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Chapter 15

Chapter 15, Building Partner Capacity Programs, provides policy and procedures for execution of Building Partner Capacity (BPC) programs, which encompass security cooperation and security assistance activities funded with U.S. Government appropriations and executed through existing security assistance automated systems using a pseudo Letter of Offer and Acceptance (LOA).

Section Title
C15.1 Overview
C15.2 BPC Planning and Requirements Definition
C15.3 BPC Case Development
C15.4 BPC Case Implementation
C15.5 BPC Case Execution
C15.6 BPC Case Closure

C15.1.1. General. Building Partner Capacity (BPC) programs encompass security cooperation and security assistance activities that are funded with U.S. Government (USG) appropriations and administered as cases within the Foreign Military Sales (FMS) infrastructure. These programs may provide defense articles and/or services to other USG departments and agencies under the authority of the Economy Act or other transfer authorities for the purpose of building the capacity of partner nation security forces and enhancing their capability to conduct counterterrorism, counter drug, and counterinsurgency operations, or to support U.S. military and stability operations, multilateral peace operations, and other programs. They are crucial tools used by the Department of Defense (DoD) and other USG agencies in furtherance of U.S. national security objectives. To enable BPC program execution through existing security assistance automated systems, the DoD Implementing Agency (IA) develops a pseudo Letter of Offer and Acceptance (LOA) in the Defense Security Assistance Management System (DSAMS). The pseudo LOA is not signed by the partner nation that will ultimately receive the articles and/or services, but serves to document the transfer of articles and services to the USG Requesting Authority.

C15.1.1.1. Economy Act. The Economy Act, 31 U.S.C., Section 1535 and Section 1536, is a general authority for the interagency or the intradepartmental furnishing of goods and services on a reimbursable basis. Under the Economy Act, the purchasing department or agency must pay the performing agency’s actual costs of the goods or services provided, to include direct and indirect costs. The entire amount of an Economy Act order to fill a BPC program requirement is obligated by the purchasing agency when the order is accepted (DoD FMR Volume 11A, Chapter 3). The performing agency must further obligate the funds before the period of availability for new obligation expires.

C15.1.1.2. DoD Appropriations. Congress appropriates funding to DoD for specific BPC programs through the annual DoD Appropriations Act, and in certain cases, through other appropriations acts. For example, Congress first enacted legislation establishing and appropriating funds to the Afghanistan Security Forces Fund (ASFF) in 2005 and appropriated additional funds for ASFF in several subsequent years. Pursuant to the Economy Act, when the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) or other DoD component transfers funds to DSCA in support of a BPC program, the funds must be obligated within their period of availability.

C15.1.1.3. Other USG Agency Appropriations. Congress authorizes and appropriates funds to the Department of State (DoS) and other USG agencies for security cooperation and security assistance activities. These agencies may, in turn, transfer funds to DSCA (often via a Foreign Assistance Act (FAA), Section 632(b) Memorandum of Agreement (MOA)), identifying a specific requirement for defense articles and services for a partner nation under the authority of a BPC program. When interagency funds are transferred into the FMS Trust Fund for BPC programs, they are considered obligated upon signature of the MOA (as stated in the document). IAs must then obligate the funds contractually or through other means.

C15.1.2. BPC Case Process. The process of developing and executing a BPC case is organized into five phases:

  1. Planning and Requirements Definition;

  2. Case Development;

  3. Case Implementation;

  4. Case Execution; and

  5. Case Closure.

Management of appropriated funds and communications with the Benefitting Country must be recognized in each phase.

C15.1.2.1. Planning and Requirements Definition. A USG Requesting Authority, which is usually the Geographical Combatant Command (CCMD), but could also be another DoD or non-DoD agency, defines and initiates the BPC requirement to support specific USG objectives. The IA may conduct a feasibility assessment to determine the most appropriate solution. The Requesting Authority then submits an actionable Memorandum of Request (MOR) to the IA. Note: The BPC MOR is similar to the FMS Letter of Request (LOR), which is submitted by a foreign purchaser.

C15.1.2.2. Case Development. During case development, the IA and the Requesting Authority coordinate to document the requirements and costs on a pseudo LOA. The DSCA Case Writing Division (CWD) conducts a quality assurance review, prepares the final version of the LOA, and coordinates review and approval by DSCA and DoS, as required. See Section C5.4.13.11. for DoS requirements.

C15.1.2.3. Case Implementation. The IA accepts the Offered case in DSAMS and DSCA (Business Operations Directorate) authorizes required funds to be transferred into the FMS Trust Fund. Defense Finance an Accounting Service – Indianapolis (DFAS-IN) implements the case in the Defense Integrated Financial System (DIFS) and obligation authority is passed to the IA.

C15.1.2.4. Case Execution. During case execution, the IA must often work quickly to obligate funds before they expire. The IA procures the defense articles and services according to DoD regulations. Materiel is transported using the Defense Transportation System (DTS) or other government-procured transportation, while the IA retains oversight of the transportation process and assists with resolution of transportation issues that may arise. After materiel has arrived in country and has been inventoried, the Security Cooperation Organization (SCO) transfers custody and responsibility of the materiel and services to the Benefitting Country and begins end use monitoring (EUM), as applicable.

C15.1.2.5. Case Closure. The BPC case closure phase can begin as soon as supply services are complete (i.e., all materiel and services have been delivered). The IA will expend BPC program funds no later than July 31st of the funds cancelling fiscal year or other deadline specified in funding documents. The IA must ensure that residual funds are identified for return as soon as possible. When closure activities are complete, DFAS-IN closes the case in DIFS.

C15.1.3. Responsibilities. Refer to Section 1.3. for general responsibilities of the contributors to case development and execution. Specific roles and responsibilities that pertain to the management of BPC programs are summarized below.

C15.1.3.1. Department of State (DoS) Bureau of Political Military Affairs (PM). DoS(PM) is responsible for ensuring that, pursuant to Section 505 of the FAA, there is an agreement (a “Section 505 Agreement”) with each partner nation eligible for BPC program assistance and for ensuring that, if needed, the Benefitting Country acknowledges that the assurances provided in the 505 Agreement apply to specific BPC programs. This may be accomplished by a unilateral Diplomatic Note, or other appropriate means, that clearly demonstrates the Benefitting Country understands its responsibilities. DoS(PM) approves each BPC LOA based on the daily State List report provided by DSCA CWD. DoS(PM) is responsible for oversight, Congressional Notification, and funding of Peacekeeping Operations (PKO) programs, including Global Peace Operations Initiative (GPOI) programs.

C15.1.3.2. Office of the Under Secretary of Defense for Policy (OUSD(P)). The OUSD(P) is responsible for oversight of DoD-funded BPC programs. For certain BPC programs, OUSD(P) prioritizes requirements and ensures that requirements are fully coordinated. Together with State, OUSD(P) provides oversight of the jointly funded Global Security Contingency Fund (GSCF) and provides staffing to the interagency GSCF program office. For the GSCF program, the Coalition Readiness Support Program (CRSP), and the Section 2282 Program, OUSD(P) is responsible for obtaining Secretary of Defense Approval of the training, equipment, and supplies to be provided. For the Section 2282 Program, OUSD(P) provides policy oversight and guidance, leads the DoD proposal review process, and coordinates with State to secure the Secretary of State’s approval. Subsequent to Secretary approvals, OUSD(P) submits or concurs on Congressional Notification packages for GSCF and Section 2282 to eight committees and sub-committees for the specified Congressional Notification periods. OUSD(P) leads interactions with Congress and ensures that the Secretary’s goals and objectives are properly communicated.

C15.1.3.3. Office of the Under Secretary of Defense, Comptroller (OUSD(C)). OUSD(C) is responsible for establishing and updating guidance on the use of DoD funds. OUSD(C) reviews and submits Congressional Notification packages to the Under Secretary of Defense for Legislative Affairs for forwarding to appropriate Congressional committees. OUSD(C) authorizes the release of DoD funds for BPC programs and reports to Congress on the use of funds.

