C5.1.1. General. The Foreign Military Sales (FMS) process begins when an eligible foreign country or international organization requests information on defense articles or services, including training, being considered for purchase. All requests for information require the same channels of submission and must be answered consistent with the legal provisions under which the FMS program operates. See Section C5.1.3.

C5.1.2. LOR Format and Information Requirements. Requests are generally referred to as Letters of Request (LORs), whether provided through formal correspondence, requests for proposal (RFPs), discussions, electronic mail (e-mail), letters, or messages. Although no specific format is required for an LOR, they must be in writing and the partner nation should ensure that the request is complete in that it shall:

Identify the desired defense articles and/or services in sufficient detail for the United States Government (USG) to prepare an accurate cost estimate; Indicate whether Price and Availability (P&A) data, a Letter of Offer and Acceptance (LOA), an LOA Amendment, or an LOA Modification is desired; If for a blanket order LOA, include the desired materiel and services value or the desired total case value; Indicate the proposed method of financing; Identify any anticipated involvement in the requested case by anyone not a duly appointed officer or government civilian employee of the requesting government – i.e., a “third party” – so that the receiving Military Department (MILDEP)/Implementing Agency (IA) may initiate appropriate reviews and approval requests; and Contain the name and address of the originator and a traceable reference number, e.g. letter serial number.

C5.1.3. LOR Submission Procedures. If the request is received verbally, a memorandum for record (MFR) must document the conversation and outline the required information. Written confirmation should be obtained from the purchaser. If the request is received during a meeting or conference, the minutes should document the request and be signed by an appropriate purchaser representative. LORs transmitted by United States (U.S.) Embassies or Security Cooperation Organizations (SCOs) should refer to the country letter or message requesting the data.

C5.1.3.1. Non-Significant Military Equipment Requests. Non-Significant Military Equipment (Non-SME) requests that originate in-country must be transmitted either by the purchaser's authorized representative or the DoD element of the U.S. country team to the Defense Security Cooperation Agency (DSCA) (Operations Directorate) and the appropriate DoD Component with information copies to the Combatant Command (CCMD). Requests originated by foreign representatives of the purchaser in the United States must be sent to DSCA (Operations Directorate) and the appropriate DoD Component with information copies to the SCO. If it appears that the SCO is not on distribution for a purchaser’s request, the DoD Component must furnish copies to the CCMD and SCO as quickly as possible.

C5.1.3.2. Significant Military Equipment (SME) and Major Defense Equipment (MDE) Requests. SME/MDE requests that originate in-country must be addressed to DSCA/Operations Directorate) and the cognizant Department of Defense (DoD) Component with information copies to the DoS (Bureau of Political-Military Affairs) (DoS (PM)), and the CCMD. Requests regarding SME that originate with purchaser representatives in the United States must be addressed to DSCA (Operations Directorate) and the cognizant DoD Component with information copies to DoS (PM), the CCMD, and the SCO. If it appears that the DoS (PM) or the SCO is not on distribution for a purchaser’s request, the DoD Component must furnish copies to these organizations as quickly as possible.

AECA, section 47, (22 U.S.C. 2794), defines the terms “defense article” and “defense service.” Certain defense articles and services are enumerated on the United States Munitions List (USML). Those defense articles designated Significant Military Equipment (SME) are marked with an asterisk (*) on the USML. Any SME that has a nonrecurring research and development cost of more than $50 million or a total production cost* of more than $200 million is considered Major Defense Equipment (MDE). See Appendix 1 for Nonrecurring Cost Recoupment Charges for identified MDE. *Includes DoD expenditures for preproduction engineering; rate and special tooling; special test equipment; production engineering; product improvement; destructive testing; and pilot model production, testing, and evaluation. Includes costs of any engineering change proposals initiated before the date of calculations of the NCs recoupment charge.

C5.1.4. Country Team Assessment (CTA). The CTA presents the coordinated position of senior U.S. Embassy leadership in support of a proposed sale and provides key information necessary to evaluate and explain it. See Chapter 2 for a description of the Country Team. It should be viewed as an important opportunity to provide valuable information that will expedite the decision process. The CTA must accompany any LOR that:

is likely to result in a Congressional Notification pursuant to AECA section 36(b) (22 U.S.C. 2776) (See Section C5.5.) based on its cost; or regardless of cost, that would result in first introduction of a new capability for the country; or that requests defense articles or services of a sensitive nature (See Section C5.1.4.2.); or upon request by DSCA (Operations Directorate).

C5.1.4.1. All CTAs must address the following common elements:

Table C5.T1. Country Team Assessment – Common Required Elements

#	Required Element
1	Reason the purchaser desires the defense articles or services and description of how the country or organization intends to use them.
2	Appropriateness of the proposed sale in responding to legitimate recipient security needs.
3	Impact of the proposed sale on the military capabilities of the proposed recipient, including the ability of the proposed recipient effectively to field, support, and appropriately employ the requested defense articles in accordance with their intended use.
4	Source of financing and risk of adverse economic, political, or social impact within the recipient nation and the degree to which security needs might be addressed through other means.
5	The human rights, terrorism, and proliferation record of the proposed recipient and the potential for misuse of the defense articles in question.
6	How the articles or services would contribute to both the U.S. and the recipient’s defense/security goals.
7	The proposed recipient’s will and ability to account for and safeguard sensitive technology from transfer to unauthorized third parties or in-country diversion to unauthorized uses.
8	The availability of comparable systems from foreign suppliers.
9	How the proposed sale would contribute to U.S. security and foreign policy goals.
10	How the proposed sale would affect the relative military strength of the countries in the region and its impact on U.S. relations with countries in the region. This is especially important when considering sales involving power projection capability or introduction of a system that could conceivably increase tension or contribute to an arms race.
11	Possible impact of or reaction to any in-country U.S. presence that might be required to carry out the sale or provide training.

C5.1.4.2. Additional elements are required for CTAs in support of defense articles or services identified below as being of a sensitive nature.

Table C5.T1a. Defense Articles that Require Additional CTA Elements

#	Required Element
1	MTCR Category I ISR UAV/UCAV (if information has not already been submitted before the LOR per Section C3.7.2. If a CTA was submitted in the pre-LOR phase, it may be referenced without submission of a new CTA.) Table C5.T1b.
2	Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance (C4ISR) Table C5.T1c.
3	Defense Articles and Services Containing Geospatial Intelligence (GEOINT) Table C5.T1d.
4	Night Vision Devices (NVDs) Table C5.T1e.
5	STINGER or Similar Missiles in any Surface-to-Air Configuration Table C5.T1f.
6	White Phosphorous Munitions Table C5.T1g.

Table C5.T1b. Additional CTA Elements for MTCR Category 1 ISR UAV/UCAV
_{(If information has not already been submitted before the LOR per Section C3.7.2.
If a CTA was submitted in the pre-LOR phase, it may be referenced without submission of a new CTA.)}

#	Required Element
12	What are the military requirements and operational intentions or plans for the ISR UAV/UCAV that might be requested, to include: Description of the primary mission and secondary missions for the ISR UAV/UCAV? Extent of anti-terrorist, border patrol/ coast guard, and/or humanitarian missions for the UAV/UCAV(s) endorsed.
13	Specify performance characteristics of the desired air vehicle in terms of range (km), payload (kg), payload performance parameters or desired capabilities, altitude ceiling (ft), flight endurance (hrs). Are there any desired modifications or changes to the basic configuration for the desired air vehicle or payload?
14	How the ISR UAV or UCAV would affect the military capabilities of the proposed recipient, including the ability of the recipient effectively to field, support, and appropriately employ the system in accordance with its intended end-use.
15	How the ISR UAV or UCAV would contribute to U.S. strategic and foreign policy goals.
16	Justification for number and type of ISR UAV/UCAV that might be requested with an explanation of how the quantity endorsed is the minimum required consistent with the legitimate military requirements of the recipient. What is the estimated or approximate monthly number of sorties and flight hours? Where will the ISR UAV/UCAVs be based?
17	What are the communications resources that the recipient nation would utilize to support its ISR UAV/UCAV flight operations? Does the recipient nation require beyond line-of-sight flight operations? Will air-ground communications and/or data transfer require encryption?
18	If applicable, would the ISR UAV/UCAV fulfill or contribute to NATO force goals?
19	Explain why an MTCR Category I ISR UAV or UCAV would fulfill the requirements and a manned aircraft or non-MTCR Category I ISR UAV or UCAV cannot.
20	Is this the first introduction of this system/capability to the recipient/region?
21	Anticipated reactions of neighboring nations to the introduction of the ISR UAV/UCAV capability into the region.
22	Analysis of how the proposed sale would affect the relative military strengths of countries in the region and of the impact of the proposed sale on U.S. relations with the countries in the region.
23	Extent of military interoperability missions/training with U.S. Forces?
24	The availability of comparable systems from foreign suppliers.
25	Assessment of the nation’s ability to account for, safeguard, operate, maintain, and support the ISR UAV or UCAV. What is the nation’s maintenance concept? Two level? Three level? Does the nation expect it will provide depot level repair or will it elect contractor provided depot level maintenance? What level of repairable stocks does the nation anticipate it will require?
26	A plan for end-use monitoring for sensitive and advanced war fighting technology and the SCO’s plan for compliance verification.
27	Training required either in-country or in the United States and anticipated reactions resulting from the presence of U.S. trainers in-country. How many pilots, sensor operators, and maintainers will it need to be trained either in-country or in the U.S.? Approximately when the nation needs to commence/end any desired U.S.-based training? Will the nation need in-country flight simulators? If so, how many? Will the nation need to participate in related USAF/ISN UAV user-groups, forums, or other USAF/USN programs concurrent with adopting a U.S. UAV.
28	Possible impact of any in-country U.S. presence that might be required as a result of providing the ISR UAV or UCAV.
29	Is the potential recipient a: Member of NATO? MTCR Partner? Signatory to the Nuclear Non-Proliferation Treaty? Signatory to the Chemical Warfare Convention? Signatory to the Biological Weapons Convention?
30	Has the SCO consulted with the Foreign Disclosure Office of the FMS IA regarding the need for disclosure of information actions in regard to a potential transfer of a Category I ISR UAV/UCAV? Yes/No
31	Any additional information in support of, or that would recommend against, the transfer request.

Table C5.T1c. Additional CTA Elements for C4ISR

#	Required Element
12	Combatant Commander’s statement of interoperability requirement. Can be provided separately

Table C5.T1d. Additional CTA Elements for GEOINT

#	Required Element
12	Describe plans for sharing, use, and protection of the required GEOINT data in the recipient country.

Table C5.T1e. Additional CTA Elements for Night Vision Devices

#	Required Element
12	Full description of the type and quantity of NVDs requested (LOR development may require coordination with MILDEP for recommended model/quantity).
13	Justification for the type and quantity of NVDs requested and the operational plan for use and specific end-users to include: Description of the primary mission for the units to receive the NVDs? Extent of military interoperability missions/training with U.S. Forces? Extent of anti-terrorist missions for the units to receive the NVDs?
14	Whether this capability (Figure of Merit (FOM), Auto-gating power features) been transferred previously to the country. If so, when, how many devices, device types and FOM? Method of procurement? FMS? DCS? Case Designator or License Number?
15	Assessment of the purchaser’s capacity to provide substantially the same degree of support, security and accountability protection as given by the United States and willingness to accept the NVD physical security and accountability note.
16	The SCO plan for Post Shipment End-Use Monitoring (EUM) and compliance verification.
17	Additional information in support of the transfer request (e.g., status of previous NVD transfers and results of past U.S. security inspections/inventories/Compliance Assessment Visits (CAVs)).
18	Recommendation whether the USG should approve transfer of the article and justification.
19	Combatant Commander’s concurrence. If provided separately, cite reference if available.

