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Arlington, Check out our Services or Contact Us to learn more. However, as foreign competitors move into the global aerospace and defense market more vigorously, several factors will affect (and are affecting) the future long-term presence of the United States: 2101 Wilson Blvd, Suite 700 direct commercial sales between foreign countries and U.S. contractors that are financed by foreign military financing credits are DoD procurements and should follow FAR and DFARS requirements for acquisition and contract administration. All rights reserved. Vendor – the Vendor refers to the U.S. defense company seeking to sell their product overseas. Defense technology transfers equip our international friends and allies with capabilities needed to address regional and global security concerns. From there, you might want to see the rest of my posts on FMS. DCS means that the U.S. defense company (the vendor) works directly with the foreign government customer to negotiate, finalize, and deliver a sale. Direct Commercial Sales Reviews. U.S. Government (USG) is not involved in the transaction, and does not act on behalf of the Customer or Vendor should complications arise. We are also authorized to provide EDA under the FAA and to approve third-party transfer requests under both the … Foreign Military Sales Versus Direct Commercial Sales [Metin Gultekin] on Amazon.com. In these cases, the Pentagon does not support these types of mission requirements in their stockpiles, or in their annual budget. These activities represent overhead management costs to the Customer. Through the Foreign Military Sales process, the U.S. government serves as a go-between for foreign partners and American industry. DCS should be distinguished from the Foreign Military Sales program, which manages government-to-government sales. Like the FMS program, DCS advances interoperability between the U.S military and its allies. Unlike FMS, direct commercial sales are negotiated directly between the foreign … Furthermore, foreign countries use FMF funding to purchase U.S. defense products and systems through both the FMS program and, on occasion, the DCS process. doing business with the Department of Defense. This is a government-to-government transfer, so the export process is managed the US DOD. © 2020 National Defense Industrial Association. It has been reproduced in the best form available to the Pentagon. 22201 Or, learn more about LMDefense and our consulting services. Domestic Content Requirements & Exceptions iii. No involvement by the Vendor is required. Broadly, combat resource acquisition comes in two colors, FMS and DCS. The Department of Commerce’s Bureau of Industry and Security (BIS) grants export licenses to more commercial and “dual-use” defense products and services on the Commerce Control List (CCL), pursuant to the Export Administration Regulations (EAR). However, they must carry more risk and administrative burdens. There are various DOD offices involved in the FMS process. U.S. Government’s Foreign Military Sales (“ FMS ”) program and similar mechanisms, and Direct Commercial Sales (“ DCS ”) negotiated directly between the contractor and the foreign customer. Join a local chapter and get plugged in to NDIA. Over the past three years, the Policy team has led NDIA’s Acquisition Reform Initiative. As Fiscal Year (FY) 2017 comes to a close, FMS sales total roughly $64 billion, surpassing the previous record of $67.8 billion in total sales in FY 2012. The Customer pays an additional 3.5% of the total price to cover the contracting and administrative services provided by US DOD. Customer negotiates directly with the Vendor. Follow the links to learn more about activities, missions, and contacts. Growth in Foreign Military Sales — Fluke or Long-Term Trend? Direct Commercial Sales United States Government LOA CONTRACT Foreign Military Sales United States Contractor Foreign Government CONTRACT United States Government EXPORT LICENSE OFFSET AGREEMENT •The AECA requires that the FMS program must be conducted at no cost to the U.S. Government and may not be supported by appropriated funds. Any required notifications to Congress are jointly sponsored by the US DOD and the State Department. FMS – an acquisition program administered through the Defense Security Cooperation Agency (DSCA), with final approval by the State Department – supports security cooperation between the U.S. and its allies. This is a NAVAL POSTGRADUATE SCHOOL MONTEREY CA report procured by the Pentagon and made available for public release. Regulatory Coverage vs. The USG is not involved in the sale (although the vendor is required to comply with U.S. regulations regarding military exports). A key difference between Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) is that: Unlike FMS, with DCS the purchaser must communicate with the US Government . The Foreign Military Sales (FMS) program manages government-to-government purchases of weapons and other defense articles, defense services, and military training. The NDIA Business Institute exists to build a more capable, qualified, and Foreign Military Sales (FMS): Government-to-government sales facilitated and regulated by the United States government. DCS is the mode that foreign government deals with U.S. military suppliers directly, with the permission of the U.S. government. Both methods have existed for decades, but a novice to international sales has a steep learning curve regarding the complexities of each. Eligible Countries c. Eligible Contractors d. Eligible Items i. LMDefense, LLC is a registered broker for defense articles and services. also read. This effort has provided legislative recommendations to assist Congressional acquisition reform efforts, many of which were enacted or influenced final provisions in the Fiscal Year 2016 and Fiscal Year 2017 National Defense Authorization Acts. Abstract : The transfer of arms from the U.S. to other countries under the Security Assistance Program is done in two basic ways: government-to-government Foreign Military Sales (FMS), and contractor-to-government Direct Commercial Sales (DCS). In 2016 alone, aerospace and defense exports reduced the overall deficit by $80-90 billion dollars. American arms manufacturers have two major channels through which they can sell major weaponry to foreign countries: foreign military sales ("FMS"), in which a government-to-government agreement is negotiated by the Pentagon; and direct commercial sales ("DCS"), in which industry negotiates directly with the purchasing country and must apply for a license from the State Department. U.S. DOD – U.S. DOD refers to any U.S. military office. The US DOD guarantees payment by the Customer. LMDefense provides consulting and brokering services to help U.S. defense companies do business overseas. The Apache sale is a hybrid procurement—Direct Commercial Sale (DCS) between Boeing and MoD and Foreign Military Sale (FMS) between government of India and the US government. The United States has four different ways to provide military equipment to Latin America: Foreign Military Financing (grants for military purchases), direct commercial sales (negotiated The State Department’s Directorate of Defense Trade Controls (DDTC) executes authority in issuing export licenses to all defense related products and services on the U.S. Our consulting services can help you determine whether FMS or DCS is right for your company! Direct Commercial. This chart explains the main differences between Foreign Military Sales (FMS) and Direct Commercial Sales (DCS). The initial deposit required is usually somewhat lower than commercial contract down payments. FMF funds purchases are made through the Foreign Military Sales (FMS) program, which manages government-to-government sales. This adds value for customers by ensuring that they have the same contract benefits and protections that apply to the U.S. military’s acquisition of its own defense articles and services. 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