August 2007 Print

FMS CUSTOMER FINANCIAL 

MANAGEMENT HANDBOOK 

(BILLING) 

Jointly Developed By 

 Defense Institute of Defense Finance and 

 Security Assistance Accounting Service

 Management 

 

Tenth Edition 

Library of Congress 

Catalog Card No. 96-71924 

ACKNOWLEDGEMENTS 

 DEFENSE INSTITUTE OF SECURITY DEFENSE FINANCE AND 

 ASSISTANCE MANAGEMENT ACCOUNTING SERVICE, DIRECTORATE

FOR SECURITY ASSISTANCE 

 Dr. Ronald H. Reynolds Gregory Keiling 

 Commandant Director 

 

 

AUTHORS AND CONTRIBUTORS 

 Don McCormick, DISAM Danny Gaddy, DFAS 

 Steve Cheresnick, DFAS Ned Sworts, DFAS

 Avis Grunewald, DFAS 

 

 

 

EDITORIAL ASSISTANT 

Patricia Vocke, DISAM 

GRAPHICS 

Danny Palmer, DISAM 

iii

PREFACE 

The FMS Customer Financial Management Handbook (Billing) is intended to 

provide an explanation of the financial aspects of the U.S. foreign military sales (FMS) 

program, with emphasis on FMS billing and reporting. This publication describes “how” 

the FMS financial system works and, in many instances, delineates “why” this financial 

system is designed to function as it does. While the U.S. Department of Defense (DoD) 

is always receptive to suggestions to improve FMS financial procedures, readers of this 

publication should observe that many such procedures are followed because of legal 

requirements contained in U.S. Public Law. As a result, DoD very often has little 

flexibility in the financial administration of the FMS Program. This publication does not 

take precedence over officially published U.S. government directives, instructions, or 

manuals and is intended as a guide only. Additionally, this publication goes to press in a 

time of dynamic changes in the security assistance arena. Some changes may even occur 

while this handbook is being printed. 

 Any requests for clarification or suggestions for improvement or content should be 

addressed to the Defense Finance and Accounting Service, Directorate of Security 

Assistance (DFAS-DE), 6760 E. Irvington Place, Denver, Colorado 80279-2000, 

Telephone DSN 926-7383 or Commercial (303) 676-7383, Data Facsmile DSN 926-

6394, Commercial (303) 676-6394; or the Defense Institute of Security Assistance 

Management (DISAM/DR), 2475 K Street, Building 52, Wright-Patterson AFB, Ohio 

45433-7641, Telephone DSN 785-3196 or Commercial (937) 255-3196, Data Facsimile 

DSN 785-4685, Commercial (937) 656-4685. 

 August 2007 Print
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TABLE OF CONTENTS Page

Preface iii 

PART I -- GENERAL OVERVIEW

1. An Introduction to the Foreign Military Sales Program 

 Purpose 1-1 

 The What, Why, When and How of FMS 1-1 

 What 1-1 

 Why 1-1 

 When 1-2 

 How 1-2 

 Basic FMS Policies 1-2 

 Summary 1-4 

2. Foreign Military Sales: Organizations and Processes 

 Purpose 2-1 

 USG Organizations for FMS 2-1 

 Department of State 2-1 

 Secretary of State 2-1 

 Under Secretary of State 2-1 

 Bureau of Politico-Military Affairs 2-1 

 Department of Treasury 2-2 

 Department of Commerce 2-2 

 Department of Defense 2-2 

 Secretary of Defense 2-2 

 Office of the Secretary of Defense 2-2 

 Joint Chiefs of Staff, Unified Commands, and Overseas Activities 2-3 

 Defense Agencies 2-4 

 Secretaries of the Military Departments 2-5 

 FMS Process 2-6 

 Letter of Request/Offer Process 2-6 

 Letter of Acceptance/Implementation Process 2-7 

 Execution/Performance Reporting Process 2-7 

 Flow of Funds 2-7 

Data Sources for DD Form 645 2-14

 Summary 2-14

3. Foreign Military Sales: Offer and Acceptance Documentation 

 Purpose 3-1 

 Letter of Offer and Acceptance 3-1 

 FMS Record Keys 3-1 

 Notes, Standard Terms and Conditions, and LOA Information 3-14 

 FMS Payment Schedule 3-15 

 Concept 3-15 

 Definitions 3-15 

 Payment Schedule Development 3-16 

 Relationship of Payment Schedule to the DD Form 645 3-16 

 FMS Pricing Elements 3-19 

 General 3-19 
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 Page 

 LOA Materiel/Services Costs 3-20 

 Administrative/Accessorial Costs 3-22 

 Terms of Sale 3-24 

 Other Terms and Conditions Having Financial Implications 3-27 

 Type of Assistance Codes 3-28 

 Amendments and Modifications to the LOA 3-28 

 Amendment 3-28 

 Modification 3-28 

 Impact of Amendments and Modifications 3-29 

 Summary 3-29 

4. The Foreign Military Sales Billing System 

 Purpose 4-1 

 The Billing Cycle 4-1 

 Inputs to DFAS-DE 4-1 

 Payment Schedules 4-1 

 FMS Detail Delivery Transaction 4-2 

 Cash Accounting 4-2 

 FMS Trust Fund 4-2 

 FMS Customer Funds 4-3 

 Crossleveling 4-4 

 DFAS-DE Reports 4-5 

 FMS Billing Statement (DD Form 645) 4-6 

 FMS Delivery Listing 4-6 

 FMS Reply Listing to Customer Requests for Adjustments 4-7 

 FMS Financial Forecast 4-7 

 FMS Accelerated Case Closure Suspense Account 4-7 

 Holding Account Statement 4-7 

 FMS Case Closure 4-9 

 Standard Case Closure Procedures 4-9 

 Accelerated Case Closure Procedures (ACC) 4-11 

 Summary 4-12 

5. DFAS-DE Customer Assistance 

 Purpose 5-1 

 DFAS-DE Organization 5-1 

 Overall Structure 5-1 

 Functional Area Points of Contact 5-1 

 Visits to DFAS-DE 5-1 

 Policy 5-1 

 Visit Requests 5-1 

 DFAS-DE Visits to Customer Site 5-2 

 Summary 5-2 
vii

PART II -- FMS BILLING DOCUMENTS

 Page

6. The Foreign Military Sales Billing Statement (DD Form 645) 

 Purpose 6-1 

 Introduction 6-1 

 General Information Regarding DD Form 645 6-1 

 Function and Content 6-1 

 Cycle 6-1 

 Types of Statements 6-2 

 Explanation of Entries on the DD Form 645 6-2 

 Sample Documents 6-3

 Entries on DD Form 645 6-11 

 Other Information 6-15 

 Summary 6-16 

7. Foreign Military Sales Delivery Listing 

 Purpose 7-1 

 General Information 7-1 

 Function and Format 7-1 

 Cycle 7-1 

 Explanation of Entries on the Foreign Miitary Sales Delivery Listing 7-1 

 Automated Products 7-12 

 Summary 7-12 

8. Foreign Military Sales Financial Forecast 

 Purpose 8-1 

 General Information 8-1 

 Function and Format 8-1 

 Cycle 8-1 

 Explanation of Entries on the FMS Financial Forecast 8-3 

 Header Information 8-3 

 Lower Portion 8-3 

 Summary 8-5

9. Foreign Military Sales Reply Listing to Customer Requests for Adjustments 

 Purpose 9-1 

 General Information 9-1 

 Function and Format 9-1 

 Cycle 9-1 

 Explanation of Entries on the Reply Listing 9-3 

 Header Information 9-3 

 Lower Portion 9-3 

 Summary 9-4 
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 Page

10. Holding Account Statement 

 Purpose 10-1 

 General Information 10-1 

 Function 10-1 

 Cycle 10-1 

 Explanation of Entries on the Holding Account Statement 10-1 

 Summary 10-2 

11. Accelerated Case Closure Suspense Account Statement 

 General Information 11-1 

PART III -- APPENDICES

A. Foreign Military Sales Delivery Listing Document Identifiers and Headings A-1 

B. Generic Surcharge Table B-1 

C. Routing Identifier Codes C-1 

D. Price Codes D-1 

E. Foreign Military Sales MILSTRIP Document Number (Construction of) E-1 

F. Implementing Agency Codes F-1 

G. Delivery Term Codes and Related Charges G-1 

H. Type of Assistance Codes H-1 

I. Julian Date Calendar I-1 

J. Unit of Issue Abbreviations J-1 

K. Offer/Release Codes K-1 

L. Mode of Shipment Codes L-1 

M. Adjustment Reply Codes M-1 

N. Transportation Bill Codes and Related Charges N-1 

O. Delivery Source Codes and Accessorial Computation Matrix O-1 

P. Abbreviations and Acronyms (Part 1) P-1 

Glossary of Selected Terms (Part 2) P-13

Index Index-1 
PART I 

GENERAL OVERVIEW 

“The next best thing to knowing something 

is knowing where to find it.” 

 Samuel Johnson 

CHAPTER 1 

AN INTRODUCTION TO THE 

FOREIGN MILITARY SALES PROGRAM 

PURPOSE 

The purpose of this chapter is to acquaint the reader with selected terminology, legislative 

provisions, and policies associated with the management of the Foreign military sales (FMS) 

program. These laws and policies - most of which have their foundation in the Arms Export

Control Act (AECA), as amended - form the foundation for the procedural aspects of the FMS 

financial management and billing system and the role of Defense Finance and Accounting 

Service, Denver Center, DFAS-DE. 

THE WHAT, WHY, WHEN, AND HOW OF FMS 

WHAT 

Just what is foreign military sales (FMS)? FMS is the largest program element of the 

overall U.S. security assistance program. Other program elements include: the International 

Military Education and Training Program (IMETP); commercial exports licensed under the 

AECA; the Economic Support Fund (ESF); and Peacekeeping Operations (PKO). The Foreign 

Military Sales Financing Program may be used to finance FMS agreements (United States of

America Letter of Offer and Acceptance - referred to as the LOA) and, in some instances, to 

finance commercially licensed exports. 

FMS is a process through which eligible foreign governments and international 

organizations may purchase defense articles and services from the United States Government 

(U.S. government). The FMS government-to-government agreement is documented on an LOA. 

FMS is accomplished in two basic ways, as follows: 

 • FMS cash purchases whereby the purchaser pays in cash (U.S. dollars) all costs that 

may be associated with a sale. 

 • Foreign military financing (FMF) wherein U.S. government grants/non-repayable 

and repayable loans are involved. These credit/loan arrangements are negotiated by the 

foreign government and the U.S. government. 

In either situation–cash purchases or financing–the funds that are required to implement the 

LOA must be paid or transferred to DFAS-DE where they are closely accounted for in the FMS

Trust Fund. 

WHY 

Why does the U.S. government have an FMS program? There are many reasons. Since 

World War II, the United States has provided various forms of security assistance to other 

nations in furtherance of the principle of collective security. In furtherance of this principle, 

Section 1 of the AECA establishes the rationale for FMS: 

The Congress recognizes . . . that the United States and other free and 

independent countries continue to have valid requirements for effective and mutually 

beneficial defense relationships. . . . Because of the growing cost and complexity of 

defense equipment, it is increasingly difficult and uneconomic for any country, 

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particularly a developing country, to fill all of its legitimate defense requirements 

from its own design and production base. 

There are many benefits that accrue to the FMS purchasing country and the United States as 

a result of FMS. Some of these benefits include: 

• Lowered unit production costs and shared research and development costs. 

• Progress toward standardization and interoperability of equipment between the United 

States and friendly foreign nations. 

• Utilization of Cooperative Logistics Supply Support Arrangements (CLSSA) by 

selected countries, which permits support of the foreign nation’s equipment from U.S. 

stocks on an equal basis with comparable U.S. forces having a similar mission. 

WHEN 

When (or under what circumstances) is an FMS agreement approved? Again, Section 1 of 

the AECA applies: 

It is the sense of the Congress that all such sales be approved only when they are 

consistent with the foreign policy interests of the United States, the purposes of the 

foreign assistance program of the United States as embodied in the Foreign 

Assistance Act of 1961, as amended. . . . 

HOW 

How is the FMS program administered? The overall security assistance program is under 

the supervision and general direction of the U.S. Secretary of State. However, the Secretary of 

Defense is responsible for administering certain security assistance program elements, one of 

which is FMS. In accordance with Section 42(d) of the AECA, the Secretary of Defense has 

primary responsibility for: 

• The determination of military end-item requirements. 

• The procurement of military equipment in a manner which permits its integration with 

service programs. 

• The supervision of the training of foreign military personnel. 

• The movement and delivery of military end items. 

• Within the Department of Defense, the performance of any other functions with respect 

to sales and guarantees. 

BASIC FMS POLICIES 

There are several policies, many of which have their roots in the AECA, which affect the 

conduct of the FMS program. Other policies are found in the Security Assistance Management 

Manual (SAMM) or DoD directives/instructions. The ones listed herein are considered to be the 

more pertinent in providing a background to the FMS financial management and billing system

from the perspective of the FMS customer. 

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 • FMS Agreement. The AECA, in the absence of a country-accepted LOA, effectively 

prohibits the advance procurement of FMS articles and services. Accordingly, it is important in 

country acceptance of the LOA that all necessary copies be signed and returned, including the 

copies destined for DFAS-DE. DFAS-DE receipt of the signed LOA and the initial deposit

specified, is prerequisite to proper implementation of the LOA (generally referred to as an 

(FMS case). 

 • Standardized Documentation. The LOA is used for all foreign military sales of

defense articles and services, including training, by the Military Departments and Defense 

Agencies. The DD Form 645 (Foreign Military Sales Billing Statement) is used to report 

deliveries, work in process, and the amounts due. The DD Form 645 is prepared on a quarterly 

basis by DFAS-DE. 

 • Pricing. FMS pricing policy is addressed in Sections 21 and 22 of the AECA. The 

various pricing factors involved, many of which specifically show up in FMS billing 

documentation, are addressed in Chapter 3. Unless otherwise specified, all prices indicated on 

the LOA are estimates and final costs may vary from these estimated amounts. 

 • Advance Collection. The normal method of collection shall be in advance of 

performance or delivery. Advance collection is accomplished in two general ways: (1) through 

receipt of an initial deposit upon acceptance of the LOA; (2) through payment of amounts billed 

on the DD Form 645. 

 • Interest on Arrearages. Both the AECA and the LOA, Standard Terms and 

Conditions, specify that interest must be paid by the FMS customer on any net amount by which 

it is in arrears on payments. 

 • Country Administrative Self-Sufficiency. Countries purchasing under the FMS 

program are expected to attain a high degree of administrative self-sufficiency, to include: 

a. Establishment of a purchasing mission in the Continental United States, or the 

vesting of adequate purchasing authority with the attaché or embassy staff in the United States; 

b. Establishment of a freight forwarder, so that the DoD transportation system

(DTS) is used only in rare circumstances when specifically agreed upon by the U.S. government; 

c. Establishment of communications channels, regarding FMS, directly between 

country representatives and appropriate U.S. government activities in the Continental United 

States; and 

d. Establishment of country records required to follow the progress of orders placed 

under FMS. 

It is this latter aspect, i.e., establishment and maintenance of country records, that DFASDE billing and performance reporting documentation can be highly useful to the FMS 

customer. As part of the documentation, as shall be seen in subsequent chapters, detailed 

information is provided with respect to the delivery of equipment and services on a transactionby-transaction basis. Furthermore, in addition to receiving a performance status document, the 

FMS customer is provided with an invoice which supports the expenditure of country funds. 

 • DoD Management. The U.S. government, in accordance with the LOA Standard 

Terms and Conditions, is responsible for acquiring (and, under certain circumstances, delivering) 

the desired article and service. In this regard, the FMS customer benefits from the management 

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expertise of DoD, who often must contract with industry. The LOA Standard Terms and 

Conditions specifically states: 

When procuring for the Purchaser, the DoD will, in general, employ the same 

contract clauses, the same contract administration, and the same quality and audit 

inspection procedures as would be used in procuring for itself, except as otherwise 

requested by the Purchaser and as agreed to by the DoD. . . . 

 FMS, involving billions of dollars of new orders annually, is no small effort in terms of the 

impact on the DoD work force. In fact, the DoD expends thousands of man years of effort 

annually managing the FMS program. FMS is a big program that requires intensive management. 

In this regard, it is DoD policy, as delineated in DoD Directive 5132.3, that: 

The development and execution of the [security assistance] program shall be 

accorded the same high degree of attention and efficiency as other DoD programs. To 

the extent practical, security assistance requirements shall be integrated with other 

DoD requirements and implemented through the same DoD systems, facilities, and 

procedures. 

SUMMARY 

 The foreign military sales program is governed by law and Executive Branch policy. Some 

of the basic FMS policies include: 

 • FMS is documented on a signed copy of the LOA. Receipt of the LOA, together with 

the requisite initial deposit, is necessary for implementation of the FMS agreement. 

 • The FMS customer is expected to attain administrative self-sufficiency in many areas, 

to include the establishment of communications channels and country records. 

• Pricing of FMS is mandated by the Arms Export Control Act (AECA), as amended. 

 • Payment for FMS shall normally be in advance. 

 • Interest must be collected in the event that the country is in arrears on payments. 

 • It is DoD policy that the FMS program be managed with the same attention and care as 

other DoD programs. 

 The FMS process is described in the next chapter, together with the U.S. government 

organizations which interface with DFAS-DE. 
2-1 

CHAPTER 2 

FMS: ORGANIZATIONS AND PROCESSES 

PURPOSE 

 An awareness of the U.S. government (USG) organizations involved in foreign military 

sales (FMS), their interrelationships, and the FMS process is a prerequisite to understanding the 

FMS financial management and billing system. This chapter will provide that awareness through 

descriptions of the organizations and the processes, together with flow charts to illustrate the 

relationships. 

USG ORGANIZATIONS FOR FMS 

 FMS is a large, complex program, which cuts across several U.S. government 

organizational lines. In the discussion, which follows, an effort is made to highlight the functions 

of those organizations, which have a substantial role in the FMS process, with an emphasis on 

financial management. 

DEPARTMENT OF STATE 

SECRETARY OF STATE 

 In accordance with Section 2 of the Arms Export Control Act (AECA), as amended, the 

Secretary of State is responsible for: 

 • The continuous supervision and general direction of foreign military sales and 

commercial exports licensed under the AECA. 

 • Determining whether there shall be a sale to a country and the amount thereof. 

UNDER SECRETARY OF STATE 

 The Under Secretary of State for Arms Control and International Security is the principal 

adviser to the Secretary of State and focal point for security assistance (including FMS) matters 

within the Department of State. 

BUREAU OF POLITICAL-MILITARY AFFAIRS 

 The Director, Bureau of Political-Military Affairs serves as the principal channel of liaison 

and contact between the Department of State and the DoD. Two offices within this Bureau are 

specifically concerned with security assistance. 

 • The Office of Regional Security and Arms Transfer Policy promulgates and 

oversees export control policy and coordinates arms transfer authorization/denial 

decisions for the Secretary of State. 

 • The Office of Defense Trade Control is responsible for the licensing of exports or 

arms and materiel on the U.S. Munitions List (contained in the International Traffic in 

Arms Regulations, or ITAR). 
2-2 

DEPARTMENT OF TREASURY 

 The Department of Treasury is involved in FMS in the following ways: 

 • Receiving and reviewing periodic reports of accountability from DFAS-DE. 

 • Overseeing the functions of the Federal Financing Bank (FFB) which (in coordination 

with the Defense Security Cooperation Agency) provides guaranteed loans to finance 

FMS and commercial export sales. 

 • Overseeing the U.S. Customs Service, which is responsible for reviewing munitions 

control export licenses (including FMS items sent via a Freight Forwarder agent) at the 

U.S. port of departure. 

 • Setting the rate of interest in the event of FMS payment arrearages on the part of the 

foreign government. 

DEPARTMENT OF COMMERCE 

 The Department of Commerce, through the Maritime Administration, has a responsibility to 

determine if foreign countries (through their freight forwarder agents) are properly utilizing U.S. 

flag shipping for items financed under the U.S. government credit/loan program. 

DEPARTMENT OF DEFENSE 

SECRETARY OF DEFENSE 

 The legal responsibilities of the Secretary of Defense are as noted in Chapter 1 of this 

Handbook. Many of these responsibilities have been delegated; DoD Directive 5132.3 is a 

primary source in this regard. 

OFFICE OF THE SECRETARY OF DEFENSE 

Under Secretary of Defense for Policy [USD(P)]. This official serves as the principal 

adviser and assistant to the Secretary of Defense for all matters concerned with the integration of 

departmental plans and policies with overall national security objectives. 

Assistant Secretary of Defense (International Security Affairs) [ASD(ISA)]. The office 

within the Defense Department which is responsible for supervising security assistance programs 

(except those of the New Independent States of the Former Soviet Union and Latin America) is 

the ASD/ISA. 

Under Secretary of Defense (Acquisition, Technology and Logistics) [USD(AT&L)].

This office promulgates policy and procedures on a variety of security assistance functional 

areas, to include Cooperative Logistics Supply Support Arrangements and International Coproduction Agreements. The Defense Threat Reduction Agency reports to this office adding 

responsibilities for reducing the threat to the U.S. and its allies from weapons of mass 

destruction and special weapons. 

Under Secretary of Defense (Comptroller). It is the responsibility of this office to 

establish policy and procedures involving financial management, fiscal matters, accounting, 

pricing, auditing, and international balance of payments as these matters relate to security 
2-3 

assistance. Within this office the DoD 2140 and 7000 series of directives/instructions applicable 

to the FMS pricing and billing are published. 

JOINT CHIEFS OF STAFF, UNIFIED COMMANDS, AND OVERSEAS 

ACTIVITIES 

Joint Chiefs of Staff. The Chairman of the Joint Chiefs of Staff (Joint Staff) is the 

principal military adviser to the President. The Joint Staff constitutes the immediate military staff 

of the Secretary of Defense, serving in the chain of command that extends from the President to 

the Secretary of Defense, through the JCS, to the commanders of unified and specified 

commands. 

 JCS is a key participant in the security assistance program development and review process. 

The following security assistance functions are performed by JCS: 

 • Coordinating security assistance with U.S. military plans and programs and providing 

the Secretary of Defense with military advice concerning security assistance programs, 

actions, and activities to include: 

 • Recommending military force objectives, requirements, and priorities for actual or 

potential security assistance recipients; 

 • Determining the impact of security assistance programs on U.S. programs and defense 

readiness; 

 • Recommend security assistance organizational and manpower requirements for 

overseas Security Assistance Organizations (SAOs) and security assistance personnel 

augmentations to Defense Attaché Offices; 

 • Assign Force/Activity Designators to determine priorities in the allocation of defense 

articles among recipient nations and between recipient nations and the U.S. Armed 

Forces within guidelines established by the Office of the Secretary of Defense in DoD 

Directive 4410.6, and recommend priorities of allocation of materiel and equipment 

when competing requirements cannot be resolved. 

Combatant Commands. Four of the combatant commands have responsibilities for the 

conduct of the U.S. security assistance program within their respective geographical regions.. 

They are the United States European Command (USEUCOM); the United States Southern 

Command (USSOUTHCOM); the United States Pacific Command (USPACOM) and the United 

States Central Command (USCENTCOM). With regard to security assistance, the functions of 

the combatant commands include (among many others): 

 • Making recommendations to the Joint Staff and the Secretary of Defense on any aspect 

of security assistance programs, projections or activities; 

 • Commanding, supervising, and supporting the SAOs in matters that are not functions 

or responsibilities of the Chiefs of the U.S. Diplomatic Missions, including the 

provision of necessary technical assistance and administrative support to SAOs. 

Security Assistance Organizations (SAOs). Functions of SAOs (among many others) are 

FMS case management, training program management, and security assistance program 

monitoring. In performing these functions, each SAO maintains liaison between DoD 

components, the appropriate elements of the U.S. Diplomatic Mission, and the foreign defense 

organization. 
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DEFENSE AGENCIES 

Defense Security Cooperation Agency (DSCA). As prescribed by DoD Directive 5105.38, 

DSCA is established as a separate agency of the DoD under the direction, authority, and control 

of the ASD/ISA. Some of the functions of DSCA are: 

 • Administering and supervising security assistance planning and programs. 

 • Conducting international logistics and sales negotiations with foreign countries. 

 • Serve as the DoD focal point for liaison with U.S. industry with regard to security 

assistance activities. 

 • Managing the credit financing program. 

 • Developing and promulgating security assistance procedures, such as the Security 

Assistance Management Manual (SAMM) (DoD 5105.38-M). 

Defense Finance and Accounting Service (DFAS). As prescribed by DoD Directive 

5118.5, DFAS was established January 15, 1991, under the direction, authority, and control of 

the DoD Comptroller to perform finance and accounting services for the DoD. As part of the 

DFAS Denver Center, the Deputate for Security Assistance (DFAS-DE) performs finance and 

accounting services for specific DSCA security assistance programs. Some key functions of 

DFAS-DE include: 

 • Serving as the central point of contact within DoD for FMS Trust Fund accounting 

and/or billing inquiries from U.S. government activities and foreign governments. 

 • Preparing and reviewing all DoD FMS bills, and calculate and assess interest due on 

delinquent debts. 

 • Maintaining a centralized, automated FMS financial data system. 

 • Managing each FMS customer Trust Fund account to include timely recording of 

customer deposits, control of cash expenditure authority, recording disbursements, and 

identifying developing customer Trust Fund cash flow problems. 

 • Developing and promulgating finance and accounting policy and procedures through 

the DoD Financial Management Regulation (DoD 7000.14-R). 

Defense Logistics Agency (DLA). DLA is a DoD activity whose mission is to provide 

support to the military services, other DoD components, Federal civil agencies, and foreign 

governments. Such support includes the providing of assigned materiel commodities and items 

of supply, logistics services, contract administration services, and other support services. 

Defense Contract Audit Agency (DCAA). DCAA is a separate agency under the control 

of the Assistant Secretary of Defense (Comptroller). Through its field audit offices, it provides 

audit services for many FMS-related contracts. 

Defense Language Institute English Language Center (DLIELC), located at Lackland 

Air Force Base, Texas, operates under the command and control of Headquarters, Air Education 

and Training Command. The Center is tasked by the Army, Navy, and Air Force, under 

provisions of a joint regulation. It is responsible for the conduct, supervision, and technical 
2-5 

control of English language training programs for non-English speaking foreign and U.S. service 

personnel. 

National Geospatial-Intelligence Agency (NGA). NGA offers support on matters of 

mapping, charting, and geodesy to foreign countries under the U.S. security assistance program. 

Defense Institute of Security Assistance Management (DISAM). In accordance with 

DoD Directive 2140.5, the DISAM shall: 

 • Conduct courses of study that will prepare military (U.S. and foreign) and civilian 

(USG, foreign, and U.S. contractor) personnel for assignments in security assistance 

management positions. 

 • Conduct research, consultations, or special studies directed toward improving the 

curricula in security assistance management. 

 • Disseminate security assistance information. 

 DISAM is organized as part of the Defense Security Cooperation Agency (DSCA). The 

U.S. Air Force, as the Executive Agent provides logistics and administrative support to DISAM 

with reimbursement from DSCA. 

SECRETARIES OF MILITARY DEPARTMENTS 

Functions. The Secretaries of the Military Departments serve as advisers to the Secretary of 

Defense on all matters of security assistance impacting on, or related to, their department and 

shall act for the Secretary of Defense where responsibility for actions is delegated. In carrying 

out their responsibilities, the Secretaries: 

 • Provide the Secretary of Defense recommendations considered appropriate and 

necessary to ensure the successful conduct of security assistance, including its 

interface with and support of Military Department policies, objectives, plans, and 

programs. 

 • Provide data, upon request, pertaining to price, source, availability and lead time for 

use in developing and reviewing security assistance programs, including foreign 

military sales (FMS) cases. 

 • Provide to elements of the Office of the Secretary of Defense, JCS, Combatant 

Commands, and SAOs, as appropriate, technical information as to weapons systems, 

tactics and doctrine, training, and pertinent logistic support. 

 • Conduct training, and acquire and deliver defense articles and services included in 

approved programs. 

 • Coordinate and establish delivery schedules and necessary internal procedures for 

follow-up, expediting, and related actions during implementation of approved 

programs. 

 • Within policies and criteria established by the Assistant Secretary of Defense (ISA), 

and under direction of the Director, DSCA, make sales of defense articles and services 

to eligible countries and international organizations. 
2-6 

Military Department Subordinate Organizations. A discussion as to how each military 

department is organized for FMS is almost a handbook unto itself. Suffice to say that numerous 

major/subordinate commands and field activities are involved. In a general sense, the following 

types of organizational components have a role in FMS: 

 • Systems/Logistics/Training Commands: Prepare the LOA and LOA data studies. 

Acquire defense articles and services, once an LOA is implemented. 

 • International Logistics Control Offices (ILCOs): Maintain the detailed case records 

for accounting and logistics reporting. 

FOREIGN MILITARY SALES PROCESS 

 Many of the organizations discussed above will now be further addressed in the context of 

the basic FMS process (Figure 2-1). This process, of course, can be viewed in terms of various 

phases, depending on what is being emphasized. For the purpose of this Handbook, the FMS 

process is divided into three supporting processes (or sub-processes): (1) the Letter of Request 

(LOR) Process, (2) the Letter of Offer and Acceptance (LOA)/Implementation Process, and (3) 

the Execution/Performance Reporting Process. 

LETTER OF REQUEST/OFFER PROCESS 

 This process (illustrated in Figure 2-2) sets the stage for subsequent financial transactions. 

The customer initiated Letter of Request LOR) for defense articles/services is submitted to the 

implementing agency (IA) for action; however, all LORs must be approved by the Department of 

State and DSCA. The IA (e.g., U.S. Army, U.S. Navy, U.S. Air Force, etc.) definitizes the 

Purchaser’s requirements in the form of an LOA which is submitted through review channels to 

the DSCA, the Department of State, and, in some instances, the U.S. Congress. [Note: The 

channels are determined by the dollar amount and type of articles/services being offered. Under 

Section 36(b)(1) of the Arms Export Control Act (AECA), as amended, all offers to sell defense 

articles or services for $50 million or more, design and construction services for $200 million or 

more, or major defense equipment for $14 million or more, must be presented to the U.S. 

Congress for review.] 

 The LOA, once approved, is signed by the IA, countersigned by DSCA Comptroller, and 

then forwarded to the Purchaser for acceptance. The DFAS-DE records the LOA in its computer 

system. 

 It is during this initial process that the IA prepares an estimate of the LOA data for the 

article or service requested. The price is developed in accordance with current pricing practice 

and is based upon the IA’s understanding of the customer’s requirements. The price will have 

two essential elements: (1) a base price, and (2) applicable surcharges. At least four events, 

among others, can make a difference between the price quoted in the LOA and the ultimate price 

to the customer. First, if the foreign purchaser changes any item/specification/quantity during the 

life of the program, costs will most likely be impacted. Second, if the inflation rates predicted for 

the life of the program change, prices may be different particularly for programs which span 

several years. Third, if the rate of production for procurement items is altered in a contractor’s 

plant, either by the foreign purchaser or by the United States Government (for systems for U.S. 

military use), the overhead rates and attendant costs could be different. Finally, procurements 

involving research and development or high level technology (with the attendant risks and cost 

sharing contractual instruments) may result in different prices than originally quoted. The 

Purchaser, in accordance with the standard terms and conditions of the LOA, agrees to pay all 

costs once determined. 
2-7 

LETTER OF OFFER AND ACCEPTANCE/IMPLEMENTATION PROCESS 

 Once the FMS Purchaser accepts/signs the LOA, it constitutes the agreement and with 

applicable funding completes the contract. Upon receipt of the signed LOA and, if required, an 

initial deposit DFAS-DE is in position to issue Obligational Authority (OA) to the IA. OA 

enables the IA to prepare requisitions that will result in Material Release Orders (MROs), work 

requests for services, or purchase requests for any contracts that may ensue. Most FMS cases are 

implemented by means of an IA implementing directive (e.g., case directive, program/project 

directive, etc.) which is distributed to the performing activities and further allocates the required 

obligational authorities. The performing activities will prepare/route the necessary requisitions, 

work requests, etc., and, in the case of new contracts, start the procurement cycle with requests 

for proposals (RFPs) or invitations for bid (IFBs) sent to appropriate defense contractors. 

 The LOA/implementation process is illustrated in Figure 2-3. 

EXECUTION/PERFORMANCE REPORTING PROCESS 

 Performance on an FMS case is demonstrated to the FMS purchaser through receipt of 

status data or the quarterly requisition report (QRR) from the IA, receipt of the ordered 

articles/services, or the reporting of the performance/delivery in the Delivery Listing 

accompanying each quarterly FMS Billing Statement (DD Form 645). Any event may occur first 

depending on the nature of the item or service and other factors. In theory, however, the 

impending release of the materiel should be accompanied by Military Standard Requisition and 

Issue Procedures (MILSTRIP) shipment status (AS_), followed next by physical delivery, and 

finally by the FMS billing documentation (including an FK_ document identifier–FMS 

Materiel/Service Transaction). 

 This process is illustrated in Figure 2-4. 

FLOW OF FUNDS 

 Figures 2-1 through 2-4 provided an overview of the entire FMS process. Figure 2-5 depicts 

a portion of the entire process from a “Flow of Funds” perspective. This flow works as follows: 

 • Monies (in U.S. dollars) are received from the foreign customer in response to: (1) the 

initial deposit requirement associated with LOA acceptance; (2) quarterly Billing 

Statements (DD Form 645) from DFAS-DE; or, (3) supplemental billing arrangements. 

The monies are deposited into the FMS Trust Fund Account or the Federal Reserve 

Bank Accounts. 

 • Obligational authority (OA), which was explained earlier, is provided by DFAS-DE to 

the IA/disbursing organization at time of case implementation. Under reimbursable 

financing the IA/disbursing organization cites its performing appropriation as the 

funding source and this appropriation is subsequently reimbursed by DFAS-DE 

following performance. Under direct citation financing, the IA/disbursing organization 

cites the FMS Trust Fund Account on a DoD contract; no reimbursement is required. 
2-8 

FIGURE 2-1 

FMS Processes - Overview 

LOR/LOA PROCESS LOA IMPLEMENTATION

PROCESS

EXECUTION/PERFORMANCE

REPORTING PROCESS

USG & IMPLEMENTING AGENCY (IA)

FMS PURCHASER

SOURCE OF SUPPLY/PERFORMANCE

• STOCK POINT/DEPOT • CONTRACTING OFFICE • SERVICES/TRAINING ACTIVITY

LOR LOA

LOA &

INITIAL

DEPOSIT

STATUS DD FORM 645 PAYMENT

REQUESTFOR LOA

DATA

LOA

DATA OA STATUS DELIVERY REPORTS REIMBURSEMENT
2-9 

FIGURE 2-2 

Letter of Request/Offer Processes 

FMS 

PURCHASER

PREPARE 

LOA

INITIATE

ACCEPT 

LOR

START 

LOA

REVIEW 

LOR

APPROVE 

RELEASE

POST 

LOR COORDINATE LOA

RELEASE 

36(B)

COUNTERSIGN 

LOA

RELEASE 

LOA

RECORD 

LOA

LETTER OF 

OFFER AND 

ACCEPTANCE 

(LOA)

 APPROVE 

RELEASE

DFAS-DE

IMPLEMENTING

AGENCY

DSCA

DEPTDEPT OF STATE

 OF STATE
2-10 

Figure 2-3 

Letter of Offer and Acceptance (LOA)/Implementation Process 

CONTRACTS

RECORD 

ACCEPTANCE 

AND ISSUE OA

MATERIAL 

RELEASE 

ORDERS

FMS 

PURCHASER 

IMPLEMENTING 

AGENCY 

SUPPLY 

SOURCES 

(DEPOT/ 

CONTRACTORS) 

DFAS-DE

LETTER OF 

OFFER AND 

ACCEPTANCE 

(LOA)

INITIAL 

DEPOSIT

PERFORMING

AND FUNDING

FUNCTION

PREPARE 

IMPLEMENTING 

DIRECTIVE

• REQUISITIONS 

• WORK REQUESTS 

• PURCHASE 

 REQUESTS
2-11

FIGURE 2-4 

Execution/Performance Reporting Process 

FMS 

PURCHASER 

IMPLEMENTING 

AGENCY 

SUPPLY 

SOURCES 

(DEPOT/ 

CONTRACTORS) 

DFAS-DE

MATERIAL 

DELIVERY

AS__STATUS 

DATA

DELIVERY 

LISTING

PERFORMANCE 

REPORT

RELEASE OF 

MATERIAL

DELIVERY 

TRANSACTIONS

FK DATA
2-12

FIGURE 2-5 

Flow of Funds 

FRB AND/OR

TRUST FUND ACCOUNT FOREIGN CUSTOMER

MILITARY DEPARTMENT

APPROPRIATION ACCOUNT PRODUCTION CONTRACTOR

DIRECT

CITE

REIMBURSABLE
2-13

FIGURE 2-6 

Data Sources for FMS Billing Statements 

SDR’s MRO

IDB

SF-1080

DD-1195

DD-250

COMMITTED

VALUE FOR

REQN CASES

PAYMENT

SCHEDULE

LETTER OF

OFFER AND

ACCEPTANCE

 (LOA)

DELIVERY

TRANSACTIONS

FINANCIAL

FORECAST COLLECTIONS

 DD FORM 645

FMS DELIVERY LISTING

FMS FINANCIAL FORECAST

FMS REPLY LISTING TO CUSTOMER

REQUESTS FOR ADJUSTMENTS

HOLDING ACCOUNT STATEMENT
2-14

 • Expenditure authority (EA) is a DFAS-DE reservation of funds and the release to the 

implementing agency of authority to disburse, either for direct cite or selfreimbursement purposes. DFAS-DE issues expenditure authority at country and 

implementing agency level and reduces the customer country’s available cash balance. 

The IA is limited to the EA issued dollar amount for disbursements for progress 

payments to contractors or other funds supporting the FMS Trust Fund. Implementing 

agencies have the authority, within DFAS-DE issuance, to disburse and record 

expenditures at FMS case level. 

DATA SOURCES FOR DD FORM 645 

 Figure 2-6 serves as a summary of portions of the earlier processes figures and provides a 

concentrated perspective of the types of documents which are consolidated and referenced in the 

FMS Billing Statement (DD Form 645) and its supporting listings. Some of these source 

documents are distributed to the Purchaser (i.e., processed Supply Discrepancy Report (SDR), 

LOA, Payment Schedule, ULO Report, etc.). Other source documents are retained by the DoD 

for its internal use [i.e., Material Release Order (MRO), Interdepartmental Bill (IDB), Voucher 

for Transfers between Appropriations and/or Funds (SF-1080), Contractor’s Request for 

Progress Payment (DD-1195), Material Inspection and Receiving Report (DD-250), Delivery 

Transaction, the Committed Values for Requisition Cases Report, etc.]. 

SUMMARY 

 The FMS process involves several USG organizations. Although FMS is under the general 

direction of the Secretary of State, the DoD is responsible for administering the program. 

 The overall FMS process involves a series of sub-processes. For purposes of this 

Handbook, the three sub-processes are: 

 • The Letter of Request/Letter of Offer and Acceptance Process; 

 • The Letter of Offer and/Implementation Process; and 

 • The Execution/Performance Reporting Process. 
3-1 

CHAPTER 3 

FMS: OFFER AND ACCEPTANCE DOCUMENTATION 

PURPOSE 

 The purpose of this chapter is to highlight those aspects of the United States of America 

Letter of Offer and Acceptance (LOA) and Amendments/Modifications thereto which are 

fundamental to an understanding of the foreign military sales (FMS) billing process. The Letter 

of Offer and Acceptance is highly important inasmuch as it forms the basis for many data 

elements contained in the FMS Billing Statement (DD Form 645). 

LETTER OF OFFER AND ACCEPTANCE 

FMS RECORD KEYS 

FMS Case Identifier. An FMS case is a contractual sales agreement between the U.S. and 

an eligible foreign country or international organization documented by an LOA (see Figure 3-

1). Each FMS case is identified by a six-character case identifier (e.g., BN-B-AAA), which is 

assigned by the DoD component having overall cognizance and responsibility for the FMS case. 

The case identifier consists of: 

 • A two-character country code (e.g., BN for the fictitious country of Bandaria). 

 • A one-character DoD component/implementing agency code (e.g., B for U.S. 

Army). 

 • A three-character case designator (e.g., AAA in this example). The first 

character of the case designator may identify the commodity or service furnished. 

The second and third characters are assigned in sequence as new cases for the 

country are prepared. 

Item Number. Each FMS case consists of one or more item numbers which appear in 

column (1) of the LOA. 

Document Identifier (Number). Each item number, in turn, may be further broken down 

into one or more “transactions”–each having a unique document number. Document numbers are 

assigned to requisitions for items to be delivered from DoD inventory, from contracts issued 

under Federal Acquisition Regulation (FAR) procedures, and so forth. The document number is 

the “lowest system level” record key used in transaction status and delivery reporting. 

 The relationship of the FMS case to the item numbers(s) to the document number(s) which 

is basic to the interpretation of FMS financial/billing reports and statements provided to the FMS 

customer is illustrated in Figure 3-2. 
3-2 

 FIGURE 3-1 

 

 United States of America 

 Letter of Offer and Acceptance 

Based on 

Pursuant to the Arms Export Control Act, the Government of the United States (USG) offers to sell 

_______________________________________________the defense articles or defense services (which may 

include defense design and construction services) collectively referred to as “items,” set forth herein, subject to the 

provisions, terms, and conditions in this LOA. 

This LOA is for 

Estimated Cost: Initial Deposit: 

Terms of Sale: 

This offer expires on ____________________. Unless a request for extension is made by the Purchaser and 

granted by the USG, the offer will terminate on the expiration date. 

 This page through page ___ plus Letter of Offer and Acceptance Standard Terms and Conditions attached, are 

a part of this LOA. 

 The undersigned are authorized representatives of their Governments and hereby offer and accept, 

respectively, this LOA: 

_____________________________________________ ________________________________________ 

U.S. Signature Date Purchaser Signature Date 

Typed Name and Title Typed Name and Title 

 

Implementing Agency Agency 

DSCA Date 

 Information to be provided by the Purchaser: 

Mark For Code ______, Freight Forwarder Code ____, Purchaser Procuring Agency Code _____, Name and 

Address of the Purchaser's Paying Office 

___________________________________________________________________________________________

___________________________________________________________________________________________
3-3 

FIGURE 3-1 (PAGE 2) 

Explanations for acronyms and codes, and financial information, may be found in attached “Letter of 

Offer and Acceptance Information.” 

Items to be Supplied (costs and months for delivery are estimates): 

(1) (3) (5) (6) (7) 

 Qty, (4) SC/MOS/ Ofr Del 

Itm (2) Unit of Costs TA Rel Trm 

Nbr Description/Condition Issue (a) Unit (b) Total Notes Cde Cde

(8) Net Estimated Cost 

(9) Packing, Crating, and Handling 

(10) Administrative Charge 

(11) Transportation 

(12) Other Asset Use 

(13) Total Estimated Cost 

To assist in fiscal planning, the USG provides the following anticipated costs of this LOA: 

ESTIMATED PAYMENT SCHEDULE 

 Payment Date Quarterly Cumulative
3-4 

LETTER OF OFFER AND ACCEPTANCE STANDARD TERMS AND CONDITIONS 

Section 

1 Conditions – United States Government (USG) Obligations 

2 Conditions – General Purchaser Agreements 

3 Indemnification and Assumption of Risks 

4 Financial Terms and Conditions 

5 Transportation and Discrepancy Provisions 

6 Warranties 

 7 Dispute Resolution

1 Conditions – United States Government (USG) Obligations 

 1.1 Unless otherwise specified, items will be those which are standard to the U.S. Department of Defense 

(DoD), without regard to make or model. 

 1.2 The USG will furnish the items from its stocks and resources, or will procure them under terms and 

conditions consistent with DoD regulations and procedures. When procuring for the Purchaser, DoD will, in 

general, employ the same contract clauses, the same contract administration, and the same quality and audit 

inspection procedures as would be used in procuring for itself, except as otherwise requested by the Purchaser and 

as agreed to by DoD and set forth in this LOA. Unless the Purchaser has requested, in writing, that a sole source 

contractor be designated, and this LOA reflects acceptance of such designation by DoD, the Purchaser understands 

that selection of the contractor source to fill requirements is the responsibility of the USG, which will select the 

contractor on the same basis used to select contractors for USG requirements. Further, the Purchaser agrees that the 

U.S. DoD is solely responsible for negotiating the terms and conditions of contracts necessary to fulfill the 

requirements in this LOA. 

 1.3 The USG will use its best efforts to provide the items for the dollar amount and within the availability 

cited. 

 1.4 Under unusual and compelling circumstances, when the national interest of the U.S. requires, the USG 

reserves the right to cancel or suspend all or part of this LOA at any time prior to the delivery of defense articles or 

performance of defense services. The USG shall be responsible for termination costs of its suppliers resulting from 

cancellation or suspension under this section. Termination by the USG of its contracts with its suppliers, other 

actions pertaining to such contracts, or cessation of deliveries or performance of defense services is not to be 

construed as cancellation or suspension of this LOA itself under this section. 

 1.5 U.S. personnel performing defense services under this LOA will not perform duties of a combatant 

nature, including duties relating to training and advising that may engage U.S. personnel in combat activities outside 

the U.S., in connection with the performance of these defense services. 

 1.6 The assignment or employment of U.S. personnel for the performance of this LOA by the USG will not 

take into account race, religion, national origin, or sex. 

 1.7 Unless otherwise specified, this LOA may be made available for public inspection consistent with the 

national security of the United States. 
3-5 

2 Conditions – General Purchaser Agreements 

 2.1 The Purchaser may cancel this LOA or delete items at any time prior to delivery of defense articles or 

performance of defense services. The Purchaser is responsible for all costs resulting from cancellation under this 

section. 

 2.2 The Purchaser agrees, except as may otherwise be mutually agreed in writing, to use the defense articles 

sold hereunder only: 

 2.2.1 For purposes specified in any Mutual Defense Assistance Agreement between the USG and the 

Purchaser; 

 2.2.2 For purposes specified in any bilateral or regional defense treaty to which the USG and the Purchaser 

are both parties, if section 2.2.1 is inapplicable; or, 

 2.2.3 For internal security, individual self-defense, or civic action, if sections 2.2.1 and 2.2.2 are 

inapplicable. 

