed CCI must be packaged for shipment in any manner that provides sufficient protection from damage, and provides evidence of any attempt to penetrate the package while the material is in transit.

C7.15.4.1.1. In order to conceal the sensitive nature of the shipment, packages containing CCI must not be externally marked as CCI or show the item description (nomenclature) of the equipment being shipped. For exterior container documentation purposes, CCI is are considered controlled and sensitive items (e.g., MIL-STD-129, paragraph 5.3.3.).

C7.15.4.1.2. CCI must only be shipped to authorized activities. Packages must be addressed in a manner that will ensure delivery of the material to an organization with an individual designated to accept custody for it at the recipient activity. An individual's name should not be used in the address; rather a functional designator should be used (e.g., an office symbol, a MAPAC, or a COMSEC Material Control System (CMCS) account number).

C7.15.5. AA&E and Sensitive to Canada. Canada may have shipments of all categories of AA&E and Sensitive items moved directly to locations in Canada. Canada has no freight forwarders and arranges shipments directly with North American carriers.

Shipments of hazardous materials (HAZMAT) must comply with the applicable provisions of 49 CFR, Subchapter C, U.S. Hazardous Materials Regulations (HMR), and international transportation standards. The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (DOT/PHMSA) regulates commercial conveyance of HAZMAT in the U.S. DOT/PMHSA issues authorizations, known as EX-Numbers, which are required for commercial conveyance of all HAZMAT containing Hazard Class 1 (HC1) Explosives, such as rockets, missiles, torpedoes, and explosives. Any article containing HC1 materiel requires an EX-Number, regardless of overall Hazard Classification.

C7.16.1. Use of EX-Numbers. A unique DOT/PHMSA-issued EX-Number is associated with every HC1 article and must be assigned before the article can be moved by commercial conveyance in the United States. As required by the HMR, each EX-Number provides an article’s assigned Hazard Class and Division, proper shipping name, and United Nations (UN) identification number. An EX-Number can be filed for each HC1 article, or groups of articles that have the same UN identification number, hazard classification, and packaging instructions, rather than on a per-shipment basis. Most EX-Numbers also have the specific packaging/container requirements for the identified HC1 material. If alternative packaging arrangements are used, then a specific EX-number for packaging must be obtained from DOT/PHMSA. Small arms cartridges for rifles, pistols, and shotguns with inert projectiles or blank ammunition not exceeding .50 caliber or 8 gauges do not require EX-Numbers if the manufacturer has assigned a hazardous classification code of 1.4S. Cartridges, small arms meeting the criteria of 49 CFR 173.56(h) may be assigned a classification code of 1.4S by the manufacturer.

C7.16.2. Use of Department of Defense (DoD) EX-Numbers for export of Foreign Military Sales (FMS)-origin articles from the United States. DOT/PHMSA issues DoD-specific EX-Numbers for movement of DoD HC1 articles. The DoD EX-Number may be used for the initial export of FMS-origin HC1 articles from the United States if the materiel is moving through the DTS to the destination. Otherwise, FMS purchasers are responsible for obtaining appropriate EX Numbers.

C7.16.2.1. FMS-origin HC1 articles being moved by the Defense Transportation System to the purchaser’s country (Delivery Term Code (DTC) 7 and 9) may use the DoD EX-Number. Once custody of the materiel is transferred to the purchaser, the DoD EX-Number is no longer valid for the movement of FMS-origin HC1 articles.

C7.16.2.2. The DoD EX-Number may be used for the FMS purchaser pick-up of HC1 at a DoD-controlled Port of Embarkation (DTC 8). The use of the DoD EX-Number by the purchaser is valid only while the materiel remains in U.S. territorial jurisdiction. DoD EX Numbers cannot be used for any subsequent movement outside of the United States.

C7.16.3. EX-Numbers issued to FMS Purchasers. Any commercial movement by the purchaser or its FMS freight forwarder of FMS HC1 materiel within the United States or the return of any HC1 materiel to the United States for any reason, such as repair, modification, upgrade, testing, or training exercises, requires that the purchaser first apply to DOT/PHMSA for an EX-Number following the process detailed under Section C7.16.4. DoD will provide needed documents. Any exemption to the EX-Number application process, known as a Special Permit, must be secured from DOT/PHMSA.

C7.16.4. Securing EX-Numbers from the U.S. Department of Transportation. Purchasers must apply for a DOT/PMHSA-issued EX-Number for each HC1 article if the materiel is expected to return to the United States for any reason. An application should be filed for each HC1 article, or groups of articles that have the same UN identification number, hazard classification, and packaging instructions, rather than on a per-shipment basis. The length of time an EX-Number is valid varies depending on the type of application filed. EX-Numbers must be obtained for FMS articles that remain in the original configurations and for FMS articles that have been modified from their originally-purchased configuration, including packaging.

C7.16.4.1. Applications.