C15.1.3.4. Defense Security Cooperation Agency (DSCA). DSCA administers BPC programs under the direction of the USD(P) and provides guidance to DoD components and SCOs on the administration and execution of BPC program activities. DSCA oversees program-level logistics planning, provides financial management, develops and implements program policies, and otherwise assists Requesting Authorities in achievement of BPC program objectives.

C15.1.3.5. Geographical Combatant Commands (CCMD). Each CCMD is responsible for multi-year planning of BPC activities and strategies for the regions and countries within its theater of operations, documented in the Theater Security Cooperation Plan (TSCP). Each TSCP supports CCMD goals and objectives for regional security and is coordinated with the U.S. Missions’ plans for security assistance. In addition to planning, the CCMD has overall responsibility for prioritizing, coordinating and evaluating the success of security cooperation activities in theater.

C15.1.3.6. Requesting Authority. The Requesting Authority for a BPC case is an organization with responsibility for planning regional or country capacity building activities. Within DoD, the CCMDs often serve as Requesting Authorities. During pre-MOR planning, the Requesting Authority will communicate detailed requirements to the IA and receive IA feedback in order to complete the MOR. The Requesting Authority must then remain actively engaged to ensure the IA has the necessary information for case development, to enable timely obligation of expiring funds, and to participate in transportation and delivery. BPC cases will compete with FMS and other DoD requirements for the IA’s resources, so the Requesting Authority should communicate and justify its highest priorities.

C15.1.3.7. Funding Authority. The Funding Authority is the organization that controls and oversees management of funds for the BPC program. When BPC program funding is provided by a DoD appropriation, one of the Military Departments (as in the case of ASFF, the Iraq Security Forces Fund (ISFF), and the Pakistan Counterinsurgency Fund (PCF)) or OUSD(P) will serve as the Funding Authority. Non-DoD agencies serve as the Funding Authority for appropriations they provide to DSCA.

C15.1.3.8. Implementing Agency (IA). The IA has overall responsibility for case development, execution, and closure. IAs must communicate frequently with the DSCA Country Program Director (CPD), the DSCA Country Financial Director (CFD), the Requesting Authority, the Procuring Agency, the U.S. Transportation Command (USTRANSCOM) and the SCO to facilitate information sharing of case plans, status, and changes. During the planning phase, the IA collaborates closely with the Requesting Authority and verifies that the MOR is complete before initiating a pseudo LOA document in DSAMS. The IA must fully understand the nature of the appropriated funds being used in order to ensure its activities meet obligation and expiration/cancellation timelines.

C15.1.3.9. U.S. Transportation Command (USTRANSCOM). Though the IA has overall responsibility for ensuring BPC material is transported and delivered to the SCO, USTRANSCOM manages the DTS which moves materiel from point of origin to the final destination within the Benefitting Country. If materiel is delivered to a central aerial port of debarkation (APOD) in-theater, USTRANSCOM will coordinate with the CCMD to arrange for materiel to be moved to the final destination.

C15.1.3.10. Security Cooperation Organization (SCO). The SCO within each Benefitting Country supports the Requesting Authority through each phase of the BPC case, and interacts closely with Benefitting Country security forces. The SCO is entrusted with communicating BPC program objectives and requirements to Benefitting Country representatives and soliciting their partnership. The SCO is also familiar with the in-country security and logistics environment. Table C15.T1. provides a summary listing of SCO responsibilities unique to BPC programs.

Table C15.T1. SCO Responsibilities for BPC Programs

# Responsibility

1

Maintain a copy of the FAA, Section 505 Agreement (as amended by any Diplomatic Notes) and other relevant agreements between the USG and the Benefitting Country. See Table C15.T3.

2

Provide interface for exchange of cooperative requirements information among the Benefitting Country, the Country Team within the U.S. Embassy, and the DoD components responsible for the BPC case. See Section C15.2.4.2.

3

Provide a detailed explanation and a list of required defense articles and services to support Congressional Notification, as requested.

4

Provide shipping information (e.g., Mark For Code and Military Assistance Program Address Code (MAPAC)) to the Requesting Authority for inclusion in the MOR. See Table C15.T4.

5

Obtain the signed Benefitting Country’s Physical Security and Accountability Plan no later than 30 days prior to delivery of any enhanced EUM (EEUM) materiel, and provide a copy to DSCA (Programs Directorate). See Section C8.4.

6

Coordinate with the IA and the Benefitting Country on the preparation and arrangement for receipt of BPC program defense articles and services. Provide advance notification of delivery to the Benefitting Country to coordinate receipt and security of case materiel. See Section C15.5.4.

7

Prepare and submit Transportation Discrepancy Reports (TDRs) and Supply Discrepancy Reports (SDRs) in accordance with guidance provided to foreign purchasers. See Section C6.4.

8

Prepare the Transfer and Receipt of Materiel and Services document and obtain signature from the Benefitting Country representative. Record when, where, and to whom delivery of materiel was made. See Section 15.5.5.

9

Maintain all records pertaining to Benefitting Country notifications and BPC case documentation. E-mail these documents to the DSCA CPD and the IA, as appropriate.

C15.1.4. BPC Programs. Following is a brief description of some of the more common BPC Programs. See Table C15.T2. for a complete listing of available BPC programs with their corresponding codes and authorities.

C15.1.4.1. Afghanistan Security Forces Fund (ASFF). The ASFF is authorized to be used to train, equip and provide related assistance to Afghanistan National Security Forces (ANSF), including the provision of equipment, supplies, services, facility repair, renovation and construction. The OUSD(C) coordinates the ASFF Financial and Activity Plan (FAP) for approval by the Afghanistan Resources Oversight Council (AROC), comprised of Principal Deputy Under Secretaries for OUSD(P), OUSD Acquisition, Technology, and Logistics (AT&L), and OUSD(C), as well as senior representatives from the Joint Staff, U.S. Central Command, and the Office of the Assistant Secretary of the Army (Financial Management and Comptroller). The OUSD(C) then coordinates the ASFF FAP with DoS and submits the program Congressional Notification by Budget/Sub-budget Activity Groups (BAG/SAG). Only a portion of ASFF is used to fund BPC cases. The Army provides the fund allotments for these to DSCA. Requirements for ASFF cases are received from the Combined Security Transition Command - Afghanistan (CSTC-A).

C15.1.4.2. Coalition Readiness Support Program (CRSP). CRSP is an authority in the Coalition Support Funds legislation, which is part of the annual DoD Appropriations Act, and is funded with Defense-Wide Operation and Maintenance (DW O&M) appropriations. CRSP may be used to provide specialized training, procure supplies and specialized equipment, and loan equipment on a non-reimbursable basis to coalition forces supporting U.S. military operations in Afghanistan and Iraq. CCMDs may submit requests for CRSP funds to OUSD(P) for prioritization, coordination, and submittal to the Secretary of Defense for approval. Funds made available for CRSP prior to FY12 are available until expended.

C15.1.4.3. DoD Counternarcotics (CN) Program. DoD has authority under provisions in various National Defense Authorization Acts (NDAAs) to transfer defense articles and services for building counternarcotics capacity and counternarcotics support to Benefitting Countries. DSCA executes only a small portion of the DoD CN program: Sections 1004 and 1033 of NDAA 1991 and 1998, respectively and as amended, are generally the authorities under which CN programs are executed by DSCA. The Office of the Assistant Secretary of Defense for Special Operations/Low Intensity Conflict (SO/LIC) is responsible for CN policy and funding and may submit MORs to DSCA detailing equipment, training, facilities, and communications requirements to support security, law enforcement, drug detection, and reconnaissance within a Benefitting Country. OUSD(C) transfers DoD CN funds to DFAS-IN from the DoD Counter Drug Transfer Account to execute these BPC cases.

