Module 5 (Foreign Military Sales) Flashcards
is one of the components of the US Security Assistance Programs pursuant to US Foreign Assistance Act (FAA) of 1961.
US Foreign Military Sales (FMS) Program
is a group of programs authorized by the US Foreign Assistance Act (FAA) and Arms Export Control Act (AECA) or other related statutes by which the US provides defense articles, military training and other defense related services by grant, credit, cash sale, lease or loan to its partner nation.
US Security Assistance Programs (US SAP)
US Security Assistance Programs (US SAP) strictly implements no assistance to oppositions of US Foreign Policy, such as:
- Violation of Human Rights
- Communist Countries
- Grants sanctuary to International Terrorists
- Discrimination against US Personnel
- Delivers/Receives nuclear materials
- No adequate steps to stop drug trafficking
What are the Components of US Security Assistance Programs (US SAP):
- Economic Support Fund
- Leases
- Emergency Drawdowns
- Third-Country Transfer
- International Military Education and Training Program
- Peacekeeping Operations
- Building Partner Capacity (Sec. 333)
>US Counterterrorism Program – J4
>Maritime Security Initiatives – J5 - Foreign Military Financing (FMF) – J4
- Excess Defense Articles (EDA) – J4
- Direct Commercial Sales (DCS) – J4
- Foreign Military Sales (FMS) – J4
ARTICLE 1.- Subject to mutual agreements, the Government of the United States of America will furnish military assistance to the Government of the Republic of the Philippines in the training and development of armed forces and in the performance of other services essential to the fulfillment of those obligations which may devolve upon the Republic of the Philippines under its international agreements including commitments assumed under the United Nations and to the maintenance of the peace and security of the Philippines…
RP-US Military Assistance Agreement of 1947 and 1953
An Act to promote the foreign policy, security, and general welfare of the United States by assisting peoples of the world in their efforts toward economic and social development and internal and external security, and for other purposes.
US Foreign Assistance Act of 1961
The________ gives thePresident of the United Statesthe authority to control the import and export of US defense articles and defense services. This Act requires international governmentsreceiving weapons from the United States to use the armaments for legitimate self-defense only.
US Arms Export Control Act of 1976
Philippines Legal Basis for Procurement via US FMS Program:
Republic Act 9184 and its Revised IRRs
>Thru Sec 53.8 Defense Cooperation Agreement under Sec 53 Negotiated Procurement of RA 9184
The Contracts or LOA for the acquisition projects using Republic Funds are entered pursuant to Section 53.8 that allows the procurement of equipment with an agency or instrumentality of another country with which the Philippines has entered into a ________.
Sec 53.8 Defense Cooperation Agreement
TRUE or FALSE
Republic Act 9184 and its Revised IRRs
“Sec 4.2. Any Treaty or International or Executive Agreement to which the GoP is a signatory affecting the subject matter of the Act and this IRR shall be observed. In case of conflict between the terms of the Treaty and this IRR, the former shall prevail.”
TRUE
A program that authorizes eligible foreign countries/ US partner nation to purchase defense articles, services and training from the US Government using National Funds or grant funds from the US Foreign Military Financing (FMF) Program.
Foreign Military Sales (FMS) Program
A Government-to-Government Agreement pursuant to Sec.4.2 of Republic Act 9184. Each ________ project is documented through the Letter of Offer and Acceptance (LOA) as Contract Agreement.
Foreign Military Sales (FMS) Program
The ________ emphasizes the Total Package Approach to defense acquisitions.
US Foreign Military Sales (FMS) Program
What can be sold through FMS?
- DEFENSE ARTICLES
- DEFENSE SERVICES
- DESIGN & CONSTRUCTION SERVICES
weapons, weapon systems, munitions, aircraft, vessel, boat, component or parts
Defense Articles
services, test, inspection, repair, training, publication, or defense information
Defense Services
engineering services, technical advisory assistance
Design and Construction Services
3 Types of FMS Projects
- US Funded
- RP Funded (National Funds)
- Co-Investment
[Type of FMS Projects]
through US Foreign Military Financing (FMF)
US Funded
[Type of FMS Projects]
Capital Outlay/MOOE/Modernization/Other Special Sources
RP Funded (National Funds)
[Type of FMS Projects]
combination of RP & US Funds
Co-investment
Term used to identify a request from an eligible partner nation for the purchase of US defense articles and services, including EDA.
Letter of Request (LOR)
JUSMAG-Phil receives our ________ in-country
Letter of Request (LOR)
Letter of Request (LOR) can request 2 things:
- Price and Availability (P&A)
- Letter of Offer and Acceptance (LOA)
- Rough order of magnitude (ROM) data
- Sufficient for planning, but not for budgeting
- Not an offer to sell
Price and Availability (P&A)
- Most precise estimate based on info provided
- Sufficient for budgeting
- Offer to sell
Letter of Offer and Acceptance (LOA)
Authorized document used by the USG as an offer to sell defense articles and services to foreign country
The offer becomes a contract once it is accepted and funding is provided.
