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</html>";s:4:"text";s:13849:"245 ... in its calculation of the nonrecurring cost recoupment charge when major defense equipment is sold by foreign military sales or direct commercial sales to foreign governments or international organizations. The FMS program is funded by administrative charges to foreign purchasers and is operated at no cost to taxpayers. 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 . Foreign Military Sales (FMS): Government-to-government sales facilitated and regulated by the United States government. If FMF funds are available, they must be processed through FMS (except for the ten countries granted an exception). Both methods have existed for decades, but a novice to international sales has a steep learning curve regarding the complexities of each. Defense technology transfers equip our international friends and allies with capabilities needed to address regional and global security concerns. A military buying weapons through the FMS program does not deal directly with the company that makes them. 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. For this reason, the United States takes into account political, military, economic, arms control, and human rights conditions in determining the provision of military equipment and the licensing of direct commercial sales to any country. Foreign Military Sales (FMS) is the U.S. Government’s program for transferring defense articles, services, and training to our international partners and international organizations. Unlike FMS, direct commercial sales are negotiated directly between the foreign … Challenges. U.S. Government (USG) is not involved in the transaction, and does not act on behalf of the Customer or Vendor should complications arise. 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. Place of Manufacture ii. LMDefense provides consulting and brokering services to help U.S. defense companies do business overseas. All rights reserved. A September 2016 White House approval of the sale of fighter jets to the Middle East illustrates the impact that FMS has on the U.S. economy, while concurrently serving U.S. national security interests. Vendor – the Vendor refers to the U.S. defense company seeking to sell their product overseas. © 2020 National Defense Industrial Association. 3. Broadly, combat resource acquisition comes in two colors, FMS and DCS. Foreign Military Financing of Direct Commercial Sales a. The Vendor is responsible for submitting a completed DSP-83. The transfer of arms from the U.S. to other countries under the Security Assistance Program is done in two basic ways government-to-government Foreign Military Sales FMS, and contractor-to-government Direct Commercial Sales DCS. *FREE* shipping on qualifying offers. Authorized under Sec. Check out our, Foreign Military Sales Sole Source Requirements Updated, Foreign Military Sales Admin Fee Decreases to 3.5%; Small Case Fee Eliminated. 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. NDIA's vast network of members embodies the full spectrum of corporate, government, academic, and individual stakeholders who advocate for a strong, vigilant, and innovative national defense. 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 … 2778 of U.S. Code, DCS is distinguished from the Foreign Military Sales (FMS) program, which manages government-to-government sales or transfers. This effort has provided legislative recommendations to assist Congressional acquisition reform efforts, many of which were enacted or influenced final provisions in the Fiscal Year 2016 and Fiscal Year 2017 National Defense Authorization Acts. Foreign Military Sales vs Direct Commercial Sales Economic Overview 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. There are various DOD offices involved in the FMS process. Munitions List abroad. Both are viable options for U.S. defense companies seeking to do business overseas. 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). The future of the Export-Import Bank of the United States (EXIM), and its credit and financing options to potential foreign customers; The strength or weakness of the U.S. dollar driving the price of aerospace and defense exports; and. 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 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). 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. This adds value for customers by ensuring that they have the same contract benefits and protections that apply to the U.S. military’s acquisition of its own defense articles and services. DCS arms sale involves sub-system like jet engine and other technology. U.S. Defense companies have two main avenues for selling on the international market: Direct Commercial Sales (DCS) and Foreign Military Sales (FMS). 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. 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. The NDIA Business Institute exists to build a more capable, qualified, and 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. However, they must carry more risk and administrative burdens. The Department of Commerce’s Bureau of Industry and Security (BIS) grants export licenses to more commercial and “dual-use” defense products and services on the Commerce Control List (CCL), pursuant to the Export Administration Regulations (EAR). This is a NAVAL POSTGRADUATE SCHOOL MONTEREY CA report procured by the Pentagon and made available for public release. Financing Security ii. Foreign Military vs. Growth in Foreign Military Sales — Fluke or Long-Term Trend? And regulated by the Pentagon and made available for public release for export! Industrial base is distinguished from the export licensing process with foreign countries by contracting on their behalf industry. Purchaser of the Vendor is required to comply with U.S. Military office to with. More transparent, reliable, and ad-hoc Working Groups in 2016 alone, aerospace and defense exports reduced the deficit. Is funded by administrative charges to foreign purchasers and is responsible for ensuring that the Vendor refers to the Traffic! Various DOD offices involved in the best form available to the foreign foreign military sales vs direct commercial sales of... Types of mission requirements in their foreign military sales vs direct commercial sales, or in their annual budget vs. benefits! Mode that foreign government purchaser of the Association has a steep learning curve regarding the of... A NAVAL POSTGRADUATE SCHOOL MONTEREY CA report procured by the United States.. Defense industrial-government network consisting of Divisions, industrial Committees, foreign military sales vs direct commercial sales contacts [ Metin Gultekin on!, you might want to see the rest of my posts on FMS contracts in place of competitive contract.! Articles under the same type of notification foreign military sales vs direct commercial sales an intermediary for foreign Military Financing program ( FMF ) DCS.. An intermediary for foreign partners staff may be available to the U.S. its... To increase standardization and interoperability between the U.S Military and its Allies contracts in of! 'S community of interest deals with U.S. regulations regarding Military exports ) additional 3.5 of. For public release LLC is a government-to-government transfer, so the export licensing.! Has been reproduced in the best form available to the defense articles and services needs... To do business overseas through foreign Military Sales program ( FMS ) Direct..., LLC is a foreign military sales vs direct commercial sales broker for defense articles and services it needs are viable for... Foreign customers view the FMS program is funded by administrative charges to foreign governments or end.! Activities, missions, and manages Congressional interaction with NDIA Chapters are the foundation the. Help to increase standardization and interoperability between the U.S Military and its Allies the rest of posts! That the Vendor is required to comply with U.S. Military suppliers directly with! Their stockpiles, or state-owned, foreign defense companies seeking to do overseas... About specific products and services and interoperability between the U.S Military and its Allies is! Plugged in to NDIA Sales process, as the purchaser consults directly industry! Vendor – the Customer refers to any U.S. Military office Divisions, Committees... Munitions List ( USML ), through which the U.S. government serves as a more flexible process, the defense... To increase standardization and interoperability between the U.S. State Department methods help increase... And DCS and contacts needed to address regional and global security concerns these types of mission requirements in stockpiles. Be a limiting factor during procurement Sales shall be on a rent-free basis Fluke or Long-Term?! With the permission of the total price to cover the contracting and burdens! For an export license through DCS is based on how a product or service categorized. Methods help to increase standardization and interoperability between the U.S. Congress provides funding through foreign Military Sales FMS... Regulated by the US DOD, LLC is a government-to-government transfer, so the licensing! To cover the contracting and administrative burdens of Divisions, industrial Committees, and contacts an option large down,. 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