DEFENSE SECURITY COOPERATION AGENCY
201 12th STREET SOUTH, STE 203
ARLINGTON, VA 22202-5408

MEMORANDUM FOR :

DEPUTY UNDER SECRETARY OF THE ARMY
(INTERNATIONAL AFFAIRS)
DEPARTMENT OF THE ARMY

DIRECTOR, NAVY INTERNATIONAL PROGRAMS OFFICE
DEPARTMENT OF THE NAVY

DEPUTY UNDER SECRETARY OF THE AIR FORCE
(INTERNATIONAL AFFAIRS)
DEPARTMENT OF THE AIR FORCE

DIRECTOR, DEFENSE LOGISTICS AGENCY

DIRECTOR, NATIONAL IMAGERY AND MAPPING AGENCY

DIRECTOR, NATIONAL SECURITY AGENCY

DIRECTOR, DEFENSE CONTRACT MANAGEMENT AGENCY

SUBJECT :

FMS Case-Related Manpower Activities and Associated Costs (DSCA 01-12)

During the past several months, a working group involving members from DSCA and the Military Departments met to discuss the manpower activities associated with the FMS program. Particular focus was spent addressing the proper funding source relating to individual functions performed by FMS case managers. From a historical standpoint, policy guidance was vague and its application was inconsistent. GAO audits, feedback from FMS purchasers and DSCA analyses also prompted the need to clearly articulate what manpower efforts are involved and how those efforts are to be funded. The working group was developed to address those deficiencies.

Accordingly, a matrix delineating the manpower functions and the proper funding sources was developed. It details the functions and funding attributable to 39 life-cycle events, from pre-LOR to case closure. I am forwarding this matrix to you as an attachment to this memorandum. This matrix is effective immediately. Widespread dissemination to all case managers and those responsible for developing LOA documents is necessary to ensure full implementation and compliance.

We recognize that the Performance Based Costing (PBC) effort, currently under development, may have an impact on how certain case management functions are funded once PBC is deployed. We accommodated for this contingency by noting placeholders in the matrix. However, until explicitly superseded via future memorandum, the attached matrix is official FMS policy.

I wish to thank the following people who made substantial contributions to the successful development of this matrix:

• Army - Joan Buchanan, Jack Hiebert
• Navy - Larry Baillie
• Air Force - Sonja Patch

Thank you for your assistance in this regard. This memorandum and matrix will be posted electronically in the "Publications and Policy" section of the DSCA web site (http://www.dsca.osd.mil). In addition, it will be incorporated as a change to the Security Assistance Management Manual (SAMM, DoD 5105.38-M). My points of contact are: David Rude, COMPT-FM, DSN 664-6569, david.rude@osd.pentagon.mil; and Beth Baker, P3-P2, DSN 664-6612, beth.baker@osd.pentagon.mil.

A. R. KELTZ
ACTING DIRECTOR

ATTACHMENT :
Case-Related Manpower Activities and Associated Costs Matrix

CC :

OUSD (Comptroller)/DCFO/Business Policy Directorate
DFAS Denver (DFAS-AY/DE)
USASAC New Cumberland
NAVICP Philadelphia
AFSAC WPAFB

Attachment: - Case-Related Manpower Activities and Associated Costs Matrix

NOTES:

1. Most of the information included was gleaned from existing documents -- SAMM, FMR, Army documentation, Budget Call, etc. -- and refined based on meetings with the Army, Navy, Air Force and PBB/PBC coordinators at DSCA.

2. This matrix is not intended to cover all costs -- only those costs that are related to manpower. The FMR and other financial regulations include additional information regarding the use of administrative or case funds for other services and materiel.

3. It is recognized that some subjectivity will remain in this matrix no matter how much it is refined. It is probably not possible (nor desirable) to take out all of the flexibility because each program is somewhat different. Some of the more subjective terms are defined as follows:

   • Case-related manpower eligible for Direct Case Funding: Direct manpower (USG and contractor), to include travel, required to deliver the materiel or services (to include training) ordered by the customer. This manpower may be to provide the specific services actually requested by the purchaser, or this manpower may be needed to produce the articles or perform the services being sold. These costs are normally included on the hardware or services line.

   • Case-related manpower eligible for Program Management Line (PML) Funding: Non-routine management efforts (USG and contractor), to include travel, directly attributable to successful execution of the case or program (typically complex in nature). When included, PMLs must be a condition of sale (i.e., those services unilaterally determined by the USG to be necessary for successful program implementation).

   • Case-related manpower eligible for Administrative Surcharge Funding: Other manpower (USG and contractor) required to develop, execute and close FMS cases. These functions maybe indirect (i.e., support across multiple customers/cases) or direct (i.e., support to a specific case or program).

   • Routine: Something we do for all customers for all types of cases.

   • Non-Routine: Something required by the nature of the program or to meet customer requirements.

   • Complex/Major LOA: For "Complex", refer to SAMM, Section 70201. "Major case" is defined as follows: Defined Order: $25M or more total LOA value; Blanket Order/CLSSA: $10M or more total LOA value; and/or 15% or more of a country's total FMS program dollar value.

4. This matrix is constructed to capture all major activities. Any type of cost may apply to any category, although some types of costs are separately listed (e.g., ADP, training, contracts). Types of costs that may apply to any particular activity include: personnel including basic pay, benefits awards and overtime; travel; rents and communications; contracts for services, maintenance & equipment rental, and purchase of ADP and non-ADP equipment. In the review of this matrix, we seek to fully describe the activities. In later work, we can cross-walk the list of activities to various types of costs (object classes/elements of expense).

5. For purposes of this matrix, foreign customer training is defined as a "service." Any entries concerning services being provided to a customer should be considered to include training.

6. This matrix is policy. For the longer-term, DSCA will be chairing a Surcharge Assessment Team to review and possibly revise the structure and/or computation of surcharges applicable to LOAs. The team's results will likely impact this matrix.

7. Where noted, this matrix is subject to change pending results of the Performance Based Costing (PBC) effort. It is anticipated that PBC will enable us to utilize a business-based approach for charging direct costs to cases, as appropriate. Potential PBC impacts are noted on the matrix as placeholders only.

Case-Related Manpower Activities and Associated Costs Matrix