C15.1.1. General. Building Partner Capacity (BPC) programs encompass security cooperation and security assistance activities that are funded with U.S. Government (USG) appropriations and administered as cases within the Foreign Military Sales (FMS) infrastructure. These programs may provide defense articles and/or services to other USG departments and agencies under the authority of the Economy Act or other transfer authorities for the purpose of building the capacity of partner nation security forces and enhancing their capability to conduct counterterrorism, counter drug, and counterinsurgency operations, or to support U.S. military and stability operations, multilateral peace operations, and other programs. They are crucial tools used by the Department of Defense (DoD) and other USG agencies in furtherance of U.S. national security objectives. To enable BPC program execution through existing security assistance automated systems, the DoD Implementing Agency (IA) develops a pseudo Letter of Offer and Acceptance (LOA) in the Defense Security Assistance Management System (DSAMS). The pseudo LOA is not signed by the partner nation that will ultimately receive the articles and/or services, but serves to document the transfer of articles and services to the USG Requesting Authority.

C15.1.1.1. Economy Act. The Economy Act, 31 U.S.C., Section 1535 and Section 1536, is a general authority for the interagency or the intradepartmental furnishing of goods and services on a reimbursable basis. Under the Economy Act, the purchasing department or agency must pay the performing agency’s actual costs of the goods or services provided, to include direct and indirect costs. The entire amount of an Economy Act order to fill a BPC program requirement is obligated by the purchasing agency when the order is accepted (DoD FMR Volume 11A, Chapter 3). The performing agency must further obligate the funds before the period of availability for new obligation expires.

C15.1.1.2. DoD Appropriations. Congress appropriates funding to DoD for specific BPC programs through the annual DoD Appropriations Act, and in certain cases, through other appropriations acts. For example, Congress first enacted legislation establishing and appropriating funds to the Afghanistan Security Forces Fund (ASFF) in 2005 and appropriated additional funds for ASFF in several subsequent years. Pursuant to the Economy Act, when the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) or other DoD component transfers funds to DSCA in support of a BPC program, the funds must be obligated within their period of availability.

C15.1.1.3. Other USG Agency Appropriations. Congress authorizes and appropriates funds to the Department of State (DoS) and other USG agencies for security cooperation and security assistance activities. These agencies may, in turn, transfer funds to DSCA (often via a Foreign Assistance Act (FAA), Section 632(b) Memorandum of Agreement (MOA)), identifying a specific requirement for defense articles and services for a partner nation under the authority of a BPC program. When interagency funds are transferred into the FMS Trust Fund for BPC programs, they are considered obligated upon signature of the MOA (as stated in the document). IAs must then obligate the funds contractually or through other means.

C15.1.2. BPC Case Process. The process of developing and executing a BPC case is organized into five phases:

Planning and Requirements Definition; Case Development; Case Implementation; Case Execution; and Case Closure.

Management of appropriated funds and communications with the Benefitting Country must be recognized in each phase.

C15.1.2.1. Planning and Requirements Definition. A USG Requesting Authority, which is usually the Geographical Combatant Command (CCMD), but could also be another DoD or non-DoD agency, defines and initiates the BPC requirement to support specific USG objectives. The IA may conduct a feasibility assessment to determine the most appropriate solution. The Requesting Authority then submits an actionable Memorandum of Request (MOR) to the IA. Note: The BPC MOR is similar to the FMS Letter of Request (LOR), which is submitted by a foreign purchaser.

C15.1.2.2. Case Development. During case development, the IA and the Requesting Authority coordinate to document the requirements and costs on a pseudo LOA. The DSCA Case Writing Division (CWD) conducts a quality assurance review, prepares the final version of the LOA, and coordinates review and approval by DSCA and DoS. Also during case development, the IA prepares a Case Advisory document for the Benefitting Country, which informs our partner nation of USG expectations. See Figure C15.F2.

C15.1.2.3. Case Implementation. The IA accepts the Offered case in DSAMS and DSCA (Business Operations Directorate) authorizes required funds to be transferred into the FMS Trust Fund. Defense Finance an Accounting Service – Indianapolis (DFAS-IN) implements the case in the Defense Integrated Financial System (DIFS) and obligation authority is passed to the IA.

C15.1.2.4. Case Execution. During case execution, the IA must often work quickly to obligate funds before they expire. The IA procures the defense articles and services according to DoD regulations. Materiel is transported using the Defense Transportation System (DTS) or other government-procured transportation, while the IA retains oversight of the transportation process and assists with resolution of transportation issues that may arise. After materiel has arrived in country and has been inventoried, the Security Cooperation Organization (SCO) transfers custody and responsibility of the materiel and services to the Benefitting Country and begins end use monitoring (EUM), as applicable.

C15.1.2.5. Case Closure. The BPC case closure phase can begin as soon as supply services are complete (i.e., all materiel and services have been delivered). The IA will expend BPC program funds no later than July 31st of the funds cancelling fiscal year or other deadline specified in funding documents. The IA must ensure that residual funds are identified for return as soon as possible. When closure activities are complete, DFAS-IN closes the case in DIFS.

C15.1.3. Responsibilities. Refer to Section 1.3. for general responsibilities of the contributors to case development and execution. Specific roles and responsibilities that pertain to the management of BPC programs are summarized below.

C15.1.3.1. Department of State (DoS) Bureau of Political Military Affairs (PM). DoS(PM) is responsible for ensuring that, pursuant to Section 505 of the FAA, there is an agreement (a “Section 505 Agreement”) with each partner nation eligible for BPC program assistance and for ensuring that, if needed, the Benefitting Country acknowledges that the assurances provided in the 505 Agreement apply to specific BPC programs. This may be accomplished by a unilateral Diplomatic Note, or other appropriate means, that clearly demonstrates the Benefitting Country understands its responsibilities. DoS(PM) approves each pseudo LOA based on the daily State List report provided by DSCA CWD. DoS(PM) is responsible for oversight, Congressional Notification, and funding of Peacekeeping Operations (PKO) programs, including Global Peace Operations Initiative (GPOI) programs.

C15.1.3.2. Office of the Under Secretary of Defense for Policy (OUSD(P)). The OUSD(P) is responsible for oversight of DoD-funded BPC programs. For certain programs, OUSD(P) prioritizes and ensures fully justified requirements are coordinated. For the Coalition Readiness Support Program (CRSP) and for the Section 1206 Program, OUSD(P) is responsible for obtaining Secretary of Defense approval on the amount of training, equipment, and supplies to be provided. For the Section 1206 Program, OUSD(P) also provides policy oversight and guidance, leads the DoD proposal review process, and coordinates with State to secure the Secretary of State’s approval. Subsequent to Secretary approval, the OUSD(P) submits the Congressional Notification packages to eight committees and sub-committees for the 15-day Congressional Notification period. The OUSD(P) proponent for Section 1206 leads all interaction with Congress and ensures that the Secretary’s goals and objectives are properly explained to members. Following the expiration of the notification period, OUSD(P) directs DSCA to begin case implementation.

C15.1.3.3. Office of the Under Secretary of Defense, Comptroller (OUSD(C)). OUSD(C) is responsible for establishing and updating guidance on the use of DoD funds. OUSD(C) reviews and submits Congressional Notification packages to the Under Secretary of Defense for Legislative Affairs for forwarding to appropriate Congressional committees. OUSD(C) authorizes the release of DoD funds for BPC programs and reports to Congress on the use of funds.

C15.1.3.4. Defense Security Cooperation Agency (DSCA). DSCA administers BPC programs under the direction of the USD(P) and provides guidance to DoD components and SCOs on the administration and execution of BPC program activities. DSCA oversees program-level logistics planning, provides financial management, develops and implements program policies, and otherwise assists Requesting Authorities in achievement of BPC program objectives.

C15.1.3.5. Geographical Combatant Commands (CCMD). Each CCMD is responsible for multi-year planning of BPC activities and strategies for the regions and countries within its theater of operations, documented in the Theater Security Cooperation Plan (TSCP). Each TSCP supports CCMD goals and objectives for regional security and is coordinated with the U.S. Missions’ plans for security assistance. In addition to planning, the CCMD has overall responsibility for prioritizing, coordinating and evaluating the success of security cooperation activities in theater.

C15.1.3.6. Requesting Authority. The Requesting Authority for a BPC case is an organization with responsibility for planning regional or country capacity building activities. Within DoD, the CCMDs often serve as Requesting Authorities. During pre-MOR planning, the Requesting Authority will communicate detailed requirements to the IA and receive IA feedback in order to complete the MOR. The Requesting Authority must then remain actively engaged to ensure the IA has the necessary information for case development, to enable timely obligation of expiring funds, and to participate in transportation and delivery. BPC cases will compete with FMS and other DoD requirements for the IA’s resources, so the Requesting Authority should communicate and justify its highest priorities.