C7.16.4.1.1. Unmodified FMS Articles. A new EX-Number must be obtained by the FMS purchaser prior to any commercial transport in the United States of FMS articles containing HC1 that remain in the original configuration with no modifications. The following documentation, all in English, is required to be submitted to DOT/PMHSA by an official of the purchaser’s government:

C7.16.4.1.2. Modified FMS Articles. Modified articles are considered to be “new explosives” under 49 CFR 173.56(a). Prior to movement of such assets in the United States, a purchaser’s Competent Authority, as the “manufacturer” of the new explosive, must apply for and obtain a new EX-Number. The following set of informational documentation, all in English, is required to be submitted to DOT/PMHSA as an EX-Number application for modified FMS articles:

The export of defense articles must comply with the International Traffic in Arms Regulations (ITAR). Materiel transferred to foreign partners through Foreign Military Sales (FMS) is generally exempt from specific licensing requirements. Consistent with 15 CFR 734.3(b)(vi), items that are sold, leased, or loaned by the Department of Defense to a foreign country or international organization under FMS pursuant to a Letter of Offer and Acceptance (LOA) are not subject to the Export Administration Regulations, but rather the Arms Export Control Act and the ITAR.

C7.17.1. ITAR Exemptions for FMS. FMS shipments do not require a license when all conditions of ITAR Section 126.6(a) or Section 126.6(c) can be met. Table C7.T8. provides individual shipment-level requirements when using the ITAR 126.6(a) and 126.6(c) exemptions.

C7.17.1.1. ITAR Section 126.6(a) applies to Defense Transportation System shipments using USG-owned (organic) assets, DoD-contracted commercial resources, or shipments exported on military aircraft or naval vessel of the recipient foreign government or international organization.

C7.17.1.2. ITAR Section 126.6(c) applies to shipments arranged by FMS freight forwarders. Any freight forwarder using the ITAR exemption in Section 126.6(c) must meet the requirements identified in Section C7.5.

C7.17.2. Transportation Plans. Any exports of classified hardware and/or related technical data must have a detailed Transportation Plan in accordance with Section C7.13. The exporter shall provide an electronic copy of the Transportation Plan to CBP, generally by email, at the port where the FMS materiel is being loaded on the conveyance. If electronic reporting of such information is unavailable, contact CBP at the port where the classified materiel will be exported for specific instructions.

C7.18.1. Transportation of controlled substances, such as morphine and other drugs, must be handled in accordance with the Controlled Substances Import and Export Act (21 U.S.C. 951 et seq). Prior to export, the Implementing Agency obtains import authorizations from the purchaser (21 U.S.C. 953(a)(3) and (21 U.S.C. 953(e)(1))and submits the documentation to the Department of Justice’s Drug Enforcement Administration and requests export permits for the controlled substance. Once approved, the export permit number, the expiration date, and the port of export should be furnished to the Defense Logistics Agency Troop Support (formerly Defense Supply Center Philadelphia).

C7.19.1. The Procurement Agency will notify the Implementing Agency (IA) of any materiel procured offshore and the IA notifies the purchaser of articles to be supplied from offshore sources within three weeks after source identification. The purchaser may, for logistics reasons, request that the procurement be made from a CONUS source. The IA will notify the Procurement Agency of the purchaser’s decision. If procurement is from an offshore vendor, the Department of Defense (DoD) Contract Administrator must send a Notice of Availability (DD Form 1348-5) to either the Offshore NOA address identified for the purchaser in the applicable Military Assistance Program Address Directory (MAPAD) or, if none is listed, to the appropriate NOA address listed for the applicable MAPAD. Based on the NOA, the purchaser or its Foreign Military Sales (FMS) freight forwarder may direct movement of the materiel to an offshore facility in the same region as the materiel's origin or to the FMS freight forwarder's facility in CONUS. The purchaser is responsible for the cost of movement to the CONUS FMS freight forwarder and for all export and/or import licenses and Customs clearance requirements imposed by the materiel’s country of origin and the United States Government (USG). Regardless of what procedure is followed, title passes to the purchaser at the shipment's point of origin, See Chapter 15. for certain exceptions, and Chapter 9 for further information on Offshore Procurement. The DoD CONUS contractor who was awarded the original FMS contract is responsible if they purchase the items offshore at an OCONUS subcontractor’s facility since this will change the original plans for transportation and DoD contract that was awarded. The primary DoD contractor then becomes responsible to move the freight from the subcontractor’s facility to the ultimate destination at no cost to the USG or the FMS customer.

C7.20.1. If possible, items returned to the United States for servicing should be moved by a purchaser or a purchaser’s Foreign Military Sales (FMS) freight forwarder. The details of the transfer are included in a Transportation Plan, if applicable, in accordance with Section C7.13. Arms, Ammunition, & Explosives or Sensitive items are returned through a DoD-controlled ocean or aerial port as indicated by the Security Risk Category. The purchaser and FMS freight forwarder are responsible for clearance through U.S. Customs and any other necessary documentation, as well as the purchaser’s Customs. Onward movement to the designated CONUS repair facility depends on the Delivery Term Code used. The purchaser and FMS freight forwarder should ensure that these shipments are accompanied by appropriate shipping documents and that import and/or export documents are done correctly when the items enter and exit CONUS. Under special circumstances, the Defense Transportation System can be used to return items to CONUS for service and return. All HC 1 articles returning to CONUS must have a country-specific EX-Number, See Section C7.16.

