The FMS program transfers defense articles and services to eligible countries and international organizations. AECA section 47 (22 U.S.C. 2794) defines the terms “defense article” and “defense service.” The U.S. Munitions List (22 CFR part 121) designates specific items that fall into these categories and includes an asterisk (*) by Significant Military Equipment (SME). Any item of 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 Chapter 9 and Appendix 1 for the rules and charges regarding Nonrecurring Cost Recoupment (NCR) charges for MDE.

C4.4.1. Source of Supply. Defense articles or services may be sold from DoD stocks, or the DoD may enter into contracts to procure defense articles or services on behalf of eligible foreign countries or international organizations. DoD procurements for FMS use standard Federal Acquisition Regulation (FAR) contract clauses and contract administration practices except where deviations for FMS are authorized in the Defense Federal Acquisition Regulation Supplement (DFARS). IAs may procure from foreign sources as required to conduct FMS acquisitions in accordance with the DFARS under the same acquisition and contract management procedures used for other defense acquisitions to meet U.S. standard inventory requirements. IAs should not enter into such sales arrangements for equipment not in the U.S. inventory unless DSCA (Strategy Directorate and Office of the General Counsel) have approved an exception.

C4.4.2. Materiel Standards. It is DoD policy that defense articles sold under FMS programs should reflect favorably upon the United States. Defense articles offered and sold under FMS are new or unused or, as a result of refurbishment, possess original appearance insofar as possible and, as a minimum, have serviceability standards prescribed for issue to U.S. Forces. If the purchaser desires exclusively new equipment, this requirement is stated in the LOA. If the purchaser wishes to purchase “as is” (no assurance of serviceability), this is also stated in the LOA. In addition to full disclosure of item condition, the purchaser is informed of unusual safety or environmental risks known at the time of sale. This information is included in the LOA with reference to separate publications or correspondence as appropriate.

C4.4.3. Logistics Support. The DoD considers the support of U.S. origin defense articles critical to the success of the SA program. Systems in use with U.S. Forces are supported through the DoD procurement system. Support items that are stocked, stored, and issued due to common application with end items in use, should be provided even though the end items may have been acquired commercially or system support buyout is complete. See Chapter 6.

C4.4.3.1. When a system is to be phased out of the DoD inventory, countries that have acquired the system under FMS are given the opportunity to determine item requirements and to place final orders designed to maintain system capability through its service life. These orders are consolidated to ensure economic buys. See Section C6.4.7.

C4.4.3.2. DoD will take reasonable steps to support systems that are not used by U.S. Forces including items that were never adopted by U.S. Forces. Support is provided for these items when mutually satisfactory arrangements are made with the country involved and supply sources are available. Effort is made to support non-standard items, whether acquired commercially or through FMS, when this effort serves U.S. interests.

C4.4.4. Communications Security (COMSEC) Equipment. Combatant Commanders’ (CCDR) requirements to communicate with foreign governments via secure transmissions will necessitate a requirement for release and delivery of U.S. COMSEC. Transfer of U.S. COMSEC must be done in conjunction with a Combatant Command’s (CCMD) interoperability requirement or otherwise support a U.S. policy objective. See Section C3.1. and Section C3.2., for information on the technology transfer process. See Section C3.7.3. for information on INFOSEC case processing.

C4.4.5. Coproduction. Coproduction policy is provided in DoD Directive 2010.06. Per DoD Directive 5530.3, the Director, DSCA must provide written approval to enter into negotiations for coproduction programs pursuant to an LOA. Requests for DSCA authority must include a description of the project as well as fiscal and legal memoranda. Discussions on coproduction programs may be initiated by the Implementing Agency or by authorized representatives of foreign Governments or international organizations. When partially or fully implemented through DoD Directive 5530.3 agreements, the Implementing Agency recommendation is forwarded to DSCA for authorization to proceed and includes the information shown in Table C4.T5.

Table C4.T5. Information Required for DSCA Authorization of Coproduction Agreements

C4.4.5.1. Classification of DoD Directive 5530.3 Coproduction Agreements. DoD Directive 5530.3 agreements for coproduction of MDE are classified “CONFIDENTIAL,” as a minimum, until the agreement is concluded. Programs implemented via LOAs are subject to normal LOA classification guidance. See Section C4.3.12.

