Diversions, returns and buy backs

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1. Equipment moving the wrong way

The normal direction of travel on a case is outward: equipment goes to a partner and stays there. Two provisions run against that flow. One takes equipment from American forces or production to fill a partner order faster. The other brings equipment already sold back.

Both sit outside the routine and are controlled well above the case. Ordinary pricing for equipment drawn from stock is in pricing equipment sold from stock.

2. Jumping the queue

The default is simple and impersonal. "Under normal circumstances, IAs fill FMS requirements from production on a first-in, first-out basis" (SAMM C6.4.6.1). Priority of supply generally is covered in priority of supply and force activity designators.

National security and foreign policy can override it. "Items may be diverted from production or from U.S. Forces to meet high priority FMS requirements" (SAMM C6.4.6.1), and the authority to do so is held at the top: "Materiel procured or stocked for FMS may be diverted to meet higher priority requirements with the prior concurrence of the Director, DSCA" (SAMM C6.4.6).

One limit governs all of it. "The diversion or withdrawal must not significantly lower the operational readiness of U.S. Forces as determined by the DoD Component" (SAMM C6.4.6.1). The manual also notes that although the governing statute addresses shipments from stock, the same effect can occur when material is diverted from production.

3. What happens when readiness is threatened

The escalation path is unusually detailed for a supply question. Where a military department or the secretary’s staff identifies an undesirable effect on combat readiness, a written assessment is requested through the policy chain. The department secretary verifies it and submits it for review, and the coordinated recommendation goes to the secretary of defense for decision (SAMM C6.4.6.1.1).

Reserve forces get their own consultation (SAMM C6.4.6.1.2). One category of equipment is singled out by name. Where tanks are involved, the congressional notification must carry "a determination that the proposed sale will not increase the shortage of tanks in the U.S. National Guard or Reserve during the current 5-year defense plan" (SAMM C6.4.6.1.2), and Congress is told how they will be replaced. Notification generally is covered in congressional notification of arms sales.

Above a certain level of harm the President becomes involved. "The AECA requires a report by the President to Congress when a sale could have significant adverse effect on the combat readiness of the U.S. Armed Forces" (SAMM C6.4.6.1.3).

Not every referral reaches that threshold. A department secretary may decide an action deserves review at secretary of defense level without amounting to significant adverse impact (SAMM C6.4.6.1.3). The referral carries the purchaser, the value, the item and an assessment of whether the action should be altered or stopped.

Two rules keep the reporting proportionate. "The Secretary of Defense determines whether DoD provides items on an expedited basis" (SAMM C6.4.6.1.4) and whether the impact is statutorily significant. And "No Presidential report is required if the decision is not to make a sale" (SAMM C6.4.6.1.5). The provision also applies where the effect appears only after a contract is concluded.

4. Sending equipment back

The reverse case has two forms, and the manual is careful to distinguish them. A partner may return articles through a redistribution program, or the defense department may buy them back under ordinary procurement authority (SAMM C6.4.9).

Either way one step comes first. "the partner must submit a request for a change of end use to the Department of State (PM/RSAT)" (SAMM C6.4.9), and the embassy office must be told so that monitoring obligations are met. Those obligations are described in what end use monitoring is.

Returns are narrow. "Returns may be accepted if the defense article was previously provided under the AECA, is not Significant Military Equipment (SME), and is in fully functioning condition without need of repair or rehabilitation" (SAMM C6.4.9.1). A further condition follows: "In addition, there must be either a DoD or FMS-funded requirement for the defense article" (SAMM C6.4.9.1). Nothing is taken back simply because a partner no longer wants it.

Onward movement is restricted too. Where the requirement is funded by another case, "sensitive defense articles that require export controls and release determinations may not be provided to other FMS partners through the return process" (SAMM C6.4.9.1). Retransfer rules still apply to anything that does move, as set out in third party transfer and retransfer consent.

5. Buying it back instead

The second route is wider in scope and different in character. "DoD organizations may also purchase (i.e., buy back) defense articles, SME or non-SME, previously sold under the FMS program to a partner" (SAMM C6.4.9.2), either for American use or for onward sale to another partner.

The legal framing matters. "The buy back of defense articles does not constitute a new FMS case" (SAMM C6.4.9.2). It is an ordinary federal procurement, conducted under the standard acquisition regulations by the relevant purchasing organization.

The money comes from a different place as well. "These buy backs are funded through standard DoD procurement appropriations rather than FMS funds" (SAMM C6.4.9.2.1), with any amount due to the partner transferred into its trust fund account. Those accounts are described in the FMS trust fund and getting money back. Restrictions on buying foreign products with American appropriations still apply (SAMM C6.4.9.2.1).

6. The record that has to survive

Because a buy back is not a case, the paperwork has to be attached to something. Where the original case is still open and not yet supply complete, the buy back is reconciled on that case once the contract is fully executed (SAMM C6.4.9.2.2). Closure then follows the usual route, described in how a case is reconciled and closed.

Accountability is explicit. "The SCO must be made aware to ensure accountability requirements related to End Use Monitoring are met" (SAMM C6.4.9.2.2).

One central record is kept by the implementing agency, and its contents are the whole chain of custody. "This record identifies the original purchasing FMS partner, the defense articles originally purchased under FMS, the recipient of the newly acquired defense articles that were bought back" (SAMM C6.4.9.2.2), together with the legal authority for any onward transfer. It goes to the agency on request, and "A buy back indicator in DSAMS and case remarks may serve as the central record" (SAMM C6.4.9.2.2).

Transport follows whoever asked. Where the government initiates the buy back, the American purchaser coordinates transport under the contract; where the partner initiates it, "the partner shall coordinate transportation requirements with the DoD purchaser pursuant to the terms of the buy back contract" (SAMM C6.4.9.2.4).

7. What a supplier can take from this

A delivery date that moves forward for reasons nobody will explain may be a diversion, and a diversion has been approved at agency director level against a readiness test. That is worth knowing because the same mechanism can move a date the other way for somebody else.

On the return side, the conditions are the useful part. Equipment comes back only if it is not significant military equipment, is fully serviceable, and is wanted by someone. Anything needing repair first falls outside the return route, and a buy back is a fresh procurement with its own contract, transport and custody record.

Key terms

Diversion	Taking equipment from production or from American forces to fill a partner requirement faster, approved at agency director level.
Significant adverse effect	The readiness threshold that triggers a Presidential report to Congress about a sale.
Return	A partner sending fully serviceable non sensitive equipment back, where a funded requirement for it exists.
Buy back	An ordinary federal procurement of equipment previously sold, funded from appropriations and not creating a new case.

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 moving in an unusual direction still needs the same care in transit and on arrival. Sentfore provides secure movement, protective security, facilities and life support for defense programs in complex environments. Requirements can be sent through the contact page.