How a payment schedule is built

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1. Built line by line

Under the Security Assistance Management Manual (SAMM), a Foreign Military Sales payment schedule is built line by line. The Defense Security Assistance Management System (DSAMS) builds it at line, sub-line or delivery set level, then rolls it up to the whole case (SAMM C9.9.1.2). Which partners get a schedule at all, and the quarterly dates it follows, are covered in payment schedules and billing. This piece covers how the numbers inside it are produced.

The Defense Security Cooperation Agency (DSCA) case writing division generates the schedule in DSAMS (SAMM C9.9.1.3). It works from pricing estimates and estimated dates: when the purchaser will accept the offer and when it will be implemented. It also uses dates for requisitions, contract awards, payments to contractors, deliveries and personnel costs. The implementing agency (IA) enters that information at line level. Unique schedules need approval from DSCA’s regional financial division, which may ask the IA to assess whether one is feasible.

2. What each payment must cover

Each deposit covers all costs expected to be incurred for the purchaser in the next quarter, plus a reserve for termination liability on sales from procurement (SAMM C9.9.1.5). Those costs may include expected deliveries of services and stock items and progress payments on contracts.

The first payment is the initial deposit, which covers the nonrecurring cost charge and the outlays or deliveries expected before the first quarterly payment arrives (SAMM C9.9.1.5.1). The purchaser sends it to the finance center in Indianapolis, preferably by wire transfer, and may use excess money in its trust fund holding account. On amendments the same payment is labeled "Due with Amendment Acceptance" instead.

Credit-financed cases have a strict rule (SAMM C9.9.1.5.1). Where a case is financed wholly or partly with non-repayable credit or merger funds, and the country has neither dependable undertaking nor cash flow financing, the initial deposit is the full case value.

The deposit table also has some less familiar rows (SAMM C9.9.1.5.1). Under credit assured payment schedules the deposit is 25 percent of total case value, including termination liability, or at least the termination liability if that is higher. A case with no performance or contract action before the first quarterly payment needs only any small case management line value and the opening share of the surcharge. Where items go on contract first and no standby letter of credit applies, the deposit also covers termination liability for that period and the contractor holdback. Nonrecurring costs are collected at 5 percent on new requirements from 1 July 2025. Two arrangements billed as delivered have their own deposits under the cash with acceptance, balance as billed term. A worldwide warehouse redistribution services case pays 5 percent of the services line plus 35 percent of the surcharge. A cooperative logistics supply support arrangement pays 30 percent of the line plus its supply support surcharge.

3. Curves for each kind of line

Payment schedule curves, most of them held in DSAMS, profile spending patterns for types of case or weapon system (SAMM C9.9.1.5.2). They spread each line’s payments across the schedule. The IA may recommend a new curve, validate the need and check how it should be built, then send it to DSCA’s regional financial division for approval. Materiel from stock follows estimated deliveries in each 90-day period after a quarterly payment, and historical delivery data may be used (SAMM C9.9.1.5.2.1). Stock schedules are available only to partners authorized dependable undertaking, unless DSCA approves an exception.

Procured materiel needing progress payments follows progress payment schedules or historical cost curves (SAMM C9.9.1.5.2.2). The schedule should include estimated payments to contractors, a contract holdback percentage, and termination liability unless a standby letter of credit covers it. Concurrent spare parts follow the delivery of the end items they support (SAMM C9.9.1.5.2.3). Lines for purchaser-initiated requisitions use equal quarterly payments, unless the government knows activity will vary (SAMM C9.9.1.5.2.4).

Services follow their scheduled performance dates and cost elements (SAMM C9.9.1.5.2.5). Defined order training follows course start dates, while blanket order training with no course information uses equal payments over the period, like any blanket order case (SAMM C9.9.1.5.2.6). Royalties and nonrecurring costs follow the production schedule of the end item (SAMM C9.9.1.5.2.7). The administrative surcharge and accessorial costs follow the delivery of the main items or services, and exceptions need DSCA approval (SAMM C9.9.1.5.2.8).

4. Termination liability inside the schedule

Termination liability applies to any case with procurement contracts (SAMM C9.9.1.5.3). The calculation follows a set order. Contractor termination schedules come first. If they are not available, the termination component of the payment curve is used, and failing that, the standard Defense Department curve in the Financial Management Regulation.

A termination liability worksheet, prepared in DSAMS, shows how much termination liability is built into each quarterly payment (SAMM C9.9.1.5.3). One is required whenever a case contains pricing element code "CC". The worksheet stays in the case file and is not sent to DSCA with the package for countersignature. Where a case or line carries more than one pricing element code, that code’s share is prorated. All termination liability reserves in the trust fund are recorded in ledger account 1003, which should be used for nothing else (SAMM C9.9.1.5.3.1). How a standby letter of credit can replace that cash reserve is covered in the standby letter of credit.

5. Who may depart from the standard

Schedules are developed only for partners eligible for dependable undertaking, unless the term of sale is cash with acceptance (SAMM C9.9.1.1). Cases financed with non-repayable credit or Military Assistance Program merger funds need no schedule. IAs may ask DSCA’s regional financial division for exceptions to these rules. Purchasers can also ask for a schedule of their own, and schedules are revised as cases change, as described in requested and revised payment schedules.

Key terms

Payment schedule curve	A spending profile used to spread a line’s payments over time.
Initial deposit	The first payment, covering nonrecurring costs and outlays before the first quarterly payment.
Contract holdback	A percentage of contract payments included in schedules for procured materiel.
Termination liability worksheet	The DSAMS record of termination liability in each quarterly payment.
Account 1003	The trust fund ledger account used only for termination liability reserves.

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

Payment schedules follow the pace of work, including work in the field. 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.