C15.1.4.4. Global Train and Equip (Section 1206). Between Fiscal Year (FY) 2006 and FY2015, under Section 1206 of the FY 2006 National Defense Authorization Act (NDAA) as amended, the Secretary of Defense, with the concurrence of the Secretary of State, had authority to provide equipment, supplies, and training to build the capacity of foreign military forces to conduct counterterrorism operations, assist in building a partner nations military, national security, and/or maritime security forces or to participate in or support military and stability operations in which U.S. forces participated. The Section 1206 Program was funded with Operations & Maintenance appropriations. Program funds could also be used to build the capacity of maritime security forces to conduct counterterrorism operations. The Combatant Command (CCMD), the Office of the Secretary of Defense Special Operations/Low Intensity Conflict (OSD (SO/LIC)), the Joint Staff (J5), and/or the Department of State (DoS) identified and prioritized Section 1206 requirements. The CCMD submitted requirements in the form of proposals to OSD(SO/LIC). The Defense Security Cooperation Agency (DSCA) oversaw an annual feasibility review of the proposals (which also serve as MORs) to validate equipment lists, training requirements, and costs. These documents were simultaneously reviewed and prioritized by the Office of the Under Secretary of Defense for Policy OUSD(P), the Joint Staff, and DoS, before approval by the Secretary of Defense and submission of a Congressional Notification. The Implementing Agency (IA) developed Section 1206 cases as rapidly as possible due to the short timelines of the 1206 process. Cases needed to be developed quickly so that they were ready to procure defense articles and/or services as soon as case funding became available so contracting actions could be completed before the end of the fiscal year. The CCMDs remained actively engaged and responsive in order to best support these efforts. The DSCA Building Partnership Capacity (BPC) Directorate centrally managed the Section 1206 programs and tracked program activities from inception to case closure, including the timely, assured delivery of defense articles and services. See Section C15.3.4.3. for Section 2282 Cross Fiscal Year Authority. See DoD Instruction 5111.19, Section 1206 Global Train-and-Equip Authority, for general Section 1206 program guidelines. Effective December 19, 2014, P.L. 113-235, Section 1205(c) repealed the Section 1206 authority and replaced it with Section 2282 of Title 10, United States Code. Section 1206 Programs in progress at the time of repeal may continue to execute under the authorities and policies of Section 1206.

C15.1.4.5. Section 2282 Global Train and Equip (GT&E). Effective December 19, 2014, Section 1205 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015, Public Law (P.L.) 113-235, enacted Section 2282 of Title 10, United States Code, and repealed the analogous authority provided by the NDAA for FY 2006, P.L. 109-163. The Secretary of Defense, with the concurrence of the Secretary of State, has the authority under Section 2282 to provide equipment, supplies, defense services, training, and small-scale military construction to build the capacity of a foreign country's national military forces participating in or supporting on-going allied or coalition stability operations that benefit the national security interests of the United States or to conduct counterterrorism operations. Section 2282 authority may also be used to build the capacity of a foreign country's national-level security, maritime and border security forces that conduct counterterrorism operations. The Section 2282 Program is funded with Operations & Maintenance appropriations or other funds made available to carry out programs on an annual basis. Similar to the preceding Section 2282 authority, the CCMD submits Section 2282 proposals to OSD (SO/LIC) to specify requirements. DSCA oversees a feasibility review of the proposals to identify procurement and other issues with Combatant Commands (CCMDs) equipment lists and training requirements, which serve as the MOR. The proposals are simultaneously reviewed and prioritized by OSD (SO/LIC), the Joint Staff, and DOS; approved by the Secretary of Defense; and then submitted for Congressional Notification. Once Congress approves a Section 2282 proposal, it becomes an approved Section 2282 program ready for execution. An approved Section 2282 program may consist of multiple interrelated LOAs managed by different executing offices and possibly different IAs to provide the desired capability. The IAs develop Section 2282 program cases as rapidly as possible to meet the short timelines of the Section 2282 process and maximize the time remaining for contracting actions. The CCMDs and SCOs should remain actively engaged and responsive to support the case development efforts. DSCA Security Assistance & Equipping (SA&E) Directorate centrally manages Section 2282 programs and tracks all cases from inception to case closure, including the timely and reliable delivery of defense articles and services. See Section C15.3.4.3. for Cross Fiscal Year Authority and Section C15.3.4.4. for a discussion on Full Operational Capability.

C15.1.4.6. Iraq Security Forces Fund (ISFF). The ISFF provides support to all Iraqi Security Forces (ISF), including military, police forces, special task forces, and border security. It funds construction, force protection, training, equipping, life support, and sustainment of ISF. Authority for the use of ISFF is incrementally drawn down following the withdrawal of U.S. forces from Iraq.

C15.1.4.7. Pakistan Counterinsurgency Fund/Counterinsurgency Capability Fund (PCF/PCCF). PCF/PCCF provides assistance to build and maintain the counterinsurgency capability of the Pakistan Security Forces, including military forces and the Pakistan Frontier Corps, and is authority to provide program management, equipment, supplies, services, training, facility and infrastructure repair, renovation, and construction. PCF is a DoD authority and appropriation, while PCCF is a DoS authority and appropriation. The OUSD(C) coordinates the PCF FAP with DoS and then submits the program-wide Congressional Notification by BAG/SAG. PCF is appropriated entirely to the Army as the DoD Executive Agent; only a portion of PCF is used to fund BPC cases via DSCA. The Army provides the fund allotments for these to DSCA. The Office of the Defense Representative-Pakistan (ODR-P) serves as the Requesting Authority and generates requirements for PCF/PCCF, while the Army serves as the Funding Authority for those funds provided to DoD.

C15.1.4.8. Peacekeeping Operations (PKO), FAA Section 551. Funds for PKO are appropriated to DoS. The PKO legislation authorizes the provision of assistance to partner nations and international organizations on such terms and conditions as the President may determine, including for use in regional security peacekeeping operations and other programs carried out in furtherance of U.S. national security interests. Such assistance may include reimbursement to DoD for expenses incurred pursuant to Section 7 of the United Nations (UN) Participation Act of 1945, but may not exceed $5,000,000 in any fiscal year unless a greater amount is specifically authorized by the President. Each year, DoS uses FAA, Section 632(b) MOAs to transfer some of the PKO funding to DSCA in support of specific requirements. The U.S. Embassy within a Benefitting Country or the CCMD defines PKO requirements and prepares the MOR for those requirements that will be executed by DSCA as a PKO BPC program.

C15.1.4.9. Global Peace Operations Initiative (GPOI). The GPOI Program is funded with PKO funds that have been specifically allocated by DoS to support UN and regional peace support operations (PSO) that establish and strengthen partner nations’ institutional infrastructure to conduct PSO training, train partner nation peacekeepers, and build capacity to address critical shortages in UN peacekeeping operations. DoS transfers a portion of the GPOI funds to DSCA under FAA, Section 632(b) MOAs. OSD(SO/LIC) approves GPOI MORs prior to case development. DSCA (Programs Directorate) centrally manages GPOI program and tracks cases from inception to closure, including the timely, assured delivery of defense articles and services. The CCMDs are the lead implementers of GPOI activities, in collaboration with the IA and DoS.

C15.1.4.10. Counterterrorism Assistance for East Africa and Yemen. Counterterrorism Assistance for East Africa and Yemen is authorized under Section 1207(n) the FY12 NDAA and under Section 1203 of the FY13 NDAA. These authorities are funded by Defense-Wide Operation and Maintenance (DW O&M) Appropriations. The Secretary of Defense, with the concurrence of the Secretary of State, may provide equipment, supplies, training, and (under Section 1203) minor military construction. The purpose of these programs is to enhance the ability of the Yemen Ministry of Interior Counterterrorism Forces and to enhance the capacity of the national military forces, security agencies, counterterrorism forces, and border security forces of Djibouti, Ethiopia, Kenya, and national military forces participating in the African Union Mission in Somalia to conduct counterterrorism operations against al-Qaeda, al-Qaeda affiliates, and al-Shabaab. Funds obligated for Section 1207(n) programs before the end of FY12 are available until completion of the projects. See Section C15.3.4.5. Amounts available for Section 1203 in a fiscal year may be used for programs that begin in such fiscal year but end in the subsequent fiscal year. See Section C15.3.4.3. CCMDs and IAs develop and execute Section 1207(n) and Section 1203 program requirements using procedures applicable to the Section 2282 Program.