When a discrepancy occurs in-transit, Security Cooperation Offices (SCO) must submit a DD Form 361; Transportation Discrepancy Report (TDR) for Defense Transportation System (DTS)-routed Foreign Military Sales (FMS) and grant aid deliveries. The purchaser cannot submit a TDR. TDR procedures are found in Defense Transportation Regulation Chapter 210. A TDR documents lost shipments and establishes an official record for future claims against a carrier for loss or damage. Limited liability prevents the purchaser from receiving full value from a carrier, but if the purchaser obtains commercial insurance for its purchases, the official record may help the purchaser when submitting insurance claims. Whether shipments move via DTS under collect or third-party billing terms to FMS freight forwarders or are shipped prepaid to FMS freight forwarders, the most that the purchaser might collect for loss or damage is the limited liability applicable to the commercial ocean, air, or inland carrier.

C7.21.1. Claims That Cannot Be Submitted By the United States Government (USG). Claims against carriers or third-party billing shipments and FMS freight forwarder-contracted carriers must be filed by purchasers or their FMS freight forwarders directly with the carriers.

C7.21.2. Claims That Can Be Submitted By the USG. For Department of Defense (DoD)-furnished or contracted transportation, DoD is responsible for submitting claims against carriers. Surface Deployment and Distribution Command (SDDC) processes claims against ocean carriers, Air Mobility Command processes claims against air carriers, and DoD shipping activities submit claims against inland CONUS carriers. The SDDC initiates its claims in response to TDR packages submitted by SCOs in the purchaser’s country. CONUS shipping activities submit claims against inland CONUS carriers in response to requests from purchaser representatives or FMS freight forwarders. Any proceeds from these claims are forwarded by the Implementing Agency (IA) to purchaser accounts held by Defense Financial Accounting Services Indianapolis.

C7.21.3. Tracers. When an IA has furnished shipment status showing item pickup by an inland carrier, but materiel has not been received, the purchaser is responsible for initiating a tracer action. Whether the materiel moved prepaid, collect, small parcel or a freight shipment, DoD shipping activities assist with the tracer action by providing constructive proof of delivery or pertinent information obtained from shipping documents or from carriers.

C7.21.3.1. For all shipments processed through FMS freight forwarders, purchasers should direct tracer requests to their FMS freight forwarders before addressing any inquiries to DoD.

C7.21.3.2. If a FMS freight forwarder claims non-receipt, it may contact the shipping activity directly for assistance, especially if the shipment is less than 30 days old. Alternately, upon request from purchaser country representatives, the IA may obtain shipping documents and data from the shipping activity. If constructive proof of delivery is provided, the purchaser must follow-up with the FMS freight forwarder to determine if the item has been received.

C7.21.3.3. If the FMS freight forwarder's records still show non-receipt, the purchaser directs the FMS freight forwarder to start a formal tracer action with the inland carrier if the shipment was released under a Commercial Bill of Lading or third-party billing procedures. The carrier should provide proof of delivery, or the FMS freight forwarder must make a claim against the carrier on behalf of the purchaser. If the shipment was released to the inland carrier under some method of pre-paid transportation, the FMS freight forwarder should submit a formal request to the shipping activity so that the shipping activity can obtain proof of delivery from the carrier or submit a claim against the carrier for lost or damaged goods. If materiel has been misdirected, the IA may be contacted for assistance with redirecting materiel to its correct destination.

C7.21.4. Claims Documentation. To resolve claims of non-receipt, the USG provides evidence of shipment. This constitutes as "constructive proof of delivery" since title passes at the point of origin regardless of who furnishes the transportation. Any movement document, bill of lading, or receipt (signed by a carrier representative) that shows that a DoD shipping activity (including vendors filling DoD contracts for the FMS program) has released materiel to a carrier for shipment constitutes evidence of shipment. This evidence applies equally to shipments released to a purchaser's FMS freight forwarder or country representative, or for movement overseas via the DTS. Examples of these documents are Bills of Lading (BL), U.S. Postal Service receipts (insured, certified, express or registered mail), or small parcel carrier pickup documents.

C7.21.4.1. Key Supporting Documentation. In order to strengthen the claim against the carrier for lost or damaged material, the SCO in representing the purchaser should provide as much supporting documentation as possible, in addition to providing all requested information on the TDR. This supporting documentation includes BLs, delivery receipt, photographs, carrier’s inspection report, government inspection report, actual repair cost estimate, signed and dated statements from personnel discovering damage, etc.