Logistics and Discrepancies · 3 of 3
Most requisitions draw on whatever stock happens to exist. A cooperative logistics supply support arrangement changes that by having the partner pay to enlarge the stock in advance.
It runs on two case documents. The first buys the position: it "provides for the purchase and sustainment of equity in the DoD inventory and pipeline" (SAMM C6.4.3.2.1). The second is the ordering instrument, "used by the purchaser to requisition spare and repair parts that are needed to replenish in-country stocks" (SAMM C6.4.3.2.2).
The money in the first case is not a deposit against future orders. The manual describes the components using it "to procure additional stocks of secondary items, in preparation for purchaser stock withdrawals" (SAMM C6.4.3.2.1). The partner is funding inventory that physically exists in the American system.
The size of the equity is defined in months of supply rather than in dollars. Once enough stock is held to sustain the fill of incoming requisitions, a state the manual calls maturity, the first case "provides for 5 months of on hand stock (FMSO I Part A) and 12 months of on order stock (FMSO I Part B)" (SAMM C6.4.3.2.1).
Reaching that state takes time, and the manual is candid about the gap. Unless levels are already adequate to support every purchaser, requisitions "received prior to receipt of augmentation stock are placed on backorder pending maturity of the FMSO I" (SAMM C6.4.3.2.4).
That is the single most important thing to understand before entering one of these arrangements. The benefit is real, but it arrives late. Early orders queue while the stock the partner has just paid for is still being bought.
The return on the investment is priority of supply. Requirements under the arrangement "are satisfied on the same basis as U.S. Force requirements in accordance with the country's F/AD and Uniform Material Movement and Issue Priority System (UMMIPS)" (SAMM C6.4.3.2).
That is a different proposition from an ordinary spares case, where the control point issues down to a reorder point and then chooses among backorder, early release and fresh procurement. How that ranking works, and who sets it, is covered in priority of supply and force activity designators.
Terms specific to the arrangement travel with the case. The manual notes that they are "provided with each FMSO I LOA in addition to the LOA Standard Terms and Conditions" (SAMM C6.4.3.2.3), so the standard conditions are not the whole agreement.
Much of what a partner orders is not managed by the military department that wrote the case. For items supplied by the defense logistics agency, "the IA submits requirements to DLA" (SAMM C6.4.3.2.5), and the implementing agency manages the deposits on its behalf.
Item management moves over time, and the equity is written to follow it. When augmented items transfer between components, "CLSSA program data and funds are provided to the receiving DoD Component during the transfer process" (SAMM C6.4.3.2.6).
Performance is measured rather than assumed. The components "maintain performance standards and measurement records to show effectiveness and timeliness of CLSSA support" (SAMM C6.4.3.2.7). A partner asking how its arrangement is performing is asking for something that exists.
Equity bought against a forecast that does not materialize becomes stock nobody wants. The manual assigns that outcome: where the arrangement caused the excess condition, the implementing agency "notifies the purchasers of their liability and asks for disposition instructions" (SAMM C6.4.3.2.8).
The liability sits with the party whose requirements drove the buy. That is the corollary of getting priority: the partner is carrying inventory risk in exchange for position in the queue.
Termination is the part most worth reading before signature. The stated aim is balanced: where a level is reduced or an arrangement ended, closeout "should minimize impact on the DoD Working Capital Fund (WCF) and the purchaser" (SAMM C6.4.3.2.9). Participants pay their share of depreciation and other operating costs across the life of the agreement.
One fact pattern is singled out. "When a purchaser builds an initial FMSO I, then terminates the CLSSA before substantial orders are placed, and no other purchaser exists, liability may apply for assets on hand and due-in" (SAMM C6.4.3.2.9). The country then pays for those items through the arrangement.
What happens to the goods is the partner's choice. They may be received, or sent to the disposition service, with the partner bearing the disposal costs. There is an upside clause worth noting: "If proceeds exceed disposal costs, the net proceeds are credited to the purchaser's FMS trust fund account" (SAMM C6.4.3.2.9).
Read together, entry and exit describe the same bargain from two directions. The arrangement converts money into supply position, and unwinding it converts the position back into goods and costs rather than into a refund.
Two other arrangements sit close enough to be confused with this one, and the manual separates them.
The first applies when a system is going out of service without ever having been supported this way. Under a system support buyout, a purchaser is given a minimum of two years to place a final order for secondary items. Items with no demand across a four year window, the buyout period included, may then be processed for disposal, while items that did see demand in that window are retained (SAMM C6.4.7).
The second is a repair mechanism rather than a stocking one. Direct exchange programs, where an unserviceable item is swapped for a serviceable one, may be executed under defined order, blanket order or cooperative arrangement cases alike (SAMM C6.4.8.1.1). The case type is a container, not the substance of the support.
Sanctions reach all of them. Where assistance is suspended, requisitions against blanket order and cooperative arrangement cases may be required to be held and not filled. Reporting on a suspension includes the total unused dollar value on those cases (SAMM C6.6.1). Equity already bought does not insulate a partner from a political decision.
| CLSSA | Cooperative logistics supply support arrangement, an equity position in American inventory. SAMM C6.4.3.2. |
|---|---|
| FMSO I | The case that buys and sustains the equity, in two parts: on hand and on order. |
| FMSO II | The case the partner requisitions against to replenish its own stocks. |
| Maturity | The point at which stocks are adequate to sustain the fill of incoming requisitions. |
| Working capital fund | The revolving fund whose exposure closeout is required to minimize. |
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.
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