C15.1.4.11. Global Security Contingency Fund (GSCF). The Global Security Contingency Fund (GSCF) was signed into law in Section 1207 of the National Defense Authorization Act for Fiscal Year 2012 (FY12 NDAA, P.L. 112-81) as a four-year pilot program expiring in FY15. Under this authority, DoD and DoS can provide assistance to enhance the capabilities of a partner country’s national military forces and other national security forces that conduct border and maritime security, internal defense and counterterrorism operations, as well as the government agencies responsible for such forces; and to participate in or support military, stability, or peace support operations consistent with U.S. foreign policy and national security interests. Program funds may also be used to provide assistance for the justice sector (including law enforcement and prisons), rule of law programs, and stabilization efforts. GSCF assistance programs must include elements that promote observance of and respect for human rights and fundamental freedoms, and respect for legitimate civilian authority within the partner country. Section 1207 of the FY12 NDAA specifies DoD and DoS contribution of funds to the GSCF and provides transfer authority.

C15.1.4.11.1. Planning. GSCF assistance is limited to countries designated by the Secretary of State, with the concurrence of Secretary of Defense. Requirements may be identified by the CCMDs, the interagency Country Team, regional offices within DoD and DoS, or the Deputies Committee for consideration by DoD and DoS leadership. OUSD(P), Joint Staff, DSCA, CCMD representatives and relevant interagency subject matter experts participate in development of the country implementation plan. DSCA representatives contribute regional and programmatic expertise to guide the formation of an effective and executable plan and communicate potential requirements to the IAs. CCMDs and IAs should be actively engaged and responsive during the planning phase, and collaborate to ensure that cost estimates are accurate and required delivery dates (RDDs) are achievable. Designation memoranda and country plans are reviewed by OUSD(P), DoD GC, ASD/LA, OUSD(C) and the Joint Staff, before presentation to the Secretary of Defense for concurrence. The Secretary of State provides final approval. OUSD(P) and State (Political Military Affairs) prepare and submit Congressional Notification of GSCF transfers and country plans, as required by law. DSCA and other USG agencies jointly execute efforts identified in the country plans.

C15.1.4.11.2. Funds Availability. GSCF program authority terminates at the end of FY15, in accordance with the FY12 NDAA. However, funds contributed to the GSCF account before the end of FY15 will remain available after that date for obligation against GSCF programs that began before the end of FY15 (P.L. 112-81, Sec 1207(i)). DSCA (Business Operations Directorate) may issue GSCF funds against a BPC case or against a Funding Authorization Document (FAD). Funds are available until expended against GSCF programs.

C15.1.4.11.3. Implementation and Execution. DSCA (Programs Directorate) centrally manages the GSCF program for DSCA. The DSCA Program Manager coordinates planning efforts, program feasibility reviews, collaboration with other agencies and support to the GSCF program office. The IA develops GSCF cases in DSAMS, and the DoD component executing specific portions of a country plan works with the CCMD to complete project planning, so that implementation can occur as soon as funding is made available. The IA or DoD component will provide weekly and monthly status updates to the DSCA Program Manager via teleconference and IT reporting systems. DSCA (Programs Directorate) will provide monthly project execution reports to OUSD(P) and the GSCF program office via teleconference.

C15.1.4.12. Section 1263 South China Sea Initiative (SCSI). Section 1263 of the NDAA for Fiscal Year 2016 (P.L. 114-92) provides authority for the South China Sea Initiative until September 30, 2020. This section authorizes the Secretary of Defense, with the concurrence of the Secretary of State, to provide assistance (equipment, supplies, defense services, training, and small-scale military construction) to assist the national military or security forces that have maritime security missions as part of their fundamental responsibilities in the countries of Indonesia, Malaysia, the Philippines, Thailand and Vietnam. Section 1263 may also be used to pay for training for ministry, agency and headquarters level organizations of these countries. Further, this section authorizes the Secretary of Defense to pay the incremental expenses (i.e., per diem, incidental expenses, and travel costs to and from the partner nation) associated with training of organizational personnel of Brunei, Singapore, and Taiwan.

C15.1.4.12.1. Section 1263 is funded with one-year Operations & Maintenance (O&M) funds, which are only available for new obligations until September 30 of the year of appropriation. Civilian and military personnel services, to include any related travel and per diem, must cease program-related activities no later than the end of the period of funds availability (September 30 of the year of appropriation). For the procurement of articles that under normal production may not be delivered to the USG until after the funds period of availability has expired, the lead-time exception to the bona fide needs rule allows the USG to obligate the funds to procure the articles during the funds period of availability and deliver the items in the subsequent fiscal year. In addition, O&M funds authorized for non-severable services under the Section 1263 authority may be obligated during the current fiscal year even though the services being performed may cross into the next fiscal year. Non-severable contracted services, such as below the line transportation, unpacking, assembly, and basic initial operation and maintenance training necessary to operate the equipment, are typically considered to be non-severable services associated with the equipment delivery. By contrast, tactical training, field service representatives, and deployment training and services generally constitute severable services. The contracting officer at the executing activity, with the advice of counsel, will review the contract statement of work to determine if contractor services are severable or non-severable. For guidance on contractor-provided services, refer to Section C15.3.4.1., "Contractor Services", and the relevant subparts C15.3.4.1.1. for Severable Contractor Services and C15.3.4.1.2. for Non-Severable Contractor Services.

C15.1.4.12.2. Although funds for training are considered obligated on the date the student enters the course, based on the expiring nature of Section 1263 funding and the lack of cross fiscal year authority, any USG-provided training must be obligated and accomplished within the appropriation fiscal year and may not extend beyond September 30 of the same fiscal year.

C15.1.4.12.3. Transportation services are considered non-severable when using Below-The-Line Transportation because they are assessed as an indirect charge to the line and funds are obligated when the line item is obligated (i.e., when a contract is awarded or a requisition is placed). Funds on Transportation Cases or Transportation Lines on cases, however, are severable and will expire for obligation on September 30 of the appropriation year because there is no valid obligation for the funds (i.e., the transportation provider has not accepted the funds and no manifest for transportation has been established).

C15.2.1. General. During the planning and requirements definition phase of a BPC case, the Requesting Authority must determine program objectives and develop the request packages, with input from the Security Cooperation Organization (SCO), the Implementing Agency (IA), the Benefitting Country, and other stakeholders. The IA needs detailed requirement information to source the defense articles and services appropriately. The Requesting Authority should clearly communicate a linkage between the provision of defense articles and services and the achievement of specific U.S. national security objectives; so that program effectiveness can be assessed following case execution. This phase of a BPC case concludes with the Requesting Authority’s submittal of a detailed, coordinated Memorandum of Request (MOR) that is executable by the IA within funding and timeline limitations.

C15.2.2. BPC Programs and Authorities. Implementation of BPC programs and execution of appropriated funds must comply with authorizing legislation. To accurately track the use of funds in support of specific authorization, DSCA assigns a unique 2-digit program code to each BPC program and applicable appropriation. Table C15.T2. lists each BPC program administered by DSCA with its public law authorities and assigned program codes. Table C15.T2, Fund Source column, provides the fund source associated with each code and indicates whether the funds are from DoD or are from a non-DoD agency, and provided via a Foreign Assistance Act (FAA), Section 632(b) Memorandum of Agreement (MOA). The Appropriation Authority, Expiration Date and Cancelling FY columns indicate the fiscal year that the appropriation was signed into law and its timeline. As appropriations cancel, BPC program codes associated with them are removed from the table.