Table C5.T1f. Additional CTA Elements for STINGER or Similar Missile in any Surface-to-Air Configuration

#	Required Element
12	Indicate the system, quantity, and intended use.
13	U.S. Mission’s opinion as to whether the amount requested is reasonable in relation to the intended use, current on-hand inventories, and predictable usage rates of such items.
14	As U.S. weapons replace the country’s current inventory, how many weapons, of U.S. or foreign origin, will become excess to military requirements?
15	If excess weapons are to be stored, how will they be stored and controlled and by whom?
16	If surface-to-air systems from active duty forces will be transferred to reserve forces as a result of this transfer, what will be done with any surface-to-air systems currently in the reserves?
17	Do reserve air defense (AD) units exist? What is the reserve force AD structure? What are the numbers and types of units?
18	How well trained are the relevant reserve forces generally and specifically in terms of MANPADS usage and proper storage of MANPADS and similar surface to air systems?
19	What is the track record of the armed forces or police in maintaining security of national stockpiles of small arms? Have there been thefts or other illicit transfers?
20	If excess weapons are to be destroyed, what is the plan for their destruction? May U.S. representatives, normally the SCO, observe the destruction of those weapons even if they are not of U.S. origin?

Table C5.T1g. Additional CTA Elements for White Phosphorous Munitions

#	Required Element
12	Indicate type of ammunition, quantity, and intended use.
13	U.S. Mission’s opinion as to whether the amount requested is reasonable in relation to the intended use, current on-hand inventories, and predictable usage rates of such items.
14	Requests must also contain assurance from the host Government that white phosphorus munitions are used only for purposes such as signaling and smoke screening.

C5.1.5. LORs Submitted by Electronic Mail. To send LORs via electronic means, purchasers must provide a list of authorized signers and senders to the Implementing Agencies (IAs). LORs submitted using electronic means must be submitted through appropriate channels. Purchasers that wish to submit LORs electronically should contact the identified recipients to determine whether a file naming convention should be used. Electronic mail attaching the signed LOR is the preferred means of transmission. All electronic LORs must be sent to DSCA (Operations Directorate) at: LOR-DSCA@dsca.mil. Information copies of electronic LORs for DoS (PM) should be sent to: pm-rsat-lor@t.state.gov.

C5.1.5.1. The DoD Components Authorized to Receive LORs. Certain DoD Components are IAs authorized to receive and respond to LORs. Table C5.T2. identifies these agencies and their addresses.

Table C5.T2. IA’s Authorized to Receive Letters of Request (LORs)

Click to view : Table C5.T2. IA’s Authorized to Receive Letters of Request (LORs)

C5.1.5.2. Exceptions. LORs may be submitted directly to DoS (PM) and DSCA if the U.S. Embassy in-country or the purchaser’s representative in the United States believes the request is sensitive and requires a higher level policy determination, or if the purchaser or the SCO and/or U.S. Embassy cannot determine the appropriate DoD Component.

C5.1.5.3. LORs for FMS to non-MOD Units. Under limited circumstances, the DOS can legally approve the sale of defense articles and services via FMS (including cases funded with FMF) for non-MOD units on a case-by-case basis. Approval of such transactions requires a fact intensive legal analysis of whether the assistance would be consistent with section 4 of the AECA, which requires that defense articles and services be sold by the USG under the Act only for certain purposes, including legitimate self-defense and internal security. In this context "internal security" does not include law enforcement functions, but rather refers to threats against the state, such as armed insurrection or criminal activity of such an unusual nature that it requires a response by security forces with a military mission. When considering FMS transactions with non-MOD units, DOS (PM), in consultation with the DOS Office of the Legal Advisor, will examine the mission of the entity for which the articles are requested and the relationship between that entity and other security forces with police functions to ensure that the provision of assistance would be consistent with the AECA and U.S. foreign policy. To request an FMS transaction for a non-MOD unit, SCOs should provide the information below to DOS (PM) through DSCA (Operations Directorate). Failure to engage on this issue early in the process may result in transactions being delayed or denied in the final stages of the approval process.

The unit’s name, command, and organizational structure. The unit’s full range of functions. The nature of the sale or assistance sought. To the extent that the sale or assistance is provided to support internal security, an explanation of the threat to the country’s internal security and reason why it cannot be addressed by regular law enforcement forces using other assistance. An assessment of the risk that the defense articles or services will be transferred outside the recipient unit or security force.

C5.1.6. DSCA and DoS LOR Review. The IA will provide a copy of the LOR to DSCA (Operations Directorate) and the applicable SCO if one or both were not on distribution and, if the LOR is for SME/MDE, to DoS (PM)), and the CCMD. IAs should begin performing the activities identified in Section C5.1.6.1. unless they believe the LOR raises concerns that should be addressed to DSCA and/or DoS for guidance. At any time during the LOR to LOA process, DSCA and/or the DoS may initiate coordination to approve or disapprove the request, or advise the IA to suspend further correspondence until coordination is complete. If the request is disapproved, DSCA formally advises the IA to stop processing the purchaser’s request, provides the rationale for the decision, and issues guidance concerning further actions. The IA will cancel the Case Identifier in DSAMS if it has already been established.

C5.1.7. LOR Validation and Acknowledgement of Receipt. Within 5 days of receiving the LOR, the IA will validate the LOR to:

Ensure that the potential purchaser is an eligible FMS recipient. See Section C4.1.2. Ensure that the item sought may be sold. See Section C4.4. Ensure that the request was received through proper channels. See Section C5.1.3. Determine whether any sanctions exist that would prevent an LOA from being prepared and/or offered to the purchaser. See Section C6.6. for more information on sanctions. Determine whether or not a country or international organization is authorized Dependable Undertaking. The IA will notify the purchaser as soon as possible of the payment terms available for procurement items to ensure customers have maximum time to make financial arrangements. See Table C4.T2.

Once validated, the IA enters the LOR data in the Defense Security Assistance Management System (DSAMS) as a Customer Request and acknowledges receipt of the LOR to the prospective purchaser. A Customer Request should be created in DSAMS for each LOA document that is prepared. This includes creating separate Customer Requests for multiple LOA documents that are developed based upon one LOR. Creating a separate Customer Request for each LOA document will enable DSAMS to accurately measure the LOA development processing time of each document, to include scenarios where only one of the LOA documents is restated.

C5.1.7.1. Case Initiation and LOR Evaluation. Case initiation and LOR Evaluation are separate processes that begin immediately upon LOR Receipt.

C5.1.7.1.1. Case Initiation. Within 10 days of LOR Receipt, IAs should establish the case document in DSAMS, which creates either a Case Initialized Milestone for Basic LOAs or a Document Initialized Milestone for Amendments and Modifications, and generates an automatic transaction (“S1”) to the DSCA 1200 system. See Chapter 13. If the IA does not allow automatic transmissions from DSAMS to the DSCA 1200 System, the IA will submit the initial S1 transaction for Basic LOAs no later than 10 days after receiving the LOR. The IA will also provide the Case Identifier to the prospective purchaser unless the case meets Congressional Notification thresholds. See Section C5.5.

C5.1.7.1.2. LOR Evaluation. U.S. Embassies, SCOs, and the DoD components use Table C5.T3. to evaluate LORs. If an LOR does not meet the requirements of Table C5.T3., the DoD Component initially receiving the request notifies the originator of the deficiency and, after entering the request in DSAMS, holds any further action until all required information is received. IAs should strive to allow no more than 20 days to pass from LOR Receipt to LOR Complete. This key step reflects internal review by subject matter experts and assures that the LOR contains sufficient information to begin drafting the LOA. If more than 20 days pass between LOR Receipt and LOR Complete, explanatory remarks will be entered in the Customer Request window in the Request Status Comments field in DSAMS. DSAMS automatically cancels LORs that reside in DSAMS one year or longer with no associated LOA document.

Table C5.T3. Letter of Request (LOR) Check List - Evaluation Criteria

#	LOR Check List - Evaluation Criteria
1	Is the request a valid military requirement of the purchaser?
2	Is the request for an FMS LOA (LOR for an LOA implies that the requesting country or international organization has identified a source of funding) or is it a request for P&A data?
3	Has the request been made by someone with the authority to submit procurement requests on behalf of the requesting country or international organization?
4	Is the request specific enough to enable a contracting officer to obtain pricing data? If "No,” consult with the requesting country or international organization to obtain sufficiently detailed data, similar to that prepared for a request for quotation. If the country or international organization cannot provide additional definition, advise that it should request a Requirements Survey Team or Definition Conference with U.S. experts to help define the requirements. The purchaser must fund these expert teams on a separate FMS case. See Section C2.4. on Survey Teams.
5	Ensure the LOR contains the following (as appropriate): Are all hardware requirements specified, including National Stock Numbers (NSNs)? Are all country unique support and training requirements identified? Does the requirement provide a realistic operational capability and is the country or international organization using the Total Package approach, to include concurrent spares, training, ammunition, and follow-on support? Is an adequate source of funding identified? If so, what type? Does the overseas Contract Administration Services (CAS) surcharge apply?
6	Has the country been in negotiation directly with a company to obtain the item on a direct commercial basis? If "Yes,” the USG cannot provide any information until the country advises the USG in writing that it has terminated commercial negotiations. It is USG policy that sales via Government-to-Government FMS channels shall not compete with direct commercial sales. See Section C4.3.7.
7	Is a Country Team Assessment required and, if so, has it been provided? See Section C5.1.4. and Table C5.T1.
8	Have copies been submitted to DSCA (Operations Directorate) and DoS (PM).

C5.1.8. LORs Requiring LOR Advisory Memoranda and/or Unique Review.

C5.1.8.1. LOR Advisory Memoranda. An LOR Advisory notifies USD(AT&L) and the Joint Chiefs of Staff that DSCA has received an LOR for defense articles or items or services that require LOR Advisories or LOR review specific to the proposed sale or specific end item. Table C5.T4. identifies defense articles requiring item-specific review and provides links either to forms for LOR Advisories or to explanations of unique review requirements.

C5.1.8.2. Preparing LOR Advisories. DSCA (Operations Directorate) prepares and sends an LOR Advisory to the Joint Chiefs of Staff and OUSD(AT&L) using the format in Figure C5.F1. The LOR Advisory should include a copy of the purchaser’s request as well as the Country Team Assessment (when required). To ensure consistency with existing Theater Security Cooperation objectives and technology security policy, DSCA sends the LOR Advisory as soon as possible after receiving the LOR with all required attachments. The recipients identified in Section C5.1.7.1. have 10 working days from the date of the LOR Advisory to provide comments to DSCA for consideration. In the event of non-concurrence, DSCA will refer disagreements to an appropriate level in OUSD(P) for resolution. The LOR Advisory does not take the place of any Exception to National Disclosure Policy (ENDP) processes or releasability requirements that are worked by the MILDEPs.

Table C5.T4. Defense Articles or Services that Require Item-specific LOR Advisories or Review

Item	Requirement	Notes
Ballistic Missile Defense Capability	Standard Advisory Letter with MDA as an Addressee. Form C5.F1a.
Coproduction or licensing agreements for MDE	Standard Advisory Letter Form C5.F1.
Electronic Warfare (EW) Systems and EW Integrated Reprogramming Database (EWIRDB)		Unique review Section C3.7.4.
First Introduction of MDE to the Purchaser	Standard Advisory Letter Form C5.F1.
MDE Expected to Result in a Congressional Notification pursuant to Arms Export Control Act (AECA) section 36(b)	Standard Advisory Letter Form C5.F1.
MTCR Category 1 ISR UAV/UCAV	Standard Advisory Letter Form C5.F1.	Unique review Section C3.7.2.
Night Vision Devices (NVDs)	NVD Advisory Letter Form C5.F2.	Unique review Section C4.4.14.
Other defense articles or services of a sensitive nature. Any sale of defense articles or services may rise to the level at which it might be considered politically sensitive in the context of bilateral or regional relationships at the time it is requested	Standard Advisory Letter Form C5.F1.
MDE that has not yet completed Operational Testing & Evaluation (OT&E)	Standard Advisory Letter Form C5.F1.	Unique review Section C5.1.8.1.
	Standard Advisory Letter Form C5.F1.	Unique review Section C4.4.12.
Integration of Non-U.S. Subsystems	Standard Advisory Letter Form C5.F1.	Unique review C5.1.8.2.
Nonstandard Significant Military Equipment (SME)	Standard Advisory Letter Form C5.F1.	Unique review Section C5.1.8.3.
Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance (C4ISR)		Unique review Section C3.7.3.
Communications Security (COMSEC) Equipment		Unique review Section C4.4.4.
Defense Articles and Services Containing Geospatial Intelligence (GEOINT)		Unique review Section C4.4.16.
Medical Countermeasures		Unique review Section C4.4.15.
Police Training or Related Programs		Unique review Section C4.5.6.3.
Technical Data Packages (TDPs) for Defense Articles Manufactured by Watervliet Arsenal		Unique review Section C4.4.11.
White Phosphorous Munitions		Unique review Section C4.4.8.

