Foreign military sales process guide: LOR, LOA, congressional notification and delivery

The US Foreign Military Sales (FMS) program is the primary mechanism through which allied and partner nations acquire US-origin defense articles, services, and training with the US government acting as the contracting intermediary. Unlike a commercial purchase, FMS places the full weight of US government contracting authority between the purchasing nation and the defense industry — a structure that provides significant quality and sustainment advantages but introduces a procedural pipeline that can confuse first-time purchasers. This guide walks through each stage of the FMS pipeline from initial request through case closure, with particular attention to the decision points that most frequently cause delays.

The audience is the defense program manager, acquisition official, or security assistance professional on the purchasing side of an FMS transaction. Those navigating the vendor side of FMS should pair this guide with the broader context available in our complete guide to defense procurement.

FMS vs Direct Commercial Sales (DCS): which path for your program

Allied nations seeking US defense equipment or services have two primary acquisition pathways: Foreign Military Sales (FMS), in which the US government contracts on the purchasing nation's behalf, and Direct Commercial Sales (DCS), in which the purchasing nation contracts directly with the US defense company after receiving a commercial export license from the State Department's Directorate of Defense Trade Controls (DDTC).

The FMS program is authorized under the Arms Export Control Act (AECA) and administered by the Defense Security Cooperation Agency (DSCA). It offers several structural advantages over DCS:

• US government quality assurance. The implementing agency — Army, Navy, or Air Force — stands behind the contract and performs oversight that a purchasing government could not easily replicate independently.
• Access to the US logistics and sustainment ecosystem. FMS purchasers can access the entire US military supply chain, including spare parts from DoD stocks, depot-level maintenance support, and integration into US sustainment programs.
• Performance guarantees. If a contractor defaults or fails to perform, the US government — not the purchasing nation — bears primary responsibility for resolution and replacement contracting.
• Favorable pricing leverage. The US government's bulk purchasing power and access to existing contracts can produce lower unit pricing than a purchasing nation could negotiate independently for the same item.
• Simplified export compliance. FMS inherently satisfies US export control requirements — the purchasing government does not need to separately manage ITAR/EAR licensing for articles transferred through FMS.

DCS advantages are real but narrowly applicable. DCS is generally faster for small, clearly scoped, commercially available items where the purchasing nation has the contracting capacity to manage the relationship directly and the US government's quality oversight adds limited incremental value. For complex defense systems, sustainment-intensive platforms, or sensitive technologies, FMS is structurally superior. For most allied nations entering a major defense program with US-origin equipment, FMS is either the preferred or the only available option.

A practical decision heuristic: if the program involves a major defense system (aircraft, ships, armored vehicles, advanced missiles, C2 platforms), requires multi-year sustainment, or involves classified technology, FMS is almost always the correct path. If the program involves a discrete commercial-derivative item with a short delivery timeline and the purchasing nation has contracting expertise, DCS merits evaluation. International defense cooperation strategy shapes which pathway fits a given bilateral relationship.

Step 1: Letter of Request (LOR)

The FMS process begins with a formal Letter of Request (LOR) from the purchasing government to the US government. The LOR is the official expression of interest that initiates the FMS pipeline. It does not commit either party to a transaction — it authorizes the US government to begin studying the request and preparing a formal offer.

A properly prepared LOR must contain:

• Identification of the requesting government and the authorized point of contact (typically the Ministry of Defense or equivalent acquisition authority).
• Specific defense articles or services requested using US government nomenclature and part numbers where available. Vague descriptions (e.g., "advanced communication systems") cause significant delay during P&A development.
• Quantities — both the primary quantity and any desired options or follow-on quantities that should be evaluated at the same time.
• Intended end-use — operational deployment, training, research, evaluation, or some combination. End-use certification requirements flow from this declaration.
• Required delivery schedule — the purchasing government's operational need date and any interim delivery milestones.
• Configuration requirements — any modifications from standard US military configuration (non-standard configurations increase cost and complexity significantly).
• Any prior US government correspondence on the same requirement, including previous P&A requests or informal feasibility discussions.

