C15.3.1.
General.
The Requesting Authority and Security Cooperation Organization (SCO) will remain actively engaged during case development to clarify requirements, ensure development is on-track, and maintain communications with the Benefitting Country. The Implementing Agency (IA) will document and price the required materiel and services on a pseudo LOA and prepare a Case Advisory for the Benefitting Country. The DSCA Case Writing Division (CWD) will place the BPC case in Offered status once all programmatic and policy requirements have been met.
C15.3.2.
Initiating a Pseudo LOA.
The DSCA Country Program Director (CPD) will forward a copy of the Memorandum of Request (MOR) to the IA, identify the allowed total case value (TCV), and provide a unique case identifier. The case identifier is a 6-position alpha-numeric string which includes the program code, the single-position IA code of the DoD component providing the support, and a 3-position case designator (e.g., E7-B-UAC). The Defense Security Assistance Management System (DSAMS) will attach pseudo LOA information (in lieu of FMS LOA information) and validate the entry of BPC case data. Each program code in DSAMS is associated with the programs authorized Benefitting Countries. If a pseudo LOA document must benefit more than one Benefitting Country, the IA will first coordinate this with the DSCA Country Financial Director (CFD). The Benefitting Country FMS country code (found in
Table C4.T2.
and distinct from the BPC code) will be selected by the IA at the line level in DSAMS. Table C15.T5. provides Instructions for preparing a Pseudo LOA document, to be used with BPC Program data provided in
Table C15.T2.
and the definitions of terms provided in the Pseudo LOA Information document.
Table C15.T5. Instructions for Preparing Pseudo LOAs
C15.3.3.
Pricing.
The IA will price defense articles and services for pseudo LOA documents in accordance with the
DoD Financial Management Regulation (FMR), DoD 7000.14-R; Volume 11A,
for reimbursable operations, the authorizing legislation and relevant financial management policy for the funds. The IA must exercise care whenever items and quantities on the LOA change to ensure they do not change or exceed the nature and scope of the congressionally notified program. Depending on the requirements of the authorizing statute, there may be no flexibility in adjusting or exceeding the notified quantifies or values.
C15.3.3.1.
Standard Level of Service.
DSCA Directorates and IAs will render the same level and manner of service for management of BPC cases as they do for management of FMS cases. See
Table C9.T2.
Funding Authorities may approve payment for above standard level of service activities as long as the requirement is clearly justified in the MOR. The IA will include a charge for above standard level of service on the pseudo LOA or on a separate management case for the BPC program.
C15.3.3.2.
Defense Articles.
The price of defense articles sold under BPC program authority is the acquisition cost, adjusted as appropriate for condition and age.
C15.3.3.3.
Defense Working Capital Funded (DWCF) Materiel and Services.
The selling price is the DWCF current standard price. Payments or reimbursements are credited to the DWCF providing the items.
C15.3.3.4.
Non-Excess Procurement Assets Not to be Replaced.
The IA will set the price for these assets at the sum of the most recent actual procurement cost and modifications or improvements incorporated after production, adjusted for age or condition, plus prorated overhaul cost. The IA deposits payments from the Funding Authority into the Miscellaneous Receipts Account.
C15.3.3.5.
Non-Excess Procurement Assets to be Replaced.
The DoD Budget and/or Future Years Defense Program (FYDP) must reflect intent to acquire replacements for such assets before they are included on a BPC case. The Funding Authority will make reimbursements equal to the estimated replacement cost, including the contract or production costs of the article less an adjustment for age and condition of the item being sold.
C15.3.3.6.
Procurement.
The investment item unit cost restrictions contained in
10 U.S.C. 2245a
and the annual appropriations act for DoD enacted by Congress do not apply to the use of Operations and Maintenance funds for defense articles procured in support of BPC programs unless specifically applied by Congress. Refer to language in the Congressional authorization and appropriation acts, the DSCA Office of General Counsel (OGC), and OUSD(C) for more information. The provisions of the various
Buy American Acts
may not themselves apply to all BPC programs, however similar provisions generally will apply to most BPC programs under the Balance of Payments Program regulations, which require DoD to purchase only U.S. domestically produced end-products (as defined by those regulations).
C15.3.3.7.
Training.