Figure C5.F1. Standard Letter of Request (LOR) Advisory Format

Full Size Image PDF Version of Figure

Figure C5.F1a. Ballistic Missile Defense Letter of Request (LOR) Advisory Format

Full Size Image PDF Version of Figure

Figure C5.F2. Sample Request for Exception to DoD NVD Policy

Full Size Image PDF Version of Figure

C5.1.8.3. Pre-Operational Test and Evaluation (OT&E) Sales Policy (Yockey Waiver). Before responding to LORs for MDE items that have not completed OT&E, the IA submits a request to DSCA (Programs Directorate, Weapons Division) for the concurrence of the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)). This request may be for multiple countries. LOA or P&A data for such items is not released prior to DSCA and USD(AT&L) approval. If approved for release, a note is included in the P&A data correspondence or on the LOA. See Appendix 6.

C5.1.8.4. Integration of Non-U.S. Subsystems. The IA reviews requests for integration or certification services for installation of non-U.S. subsystems and coordinates with DSCA (Programs Directorate/Weapons Division) prior to development of P&A data or an LOA.

C5.1.8.5. Nonstandard Significant Military Equipment (SME). The IA reviews requests for SME not standard in DoD inventory and coordinates with DSCA (Programs Directorate/Weapons Division) prior to development of P&A data or an LOA.

C5.2.1. Types of LOR Responses. USG responses to LORs include Price and Availability (P&A) data, Letters of Offer and Acceptance (LOAs), and other appropriate actions that respond to purchasers’ requests for defense articles and/or services through the FMS process. The USG can tailor responses to meet Purchasers’ requests. These can be in the form of a hybrid, negotiated, or Not-To-Exceed (NTE) tailored response as noted below. Advance planning and coordination are essential in situations involving responses that combine both FMS and Direct Commercial Sales (DCS) elements, particularly when those situations originate through DCS channels. The USG is not bound to honor commitments made by industry, nor can it be held liable for inability to provide FMS support in conjunction with a DCS even if requested by the FMS purchaser. Examples of such support include, but are not limited to, airworthiness certification, training in U.S. military schools, aircraft ferrying, refueling services, and the provision of equipment, components, or services available only through FMS channels. To ensure that such situations do not occur, it is in industry’s interest to advise the foreign purchaser that FMS articles or services will be required for the foreign purchaser to effectively use and sustain equipment being purchased through DCS and that the foreign purchaser must submit a LOR to obtain this support. Industry should inform DSCA and the relevant IA of the possibility of a requirement for FMS articles or services. SCOs providing support to U.S. companies in-country should be alert to the need for the foreign country to submit a LOR and remind the foreign counterparts and company representatives of this requirement.

C5.2.1.1. Hybrid. Hybrid responses contain both FMS and DCS elements. Hybrid responses may be provided to purchasers who submit LORs either for FMS support (e.g., Training, Support Equipment, Components, Munitions, etc.) of a defense article procured via DCS or for a defense article being procured via FMS that will include components or support purchased through DCS. The DCS procured defense article is not a line item on the LOA but is identified on the LOA as the end item for which the FMS support is provided.

C5.2.1.2. Negotiated. Negotiated responses may be provided when the purchaser negotiates the price of the items either before submitting the LOR or prior to the USG’s obtaining the pricing for the defense articles/services from the company identified by the purchaser. Negotiated prices must be identified if a sole source of the company is approved and included in the LOA. However, the contract price is as agreed between the IA’s contracting officer and the company.

C5.2.1.3. Not-to-Exceed (NTE). Not-to-Exceed or Firm Fixed Price (FFP) responses will not normally be provided. Maximum use will be made of FFP sales from stock in accordance with Section 070303 of Chapter 7, Volume 15, of the DoD FMR and consistent with the obligations of the purchaser to pay all costs even if in excess of LOA estimates. For items from procurement, NTE prices may be included in the LOA line by line. Purchasers that request NTE pricing will be charged the incremental costs that the IA incurs or expects to incur to prepare the LOA using NTE pricing. See Table C9.T2.

C5.2.2. Negative Responses to LORs.

C5.2.2.1. Implementing Agency Disapproval Recommendation. If the IA recommends that the purchaser’s request be disapproved, the IA notifies DSCA (Operations Directorate). DSCA coordinates the disapproval with DoS (PM) as required and formally notifies the customer of the disapproval.

C5.2.2.1.1. This procedure applies to requests for FMS, coproduction, sensitive technical information, leases, etc. This procedure does not apply to negative responses to technical inquiries on implemented FMS cases unless, if approved, the request would result in an amendment to the case (e.g., requests involving a significant system modification or an increase in the overall capability of the item).

C5.2.2.2. Negative Responses to Training Requests. The following routine training disapproval actions are exempt from this prior coordination requirement.

Denial of requests within established policy (e.g., training courses closed to all foreign nationals, information not cleared for release, training for support equipment not in the purchaser’s inventory). Notification of class cancellations for previously approved quotas. Quota requests that cannot be accommodated within the desired timeframe. Courses where annual foreign participation is restricted to those invited by Chiefs of Services.

DSCA (Operations, Programs, and Strategy Directorates) are information addressees on all such responses.

C5.2.2.2.1. Responses to Requests for Less Than Economic Order Quantity (EOQ). Responses to P&A data or LOA requests for items that cannot be supplied from stock and cannot be procured immediately because they represent less than an EOQ must be coordinated with DSCA (Operations Directorate) and indicate whether the contractor is willing to provide the quantity requested under separate procurement, and if so at what price and availability date; or, if a USG procurement is planned, the anticipated price and availability date if the requirement is held pending this procurement.

P&A data are requested when preliminary data are required by a foreign country or international organization for planning or in anticipation of a purchase under FMS.

C5.3.1. Definition. P&A data are rough order of magnitude estimates of cost and availability of defense articles or services. These estimates are sufficiently accurate for rough-order planning purposes, but should not be used for budget purposes and are not commitments. P&A data are not valid for use in preparing an LOA. The term P&A data is not used to reference data being developed for an LOA. Instead, data compiled for an LOA are referred to as LOA Data (LOAD). When responding to requests for P&A data, the IA ensures that:

The DoD Component can recommend release of the articles and/or services. If the purchaser were to request an LOA, it could be provided (i.e., further clearances such as Congressional Notification or disclosure approval are obtainable). The purchaser knows to submit an LOR to request an LOA if it wants to pursue the purchase.

C5.3.2. P&A Preparation Timeframe. P&A data estimates should be provided to the prospective purchaser within 45 days of the request.

C5.3.2.1. Classified P&A Data. P&A data are classified only in rare circumstances. Classified P&A data cannot be entered into DSAMS. P&A data, regardless of estimated dollar value or proposed program content, are classified only when directed by the DoS, the Secretary of Defense or his or her designees, to include Director, DSCA; or the purchaser requests classification and the request is approved by an authority listed above.

C5.3.3. P&A for Nonstandard Subsystems. P&A data normally includes standard U.S. subsystems. In exceptional cases, purchasers may request P&A data for nonstandard subsystems. The purchaser’s P&A request should include a description of the performance characteristics of any nonstandard subsystem(s) and supporting justification, including why U.S. systems do not meet the purchaser’s requirements. DSCA must approve any proposed responses to requests for nonstandard subsystems. If an IA believes it should modify contractor-furnished data for nonstandard subsystem(s), the IA notifies the contractor and contractor comments are considered prior to P&A issuance. Significant differences must be reconciled.

C5.3.4. P&A Preparation. IAs authorized to prepare LOAs are also authorized to prepare P&A data for presentation to purchasers. DSAMS should be used to prepare P&A data response documents whenever possible. DSAMS cannot be used to prepare classified P&A data.

C5.3.5. P&A Data Format. Table C5.T5. presents the information included in P&A data.

Table C5.T5. Price and Availability (P&A) Data

#	Price and Availability (P&A) Data
1	Major item or service, quantity, and estimated cost. Cost includes adjustments for inflation. If inflation trends on a given system are not known, Under Secretary of Defense, Comptroller (USD(C)) standard inflation factors are used. Include estimated offset costs as provided by the contractor.
2	Ancillary support equipment necessary for the operation and maintenance of the requested system and its estimated cost.
3	Integrated logistics support (ILS) elements (e.g., training and publications) and estimated cost.
4	Estimated assessorial charges.
5	Source of the data (e.g., last contract award, stock price).
6	Estimated availability of the articles or services.
7	Assumptions used in developing the data. For example: The standard DoD Component factors were used in developing the ancillary equipment or ILS elements necessary to support the quantity of items requested. Training and publication cost estimates are based on criteria used by the DoD Component.
8	Key factors affecting the data. For example: The current contract for this item expires on [insert date] and an LOA must be accepted by [insert date] so that options can be added to the current contract. The production line is due to phase out by [insert date]. Start-up costs apply if an LOA is not accepted by [insert date]. The materiel has a shelf life of [insert date].
9	The following is included in all responses for P&A data: “The Price and Availability (P&A) data provided are not valid for purposes of preparing a Letter of Offer and Acceptance (LOA) and may not be adequate for budgetary purposes. These data are for planning/review purposes only, to assist in your Government’s determination whether or not to request an LOA. If [insert the appropriate foreign country] is interested in pursuing this potential purchase, it must request an LOA.”

C5.3.6. Agents Fees or Sales Commissions. P&A data quotations that contain agents’ fees or sales commissions are coordinated with DSCA (Strategy Directorate) prior to presentation to the purchaser. See Section C6.3.7.

C5.3.7. Discussions with Foreign Governments and International Organizations. Economic, production, and budget uncertainties make it difficult to develop accurate cost and delivery estimates. Discretion must be exercised by members of the country team or other U.S. officials in discussing P&A data with foreign Government or international organization officials. Only specific data approved and provided by the IA or DSCA should be used.

C5.4.1. Definition. The LOA is the legal instrument used by the USG to sell defense articles, defense services including training, and design and construction services to a foreign country or international organization under authorities provided in the Arms Export Control Act (AECA). The LOA itemizes the defense articles and services offered and when implemented becomes an official tender by the USG. The LOA is not used to provide Price and Availability (P&A) data. Signed LOAs and their subsequent Amendments and Modifications are also referred to as “FMS cases.” See Chapter 15 on use of LOAs to implement Building Partner Capacity (BPC) cases.

C5.4.2. LOA Preparation Timeframe. The time required to prepare LOAs varies with the complexity of the sale and the clarity of the purchaser’s LOR. Processing time for LOAs and Amendments is measured from the time the LOR is considered complete (i.e., sufficiently detailed to begin LOA Data (LOAD) development) until the time it is offered to the purchaser (Document Sent, (DOCMNTSENT in DSAMS)). Table C5.T9. lists DSAMS Milestones. After DSCA has countersigned the LOA, the Implementing Agency (IA) sends a copy of it to the SCO to offer to the purchaser. Processing time for Modifications will be measured from the time the LOR is considered complete until the Modification is implemented.

C5.4.2.1. Assignment of an Anticipated Offer Date (AOD). Upon creation of a case document, the IA must enter a Case Category Code and assign an AOD Group Code in DSAMS regardless of whether the LOR has been marked complete or associated to a case document. DSAMS will not allow the case document to be saved until both codes have been entered. Once entered in DSAMS, the Case Category Code and AOD Group Code cannot be deleted but can be revised by the IA. DSAMS will automatically assign an AOD derived from the AOD Group Code to every case document when the IA enters an LOR complete date and associates the LOR to a case document. The DSAMS-generated default AOD is designated according to the following case groupings shown in Table C5.T6.

