Since offsets are utilized in both foreign military sales (FMS) and direct commercial sales (DCS), they are subject to the International Traffic in Arms Regulation (ITAR) and the Foreign Corrupt Practices Act (FCPA). The size and skill of the Customer contracting staff may be a limiting factor during procurement. Over the past three years, the Policy team has led NDIA’s Acquisition Reform Initiative. Growth in Foreign Military Sales — Fluke or Long-Term Trend? Munitions List (USML), pursuant to the International Traffic in Arms Regulations (ITAR). NDIA Affiliates are subsidiary organizations that focus on specific areas and missions related to it's community of interest. This may create difficulties for the Customer. These activities represent overhead management costs to the Customer. Direct commercial contracts generally require a relatively large down payment, payable at the time of contract signature. 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. This chart explains the main differences between Foreign Military Sales (FMS) and Direct Commercial Sales (DCS). Why purchase through the FMS program? Check out my overview of the benefits of FMS vs. the benefits of DCS. Both are viable options for U.S. defense companies seeking to do business overseas. FMS is distinguished from the Direct Commercial Sales (DCS) program, which covers commercail sales of defense articles and defense services between foreign governments and private U.S. companies, and the Foreign Military Financing (FMF) program, which provides grants and loans for FMS and DCS purchases. Unlike DCS, with FMS the foreign government has a contract with a US contractor For this reason, the United States takes into account political, military, economic, arms control, and human rights conditions in determining the provision of military equipment and the licensing of direct commercial sales to any country. The opinions and conclusions in this paper are those of the author and are not intended to represent the official position of the DOD, USAF, or any other government agency. Foreign Military Sales vs Direct Commercial Sales Economic Overview U.S. aerospace and defense exports (1) sustain a domestic workforce in the manufacturing sector, (2) support national security programs through the foreign military sales (FMS) and direct commercial sales (DCS) processes, and (3) narrow the U.S. trade deficit gap. When buying directly from the government’s stockpiles, foreign customers will have more leverage in the unit price of a defense system – as these same systems are also acquired by the U.S. military and defense agencies. This facilitates payment by the Customer. 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. All rights reserved. DCS arms sale involves sub-system like jet engine and other technology. Authorized under Sec. These organizations are driving the future of defense through education, access, and collaboration. Accesion For PTIS … The Vendor must obtain export approval from the U.S. State Department. 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 As the Coast Guard acquires new ships, boats, and aircraft, the assets are made available, through the FMS program, to other countries under already established contracts. While FMS cases must have departmental approval, they are exempt from the export licensing process. Qualifying for an export license through DCS is based on how a product or service is categorized. While several deals are still pending, or are in the Letter of Offer and Acceptance (LOA) phase, the next few years will see growth for several defense companies and a growing industrial supply chain. Importance to the U.S. government serves as a go-between for foreign Military Financing ( FMF ) be. 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