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

MEMORANDUM FOR :

SEE DISTRIBUTION

SUBJECT :

Availability Foreign Military Financing (FMF) and Peacekeeping Operations (PKO) Funds (DSCA 06-51) [SAMM E-Change 54]

This memorandum transmits the Assistant Secretary of State for Political-Military Affairs' letter of October 27, 2006 and updates the Security Assistance Management Manual (SAMM) concerning when transfers of Foreign Military Financing (FMF) and Peacekeeping Operations (PKO) funds to the FMS Trust Fund are treated as expended. As explained in the letter, once transferred to the 8242 trust fund account, FMF and PKO funds are expended and remain available indefinitely for disbursements consistent with the purposes for which there were appropriated, obligated, and expended.

Effective immediately, the SAMM, is updated as follows to provide guidance on the expenditure of FMF funds.

Insert: C9.7.2.10.4. Expenditure of FMF Funds. Transfers of FMF funds to the FMS Trust Fund account are expenditure transfers. Once transferred, FMF funds are expended and remain available indefinitely for disbursements consistent with the purposes for which they were appropriated, obligated, and expended.

My point of contact for this action is Ms. Patricia Higgins, DSCA/DBO/FPA, patricia.higgins@dsca.mil, (703)604-6570.

Keith B. Webster
Principal Director
Business Operations

DISTRIBUTION :

DEPUTY ASSISTANT SECRETARY OF THE ARMY
DEFENSE EXPORTS AND COOPERATION (DASA-DEC)
DEPARTMENT OF THE ARMY

DEPUTY ASSISTANT SECRETARY OF THE NAVY
INTERNATIONAL PROGRAMS (NAVIPO)
DEPARTMENT OF THE NAVY

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

DIRECTOR, DEFENSE LOGISTICS AGENCY

DIRECTOR, NATIONAL GEOSPATIAL-INTELLIGENCE AGENCY

DIRECTOR, DEFENSE THREAT REDUCTION AGENCY

DIRECTOR, DEFENSE REUTILIZATION AND MARKETING SERVICE

DIRECTOR, DEFENSE CONTRACT MANAGEMENT AGENCY

DIRECTOR, DEFENSE INFORMATION SYSTEMS AGENCY

DIRECTOR, DEFENSE LOGISTICS INFORMATION SERVICE

DEPUTY DIRECTOR FOR INFORMATION ASSURANCE,
NATIONAL SECURITY AGENCY

DEPUTY DIRECTOR FOR SECURITY ASSISTANCE,
DEFENSE FINANCE AND ACCOUNTING SERVICE - DENVER CENTER

CC :

STATE/PM-RSAT
USDP/ISP
DISAM
USASAC
SATFA TRADOC
NAVICP
NETSAFA
AFSAC
AFSAT
JFCOM
SOCOM
EUCOM
CENTCOM
NORTHCOM
PACOM
SOUTHCOM

United States Department of State

Assistant Secretary of State for Political-Military Affairs
Washington DC, 20520

Lieutenant General Jeffrey B. Kohler, USAF
Director
Defense Security Cooperation Agency
2800 Defense Pentagon
Washington, DC 20301-2800

Dear General Kohler:

On September 28, State and DSCA legal and financial officials met to discuss the availability of Foreign Military Financing (FMF) and Peacekeeping Operations (PKO) funds. As a follow-up to my letter dated January 3, 2006 regarding fiscal practices concerning "expenditure" of the Foreign Military Financing (FMF) funds, I wanted to let you know that DSCA and State are in agreement that once transferred to the 8242 trust fund account held at DSCA, both FMF and PKO funds are expended and would e treated, as in the past, as remaining available indefin9itelyt for disbursements consistent with the purposes for which they were appropriated, obligated or expended. This includes any residual funds that may remain after closing or otherwise modifying a case. In the future, State may wish to discuss the possibility of a mechanism whereby PKO could be obligated but remain unexpended for a longer period of time so as to maintain maximum flexibility to achieve policy goals.

I appreciate your staff's effort to work cooperatively with State officials to resolve this long-standing issue. I look forward to working with you in the future.

Sincerely,
John Hillen