Table C5.T6. AOD Group Codes

Group	Description
A	75 days for Blanket Order LOAs, training LOAs, Cooperative Logistics Supply Support Arrangements (CLSSAs), and associated Amendments and Modifications. The IA can change the date to less than 75 calendar days if appropriate, but cannot exceed 75 days without justification, which must be documented in DSAMS milestone comments.
B	120 days for Defined Order LOAs, and associated Amendments, and Modifications. The IA can change the date to less than 120 calendar days if appropriate; but cannot exceed 120 days without justification, which must be documented in DSAMS milestone comments.
C	121 days for Defined Order LOAs and associated Amendments that are considered “purchaser-unique” in nature. The IA may revise the AOD to more than 121 days based on factors (1) through (8) below. Associated Modifications will be placed in either Group B as Modifications generally do not require more than 120 days for preparation First-time purchase of a defense article or service by an FMS purchaser First-time FMS purchase by a specific country or international organization with limited experience or knowledge of FMS processes/procedures Case requires engineering, system integration, or special acquisition Requested use of the system is different from its use by U.S. military forces (e.g., Navy ship missile to be fired from an Army or foreign country’s helicopter) Detailed release/disclosure coordination required Complex pricing effort required Extraordinary coordination required inside or outside the IAs Other (must be explained by detailed milestone comments in DSAMS)
D	75 days for all Pseudo LOAs and associated Amendments and Modifications. The IA may shorten or lengthen the DSAMS-generated AOD as soon as information or conditions make AOD determination possible; e.g., receipt of contracting, funding, or other guidance and information needed to determine when the document will be approved.

C5.4.2.2. AOD Changes. Changes to the AOD will be permitted on a case-by-case basis and not as a matter of routine. The IA will determine who has the authority to change an AOD. Detailed milestone comments will be entered when an AOD is changed. The IA should transmit or implement at least 85 percent of its total number of LOA documents on or before the assigned AOD. The IA will inform the purchaser of the AOD and of any subsequent changes.

C5.4.2.3. AOD for Restatements. There may be times when major changes need to be made to a document after it has been countersigned and offered to the purchaser. If the purchaser wants to retain the existing designator (instead of canceling the offer and issuing a new case), the offered case may be restated. Restatements can be made as long as the document is in “offered” status, the purchaser has not yet signed the case, the Offer Expiration Date (OED) has not yet expired, and all changes are consistent with FMS policies and procedures. See Section C6.7.1.4. for more information on restatement. DSAMS will automatically revise the original customer request status of an LOA document from LOR Complete to LOR Restate once an IA selects the restatement tool in DSAMS. Once it is determined there is sufficient information to begin restatement of the LOA, the IA will revise the customer request status in DSAMS from LOR Restate to LOR Complete. DSAMS will not allow the MILDEP Approval (MILAP) on the restated LOA document without the customer request status being marked LOR complete. Once the customer request is marked complete, DSAMS will automatically assign a new AOD to the restatement based upon the case grouping selected. The IA may revise the DSAMS generated AOD for the restated LOA as described in Section C5.4.2.1.

C5.4.3. Types of FMS Cases. The standard types of FMS cases are Defined Order, Blanket Order, and Cooperative Logistics Supply Support Arrangement (CLSSA). These cases generally allow DoD to provide FMS purchasers the same kinds of defense articles and services used by U.S. Forces. Defined Order and Blanket Order cases are also routinely used to provide hardware or services to support commercial end items, obsolete end items, (including end items that have undergone system support buy outs), and selected non-U.S. origin military equipment.

C5.4.3.1. Defined Order Cases or Lines. Defined Order cases or lines are commonly used for the sale of items that require item-by-item security control throughout the sales process or that require separate reporting. Items to be provided are stated explicitly on the LOA and include specific quantities (articles) or periods of performance (services). Scope is limited to the quantity of items or described services including specific performance periods listed on the LOA. The IA places the orders with companies that manufacture the equipment or provide the requested service.

C5.4.3.1.1. Items Provided on Defined Order Cases or Lines. Significant Military Equipment (SME), and the related initial support package; explosives, including munitions; specific services; classified materiel (e.g., software) and Technical Data Packages (TDPs) are types of items normally provided under Defined Order cases. Defined Order cases or lines may also be used to provide specific services that are designated for a specific period of time. Major Defense Equipment (MDE) items must be identified clearly on the LOA with specific quantities and cannot be embedded in a line coded as non-MDE. Defined Order cases can also include Blanket Order non-MDE lines when no specific period of performance or quantity is identified for the support on those lines, and the intent is to use the lines until funds are exhausted.

C5.4.3.1.2. Items Not Provided on Defined Order Cases or Lines. Relatively minor, non-SME items that do not require intensive item-by-item control are not normally provided on Defined Order cases or lines except as part of an initial support package for a system or major end item. An assembled article ready for its intended use. Only ammunition, fuel or another energy source is required to place it in an operating state.

C5.4.3.2. Blanket Order Cases or Lines. Blanket Order cases or lines are used to provide categories of items or services (normally to support one or more end items) with no definitive listing of items or quantities. Scope is limited to the specified item or service categories, and the purchaser specifies the case or line dollar value. The foreign purchaser normally submits its own requisitions. The preferred method is for purchasers to submit requisitions through the Security Cooperation Information Portal (SCIP).

C5.4.3.2.1. Items Provided on Blanket Order Cases. Types of unclassified, non-SME items or services that can be provided on Blanket Order cases or lines include spares and repair parts (consumables and repairables), support equipment (tools, test equipment), supplies (fuel, personnel items, commercial consumable items), maintenance (repair, rebuild, minor modifications or alterations), technical assistance (specialist advice or actions, site survey teams, system integration, item checkout, systems evaluation, study groups to develop engineering requirement plans, technical assistance teams), training, publications (forms, catalog data, technical order manuals, stock lists, reports, books, maps), unclassified software, and training aids. Classified publications, including technical manuals and reports, may be included on Blanket Order lines if the following conditions are met as shown in Table C5.T7.

Table C5.T7. Blanket Order Case Conditions for Classified Publications

#	Condition
1	Classified publications must be offered as a standalone line item and cannot be combined with unclassified publications
2	MASL for classified publications must be used
3	Quantities of the classified publications must be identified in the corresponding line item description note
4	Statement must be included in the line item description note that only the USG is authorized to acquire the classified publications

C5.4.3.2.2. Items Not Provided on Blanket Order Cases or Lines. Classified material, SME, commercial items more readily provided from in-country (e.g., lumber, sand, gravel, household goods), Technical Data Packages (TDPs), and ozone depleting substances are not provided on Blanket Order cases or lines. Refer to http://www.epa.gov/ozone/science/ods/ for information on ozone depleting substances.

C5.4.3.3. Cooperative Logistics Supply Support Arrangements (CLSSAs). CLSSAs provide for pre-stock and storage of DoD-stocked non-SME items that are needed and used by the FMS purchaser on a recurring basis. CLSSA LOAs reflect support for end items with no definitive listing of items or quantities, although items and quantities may be negotiated with the purchaser as part of the CLSSA management process. CLSSA programs consist of two separate cases: a Foreign Military Sales Order (FMSO) I case, and a FMSO II case. The FMSO I case provides for the purchase and sustainment of spare and repair parts in DoD inventory. The FMSO II case is used by the purchaser to requisition those spare and repair parts to replenish their in-country stock. Scope is limited by the LOA description of end items to be supported and dollar values of the FMSO I and II cases. FMSO I and II dollar values are based on the cost of forecasted requirements for the anticipated period of support. The purchaser submits requisitions through the MILDEP Case Manager or SCIP. See Section C6.4.3.2. for information on the CLSSA process.

C5.4.3.3.1. Items Provided on CLSSA Cases. Centrally stocked or centrally managed spare and repair parts of defense systems common to purchaser and U.S. forces. CLSSA item eligibility is based on the Acquisition Advice Code (AAC), See Section C6.4.3.2.8. which identifies an item as centrally managed or centrally stocked.

C5.4.3.3.2. Items Not Provided on CLSSA Cases. SME, Excess Defense Articles (EDA), parachutes, explosive ordnance items, commercial items of materiel more readily provided from in-country, controlled medical items, modification kits, ozone depleting substances, technical data packages or other similar documentation that conveys manufacturing process information, publications, tool sets, cryptographic equipment, classified materiel, or initial spare parts are not provided on CLSSA cases even when they are identified by an eligible AAC.

C5.4.3.4. Classified LOAs. LOAs are classified only in rare circumstances. Classified LOA data cannot be entered into DSAMS. LOAs may be classified only when the classification is directed, or the purchaser’s request for classification is approved, by the DoS, the Secretary of Defense or his or her designees to include the Director, DSCA. If a case is approved to be classified, the purchaser will be responsible for all costs associated with the development and execution of the case in a classified environment.

C5.4.4. LOAs for Nonstandard Support. LOAs may be used to provide nonstandard support. Nonstandard support may include hardware or services required to support commercial end items; support of obsolete end items, including end items that have undergone system support buy outs; and support of selected non-U.S. origin military equipment. Requests involving sensitive technology or that have significant impact on U.S. programs should be coordinated with DSCA (Programs and Strategy Directorates).

C5.4.5. General LOA Preparation Guidelines. All unclassified portions of LOAs are prepared using DSAMS. See Figure C5.F3. for instructions pertaining to general LOA preparation and See Section C5.4.10. for guidance pertaining to preparation of classified LOAs.

C5.4.5.1. Implementing Agencies (IAs). Organizations authorized to receive LORs and responsible for preparing and processing LOAs in accordance with the SAMM are known as IAs. See Table C5.T2. for IA listing. When an LOR received by an IA includes a requirement for an item managed by another IA, the LOR must be coordinated with all organizations involved. The IA should consider a Multi-Service LOA when the purchaser advises the USG that it requires multiple weapon systems on a single case for its own budgetary or other internally-based reasons. However, if the additional financial and logistical processing is required to prepare and execute a Multi-Service LOA, the LOR requirements may be split into multiple LOAs that are separated by IA, and major weapon system, and managed in coordination with one another. DSCA Operations Directorate will coordinate with the purchaser and SCO before separating between multiple IAs. The IAs must operate under mutually agreed terms, assigning a “Lead IA” to the LOAs to ensure a Total Package Approach is delivered. Questions relating to this subject, and the designation of the IA for Multi-Service LOA should be referred to DSCA (Operations and Strategy Directorates) for resolution. For the multiple-LOAs option, the IAs, involved must, to the greatest extent practicable, plan events such as Program Management Reviews (PMRs) as joint events in which all IAs participate. Regardless of the method used, IAs must operate within a framework that clearly defines the roles and responsibilities of each participant. If multiple LOAs separated by IA and major weapon system are used to respond to an LOR submitted for a single program, the IA that received the LOR must advise the purchaser that the response will be multiple LOAs instead of a Multi-Service LOA. IAs are encouraged to consolidate requirements as much as possible. Multiple LORs from the same purchaser may be answered by a single LOA.

C5.4.5.2. Purchaser Participation in the LOA Preparation Process. Purchaser involvement early in the LOA development process is essential to ensure the final document best satisfies its requirements. Purchasers should be encouraged to attend meetings and receive correspondence designed to clarify LOR information. As the development of the LOA progresses, there are many instances where purchaser participation and input are necessary, (e.g., the purchaser should help identify unique requirements and special needs that must be accommodated in the final sales document.) Any unique notes or conditions being considered may be provided to the purchaser for advance review to ensure these special case or program-unique needs are addressed. Such meetings and agreements can be recorded in the Case Remarks area in DSAMS to preserve them with the document. The purchaser should be encouraged to participate in the acquisition process, See Section C6.3.5.2. for more information on purchaser’s involvement in the acquisition process.

C5.4.6. LOA Format. The LOA format including sample data, LOA Information, and instructions for preparation are provided in Figure C5.F3. through Figure C5.F6.

C5.4.7. Additional LOA Information.

C5.4.7.1. Standard Terms and Conditions and LOA Information. Standard Terms and Conditions (Figure C5.F4.) are an official part of each LOA, whether or not they are attached to a particular copy. The Standard Terms and Conditions that are in effect at the time the LOA is prepared and signed are the conditions that apply throughout the life of the FMS case. An LOA Information document (Figure C5.F6.) provides information describing some of the codes and language used on the LOA. Both the LOA Standard Terms and Conditions and the LOA Information documents must be attached to the original LOA that is sent to the purchaser for review or acceptance. The MILDEP Case Manager must retain a copy of the LOA and all attachments in the official case file.