 2.3 The Purchaser will not transfer title to, or possession of, the defense articles, components and associated 

support material, related training or other defense services (including plans, specifications, or information), or 

technology furnished under this LOA to anyone who is not an officer, employee, or agent of the Purchaser 

(excluding transportation agencies), and shall not use or permit their use for purposes other than those authorized, 

unless the written consent of the USG has first been obtained. The Purchaser will ensure, by all means available to 

it, respect for proprietary rights in any items and any plans, specifications, or information furnished, whether 

patented or not. The Purchaser also agrees that the defense articles offered will not be transferred to Cyprus or 

otherwise used to further the severance or division of Cyprus, and recognizes that the U.S. Congress is required to 

be notified of any substantial evidence that the defense articles sold in this LOA have been used in a manner which 

is inconsistent with this provision. 

 2.4 To the extent that items, including plans, designs, specifications, technical data, or information, 

furnished in connection with this LOA may be classified by the USG for security purposes, the Purchaser certifies 

that it will maintain a similar classification and employ measures necessary to preserve such security, equivalent to 

those employed by the USG and commensurate with security agreements between the USG and the Purchaser. If 

such security agreements do not exist, the Purchaser certifies that classified items will be provided only to those 

individuals having an adequate security clearance and a specific need to know in order to carry out the LOA 

program and that it will promptly and fully inform the USG of any compromise, or possible compromise, of U.S. 

classified material or information furnished pursuant to this LOA. The Purchaser further certifies that if a U.S. 

classified item is to be furnished to its contractor pursuant to this LOA: (a) items will be exchanged through official 

government channels, (b) the specified contractor has been granted a facility security clearance by the Purchaser at a 

level at least equal to the classification level of the U.S. information involved, (c) all contractor personnel requiring 

access to such items have been cleared to the appropriate level by the Purchaser, and (d) the Purchaser will assume 

responsibility for administering security measures while in the contractor’s possession. If a commercial 

transportation agent is to be used for shipment, the Purchaser certifies that such agent has been cleared at the 

appropriate level for handling classified items. These measures will be maintained throughout the period during 

which the USG may maintain such classification. The USG will use its best efforts to notify the Purchaser if the 

classification is changed. 

3 Indemnification and Assumption of Risks 

 3.1 The Purchaser recognizes that the USG will procure and furnish the items described in this LOA on a 

non-profit basis for the benefit of the Purchaser. The Purchaser therefore undertakes to indemnify and hold the 

USG, its agents, officers, and employees harmless from any and all loss or liability (whether in tort or in contract) 

which might arise in connection with this LOA because of: 
3-6 

 3.1.1 Injury to or death of personnel of Purchaser or third parties, or 

 3.1.2 Damage to or destruction of (a) property of DoD furnished to Purchaser or suppliers specifically to 

implement this LOA, (b) property of Purchaser (including the items ordered by Purchaser pursuant to this LOA, 

before or after passage of title to Purchaser), or (3) property of third parties, or 

 

 3.1.3 Infringement or other violations of intellectual property or technical data rights. 

 3.2 Subject to express, special contractual warranties obtained for the Purchaser, the Purchaser agrees to 

relieve the contractors and subcontractors of the USG from liability for, and will assume the risk of, loss or damage 

to: 

 3.2.1 Purchaser’s property (including items procured pursuant to this LOA, before or after passage of title to 

Purchaser), and 

 3.2.2 Property of DoD furnished to suppliers to implement this LOA, to the same extent that the USG would 

assume for its property if it were procuring for itself the items being procured. 

4 Financial Terms and Conditions 

 4.1 The prices of items to be procured will be billed at their total cost to the USG. Unless otherwise 

specified, the cost of items to be procured, availability determination, payment schedule, and delivery projections 

quoted are estimates based on the best available data. The USG will use its best efforts to advise the Purchaser or its 

authorized representatives of: 

 4.1.1 Identifiable cost increases that might result in an overall increase in the estimated costs in excess of ten 

percent of the total value of this LOA, 

 4.1.2 Changes in the payment schedule, and 

 4.1.3 Delays which might significantly affect estimated delivery dates. USG failure to advise of the above 

will not change the Purchaser’s obligation under all subsections of section 4.4. 

 4.2 The USG will refund any payments received for this LOA which prove to be in excess of the final total 

cost of delivery and performance and which are not required to cover arrearages on other LOAs of the Purchaser. 

 4.3 Purchaser failure to make timely payments in the amounts due may result in delays in contract 

performance by DoD contractors, claims by contractors for increased costs, claims by contractors for termination 

liability for breach of contract, claims by USG or DoD contractors for storage costs, or termination of contracts by 

the USG under this or other open Letters of Offer and Acceptance of the Purchaser at the Purchaser’s expense. 

 4.4 The Purchaser agrees: 

 4.4.1 To pay to the USG the total cost to the USG of the items even if costs exceed the amounts estimated in 

this LOA. 

 4.4.2 To make payment(s) by check or wire transfer payable in U.S. dollars to the Treasurer of the United 

States. 

 4.4.3 If Terms of Sale specify “Cash with acceptance”, to forward with this LOA a check or wire transfer in 

the full amount shown as the estimated Total cost, and agrees to make additional payment(s) upon notification of 

cost increase(s) and request(s) for funds to cover such increase(s). 
3-7 

 4.4.4 If Terms of Sale specify payment to be “Cash prior to delivery”, to pay to the USG such amounts at 

such times as may be specified by the USG (including initial deposit) in order to meet payment requirements for 

items to be furnished from the resources of DoD. USG requests for funds may be based on estimated costs to cover 

forecasted deliveries of items. Payments are required 90 days in advance of the time DoD plans such deliveries or 

incurs such expenses on behalf of the Purchaser. 

 4.4.5 If Terms of Sale specify payment by “Dependable undertaking”, to pay to the USG such amounts at 

such times as may be specified by the USG (including initial deposit) in order to meet payments required by 

contracts under which items are being procured, and any damages and costs that may accrue from termination of 

contracts by the USG because of Purchaser’s cancellation of this LOA. USG requests for funds may be based upon 

estimated requirements for advance and progress payments to suppliers, estimated termination liability, delivery 

forecasts, or evidence of constructive delivery, as the case may be. Payments are required 90 days in advance of the 

time USG makes payments on behalf of the Purchaser. 

 4.4.6 If Terms of Sale specify “Payment on delivery”, that bills may be dated as of the date(s) of delivery of 

the items, or upon forecasts of the date(s) thereof. 

 4.4.7 That requests for funds or billings are due and payable in full on presentation or, if a payment date is 

specified in the request for funds or bill, on the payment date so specified, even if such payment date is not in 

accord with the estimated payment schedule, if any, contained in this LOA. Without affecting Purchaser’s 

obligation to make such payment(s) when due, documentation concerning advance and progress payments, 

estimated termination liability, or evidence of constructive delivery or shipment in support of requests for funds or 

bills will be made available to the Purchaser by DoD upon request. When appropriate, the Purchaser may request 

adjustment of any questioned billed items by subsequent submission of discrepancy reports, Standard Form 364. 

 4.4.8 To pay interest on any net amount by which it is in arrears on payments, determined by considering 

collectively all of the Purchaser’s open LOAs with DoD. Interest will be calculated on a daily basis. The principal 

amount of the arrearage will be computed as the excess of cumulative financial requirements of the Purchaser over 

total cumulative payments after quarterly billing payment due dates. The rate of interest paid will be a rate not less 

than a rate determined by the Secretary of the Treasury taking into consideration the current average market yield on 

outstanding short-term obligations of the USG as of the last day of the month preceding the net arrearage and shall 

be computed from the date of net arrearage. 

 4.4.9 To designate the Procuring Agency and responsible Paying Office and address thereof to which the 

USG will submit requests for funds and bills under this LOA. 

5 Transportation and Discrepancy Provisions 

 5.1 The USG agrees to deliver and pass title to the Purchaser at the initial point of shipment unless otherwise 

specified in this LOA. With respect to items procured for sale to the Purchaser, this will normally be at the 

manufacturer’s loading facility; with respect to items furnished from USG stocks, this will normally be at the U.S.. 

depot. Articles will be packed, crated, or otherwise prepared for shipment prior to the time title passes. If “Point of 

Delivery” is specified other than the initial point of shipment, the supplying U.S. Department or Agency will 

arrange movement of the articles to the authorized delivery point as a reimbursable service but will pass title at the 

initial point of shipment. The USG disclaims any liability for damage or loss to the items incurred after passage of 

title irrespective of whether transportation is by common carrier or by the U.S. Defense Transportation System. 

 5.2 The Purchaser agrees to furnish shipping instructions which include Mark For and Freight Forwarder 

Codes based on the Offer/Release Code. 

 5.3 The Purchaser is responsible for obtaining insurance coverage and customs clearances. Except for 

articles exported by the USG, the Purchaser is responsible for ensuring that export licenses are obtained prior to 

export of U.S. defense articles. The USG incurs no liability if export licenses are not granted or they are withdrawn 

before items are exported. 
3-8 

 5.4 The Purchaser agrees to accept DD Forms 645 or other delivery documents as evidence that title has 

passed and items have been delivered. Title to defense articles transported by parcel post passes to the Purchaser at 

the time of parcel post shipment. Standard Form 364 will be used in submitting claims to the USG for overage, 

shortage, damage, duplicate billing, item deficiency, improper identification, improper documentation, or nonshipment of defense articles and non-performance of defense services and will be submitted promptly by the 

Purchaser. DoD will not accept claims related to items of $200. or less for overages, shortages, damages, nonshipment, or non-performance. Any claim, including a claim for shortage (but excluding a claim for 

nonshipment/nonreceipt of an entire lot), received after one year from passage of title to the article or from 

scheduled performance of the service will be disallowed by the USG unless the USG determines that unusual and 

compelling circumstances involving latent defects justify consideration of the claim. Claims, received after one year 

from date of passage of title or initial billing, whichever is later, for nonshipment/nonreceipt of an entire lot will be 

disallowed by the USG. The Purchaser agrees to return discrepant articles to USG custody within 180 days from the 

date of USG approval of such return. 

6 Warranties 

 6.1 The USG does not warrant or guarantee any of the items sold pursuant to this LOA except as provided in 

section 6.1.1. DoD contracts include warranty clauses only on an exception basis. If requested by the Purchaser, the 

USG will, with respect to items being procured, and upon timely notice, attempt to obtain contract provisions to 

provide the requested warranties. The USG further agrees to exercise, upon the Purchaser’s request, rights 

(including those arising under any warranties) the USG may have under contracts connected with the procurement 

of these items. Additional costs resulting from obtaining special contract provisions or warranties, or the exercise of 

rights under such provisions or warranties, will be charged to the Purchaser. 

 6.1.1 The USG warrants the title of items sold to the Purchaser hereunder but makes no warranties other 

than those set forth herein. In particular the USG disclaims liability resulting from infringement or other violation of 

intellectual property or technical data rights occasioned by the use or manufacture outside the U.S. by or for the 

Purchaser of items supplied hereunder. 

 6.1.2 The USG agrees to exercise warranties on behalf of the Purchaser to assure, to the extent provided by 

the warranty, replacement or correction of such items found to be defective, when such materiel is procured for the 

Purchaser. 

 6.2 Unless the condition of defense articles is identified to be other than serviceable (for example, “As is”), 

DoD will repair or replace at no extra cost defense articles supplied from DoD stocks which are damaged or found 

to be defective in respect to material or workmanship when it is established that these deficiencies existed prior to 

passage of title, or found to be defective in design to such a degree that the items cannot be used for the purpose for 

which they were designed. Qualified representatives of the USG and of the Purchaser will agree on the liability 

hereunder and the corrective steps to be taken. 

7 Dispute Resolution 

 7.1 This LOA is subject to U.S. Federal procurement law. 

 7.2 The USG and the Purchaser agree to resolve any disagreement regarding this LOA by consultations 

between the USG and the Purchaser and not to refer any such disagreement to any international tribunal or third 

party for settlement. 
3-9 

LETTER OF OFFER AND ACCEPTANCE INFORMATION 

1. GENERAL. This provides basic information pertaining to the LOA for U.S. and Purchaser use. 

Additional information may be obtained from the Security Assistance Management Manual, DoD 

5105.38-M, the in-country Security Assistance Office, the DSCA Country Director, or from the 

implementing agency. 

2. INFORMATION ENTERED BY THE USG.

 a. Terms of Sale, and Purchaser responsibilities under those Terms, are described on the LOA. A 

list of all Terms of Sale, with explanations for each, are shown in DoD 5105.38-M. 

 b. Description/Condition. The item description consists of coding for use in U.S. management of 

the LOA (starting with Generic/MASL and MDE “(Y)” or non-MDE “(N)” data such as that in DoD 

5105.38-M, Appendix D) plus a short description of what is to be provided. When items are serviceable, 

Code “A” (new, repaired, or reconditioned material which meets U.S. Armed Forces standards of 

serviceability) may be used; otherwise, Code “B” (unserviceable or mixed condition without repair, 

restoration, or rehabilitation which may be required) may be used. In some instances, reference to a note 

in the Terms and Conditions may complement or replace these codes. 

 c. The Unit of Issue is normally “EA” (each, or one; for example, 40 EA) or blank (unit of issue 

not applicable; for example, services or several less significant items consolidated under one LOA Item 

Number). When blank, a quantity or Unit Cost is not shown. 

 d. The Source Code (SC) in the Articles or Services to be Supplied Section is one or more of the 

following: 

 S - Shipment from DoD stocks or performance by DoD personnel 

 P - From new procurement 

 R - From rebuild, repair, or modification by the USG 

 X - Mixed source, such as stock and procurement, or undetermined 

 E - Excess items, as-is 

 F - Special Defense Acquisition Fund (SDAF) items 

 e. Availability leadtime cited is the number of months (MOS) estimated for complete delivery of 

defense articles or performance of defense services. The leadtime starts with Acceptance of this Offer, 

including the conclusion of appropriate financial arrangements, and ends when items are made available 

to transportation. 

 f. Type of Assistance (TA) Codes are as follows: 

 3 - Source Code S, R, or E; based on Arms Export Control Act (AECA) Section 21(b). 

 4 - Source Code X; AECA Sections 21(b), 22(a), 29, or source undetermined. 

 5 - Source Code P; AECA Section 22(a). 

 6 - Source Code S, R, or E, payment on delivery; AECA Section 21(d). 
3-10 

 7 - Source Code P, dependable undertaking with 120 days payment after delivery; AECA 

Section 22(b). 

 8 - Source Code S, R, or E, stock sales with 120 days payment after delivery; AECA 

Section 21(d). 

 M - MAP Merger; Foreign Assistance Act (FAA) Section 503(a)(3). 

 N - FMS Credit (Nonrepayable); AECA Sections 23 or 24. 

 U - Source Code P; Cooperative Logistics Supply Support Arrangement (CLSSA) Foreign 

Military Sales Order (FMSO) I. 

 V - Source Code S; CLSSA FMSO II stocks acquired under FMSO I. 

 Z - FMS Credit; AECA Sections 23 or 24. 

 g. Training notes: AP - Annual training program; SP - Special training designed to support 

purchases of U.S. equipment; NC - This offer does not constitute a commitment to provide U.S. training; 

SC - U.S. training concurrently being addressed in separate LOA; NR - No U.S. training is required in 

support of this purchase. 

 h. Offer Release Codes (Ofr Rel Cde) and Delivery Term Codes (Del Trm Cde) below may also 

be found in DoD 4500.9-R. Part III. The following Offer Release Codes also pertain to release of items 

for shipment back to Purchaser on repair LOAs: 

 A - Freight and parcel post shipments will be released automatically by the shipping activity 

without advance notice of availability. 

 Y - Advance notice is required before release of shipment, but shipment can be released 

automatically if release instructions are not received by shipping activity within 15 

calendar days. Parcel post shipments will be automatically released. 

 Z - Advance notice is required, before release of shipment. Shipping activity will follow-up 

on the notice of availability until release instructions are furnished. Parcel post shipments 

will be automatically released. 

 X - The implementing agency (IA) and country representative have agreed that the: 

 -- IA will sponsor the shipment to a country address. Under this agreement, the Freight 

Forwarder Code must also contain X and a Customer-within-Country (CC) Code must be entered in the 

Mark For Code on the front page of the LOA. The MAPAD must contain the CC Code and addresses for 

each type of shipment (parcel post or freight). 

 -- Shipments are to be made to an assembly point or staging area as indicated by clear 

instructions on exception requisitions. Under this agreement, the Freight Forwarder Code must contain 

W. A Mark For Code may be entered in the Mark For Code space on the front page of the LOA and the 

MAPAD must contain the Mark For Code if the Mark For Address is to be used on the shipment to the 

assembly point or staging area. 

 i. For the following Delivery Term Codes, DoD delivers: 

 2 - To a CONUS inland point (or overseas inland point when the origin and destination are 

both in the same geographic area) 
3-11 

 3 - At the CONUS POE alongside the vessel or aircraft 

 4 - Not applicable (Purchaser has full responsibility at the point of origin. Often forwarded 

collect to country freight forwarder.) 

 5 - At the CONUS POE on the inland carrier’s equipment 

 6 - At the overseas POD on board the vessel or aircraft 

 7 - At the overseas inland destination on board the inland carrier’s equipment 

 8 - At the CONUS POE on board the vessel or aircraft 

 9 - At the overseas POD alongside the vessel or aircraft 

 Delivery Term Codes showing DoD transportation responsibility for repair LOAs are shown below. 

The LOA will provide a CONUS address for each item identified for repair. The customer must assure 

this address is shown on all containers and documentation when materiel is returned. 

 A - From overseas POE through CONUS destination to overseas POD on board the vessel or 

aircraft 

 B - From overseas POE through CONUS destination to CONUS POE on board the vessel or 

aircraft 

 C - From CONUS POD on board the vessel or aircraft through CONUS destination to 

CONUS POE on board the vessel or aircraft 

 D - From CONUS POD on board the vessel or aircraft through the CONUS destination to 

overseas POD on board the vessel or aircraft 

 E - Not applicable (Purchaser has complete responsibility.) 

 F - From overseas inland point through CONUS destination to overseas inland destination 

 G - From overseas POE through CONUS destination to overseas POD alongside vessel or 

aircraft 

 H - (For classified items) From CONUS inland point to CONUS POE alongside vessel or 

aircraft 

 J - (For classified cryptographic items) From CONUS inland point to overseas inland 

destination 

 3. INFORMATION TO BE ENTERED BY THE PURCHASER. Mark For and Freight 

Forwarder Codes are maintained in the Military Assistance Program Address Directory (MAPAD), 

DoD 4000.25-8. The Purchaser Procuring Agency should show the code for the Purchaser’s Army, 

Navy, Air Force, or other agency which is purchasing the item(s). The Name and Address of the 

Purchaser’s Paying Office is also required. 

 a. Mark For Code. This Code should be entered for use in identifying the address of the 

organization in the Purchaser country which is to receive the items. This includes return of items repaired 

under an LOA. 
3-12 

 (1) This address will be added by the U.S. DoD to the Ship To address on all freight 

containers. It will also appear on items forwarded by small parcel delivery service, including parcel post. 

The address should include the port of discharge name and designator (water or air); country name, 

country service name, street, city, state or province, and (if applicable) in-country zip or similar address 

code. 

 (2) Shippers are not authorized to apply shipment markings. If codes and addresses are not 

published, containers will be received at the freight forwarder or U.S. military representative in-country 

unmarked for onward shipment with resultant losses, delays, and added costs. The USG will sponsor 

shipment of this materiel to FOB U.S. point of origin. 

 b. Freight Forwarder Code. When Offer Release Code X applies, Code X or W, discussed under 

Offer Release Code X above, must be entered. 

4. FINANCIAL.

 a. The method of financing is shown in the LOA, Amendment, or Modification. The initial 

deposit required with Purchaser signature of the LOA is an integral part of the acceptance. 

 b. LOA payment schedules are estimates, for planning purposes. DFAS (DFAS-DE) will request 

payment in accordance with the payment schedule unless DoD costs, including 90-day forecasted 

requirements, exceed amounts required by the payment schedule. When this occurs, the U.S. will use its 

best efforts to provide a new schedule via LOA Modification at least 45 days prior to the next payment 

due date. The Purchaser is required to make payments in accordance with quarterly DD Forms 645 issued 

by DFAS regardless of the existing payment schedule. 

 c. The DD Form 645 serves as the bill and statement of account. An FMS Delivery Listing, 

identifying items physically or constructively delivered and services performed during the billing period, 

will be attached to the DD Form 645. DFAS forwards these forms to the Purchaser within 45 days before 

payments are due and Purchasers must forward payments in U.S. dollars to the USG in time to meet 

prescribed due dates. Costs in excess of amounts funded by FMF agreements must be paid by the 

Purchaser. Questions concerning the content of DD Forms 645 and requests for billing adjustments 

should be submitted to the Defense Finance and Accounting Service (DFAS-DE), 6760 East Irvington 

Place, Denver CO 80279-2000. 

 d. The preferred method for forwarding cash payments is by bank wire transfer to the Department 

of the Treasury account at the Federal Reserve Bank of New York using the standard federal reserve 

funds transfer format. Wire transfers will be accepted by the Federal Reserve System (FRS) only from 

banks that are members of the FRS, therefore, non-U.S. banks must go through a U.S. correspondent FRS 

member bank. The following information is applicable to cash payments: 

 Wire transfer-- Check mailing address-- 

 Federal Reserve Bank of New York DFAS-ADCTA/DE 

 Treasury NYC (3801), P.O. BOX 173659 

 DFAS-DE Denver CO 80217-3659 

 ABA#021030004 

 e. To authorize payments from funds available under FMF loan or grant agreements, the 

Purchaser may be required to submit a letter of request to the Defense Finance and Accounting Service 

(DFAS-DE), Denver, Colorado 80279-2000. Purchasers should consult applicable FMF agreements for 

explicit instructions. Questions pertaining to the status of FMF financing and balances should be directed 

to DSCA Comptroller. 
3-13 

 f. Payments not received by DFAS (DFAS-DE) by the due date may be subject to interest charges 

as outlined in paragraph 4.4.8 of the LOA Standard Terms and Conditions. 

 g. The values on the LOA are estimates. The final amount will be equal to the cost to the USG. 

When deliveries are made and known costs are billed and collected, DFAS-DE will provide a “Final 

Statement of Account” which will summarize final costs. Excess funds will be available to pay unpaid 

billings on other statements or distributed as agreed upon between the Purchaser and the Comptroller, 

DSCA. 

 h. The Purchaser may cancel this LOA upon request to the implementing agency. An 

administrative charge that equals one-half of the applicable administrative charge rate times the ordered 

LOA value, which is earned on LOA acceptance, or the applicable administrative charge rate times the 

actual LOA value at closure, whichever is higher, may be assessed if this LOA is cancelled after 

implementation. 

5. CHANGES TO THE LOA. Changes may be initiated by the USG or by requests from the 

Purchaser. After acceptance of the basic LOA, these changes will take the form of Amendments or 

Modifications. 

 a. Amendments encompass changes in scope, such as those which affect the type or number of 

significant items to be provided. Amendments require acceptance by the USG and the Purchaser in the 

same manner as the original LOA. 

 b. Modifications include changes which do not constitute a change in scope, such as increases or 

decreases in estimated costs or delivery schedule changes. Modifications require signature only to 

acknowledge receipt by the Purchaser. 

 c. When signed, and unless alternate instructions are provided, copies of Amendments and 

Modifications should be given the same U.S. distribution as the basic LOA. 

 d. Requests for changes required prior to acceptance by the Purchaser should be submitted to the 

implementing agency for consideration. See DoD 5105.38-M, section 70105.M.2. 

6. CORRESPONDENCE. Questions or comments regarding this LOA should identify the Purchaser 

request reference and the identification assigned by the implementing agency within DoD. 
3-14 

FIGURE 3-2 

Relationship of FMS Case to Item Numbers 

to Document Numbers 

FMS CASE 

(LOA)

ITEM 

NUMBER

ITEM 

NUMBER

ITEM 

NUMBER

DOCUMENT 

NUMBER

DOCUMENT 

NUMBER

DOCUMENT 

NUMBER

• MILSTRIP REQUISITION 

• PURCHASER ORDER 

• WORK ORDER

NOTES, STANDARD TERMS AND CONDITIONS, AND LOA INFORMATION 

 Individual LOAs differ in scope, complexity, and length. Additional information pertinent 

to a given LOA may be incorporated by means of notes. For example, the assumptions that the 

DoD component used in computing Packing, Crating and Handling (PCH) estimated charges 

may sometimes be found in a note. Notes plus LOA Standard Terms and Conditions, and LOA 

Information are part of every LOA. 

 • LOA Standard Terms and Conditions is an instrumental part of every LOA. It defines 

the roles and responsibilities of both the U.S. government and the FMS customer. In this regard: 

 •• Section 1 describes the rights and responsibilities of the U.S. government. 

 •• Section 2 describes the rights and responsibilities of the FMS purchaser. 

 •• Section 3 addresses the subject of Indemnification and Assumption of Risk. 

 •• Section 4 addresses the subject of Financial Terms and Conditions. 

 •• Section 5 addresses the subject of Transportation and Discrepancy Provisions 

 •• Section 6 addresses the subject of Warranties. 

 •• Section 7 addresses the subject of Dispute Resolution. 
3-15 

 • LOA Information provides basic information pertaining to the LOA for U.S. and 

Purchaser use. Additional information may be obtained from the Security Assistance 

Management Manual, DoD 5105.38-M, the in-country Security Assistance Office, DSCA, or 

from the implementing agency 

FMS PAYMENT SCHEDULE 

 The payment schedule is also an important part of the LOA. It is designed to provide 

budgetary planning information to the FMS customer. The Arms Export Control Act, as 

amended, and DoD policy require that payments be made in advance of delivery/performance. 

Unless the LOA indicates that the total estimated cost of the case should be paid as an initial 

deposit, a payment schedule (showing the estimate amount payable by quarter) will be provided. 

CONCEPT 

 The payment schedule, which is an integral part of the LOA, contains estimates based upon 

forecasted: 

 • Defense articles/services to be provided by the DoD. 

 • New procurement contractor “progress payments,” “contractor holdback,” and 

 remaining “termination liability” as of each scheduled payment date. (The terms 

are defined below.) 

 • Associated administrative, accessorial, and other authorized charges, as 

appropriate. 

DEFINITIONS 

Progress Payments. Those payments made to contractors or DoD industrial fund activities 

as work progresses under a contract, on the basis of cost incurred or percentage of completion, or 

of a particular stage of completion, accomplished prior to actual delivery and acceptance of 

contract items. 

Contractor Holdback. Amount earned by contractors or suppliers during the production 

period but not paid to the contractor/supplier to ensure future performance. 

Termination Liability Reserve. That amount collected from a purchaser in anticipation of 

any liability that would accrue to the U.S. government should a particular case or program be 

terminated prior to the normal completion of the contract. The reserve is not always a constant 

amount but must be adjusted regularly as contracts are awarded, work progresses, payments are 

received, and deliveries are made. 

 A primary point to remember is that progress payments, contractor holdback, and 

termination liability reserve are included in the Payment Schedule and the FMS Billing 

Statement (DD Form 645). Within the DD Form 645, progress payments are identified at case 

level as WIP in Column 6. The aggregated WIP is shown in Column 10. Once deliveries of 

equipment, etc., are subsequently made and posted in Column 9 of the DD Form 645, an 

attendant amount of the WIP liability is liquidated. 
3-16 

PAYMENT SCHEDULE DEVELOPMENT 

 As noted in the LOA Standard Terms and Conditions, it is U.S. government policy to obtain 

funds 90 days in advance (e.g., a payment due 15 June covers requirements of the 1 July - 30 

September period) of the time that the DoD plans such deliveries or incurs such expenses on the 

part of the FMS Purchaser. The payment schedule, along with the initial deposit, provides the 

mechanics for implementing this policy. 

 Every LOA, except for the Foreign Military Sales Order (FMSO I) case under a 

Cooperative Logistics Supply Support Arrangement, will have a Payment Schedule. For 

illustration purposes, an FMS case having a total estimated value of $500,000 might have a 

payment schedule as follows: 

 Payment Date Amount

 Initial Deposit $200,000 

 15 March 200X $100,000 

 15 June 200X $100,000 

 15 September 200X $100,000 

The dates indicated above (e.g., 15 March 199X) relate to the dates the estimated payments are 

due at DFAS-DE, i.e., the date which would be reflected in Block 2 of the applicable DD Form 

645, “Foreign Military Sales Billing Statement.” Of course, since the Payment Schedule reflects 

“estimated” payments based on anticipated implementation dates, the amounts subsequently 

indicated as due on the DD Form 645 can and often do differ. For example, if the case is signed 

but the implementation is delayed, the Payment Schedule could be one quarter ahead of the DD 

Form 645 bill amount. 

 The FMS customer should pay the amounts indicated as due on the DD Form 645, rather 

than the amounts reflected on the Payment Schedule. The DD Form 645 - and not the Payment 

Schedule - is the “official” DFAS-DE billing notification. 

RELATIONSHIP OF THE PAYMENT SCHEDULE TO THE DD FORM 645 

 In recognition of the importance of firm and meaningful budgetary estimates to the FMS 

customer, DoD policy - to the extent possible and feasible - is to use the amounts reflected in the 

Payment Schedule as the forecasting mechanism for the DD Form 645. In theory, as illustrated in 

Figure 3-3, Column 12 of the DD Form 645 (the header of which reads “Total Financial 

Requirements”) should balance to the cumulative Payment Schedule through the applicable 

forecast quarter. Furthermore, assuming the FMS customer has made all required payments at 

the appropriate times, Column 14 of the DD Form 645 (the header of which reads “Amount Due 

and Payable”) should equate to the corresponding incremental amount shown by the appropriate 

date in the Payment Schedule. This balancing formula will not materialize, however, if actual 

deliveries/expenses have exceeded forecasted estimates, if the FMS customer has paid an 

amount(s) different from that required (or payment is received late), or if amendments/modifications have just entered the billing system, just to name a few reasons. Still, the 

point is: Every effort is made by the DoD component and DFAS-DE to enhance the reliability of 

the budgetary estimates contained in the Payment Schedule. 

 One system exception to the above balancing formula needs to be briefly addressed. For 

Supply Support Arrangement (FMSO II) and other repair part cases, experience has shown that 

variations in both requisitioning and supply actions render most Payment Schedules for these 

cases highly overstated. To preclude substantial over billing, each implementing agency provides 

DFAS-DE with a quarterly “Committed Values for Requisition Cases” report. These up-to-date 

forecast amounts are subsequently incorporated into the DD Form 645 billing criteria if less than 

the payment schedule. 
3-17 

FIGURE 3-3 

Relationship of Payment Schedule to DD Form 645 CUMULATIVE (TO DATE) ESTIMATED PAYMENT SCHEDULE AMOUNTS IN LOA PAYMENT SCHEDULE TOTAL FINANCIAL REQUIREMENTS (COLUMN 12) OF DD FORM 645

GOAL: BALANCE

REVISIONS TO FINANCIAL ANNEX PAYMENT SCHEDULES

Whenever a substantive change in payment requirements is evident, an LOA modification shall be issued to provide a new payment schedule. Such action is required if the LOA total estimated cost varies by more than $500,000 or 10% (whichever is greater) during a 12 month period.
3-18 

FMS PRICING ELEMENTS 

GENERAL 

 The elements of an FMS price can be combined into two major categories; base price and 

other authorized charges. The base price generally refers to the price of the item or service, i.e., 

contract price, inventory price, etc. The authorized charge, on the other hand, related to the 

application of a cost (often on a percentage or pro-rata basis) that is dependent to some degree on 

the value of a base price or other combinations. A description of base prices and other authorized 

charges follows. 

Base price relate to the basic article (hardware) or service being sold under the terms of the 

LOA. The unit costs estimate, column (4)(a) of the LOA, may contain, in addition to the base 

price figure, certain other authorized charges. 

Authorized charges (Administrative Costs, Packing, Crating and Handling, etc.) are 

reflected in two ways on the LOA 

 1. As part of the unit price figure in column (4)(a). Examples of these are: a pro rata share 

on nonrecurring research, development, test and evaluation (RDT&E) and/or production start up 

costs; attrition for FMS training; contract administration costs, etc. 

 2. As separate costs shown in lines (9), (10), (11), or (12) of the LOA 

DoD Pricing/Billing Relationships and Policies. What do these cost category breakouts 

really mean to the FMS customer in the context of understanding the LOA and the DD Form 

645? 

 It is DoD policy that, to the degree possible, only the single selling be shown on the LOA 

and associated DD Form 645 billing documentation. It is not normal FMS practice to provide a 

detailed description of the components of prices included for line items on the LOA. This means 

that prices relevant to unit costs [column (4)(a)], total cost [column (4)(b)], and Net Estimated 

Cost [line (8)] are “rolled-up” single selling prices. For instance, a military equipment item may 

reflect a $100,000 cost in column (4)(a) (Unit Cost) and included or rolled-up in this price would 

be the base materiel price, any nonrecurring costs, contract administration, etc. 

 The degree of detail on the LOA theoretically corresponds to and drives the level of detail 

on the DD Form 645. The $100,000 equipment item in the above example would initially show 

up in Column 7 (Total Value Ordered) of the DD Form 645, and as deliveries were made, such 

delivery information would be reflected in Column 9 (Current Period Delivery Costs), and other 

aggregated columns. The FMS Delivery Listing, which supports the current period entries in 

Column 9 of the DD Form 645, would reflect the estimated or actual price (as coded by the 

Implementing Agency) under the subheading “ARTICLES/SERVICES TRANSACTIONS . . . 

UNIT PRICE.” This UNIT PRICE would include applicable authorized charges. 

 The authorized charge(s) computations would be reflected in the “ADMINISTRATIVE/ 

ACCESSORIAL TRANSACTIONS” portion of the FMS Delivery Listing, where the costs 

would be broken down in terms of generic code descriptions–for example, L1A Inland 

Transportation CONUS, L1D Parcel Post, L6A Administrative Costs, etc. 

 It is DoD policy that the percentages used in determining the estimated costs on the LOA 

[example: 2.5 percent for general administrative costs on Line (10)] will not be shown in the 

related line of the LOA. This is because, in part, these percentages are estimates and have been 

known to change. However, the percentages applied in administrative/accessorial cost 
3-19 

calculations on the FMS Delivery Listing attachment to the DD Form 645 are available for the 

FMS customer’s review. 

LOA MATERIEL/SERVICES COSTS 

Scope. This general category of prices refers to the primary item or service being sold (as 

well as the authorized surcharge costs which are above and beyond the accessorial 

surcharges/add-ons). Some of the more common items and services are discussed next, starting 

with the Defense Working Capital Fund. 

Defense Working Capital Fund. These fund items may be thought of as “consumable bits 

and pieces,” such as repair parts, lubricants, hand tools, etc., and most reparable items. DWCF 

catalog prices are usually updated once a year. This catalog price includes the following cost 

elements: 

 • Materiel procurement cost. 

 • Operating Costs. 

 • Continental United States (CONUS), first destination transportation cost (i.e., 

manufacturer to depot), and second destination cost to the CONUS POE. 

 • Surcharges to recover estimated net stock losses from pilferage, damage, obsolescence, etc., as well as a price stabilization factor for inflation. 

 Sample Price Computation of a DWCF Item:

 Catalog price current at date of drop-from-inventory XXX 

 (Column (4)(a), Unit Cost* XXX) 

*[Also the “Unit Price” in the FMS Delivery Listing attachment to 

the DD Form 645; the “FMS Selling Price” in DoD pricing 

directives/ instructions, hereafter referred to as the “Unit Cost.”] 

Principal and Major Items. This equates to the larger items such as a tank, a vehicle, an 

aircraft, or an aircraft engine. These items may be priced differently depending on whether the 

item is to be replaced or not replaced at all. Some special rules which pertain to principal/major 

items are: 

 • Reductions to the sale price may be made when there is an actual difference in 

utility or desirability among units due to age or condition. For example, if an item has a useful 

peacetime life of twenty years and ten years have expired, the sale price of the item may be 

reduced by 50 percent. However, overhaul costs may also be an additive. 

 • In no event will the sale price be lower than the scrap value plus the cost of any 

major overhaul or outfitting accomplished prior to the sale. 

 • A pro rata share of any nonrecurring research, development, test and evaluation 

(RDT&E) and nonrecurring production costs. These costs are in accordance with DoD Directive 

2140.2, which indicates that pro rata shares shall be computed for major defense equipment 

(MDE) which is defined as significant military equipment having a nonrecurring RDT&E cost of 

more than $50 million or a total production cost of more than $200 million. The pro rata share is 

determined by dividing the total of the nonrecurring cost investment (nonrecurring RDT&E and 
3-20 

nonrecurring production) by the total estimated number of units to be produced over the life of 

the system. 

 • When the price of the item is reduced as result of age, condition, or supply status 

(excess), the same percentage reduction shall be made to the pro rata share of nonrecurring costs. 

 Sample Price Computation of Principal/Major Item Not to be

 Replaced: 

 Acquisition cost of item sold from stock XXX 

 Less adjustment for expired peacetime useful life XXX 

 Plus nonrecurring RDT&E/production costs XXX 

 Plus overhauls (Prorated) XXX

 Unit Cost XXX 

 Sample Price Computation of Principal/Major Item to Be

 Replaced: 

 Contract cost of new item serving as the replacement XXX 

 Less adjustment for expired service life of item sold from stock XXX 

 Plus nonrecurring costs XXX

 Unit Cost XXX 

Excess Materiel. Excess equipment will normally be sold in an “as-is” condition; any costs 

associated with repairing, rehabilitating, or modifying such materiel are additive. The selling 

price of excess equipment, exclusive of repair and modification costs, will be the higher of: 

 • Its market value as military hardware. 

 • Its fair value computed using the appropriate fair value table rate (times the 

acquisition value of the item) promulgated in the DoD Financial Regulation

Volume 15, Security Assistance Policy and Procedures (DoD 7000.14-R). 

 • Its scrap value 

 Sample Price Computation of Excess Materiel: 

 Higher of market value/fair value/scrap value XXX 

 Nonrecurring costs XXX 

 Pro rata overhaul cost before sale date XXX

 Unit Cost XXX 

New Procurement. The basic rule with regard to the base price of articles or services from 

new procurement/production is that the FMS purchaser is required to pay the full amount of the 

contract. In addition, there are other additive costs which may be included in the base price: 

 • Contract administration costs, computed as a percent surcharge (currently 1.5 

percent) on all disbursements which are reported to DFAS-DE as made to contractors for FMS 

new procurements on which applicable contract administration costs have not been waived. 
3-21 

 • The costs of any government furnished materiel (GFM) or government furnished 

equipment (GFE, including applicable DTS rates and a 3.5/1.0 percent packing, crating, and 

handling (PCH) surcharge, if applicable. 

 Sample Price Computation of New Procurement Item: 

 Contract price XXX 

 Plus: 

 Nonrecurring costs XXX 

 Contract administration XXX 

 GFM/GFE XXX

 Unit Cost XXX 

DoD Personal Services. This refers to services involving DoD civilian and/or military 

personnel, such as a technical assistance or site survey. The base price of these services include: 

 • For civilians, the General Schedule (GS), or other appropriate wage schedule, 

rates. To this is added: 

 • The applicable acceleration rate (percentage) for the USG share of retirement 

costs, fringe benefit costs, and leave and holiday period costs. 

 • Actual temporary duty (TDY) (i.e., travel and per diem) costs. 

 • Actual permanent change of station (PCS) costs, if made to implement the 

FMS case. 

 • For U.S. military personnel, the appropriate amount (factored on an hourly rate, 

as necessary) from the DoD Annual Composite Standard Rates Table (comprised of basic pay, 

retirement, basic allowance for quarters, miscellaneous expense, pro rata share of normal PCS, 

incentive and special pay). To this is added: 

 • Actual TDY costs. 

 • Actual PCS cost, if made to implement the FMS case. 

 • Fringe benefit and leave and holiday period costs. 

 Sample Price Computation for DoD Personal Services: 

 Direct civilian labor or Military Composite Standard Rate XXX 

 Plus: 

 Acceleration (retirement, fringe benefits, leave and holiday) XXX 

 PCS/TDY XXX

 Unit Cost XXX 

ADMINISTRATIVE/ACCESSORIAL COSTS 

 As was noted in the above discussion, several FMS authorized charges appear in the LOA 

Materiel/Services lines and as authorized charges in lines (9), (10), (11), and (12). The 

authorized charges in lines (9), (10), (11), and (12) are reflected by means of two basic generic 

categories on the DD form 645: 
3-22 

 • ADMINISTRATIVE FEE (Generic Code L6A in Column 6 of the DD Form 

645). As the title suggests, this cross-references to the Administrative Costs in Line (10) [or Line 

(12) for Supply Support Arrangements] of the LOA. A further breakdown of current period 

administrative costs can be found in the FMS Delivery Listing, under the subheading 

“ADMINISTRATIVE/ACCESSORIAL TRANSACTIONS . . . [and Generic Description] L6A 

ADMIN COSTS.” 

 • ACCESSORIAL COSTS (Generic Code LOO in Column 6 of the DD Form 

645). These, too, show up on the FMS Delivery Listing under the subheading 

“ADMINISTRATIVE/ACCESSORIAL TRANSACTIONS.” Included in this accessorial 

grouping are: 

 • Packing, Crating, and Handling (PCH) Costs: “L2A PCH.” (Cross-references 

to Line (9) of the LOA). Applies to non-DWCF items only. 

 • Defense Transportation Service (DTS) Costs: “L1A CONUS TRANS, L1B 

OCEAN TRANS, L1C AIR TRANS, L1D PARCEL POST, L1E COMM 

PKG, L1F OS INLAND.” (Cross-references to Line (11) of the LOA). 

 • Port Handling Costs: “L2B CONUS PORT, L2C OS PORT.” (Crossreferences to Line (11) of the LOA). 

 • Staging Costs: “L4O STAGING.” (Cross-references to Line (11) of the 

LOA). 

 These administrative/accessorial costs are now defined and discussed in some detail. 

Packing, Crating, and Handling (PCH) (Line (9) of the LOA). Standard PCH rates are 

applied to the selling price of certain materiel sold from DoD inventories. Prescribed PCH rates 

are: 

 • 3.5 percent of material with a unit price of $50,000 or less. 

 • 1.0 percent of that portion of the selling price above $50,000. 

Notes: (1) In accordance with DoD policy, the above PCH percentage rates will not be 

shown in Line (9) of the LOA. Rather, only the whole dollar amounts computed will be shown. 

This guidance applies to the other authorized charges discussed below. (2) Standard PCH rates 

of 3.5/1.0 percent apply unless RIC begins with “G,” then the rate provided by GSA applies. 

Administrative Costs (Line (10) of the LOA). The purpose of the general administrative 

cost element is to recover DoD expenses related to the functions of sales negotiations, case 

implementation, funds control of FMS, and related general costs of an administrative nature. The 

prescribed standard rates charged are as follows: 

 • Supply Support Arrangements: Shown in Line (12) of the LOA. 

 • Nonstandard Articles: 5% 
3-23 

 • All Other FMS Orders: 

 • 29 Jan 70 - 9 Mar 77 (i.e., Date of Offer): 2%, unless otherwise prescribed. 

 • 10 Mar 77 - 30 Sep 77: 2% uniform rate. 

 o 1 Oct 77 - 31 May 99: 3% uniform rate. 

 o 1 June 99 - Present 2.5% 

Defense Transportation System (DTS) Costs. Although normally the transportation of 

non-DBOF funded FMS materiel will be on collect commercial bills of lading from the U.S. 

depot to the freight forwarder agent of the FMS customer, there are occasions (e.g., shipment of 

hazardous material) where the DTS must be used. The DTS percentages are as shown in Figure 

3-4 and apply to that portion of the unit price up to $10,000; for that portion of the unit price 

above $10,000, the appropriate percentage rate is multiplied by a 0.25 factor. Also, on occasion, 

actual transportation billings may be applicable. 

Cooperative Logistics Supply Support Arrangement (CLSSA) Charges (Line (12) of 

the LOA). 5% uniform rate applicable to the FMSO I, Part A, portion; 2.5% uniform rate of 

FMSO II, Line (8), amount. 

Attrition. The attrition charge may be applicable to training cases. The attrition cost 

factors, four percent for flying training and one percent for non-flying, will be included in tuition 

rates whenever the training or educational course includes the use of training equipment or 

operational equipment used as training aids. 

TERMS OF SALE 

Scope. The Security Assistance Management Manual (SAMM), Chapter 13, and the LOA 

Standard Terms and Conditions depict the various terms of sale which may appear on the LOA. 

There are several terms of sale which are available to accommodate the specific circumstances of 

the sale to include: 

 • The time that the payment(s) is needed based upon delivery and contractor 

financing requirements. 

 • The source of supply (DoD stocks or new procurement). 

 • The type of financing (cash or credit). 

Cash financing is defined as payment(s) coming from FMS customer resources or through 

financing arrangements which do not involve the DoD FMS Financing (Credit) Program. Credit 

financing involves payments being made into the FMS trust fund, the source of which is the 

Foreign Military Financing Program. Further information about these programs can be found in 

the SAMM, Chapter 9. 

Discussion. There are seven general terms of sale, the first four of which appear in 

paragraph 4.4, LOA Standard Terms and Conditions. A listing of the terms and their general 

wording follows. 

 • Cash with Acceptance. The Purchaser agrees to forward with the LOA a check 

or wire transfer in the full amount shown as the estimated total cost [Line (13)], and agrees to 
3-24 

make such additional payment(s) as may be specified upon notification of cost increase(s) and 

request(s) for funds to cover such increases. 

 • Cash Prior to Delivery: The Purchaser agrees to pay to the USG such amounts at 

such times as may be specified from time to time (including any initial deposit required) in order 

to meet payment requirements for articles or services to be furnished from the resources of the 

DoD. USG requests for funds may be based on estimated requirements to cover forecasted 

deliveries of articles or costs to provide defense services. It is USG policy to obtain funds 90 

days in advance of the time DoD plans such deliveries or incurs such expenses on behalf of the 

Purchaser. 

