C9.6.1.
Waiver of FMS Administrative Surcharge.
Costs associated with administering the FMS program must always be paid and/or collected
(AECA, section 21(e)(1)) (22 U.S.C. 2761(e)(1)).
If a waiver of the FMS Administrative Surcharge for the purchaser is approved in one of the circumstances described below, it must still be recouped from another funding source.
C9.6.1.1.
Waiver by the Implementing Agency.
DoD 7000.14-R, Volume 15, Chapter 7,
and
AECA, section 21(e)(2)) (22 U.S.C. 2761(e)(2))
allow the IA to waive or reduce FMS Administrative Surcharges that should be assessed to the purchaser on the LOA as long as the IA obligates its own operation and maintenance appropriations to pay the FMS Administrative Surcharge Account the waived and/or reduced amount. Any FMS Administrative Surcharge waivers approved apply to the SCML as well.
C9.6.1.2.
Waiver of Administrative Surcharges for NATO Maintenance and Supply Agency (NAMSA) FMS Programs.
AECA, section 21(e)(3) (22 U.S.C. 2761(e)(3)),
allows the waiver of FMS Administrative Surcharges for NAMSA programs under very specific circumstances. Waiver of FMS Administrative Surcharges on these cases is not retroactive; only LOAs implemented after October 1, 1988, are eligible for consideration. The waiver value includes the calculated FMS Administrative Surcharge amount and any SCML value included on the LOA. Only NAMSA LOAs in support of weapon system partnership agreements or NATO Supreme Headquarters Allied Powers, Europe (SHAPE) projects (i.e., common-funded projects supported by allocated credits from NATO bodies or by host nations with NATO infrastructure funds) qualify for FMS Administrative Surcharge waivers. FMS Administrative Surcharges waived under this program must be reimbursed to the FMS Administrative Surcharge Account from Major Force Program (MFP) 10 funds controlled by the U.S. Mission to NATO. The following procedures apply.
C9.6.1.2.1.
NAMSA includes a statement in their Letter of Request (LOR) indicating the LOA qualifies for an FMS Administrative Surcharge waiver under
AECA, section 21(e)(3) (22 U.S.C. 2761(e)(3)).
NAMSA identifies the specific NATO/SHAPE project supported by the request and includes the following statement:
C9.6.1.2.2.
NAMSA provides an information copy of the LOR to the U.S. Mission to NATO when an FMS Administrative Surcharge waiver is requested. For budgeting purposes, NAMSA provides a yearly estimate of the amount of FMS Administrative Surcharge waivers to the U.S. Mission to NATO.
C9.6.1.2.3.
The IA reviews the waiver request to ensure it supports projects cited in
AECA section 21(e)(3) (22 U.S.C. 2761(e)(3)).
The IA provides a copy of the request to the DSCA (Operations Directorate) and ensures that the U.S. Mission to NATO has agreed to reimburse DoD. The IA includes a statement in the LOA notes indicating the FMS Administrative Surcharge, to include any SCML value, has been waived. See
Appendix 6
for the specific wording of this note. The IA includes relevant correspondence when the LOA document is sent to DSCA for countersignature.
C9.6.1.2.4.
DSCA determines applicability to specific requests and approves waivers during final staffing of the LOA document prior to countersignature.
C9.6.1.2.5.
The U.S. Mission to NATO budgets for waived FMS Administrative Surcharges, advises DSCA of agreements to reimburse DoD for waived FMS Administrative Surcharges before the LOA is issued to NAMSA, and develops an understanding with NAMSA concerning programs for which waivers are supported. The U.S. Mission reserves and obligates MFP 10 funds for waived FMS Administrative Surcharges under this legislation for the life of the FMS case. For cases where the calculated FMS Administrative Surcharge value is greater than $30,000, one half of the FMS Administrative Surcharge is recouped as part of the initial deposit. The remaining half is recouped based on the dollar value of items or services delivered in each year. For cases where the calculated FMS Administrative Surcharge is $30,000 or less, the entire FMS Administrative Surcharge value, as well as any SCML value, is recouped as part of the initial deposit.
C9.6.1.2.6.
DFAS Indianapolis maintains a record of NAMSA LOAs that contain FMS Administrative Surcharge waivers. As approved by DSCA and the U.S. Mission to NATO, DFAS Indianapolis bills and collects funds quarterly for waived FMS Administrative Surcharges from the U.S. Mission to NATO and reimburses the FMS Administrative Surcharge Account.
C9.6.2.
Waiver of Contract Administration Services (CAS).
