1. Acquisition Policy SCM-OC July 2015

2. Lesson Outline  US DOD Acquisition Policy and Authority  Acquisition Framework  USG, Foreign Government and Industry procurement relationship  Offsets

3. 01 August 2012 3002 3 And / Or  Procurement Where is the USG going to get “our stuff” from and how will it happen?  Stock

4. Acquisition Policy Acquisition for FMS purchasers will be in accordance with U.S./DoD regulations and procedures. This affords the foreign purchaser the same benefits and protection that apply to DoD procurement and is one of the principal reasons why foreign governments and international organizations prefer to procure through FMS channels.

5. SAMM C6.3.1: SAMM C6.3.1: Federal Acquisition Regulation (FAR) provisions applicable to the DoD also apply to FMS procurements. DFARS Subpart 201.104: DFARS Subpart 201.104: The Defense Federal Acquisition Regulation Supplement (DFARS) apply to purchases and contracts by DoD activities made in support of foreign military sales. Acquisition Authority

6. Acquisition Framework

7. 01 August 2012 3002 7 Defense Acquisition Management Framework Defense Acquisition System (DoDD 5000.01)DoDD 5000.01 and Joint Capabilities Integration & Development System (JCIDS - CJCSI 3170.01H)CJCSI 3170.01H Operations & Support BA Engineering & Manufacturing Development Production & Deployment Operations & Support C Materiel Solution Analysis Technology Development Full Rate Production Decision Materiel Development Decision Sustainment Disposal Low Rate Initial Production Full-Rate Prod & Deployment Integrated System Design System Capability & Manufacturing Process Demonstration Foreign Military Sales USD (Policy) LOAs DISAM

8. 01 August 2012 3002 8 Defense Acquisition Management Framework Defense Acquisition System (DoDD 5000.01)DoDD 5000.01 and Joint Capabilities Integration & Development System (JCIDS - CJCSI 3170.01H)CJCSI 3170.01H Operations & Support BA Engineering & Manufacturing Development Production & Deployment Operations & Support C Materiel Solution Analysis Technology Development Full Rate Production Decision Materiel Development Decision Sustainment Disposal Low Rate Initial Production Full-Rate Prod & Deployment Integrated System Design System Capability & Manufacturing Process Demonstration Defense Acquisition University DISAM Foreign Military Sales USD (Policy) LOAs International Armament Cooperation Programs USD (AT&L) International Agreements

9. 01 August 2012 3002 9 Procurement Relationships

10. 01 August 2012 3002 10 Buyer/Seller Relationships United States Government ForeignGovernmentForeignGovernmentDefenseContractorDefenseContractor LOA CONTRACT 1 2

11. DoD Procurement Relationships ItemManagerItemManager ContractingOfficerContractingOfficer Procurement Contract United States Government SystemManagerSystemManager Purchase Request Authorizations & Appropriations DefenseContractorDefenseContractor

12. FMS Procurement Relationships CaseManagerCaseManager ItemManagerItemManager ContractingOfficerContractingOfficer ForeignGovernmentForeignGovernment LOA Procurement Contract United States Government SystemManagerSystemManager MILSTRIP Purchase Request Directive DefenseContractorDefenseContractor

13. Procurement Methods Competitive Method Default - procurement method Noncompetitive Method Exception - Country request for procurement using other than full and open competition (commonly referred to as “sole source”)

14. FMS Source Selection LOA Standard Terms & Conditions, Sec 1.2 The USG will furnish the items from its stocks and resources, or will procure them under terms and conditions consistent with DoD regulations and procedures.

15. Customer In Contract Process At contracting officer discretion, customer can participate in discussions with industry on: Technical Specifications Delivery Schedules Price/Performance Tradeoffs Other Requirements Unique to FMS Purchaser

16. Customer In Contract Process FMS Customer Cannot: Observe Negotiations Involving Cost or Pricing Data Receive contractor proprietary data Direct exclusion of specific firms

17. Contract Administration  Procuring Contracting Officer (PCO)  DoD Contracting Officers conduct source selection, contract negotiation, and contract award.  Work in the Program Management Offices and Program Executive Offices  Administrative Contracting Officer (ACO)  Defense Contract Mgmt Agency (DCMA) performs contract administration and quality assurance  Defense Contract Audit Agency (DCAA) auditors support both PCOs and ACOs

18. Contract Administration CaseManagerCaseManager ItemManagerItemManager MILDEP PCO ForeignGovernmentForeignGovernment LOA United States Government SystemManagerSystemManager MILSTRIP Purchase Request PR Directive Negotiate & Award DCMAACODCMAACO Administer DefenseContractorDefenseContractor

19. Offsets

20. Offset Definition Commercial compensation practices demanded by a foreign purchaser and agreed to by a contractor that obligate the contractor to perform actions that will “Offset” the outflow of money.

21. Offset Relationships United States Government ForeignGovernmentForeignGovernment United States Contractor Contractor LOA CONTRACT OFFSET 1 23

22. Direct = Compensation in goods related to defense system being sold Indirect = Compensation in goods unrelated to the defense system sold Indirect Offset deemed allocable and reasonable per DFARS SUBPART 225.73 Types of Offsets

24. Release of Contract Data SAMM C6.3.6.2 SAMM C6.3.6.2 SAMM C6.3.6.2 Contractual obligations between the USG and FMS purchaser are contained in LOA FMS purchaser has no privity of contract and therefore no legal right to the contract Release can be considered if contract is unclassified and only covers purchaser’s requirement