FIGURE 3-4 

Defense Transportation System (DTS) Percentage Rates 

Rate

Area

DoD Movement:

Point of Origin

to Destination

DTC 4

Conus

Port of

Exit

Conus Port

Aboard

Vessel

DTC 5 DTC 8

Overseas

Port

DTC 6

Overseas

Port

Discharged

DTC 9

Overseas

Inland

Destination

DTC 7

Port to Port

Discharged

14.25

10.50 

11.25

7.50 

10.25

6.50 

7.5

16.25

12.50 

13.25

9.50 

12.25

8.50 

6.25 9.5

2.50 

6.25

2.50 

3.75

0 

0

Europe

Central America

Mediterranean

Newfoundland,

Labrador,

Thule, Iceland,

South America,

Far East,

Africa, Near

East

1

2

TRANSPORTATION MATRIX

TBC

D,K,L

TBC

H,U

TBC

A,B,E

TBC

J

TBC

F,X

TBC

C,V

TBC

G,Y

Note 1: In most instances, the Transportation Bill Code (TBC), e.g., A, B, contained in the implementing 

agency’s delivery transaction determines the surcharge rate. The TBC reflects the actual level of 

transportation effort, whereas the Delivery Term Code (DTC), e.g., 5, indicates the planned 

transportation effort. However, in the absence of a TBC in the delivery transaction, the DTC will 

determine the surcharge rate. The DTC and TBC descriptions are contained in Appendices G and N of 

this handbook, respectively. 

Note 2: Above rates are applied in full up to a unit price of $10,000. For that portion of the unit price in excess 

of $10,000, 25 percent of the rate is applied. 
3-25 

 • Dependable Undertaking: The Purchaser agrees to pay to the USG such 

amounts and at such times as may be specified from time to time by the USG (including any 

initial deposit required) in order to meet payments required by contracts under which items are 

being procured, and any damages and costs that may accrue, or have accrued, from termination 

of contracts by the USG because of the Purchaser’s cancellation of the LOA. USG requests for 

funds may be based upon estimated requirements for advance and progress payments to 

suppliers, estimated termination liability, delivery forecasts or evidence of constructive delivery, 

as the case may be. It is USG policy to obtain such funds 90 days in advance of the time that the 

USG makes payments on behalf of the Purchaser. 

 • Payment on Delivery: The Purchaser agrees that bills may be dated as of the 

date(s) of delivery of the defense articles or rendering of the defense services, or upon forecasts 

of the date(s) thereof. (Consistent with Section 21(b) and (d) of the AECA, this term of sale is 

used only pursuant to a written determination delegated to the Director, DSCA, that it is in the 

national interest to do so. When used, billings to country are accomplished quarterly.) 

 • FMS Credit: This term applies to payment in whole or in part with FMS credit 

funds. In accordance with LOA information, the purchaser may be required to submit a letter of 

request to the Defense Finance and Accounting Service (DFAS/DE-IADD) Denver, Colorado, to 

authorize payments from funds available under FMS loan or grant agreements. 

OTHER TERMS AND CONDITIONS HAVING FINANCIAL IMPLICATIONS 

 The following terms and conditions are also contained in the LOA or the LOA Standard 

Terms and Conditions: 

 • Payment of Total Cost: The Purchaser shall pay to the USG the total cost to the 

USG of the items, even if the final total cost exceeds the amounts estimated in the LOA. 

 • Payment Method: The Purchaser shall make payment(s) for the items by 

check(s) or by wire transfer payable in U.S. dollars to the Treasurer of the United States. 

Requests for funds or billings are due and payable in full on presentation, even if such payment 

date is not in accord with the estimated payment schedule. 

 • Requests for Adjustments: The Purchaser will request adjustments of any 

questioned billed items by subsequent submission of required deficiency reports in accordance 

with paragraph 5, LOA Standard Terms and Conditions, which indicates: 

 • The Purchaser shall accept title to the defense articles at the initial point of 

shipment. 

 • The Purchaser shall be responsible for in-transit accounting and settlement of 

claims against common carriers. 

 • Standard Form 364 shall be used in submitting claims to the USG for 

overage, shortage, damage, duplicate billing, item deficiency, improper 

identification or improper documentation and shall be submitted by the 

Purchaser promptly. 

 • Claims of $200 or less will not be reported for overages, shortages, or 

damages (except for older cases reflecting a $25 or $100 limitation). 

 • Claims (excluding a claim for nonshipment/nonreceipt of an entire lot) 

received one year after date of passage of title or initial billing, whichever is 
3-26 

later, will be disallowed by the USG, unless the USG determines that 

unusual and compelling circumstances involving latent defects justify 

consideration of the claim. [Initial billing is interpreted as applicable either 

to estimated (price code E), incremental (price code N) or actual (price code 

A) costs reported on the first quarterly billing for the item.] 

 • Interest on Net Arrearages: The Purchaser is required to pay interest on any net 

amount by which it is in arrears on payments, determined by considering collectively all of the 

Purchaser’s open LOAs with the DoD. 

 • Designation of Procuring Agency and Paying Office: The purchaser shall 

designate the Procuring Agency and responsible Paying Office and address thereof to which the 

USG shall submit requests for funds and bills under the LOA. (Note: This information goes on 

page 1 of the LOA). 

 • Acceptance of the LOA: The purchaser shall, in the process of accepting an 

LOA, return three copies properly signed to DFAS-DE, accompanied by the initial deposit or 

other payment arrangement as may be required. These actions must be done not later than the 

expiration date as shown on the LOA (except when the expiration date is extended). In addition, 

the Purchaser will concurrently return three (or more, if so specified) copies properly signed to 

the U.S. Military Department or Defense Agency making the offer. When properly accepted and 

returned, the provisions of the LOA shall be binding upon the USG and the Purchaser. 

 It is emphasized that implementation of the LOA cannot proceed without a proper 

acceptance. A delay in submission of any required initial deposit or payment of full estimated 

cost, may require revision or reissue of the LOA. 

 • Refunds: DFAS-DE shall refund to the Purchaser any payments which prove to 

be in excess of the final total cost of delivery and performance of a given LOA, provided 

arrearages do not exist. Refund agreements between the FMS customer and DFAS-DE will 

specify either blanket (automatic) or case-by-case processing. Case-by-case processing must be 

confirmed in writing from the FMS customer. 

 • Cancellation: Either the USG or the Purchaser may cancel the LOA with respect 

to any or all items listed therein at any time prior to delivery of defense articles or performance 

of defense services (including training). The party initiating the cancellation shall be responsible 

for any termination or other cancellation costs as provided in the LOA and/or DSCA case policy 

decisions. 

TYPE OF ASSISTANCE CODES 

 The type of assistance (TA) Code distinguishes the various types of FMS agreements for 

Military Standard Requisitioning and Issue Procedures (MILSTRIP) requisitioning purposes, 

i.e., code is entered in data position 35 of the MILSTRIP DD-1348. The implementing agency 

(IA) generally enters the TA code on the LOA or in the internal IA implementing directives for 

an FMS case for subsequent transcription to the DD-1348. These codes are found in Appendix H 

of this Handbook and paragraph 2.F of the LOA Information. 
3-27 

AMENDMENTS AND MODIFICATIONS TO THE LOA 

 Occasionally, it is necessary to amend or modify the LOA. 

AMENDMENT 

 The United States of America Amendment to Letter of Offer and Acceptance, is used 

for changes in “scope” to the LOA and requires FMS customer’s signature (acceptance). 

MODIFICATION 

 The United States of America Modification to Letter of Offer and Acceptance, is used 

to record modifications to an existing LOA, not affecting the LOA “scope,” and does not require 

the FMS customer’s acceptance. It is often used to notify the FMS customer of estimated price 

increases and/or revised schedule of payments (Payment Schedule). 

IMPACT OF AMENDMENTS AND MODIFICATIONS 

 The impact and significance of the Amendments and Modifications, as they relate to the 

FMS billing system, are as follows: 

 • Payment schedules may have to be revised which, in turn, impact on the amounts 

“forecasted” in the DD Form 645. 

 • Unit prices which may have processed through the FMS billing system (and 

appeared on the FMS Delivery Listing) may have to be revised (i.e., the old price “credited out” 

and the new price “debited in”). The authorized charges, in this event, would also have to be 

revised accordingly. 

SUMMARY 

 In this chapter, the role of the LOA and amendments/modifications thereto were discussed 

in the context of their importance to the FMS billing process. Some of the key points were: 

 • The DFAS-DE inventory of implemented LOAs serves as the initial basis for 

preparation of the DD Form 645. However, the prices shown on the LOA and the payments 

contained in the Payment Schedule are estimates only; actual costs and possibly updated 

payment forecasts will be reflected in the DD Form 645. 

 • There are three primary record keys associated with the LOA (or the FMS case): 

(1) the FMS Case Identifier, (2) the Item Numbers, and (3) Document Numbers. The first two 

record keys are found in the LOA; the latter (i.e., Document Numbers) are compiled during the 

case implementation process and may be verified by comparison to the shipping document (DD 

Form 250 or DD Form 1348-1, as applicable). 
3-28 

[This page intentionally left blank.] 
4-1

CHAPTER 4 

THE FOREIGN MILITARY SALES BILLING SYSTEM 

PURPOSE 

 The Arms Export Control Act (AECA), as amended, (Sections 21 through 24) provides the 

legal basis for foreign military sales (FMS) billing policies and procedures. These policies and 

procedures are further defined and expressed, in part, in the DoD Financial Management 

Regulation, Security Assistance Policy and Procedures (DoD 7000.14R, Vol. 15), in the Security 

Assistance Management Manual (SAMM) (DoD 5105.38-M), and in the United States of 

America Letter of Offer and Acceptance (LOA) Standard Terms and Conditions. The purpose of 

this Chapter is to describe the Defense Finance and Accounting Service-Denver (DFAS-DE) 

function in the billing cycle, responsibilities of the implementing agencies (IAs-DoD 

components), DFAS-DE cash management and reports/products provided by DFAS-DE to the 

FMS customer. 

THE BILLING CYCLE 

 DFAS-DE issues quarterly billing statements (DD Form 645) to FMS customers based upon 

payment schedules in the LOA by the applicable implementing agency. DFAS-DE bills for costs 

related to defense articles, services, and training that have been sold pursuant to the AECA, as 

amended. Implementing agencies report FMS deliveries of materiel, services, training, accrued 

expenditures (work in process), and other related costs to DFAS-DE for the purpose of obtaining 

reimbursement or reporting performance under an allotment of trust fund budget authority. 

INPUTS TO DFAS-DE 

 To prepare a proper bill (DD Form 645) for a given FMS case, DFAS-DE must have certain 

information from implementing agencies. When an LOA is sent to the FMS customer, a copy is 

also provided to DFAS-DE with its Payment Schedule loaded into the DIFS computer. After the 

FMS customer accepts the LOA and provides DFAS-DE with signed copies of the LOA and the 

applicable initial deposit, DFAS-DE updates its computer and prepares for case implementation 

and implementing agency delivery reports. The initial deposit accompanying most FMS cases 

provides sufficient cash advance to cover disbursements from the time the case is accepted until 

the first billing payment due date. 

PAYMENT SCHEDULES 

 It is DoD policy that FMS customers be requested to pay amounts reflected in the Payment 

Schedule to the LOA. The purpose of the Payment Scheduleis to supplement and amplify terms 

in Section 4 of the LOA Standard Terms and Conditions, and to provide a clear understanding 

between the United States Government and the purchaser as to the estimated rate and timing of 

the payments to be made. The Payment Schedule is prepared by implementing agencies. DoD 

policy essentially fulfills dual objectives: (1) the FMS purchaser is assured of having sound 

budgetary information at his immediate disposal; and (2) the USG is assured of receiving monies 

in advance of anticipated expenditures. 

 Payment schedules are a consolidated formal presentation to the FMS customer of the 

estimates of cash requirements and potentially consist of two financial categories: (1) an initial 

deposit, and (2) estimated quarterly billing amounts. If initial deposits are required upon 

acceptance of a sales agreement, the amount of the initial deposit should be sufficient to cover all 

costs and contingencies (e.g., contract holdback, potential termination liability) anticipated to be 

incurred until the first billing statement can be rendered and monies collected. 
4-2

 Implementing agencies are expected to closely monitor the accuracy of payment schedules 

on all cases to insure that cash is available when the necessity for disbursements arises. 

FMS DETAIL DELIVERY TRANSACTION 

 Implementing agencies must report the performance and execution (e.g., deliveries from 

DoD stock, progress payments, etc.) of the FMS program to DFAS-DE by use of the Delivery 

Transactions. The Delivery Transaction formats are explained in the DoD Financial 

Management Regulation, Security Assistance Policy and Procedures (DoD 7000.14R, Vol. 15). 

Among other things, the Delivery Transactions reflects the MILSTRIP document number, the 

stock or part number, quantity, mode of shipment, delivery source code, transportation bill code, 

and dollar value. For several FMS cases (e.g., FMSO II), thousands of delivery transactions are 

received by DFAS-DE on a monthly basis. The delivery data transmissions are due to arrive at 

DFAS-DE by the 16th calendar day of the month following the end of the month being reported. 

The Delivery Transactions provides the basis for the detailed entries which appear in the FMS 

Delivery Listing, and further prompts reimbursement/liquidation of transactions reported by the 

implementing agencies. 

CASH ACCOUNTING 

FMS TRUST FUND 

 The FMS country trust fund is a fund credited with receipts which are earmarked by law 

and held in trust or in a fiduciary capacity by the United States Government for use in carrying 

out specific purposes and programs. The FMS trust fund (accounting classification 97-8242) 

represents the aggregation (corpus) of cash received from purchaser countries and international 

organizations credited to open FMS cases, funds that are excess to closed FMS case financial 

requirements, and/or funds held pending implementation of new cases or other agreed financial 

arrangements. 

 DFAS-DE is responsible for recording transactions that impact the FMS trust fund. FMS 

customer cash deposits for defense articles and services sold under Sections 21 and 22 of the 

AECA are to be made in advance of delivery, performance or progress payments to contractors. 

The DD Form 645 (“FMS Billing Statement”) and LOA direct that foreign customer payments 

(initial deposits or in response to billing statements) be forwarded by wire transfer or check to 

DFAS-DE. If your country has a Federal Reserve Bank of New York (FRBNY) account 

agreement your remittances should be sent to: 

 Federal Reserve Bank of New York (Foreign Accounts Department) 

 For Deposit to (your account) 

 33 Liberty Street 

 New York, New York 10045-0001 

If you do not have a Federal Reserve Bank of New York account, wire transfers are preferred 

and should be sent to the Federal Reserve Bank of New York, following the Fedwire System 

procedures with the following identifications: U.S. Treasury NYC (3801) Agency Location Code 

(ALC) , DFAS-DE, ABA #021030004. 

 If wire transfer is not utilized, make checks payable to U.S. Treasury, payable in U.S. 

dollars and forwarded to: 

 DFAS-ADCTA/DE 

 P.O. Box 173659 

 Denver, CO 80217-3659 
4-3

All payments should properly identify the customer country making the payment, FMS case 

designator, amounts being paid on each case, and the U.S. service responsible for managing the 

case(s). 

 DFAS-DE exercises stringent controls over the FMS trust fund to insure proper visibility 

and accountability are maintained for all payments made by a customer for every FMS case. 

There are certain principles of trust fund management to include: 

 • One FMS customer’s trust fund balance cannot be used to finance another 

customer’s programs. In other words, DoD does not view the overall FMS trust fund balance as 

“one big account” from which any customer-related bills or reimbursements can be paid. The 

integrity of customer country monies is strictly observed. 

 • Cash disbursements are controlled on a country basis, although accounting for 

FMS transactions are maintained on an FMS case basis. In other words, cash deposits of a given 

country are used to pay U.S. military departments or contractors for costs associated with any of 

that country’s cases, but the accounting will be maintained and reported on individual cases. All 

cash disbursements for a purchaser shall not exceed the customer’s cash deposits. 

 • Dollars received into the FMS trust fund are subject to United States Treasury 

accounting system controls from date of receipt to date of expenditure or refund. DFAS-DE, as 

the accountable agency, renders periodic reports to the United States Treasury and performs a 

monthly reconciliation of balances. 

FMS CUSTOMER FUNDS 

 The FMS customer is billed for United States Government requests for payments (initial 

deposits, quarterly billing statements, or supplemental billing arrangements) and (if applicable) 

direct commercial contract progress payments. The customer may make payments in the form of 

United States dollars directly to DFAS-DE or, when authorized, utilize foreign military financing 

(FMF) funds through the U.S. government. There are presently two types of FMS financing 

programs authorized by the AECA, as described below. 

 • DoD Guaranteed Loans. (Section 24, AECA). This kind of financing constituted 

the major portion of the FMF program prior to FY 1985. Under the guaranteed loan concept, 

DoD (DSCA) submitted a guaranty (against all political and credit risks of nonpayment) for 

principal and interest installments defaulted by the borrower to the Federal Financing Bank (FFB 

- an agency of the Treasury Department). The FFB was responsible for signing the loan 

agreement with the borrowing country and for disbursing loan funds upon receipt of drawdown 

requests from the borrower. This form of financing was terminated at the end of FY 1984. 

 • The FMS customer will normally be required to make semi-annual payments of 

interest and (once the grace period expires) principal. Current loan repayments should be sent 

directly to the FFB; however, repayments of arrearages on FFB loan installments should be sent 

to DFAS-DE (since the FFB has already been paid by DFAS-DE under provisions of the 

guaranty noted above). 

 • DoD Direct Credit. (Section 23, AECA). With the exception of a few direct 

credits in the early 1970s, this form of financing commenced in FY 1985. The source of funding 

to finance this program is appropriated by Congress through annual Foreign Operations 

legislation. Direct Credit can be provided either in the form of grants (non-repayable) or loans 

(repayable). A discussion of these funding categories is provided below. 
4-4

 •• FMF Grants. FMS grant funds are availed upon apportionment of 

country-level funds. If a country is authorized to use FMF funds to finance direct commercial 

purchase, a grant agreement certifying compliance with various requirements must be 

implemented prior to the utilization of funds for commercial contacts. If countries cannot use 

FMS for direct commercial purchases, no agreement is required. In this latter instance, DFASDE can unilaterally disburse funds for LOAs financed with FMF in accordance with billing 

procedures for that country. 

 •• FMF Loans. FMF loan funds are availed upon implementation of a 

bilateral loan agreement, signed by the USG and the borrower. Generally, loan repayment terms 

are a total of 12 years (7 of which are principal); interest rates are determined by the Department 

of the Treasury. The FMS customer will normally be required to make semi-annual payments of 

interest and (once the grace period expires) principal. FMF loan repayments should be sent 

directly to DFAS-DE. 

 •• Once an FMF loan has been established, all requests for disbursement of 

those funds must be submitted by the borrower to DFAS-DE for processing/approval. For 

commercial contract disbursements, the requests must be accompanied by relevant invoices, bills 

of lading, various certificates, and other documentation as prescribed in the Annexes and 

Attachments to the loan agreement. Regarding FMS cases, the customer also issues a 

disbursement request for LOA initial deposits or DD Form 645 billing requirements. 

 Whenever an FMS case has multiple financing, FMF funds are considered to be applied 

first and cash funds second. If the case is closed and excess funds exist, the excess cash funds 

would be considered available to the FMS customer absent arrearages or funding shortfalls on 

other cash cases. Excess FMF funds, however, cannot be refunded to the FMS customer. The 

FMF funds can be used to pay down arrearages on FMF loan installments; DFAS-DE will 

normally not initiate this action and must have DSCA authorization prior to doing so. 

CROSSLEVELING 

 Crossleveling is an accounting technique by which DFAS-DE transfers excess funds (i.e., 

cash receipts) from one FMS case to another FMS case. This transfer permits the FMS purchaser 

to minimize payments due on a billing by fully utilizing all funds previously paid on FMS cases. 

For example, if DFAS-DE has collected excess funds on a case or a case has been closed and 

there are excess funds, these funds may be transferred to other open cases thereby reducing the 

amount due on the bill. 

 There are two methods through which crossleveling of excess funds may be accomplished. 

In the first method, the customer conducts a cash analysis and, in a letter (usually with a 

payment), requests DFAS-DE make specific cash transfers among designated FMS cases. The 

second method authorizes DFAS-DE to automatically crosslevel based on case needs. 

 In order for DFAS-DE to perform crossleveling, a written agreement must be accomplished 

between DFAS-DE and the FMS customer. In order to initiate this action, the customer should 

advise DFAS-DE of an interest in entering into a crossleveling arrangement and specify the 

name and office of the individual to sign a Memorandum of Agreement on behalf of the FMS 

customer. DFAS-DE will prepare the agreement in duplicate, sign and forward it for the 

customer’s signature. Upon receipt of the signed agreement, DFAS-DE will begin crossleveling 

on the next succeeding billing statement. 
4-5

 In order to provide the FMS customer with a complete record of crossleveling transactions, 

the transfer of excess cash is processed to the country holding account and then withdrawn from 

the holding account to be applied to a case requiring payment. For example, consider the 

situation where FMS case ABC is in a $10,000.00 over-payment surplus status but case ABD is 

underpaid by $10,000.00. Under crossleveling, DFAS-DE could transfer, via the Holding 

Account, $10,000.00 from case ABC to ABD. The basic procedure is to record such transfers (as 

the $10,000.00 amount above) as a withdrawal (credit) transaction to the cash position of the 

FMS case with a surplus (case ABC) and as a deposit (debit) to the Holding Account. 

Simultaneously, $10,000.00 is recorded as a deposit (debit) to the underpaid case (ABD) and a 

withdrawal (credit) is recorded against the Holding Account. In other words, the $10,000.00 is 

“washed through” the Holding Account for control and reporting purposes. See Figure 4-1 for a 

sample crossleveling agreement. DFAS-DE will also honor individual FMS crossleveling in lieu 

of blanket authorizations based on letter or message requests from the FMS customer. 

DFAS-DE REPORTS 

 The basic FMS billing document is the DD Form 645, which is prepared at the end of each 

calendar quarter. The DD Form 645 serves as both a billing document and a statement of 

account. Numerous attachments, as applicable, accompany the DD Form 645, to include the 

“FMS Delivery Listing,” the “FMS Reply Listing to Customer Requests for Adjustments,” the 

“FMS Financial Forecast,” the “ULO Report,” and the “Holding Account Statement.” 

FIGURE 4-1

[Sample] 

Memorandum of Agreement 

Between 

The Government of ____________ 

and 

Defense Finance and Accounting Service 

Directorate of Assistance, Denver Center 

(Date) 

The Government of _______________ requests the Defense Finance and Accounting Service to 

use its best efforts to lessen cash requirements related to ____________ foreign military sales 

(FMS) cases by cross leveling monies on deposit in FMS Trust Fund Account. Crossleveling 

shall include the identification of over-payments (cash surpluses) and under-payments (amounts 

due and payable) and the transfer of such surplus monies to liquidate current amounts due and 

payable. DFAS-DE is requested to implement the following specific procedures: 

 1. Transfer surplus monies among FMS cases and provide a full accounting of such 

transfers to ____________ at least quarterly. 

 2 Record such transfers as a withdrawal (credit) transaction to cash position of FMS 

cases with surplus funds and as a deposit (debit) to the cash position of the Holding Account. 

Simultaneously, record a deposit (debit) to the gaining case and a withdrawal (credit) to the 

Holding Account. 

 3. Transfers other than those made by DFAS-DE, or a reversal of transfers made by 

DFAS-DE, will be made if requested by ________________. 
4-6

FMS BILLING STATEMENT (DD FORM 645) 

 DoD billings to FMS customers are issued by DFAS-DE. A computer-produced DD Form 

645 or supplementary billing arrangements (official claim for payment by the U.S. government) 

is used in billing the FMS customer. In addition, it furnishes an accounting to the FMS purchaser 

for all costs incurred under each LOA agreement. 

 Detail on the face of the billing statement segregates the cost elements in a manner parallel 

to the presentation of line item detail on the LOA. Physical performance of services or delivery 

of materiel is shown against the item number of the LOA. Administrative charges, accessorial 

costs, and work in process are separately listed. 

 Billing statements are prepared and forwarded to the FMS purchaser on a quarterly basis 

(i.e., for quarters ending March, June, September, and December). The billing cycle is essentially 

as follows: 

 Period DD 645 Payment Due Forecast 

 Ending Mailed at DFAS-DE Quarter

 31 MAR 15 APR 15 JUN JUL-SEP 

 30 JUN 15 JUL 15 SEP OCT-DEC 

 30 SEP 15 OCT 15 DEC JAN-MAR 

 31 DEC 15 JAN 15 MAR APR-JUN 

 For example, the 31 December (period ending) bill reflects physical deliveries and cash 

collections recorded for the FMS case through the December cut-off for entries into the FMS 

accounting system. It also contains a forecast of estimated advance cash requirements through 

the month of June. This period’s bill is mailed on or about January 15, with a due date for 

payment of March 15. The March, June, and September statements follow the same basic time 

frames. (Please note that the FMS Delivery Listing will only include delivery data received in 

DFAS-DE by the end of each quarter, thus military department reporting for March, June, 

September, and December will appear in the next quarterly billing statements.) 

 In addition to identifying deliveries (or performance of services) made on the FMS 

purchaser’s behalf, the DD Form 645 also reflects the forecasted costs which relate to a given 

FMS case. These forecasted costs equate to a number of factors, to include: anticipated progress 

payments/advances, contractor holdbacks, termination liability reserve, accrued and future 

deliveries, pro rata share of non-recurring charges, contract administration costs, and 

administrative/ accessorial costs, as applicable. Previous schedule of payment amounts on 

requisition-type cases may be replaced by military department reporting of open requisition 

values on hand or anticipated. 

 Essentially, the DD Form 645 provides current period (the calendar quarter preceding the 

period ending date) delivery costs as well as cumulative delivery costs for all prior periods and 

work in process costs for the period subsequent to the period ending date. The bill normally 

requests monies to cover the planned deliveries for the forecast quarter (the calendar quarter 

subsequent to DFAS-DE payment due date). This concept is illustrated in Figure 4-2. 

FMS DELIVERY LISTING 

 This is a computer printout of the performance reporting of articles/services/SDRs/ notice 

of action taken which have been reported to DFAS-DE by the Military Departments/DoD 

agencies. An FMS Delivery Listing will be provided if deliveries have been received in DFASDE during the Current Quarter Period (column 9) of the DD Form 645. 
4-7

 The FMS Delivery Listing provides delivery information by case and by item number. 

Detailed information regarding articles/services transactions, administrative/accessorial 

transactions and a summary of delivery costs for each item number is provided. 

FMS REPLY LISTING TO CUSTOMER REQUESTS FOR ADJUSTMENTS 

 This is a computer printout which reflects all transactions relating to the final 

disposition/action taken with respect to any Supply Discrepancy Reports (SDR) and may contain 

other internal USG billing transactions which also require an Adjustment Reply Code (ARC) and 

which are being billed the FMS customer. Close review should be made to ascertain that the 

adjustment does or will satisfy a SDR requirement in the event the SDR number is not present. 

 In the event customer review of the DD Form 645 and/or the supporting FMS Delivery 

Lists identifies the necessity for an adjustment, the FMS customer should submit a formal 

request for adjustment. Requests for billing and supply adjustments for materiel and service 

performance should be submitted to the implementing agency. Requests for adjustments 

pertaining exclusively to administrative and accessorial charges should be submitted to DFASDE. FMS customers should submit all requests for billing and supply adjustments on a Standard 

Form (SF) 364, clearly indicating the specific adjustment or billing action requested. The form, 

instructions for completion and definitions are prescribed in Joint Regulation DLAI 4140.55, AR 

735-11-2, SECNAVINST 4355.18A, and AFJMAN 23-215. After resolution of SDRs applicable 

to materiel and services, implementing agencies report the action which is being taken to DFASDE. DFAS-DE will prepare a consolidated listing of the actions taken in response to the SDRs, 

and this listing will be mailed with the DD Form 645 to the country involved. All responses to 

SDRs are listed separately for each country, Service, Case, and Item Number. The Reply Listing 

is prepared in the same basic sequence as the billing statement and FMS Delivery Listing. All 

SDRs appearing on the FMS Delivery Listing are included in the Reply Listing. 

FMS FINANCIAL FORECAST 

 This is a computer printout which reflects future forecast amounts of payments due, by 

quarter, for the FMS case. It essentially portrays the same information as the LOA payment 

schedule. The FMS Financial Forecast is provided only at the FMS customer’s request. 

FMS ACCELERATED CASE CLOSURE SUSPENSE ACCOUNT

 This is a computer printout which shows FMS cases of participating countries where all 

ordered goods and services have been provided and only final financial reporting is necessary. It 

depicts the country, implementing agency, case and closure date with the previous quarters 

unliquidated obligations (ULO) and current quarters activity. The balance column represents 

those outstanding financial obligations yet to be reported by the military department. 

HOLDING ACCOUNT STATEMENT 

 As a convenience to the FMS purchaser, procedures are available for the establishment of a 

purchaser holding account. The holding account is a subaccount of monies not identified to a 

specific FMS case, reserved for identified cases, and/or funds not required when a case is closed. 

The FMS customer may request DFAS-DE to “draw upon” their holding account for transfers to 

specific cases as the need arises. The holding account balances are not included in the totals of 

the DD Form 645. A separate statement is provided to the country showing deposits and 

withdrawals to the holding account and is considered an off-line billing statement. The following 

information may appear on the holding account statement: 
4-8

 • Debit or credit transactions affecting FMS closed cases for Calendar year 1992 

and prior. This may consist of deliveries not previously reported, and/or 

adjustments due to approved SDRs. [Effective with the March 1993 billing 

statement all cases with post closure activity will be reopened for those customers 

not participating in the DoD accelerated closure program.] 

 • Recording of funds received prior to implementation of a case. 

 • Transfer of funds to a newly implemented case that were held in the holding 

account until the case was implemented. 

 • Authorized transfers of collections between open cases or refunds requested by 

the FMS customer. 

 For those FMS customers receiving holding account statements, the combination of the DD 

Form 645 and holding account statement will reflect the total activity for the accounting period. 

 The FMS customer needs to advise DFAS-DE of its desires relative to the controls over 

holding account transactions. For example, DFAS-DE needs to know if the customer will allow 

automatic use of the funds for other open FMS cases, if the customer desires automatic refunds, 

or if the customer wants to request refunds on a case-by-case basis. Please note that funds 

temporarily held for new case implementation are not available for crossleveling or refund. 

DFAS-DE will state the total reserved balance for each account. 
4-9

FIGURE 4-2 

The “Four Periods” of the DD 645 

PRIOR 

PERIOD(S)

CURRENT 

PERIOD

ACCRUAL 

PERIOD

FORECAST 

PERIOD

DELIVERY 

TRANSACTIONS

30 

SEP

31 

DEC

31 

MAR

30 

JUN

15 MAR 

PAYMENT 

DUE

ESTIMATED 

PAYMENT 

SCHEDULE 

15 MAR 

15 JUN

FMS CASE CLOSURE 

 A logical follow-on event to a case that has been completely delivered and billed is case 

closure. FMS customers are encouraged to request status from the implementing agency on 

undelivered/unbilled items prior to case closure. An FMS case is considered closed when all 

material has been delivered and/or all services have been performed, the implementing agency 

has certified the final delivered cost, all financial transactions (including all collections) have 

been completed, and the customer has received a Final Statement of Account (i.e., a “Final” DD 

Form 645). DFAS-DE is the final determining organization for case closures; however, an 

implementing agency may consider their records as logistically closed at the time a closure 

certificate is released to DFAS-DE. After processing, DFAS-DE confirms closure data to the IAs 

to ensure that records are logistically and financially complete. FMS cases are either closed 

using standard closure procedures or accelerated closure procedures. 

STANDARD CASE CLOSURE PROCEDURES 

 Before a case can be considered to be in a candidate status for closure, several actions are 

required. 

 • For Blanket Order and Cooperative Logistics Supply Support Arrangement 

(CLSSA) cases, the purchaser’s requisitioning action must have been completed. (Defined Order 

case requisitions would, of course, be controlled by the CONUS case manager.) 

 • Appropriate management follow-up action should be initiated to validate any and 

all outstanding requisitions/purchase orders. This may require discussions (during country 
4-10

program reviews, etc.) with the purchaser’s representatives. Cancellation action should be 

attempted on invalid (i.e., no longer needed) requisitions. The implementing agency must then 

take action to insure final delivery and reporting to DFAS-DE for billing purposes. 

 • For reconciliation purposes, an initial objective is that each MILSTRIP 

requisition will have its own audit trail from “cradle to grave.” Ideally, each requisition can be 

traced back to a given item number on the LOA, to the Case Directive (if applicable), to the 

assignment of the MILSTRIP document number itself, to the issue/procurement document, to 

completion of delivery or performance of service, to the reporting of the delivery/performance to 

DFAS-DE via the Delivery Transaction, to the billing statement (with the FMS Delivery Listing) 

provided by DFAS-DE to the country. Throughout this process, efforts must be taken to 

reconcile the International Logistics Control Office (ILCO) records with those of the stock point, 

accounting office, and DFAS-DE. The case manager must process Supply Discrepancy Reports 

and record any adjustments to the case financial records. 

 • To allow an FMS case to be closed, the following actions are required: 

 (1) Implementing agencies will: 

 (a) Ensure that all known Supply Discrepancy Reports (SDRs) have been 

resolved. 

 (b) Ensure that all articles/services have been fully delivered to the FMS 

customer and reported to DFAS-DE. 

 (c) Formally advise DFAS-DE that the cost of applicable articles and 

services have been fully reimbursed to financing U.S. Treasury Accounts. 

 (d) Once all of the above conditions are met, will provide DFAS-DE with 

the certified closure certificate indicating total costs incurred including disbursements. 

 (2) DFAS-DE responsibilities: 

 (a) Affirm the values (from implementing agencies) have been billed to 

the FMS customer. 

 (b) Ensure that all funds due have been collected and that delivered values 

and disbursements are equal. 

 (c) Ensure that no inhibitors exist to preclude issuance of final billing 

statement and/or excess funds have been transferred to the applicable holding account. 

 (d) If all of the above are met, DFAS-DE issues “Final Statement of 

Account” as part of the next quarterly DD Form 645 Billing cycle. 

 • Effective Fiscal Year 1993 (Oct. 1992) cases not utilizing accelerated case closure 

procedures will be reopened if new activity (disbursements or deliveries) are reported after 

closure. 
4-11

ACCELERATED CASE CLOSURE PROCEDURES (ACC) 

 Effective May 1, 1992, each FMS customer may elect to participate in an accelerated case 

closure process. This process is intended primarily for FMS cases supported by long-running 

contracts, but can also be used to close other cases with uncleared activity. 

 Once selected by a country, accelerated procedures apply to all cases for that country. 

Participation is optional for customers with programs financed entirely by cash. The ACC 

procedures are mandatory for credit funded programs/cases. 

 In addition to the case closure reconciliation action defined for standard case closure, the 

following action are also required: 

 • The implementing agencies will: 

 •• Identify and report delivery transactions to include any remaining unliquidated 

obligations (ULO) recorded against the case. This amount should include all remaining 

costs/contingent liabilities for contracts or other obligating documents that support the case. 

 •• Within 12-24 months after the case is supply complete, certify the case for 

“interim” closure to DFAS-DE. The certified cost should include actual disbursements recorded 

against the case and the ULO amount. 

 •• When actual contract or other financial activity costs for the case are known, 

certify the case for final closure to DFAS-DE. Return any unused ULO obligational authority to 

DFAS-DE. 

 • DFAS-DE will: 

 •• Bill the amount reported by the implementing agencies to the customer using 

normal billing procedures. 

 •• When the case is reconciled for closure, refund any cash collection in excess of 

actual case disbursements plus the ULO amount to the customer. Standard rules apply regarding 

the disposition of excess repayable/nonrepayable credit collections. 

 •• Record the recorded (and subsequently collected) ULO amounts in a summary 

liability account, “case closure suspense account,” when the case is “interim” closed. 

 •• Provide a final statement of account to the customer at “interim” case closure. 

 •• Record post-closure charges and credits by country and case against the country’s 

suspense account. 

 •• Bill the customer if that customer’s case closure suspense account balance reflects 

a deficit of $100,000 or more for a period of six months. 

 •• When case is certified for final closure, move the case to “final” closure status. 

Any remaining ULO funds on the case are made available at that point to support ULO cash 

shortages on other closed cases for that country. 

 •• Cases utilizing accelerated case closure procedures may be reopened only if a 

major pricing error by the U.S. government or contractor, in the amount of $100,000 or greater is 
4-12

discovered after case closure. DSCA approval is required before reopening an accelerated closed 

case. 

SUMMARY 

 The FMS Billing System provides a mechanism of complying with the Arms Export 

Control Act, as amended. Through the LOA and its included Payment Schedule, the FMS 

customer is able to determine the required initial deposit and programmed quarterly financial 

requirements. 

 DFAS-DE through its FMS Trust Fund management and related cash accounting 

procedures, is able to collect and track country monies by case. The basic FMS billing document 

is the DD Form 645, which is prepared at the end of each calendar quarter. The DD Form 645 

serves as both a billing document and a statement of account. The “FMS Delivery Listing,” the 

“FMS Reply Listing to Customer Requests for Adjustment,” and the “Holding Account 

Statement” are all documents that are included with the DD Form 645 when applicable. 

 Case closure is accomplished once all necessary logistical and financial actions have been 

completed on the part of both the U.S. government and the foreign purchaser. Closed cases are 

identified by an asterisk on the DD Form 645 (Billing Statement) and a separate case level DD 

Form 645 (Final Statement) is printed for distribution to appropriate parties. Once a case appears 

with the closed case asterisk, it will be dropped from future DD Forms 645 unless the IA or 

DFAS-DE has cause to reopen the case. 

 Effective fiscal year 1993 (October 1, 1992), cases not utilizing accelerated case closure 

procedures will be reopened if new activity (disbursements or deliveries) are reported after 

closure. Cases utilizing accelerated case closure procedures will be reopened only if a major 

pricing error by the U.S. government or contractor, in the amount of $100,000 or greater is 

discovered after case closure. DSCA approval is required before reopening an accelerated closed 

case. 
5-1 

CHAPTER 5 

DFAS-DE CUSTOMER ASSISTANCE 

PURPOSE 

 There are certain initiatives FMS customers may take which can facilitate their 

understanding of the financial documents received from DFAS-DE. These initiatives consist of 

writing or calling DFAS-DE points of contact and visiting the Center. This Chapter provides a 

list of DFAS-DE points of contact, along with telephone numbers and mailing addresses. Also 

provided is the information necessary to arrange for a visit to the Center. 

DFAS-DE ORGANIZATION 

OVERALL STRUCTURE 

 Customers desiring to call, write, or visit DFAS-DE are invited to do so. To assist in this 

effort, Figure 5-1 is an organization chart of DFAS-DE. Figure 5-2 is a list of countries and 

corresponding DFAS-DE country manager office symbols. 

FUNCTIONAL AREA POINTS OF CONTACT 

 Figure 5-3, a list of DFAS-DE functional area points of contact, is provided to facilitate 

contact with DFAS-DE and the resolution of day-to-day management inquiries and concerns. In 

reviewing Figure 5-3, please note that DFAS-DE office symbols and corresponding telephone 

numbers are listed in Figure 5-1. 

VISITS TO DFAS-DE 

POLICY 

 FMS customers are encouraged to visit DFAS-DE from time to time. A visit may be 

warranted for any number of reasons, to include: 

 (a) to resolve problems or misunderstandings; 

 

 (b) to discuss the realignment/redistribution of billing products which are sent to 

country addresses; or 

 (c) to meet with your country manager and other DFAS-DE officials for orientation 

purposes. 

 Visits, of course, are most productive when DFAS-DE is afforded sufficient advance 

notification and time for preparation. Please attempt to furnish advance agenda items on specific 

problem/subject areas to DFAS-DE for research. 

VISIT REQUESTS 

 In order for DFAS-DE to make the proper preparations for a visit, to include 

building/parking clearances, etc., the following information should be provided to DFAS-DE 30 

days in advance of the intended visit: 

 • Name, Rank, and Position of Visitor(s). Equivalent rank should be 

 furnished if military rank does not apply. 

 • Desired Visit Dates. 
5-2 

 • Lodging/Protocol Requirements. 

 • Topics to be Discussed. 

The visit authorization must be approved by the Defense Intelligence Agency (DIA), Foreign 

Liaison Branch, CO8-4, Washington DC. 

DFAS-DE VISITS TO CUSTOMER SITE 

 Based on resource availability, DFAS-DE is available to send a representative to your 

country, embassy/mission in Washington D.C., etc. In circumstances where extensive/ 

extraordinary services or assistance are needed, it may be necessary to have the associated costs 

directly funded through a “management line” on an FMS case. All in-country visits will be 

reviewed on a case-by-case basis. 

SUMMARY 

 Good communications are essential to any endeavor of importance, and such communications are vital to positive DFAS-DE customer relations. This Chapter contains copies of 

DFAS-DE organization chart, country manager designators, and functional area points of 

contact. The policies regarding customer visits to DFAS-DE and, conversely, DFAS-DE visits to 

the customer site are also outlined. 
5-3 

FIGURE 5-1 

Defense Finance and Accounting Service - Denver Center 
5-4

FIGURE 5-3 

DFAS-DE 

Functional Area Points of Contact 

 Nature of Inquiry DFAS-DE Office

 

• Clarification or determination of DFAS-DE 

Finance and Accounting policy. 

 IA/IB 

• Non-routine financial inquiries. ICC 

• Routine questions about DD Form 645 and 

attachments thereto. 

 ICC 

• Status of financial Supply Discrepancy Reports. ICC 

• Changes to distribution or scope of DFAS-DE 

reports. 

 ICC 

• Recording of country payments. ICC 
PART II 

FMS BILLING DOCUMENTS 

6-1 

CHAPTER 6 

THE FOREIGN MILITARY SALES BILLING STATEMENT 

(DD FORM 645) 

PURPOSE 

 The purpose of this chapter is to introduce the reader to the format of, and the types of 

information contained in, the Foreign Military Sales Billing Statement, DD Form 645. 

INTRODUCTION 

 The final FMS Bill (DD 645) and attachments are produced by the DFAS-DE billing 

subsystem. 

 FIVE reports are produced in conjunction with the FMS billing. They are the Bill itself (the 

DD Form 645), the Delivery List, the Reply List, Holding Account Statement, and the Financial 

Forecast Report. Utilizing the Country Address/Distribution file, customized print packets are 

generated for each addressee. Their packets contain only the reports or portions of the reports in 

the number and sort sequence required by a specific country addressee. The select and variable 

sort sequence parameters used are Bill Code, implementing agency, in-country service, and 

Report type. The proper mailing label is also printed for each packet. All report copies printed 

are originals and the special form required for the DD Form 645 is formatted within the 

computer system. The ULO report is prepared separately and included is the DD Form 645 and 

attachments. 

GENERAL INFORMATION REGARDING DD FORM 645 

FUNCTION AND CONTENT 

 The DD Form 645, prepared by DFAS-DE, represents the official claim for payment by the 

U.S. Government referred to in the United States of America Letter of Offer and Acceptance 

(LOA) Information (attached to the original LOA). In addition, it furnishes an accounting to the 

FMS Purchaser for all costs incurred under each agreement. Detail on the face of the Billing 

Statement segregates the cost elements in a manner parallel to the presentation of item number 

detail on the LOA. Physical performance of services or delivery of materiel is shown against the 

item number of the LOA. Administrative surcharges, accessorial costs, progress payments, and a 

forecast of future performance/deliveries are provided at case, as opposed to item number level. 

CYCLE 

 The DD Form 645 is prepared and forwarded to the FMS Purchaser on a quarterly basis in 

accordance with the following cycle: 

Period/Quarter Projected Payment Due Forecast 

 Ending Mailing Date to DFAS-DE Quarter

 31 MAR 15 APR 15 JUN JUL-SEP 

 30 JUN 15 JUL 15 SEP OCT-DEC 

 30 SEP 15 OCT 15 DEC JAN-MAR 

 31 DEC 15 JAN 15 MAR APR-JUN 
6-2 

TYPES OF STATEMENTS 

 The DD Form 645 has two basic variations: 

 Billing Statement. Block 2, in the first instance, states “This is a Billing Statement based on 

cash (financial) requirements. Payment is due by: ________.” The Billing Statement variation 

serves as a bill and statement of account for all open FMS cases and those cases which are closed 

during that quarterly period. 

 Final Statement of Account. Block 2, in the second instance, states: “This is a Final 

Statement of Account.” Each FMS case reflecting a closed status on the quarterly Billing 

Statement will be accompanied by a Final Statement, the latter of which may be conveniently 

detached by the FMS Purchaser and filed in any locally maintained case files. A closed case is 

depicted by an asterisk (*) at the beginning of the case designator in Column 6 of the Billing 

Statement and Final Statement. 

 Once a Final Statement has been submitted for an FMS case, no subsequent adjustment of 

such billings (upward or downward) is authorized, except under the following instances (Note: 

This information appears in the “Explanatory Notes” at the bottom of a Final Statement): 

 • Discovery of latent errors, such as obvious errors in addition or multiplication, 

unauthorized deviations from DoD policy, or computer errors in establishing unit prices. 

 • To provide charges/credits for Supply Discrepancy Reports (SCR) submitted by 

the purchaser in accordance with terms and conditions of the LOA. 

 • Discovery by the United States that it has shipped an item or rendered a service for 

a case but has failed to submit a bill. 

 • Discovery by the United States that the final price paid to a U.S. contractor for an 

item provided in accordance with Section 22 of the Arms Export Control Act is different from 

the final amount billed for that item. 

EXPLANATION OF ENTRIES ON THE DD FORM 645 

SAMPLE DOCUMENTS 

 For ease of reference and illustration, the following documents (with sample information 

entries) are provided: 

 • Figure 6-1: The LOA for FMS case identifier BN-B-URK (for the fictitious 

country of Bandaria, country code BN), together with Payment Schedule information. 

 • Figure 6-2: DD Form 645 “Billing Statement,” Statement Number 00-12NA, which 

is comprised of case designators CXY, URA, and URK. 

 • Figure 6-3: DD Form 645 “Final Statement,” Statement Number 00-12NA, for case 

designator URA. 

