A Comparison of Foreign Military Sales FMS Versus Direct Commercial Sales DCS Back A Comparison of Foreign Military Sales (FMS) Versus Direct Commercial Sales (DCS) September 30, 2014, Co-Author with the General Counsel for the Defense Security Cooperation Agency. The granting of a license does not necessarily mean that items will be delivered immediately; licenses are valid for four years, during which sales may be delayed or … Foreign customers leverage more negotiating power regarding the type of contract (fixed price or firm fixed price), how the contract is written, final delivery requirements, and methods of payment. LMDefense provides consulting and brokering services to help U.S. defense companies do business overseas. We are also authorized to provide EDA under the FAA and to approve third-party transfer requests under both the … Foreign Military Sales (FMS): Government-to-government sales facilitated and regulated by the United States government. –The … Disclosure e. Contracts i. Direct Commercial. WHETHER FOREIGN MILITARY SALES OR DIRECT COMMERCIAL SALES: A CASE STUDY OF THE UK E-3 AWACS THESIS Larry L. Brown, GS-13 AFIT/GLM/LSM/90S-6 Approved for public release; distribution unlimited . U.S. aerospace and defense exports (1) sustain a domestic workforce in the manufacturing sector, (2) support national security programs through the foreign military sales (FMS) and direct commercial sales (DCS) processes, and (3) narrow the U.S. trade deficit gap. maloberti@lmdefense.com, LMDefense | 703-200-2409 | About | Contact, Our consulting services can help you determine whether FMS or DCS is right for your company! The Vendor must obtain export approval from the U.S. State Department. FMS – an acquisition program administered through the Defense Security Cooperation Agency (DSCA), with final approval by the State Department – supports security cooperation between the U.S. and its allies. If the Customer wishes to use FMF funding, DCS is not an option. The FMS program’s overriding purpose is to build relationships with foreign countries by contracting on their behalf with industry providers. Broadly, combat resource acquisition comes in two colors, FMS and DCS. VA The size and skill of the Customer contracting staff may be a limiting factor during procurement. DCS should be distinguished from the Foreign Military Sales program, which manages government-to-government sales. Follow the links to learn more about activities, missions, and contacts. tel: (703) 522-1820, Chemical Biological Defense Acquisition Initiatives Forum, Industrial Committee of Ammunition Producers, Industrial Committee on Test and Evaluation, Trusted Microelectronics Joint Working Group, ADAPT - Agile Delivery for Agencies, Programs and Teams. Each affiliate has its own membership, structure, and dues. The Customer pays an additional 3.5% of the total price to cover the contracting and administrative services provided by US DOD. Located in areas of concentrated defense work, they collaborate with government and industry to facilitate important discussions of local issues and matters critical to our national defense. Competition in the form of subsidized, or state-owned, foreign defense companies receiving sole-sourced contracts in place of competitive contract bidding. The NDIA Policy team monitors, advocates for, and educates government stakeholders on, policy matters of importance to the defense industrial base. The initial deposit required is usually somewhat lower than commercial contract down payments. This chart explains the main differences between Foreign Military Sales (FMS) and Direct Commercial Sales (DCS). Customer – the Customer refers to the Foreign Government purchaser of the U.S. defense products. As Fiscal Year (FY) 2017 comes to a close, FMS sales total roughly $64 billion, surpassing the previous record of $67.8 billion in total sales in FY 2012. Since offsets are utilized in both foreign military sales (FMS) and direct commercial sales (DCS), they are subject to the International Traffic in Arms Regulation (ITAR) and the Foreign Corrupt Practices Act (FCPA). In 2016 alone, aerospace and defense exports reduced the overall deficit by $80-90 billion dollars. U.S. DOD – U.S. DOD refers to any U.S. military office. Congress must be notified by the State Department of a decision to issue an export license if the sale includes significant defense equipment valued at $14 million or more. Accesion For PTIS … 22201 the Foreign Military Sales program (FMS), through which the U.S. government procures defense articles as an intermediary for foreign partners. Both are viable options for U.S. defense companies seeking to do business overseas. FMF funds purchases are made through the Foreign Military Sales (FMS) program, which manages government-to-government sales. U.S. financial assistance, through the Foreign Military Financing Program (FMF) may be available to the Customer. While the U.S. government contracts out to the defense industry on a