C15.1.3.7. Funding Authority. The Funding Authority is the organization that controls and oversees management of funds for the BPC program. When BPC program funding is provided by a DoD appropriation, one of the Military Departments (as in the case of ASFF, the Iraq Security Forces Fund (ISFF), and the Pakistan Counterinsurgency Fund (PCF)) or OUSD(P) will serve as the Funding Authority. Non-DoD agencies serve as the Funding Authority for appropriations they provide to DSCA.

C15.1.3.8. Implementing Agency (IA). The IA has overall responsibility for case development, execution, and closure. IAs must communicate frequently with the DSCA Country Program Director (CPD), the DSCA Country Financial Director (CFD), the Requesting Authority, the Procuring Agency, the U.S. Transportation Command (USTRANSCOM) and the SCO to facilitate information sharing of case plans, status, and changes. During the planning phase, the IA collaborates closely with the Requesting Authority and verifies that the MOR is complete before initiating a pseudo LOA document in DSAMS. During case development, the IA communicates with the Requesting Authority and with the SCO to ensure case-specific requirements are captured and prepares the Case Advisory. The IA must fully understand the nature of the appropriated funds being used in order to ensure its activities meet obligation and expiration/cancellation timelines.

C15.1.3.9. U.S. Transportation Command (USTRANSCOM). Though the IA has overall responsibility for ensuring BPC material is transported and delivered to the SCO, USTRANSCOM manages the DTS which moves materiel from point of origin to the final destination within the Benefitting Country. If materiel is delivered to a central aerial port of debarkation (APOD) in-theater, USTRANSCOM will coordinate with the CCMD to arrange for materiel to be moved to the final destination.

C15.1.3.10. Security Cooperation Organization (SCO). The SCO within each Benefitting Country supports the Requesting Authority through each phase of the BPC case, and interacts closely with Benefitting Country security forces. The SCO is entrusted with communicating BPC program objectives and requirements to Benefitting Country representatives and soliciting their partnership. The SCO is also familiar with the in-country security and logistics environment. Table C15.T1. provides a summary listing of SCO responsibilities unique to BPC programs.

Table C15.T1. SCO Responsibilities for BPC Programs

#	Responsibility
1	Maintain a copy of the FAA, Section 505 Agreement (as amended by any Diplomatic Notes) and other relevant agreements between the USG and the Benefitting Country. See Table C15.T3.
2	Provide interface for exchange of cooperative requirements information among the Benefitting Country, the Country Team within the U.S. Embassy, and the DoD components responsible for the BPC case. See Section C15.2.4.2.
3	Provide a detailed explanation and a list of required defense articles and services to support Congressional Notification, as requested.
4	Provide shipping information (e.g., Mark For Code and Military Assistance Program Address Code (MAPAC)) to the Requesting Authority for inclusion in the MOR. See Table C15.T4.
5	Present the Case Advisory document to the Benefitting Country prior to shipment of defense articles and services; record the name of the receiving Benefitting Country representative and the date of presentation. See Section C15.3.7.
6	Obtain the signed Benefitting Country’s Physical Security and Accountability Plan no later than 30 days prior to delivery of any enhanced EUM (EEUM) materiel, and provide a copy to DSCA (Programs Directorate). See Section C8.4.
7	Coordinate with the IA and the Benefitting Country on the preparation and arrangement for receipt of BPC program defense articles and services. Provide advance notification of delivery to the Benefitting Country to coordinate receipt and security of case materiel. See Section C15.5.4.
8	Prepare and submit Transportation Discrepancy Reports (TDRs) and Supply Discrepancy Reports (SDRs) in accordance with guidance provided to foreign purchasers. See Section C6.4.
9	Prepare the Transfer and Receipt of Materiel and Services document and obtain signature from the Benefitting Country representative. Record when, where, and to whom delivery of materiel was made. See Section 15.5.5.
10	Maintain all records pertaining to Benefitting Country notifications and BPC case documentation. E-mail these documents to the DSCA CPD and the IA, as appropriate.

C15.1.4. BPC Programs. Following is a brief description of some of the more common BPC Programs. See Table C15.T2. for a complete listing of available BPC programs with their corresponding codes and authorities.

C15.1.4.1. Afghanistan Security Forces Fund (ASFF). The ASFF is authorized to be used to train, equip and provide related assistance to Afghanistan National Security Forces (ANSF), including the provision of equipment, supplies, services, facility repair, renovation and construction. The OUSD(C) coordinates the ASFF Financial and Activity Plan (FAP) for approval by the Afghanistan Resources Oversight Council (AROC), comprised of Principal Deputy Under Secretaries for OUSD(P), OUSD Acquisition, Technology, and Logistics (AT&L), and OUSD(C), as well as senior representatives from the Joint Staff, U.S. Central Command, and the Office of the Assistant Secretary of the Army (Financial Management and Comptroller). The OUSD(C) then coordinates the ASFF FAP with DoS and submits the program Congressional Notification by Budget/Sub-budget Activity Groups (BAG/SAG). Only a portion of ASFF is used to fund BPC cases. The Army provides the fund allotments for these to DSCA. Requirements for ASFF cases are received from the Combined Security Transition Command - Afghanistan (CSTC-A).

C15.1.4.2. Coalition Readiness Support Program (CRSP). CRSP is an authority in the Coalition Support Funds legislation, which is part of the annual DoD Appropriations Act, and is funded with Defense-Wide Operation and Maintenance (DW O&M) appropriations. CRSP may be used to provide specialized training, procure supplies and specialized equipment, and loan equipment on a non-reimbursable basis to coalition forces supporting U.S. military operations in Afghanistan and Iraq. CCMDs may submit requests for CRSP funds to OUSD(P) for prioritization, coordination, and submittal to the Secretary of Defense for approval. Funds made available for CRSP prior to FY12 are available until expended.

C15.1.4.3. DoD Counternarcotics (CN) Program. DoD has authority under provisions in various National Defense Authorization Acts (NDAAs) to transfer defense articles and services for building counternarcotics capacity and counternarcotics support to Benefitting Countries. DSCA executes only a small portion of the DoD CN program: Sections 1004 and 1033 of NDAA 1991 and 1998, respectively and as amended, are generally the authorities under which CN programs are executed by DSCA. The Office of the Assistant Secretary of Defense for Special Operations/Low Intensity Conflict (SO/LIC) is responsible for CN policy and funding and may submit MORs to DSCA detailing equipment, training, facilities, and communications requirements to support security, law enforcement, drug detection, and reconnaissance within a Benefitting Country. OUSD(C) transfers DoD CN funds to DFAS-IN from the DoD Counter Drug Transfer Account to execute these BPC cases.

C15.1.4.4. Global Train and Equip (Section 1206). The Section 1206 Program is funded with DW O&M appropriations. The Secretary of Defense, with the concurrence of the Secretary of State, has authority under Section 1206 to provide equipment, supplies, and training to build the capacity of foreign military forces to conduct counterterrorism operations or to participate in or support military and stability operations in which U.S. forces participate. Program funds can also be used to build the capacity of maritime security forces to conduct counterterrorism operations. The CCMDs, OSD, the Joint Staff, and/or DoS may identify Section 1206 requirements. The CCMD submits requirements in the form of proposals to OSD(SO/LIC). DSCA oversees a feasibility review of the proposals (which serve as MORs) to validate equipment lists, training requirements, and costs. These documents are simultaneously reviewed and prioritized by OUSD(P), the Joint Staff, and DoS, before approval by the Secretary of Defense, and then are submitted for Congressional Notification. The IA must develop Section 1206 cases as quickly as possible so that they are ready to offer as soon as case funding is available and to maximize the time remaining for contracting actions. The CCMDs should remain actively engaged and responsive to support this effort. DSCA (Programs Directorate) centrally manages the Section 1206 programs and tracks them from inception to case closure, including the timely, assured delivery of defense articles and services. See Section C15.3.4.3. for Section 1206 Cross Fiscal Year Authority. See DoD Instruction 5111.19, Section 1206 Global Train-and-Equip Authority, for general Section 1206 Program guidelines.

C15.1.4.5. Iraq Security Forces Fund (ISFF). The ISFF provides support to all Iraqi Security Forces (ISF), including military, police forces, special task forces, and border security. It funds construction, force protection, training, equipping, life support, and sustainment of ISF. Authority for the use of ISFF is incrementally drawn down following the withdrawal of U.S. forces from Iraq.