 These sample documents are referred to in the following explanation of entries on the DD 

Form 645. 
6-3 

 FIGURE 6-1 

 

 

 United States of America 

 Letter of Offer and Acceptance (LOA)

 BN-B-URK 

Based on Bandaria Letter, 25 Sep 199X 

 Pursuant to the Arms Export Control Act, the government of the United States (USG) offers to 

sell to the Government of Bandaria (GOB), Embassy of Bandaria, 6000 Massachusetts Avenue, 

Washington DC, 20036 the defense articles or defense services (which may include defense design 

and construction services) collectively referred to as “items,” set forth herein, subject to the 

provisions, terms, and conditions in this LOA. 

 This LOA is for Armament Systems and Support Equipment. 

Estimated Cost: $72,725.00 Initial Deposit: $12, 150.00 

Terms of Sale: Dependable Undertaking/Cash Prior to Delivery; 

 

 This offer expires on 3 January 200X. Unless a request for extension is made by the 

Purchaser and granted by the USG, the offer will terminate on the expiration date. 

 This LOA consists of page 1 through page XX 

 The undersigned are authorized representatives of their governments and hereby offer and 

accept, respectively, this LOA: 

_____________________________ ____ ______________________________________ 

U.S. Signature Date Purchaser Signature Date 

________________________________________ 

Typed Name and Title Typed Name and Title 

________________________________________ _______________________________________ 

Implementing Agency Agency 

DSCA Date 

Information to be provided by the Purchaser: 

Mark For Code_X_, Freight Forwarder Code_2_, Purchaser Procuring Agency Code_B_, Name and 

Address of the Purchaser’s Paying Office: Bandarian Embassy, 6000 Massachusetts Avenue, Washington 

DC 20036 ____________________________________ 
6-4 

FIGURE 6-1 (Continued) 

Explanations for acronyms codes, and financial information, may be found in attached “Letter 

of Offer and Acceptance Information.” 

Items to be Supplied (costs and months for delivery am estimates): 

 (3) (5) (6) (7) 

 (1) Qty, (4) SC/MOS/ Ofr Del 

Itm (2) Unit of Costs TA Rel Trm 

Nbr Description/Condition Issue (a) Unit (b) Total Notes Cde Cde

 1 F4Z 9F4ZOOM1SCWPN(Y) 4 Ea $15,000 $60,000 P(30) Z 8 

 Armament System TAS 

 2 J6Z 9J6Z00SUPTEQP(N) XX $10,000 X(1-30) A 4 

 Support Equipment TA4 

 (8) Net Estimated Cost $70,000 

 (9) Packing, Crating, and Handling 

(10) Administrative Charge $2,100 

(11) Transportation 625 

(12) Other 

(13) Total Estimate Cost $72,725 

To assist in fiscal planning, the USG provides the following anticipated costs of this LOA: 

ESTIMATED PAYMENT SCHEDULE 

 Payment Date Quarterly Cumulative

 

 Initial Deposit $12,150 $12,150 

 15 June 200X 15,300 27,450 

 15 Sep 200X 12,000 39,450 

 15 Dec 200X 11,000 50,450 

 15 Mar 200X 8,550 59,000 

 15 Jun 200X 7,000 66,000 

 15 Sep 200X 5,000 71,000 

 15 Dec 200X 1,725 72,725 






6-11 

ENTRIES ON DD FORM 645 

Upper Left-Hand Corner. Title of DD Form 

645. 

Upper Right-Hand Corner. Identifies the U.S. Department 

of Defense Component acting as the implementing agency 

(IA) for the cases shown on the statement. In this example, the U.S. Army is the IA. 

Block 1. Identifies the FMS Purchaser Service who is the 

recipient of the statement. Reflects full country/activity name 

followed by Military Service within country or special paying office. In this example, we show 

the Bandaria Army. 

Block 2. Identifies the statement as a “Billing 

Statement based on cash requirements” or a “Final 

Statement of Account,” whichever is applicable. If the 

statement is a Billing Statement, this block also 

indicates the date payment is due. The due date is about 60 days after the preparation date in 

Block 5, but in any event will be the 15th day of the last month of the quarter, e.g., 15 March 

2001 in this example. 

Block 3. Statement number is assigned mechanically and is 

composed of the numeric year and month representing the period 

ended followed by an alphabetic management code assigned by 

DFAS-DE. The management code (also referred to as the “bill code”) is used to sort cases for 

distribution, and normally identifies the paying office. The foreign customer can request and 

obtain billing sorted in some other manner. In this example, the statement number is “00-12NA,” 

with “00” standing for calendar year 2000; “12” standing for the 12th month or December; and 

“NA” standing for the applicable management and/or paying office bill code. Those cases not 

identifiable or reflected on a specific Paying Office alpha code will be included on the standard 

statement number: i.e., “00-01--” and require FMS customer advice to DFAS-DE as to the 

proper billing code layout for future billings. 

Block 4. Contains the last calendar day of the month for which the 

statement is prepared. It is normally the last day of the month at the 

end of each calendar quarter, e.g., 31 December 2000 in this example. 

Block 5. Reflects the actual date on which the statement was 

prepared/mailed, e.g., 15 January 2001 in this example.

FOREIGN MILITARY SALES BILLING 

STATEMENT 

UNITED STATES OF AMERICA 

DEPARTMENT OF DEFENSE/ARMY 

1. TO: BANDARIAN ARMY

2. THIS IS A BILLING STATEMENT 

BASED ON CASH REQUIREMENTS. 

PAYMENT IS DUE BY: 01 MAR 15

3. STATEMENT NUMBER 

 00-12NA

4. FOR PERIOD ENDED 

 00 DEC 31

5. DATE PREPARED 

 01 JAN 15
6-12 

NOTE: IN ILLUSTRATING COLUMNS 6 THROUGH 14, 

CASE DESIGNATOR URK FROM FIGURE 6-2 IS USED. 

Middle-Left Portion. Descriptor for 

Columns 6 through 9. 

Column 6. Consists of the following information: 

 a. Identifies the FMS case designator (URK in this illustration), and the 

item number identification (e.g., 001, 002) from the LOA. Immediately below 

and slightly to the right of each item number(and spilling over into Columns 7 

and 8) is the abbreviated/short title of articles/services taken from the Military 

Articles and Services List (MASL) (Reference: SAMM, Appendix D); an 

abbreviated title in this illustration would be “ARMAMENT SYS” which relates 

to item number 001 or the major element of the LOA. 

 b. Additionally, this column contains identification of administrative 

surcharges (Generic Code L6A), accessorial costs (LOO), and work in process 

(WIP) related to the case, as well as the Case Total. 

 c. As noted earlier, an asterisk (*) preceding the case designator indicates 

a completed case (closed). A case which has been closed since the previous 

Billing Statement was issued will appear on the current Billing Statement with 

an asterisk. Concurrently, a Final Statement of Account is prepared mechanically for the case 

and presented following the billing statement. Figure 6-2 reflects case designator URA (shown 

as *URA) as being a closed case. This case will not appear on a subsequent DD Form 645 unless 

the case is re-opened. 

Column 7. Contains the dollar value of articles/services associated 

with each item number /generic descriptor and the value of the entire 

case. These dollar values come from the LOA and amendments/ 

modifications thereto. Note that the abbreviated/short titles of the 

articles/ services (e.g., ARMAMENT SYS ) carry over into Column 7 

from Column 6. 

CASE IDENTIFICATION AND DELIVERY STATUS 

6. 

CASE 

& ITM 

 NBR 

URK 

 001 

 002 

 L6A 

 L00 

 WIP 

 CASE 

 TOTAL 

7. 

 TOTAL VALUE 

 ORDERED 

 60,000.00 

ARMAMENT SYS 

 10,000.00 

SUPP EQT 

 2,100.00 

ADMINISTRATIVE FEE 

 625.00 

ACCESSORIAL COST 

WORK IN PROCESS 

 72,725.00 
6-13 

Block 8. Dollar value of cumulative delivery costs as of the end of the 

prior statement period (e.g., deliveries cumulative through 30 September 

2000 in this example). No value is shown in this column for progress 

payments applicable to undelivered items. 

Block 9. Dollar value of delivery costs reported since the end of the prior 

statement period, i.e., those delivery transactions received in and 

accepted by DFAS-DE during the current period (October through 

December in this example). Values shown in this column are supported 

in (transaction) detail by the FMS Delivery Listing (identified in the 

Column 9 heading as Attachment 1). In Chapter 7, the FMS Delivery 

Listing for item number 002 which relates to the $1,155.50 figure in 

Column 9, is illustrated. No value is shown in this column for work in 

process applicable to undelivered items. 

Middle-Right Portion. Descriptor for 

Columns 10 through 14. 

Column 10. This column contains the totals of values shown in 

Columns 8 and 9, plus work in process applicable to undelivered items. 

The value in Column 10 for work in process represents accrued costs 

incurred on behalf of the FMS Purchaser which are not yet supported 

by physical or constructive deliveries. These costs include contractor 

holdbacks on work in process made to contractors, potential 

termination liabilities, and any other applicable authorized charges. 

8. 

CUMULATIVE 

DELIVERY COST 

END PRIOR PERIOD

 14,900.00 

 3,844.50 

 562.33 

 270.47 

 19,577.30 

9. 

CURRENT PERIOD 

DELIVERY COST 

(ATTACHMENT 1)

 15,100.00 

 1,155.50 

 487.67 

 150.70 

 16,893.87 

 FINANCIAL STATUS 

10. 

CUMULATIVE 

DELIVERY COST & 

WORK IN PROCESS

 30,000.00 

 5,000.00 

 1,050.00 

 421.17 

 13,978.83 

 50,450.00 
6-14 

Column 11. Contains the forecasted requirements for the case, i.e., the 

value of potential costs to be incurred during the calendar quarter 

following the payment due date of the current statement. This value 

appears on the “Case Total” line only and may be derived from one of 

two different sources. 

 a. The quarterly deposit identified in the payment schedule for 

the case which has a due date that coincides with the payment due date 

of the current statement. In this illustration, the $8,550.00 figure comes 

from the payment schedule (see Figure 6-1). 

 b. For all requisition type cases (i.e., Supply Support 

Arrangement - FMSO 2, and other repair part cases), the Defense Component may provide 

DFAS-DE with a “Committed Values for Requisition Cases” report. This report reflects the 

current value of on-hand, unfilled requisitions for each case. This report will be submitted to 

DFAS-DE by automated means. These inputs will be submitted to DFAS-DE by the 15th day of 

the last month of each calendar quarter (i.e., by 15 March, 15 June, 15 September, and 15 

December) reflecting the most recent status for each case. The committed value will be used as 

the forecasted requirements in Column 11 for the case in lieu of the quarterly deposit in the 

payment schedule when the committed value is less than the payment schedule quarterly deposit. 

Forecasted amounts may be adjusted by DFAS-DE based on documented information. 

 The Column 11 heading makes reference to “Note A,” which is one of the “Explanatory 

Notes” at the bottom of the certification page of the Billing Statement (see Figure 6-2). Note A

reads as follows: “The terms of the U.S. public law, the Arms Export Control Act, require the 

Department of Defense to collect payments from foreign purchasers in advance of the time that 

DoD incurs costs on the purchaser’s behalf. Therefore, this Billing Statement requests payment 

of monies that are anticipated to be expended between the time this Billing Statement is paid and 

the following Billing Statement is paid.” 

Column 12. A value appears in this column on the “Case Total” line 

only. It represents the total of the Column 10 and Column 11 values for 

the case. Note also that for those cases where the forecasted 

requirements are derived from the payment schedule, the figure in 

Column 12 equates to cumulative payment schedule amounts up 

through the current forecast period. 

Column 13. A value appears in this column on the “Case Total” line 

only. It represents the total amount of payments received by DFASDE in behalf of the FMS customer through the official date of billing 

in Block 5. 

11. 

FORECASTED 

REQUIREMENTS 

NOTE A

 8,550.00 

12. 

TOTAL FINANCIAL 

REQUIREMENTS

 59,000.00 

13. 

CUMULATIVE 

PAYMENTS 

RECEIVED

 50,450.00 
6-15 

Block 14. A value appears in this column on the “Case Total” line only. 

It represents a calculation, Column 12 value minus Column 13 value, and 

is the additional payment which is due from the customer. In the event 

the calculation shows a negative amount due, the negative amount will 

not normally be shown. [Excess payments on one case does not reduce or 

eliminate the requirement to pay on another case, since billing is required 

on a case-by-case basis.] This is of particular significance for those cases 

subject to case closure actions. 

OTHER INFORMATION 

 • The last page of Figure 6-2 reflects the BILL TOTAL for case designators CXY, URA, 

and URK -- which collectively comprise Statement Number 00-12NA for U.S. Army 

implemented cases to Bandaria. The Bill Total figure is the summation of all entries in Columns 

8 through 13 for applicable cases. It should be noted that the Bill Total amount will not be equal 

to Column 12 minus Column 13, if one or more of the cases have excess payments, which are 

computer suppressed. 

 • The bottom left-hand portion of the last page of the DD Form 645 (Figure 6-3) is titled 

Review Process and contains space for DFAS-DE signatures. However, as of the 96-12 Billing 

Statement a validation and signature letter took the place of individually signed bills. Exceptions 

to this procedure are made only at customers request. 

 • The bottom right-hand portion of the last page of the DD Form 645 is titled 

Explanatory Notes. Note A was addressed as part of the discussion for Column 11. There is 

another note which reads: “*Denotes cases closed during the current period.” 

 • Directly below the Explanatory Notes portion are the Payment Instructions, which 

read: “Your payments may be made using either checks or wire transfer procedures. Wire 

transfers are preferred and should be sent to the Federal Reserve Bank of New York, with the 

following identifications: U.S. Treasury NYC (3801), DFAS- DE, ABA #021030004. 

 If wire transfer is not utilized, make checks payable to U.S. Treasury, in U.S. dollars and 

forwarded to: 

 DFAS-ADCTA/DE 

 P.O. Box 173659 

 Denver, CO 80217-3659 USA 

 For those FMS Customer Countries who have entered either a tripartite, or quadripartite 

agreement authorizing the establishment of a Federal Reserve Bank account New York 

(FRBNY), the following applies: 

 • Initial deposits required on newly accepted FMS cases are to be made to your 

respective account as part of the LOA acceptance terms. 

 • Payments Due based on the DD Form 645 billings are also to be deposited to your 

FRBNY account. 

 Federal Reserve Bank of New York (Foreign Deposits Accounts Dept.) 

 For Deposit to (your account #) 

 33 Liberty Street 

 New York, New York 10045-0001 

14. 

AMOUNT DUE 

AND PAYABLE

 8,550.00 
6-16 

 • It is imperative that confirmation of all deposits made to the FRBNY account be 

furnished direct to DFAS-DE by the FMS customer office making such deposits. These advices 

must contain country code, implementing agency of the U.S. government and case designator, 

i.e., BN-B-XYZ. This action will help ensure that DFAS-DE records are properly updated and 

credit will appear on subsequent DD Form 645s. Failure to advise DFAS-DE will result in an 

imbalance between the payment records of the FMS customer and DFAS-DE billing cumulative 

payments received (column 13) on DD Form 645s. 

SUMMARY 

 The DD Form 645 is prepared and distributed to the FMS Purchaser on a quarterly basis. 

This document consists of two parts: a “Billing Statement,” and a “Final Statement of Account” 

for each closed case. 

 The DFAS-DE data base relative to LOA provides the basis for the degree of information 

detail provided on the DD Form 645. Specifically, those item numbers on the LOA are 

transferred to the DD Form 645, and detailed delivery costs are shown accordingly. For most 

FMS cases (with the exception being requisition type cases to include Supply Support 

Arrangement - FMSO 2 and other repair part cases), the Payment Schedule is the source of the 

forecasted requirements which appear in Column 11 of the DD Form 645. 
7-1 

CHAPTER 7 

FMS DELIVERY LISTING 

PURPOSE 

 In this chapter, the FMS Delivery Listing - which is an attachment to the DD Form 645 - is 

addressed. The discussion centers on how to read the FMS Delivery Listing and how such 

Listing relates to the DD Form 645. 

GENERAL INFORMATION 

FUNCTION AND FORMAT 

 An FMS Delivery Listing (see Figure 7-1) is prepared in support of entries in Column 9, 

“Current Period Delivery Costs,” of the DD Form 645. The Listing identifies items physically or 

constructively delivered and services performed that are received and accepted by DFAS-DE 

during the reporting period. It is cross referenced to specific document numbers and allows FMS 

customers to validate receipt of the materiel or services. This Delivery Listing also includes 

DFAS-DE’s computations of authorized charges applied by that organization in accordance with 

established pricing policy. Those performance reporting items rejected back to an IA must be 

researched by them for determination of errors, correction and/or re-input in subsequent 

reporting. The FMS delivery list is in item number sequence and delivery source code sequence 

within item number and subtotaled by delivery source code. 

CYCLE 

 The FMS Delivery Listing, being an attachment to the DD Form 645, is prepared and 

distributed on a quarterly basis. 

EXPLANATION OF ENTRIES ON THE FMS DELIVERY LISTING 

 The FMS Delivery Listing essentially consists of four sections or groupings of information: 

• Header Information, e.g., identification of country, service, statement number, case, 

item number, etc. 

• Articles/Services Transactions, which support the Column 9, DD Form 645, entry for 

the given item number, e.g., Item Number 001, 002, etc. 

• Administrative/Accessorial Transactions, which provide a breakout of administrative/accessorial costs by generic code and the accounting date/month. 

• Summary of Delivery Costs, reflecting the net total of articles/services costs, the net 

total of administrative and accessorial costs, and total delivery costs. 



7-5 

The sections of the FMS Delivery List and associated data fields are discussed below. 

HEADER INFORMATION 

[Reference: Figure 7-1, Page 1 of 3] 

Top Center Portion. Identifies the type of listing, the 

statement number, the case and item number. 

Top Right-Hand Portion. Identifies the period 

ended date, the actual date prepared, the U.S. 

implementing agency (e.g., U.S. Army), and the 

page number of the listing. 

Top Left-Hand Portion. Identifies the FMS recipient country 

and Service within that country. 

ARTICLES/SERVICES TRANSACTIONS 

[Reference: Figure 7-1, Page 1 of 3] 

Document Identifier (DOC ID). The DOC ID identifies the type of transaction. 

In the “Articles/Services Transactions” section, there are two possibilities: 

• FKA: Materiel/Service Transaction (Debit). • FKB: Materiel/Service Transaction (Credit). In the event of an FKB, the 

abbreviation for credit (CR) follows the quantity in the QUAN SHIP 

column and the dollar amount in the EXTENDED VALUE column. 

Routing Identifier Code (RIC). Three position (alpha/numeric) code which 

identifies the shipping depot or activity performing services as established in 

MILSTRIP procedures. S9C, for example, equates to the Defense Supply Center, 

Columbus, OH. 

FMS DELIVERY LISTING 

STATEMENT NUMBER: 00-12NA 

CASE: URK ITM NBR: 002 

 PAGE 

 FOR PERIOD ENDED: 00 DEC 31 

 DATE PREPARED: 01 JAN 15 

 U.S. DEPT/AGENCY ARMY 

COUNTRY: BANDARIA 

SERVICE: ARMY 

 DOC 

 ID 

 FKB 

 FKA 

 FKA 

 FKA 

 FKA 

 RIC 

 B14 

 B14 

 S9J 

 B14 

 B14 
7-6 

Price Code (PRC CD). An alpha code which identifies the price as being: 

• A = An actual price. A blank in the PRC CD field is also treated as an 

actual price. • E = An estimated price. Used to report physical deliveries at an estimated 

price. This transaction will eventually be reversed when an actual price 

(PRC CD “A”) is submitted by the Implementing Agency (IA). 

Stock Number. Shows stock or part number, training course number, 

film number, publication number, phrase “SERVICE,” etc. In reporting 

cost of DoD Services, the following cost codes or similar information 

will be used in the last two positions of the stock number field; 

 11 - Civilian Personnel Services and Benefits 

 17 - Military Personnel Services and Benefits 

 21 - Travel and Transportation of Personnel 

 22 - Transportation of things 

 23 - Rent, Communications, and utilities 

 24 - Printing and Reproduction 

 25 - Other Services 

 26 - Supplies and Materials 

 31 - Equipment 

Unit of Issue. Abbreviation for unit of issue, e.g., EA equates to Each. 

Quantity Shipped (QUAN SHIP). Self-explanatory. For 

FKB transactions, the quantity is followed by the 

abbreviation “CR” standing for Credit. 

Document Number. Composed of 14 alpha/numeric characters 

identifying the transaction. 

• Position 1: Implementing agency code, as shown in Part III, 

Appendix F. For example, “B” equates to U.S. Army. 

• Position 2-3: Country code, e.g., BN equates to fictitious country 

of Bandaria. 

• Position 4: Customer in-country code (or mark-for code). Comes 

from the LOA, e.g., code “C” in the above example. 

PRC 

CD 

A 

E 

A 

A 

A 

STOCK NUMBER 

C0001BNURK 

493000926123400 

473000016267800 

CONTRACT ADMIN 

493000928111100 

UNIT 

ISSUE 

EA 

EA 

EA 

XX 

EA 

QUAN 

SHIP 

 5CR 

 10 

 2 

 1 

 1 

DOCUMENT 

NUMBER 

BBNC4481009004 

BBNC4481009001 

BBNC4481009009 

BBN00000005330 

BBNC4481009010 
7-7 

• Position 5: Delivery Term Code as shown in Appendix G, of this Handbook. This is 

the negotiated/anticipated method of movement of the material. 

• Position 6: Type of Assistance Code as shown in Appendix H, of this Handbook. 

• Position 7-10: Four numeric characters representing calendar year and Julian date. 

For the date 8100: 8 = calendar year 1998; and 100 = the 100th calendar day of 1998, 

or 9 April. 

• Position 11-14: Serial number of the transaction/requisition. In the illustration above, 

the serial numbers are 5330, 9001, 9004, 9009, and 9010. 

Document Suffix Code (DOC SFX). If this field contains an alpha/ numeric entry, 

it indicates a partial supplying action on the part of the supplier. Block assignment 

of the suffix codes is accomplished essentially as follows: 

 Processing Source Assigned Suffix Codes

 Initial Source A through E 

 First Secondary Source F through H, J, and K 

 Second Secondary Source L, M, Q, T, and U 

 Third Secondary Source V through X 

 Fourth Secondary Source Z through 9 

Supplementary Address (SUPL ADRS). 

• Position 1: In-country Service Code, e.g., “B” = Bandaria Army 

• Position 2: Offer/release code from column (6), LOA, e.g., “Z” in this 

illustration, which advises that a Notice of Availability (NOA) is required 

prior to item release. 

• Position 3: Freight Forwarder Code from the LOA, e.g., “2” in this 

illustration. 

• Position 4-6: Case designator, e.g., “URK” in this example. 

Mode of Shipment (MS) Code. Codes listed in Appendix L. Code “F,” for example, 

indicates transportation was accomplished by the Air Mobility Command (AMC). 

Adjustment Reply Code (ARC). May be used to explain material cost 

or quantity adjustment, either as the result of a SDR or some other 

billing adjustment input to DFAS-DE by the shipper. A list of ARCs is 

contained in Appendix M. Code “CB” indicates that a credit adjustment 

will be made. Some MILSTRIP adjustments may also be coded that do 

not directly relate to a SDR; therefore further comparison to the stock 

number field is recommended to determine the validity. 

DOC 

SFX 

A 

SUPL 

ADRS 

 BZ2URK 

 BZ2URK 

 BZ2URK 

 URK 

 BZ2URK 

M 

S 

G 

F 

G 

B ARC 

CB 
7-8 

Accounting Date (ACTG DATE). Calendar year (e.g., “00” = 2000) and month 

(e.g., 10 = October) that a transaction is processed by DFAS-DE. 

Transportation Bill Code (TBC). An alpha character used by 

DFAS-DE to recognize the necessity to charge for the 

transportation of materiel. TBCs are listed in Appendix N. Code 

“G,” for example, indicates that the materiel was moved to the 

FMS consignee at an overseas inland destination. 

Delivery Source Code (DSC). Comprised of two alpha characters. Codes in this 

field provide an audit trail between delivery transactions and FMS pricing policies. 

Code is also used by DFAS-DE to recognize the necessity to charge for packing, 

crating and handling (PCH) and contract administration on new procurement 

contract disbursements. DSCs are listed in Appendix O. Code “AB,” for example, 

relates to a nonexcess stock fund Defense Working Capital Fund (DWCF) (other 

than matured FMSO) item from inventory. 

Date Shipped (DATE SHIP). Four numeric characters with the first being the last 

digit of the calendar year (e.g., “0” = 2000) followed by the three position Julian 

Date (e.g., 250). 

Unit Price. Derived in DFAS-DE by dividing quantity shipped 

into extended value reported by IA. An asterisk (*) in this 

Column means that the extended value is “not divisible” (in 

whole dollars and cents by quantity shipped). 

 Extended Value. Quantity times Unit Price. 

ADMINISTRATIVE/ACCESSORIAL TRANSACTIONS

[Reference: Figure 7-1, Page 2 of 3] 

Document Identifier (DOC ID). 

• FKC - Administrative Costs (Debit). 

• FKD - Administrative Cost Adjustments (Credit). 

• FKE - Accessorial Costs (Debit). 

• FKF - Accessorial Cost Adjustments (Credit). 

ACTG 

DATE 

0010 

0010 

0011 

0011 

0011 

TBC 

A 

G 

A 

D 

D 

DSC 

AB 

AB 

AB 

BD 

DC 

SHIP 

DATE 

9140 

9250 

9280 

9330 

9281 

UNIT 

PRICE 

 70.00 

 120.55 

 50.00 

 2.96 

 197.04 

 DOC 

 ID 

FKC 

FKC 

FKD 

FKE 

FKE 

FKE 

FKE 
7-9 

Generic Code. Selected Administrative and Accessorial cost related generic codes (reference: 

SAMM, Appendix D, for a list of all generic codes). The following generic codes, together with 

their long and short titles, may be shown in this portion of the DD Form 645: 

Generic Generic Generic 

Code Long Title Short Title

L1A* INLAND TRANSPORT CONUS CONUS TRANS 

L1B* OCEAN TRANSPORTATION OCEAN TRANS 

L1C AIR TRANSPORTATION AIR TRANS 

L1D** PARCEL POST PARCEL POST 

L1E** COMMERCIAL PKG CARRIERS COMM PKG 

L1F INLAND TRANSPORT OVERSEAS OS INLAND 

L1O TRANSPORTATION COSTS TRANS COSTS 

L2A* PACK CRATE & HANDLE PCH 

L2B CONUS PORT HANDLING CONUS PORT 

L2C OVERSEAS PORT HANDLING OS PORT 

L4A STORAGE# STORAGE 

L4B STORAGE# STORAGE 

L4O STAGING STAGING 

L6A ADMINISTRATIVE COSTS ADMIN COSTS 

N7E MEDICAL# MEDICAL 

N7F QUARTERS# QUARTERS 

R9D TDP ROYALTY FEE# TDP ROYALTY 

R9H*** ASSET USE CHARGE# ASSET USE 

U10 NORMAL INVENTORY LOSS# INV LOSS 

# LIST CONTAINS SOME GENERIC CODES WHICH MAY BE INCLUDED WITHIN THE LOA 

* Effective October 1990, these charges are not applied if the DSC is AA, AB, AC, AD, AH, AJ, AK, CA, EF, or 

 EG, and the ship date is greater than 1 October 1990. 

** Effective October 1991, these charges are not applied if the DSC is AA, AB, AC, AD, AH, AJ, AK, CA, EF, or 

 EG and the ship date is greater than 1 October 1991. 

*** Asset use charges are not applicable after November 1989 per Public Law. 101-167.

Cost Description. Generic short title of cost. See discussion 

immediately preceding this block. 

Document Number. Comprised of three positions: 

• Position 1: U.S. Implementing Agency, e.g., B = U.S. Army. 

• Position 2-3: Country code of recipient, e.g., BN. 

 COST 

 DESCRIPTION 

 ADMIN COSTS 

 ADMIN COSTS 

 ADMIN COSTS 

 AIR TRANS 

 OS INLAND 

 CONUS PORT 

 OS PORT 
7-10 

Adjustment Reply Code (ARC). Same meaning as in “Articles/Services Transactions” 

discussion. Normally, no entries are shown here because this is a summation of many entries in 

the “ARTICLES/SERVICES TRANSACTIONS” portion of the Delivery Listing. See Appendix 

M for listing of ARCs. 

Accounting Date (SDR DATE). Same meaning as in “Articles/Services 

Transactions” discussion. Note that all administrative/accessorial costs are 

summarized in terms of document identifier, generic code(s) relevant to that 

document identifier, and accounting date/month. 

Type of Cost. Can be of two types: 

• Computed - Meaning that the routine percentage charge is 

used, e.g., 3.00% for general administrative costs. The 

type of computation is denoted by the word 

“COMPUTED.” 

• Actual - Meaning that actual, in lieu of percentage 

derived, charges are applicable. This type of computation 

is denoted by the word “ACTUAL.” 

Percent Factor. Denotes the percentage used on “COMPUTED” costs 

described above. When “ACTUAL” charges are used, the words “FLAT 

CHARGE” appear in lieu of the percentage rate. 

Total Value Applied. Relates to the total value (from 

the “Articles/Services Transactions” section) to which 

the percentage or flat charge, in the previous column, is 

applied. This total value figure is sorted/summarized by 

document identifier, generic code, and accounting date. 

 ACTG 

 DATE 

 0010 

 0010 

 0010 

 0011 

 0010 

 0010 

 0010 

TYPE OF 

COST 

COMPUTED 

COMPUTED 

COMPUTED 

COMPUTED 

COMPUTED 

COMPUTED 

COMPUTED 

PERCENT 

FACTOR 

3.00 

3.00 

3.00 

6.00 

3.00 

2.50 

1.00 

TOTAL VALUE 

APPLIED 

1205.50 

300.00 

350.00CR 

1205.50 

1205.50 

1205.50 

1205.50 
7-11 

Administrative/Accessorial Cost (ADMIN/ ACSRL COST). 

Equates to the end results following the application of percentage or 

flat charges. 

SUMMARY OF DELIVERY COSTS

[Reference: Figure 7-1, Page 3 of 3] 

Cost Descriptions Summary. In this portion of the FMS Delivery Listing, the aggregated costs 

(irrespective of accounting date/month) are identified to their document identifier (e.g., FKA, 

FKB) and the Net Total is shown. Accessorial costs are further displayed by generic code. 

“Total Delivery Costs” equal to the net totals of articles/services costs, administrative costs, and 

accessorial costs. 

ADMIN/ACSRL 

COST 

 36.17 

 9.00 

 10.50CR 

 72.33 

 36.17 

 30.14 

 12.06 

SUMMARY OF DELIVERY COSTS 

 FKA ARTICLES/SERVICES COSTS 

 FKB ARTICLES/SERVICES COST ADJUSTMENTS 

NET TOTAL OF ARTICLES/SERVICES COSTS 

 FKC ADMINISTRATIVE COSTS 

 FKD ADMINISTRATIVE COST ADJUSTMENTS 

NET TOTAL OF ADMINISTRATIVE COSTS 

 FKE ACCESSORIAL COSTS 

 L1C AIR TRANSPORTATION 

 L1F INLAND TRANSPORT OVERSEAS 

 L2B CONUS PORT HANDLING 

 L2C OVERSEAS PORT HANDLING 

NET TOTAL OF ACCESSORIAL COSTS 

 TOTAL DELIVERY COSTS 
7-12 

Cost Information Summary. Displays the costs in terms of “ACTUAL COST,” “COMPUTED 

COSTS,” and “TOTAL COSTS.” 

 Note that the “Net Total of Articles/Services Costs” ($1155.50 in this illustration) equates 

to the amount for that FMS case/item number in Column 9 of the DD Form 645. The “Net Total 

of Administrative Costs” ($34.67 in this illustration) represents a portion the L6A 

ADMINISTRATIVE FEE figure (i.e., $487.67 in Column 9 of the DD Form 645 - see Figure 6-

2, page 2 of 3). The L00 line on the DD Form 645 is the total of all assessed accessorial charges. 

AUTOMATED PRODUCTS 

 The customer may request that DFAS-DE provide data to support the FMS Delivery 

Listings. Specific data formats prepared by DFAS-DE based upon Delivery Transactions are 

shown in Figures 7-2 through 7-7 for the following transactions. 

 • Articles/Service Transaction (Data Tape)- Figure 7-2. 

 • Training Transaction (Data Tape) - Figure 7-3. 

 • Administrative Transaction (Data Tape) - Figure 7-4. 

 • Accessorial/Additional Cost Transaction (Data Tape) - Figure 7-5 

 • Articles/ Services Transaction (Diskette) – Figure 7-6 

 • Administrative/Accessorial Cost Transactions (Diskette) – Figure 7-7 

SUMMARY 

 The FMS Delivery Listing is a key attachment to the DD Form 645. Essentially, it contains 

detailed transaction data to support the entries in Column 9 of the DD Form 645. The FMS 

Purchaser may request data tapes to support the FMS Delivery Listings. 

COMPUTED COSTS 

 45.17 

 10.50CR 

 34.67 

 72.33 

 36.17 

 30.14 

 12.06 

ACTUAL COSTS 

 .00 

 .00 

 .00 

 .00 

 .00 

 .00 

 .00 

TOTAL COSTS 

 1505.50 

 350.00CR 

 1155.50 

 45.17 

 10.50CR 

 34.67 

 72.33 

 36.17 

 30.14 

 12.06 

 150.70 

 1340.87 
7-13 

FIGURE 7-2 

Data Tape Format for 

Articles/Service Transaction1

 Transaction 

 Position Field Contents

 1-3 Document Identifier Code2

 4-6 Routing Identifier Code 

 7 Price Code 

 8-22 Stock or Part Number/SDR Response 

 23-24 Unit of Issue 

 25-29 Quantity Shipped3

 30-43 Document Number 

 44 Suffix Code 

 45-50 Supplemental Address 

 51 Mode of Shipment 

 52-53 Adjustment Reply Code 

 54-57 Accounting Date (numeric year and month in which processed at 

 DFAS-DE) 

 58 Transportation Bill Code (second position of original code) 

 59-60 Delivery Source Code 

 61-64 Date Shipped 

 65-73 Extended Value3,4

 74-80 Unit Price4 

 81-83 Item Number 

 84 Cost Identification Code 

 85 In-Country Service 

1 The majority of data in this transaction is perpetuated from the Delivery Transaction report. 

2 Document identifier code will be FKA for debits, FKB for credits, and FKG for reply to 

customer requests for adjustments. FKG cards may contain either debit or credit values and 

are financial information relating to the original FKA/FKB transaction. 

3 A credit value is indicated by a CR or - after the value. 

4 For items which exceed $99,999.99 in unit price, the extended value and unit price fields 

contain dollars only. 
7-14 

FIGURE 7-3 

Data Tape Format for 

Training Transaction 

 Transaction 

 Position Field Contents

 1-3 Document Identifier Code (FKA, FKB) 

 4-6 Routing Identifier Code 

 7 Price Code (normally “A”) 

 8-22 Course Number or Brief Description 

 23-24 Unit of Issue (normally “XX”) 

 25-29 Quantity 

 30-43 Document Number (normally contains zeros in cc 33-35 and ITO date 

and/or number in cc 36-43) 

 44 Suffix Code or Blank 

 45-50 Supplemental Address (normally contains zeros in cc 46-47) 

 51-53 Blank or Zero 

 54-57 Accounting Date 

 58 Normally Blank 

 59-60 Delivery Source Code 

 61-64 Course Commencement Date or Blank 

 65-73 Extended Value (cost involved with training) 

 74-80 Unit Price (normally same as extended value) 

 81-83 Item Number 

 84 Cost Identification Code 

 85 In-Country Service 
7-15 

FIGURE 7-4 

Data Tape Format for 

Administrative Transaction 

 Transaction 

 Position Field Contents

 1-3 Document Identifier Code (FKC for debits, FKD for credits) 

 4-6 Routing Identifier Code of activity which reported materiel/services to 

which administrative costs apply 

 7 Blank 

 8-19 Contains constant “ADM COST,” left-justified 

 20-29 Value to which cost applies, if applicable 

 30 U.S. Implementing Agency Code 

 31-32 FMS Country Code 

 33-44 Blank 

 45 FMS Country Service 

 46-47 Blank 

 48-50 FMS Case Designator 

 51 Blank 

 52-53 Adjustment Reply Code, if applicable 

 54-57 Accounting Date 

 58-60 Generic Code (L6A) 

 61-64 Blank 

 65-73 Value of Administrative Cost 

 74-80 Percentage rate used, if applicable 

 81-83 Item Number 

 84 Cost Identification Code 

 85 In-Country Service 
7-16 

FIGURE 7-5 

Data Tape Format for 

Accessorial/Additional Cost Transaction 

 Transaction 

 Position Field Contents

 1-3 Document Identifier Code (FKE for debits, FKF for credits) 

 4-6 Routing Identifier Code of activity which reported materiel/services to 

which accessorial costs apply 

 7 Blank 

 8-19 Phrase identifying type of cost, e.g., ”CONUS T,” ”OSEAS T,” ”P POST,” 

”PCH,” ”STAGING,” ”MEDICAL,” etc. 

 20-29 Value to which cost applies, if applicable 

 30 U.S. Implementing Agency Code 

 31-32 FMS Country Code 

 33-44 Blank 

 45 FMS Country Service 

 46-47 Blank 

 48-50 FMS Case Designator 

 51 Blank 

 52-53 Adjustment Reply Code, if applicable 

 54-57 Accounting Date 

 58-60 Generic Code for type of cost as prescribed by the Security Assistance 

Management Manual (SAMM) 

 61-64 Blank 

 65-73 Value of Accessorial Cost 

 74-80 Percentage rate used, if applicable 

 81-83 Item Number 

 84 Cost Identification Code 

 85 In-Country Service 
7-17 

FIGURE 7-6 

Data Diskette Format for 

Articles/Service Transaction1

 Transaction 

 Position Field Contents

 1-3 Document Identifier Code

 4-6 Routing Identifier Code 

 7 Price Code 

 8-22 Stock or Part Number/SDR Response 

 23-24 Unit of Issue 

25-30 Quantity Shipped2

 31 Blank 

 32-45 Document Number 

 46 Suffix Code 

 47-52 Supplemental Address 

 53 Mode of Shipment 

 54-55 Adjustment Reply Code 

 56-59 Accounting Date (numeric year and month in which processed at 

 DFAS-DE) 

 60 Transportation Bill Code (second position of original code) 

 61-62 Delivery Source Code 

 63-66 Date Shipped 

 67-79 Extended Value 2,3

 80-88 Unit Price2,3,4 

89-91 Item Number 

 92 Cost Identification Code5

 93 In-Country Service 

1 The majority of data in this transaction is perpetuated from the Delivery Transaction report. 

2 The sign positions are ‘0’ for positive and ‘-‘ for negative quantities. 

3 For items that exceed $9,999,999.99 in the extended value field, the extended value is 

expressed as rounded whole dollars only (no cents). 

4 For items that exceed $99,999.99 in the unit price field, the extended value and unit price 

fields contain dollars only. 

5 This field always contains an ‘A’ (above the line costs, articles and services). 
7-18 

FIGURE 7-7 

Data Diskette Format for 

Administrative and Accessorial Transactions 

 Transaction 

 Position Field Contents

 1-3 Document Identifier Code (DIC) 

 4-6 Routing Identifier Code of activity which reported materiel/services to 

which administrative/accessorial costs apply 

 7 Blank 

8-19 Cost Description 1

 20-31 Extended Value Total 2,3,4

 32 U.S. Implementing Agency Code 

33-34 FMS Country Code 

 35 Type Cost 5

 36-46 Blank 

 47 FMS Country Service 

 48-49 Blank 

 50-52 FMS Case Designator 

 53 Blank 

 54-55 Adjustment Reply Code, if applicable 

 56-59 Accounting Date 

 60-62 Generic Code (L6A) 6

 63-66 Blank 

 67-77 Value of Administrative/Accessorial Cost3,4

 78-85 Percentage rate used, if applicable4

86-88 Blank 

 89-91 Item Number 

 92 Cost Identification Code7

 93 In-Country Service 

1 If the DIC is FKC or FKD, ‘ADMIN-COSTS’ should appear this space. If DIC is FKE or 

FKF, the generic description of the accessorial charges (i.e., CONUS TRANS, PCH, P Post, 

etc) should appear in this space. 

2 If the actual cost is used (see Note 5), this field will be spaced out. If the computed cost is 

used, the extended value total is placed here. 

3 The sign position is designated by a ‘0’ for positive and ‘-‘ for negative. 

4 An actual decimal point is used. 

5 If the input is actual cost, this field will contain an ‘A’. Otherwise, this field will contain a ‘C’ 

(computed cost). 

6 If DIC is FKC or FKD, the generic code is L6A. If DIC is FKE or FKF, the generic code is 

the code to the accessorial charge, i.e., LIA, L2B, L2C, etc. 

7 This field always contains a ‘B’ (below-the-line costs, i.e., accessorial and admin). 
8-1 

CHAPTER 8 

FOREIGN MILITARY SALES FINANCIAL FORECAST 

PURPOSE 

 The purpose of this chapter is to provide information on how to read and understand the 

Foreign Military Sales (FMS) Financial Forecast, an attachment to the DD Form 645. 

GENERAL INFORMATION 

FUNCTION AND FORMAT 

 An FMS Financial Forecast (Figure 8-1) is prepared to show the anticipated forecast 

amounts which will eventually be posted to Column 11 (Forecasted Requirements) of the DD 

Form 645. In theory and most actual practice, the amounts contained in the FMS Financial 

Forecast are extracted from the most recent amended/modified Payment Schedule. The FMS 

Financial Forecast, in this instance, is valuable inasmuch as it reflects the latest payment 

schedule information as received by DFAS-DE. In other instances, such as requisition type, 

repair part, and FMSO II cases, where a quarterly “Committed Values for Requisition Cases” 

report is submitted the FMS Financial Forecast reflects the latest outlying forecasts. Also refer to 

the Payment Schedule for further clarity and understanding. 

CYCLE 

 This report is produced quarterly, along with the DD Form 645. 

8-3 

EXPLANATION OF ENTRIES ON THE FMS FINANCIAL FORECAST 

 The following segmented illustrations are taken from Figure 8-1, which is a hypothetical 

FMS Financial Forecast for Statement Number 96-12NA and relates to FMS case designators 

CXY and URK each of which reflect future forecast amounts. 

HEADER INFORMATION 

Upper Left-Hand Portion. Self-explanatory. 

Upper Center Portion.

 Self-explanatory. 

Upper Right-Hand Portion. Self-explanatory. 

 The Header Information, illustrated above, follows essentially the same pattern as the FMS 

Delivery Listing and no further discussion is needed. 

LOWER PORTION 

Left-Hand Side. Reflects the heading “CASE” (and the cases CXY 

and URK in this illustration). The “TOTAL STATEMENT” heading 

relates to the Statement Number (00-12NA in this illustration). 

Forecast by Quarter. There is space on this report for 

19 future quarterly forecasts–normally enough for most 

cases. The 1st quarterly forecast case entry (i.e., the 

$12,000 boxed figure in the illustration) crossreferences to the 15 JUN XX payment date and amount 

on the Payment Schedule (Figure 8-2) for FMS Case 

BN-B-CXY. The $7,000 boxed entry for FMS case 

URK also cross references to the Figure 8-2. 

 U.S. DEPT/AGENCY: ARMY 

COUNTRY: BANDARIA 

SERVICE: ARMY 

FMS FINANCIAL FORECAST 

STATEMENT NR: 00-12NA 

DATE PREPARED: 01 JAN 15 PAGE 

FOR PERIOD ENDED: 00 DEC 31 

 CASE 

 CXY 

 

 URK 

 

 TOTAL STATEMENT 

FORECAST BY QUARTER: 1ST 

 8TH 

 15TH 

 12000 

 0 

 0 

 7000 

 0 

 0 

 19000 

 0 

 0 
8-4 

 Rule: The 1st quarterly forecast entry equates to the DD Form 645, Block 2 (Payment Due 

Date), plus 90 days, e.g., if the DD Form 645, Block 2, date is 15 MAR 00, then the 1st quarterly 

forecast entry on the FMS Financial Forecast will equate to the 15 JUN 00 amount from the 

payment schedule. The 2nd quarterly forecast entry will be 15 SEP 00 in this example, and so 

on. 

FIGURE 8-2 

Payment Schedule Information 

For FMS Case BN-B-CXY

 Payment Date Amount Cumulative

 Initial Deposit1 $35,000 $35,000 

 15 SEP 99 15,000 50,000 

 15 DEC 99 20,000 70,000 

 15 MAR 00 25,000 95,000 

15 JUN 00 12,000 107,000 

 TOTAL $107,000 

For FMS Case BN-B-URK

 Payment Date Amount Cumulative

 Initial Deposit1 $12,150 $12,150 

 15 JUN 00 15,300 27,450 

 15 SEP 00 12,000 39,450 

 15 DEC 00 11,000 50,450 

 15 MAR 01 8,550 59,000 

15 JUN 01 7,000 66,000 

 15 SEP 01 5,000 71,000 

 15 DEC 01 1,725 72,725 

 TOTAL $72,725 

1The initial deposit normally consists of one half of the total administrative cost (ADM Cost) for the FMS case 

(unless otherwise waived) plus the initial three months of anticipated costs (by the Implementing Agency). 

 The Total Statement entry (i.e., $19,000 in this illustration) is the sum of the $12,000 and 

$7,000 individual case entries. 

Remaining Quarterly Amounts

 2ND 3RD 4TH 5TH 6TH 7TH 

 9TH 10TH 11TH 12TH 13TH 14TH 

 16TH 17TH 18TH 19TH 

 0 0 0 0 0 0 

 0 0 0 0 0 0 

 0 0 0 0 

 5000 1725 0 0 0 0 

 0 0 0 0 0 0 

 0 0 0 0 

 5000 1725 0 0 0 0 

 0 0 0 0 0 0 

 0 0 0 0 
8-5 

 The remaining quarterly amounts also cross-reference to the payment schedule in the 

manner described above. Note that case BN-B-CXY reflects zeros inasmuch as its final 

estimated payment ($12,000 for payment date 15 JUN 00) was reflected in the 1st quarterly 

payment entry. However, case BN-B-URK reflects 2nd and 3rd quarter forecasted payment 

entries corresponding to the Payment Schedule for payment dates 15 SEP 01 and 15 DEC 01, 

respectively. 

