1. PERU
July 2009

2. The Sales Process State Defense MILDEPs President Congress Foreign
Purchaser
Needs
Supplies
and
Services
C214 PD&R
SAM-I, 5/1/2009

3. FMS Terminology What’s a FMS Case?
A government to government agreement to transfer defense articles & services is a:
Letter of Offer & Acceptance
=LOA
= FMS Case
=Case “BN-D-YCY”
=Case YCY

4. International Sales Process FMS Case lifecycle phases (DISAM Text Page 5-2)
Preliminary, Definition and Request
Offer and Acceptance
(SAMM C-5)
Case Development
Implementation, Execution, and Closure
(SAMM C-6)
Case Execution

5. Security Assistance Policy Documents
Security Assistance Management Manual (SAMM) DoD M
DSCA Policy Memoranda
Financial Management Regulation R, Vol. 15, Security Assistance Policy and Procedures
Reconciliation and Closure Manual DoD M (RCM)
MILDEP Specific Policy Manuals

6. = Customer Decisions Needs Where Cost What Kind When How Many FMS
Non-U.S.
Sources
Where
Cost
What Kind
U.S.
Munitions
List
When
U.S.
Commercial
Export
Needs
How
Many =
Arms
Export
Control
Act
FMS
Letter Of
Request
(LOR)
Minister of
Defense
Bandaria

7. Letter of Request Checklist
Identification Information
Purpose:
P&A- Price & Availability
LOA-Letter of Offer & Acceptance
Lease
Purchaser
Pre-negotiations
Transparency
Acceptance Time Frame
International Solicitation
Major Item Considerations
Standard Model
Quantity
Unique Configuration
Delivery Timeframe
Transportation
Warranties
Sole Source
Support Considerations
Operations Concept
Maintenance Concept
Supply Concept
Initial Spares
Support Equipment
Facilities
Follow on Support
Publications
Services
FMS Case Reviews
Training
DOD/Contractor Services
Site Survey
Financial Considerations
Funding Source
Payment Schedule/Initial deposit
Financial Waivers
Special Considerations
Memorandum of Understanding (MOU)
Offsets
Commercial Negotiations
Special Reports
Interoperability
Total
Package
Approach
Purchaser Who and what organization in Bandaria is submitting the LOR (Army, Navy, Air Force, etc.)
Purpose: Does Bandaria want P&A or LOA? Explain the 3 basic differences.
Model: What specific version of the system do they want? Model designator or series.
Quantity: How many do they want?
Configuration: Do they want a special Bandarian configuration or do they want the standard U.S. version? The benefits of the standard version include: cheaper, easier to support, upgrade and mods, shorter lead time
Sole Source: Do they want sole source? Justification must be included in the LOR. Have they conducted their own competition?)
Delivery: What is the requested delivery timetable for all quantities?
Acceptance Timeframe: Will the country be able to accept in 60 days or will more time be needed?
Initial Spares: How many years of spares support will be requested? Usually 1-3 years are provided.
 Operational Concept: Under what conditions will the weapon system be deployed? High or low altitude. Dessert or tropical. 1 base or 3 bases. All impact spares and support equip.
 Maintenance Concept: Organizational, Intermediate, Depot (contractor, internal, third country, FMS). Impacts initials spares
 Supply Concept: Commercial, third country, internal, FMS? This impacts initial spares and follow on support cases rqmts.
 Transportation: Do they have a freight forwarder? Options: DTS internal, commercial, third country. Is staging/aggregation in U.S. or overseas required? Classified? Transportation plan required? Do they want insurance to cover shipment?
 Contract Services/Organic Services: What does the customer want?Technical assistance, engineering, maintenance, supply, operators, A WSLO?
 Training: What Kind? Operational, language, support to include maintenance. Options: commercial, internal, FMS, third country
 Waivers: We need to know what waivers to the std /SAMM/AECA rules are required by the customer up front..
 Warranties: Is a performance warranty required? (could increase cost)
 MOU Is there an associated MOU/MOA? MOU’s may contain cost waiver information, tech transfer, mutual logistics support, and RSI considerations which may impact the LOA.
 Commercial Negotiations: Have they previously purchased a similar item commercially? Are they currently engaged in serious negotiation with U.S. industry? Does national policy require price comparisons?
 Foreign Competition: Is there serious foreign competition? This may be a SAO input.
Transparency: Has the customer requested a detail line item break out with respect to cost? Will they request to observe contract negotiations? (SAO should not suggest these options)
 Offsets: Define Define quicly a offsett. Will the customer request an offset from the manufacturer(s)? This information is needed for notification to Congress and possible financial impact considerations in the LOA
 Site Survey: Has there been a site survey or is one being requested? Discuss the importance of a site survy . Read the text C-8 structure for a survey.
Define a site survey- survey for specific piece of equipment as opposed to a Defense Rqmts survey.. Who does the survey, how is it paid for, when should it be done.
Bottom line-can get all required info. via a site survey
LOR Writing Guide

