Acknowledge Receipt: Within five days of receipt of a valid LOR, the U.S. Implementing Agency (IA) will acknowledge receipt of your LOR.

Request More Information: If information is unclear or is missing from your LOR, you will be contacted to provide the missing information. While, it may be possible to continue limited processing of some portions of the request, a complete response from the USG may be delayed until the information is provided or the request amended.

Assign a FMS Case Identifier: A FMS case identifier is assigned to each LOR. A case identifier consists of a Country Code, the IA code of the U.S. agency developing your FMS case and, a unique three-position FMS case designator. For example, “BN-B-UXP” is a FMS case for Bandaria (“BN”-a make-believe country) being prepared by the U.S. Army (“B” is the Implementing Agency code for the U.S. Army). The “UXP” denotes a particular FMS case for this country. 

Assign a FMS Case Manager: A FMS Case Manager is assigned to every FMS case and is responsible for ensuring that the FMS case meets your requirements as identified in your LOR. The FMS Case Manager acts as the coordinator for both development of the FMS case, and the subsequent “execution,” or performance of the FMS case. If you have questions about the development progress of your FMS case, they should be directed to the appropriate FMS Case Manager. DSCA has assigned a Country Program Director (CPD) for each country and the IAs may also assign a Country Program Director for your programs. These managers may also be contacted if you have questions concerning the progress of your FMS case.

Review Releasability Issues: Part of the USG review process involves determining if the technology involved is releasable for export. The releasability review takes place for both FMS sales (government to government) and for Direct Commercial Sales (DCS) that are directly negotiated between your country and a specific manufacturer. If the sale involves a system with technology that has not been previously approved for export, this process will generally take longer than if the system has already been reviewed and approved for export. An LOA will not be written for systems that you are not eligible to receive.

Notify the U.S. Congress:  There are many U.S. laws that the FMS case Manager must comply with as the FMS case is being developed.  If the FMS case is expected to exceed $14 million ($25 million for NATO, Australia, New Zealand and Japan SAMM C5.T11) of Major Defense Equipment (MDE), or will exceed a total FMS case value of $50 million ($100 million for NATO, Australia, New Zealand and Japan SAMM C5.T11) ($200 million ($300 million for NATO, Australia, New Zealand and Japan SAMM C5.T11) for construction cases), then the U.S. Congress must be notified of the prospective sale.  This notification process must be completed before the FMS case can be countersigned by DSCA and formally offered to your country for consideration.  When the official notification of a sale has been made to the U.S. Congress, this information is normally posted on the DSCA Web page.

As stated earlier, the LOA is the government-to-government agreement that identifies the defense articles and services that the USG proposes to sell to you to meet the requirements identified in your LOR. The LOA spells out all of the terms and conditions that will apply. Much of the content, especially the Standard Terms and Conditions, is dictated by U.S. law. We have included a sample LOA which you can see in C5.F2 in chapter 5 of the SAMM. SAMM table C5.F7 contains the Standard Terms and Conditions.

There are three basic types of FMS cases. The type used depends on what is being sold. These are: 

• Defined Order: This type of FMS case is for defense articles, services and training that are specified in your LOR and stated explicitly in the LOA. This type would most likely be used for a weapon system sale. 
• Blanket Order: This type of FMS case is used to purchase a specific category of items or services at a set dollar value ceiling with no definitive listing of the exact items or quantities desired. This type would most likely be used for follow-on support. 
• Cooperative Logistics Supply Support Arrangement (CLSSA): CLSSA is a unique arrangement where you are able to invest in the U.S. supply system and receive access to DoD stocks. This arrangement involves two separate FMS cases. The first FMS case covers your investment in specific USG supply system items. The second FMS case is used to requisition these items. 

LOA Sections: Your LOA will be made up of several sections. The first page will be an overview of the proposal and will include a space for the signatures of our USG representative and your government. It will provide a total cost estimate and will identify any initial deposit that might be required upon acceptance. The first page will also reflect the Terms of Sale (i.e., CASH WITH ACCEPTANCE, FMS CREDIT, etc.) and will identify the expiration date of the offer, 

The next several pages of the LOA will describe in greater detail the material and services being offered and responsibilities for transportation and delivery of the items. Separate FMS “case lines” will be included on your LOA. Each line will cover a specific category of material or service. Most of the information is in plain text or monetary terms, but in several situations we use codes to convey information. The codes are explained in greater detail in the “Letter of Offer and Acceptance Information” provided with each FMS case. 

A sample FMS case line might look like the following:

The LOA will also include notes to provide additional information unique to this FMS case. It will include a cost summary and an estimated payment schedule along with instructions on where to return the signed LOA and how to submit payments. 

The LOA also includes “Letter of Offer and Acceptance Standard Terms and Conditions.” These are included with every FMS case we write---they are not unique to your particular country or FMS case. These Standard Terms and Conditions identify specific requirements regarding liability, discrepancy reporting, etc.

LOA Pricing and Delivery Estimates: Dollar values and delivery schedules shown on the LOA are estimates based on the best available information at the time that the LOA is prepared. These estimates are based either on contractors’ quotes and/or on the current or projected cost and availability of the desired items. As noted in the LOR section of this guide, a key element in obtaining accurate LOA data is complete identification of each of the required items and services. During the life of the FMS case, the amounts billed to the FMS case will be the actual costs incurred by the USG, which may differ from those on the LOA.

Payment Schedule: Each FMS case will include an estimated payment schedule identifying when each of your payments is due. The schedule consists of two financial categories: (1) your initial deposit, and (2) future estimated quarterly billing amounts. Your initial deposit is for the costs anticipated to be incurred from FMS case acceptance until your first quarterly FMS billing statement is provided and monies collected. If the FMS case is written as “CASH WITH ACCEPTANCE,” the initial deposit will be for the entire FMS case value. Some of the factors used in computing your payment schedule include:

• Progress Payments: Those payments made to contractors or DoD activities as work progresses under a contract.
• Contractor Holdback: Amount earned by contractors or suppliers during the period, but held back by the USG, to ensure future performance of the Contractor.
• Termination Liability: That amount collected from you in advance to protect the USG if you decide to terminate a program before performance is complete on contracts for your program.

Most FMS cases must also be approved and countersigned by DSCA. This coordination/ countersignature is done electronically using the Defense Security Assistance Management System (DSAMS). There are many FMS cases, known primarily as “follow-on” or “support” FMS cases, which do not contain Major Defense Equipment. These FMS cases are often written and signed by the IA and do not require a formal DSCA review. 

Once a FMS case has been approved and countersigned (if required) the IA will print the LOA, sign it and deliver it to you for your review.