SUMMARY 

 The FMS Financial Forecast is a rather straightforward report. It reflects anticipated, future 

payments starting with a payment due date 90 days beyond the date reflected in Block 2 of the 

DD Form 645. The FMS Financial Forecast has space for 19 quarterly forecasts; any forecasted 

payments beyond that period are “rolled up” into the 19th quarter entry. 
8-6

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9-1 

CHAPTER 9 

FMS REPLY LISTING TO CUSTOMER REQUESTS 

FOR ADJUSTMENTS 

PURPOSE 

 The purpose of this chapter is to provide information on how to read and understand the 

FMS Reply Listing to Customer Requests for Adjustments, hereafter referred to as the Reply 

Listing. The Reply Listing - like the FMS Delivery Listing (Chapter 7) and the FMS Financial 

Forecast (Chapter 8) - is an attachment to the DD Form 645. 

GENERAL INFORMATION 

FUNCTION AND FORMAT 

 The Reply Listing is a consolidated listing of the actions/dispositions taken in response to 

Supply Discrepancy Reports (SDRs) (Standard Form 364). SDR dispositions are commonly 

referred to as “FKG transactions” inasmuch as the Document Identifier on the Reply Listing is 

FKG. Each FKG transaction contains many of the same data elements as the FKA/FKB 

transaction shown on the FMS Delivery Listing. The FKG is a management/non-financial 

transaction generated from an original FKA/FKB transaction. The Reply Listing is prepared in 

the same basic sequence as the Billing Statement and the FMS Delivery Listing. If the FMS 

Purchaser uses mechanized procedures, the FKG data (tape/disc) (upon request) may be mailed 

with the Reply Listing. 

 The Reply Listing is illustrated in Figure 9-1, which contains a credit transaction to FMS 

case BN-B-URK, Item Number 002. 

CYCLE 

 The Reply Listing is prepared quarterly along with the DD Form 645. 

9-3 

EXPLANATION OF ENTRIES ON THE REPLY LISTING 

[Reference: Figure 9-1] 

HEADER INFORMATION 

Upper Left-Hand Portion. Self-explanatory. 

 Upper Center Portion. Self-explanatory. 

Upper Right-Hand Portion. Self-explanatory. 

 The header information (illustrated above) follows essentially the same pattern as the FMS 

Delivery Listing and no further discussion is needed. 

LOWER PORTION 

Case/Item Number. Self-explanatory. Located just above 

the transaction(s) data fields. 

The data fields at left are addressed in Chapter 7. 

Supply Discrepancy Report (SDR). In accordance with the standard 

numbering system for SDRs, the 10 position SDR Serial Number consists 

of: 

 • Position 1: Alpha character to identify the preparing office incountry, e.g., “C” in this illustration. 

 • Positions 2-5: Four numeric characters for each FMS case for 

each in-country office, beginning with 0001. 

 • Positions 6-7: Country code, e.g., BN = Bandaria. 

 • Positions 8-10: Case Designator, e.g., URK. 

COUNTRY: BANDARIA 

SERVICE: ARMY 

STATEMENT NUMBER: 00-12NA 

 PAGE 

 FOR PERIOD ENDED: 00 DEC 31 

 DATE PREPARED: 01 JAN 15 

 U.S. DEPT/AGENCY ARMY 

 ITM 

CASE: URK NBR: 002 

 DOC PRC 

 ID RIC CD 

 FKG B14 A 

 SDR SERIAL* 

 NUMBER 

 C0001BNURK 
9-4 

 The above data fields are addressed in Chapter 7. 

SUMMARY 

 The FMS Reply Listing to Customer Requests for Adjustments (commonly referred to as 

the Reply Listing) is a consolidated listing of the actions taken in response to SDRs. SDR 

debit/credit transactions will appear both on the FMS Delivery Listing (as an FKA/FKB 

transaction) and the Reply Listing (as an FKG information transaction). 

 UNIT QUAN DOCUMENT** DOC SUPL M 

 ISSUE SHIP NUMBER SFX ADRS S 

 EA 5CR BBNC4481009004 BZ2URK G 

 ACTG UNIT EXTENDED 

 ARC*** DATE TBC DSC PRICE VALUE 

 CB 0010 A AB 70.00 350.00CR 
10-1 

CHAPTER 10 

HOLDING ACCOUNT STATEMENT 

PURPOSE 

 The purpose of this chapter is to provide information on how to read and understand the 

Holding Account Statement. 

GENERAL INFORMATION 

FUNCTION 

 Cash payments are often received, for an individual FMS case, which are determined to be 

in excess of the final value of that particular case at time of closure. Also, there are instances 

where Purchaser funds are received prior to receipt of an accepted LOA or other identifying 

documentation; since these funds must be promptly deposited/recorded to the U.S. Treasury 

account for control purposes, they are deposited to the country’s Holding Account pending 

identification. Unreserved funds in this account may be retained, applied to other FMS cases, or 

refunded at the purchaser’s request, provided there are no collection delinquencies for other FMS 

cases. 

CYCLE 

 Transactions which effect a purchaser’s holding account will be recorded on a Holding 

Account Statement and forwarded with the DD Form 645, during the period in which the charge/ 

credit occurred. 

EXPLANATION OF ENTRIES ON THE 

HOLDING ACCOUNT STATEMENT 

 Referring to Figure 10-1, the following comments are applicable: 

 If no transactions are processed during a given quarter, a Holding Account Statement is 

prepared stating: “NO ACTIVITY DURING BILLING CYCLE.” 

 • There is at least one, perhaps more, separate Holding Accounts for each Military 

Service of the Purchaser country. The Holding Account numbering system is explained 

below. 

 • Holding Account transactions are recorded by date, detail, and amount of 

deposit/withdrawal. A Holding Account Statement is required on a calendar quarter 

basis and also reflects the opening and closing balances. (Funds reserved for specific 

purposes/cases are not available for redistribution by the FMS customer.) 

 • A pseudo designator is assigned by DFAS-DE for each holding account. This threeposition designator is structured as follows: 

 •• The first position (numeric) describes the type of funds in the Holding account. 

 Numeric Type of Funds

 0 Interest bearing account 

 1 Regular FMS payments by purchaser 
10-2 

 2 Military Assistance Program (MAP) funds (MAP is nonrefundable to FMS Customer) 

 3 Third country recoupments 

 4 Buybacks 

 5 Credit FMS funds (non-refundable to FMS Customer) 

6 World-Wide Warehouse 

7 ULO (Participating Countries) refundable to customer 

8 SDR Transportation Reimbursement 

 •• The second position (alpha) identifies the applicable U.S. implementing agency. 

In some instances DFAS-DE may code the second position “Q” (or some other 

alpha) to either reduce the number of accounts or to satisfy some other customer 

country request. For a complete understanding of the coding of a specific Holding 

account, the customer should contact DFAS-DE country manager. 

 •• The third position (alpha) identifies the applicable purchaser’s in-country 

service. 

Example: Holding Account “1BD,” illustrated in Figure 10-1, indicates regular FMS payments 

by Purchaser (numeric “1”) applicable to a U.S. Army program/case (Alpha “B”) and the 

purchaser’s Air Force (Alpha “D”). 

FIGURE 10-1 

Holding Account Bandaria Air Force 1BD

for Calendar Quarter Ended 31 Dec 99

 Date Detail Deposits Withdrawals Balance

 30Sep99 Balance brought forward $3,000.00 

 25Oct99 Funds transferred to 

 1BB Holding Account $200.00 

 13Nov99 Credit delivery to 

 closed case BN-B-CAX $90.00 

 30Dec99 Balance $2,890.00 

SUMMARY 

 The Holding Account Statement(s) is rendered on a quarterly basis. The Holding Account 

concept provides a simplified method for accounting for funds awaiting further disposition 

instructions. Each military service within a Purchaser country has at least one, maybe more, 

Holding Accounts. 
11- 1

CHAPTER 11 

ACCELERATED CASE CLOSURE SUSPENSE ACCOUNT 

STATEMENT 

GENERAL INFORMATION 

 The Accelerated Case Closure Suspense Account statement depicts closed foreign 

military sales (FMS) cases of participating countries. These cases are “supply complete” 

(all ordered goods and services have been delivered/provided) and only final financial 

reporting is necessary. 

 Entries and information of the statement is basically self explanatory indicating 

the FMS Country, U.S. implementing agency, case designator, and date the case was 

closed. Financial information by case is indicated in the last three columns. Reported 

financial obligations in the Current Quarter Activity column will adjust the Current 

Quarter Balance. The Current Quarter Balance then represents those outstanding 

financial obligations that are yet to be reported by the Implementing Agency. 

DEFENSE FINANCE AND ACCOUNTING SERVICE - DENVER CENTER 

DEPUTATE FOR SECURITY ASSISTANCE (DFAS-DE) 

ACCELERATED CASE CLOSURE SUSPENSE ACCOUNT 

CC IA CASE STATUS 

CHANGE 

DT-CLSR PREV QTR BAL 

(9909) 

CURR QTR ACTIVITY CURR QTR BAL 

(9912) 

BN B BGG 94150 1,480.00 0.00 1,480.00 

BN B ZPK 98211 14,862.48 0.00 14,862.48 

SUBTOTAL BY IA 16,342.48 0.00 16,342.48 

BN D GEX 98181 163,356.13 0.00 163,356.13 

BN D GFU * 99340 0.00 312.56 312.56 

BN D NCO 98138 2,135.26- 0.00 2,135.26- 

SUBTOTAL BY IA 161,220.87 312.56 161,533.43 

BN P AQA 95263 7,771.27 7,463.57- 307.70 

BN P BBK 98090 219,887.44 216,900.44 436,787.88 

BN P GCC 95181 73,981.06 75,583.36- 1,602.30- 

SUBTOTAL BY IA 301,639.77 133,853.51 435,493.28 

NOTE: An asterisk (*) in Status Change column means the case was closed in the current 

quarter. An R in the Status Change column means the case was reopened in the current quarter. 

 The 9909 under the PREV QTR BAL indicates the year and month of the 

previous quarter. (In this example, the previous quarter was September 1999). The next 

column indicates the net balance of all activity in the current quarter. The last column 

then indicates the balance, again by case, as of the end of the current quarter (December, 

1999 in this example). 
11- 2

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PART III 

APPENDICES 

NOTE: For the reader’s convenience, the appendices have 

been arranged in the general order in which the 

information/codes appear in the FMS Delivery Listing. 

A-1 

APPENDIX A 

FMS DELIVERY LISTING DOCUMENT IDENTIFIERS AND HEADINGS 

DOCUMENT IDENTIFIER CODES 

 -- GENERAL DESCRIPTION 

 Document Identifier Codes are assigned to the Delivery Listing transactions as follows: 

 FKA — Articles/Service Transactions (Debit) 

 FKB — Articles/Service Transactions Adjustments (Credit) 

 FKC — Administrative Costs (Debit) 

 FKD — Administrative Cost Adjustments (Credit) 

 FKE — Accessorial Costs (Debit) 

 FKF — Accessorial Cost Adjustments (Credit) 

 FKG — Reply to Customer Request for Adjustments (Debit or Credit). This is a 

 non-financial or management information only transaction. The actual 

 adjustment is in the FKA/FKB transaction 

SPECIFIC EXPLANATION 

 Specific explanation of FMS Delivery Listing summary amounts follows: 

 • FKA AND FKB ENTRIES

 • FKA ARTICLES/SERVICE TRANSACTIONS represent charges. Total of detail 

FKA (Debit) transactions. 

 • FKB ARTICLES/SERVICE TRANSACTIONS represent charge reversals (of 

FKAs). Total of detail FKB (Credit) adjustment transactions. 

 • NET TOTAL FOR ABOVE TRANSACTIONS. Total FKB (Credits) subtracted 

from total FKA (Debits) equals net Articles/Services extended values. 

 • FKC ADMINISTRATIVE COSTS AND FKD ADMINISTRATIVE COST 

ADJUSTMENTS

 If the cost is computed by DFAS-DE, the value against which the percentage (%) factor 

is applied, the percentage factor used, and the applied charge (under TOTAL) are shown. The 

charge is shown as a debit (FKC) or credit (FKD) amount. 

 If actual costs have been applied, the words “FLAT/ACTUAL CHARGE” are shown as 

type of cost. FKC (Administrative Costs) transactions are applied against FKA (Articles/Services 

debit) transactions. FKD (Administrative Cost Adjustments) transactions are applied against 

FKB (credit Articles/Service). 

 • FKE ACCESSORIAL COSTS AND FKF ACCESSORIAL COST 

ADJUSTMENT

 FKE transactions are applied against FKA (Articles/Services debit) transactions; FKF 

transactions are applied against FKB (Articles/Services credit) transactions. 
A-2 

 Each accessorial cost applied is identified by Generic Code and description of cost 

below the FKE and FKF headings. For example: 

 L1A INLAND TRANSPORT CONUS 

 L1B OCEAN TRANSPORTATION, ETC. 

 • NET TOTAL OF ADMINISTRATIVE COSTS. All FKC (debit) and FKD (credit) 

transactions equal the net total of administrative costs. 

 • NET TOTAL OF ACCESSORIAL COSTS. All FKE (debit) and FKF (credit) 

transactions equal the net total of accessorial costs. 

 • TOTAL DELIVERY COSTS. All summary costs are summed to provide the total 

delivery costs. 
B-1 

APPENDIX B 

AUTHORIZED CHARGES TABLE 

Generic 

Code 

(Notes Generic Generic Generic 

1,2,4&5) Long Title Short Title Percent 

 L1A INLAND TRANSPORT CONUS CONUS TRANS 3.75 

 L1B OCEAN TRANSPORTATION OCEAN TRANS 4.00/6.00 (Note 3) 

 L1C AIR TRANSPORTATION AIR TRANS 4.00/6.00 (Note 3) 

 L1D PARCEL POST PARCEL POST 3.75 

 L1E COMMERCIAL PKG CARRIERS COMM PKG 3.75 

 L1F INLAND TRANSPORT OVERSEAS OS INLAND 3.00 

 L1O TRANSPORTATION COSTS TRANS COSTS 0.00 

 L2A PACK CRATE & HANDLE PCH 3.50 of unit cost (Note 4) 

 up to $50,000; 

 1.00 of unit cost over $50,000 

 L2B CONUS PORT HANDLING CONUS PORT 2.50 

 L2C OVERSEAS PORT HANDLING OS PORT 1.00 

 L4A STORAGE (FMSO II ONLY) STORAGE 1.50 Actual Cost 

 L4B STORAGE (ALL OTHER STORAGE) STORAGE Actual Cost 

 L4O STAGING STAGING 3.00 

 L6A ADMINISTRATIVE COSTS ADMIN COSTS 2.5 current rate, 

 standard items 

 3.00 1 Oct 77 to 1 June 99 

 2.00 rate prior to 1 Oct 77 

 5.00 nonstandard rate 

 N7E MEDICAL MEDICAL 0.00 

 N7F QUARTERS QUARTERS Actual Cost 

 R9D TDP ROYALTY FEE TDP ROYALTY 0.00 

 R9H ASSET USE CHARGE ASSET USE 1.00 (on inventory issues) 

 U1O NORMAL INVENTORY LOSS INV LOSS Actual Cost 

NOTES: (1) The above authorized charges appear in the FMS Delivery Listing. 

 (2) Generic Code LOO, which appears on the face of the DD Form 645 (in column 6), represents 

the summation (or roll-up) of the above L1_, L2_, and L4_ authorized charges for a given FMS 

Case. Generic Code L6A appears on both the face of the DD Form 645 and the FMS Delivery 

Listing. 

 (3) When two percents are shown, the first percent relates to Delivery Rate Area 1 and the second 

percent to Delivery Rate Area 2. Each FMS country is designated as either Delivery Rate Area 1 

or 2; considering such factors as the distance/accessibility from the U.S. for shipment purposes. 

 (4) Standard PCH rates of 3.5/1.0 percent apply unless RIC begins with “G,” then rate provided by 

GSA applies. 

 (5) DWCF Pricing Policy changed the computation of generic code L1A for CONUS transportation 

and generic code L2A for Packaging Creating and Handling. The following logic is now in 

place: Effective October 1, 1990, if Delivery Source Code equals AA, AB, AC, AD, AH, AJ, 

AK, CA, EF, or EG and the ship date is greater than or equal to October 1, 1990, bypass generic 

code L1A and generic code L2A. 

 Effective October 1, 1991, if Delivery Source Code equals AA, AB, AC, AD, AH, AJ, AK, CA, 

EF, or EG and the ship date is greater than or equal to October 1, 1991, bypass generic code 

L1D and generic code L1E. 
B-2 

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C-1 

 APPENDIX C 

 ROUTING IDENTIFIER CODES (RIC) 

[Following list represents only a few of the total. For a complete list see DoD 4000.25-1-S1] 

RIC RIC ADDRESS

AKZ USA Tank Automotive and Armaments 

 Command (TACOM) 

Warren MI 48397-5000 

A12 USA Soldiers & Biological Chemical Command 

Aberdeen Proving Ground, MD. 

BY7 U.S. Army Security Assistance Command 

New Cumberland PA 17070-5096 

BKZ USA Tank Automotive and Armaments 

Command-Rock Island (Formerly ACALA) 

Rock Island IL. 61299 

B16 USA Communication & Electronics 

Command (CECOM) 

Fort Monmouth NJ 07703-5000 

B46 USA Electronics Materiel Readiness 

 Activity (ERMA) 

Warrenton VA 22186-5141 

B56 U.S. Army Communication Security 

 Logistics Activity (CSLA) 

Ft. Huachuca AZ 85613-7090 

B64 USA Aviation and Missile Command 

(AMCOM) 

Redstone Arsenal AL 35898-5239 

B69 USA Medical Materiel Agency (USAMMA) 

Frederick MD 21701-5001 

CKT Commander, TRADOC 

Fort Monroe VA 23651-5375 

FFZ Sacramento Air Logistics Center 

McClellan AFB 

Sacramento CA 95652-1062 

FGZ Ogden Air Logistics Center 

Hill AFB 

Ogden UT 84056-5713 

RIC RIC ADDRESS

FHZ Oklahoma City Air Logistics Center 

Tinker AFB OK 73145-3055 

FLZ Warner Robins Air Logistics Center 

Robins AFB 

Warner Robins GA 31098-1640 

FPZ San Antonio Air Logistics Center 

Kelly AFB 

San Antonio TX 78241-6425 

N21 Navy Materiel 

Naval Air Systems Command 

Washington DC 20360 

N23 Navy Materiel 

Naval Sea Systems Command 

Washington DC 20362 

N24 Navy Materiel 

Naval Sea Systems Command 

Washington DC 20362 

N32 Navy Material 

Aviation Supply Office 

Philadelphia PA 19111 

N35 Navy Material 

Navy Ships Parts Control Center 

Mechanicsburg PA 17055 

N65 Navy Material 

Navy Inventory Control Point, Code OF 

Philadelphia PA 19111 

N77 Space and Warfare Systems Command 

Washington DC 20360 
C-2 

RIC RIC ADDRESS

S9F Defense Energy Support Center 

Fort Belvoir VA 22060-6222 

S9G Defense Supply Center Richmond 

Richmond VA 23297-5000 

S9I Defense Industrial Supply Center 

700 Robbins Avenue 

Philadelphia PA 19111 

S9L Defense Logistics Information Services 

Battle Creek MI 49017-3084 

S9M Defense Supply Center Philadelphia 

Directorate of Medical Materiel 

Philadelphia PA 19101 

S9P Defense Supply Center Philaeelphia 

Directorate of Subsistance, 

Philadelphia PA 19101 

S9T Defense Supply Center, Philadelphia 

Directorate of Clothing and Textiles 

Philadelphia, PA 19145 

 

 

 

 

 

 

 
D-1 

APPENDIX D 

PRICE CODE (PRC CD) 

CODE MEANING

A Actual price. 

E Estimated price. Used to report physical deliveries at an estimated price. This 

transaction will eventually be reversed when an actual price (PRC CD “A”) is 

submitted by the implementing agency. 

N Used to determine if contract administration services (CAS) is to be computed on 

progress payments (FKP/Q) and on non-liquidating deliveries (FKA/B). 
D-2 

[This page intentionally left blank.] 
E-1 

APPENDIX E 

FOREIGN MILITARY SALES MILSTRIP DOCUMENT NUMBER 

(CONSTRUCTION OF) 

PURPOSE: To provide a document record under which order, performance, and billing can be 

traced (by means of a standard 15-digit number). The document number should 

be traceable from the country's requirement to the billing transaction on the 

Delivery Listing attached to the DD Form 645. 

________________________________________________________________________ 

 Number MILSTRIP 

 Position Description of Data of Digits C/C 

________________________________________________________________________ 

 1 Implementing Agency 1 30 

 2 and 3 Country Code 2 31-32 

 4 Customer in country (in MAPAD) 1 33 

 5 Delivery Term Code 1 34 

 6 Type of Assistance 1 35 

 7 thru 10 Date of Requisition (year, day, day, day) 4 36-39 

 11 thru 14 Serial Number of Requisition 4 40-43 

 A. Numbered 0001 through 4999 if 

 country prepared requisition. 

 B. Numbered 5000 thru 9999 if DoD 

 activity initiated action. 

 C. Alphas in first position for unique 

 identifier. 

 15 Document number suffix. Used 1 44 

 to identify partial/split shipments 

 (alphas/numerics). 

________________________________________________________________________ 
E-2 

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F-1 

APPENDIX F 

IMPLEMENTING AGENCY CODES 

 CODE IMPLEMENTING AGENCY 

______________________________________________________________________________ 

 

 B U.S. ARMY 

 C DEFENSE INFORMATION SYSTEMS AGENCY 

 

 D U.S. AIR FORCE 

 

 E U.S. ARMY CORPS OF ENGINEERS 

 

 F DEFENSE CONTRACT MANAGEMENT AGENCY 

 

 L DEFENSE AUDIO VISUAL AGENCY (Transactions prior to 1 October 1985) 

 

 M ARMY-G (SELPO) 

 

 P/K U.S. NAVY/U.S. MARINE CORPS 

 

 Q DEFENSE SECURITY COOPERATION AGENCY 

 

 R DEFENSE LOGISTICS AGENCY 

 U NATIONAL GEOPSPATIAL-INTELLIGENCE AGENCY 

 

 V DEFENSE CONTRACT AUDIT AGENCY 

 

 W DEFENSE ADVANCED RESEARCH PROJECTS AGENCY 

 X DEFENSE FINANCE AND ACCOUNTING SERVICE 

 DENVER CENTER, DFAS-DE 

 

 Z DEFENSE SPECIAL WEAPONS AGENCY 

 
F-2 

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G-1 

APPENDIX G 

DELIVERY TERM CODES AND RELATED CHARGES 

DTC DESCRIPTIONS 

DTC 

APPLICABLE GENERIC 

CODE(S) DESCRIPTION 

 

A U.S. DOD IS RESPONSIBLE FOR TRANSPORTATION FROM A 

DESIGNATED OVERSEAS PORT OF EMBARKATION (POE) 

TO A CONUS DESTINATION, AND RETURN TO A 

DESIGNATED OVERSEAS PORT OF DEBARKATION (POD). 

CUSTOMER COUNTRY IS RESPONSIBLE FOR OVERSEAS 

INLAND TRANSPORTATION OF MATERIAL TO OR FROM 

THE OVERSEAS POE/POD AND OVERSEAS PORT 

HANDLING. 

 

B U.S. DOD IS RESPONSIBLE FOR TRANSPORTATION FROM A 

DESIGNATED OVERSEAS PORT OF EMBARKATION (POE) 

TO A CONUS DESTINATION, RETURN TO A CONUS POE, 

AND CONUS PORT HANDLING. CUSTOMER COUNTRY IS 

RESPONSIBLE FOR OVERSEAS INLAND TRANSPORTATION 

TO THE OVERSEAS POE, OVERSEAS PORT LOADING, AND 

OVER-OCEAN TRANSPORTATION FROM THE CONUS POE 

TO ULTIMATE DESTINATION. 

 

C U.S. DOD IS RESPONSIBLE FOR CONUS PORT UNLOADING 

OF COUNTRY-ARRANGED CARRIER, TRANSPORTATION 

TO AND FROM A DESIGNATED CONUS DESTINATION, AND 

CONUS PORT LOADING OF COUNTRY ARRANGED 

CARRIER. CUSTOMER COUNTRY IS RESPONSIBLE FOR 

MOVEMENT OF MATERIEL TO AND FROM THE CONUS 

POD OR POE. 

 

D U.S. DOD IS RESPONSIBLE FOR CONUS PORT UNLOADING 

OF COUNTRY-ARRANGED CARRIER, TRANSPORTATION 

TO A CONUS DESTINATION, AND RETURN TO AN 

OVERSEAS DESIGNATED POD. CUSTOMER COUNTRY IS 

RESPONSIBLE FOR OVER-OCEAN TRANSPORTATION TO A 

CONUS POD, OVERSEAS PORT UNLOADING, AND 

OVERSEAS INLAND TRANSPORTATION TO ULTIMATE 

DESTINATION OF RETURNED MATERIEL. 

 

E CUSTOMER COUNTRY IS RESPONSIBLE FOR ALL 

TRANSPORTATION FROM OVERSEAS POINT OF ORIGIN TO 

CONUS ACTIVITY AND RETURN TO AN OVERSEAS 

DESTINATION. 
G-2 

DTC 

APPLICABLE GENERIC 

CODE(S) DESCRIPTION 

 

F U.S. DOD IS RESPONSIBLE FOR TRANSPORTATION FROM 

AN OVERSEAS INLAND LOCATION TO AN OVERSEAS 

PORT OF EMBARKATION (POE), OVERSEAS PORT 

HANDLING, OVERSEAS TRANSPORTATION TO A CONUS 

PORT OF DEBARKATION (POD), CONUS PORT HANDLING, 

INLAND TRANSPORTATION TO A DESIGNATED CONUS 

DESTINATION, AND RETURN TO AN OVERSEAS 

DESTINATION. 

 

G U.S. DOD IS RESPONSIBLE FOR OVERSEAS PORT 

HANDLING THROUGH AN OVERSEAS PORT OF 

EMBARKATION (POE), OVERSEAS TRANSPORTATION TO A 

CONUS PORT OF DEBARKATION (POD), CONUS PORT 

HANDLING, INLAND TRANSPORTATION TO A CONUS 

DESTINATION, RETURN TO AN OVERSEAS PORT OF 

DEBARKATION, AND OVERSEAS PORT HANDLING. 

CUSTOMER COUNTRY IS RESPONSIBLE FOR OVERSEAS 

INLAND TRANSPORTATION TO AND FROM THE 

OVERSEAS PORT. 

 

H CUSTOMER COUNTRY IS RESPONSIBLE FOR ALL 

TRANSPORTATION FROM OVERSEAS POINT OF ORIGIN TO 

CONUS ACTIVITY. U.S. DOD IS RESPONSIBLE FOR 

RETURN TRANSPORTATION FROM CONUS ACTIVITY TO 

CONUS POE. CUSTOMER COUNTRY IS RESPONSIBLE FOR 

RETURN ARRANGEMENTS, CONUS PORT HANDLING, AND 

ALL TRANSPORTATION TO OVERSEAS DESTINATION. 

 

J CUSTOMER COUNTRY IS RESPONSIBLE FOR ALL 

TRANSPORTATION FROM OVERSEAS POINT OF ORIGIN TO 

CONUS ACTIVITY. U.S. DOD IS RESPONSIBLE FOR ALL 

TRANSPORTATION FROM CONUS ACTIVITY TO OVERSEAS 

DESTINATION. 

 

2 L1A1 FREE ON BOARD (FOB) DESTINATION — INLAND ORIGIN 

TO INLAND DESTINATION WITHIN CONUS/CANADA OR 

INLAND ORIGIN TO INLAND DESTINATION WITHIN THE 

SAME OVERSEAS GEOGRAPHICAL AREA. U.S. DOD IS 

RESPONSIBLE FOR INLAND TRANSPORTATION TO NAMED 

INLAND POINT. RECIPIENT COUNTRY IS RESPONSIBLE 

FOR UNLOADING AT NAMED POINT AND SUBSEQUENT 

ARRANGEMENTS AND COSTS. 

 

3 L1A1 FAS (FREE ALONG SIDE) VESSEL CONUS/CANADA PORT 

OF EXIT. U.S. DOD IS RESPONSIBLE FOR 

TRANSPORTATION TO A POINT ALONGSIDE VESSEL. 

RECIPIENT COUNTRY IS RESPONSIBLE FOR LOADING 

ABOARD VESSEL AND SUBSEQUENT ARRANGEMENTS 

AND COSTS. 
G-3 

DTC 

APPLICABLE GENERIC 

CODE(S) DESCRIPTION 

 

4 FOB ORIGIN. RECIPIENT COUNTRY IS RESPONSIBLE FOR 

COSTS OF CONUS INLAND TRANSPORTATION AND 

SUBSEQUENT ARRANGEMENTS FOR ONWARD 

MOVEMENT. 

 

5 L1A1 FOB PORT OF EXIT. U.S. DOD IS RESPONSIBLE FOR 

INLAND TRANSPORTATION TO THE CONUS/CANADA 

PORT OF EXIT. RECIPIENT COUNTRY IS RESPONSIBLE 

FOR UNLOADING FROM INLAND CARRIER AT PORT OF 

EXIT AND SUBSEQUENT ARRANGEMENTS AND COSTS. 

 

6 L1A1,L2B,L1B FOB OVERSEAS PORT OF DISCHARGE. U.S. DOD IS 

RESPONSIBLE FOR TRANSPORTATION FROM CONUS 

POINT OF ORIGIN TO AND INCLUDING OCEAN 

TRANSPORTATION TO THE OVERSEAS PORT OF 

DISCHARGE. RECIPIENT COUNTRY IS RESPONSIBLE FOR 

VESSEL DISCHARGE, PORT HANDING, AND SUBSEQUENT 

ARRANGEMENTS AND COSTS. 

 

7 L1A1,L2B,L1B 

L2C,L1F 

FOB DESTINATION (NAMED INLAND POINT IN RECIPIENT 

COUNTY). U.S. DOD IS RESPONSIBLE FOR TRANSPORTATION FROM CONUS POINT OF ORIGIN TO AND 

INCLUDING OVER-SEAS INLAND CARRIER DELIVERY TO 

NAMED INLAND POINT. RECIPIENT COUNTRY IS 

RESPONSIBLE FOR UNLOADING AT NAMED POINT AND 

SUBSEQUENT ARRANGEMENTS AND COSTS. 

 

8 L1A1,L2B FOB VESSEL — CONUS PORT OF EXIT. U.S. DOD IS 

RESPONSIBLE FOR TRANSPORTATION FROM CONUS 

POINT OF ORIGIN TO AND INCLUDING CARRIER 

UNLOADING, PORT HANDLING, AND STORAGE ABOARD 

VESSEL AT PORT OF EXIT. RECIPIENT COUNTRY IS 

RESPONSIBLE FOR OCEAN TRANSPORTATION AND 

SUBSEQUENT ARRANGEMENTS AND COSTS. 

 

9 L1A1,L2B,L1B,L2C FOB PORT OF DISCHARGE (LANDED). U.S. DOD IS 

RESPONSIBLE FOR TRANSPORTATION FROM CONUS 

POINT OF ORIGIN TO AND INCLUDING VESSEL 

DISCHARGE AND PORT HANDLING AT OVERSEAS PORT 

OF DISCHARGE. RECIPIENT COUNTRY IS RESPONSIBLE 

FOR LOADING ON INLAND OVERSEAS CARRIER 

EQUIPMENT AND FOR SUBSEQUENT ARRANGEMENTS 

AND COSTS. 

 1 THE CHARGE FOR L1A ON NON-DWCF ITEMS IS 3.75 PERCENT. DWCF ITEMS ARE IDENTIFIED 

BY DELIVERY SOURCE CODES 
G-4 

COMPUTING TRANSPORTATION CHARGES USING DELIVERY TERM CODE

IF THE REPORT DOES NOT CONTAIN A TRANSPORTATION BILL CODE (TBC), 

DFAS-DE WILL COMPUTE TRANSPORTATION AS FOLLOWS:5

IF DELIVERY 

TERM CODE (5TH 

POSITION OF 

DOCUMENT NO.) 

IS EQUAL TO: APPLICABLE GENERIC CODE 

PERCENTAGE BY 

GENERIC CODE TOTAL 

 

2 L1A5 INLAND TRANSPORT CONUS 3.75 3.75 

 

3 L1A5 INLAND TRANSPORT CONUS 3.75 3.75 

4 NOT APPLICABLE - - - - 

5 L1A5 INLAND TRANSPORT CONUS 3.75 3.75 

6 L1A5 INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

L1B OCEAN TRANSPORT 

3.75 

2.5 

4.0/6.04 10.25/12.25 

 

7 L1A5 INLAND TRANSPORT CONUS 

L1F INLAND TRANSPORT OVERSEAS 

L2B CONUS PORT HANDLING 

L1B OCEAN TRANSPORT 

L2C OVERSEAS PORT HANDLING 

3.75 

3.0 

2.5 

4.0/6.04 

1.0 14.25/16.25 

 

8 L1A5 INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

3.75 

2.5 6.25 

 

9 L1A5 INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

L1B OCEAN TRANSPORT 

L2C OVERSEAS PORT HANDLING 

3.75 

2.5 

4.0/6.04 

1.0 11.25/13.25 

 

0 NO COMPUTATIONS PERFORMED 

A,B,C,D,E,F,G,H,J NO COMPUTATIONS PERFORMED 

(SEE NOTE 3) 

NOTES: 1 GENERIC CODES (e.g., L1A) ARE DESCRIBED IN APPENDIX B. 

 2 ABOVE PERCENTAGE RATES ARE APPLIED IN FULL UP TO A UNIT PRICE OF $10,000. FOR 

THAT PORTION OF THE UNIT PRICE IN EXCESS OF $10,000 25% OF THE RATE IS APPLIED. 

 3 ACTUAL TRANSPORTATION COSTS FOR ALPHA DTCs ARE BILLED TO THE FMS CUSTOMER. 

 4 OCEAN TRANSPORTATION IS COMPUTED AT 4.0% or 6.0% DEPENDING ON AREA (1 or 2). 

 5 GENERIC CODES L1A, L1D, AND L1E WHEN USED IN CONJUNCTION WITH DELIVERY SOURCE 

CODES AA, AB, AC, AD, AH, AJ, AK, CA, EF, OR EG ARE NO LONGER APPLICABLE TO DWCF 

ASSETS. 
H-1 

APPENDIX H 

 

TYPES OF ASSISTANCE CODES 

 T/A CODES MEANING

 3 Cash Sale for stock with Payment in Advance 

 4 Source of Supply not Predetermined, Payment in Advance 

 5 Cash Sale from procurement with Payment in Advance 

 6 Cash Sale from Stock with Payment on Delivery 

 7 Cash Sale from Procurement with 120 Day Payment 

 8 Cash Sale from Stock with 120 Day Payment 

 N FMS Credit (Non-Repayable) 

 U Foreign Military Sales Order No. I, 

 Equity in DoD Inventory 

 V FMSO No. II, Requisition from Equity with automatic 

 replenishment action 

 Z FMS Credit 
H-2 

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I-1 

APPENDIX I 

JULIAN DATE CALENDAR 

Day Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Day 

1 001 032 060 091 121 152 182 213 244 274 305 335 1 

2 002 033 061 092 122 153 183 214 245 275 306 336 2 

3 003 034 062 093 123 154 184 215 246 276 307 337 3 

4 004 035 063 094 124 155 185 216 247 277 308 338 4 

5 005 036 064 095 125 156 186 217 248 278 309 339 5 

6 006 037 065 096 126 157 187 218 249 279 310 340 6 

7 007 038 066 097 127 158 188 219 250 280 311 341 7 

8 008 039 067 098 128 159 189 220 251 281 312 342 8 

9 009 040 068 099 129 160 190 221 252 282 313 343 9 

10 010 041 069 100 130 161 191 222 253 283 314 344 10 

11 011 042 070 101 131 162 192 223 254 284 315 345 11 

12 012 043 071 102 132 163 193 224 255 285 316 346 12 

13 013 044 072 103 133 164 194 225 256 286 317 347 13 

14 014 045 073 104 134 165 195 226 257 287 318 348 14 

15 015 046 074 105 135 166 196 227 258 288 319 349 15 

16 016 047 075 106 136 167 197 228 259 289 320 350 16 

17 017 048 076 107 137 168 198 229 260 290 321 351 17 

18 018 049 077 108 138 169 199 230 261 291 322 352 18 

19 019 050 078 109 139 170 200 231 262 292 323 353 19 

20 020 051 079 110 140 171 201 232 263 293 324 354 20 

21 021 052 080 111 141 172 202 233 264 294 325 355 21 

22 022 053 081 112 142 173 203 234 265 295 326 356 22 

23 023 054 082 113 143 174 204 235 266 296 327 357 23 

24 024 055 083 114 144 175 205 236 267 297 328 358 24 

25 025 056 084 115 145 176 206 237 268 298 329 359 25 

26 026 057 085 116 146 177 207 238 269 299 330 360 26 

27 027 058 086 117 147 178 208 239 270 300 331 361 27 

28 028 059 087 118 148 179 209 240 271 301 332 362 28 

29 029 088 119 149 180 210 241 272 302 333 363 29 

30 030 089 120 150 181 211 242 273 303 334 364 30 

31 031 090 151 212 243 304 365 31 

FOR LEAP YEAR, USE NEXT PAGE 
I-2 

JULIAN DATE CALENDAR 

[FOR LEAP YEARS ONLY] 

(USE IN 1992, 1996, 2000, ETC.) 

Day Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Day 

1 001 032 061 092 122 153 183 214 245 275 306 336 1 

2 002 033 062 093 123 154 184 215 246 276 307 337 2 

3 003 034 063 094 124 155 185 216 247 277 308 338 3 

4 004 035 064 095 125 156 186 217 248 278 309 339 4 

5 005 036 065 096 126 157 187 218 249 279 310 340 5 

6 006 037 066 097 127 158 188 219 250 280 311 341 6 

7 007 038 067 098 128 159 189 220 251 281 312 342 7 

8 008 039 068 099 129 160 190 221 252 282 313 343 8 

9 009 040 069 100 130 161 191 222 253 283 314 344 9 

10 010 041 070 101 131 162 192 223 254 284 315 345 10 

11 011 042 071 102 132 163 193 224 255 285 316 346 11 

12 012 043 072 103 133 164 194 225 256 286 317 347 12 

13 013 044 073 104 134 165 195 226 257 287 318 348 13 

14 014 045 074 105 135 166 196 227 258 288 319 349 14 

15 015 046 075 106 136 167 197 228 259 289 320 350 15 

16 016 047 076 107 137 168 198 229 260 290 321 351 16 

17 017 048 077 108 138 169 199 230 261 291 322 352 17 

18 018 049 078 109 139 170 200 231 262 292 323 353 18 

19 019 050 079 110 140 171 201 232 263 293 324 354 19 

20 020 051 080 111 141 172 202 233 264 294 325 355 20 

21 021 052 081 112 142 173 203 234 265 295 326 356 21 

22 022 053 082 113 143 174 204 235 266 296 327 357 22 

23 023 054 083 114 144 175 205 236 267 297 328 358 23 

24 024 055 084 115 145 176 206 237 268 298 329 359 24 

25 025 056 085 116 146 177 207 238 269 299 330 360 25 

26 026 057 086 117 147 178 208 239 270 300 331 361 26 

27 027 058 087 118 148 179 209 240 271 301 332 362 27 

28 028 059 088 119 149 180 210 241 272 302 333 363 28 

29 029 060 089 120 150 181 211 242 273 303 334 364 29 

30 030 090 121 151 182 212 243 274 304 335 365 30 

31 031 091 152 213 244 305 366 31 
J- 1

APPENDIX J 

UNIT OF ISSUE CODES* 

Code Term Definition 

 

AM Ampoule A small glass tube sealed by fusion after filling. 

AT Assortment A collection of a variety of items that fall into a 

 category or class packaged as a small unit constituting 

 a single item of supply. Use only when the term 

 "assortment" is a part of the item name. 

 

AY Assembly A collection of parts assembled to form a complete 

 Unit, constituting a single item of supply, e.g., hose 

 Assembly. Use only when the term "assembly" is a 

 Part of the item name. 

BA Ball A spherical-shaped mass of material such as twine or 

 thread 

 

BE Bale A shaped unit of compressible materials bound with 

 cord or metal ties and usually wrapped, e.g., paper or 

 cloth rags. 

BF Board Foot A unit of measure for lumber equal to the volume of a 

 board 12" X 12" X 1". 

BG Bag A flexible container of various sizes and shapes which is 

 fabricated from such materials as paper, plastic or 

 textiles. Includes "sack" and "pouch". 

BK Book A book-like package, such as labels or tickets, fastened 

 together along one edge, usually between protective 

 covers. 

BL Barrel A cylindrical container, metal or wood, with sides that 

 bulge outward and flat ends or heads of equal diameter. 

 Includes "keg". 

BD Bundle A quantity of the same item tied together without 

 compression. 

BO Bolt A flat fold of fabric having a stiff paperboard core. 

 

BR Bar A solid piece or block of various materials, with its 

 length greater than its other dimensions, e.g., solder. 

 Not applicable to items such as soap, beeswax, buffing 

 compound. 
J- 2

Code Term Definition 

BT Bottle A glass, plastic, or earthenware container of various 

 sizes, shapes, and finishes such as jugs but excluding 

 jars, ampoules, vials, and carboys, with a closure for 

 retention of contents. 

 

BX Box A rigid three dimensional container of various sizes 

 and material. Includes :case", "carton", "tray", and 

 "crate". 

CA Cartridge Usually a tubular receptacle containing loose or 

 pliable material and designed to permit ready 

 insertion into an apparatus for dispensing the 

 material. Usually associated with adhesives and 

 sealing compounds. 

CB Carboy A heavy duty, bottle-type container used for 

 transportation and storage of liquids. Usually 

 designed to be encased in a rigid protective 

 outer container for shipment. 

CD Cubic Yard A unit of cubic measure. 

CE Cone A cone-shaped mass of material wound on itself 

 such as twine or thread, wound on a conical core. 

CF Cubic Foot A unit of cubic measure. 

CK Cake A block of compacted or congealed matter. Applicable 

 to such items as soap, buffing compound. 

CL Coil An arrangement of material such as wire, rope and 

 tubing wound in a circular shape. 

CN Can A rigid receptacle made of fiber, metal, plastic or a 

 combination thereof. Cans may be cylindrical or any 

 number of irregular shapes. Restricted to items which 

 cannot be issued in less than container quantity. 

 Includes "pail" and "canister". Do bot use when the 

 packaged quantity equates to a unit of measure, i.e., 

 pint, quart, gallon, pounce or pound. 

CO Container A general term for use only when an item is 

 permitted to be packaged for issue in optional 

 containers, e.g., bottle or tube for a single National 

 Stock Number. 

CY Cylinder A rigid, cylindrical, metal container designed as a 

 portable container for storage and transportation of 

 compressed gasses, generally equipped with 

 protected valve closure and pressure relief safety device. 
J- 3

Code Term Definition 

CZ Cubic Meter A unit of cubic measure expressed in the metric system 

 of measurement. Limited in application to locally 

 assigned stock numbers used in the local procurement 

 of items such as ready-mix concrete and asphalt in 

 oversea areas where the metric system prevails. 

DR Drum A cylindrical container designed as an exterior pack for 

 storing and shipping bulk materials, e.g., fuels, 

 chemicals, powders, etc.. Drums may be made of metal, 

 rubber, polyethylene or plywood, or fiber with wooden, 

 metal or fiber ends. 

DZ Dozen Twelve (12) of an item of supply. 

EA Each A numeric quantity of one item of supply. Do not use 

 if a more specific term applies, such as kit, set, 

 assortment, assembly, group, sheet, plate, strip or length. 

FT Foot Unit of linear measure sometimes expressed as 

 "linear foot". 

FV Five Five (5) of an item. 

FY Fifty Fifty (50) of an item. 

GL Gallon Unit of liquid measure. 

GP Group A collection of related items issued as a single item 

 of supply, e.g., test set group. Use only when the term 

 "group" is a part of the item name. 

GR Gross One hundred forty four (144) of an item. 

HD Hundred One hundred (100) of an item. 

HK Hank A loop of yarn or roping, containing definite yardage, 

 e.g., cotton, 840 yards; worsted, 560 yards. See "skein" 

 for comparison. 

IN Inch Unit of linear measurement, equivalent to 1/12 of a foot 

 and sometimes expressed as "linear inch". 

JA Jar A rigid container having a wide mouth and often no 

 neck, typically made of earthenware or glass. Excludes 

 "bottle". 
J- 4

Code Term Definition 

KT Kit A collection of related items issued as a single item 

 of supply, such as the tools, instruments, repair parts, 

 instruction sheets and often supplies typically carried 

 in a box or bag. Also includes selected collections of 

 equipment components, tools, and/or materials for the 

 repair, overhaul or modification of equipment. Use only 

 when the term "kit" is a part of the item name. 

LB Pound A unit of avoirdupois weight measure equivalent to 16 

 ounces. 

LG Length Term applied to items issued in fixed or specific linear 

 measurement, without deviation. This term no longer 

 applies to random lengths which will be expressed in 

 definitive units of linear measure such as foot or yard. 

 Excludes "strip". 

LI Liter A unit of liquid measure expressed in the metric system 

 of measurement. 

MC Thousand A unit of cubic measure expressed in one thousand 

 Cubic Feet (1,000) increments. 

ME Meal The measure of food generally taken by an individual 

 at one time. 

MR Meter A unit of linear measure expressed in the metric system 

 of measurement, equivalent to 39.37 inches. 

MX Thousand One thousand (1,000) of an item. 

OT Outfit A collection of related items issued as a single item of 

 supply, such as the tools, instruments, materials, 

 equipment, and/or instruction manual(s) for the 

 practice of a trade or profession or for the carrying out 

 of a particular project or function. Use only when the 

 term "outfit" is a part of the item name. 

OZ Ounce A unit of liquid or avoirdupois weight. 

PD Pad Multiple sheets of paper that are stacked together and 

 fastened at one end by sealing. 

PG Package A form of protective wrapping for two or more of the 

 same item of supply. To be used only when a unit of 

 measure or container type term is not applicable. 