Figure C5.F3. Sample Letter of Offer and Acceptance (LOA)

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Figure C5.F4. Letter of Offer and Acceptance (LOA) Standard Terms and Conditions

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Figure C5.F5. Letter of Offer and Acceptance (LOA) Information

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Figure C5.F6. Instructions for Preparing a Letter of Offer and Acceptance (LOA)

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C5.4.7.2. LOA Notes/Supplemental Information. Standard Terms and Conditions must be supplemented with additional items or notes for each offer in order to make obligations clear. Notes in LOAs provide more detailed information concerning items or services being offered. When LOAs are prepared before details are known, notes include general coverage of this information and an estimate of when specific information on these topics can be provided to the purchaser. These notes may be shared in advance with the purchaser to ensure any purchaser-unique requirements are accommodated.

C5.4.7.3. Deviations from the LOR. Extraordinary reservations concerning the price quoted, and the extent to which either the price or availability is dependent on action to be taken by the USG, e.g., selection of equipment for U.S. Forces, are examples where further explanation should be included. Advice should be obtained from the DSCA Office of General Counsel when special circumstances require an expansion of standard or supplemental indemnity clauses included in this Manual. Appendix 6 lists the notes that should be included in LOAs as indicated. The “Note Usage” column of this table is intended to show when the note should be included on a Basic LOA, Amendment, and Modification. This column is not intended to show when an Amendment or a Modification should be used. See Section C6.7. for information on determining which document is appropriate. See Figure C5.F6., for guidance on the ordering of notes within an LOA.

C5.4.7.4. Combining Requirements. LOAs for major systems or end items should include supporting items and services rather than offering for these items or services on separate LOAs.

C5.4.7.5. Estimated Delivery Schedule. The MOS (months) entry on the LOA provides the estimated lead-time from the LOA implementation date to the delivery date of the materiel or to the dates when services are provided. A schedule of estimated in-country or CONUS equipment deliveries by month is provided for major end items. When the purchaser’s request or program schedules require that items not be delivered or services not be performed earlier than a specified date, this must be stated in the LOA notes.

C5.4.7.6. Permanent Change of Station (PCS) Costs. The IA notifies the SCO by message of requirements for assignment of PCS (but not TDY) personnel to the purchaser country, including projected start date and duration, rank or grade and specialty, and in-country location. The DSCA (Operations Directorate), the Combatant Command (CCMD), the Department of State (DoS) (Resource Management (RM) and PM/RSAT), and the U.S. Embassy are information addressees. The SCO coordinates with the U.S. Chief of Mission and reports PCS personnel support cost data, as well as obstacles to their acceptance or support, to the IA. The IA includes PCS personnel support costs in the LOA, adds a note at the bottom of the item description (See Table C5.T5. for LOA Notes requirement), ensures the PCS block on the Case Detail Document Tab in DSAMS is checked, and lists the PCS requirement and any support problems in the LOA Checklist (formerly the LOA Cover Letter or Transmittal) when the LOA is transmitted to DSCA for countersignature.

C5.4.7.6.1. LOAs that include PCS or TDY personnel should specify the number of personnel who will perform the task, planned dates of arrival and departure, in-country destination and home station, and extent of in-country travel required.

C5.4.7.7. Personnel Protection and Related Costs. For the purpose of performing services outside of the United States, the term "U.S. personnel" as discussed below and in Appendix 6 pertains to personnel involved in the performance of actions under the LOA.

C5.4.7.7.1. In carrying out LOA programs, it is desirable that USG personnel operate under conditions most advantageous to their legal status. In many cases a Status of Forces agreement (SOFA) will be in effect. USG employees, executing their duties under an LOA with a country which also has a SOFA with the United States, are covered by the provisions of that SOFA, which will typically grant substantial administrative jurisdiction, and other benefits that modify the host nation’s law. When DSCA (Office of the General Counsel) indicates a SOFA or SOFA-like agreement exists that is pertinent to the specific FMS or Building Partner Capacity (BPC) LOA, that agreement is referenced in the LOA for guidance of the U.S. personnel executing the LOA. The LOA itself does not create any rights or benefits. Inclusion of SOFA-like status provisions in an LOA requires that the LOA be staffed in accordance with procedures for staffing international agreements in DoD Directive 5530.3. Since these procedures are complex and require the development of specialized supporting documentation, inclusion of status provisions in LOAs should be avoided if possible. Status provisions are not normally used to require compliance when authority to ensure compliance is outside the purchaser’s defense establishment. Individual situations should be brought to the attention of the DSCA (Operations Directorate and Office of General Counsel) for coordination during LOA preparation.

C5.4.7.7.2. Provisions for recouping costs associated with in-country duty, (e.g., currency revaluation or unanticipated import or export charges), are covered in the LOA Standard Terms and Conditions and do not normally require special LOA provisions. When it is envisioned that the purchaser may fail to abide by existing SOFA or other status provisions and thus increase costs associated with an FMS program, special notes may be included in the LOA. Appendix 6 shows sample notes and required purchaser actions that can be used as a guide.

C5.4.7.8. Separate Memorandum of Understanding (MOU) Detailed Statement of Work (SOW), or Performance Work Statement (PWS). Major programs may call for an MOU, SOW, or PWS, which should be referenced or attached to the LOA. For routine LOAs, a detailed SOW or PWS can be avoided by providing the following information:

C5.4.7.8.1. Routine LOAs. A detailed SOW or PWS can be avoided if the description and purpose of the service to be performed; a statement of where and how the service will be performed; and a statement of the anticipated result when the service is completed, together with any information the purchaser should be aware of regarding USG reservations or qualifications to the probable success of the project.

C5.4.7.9. Schedule of Personnel Training. Defined order LOAs should include a confirmed schedule of personnel into specific training courses. When this is not feasible, LOAs should set forth training plans and schedules in general terms, and should show the need to define training needs at a later date. Blanket Order LOAs for training include notes to explain the scope of coverage and methods for definitizing and requesting courses. LOAs must specify purchaser responsibilities, such as providing pay and allowances; housing; medical expenses; insurance; qualified students; and any required supervision thereof.

C5.4.7.10. Logistics Information. LOAs show the configuration of equipment being sold but furnish detailed equipment specifications only if required. Variations from standard USG configurations are noted, together with risks that might be assumed as a result of the variance. The notes highlight any purchase of a configuration contrary to that recommended by the USG.

C5.4.7.10.1. LOAs include any requirement for, and scheduling of, logistics conferences or other program management actions for the purpose of definitization. The costs of such conferences that occur prior to acceptance of the LOA can be funded from the Administrative Budget Account Allocation of the IA, with reimbursement from the LOA after it is accepted. These actions pertain to approved programs and are distinguished from AECA, section 26 (22 U.S.C. 2766), Survey Teams.

C5.4.7.10.2. The IA assures that at least a one-year supply of concurrent (initial) spare parts, at U.S. peacetime usage rates, is included on the LOA with equipment being offered. Such spare parts packages should be identified on the LOA by category and total value (Blanket Order line) rather than by article.

C5.4.7.10.3. For offers of MDE items, the purchaser is advised of the estimated period that USG repair parts support is available.

C5.4.7.10.4. If the purchaser has requested that a particular item be provided from a sole source, and the IA has approved this request, the sole source designation is included in the notes. See Appendix 6.

C5.4.7.10.5. Any USG intent to develop logistics or maintenance support plans will be specified.

C5.4.7.10.6. The basis for logistics support costs will be specified. This must include the period of support of the initial spares package, operational deployment of equipment, level of maintenance to be accomplished by the purchaser, number of maintenance sites, or other cost basis as applicable.

C5.4.7.10.7. To ensure logistics support of weapons systems, the LOA should identify critical long lead-time items that must be procured in advance of total program definitization.

C5.4.7.10.8. Known limitations in condition must be shown using codes in Figure C5.F5., or in unique case notes. The LOA should specify that the cost of any rehabilitation is not included in the “as-is” price. The purchasers are encouraged to perform Joint Visual Inspection (JVI) of the materiel before accepting it, in advance of receipt of the LOA if possible. JVI of materiel cannot occur prior to transfer approval from DSCA unless DSCA (Programs and Strategy Directorates) has granted an exception. See Section C11.3.6., for more information on JVI.

C5.4.7.10.9. CLSSA and Blanket Order LOAs must show supported major items. CLSSA FMSO II LOAs must reference the associated FMSO I LOA.

C5.4.7.10.10. Responsibility for Initiation of Requisitions. The LOA will show which party is to initiate requisitions. If requisition input is a purchaser responsibility, the LOA contains information to enable correct requisition initiation and routing.

C5.4.8. Manpower on LOAs. Manpower in support of specific FMS programs is provided on FMS cases; either on applicable services lines or included directly in the price of materiel for activities that are not part of the Standard Level of Service. See Section C9.4.2. for information on pricing and tracking manpower requirements.

C5.4.8.1. Case-Related Manpower Functions and Funding Sources. Table C9.T2. describes case related manpower functions and indicates which activities are covered under the FMS Administrative Surcharge and which should be included as line items on the LOA.

C5.4.9. Contingency Lines. Contingency/undefined requirements lines (MASL R9B 079200N0NSPRQ, Non-Specific Requirements) may be included on FMS cases when requested by the purchaser as a holding place for funds budgeted but not yet programmed. Contingency lines cannot be used to requisition items or to provide services. Contingency lines are generally written without a defined period of performance. Funds collected for a contingency line will normally be at the end of a payment schedule until the requirements are further defined and broken out on separate lines. Any transactions inadvertently assessed against contingency lines must be “backed out” and applied to an eligible line.

C5.4.9.1. Including Contingency Lines on an LOA. The FMS Administrative Surcharge is applied to the contingency line value. Contingency lines are limited to ten percent or less of the LOA value. LOAs funded with FMF may not include contingency lines.

C5.4.9.2. Execution of Contingency Lines. Obligation authority is not granted for contingency lines. Orders cannot be placed against contingency lines. When requirements are identified by the purchaser, the applicable dollar values included in the contingency line must be moved to specific defense articles or services (non-contingency) lines, with commensurate payment schedule and other LOA adjustments, as needed. LOA Amendments are used for reallocation of contingency line authority.

C5.4.10. Preparing Classified LOAs. Classifying LOAs at the secret level or higher should be strongly discouraged. Section C5.4.3.4. provides information on when LOAs may be classified. DSAMS is an unclassified system; therefore classified information cannot be entered into this system even on a temporary basis. Preparation of cases classified on a temporary basis in advance of Congressional Notification is described at Section C5.5. In all other cases where classification is required, the following procedures should be applied when using DSAMS to write these cases.

C5.4.10.1. The country must ensure LORs are marked in accordance with classification guidelines described in Section C5.5.4.4., and must specify the classified data. For example, some purchasers may wish for the nomenclature of the item to remain classified, others may want to classify the quantity or information normally provided in the line item description note. At a minimum, each paragraph must be annotated with the specific classification markings, to include data that can remain unclassified.

C5.4.10.2. Any piece of information that is considered classified cannot be entered into DSAMS. The bulk of the case (containing all unclassified information) may be created using DSAMS. Any classified information must be entered on the document using approved classified systems after the document has been printed (e.g., using a typewriter, SIPRNET) or via separate classified annex. Pseudo or generic MASL lines may be used within the system to prevent the item from being disclosed. Using a pseudo MASL line does not allow automated application of pricing or waivers that are linked to the real MASL (e.g., Nonrecurring Cost (NC) Recoupment Charges). The case developer must ensure all appropriate charges are applied. If the application of specific pricing within DSAMS could reveal the item being purchased (e.g., inputting a specific NC value could be used to determine the exact item being sold), the pricing must be done off-line and only a total price for the line should be entered. When generic MASL lines are used, the correct MASL lines must be entered on the document off-line after it has been printed. The hard copy document must be marked in accordance with classification guidelines. Costs incurred to write and execute classified cases will be charged to the purchaser in accordance with Table C9.T4.

