After funds are obligated on a capacity case

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1. The moment a grant case goes live

A Building Partner Capacity (BPC) case, or a training grant, is implemented through a chain of steps in the case system, under the Security Assistance Management Manual (SAMM) (SAMM C15.4.1). It begins when financial approval is posted and the funding authorization document is sent for approval. The Defense Security Cooperation Agency (DSCA) first confirms that funds are available and starts distributing them. The implementing agency (IA) then posts that it has received the funding, which implements the case. For a training grant, the system then posts a grant funded milestone automatically. If DSCA’s comptroller rejects a case, it returns to development status for a decision on the way forward. All of this must happen while the appropriation is still available for obligation.

Once funds are obligated, the IA notifies the Security Cooperation Organization (SCO) and gives it a copy of the implemented case or the training grant information (SAMM C15.5.3). The SCO, another government employee or a designee may then start preparing to receive the materiel and services. How obligation itself works on these cases is covered in obligating money on a grant case.

2. What the partner may be told

The SCO may share the case or training grant information and supporting documents with the partner’s defense ministry, as appropriate (SAMM C15.5.3.1). Protected information, such as a vendor’s proprietary data, is held back. Where a case covers several partners, its information is not normally shared among them.

The manual asks SCOs to manage expectations clearly (SAMM C15.5.3.1). Shipment and training schedules are not a commitment by the United States. An implemented case and valid obligations are not a guarantee that assistance will be provided. Contracts may change during execution, equipment may be redirected to another partner, and assistance is not guaranteed.

3. Spending the money in time

Once obligated, funds should be fully spent under military department procedures, leaving enough time to process final invoices and close the case on time (SAMM C15.5.4). Cancelled funds are no longer available for any purpose. A standard case note on fund source and availability states the date by which funds must be spent. The IA oversees deliverables and works with the Defense Contract Management Agency on inspection, acceptance and prompt invoice processing (SAMM C15.5.4). Execution data from each Defense component feeds directly into security cooperation dashboards, which centralize tracking and reporting (SAMM C15.5.4.1).

Financial records are reviewed every quarter (SAMM C15.5.4.2). The Financial Management Regulation requires a dormant account review of commitments, obligations, payables and receivables. The IA reviews and reconciles its records regularly to find and fix errors. That helps use funds fully before they expire, and makes sure open obligations are valid and paid before the appropriation cancels. The manual calls for a joint effort across resource management, accounting, program management, contracting, acquisition and logistics.

4. Changes after funds expire

Price increases and other activity can still occur after the period for new obligations ends (SAMM C15.5.4.2). Fiscal law allows upward adjustments to record and pay obligations properly chargeable to the original account. Current-year funds are used only if no original-year funds are available, or if using them would not be a bona fide need of the year the funds were first obligated. DSCA’s country finance director reviews any increase in price or quantity, and any extension of months or delivery dates, at line or sub-line level.

Cancelled funds raise a different problem. If more money is needed on a case funded by a cancelled appropriation, the IA contacts the country finance director, and DSCA may approve paying from a current appropriation through a prior year adjustment request (SAMM C15.7.5.1). Total payments from the current appropriation must stay within the limit in the Financial Management Regulation. A closed case must be reopened if later financial activity affects it (SAMM C15.7.5.2). The IA sends DSCA a justified request, and DSCA decides whether to apply a credit or use current-year funds.

5. Items still on their way at closure

Some items reach the government under a case but have not been delivered to the partner when the case closes (SAMM C15.7.6). They are identified during closure. A program-wide transportation case then makes the final shipment, with a case note naming the receiving partner, the original case, the items and quantities, and the expected receipt date. How cases close is covered in how a BPC case runs and closes.

6. No foreign taxes on grant aid

American grant assistance must be free of foreign sales tax, value added tax, customs fees and similar charges imposed by the partner (SAMM C15.5.5). Without an exception approved by the Under Secretary of Defense for Policy, Defense funds may not pay a foreign tax charged to the government directly, or indirectly through a contractor. The rule rests on the Defense Department’s foreign tax relief instruction and a 2017 policy memorandum.

The manual prefers existing relief to a later refund (SAMM C15.5.5). Tax relief may already exist through a bilateral agreement with the United States, or the partner’s domestic law may exempt foreign assistance on its own terms. Either route is better than the partner offering to refund collected tax. Refunds work badly, because by the time money comes back the funds have usually expired and cannot be reused. To seek an exception, the Combatant Command must get clearance through DSCA and show why paying the tax serves American national security interests.

7. Orders placed with other agencies

Some BPC requirements are filled by another agency under the Economy Act, the general authority for one agency to supply goods or services to another on a reimbursable basis (SAMM C15.2.9). The buying agency pays the performing agency’s actual costs, direct and indirect. The whole order is obligated when the performing agency accepts it, but it remains subject to the limits of the appropriation behind it. Contracts under the order must be signed before the appropriation expires for obligation. Where the performing agency provides services itself, it deobligates funds for services that will not be provided before the funds expire and returns them to DSCA.

Key terms

Funds received milestone	The entry by the implementing agency that implements a capacity building case.
Fund source and availability note	The case note stating the date by which funds must be spent.
Dormant account review	The quarterly review of commitments, obligations, payables and receivables.
Upward adjustment	A later increase to an obligation properly chargeable to the original account.
Program-wide transportation case	The case used to ship items still undelivered when a case closes.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

Delivery and handover are where obligated funds become real support. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.