The IA will apply Rate D
(See DoD FMR Volume 15, Chapter 7)
for tuition-based training wholly funded with appropriated funds. For training requiring dedicated resources, the full cost of the training will be applied (excluding military pay and civilian unfunded retirement).
C15.3.3.8.
Services.
Non-training services will be priced using the
DoD FMR Volume 11A.
See
Section C15.3.4.
C15.3.3.9.
Surcharges and Accessorial Charges.
The IA will apply the FMS Administrative Surcharge, Contract Administrative Services (CAS) surcharge, and accessorial charges (such as packing, crating, handling (PC&H) and transportation) to the pseudo LOA. Outside Continental United States (OCONUS) CAS is not applicable when Defense Contract Management Agency (DCMA) personnel are present in a Benefitting Country for the purpose of supporting DoD. OCONUS CAS on a BPC case, however, is applicable to DCMA personnel present in a Benefitting Country only to support an FMS case (i.e., full-time employees, 90 percent or more of their time devoted to an FMS case).
C15.3.3.10.
Travel and Living Allowances (TLA) for Training.
Provision of CONUS training to foreign personnel under a BPC case is not common, and any request must be supported by the DSCA CPD. A TLA waiver is not required. The IA may include student travel and living allowances as a line on the pseudo LOA document as long as funds are obligated before they expire. See
Section C15.3.4.3.
for a discussion of Section 1206 cross-fiscal year authority. TLA for OCONUS training does not require DSCA CPD support. The IA may add a separate line to the LOA to cover unforeseen medical expenses that may arise in the event that the student does not possess medical insurance. The LOA may not pay for routine medical expenses or for dependents. Unless dependents have adequate healthcare insurance coverage, dependents are not allowed to accompany the student to training in CONUS or OCONUS. See
Chapter 10.
C15.3.3.11.
Transportation Charges.
DSAMS will automatically apply the DoD transportation rates for standard transportation of BPC case materiel, which includes the use of channel flights, for each applicable line on the pseudo LOA. These below-the-line transportation charges (called such because they are added on the LOA estimated cost summary below the line item net estimated cost) are collected into a Transportation Cost Account within the FMS Trust Fund. Below-the line transportation expenses are subsequently paid from this account. There are specific situations, however, in which the standard transportation rate will not be applied. If an IA deviates from the standard percentage rate, it must enter a case remark in DSAMS to provide the rationale for the rate being used.
C15.3.3.11.1.
Transportation to a Consolidation Point.
The IA may consolidate materiel at a CONUS inventory control point in order to manage multiple shipments of materiel to a Benefitting Country. If materiel consolidation is planned during case development, the IA will include a case note on the Pseudo LOA document to describe the intended consolidation and cite the separate case (if known) that will provide funds for materiel handling at the ICP and onward shipment into the Benefitting Country. The IA will inform their billing office to override the DTC rate calculation on the case in development by entering an appropriate Transportation Bill Code (TBC) to fund only transportation to the ICP at the time of delivery booking.
C15.3.3.11.2.
Separate Transportation.
If a separate transportation case will fund transportation of materiel to the Benefitting Country (other than from a consolidation point), the IA should not include a transportation charge on the Pseudo LOA. The IA will include a case note that identifies the lines that will be transported via a separate case and provide that case’s identification. This information will also be entered when the TBC is selected.
C15.3.3.11.3.
Premium Transportation.
If a line item will be transported via a Special Assignment Airlift Mission (SAAM) or other premium transportation, the transportation service is entered as an above-the-line direct charge and not assessed on a rate basis.
C15.3.3.11.4.
Prime Vendor Transportation.
For system sales and more complex acquisition and sustainment efforts, the IA may request approval from DSCA (Strategy Directorate) for the prime vendor to transport and make delivery of materiel to the in-country location. The Prime Vendor’s contract price will include a cost for transportation and DTC 4 will be cited against the line. The IA will include a note in the pseudo LOA to describe the transportation and delivery arrangements.
C15.3.3.12.
Engineering Services and Construction.
Absent specific statutory authorization, BPC programs cannot be used for engineering services or construction to accomplish infrastructure projects within a Benefitting Country that are in support of U.S. forces. Such projects are governed by the laws regarding military construction,
10 U.S.C. Section 2801,
implementing regulations and guidance provided by the CCMD.