C4.4.5.2. FMF-Financed Coproduction Program. AECA, section 42(b) (22 U.S.C. 2791(b)) requires the DoS to advise Congress prior to use of Foreign Military Financing (FMF) to finance coproduction or licensed production in a foreign country. DSCA (Operations Directorate) memoranda to the DoS advises of the country, type of proposed transaction (FMS LOA or direct commercial sale), description of program, the extent of foreign production, and impact on employment and production within the United States. Normally approval is staffed concurrently with the related AECA, section 36(b) (22 U.S.C. 2776(b)) notification. DSCA (Operations Directorate) shall not approve release of an FMS LOA or FMF funding until the DoS has advised Congress.

C4.4.6. Monitoring Coproduction Agreements. LOAs or DoD Directive 5530.3 agreements are structured to assure there are acceptable monitoring provisions for each program and the Implementing Agency receives adequate data to prepare status reports. When USG responsibilities can be satisfied only with access by USG personnel, a note must be included in the LOA and the DoD Directive 5530.3 agreement. See Appendix 6 Coproduction Reporting and/or Validation for the exact note wording.

C4.4.7. Design and Construction Services. AECA, section 29 (22 U.S.C. 2769) authorizes the sale of design and construction services to eligible foreign countries and international organizations provided that full costs are paid to the United States.

C4.4.7.1. Design and construction services are offered under normal FMS procedures. Management and oversight of design and construction services is performed by construction agents designated by DoD Directive 4270.5. When part of a larger program, construction services may be provided in two ways:

C4.4.7.2. The U.S. Army Corps of Engineers is responsible for construction cases when it is the construction agent designated by DoD Directive 4270.5. For other construction cases, the IA will provide construction services through its designated construction agent. In this latter situation, the IA and construction agent will conclude an internal agreement to provide for U.S. Government management of the construction by the construction agent and to define program management relationship

C4.4.8. White Phosphorous Munitions. Requests for white phosphorus munitions should be submitted in accordance with the procedures explained in Table C5.T1g. Requests should indicate, by type of ammunition, the quantity, and intended use. Requests should be accompanied by the 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. Requests must also contain assurance from the host Government that white phosphorus munitions are used only for purposes such as signaling and smoke screening. The DSCA (Operations Directorate) shall coordinate the request. Upon approval, the DSCA (Operations Directorate) advises the DoD Component and provides the special conditions that must be included in the LOA.

C4.4.9. M-833 and Comparable Depleted Uranium Rounds. FAA, section 620J (22 U.S.C. 2378a) allows the sale of M-833 depleted uranium ammunition and comparable anti-tank rounds containing a depleted uranium penetrating component to NATO member countries, major non-NATO allies, Taiwan, and countries for which a Presidential national security interest determination has been completed. Such a determination (Presidential Determination No. 94-37 of July 19, 1994) has been completed for the M-833 round for Bahrain and Saudi Arabia and the M-829 round for Saudi Arabia and Kuwait.

C4.4.10. Ship Transfers. Vessels 20 years old or more and no more than 3,000 tons (light load displacement) or less may be transferred after 30 continuous days of the date that the U.S. Navy (USN) notifies Congress of its intent to make the transfer. Naval vessels that are less than 20 years old or more than 3,000 tons may be transferred only after enactment of legislation authorizing the transfer. 10 U.S.C. 7307 prescribes these criteria and Congressional oversight provisions. See Section C11.3. for information on Excess Defense Articles (EDA) Congressional notification requirements.

C4.4.11. Technical Data Packages (TDPs) for Defense Articles Manufactured by Watervliet Arsenal. TDPs from a Government-owned and operated defense plant manufacturing large caliber cannons (e.g., Watervliet Arsenal) to a foreign Government, or assistance to a foreign Government in producing defense items currently manufactured or developed in a Government-owned and operated defense plant manufacturing large caliber cannons, may be transferred if the statutory exceptions in 10 U.S.C. 4542 are met. The Secretary of the Army must determine if these requirements can be met before committing to such transfers; notify the Congress of every transfer agreement; and submit a semiannual report to Congress on the operation of this law and all agreements entered into under it.

