Eligibility and Scope of Sale · 2 of 3
The category is statutory, not descriptive. Section 47 of the Arms Export Control Act defines what a defense article and a defense service are. The United States Munitions List then designates which specific items fall inside them, marking significant military equipment with an asterisk (SAMM C4.4).
Above that sits a tier defined purely by money. "Any item of SME that has a nonrecurring research and development cost of more than $50 million or a total production cost of more than $200 million is considered Major Defense Equipment (MDE)" (SAMM C4.4). That classification drives congressional notification thresholds and cost recovery charges, so it is worth checking early rather than late.
Two routes exist for filling an order. "Defense articles or services may be sold from DoD stocks, or the DoD may enter into contracts to procure defense articles or services on behalf of eligible foreign countries or international organizations" (SAMM C4.4.1). Procurement runs on the standard federal acquisition rules, with the defense supplement carrying the authorized deviations.
Buying from outside the United States is possible but narrow. Agencies may procure from foreign sources under the same rules used for American requirements, but "IAs should not enter into such sales arrangements for equipment not in the U.S. inventory unless DSCA (Office of Strategy, Plans, and Policy (SPP)), and DSCA (Front Office, Office of the General Counsel (FO/OGC)) have approved an exception" (SAMM C4.4.1).
There is a stated quality floor. "Defense articles offered and sold under FMS are new or unused or, as a result of refurbishment, possess original appearance insofar as possible and, as a minimum, have serviceability standards prescribed for issue to U.S. Forces" (SAMM C4.4.2).
Both directions can be varied, and both variations live in the offer document. A buyer wanting exclusively new equipment says so and the requirement is written into the case. A buyer content to take something with no assurance of serviceability can do that too, and that is written in as well (SAMM C4.4.2).
A disclosure duty runs alongside. Beyond full disclosure of item condition, "the purchaser is informed of unusual safety or environmental risks known at the time of sale", with the information carried in the case or in referenced publications (SAMM C4.4.2).
Sustainment is treated as part of the transfer rather than an afterthought. "The DoD considers the support of U.S. origin defense articles critical to the success of the security assistance (SA) program" (SAMM C4.4.3).
The commitment survives American withdrawal of the system. When a system is phased out of American inventory, countries that bought it "are given the opportunity to determine item requirements and to place final orders designed to maintain system capability through its service life", with those orders consolidated into economic buys (SAMM C4.4.3.1).
It extends further than that, to equipment the Americans never operated. "DoD will take reasonable steps to support systems that are not used by U.S. Forces including items that were never adopted by U.S. Forces", where arrangements are agreed and supply sources exist (SAMM C4.4.3.2). That is a real option for a fleet assembled from several suppliers, and it is easy to miss.
One policy governs how an offer is shaped. "The Total Package Approach (TPA) ensures that FMS purchasers can obtain support articles and services, to include construction of necessary support facilities, required to introduce and sustain equipment and to operate in a responsible and effective manner consistent with U.S. intent in approving the transfer" (SAMM C4.3.2).
It is not optional on the seller's side. "The complete sustainability package must be offered to the purchaser when preparing a Letter of Offer and Acceptance (LOA)", and it should also appear so far as possible in planning estimates given for international competitions (SAMM C4.3.2).
What belongs in the package is listed. "In addition to the system itself, other items to consider in a total package include training, technical assistance, initial support, software, ammunition, follow-on support, intelligence mission data, etc." (SAMM C4.3.2). A price that looks high against a commercial quotation is often a price that includes several of those.
A related rule constrains what can be said before any of it is approved. "USG personnel must consider releasability, disclosure, sanctions, and all required coordination before indicating to a potential purchaser that a sale from the USG is possible" (SAMM C4.3.3).
The starting position is indifference. "As a matter of policy, the USG is generally neutral as to whether a partner purchases U.S.-origin defense articles or services commercially or through Government-to-Government (G2G) channels (e.g. FMS)" (SAMM C4.3.4). The exception protects the most sensitive technology.
That exception is a published list. The statute gives the President authority to designate articles or services as transferable only through government channels, and the authority was delegated to the state department; the designations are consolidated into a single list (SAMM C4.3.5).
Three criteria put an item there. The first is sensitivity, and its test is stated precisely: "The test for determining the most sensitive and sophisticated technology is whether its unauthorized disclosure could reasonably be expected to cause exceptionally grave damage to U.S. critical military or intelligence advantage" (SAMM C4.3.5.1). The second is a legal or agreement requirement. The third is supply: "Items that are solely sourced from the USG, or that are critically dependent on provision of USG-sourced equipment, data, and/or services" (SAMM C4.3.5.1).
The list is published for a reason. It exists "In order to support uniform application of export policy and provide transparency to industry" (SAMM C4.3.5.2.1), so a company can check before pursuing a commercial route that is not available.
The preference can run the other way too. "Companies may prefer that a sale be made commercially rather than using FMS procedures", and a company holding a request for proposal may ask for a commercial preference on that particular sale, supplying a copy of the buyer's solicitation (SAMM C4.3.6).
The commitment behind it is qualified. "The process outlined in this section is a best efforts commitment by DoD. Failure on the part of the DoD Component to comply with these procedures will not invalidate any resultant FMS transaction" (SAMM C4.3.6).
Two exclusions limit it. "Items provided on blanket order lines and those required in conjunction with a system sale do not normally qualify for DCS preference" (SAMM C4.3.6.1). And some sales must run through government channels regardless, including sales to certain countries and, in most cases, sales financed with American grant money (SAMM C4.3.6.2).
A preference does not last indefinitely. "DCS preferences are valid for one year" (SAMM C4.3.6.3). Where one is in force and the buyer asks for the same item through government channels, the agency tells the buyer that commercial negotiations are under way and asks it to confirm those have ceased before data is provided. The two routes are compared in government sale or direct commercial sale.
| MDE | Major defense equipment, set by a $50 million development or $200 million production cost. SAMM C4.4. |
|---|---|
| Total package approach | The rule that an offer covers the capability rather than the machine alone. |
| G2G-Only list | The published list of items that may move only through government channels. |
| DCS preference | A company's request that a particular sale run commercially, valid for one year. |
| As is | A purchase with no assurance of serviceability, stated in the case document. |
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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