 Includes "envelope". 
J- 5

Code Term Definition 

PM Plate A flat piece of square or rectangular-shaped metal 

 of uniform thickness, usually 1/4 inch or more. Use 

 only when "plate" (Federal Supply Classes (FSGs) 

 9515 and 9535) is used in an item name to denote 

 shape. 

PR Pair Two similar corresponding items, e.g., gloves, shoes, 

 bearings; or items integrally fabricated of two 

 corresponding parts, e.g., trouser, shears, goggles. 

PT Pint A unit of liquid or dry measure. 

PZ Packet A container used for subsistence items. Use only when 

 "food packet" is part of the item name (Federal Supply 

 Group (FSG) 89). 

QT Quart A unit of liquid or dry measure. 

RA Ration The food allowance of one person for one day. Use only 

 when "ration" (FSC 8970) is a part of the item name. 

RL Reel A cylindrical core on which a flexible material, such as 

 wire or cable, is wound. Usually has flanged ends. 

RM Ream A quantity of paper varying from 480 to 516 sheets, 

 depending upon grade. 

RO Roll A cylindrical configuration of flexible material which 

 has been rolled on itself such as textiles, tape, abrasive 

 paper, photosensitive paper and film, and may utilize 

 a core with or without flanges. 

SD Skid A pallet-like platform consisting of a load-bearing area 

 fastened to and resting on runner-type supports. 

SE Set A collection of matched or related items issued as a 

 single item of supply, i.e., tool sets, instrument sets, and 

 matched sets. Use only when the term "set" is a part of 

 the item name. 

SF Square Foot A unit of square measure (area). 
J- 6

Code Term Definition 

SH Sheet A flat piece of rectangular-shaped material of uniform 

 thickness that is very thin in relation to its length and 

 width, such as metal, plastic, paper and plywood. Use of 

 this term is not limited to any group of items or FSCs. 

 However, it will always be applied when "sheet" is used 

 in the item name to denote shape, e.g., aluminum alloy 

 sheet, except in items in FSC 7210. 

SK Skein A loop of yarn 120 yards in length, usually wound on a 

 54-inch circular core. See "hank" for comparison. 

SL Spool A cylindrical form with an edge or rim at each end and 

 an axial hole for a pin or spindle on which a flexible 

 material such as thread or wire is wound. 

SO Shot A unit of linear measure, usually applied to anchor 

 chain; equivalent to 15 fathoms (90 ft). 

SP Strip A relatively narrow, flat length of material, uniform in 

 width, such as paper, wood and metal. Use only when 

 the term "strip" is a part of the item name. 

SX Stick Material in a relatively long and slender, often 

 cylindrical form for ease of application or use, e.g., 

 abrasives. 

SY Square Yard A unit of square measure (area). 

TD Twenty-four Twenty-four (24) of an item. 

TE Ten Ten (10) of an item. 

TF Twenty-five Twenty-five (25) of an item. 

TN Ton The equivalent of 2000 lbs. Includes short ton and net 

 ton. 

TO Troy Ounce A unit of troy weight measure, based on 12 ounce 

 pound, generally applied to weights of precious metals. 

TS Thirty-six Thirty-six (36) of an item. 

TU Tube Normally a squeeze-type container, most commonly 

 manufactured from a flexible type material and used 

 in packaging toothpaste, shaving cream, and 

 pharmaceutical products. Also applicable as form 

 around which items are wound, such as thread. It is 

 not applicable to mailing tube, pneumatic tube or 

 cylindrical containers of a similar type. 
J- 7

Code Term Definition 

VI Vial A small container which is cylindrical in shape and flat 

 bottomed with a variety of neck finishes to 

 accommodate any type of cap, cork or stopper. 

YD Yard A unit of linear measure, equivalent to 3 feet and 

 sometimes expressed as "linear yard". 

* Adopted from DoD 4100.39-M, Volume 10, Chapter 4, Table 53 

 

 
J- 8

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K-1 

APPENDIX K 

OFFER/RELEASE CODES 

 Based upon agreement between the DoD component and the FMS purchaser, offer/release 

codes are used for each line involving defense articles, as follows: 

 A — Freight and parcel post shipments will be released automatically by the shipping 

activity without advance notice (Notice of Availability). 

 Y — Advance notice is required before release of shipment, but shipment can be 

released automatically if release instructions are not received by shipping activity 

within 15 calendar days. Parcel post shipments will be automatically released. 

 Z — Advance notice is required before release of shipment. Shipping activity will 

follow-up on the notice of availability until release instructions are furnished. 

Parcel post shipments will be automatically released. 

 X — The U.S. Service and country representative have agreed that the: 

 a. U.S. service will sponsor the shipment to a country address. 

 b. Shipments are to be made to an assembly point or staging area. 

 The Offer/Release Code appears in column (6) of the Letter of Offer and Acceptance and 

card column 46 of the DD Form 1348 (MILSTRIP) requisition. 
K-2 

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L-1 

APPENDIX L 

MODE OF SHIPMENT (MOS) CODES 

Mode of 

Shipment 

 Code** Initial Method of Movement by the Shipper 

 * FMS Customer Pilot Pickup 

 A Motor, truckload 

 B Motor, less truckload 

 C Van (unpacked, or uncrated personal or government property) 

 D Drive-away, truck-away, tow-away 

 E Bus 

 F Air Mobility Command (Channel and Special Assignment Airlift Mission) 

 G Surface, parcel post 

 H Air, parcel post 

 I Government truck for shipments outside local delivery area 

 J Air, small package carrier 

 K Rail, carload includes trailer or container-on-flatcar (excluding SEAVAN) 

 L Rail, less than carload includes trailer or container-on-flatcar (incl. SEAVAN) 

 M Surface, Freight Forwarder 

 O Organic military air (includes aircraft of foreign governments) 

 P Through government bill of lading (TGBL) 

 Q Commercial air freight; 

 R European Distribution System (EDS)/or Pacific Distribution System (PDS) 

 S Scheduled Truck Service (applies to contract carriage, guaranteed traffic routings 

 and/or scheduled service) 

 T Air freight forwarder 

 U QUICKTRANS 

 V Sea-van service 

 W Water, river, lake, or coastal (commercial) 

 X Bearer Walk through (customer pickup of materiels) 

 Y Military intra-theater airlift services 

 Z MSC (controlled/contract/arranged space) 

 2 Government watercraft, barge/lighter 

 3 Roll-on or roll-off (RORO) service 

 4 Armed Forces Courier Service (ARFCOS) 

 5 Surface, small package carrier 

 6 Military official mail (MOM) 

 7 Express mail 

 8 Pipeline 

 9 Local delivery by government or commercial truck including deliveries between 

 air or water terminals and adjacent activities. 

 

** This code is for information only. It is not used by DIFS in any systemic computes. 
L-2 

[This page intentionally left blank.] 
M-1 

APPENDIX M 

ADJUSTMENT REPLY CODES (ARC) 

 

ARC DESCRIPTION

 

AA DUPLICATE BILLING AND/OR SHIPMENT RESULTED FROM RECEIPT OF DUPLICATE 

REQUISITION AND DUPLICATE SUPPLY ACTION. 

 

AB BILL REFLECTED CORRECT UNIT OR EXTENDED PRICE OF MATERIEL SHIPPED. 

 

AE SUPPLIER ADJUSTED TO UNIT PACK SINCE REQUISITION DID NOT PROHIBIT THIS 

ACTION; OR SHIPMENT MADE IN ACCORDANCE WITH INSTRUCTIONS IN 

REQUISTIONS. 

 

AF AUTHORIZED SUBSTITUTE IN LATEST SUPPLY MANUAL. REQUISITION DID NOT PROHIBIT SUBSTITUTIONS. 

 

AG CLAIMS LESS THAN $100 LOSS OR GAIN TO BE ABSORBED BY CUSTOMER. 

 

AI LOCAL RECORDS INDICATE PRIOR REVERSAL OF DUPLICATE CREDIT OR CHANGE IN 

BILL NUMBER CITED. 

 

AJ CREDIT WAS GRANTED AS A RESULT OF PRIOR REQUEST AND PROCESSING IN 

BILLING. 

 

AK SHIPMENT MADE VIA COMMERCIAL BILL OF LADING; U.S. GOVERNMENT NOT 

RESPONSIBLE FOR DAMAGED SHIPMENTS. 

 

AL COPIES OF SHIPPING DOCUMENT EVIDENCING PROOF OF SHIPMENT/ACCEPTANCE 

ARE ATTACHED. 

 

AN CLAIMS LESS THAN $25 LOSS OR GAIN TO BE ABSORBED BY CUSTOMER. 

 

AO REQUEST CANNOT BE GRANTED BECAUSE DISCREPANCY REPORT WAS NOT 

RECEIVED WITHIN ALLOWABLE TIMEFRAME. 

 

AP REQUEST CANNOT BE GRANTED BECAUSE ITEM WAS PROCURED SPECIFICALLY FOR 

FMS CUSTOMER. GENERAL CONDITION A2, AS SET FORTH IN ANNEX A OF THE DD 

FORM 1513, APPLIES. 

 

BA MATERIEL TO BE DISPOSED OF LOCALLY. 

 

BB MATERIEL TO BE RETURNED TO ACTIVITY DESIGNATED IN COLUMNS 4-6 FOR 

SUBSEQUENT CREDIT. 

 

BC HOLD UNACCEPTABLE SHIPMENT QUANTITY PENDING DISPOSITION INSTRUCTIONS 

TO BE SUBMITTED VIA SEPARATE COMMUNICATION. 

 
M-2 

ARC DESCRIPTION

CA REQUESTED CREDIT ADJUSTMENT WILL BE MADE AND BILL ISSUED. NO SUPPLY 

ACTION REQUIRED. 

 

CB REQUESTED CREDIT ADJUSTMENT WILL BE MADE AND AMENDED BILL ISSUED. NO 

SUPPLY ACTION REQUIRED. 

 

CF REQUEST GRANTED FOR FINANCIAL ADJUSTMENT NOT DIRECTLY RELATED TO 

MATERIEL SHIPMENT, I.E., REPAIR COSTS. 

 

CW CREDIT ADJUSTMENTS GRANTED ON ACCESSORIAL CHARGES -- FKF CARDS ONLY. 

 

CX CREDIT ADJUSTMENT GRANTED ON ADMINISTRATIVE CHARGES --FKD CARDS ONLY. 

 

CY DEBIT ADJUSTMENT GRANTED ON ADMINISTRATIVE CHARGES -- FKC CARDS ONLY. 

 

CZ DEBIT ADJUSTMENT GRANTED ON ACCESSORIAL CHARGES -- FKE CARDS ONLY. 

 

DA REQUEST PREVIOUSLY PROCESSED AND CREDIT GRANTED. 

 

DB REQUEST PREVIOUSLY PROCESSED AND CREDIT NOT GRANTED. 

 

DD BILLING PREVIOUSLY RENDERED. 

 

DG DUPLICATED BILLING WILL BE FURNISHED. 

 

DI LETTER OF EXPLANATION FOLLOWS. 

 

DJ NO RECORD OF PREVIOUS REQUEST. RESUBMIT. 

 

DK COPIES OF SHIPPING DOCUMENTS EVIDENCING PROOF OF SHIPMENT AND ACCEPTANCE ARE ATTACHED. 

 

DM REPLY DELAYED 30 DAYS. MATTER BEING INVESTIGATED. 

 

DX REQUEST FOR ROD CANCELLATION APPROVED. 

 

EB DOCUMENT NUMBER INCOMPLETE. RESUBMIT. 

 

EC BILL NUMBER INCOMPLETE/MISSING. 

 

EF RECORDS DO NOT INDICATE DUPLICATE SHIPMENT AND/OR BILLING ON BILL 

NUMBER CITED. IF DUPLICATION OCCURED ON ANOTHER BILL, RESUBMIT CITING 

BOTH BILL NUMBERS. 

 

EI CLAIM SHOULD BE SUPPORTED BY APPROPRIATE DOCUMENTATION. PLEASE 

RESUBMIT. 

 

EJ CLAIM SHOULD BE SUPPORTED BY CONFIRMATION OF CANCELLATION. PLEASE 

RESUBMIT 
N-1 

APPENDIX N 

TRANSPORTATION BILL CODES AND RELATED CHARGES 

TBC DESCRIPTIONS

 (Also see note on page N-4) 

TBC 

APPLICABLE 

GENERIC 

CODE(S) DESCRIPTION 

 

A L1D MATERIEL MOVED BY PARCEL POST TO AN INLAND CONUS 

DESTINATION OR FREIGHT FORWARDER, OR TO AN OVERSEAS 

DESTINATION THROUGH THE ARMY/AF POSTAL SYSTEM (APO) 

OR INTERNATIONAL MAIL. ALL SUBSEQUENT ARRANGEMENTS 

ARE MADE BY THE FMS CUSTOMER. 

 

B L1E MATERIEL MOVED BY COMMERCIAL PACKAGE CARRIER TO AN 

INLAND CONUS DESTINATION OR FREIGHT FORWARDER, WHEN 

ALL SUBSEQUENT ARRANGEMENTS ARE MADE BY THE FMS 

CUSTOMER. 

 

C L1A 

L2B 

L1B/L1C1 

L2C 

MATERIEL MOVED BY GBL, AMC CHANNEL AIRLIFT, USAF 

ORGANIZATIONAL AIRLIFT, MSC SEALIFT, AND COMBINATIONS 

THEREOF, TO AN OVERSEAS POD IN RATE AREA ONE OR TWO 

INCLUDING OVERSEAS CARRIER DISCHARGE. ALL SUBSEQUENT 

ARRANGEMENTS ARE MADE BY THE FMS CUSTOMER. 

 

D ANY FORM OF MATERIEL FOR WHICH THE FMS CUSTOMER IS 

TOTALLY RESPONSIBLE, E.G., MATERIEL MOVED BY A COLLECT 

COMMERCIAL BILL OF LADING TO AN INLAND CONUS DESTINATION, FREE ALONG SIDE (FAS), OVERSEAS CARRIER CONUS POE, 

FREIGHT FORWARDER, A CONUS POE, OR AN INLAND OVERSEAS 

DESTINATION. ALSO USED IF TRANSPORTATION COSTS ARE NOT 

APPLICABLE. 

 

E L1A MATERIEL MOVED BY GBL, AMC CHANNEL AIRLIFT, USAF 

ORGANIZATIONAL AIRLIFT, MSC SEALIFT, AND COMBINATIONS 

THEREOF, TO AN INLAND CONUS/CANADA DESTINATION, FREE 

ALONG SIDE (FAS), OVERSEAS CARRIER CONUS POE, A FREIGHT 

FORWARDER, OR A CONUS POE, WHEN ALL SUBSEQUENT 

ARRANGEMENTS ARE MADE BY THE FMS CUSTOMER. 

 

F L1A 

L1F 

L2B 

L1B/L1C1 

MATERIAL MOVED BY GBL, AMC CHANNEL AIRLIFT, USAF 

ORGANIZATIONAL AIRLIFT, MSC SEALIFT AND COMBINATIONS 

THEREOF TO AN OVERSEAS POD IN RATE AREA ONE OR TWO 

WHEN OVERSEAS CARRIER DISCHARGE AND ALL SUBSEQUENT 

ARRANGEMENTS ARE MADE BY THE FMS CUSTOMER. 

 
N-2 

TBC 

APPLICABLE 

GENERIC 

CODE(S) DESCRIPTION 

 

G L1A 

L1F 

L2B 

L1B/L1C1 

L2C

MATERIAL MOVED BY GBL, AMC CHANNEL, AIRLIFT, USAF 

ORGANIZATIONAL AIRLIFT, MSC SEALIFT, ARFCOS, MOM, 

WEAPON SYSTEM POUCH SERVICE, AND COMBINATIONS 

THEREOF TO THE ULTIMATE FMS CONSIGNEE AT AN OVERSEAS 

INLAND DESTINATION IN RATE AREA ONE OR TWO. 

 

H L1A 

L2B 

MATERIAL MOVED BY GBL, AMC CHANNEL AIRLIFT, USAF 

ORGANIZATIONAL AIRLIFT, MSC SEALIFT AND COMBINATIONS 

THEREOF TO A CONUS POE WHEN ALL ARRANGEMENTS SUBSEQUENT TO LOADING THE VESSEL ARE MADE BY THE FMS 

CUSTOMER. 

 

J L2B 

L1C 

L2C 

MATERIEL MOVED BY AMC CHANNEL AIRLIFT TO AN OVERSEAS 

APOD IN RATE AREA ONE OR TWO WHEN THE USE OF INLAND 

CONUS TRANSPORTATION IS NOT REQUIRED IN EFFECTING 

DELIVERY TO THE CONUS POE. ALL ARRANGEMENTS 

SUBSEQUENT TO CARRIER DISCHARGE ARE MADE BY THE FMS 

CUSTOMER. 

 

K LIC MATERIEL MOVED BY AMC SPECIAL ASSIGNMENT AIRLIFT 

MISSION (SAAM) WITHIN THE CONUS, TO AN OVERSEAS APOD OR 

INLAND FMS CONSIGNEE BASE, WITHIN AN OVERSEAS AREA OR 

BETWEEN OVERSEAS AREAS. ANY ARRANGEMENTS 

SUBSEQUENT TO CARRIER DISCHARGE ARE MADE BY THE FMS 

CUSTOMER 

 

L SUBSTITUTE FOR ANY OF THE OTHER STANDARD CODES WHENEVER ACTUAL TRANSPORTATION COSTS WILL BE REPORTED. 

 

M L40 MATERIEL MOVED BY FMS COUNTRY OWNED AIRCRAFT FROM A 

US/DOD STAGING AREA. 

 

N L1A 

L40 

MATERIEL MOVED BY GBL OR OTHER CONUS INLAND MODE TO 

A CONUS STAGING/AGGREGATION AREA; STAGING/ AGGREGATION OF THE MATERIAL; AND ONWARD MOVEMENT OF THE 

MATERIEL TO A FREIGHT FORWARDER BY A COLLECT COMMERCIAL BILL OF LADING (CBL), BY COUNTRY-OWNED OR PROVIDED AIRCRAFT, OR BY AMC OR BY COMMERCIAL SAAM. 

 

P L1A 

L40 

L1A 

MATERIEL MOVED BY GBL OR OTHER CONUS INLAND MODE TO 

A CONUS STAGING/AGGREGATION AREA; STAGING/AGGREGATION OF THE MATERIAL; AND ONWARD MOVEMENT OF THE 

MATERIEL FROM THE STAGING AREA BY GBL OR OTHER 

PREPAID (REIMBURSABLE) CONUS TRANSPORTATION TO AN 

AERIAL/WATER POE, FREE ALONG SIDE (FAS) AN OVERSEAS 

CARRIER AT A CONUS POE, OR TO ANY OTHER CONUS DESTINATION, WHEN ALL SUBSEQUENT ARRANGEMENTS ARE MADE BY 

THE FMS CUSTOMER 
N-3 

TBC 

APPLICABLE 

GENERIC 

CODE(S) DESCRIPTION 

 

Q L1A 

L40 

L1A 

L2B 

L1B/L1C1

MATERIEL MOVED BY GBL OR OTHER CONUS INLAND MODE TO 

A CONUS STAGING/AGGREGATION AREA; STAGING/AGGREGATION OF THE MATERIAL; AND OUT MOVEMENT OF THE 

MATERIEL FROM THE STAGING AREA BY GBL OR OTHER 

PREPAID (REIMBURSABLE) CONUS TRANSPORTATION TO AN 

AERIAL/WATER POE, PORT HANDLING OF THE MATERIEL; AND 

ONWARD MOVEMENT BY GBL, AMC CHANNEL AIRLIFT, USAF 

ORGANIZATIONAL AIRCRAFT, MSC SEALIFT , AND/OR COMBINATIONS THEREOF TO AN OVERSEAS POD IN RATE AREA ONE OR 

TWO, WHEN OVERSEAS CARRIER DISCHARGE AND ALL SUBSEQUENT ARRANGEMENTS ARE MADE BY THE FMS CUSTOMER. 

 

R L1A 

L40 

L1A 

L2B 

L1B/L1C1 

L2C 

L1F

MATERIEL MOVED BY GBL OR OTHER CONUS INLAND MODE TO 

A CONUS STAGING/AGGREGATION AREA; STAGING/AGGREGATION OF THE MATERIAL; AND OUT MOVEMENT OF THE 

MATERIEL FROM THE STAGING AREA BY GBL OR OTHER 

PREPAID (REIMBURSABLE) CONUS TRANSPORTATION TO AN 

AERIAL/WATER POE, PORT HANDLING OF THE MATERIEL; AND 

ONWARD MOVEMENT BY GBL, AMC CHANNEL AIRLIFT, USAF 

ORGANIZATIONAL AIRCRAFT, MSC SEALIFT , AND/OR COMBINATIONS THEREOF TO AN OVERSEAS POD IN RATE AREA ONE OR 

TWO; OVERSEAS PORT HANDLING OF THE MATERIEL, AND 

ONWARD OVERSEAS INLAND MOVEMENT TO THE ULTIMATE 

FMS CONSIGNEE AT AN OVERSEAS INLAND DESTINATION IN 

RATE AREA ONE OR TWO. 

 

S L1A 

L40 

L1A 

L2B 

MATERIEL MOVED BY GBL OR OTHER CONUS INLAND MODE TO 

A CONUS STAGING/AGGREGATION AREA; 

STAGING/AGGREGATION OF THE MATERIAL; OUT MOVEMENT OF 

THE MATERIEL FROM THE STAGING AREA BY GBL OR OTHER 

PREPAID (REIMBURSABLE) CONUS TRANSPORTATION TO AN 

AERIAL/WATER POE; AND LOADING OF THE MATERIEL ABOARD 

A COUNTRY OWNED OR PROVIDED AIRCRAFT/VESSEL, WHEN 

ALL ARRANGEMENTS SUBSEQUENT TO LOADING THE AIRCRAFT/ 

VESSEL ARE MADE BY THE FMS CUSTOMER 

 

U L1D/L1E 

L2B 

MATERIEL MOVED BY PARCEL POST OR COMMERCIAL PACKAGE 

CARRIER TO A CONUS POD WHEN ALL ARRANGEMENTS SUBSEQUENT TO LOADING THE VESSEL ARE MADE BY THE FMS CUSTOMER. (MODE OF SHIPMENT DETERMINES WHETHER PARCEL 

POST OR COMMERCIAL PACKAGE CARRIER USED.) 

 

V L1D/L1E 

L2B 

L1B/ L1C1

L2C

MATERIEL MOVED BY PARCEL POST OR COMMERCIAL PACKAGE 

CARRIER TO AN OVERSEAS POD IN RATE AREAS ONE OR TWO, 

INCLUDING OVERSEAS CARRIER DISCHARGE WHEN 

SUBSEQUENT ARRANGEMENTS ARE MADE BY THE FMS 

CUSTOMER. (MODE OF SHIPMENT DETERMINES WHETHER 

PARCEL POST OR COMMERCIAL PACKAGE CARRIER USED.) 

 
N-4 

TBC 

APPLICABLE 

GENERIC 

CODE(S) DESCRIPTION 

 

W N/A COST TAKEN FROM LOOKUP TABLE. 

 

X L1D/L1E 

L2B 

L1B/L1C1

MATERIEL MOVED BY PARCEL POST OR COMMERCIAL PACKAGE 

CARRIER TO AN OVERSEAS POD IN RATE AREAS ONE OR TWO, 

WHEN OVERSEAS CARRIER DISCHARGE AND SUBSEQUENT 

ARRANGEMENTS ARE MADE BY THE FMS CUSTOMER. (MODE OF 

SHIPMENT DETERMINES WHETHER PARCEL POST OR 

COMMERCIAL PACKAGE CARRIER USED.) 

 

Y L1D/L1E 

L2B 

L1B/L1C1 

L2C 

L1F 

MATERIEL MOVED BY PARCEL POST OR COMMERCIAL PACKAGE 

CARRIER TO THE ULTIMATE FMS CONSIGNEE AT AN OVERSEAS 

INLAND DESTINATION IN RATE AREAS ONE OR TWO. (MODE OF 

SHIPMENT DETERMINES WHETHER PARCEL POST OR 

COMMERCIAL PACKAGE CARRIER USED.) 

 

Z L1A MATERIEL MOVED WITHIN THE CONUS BY COMMERCIAL 

CARRIER WITH A PUBLISHED MAXIMUM RATE OF $25.00 (FOR 

EXAMPLE, AS PUBLISHED BY UNITED PARCEL SERVICES). 

NOTE: Generic Codes L1A, L1D, and L1E when used in conjunction with Delivery Source Codes AA, AB, AC, 

AD, AH, AJ, AK, CA, EF, or EG are no longer applicable to DWCF assets. 

1. WHEN THE TRANSPORTATION COMPUTE IS BASED ON A TBC AND THE PORT OF EXIT (POE) IS 

EQUAL TO AIR, “A,” DFAS-DE WILL COMPUTE L1C; IF THE POE IS OTHER THAN “A,” DFAS-DE WILL 

COMPUTE L1B 
N-5 

TBC RELATED CHARGES 

TBC APPLICABLE GENERIC CODE 

PERCENTAGE BY 

GENERIC CODE [3] TOTAL 

A L1D PARCEL POST 3.753 3.75 

 

B L1E COMMERCIAL PKG CARRIERS 3.753 3.75 

 

C L1A INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

L2C OVERSEAS PORT HANDLING 

3.75 

2.5 

4.0/6.01,4 

1.0 11.25/13.25 

 

D N/A 0.0 0.0 

E L1A INLAND TRANSPORT CONUS 3.75 3.75 

F L1A INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

3.75 

2.5 

4.0/6.01,4 10.25/12.25 

 

G L1A INLAND TRANSPORT CONUS 

L1F INLAND TRANSPORT OVERSEAS 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

L2C OVERSEAS PORT HANDLING 

3.75 

3.0 

2.5 

4.0/6.01,4 

1.0 14.25/16.25 

 

H L1A INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

3.75 

2.5 6.25 

 

J L2B CONUS PORT HANDLING 

L1C AIR TRANSPORTATION 

L2C OVERSEAS PORT HANDLING 

2.5 

4.0/6.01,4 

1.0 7.5/9.5 

 

K L1C AIR TRANSPORTATION N/A Actual amount 

billed by AMC 

 

L AS APPLICABLE N/A Actual amount 

computed by shipper 

 

M L40 STAGING 3.03 3.0 

 

N L1A INLAND TRANSPORT CONUS 

L4O STAGING 

3.75 

3.03 6.75 

 

P L1A INLAND TRANSPORT CONUS 

L4O STAGING 

L1A INLAND TRANSPORT CONUS 

3.75 

3.03 

3.75 10.5 

Q L1A INLAND TRANSPORT CONUS 

L4O STAGING 

L1A INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

3.75 

3.03 

3.75 

2.5 

4.0/6.01,4 17.0/19.0 
N-6 

TBC APPLICABLE GENERIC CODE 

PERCENTAGE BY 

GENERIC CODE [3] TOTAL 

R L1A INLAND TRANSPORT CONUS 

L4O STAGING 

L1A INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

L2C OVERSEAS PORT HANDLING 

L1F INLAND TRANSPORT OVERSEAS 

3.75 

3.03

3.75 

2.5 

4.0/6.01,4 

1.0 

3.0 21.0/23.0 

 

S L1A INLAND TRANSPORT CONUS 

L4O STAGING 

L1A INLAND TRANSPORT CONUS 

L2B CONUS PORT HANDLING 

3.75 

3.03 

3.75 

2.5 13.0 

 

U L1D/L1E PARCEL POST/COMM PKG 

L2D CONUS PORT HANDLING 

3.753 

2.5 6.25 

 

V L1D/L1E PARCEL POST/COMM PKG 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

L2C OVERSEAS PORT HANDLING 

3.753 

2.5 

4.0/6.01,4 

1.0 11.25/13.25 

 

W [Only those National Stock Numbers listed in 

Appendix F, DOD 5105.38-M, will be assessed 

the transportation charge listed in that table.] 

 

X L1D/L1E PARCEL POST/COMM PKG 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

3.753 

2.5 

4.0/6.01,4 10.25/12.25 

 

Y L1D/L1E PARCEL POST/COMM PKG 

L2B CONUS PORT HANDLING 

L1B/L1C OCEAN/AIR TRANSPORTATION 

L2C OVERSEAS PORT HANDLING 

L1F INLAND TRANSPORT OVERSEAS 

3.753 

2.5 

4.0/6.01,4 

1.0 

3.0 14.25/16.25 

 

Z L1A. Material moved within the CONUS by 

commercial carrier with a published maximum 

rate of $25.00 (for example, as published by 

United Parcel Service). 

 $25.00/limit 

1 OCEAN OR AIR TRANSPORTATION IS COMPUTED AT 4.0% OR 6.0% DEPENDING ON THE DELIVERY AREA (1 OR 2). 

2 ABOVE PERCENTAGE RATES ARE APPLIED IN FULL UP TO A UNIT COST OF $10,000. FOR THAT PORTION OF THE UNIT 

COST IN EXCESS OF $10,000, 25% OF THE RATE IS APPLIED. 

3 REIMBURSED TO SHIPPING DEPOT SHOWN ON THE DELIVERY TRANSACTIONS. 

4 WHEN THE TRANSPORTATION COMPUTE IS BASED ON A TBC AND THE PORT OF EXIT (POE) IS EQUAL TO AIR “A,”

DFAS-DE WILL COMPUTE L1C; IF THE POE IS OTHER THAN “A,” DFAS-DE WILL COMPUTE L1B 

NOTE: Generic Codes L1A, L1D, and L1E when used in conjunction with Delivery Source Codes AA, AB, AC, AD, AH, AJ, 

AK, CA, EF, or EG are no longer applicable to DWCF assets. 
N-7 

TRANSPORTATION AREA RATE TABLE

COUNTRY RATE COUNTRY RATE

 

AFGHANISTAN 2 GABON 2 

ALBANIA 1 GAMBIA 2 

ALGERIA 1 GERMANY 1 

ANDORA 1 GHANA 2 

ANTIGUA 1 GREECE 1 

ARGENTINA 2 GRENADA 1 

AUSTRALIA 2 GUATEMALA 1 

AUSTRIA 1 GUINEA 2 

BAHRAIN 2 GUINEA-BISSAU 2 

BANGLADESH 2 HAITI 1 

BARBADOS 1 HONDURAS 1 

BELGIUM 1 HUNGARY 1 

BELIZE 1 ICELAND 2 

BENIN 1 INDIA 2 

BERMUDA 1 INDONESIA 2 

BOLIVIA 2 IRELAND 1 

BOLIVIA D1 INT’L NARCOTICS CONTROL 2 ISRAEL 1 

BOTSWANA 2 ITALY 1 

BRAZIL 2 IVORY COAST 2 

BRUNEI 2 JAMAICA 1 

BULGARIA 1 JAPAN 2 

MYANMAR 2 JORDAN 2 

CAMEROON 2 KENYA 2 

CANADA 1 KOREA 2 

CAPE VERDE 2 KUWAIT 2 

CENTRAL AFRICAN REPUBLIC 2 LATVIA 1 

CHAD 2 LEBANON 1 

CHILE 2 LIBERIA 2 

CHINA 2 LICHTENSTEIN 1 

COLOMBIA 1 LITHUANIA 1 

COLOMBIA D5 INT’L NARCOTICS CONROL 1 LUXEMBOURG 1 

COSTA RICA 1 MADAGASCAR 2 

CUBA 1 MALAWI 2 

CYPRUS 1 MALAYSIA 2 

CZECH&SLOVAK 1 MALI 2 

DENMARK 1 MALTA 1 

DJIBOUTI 2 MAURITANIA 2 

DOMINICA ROSEAU 1 MAURITIUS 2 

DOMINICAN REPUBLIC 1 MEXICO 1 

ECUADOR 2 MOROCCO 1 

EGYPT 1 NEPAL 2 

EL SALVADOR 1 NETHERLANDS 1 

EQUATORIAL GUINEA 2 NEW ZEALAND 2 

ESTONIA 1 NICARAGUA 1 

ETHIOPIA 2 NIGER 2 

EUROPE 1 NIGERIA 2 

FIJI 2 NORWAY 1 

FINLAND 1 OMAN 2 

FRANCE 1 PAKISTAN 2 

 
N-8 

TRANSPORTATION AREA RATE TABLE

COUNTRY RATE COUNTRY RATE

 

PANAMA 1 ST CHRISTOPHER-NEVIS 1 

PAPUA-NEW GUINEA 2 ST LUCIA 1 

PARAGUAY 2 ST VINCENT 1 

PERU 2 SUDAN 2 

PERU D3 INT’L NARCOTICS CONTROL 2 SURINAME 1 

PHILIPPINES 2 SWEDEN 1 

POLAND 1 SWITZERLAND 1 

PORTUGAL 1 TAIWAN 2 

QATAR 2 THAILAND 2 

ROMANIA 1 TOGO 2 

RUSSIA 1 TRINIDAD 1 

RWANDA 2 TUNISIA 1 

R/4-ASIA PACIFIC REGION 2 TURKEY 1 

SAO TOME & PRINCIPE 2 UKRAINE 1 

SAUDI ARABIA 2 UNITED ARAB EMIRATES 2 

SENEGAL 2 UNITED KINGDOM 1 

SEYCHELLES 2 URUGUAY 2 

SIERRA LEONE 2 VENEZUELA 1 

SINGAPORE 2 YEMEN 2 

SOMALIA 2 YUGOSLAVIA 1 

SPAIN 1 ZAIRE 2 

SRI LANKA 2 

INTERNATIONAL ORGANIZATIONS

ORGANIZATION RATE

AFRICA REGION 2 

AMERICAN REPUBLIC REGION 1 

EAST ASIA/PACIFIC REGION 2 

EUROPE REGION 1 

EUROPEAN SPACE AGENCY 1 

F-16 BELGIUM 1 

F-16 DENMARK 1 

F-16 NETHERLANDS 1 

F-16 NORWAY 1 

F-16 ISRAEL (SME) 1 

F-18 AUSTRALIA 2 

NATO 1 

 Headquarters 1 

 Airborne Early Warning & Control 

 Operations & Support Budget (O&S) 1 

 Prog Mgt Ofc (NAPMO) 1 

 Commun & Info Sys Agency (NACISA) 1 

 EURO Fighter Acft Dev, Prod & 

 Log Mgt Agency (NEFMA) 1 

 HAWK Prod & Log Org (NHPLO) 1 

 Multi-Role Combat Acft (MRCA) Dev & 

 Prod Agency (NAMMA) 1 

 NAMSA, F-104 1 

 NAMSA, General, Nike 1 

 NAMSA, General, Other 1 
N-9 

INTERNATIONAL ORGANIZATIONS (continued)

ORGANIZATION RATE

NATO (continued)

 NAMSA, HAWK 1

 NAMSA, M60 Series Tank 1 

 NAMSA, Nike Training Center (NNTC) 1 

 NAMSA, Patriot 1 

 NAMSA, Weapons 1 

 Supr Allied Cdr, Atlantic (SACLANT) 1 

 Southern Region Signal & Communication 1 

 Supreme HQ, Allied Powers, Europe (SHAPE) 1 

NEAR EAST & SOUTHERN ASIA (NESA) REGION 2 

ORGANIZATION OF AMERICAN STATES 1 

UNITED NATIONS 1 

NOTE: This table does not necessarily indicate that sales/shipments are being made to all countries/organizations 

listed. 
N-10 

[This page intentionally left blank.] 
O-1 

APPENDIX O 

DELIVERY SOURCE CODES AND 

ACCESSORIAL COMPUTATION MATRIX 

 DSC 1st 

Position

DSC 2nd 

Position

Sale of DoD Articles Under Section 21 

• Working Capital Funds nonexcess items, including 

technical data packages and publications, from inventory 

 

 

 1. Matured FMSO A A 

 2. Other than matured FMSO A B 

• Working Capital Funds nonexcess items diverted from 

procurement initiated to maintain stock fund inventory 

 

 

 1. Matured FMSO A C 

 2. Other than matured FMSO A D 

• Procurement funded item (including technical data 

packages and publications) from inventory that requires 

replacement. 

 A E 

• Procurement funded item (including technical data 

packages and publications) from inventory that do not 

require replacement. 

 A G 

• Excess Working Capital Funds Item 

 

 1. Matured FMSO A H 

 2. Other than matured FMSO A J 

• Excess Procurement Funded Item from Inventory PC&H 

computed on original acquisition cost of item and 

submitted by IA. 

 A K 

• Any item other than Defense Working Capital Fund Items 

sold from inventory which are not subject to normal 

PC&H charge. This code shall only be used when the case 

contains a transportation line or a packing, crating and 

handling line, or a pricing exception has been granted by 

the Office of the Under Secretary of Defense 

(Comptroller). 

 A L 
O-2 

APPENDIX O 

DELIVERY SOURCE CODES (DSC) AND 

ACCESSORIAL COMPUTATION MATRIX 

 DSC 1st 

Position

DSC 2nd 

Position

Performance of DoD Services Under Section 21 or 22 

• Training Course 

 

 1. DoD B A 

 

 2. Contractor B B 

• Repair or replace customer equipment. IAs shall include 

actual PC&H and transportation for materiel consumed in 

overhaul in reported costs 

 

 B C 

• Other DoD services. Does not include “above-the-line” 

transportation or “above-the-line” PCH&T associated with 

the repair or modification of customer-owned equipment 

that is included in repair cost reported using code “BC”. 

 B D 

• Storage charge ( for other than FMSO cases ) B E 

• Leases 

 

 1. Depreciation B F 

 2. LOA sales of articles and services in connection 

with lease, prior to, during, or after lease period (includes 

transportation, PC&H, refurbishment ) 

 B G 

• Actual PC&H charge. This report must accompany 

delivery transactions for items sold from inventory with 

DSCs AK and AL 

 B H 

• “Above-the-line” transportation to FMS customers that is 

included in management line(s). Code includes “highflight” or special airlift. Code does not include “abovethe-line” transportation cost that is included in the selling 

price of an item or service. 

 B T 

Unique FMSO Charges 

• FMSO I materiel used to support system obsolete to DoD 

use (buy out of unique repair parts to support obsolete 

end-items). 

 C A 

 
O-3 

APPENDIX O 

DELIVERY SOURCE CODES (DSC) AND 

ACCESSORIAL COMPUTATION MATRIX 

 DSC 1st 

Position

DSC 2nd 

Position • Annual inventory maintenance and storage cost. Charge 

annually on current FMSO II case. The FMSO I case 

manager shall input the FMS detail delivery transaction. 

There is no annual charge for Working Capital Fund items 

for CLSSAs, as the Working Capital Fund standard 

stabilized) price recoups all costs. 

 

 C B 

• Normal inventory loss on procurement appropriation 

funded secondary items (physical inventory gain or loss, 

expiring shelf life, and damage of stored parts). Charge 

assessed annually on current FMSO II case. The FMSO I 

case manager shall input the delivery transactions. 

 C C 

• Cash advances for on-hand portion of FMSO I. C D 

Procurement for FMS Customers Under Section 22 

Codes DE through DL represent Work-in-Process (WIP) 

transactions. The break-down of these charges provides 

audit trail visibility for pricing purposes. The DFAS-DE 

shall treat them as progress payments and report them as 

such to the FMS customer. These charges shall be 

liquidated by one of the contract delivery codes DA 

through DD in combination with reimbursement code “N”. 

 

 1. Contractor Services (other than training) D A 

 2. DWCF item, TDP, or publications from contractor D B 

 3. Procurement appropriation funded secondary item 

 from contractor 

 D C 

 4. Procurement funded principal or major item from 

 contractor 

 D D 

 5. Progress payment to contractor D E 

 

 6. DoD services in support of procurement. (This code 

 was applied to actual CAS hours prior to 

 establishment of the charge. It now applies to other 

 than CAS services). 

 D F 

 7. Nonrecurring Cost Recoupment Charge (R&D and 

 Production). 

 D G 

 8. Government-furnished materiel (GFM) 

 a. Shipped from inventory D J 
O-4 

APPENDIX O 

DELIVERY SOURCE CODES (DSC) AND 

ACCESSORIAL COMPUTATION MATRIX 

 b. Shipped from another contractor D K 

 

 c. PCH&T applicable to procurement funded GFM D L 

 9. Contractor effort in overseas locations which is 

 is supported by an FMS management line rather 

 than through normal CAS effort. 

 D X 

 DSC 1st 

Position

DSC 2nd 

Position

 Miscellaneous Charges 1. Royalty Charge (USG TDP) E E 

 

 2. Other federal agency shipment 

 a. From stock E F 

 b. From contractor E G 

 3. NATO POL E H 

 4. Redistributable MAP property E J 

 5. Collection on nonrecurring production charge or 

 license fee on behalf of a third country 

 E K 

 6. Prepositioning costs E L 

 7. Interest on arrearage computed in accordance with 

 Volume 6, Chapter 12, DoD 7000.14-R, Volume 15. 

 (Collecting and Reporting of Foreign Indebtedness 

 Within the Department of Defense. Restricted to 

 use by the DFAS-DE) 

 E M 

 8. Nonrecurring cost recoupment charges E N 

 Special Defense Acquisition Fund

The SDAF shall use Delivery Source Codes as follows: 

 

• This code shall be used for SDAF sales of items 

originally purchased from DoD DWCF inventories. 

 S A 

• This code shall be used for SDAF sales of items 

originally purchased from DoD inventories other than 

Defense Business Operations Fund. 

 S B 

• This code shall be used for SDAF sales of items 

procured from contractors for the fund. 

 S D 

• This code shall be used for SDAF sales of items 

procured from contractors and shipped directly from 

the contractor to the FMS customer, providing there is 

no requirement for any special packing, crating, or 

handling. 

 S E 
O-5 

• ACCESSORIAL COMPUTATION MATRIX

 [N = No; Y = Yes] 

DSC

CONTRACT 

ADMINISTRATION1 PCH2 ADMIN4

TRANSPORTATION 

PARCEL POST5,6

 

AA N N Y Y 

AB N N Y Y 

AC N N Y Y 

AD N N Y Y 

AE N Y Y Y 

AG N Y Y Y 

AH N N Y Y 

AJ N N Y Y 

AK N N Y Y 

AL N N Y Y 

BA N N Y N 

BB Y N Y N 

BC N N3 Y N3

BD N N Y N 

BE N N Y N 

BF N N N N 

BG N N Y N 

BH N N Y N 

BT N N Y N 

CA N N N Y 

CB N N Y N 

CC N N Y N 

CD N N N N 

DA Y N Y N 

DB Y N Y Y 

DC Y N Y Y 

DD Y N Y Y 

DE Y N Y N 

DF N N Y N 

DG N N Y N 

DJ N N Y N 

DK Y N Y N 

DL N N Y N 

DX N N Y N 

EE N N Y N 

EF N Y Y Y 
O-6 

• ACCESSORIAL COMPUTATION MATRIX

 [N = No; Y = Yes] 

 

DSC

CONTRACT 

ADMINISTRATION1 PCH2 ADMIN4

TRANSPORTATION 

PARCEL POST5,6

 

EG N N Y Y 

EH N N Y N 

EJ N Y Y Y 

EK N N Y N 

EL N N N N 

EM N N N N 

EN N N Y N 

SA N N Y Y 

SB N Y Y Y 

SD N Y Y Y 

SE N N Y Y 

 

1 DFAS-DE will compute CAS (unless statutory waiver of contact administration has been made) if price code is 

“N” and reimbursement code is other than “N.” 

2 PC&H does not apply to stock fund/Defense Working Capital Fund items with ship dates from 1 

October1990. 