C15.3.3.13.
Nonrecurring Costs (NC).
USG appropriated funds will not be used to pay NC; therefore, IAs will not apply NC to pseudo LOA documents.
C15.3.4.
Period of Performance for Services.
C15.3.4.1.
Contractor Services.
C15.3.4.1.1.
Severable contractor services (such as tactical and deployment training) must generally be performed in, and paid with, funds from the current year. However, the period of performance for severable services may begin in the year of funds availability and end in the subsequent year, provided the contract period does not exceed 12 months.
C15.3.4.1.2.
Non-severable contractor services, such as services to produce a single or unified outcome, product, or report, will be funded entirely at the time the contract is awarded, though the period of performance may extend across fiscal years. Contractor-provided new equipment training and installation at a basic level are considered non-severable services when necessary for the installation or operation of the actual equipment. This includes basic quality assurance testing to ensure that the items are in operating order. For example, if a Benefitting Country under an FY 2011 appropriation is to receive radios and antennas with a lead-time allowing deliveries in November 2012, FY 2011 funds can be used to place basic radio operator training and antenna installation on contract so that training and installation can be conducted when the equipment is delivered.
C15.3.4.2.
Government-sourced Services.
The IA may use current year BPC program funds to pay for training and services to be executed by USG sources, such as USG civilian and military personnel, as long as the funds are fully obligated prior to their expiration. This generally requires that civilian and military personnel funded with BPC program funds must cease program-related activities no later than the end of the funds expiration fiscal year.
C15.3.4.3.
Section 1206 “Cross Fiscal Year” Authority.
Congress has provided the Section 1206 Program with a “cross fiscal year authority,” which applies to both contracted and government-sourced services. Amounts available for a fiscal year may be used for 1206 programs that begin in such fiscal year but end in the next fiscal year
(See FY09 NDAA, PL 110-417, Section 1206(b)).
This authority provides a time-limited exception to the bona fide need rule (which requires that appropriated funds be used only for goods and services for which a need arises during the period of that appropriation’s availability for obligation), in that it authorizes performance of Section 1206 Program services beyond the funds availability period and up to the end of the fiscal year following appropriation, and includes services such as travel and government civilian services as they pertain to TDY that is properly chargeable to the Section 1206 Program. Funded civilian personnel are not required to cease their Section 1206-related activities at the end of the appropriation fiscal year. If military pay is part of the reimbursable expense (i.e., under contingency operations), it may be reimbursed from Section 1206 funds. This authority does not extend the period of availability for the Section 1206 appropriation,; all funds providing support through the end of the subsequent fiscal year must be obligated prior to the end of the appropriation fiscal year.
C15.3.4.4.
Services Under a Continuing Resolution (CR) Appropriation.
When developing a pseudo LOA document that will be funded under a CR appropriation that lapses before the end of the fiscal year, the IA will specify the required period of performance for services in accordance with regulation and disregarding the CR expiration date. For example, if the CR appropriation ends on December 15, 2011 but the required period of performance extends to March 31, 2012, the pseudo LOA document will be written to reflect performance period extending to March 31, 2012. The IA must ensure that the pseudo LOA is for activity that is allowed by the CR. For example, CRs generally prohibit the initiation of projects for which appropriations, funds or authority were not available during the preceding fiscal year. The IA will provide written notification via e-mail or memo to the service provider to clarify that obligations are subject to the availability of funds. See
Section C15.3.8.3.1.
for a discussion of funds obligation under a CR appropriation.
C15.3.5.
Signed Copy Distribution.
The following statement will be automatically included after the payment schedule portion of each pseudo LOA document:
C15.3.6.
Notes.
A line item description note is required for every line on the LOA unless line item description information for each line can fit beneath the Military Articles and Services List (MASL) descriptions. Notes on a pseudo LOA do not represent terms and conditions of an international agreement, but rather an internal USG communication. Standard notes and case-unique notes for BPC cases communicate case information necessary for proper management of the case and case materiel. See
Appendix 6.
The Note Usage line of
Appendix 6
identifies which standard notes apply to BPC cases.
C15.3.7.
Case Advisory.