The
AECA, section 21(h) (22 U.S.C. 2761(h))
allows the USG to provide quality assurance, inspection, contract administration services, and contract audit defense services without charge to certain foreign governments who have reciprocal agreements. Tables C9.T6., C9.T7., and C9.T8. list approved CAS waiver agreements. The waiver under each agreement applies only to new FMS LOAs with implementation dates (as recorded in DSAMS) on or after the effective date of the reciprocal agreement. See
Appendix 6
for CAS Waiver LOA note wording.
C9.6.2.1.
Table C9.T5. provides a listing of approved reciprocal country agreements. USD(AT&L) is responsible for negotiating these agreements. These waivers apply to LOAs as a whole and not to individual LOA lines.
C9.6.2.2.
Table C9.T6. provides a listing of approved agreements relating to participating groups, organizations, or projects. Changes to this listing should be submitted to the DSCA (Business Operations Directorate).
C9.6.2.3.
Table C9.T7. provides a listing of approved NATO CAS reciprocal agreements. Changes to this listing should be submitted to the DSCA (Business Operations Directorate).
Table C9.T5. Approved Reciprocal Country Agreement Listing
(Office of Primary Responsibility (OPR): USD(AT&L))
Country/Security Assistance
Country Code |
Effective Date |
Cost Waived |
Belgium (BE) |
April 26, 1983 |
Quality Assurance and Inspection |
Canada (CN) |
July 27, 1956 |
Contract Audit |
April 1, 1984 |
Quality Assurance and Inspection |
Czech Republic (EZ) |
May 7, 2004 |
Quality Assurance and Inspection |
Denmark (DE) |
April 3, 1985 |
Quality Assurance and Inspection |
France (FR) |
July 17, 1981 |
Contract Audit |
April 23, 1986 |
Quality Assurance and Inspection |
April 23, 1986 |
Contract Administration Services |
Germany (GY) |
December 6, 1983 |
Quality Assurance and Inspection |
December 6, 1985 |
Contract Audit |
Greece (GR) |
September 23, 1992 |
Quality Assurance and Inspection |
Israel (IS) |
May 7, 2008 |
Quality Assurance and Inspection |
Italy (IT) |
January 7, 1983 |
Quality Assurance and Inspection |
Korea (KS) |
December 13, 2011 |
Quality Assurance and Inspection |
Netherlands (NE) |
April 9, 1982 |
Quality Assurance and Inspection |
April 18, 1985 |
Contract Audit |
Norway (NO) |
November 23, 1986 |
Quality Assurance and Inspection |
Poland (PL) |
June 22, 2007 |
Quality Assurance and Inspection |
Spain (SP) |
June 12, 2000 |
Quality Assurance and Inspection |
Turkey (TK) |
March 12, 2001 |
Quality Assurance and Inspection |
United Kingdom (UK) |
October 30, 1979 |
Contract Audit |
December 30, 1985 |
Quality Assurance and Inspection |
Table C9.T6. Approved Agreements Relating to Participating Groups, Organizations, or Projects
(OPR: DSCA (Business Operations Directorate, Financial Policy and Internal Operations))
| Groups/Organizations/Projects |
Effective Date |
Cost Waived |
European Participating Governments (EPG)*: |
|
|
Follow-On Buy
Country Codes = F1, F2, F3, F4 (Case Designator = SVI), and F4-SXC
|
December 19, 1980 |
Contract Audit
Quality Assurance and Inspection
|
Mid-Life Update. Production Phase Cases and new F 16 LOAs implemented on or after the effective date. |
|
|
Country Codes = F1, F2, F3, F4 (Case Designator = NMP) |
April 5, 1993 |
Contract Audit |
PT (New F-16 LOAs implemented on or after the effective date) |
June 21, 2000 |
Contract Audit |
Polaris Project: United Kingdom Polaris Project (UZ) |
USD(C) memo October 27, 1995 |
Contract Audit |
DoD GC memo October 24, 1995 |
Quality Assurance and Inspection
Contract Administration Services |
*The remainder of the F-16 LOAs for BE, DE, NE, and NO get the CAS waivers reflected in Table C9.T5. |
Table C9.T7. NATO Reciprocal CAS Agreements
(OPR: DSCA (Business Operations Directorate, Financial Policy and Internal Operations))
| Agreement |
Effective Date |
Cost Waived |
NATO (NATO Command or NATO Agency administered program funded by the NATO Security Investment Program (NSIP) (formerly infrastructure)) |
September 30, 1981
October 28, 1980 |
Contract Audit
Quality Assurance and Inspection |
NATO (All other infrastructure programs administered by a host country) |
February 10, 1981 |
Quality Assurance and Inspection |
NATO E-3A |
Program Conception (10 USC 2350e)
|
Full waiver of all contract administration to include:
- Contract Audit
- Quality Assurance and Inspection
- Contract Administration Services
|
NATO Integrated Communication System Management Agency (NICSMA) |
September 30, 1981
May 6, 1980 |
Contract Audit
Quality Assurance and Inspection |
C9.6.3.