3 Included in actual or estimated actual repair cost. 

4 Administrative costs will be computed unless administrative costs have been waived pursuant to statute. 5

 Transportation costs will be computed using the Transportation Bill Code in position 59 of the Delivery 

Transaction. However, if this position is blank, transportation costs will be computed using the Delivery Term 

Code (position 34). 6 The Inland CONUS Transportation charge of 3.75% does not apply to Defense Working Capital Fund shipments 

with shipping dates subsequent to 1 October 1990. Computation for Generic Codes L1D and L1E for DWCF 

items was discontinued on items with shipping dates from 1 October 1991. See DoD 7000.14-R for additional 

information regarding transportation charges. 
APPENDIX P 

Part 1 

ABBREVIATIONS AND ACRONYMS 

A 

AAA Army Audit Agency or Authorization Accounting Activity (U.S. Navy) 

AAC Acqusition Advice Code 

ACC Air Combat Command (USAF) 

ACCT Account 

ACO Administrative Contracting Officer 

AECA Arms Export Control Act 

AFAA Air Force Audit Agency

AFIT Air Force Institute of Technology

AFM Air Force Manual 

AFMC Air Force Materiel Command 

AFR Air Force Regulation 

AFSAT Air Force Security Assistance Training (Group) 

AFSC Armed Forces Staff College

AIS Automated Information System (Defense Automated Addressing System) 

ALC Air Logistics Center (under AFMC) or American Language Course 

AMARC Aerospace Maintenance and Regeneration Center 

AMC Army Materiel Command or Air Mobility Command (USAF) 

AMCOM Aviation Missile Command (U.S.Army)

AMDF Army Master Data File 

AMEMB American Embassy

AMRAAM Advanced Medium Range Air-to-Air Missile 

AO Action Officer 

AOG Aircraft on the Ground (Grounded Aircraft) 

AOR Area of Responsibility

APL Allowance Parts List (U.S. Navy) 

APOD Aerial Port of Debarkation (Delivery)

APOE Aerial Port of Embarkation 

AR Army Regulation 

ARC Adjustment Reply Code 

ASD Aeronautical Systems Division (USAF/AFMC) or Assistant Secretary of Defense 

ASD(C) Assistant Secretary of Defense (Comptroller) 

ASD(ISA) Assistant Secretary of Defense (International Security Affairs)

ASL Authorized Supply Level (U.S. Army) 

ASN Assistant Secretary of the Navy

ASO Aviation Supply Office (U.S. Navy) 

ATC Air Training Command (U.S. Air Force) 

ATMG Arms Transfer Management Group 

AWACS Airborne Warning and Control System 

AWC Air War College or Army War College 

P-1 
B 

B/L Bill of Lading 

BA Budget Authorization 

BAC Billing Advice Code 

BO Back Order (Supply) or Blanket Order (FMS Case) 

BOE Blanket Open End (FMS Case) 

BY Budget Year or Base Year 

C 

C3CM Command,Control, and Communications Countermeasures 

C3I Command, Control, Communications, and Intelligence 

CA Contract Authority

CAD/PAD Cartridge Actuated Device/Propellant Actuated Device 

CAO Contract Administration Office or Case Administering Office 

CAS Contract Administrative Services or Cost Accounting Standard 

CASEUR Contract Administration Service -Europe (U.S.Air Force) 

CAT Conventional Arms Transfers 

CBL Commercial Bill of Lading 

CC Country Code 

CCBL Collect Commercial Bill of Lading 

CCCI Case Closure Certificate Inventory

CCM Central Case Manager 

CD Case Designator 

CDO Country Desk Officer 

CECOM Communications Electronics Command (U.S. Army) 

CET Civilian Engineering Team

CETS Contractor Engineering Technical Services 

CETSP Contractor Engineering Technical Services Program 

CFE Contractor Furnished Equipment 

CFM Contractor Furnished Materiel 

CFMW Case Financial Management Worksheet 

CFS Contract Field Services

CFSP Contractor Field Services Personnel 

CGSC Command and General Staff College (U.S. Army) 

CGSEL Common Ground Support Equipment List 

CI Case Identifier 

CIP Component Improvement Program (Engines) 

CIS Contractor Initial Support or Commonwealth of Independent States 

CISIL Centralized Integrated System International Logistics (U.S. Army) 

CJCS Chairman, Joint Chiefs of Staff 

CLA Cross Leveling Agreement 

CLO Country Liaison Officer (Foreign Country Representative) 

CLSSA Cooperative Logistics Supply Support Arrangement 

CM Configuration Management, Case Manager 

CMCRL Consolidated Master Cross Reference List 

CMCS Case Management Control System 

CMI Classified Military Information 

CMS Contractor Maintenance Services

CN Counter Narcotics 

CNATRA Chief of Naval Air Training (U.S. Navy) 

CNET Chief of Naval Education and Training 

CNO Chief of Naval Operations 

CNTECHTRA Chief of Naval Technical Training (U.S. Navy) 

CO Contracting Officer or Change Order or Commanding Officer 

COCO Contractor Owned/Contractor Operated (Facilities) 

COCP Customer Order Control Point (U.S. Army) 

P-2 
COE Corps of Engineers (U.S. Army) 

COG Navy Material Cognizance Symbol 

COGARD U.S. Coast Guard 

COM Chief of Mission (U.S. Embassy) 

COMNAVSUP Commander, Naval Supply Systems Command 

COMSEC Communications Security (NSA) 

CONUS Continental United States 

COOPLOG Cooperative Logistics 

COR Contracting Officer's Representative 

CPM Country Program Manager 

CSP Concurrent (initial) Spare Parts 

CSS Contractor Support Services 

CWA Cash with Acceptance 

CY Calendar Year or Current Year 

D 

DA Department of the Army

DAAS Defense Automatic Addressing System 

DAASC Defense Automatic Addressing System Center 

DAC Defense Acquisition Circular or Department of the Army Civilian 

DAF Department of the Air Force 

DAO Defense Attaché Office or Disbursing Accounting Office 

DARPA Defense Advanced Research Projects Agency

DASD(ISA) Deputy Assistant Secretary of Defense (International Security Affairs)

DASD(ISP) Deputy Assistant Secretary of Defense (International Security Policy)

DATT Defense Attaché 

DCA Defense Cooperation in Armaments 

DCAA Defense Contract Audit Agency

DCM Deputy Chief of Mission (U.S. Embassy) 

DCMAO Defense Contract Management Area Operation 

DCMD Defense Contract Management District 

DCN Document Control Number or Design Change Notice 

DCS Deputy Chief of Staff or Direct Commercial Sales 

DCSLOG Deputy Chief of Staff for Logistics (U.S. Army) 

DD Form 250 Department of Defense Material Inspection and Receiving Report 

DD Form 645 Department of Defense FMS Quarterly Billing Statement 

DDN Defense Data Network 

DELP Defense English Language Program 

DEPSECDEF Deputy Secretary of Defense 

DESC Defense Electronic Supply Center 

DFARS Defense Federal Acquisition Regulation Supplement 

DFAS Defense Accounting and Finance Service-five centers

HQ Washington DC 

Cleveland Center, Ohio 

Columbus Center, Ohio 

Denver Center, Colorado—DFAS-DE 

Indianapolis Center, Indiana—DFAS-IN 

Kansas City Center, Kansas 

DIA Defense Intelligence Agency

DIC Document Identifier Code or Defense Industrial Cooperation 

DIFS Defense Integrated Financial System 

DIS Defense Investigative Service 

DISAM Defense Institute of Security Assistance Management (Wright-Patterson AFB, OH) 

DISC Defense Industrial Supply Center 

DLA Defense Logistics Agency

DLIELC Defense Language Institute English Language Center (Lackland AFB, TX) 

DLIFLC Defense Language Institute Foreign Language Center (Presidio of Monterey, CA) 

DLSC Defense Logistics Services Center 

DO Defined Order (FMS Case) 

P-3 
DoC Department of Commerce 

DoD Department of Defense 

DoDAADS Department of Defense Activity Address Directory System 

DoDAC Department of Defense Address Code 

DoDD DoD Directive 

DoDI DoD Instruction 

DoDIG DoD Inspector General 

DoDIP Department of Defense Informational Program 

dOd Department of Defense Transportation Regulation Part II Cargo Movement (DoD 4500.9-R) 

DoE Department of Energy

DoS Department of State 

DoT Department of Transportation 

DPACT Defense Policy Advisory Committee on Trade 

DPRO Defense Plant Representative Office 

DRMO Defense Reutilization Marketing Office 

DRMS Defense Reutilization Marketing Service 

DRP Direct Requisitioning Procedure (U.S. Navy) 

DRSA Office of Defense Relations and Security Assistance (Dept. of State) 

DS Direct Support Level of Maintenance 

DSCA Defense Security Cooperation Agency

DSAM Directorate of Security Assistance Management (U.S. Army) 

DSC Defense Supply Center or Delivery Source Code 

DSMC Defense Systems Management College (Ft Belvoir, VA) 

DT&E Development, Test, and Evaluation 

DTC Delivery Term Code or Office of Defense Trade Controls (Dept. of State) 

DTP Office of Defense Trade Policy (Dept. of State) 

DTS Defense Transportation System 

DU Dependable Undertaking 

DV Distinguished Visitor 

E 

EA Expenditure Authority or Each 

EAA Export Administration Act 

ECL English Comprehension Level 

ECP Engineering Change Proposal 

EDA Excess Defense Articles 

EDD Estimated Delivery Date 

EI End Item 

ELT English Language Training 

EOQ Economic Order Quantity

ESD Estimated Shipment Date or Electronics Systems Division (Air Force) 

ESF Economic Support Fund 

ETSS Extended Training Services Specialist 

F 

FAA Foreign Assistance Act of 1961 

FAD Force Activity Designator 

FAO Foreign Area Officer (U.S. Army) 

FAR Federal Acquisition Regulation 

FAS Free Alongside Ship 

FC Fixed Cost 

FF Freight Forwarder 

FFP Firm Fixed Price

FICS FMS Integrated Control System

FLO Foreign Liaison Office or Foreign Liaison Officer (located within CONUS) 

FM Financial Management 

FMCS Foreign Military Construction Sales 

P-4 
FMFP Foreign Military Financing Program

FMS Foreign Military Sales 

FMSO Fleet Material Support Office (U.S. Navy) 

FMSO I Foreign Military Sales Order No. I (stock level sales case) 

FMSO II Foreign Military Sales Order No. II (requisition/consumption sales case) 

FOB Free On Board 

FOIA Freedom of Information Act 

FORSCOM Forces Command (Specified Command) 

FRB Federal Reserve Bank 

FSC Federal Supply Classification 

FSCM Federal Supply Code for Manufacturers 

FSG Federal Supply Group 

FSN Federal Stock Number or Foreign Service National (local hire overseas) 

FSO Foreign Service Officer (Department of State) 

FST Field Service Team

FTD Field Training Detachment or Foreign Technology Division (U.S. Air Force) 

FTS Field Training Service

FWE Foreign Weapons Evaluation 

FY Fiscal Year 

G 

G&A General and Administrative Expense (e.g., overhead) 

GA Grant Aid [obsolete) or General Authority

GAO General Accounting Office 

GATT General Agreement on Tariffs and Trade 

GBL Government Bill of Lading 

GC Generic Code 

GCC Gulf Cooperation Council 

GFE Government Furnished Equipment 

GFI Government Furnished Information 

GFM Government Furnished Materiel 

GFP Government Furnished Property

GO_ Government of (country name) 

GOCO Government-Owned, Contractor Operated 

GOGO Government-Owned, Government-Operated 

GPC Government Procurement Code 

GS General Support Level of Maintenance 

GSA General Services Administration 

GSE Ground Support Equipment 

H 

HC Host Country

HLDBK Contractor Holdback 

HNS Host Nation Support 

P-5 
I 

IA Implementing Agency

ICP Inventory Control Point or International Cooperative Programs 

IDB Interdepartmental Bill 

IF Industrial Fund 

IFB Invitation For Bid 

IL International Logistics 

ILC International Logistics Center (U.S. Air Force) 

ILCO International Logistics Control Office 

ILCS International Logistics Communication System 

ILOSS International Logistics Overseas Support System 

ILP International Logistics Program 

ILS Integrated Logistics Support 

ILSP Integrated Logistics Support Plan 

IM Item/Inventory Manager 

IMET International Military Education and Training 

IMS International Military Student 

IMSM International Military Student Manager 

IMSO International Military Student Officer (Office) (Organization) 

IMT International Military Trainee or International Military Training 

INS Immigration and Naturalization Service (Dept. of Justice) 

IP Informational Program (DOD) 

IPD Issue Priority Designator or Implementing Project Directive 

ISA International Security Affairs [Assistant Secretary of Defense (International Security Affairs)]

ISP International Security Policy [Assistant Secretary of Defense (International Security Policy )]

ISSL Initial Spares Support List (See CSP) 

ITAR International Traffic in Arms Regulations 

ITMO International Training Management Officer 

ITO Invitational Travel Order 

J 

JCS Joint Chiefs of Staff 

JFM Joint Forces Memorandum 

JS Joint Staff 

JSAT Joint Security Assistance Training (Regulation) 

K 

[None at this time.]

L 

LCC Life Cycle Cost 

LCM Life Cycle Management 

LIC Low-Intensity Conflict 

LLI Long Lead Item 

LM Logistics Management or Local Manufacture 

LOA Letter of Offer and Acceptance (synonymous with DD Form 1513) 

LOR Letter of Request 

LSC Logistics Support Charge 

P-6 
M 

MAAG Military Assistance Advisory Group 

MACOM Major Army Command 

MAG Military Assistance Group 

MAGTEC Marine Corps Air Ground Training and Education Center 

MAJCOM Major Command (U.S. Air Force) 

MANPADS Man-Portable Air Defense System 

MAPAC Military Assistance Program Address Code 

MAPAD Military Assistance Program Address Directory

MASL Military Articles and Services List(s) (for materiel and training) 

MCL Munitions Control List 

MCRL Master Cross Reference List 

MCSATFA Marine Corps Security Assistance Training Field Activity

MCTL Military Critical Technologies List 

MDA(A) Mutual Defense Assistance Agreements

MDAO Mutual Defense Assistance Office 

MDE Major Defense Equipment 

MET Mobile Education Team 

MICAP Mission Capability

MILDEPS Military Departments 

MILGP Military Group 

MILPERS Military Personnel 

MILSBILLS Military Standard Billing System

MILSPEC Military Specification 

MILSTEP Military Supply and Transportation Evaluation Procedures 

MILSTRAP Military Standard Transaction Reporting and Accounting Procedures 

MILSTRIP Military Standard Requisitioning and Issue Procedures 

MIRR Material Inspection and Receiving Report (DD Form 250) 

MIS Management Information System 

MISIL Management Information System International Logistics (U.S. Navy) 

MLA Manufacturing License Agreement 

MMC Material Management Code 

MOA Memorandum of Agreement 

MOD Ministry of Defense (international equivalent of U.S. DoD) 

MOU Memorandum of Understanding 

MRI MILSTRIP Routing Identifier 

MRO Materiel Release Order 

MRRL Materiel Repair Requirements List 

MSC Military Sealift Command (U.S. Navy) or Major Subordinate Command (U.S. Army) or Mess 

Specialist, Chief (U.S. Navy). Medical Service Corps (U.S. Army and U.S. Air Force) 

MSG Message

MTCR Missile Technology Control Regime 

MTMC Military Traffic Management Command 

MTT Mobile Training Team 

MWO Modification Work Order 

N 

NAD Navy Aviation Deport 

NADEP Naval Aviation Depot 

NAF Non-Appropriated Fund(s) 

NAMSA NATO Maintenance and Supply Agency

NAMSO NATO Maintenance and Supply Organization 

NAPR NATO Armaments Planning Review 

NATO North Atlantic Treaty Organization 

NAVAIR Naval Air Systems Command 

NAVCOMPT Navy Comptroller 

NAVEDTRACOM Naval Educational and Training Command 

P-7 
NAVFAC Naval Facilities Engineering Command 

NAVILCO Navy International Logistics Control Office (Philadelphia, Pennsylvania) 

NAVPRO Naval Plant Representative Office 

NAVSEA Naval Sea Systems Command 

NAVSUP Naval Supply Systems Command 

NAVY IPO Navy International Programs Office 

NC Nonrecurring Cost 

NCB National Codification Bureau 

NDI Non-Developmental Items 

NDP-1 National Disclosure Policy

NDPC National Disclosure Policy Committee 

NETSAFA Naval Education and Training Security Assistance Field Activity

NICP National Inventory Control Point (U.S. Army) 

NIIN National Item Identification Number 

NIPARS Nonstandard Item Parts And Repair Support (U.S. Air Force) 

NMCS Not Mission Capable Supply

NMDE Non-Major Defense Equipment 

NMDL Navy Management Data List 

NOA New Obligation Authority or Notice of Availability

NPC Nonrecurring Production Costs 

NPFC Naval Publications and Forms Center 

NRC Nonrecurring Cost 

NSA National Security Agency

NSADS Navy Security Assistance Data System 

NSC Naval Supply Center or National Security Council 

NSD Naval Supply Depot 

NSI Nonstandard Item 

NSN National Stock Number (replaces FSN) 

NSS National Supply System 

NSY Naval Shipyard 

NTSC Naval Training Systems Center 

NWC National War College or Naval War College 

O 

O&M Operation and Maintenance 

OA Obligational Authority

OAC Operating Agency Code 

OASD/ISA Office of Assistant Secretary of Defense/International Security Affairs

OBT Observer Training 

OC-ALC Oklahoma City Air Logistics Center (U.S. Air Force - AFMC) 

OCONUS Outside of the Continental United States 

ODC Office of Defense Cooperation 

ODTC Office of Defense Trade Controls (Dept. of State) 

OECD Organization for Economic Cooperation and Development 

OED Offer Expiration Date (LOA) 

OJCS Office of the Joint Chiefs of Staff 

OJT On-the-Job Training 

OMA Operations and Maintenance (U.S. Army) 

OMB Office of Management and Budget 

OMC Office of Military Cooperation 

OO-ALC Ogden Air Logistics Center (U.S. Air Force-AFMC) 

OPNAV Office of the Chief of Naval Operations 

OPR Office of Primary Responsibility

OSD Office of the Secretary of Defense 

OT Orientation Tour 

OVHL Overhaul 

P 

P-8 
P&A Price and Availability Data 

P/N Part Number

PACOM U.S. Pacific Command 

PBAS Program, Budget, & Accounting System (U.S. Army) 

PC&H Packaging, Crating, & Handling 

PCH&T Packaging, Crating, Handling, and Transportation 

PCS Permanent Change of Station 

PD Presidential Determination 

PDO Property Disposal Officer 

PHS&T Packaging, Handling, Storage, and Transportation 

PICA Primary Inventory Control Activity

PIP Product Improvement Program 

PKO Peacekeeping Operations

PL Public Law 

PLT Procurement Lead Time

PM Bureau of Political-Military Affairs (Dept. of State) 

PME Professional Military Education or Precision Measuring Equipment 

PMR Program Management Review 

POC Point of Contact 

POD Port of Debarkation 

POE Port of Embarkation or Port of Entry

POL Petroleum, Oil, and Lubricants 

PPBS Planning, Programming, and Budgeting System 

PR Procurement Request 

PTC Positive Transaction Control 

PWD Program Work Directive 

PWRMS Prepositioned War Reserve Materiel Stocks 

PY Program Year 

Q 

QA Quality Assurance 

QAT Quality Assurance Team

QBR Quarterly Billing Report 

QC Quality Control 

QDR Quality Deficiency Report 

QRR Quarterly Requisition Report 

QTY Quantity

R 

R&D Research & Development 

R&M Replacement and Modernization 

R&R Repair and Return or Repair and Replace 

RAD Required Availability Date 

RCN Record Control Number 

RCS Report Control Symbol 

RDD Required Delivery Date 

RDT&E Research, Development, Test, and Evaluation 

RIC Routing Identifier Code 

RIK Replacement in Kind 

RIM Retainable Instructional Material 

RMS Resource Management Systems 

ROM Rough Order of Magnitude 

RSI Rationalization, Standardization, and Interoperability

RSN Record Serial Number 

S 

P-9 
SA-ALC San Antonio Air Logistics Center (U.S. Air Force - AFMC) 

SAMD Security Assistance Management Directorate (U.S. Army) 

SAMIS Security Assistance Management Information System 

SAMM Security Assistance Management Manual (DOD 5105.38-M) 

SAMR Security Assistance Management Review 

SAN Security Assistance Network 

SAO Security Assistance Organization/Office 

SAPRWG Security Assistance Program Review Working Group 

SATFA Security Assistance Training Field Activity (U.S. Army) 

SATMO Security Assistance Training Management Organiztion (U.S. Army) 

SATP Security Assistance Training Program

SCN Student Control Number 

SCR System Change Request 

SDAF Special Defense Acquisition Fund 

SDR Supply Dificiency Report 

SECDEF Secretary of Defense 

SECNAV Secretary of the Navy

SECSTATE Secretary of State 

SET Specialized English Training 

SF 364 Standard Form 364, Report of Discrepancy

SFRC Senate Foreign Relations Committee 

SII Special Instructions Indicator 

SM-ALC Sacramento Air Logistics Center (U.S. Air Force - AFMC) 

SME Significant Military Equipment 

SNUD Stock Number User Directory

SOFA Status of Forces Agreement 

SOP Standard Operating Procedure 

SOW Statement of Work 

SPAWAR Space & Naval Warfare Systems Command (U.S. Navy) 

SPD System Program Director (U.S. Air Force) 

SPM System Program Manager 

SPO System Program Office (U.S. Air Force) 

SPOD Surface (Sea) Port of Debarkation 

SPOE Surface (Sea) Port of Embarkation 

SSBO System Support Buy-out 

SSC System Sales Case or Supply Status Code 

SSP Single Stock Point 

SST Site Survey Team

STARS Standard Accounting and Reporting System (U.S. Navy) 

STARR/PC Supply Tracking and Repairable Return/Personal Computer 

STL Standardized Training Listing 

STRICOM Simulation, Training and Instrumentation Command 

SVI Single Vendor Integrity

T 

T&E Test and Evaluation 

TA Type Assistance

TAA Technical Assistance Agreement or Trade Agreement Act 

TAC Type of Address Code 

TACOM Tank, Automotive and Armaments Command (U.S. Army) 

TAFT Technical Assistance Field Team

TAPR Training Activity Program/Report 

TASA Television-Audio Support Activity (U.S. Army) 

TAT Technical Assistance Team

TBC Transportation Bill Code 

TCN Transportation Control Number 

TCP Technical Coordination Program 

TD Technical Data 

TDP Technical Data Package 

P-10 
TECOM Test and Evaluation Command (U.S. Army) 

TL Termination Liability

TL/TLW Termination Liability/ TL Worksheet 

TLA Travel and Living Allowance 

TLR Termination Liability Reserve 

TMDE Test Measurement & Diagnostic Equipment 

TO Technical Order 

TOA Total Obligational Authority or Transportation Operating Agency

TOEFL Test of English as a Foreign Language 

TPA Total Package Approach 

TPC Total Program Concept 

TPMR Training Program Management Review 

TRACS Training Control System 

TRADOC Training and Doctrine Command (U.S. Army) 

TRANSCOM U.S. Transportation Command 

TRNG Training 

TSASS TRADOC Security Assistance Supporting System 

TTA Tailored Training Approach 

U 

U/I Unit of Issue 

U/P Unit Price 

UCMD Unified Commands 

UCOM Unified Command 

ULO Unliquidated Obligations 

UMMIPS Uniform Materiel Movement and Issue Priority System

UN United Nations 

UND Urgency of Need Designator 

USA U.S. Army

USACOM United States Atlantic Command 

USAF U.S. Air Force 

USAFE U.S. Air Forces, Europe 

USAID United States Agency for International Development 

USAMC U.S. Army Materiel Command 

USAREUR U.S. Army, Europe 

USARSA U.S. Army School of the Americas 

USASAC U.S. Army Security Assistance Command 

USC U.S. Code (as in law) 

USCENTCOM U.S. Central Command 

USCG U.S. Coast Guard 

USDLO U.S. Defense Liaison Office 

USDP U.S. Disclosure Policy or Under Secretary of Defense for Policy

USEUCOM U.S. European Command 

USG U.S. Government 

USLO U.S. Liaison Office 

USMC U.S. Marine Corps 

USML U.S. Munitions List 

USMTM U.S. Military Training Mission 

USN U.S. Navy

USPACOM U.S. Pacific Command 

USSOCOM U.S. Special Operations Command 

USSOUTHCOM U.S. Southern Command 

USTRANSCOM U.S. Transportation Command 

V 

[None at this time.]

P-11 
W 

WCN Worksheet Control Number 

WCF Working Capital funds 

WFO Washington Field Office (SATFA, U.S. Army) 

WIMMS Weapons Integrated Material Management System 

WIP Work In Process 

WPOD Water Port of Discharge 

WR-ALC Warner-Robins Air Logistics Center (U.S. Air Force - AFMC) 

WRSA War Reserve Stocks for Allies 

WSD Weapon System Designator 

WSLO Weapon System Logistics Office 

WSP Weapon System Package 

XYZ

[None at this time.]

P-12 
APPENDIX P 

Part 2 

GLOSSARY OF SELECTED TERMS 

 

A 

above-the-line-cost [obsolete terminology] Cost identified as specific FMS line items or as part of a specific line on 

an [obsolete form] DD Form 1513 (see Table 200-1, DoD 7290-3-M). Applicable costs are added to arrive at

estimated cost (line 21 of the DD Form 1513). 

acceptance The act of an authorized representative of the government by which the government assumes for itself, 

or as agent of another, ownership of existing and identified supplies tendered, or approves specific services 

rendered, as partial or complete performance of the contract on the part of the contractor. 

acceptance date The date which appears in the acceptance portion of the LOA and indicates the calendar date on 

which a foreign buyer agrees to accept the items and conditions contained in the FMS LOA. 

 

accepted case An LOA that has been signed by the designated representative of the eligible recipient before the 

expiration date and has been received by DFAS-DE/F with any required initial deposit. 

accessorial cost The value of expenses incidental to issues, sales, and transfers of materiel which are not included 

in the standard price or contract cost of materiel; also, any expenses incidental to the performance of services, 

training, etc. May be commonly referred to by the higher level generic code "LOO" for all types of accessorial 

costs. 

accrued costs The financial value of delivered articles and services and incurred costs reported to DFAS-DE/F via 

Delivery Transactions. Incurred costs represent disbursements for which no physical deliveries have yet occurred. 

Examples are: progress payments to contractors, GFM/GFE provided to contractors, and nonrecurring costs. 

action officer (AO) The person responsible for taking action on a project, for coordination of all staff activities, 

and for assembling an action package for decision by higher authority. 

actual cost A cost sustained in fact, on the basis of costs incurred, as distinguished from forecasted or estimated 

costs. 

actual cost of work performed The costs actually incurred and recorded in accomplishing the work performed 

within a given time period. 

actual dollars Expenditures as recorded in prior time periods. 

adjustment reply code (ARC) A code which identifies the type of action being taken in reply to the FMS customer 

Supply Discrepancy Report (SDR). ARCs are transmitted to DFAS-DE by an FMS case Implementing Agency in 

Delivery Transactions. 

administrative contracting officer (ACO) The U.S. government contracting officer who is assigned the 

responsibility for the administration of USG contracts. 

administrative agency The Military Department charged with the responsibility for the provision of logistical and 

administrative support to a DoD element either in the U.S. or in a foreign country or international organization. 

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administrative cost The value of costs associated with the administration of the FMS Program. The prescribed 

administrative percentage cost for a case appears in the United States of America Letter of Offer and Acceptance 

(LOA). May be commonly referred to by the generic code "L6A" for administrative costs. 

administrative leadtime The time interval between the initiation of procurement action and the letting of a contract 

or the placing of an order. 

agency Any department, office, commission, authority, administration, board, Government-owned corporation, or 

other independent establishment of any branch of the Government of the United States. 

allotment [FMS] Authority issued to a DoD Component to incur commitments and obligations within a specified 

amount. In the FMS program there are two types of allotments:

 a. allotment for actual administrative expenses - All of the actual cost incurred by DoD Components in

administering the FMS program are funded by this allotment. The allotment is issued on a quarterly basis and may

not be exceeded. 

 b. allotment for program implementation - An allotment of FMS case contract authority for use on a 

direct cite basis, citing the allotment holder's accounting station. This type of allotment is made when DFAS-DE 

determines it does not have the accounting capability to support detailed accounting requirements below the FMS 

case level, i.e., commitments, obligations and disbursements resulting from contract award to implement individual

FMS case line items. The amount released on each FMS case is a specific limitation and the monthly status-ofallotment report must show the status of each case. 

 

anticipated reimbursements A term which refers to the dollar value of reimbursable orders that has been included 

in a DoD component's budget. Applicable amounts are not available for obligation until an actual customer order 

has been received. 

Armed Services Board of Contract Appeals A board established to act as the authorized representative of the 

SECDEF or department Secretaries, in deciding appeals under the provisions of the disputes clause contained in

USG contracts. 

Arms Export Control Act (AECA) The basic U.S. law providing the authority and general rules for the conduct of 

foreign military sales and commercial sales of defense articles, defense services, and training. The AECA came into

existence with the passage of the Foreign Military Sales Act (FMSA) of 1968. An amendment in the International 

Security Assistance and Arms Export Control Act of 1976 changed the name of FMSA to the AECA. 

 arms transfers Involves the sale, lease, loan, or other transfer of defense articles and defense services such as 

arms, ammunition, and implements of war, including components thereof, and the training, manufacturing licenses, 

technical assistance, and technical data related thereto, provided by the USG under the authority of the Foreign 

Assistance Act of 1961, as amended, or the Arms Export Control Act, as amended, or other statutory authority, or 

directly by commercial firms to foreign countries, foreign private firms, or to international organizations. See also 

conventional arms transfers. 

attrition The loss of a resource due to natural causes in the normal course of events such as a turnover of 

employees or spoilage and obsolescence of materiel. 

audit The systematic examination of records and documents to determine: (1) the adequacy and effectiveness of 

budgeting, accounting, financial, and related policies and procedures; (2) compliance with applicable statutes, 

regulations, policies, and prescribed procedures; (3) the reliability, accuracy, and completeness of financial and 

administrative records and reports; and (4) the extent to which funds and other resources are properly protected and 

effectively used.

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auditor [procurement] A term used to represent the cognizant audit office designated by the Defense Contract

Audit Agency (DCAA) or Military Service audit activities for conducting audit reviews of the contractor's

accounting system policies and procedures for compliance with the criteria. 

B 

back order (BO) The quantity of an item requisitioned by ordering activities that is not immediately available for 

issue but is recorded as a stock commitment for future issue. 

base price The standard price or contract cost of materiel. Does not include surcharges 

base year (BY) A reference period which determines a fixed price level for comparison in economic escalation 

calculations and cost estimates. The price level index for the base year is 1.000. 

 

below-the-line-costs [obsolete terminology] Costs identified on the DD Form 1513 on lines 22 through 25. 

Applicable costs are added to estimated costs to arrive at estimated total costs. Normally, DFAS-DE retains the 

obligational authority necessary to execute applicable costs. 

bill (or billing) code This is a DFAS-DE Country assigned code which divides FMS customer country billings 

into management levels lower than a U.S. Implementing Agency or in-country service. This code often correlates to

an FMS customer paying office. It appears in Block 3 of the DD Form 645. 

 

billing statement The DD Form 645 Billing Statement represents the official claim for payment by the U.S. 

Government referred to in the LOA. It also furnishes an accounting to the FMS purchaser for all costs incurred on 

his behalf under each agreement. 

 

blanket order FMS case An agreement between a foreign customer and the U.S. Government for a specific 

category of items or services (including training) with no definitive listing of items or quantities. The case specifies 

a dollar ceiling against which orders may be placed. 

budget authority Authority provided by law to enter into obligations which generally result in immediate or future 

outlays of federal funds. The basic forms of budget authority are appropriations, contract authority, and borrowing 

authority. Budget authority may be classified by (1) the period of availability (one-year, mutiple-years, or without a 

time limitation), (2) the timing of congressional action (current or permanent), or (3) the manner of determining the 

amount available (definite or indefinite). 

budget year The fiscal year following the current fiscal year, and for which the new budget estimate is prepared. 

C 

cancelled case An FMS case (LOA) which was not accepted or funded within prescribed time limitations, or was 

accepted and subsequently cancelled by the requesting country or the U.S. government. In the latter case, the U.S. 

government or purchaser electing to cancel all (or part) of a case prior to the delivery of defense articles or the 

performance of services shall be responsible for all (or associated) termination costs. 

case An FMS contractual sales agreement between the United States of America. and an eligible foreign country or 

international organization documented by an LOA. An FMS case identifier is assigned for the purpose of 

identification, accounting, and data processing for each LOA. 

case amendment An amendment of an FMS case documented by an LOA amendment which constitutes a 

contracted scope change to an existing LOA. 

case description A short title specifically prepared for each FMS case by the implementing agency. 

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case designator A unique designator assigned by the implementing agency to each FMS case. The designator 

originates with the offer of a sale, identifies the case through all subsequent transactions, and is generally a threeletter designation, comprising the last element of the Case Identifier. 

case identifier A unique six digit identifier assigned to an FMS case for the purpose of identification, accounting, 

and data processing of each accepted LOA. The case identifier consists of the two-letter country code, a one letter 

designator for the DoD implementing agency, and a three-letter case designator. 

case modification Modification of a case documented by an LOA modification which constitutes an administrative 

or price change to an existing LOA, without revising the scope of the case. 

cash case [FMS] An FMS case for which the source of funding is directly provided by the purchaser, i.e., not

through a credit or grant agreement with the USG. 

cash in advance [FMS] Payment in U.S. dollars. 

cash prior to delivery [FMS] A term of sale in which the USG collects cash in advance of the delivery of defense 

articles and/or the performance of defense services from DoD resources. 

cash sales [FMS] An FMS case financed with purchaser funds other than non-repayable credit funds. 

 

cash with acceptance [FMS] A term of sale indicating that the purchaser forwards by check or wire transfer the 

full amount shown as the estimated total cost on the LOA. 

 

closed case An FMS case for which all materiel has been delivered, all services have been performed, all financial 

transactions, including all collections, have been completed, and the customer has received a final statement of 

account. If additional costs are identified at a later date, the FMS case can be re-opened. 

 

collections [FMS financial] Receipts in U.S. dollars from a purchasing country to pay for defense articles, 

services, or military training based on accepted FMS cases. 

commercial sale A sale of defense articles or defense services made by U.S. industry directly to a foreign buyer, 

and which is not administered by DoD through FMS procedures. Also referred to as a direct commercial sale. 

commercial-type items Any items, including those expended or consumed in use which, in addition to military use, 

are used and traded in normal civilian enterprise and which are, or can be, imported/exported through normal 

international trade channels. 

commitment Any communication between a responsible United States of America official and a representative 

foreign official (including officials of any international organization or supra-national authority) which reasonably

could be interpreted as being a promise that the U.S. will provide a foreign government (including international 

organizations or supra-national authorities) with either funds (including long term credit assignments), goods, 

services, or information. 

commitment [financial] A firm administrative reservation of funds based upon firm procurement directives, orders, 

requisitions, authorizations to issue travel orders, or requests which authorize the recipient to create obligations 

without further recourse to the official responsible for certifying the availability of funds. The act of entering into a 

commitment is usually the first step in the process of spending available funds. The effect of entering into a 

commitment and the recording of that commitment on the records of the allotment is to reserve funds for future 

obligations. A commitment is subject to cancellation by the approving authority if it is not already obligated. 

Commitments are not required under Operation and Maintenance appropriations. 

commodity group A grouping or range of items which possess similar characteristics, have similar applications, or 

are susceptible to similar supply management methods. 

 

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competitive proposals A method for awarding a United States of America government contract on a basis other 

than low bid, whereby the best and final offer may be obtained after discussions are concluded. 

completed case An FMS case for which all deliveries and collections have been completed, but for which a final

accounting statement (DD Form 645) has not been furnished to the purchaser. 

concurrent spare parts (CSP) These are spare parts programmed as an initial stockage related to a major item or

system. CSPs are normally shipped in advance of the release of the major item or system. 

constant year dollars A method of relating dollar values for various years by removing the annual effects of 

inflation and showing all dollars at the value they would have had in a selected base year. See also current year 

dollars.

constructive delivery [FMS] Completion of delivery of materiel to a carrier for transportation to a consignee, or 

delivery to a U.S. post office for shipment to a consignee. Delivery is evidenced by completed shipping documents

or listings of delivery at the U.S. post office. The delivery of materiel to the customer or the customer's designated 

freight forwarder at a point of production, testing, or storage at dockside, at staging areas, or at airports constitutes 

actual delivery. Also referred to as physical delivery. 

Continental United States (CONUS) United States of America territory, including the adjacent territorial waters, 

located within the North American Continent between Canada and Mexico. 

contract An agreement between two or more legally competent parties, in the proper form, on a legal subject matter 

or purpose, for a legal consideration. 

contract administration All the activities associated with the performance of a contract from pre-award to closeout. 

contract administration surcharge [FMS] A surcharge applied to all FMS purchases from procurement to cover 

the cost of contract administration, quality assurance and inspection, and contract audit. The surcharge percentage

depends upon any contract administrative reciprocal agreements with a particular purchasing country. 

contract authority Budget authority contained in an authorization bill that permits an agency of the federal 

government to enter into contracts or other obligations for future payments from funds not yet appropriated by

Congress. The assumption is that the necessary funds will be made available for payment in a subsequent 

appropriations act. 

contract/budget authority [FMS] Authority provided by law to enter into obligations in support of FMS cases 

without all of the cash necessary to liquidate the obligations. There are two basic types of budget authority resulting 

from the operation of the FMS program:

 a. contract/budget authority in the trust fund. This authority represents that portion of an FMS case 

which will be implemented in a current fiscal year. That portion of an FMS case that may not be implemented in a 

current fiscal year but is scheduled for a future year(s) is an uncommitted acceptance. Uncommitted acceptances 

are not budget authority but are reported in schedules attached to the "Report on Budget Execution." 

 

 b. contract/budget authority in DoD appropriation/fund account. In the direct program portion of the 

budget, this authority results from the appropriation process. For the reimbursable portion of the budget, the 

authority results from the receipt of customer orders. In the case of the FMS program, the customer order (and 

hence budget authority) results from receipt by the implementing agency of a reimbursable order issued by the 

DFAS-DE for all or a portion of an FMS case. 

contracting activity Each service designates certain commands as contracting activities. The subordinate command 

is that in which a principal contracting office is located. It may include the program office, related functional

support offices, and contracting offices. DoD FAR Supplement 2.1 lists the contracting activities. The Head of the 

contracting activity has certain approval and authority responsibilities. 

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conventional arms transfers (CAT) The transfer of nonnuclear weapons, aircraft, equipment, and military services 

from supplier states to recipient states. The USG views arms transfers as a useful foreign policy instrument to

strengthen collective defense arrangements, maintain regional military balances, secure U.S. bases, and compensate 

for the withdrawal of troops. U.S. arms may be transferred by grants, leases, loans, direct commercial sales, or 

government-to-government sales under FMS. 

cooperative logistics The logistics support provided a foreign government/agency through its participation in a 

United States Department of Defense logistics system, with reimbursement paid to the USG for the support

provided. [JCS Pub 1]

cooperative logistics sales Sales pursuant to arrangements wherein continuing support is provided a foreign 

government through its participation in a U.S. Department of Defense logistics system with reimbursement to the 

USG for the support performed. 

 

cooperative logistics supply support arrangements (CLSSA) Military logistics support arrangements designed to 

provide responsive and continuous supply support at the depot level for U.S.-made military materiel possessed by 

foreign countries and international organizations. The CLSSA is normally the most effective means for providing 

common repair parts and secondary item support for equipment of U.S. origin which is in allied and friendly 

country inventories. 

 

cooperative logistics support arrangement Procedural arrangements (cooperative logistics arrangements) and 

implementing procedures (supplementary procedures) which together support, define, or implement cooperative 

logistics understandings between the United States and a friendly foreign government. 

coproduction A program implemented by a government-to-government or commercial licensing arrangement

which enables a foreign government or firm to acquire the “know-how” to manufacture or assemble, repair, 

maintain and operate, in whole or in part, a defense item.

 

cost estimate A judgment or opinion regarding the anticipated cost of an object, commodity, or service. A cost

estimate is the result of an estimating procedure which specifies the expected dollar cost required to perform a 

stipulated task or to acquire an item. A cost estimate may constitute a single value or a range of values. 

Country Liaison Officer (CLO) An officer or non-commissioned officer (NCO) of a foreign military establishment 

selected by his or her government and attached to a MILDEP or DoD agency for the primary purpose of helping 

administer IMSs from his or her home country. For administrative purposes, the CLO is considered in a student

status. 

 

country team Senior members of USG agencies assigned to a U.S. diplomatic mission overseas, and subject to the 

direction and supervision of the Chief, U.S. Mission (Ambassador). Normally, such members meet regularly (i.e., 

weekly) to coordinate USG political, economic, and military activities and policies in the host country. 

 

credit Transactions approved on a case-by-case basis by the Departments of State, Treasury, and Defense, which 

allow repayment of military export sales for periods beyond 120 days after delivery of materiel or performance of 

service. [Sections 23 and 24, AECA]

 

credit arrangement An arrangement with a foreign government that the USG will advance a stipulated amount of 

credit for the financing of a Foreign Military Sale or a direct commercial sale to that government. 

credit case The use of USG appropriated funds from the Foreign Military Sales Financing Program (FMFP) 

account to finance a foreign country’s FMS purchases of U.S. defense articles or services. Credit funds may be in

the form of repayable loans or non-repayable grants. 

credit guaranty A guaranty to any individual corporation, partnership or other judicial entity doing business in the 

United States (excluding USG agencies other than the Federal Financing Bank) against political and credit risks of

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nonpayment arising out of their financing of credit sales of defense articles and defense services to eligible countries 

and international organizations. 

cross-leveling An accounting technique by which DFAS-DE transfers funds (cash receipts) from one FMS case to 

another FMS case. 

cross-servicing That function performed by one military service in support of another military service for which 

reimbursement is required from the service receiving support. 

current fiscal year See also fiscal year . 

current year The fiscal year in progress. 

current-year dollars Dollar values of a given year that include the effects of inflation or escalation for that year, or 

which reflect the price levels expected to prevail during the year at issue. Also referred to as escalated dollars or 

then-year dollars. 

D 

defense article As defined in Section 644(d), FAA and Section 47(3), AECA, includes any weapon, weapons 

system, munition, aircraft, vessel, boat, or other implement of war; any property, installation, commodity, materiel, 

equipment, supply, or goods used for the purposes of furnishing military assistance or making military sales; any 

machinery, facility, tool, material, supply, or other item necessary for the manufacture, production, processing, 

repair, servicing, storage, construction, transportation, operation, or use of any other defense article or any

component or part of any articles listed above, but shall not include merchant vessels, or as defined by the Atomic

Energy Act of 1954, as amended (42 U.S.Code 2011), source material, by-product material, special nuclear 

material, production facilities, utilization facilities, or atomic weapons or articles involving Restricted Data. 

Defense Automatic Addressing System (DAAS) The DAAS functions as an automated system for routing logistics 

data traffic and provides document processing and data information services. 

Defense Contract Management Command (DCMC) An agency under the direction of the Director of the Defense 

Logistics Agency, which provides unified contract administration services to DoD components and NASA, for all

contracts except those specifically exempted. In 1990, DCMC superseded the Defense Contract Administration 

Service (DCAS). 

 

defense information As defined in Section 644(e), FAA, the term defense information includes any document,

writing, sketch, photograph, plan, model, specification, design, prototype, or other recorded or oral information 

relating to any defense article or defense service, but shall not include Restricted Data as defined by the Atomic

Energy Act of 1954, as amended, or data removed from the Restricted Data category under Section 142d of that

Act. 

Defense Institute of Security Assistance Management (DISAM) The centralized DoD school for the consolidated 

professional education of personnel involved in security assistance management. DISAM is located at WrightPatterson AFB, Ohio, and provides an array of resident and non-resident instruction for both USG and foreign 

government military and civilian personnel as well as for defense contractor and industry personnel. 

Defense Security Cooperation Agency (DSCA) The agency that performs administrative management, program

planning, and operations functions for U.S. military assistance programs at the DoD level under the policy direction 

of the Assistant Secretary of Defense (International Security Affairs). 

 

defense service As defined in Section 644(f), FAA and Section 47(4), AECA, the term defense service includes any

service, test, inspection, repair, training, publication, technical or other assistance, or defense information used for 

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the purpose of furnishing military assistance or FMS, but does not include military education and training activities 

or design and construction services under Section 29, AECA. 

 

defense stock The term defense stock includes defense articles on hand which are available for prompt delivery. It

also includes defense articles under contract and on order which would be available for delivery within a reasonable 

time from the date of order by an eligible foreign government or international organization without increasing 

outstanding contracts or entering into new contracts. Any orders received from an eligible foreign government or 

international organization which cannot be filled in this manner fall within the provisions of Section 22 of the Arms

Export Control Act which requires such orders to be filled under new procurement contracts. 

 

defined order case These are FMS cases characterized by orders for specific defense articles and services which 

are separately identified line items on the LOA. 

 

delivered case See completed case.

 

delivery Includes constructive or actual delivery of defense articles; also, includes the performance of defense 

services for the customer or requisitioner, as well as surcharges, when they are normally recorded in the billing and

collection cycle immediately following performance. 

delivery forecasts Periodic estimates of contract production deliveries used as a measure of the effectiveness of 

production and supply availability scheduling and as a guide to corrective actions to resolve procurement or 

production bottlenecks. These forecasts provide estimates of deliveries under obligation against procurement from

appropriated or other funds. 

dependable undertaking [FMS] A firm commitment by a foreign government or international organization to pay

the full amount of a contract for new production or for the performance of defense services which will assure the 

U.S. against any loss on such contract and to make funds available in such amounts and at such times as may be 

required by the contract, or for any damages and costs that may accrue from the cancellation of such a contract, 

provided that in the judgment of the DoD there is sufficient likelihood that the foreign government or international

organization will have the economic resources to fulfill the commitment. 

depot level maintenance Maintenance performed on material requiring a major overhaul or a complete rebuilding 

of parts, assemblies, subassemblies, and end items, including the manufacture of parts, modification, testing, and 

reclamation as required. Provides more extensive shop facilities and equipment and personnel of higher technical 

skill than are normally available at the lower levels of maintenance, i.e., organizational and intermediate level 

maintenance. 

designated country representative A person or persons duly authorized by a foreign government to act on behalf of 

that government to negotiate, commit, sign contractual agreements, and/or accept delivery of materiel. 

 

direct cite Citation of the FMS Trust Fund as the financing source on documents. Also see reimbursable financing

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direct commercial sale See commercial sale.

direct cost Any cost that is specifically identified with a particular final cost objective. Such costs are not 

necessarily limited to items that are incorporated into the end product as labor or materiel. 

disbursements [gross and net] Gross disbursements represent the amount of checks issued, cash, or other 

reimbursable transactions processed, payments made, less refunds received. Net disbursements represent gross 

disbursements less income collected and credited to the appropriation of fund account, such as amounts received for 

goods and services provided. Also see outlays and expenditures

disclosure authorization An authorization by an appropriate U.S. military department authority which is required

prior to the disclosure of classified information to foreign nationals who are cleared by their governments to have 

access to classified information. 

distributed costs Costs which have been identified or allocated to an FMS case or cases. 

DoD acquisition system A single uniform system whereby all equipment, facilities, and services are planned,

designed, developed, acquired, maintained, and disposed of within the Department of Defense. The system

encompasses establishing and enforcing policies and practices that govern acquisitions, to include documenting 

mission needs and establishing performance goals and baselines; determining and prioritizing resource requirements 

for acquisition programs; planning and executing acquisition programs; directing and controlling the acquisition 

review process; developing and assessing logistics and implications; contracting; monitoring the execution status of 

approved programs; and reporting to Congress. 

DoD Activity Address Directory System (DODAADS) The DODAADS provides data elements, identification 

codes, and clear text addresses of organizational activities needed for materiel requisitioning, marking, shipping

document preparation, billing and similar applications. 

DoD components These include all of the following: the Office of the Secretary of Defense (OSD); the Military 

Departments; the Joint Chiefs of Staff (JCS); the Unified and Specified Commands; the Office of the Inspector 

General, Department of Defense (OIG/DoD); the Defense Agencies, to include the Strategic Defense Initiative 

Organization (SDIO); and DoD Field Activities. 

 

DoD direct credit [FMS] A long-term credit for an FMS purchase which is directly financed from an appropriation 

or account available for that purpose. Authority is Section 23 of the Arms Export Control Act, as amended, or 

pertinent earlier legislation.

E 

earmarking of stocks The arrangement whereby nations agree, normally in peacetime, to identify a proportion of 

selected items of their war reserve stocks to be called for by specified NATO commanders under emergency

conditions. 

economic lot size That number of units of material or a manufactured item that can be purchased or produced 

within the lowest unit-cost range. Its determination involves reconciling the decreasing trend in unit preparation 

cost and the increasing trend in unit costs of storage, interest, insurance, depreciation, and other costs incident to

ownership, as the size of the lot is increased. 

economic order quantity (EOQ) The most economical quantity of parts to order at one time to support a defined 

production rate, considering the applicable procurement and inventory costs. 