C5.4.11. Quality Control of LOA Documents. IAs must ensure that adequate controls exist to ensure the LOA package is factually accurate, complete and compliant with all statutory, regulatory, and fiscal requirements. See Table C5.T8. for more specifics on IA and DSCA (Case Writing Division (CWD)) responsibilities.

C5.4.12. Pre-Countersignature Meetings for New LOAs for Major Sales. DSCA (Business Operations Directorate) will convene a meeting on selected “major sales” when warranted. Attendees include DSCA, IAs, and prime contractor representatives, as appropriate. The purpose of the meeting is to review the purchaser requirements; ensure the proposed financial payment schedule correlates to the proposed program/delivery plan, and Dependable Undertaking term of sale if applicable; LOA notes and transportation methods are appropriate; MASLs are correct; disclosure and releasability review process was conducted as required, etc. The IA is responsible for presenting a plan to manage the program/delivery performance schedule within the financial requirements in the payment schedule and should address the contract financing vehicle, anticipated contract payment milestones, and known purchaser budget constraints. For the purpose of this paragraph “major sales” include: sales that trigger AECA section 36(b) (22 U.S.C. 2776) thresholds or proposed sales that represent an increase of more than fifteen percent to the FMS purchaser’s current active program. The IA notifies the DSCA Country Financial Director (CFD) at least 15 days prior to submitting an LOA for a “major sale” for countersignature. The DSCA CFD is responsible for scheduling the meeting.

C5.4.13. Coordination and Countersignature of LOA Documents. All LOA documents require DSCA countersignature. The DSCA point of entry for LOA document coordination and countersignature is the CWD. Once IAs have approved the LOA Data (LOAD) for an LOA document, they submit it to DSCA CWD using electronic procedures for countersignature.

C5.4.13.1. Preparation of LOA Documents. Preparation of Basic LOAs, Amendments, and Modifications is divided between the IAs and the DSCA CWD. LOAs progress through the following case preparation milestones: Development, Writing, Review, and Proposed. Table C5.T8. shows the basic allocation of the responsibilities between the IAs and the CWD. Table C5.T9. shows the LOA preparation milestones from Case Initialized to Case Implemented.

Table C5.T8. General LOA Preparation Responsibilities

Implementing Agency

DSCA Case Writing Division

LOA Data (LOAD) Development Input Letter of Request Create Case/Line Structure Manpower and Travel Data Sheets (MTDS) Military Technology Control Regime (MTCR) Review Critical Program Information (CPI) Anti-tamper Requirements Pricing (to include accessorial charges) and Delivery Data Terms of Sale Line Item Description Notes Case-unique Notes (to include Short OED, if needed) Service-unique Notes Congressional Notification (36b) Information Waiver Requests (to include NRC, Yockey, TLA) Releasability Sole Source Site Surveys Offset Information Price and Availability Data Leases AECA Section 30 Sales to U.S. companies Restatements Pen and Ink Changes (to include associated payment schedules) Input Applicable Case-related Milestones in DSAMS Review of LOAD and Preparing/Processing of LOA Prior to Sending to the CWD Approval of Customer-Requested Payment Schedules

Finalize the LOA Document in DSAMS Sequence Line and Note Order Enter DSCA Standard and DSCA-unique LOA Notes Adjust OEDs to Comply with Figure C5.F6. Validate Accessorial Charges Prepare and Validate Payment Schedules (except for Pen and Ink changes) Perform Review of Entire Package to Ensure Compliance with Laws (AECA and FAA), Regulations, and Policies Obtain DSCA/IA Coordination/ Review Prepare and Coordinate DoS List Perform Internal Case Tracking and Reporting Load Case-related Milestones in DSAMS Obtain DSCA Approval and Countersign

Table C5.T9. LOA Preparation Milestones

Click to view : Table C5.T9. LOA Preparation Milestones

C5.4.13.1.1. In case development status, the IA is responsible for development of the LOA data (LOAD) and initial quality assurance. The IA loads the LOR and develops the basic structure of the LOA to include pricing and availability, individual case lines, releasability coordination, AECA section 36(b) (22 U.S.C. 2776) data for notification (if appropriate) manpower worksheets, and other related supporting documents into DSAMS. All waivers, releasability coordination and any special approvals should be complete before the LOAD is submitted to the CWD for final processing. The IA should conduct a quality review of the LOAD before submission for further processing.

C5.4.13.1.2. When the IA has completed the LOAD process and its quality review of the LOAD package for the Basic LOA, Amendment or Modification, it will post the MILDEP Approval (MILAP) milestone in DSAMS, which moves the document from Development to Writing status. DSAMS reports used by the CWD will advise when case documents have moved to Writing status.

C5.4.13.1.3. Concurrent with movement of the document to Writing status, the IA must send an e-mail to the CWD no later than 24 hours after the MILAP notification with all applicable supporting files (LOA Checklist (former DSCA Cover Memo or transmittal), Letter of Request (LOR), manpower worksheet, AECA 36(b) notification, Missile Technology Control Regime (MTCR) Approval, etc., to support preparation of the case. All unclassified e-mails submitting LOAD supporting data must be sent to: LOA-DRAFT-CWD@cwd.dsca.mil. For cases that include classified documentation, also send to: DSCA.CWD@afmc.af.smil.mil, LOA.OPS@osd.dsca.smil.mil, LOA-FPIO@osd.dsca.smil.mil and LOA-POL@DSCA.osd.smil.mil. The CWD cannot initiate action to prepare the case until both of these actions have taken place. If the e-mail is not received within 24 hours, CWD will return the document to the IA via DSAMS for resubmission. If system problems prevent meeting this requirement, the IA should contact the CWD.

C5.4.13.1.4. Table C5.T10. provides the specific naming convention taxonomy for files submitted for countersignature. Each file name starts with the case identifier and then indicates which version of the document is being submitted. The file name should also include an abbreviation for the specific attachment that is being provided (i.e., termination liability worksheet, financial analysis worksheet, etc.).

Table C5.T10. Taxonomy for DSAMS Electronic Countersignature

File Name	Document Applies To
BN-B-SAA-BASIC-PKG.pdf	Master pdf file which includes sub-files as required
BN-B-SAA-BASIC-LOR.pdf	Letter of Request for the Basic case
BN-B-SAA-BASIC.pdf	Letter of Offer and Acceptance (LOA)
BN-B-SAA-BASIC-MNP.pdf	Manpower and Travel Data Sheet for the Basic case, as required
BN-B-SAA-BASIC-MTCR.pdf	Missile Technology Control Regime (MTCR) information for the Basic case
BN-B-SAA-BASIC-RESTATE.pdf	Restatement of the Basic case
BN-B-SAA-BASIC-REV1.pdf	Revision 1 to the Basic case -- used when the case is rejected and returned with changes made
BN-B-SAA-A01.pdf	Amendment 1 to the LOA
BN-B-SAA-A05-NCWAIVER.pdf	Nonrecurring Cost (NC) Waiver information for A05
BN-B-SAA-M03-REV1.pdf	Revision 1 to M03 -- used when the Modification is rejected and returned with changes made
Note: This list is not all-inclusive. File names provided are samples only. The e-mail sent to DSCA should also include the case identifier in the subject line and should indicate what action is required (i.e., approval, resubmittal, etc.). For example: "BN-B-SAA-BASIC Approval Request." The individual file conventions are used when documents are not included as part of the Basic, Amendment, or Modification package.

C5.4.13.2. In Case Writing status, the CWD will assemble the LOAD data provided by the IA and conduct final preparation of the Basic LOAs, Amendments or Modifications, including quality review of the LOAD, validation of all accessorial and manpower data, adding payment adjustments; developing the payment schedule; adding appropriate DSCA standard and unique notes, if necessary; and conducting a final quality assurance review of the entire LOA version before moving the package to Review status in DSAMS.

C5.4.13.3. During the Case Review process, the CWD forwards the final version of the LOA for review to both the DSCA staff, and the originating IA. Once the required DSCA offices have approved and the IA approves and enters the MILSGN milestone in DSAMS, the case is moved to Case Proposed status in DSAMS.

C5.4.13.4. In Case Proposed status, staffed and approved LOA documents will be added to the daily State FMS List and submitted for review and approval by DoS. See Section C5.4.13.11. for additional information on the DoS List Report.

C5.4.13.5. All case reviewers enter comments in the "Case Remarks" section of DSAMS when necessary. Since this field is at the case level and does not automatically identify the document version (e.g., Amendment 2, Modification 1, Basic LOA, etc.), reviewers must use a specific format when creating a title for their comments. The title must be entered as follows: Individual’s Office, Accept/Return, Document Version, and Revision Number (if applicable). A sample entry is: "OPS-EAF, Return-A02, Rev2." Reviewers must enter Case Remarks for all returns; however, comments for acceptances are optional.

C5.4.13.6. IAs should use DSAMS Management Flags to provide notification, as a minimum, when documents have been countersigned by DSCA (Milestone - DCSGN), returned from Writing Status (Milestone – CWDDOCRTN) by the CWD, or returned from Review Status (Milestone - WDOCRTN) by DSCA. A WDOCRTN milestone moves a case back to Writing Status for corrections, at which point CWD returns it to Case Development status for the IA to make the corrections.

C5.4.13.7. DSAMS allows holds and suspensions to be placed on documents. These capabilities cannot be used as a substitute for returning documents or for moving documents through the process in a timely manner. Holds do not "stop the clock." The time period during which the case is on hold is included in the LOA processing metric time calculations.

C5.4.13.8. When the case is countersigned and the IA receives notification that the case is in "Offered" status, the IA signs the document and sends it to the purchaser.

C5.4.13.9. For Taiwan case documents, all milestones are entered in DSAMS and the IA is responsible for transferring signature dates and information onto the cover memorandum to the American Institute in Taiwan.

C5.4.13.10. For emergency situations and classified cases, the IA enters all DSAMS milestones and notifies DSCA (Operations Directorate) in advance that these documents are being processed in hardcopy form. Concurrent with the MILAP milestone and subsequent processing of unclassified supporting documentation to the LOA-DRAFT-CWD@cwd.dsca.mil mailbox, IAs must forward classified documentation to the following SIPRNET addresses: DSCA-CWD@afmc.af.smil.mil, LOA-OPS@osd.dsca.smil.mil, LOA-FPIO@osd.dsca.smil.mil and LOA-POL@osd.dsca.smil.mil.

C5.4.13.11. DoS approval is required for LOA and subsequent Amendments that add or increase scope. CWD submits the DoS List Report daily, which provides the DoS with descriptions of defense articles and services being transferred on LOA documents. The report is produced by DSAMS and includes the “State Description” entered by the IA on the DSAMS Case Detail Window. The IA is responsible for ensuring the State Description as shown in Table C5.T11.

Table C5.T11. IA Responsibilities concerning the State Description

Step	IA Responsibilities
A	A clear and concise description of the major defense articles and or services being transferred or sold to include quantities and if follow-on support or spares are also being provided (e.g., “This LOA is for the purchase of 6 PATRIOT PAC-3 Fire Units and related support equipment, spare parts and initial maintenance teams”). Sensitive munitions (e.g., White Phosphorus or Depleted Uranium) must also be highlighted in this field.
B	Lists additional end items being provided on Amendments to Major Defense Equipment (MDE) cases. Quantities should be included only if there is an increase or decrease with a brief explanation of the change (e.g. “This Amendment provides 2 additional MIDS Terminals and associated support equipment per customer’s request”). Amendments that realign funds between lines, adjust delivery schedules or periods of performance should provide a succinct statement that indicates the intent of the document (e.g., “This Amendment realigns funds between lines to reflect actual costs and adjusts delivery schedules for M1A2 Tanks and support equipment”).
C	List the major end items being supported and provide descriptions of items previously delivered if multiple platforms are being supported for follow-on support documents, Basic LOAs, Amendments or Modifications, (e.g., “This LOA provides follow-on support for the M1A1Abrams Tank, M2 Bradley IFVs, M113 APCs, M109 Howitzer and related support equipment including maintenance teams, spare parts and related services”).

C5.4.14. Documents to Accompany LOAs During Coordination.