C15.1.4.6. Pakistan Counterinsurgency Fund/Counterinsurgency Capability Fund (PCF/PCCF). PCF/PCCF provides assistance to build and maintain the counterinsurgency capability of the Pakistan Security Forces, including military forces and the Pakistan Frontier Corps, and is authority to provide program management, equipment, supplies, services, training, facility and infrastructure repair, renovation, and construction. PCF is a DoD authority and appropriation, while PCCF is a DoS authority and appropriation. The OUSD(C) coordinates the PCF FAP with DoS and then submits the program-wide Congressional Notification by BAG/SAG. PCF is appropriated entirely to the Army as the DoD Executive Agent; only a portion of PCF is used to fund BPC cases via DSCA. The Army provides the fund allotments for these to DSCA. The Office of the Defense Representative-Pakistan (ODR-P) serves as the Requesting Authority and generates requirements for PCF/PCCF, while the Army serves as the Funding Authority for those funds provided to DoD.

C15.1.4.7. Peacekeeping Operations (PKO), FAA Section 551. Funds for PKO are appropriated to DoS. The PKO legislation authorizes the provision of assistance to partner nations and international organizations on such terms and conditions as the President may determine, including for use in regional security peacekeeping operations and other programs carried out in furtherance of U.S. national security interests. Such assistance may include reimbursement to DoD for expenses incurred pursuant to Section 7 of the United Nations (UN) Participation Act of 1945, but may not exceed $5,000,000 in any fiscal year unless a greater amount is specifically authorized by the President. Each year, DoS uses FAA, Section 632(b) MOAs to transfer some of the PKO funding to DSCA in support of specific requirements. The U.S. Embassy within a Benefitting Country or the CCMD defines PKO requirements and prepares the MOR for those requirements that will be executed by DSCA as a PKO BPC program.

C15.1.4.8. Global Peacekeeping Operations Initiative (GPOI). The GPOI Program is funded with PKO funds that have been specifically allocated by DoS to support UN and regional peace support operations (PSO) that establish and strengthen partner nations’ institutional infrastructure to conduct PSO training, train partner nation peacekeepers, and build capacity to address critical shortages in UN peacekeeping operations. DoS transfers a portion of the GPOI funds to DSCA under FAA, Section 632(b) MOAs. OSD(SO/LIC) approves GPOI MORs prior to case development. DSCA (Programs Directorate) centrally manages GPOI program and tracks cases from inception to closure, including the timely, assured delivery of defense articles and services. The CCMDs are the lead implementers of GPOI activities, in collaboration with the IA and DoS.

C15.2.1. General. During the planning and requirements definition phase of a BPC case, the Requesting Authority must determine program objectives and develop the request packages, with input from the Security Cooperation Organization (SCO), the Implementing Agency (IA), the Benefitting Country, and other stakeholders. The IA needs detailed requirement information to source the defense articles and services appropriately. The Requesting Authority should clearly communicate a linkage between the provision of defense articles and services and the achievement of specific U.S. national security objectives; so that program effectiveness can be assessed following case execution. This phase of a BPC case concludes with the Requesting Authority’s submittal of a detailed, coordinated Memorandum of Request (MOR) that is executable by the IA within funding and timeline limitations.

C15.2.2. BPC Programs and Authorities. DSCA assigns BPC program codes to specific programs and appropriated fund sources in the same way that FMS country codes are assigned to FMS purchasers. Table C15.T2. lists each BPC program with its associated code, authority, and funding information. The Fund Source column provides the fund source for pseudo LOA documents and indicates whether the funds are from DoD or are provided via an FAA, Section 632(b) MOA. Program and appropriation authorities are identified in separate columns. The funds expiration date is September 30th of the year shown in the Expiration Date column (unless otherwise indicated), and program funds must be expended prior to the end of the year shown in the cancelling FY column. As Congress enacts legislation creating new authorities, DSCA (Strategy Directorate) will assign new program codes and update Table C15.T2. As appropriations cancel, they will be removed from the table.

Table C15.T2. BPC Programs and Authorities

Click to view : Table C15.T2. BPC Programs and Authorities

C15.2.3. International Agreements and Treaties in Force. Requesting Authorities will plan and execute BPC programs in accordance with applicable bilateral and multilateral international agreements and arrangements. The SCO will maintain copies of these documents and be familiar with their contents. Copies should be shared with the Combatant Command (CCMD), USG planners and Benefitting Country Ministry of Defense (MoD) counterparts, as necessary, to ensure all contributors are cognizant of their contents. Specific agreements and arrangements apply to each Benefitting Country, but Table C15.T3. provides a listing of some of the common agreements which may be in place.

Table C15.T3. International Agreements

International Agreement	Purpose
FAA, Section 505 Agreement	A bi-lateral exchange of diplomatic notes initiated by DoS in which the Benefitting Country provides end-use, security, and re-transfer assurances with respect to U.S. defense articles and services transferred via grant. Section 505 Agreements are a requirement of law for grant transfers.
Unilateral Diplomatic Note amending the Section 505 Agreement	Amends the Section 505 Agreement to apply to the U.S. assistance under consideration, in addition to those included in the original Section 505 Agreement. Generally, DoS(PM) will initiate the diplomatic note from the U.S. Embassy when a partner nation is approved to benefit from a BPC program.
Status of Forces Agreement (SOFA)	The SOFA generally establishes the legal framework under which DoD military and civilian personnel operate in a partner nation, addressing matters such as taxation, criminal jurisdiction, claims, drivers’ licenses, privileges and immunities. The U.S. does not pursue a SOFA with each partner nation, and a SOFA is not required before a partner nation may receive BPC program assistance.
General Security of Military Information Agreements (GSOMIA)	Legally binding international agreements that establish terms for the protection and handling of classified military information provided by either partner to the other. Agreements that handle other types of classified information in addition to classified military information are referred to as General Security of Information Agreements (GSOIAs).
Communications and Information Security Memorandum of Agreement (CISMOA)	Establishes terms for secure communications interoperability and security
Bi-Lateral or Multi-Lateral Treaties	Various – e.g., NATO Treaty, NATO SOFA, U.S.-UK Defense Trade Cooperation Treaty.
Other Agreements and Memorandum of Understanding (MOU)	Various – e.g., RDT&E Agreements, Reciprocal Defense Procurement MOUs, coproduction agreements.

C15.2.4. Planning and Coordination. Most BPC program and case planning will occur in conjunction with annual CCMD security cooperation planning, which is organized by the CCMD J5 (or J4 for the U.S. Pacific Command (USPACOM)) in a series of regional and country-focused working groups and documented in the Theater Security Cooperation Plan (TSCP). Crises, targeted appropriations, and other events may make it necessary for the Requesting Authority to begin BPC case planning outside the annual CCMD planning process. Some authorities, like Section 1206, have their own annual coordination cycles. In every instance, the Requesting Authority should initiate coordination with the appropriate IAs, other key USG stakeholders, and the CCMD J5 as early in the process as possible. It is often beneficial to invite participation from the SCO, the Military Departments (MILDEPs), and regional experts within OUSD and DoS.

C15.2.4.1. International Sanctions and Leahy Restrictions. The Requesting Authority must confirm that the Benefitting Country is not under sanctions and is otherwise eligible to receive BPC program assistance from the USG. DoD and DoS “Leahy” human rights vetting requirements must be completed, as applicable, before a Benefitting Country receives BPC program assistance. The DoS Leahy law (Section 620M of the FAA) provides that no assistance may be provided under the FAA or the Arms Export Control Act (AECA) to any unit of the security forces (including an individual) of a Benefitting Country if the Secretary of State has received credible information that such unit has committed a gross violation of human rights, unless the partner nation is taking effective steps to bring the responsible members of the security forces unit to justice. The DoS Leahy law applies to DoS authorities and certain DoD authorities, such as Section 1206, pursuant to the terms of those authorities. The DoD Leahy law is provided in the annual DoD Appropriations Act, and it provides that DoD appropriations may not be used to support a training program involving a security forces unit (including police) of a partner nation if the Secretary of Defense has received credible information from DoS that the unit has committed a gross violation of human rights, unless all necessary corrective steps have been taken.

C15.2.4.2. Benefitting Country Involvement. The SCO will advise the Benefitting Country of BPC program objectives and the Benefitting Country’s role in the BPC case process. Benefitting Country representatives should provide details of their existing capabilities, capacity, and security requirements to enable identification and prioritization of BPC requirements. The Benefitting Country should also indicate its ability to support and sustain the articles and services under consideration after delivery.