 

Economic Support Fund (ESF) A USG Program through which economic assistance is provided on a loan or 

grant basis, to selected foreign governments having unique security problems, which are of strategic concern to the 

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U.S. The funds may be used to finance imports of commodities, capital, or technical assistance in accordance with 

the terms of a bilateral agreement; counterpart funds thereby generated may be used as budgetary support. These 

funds enable a recipient to devote more of its own resources to defense and security purposes than it otherwise 

could do without serious economic or political consequences. (Formerly termed “Security Supporting Assistance.”) 

economies of scale Reductions in the unit cost of output resulting from the production of additional units. Such 

economies stems from: (1) an increased specialization of labor as the volume of output increases; (2) decreased unit

costs of materials; (3) better utilization of management; (4) the acquisition of more efficient equipment; and (5) a 

greater use of by-products. 

eligible recipient [security assistance] Any friendly foreign country or international organization determined by the 

President to be eligible to purchase or receive (on a grant basis) U.S. defense articles and defense services, unless 

otherwise ineligible due to statutory restrictions. 

end item (EI) A final combination of end products, component parts, and/or materials which is ready for its

intended use, e.g., aircraft, ship, tank, mobile machine shop. 

 

engineering change proposal (ECP) A proposal to a responsible authority recommending that a change to an 

original item of equipment be considered, and the design or engineering change be incorporated into the article to

modify, add to, delete, or supersede original parts. 

English Comprehension Level (ECL) examination A test of the overall proficiency of foreign military students in

English language listening and reading. A minimum entry level for each DoD course of instruction is set by the 

military departments (MILDEPs) on the basis of course level difficulty and hazard factors. 

equipment A major subdivision of a weapon system or subsystem that performs a function impacting the 

operational capability and readiness of the weapon system/subsystem. It is grouped into two general categories, 

mission equipment and support equipment. Equipment does not denote bit-part pieces, components, or elements 

that comprise an equipment entity. 

estimated actual charges A systematic and documented estimate of actual costs. The procedure is used in the 

absence of an established cost accounting system and the procedure is sometimes referred to as a cost finding 

technique. 

 

excess defense articles (EDA) Defense articles owned by the United States Government which are neither procured 

in anticipation of military assistance or sales requirements, nor procured pursuant to a military assistance or sales 

order. EDA are items which are in excess of the Approved Force Acquisition Objective and Approved Force 

Retention Stock of all Department of Defense Components at the time such articles are dropped from inventory by

the supplying agency for delivery to countries or international organizations. 

execution The operation of carrying out a program as contained in the approved budget. Often referred to as 

budget execution. 

Executive Order A rule or regulation, issued by the President, a governor, or some other administrative authority, 

that has the effect of law. Executive orders are used to implement and give administrative effect to provisions of the 

Constitution, to treaties, and to statutes. They may be used to create or modify the organization or procedures of

administrative agencies or may have general applicability as law. Under the national Administrative Procedure Act 

of 1946, all executive orders must be published in the Federal Register. 

expendable supplies and material Supplies which are consumed in use, such as ammunition, paint, fuel, cleaning 

and preserving materials, surgical dressings, drugs, medicines, etc., or which lose their identity, such as spare parts, 

etc. Sometimes referred to as consumable supplies and material. 

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expenditure authority (EA, as used in FMS) A document or authority from DFAS-DE to an FMS case 

implementing DoD component which allows expenditures against obligations previously recorded against an FMS 

case. The disbursing activity must ensure that cash is available prior to processing the disbursement. 

expenditures The actual spending of money as distinguished from the appropriation of funds. Expenditures are 

made by the executive branch; appropriations are made only by Congress. The two rarely are identical in any fiscal

year. In addition to some current budget authority, expenditures may represent prior budget authority made 

available one, two, or more years earlier. See also disbursements. 

extended offer [FMS] An FMS offer for which a reply from the buyer has not been received within the time limit 

specified on the LOA but which remains in effect pending clarification of its status. 

F 

Federal Acquisition Regulation (FAR) The FAR is the primary regulation for use by federal executive agencies 

for the acquisition of supplies and services with appropriated funds. 

field training services (FTS) A generic term that refers to either engineering and technical services, contract field 

services, or both. 

 

financing appropriation The appropriation account originally increased as a result of the performing DoD 

Component's acceptance of a reimbursable order from DFAS-DE. This activity is reflected as "FMS 

reimbursables." (See reimbursable financing.) 

financing, type of [FMS] The method by which the U.S. Government is authorized to sell defense articles and 

services under the Arms Export Control Act (e.g., cash with acceptance, dependable undertaking, credit etc.). The 

type of financing is reflected through an entry of the proper term(s) of sale on the LOA. 

fiscal year Accounting period beginning 1 October and ending 30 September of the following year. The fiscal year 

is designated by the calendar year in which it ends. Fiscal Year 1991 begins on 1 October 1990 and ends 30 

September 1991. 

fixed costs Costs that do not vary with the volume of business, such as property taxes, insurance, depreciation, 

security, and minimum water and utility fees. 

flyaway costs The costs related to the production of a useable end item of military hardware. Flyaway cost include 

the cost of procuring the basic unit (airframe, hull, chassis, etc.), a percentage of basic unit for changes allowance, 

propulsion equipment, electronics, armament, and other installed government-furnished equipment, and 

nonrecurring production costs. Flyaway cost equates to Rollaway and Sailaway costs. 

follow-on training Sequential training following an initial course of training.

Foreign Assistance Act (FAA) of 1961 The basic law providing the authority and the general rules for the conduct

of foreign assistance grant activities/programs by the USG. 

foreign liaison officer (FLO) An official representative, either military or civilian, of a foreign government or 

international organization stationed in the United States normally for the purpose of managing or monitoring 

security assistance programs. 

 

foreign military sales (FMS) That portion of U.S. security assistance authorized by the Arms Export Control Act,

as amended, and conducted on the basis of formal contracts or agreements between the United States Government

and an authorized recipient government or international organization. FMS includes government-to-government

sales of defense articles or defense services, from DoD stocks or through new procurements under DoD-managed 

contracts, regardless of the source of financing. 

P-23 
 

foreign military sales (FMS) case United States of America Letter of Offer and Acceptance (LOA) which has been 

accepted by a foreign country. 

Foreign Military Sales Order (FMSO) A terms used to describe LOAs which implement Cooperative Logistics 

Supply Support Arrangements. Two LOAs are written: a FMSO I and a FMSO II. 

Foreign Military Sales Order No. I (FMSO No. I) Provides funding for the pipeline capitalization of a cooperative 

logistics support arrangement, which consists of stocks on hand and replenishment of stocks on order in which the 

participating country buys equity in the U.S. supply system for the support of a specific weapons system. Even 

though stocks are not moved to a foreign country, delivery (equity) does in effect take place when the country pays 

for the case. 

 

Foreign Military Sales Order No. II (FMSO No. II) Provides for the replenishment of withdrawals of 

consumption-type items (repair parts, primarily) from the DoD supply system to include charges for accessorial 

costs. A cutomer buying an item on a FMSO II case creates the funds source for buying another item in the FMSO 

I pipeline 

 

Foreign Military Sales Planning Directive (DD Form 2061) A working paper that provides an identification of the 

cost elements included in the prices on an LOA; provides a time-phased plan for the execution of an LOA; and, 

identifies procurement/ reimbursement appropriations/ funds. 

formal training [military] Training (including special training) in an officially designated course. It is conducted 

or administered according to an approved program of instruction. This training generally leads to a specific skill in 

a certain military occupational specialty. 

 

G 

General Accounting Office (GAO) An agency of the legislative branch, responsible solely to the Congress, which 

functions to audit all negotiated government contracts and investigate all matters relating to the receipt, 

disbursement, and application of public funds. The GAO determines whether public funds are expended in

accordance with appropriations, and recommends to Congress various policies and procedures to be enacted into 

law to provide oversight and governance of government spending. 

generic code (GC) A three-digit code identified in the Military Articles and Services List (MASL) which represents 

the type of materiel or services to be furnished according to a specific budget activity/project account classification. 

May related to the federal supply class (1st four positions of the NSN). 

government furnished equipment (GFE) Items in the possession of, or acquired by the USG, and delivered to or 

otherwise made available to a contractor. 

government furnished materiel (GFM) USG property which may be incorporated into, or attached to an end item

to be delivered under a contract or which may be consumed in the performance of a contract. It includes, but is not

limited to, raw and processed material, parts, components, assemblies, small tools, and supplies. 

government furnished property (GFP) Property in the possession of, or acquired directly by the USG, and 

subsequently delivered to or otherwise made available to the contractor. 

government-owned, contractor-operated (GOCO) facility A manufacturing plant that is owned by the 

Government and operated under contract by a non-government, private firm. 

government-owned, government-operated (GOGO) facility A manufacturing plant that is both owned and operated 

by the Government. 

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grant A form of assistance involving a gift of funds, equipment, and/or services which is furnished by the USG to

selected recipient nations on a free, nonrepayable basis. 

H 

holding account An account established for each country/international organization for the purpose of recording 

and safeguarding unidentified and certain earmarked funds for future use. 

I 

implementation date [FMS] The date when supply action on an FMS case is initiated or directed by an 

implementing agency. 

implementing agency (IA) The U.S. Military Department or Defense Agency responsible for the execution of 

military assistance programs. With respect to FMS, the Military Department or Defense Agency assigned

responsibility by the Defense Security Assistance Agency to prepare an LOA and to implement an FMS case. The 

implementing agency is responsible for the overall management of the actions which will result in delivery of the 

materials or services set forth in the LOA which was accepted by a foreign country or international organization. 

indirect cost Costs which are incurred for common or joint objectives, and which are not as readily subject to 

treatment as direct costs. See also direct costs. 

indirect offset A general type of industrial or commercial compensation practice required of a contractor by a 

purchasing government as a condition for the purchase of defense articles/services. The form of compensation, 

which generally offsets a specific percentage of the cost of the purchase, is unrelated to the items purchased, and 

may include contractor purchases of commodities and manufactured goods produced in the purchasing country. 

Informational Program (IP) The DoD Informational Program (IP) that affords an opportunity for IMSs to become

familiar with the United States, the social, cultural, and political institutions of the U.S., and its people and their 

ways of life. The IP further increases IMSs' awareness of the U.S. commitment to basic principles of 

internationally-recognized human rights. 

initial deposit [FMS] Money transferred to the credit of the Treasurer of the United States or other authorized 

officer at the time of acceptance of an FMS case (LOA) as full or partial payment for defense articles, services, or 

training contracted for by an eligible foreign country. 

interfund billing system (reimbursable) Under IBS, a selling activity will credit the appropriation or fund which 

owns the materiel and/or finances the accessorial charges at the time of billing the ordering activity, and will charge 

the appropriations/funds of the ordering activity. IBS normally encompasses all supply system sales and purchases 

of materiel, including perishable substances, bulk petroleum, oil, lubricants, and aviation fuel. Reimbursable sales 

will be billed at the time items are dropped from inventory except that billings for sales under FMS will be based on 

constructive delivery. [DODI 7420.12]

international logistics support The provision of military logistics support by one participating nation to one or 

more participating nations, whether with or without reimbursement. 

international military education and training (IMET) order A document issued by the Defense Security 

Cooperation Agency (DSCA) to authorize and direct the delivery of defense articles or the furnishing of defense 

services (including military training) to designated grant aid (IMET) recipients. The IMET order identifies the 

funding source for each program line of a country program (IMET program). 

 

international military education and training (IMET) program The portion of the U.S. security assistance 

program which provides training to selected foreign military and defense associated civilian personnel on a grant 

basis. Training is provided at U.S. military facilities and with U.S. Armed Forces in the U.S. and overseas, and

P-25 
through the use of Mobile Training Teams. Training also may be provided by contract technicians, contractors 

(including instruction at civilian institutions), or by correspondence courses. The IMET Program is authorized by 

the Foreign Assistance Act of 1961 (FAA), as amended. 

 

International Military Student (IMS) A national of a foreign government, with military or civilian status of that 

government, who is receiving education or training or is touring USG activities under the sponsorship of the 

security assistance training program (SATP). 

inventory control That phase of military logistics which includes managing, cataloging, requirements 

determinations, procurement, distribution, overhaul, and disposal of materiel. 

inventory control point (ICP) The organizational element within a DoD system which is assigned responsibility for 

materiel management of a group of items including such management functions as the computation of requirements, 

the initiation of procurement or disposal actions, distribution management, and rebuild direction.

investment cost The cost of equipment, supplies and services that improve the capability of a force, including initial 

unit equipment, war reserves of equipment and ammunition, concurrent spare parts, and initial spare parts stockage

levels. Also includes replacement costs for obsolescent and attrited equipment, rebuild and modernization costs for 

newly provided equipment, projects programmed as dollar value lines to facilitate administration, and training costs 

associated with the introduction of new equipment or an improved capability. 

invitational travel order (ITO) A written authorization for international military students to travel to, from, and

between U.S. activities for the purpose of training under an approved and funded IMET or FMS program. 

item identification number A seven-character identifier assigned to each line of training in the MASL. The first 

character is a letter which identifies the MILDEP offering the training (B-Army, P-Navy, D-Air Force). The 

following six characters are numbers that identify the specific item of training. The identification number is used in

all FMS and IMET training programs and implementation documents. 

item manager (IM) An individual within the organization of an inventory control point or other such organization 

assigned management responsibility for one or more specific items of materiel. 

item number See line item number. 

J 

[None at this time.] 

L 

lease (security assistance) An agreement for the temporary transfer of the right of possession and use of a nonexcess defense article or articles to a foreign government or international organization, with the lessee agreeing to

reimburse the USG in U.S. dollars for all costs incurred in leasing such articles, and to maintain, protect, repair, or

restore the article(s), subject to and under the authority of Section 61, AECA (Title 22 U.S.C 2796). 

letter of offer and acceptance (LOA) the United States of America Letter of Offer and Acceptance (LOA) by 

which the U.S. Government offers to sell to a foreign government or international organization U.S. defense articles 

and defense services pursuant to the Arms Export Control Act, as amended. The LOA lists the items and/or 

services, estimated costs, and the terms and conditions of sale; it also provides for the signature of an appropriate

foreign government official to indicate acceptance. 

letter of request (LOR) The term used to identify a request from an eligible FMS participant country for the 

purchase of U.S. defense articles and services. The request may be in message or letter format. 

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liabilities Amounts of money owed to others for goods and services received, or for assets acquired. Liabilities 

include accrued amounts earned but not yet due for payment, and progress payments due to contractors. 

life cycle The total phases through which an item/system passes from the time it is initially developed until 

disposal. 

life cycle cost The total costs to the government of acquisition and ownership of a system over its useful life. It 

includes the costs of development, acquisition, support, and, where applicable, disposal. 

limited rights Involves the rights to use, duplicate, or disclose technical data (TD) in whole or in part, by or for the 

Government, with the express written permission of the party furnishing the TD to be (1) released or disclosed

outside the Government; (2) used by the Government for manufacture (or if software documentation, for preparing 

the same or similar software); or (3) used by a party other than the Government except under certain restricted 

circumstances. 

line item number A code which identifies a detail line item on the LOA. This code is perpetuated on the FMS 

customers’ bill. 

 

loan An agreement for the temporary transfer of the right of possession and use of a defense article or articles not

acquired with military assistance funds to a foreign government or international organization, at no rental charge to 

the transferee, subject to and under authority of the FAA, Section 503. Also, applies to loans to a NATO or major 

non-NATO ally of materials, supplies, or equipment for the purpose of carrying out a program of cooperative 

research, development, testing, or evaluation subject to and under the authority of Section 65, AECA. Also 

involves the transfer of funds from one economic entity to another (e.g., government to government, individual to 

individual, or bank to individual) which must be repaid with interest over a prescribed period of time. 

logistics The science of planning and carrying out the movement and maintenance of forces. In its most

comprehensive sense, involves those aspects of military operations which deal with: (a) design and development, 

acquisition storage, movement, distribution, maintenance, evacuation, and disposition of materials; (b) movement, 

evacuation, and hospitalization of personnel; (c) acquisition or construction, maintenance, operation, and disposition 

of facilities; and (d) acquisitioning or furnishing of services. 

logistics support charge (LSC) A charge based on the Arms Export Control Act (AECA) requirement for full cost

recovery. This charge is intended to recover the cost of logistics support involved in providing the spares and other 

items required to maintain a weapon system. These support costs are associated with production control, requisition 

processing, inventory maintenance, administration of Reports of Discrepancy (ROD), and logistics management. 

The LSC is applied by the DFAS-DE to delivery costs for those lines in FMS cases which have been identified as 

support lines based on the generic code included in the LOA. 

P-27 
long-lead items/long-lead time materiels Those components of a system or piece of equipment for which the times 

to design and fabricate are the longest, and therefore, to which an early commitment of funds may be desirable in

order to meet the earliest possible date of system completion. Might be ordered during full scale development

(FSD) to arrive in time for production start. 

M 

maintainability The ability of an item to be retained in or restored to specified conditions when maintenance is 

performed by personnel having specified skill levels, using prescribed procedures and resources, at each prescribed 

level of maintenance and repair. 

maintenance The upkeep of property, necessitated by wear and tear, which neither adds to the permanent value of 

the property nor appreciably prolongs its intended life, but keeps it in efficient operating condition. Normally 

includes "repair" but in Defense, in the case of real property, is distinguished from repair through being limited to

the recurrent, day-to-day periodic, or scheduled work required to preserve or restore a real-property facility to such

condition that it may be effectively utilized for its designated purpose. The term “preventive maintenance” involves 

deterring something from going wrong; the term “corrective maintenance” involves restoring something to its 

proper condition. 

major defense equipment (MDE) Any item of significant military equipment on the United States Munitions List 

having a nonrecurring research and development cost of more than $50 million or a total production cost of more 

than $200 million. 

 

major line item A program line for which the requirement is expressed quantitatively as well as in dollars. These 

lines are identified in the military articles and services list(s) (MASL) by a unit of issue (XX) other than dollars. 

 

materiel management Direction and control of those aspects of logistics which deal with materiel, including the 

functions of identification, cataloging, standardization, requirements determination, procurement, inspection, quality 

control, packaging, storage, distribution, disposal, maintenance, mobilization planning, industrial readiness 

planning, and item management classification; encompasses materiel control, inventory control, inventory

management, and supply management. 

memorandum of agreement (MOA) or memorandum of understanding (MOU) A written agreement between

governments or a government and international organization signed by authorized representatives and signifying an 

intent to be legally bound. 

military articles and services list (MASL) A catalogue of materiel, services, and training used in the planning and 

programming of Military Assistance Program (MAP), International Military Education and Training (IMET), and

Foreign Military Sales (FMS). Separate MASLs are maintained for IMET and FMS training which provide data on

course identification, course availability, price, and duration of training.

 

Military Assistance Advisory Group (MAAG) A joint service group based overseas which primarily administers 

United States military assistance planning and programming in a host country. The term MAAG encompasses Joint 

U.S. Military Advisory Groups, Military Missions, Military Assistance Groups, U.S. Military Groups, and U.S. 

Military Representatives exercising responsibility within a U.S. Diplomatic Mission for security assistance and 

other related DoD matters. Defense Attachés are included only when specifically designated as having security

assistance functions. See also security assistance organization.

 

Military Assistance Program Address Directory (MAPAD) The MAPAD provides clear text addresses of country

representatives, freight forwarders, and customer-within-country required for releasing FMS and MAP shipments 

processed in accordance with military standard requisitioning and issuing procedures (MILSTRIP), and addresses 

required for the forwarding of related documentation. 

 

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military export sales All sales of defense articles and defense services made from U.S. sources to foreign 

governments, foreign private firms, and international organizations, whether made by DoD or by U.S. industry

directly to a foreign buyer. Such sales fall into two major categories: Foreign Military Sales and Commercial Sales. 

military standard billing system (MILSBILLS) This system provides data elements, codes, standard mechanized 

procedures, and formats for use by DoD Components for billing, collecting and related accounting for sales from

system stocks, including direct deliveries. The mechanized procedures apply to FMS as outlined in DODI 7420.12 

(regarding Interfund Billing System). 

military standard contract administration procedures (MILSCAP) Provides uniform procedures, rules, formats, 

time standards and standard data elements and codes for the interchange of contract-related information between 

and among DoD components and contractors. 

 

military standard requisitioning and issue procedures (MILSTRIP) A uniform procedure established by the 

Department of Defense to govern the requisition and issue of materiel within standardized priorities. 

military standard transaction reporting and accounting procedures (MILSTRAP) Prescribes uniform procedures, 

data elements, codes, documents, and time standards for the flow of inventory accounting information pertaining to

receipt, issue, and adjustment actions, between inventory control points, stock control/activities, storage sites, and 

posts or bases. 

 

military supply and transportation evaluation procedures (MILSTEP) Provides a standard method for the 

preparation and collection of basic data necessary to measure supply system performance and transportation 

effectiveness. 

 

mobile education team (MET) A team of U.S. DoD personnel on temporary duty in a foreign country for the 

purpose of training foreign personnel in resource management. Teams normally funded from Expanded IMET 

Program. 

mobile training team (MTT) A team of U.S. DoD personnel on temporary duty in a foreign country for the purpose 

of training foreign personnel in the operation, maintenance, or other support of weapon systems and support

equipment, as well as training for general military operations. MTTs may be funded from either FMS or IMET 

Programs. 

 

munitions list The U.S. Munitions List is an enumeration of defense articles and defense services and is published 

in the Department of State’s International Traffic in Arms Regulations. 

N 

national stock number a 13-digit stock number consisting of a 4-digit Federal Supply Classification and a 9-digit

National Item Identification Number. 

 

net case value Amount of the estimated cost reflected on the LOA and its amendments/modifications. 

nonrecurring costs (NRC or NC) Those costs funded by an RDT&E appropriation to develop or improve a product

or technology either through contract or in-house effort. Also, those one-time costs incurred in support of previous 

production of a specified model and those costs incurred in support of a total projected production run. 

nonrecurring demands a one-time requisition from a customer which is not used to compute demand-based 

requirements. 

 

nonrepayable credits/loans Grant funds appropriated by the Congress of the United States of America for use in

the Foreign Military Financing Program under Title III of the annual Foreign Operations Appropriations Act. 

Formerly termed” forgiven credits/loans,” these grant funds are allocated to selected countries for their use in

P-29 
financing FMS acquisitions of defense articles, defense services, and training under the authority of Section 23, 

AECA. Additionally, certain countries may be authorized these grant funds to finance Direct Commercial Sales. 

nonstandard article For FMS purposes, a nonstandard article is one that the DoD does not manage, either because 

an applicable end item has been retired or because it was never purchased for DoD components. 

nonstandard item An item of supply determined by standardization action as not authorized for procurement.

nonstandard service For FMS purposes a nonstandard service is a service that the DoD does not routinely provide 

for itself or for purchase. 

O 

 

obligation A duty to make a future payment of money. The duty is incurred as soon as an order is placed, or a 

contract is awarded for the delivery of goods and the performance of services. It is not necessary that goods 

actually be delivered, or services actually performed, before the obligation is created; neither is it necessary that a 

bill, or invoice be received first. The placement of an order is sufficient. An obligation legally encumbers a 

specified sum of money which will require an outlay or expenditure in the future. 

obligational authority Authority, from DFAS-DE to the implementing agency, allowing obligations to be 

incurred against a country’s Trust Fund in an amount not to exceed the DFAS-DE established value. 

obligations Amounts of orders placed, contracts awarded, services received, and similar transactions during a given 

period requiring the future payment of money. Such amounts include adjustments for differences between 

obligations previously recorded and accrued expenditures of actual payments. 

offer date The date which appears on the offer portion of an LOA and which indicates the date on which an FMS 

offer is made to a foreign buyer. 

Office of Defense Cooperation (ODC) A Security Assistance Organization limited to three U.S. military and DoD 

civilian members for the performance of security assistance functions. Where necessary, the Chief of the 

Diplomatic Mission may request up to three additional members to perform such functions. See also security 

assistance organization. 

 

omnibus billing statement of account A statement of additional charges or credits to cases that have been 

recategorized from active to inactive status. 

 

open sales case An FMS case which is designated as open as long as any portion of the transaction is incomplete, 

i.e., delivery of materiel, performance of services, financial transactions, or rendering of the final statement of 

accounts. 

open sales offer An FMS offer made to a foreign purchaser which is pending acceptance. 

 

operation & maintenance (O&M) costs Costs associated with equipment, supplies, and services required to train, 

operate, and maintain forces in a recipient country, including the cost of spare parts other than concurrent spares and 

initial stockages, ammunition and missiles used in training or replacements for such items expended in training or 

operations, rebuild and overhaul costs (excluding modernization) of equipment subsequent to initial issue, training

and other services that do not constitute investment costs, and administrative costs associated with overall program

management and administration. 

ordering activity An activity which originates a requisition or order for procurement, production, or performance of 

work or service by another activity. 

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outlays Actual expenditures. Checks issued, interest occurred on the public debt, or other payments. Total budget

outlays consist of the sum of the outlays from appropriations and other funds in the budget, less receipts (i.e., 

refunds and reimbursements). 

outside CONUS All geographic areas not within the territorial boundaries of the continental United States of 

America. OCONUS includes Hawaii and Alaska. 

overhead costs See indirect costs.

overseas training Training provided foreign nationals at training installations outside the U.S. 

P 

packing, handling, storage, & transportation (PHS&T) The resources, processes, procedures, design 

considerations, and methods to ensure that all system, equipment, and support items are preserved, packaged, 

handled, and transported properly, including: environmental considerations, equipment preservation requirements 

for short-and-long-term storage, and transportability. One of the principle elements of integrated logistics support 

(ILS). 

payment on delivery [FMS] An FMS term of sale in which the USG issues a bill to the FMS purchaser at the time 

of delivery of defense articles or the rendering of defense services from DoD resources. This term may only be 

used pursuant to a written statutory determination by the Director, DSCA, who may find it in the national interest to

authorize such payment. Based on Presidential action, this term may also be modified to read “Payment 120 Days

After Delivery.” 

payment schedule List of dollar amounts and when they are due from the foreign customer. The payment schedule 

supplements the LOA presented to the customer. After acceptance of the LOA, the payment schedule generally 

serves as the basis for billing to the customer. Changes in the estimated costs of an FMS case may require changes 

in the accompanying payment schedule. 

performing activity An activity which is responsible for performing work or service, including the production of 

material and/or the procurement of goods and services from other contractors and activities. 

pipeline That portion of accepted security assistance program orders for defense articles and services, for which 

delivery, either constructive or actual, has not occurred, or services have not been rendered. 

 

price and availability (P&A) data Prepared by the MILDEPs, DSCA, and other DoD components in response to a 

foreign government’s request for preliminary data for the possible purchase of a defense article or service. P&A 

data are not considered valid for the preparation of an LOA. Furnishing of this data does not constitute a 

commitment for the USG to offer for sale the articles and services for which the data are provided.

procuring activity See contracting activity.

procurement lead time The interval in months between the initiation of procurement action and receipt into the 

supply system of the production model (excluding prototypes) purchased as the result of such actions; procurement

leadtime is composed of two elements, production lead time, and administrative lead time. 

procuring contracting officer (PCO) The individual authorized to enter into contracts for supplies and services on 

behalf of the government by detailed bids or negotiations and who is responsible for overall procurement under 

such contracts. 

production lead time the time interval between the placement of a contract and receipt into the supply system of 

materiel purchased. 

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professional military education (PME) Career training designed to provide or enhance leadership and the recipient

force’s capabilities to conduct military planning, programming, management, budgeting, and force development to 

the level of sophistication appropriate to that force. 

program management review (PMR) A management level review held by a Systems Program Office or Systems 

Program Manager for the purpose of determining the status of an assigned system. PMRs are designed as tools to

identify problems, if any, and to develop appropriate follow-up actions as required. 

progress payments Those payments (disbursements) made to contractors or DoD industrial fund activities as work 

progresses under a contract; payments are made on the basis of cost incurred or percentage of work completed, or of 

a particular stage of completion accomplished prior to actual delivery and acceptance of contract items. 

 

Q 

quality assurance (QA) A planned and systematic pattern of all actions necessary to provide confidence that

adequate technical requirements are established, that products and services conform to established technical

requirements, and that satisfactory performance is achieved. 

R 

rationalization, standardization & interoperability (RSI) Any action that increases the effectiveness of NATO 

Forces through more efficient or effective use of defense resources committed to the Alliance. 

reciprocal defense procurement Procurement actions which are implemented under memoranda of 

understanding/memoranda of agreement (MOU/MOA) between the U.S. and various participating nations whereby

the participants agree to effect complementary acquisitions of defense articles from each other's country. 

record serial number (RSN) [obsolete terminology] See item number. 

reimbursable transactions Transactions utilized on internal U.S. DoD documents whereby no check is drawn.

Funds are moved from one fund cite to another without the cost of writing check, thus, no check drawn procedure. 

See also direct citation. 

 

reimbursements Amounts received by an activity for the cost of material, work, or services furnished to others, for 

credit to an appropriation or their fund account. 

reorder point The point at which time a stock replenishment requisition is submitted to maintain the predetermined

stock age objective. 

 

repair and replace [FMS] Programs by which eligible Cooperative Logistics Supply Support Arrangement

(CLSSA) customers return repairable carcasses to the U.S. and receive a serviceable item without awaiting the 

normal repair cycle timeframe. The concept is that the replacement involves an exchange of CLSSA customerowned stocks in the customer's hands and the CLSSA customer-owned stocks in the USG inventory in the U.S. 

Countries are initially charged the estimated repair cost, with adjustment to the actual repair cost upon completion 

of repair of the carcass. 

repair and return Programs by which eligible foreign countries return unserviceable repairable items for entry into 

the U.S. Military Department repair cycle. Upon completion of repairs, the same item is returned to the country and 

the actual cost of the repair is billed to the country. 

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reparable item An item that can be reconditioned or economically repaired for reuse when it becomes 

unserviceable 

replenishment The purchase of item following the initial purchase, whether bought for the initial support of 

additional end items, stock replenishment, or other purposes. 

reprogramming The transfer of funds between program elements or line items within an appropriation. 

research and development Those program costs primarily associated with research and development efforts, 

including the development of a new or improved capability to the point where it is ready for operational use. These 

costs include equipment cost funded under the RDT&E appropriation and related military construction 

appropriation costs. They exclude costs which appear in the military personnel, operation and maintenance, and 

procurement appropriations. 

S 

security assistance (SA) A group of programs authorized by the Foreign Assistance Act of 1961, as amended, and 

the Arms Export Control Act, as amended, or other related statutes by which the United States provides defense 

articles, military training, and other defense related services, by grant, credit, cash sale, lease, or loan, in furtherance 

of national policies and objectives. 

Security Assistance Management Manual [DOD 5105.38M] A manual published by the Defense Security

Assistance Agency under authority of DoD Directive 5105.38. It sets forth the responsibilities, policies, and 

procedures governing the administration of security assistance within the Department of Defense. 

Security Assistance Management Review (SAMR) A management review led by a security assistance organization, 

for the purpose of determining the status of one or more specific problems. Such reviews may include the entire 

range of a purchaser’s security assistance program. 

security assistance organization/office (SAO) The generic term SAO encompasses all DoD elements, regardless of 

actual title, located in a foreign country with assigned responsibilities for carrying out security assistance 

management functions. 

Security Assistance Policies and Procedures (Volume 15 to DoD 7000.14-R). A manual published by the Defense 

Finance and Accounting Service under the authority of DODI 7290.3. It establishes basic financial procedures for 

security assistance activities involving management, fiscal matters, accounting, pricing, budgeting for 

reimbursements to DoD appropriations accounts and revolving funds, auditing, international balance of payments, 

and matters affecting the DoD budget.

 

services Includes any service, test, inspection, repair, training, publication, technical or other assistance, or defense 

information furnished as military assistance under the Foreign Assistance Act of 1961, as amended, or furnished 

through FMS under the U.S. Arms Export Control Act of 1976, as amended. 

significant military equipment (SME) Those defense articles and services on the U.S. Munitions List in the 

International Traffic in Arms Regulation (ITAR) which are preceded by an asterisk. SME are articles which require 

special export controls "because of their capacity for substantial utility in the conduct of military operations." 

spares/spare parts An individual part, subassembly, or assembly supplied for the maintenance or repair of systems 

or equipment.

specialized English training (SET) Instruction conducted at DLIELC for IMSs who have attained the required 

ECL to develop vocabulary skills for entry into both hazardous and highly technical courses. 

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staging cost The cost incurred by the Department of Defense in consolidation of materiel before shipment to an 

FMS customer. Includes costs incident to storage and control of inventory, consolidation of incoming articles into a 

single shipment, and a break in CONUS transportation. 

standardization The process by which DoD achieves the closest practicable cooperation among the Services and 

Defense Agencies for the most efficient use of research, development, and production resources, and agrees to adopt

on the broadest possible basis the use of (a) common or compatible operational, administrative, and logistic 

procedures; (b) common or compatible technical procedures and criteria; (c) common, compatible, or 

interchangeable supplies, components, weapons, or equipment; and (d) common or compatible tactical doctrine with

corresponding organizational compatibility. As applied to NATO and to non-NATO countries, standardization 

involves the process of developing concepts, doctrines, procedures and designs to achieve and maintain the most

effective levels of compatibility, interoperability, interchangeability and commonality in the fields of operations, 

administration, and materiel. 

surcharge Expenses incident to issues, sales, and transfers of materiel that are not included in the standard price or 

contact cost of materiel. Elements of surcharges are (but not limited to):—Packing, Crating, Handling (PCH);

Transportation (2nd destination); Administrative Fee; Logistics Support Change; Contract Administrative Service;

Storage Costs, Staging. 

system program office The office of the program manager and the single point of contact with industry,

Government agencies, and other activities participating in the system acquisition process. 

T 

technical assistance field team (TAFT) A team of U.S. DoD personnel deployed on PCS status, normally for one 

year or longer, to a foreign country to provide technical assistance and training to foreign military personnel in the 

operation, maintenance, and employment of specific equipment, technology, weapons, supporting systems, or in

other special skills related to military functions. 

technical assistance team (TAT) A team of U.S. DoD personnel deployed to a foreign country on TDY status (i.e., 

up to 179 days) to place into operation, operate, maintain, and repair equipment provided under the FMS programs. 

technical data (TD) Recorded information, regardless of form or characteristic, of a scientific or technical nature. 

Examples of technical data packages include research and engineering drawings and associated lists, specifications, 

standards, process sheets, manuals, technical reports, catalog item identifications, and related information and

computer software documentation. 

technical data package (TDP) Normally includes technical design and manufacturing information sufficient to

enable the construction or manufacture of a defense item component modification, or to enable the performance of 

certain maintenance or production processes. It may include blueprints, drawings, plans, or instructions that can be 

used or adapted for use in the design, production, manufacture, or maintenance of defense items or technology. 

technical manual A publication containing instructions designed to meet the needs of personnel responsible for (or 

being trained in) the operation, maintenance, service, overhaul, installation, and inspection of specific items of

equipment and materiel. 

training/training support Formal or informal instruction of IMSs in the United States or overseas by officers or 

employees of the United States, contract technicians, contractors (including instruction at civilian institutions), or by

correspondence courses, technical, educational or information publications and media of all kinds, training aids, 

orientations, training exercises, and military advice to foreign military units and forces. [Sec. 47(5), AECA] 

travel and living allowance (TLA) Those costs associated with transportation, excess baggage, and living 

allowances (per diem) of IMSs which are authorized for payment under the IMET Program. 

P-34 
trust fund (FMS) A fund established for each FMS customer country for recording all financial transactions for use 

in carrying our specific purposes and programs in accordance with an agreement. The Trust Fund does not include 

monies on deposit in an approved Federal Reserve Bank New York (FRBNY) account or, Commercial interest

bearing account, until withdrawn by DFAS-DE. (FRBNY funds can only be withdrawn by DFAS-DE) 

type of address code One of several codes used in the MAPAD to identify a plain language address to which to

ship a specific category of documents or material. 

type of assistance code A code used to reflect the terms of sale and the planned source of supply for items/services 

identified on LOA. Also knows as a type of finance code. 

U 

unaccepted case An FMS letter of offer which was not accepted or funded within the prescribed time shown on the 

LOA. 

unearned advance Monies collected/received that are greater than accrued costs. 

undistributed cost An identified cost which has not been allocated to a specific case. 

United States Code (U.S.C.) A consolidation and codification of the general and permanent laws of the United 

States of America arranged according to subject matter under 50 title headings. The USC sets out the current status 

of the laws, as amended. It presents the laws in a concise and usable form without requiring recourse to the many

volumes of the Statutes at Large containing the individual amendments. 

unlimited rights Rights to use, duplicate, release, or disclose technical data or computer software in whole or in

part in any manner and for any purpose, and to have or permit others to do so. 

V 

[None at this time] 

W 

weapon system life cycle cost A time period divided into phases, ranging from the first consideration of the need 

for a weapon system through the development and in-service stages down to system phase-out and disposal. 

work in process The costs of the materiel, labor and indirect costs used in producing customized items. Includes 

DoD organizations and contracts. A cost accounting system that supports the summary changes (progress 

payments) must be utilized. 

X Y Z

[None at this time] 

P-35 
P-36

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Index-1 

INDEX 

Accessorial Computation Matrix, O-1 

Accounting Date, 7-8, 7-10 

Adjustment Reply Code(s), 7-7, 7-10, M-1 

Administrative/Accessorial 

 Cost, 3-20, 7-11 

 Transactions, 7-8 

Advance Collection, 1-3 

Amendment to LOA, 3-25 

Arms Export Control Act (AECA), 1-1 

Arrearages, Interest on, 1-3 

Articles/Services Transactions, FMS Delivery 

 Listing, 7-5 

Assistant Secretary of Defense 

 International Security Affairs, 2-2 

Authorized Charges, 3-17 

Authorized Charges Table, B-1 

Attrition, 3-22 

Base Price, 3-17 

Basic FMS Policies, 1-2 

Billing Statement, 6-1 to 6-16 

Bureau of Political-Military Affairs, DoS, 2-1 

Case Closure Procedures, 

 Accelerated, 4-10 

 Standard, 4-9 

Cash with Acceptance, Term of Sale, 3-22 

Cash Prior to Delivery, Term of Sale, 3-22 

Collection, Advance, 1-3 

Cooperative Logistics Supply Support Arrangements 

 (CLSSA), 1-2, 3-22 

Contractor Holdback, 3-14

Country Admin. Self-Sufficiency, 1-3 

Country Managers (at DFAS-DE/I), 5-5 

Crossleveling, 4-4 

Customer Assistance (at DFAS-DE/I), 5-1 

Customer Funds, 4-3 

Date Shipped, 7-8 

DD Form 645, 1-3,4-6, 6-1 

 Billing Statement, 6-2 

 Cycle, 6-1 

 Data Sources for, 2-11, 2-14 

 Entries on, 6-2, 6-11 to 6-15 

 Final Statement of Account, 6-2 

 Functions and Content, 6-1 

 Net Total of Accessorial Costs, A-2 

 Net Total of Administrative Cost, A-2 

 Price Code(s), D-1 

 Pricing Policy, 1-3 

 Routing Identifier Code(s), C-1 

Defense Working Capital Fund, 3-18 

Defense 

 Contract Audit Agency (DCAA), 2-4 

 Finance and Accounting Service (DFAS), 2-4 

 Customer Assistance, 5-1 

 Country Managers, 5-5 

 Functions of, 2-4 

 Organization, 5-3 

 Defense Institute for Security Assistance 

 Management (DISAM), 2-5 

 Language Institute, 2-4 

 Logistics Agency (DLA), 2-4 

 Security Cooperation Agency (DSCA), 2-4 

Defense Finance and Accounting Service, 

Directorate 

 For Security Assistance (DFAS-DE/I) 

 Organization, 5-1 

 Visits to, 5-1 

Defense Security Cooperation Agency, 2-4 

Delivery Listing, 4-6, 7-1 to7-13 

Delivery Source Code(s), O-1 

Delivery Term Code(s), G-1 

Defense Transportation System Costs, 3-22 

Defense Transportation System Percentage Rates, 

 3-23 

Department of 

 Commerce, 2-2 

 Defense, 1-3, 2-2 

 Defense, Under Secretary of Defense 

 (Comptroller and Chief Financial Officer), 2-2 

Defense, Under Secretary of Defense 

 (Acquisition, Technology and Logistics), 2-2 

 State, 2-1 

 Treasury, 2-2 

Dependable Undertaking, 3-23 

Dispute Resolution, 3-8 

Document 

 Identifier, 3-1 

 Identifier Codes, A-1 

 Suffix Code, 7-7 

Document Number (Construction of), E-1 

DoD 

 Direct Credit (or Loans), 4-3 

 Guaranteed Loans, 4-3 

 Pricing/Billing Relationships and 

 Policies, 3-17 

Security Assistance Policies and 

 Procedures (DoD 7000.14R, Vol. 15), 4-1 

Excess Materiel, Pricing of, 3-19 

Execution/Performance Reporting Process, 2-7 

Financial Forecast, 4-7, 8-1 to 8-5 

Final Statement of Account, 6-2 

Financial Terms and Conditions, LOA 

 Standard Terms and Conditions, 3-6 

FKA Entries, A-1 

FKB Entries, A-1 

FKC Administrative Costs, A-1 
Index-2 

FKD Administrative Cost Adjustments, A-1 

FKE Accessorial Costs, A-1 

FKF Accessorial Cost Adjustments, A-1 

Flow of Funds, 2-7 

Foreign Military Financing (FMF) 

 Grants, 4-4 

 Loans, 4-4 

Foreign Military Financing (Program) (FMFP), 1-1 

Foreign Military Sales (FMS), 1-1 

 Accelerated Case Closure Suspense Account, 

 4-7 

 Advance Collection, 1-3 

 Agreement, 1-3 

 Basic Policies, 1-2 

 Billing Statement, 6-1 

 Billing Cycle, 4-1 

 Case Closure, 4-9 

 Case Identifier, 3-1 

 Cash Purchases, 1-1 

 Credit, Term of Sale, 3-24 

 Customer Funds, 4-3 

 Delivery Listing, 4-6, 7-1 

 Cycle, 7-1 

 Explanation of Entries, 7-1 

 Function and Format, 7-1 

 Detail Delivery Transaction, 4-2 

 Financial Forecast, 4-7 

 Cycle, 8-1 

 Entries on, 8-3 

 Functions and Format, 8-1 

 Payment Schedule, 3-14 

 Concept, 3-14 

 Definitions, 3-14 

 Development, 3-14 

 Pricing Elements, FMS, 3-17 

 Pricing Policy, 1-3 

 Program administration, 1-3 

 Process, 2-6,7,8 

 Reply Listing to Customer Request for 

 Adjustment, 4-7 

 Trust Fund, 4-2 

Functional Areas Points of Contact 

 at DFAS-DE/I, 5-6 

General Administrative Costs, 3-21 

General Purchaser Agreements, LOA Standard 

 Terms and Conditions, 3-4 

Generic Code, 7-9 

Generic Surcharge Table, B-1 

Holding Account, 

 Cycle, 10-1 

 Explanation of Entries, 10-1 

 Function, 10-1 

 Statement, 4-8, 10-1 to 10-2 

Implementing Agency Codes, F-1 

Interest on Arrearages, 1-3, 3-24 

International Logistics Control Office (ILCO), 2-6 

International Military Education and 

 Training (IMET), 1-1 

Joint Chiefs of Staff, 2-3 

Julian Calendar, I-1 

Julian Date, 7-7 

Letter of Offer and Acceptance/Implementation 

 Process, 2-7, 2-10 

Letter of Request/Offer Process, 2-6, 2-9 

Letter of Offer and Acceptance (LOA), 3-1 

 Acceptance, 3-25 

 Amendment, 3-25 

 Cancellation, 3-25 

 Example of, 3-2 

 Information, 3-9 to 3-12 

 Materiel/Services Cost, 3-18 

 Modification, 3-25 

 Standard Terms and Conditions, 3-4 to 3-8 

Materiel/Service Cost, 3-18 

MILSTRIP, Document Number, E-1 

Mode of Shipment Code(s), L-1 

Modification (LOA), 3-25 

 Impact of, 3-26 

National Imagery and Mapping Agency (NIMA), 2-5 

New Procurement, 3-19 

 Sample Price Computation of, 3-20 

Offer/Release Codes, K-1 

Organizations for FMS, 2-1 

Packing Crating and Handling (PC&H) Costs, 3-21 

Payment 

 Method, 3-24 

 of Total Cost, 3-24 

 on Delivery, Term of Sale, 3-24 

Payment Schedules, 3-14, 4-1 

 Relationship to DD 645, 3-15 

Payment Schedule Development, 3-14 

Personnel Services, Pricing of, 3-20 

Price Code, D-1 

Pricing Elements, FMS, 3-17 

Pricing Policies, 1-3 

Principal and Major Items, 3-18 

Progress Payments, 3-14 

Refunds, 3-25 

Reply Listing to Customer Request for 

 Adjustment 

 Cycle, 9-1 

 Function and Format, 9-1 

 Purpose, 9-1 

Request for Adjustments, 3-24 

Routing Identifier Code(s), C-1 

Secretaries of Military Departments, 2-5 

Secretary of State, 2-1 

Security Assistance Organizations, 2-3 

Standard Terms and Conditions (to LOA), 3-4 to 3-8 

Supply Discrepancy Report Serial Number, 9-3 
Index-3 

Termination Liability Reserve, 3-14 

Terms and Conditions Having Financial 

 Implications, 3-24 

Terms of Sale, 3-22 to 3-24 

Transportation and Discrepancy Provisions, LOA 

 Standard Terms and Conditions, 3-7 

Transportation Area Rate Table, N-7 

Transportation Bill Code(s), 7-8, N-1 

Trust Fund, 4-2 

Type of Assistance Code(s), 3-25, H-1 

Type of Cost 

 Actual, 7-10 

 Computed, 7-10 

Unified Commands, 2-3 

Unit of Issue Abbreviations, J-1 

United States of America Letter of Offer and 

 Acceptance (LOA), 3-1 

 Standard Terms and Conditions, 3-4 

United States Government Obligations, LOA 

 Standard Terms and Conditions, 3-4 

Warranties, LOA Standard Terms and Conditions, 

 3-7 
Index-4 

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