C5.4.14.1. Letter of Request (LOR). The LOR must be included in electronic LOA packages submitted to DSCA for countersignature.

C5.4.14.2. Manpower and Travel Data Sheet (MTDS). LOA documents that include case-funded manpower (program management or any other manpower) must include an (MTDS) as part of the electronic package. See Figure C9.F1. for more detailed information on this worksheet.

C5.4.14.3. Missile Technology Control Regime (MTCR). Cases that add MTCR items must include a copy of the DoS (ISN/MTR) approval as part of the electronic package. See Section C3.2., for more information on MTCR.

C5.4.14.4. Previous Versions of the Document. When LOA documents are restated, a copy of the previously approved version must be included along with the restated version as a part of the electronic package. When LOA documents have been rejected and are resubmitted for countersignature, the electronic package must include the returned version as well as the new version. If there are concerns, changes must be clearly identified in DSAMS Case Remarks and the LOA Checklist. If no changes were made in response to a return reason that was identified, DSAMS Case Remarks and the LOA Checklist must provide the rationale. The IA should contact the individual(s) who initiated the return action to discuss the reason for the return and corrective action prior to resubmission to CWD to avoid further returns or delays in processing.

C5.4.14.5. Other Documents. If there are any waivers or unique circumstances related to the case, applicable documentation should be included as part of the electronic package. Such information includes, but is not limited to, EDA approval; NC waivers; DTSA approval; 36(b) notification; Yockey Waiver; National Security Agency (NSA) approval; and Grant Agreements.

C5.4.14.6. Restatements. There may be times when major changes need to be made to a document after it has been countersigned and offered to the Purchaser. If the Purchaser wants to retain the existing designator (instead of canceling the offer and issuing a new case), the offered case may be restated. Restatements can be made as long as the document is in “Offered” status, the purchaser has not yet signed the case, the Offer Expiration Date (OED) has not yet expired, and changes are consistent with FMS policies and procedures. Before restating an LOA, the Purchasing country must be notified in writing by the IA that the original offer is no longer valid. Expiration of the OED on the offered LOA is considered written notice. Restated documents must clearly state that they are restated and supersede the previously offered version and must be coordinated and countersigned using the same procedures as the original case. A copy of the previous version(s) of the LOA must accompany the coordination request. If the Purchaser signs the original offer, it is considered an invalid acceptance because the original offer either expired or was withdrawn. This action is considered a counteroffer and a new offer should be made to the Purchaser by extending and then restating the LOA, or the case should be cancelled and a new LOA (new offer) prepared.

C5.4.14.7. Reactivating Cancelled Offers. Once an offered LOA has been cancelled, it will remain cancelled in most instances. Reactivating cancelled cases eliminates the data history. LOAs that are not yet offered can be cancelled/reactivated at the IA’s discretion. Once an LOA is offered and it is determined that the document is no longer needed, e.g., the country stipulates they do not want it, the case should be cancelled in DSAMS. Cancellation cannot be used to place a document on hold. The Hold and Suspend milestones are used for that purpose. If the IA wishes an exception to allow reactivation, a request for a reactivation/data fix should be forwarded to the DSCA (Business Operations Directorate) that identifies what actions are required along with sufficient justification warranting the changes. The request will be coordinated with the DSCA Country Program Director, Country Financial Manager, and Strategy Directorate for their input on whether to approve or disapprove the request.

C5.4.14.7.1. Positive resolution could involve reactivating the document which takes it back to development status, or doing a data fix (removing milestones), which takes it back to a more appropriate status.

C5.4.14.7.2. If reactivation is approved, the DSCA (Business Operations) will post the Reactivation Authorized Milestone (DREACT) in DSAMS and notify the IA by e-mail. The IA will then post the MILDEP Reactivation (MILREACT) milestone in the DSAMS Case Milestone List Window and bring other systems that may have this cases loaded up to date. This takes the case back to Development status.

C5.4.14.7.3. If a data fix is more appropriate, the IA must determine if there have been any changes, (e.g., lines or notes originally added to this document version that may have been deleted). DSCA (Business Operations Directorate) will post the Reactivation Authorized Milestone (DREACT) in DSAMS, and notify DSADC (info the IA), to do a data fix on the document placing it in the appropriate status. Once the data fix has been completed, the IA must then post the MILDEP Reactivation (MILREACT) milestone in the DSAMS Case Milestone List Window, replace/modify data in document, (e.g., lines/notes that were deleted), update the milestone as appropriate, and bring other systems that may have this cases loaded up to date. This cannot be done systemically, as DSAMS does not retain this information.

C5.4.15. Pen and Ink Changes. There may be times when minor changes need to be made to an LOA after it has been countersigned and offered to the purchaser. Minor changes can be made as long as the LOA is in “Offered” Status, the purchaser has not yet signed the LOA, the OED has not yet expired, and all changes are consistent with FMS policies and procedures. The purchaser must be authorized via email or memorandum to make any Pen and Ink changes, with a copy to DFAS Indianapolis. DSAMS must be updated with any changes. Pen and Ink changes should be kept to a minimum, with processing as follows:

C5.4.15.1. OED Changes. Normally, the greater the period of time between Offer and Acceptance, the greater the likelihood of decreased accuracy of pricing and availability data. Requests by the purchaser to extend the expiration date are honored only after a review by the IA to ensure data are still valid for the extended period. All concerned should be advised of any consequences associated with the extension.

C5.4.15.2. Minor Changes. Minor changes may include insignificant technical corrections such as small arithmetical changes that do not increase total case value or administrative changes, such as address corrections, initial deposit or payment schedule adjustments, or minor changes to note wording. The IA may review and approve these changes.

C5.4.15.3. Major Changes. More significant changes, such as an increase in program scope, including a revision of the terms of sale or total costs, generally require a new or restated document. Pen and Ink changes for scope changes may be done only in exceptional circumstances and with prior DSCA (Business Operations and Strategy Directorates), concurrence. Changes initiated after the purchaser has signed the LOA are accomplished through a corrective Amendment or Modification implemented subsequent to the basic LOA. See Section C6.7.1.4. and Section C6.7.2.4.

C5.4.15.4. Unauthorized Pen and Ink Changes. When an LOA is signed by the purchaser and returned to the IA with unauthorized Pen and Ink changes, it is processed as a counteroffer. The LOA should be restated and reoffered, or cancelled and a new LOA prepared.

C5.4.16. LOA Acceptance. LOA acceptance occurs when an authorized purchaser’s official signs the LOA and provides any required initial deposit to DFAS Indianapolis. Once accepted, the FMS case is implemented and becomes a government-to-government contract between the purchaser government or international organization and the United States or in the case of the Foreign Assistance Act (FAA) 607 certain voluntary non-profit relief agencies.

C5.4.16.1. In addition to signing the LOA, the purchaser must complete the “Typed Name and Title,” “Agency,” and “Information to be Provided by the Purchaser” fields on the LOA.

C5.4.16.2. When the LOA has been accepted or rejected, the SCO advises DSCA (Operations Directorate) and the IA by priority message. When LOAs are accepted for a foreign country or international organization not served by a SCO, or where LOAs are often routinely signed without direct SCO involvement, the LOA includes a note requiring the purchaser country signature authority to notify DFAS Indianapolis and the IA of the acceptance date.

C5.4.16.3. The purchaser should forward a copy of the signed LOA to the IA, which will maintain the original on file. DFAS Indianapolis requires only a copy of the signed LOA cover page.

C5.4.17. LOA Period of Performance. An implemented FMS case is effective until all articles offered are delivered and all services have been performed. Blanket Order LOAs remain in effect until the purchaser has requisitioned articles or services up to funds available on the LOA.

C5.5.1. Definition and Purpose. By law, a numbered certification must be submitted to the Speaker of the House of Representatives and the chairman of the Committee on Foreign Relations of the Senate before LOA documents which meet specific criteria may be offered to foreign purchasers. Congress reviews each such proposed sale and may prohibit the transfer by enacting a joint resolution before the end of the prescribed review period. If Congress does not enact a joint resolution, the LOA document can be offered when the review period expires.

C5.5.2. Legal References. Table C5.T12. summarizes the Congressional Notification legal references.

Table C5.T12. Congressional Notification Legislation

Legislation	Subject
Arms Export Control Act (AECA), Section 36(b)(1) (22 U.S.C. 2776(b)(1))	Notification Criteria/Content/Classification
AECA, Section 36(b)(5)(A) (22 U.S.C. 2776(b)(5)(A))	Sensitivity of Technology Enhancement/Upgrade – Report
AECA, Section 36(b)(5)(C) (22 U.S.C. 2776(b) (5)(C))	Sensitivity of Technology Enhancement/Upgrade - New Notification
AECA, Section 36(b)(1) (22 U.S.C. 2776(b)(1))	Offset Arrangements
AECA, Section 36(f) (22 U.S.C. 2776(f))	Federal Register Publication
FAA, Section 620C(d) (22 U.S.C. 2373)	Sales to Greece or Turkey
Executive Order (E.O.) 11958	Delegates certain AECA functions to the Secretary of Defense and Secretary of State
Foreign Assistance Appropriation (Issued Annually – Sections Vary)	Program Content Notifications

C5.5.3. Congressional Notification Requirement. Table C5.T13. identifies the Congressional Notification criteria and requirements. The DoS must provide clearance to DSCA prior to DSCA forwarding to Congress the statutory 15, 30, or 45 day notification, or the Advance Notification (20-day review period prior to the 30-calendar day statutory review period) required for countries other than NATO, any NATO member country, Australia, Israel, Japan, the Republic of Korea, and New Zealand.

Table C5.T13. Congressional Notification Criteria and Requirements

Click to view : Table C5.T13. Congressional Notification Criteria and Requirements

C5.5.4. Classification of AECA, Section 36(b)(1) Congressional Notifications. If a case is subject to AECA, section 36(b) (22 U.S.C. 2776) Congressional Notification, any draft USG response document (e.g., LOA, notification, or Nonrecurring Cost Recoupment Waiver) that relates the country to the sale items is classified Confidential until DSCA notifies the IA that the DoS has authorized either For Official Use Only (FOUO) handling or unclassified formal notification to Congress. IAs must maintain internal procedures to ensure that documents are handled appropriately. As DSAMS is an unclassified system, classified information cannot be entered into this system even on a temporary basis. It is the sum of the parts (purchaser, system, and quantity or value) in the context of their inclusion in a formal USG response that is classified. The individual parts, if unclassified in the LOR, remain unclassified and can be discussed in an unclassified environment provided they are not associated with a USG response that has not yet been formally notified.

C5.5.4.1. Submission of Initial Information. The IA will provide the following details to DSCA (Business Operations Directorate) via Secret Internet Protocol Router Network (SIPRNET) as soon as enough detail exists to provide reliable data:

Table C5.T14. Required Initial Submission Information

#	Required Information
1	Purchaser
2	Description of Major Defense Equipment (MDE) or other main items being sold
3	Quantity
4	Total Case Value
5	Whether annexes classified for other reasons (e.g., Sensitivity of Technology, Offset Certification) will be attached.

C5.5.4.1.1. DSCA (Business Operation Directorate) will forward this data to the DoS, which will advise in writing whether the draft notification may be prepared as FOUO. Details related to potential 36(b) notifications will continue to be classified and prepared on SIPRNET until DoS has determined that a particular case may be handled as FOUO.

C5.5.4.2. Initial Entry into DSAMS. LOA documents for cases requiring 36(b) Congressional Notification will be entered into DSAMS with a case identifier using a “masking” country code, (e.g., “XX”), to ensure the prospective purchaser is not identified. This identifier is used to enter unclassified case information, including item descriptions, into DSAMS. Using the masking case identifier allows most of the case information to be entered and helps case developers continue their work prior to the notification. The purchaser cannot be named in the notes or other supporting data to ensure the information remains unclassified. The user must use caution when entering data under a masking country code. Many pricing waivers and restrictions are programmed in DSAMS under each specific country. When a masking country code is used, these waivers are not applied automatically and the user must apply them individually as appropriate. The application of specific pricing within DSAMS could reveal the purchaser, e.g., entering a specific waiver percentage for CAS could identify a list of potential purchasers. In these instances, the pricing is done off-line and only a total price for the line should be entered.