C15.2.4.2.1. Sharing Case Information With Benefitting Countries. The SCO may share information that contributes to defining requirements; arranging for delivery, Benefitting Country Customs processing, and security; operating and sustaining the defense articles; and achieving training objectives. SCOs are encouraged to share requirement information with Benefitting Country representatives, as appropriate, to support U.S. objectives. Once the BPC case is implemented, the SCO may share the pseudo LOA and supporting documents (with the exception of protected information listed below) with Benefitting Country MoD representatives, as appropriate. Case information will be shared consistent with U.S. national security interests, and in accordance with any existing international agreements. Release of information regarding the schedule of shipments or training events does not constitute a commitment of the United States and SCOs should clearly communicate this to Benefitting Country representatives. No guarantee of assistance can be made until the defense articles or services are delivered and title and custody has been properly transferred. See Section C15.5.5.

C15.2.4.2.2. Protected Information. SCOs may not share internal USG correspondence or information about internal USG discussions regarding case requirements with Benefitting Country representatives. The following information may not be shared and must be removed from case documents prior to release unless the IA has obtained authorization from DSCA (Strategy Directorate) to share the information:

C15.2.4.2.2.1. Pre-decisional case information (to include the draft pseudo LOA);

C15.2.4.2.2.2. USG internal correspondence regarding the case (e.g., e-mails, meeting minutes) or any internal USG planning information, policy determinations or justifications regarding the case;

C15.2.4.2.2.3. Information pertaining to another partner nation (a pseudo LOA with multiple Benefitting Countries must be carefully screened prior to sharing);

C15.2.4.2.2.4. The FAA 632(b) MOA or other pseudo LOA funding documents;

C15.2.4.2.2.5. Proprietary information from any source; or,

C15.2.4.2.2.6. Contract documents or commercially sensitive information, to include the Statement of Work (SOW).

C15.2.4.3. Identification of Desired Capabilities. The Requesting Authority, in coordination with the CCMD (if it is not the CCMD itself), should define Benefitting Country military roles required to meet security objectives under existing and emerging security environments. For each capability considered, this assessment should ideally include an analysis of doctrine, organization, training, materiel, leadership, personnel, and facilities within the Benefitting Country so as to prevent an overly narrow focus on equipment or training solutions. The assessment, captured in the CCMD’s Country Campaign Plan, should also consider the Benefitting Country’s political will to apply the capabilities, the national legal framework that permits or circumscribes the application of the capabilities in support of the desired partner role, and the capacity of the MoD and other supporting institutions to sustain the capabilities. The Country Campaign Plan articulates how desired roles and capabilities relate to specific CCMD and national-level strategic objectives. The U.S. Embassy includes desired partner nation objectives in the Mission Strategic Resource Plan (MSRP).

C15.2.4.4. Prioritize Requirements. Once initial planning has occurred, the Requesting Authority will identify a prioritized list of partner capacity/capability shortfalls that the partner nation is willing to address and the Country Team within the U.S. Embassy is willing to support. This will help direct resources toward the most urgent requirements, assure proper sequencing of the delivery of new capabilities, facilitate the creation of capability packages, and provide scale-ability to the overall program should only a portion of requested funds be available. Prioritization should be done in coordination with IAs and CCMD staff, and should take into consideration any known restrictions on the use of funds.

C15.2.4.5. Capability Package Planning. The Requesting Authority will translate prioritized requirements into packages of specific, actionable, and sustainable BPC program requests. For complex programs, or to obtain more definitive assessments, USG subject matter experts may conduct site visits to consult with Benefitting Country representatives, inspect equipment, evaluate institutional capacity, and assist the Requesting Authority in capability package planning. An Expeditionary Requirements Generation Team (ERGT) could be established to accomplish this. See Section C2.4.2.

C15.2.4.6. Total Package Approach (TPA). Where appropriate, BPC MORs should present a TPA to the provision of defense articles and services for capacity building. During planning, the Requesting Authority should consider and address follow-on support and effective sustainability, recognizing that BPC programs are time-limited by their appropriations. Adequate sustainment support may require spares, additional training, consumables, and possibly contractor logistics support that exceed BPC program funding timelines.

C15.2.5. Feasibility Assessment. The IA will conduct a feasibility assessment to verify requirements are actionable and funds can be obligated within time and budget constraints. Feasibility assessments identify any documentation needed to complete the MOR package, such as a Country Team Assessment and CCMD endorsement; definition of requirements; technology security and foreign disclosure releases; accurate equipment, training, and support cost estimates; transportation plans; and special contracting requirements. If a requested item cannot be placed on contract before the funds appropriation expires, the IA will identify this to the Requesting Authority and the DSCA CPD.

C15.2.6. Memorandum of Request (MOR). The Requesting Authority, in accordance with its internal procedures, finalizes and submits an MOR to the IA with a copy to the DSCA CPD. MORs must be submitted in unclassified communication channels so they are accessible to all stakeholders, and formats vary according to the program. See Table C15.T2. for a list of MOR information. Section 1206 Program MORs (referred to as proposals) are first submitted to OUSD(P), which forwards them to DSCA and other organizations for review. Requesting Authorities should submit completed MORs no later than the first quarter of the fiscal year to allow adequate time for case development and funds obligation before year end and to support the Requesting Authority’s required delivery date. LOR guidance materials (found on the SCO/CCMD tab in the Security Cooperation Information Portal (SCIP)) may be helpful to guide MOR preparation.

Table C15.T4. MOR Information

Click to view : Table C15.T4. MOR Information

Figure C15.F1. Guidance for Sole Source Justification

Full Size Image PDF Version of Figure

C15.2.7. Congressional Notification and Funding. BPC program execution is subject to Congressional Notification before funds are made available for case implementation. The Congressional Notification process, managed by the Funding Authority, may take place prior to MOR submittal, concurrent with case development, or even after case development, but must be completed prior to case implementation. DSCA Case Writing Division (CWD) will withhold offering any pseudo LOA until confirmation that this process has completed, but it is imperative that the IA and DSCA (Operations Directorate) ensure each LOA is ready to offer as early in the year as possible, to take full advantage of remaining time for funds obligation, funds expenditure, and case execution.

C15.2.7.1. DoD Funds. The DoD Requesting Authority initiates the Congressional Notification process by submitting proposals/requirements to OSD. OUSD(C) or OUSD(P) coordinates the notification packages with DSCA, DoS, and OSD Legislative Affairs before they are submitted to Congress for the required notification period. The level of detail required for each Congressional Notification varies. For example, the ASFF notification is a high-level summary, broadly defining DoD requirements for the upcoming year. The Section 1206 Congressional Notification package includes multiple country programs, and involves cost estimates, quantities and justifications for each. CRSP and Section 1206 notifications may be submitted multiple times during a fiscal year. Once notification is complete, OUSD(C) authorizes release of funds to the appropriate DoD comptroller office for use in support of BPC programs.

C15.2.7.2. FAA Section 632(b) MOA Funds. DoS and other USG departments and agencies are responsible for preparing and coordinating Congressional Notification and/or approval packages based on program requirements. For example, DoS(PM) submits the PKO Congressional Notification and identifies the funds it proposes to execute through the DSCA case process. The Funding Authority will prepare an FAA Section 632(b) MOA which records the terms of its interagency agreement with DSCA, such as spending limits, period of performance and other unique transfer requirements. The DSCA CPD will coordinate and process the MOA for signature by the DSCA Director. Once the MOA is signed by both DSCA and the Funding Authority, funds are considered obligated for the Funding Authority. As a result, DFAS transfers the funds into the FMS Trust Fund, where they may be used to support the BPC case for the purposes outlined in the MOA. A signed copy of the MOA will be attached to each funded pseudo LOA document.

C15.3.1. General. The Requesting Authority and Security Cooperation Organization (SCO) will remain actively engaged during case development to clarify requirements, ensure development is on-track, and maintain communications with the Benefitting Country. The Implementing Agency (IA) will document and price the required materiel and services on a pseudo LOA and prepare a Case Advisory for the Benefitting Country. The DSCA Case Writing Division (CWD) will place the BPC case in Offered status once all programmatic and policy requirements have been met.