Benefitting Countries should understand USG expectations in advance of receiving any BPC assistance. The Case Advisory, prepared by the IA, is a notification to the Benefitting Country that a BPC case is being considered and alerts the Benefitting Country of USG expectations that accompany the transfer of training and equipment. The SCO may present this document during case development or after case implementation, but will do so prior to shipment of the materiel or provision of training.
C15.3.7.1.
Preparation.
The IA will use the template provided for preparing the Case Advisory during the case development phase. See
Figure C15.F2.
The IA will enter the required information in the header and the first and second paragraphs, obtaining agreement and Diplomatic Note information from the SCO. Information in paragraph 2 will generally remain constant for each case that a Benefitting Country receives. The IA will select all applicable paragraphs to include in the Case-Unique Information section, save the completed form as a PDF file, and provide it to the SCO before the case is Implemented.
Figure C15.F2. Case Advisory
C15.3.7.2.
Case Advisory Presentation.
Before presentation of the Case Advisory, the SCO will complete the form and attach specific documents: an example (uncompleted) Transfer and Receipt document
(see Figure C15.F4.)
the Benefitting Country’s Section 505 Agreement; and any unilateral Diplomatic Note amending the Section 505 Agreement. The SCO will present the Case Advisory to appropriate Benefitting Country Ministry of Defense representatives, and will communicate its purpose and intention prior to shipment of case materiel. The SCO will make it clear that this document is advisory, does not guarantee provision of program materiel and does not obligate the Benefitting Country or the USG (it is not legally binding in the way that an international agreement would be). Benefitting Country representatives should be encouraged to share the document with others in their government. If Benefitting Country representatives believe their government will be unable to meet the expectations as stated, this will be discussed and reported to the DSCA CPD before materiel is shipped. A copy of the completed Case Advisory will be retained in SCO files.
C15.3.8.
Offer of the Pseudo LOA.
C15.3.8.1.
Submittal to DSCA CWD.
The IA will ensure that pseudo LOA documents are submitted to DSCA CWD early in the fiscal year so they can be offered at the earliest opportunity. At the latest, the IA should place the LOA in Writing status in DSAMS with at least 60 days remaining before the BPC program funds expire for new obligation. The DSCA CWD conducts quality assurance review and prepares the final version of the LOA.
C15.3.8.2.
DSCA and DoS Approval.
After the pseudo LOA is reviewed and approved by DSCA and the IA, it will be coordinated with DoS(PM) via the daily State List. Either during or prior to this review, the Funding Authority will provide DSCA CWD with confirmation that all processes required by law have been completed (including Congressional Notification) and provide assurance of funding.
C15.3.8.3.
Fund Source, Availability and Amount.
DSCA CWD will place the LOA into Offered status, ensuring the Fund Source, Availability and Amount note cites the current appropriation authority and fund source. Obligation and expenditure of the case funds are subject to the terms, conditions and expiration date specified in the appropriation. Case funds must be obligated prior to the end of their period of availability.
C15.3.8.3.1.
Continuing Resolution (CR) Appropriations.
Congress may pass a CR appropriation that partially funds BPC programs and for a specific time period, rather than a full year. If a pseudo LOA is Offered using a CR appropriation and the case funds are not subsequently obligated prior to the CR expiration, the funds will generally not be available for use unless the appropriation time period is extended or replaced by a subsequent appropriation. If the CR is extended or replaced by a subsequent appropriation, case activity and funds obligation may proceed (the CR appropriation cited in the Fund Source, Availability and Amount note will need to be revised prior to case closure), subject to the terms and conditions of the new appropriation. If the CR is not extended or replaced, however, any funds not yet obligated become no longer available.
C15.3.8.3.2.
Modification to Reflect Final Fiscal Year Appropriations.
Every Implemented case that does not cite a final FY appropriation in the Fund Source, Availability, and Amount note will need to be modified prior to case closure to cite the final appropriation. Usually, this is accomplished when other case changes are implemented. For example, a BPC case implemented under the FY11 CR that expired on March 4, 2011, may carry the reference to that CR funding appropriation throughout its execution but will need to be modified sometime prior to case closure to reflect the final FY11 appropriation legislation.
Page Updated 05-30-2012
