The Sales Process

1
The Sales Process
State Defense MILDEPs President Congress
Foreign Purchaser Needs
Supplies and Services
SAM-C, 8/1/2009
2
FMS Terminology Whats a FMS Case?

• A government to government agreement to transfer
  defense articles services is a
• Letter of Offer Acceptance
• LOA
• FMS Case
• Case BN-D-YCY
• Case YCY

3
International Sales ProcessFMS Case lifecycle
phases (DISAM Text Page 5-2)
Preliminary, Definition and Request Offer and
Acceptance (SAMM C-5)
Case Development
Implementation, Execution, and Closure (SAMM C-6)
Case Execution
4
Security Assistance Policy Documents

• Security Assistance Management Manual (SAMM) DoD
  5105.38-M
• DSCA Policy Memoranda
• Financial Management Regulation 7000.14-R, Vol.
  15, Security Assistance Policy and Procedures
• Reconciliation and Closure Manual DoD 5105.65-M
  (RCM)
• MILDEP Specific Policy Manuals

5
Customer Decisions
Non-U.S. Sources
Where
Cost
What Kind
U.S. Munitions List
When
U.S. Commercial Export
Needs
How Many

Arms Export Control Act
FMS
Letter Of Request (LOR)
Minister of Defense Bandaria
6
Sources of Information
U.S. site surveys and other assessments
Internet
Military-to-military
News media, e.g., CNN
Trade pubs, print, library and electronic
Attendance at U.S. military schoolhouses
U.S. Defense Contractors
Air trade shows
Security Cooperation Organization- SCO
Visits andobserver missions
Department of Defense
7
Letter of Request Checklist

• Identification Information
• Purpose
• PA- Price Availability
• LOA-Letter of Offer Acceptance
• Lease
• Purchaser
• Pre-negotiations
• Transparency
• Acceptance Time Frame
• International Solicitation
• Major Item Considerations
• Standard Model
• Quantity
• Unique Configuration
• Delivery Time Frame
• Transportation
• Warranties
• Sole Source
• Support Considerations

• Support Equipment
• Facilities
• Follow on Support
• Publications
• Services
• FMS Case Reviews
• Training
• DOD/Contractor Services
• Site Survey
• Financial Considerations
• Funding Source
• Payment Schedule/Initial deposit
• Financial Waivers
• Special Considerations
• Memorandum of Understanding (MOU)
• Offsets
• Commercial Negotiations
• Special Reports
• Interoperability

Total Package Approach
LOR Writing Guide
8
Channels of Request
State
DSCA
Letter Of Request LOR
Combatant Command
U.S. Embassy
Implementing Agency
PROCEED
Bandaria
Prepare LOA
Congress
9
International Traffic in Arms Regulations (ITAR)

• Provides registration / licensing requirements
  for the commercial export of defense articles,
  services, and related technical data.
• Includes the United States Munitions List (USML)
• Identifies Significant Military Equipment (SME)
• SME requires special considerations because of
  Their capacity for substantial military utility
  or capability
• SME also defined in 47(9), AECA
• Identified by an Asterisk () on the Munitions
  List

22 CFR 120-130
10
Major Defense Equipment List
Approved Charge 147,604 326,461 897,452 1,045
,566 1,328,033 144,279 663,082 607,149 761.19
7
Effective Date 11 May 89 18 Jun 90 28 Nov 01 30
Dec 83 23 Feb 00 7 Aug 91 10 Aug 93 3 Jun 91 28
Nov 01
Helicopters AH-1S Cobra (with T-53-L-703 Engine)
System without C-Nite AH-1W Super Cobra (with 2
T-700-GE-401 Engines)(N) AH-1Z (H1 Helicopter
upgrade) with two T700-GE-410 Engines AH-64
Apache Helicopter System (with 2 T-700 Engines)
(A) AH-64 (New) Apache Helicopter System with 2
T-700 Engines CH-47D Chinook (without T-55
Engines) (A) OH-58D Kiowa with one T-703 engine
(with Mast Mtd Sights) (A) SH-2G (with
2T-700-GE-401 Engines) (N) UH-1Y (H-1 Helicopter
Upgrade) with two T700-GE-401C Engines
MDE List- SAMM Appendix-1
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Country Team Assessment for SME/MDE LORs
(SAMM C5.T1)

• U.S. Embassy/SCO Must Address
• Reason nation desires articles/services
• Effect on recipient's force structure
• Reaction of neighboring nations
• Purchaser's ability to maintain, operate and
  support
• Economic impact and source of financing
• Human rights considerations
• Should USG approve purchase

SMESignificant Military Equipment MDEMajor
Defense Equipment
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Defense Security Cooperation Agency
Responsibilities

• Charter-Administer FMS
• Policy (SAMM)
• Congressional Input
• FMS Country Program Financial Management
• FMS Administrative Budget
• Credit Program (FMFP)
• Training Program (IMET)
• FMS Trust Fund Mgt
• Waiver Authorities

• Memoranda of Understanding
• Security Cooperation Office Mgt.
• Computer System Development Management
• Security Assistance Metrics
• Payment Schedules/Special Bills
• Case Closure
• Lean Six Sigma (LSS) Teams
• Security Cooperation
• Non-FMS Functions

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Department of StateArms Transfer Points of
Contact
Under Secretary for Arms Control International
Security Bureau of Political-Military Affairs
Regional Security and Arms Transfers (RSAT)
Director for Defense Trade Controls (DDTC)
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Channels of Request
State
DSCA
Letter Of Request LOR
Combatant Command
U.S. Embassy
Implementing Agency
PROCEED
Bandaria
Prepare LOA
Congress
15
Preliminary Definition Request