C15.3.2. Initiating a Pseudo LOA. The DSCA Country Program Director (CPD) will forward a copy of the Memorandum of Request (MOR) to the IA, identify the allowed total case value (TCV), and provide a unique case identifier. The case identifier is a 6-position alpha-numeric string which includes the program code, the single-position IA code of the DoD component providing the support, and a 3-position case designator (e.g., E7-B-UAC). The Defense Security Assistance Management System (DSAMS) will attach pseudo LOA information (in lieu of FMS LOA information) and validate the entry of BPC case data. Each program code in DSAMS is associated with the programs authorized Benefitting Countries. If a pseudo LOA document must benefit more than one Benefitting Country, the IA will first coordinate this with the DSCA Country Financial Director (CFD). The Benefitting Country FMS country code (found in Table C4.T2. and distinct from the BPC code) will be selected by the IA at the line level in DSAMS. Table C15.T5. provides Instructions for preparing a Pseudo LOA document, to be used with BPC Program data provided in Table C15.T2. and the definitions of terms provided in the Pseudo LOA Information document.

Table C15.T5. Instructions for Preparing Pseudo LOAs

Click to view : Table C15.T5. Instructions for Preparing Pseudo LOAs

C15.3.3. Pricing. The IA will price defense articles and services for pseudo LOA documents in accordance with the DoD Financial Management Regulation (FMR), DoD 7000.14-R; Volume 11A, for reimbursable operations, the authorizing legislation and relevant financial management policy for the funds. The IA must exercise care whenever items and quantities on the LOA change to ensure they do not change or exceed the nature and scope of the congressionally notified program. Depending on the requirements of the authorizing statute, there may be no flexibility in adjusting or exceeding the notified quantifies or values.

C15.3.3.1. Standard Level of Service. DSCA Directorates and IAs will render the same level and manner of service for management of BPC cases as they do for management of FMS cases. See Table C9.T2. Funding Authorities may approve payment for above standard level of service activities as long as the requirement is clearly justified in the MOR. The IA will include a charge for above standard level of service on the pseudo LOA or on a separate management case for the BPC program.

C15.3.3.2. Defense Articles. The price of defense articles sold under BPC program authority is the acquisition cost, adjusted as appropriate for condition and age.

C15.3.3.3. Defense Working Capital Funded (DWCF) Materiel and Services. The selling price is the DWCF current standard price. Payments or reimbursements are credited to the DWCF providing the items.

C15.3.3.4. Non-Excess Procurement Assets Not to be Replaced. The IA will set the price for these assets at the sum of the most recent actual procurement cost and modifications or improvements incorporated after production, adjusted for age or condition, plus prorated overhaul cost. The IA deposits payments from the Funding Authority into the Miscellaneous Receipts Account.

C15.3.3.5. Non-Excess Procurement Assets to be Replaced. The DoD Budget and/or Future Years Defense Program (FYDP) must reflect intent to acquire replacements for such assets before they are included on a BPC case. The Funding Authority will make reimbursements equal to the estimated replacement cost, including the contract or production costs of the article less an adjustment for age and condition of the item being sold.

C15.3.3.6. Procurement. The investment item unit cost restrictions contained in 10 U.S.C. 2245a and the annual appropriations act for DoD enacted by Congress do not apply to the use of Operations and Maintenance funds for defense articles procured in support of BPC programs unless specifically applied by Congress. Refer to language in the Congressional authorization and appropriation acts, the DSCA Office of General Counsel (OGC), and OUSD(C) for more information. The provisions of the various Buy American Acts may not themselves apply to all BPC programs, however similar provisions generally will apply to most BPC programs under the Balance of Payments Program regulations, which require DoD to purchase only U.S. domestically produced end-products (as defined by those regulations).

C15.3.3.7. Training. The IA will apply Rate D (See DoD FMR Volume 15, Chapter 7) for tuition-based training wholly funded with appropriated funds. For training requiring dedicated resources, the full cost of the training will be applied (excluding military pay and civilian unfunded retirement).

C15.3.3.8. Services. Non-training services will be priced using the DoD FMR Volume 11A. See Section C15.3.4.

C15.3.3.9. Surcharges and Accessorial Charges. The IA will apply the FMS Administrative Surcharge, Contract Administrative Services (CAS) surcharge, and accessorial charges (such as packing, crating, handling (PC&H) and transportation) to the pseudo LOA. Outside Continental United States (OCONUS) CAS is not applicable when Defense Contract Management Agency (DCMA) personnel are present in a Benefitting Country for the purpose of supporting DoD. OCONUS CAS on a BPC case, however, is applicable to DCMA personnel present in a Benefitting Country only to support an FMS case (i.e., full-time employees, 90 percent or more of their time devoted to an FMS case).

C15.3.3.10. Travel and Living Allowances (TLA) for Training. Provision of CONUS training to foreign personnel under a BPC case is not common, and any request must be supported by the DSCA CPD. A TLA waiver is not required. The IA may include student travel and living allowances as a line on the pseudo LOA document as long as funds are obligated before they expire. See Section C15.3.4.3. for a discussion of Section 1206 cross-fiscal year authority. TLA for OCONUS training does not require DSCA CPD support. The IA may add a separate line to the LOA to cover unforeseen medical expenses that may arise in the event that the student does not possess medical insurance. The LOA may not pay for routine medical expenses or for dependents. Unless dependents have adequate healthcare insurance coverage, dependents are not allowed to accompany the student to training in CONUS or OCONUS. See Chapter 10.

C15.3.3.11. Transportation Charges. DSAMS will automatically apply the DoD transportation rates for standard transportation of BPC case materiel, which includes the use of channel flights, for each applicable line on the pseudo LOA. These below-the-line transportation charges (called such because they are added on the LOA estimated cost summary below the line item net estimated cost) are collected into a Transportation Cost Account within the FMS Trust Fund. Below-the line transportation expenses are subsequently paid from this account. There are specific situations, however, in which the standard transportation rate will not be applied. If an IA deviates from the standard percentage rate, it must enter a case remark in DSAMS to provide the rationale for the rate being used.

C15.3.3.11.1. Transportation to a Consolidation Point. The IA may consolidate materiel at a CONUS inventory control point in order to manage multiple shipments of materiel to a Benefitting Country. If materiel consolidation is planned during case development, the IA will include a case note on the Pseudo LOA document to describe the intended consolidation and cite the separate case (if known) that will provide funds for materiel handling at the ICP and onward shipment into the Benefitting Country. The IA will inform their billing office to override the DTC rate calculation on the case in development by entering an appropriate Transportation Bill Code (TBC) to fund only transportation to the ICP at the time of delivery booking.

C15.3.3.11.2. Separate Transportation. If a separate transportation case will fund transportation of materiel to the Benefitting Country (other than from a consolidation point), the IA should not include a transportation charge on the Pseudo LOA. The IA will include a case note that identifies the lines that will be transported via a separate case and provide that case’s identification. This information will also be entered when the TBC is selected.

C15.3.3.11.3. Premium Transportation. If a line item will be transported via a Special Assignment Airlift Mission (SAAM) or other premium transportation, the transportation service is entered as an above-the-line direct charge and not assessed on a rate basis.

C15.3.3.11.4. Prime Vendor Transportation. For system sales and more complex acquisition and sustainment efforts, the IA may request approval from DSCA (Strategy Directorate) for the prime vendor to transport and make delivery of materiel to the in-country location. The Prime Vendor’s contract price will include a cost for transportation and DTC 4 will be cited against the line. The IA will include a note in the pseudo LOA to describe the transportation and delivery arrangements.

C15.3.3.12. Engineering Services and Construction. Absent specific statutory authorization, BPC programs cannot be used for engineering services or construction to accomplish infrastructure projects within a Benefitting Country that are in support of U.S. forces. Such projects are governed by the laws regarding military construction, 10 U.S.C. Section 2801, implementing regulations and guidance provided by the CCMD.

C15.3.3.13. Nonrecurring Costs (NC). USG appropriated funds will not be used to pay NC; therefore, IAs will not apply NC to pseudo LOA documents.

C15.3.4. Period of Performance for Services.

C15.3.4.1. Contractor Services.

C15.3.4.1.1. Severable contractor services (such as tactical and deployment training) must generally be performed in, and paid with, funds from the current year. However, the period of performance for severable services may begin in the year of funds availability and end in the subsequent year, provided the contract period does not exceed 12 months.

C15.3.4.1.2. Non-severable contractor services, such as services to produce a single or unified outcome, product, or report, will be funded entirely at the time the contract is awarded, though the period of performance may extend across fiscal years. Contractor-provided new equipment training and installation at a basic level are considered non-severable services when necessary for the installation or operation of the actual equipment. This includes basic quality assurance testing to ensure that the items are in operating order. For example, if a Benefitting Country under an FY 2011 appropriation is to receive radios and antennas with a lead-time allowing deliveries in November 2012, FY 2011 funds can be used to place basic radio operator training and antenna installation on contract so that training and installation can be conducted when the equipment is delivered.