Waiver of NC Recoupment Charge.
C9.6.3.1.
Basis for NC Waiver and/or Reduction.
NC charges may be waived or reduced as follows.
C9.6.3.1.1.
For sales that would significantly advance U.S. interests in North Atlantic Treaty Organization standardization; standardization with the Armed Forces of Japan, Australia, the Republic of Korea, Israel, New Zealand; or foreign procurement in the United States under co-production arrangements
(refer to AECA 21(e)(2) (22 U.S.C. 2761(e)(2)).
C9.6.3.1.2.
For the sale of MDE also being procured for U.S. Armed Forces and resulting in a cost savings to the U.S. on the U.S.-procured equipment that substantially offsets the revenue lost as a result of the waiver.
C9.6.3.1.3.
For sales when imposition of the charge would likely result in the loss of the sale.
C9.6.3.1.4.
For the sale of MDE at a reduced price due to age or condition, the NC is reduced by the same percentage.
C9.6.3.2.
NC Waiver Process.
Waivers are granted on a case-by-case basis; blanket waivers are not considered. In most cases, the purchaser’s request must be submitted to the USG prior to acceptance of the LOA (or Amendment for increased quantities); however, some waiver requests for NATO interoperability may be approved after the LOA (or Amendment for increased quantities) is accepted.
C9.6.3.2.1.
Purchasers submit NC waiver or reduction requests to the MILDEP (preferably with the LOR). If the MILDEP concurs, it endorses the request and submits it to DSCA (Programs Directorate) for approval. The package must include: a copy of the purchaser’s written NC waiver request (including reason and/or justification), MILDEP concurrence (or non concurrence), FMS case identifier, description and quantity of items, NC amounts to be waived (pro rata and total), and any information about cost deviation (i.e., if the proposed pro rata waiver cost does not match the approved pro rata NC charge). DSCA (Programs Directorate) staffs the package within DSCA, Under Secretary of Defense for Acquisition, Technology and Logistics (USD(AT&L)), and Under Secretary of Defense (Comptroller) (USD(C)); additionally, if the basis of the NC waiver is “loss of sale”, the package is staffed within the Office of the Under Secretary of Defense (Policy) (OUSD(P)). After coordination, the Director, DSCA approves or disapproves the NC Waiver and the MILDEP is notified.
C9.6.3.2.2.
Waiver requests based on loss of sale must clearly state that denial of the waiver request will result in the loss of the sale. A competing item and its cost, if known, should be identified in the waiver request. The purchaser’s representative authorized to accept (sign) LOAs should sign the request. For loss of sale waivers, the waiver must be approved and NC charges deleted before the purchaser accepts the LOA or Amendment. Acceptance by the purchaser of the LOA or Amendment, which includes the NC charges, negates this basis for a waiver request based on loss of sale.
C9.6.3.2.3.
Waiver requests based on offsetting USG costs must be validated by the MILDEP to determine if U.S. cost savings would be realized. The savings must substantially offset the revenue given up by the waiver. The MILDEP determination is coordinated with the MILDEP's Comptroller organization and is provided to DSCA (Programs Directorate) prior to submitting the LOA or Amendment for countersignature. This waiver authority does not apply to sales from stock unless the equipment is to be replaced by current DoD procurement of additional equipment for the U.S. Armed Forces.
C9.6.3.2.4.
Section C5.5.4.
specifies classification requirements for response documents when waiver requests require congressional notification pursuant to
AECA, section 36(b) (22 U.S.C. 2776(b)).
C9.6.3.2.5.
An NC charge may be collected as part of a cooperative project or consortium of which USG is a member. If a waiver of these costs is permitted, a special note is included in the LOA. See
Appendix 6
for wordings on NC notes.
C9.6.4.
Waiver of Tooling Rental Charges for Use of DoD Assets.
In cases of direct commercial sales to FMS eligible countries, the contractor submits requests for waiver of tooling rental charges to the contracting officer. If the contracting officer approves the request, it is submitted through MILDEP contracting channels to DSCA (Strategy Directorate) for forwarding to the Director, DSCA for a decision. Contracting officers should identify any potential interference with U.S. requirements prior to forwarding a waiver request and assure that the request identifies the total amount of charges involved. For more information please refer to the
DFARS Part 245, Government Property.
Page Updated 06-21-2012
