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.

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.