C15.3.4.2. Government-sourced Services. The IA may use current year BPC program funds to pay for training and services to be executed by USG sources, such as USG civilian and military personnel, as long as the funds are fully obligated prior to their expiration. This generally requires that civilian and military personnel funded with BPC program funds must cease program-related activities no later than the end of the funds expiration fiscal year.

C15.3.4.3. Section 1206 “Cross Fiscal Year” Authority. Congress has provided the Section 1206 Program with a “cross fiscal year authority,” which applies to both contracted and government-sourced services. Amounts available for a fiscal year may be used for 1206 programs that begin in such fiscal year but end in the next fiscal year (See FY09 NDAA, PL 110-417, Section 1206(b)). This authority provides a time-limited exception to the bona fide need rule (which requires that appropriated funds be used only for goods and services for which a need arises during the period of that appropriation’s availability for obligation), in that it authorizes performance of Section 1206 Program services beyond the funds availability period and up to the end of the fiscal year following appropriation, and includes services such as travel and government civilian services as they pertain to TDY that is properly chargeable to the Section 1206 Program. Funded civilian personnel are not required to cease their Section 1206-related activities at the end of the appropriation fiscal year. If military pay is part of the reimbursable expense (i.e., under contingency operations), it may be reimbursed from Section 1206 funds. This authority does not extend the period of availability for the Section 1206 appropriation,; all funds providing support through the end of the subsequent fiscal year must be obligated prior to the end of the appropriation fiscal year.

C15.3.4.4. Services Under a Continuing Resolution (CR) Appropriation. When developing a pseudo LOA document that will be funded under a CR appropriation that lapses before the end of the fiscal year, the IA will specify the required period of performance for services in accordance with regulation and disregarding the CR expiration date. For example, if the CR appropriation ends on December 15, 2011 but the required period of performance extends to March 31, 2012, the pseudo LOA document will be written to reflect performance period extending to March 31, 2012. The IA must ensure that the pseudo LOA is for activity that is allowed by the CR. For example, CRs generally prohibit the initiation of projects for which appropriations, funds or authority were not available during the preceding fiscal year. The IA will provide written notification via e-mail or memo to the service provider to clarify that obligations are subject to the availability of funds. See Section C15.3.8.3.1. for a discussion of funds obligation under a CR appropriation.

C15.3.5. Signed Copy Distribution. The following statement will be automatically included after the payment schedule portion of each pseudo LOA document:

“Upon acceptance, the LOA Implementing Agency will sign one copy of this LOA document and retain the signed copy in case files. Simultaneously, the LOA Implementing Agency will enter the Accepted milestone into the Defense Security Assistance Management System (DSAMS), enabling the Defense Security Cooperation Agency (DSCA) to proceed with funds collection and case implementation.”

C15.3.6. Notes. A line item description note is required for every line on the LOA unless line item description information for each line can fit beneath the Military Articles and Services List (MASL) descriptions. Notes on a pseudo LOA do not represent terms and conditions of an international agreement, but rather an internal USG communication. Standard notes and case-unique notes for BPC cases communicate case information necessary for proper management of the case and case materiel. See Appendix 6. The Note Usage line of Appendix 6 identifies which standard notes apply to BPC cases.

C15.3.7. Case Advisory. Benefitting Countries should understand USG expectations in advance of receiving any BPC assistance. The Case Advisory, prepared by the IA, is a notification to the Benefitting Country that a BPC case is being considered and alerts the Benefitting Country of USG expectations that accompany the transfer of training and equipment. The SCO may present this document during case development or after case implementation, but will do so prior to shipment of the materiel or provision of training.

C15.3.7.1. Preparation. The IA will use the template provided for preparing the Case Advisory during the case development phase. See Figure C15.F2. The IA will enter the required information in the header and the first and second paragraphs, obtaining agreement and Diplomatic Note information from the SCO. Information in paragraph 2 will generally remain constant for each case that a Benefitting Country receives. The IA will select all applicable paragraphs to include in the Case-Unique Information section, save the completed form as a PDF file, and provide it to the SCO before the case is Implemented.

Figure C15.F2. Case Advisory

Full Size Image PDF Version of Figure

C15.3.7.2. Case Advisory Presentation. Before presentation of the Case Advisory, the SCO will complete the form and attach specific documents: an example (uncompleted) Transfer and Receipt document (See Figure C15.F4.) the Benefitting Country’s Section 505 Agreement; and any unilateral Diplomatic Note amending the Section 505 Agreement. The SCO will present the Case Advisory to appropriate Benefitting Country Ministry of Defense representatives, and will communicate its purpose and intention prior to shipment of case materiel. The SCO will make it clear that this document is advisory, does not guarantee provision of program materiel and does not obligate the Benefitting Country or the USG (it is not legally binding in the way that an international agreement would be). Benefitting Country representatives should be encouraged to share the document with others in their government. If Benefitting Country representatives believe their government will be unable to meet the expectations as stated, this will be discussed and reported to the DSCA CPD before materiel is shipped. A copy of the completed Case Advisory will be retained in SCO files.

C15.3.8. Offer of the Pseudo LOA.

C15.3.8.1. Submittal to DSCA CWD. The IA will ensure that pseudo LOA documents are submitted to DSCA CWD early in the fiscal year so they can be offered at the earliest opportunity. At the latest, the IA should place the LOA in Writing status in DSAMS with at least 60 days remaining before the BPC program funds expire for new obligation. The DSCA CWD conducts quality assurance review and prepares the final version of the LOA.

C15.3.8.2. DSCA and DoS Approval. After the pseudo LOA is reviewed and approved by DSCA and the IA, it will be coordinated with DoS(PM) via the daily State List. Either during or prior to this review, the Funding Authority will provide DSCA CWD with confirmation that all processes required by law have been completed (including Congressional Notification) and provide assurance of funding.

C15.3.8.3. Fund Source, Availability and Amount. DSCA CWD will place the LOA into Offered status, ensuring the Fund Source, Availability and Amount note cites the current appropriation authority and fund source. Obligation and expenditure of the case funds are subject to the terms, conditions and expiration date specified in the appropriation. Case funds must be obligated prior to the end of their period of availability.

C15.3.8.3.1. Continuing Resolution (CR) Appropriations. Congress may pass a CR appropriation that partially funds BPC programs and for a specific time period, rather than a full year. If a pseudo LOA is Offered using a CR appropriation and the case funds are not subsequently obligated prior to the CR expiration, the funds will generally not be available for use unless the appropriation time period is extended or replaced by a subsequent appropriation. If the CR is extended or replaced by a subsequent appropriation, case activity and funds obligation may proceed (the CR appropriation cited in the Fund Source, Availability and Amount note will need to be revised prior to case closure), subject to the terms and conditions of the new appropriation. If the CR is not extended or replaced, however, any funds not yet obligated become no longer available.

C15.3.8.3.2. Modification to Reflect Final Fiscal Year Appropriations. Every Implemented case that does not cite a final FY appropriation in the Fund Source, Availability, and Amount note will need to be modified prior to case closure to cite the final appropriation. Usually, this is accomplished when other case changes are implemented. For example, a BPC case implemented under the FY11 CR that expired on March 4, 2011, may carry the reference to that CR funding appropriation throughout its execution but will need to be modified sometime prior to case closure to reflect the final FY11 appropriation legislation.

C15.4.1. General. During the implementation phase of a BPC case the pseudo LOA document is Accepted by the IA, funds are placed on the case in the FMS Trust Fund by the Defense Finance and Accounting Service - Indianapolis (DFAS-IN), the case is Implemented, and obligation authority is granted to the IA. If the funds expiration date is imminent, the IA, DSCA (Business Operations Directorate) and DFAS-IN may initiate emergency implementation procedures. See Chapter 9.

C15.4.2. Acceptance. The IA is responsible for entering the Accepted milestone in DSAMS after the pseudo LOA document is Offered. An authorized representative of the IA will sign at the “U.S. Signature” block on the LOA. This is the only physical signature applied to the pseudo LOA document, as the DSCA counter signature data is updated by DSAMS. Neither the Benefitting Country nor the Funding Authority sign the pseudo LOA; the “Purchaser Signature” block is left blank.

C15.4.3. Funding. Before proceeding to implementation, DFAS-IN must confirm that BPC program funds have been collected into the FMS Trust Fund.