The LOR is transmitted to the US government through the Security Assistance Officer (SAO) stationed in-country or through the purchasing nation's defense attaché office at its US Embassy. DSCA receives the LOR and routes it to the relevant Military Department — the Army Security Cooperation (ASC) for Army materiel, Naval Supply Systems Command Weapon Systems Support (NAVSUP WSS) for Navy programs, or the Secretary of the Air Force International Affairs (SAF/IA) for Air Force programs. The implementing agency then owns the P&A study phase.

A common error at the LOR stage is insufficient specificity in the requirements description. Implementing agencies cannot develop meaningful P&A data from vague or underspecified LORs — they will return the LOR for clarification, adding weeks or months to the timeline. Investment in a well-specified LOR is the single highest-leverage action the purchasing government can take in the early FMS pipeline.

Step 2: Price and Availability (P&A) data

In response to an LOR, the implementing agency conducts a Price and Availability (P&A) study. P&A data provides the purchasing government with a rough-order-of-magnitude (ROM) cost estimate and a tentative delivery schedule — enough information to decide whether to proceed to a formal LOA request, adjust requirements, or abandon the effort.

P&A data is prepared by the implementing agency using:

• The most recent US government procurement data for the requested items
• Current production line status and backlog at the relevant contractor(s)
• Standard accessorial charge rates (DSCA administrative surcharge, transportation estimates)
• Historical analogies for similar FMS cases where current data is unavailable

Understanding the limitations of P&A data is critical for budget planning. P&A is explicitly non-binding — the formal LOA price can differ materially from P&A estimates, and sometimes substantially so. Common sources of P&A-to-LOA price movement include:

• Changes in contractor pricing between P&A and LOA development, particularly on systems with active production programs where pricing is revised frequently
• Non-recurring engineering (NRE) charges for configuration modifications that were not fully scoped in the LOR
• Changes in the implementing agency's accessorial charge methodology
• Currency or inflation adjustments for systems with significant international supply chain components

Purchasing governments should plan for P&A estimates to be accurate within roughly ±25% for mature, regularly-procured systems and potentially wider for developmental or low-rate production items. Budget submissions based on P&A figures should include explicit contingency buffers. The P&A stage is also the right moment to evaluate whether the stated requirements are achievable within the purchasing government's budget envelope — requirements adjustments are far cheaper to make here than after LOA acceptance.

P&A data does not constitute the US government's commitment to sell or to the terms described. It is an analytical product that informs the purchasing government's decision to proceed.

Step 3: Letter of Offer and Acceptance (LOA)

If the purchasing government decides to proceed following P&A review, it requests a formal Letter of Offer and Acceptance (LOA). The LOA — also referred to as an FMS case — is the binding bilateral agreement between the US government and the purchasing government that defines the transaction in legal and financial terms.

The LOA is prepared by the implementing agency in coordination with DSCA and contains:

• Case designator. A unique alphanumeric identifier (e.g., XX-D-SAC for a hypothetical case) that tracks the FMS case through its lifecycle in the Defense Integrated Financial System (DIFS).
• Implementing agency and program office. Identifies the US military organization responsible for executing the case.
• Line items. A complete listing of defense articles and services to be provided, with quantities, unit prices, and aggregate prices for each line.
• Pricing basis. Whether pricing is estimated (reconciled at case closure against actual costs) or firm (fixed price). Most FMS cases for production hardware use estimated pricing; firm pricing is available in limited circumstances where cost certainty is achievable.
• Accessorial charges. The non-article costs included in the LOA value: the DSCA administrative surcharge (currently 3.5% of article price), transportation, packing, non-recurring engineering, technical documentation, and training costs. Accessorial charges frequently account for 15–35% of total LOA value on complex system cases.
• Delivery schedule. Milestone-level delivery commitments, including any phased delivery provisions.
• Offer validity period. The date by which the purchasing government must accept the LOA (typically 60–120 days from issue). Cases that expire unaccepted require a re-offer, resetting the process.
• Payment terms. Initial deposit requirements and subsequent billing schedule against the FMS Trust Fund.
• Standard terms and conditions. The LOA incorporates by reference the standard FMS terms under the Security Assistance Management Manual (SAMM), Chapter 5, including end-use monitoring requirements, retransfer restrictions, and audit access provisions.

