Terms of Sale indicate when payments are required and whether the sales agreement is financed with purchaser’s national funds (cash), FMS Credit (repayable or non-repayable), MAP Merger, or other funding. The Term of Sale is documented on the first page of the LOA. Table C9.T12. provides the Terms of Sale for use on LOAs. Chapter 5, Figure C5.F5. provides a list of applicable Type of Assistance codes.

Table C9.T11. Terms of Sale

C9.8.1. Terms of Sale Breakouts. If an LOA involves multiple terms, the IA cite all applicable terms on the LOA and include a dollar breakout for each credit term used (it is acceptable to state “Balance” for the final term of sale shown on the LOA document). No attempt should be made to breakout the estimated costs of line items by Terms of Sale; the dollar breakout is shown only at the case level.

C9.8.2. Terms of Sale Revisions.

C9.8.2.1. Changes to Terms of Sale on LOA documents are generally made in accordance with the procedures for Pen and Ink changes, Modifications, and Amendments. See Chapter 5 and Chapter 6.

C9.8.2.2. The purchaser may choose to supplement available MAP Merger and/or FMF with its own national funds. If additional FMF and/or MAP Merger funds later become available, the purchaser may request DSCA approval to amend and/or modify the LOA to convert the cash portion of the case to FMF and/or MAP Merger.

C9.8.2.3. A purchaser may accept an LOA using its national funds as the method of payment and later determine available national funds are inadequate. The purchaser may request DSCA approval to use FMF and/or MAP Merger funds, if available, to finance the remaining payments. If approved, a Modification and/or Amendment is processed.

C9.8.2.4. Changes to Terms of Sale on implemented cases are based on the purchaser’s (someone who has LOA signature authority) written request. The DSCA (Business Operations Directorate) can initiate Terms of Sale revisions via message. For those cases containing a mixture of cash, FMF and/or MAP Merger, excess funds are determined by first releasing the cash portion, followed by FMF and lastly by MAP Merger. Exceptions as desired by the purchaser for a specific FMS case must be approved by DSCA (Business Operations Directorate).

C9.8.2.5. A change to an LOA’s Term(s) of Sale from fully funded FMF and/or MAP Merger to mixed funding impacts the cost of the case. Any Amendment or Modification that reduces non-repayable FMF or MAP Merger funding below 100 percent requires repricing to add military pay, entitlements, and NC to the entire case. See DoD 7000.14-R, Volume 15, Chapter 7, for more details.

C9.8.3. Dependable Undertaking Status.

C9.8.3.1. In accordance with AECA sections 22(a)(22 U.S.C. 2762(a)) and 29 (22 U.S.C. 2769), Dependable Undertaking may be used as a term of sale. Dependable Undertaking represents a firm commitment by the purchaser to pay the full amount of the contract, which assures the USG against any loss on the contract. The purchaser agrees to make funds available, in advance, to meet payments required by the contract as well as any damages and costs that may accrue from cancellation. The determination to authorize Dependable Undertaking as a Term of Sale for a country is based on the country’s Interagency Country Risk Assessment System (ICRAS) rating. For countries and international organizations without an ICRAS rating, DSCA will determine eligibility using the DSCA Dependable Undertaking Assessment Tool. A country with an ICRAS rating of “C” or better at the time of receipt of the Letter of Request (LOR) is presumed to be eligible to use the Dependable Undertaking Term of Sale unless other factors override that eligibility determination. ICRAS ratings themselves are sensitive and are not releasable.

C9.8.3.2. DSCA (Business Operations Directorate, Financial Policy and Internal Operations Division) will provide a list of countries and international organization with their eligibility for Dependable Undertaking to the IAs on a tri-annual basis (January/February, May/June, August/September). DSCA will include countries and international organizations on the eligibility list based on DSCA’s analysis of ICRAS ratings and other factors. See Section C9.8.3.4. for additional information applicable when Dependable Undertaking cases for eligible countries might not be appropriate. Prior to publication of the tri-annual list, DSCA will notify the Department of State of any changes being contemplated to a country’s Dependable Undertaking status.

C9.8.3.2.1. DSCA Policy Memo 09-07, published July 17, 2007, provided policy and procedures used to determine a country’s eligibility for Dependable Undertaking. Countries and international organizations included on Table C4.T2., which were listed as eligible for Dependable Undertaking prior to this policy memorandum, were included on the Dependable Undertaking listing as follows:

C9.8.3.2.1.1. Countries and international organizations that were eligible and executed cases using the Dependable Undertaking Term of Sale as of the date of DSCA Policy Memo 09-07 were marked on the list as still eligible, regardless of their current ICRAS rating. They will remain eligible for a period not to exceed 7 years, which ends July 16, 2014, unless other factors undermine creditworthiness. Those countries whose ICRAS rating is below “C” will be marked with a “#” on the tri-annual list. After the 7-year “grace period,” these counties will be included as eligible only if their ICRAS rating is “C” or better. Should these countries have problems making payments before the 7-year period has expired or other factors undermine creditworthiness, their status may be changed to ineligible and their inclusion under the “grace period” may end.

C9.8.3.2.1.2. Countries and international organizations that were eligible as of the date of DSCA Policy 09-07, but had not used the Dependable Undertaking Term of Sale, were included on the list as eligible only if their ICRAS rating was a “C” or better.

C9.8.3.2.2. Countries and international organizations that were not eligible for Dependable Undertaking were marked as eligible/not eligible in the list based on their ICRAS rating. If their ICRAS rating is “C” or better they will be marked eligible. If their ICRAS rating is “C-” or below they will be marked as ineligible until such time they attain a “C” rating or better.

C9.8.3.2.3. Countries and international organizations that are not currently listed in Table C4.T2. will be added to the Dependable Undertaking list when paperwork is approved to add them to Table C4.T2. Their current ICRAS rating will be used to determine their eligibility for Dependable Undertaking.

C9.8.3.2.4. Countries and international organizations currently listed as eligible, that do not have an ICRAS rating and are executing cases, will remain eligible for a period not to exceed 7 years, which ends July 16, 2014, (see DSCA Policy Memo 09-07) unless other factors undermine creditworthiness. After the 7-year “grace period,” these countries and international organizations will have eligibility determined by DSCA based on an assessment using the DSCA Dependable Undertaking Tool.

C9.8.3.3. The IA may request, in writing, an exception to offer a particular case (or Amendment) with the Dependable Undertaking Term of Sale to a country or international organization not otherwise eligible for Dependable Undertaking. DSCA approval of an exception will be based on the results of a second-tier structured analysis which includes factors such as previous FMS experience, Country Information Paper recommendations, Country Team Assessments, and supporting documentation provided by the requesting organization. The Director, DSCA will make the decision upon IA request, but this determination will not be reflected in the next issuance of the tri-annual list. Exceptions granted apply only to the specific case or Amendment scope being developed and do not give the country or international organization blanket eligibility for Dependable Undertaking status. DSCA will notify the Department of State prior to authorizing a Dependable Undertaking for any country or international organization not otherwise eligible under the standard criteria.

C9.8.3.4. A country or international organization may not be offered the Dependable Undertaking Term of Sale, even if it is presumed to be eligible, if other factors and circumstances indicate that another term of sale is advisable for a particular case. Information that may affect a country’s or international organization’s eligibility for the Dependable Undertaking Term of Sale should be communicated to DSCA as soon as possible so that the eligibility determination may be reviewed.