Case Changes and Reviews · 3 of 3
A program can stop for several reasons, and the words are not interchangeable. The manual says so directly: "Suspension of delivery is not the same as Foreign Military Sales (FMS) case cancellation or contract termination action" (SAMM C6.6.1).
A suspension is a political decision taken outside the defense department. The manual puts it this way: "If the Department of State (State) determines that it is necessary to suspend security cooperation (SC) to a particular country, it issues guidance for execution" (SAMM C6.6.1). The security cooperation agency turns that guidance into instructions for the implementing agency, the combatant commands and the office in country. The same agency notifies when a suspension is lifted.
A cancellation ends the case. A contract termination ends an agreement with a supplier underneath the case, and carries its own costs. A suspension leaves all of it standing and stops the movement.
The default is narrower than the word suggests. Deliveries can be halted at once, with nothing released to the country or its freight forwarder. Absent that direction, existing business continues: "In the absence of such direction, pipeline delivery cases implemented prior to the effective date of sanctions are allowed to continue regardless of term. New Letters of Offer and Acceptance (LOAs) are not signed" (SAMM C6.6.1.1).
Behind the case, production is treated differently again. Where procurement has started but no contract has been awarded, the implementing agency asks for guidance. Where a contract exists, the instruction is plain: "Contracts that have been awarded should continue" (SAMM C6.6.1.3). The output is then held rather than shipped, with the agency issuing directions on diverting it to another country, to the American service, or into storage.
Materiel already moving is caught in place. Where directed, cargo is not loaded at the port of embarkation, and anything in transit is retained under American control and stored by the relevant service until further direction (SAMM C6.6.1.4).
Storage is not free, and the bill follows ownership. Finished goods at a contractor may be moved to a government facility for segregated storage, or left where they are if that is cheaper, and "The purchaser is responsible for any storage fees if title has passed" (SAMM C6.6.1.5). Title usually passes long before delivery, which makes this a live cost rather than a theoretical one. Where that happens is set out in title transfer and risk in transit.
Not every stoppage begins with a policy decision. One recurs annually in appropriations law, and the manual quotes it: "No part of any appropriation contained in this Act shall be used to furnish assistance to the government of any country which is in default during a period in excess of one calendar year in payment to the United States of principal or interest on any loan made to the government of such country by the United States pursuant to a program for which funds are appropriated under this Act" (SAMM C6.6.1.6).
The trigger is default for more than one calendar year on an American loan, and the effect runs to appropriated money rather than to the partner's own funds. Under those sanctions, grant-financed cases accepted on or after the effective date are not implemented, and new or pending grant-financed cases are not countersigned or issued for acceptance (SAMM C6.6.1.6.1).
Cases already running survive. "FMF-funded cases implemented prior to effective date of sanctions remain in force and will be executed" (SAMM C6.6.1.6.2). Changes to them are allowed where they do not involve new obligation of funds. Requisitions against standing supply arrangements and blanket order cases may be held unfilled.
Training is handled on its own logic, and the dividing line is whether money has been committed. Students in training before the suspension date may finish their course, and training teams already deployed may finish theirs, unless the state department directs otherwise. Sequential training counts, so a student may proceed to the next scheduled course (SAMM C6.6.1.8).
For anything not yet started, obligation is the test. Where course costs were obligated before the effective date, the student may begin and teams may deploy. Where they were not, students may not start and teams may not commence (SAMM C6.6.1.8). Sequential training with funds still unobligated is reviewed individually.
A suspension produces two reports on a short timetable. "Within ten days of a suspension notification, the IA advises DSCA, the Combatant Commander (CCDR) and the SCO of the impact of the suspension" (SAMM C6.6.1.9). That first report covers major items and significant secondary items due for release within thirty days, and items on order but not shipped.
The second is wider. "Not later than 21 days after the suspension, the IA must advise DSCA of all other materiel that is either in route, scheduled for shipment within 30 days, or on order but unshipped" (SAMM C6.6.1.9). It also states the total unused value sitting on blanket order and standing supply cases.
Those two documents are the picture on which later decisions are made. A partner with an accurate view of its own pipeline is in a better position when disposition is being argued.
The escalation is provided for. "State may extend a suspension to become a cancellation" under the Arms Export Control Act (SAMM C6.6.2). The agency then directs case cancellation and the contract actions that follow, including termination. Guidance on disposition of items and funding comes after a case by case review.
A partner can also ask for cancellation itself. "After a case has been implemented, cancellations are processed as a closure of the case. The purchaser is responsible for any termination costs as well as any estimated administrative costs associated with the case" (SAMM C6.8.1).
The administrative floor is a formula rather than a number. The minimum non-refundable amount is the greatest of three figures (SAMM C6.8.1). The first is the small case management line value plus the estimated administrative surcharge, capped at $15,000. The second is one-half of the administrative surcharge estimated on the case. The third is the standard surcharge percentage applied to the value actually spent. Charging anything else needs agency approval, and "For cases closing with a case value greater than or equal to $25 million the IA will submit a recommended non-refundable FMS administrative surcharge amount to DSCA (OBO/FPRE/FP) for approval" (SAMM C6.8.1).
Cancellation can also come from the other direction. Under the standard terms and conditions "the USG may cancel a case (or any part of a case) when U.S. national interest requires" (SAMM C6.8.2). Even then the charge is not automatic, because the amount assessed must be approved by the agency "even if the proposed amount is $0" (SAMM C6.8.2).
| Suspension | A halt on execution directed by the state department, leaving the case in existence. SAMM C6.6.1. |
|---|---|
| Cancellation | Ending the case, processed as a closure once implemented. |
| Termination | Ending a contract behind the case, with costs charged to the partner. |
| Brooke Amendment | The annual appropriations bar on assistance to a government in default beyond one calendar year. |
| SCML | Small case management line, one input to the minimum administrative charge. |
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.
A halted program still has materiel sitting somewhere that has to be secured. Sentfore provides secure storage support, protective security, transport and site services around defense programs in difficult environments. Requirements can be sent through the contact page.