C15.4.3.1. DoD Appropriations. DSCA (Business Operations Directorate) sends a funding memo to DFAS-IN with instructions to collect DoD appropriated funds for the BPC case. BPC program funds will either be authorized for release by the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) or issued on a Military Interdepartmental Purchase Request (MIPR) (DD Form 448) by the Funding Authority. Funds from one fiscal year appropriation or type of appropriation cannot be combined with another fiscal year appropriation or type of appropriation to fund a BPC case.

C15.4.3.2. Foreign Assistance Act (FAA) Section 632(b). FAA, Section 632(b) Memorandum of Agreement (MOA) funds are obligated for the Funding Authority upon the last signature on the FAA, Section 632(b) MOA. DSCA (Business Operations Directorate) sends a copy of the signed FAA, Section 632(b) MOA to DFAS-IN along with instructions to collect the funds from the Funding Authority and to establish a separate account within the FMS Trust Fund associated with the BPC program. Transfer of funds into the FMS Trust Fund may take place prior to case development, but a completed Memorandum of Request (MOR) should be included with the MOA that is transmitted. Multiple BPC cases may be funded from a single FAA, Section 632(b) MOA. Additionally, an FAA, Section 632(b) MOA can be amended to add funds or change scope. Responsibility for funding cost overruns in excess of the funded amount should be clearly stated in the interagency agreement between parties and should be the responsibility of the Purchaser Agency.

C15.4.4. Implementation. The BPC case is Implemented when DFAS-IN notifies DSAMS of successful cash collection (or funds availability) in the FMS Trust Fund and obligation authority has been approved by the IA.

C15.4.5. Notification to the SCO. Immediately after a BPC case has been Implemented, the IA will notify the Security Cooperation Organization (SCO) and provide a copy of the Implemented case. The SCO may begin preparations for receipt of the materiel and services, as needed. The SCO will make no guarantee to the Benefitting Country that it will receive assistance, however, until the final delivery of the materiel or services.

C15.5.1. General. The IA receives obligation authority upon case implementation, and is then responsible for obligating the funds and executing the case to meet Requesting Authority timelines. Unless specifically exempted by law, BPC program funds are subject to applicable U.S. Government (USG) procurement law and policy. The USG is responsible for transporting BPC materiel all the way into the Benefitting Country, according to delivery requirements provided by the Security Cooperation Organization (SCO). The SCO will transfer custody to the Benefitting Country after materiel has been inventoried and when the Benefitting Country is ready to maintain and employ them.

C15.5.2. Funds Obligation. DoD must obligate USG appropriations in accordance with the rules described in the DoD Financial Management Regulation (FMR) (See Volume 3, Chapter 8). Case financial documents will indicate the FMS Trust Fund cite (97 X 8242). The Implementing Agency (IA) and the Procuring Agency must review the “Fund Source, Availability and Amount” note on the pseudo LOA document to identify the period in which case funds are available for obligation and expenditure. The IA may also refer to Table C15.T2. for BPC program funds expiration and cancellation dates. See Section C15.3.8.3.1. for specific guidance for handling LOAs offered under a CR Appropriation.

C15.5.2.1. Obligation Against Materiel and Services. To ensure funds are obligated prior to their expiration, Requesting Authorities should submit information and documentation to the IA Procuring Agency as early as possible, allowing sufficient time for that agency to submit requisitions or award contracts. The processing time required to obligate funds on contract will depend on the complexity of the requirement. The IA will ensure that participants in the sourcing, procurement and acquisition processes are informed of the BPC case financial timeline. Instructions should be included in funding documents to ensure that all contributors are aware of the expiring/cancelling nature of the case funds. An example of such wording follows:

This funding document contains funds that expire for obligation on 30 Sep 20XX. These funds cancel 30 Sep 20XX and will not be available for any funding adjustments and expenditures/disbursements after that date. All actions and final billings must be complete in sufficient time for cases to be closed before 31 Jul 20XX.

C15.5.2.2. Obligation Against DTS Transportation. The IA will plan for transportation of BPC case materiel from the earliest stages of case development in order to ensure delivery of materiel and services meets the Requesting Authority’s required delivery date (RDD). Below-the-line transportation funds on a case are considered obligated when the item requisitions are filled or the procurement contract is signed. If transportation costs will be paid by a separate transportation case, estimated costs for transportation will be calculated and tracked so that an adequate request for resources can be made. Above-the-line transportation funds are obligated when transportation is contracted or when a manifest is received from the U.S. Transportation Command (USTRANSCOM) (a manifest is issued after the materiel has been loaded on the Defense Transportation System (DTS) conveyance). The IA will confirm with the SCO that shipment delivery information provided in the Memorandum of Request (MOR) (e.g., Military Assistance Program Address Code (MAPAC), point of debarkation (POD), and RDD) is complete and valid. The shipping data will then be submitted by the IA to the Procuring Agency, along with any other specific transportation guidance. When the BPC materiel is ready for shipment, the DoD entity responsible for ensuring DTS transportation will enter the shipment requirements into the DTS booking system.

C15.5.3. Funds Expenditure. Once obligated, BPC case funds may be expended at any time until the funds cancel, at which time they are no longer available for any purpose. The Fund Source, Availability, and Amount note on the LOA will specify the date by which funds must be expended. See Table C15.T2.

C15.5.3.1. Expenditure Authority. Prior to processing disbursements, the disbursing activity must obtain expenditure authority from Defense Finance and Accounting Service - Indianapolis (DFAS-IN). The IA will maintain oversight of deliverables and coordinate with the Defense Contract Management Agency (DCMA) to ensure inspection, acceptance, and timely processing of contractor invoices. See the Federal Acquisition Regulation (FAR) 32.905.

C15.5.3.2. Reporting. DFAS-IN provides DSCA (Business Operations Directorate) and the Funding Authority with quarterly reports of program activities using DD Form 645, “FMS Billing Statement.” Though cash must be made available for a BPC case before shipment of the articles, this document indicates items shipped and amounts charged.

C15.5.3.3. Review and Reconciliation. The DoD FMR, Volume 3, Chapter 8, requires a Triannual Review of commitments, obligations, accounts payable, and accounts receivable. The IA will review and reconcile financial documentation regularly to identify and correct errors. The goal in performing these reviews is to ensure the full use of appropriations before they expire and to ensure that open obligations are valid and liquidated before the cancellation of the appropriation. This should be a collaborative effort among multiple IA offices, to include Resource Management; Accounting; Program Management; Contracting Office; and Acquisition/Logistics functions. Both case and financial data should be reconciled throughout the execution phase to facilitate timely case closure. During the funds execution period following expiration, price increases and other activities may occur on the BPC case. Appropriation law allows upward obligation adjustments only in select situations. Increases in scope, quantity increases on defined order lines, or extending the period of performance are not usually allowed. DSCA (Business Operations Directorate) will review any price/quantity increase or extension of the period of performance at the line or sub-line level. For adjustments to obligations incurred on a BPC case, fiscal year funds from the original period of availability should be used if available, and current year funds should only be used if there are no more original year funds available. See DoD FMR Volume 3, Chapter 10.

C15.5.3.4. Requests for Additional Funding After Period of Availability Expires. If a situation occurs that requires additional prior year funds or extensions of the period of performance, the IA will identify the amount required, the reason for the additional funds or time, and provide supporting documentation to the DSCA Country Financial Director (CFD). If additional funds are required for a procurement action, a determination by the IA Contracting Officer and an opinion by the IA’s legal counsel are required. The DSCA CFD will determine an appropriate fund source and coordinate approval by the DSCA Principal Director for Business Operations. In certain instances, Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) or Congressional Notification may be required. Once notified by DSCA CFD that the request has been approved, the IA will amend/modify the case and add a case note to the pseudo LOA document providing details of the fund use.

C15.5.3.5. Residual Funds. Often, the value of the Implemented case is greater than the actual funding needed to execute the case. IAs should review their BPC cases/lines for possible excess obligation authority throughout the period of funds availability to ensure any residual funds are quickly identified so they can be returned or redirected. DSCA (Business Operations Directorate) retains residual funds for upward adjustments. The funds are returned to the Funding Authority during the last months before they cancel. Options available to the Requesting Authority for use of residual funds, in priority order, are:

C15.5.3.5.1. Use for other requirements within the existing case, assuming that the requirement is consistent with any Departmental or Congressional authorization or program notification.

C15.5.3.5.2. Modification of the case to reduce case value. DSCA (Business Operations Directorate) will then direct DFAS-IN to return residual funds to the appropriate account. This action does not require an MOR from the Requesting Authority.