C15.2.2.1. DoD Appropriation Timeline. DoD funding for BPC programs is available for new obligations for a period of time specified by law, generally a one- or two-year period. At the end of this period, on September 30th, funds expire and remain available only for adjustment to or expenditure of obligations which were entered into during the appropriation's period of availability. Five years after the end of the period of availability, on September 30th, the appropriation cancels and funds are no longer available for any purpose.

C15.2.2.2. Non-DoD Appropriation Timelines. DSCA receives funds for BPC programs from non-DoD agencies in accordance with various transfer authorities and subject to varying appropriation timelines. Non-DoD funds generally have a one- or two-year initial period of availability specified by law. When used in support of a BPC program, the funds are obligated by the Funding Authority upon final signature of an FAA Section 632(b) Memorandum of Agreement (MOA) with DSCA. Once the funds have been properly obligated in this manner during their initial period of availability, the funds are available for execution by the IA in accordance with timelines specified in the appropriation legislation.

C15.2.2.2.1. DoS Appropriations Available in Fiscal Year (FY) 2012 and Future Years. Beginning with certain DoS funds available in FY12 (e.g., PKO, International Narcotics Control and Law Enforcement (INCLE), and PCCF), DSCA will apply an authority pursuant to Section 511 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act (FOAA) (P.L. 108-447) and subsequent appropriations that provides a four-year deobligation and reobligation period after the appropriation’s initial period of availability; during this four-year period, DoS may deobligate funds that were obligated in the initial period of availability and reobligate them for new purposes (within Congressionally notified scope). DoS will inform DSCA of their requirement to deobligate funds by proposing an Amendment to the FAA Section 632(b) Memorandum of Agreement which originally transferred the funds. When provided to the IA, the funds are available for obligation by the IA until the end of the four-year deobligation/reobligation period. After this period ends, the funds remain available for an additional five years only for adjustment or disbursement against obligations entered during the initial period of availability and the deobligation/reobligation period; no new obligations or changes in scope are allowed. On September 30th, nine years after the end of the initial period of availability, the funds cancel and are no longer available for any purpose.

C15.2.2.2.2. Other Appropriations. DoS appropriations which expired prior to and at the end of FY11 are generally considered available until expended. IAs should consult Table C15.T2. for availability dates applicable to these funds and to other non-DoD funds that are provided in support of BPC programs.

Table C15.T2. BPC Programs and Authorities

C15.2.3. International Agreements and Treaties in Force. Requesting Authorities will plan and execute BPC programs in accordance with applicable bilateral and multilateral international agreements and arrangements. Specific agreements and arrangements are made with each Benefitting Country. Table C15.T3. provides a listing of some of the more common agreements. The SCO will maintain copies of these documents, as applicable, and be familiar with their contents. Copies should be shared with the CCMD, USG planners and Benefitting Country Ministry of Defense (MoD) counterparts, as necessary, to ensure all contributors are cognizant of their contents. The SCO may obtain a copy of its country's Section 505 Agreement (as amended by any diplomatic notes) from the Pol/Mil Officer within the U.S. Embassy or from the DSCA CPD.

Table C15.T3. International Agreements

International Agreement Purpose

FAA, Section 505 Agreement

A bi-lateral exchange of diplomatic notes initiated by DoS in which the Benefitting Country provides end-use, security, and re-transfer assurances with respect to U.S. defense articles and services transferred via grant. Section 505 Agreements are a requirement of law for grant transfers.

Unilateral Diplomatic Note amending the Section 505 Agreement

Amends the Section 505 Agreement to apply to the U.S. assistance under consideration, in addition to those included in the original Section 505 Agreement. Generally, DoS(PM) will initiate the diplomatic note from the U.S. Embassy when a partner nation is approved to benefit from a BPC program.

Status of Forces Agreement (SOFA)

The SOFA generally establishes the legal framework under which DoD military and civilian personnel operate in a partner nation, addressing matters such as taxation, criminal jurisdiction, claims, drivers’ licenses, privileges and immunities. The U.S. does not pursue a SOFA with each partner nation, and a SOFA is not required before a partner nation may receive BPC program assistance.

General Security of Military Information Agreements (GSOMIA)

Legally binding international agreements that establish terms for the protection and handling of classified military information provided by either partner to the other. Agreements that handle other types of classified information in addition to classified military information are referred to as General Security of Information Agreements (GSOIAs).

Communications and Information Security Memorandum of Agreement (CISMOA)

Establishes terms for secure communications interoperability and security

Bi-Lateral or Multi-Lateral Treaties

Various – e.g., NATO Treaty, NATO SOFA, U.S.-UK Defense Trade Cooperation Treaty.

Other Agreements and Memorandum of Understanding (MOU)

Various – e.g., RDT&E Agreements, Reciprocal Defense Procurement MOUs, coproduction agreements.

C15.2.4. Planning and Coordination. Most BPC program and case planning will occur in conjunction with annual CCMD security cooperation planning, which is organized by the CCMD J5 (or J4 for the U.S. Pacific Command (USPACOM)) in a series of regional and country-focused working groups and documented in the Theater Security Cooperation Plan (TSCP). Crises, targeted appropriations, and other events may make it necessary for the Requesting Authority to begin BPC case planning outside the annual CCMD planning process. Some authorities, like Section 2282, have their own annual coordination cycles. In every instance, the Requesting Authority should initiate coordination with the appropriate IAs, other key USG stakeholders, and the CCMD J5 as early in the process as possible. It is often beneficial to invite participation from the SCO, the Military Departments (MILDEPs), and regional experts within OUSD and DoS.

C15.2.4.1. International Sanctions and Leahy Restrictions. The Requesting Authority must confirm that the Benefitting Country is not under sanctions and is otherwise eligible to receive BPC program assistance from the USG. DoD and DoS “Leahy” human rights vetting requirements must be completed, as applicable, before a Benefitting Country receives BPC program assistance. The DoS Leahy law (Section 620M of the FAA) provides that no assistance may be provided under the FAA or the Arms Export Control Act (AECA) to any unit of the security forces (including an individual) of a Benefitting Country if the Secretary of State has received credible information that such unit has committed a gross violation of human rights, unless the partner nation is taking effective steps to bring the responsible members of the security forces unit to justice. The DoS Leahy law applies to DoS authorities and certain DoD authorities, such as Section 2282, pursuant to the terms of those authorities. The DoD Leahy law is provided in the annual DoD Appropriations Act, and it provides that DoD appropriations may not be used to support a training program involving a security forces unit (including police) of a partner nation if the Secretary of Defense has received credible information from DoS that the unit has committed a gross violation of human rights, unless all necessary corrective steps have been taken.

C15.2.4.2. Benefitting Country Involvement. The SCO will advise the Benefitting Country of BPC program objectives and the Benefitting Country’s role in the BPC case process. Benefitting Country representatives should provide details of their existing capabilities, capacity, and security requirements to enable identification and prioritization of BPC requirements. The Benefitting Country should also indicate its ability to support and sustain the articles and services under consideration after delivery.

C15.2.4.2.1. Sharing Case Information With Benefitting Countries. The SCO may share information that contributes to defining requirements; arranging for delivery, Benefitting Country Customs processing, and security; operating and sustaining the defense articles; and achieving training objectives. SCOs are encouraged to share requirement information with Benefitting Country representatives, as appropriate, to support U.S. objectives. Once the BPC case is implemented, the SCO may share the pseudo LOA and supporting documents (with the exception of protected information listed below) with Benefitting Country MoD representatives, as appropriate. Case information will be shared consistent with U.S. national security interests, and in accordance with any existing international agreements. Release of information regarding the schedule of shipments or training events does not constitute a commitment of the United States and SCOs should clearly communicate this to Benefitting Country representatives. No guarantee of assistance can be made until the defense articles or services are delivered and title and custody has been properly transferred. See Section C15.5.5.