C5.5.4.3. Classified Attachments. If any data or attachments are classified by virtue of the information contained in them, (e.g., Sensitivity of Technology, Qualitative Military Edge (Regional Balance) Assessment, Offset Certificate) then regardless of DoS’ handling determination, those portions are kept on pages separate from the rest of the draft notification and marked with the required level of classification. Each paragraph is marked with the required classification level and the derivative authority “classified by” and “declassify on” data are shown.

C5.5.4.4. Handling Determination and Procedures. As soon as the case has been entered into DSAMS, the IA will inform the Country Financial Manager of the masked case identifier, either in conjunction with submission of the Advance or Statutory Notification Data Memorandum (See Figure C5.F7.) or by separate email. Upon receipt of DoS’ determination as to how the case will be handled, the Country Financial Manager will enter the appropriate milestone into DSAMS. If DoS approves FOUO handling, entry of the milestone will permit DSAMS to be updated with the actual country code and give LOA documents an FOUO header and footer until the formal notification is made. If FOUO handling is not approved, the milestone will not permit the actual country code to be entered prior to the unclassified formal notification to Congress. If none of the data or attachments is classified for other reasons, the documents are marked “CONFIDENTIAL” with all paragraphs preceded by “(U)”. The bottom of the first page of each submittal shows: “Declassify On Statutory Notification To Congress Unless Required Otherwise By Competent Authority." In either event, upon entry of the actual country code, the remaining case information may be entered. Pricing that was not entered into the system to protect the classification is entered into DSAMS at this time.

C5.5.5. Information Included in Congressional Notifications.

C5.5.5.1. IA Submissions. Figure C5.F7. through Figure C5.F10. show the data the IAs must submit to support AECA, section 36(b)(1) notifications.

C5.5.5.2. Cost Estimates. Rough Order of Magnitude (ROM) cost estimates, as well as generic descriptions of the proposed sales elements are acceptable for processing Congressional Notifications. For notification purposes, proposed sales should be developed for the maximum reasonable program scope and value.

C5.5.5.3. Sensitivity Of Technology. AECA, section 36(b)(1) (22. U.S.C. 2776) requires that Congressional Notifications for MDE contain a Sensitivity of Technology statement, classified if necessary, identifying the extent of the sensitive technology and classified information, and a justification for the sale in view of the technology sensitivity.

C5.5.5.3.1. Sensitivity of Technology refers to the detrimental effect on national security interests of the United States that could be caused by unauthorized disclosure or diversion of defense equipment, technical data, training, services, or documentation transferred in connection with a proposed sale. This includes special tooling or manufacturing equipment that is sold in connection with a coproduction or co-assembly program.

C5.5.5.3.2. The Sensitivity of Technology statement must address both unclassified and classified sensitive technological information and any restricted information contained in classified components or documentation, which could be transferred by the sale. The Sensitivity of Technology information should not address the risk associated with unauthorized disclosure or diversion (covered by National Disclosure Policy (NDP-1) procedures and USD(AT&L) review) or the foreign policy implications of unauthorized use by the proposed recipient. Figure C5.F8. contains a sample format for this information.

C5.5.5.4. Military Justification. Figure C5.F9. provides a sample format for this information.

C5.5.5.5. Offsets. In accordance with AECA section 36(b)(1) (22 U.S.C. 2776), each notification will indicate whether an offset agreement is proposed in connection with the sale. If so, an Offset Certificate, which is treated as confidential information, pursuant to 50 U.S.C. App. 2411(c) and AECA, section 36(g), (22 U.S.C. 2776) must be included. This certificate should be marked “CONFIDENTIAL” and remains classified even after the statutory notification is made. Figure C5.F14. provides a sample format for this information.

Figure C5.F7. Advance or Statutory Notification Data

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Figure C5.F8. Sensitivity of Technology Statement

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Figure C5.F9. Military Justification Data

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Figure C5.F10. Offset Certificate

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C5.5.5.6. Committee Requests. In accordance with AECA, section 36(b)(1), Congressional committees may request the following information be submitted with any notification:

C5.5.5.6.1. A detailed description of the defense articles or services, or design and construction services offered, including a description of the article's capabilities;

C5.5.5.6.2. An estimate of the number of officers and employees of the USG and of U.S. civilian contract personnel needed in-country to carry out the proposed sale;

C5.5.5.6.3. The names of contractors expected to provide the defense articles or services, or design and construction services and a description of any proposed offset agreements;

C5.5.5.6.4. An evaluation, prepared by the Secretary of State in consultation with the Secretary of Defense and the Director of Central Intelligence Agency, of the manner, if any, in which the proposed sale would: Contribute to an arms race, support international terrorism, increase the possibility of an outbreak or escalation of conflict, prejudice the negotiation of any arms controls, or adversely affect the arms control policy of the United States;

C5.5.5.6.5. The reasons why the foreign country or international organization needs the defense articles or services, or design and construction services, and how the country or organization intends to use the defense articles or services, or design and construction services;

C5.5.5.6.6. An analysis by the President of the impact of the sale on the military stocks and the military preparedness of the United States;

C5.5.5.6.7. The reasons why the sale is in the national interest of the United States;

C5.5.5.6.8. An analysis by the President of the impact of the sale on the military capabilities of the foreign country or international organization;

C5.5.5.6.9. An analysis by the President of how the sale would affect the relative military strengths of countries in the region and whether other countries in the region have comparable kinds and amounts of defense articles or services, or design and construction services;

C5.5.5.6.10. An estimate of the levels of trained personnel and maintenance facilities of the foreign country or international organization which are needed and available to effectively utilize the defense articles or services, or design and construction services;

C5.5.5.6.11. An analysis of the extent to which comparable kinds and amounts of defense articles or services, or design and construction services are available from other countries;

C5.5.5.6.12. An analysis of the impact of the sale on U.S. relations with other countries in the same region;

C5.5.5.6.13. For any agreement proposed to be entered into by the United States for the purchase by the United States of equipment or services of the foreign country or international organization in connection with, or as consideration for, such LOA, a detailed description of the agreement including an analysis of the impact upon U.S. business concerns which might otherwise have provided such equipment to the United States, an estimate of the costs to be incurred by the United States compared with costs which would otherwise have been incurred, an estimate of the economic impact and unemployment which would result, and an analysis of whether such costs and domestic economic impact justify entering into the agreement;

C5.5.5.6.14. The projected delivery dates of the defense articles or services, or design and construction services;

C5.5.5.6.15. A detailed description of weapons and levels of munitions that may be required as support for the sale; and

C5.5.5.6.16. An analysis of the relationship of the proposed sale to projected procurements of the same item.

C5.5.6. Responsibilities for Congressional Notification. Under E.O. 11958, the President has delegated the responsibility of implementing AECA, section 36(b) to the Secretary of Defense in consultation with the Secretary of State. Congressional Notification responsibilities are summarized in Table C5.T15.

Table C5.T15. Congressional Notification Responsibilities

Organization	Responsibility
Congress	Initiates committee requests
DoS	Consults with the DoD on Congressional Notifications Prepares FAA, section 620 certifications on Greece and Turkey Evaluates proposed sale regarding support for foreign policy goals, regional stability, consistency with international agreements, and arms control initiatives
DSCA	Prepares and submits Congressional Notifications and Reports after DoS clearance Develops the Sensitivity of Technology Statement
Implementing Agencies	Provides necessary data to DSCA

C5.5.7. Congressional Notification Process.

C5.5.7.1. Processing AECA, Section 36(b)(1) Notifications.

C5.5.7.1.1. Implementing Agencies Prepare Data. Within 10 days of receipt of a valid LOR that meets the Table C5.T10. criteria, the IA prepares and submits the data required for a Congressional Notification to DSCA (Business Operations Directorate). See Figure C5.F7. through Figure C5.F10. for more information.

C5.5.7.1.2. DSCA Prepares Notification. Upon receipt of the data, DSCA prepares the required notification documents, coordinates with the DoS, and submits the notification to Congress. DSCA assigns a Transmittal Number on each statutory notification, which identifies the year and sequential number of the transmittal (e.g. 03-30). This number must be included on the LOA and all subsequent Amendments and Modifications. When the notification is submitted to Congress, DSCA provides the Transmittal Number and a copy of the Congressional transmittal letter(s) to the IA. After receipt of the Transmittal Number, the IA can provide a draft LOA to the Purchaser.

C5.5.7.1.3. Expedited Processing. In the event of circumstances which require expedited processing of a notification (e.g. the need to exercise contract options by a specific date, termination of a current production program), the IA should provide justification in the cover memorandum to the AECA, section 36(b)(1) submission to DSCA so that the DoS and other coordinating agencies are aware of the notification urgency.

C5.5.7.1.4. Program Issues Impacting Sales. The IA must advise DSCA (Business Operations and Operations Directorates) of program difficulties or changes that impact or constrain the potential sale. For example, domestic program budget cuts, projected termination of domestic production contracts, unfavorable test and evaluation results, or program cost increases could have a detrimental effect on a potential sale and affect the Congressional Notification process.

C5.5.7.1.5. After Expiration. Upon expiration of the statutory 15 or 30 day review period and provided that Congress has not enacted a joint resolution objecting to the proposed sale, the LOA document may be coordinated, countersigned, and offered to the purchaser. AECA, section 36(f) requires the publication of the full-unclassified text of each numbered certification submitted pursuant to subsection (b) and each notification of a proposed commercial sale submitted under subsection (c). DSCA posts information regarding major arms sales notifications to Congress at http://www.dsca.mil.

C5.5.7.1.6. Period of Validity. A Congressional Notification that has not resulted in any accepted LOA(s) by a foreign government remains a valid notification against which LOAs may be accepted and implemented for a period not to exceed five years.

C5.5.7.1.7. When Congress Objects. If Congress adopts a joint resolution objecting to a proposed sale, DSCA (Operations Directorate) will notify the IA and the LOA is not offered to the prospective purchaser.

C5.5.7.1.8. Emergency Circumstances. If the President states in the AECA, section 36(b)(1) certification that an emergency exists that requires the proposed sale in the U.S. national security interest, the Congressional review requirements are waived and the LOA is offered before the 15 or 30-day notification period has expired. The President must provide a detailed justification for his or her determination, a description of the emergency circumstances that necessitate the immediate issuance of the LOA, and the national security interests involved.

C5.5.7.2. Processing Section 36(b)(5)(A) Reports. Figure C5.F11. illustrates the data submitted by the IAs to support AECA, section 36(b)(5)(A) reports for applicable sales. The section 36(b)(5)(A) report is required for 10 years after the original Congressional Notification unless deliveries are completed sooner. The IAs should consolidate all upgrades resulting in improved or enhanced capabilities and provide these reports as a package submission to DSCA (Business Operations Directorate).

Figure C5.F11. Enhancement or Upgrade of Sensitivity of Technology of Items Planned to be Delivered, AECA, Section 36(b)(5)(A) Report

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C5.5.7.3. Processing Section 36(b)(5)(C) Enhancement Notifications. Figure C5.F12. illustrates the data submitted by the IAs to support AECA, section 36(b)(5)(C) notifications for applicable sales. The IAs should consolidate upgrades resulting in improved or enhanced mission capabilities and provide these reports as a package submission to DSCA (Business Operations Directorate).

Figure C5.F12. Statutory Notification Data On Enhancement, Upgrade of Capability, or Sensitivity of Technology, AECA, Section 36(b)(5)(C) Report

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C5.5.8. Programs with Long Lead-time Items.

C5.5.8.1. An LOA can be used for the long lead-time items of the major program without Congressional Notification of the initial LOA. The value of this initial LOA for long lead-time items must fall below Congressional Notification thresholds.

C5.5.8.2. A 36(b) Congressional Notification should be submitted using an Amendment to the LOA for the long lead-time item for the remainder of the program. The notification must include a reference to this long lead-time item LOA under “Prior Related Programs” even though this section usually lists only prior related 36(b) LOAs. If the notification is disapproved, the Amendment will not be offered and the existing long-lead time item LOA will cover only costs already incurred. See Appendix 6, LOA Notes, for the applicable note that must be included in the LOA.