Subject to many conditions and restrictions
Letter of Offer and Acceptance (LOA)
Document used by USG to sell defense articles, services (including training), and design/construction services to a foreign country or international organization
Letter of Offer and Acceptance (LOA)
Signed LOA + subsequent revisions = ______________
Foreign Military Sales (FMS) Case
3 LOA Terms of Sale
- Open Source
- Sole Source
- Existing Inventory
[LOA Terms of Sale]
US Government will bid out among qualified US Companies
OPEN SOURCE
[LOA Terms of Sale]
AFP specifically identifies the Company
SOLE SOURCE
[LOA Terms of Sale]
The AFP can request for the USG to provide ________ items especially during “emergency”
EXISTING INVENTORY
4 LOA Terms of Payment
- Cash with Acceptance
- Cash prior to delivery
- Dependable Undertaking
- FMS Credit
[LOA Terms of Payment]
Full payment upon acceptance of LOA
Cash with Acceptance
[LOA Terms of Payment]
Full payment before the delivery
Cash prior to delivery
[LOA Terms of Payment]
Initial deposit and quarterly payment
Dependable Undertaking
[LOA Terms of Payment]
FMF-funded
FMS Credit
Pertains to the retransfer, disposal, or change of end-use of US-origin articles, services, or data that was obtained through US Security Assistance Program, to a third party.
Third Party Transfer
THE 6-STEP FMS PROCESS
- Defining Requirements
- Letter of Request (LOR)
- Letter of Offer and Acceptance (LOA)
- Acceptance of LOA (signed)
- Implementation
- Case Execution
4-STEP FMS PROCEDURE FLOWCHART (REPUBLIC FUNDS)
- Requirement Determination & Approval of Procurement through US FMS Program: LOR for P&A Data (Market Research)
- Pre-Case Development: Crafting and Processing of LOR for LOA
- Case Development: Offer and Acceptance
- Case Implementation and Delivery
Prepares LOR for P&A data as part of Market Research (if deemed necessary)
END USER
Reviews and submits the LOR to JUSMAG-Phil if complete
J4
Transmits the LOR to the concerned USG Agency for processing
JUSMAG-Phil
Processes the LOR & sends reply to P&A data to JUSMAG-Phil within 45 days
USG Agency
Transmits the P&A data to J4 upon availability
JUSMAG-Phil
Transmits the P&A data to End-User upon availability
J4
Reviews and examines the P&A data and seeks approval for procurement through US FMS Program
END-USER
Decides whether or not to procure thru US FMS Program pursuant to Sec 4.2 of RA 9184 and its Revised IRR
SENIOR LEADERS
3 required attachments if Senior Leaders approved the procuement thru US FMS Program
- Annual Procurement Plan (APP)
- Acquisition Decision Memorandum (ADM)
- Bids and Awards Committee (BAC) Resolution
Prepares LOR for LOA and transmits it to J4
END-USER
Reviews the completeness of LOR and transmits it to JUSMAG-Phil for processing
J4
Reviews the completeness of LOR and submits it to concerned USG Agency for processing
JUSMAG-Phil
Reviews and processes the LOR and craft corresponding LOA. Response time to the LOR depends on the type and complexity of cases (60 to 120 days or more)
USG Agency
Tranmits the LOA to J4 for transmittal to the End-User
JUSMAG-Phil
Transmits the LOA to the End-User for their review and recommendation
J4
Reviews the LOA and recommend for acceptance, amendment or declination (whichever is applicable)
END-USER
If recommended for acceptance, ________ recommends for the SND’s approval of the LOA and subsequent wire-transfer of funds (thru Channel/via CSAFP)
J4
Approves or disapproves the acceptance of the LOA and wire-transfer of fund
SND
If approved, ________ signs the LOA and transmits it to JUSMAG-Phil for implementation by the concerned USG Agency upon wire-transfer of funds
Department Circular Nr 11
J4
Issues a Memo to J4 to facilitate the wire-transfer of funds based on the issued SARO for the project
DAO, DND
Requests for the issuance of Allotment Advice (AA) to OFM
J4
Issues Allotment Advice (AA) upon approval of the VCSAFP
J10
Prepares OBR and DV and forwards it to OFM (DV is named to ISAFP who will execute fund transfer to the Payee)
AFPPS (GHQ PC)
Records obligation of funds
J10
Prepares LDDAP to process request for issuance of Notice of Cash Allocation (NCA)
GHQ Accounting
Facilitates signing of LDDAP and requests availability of NCA to DBM thru ASFP, DND
J10
Endorses request for NCA to DBM
ASFM, DND
Issues Notice of Cash Allocation (NCA)
DBM
Prepares DV and check for transfer of funds (NCA) to AFPMATF
J10
CSAFP signs DV and check
VCSAFP
Sends copy of deposit slip to GHQ Accounting
J10
Certifies availability of funds in the DV (Box A)
GHQ Accounting
Approves and signs Box B of the DV then forwards it to AFPMFO for pre-audit
GHQPC, AFPPS
Conducts pre-audit and forwards the DV to 27th FSSU for issuance of check
J10
Issues check to AGDB
27th FSSU
Coordinates with CO, GHQPC and CO, 27th FSSU who will sign the form to effect the wire-transfer of fund to US Treasury
AGDB
Implements the LOA and commences the procurement in accordance with the existing US laws and regulations
USG Agency
J4 coordinates with JUSMAG-Phil for conduct of ________ if deemed necessary prior to the delivery of items
Quality Assurance Inspection (QAI)
Facilitates the delivery of equipment based on the Delivery Term Code indicated in the LOA. JUSMAG-Phil or AFP Freight Forwarder provides a Notice of Arrival through a copy Bill of Lading (sea freight) or Air Waybill (air freight) and Invoice Receipt (DD 1149)