C15.2.4.2.2. Protected Information. SCOs may not share internal USG correspondence or information about internal USG discussions regarding case requirements with Benefitting Country representatives. The following information may not be shared and must be removed from case documents prior to release unless the IA has obtained authorization from DSCA (Strategy Directorate) to share the information:

C15.2.4.2.2.1. Pre-decisional case information (to include the draft pseudo LOA);

C15.2.4.2.2.2. USG internal correspondence regarding the case (e.g., e-mails, meeting minutes) or any internal USG planning information, policy determinations or justifications regarding the case;

C15.2.4.2.2.3. Information pertaining to another partner nation (a pseudo LOA with multiple Benefitting Countries must be carefully screened prior to sharing);

C15.2.4.2.2.4. The FAA 632(b) MOA or other pseudo LOA funding documents;

C15.2.4.2.2.5. Proprietary information from any source; or,

C15.2.4.2.2.6. Contract documents or commercially sensitive information, to include the Statement of Work (SOW).

C15.2.4.3. Identification of Desired Capabilities. The Requesting Authority, in coordination with the CCMD (if it is not the CCMD itself), should define Benefitting Country military roles required to meet security objectives under existing and emerging security environments. For each capability considered, this assessment should ideally include an analysis of doctrine, organization, training, materiel, leadership, personnel, and facilities within the Benefitting Country so as to prevent an overly narrow focus on equipment or training solutions. The assessment, captured in the CCMD’s Country Campaign Plan, should also consider the Benefitting Country’s political will to apply the capabilities, the national legal framework that permits or circumscribes the application of the capabilities in support of the desired partner role, and the capacity of the MoD and other supporting institutions to sustain the capabilities. The Country Campaign Plan articulates how desired roles and capabilities relate to specific CCMD and national-level strategic objectives. The U.S. Embassy includes desired partner nation objectives in the Mission Strategic Resource Plan (MSRP).

C15.2.4.4. Prioritize Requirements. Once initial planning has occurred, the Requesting Authority will identify a prioritized list of partner capacity/capability shortfalls that the partner nation is willing to address and the Country Team within the U.S. Embassy is willing to support. This will help direct resources toward the most urgent requirements, assure proper sequencing of the delivery of new capabilities, facilitate the creation of capability packages, and provide scale-ability to the overall program should only a portion of requested funds be available. Prioritization should be done in coordination with IAs and CCMD staff, and should take into consideration any known restrictions on the use of funds.

C15.2.4.5. Capability Package Planning. The Requesting Authority will translate prioritized requirements into packages of specific, actionable, and sustainable BPC program requests. For complex programs, or to obtain more definitive assessments, USG subject matter experts may conduct site visits to consult with Benefitting Country representatives, inspect equipment, evaluate institutional capacity, and assist the Requesting Authority in capability package planning. An Expeditionary Requirements Generation Team (ERGT) could be established to accomplish this. See Section C2.4.2.

C15.2.4.6. Total Package Approach (TPA). Where appropriate, BPC MORs should present a TPA to the provision of defense articles and services for capacity building. During planning, the Requesting Authority should consider and address follow-on support and effective sustainability, recognizing that BPC programs are time-limited by their appropriations. Adequate sustainment support may require spares, additional training, consumables, and possibly contractor logistics support that exceed BPC program funding timelines.

C15.2.5. Feasibility Assessment. The IA will conduct a feasibility assessment to verify that requirements are actionable and funds can be obligated within time and budget constraints. Feasibility assessments identify any documentation needed to complete the MOR package, such as a Country Team Assessment and CCMD endorsement; definition of requirements; technology security and foreign disclosure releases; accurate equipment, training, and support cost estimates; transportation plans; and special contracting requirements.

C15.2.5.1. Funds Execution Planning. The IA will verify that all case funds can be obligated before the expiration date provided in Table C15.T2. If funds for a required effort cannot be obligated before the period of availability for new obligations expires, the IA will identify this to the Requesting Authority and the DSCA CPD. Similarly, the IA will consider materiel shipment requirements and ensure that sufficient transportation funds are identified in the MOR and collected below-the-line on the LOA.

C15.2.6. Memorandum of Request (MOR). The Requesting Authority, in accordance with its internal procedures, finalizes and submits an MOR to the IA with a copy to the DSCA Program Manager and CPD. MORs must be submitted in unclassified communication channels so they are accessible to all stakeholders; formats vary according to the program. See Table C15.T4. for a list of MOR information. Section 2282 Program MORs (referred to as proposals) are first submitted to OUSD(P), which forwards them to DSCA and other organizations for review in accordance with DoD Instruction 5111.19. Requesting Authorities should submit completed MORs no later than the first quarter of the fiscal year to allow adequate time for case development and funds obligation. After receiving a completed MOR, the IA should develop and implement supporting BPC cases within 60 days. See Table C5.T6, for Group D.

C15.2.6.1. Memorandum of Agreement (MOA). Programs executed with funds transferred to DSCA pursuant to a FAA Section 632(b) MOA may convey MOR information within the MOA at the time the program is funded, as an appendix to the MOA, or within a separate document. An example of an FAA Section 632(b) MOA in which funds for the GPOI under the PKO appropriation are transferred and project requirement information is specified is shown in See Table C15.F1. Similar language is used for transfer of other non-DoD funds.

Table C15.T4. MOR Information

Figure C15.F1. Example FAA Section 632(b) Memorandum of Agreement (MOA)

Figure C15.F2. Guidance for Sole Source Justification

C15.2.7. Congressional Notification and Funding. BPC program execution is subject to Congressional Notification before funds are made available for case implementation. The Congressional Notification process, managed by the Funding Authority, may take place prior to MOR submittal, concurrent with case development, or even after case development, but must be completed prior to case implementation. DSCA Case Writing Division (CWD) will withhold offering any pseudo LOA until confirmation that this process has completed, but it is imperative that the IA and DSCA (Operations Directorate) ensure each LOA is ready to offer as early in the year as possible, to take full advantage of remaining time for funds obligation, funds expenditure, and case execution.

C15.2.7.1. DoD-Funded Programs. The DoD Requesting Authority initiates the Congressional Notification process by submitting proposals/requirements to OSD. OUSD(C) or OUSD(P) coordinates the notification packages with DSCA, DoS, and OSD Legislative Affairs before they are submitted to the Secretary of Defense (as required) and then to Congress for the required notification period. BPC program funds may be notified annually or may be notified in multiple tranches during the fiscal year. The level of detail required for each Congressional Notification varies. Once the notification period expires and no Congressional holds remain, OUSD(C) authorizes release of funds to the appropriate DoD comptroller office for use in support of BPC programs.

C15.2.7.2. Non-DoD-Funded Programs. USG departments and agencies that fund BPC programs are responsible for preparing and submitting Congressional Notification and/or approval packages based on program requirements. For example, DoS(PM) submits the PKO Congressional Notification and is responsible for obtaining necessary congressional approvals. Only after any required notification and waiting period is complete will DSCA accept funds from a non-DoD agency using an FAA Section 632(b) MOA. See Figure C15.F1.

C15.3.1. General. The Requesting Authority and Security Cooperation Organization (SCO) will remain actively engaged during case development to clarify requirements, ensure development is on-track, and maintain communications with the Benefitting Country. The Implementing Agency (IA) will document and price the required materiel and services on a pseudo LOA. The DSCA Case Writing Division (CWD) will place the BPC case in Offered status once all programmatic and policy requirements have been met.

C15.3.2. Initiating a Pseudo LOA. The DSCA Country Program Director (CPD) will forward a copy of the Memorandum of Request (MOR) to the IA, identify the allowed total case value (TCV), and provide a unique case identifier. The case identifier is a 6-position alpha-numeric string which includes the program code, the single-position IA code of the DoD component providing the support, and a 3-position case designator (e.g., E7-B-UAC). The Defense Security Assistance Management System (DSAMS) will attach pseudo LOA information (in lieu of FMS LOA information) and validate the entry of BPC case data. Each program code in DSAMS is associated with the programs authorized Benefitting Countries. If a pseudo LOA document must benefit more than one Benefitting Country, the IA will first coordinate this with the DSCA Country Financial Director (CFD). The Benefitting Country FMS country code (found in Table C4.T2. and distinct from the BPC code) will be selected by the IA at the line level in DSAMS. Table C15.T5. provides Instructions for preparing a Pseudo LOA document, to be used with BPC Program data provided in Table C15.T2. and the definitions of terms provided in the Pseudo LOA Information document.

