How Does FMS Operate?
4. FMS is managed and operated by DoD on a no-profit and no-loss basis. Countries and international organizations participating in the program pay for defense articles and services at prices that recoup the actual costs incurred by the United States. This includes a fee (currently 3.8% of what the defense articles and/or services cost, in most instances) to cover the cost of administering the program. When defense articles and/or services are required, the requesting country’s representative provides a Letter of Request (LOR) to their U.S. counterpart. Copies are sent to the DoS Bureau of Politico-Military Affairs and the DSCA. The original is furnished to the DoD Military Department or other implementing Defense Agency that will prepare the response in the form of a LOA. LOAs take three forms: Defined Line. Certain defense articles and services can be provided only on Defined Line LOAs, which offer items at individually estimated prices and delivery dates. The U.S. Government, where n
