Contract Type – Foreign Military Sales

Foreign Military Sales (FMS) is growing fast as it becomes the preferred method for selling defense systems abroad.

Swiftships has delivered almost 300 vessels through FMS as it offers numerous benefits to its foreign clients including: reaching a broader base of local shipyards, reducing the risk inherent in international sales, facilitation, planning, and reducing the administrative burden of doing business.

FMS offers numerous benefits to its clients compared to purchases under DCS:

BROAD MARKET ACCESS

The FMS system makes every allied nation a potential customer by including the U.S. companies’ products in the standardized catalog for international sale.

RISK REDUCTION

FMS reduces the risk involved in working with foreign customers since an FMS sale is effectively a sale to the USG, not to the end-user.

FACILITIES PLANNING

FMS orders have generous lead times from concept to delivery, allowing plenty of time for planning and production.

REDUCED ADMINISTRATIVE BURDEN

All international logistics requirements, including export licenses and transportation are managed by the U.S. Department of Defense (DoD).

FACTOIDS

Who can participate in the FMS program?
The President designates countries and international organizations eligible to participate in the FMS program. The Department of State makes recommendations and approves individual programs on a case-by-case basis. Currently, around 160 countries are eligible to participate in FMS.

What are some other differences between FMS and DCS?
Under FMS, the DoD procures defense articles and services for the foreign customer using the same acquisition process used to procure for its own military needs. Recent policy changes in the U.S. Government’s Federal Acquisition Regulations have opened the door, allowing foreign governments to participate in FMS procurement negotiations. In general, the government-to-government purchase agreements tend to ensure standardization with U.S. forces; provide contract administrative services that may not be available through the private sector; and help lower unit costs by consolidating purchases for FMS customers with those of DoD. DCS allows the foreign customer more direct involvement during the contract negotiation phase; may allow firm-fixed pricing and may be better suited to fulfilling non-standard requirements.