Buying a system still in testing

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1. Selling something that has not finished testing

A partner government can buy a major American system before the United States has finished testing it. That is a real position rather than an edge case, because a partner with an urgent capability gap may prefer an unfinished system now to a proven one in six years.

The manual attaches conditions. Cases containing major defense equipment that has not sufficiently completed government testing, and is not yet in full production, carry additional requirements. The test is stated by reference: equipment that has not satisfactorily completed operational test and evaluation under the governing defense instruction (SAMM C5.3.3).

Two things follow. The agreement must carry a standard case note drawn from the appendix of notes, and a warning must reach the partner well before that. "Additionally, the Implementing Agencies (IAs) will provide early communication to the partner of the risk associated with the procurement with all pricing information correspondence" (SAMM C5.3.3).

2. Why the case note is not the whole requirement

A case note sits inside the signed agreement, which means the partner reads it at the moment of commitment. The manual treats that as too late to be the only disclosure, and says so directly: the early communication is in addition to the required note in the agreement (SAMM C5.3.3.1).

So there are two obligations running on different clocks. One is a clause in a document that does not exist yet. The other is a conversation that has to happen while the partner is still deciding. Standard notes and where they come from are described in inside the Letter of Offer and Acceptance.

3. When the warning has to be given

The trigger is not the drafting of an agreement. It is any moment a price or an answer goes out. "The IA must communicate the risk associated with the procurement with all pricing correspondence and in responses to all Letters of Request (LOR) when the IA intends to respond with an LOA" (SAMM C5.3.3.1).

Every price carries the warning, in other words, not only the first one. And the warning has to leave a trace. "This communication must be provided in a timely manner and captured in writing" (SAMM C5.3.3.1).

The channel is flexible by design. A standard e-mail, official meeting minutes, or a memorandum will each do, provided it is directed to the partner at a level commensurate with the authority to sign a case (SAMM C5.3.3.1). That last qualification matters more than the format. A warning delivered to a working level officer does not satisfy a rule aimed at the person who will sign.

For rough order of magnitude pricing, the warning may travel as an attachment to the standard pricing memorandum (SAMM C5.3.3.1). Those early estimates and what they commit are covered in rough order of magnitude and price and availability.

4. What the published letter says

The manual prints a sample memorandum, and it is unusually blunt for a document a government sends to a customer. It opens by framing the purpose as transparency about the partner’s interest in the system, and states that "The U.S. Government is committed to ensuring our partners have all necessary information to make fully informed procurement decisions" (SAMM Figure C5.F6).

Then it lists what could go wrong. The system has not completed government testing and is not yet in full rate production. "There is a risk that if problems arise in testing, this system may never achieve its desired operational effects" (SAMM Figure C5.F6). The second risk is commercial rather than technical: "Further, even if testing is successful, the U.S. Government may decide not to acquire this system" (SAMM Figure C5.F6).

The consequences of that second outcome are spelled out in the template. Without a United States purchase the unit cost will likely rise, delivery may slip, and interoperability with American forces could become a problem later (SAMM Figure C5.F6). The stated goal is awareness of schedule, cost and performance risk before a final commitment is made.

The letter also warns that the warning will reappear. "Any subsequent Letter of Offer and Acceptance of this system shall include a case note to this effect" (SAMM Figure C5.F6). The template refers to the policy as that of the "U.S. Department of War" for major defense equipment, which is the naming used in the published version of this chapter.

5. Where the record lives

Two records are created, and they do different jobs. The signed agreement with its case note is treated as the authoritative one, serving as the official and legally binding record of both the notification and the partner’s acceptance of it (SAMM C5.3.3.2).

The earlier warning is evidenced separately, inside the case management system. "To document that early notification of the risk occurred, the IA will enter a comment in DSAMS prior to submitting the case to DSCA" (SAMM C5.3.3.2).

The sequencing in that sentence is the operative part. The comment goes in before the case is submitted, so the reviewing agency can see that the conversation happened before it approves a document that assumes it did. The systems holding these records are described in the systems an FMS case runs on.

6. The exemption, and a sentence that does not parse

The requirement is tied to a designation rather than to novelty. "NPOR solutions or components that are not designated as MDE do not require an OT&E Incomplete case note or early risk communication" (SAMM C5.3.3.3). Something can be new, unproven and bespoke, and still fall outside the rule if it is not major defense equipment.

The exemption closes again when such equipment is embedded in a wider solution. If an article that would otherwise meet the test is incorporated as a component into a solution that is not a program of record, the case note and the early warning both apply to it (SAMM C5.3.3.3). Practically, the covered item inside a larger package drags the package into the requirement.

The sentence carrying that rule is broken in the published text. It reads that an article "which would that otherwise meets the requirements" of the section triggers the obligation, which appears to be two draftings left on top of each other. The meaning is recoverable, and the manual gives an office address for clarification, but a rule about disclosure obligations is a poor place for an unedited sentence.

7. What a supplier can take from this

A program still in test is saleable, and the government has written down how it must be described. For a supplier that means the customer will have been told, in writing and more than once, that the system may never work as intended and may never be bought by the United States.

Two practical consequences follow. Expectations on unit price and delivery are set against an explicit warning that both may move, which changes the conversation when they do. And because the warning must reach someone with authority to sign, the risk discussion happens at a level where a partner may decide to wait for a proven system instead.

Key terms

Operational test and evaluation	The government testing a system must complete before it is treated as proven.
OT&E incomplete case note	The standard note required in any agreement for equipment that has not completed that testing.
Early risk communication	The written warning owed with every price and every request response.
Full rate production	The production state the equipment has not yet reached when the rule applies.

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

Equipment still in test arrives with more support risk than a mature system, and the delivery plan has to allow for it. Sentfore supports defense programs at the delivery end, providing secure transport, protective security, accommodation and site support. Requirements can be sent through the contact page.