8. Need LOR preparation help?
DISAM’s LOR Writing Guide
USASAC’S Commodity Specific Checklists (Int’l Customers tab)
AFSAC On-line
Implementing Agency (IA)- Country Program Director (CPD)
USASAC-U.S. Army Security Assistance Center
AFSAC-Air Force Security Assistance Center

9. LOR Applications LOR Submissions
Selecting

10. LOR Applications LOR Submissions--Screen 1
Selecting
The customer may submit a ‘New LOR’ or ‘View/Modify’ an existing LOR.
For new LORs, the user must select the type of LOR required (Purpose of Request) and establish a ‘unique’ Country Reference Number.
For existing LORs, the user may query by the Country Reference Number OR the AFSAC Reference Number. The user can view any existing LOR; however, only ‘open or pending’ LORs can be modified.

11. LOR Applications LOR Submissions--Screen 2
The user enters applicable LOR data on this screen, then clicks ‘Continue’ to proceed to the next screen. Edits will ensure user completes all required fields. Note that the user requested P&A data in this LOR Submission example.
Multi-line phase allows the user to select one or more materiel/services.
Selecting

12. Channels of Request Implementing Agency Prepare LOA Letter Of Request
State
DSCA
Letter Of
Request
LOR
Combatant Command
U.S. Embassy
Implementing
Agency
PROCEED
Bandaria
Prepare LOA
Congress

13. International Traffic in Arms Regulations (ITAR)
Provides registration / licensing requirements for the commercial export of defense articles, services, and related technical data.
Includes the United States Munitions List (USML)
Identifies “Significant Military Equipment” (SME)
SME requires special considerations because of “Their capacity for substantial military utility or capability”
SME also defined in §47(9), AECA
Identified by an Asterisk (*) on the Munitions List
[22 CFR ]

14. Major Defense Equipment List
Approved
Charge
$147,604
$326,461
$897,452
$1,045,566
$1,328,033
$144,279
$663,082
$607,149 $
Effective
Date
11 May 89
18 Jun 90
28 Nov 01
30 Dec 83
23 Feb 00
7 Aug 91
10 Aug 93
3 Jun 91
Helicopters
AH-1S Cobra (with T-53-L-703 Engine) System without C-Nite
AH-1W Super Cobra (with 2 T-700-GE-401 Engines)(N)
AH-1Z (H1 Helicopter upgrade) with two T700-GE-410 Engines
AH-64 Apache Helicopter System (with 2 T-700 Engines) (A)
AH-64 (New) Apache Helicopter System with 2 T-700 Engines
CH-47D Chinook (without T-55 Engines) (A)
OH-58D Kiowa with one T-703 engine (with Mast Mtd Sights) (A)
SH-2G (with 2T-700-GE-401 Engines) (N)
UH-1Y (H-1 Helicopter Upgrade) with two T700-GE-401C Engines
MDE List- SAMM Appendix-1 2

15. “Country Team Assessment” for SME/MDE LOR’s (SAMM C5.T1)
U.S. Embassy/SCO Must Address:
Reason nation desires articles/services
Effect on recipient's force structure
Reaction of neighboring nations
Purchaser's ability to maintain, operate and support
Economic impact and source of financing
Human rights considerations
Should USG approve purchase
SME=Significant Military Equipment MDE=Major Defense Equipment

16. Defense Security Cooperation Agency Responsibilities
Charter-Administer FMS
Policy (SAMM)
Congressional Input
FMS Country Program & Financial Management
FMS Administrative Budget
Credit Program (FMFP)
Training Program (IMET)
FMS Trust Fund Mgt
Waiver Authorities
Memoranda of Understanding
Security Cooperation Office Mgt.
Computer System Development & Management
Security Assistance Metrics
Payment Schedules/Special Bills
Case Closure
Lean Six Sigma (LSS) Teams
Security Cooperation
Non-FMS Functions

17. Department of State Arms Transfer Points of Contact
Under Secretary for Arms Control
& International Security
Bureau of Political-Military Affairs:
Regional Security and Arms Transfers (RSAT)
Director for Defense Trade Controls (DDTC)

18. Channels of Request Implementing Agency Prepare LOA Letter Of Request
State
DSCA
Letter Of
Request
LOR
Combatant Command
U.S. Embassy
Implementing
Agency
PROCEED
Bandaria
Prepare LOA
Congress

19. Preliminary Definition & Request

20. Optional slides

21. Sources of Information
U.S. site surveys and other assessments
Internet
News media,
e.g., CNN
Military-to-military
Trade pubs, print, library and electronic
Attendance at U.S. military schoolhouses
U.S. Contractors
Air trade shows
Security Cooperation Officer
Visits and observer missions
Department of Defense