C4.4.12. Stinger/Man-Portable Air Defense System (MANPADS). Transfer of U.S.–origin MANPADs and components is based upon the recipient’s ability and commitment to implement security and accountability controls at least equivalent to those employed by the United States, which exceed the Wassenaar Arrangement’s Elements for Export Controls of MANPADs. All security cooperation organizations and personnel, to include MILDEPs and SCOs, must get specific approval from DSCA (Programs and Strategy Directorates) prior to any discussions on MANPADS with any potential purchaser. This includes discussion of sales for replacement batteries, parts, components, or expendables for MANPADS. This requirement stands even for countries previously sold MANPADS or approved for MANPADS sales. See Table C5.T1f. and Chapter 8 for more information on Stinger/MANPADS.

C4.4.13. Foreign Liaison Officer Support. Countries may locate a representative in the United States to assist with their programs. LOAs may be written to cover administrative costs (e.g., office space, secretarial support) for these personnel. See Section C4.5.1. for the types of foreign representative services and expenses that may not be included on an LOA. For more information about visits, assignments, and exchanges of foreign nationals see DoDD 5230.20.

C4.4.14. Night Vision Devices (NVDs). NVDs are man-portable devices that incorporate image intensification, infrared, thermal, or sensor-fused technologies. NVDs fall under Category XII(c) of the U.S. Munitions List (22 CFR part 121) and are designated as sensitive, unclassified SME. The Defense Technology Security Administration (DTSA) is responsible for NVD export policy and requires the case-by-case review of all requests for the international transfer of such items through FMS or direct export licensing. Each review considers input from the MILDEPs, the acquisition community, and the Joint Chiefs of Staff. Image intensifier tubes ordered as spare parts or replacements for destroyed, lost, stolen, or missing devices also require a case-by-case review except when replacing defective or damaged tubes that are returned to the USG on a direct exchange or repair and return basis. The technical capabilities of replacement tubes will not exceed the export restrictions set forth in the original authorization. NVDs taken from DoD stock may not be sold or transferred without an accompanying data sheet verifying that the technical capabilities of the image intensifier tubes do not exceed export restrictions. See Table C5.T1e. for more information on processing requests for NVDs and Chapter 8 for End-Use Monitoring (EUM) responsibilities.

C4.4.15. Medical Countermeasures. Purchases of medical countermeasures such as drugs, vaccines, and other medical interventions against biological and chemical agents require the approval of the Office of the Assistant Secretary of Defense for Global Strategic Affairs (GSA)/Countering Weapons of Mass Destruction (CWMD). It is essential that IAs submit LORs for these items to DSCA (Operations Directorate and Strategy Directorate) as soon as the requirement is known to allow sufficient staffing time. DSCA (Strategy Directorate) staffs the request with the Office of the Secretary of Defense (OSD). Based on OSD’s direction, DSCA advises the IA how to respond to the purchaser’s LOR. If the decision is to prepare an LOA, the IA develops and submits the LOA to DSCA for countersignature. DSCA forwards the LOA to OSD for further staffing and approval as appropriate. If approved, DSCA countersigns the LOA. If disapproved, DSCA advises the IA how to respond to the purchaser.

C4.4.16. Geospatial Intelligence (GEOINT). GEOINT provides the capability to visually depict physical features and geographically referenced activities on the Earth. It consists of imagery, imagery intelligence, and geospatial information (topographic, aeronautical and hydrographic maps, and charts data). GEOINT is essential to the guidance systems in many weapons. National Geospatial-Intelligence Agency (NGA) GEOINT data are either shared with the international community through agreements and arrangements under the authority of the Director of the NGA and/or the Director of National Intelligence, or can be purchased from NGA. Implementing Agencies are responsible for coordinating the release of the GEOINT data with NGA in advance. See Table C5.T1d. for additional information.

C4.4.17. Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance (C4ISR). Transfers of U.S. C4ISR to eligible countries and international organizations must support a CCDR’s interoperability requirements. A purchaser’s desire to be interoperable with the United States is insufficient justification for release. Pre-coordination with DSCA, the respective CCMD, IAs, the SCO, and the foreign purchaser is required before a C4ISR LOR is submitted,. See Section C3.7.3. for more information on C4ISR and Table C5.T1c. for more information on processing LORs for C4ISR.