competitive or sole-source basis, it may also sell directly from its own stockpiles. This chart explains the main differences between Foreign Military Sales (FMS) and Direct Commercial Sales (DCS). NDIA Affiliates are subsidiary organizations that focus on specific areas and missions related to it's community of interest. Our services are designed to demystify the international sales process, identify opportunities, connect with potential customers, and navigate the logistics of international sales. Basically, DCS is any sale not through the FMS/FMF system. Under the AECA, there are three main authorities through which the United States can provide defense articles or services to another country: government-to-government Foreign Military Sales (FMS); licensed exports of direct commercial sales (DCS); and the lease of defense articles. The Policy team also represents NDIA in several inter-association groups representing the defense industry and the government contracting community including the Council of Defense and Space Industry Associations (CODSIA), the Acquisition Reform Working Group (ARWG), and the Industry Logistics Coalition (ILC). Vendor – the Vendor refers to the U.S. defense company seeking to sell their product overseas. also read. Regulatory Coverage vs. As the Coast Guard acquires new ships, boats, and aircraft, the assets are made available, through the FMS program, to other countries under already established contracts. It is not spiral-bound Challenges. Through the Foreign Military Sales process, the U.S. government serves as a go-between for foreign partners and American industry. American arms manufacturers have two major channels through which they can sell major weaponry to foreign countries: foreign military sales ("FMS"), in which a government-to-government agreement is negotiated by the Pentagon; and direct commercial sales ("DCS"), in which industry negotiates directly with the purchasing country and must apply for a license from the State Department. Our mission is to ensure the continued existence of a viable, competitive national technology and industrial base, strengthen the government-industry partnership through dialogue, and provide interaction between the legislative, executive, and judicial branches. Any required notifications to Congress are jointly sponsored by the US DOD and the State Department. 2778 of U.S. Code, DCS is distinguished from the Foreign Military Sales (FMS) program, which manages government-to-government sales or transfers. Or, learn more about LMDefense and our consulting services. A military buying weapons through the FMS program does not deal directly with the company that makes them. Munitions List (USML), pursuant to the International Traffic in Arms Regulations (ITAR). The State Department’s Directorate of Defense Trade Controls (DDTC) executes authority in issuing export licenses to all defense related products and services on the U.S. While certain terms of agreements may change and deliveries (if any) take years to complete, … Financing Security ii. With State Department blessing, the Defense Security Cooperation Agency notifies Congress of major arms sales under the Foreign Military Sales program, starting a clock (typically 30 days) during which Congress can block a sale by passing a resolution to do so in both the House and Senate. Foreign customers view the FMS process as more transparent, reliable, and secure. Over the past three years, the Policy team has led NDIA’s Acquisition Reform Initiative. Why purchase through the FMS program? The Vendor negotiates with the Customer. The United States Government benefits directly and indirectly from transfers of military technologies or systems to foreign governments or end users. Join a local chapter and get plugged in to NDIA. On a much less frequent basis, FMF also funds purchases made through the Direct Commercial Sales (DCS) program, which oversees sales between foreign governments and private U.S. companies. Policy staff regularly meets with key policy stakeholders, and manages Congressional interaction with NDIA Chapters and Divisions. Domestic Content Requirements & Exceptions iii. The State Department's Direct Commercial Sales (DCS) program regulates U.S. companies' sales of U.S. defense articles and defense services on the U.S. NDIA provides a platform through which leaders in government, industry and academia can collaborate and provide solutions to advance the national security and defense needs of the nation. When buying directly from the government’s stockpiles, foreign customers will have more leverage in the unit price of a defense system – as these same systems are also acquired by the U.S. military and defense agencies. As part of this diverse network, over 1,560 corporate and 63,800 individual members are actively developing best practices, initiatives, technology, and products in defense with continued guidance and feedback from key stakeholders. 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