Table C15.T5. Instructions for Preparing Pseudo LOAs

C15.3.3. Pricing. The IA will price defense articles and services for pseudo LOA documents in accordance with the DoD Financial Management Regulation (FMR), DoD 7000.14-R; Volume 11A, for reimbursable operations, the authorizing legislation and relevant financial management policy for the funds. The IA must exercise care whenever items and quantities on the LOA change to ensure they do not change or exceed the nature and scope of the congressionally notified program. Depending on the requirements of the authorizing statute, there may be no flexibility in adjusting or exceeding the notified quantifies or values.

C15.3.3.1. Standard Level of Service. DSCA Directorates and IAs will render the same level and manner of service for management of BPC cases as they do for management of FMS cases. See Table C9.T2. Funding Authorities may approve payment for above standard level of service activities as long as the requirement is clearly justified in the MOR. The IA will include a charge for above standard level of service on the pseudo LOA or on a separate management case for the BPC program.

C15.3.3.2. Defense Articles. The price of defense articles sold under BPC program authority is the acquisition cost, adjusted as appropriate for condition and age.

C15.3.3.3. Defense Working Capital Funded (DWCF) Materiel and Services. The selling price is the DWCF current standard price. Payments or reimbursements are credited to the DWCF providing the items.

C15.3.3.4. Non-Excess Procurement Assets Not to be Replaced. The IA will set the price for these assets at the sum of the most recent actual procurement cost and modifications or improvements incorporated after production, adjusted for age or condition, plus prorated overhaul cost. The IA deposits payments from the Funding Authority into the Miscellaneous Receipts Account.

C15.3.3.5. Non-Excess Procurement Assets to be Replaced. The DoD Budget and/or Future Years Defense Program (FYDP) must reflect intent to acquire replacements for such assets before they are included on a BPC case. The Funding Authority will make reimbursements equal to the estimated replacement cost, including the contract or production costs of the article less an adjustment for age and condition of the item being sold.

C15.3.3.6. Procurement. The unit cost restrictions contained in 10 U.S.C. 2245a and the annual appropriations act for DoD enacted by Congress do not apply to the use of Operations and Maintenance (O&M) funds for procurement of defense articles in support of BPC programs unless specifically applied by Congressional authorization. Refer to the DSCA Office of General Counsel (OGC) for more information. The IA does not need an Offshore Procurement Waiver to contract with non-U.S. contractors in support of a BPC program.

C15.3.3.6.1. Buy American Act. The provisions of the various Buy American Acts may not themselves apply to all BPC programs; however, similar provisions under the Balance of Payments Program (BPP) regulations will generally apply. These require DoD to purchase only U.S. domestically produced end-products (as defined by BPP regulations). The IA should consult with its Contracting Offices and Program Offices to ensure compliance with the requirements of Buy America, BPP and other non-domestic procurement laws.

C15.3.3.7. Training. The IA will apply Rate D for tuition-based training funded with BPC program funds (see DoD FMR Volume 15, Chapter 7). For training requiring dedicated resources, the full cost of the training will be applied (excluding military pay and civilian unfunded retirement). The IA will enter all BPC training in the DSAMS Training Module, to include training provided by Mobile Training Teams (MTTs). The SCO will record all Benefitting Country student information in the Security Cooperation Training Management System (SC-TMS) prior to the training start date. See Section C10.4.2.

C15.3.3.8. Services. Non-training services will be priced using the DoD FMR Volume 11A. See Section C15.3.4.

C15.3.3.9. Surcharges and Accessorial Charges. The IA will apply the FMS Administrative Surcharge, Contract Administrative Services (CAS) surcharge, and accessorial charges (such as packing, crating, handling (PC&H) and transportation) to the pseudo LOA. Outside Continental United States (OCONUS) CAS is not applicable when Defense Contract Management Agency (DCMA) personnel are present in a Benefitting Country for the purpose of supporting DoD. OCONUS CAS on a BPC case, however, is applicable to DCMA personnel present in a Benefitting Country only to support an FMS case (i.e., full-time employees, 90 percent or more of their time devoted to an FMS case).

C15.3.3.10. Travel and Living Allowances (TLA) for Training. The IA will coordinate with the DSCA CPD to ensure CONUS or OCONUS training is appropriate before including such training in the pseudo LOA. The IA may include appropriate TLA charges on BPC cases in accordance with the authorized living allowance rates in Table C10.T12. Approval from DSCA (Building Partnership Capacity Directorate) to include TLA charges on the pseudo LOA is not required. Refer to Section C15.3.4. to ensure that projected training schedules comply with period of performance restrictions applicable to the BPC program.

C15.3.3.10.1. Medical Expenses. The IA may add a separate line to the LOA to cover unforeseen medical expenses in the event that the student does not possess medical insurance. If funds on the case are insufficient to cover unforeseen medical expenses, the case may be amended and BPC program funds may be added to the case.

C15.3.3.10.2. Dependent Travel. Dependents may accompany the student to BPC training in CONUS or OCONUS at the dependents' expense, if they possess adequate personal healthcare insurance and the training facility is listed in Table C10.T11.

C15.3.3.11. Transportation Charges. DSAMS will automatically apply the DoD transportation rates for standard transportation of BPC case materiel, which includes the use of channel flights, for each applicable line on the pseudo LOA. These below-the-line transportation charges (called such because they are added on the LOA estimated cost summary below the line item net estimated cost) are collected into a Transportation Cost Account within the FMS Trust Fund. Below-the line transportation expenses are subsequently paid from this account. There are specific situations, however, in which the standard transportation rate will not be applied. If an IA deviates from the standard percentage rate, it must enter a case remark in DSAMS to provide the rationale for the rate being used.

C15.3.3.11.1. Transportation to a Consolidation Point. The IA may consolidate materiel at a CONUS inventory control point in order to manage multiple shipments of materiel to a Benefitting Country. If materiel consolidation is planned during case development, the IA will include a case note on the Pseudo LOA document to describe the intended consolidation and cite the separate case (if known) that will provide funds for materiel handling at the ICP and onward shipment into the Benefitting Country. The IA will inform their billing office to override the DTC rate calculation on the case in development by entering an appropriate Transportation Bill Code (TBC) to fund only transportation to the ICP at the time of delivery booking.

C15.3.3.11.2. Separate Transportation. If a separate transportation case will fund transportation of materiel to the Benefitting Country (other than from a consolidation point), the IA should not include a transportation charge on the Pseudo LOA. The IA will include a case note that identifies the lines that will be transported via a separate case and provide that case’s identification. This information will also be entered when the TBC is selected.

C15.3.3.11.3. Premium Transportation. If a line item will be transported via a Special Assignment Airlift Mission (SAAM) or other premium transportation, the transportation service is entered as an above-the-line direct charge and not assessed on a rate basis.

C15.3.3.11.4. Prime Vendor Transportation. For system sales and more complex acquisition and sustainment efforts, the IA may request approval from DSCA (Strategy Directorate) for the prime vendor to transport and make delivery of materiel to the in-country location. The Prime Vendor’s contract price will include a cost for transportation and DTC 4 will be cited against the line. The IA will include a note in the pseudo LOA to describe the transportation and delivery arrangements.

C15.3.3.12. Engineering Services and Construction. Absent specific statutory authorization, BPC programs cannot be used for engineering services or construction to accomplish infrastructure projects within a Benefitting Country that are in support of U.S. forces. Such projects are governed by the laws regarding military construction, 10 U.S.C. Section 2801, implementing regulations and guidance provided by the CCMD.