C15.5.4. Delivery of Materiel and Services. The IA has overall responsibility for transportation of BPC case materiel and will ensure that requirements and schedules are communicated appropriately to USTRANSCOM and the SCO. The SCO will provide shipping documents and bills of lading to the Benefitting Country representative so that materiel off-load, customs clearance, storage, onward movement, security, staging, and integration can be arranged. The IA will confirm that the SCO and Benefitting Country are ready to receive the materiel before delivery, and if any classified or sensitive cargo is on the manifest, proper arrangements have been made to receive and move the cargo to a secure location.

C15.5.4.1. Materiel Accountability. The IA will enter serial numbers, vehicle identification numbers (VINs), and country of origin (for those defense articles that have them) into the Security Cooperation Management Suite (SCMS) on the Security Cooperation Information Portal (SCIP) prior to the materiel shipment. For radios with serial numbered components only, the IA should enter the serial number of the receiver/transmitter. SCMS should be referenced during case planning to identify the status of already-programmed BPC cases by country. See Section C13.6.3.2.

C15.5.4.2. Materiel Preparation. The IA and SCO should use the Enhanced Freight Tracking System (EFTS) in SCIP to track transportation of all BPC materiel. The IA will ensure that specific requirements for materiel packing and shipping are properly addressed, and that necessary plans have been made for EEUM, classified, or sensitive materiel.

C15.5.4.3. Export Authorization. BPC defense articles and services are exported as USG-owned materiel to the SCO (or USG representative) in the Benefitting Country. The defense articles will remain USG-owned materiel until they pass through Customs and are transferred to the Benefitting Country. See Section C15.5.5. Contractors that execute BPC cases are required to comply with the International Traffic in Arms Regulation (ITAR) in their dealings with the USG and Benefitting Country.

C15.5.4.4. Advance Notice of Delivery. Approximately two weeks prior to materiel delivery, or as soon as possible thereafter, the SCO will provide the Benefitting Country MoD (or other government ministry, as appropriate) with a written notice of the pending delivery. The notice should state what materiel or service is arriving for the Benefitting Country, when (if known) and where the materiel will be delivered, and which unit is to receive the materiel or service. A copy of the Case Advisory and materiel shipment information should be attached to the notice, which may be used by the Benefitting Country to facilitate Customs processing. See Figure C15.F2. and Figure C15.F3.

Figure C15.F3. Example Notice of Delivery

Full Size Image PDF Version of Figure

C15.5.4.5. Arrival. BPC case materiel will be delivered to the Mark For address (or text address) provided at the time of DTS booking. The SCO should provide any corrections to this information to the IA as soon as they are known. Upon arrival in the Benefitting Country, BPC materiel will normally be processed through customs by Benefitting Country officials before being released into the SCO’s custody. The SCO will report the receipt date of BPC materiel to DSCA CPD.

C15.5.4.6. Joint Inventory. The SCO and the Benefitting Country representative will conduct a joint materiel inventory using the shipper’s manifest while the materiel remains in the custody of the SCO. The SCO will inform the IA of any materiel suspected to be missing, in case it has been included in a separate delivery. Items that are confirmed to be missing will be reported by the SCO on a Transportation Discrepancy Report (TDR). Items that are damaged or appear to have latent defects will be reported by the SCO on a Supply Discrepancy Report (SDR) in accordance with guidance for FMS purchasers. See Section C6.4.10.

C15.5.5. Transfer and Receipt of Materiel and Services. The SCO will retain control and ownership of the BPC equipment until such time as the Benefitting Country is ready to receive and properly employ the equipment. The Transfer and Receipt document (or a comparable form established for this purpose) and a complete materiel/services listing will be prepared by the SCO in advance of title transfer. See Figure C15.F4. When title transfer is appropriate, or when defense services are ready to begin, the SCO and the Benefitting Country representative will sign a Transfer and Receipt document, acknowledging that the Benefitting Country is assuming custody, title to, and responsibility for the items or services being transferred. The attached materiel inventory should contain item descriptions, quantities, and National Stock Number (NSN) or part numbers. The Case Advisory will also be attached to the Transfer and Receipt document. See Figure C15.F2. The SCO will provide a copy of the signed Transfer and Receipt document to the IA. If the Benefitting Country representative does not sign the Transfer and Receipt document, the SCO will provide an explanatory memo to the IA, along with the unsigned document and attachments. The IA will discuss resolution with the CPD. The SCO and the Benefitting Country will track and conduct EUM inspections as required by the DoD Golden Sentry program and guidance in Chapter 8, maintaining appropriate records within the SCIP EUM community.

Figure C15.F4. Transfer & Receipt Document

Full Size Image PDF Version of Figure

C15.6.1. General. The Implementing Agency (IA) will expend funds or reduce case value before the end of the cancelling year of the funds (i.e., generally the fifth year after the funds expire for new obligation) or other statutorily authorized period. To allow time for residual funds to be redirected or returned before this deadline, DSCA requires that BPC cases funded with expiring/cancelling funds be closed by the IA no later than July 31st of the cancelling year. This means that the IA must ensure that vendors have submitted all invoices and that all outstanding obligations have been paid in full before then. The IA will update the Estimated Closure Date milestone in DSAMS, if appropriate, and begin closure of a BPC case as soon as the case is supply service complete. For further information on case reconciliation and closure, refer to DoD 5105.65-M, Foreign Military Sales (FMS) Case Reconciliation and Closure Manual (RCM).

C15.6.2. Closure Facilitation. Prior to June 30th of the fiscal year preceding funds cancellation, each IA will provide case closure contact information to DSCA (Business Operations Directorate). The individual serving as a closure facilitator for the IA is expected to lead the stakeholders within the respective IA and ensure timely closure of BPC cases. The closure facilitator will direct stakeholders to review cancelling BPC cases as listed in the Security Cooperation Management Suite (SCMS) and identify any case at risk of not closing by July 31st. The closure facilitator will also identify to DSCA (Business Operations Directorate) valid, unliquidated obligations subject to closure/cancellation to determine whether funds are available for future adjustments or payments against such obligations. See DoD Financial Management Regulation (FMR), Volume 3, Chapter 10, 100201.D.

C15.6.3. Reporting Case Financial Status. The IA will input closure status/issues for all cases funded with funds that cancel in the current year on the form at Table C15.T6, available in SCMS (Input Case Option). DSCA (Business Operations Directorate) will download this information monthly beginning in November, bi-weekly beginning in July, and weekly beginning in September.

Table C15.T6. BPC Case Financial Status Update

Case	Country	Case Status	Implemented Case Value	Disbursements	Undisbursed Value	Date Closed or Estimated Closure Date	Status/ Issues
						Est. MMM YYYY
						Est. MMM YYYY
						Est. MMM YYYY

C15.6.3.1. Reconciling Balances. The IA and DFAS-IN will ensure accounting balances have been reconciled and all performance and disbursements have been properly reported. The IA will also ensure approved outstanding Supply Discrepancy Reports (SDRs) applicable to BPC cases have been submitted to Defense Finance and Accounting Service - Indianapolis (DFAS-IN) for action. BPC cases which have associated open contracts can be closed if no unliquidated obligations exist on those contracts. IAs will prepare the closure certificate and any other necessary supporting documentation in accordance with established procedures. Closure certificates will be sent electronically to DFAS-IN.

C15.6.4. Closure in DIFS. DFAS-IN will review the closure certificate and perform actions to close the pseudo LOA document in the Defense Information Finance System (DIFS). DFAS-IN should close cases containing no inhibitors within 30 days of receipt of the closure certificate and “C1” closure transaction. When DFAS closes the case in DIFS, DIFS sends a transaction to CISIL, MISIL or CMCS to close the case in those systems. When that closure transaction processes, those systems send a transaction to update the status in DSAMS to Closed. IAs can review closure information by referring to their MILDEP systems or to SCIP.

C15.6.5. Financial Activity After Funds Cancel.

C15.6.5.1. Adding Funds to an Open Case. If additional funds are required on a case for which funds have canceled, the IA must contact DSCA (Business Operations Directorate). Under specific conditions, a currently available appropriation may be approved by DSCA (Business Operations Directorate) to pay this requirement. The total of all payments from the current appropriation must not exceed the amount specified in DoD FMR, Volume 3, Chapter 10, 100201.F.

C15.6.5.2. Reopening a Closed Case. It will be necessary for an IA to reopen a BPC case once closed if there is financial activity that impacts the closed case. Should this occur, the IA will send a request to reopen the case, with sufficient justification, to DSCA (Business Operations Directorate) for review and approval.