The purchasing government's authorized signature on the LOA constitutes formal acceptance of all terms and conditions. Prior to signing, the purchasing government should conduct a thorough line-item review, verify that all required articles and services are included, confirm the pricing basis, and ensure internal budget authorization is in place. Discrepancies between the LOA and the original LOR requirements should be resolved through discussion with the implementing agency before acceptance — not after. Reviewing the defense export license management context alongside the LOA terms helps purchasing governments understand the retransfer and end-use certification obligations embedded in acceptance.

Step 4: Congressional notification

The Arms Export Control Act (AECA) requires the Executive Branch to formally notify Congress before issuing LOAs that meet specified value thresholds. Congressional notification is a statutory requirement, not a discretionary procedure — and it introduces mandatory timelines into the FMS pipeline that must be planned for from the outset.

The current notification thresholds under AECA Section 36(b) are:

• $14 million or more for Major Defense Equipment (MDE) — items on the US Munitions List requiring special export authorization, as defined in 22 USC 2794(6)
• $50 million or more for defense articles not meeting the MDE threshold
• $200 million or more for defense services

When a proposed FMS case meets any of these thresholds, the Executive Branch must formally notify Congress at least 30 calendar days before the LOA is issued. A reduced 15-day notification period applies to sales to NATO member nations, NATO+ countries (Japan, Australia, South Korea, Israel), and New Zealand. During the notification period, Congress may pass a joint resolution of disapproval to block the sale — though this procedural remedy is rarely used in practice.

The informal notification process. Before the formal 30-day clock begins, the State Department's Bureau of Political-Military Affairs (PM) and DSCA's legislative affairs staff brief key Congressional staff on the proposed sale. This informal consultation — conducted with the relevant subcommittees of the Senate Foreign Relations Committee, House Foreign Affairs Committee, Senate Armed Services Committee, and House Armed Services Committee — gives legislators the opportunity to surface concerns without the political formality of a formal objection during the notification period.

The informal process matters considerably in practice. Sales involving politically sensitive recipient nations, advanced precision-strike systems, or capabilities with regional stability implications frequently encounter informal staff questions that, if not resolved, can stall the formal notification indefinitely. The Executive Branch will not start the formal 30-day clock until it has reasonable confidence that the notification will complete without a formal resolution of disapproval.

For purchasing governments, the practical implications are:

• Factor a minimum of 30–45 days for notification (15–30 for qualifying allies) into the program schedule after LOA development completion, before LOA issuance
• For politically complex cases, the informal consultation period can add weeks or months beyond the statutory minimum
• Engage with your nation's US Embassy and SAO early to understand whether a proposed case is likely to face Congressional scrutiny
• Congressional notification outcomes are a US domestic political matter — the purchasing government cannot influence the Congressional side directly, but can support the Executive Branch's political preparation through diplomatic engagement

Step 5: Case implementation

Case implementation begins once both governments have signed the LOA and the purchasing government has made the required initial deposit into the FMS Trust Fund, maintained by the Defense Finance and Accounting Service (DFAS). The initial deposit — typically 25% of the total case value — authorizes the implementing agency to begin contracting or stock transfer.

Implementing agency responsibilities during implementation:

• Issuing contracts to defense industry or arranging drawdown from US military stocks
• Monitoring contractor performance against the delivery schedule
• Managing export documentation (DD-1513 delivery verification, end-user certificates)
• Coordinating in-country delivery logistics and acceptance inspections
• Managing technical assistance and training delivery where included in the case
• Maintaining financial records against the FMS Trust Fund account

Contractor involvement in FMS cases. Defense contractors in FMS cases contract with the US government, not the purchasing nation — but their performance is directly visible to the purchasing nation through the implementing agency's reporting. Contractors perform under standard US government contracting terms (FAR/DFARS), with performance monitored by the implementing agency's program office. The purchasing government does not have direct contractual recourse against the contractor; its recourse is through the implementing agency.