USG Agency/JUSMAG-Phil/AFP Freight Forwarder
Directs respective THUs to facilitate the release of the shipment from the BOC. If request for tax deferment applies, submits request to J4
END-USER
Directs THU, GHQ & HSC and AFPPS to facilitate approval of tax deferment
J4
Computes the total fund requirements for the release of FMS items from the BOC
THUs
Facilitates the availability of funds
END-USER
Upon receipt of funds and certificate of tax deferment, ________ shall coordinate with the BOC for the withdrawal of items and advises concerned SU of the incoming delivery
THU
Prepares the warehouse, receives the items and store it properly
SU
Advises End-User 4s once the articles/items have been withdrawn and delivered to the SU
THU
Informs J4 and JUSMAG-Phil that the items have been delivered and are ready for inventory and inspection
END-USER
OJ4; JUSMAG-Phil; TIAC; End-User 4s; SAO, AFP; concerned SU; AFPMFO Representative; and Major Service SAO (for items for use of the Major Service); shall conduct inventory and inspection of the delivered items
Inspection and Acceptance
If case of discrepancies, End-User’s Major Service 4 submits ________ to JUSMAG-Phil thru J4 for requisitioning
Supply Discrepancy Report (SDR)
If items are complete, TIAC submits Report and ________ of Acceptance to DAO, DND
TIAC Certificate
Upon receipt of TIAC Report & Certificate, ________ issues a Memo to J4 to facilitate the Issuance Directive for the release of the items to the End-User
DAO, DND
Prepares and release Issuance Directive to SAO, AFP
J4
Facilitates issuance of items to the SAO, End-User who shall prepare Requisition and Issue Slip (RIS)/ Inventory Receipt of Property (IRP) and submit it to the SU (P) for the issuance and release of the items
SAO, AFP
Facilitates the issuance of items to the SAO, End-User
Major Service/GHQ SAO
prepares Requisition and Issue Slip (RIS)/ Inventory Receipt of Property (IRP) and submit it to the SU.
SAO, End-User
issues the items to the End-User and submits a copy of the RIS/IRP to SAO, AFP for recording purposes.
SAO, SU
The ________ shall submit an After-Withdrawal Report to OJ4 (thru MS4s for MS items).
END-USER
Submits report to the GHQ and MS Accounting Center and reconciles records
Major Service/AFP SAO
FMS vs DCS
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
USG does the work; USG support and involvement to resolve issues
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Transparent Process
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Total Package Approach (TPA) to ensure operational capability
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
USG has knowledge and data of prior procurements
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Customer benefits from economies of scale or existing contracts
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Cost - ________ Charges 3.2% for case development and management
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Limits customer involvement
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Risk of USG diversion to other priorities
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Usually overestimate costs; but unused funds are returned to customer
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
May result in extended contract lead-times to acquire non-standard materials and/or services
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Country has ownership of entire acquisition process
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Supports development of host government acquisition capabilities
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Customer negotiates own delivery schedule
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
May be able to negotiate contract faster than via DoD process
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Potential to pay in other than US dollars
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Limited USG support to resovle problems
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
U.S. Government only involved in export license review and congressional notification
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
May not be Total Package Approach
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Potentially limited technical knowledge of system
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Country needs contracting officer and auditor expertise
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Can capitalize on the use of the extensive DoD training facilities (i.e. ranges, etc.)
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Extensive DoD operational expertise and trained personnel
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Sole-Source requests for specific items
FOREIGN MILITARY SALES (FMS)
FMS vs DCS
Customer can often decide where and when they want the training to occur
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Contractor may not have the operational expertise, capability, or trained personnel that the DoD has
DIRECT COMMERCIAL SALE (DCS)
FMS vs DCS
Contractor may not have access to DoD training facilities (i.e., ranges, etc.)
DIRECT COMMERCIAL SALE (DCS)
This Act requires international governmentsreceiving weapons from the United States to use the armaments for legitimate self-defense only.
US Arms Export Control Act of 1976