This intermediary structure means that supply chain disruptions, production delays, or quality failures at the contractor level are resolved through the US government contracting chain. The purchasing government's primary tool for managing contractor performance issues is escalation through the implementing agency case manager and, where necessary, DSCA. Establishing a strong working relationship with the implementing agency case manager from case opening is essential — the case manager is the purchasing government's most important operational point of contact throughout the life of the case.

Supply chain and delivery schedule management. Complex FMS cases — particularly those involving new-production hardware, modified configurations, or significant training components — routinely experience delivery schedule changes during implementation. Production delays, subcontractor performance issues, export control processing timelines, and US military operational priorities (which can compete for production capacity) all contribute to schedule movement.

Best practices for managing delivery schedule risk during implementation include:

• Requesting quarterly delivery status reports from the case manager
• Establishing an early warning threshold — e.g., flagging any projected delay exceeding 30 days — that triggers escalation discussion
• Planning national operational timelines with schedule buffers against the LOA delivery milestones, not the LOA dates themselves
• For cases involving multiple delivery tranches, ensuring that in-country logistics and end-user training capacity matches the actual, not planned, delivery pace

FMS case management and amendments

FMS cases are not static once accepted. Requirements evolve, delivery schedules shift, and costs move against estimates. The amendment and case management processes are the mechanisms through which these changes are formally incorporated.

Case amendments. A formal amendment (modification) to an LOA is required whenever the purchasing government or the implementing agency needs to change a material term of the accepted case: adding or removing line items, changing quantities, adjusting the delivery schedule, revising the pricing basis, or modifying other contractual terms. The amendment process mirrors the original LOA process — the implementing agency prepares a revised case document, DSCA reviews and approves it, and the purchasing government must formally accept the amendment.

If an amendment increases the total case value above a congressional notification threshold, a supplemental congressional notification may be required, restarting the 30-day clock. This makes the timing of amendment decisions operationally significant: a quantity increase that pushes a case above the $50M defense articles threshold will add 30+ days to the amendment processing timeline.

Delivery schedule changes. Delivery schedule changes that do not alter the financial terms of the case can sometimes be managed through implementing agency agreement without a formal amendment. The case manager has limited discretion to accommodate minor schedule shifts; more significant changes require amendment. Purchasing governments should communicate schedule change needs to the implementing agency as early as possible — late notification of changed requirements compresses the response timeline and increases amendment costs.

Price adjustments under estimated pricing. For cases with estimated pricing, the implementing agency periodically issues price adjustments as actual contractor costs become known. Purchasing governments should monitor Trust Fund drawdowns against these adjustments through the periodic financial status statements provided by DFAS. Unexplained price adjustments should be queried with the case manager immediately — post-facto reconciliation of financial discrepancies is significantly more difficult than real-time monitoring.

Case closure and final billing. A case closes when all deliveries and services are complete, all contractor invoices are settled, and the financial reconciliation between the FMS Trust Fund and actual costs is finalized. For estimated-price cases, final billing reconciles the LOA value against actual costs: the purchasing government receives a refund if actual costs were lower, or pays a final bill if actual costs exceeded estimates. Case closure can extend several years beyond the last physical delivery, particularly on complex system cases with long-tail support and training obligations.

Practical case closure discipline requires:

• Maintaining budget provisions for potential final bills on estimated-price cases through the expected closure date
• Ensuring all delivered articles are formally accepted in writing and documented in the national inventory system — informal acceptance creates audit complications at closure
• Requesting an anticipated case closure timeline from the implementing agency annually after the last scheduled delivery
• Escalating cases that are administratively open but inactive for extended periods — stale open cases accumulate Trust Fund charges and are harder to close cleanly

Understanding the FMS process structure is foundational to effective US security assistance program management. For purchasing governments navigating complex multi-system programs, the process parallels the strategic framework covered in our complete guide to defense procurement, which addresses the broader alliance-level acquisition landscape within which FMS programs operate.