C15.3.3.13. Nonrecurring Costs (NC). USG appropriated funds will not be used to pay NC; therefore, IAs will not apply NC to pseudo LOA documents.

C15.3.4. Period of Performance for Services. The allowable period of performance for services funded under a BPC case is subject to time limitations provided in the DoD FMR and in authorizing legislation. These limitations are different from the funds’ period of availability for new obligations; all BPC funds for services must be obligated during their period of availability regardless of the period of performance for services. The IA will make its best efforts to perform services in compliance with the Funding Authority's required delivery date (RDD) or period of performance.

C15.3.4.1. Contractor Services. Contractor services are categorized as either severable or non-severable, according to the definition provided in DoD FMR, Volume 3, Chapter 8, section 080303.C. Each category of service is subject to separate period of performance restrictions which the IA must comply with to avoid Anti-Deficiency Act violations.

C15.3.4.1.1. Severable contractor services are generally performed within the year of funds availability. However, under 10 U.S.C. 2410a, the period of performance for severable contract services entered into by a DoD component must begin during the period of funds availability and may end in the subsequent year, provided the contract period does not exceed 12 months (absent other legal authority). The contract period is limited to 12 months even if the funds availability period has not ended (e.g., during a four-year deobligation/reobligation period for PKO funds, severable service contracts might end before the funds period of availability). Option years on a contract are treated as new contracts.

C15.3.4.1.2. Non-severable contractor services, such as services to produce a single or unified outcome, product, or report, will be funded entirely at the time the contract is awarded, though the period of performance may extend across fiscal years. Contractor-provided new equipment training and installation at a basic level are considered non-severable services when necessary for the installation or operation of the actual equipment. This includes basic quality assurance testing to ensure that the items are in operating order. For example, if a Benefitting Country under an FY 2011 appropriation is to receive radios and antennas with a lead-time allowing deliveries in November 2012, FY 2011 funds can be used to place basic radio operator training and antenna installation on contract so that training and installation can be conducted when the equipment is delivered.

C15.3.4.2. Government-sourced Services. The IA may use current year BPC funds to pay for training and services to be executed by U.S. Government sources, such as U.S. Government civilian and military personnel, as long as the funds are fully obligated prior to their expiration (unless programs are specifically authorized to continue by legislation). See Section C15.5.2. This generally requires that civilian and military personnel funded under a BPC case must cease program-related activities no later than the end of the period of funds availability. Government-sourced services may be funded and performed for multiple fiscal years if BPC case funds remain available.

C15.3.4.3. "Cross Fiscal Year" Authority. Congress provided the Section 2282 Program with "cross-fiscal year" authority, applicable to both contracted and government-sourced services funded with Section 2282 program funds (See FY 2009 NDAA, P.L. 110-417, Section 2282(b)). The cross fiscal year provision was retained in the Section 2282 authority. This authority provides a time-limited exception to the bona fide needs rule, which requires that appropriated funds be used only for goods and services during the period of availability for new obligations. Pursuant to the cross fiscal year authority, amounts available for a fiscal year may be used for programs that begin in the fiscal year when funds are available for obligation and end in the subsequent fiscal year. Services and training are obligated during the period of availability, even though the actual commencement of services and training may occur in a later fiscal year. This authority does not extend the period of availability for new obligations; all Section 2282 or Section 2282 funds must be obligated prior to the end of the period of availability. Performance of program services may extend to the end of the subsequent fiscal year (to include services such as travel and government civilian services as they pertain to TDY that is appropriately charged to the program). Funded civilian personnel are not required to cease their Section 2282 or Section 2282 related activities at the end of the appropriation fiscal year. If military pay is part of the reimbursable expense (i.e., under contingency operations), it may be reimbursed from Section 2282 or Section 2282 funds.

C15.3.4.4. Full Operational Capability. Section 2282 retains "the cross fiscal year" authority language as described in Section C15.3.4.3. and adds the "full operational capability" provision in 10 U.S.C. Section 2282(c)(4)(B). The Full Operational Capability authority provides an additional time-limited exception to the bona fide needs rule to allow the use of funds from the original period of availability into the fiscal year after the partner nation takes receipt of the equipment and the next fiscal year. Full operational capability authority does not extend the period of availability for new obligations; all Section 2282 funds must be obligated prior to the end of the fiscal year of Congressional Notification.

C15.3.4.4.1. Full Operational Capability authority is available only if the equipment under the 2282 program is delivered to the USG before the end of second fiscal year (the fiscal year after Congressional Notification). If articles are not delivered to the USG by the fiscal year after the fiscal year of Congressional Notification, the time extension provided in the full operational capability provision does not apply. In such cases, cross-fiscal year authority is still available to procure and deliver long-lead items. Funds for services, other than initial operator and maintenance training, following delivery of the equipment default to the limitations of the cross fiscal year authority. Therefore, if such services require additional funds, the CCMD must request current year funds from OSD (SO/LIC).

C15.3.4.4.2. To enable the partner nation to achieve full operational capability, funding for supplies, training, defense services, and small-scale military construction associated with the equipment necessary may be used in the fiscal year the partner nation takes receipt of such equipment and the next fiscal year.

C15.3.4.4.3. DSCA Memorandum 15-45 dated August 5, 2015 directs the use of the Months of Service (MOS) field in DSAMS to be the date(s) the items/services will be delivered to the purchaser; for BPC LOAs, this is the USG. Also, a case note must be added detailing the dates that the articles/services will be provided to the benefiting country. Cases must reflect this fact; however, cases currently in development as of August 5, 2015 that are not following this guidance will not be returned to have the correction made. In those instances, as a matter of case administration and management of significant equipment with associated out-year support requirements, the IA must indicate in a case note the quarter of delivery of all SME/MDE articles to the USG.

C15.3.4.4.4. The goal is to deliver the articles to the partner nation within 120 days of receipt by the USG or as soon as practical. For all deliveries to the partner nation that occur in the third fiscal year after the fiscal year of Congressional Notification and exceed the 120 day target delivery to the partner nation, the IA must prepare a memorandum explaining the extenuating circumstances and provide an updated execution plan with key performance milestones. The updated execution memorandum will be sent to DSCA BPC, and coordinated with DSCA Directorate of Business Operations (Country Financial Management (CFM) division and Financial Policy & Analysis (FPA) division) for approval before funds may be expended for follow-on services and training activities.

C15.3.4.4.5. If articles require redirection to a different partner nation than originally notified to Congress, OSD (SO/LIC) will notify Congress and provide additional guidance to DSCA and the IAs on a case by case basis.

C15.3.4.5. Services Under a Continuing Resolution (CR) Appropriation. When developing a pseudo LOA document that will be funded under a CR appropriation that lapses before the end of the fiscal year, the IA will specify the required period of performance for services in accordance with regulation and disregarding the CR expiration date. For example, if the CR appropriation ends on December 15, 2011 but the required period of performance extends to March 31, 2012, the pseudo LOA document will be written to reflect performance period extending to March 31, 2012. The IA must ensure that the pseudo LOA is for activity that is allowed by the CR. For example, CRs generally prohibit the initiation of projects for which appropriations, funds or authority were not available during the preceding fiscal year. The IA will provide written notification via e-mail or memo to the service provider to clarify that obligations are subject to the availability of funds. See Section C15.3.7.3.1. for a discussion of funds obligation under a CR appropriation.

C15.3.4.6. Section 1207(n) Period of Performance. Funds obligated in support of Section 1207(n) efforts during the period of their availability are available for expenditure against those obligations in subsequent fiscal years for the duration of the efforts, even if the duration spans multiple years. The performance of severable services under 1207(n), to include government oversight and project management may also extend for the duration of the effort. This authority does not extend the period of availability for new obligations for the Section 1207(n) appropriation; all funds providing support through subsequent fiscal years must be obligated prior to the end of the appropriation fiscal year.

C15.3.5. Signed Copy Distribution. The following statement will be automatically included after the payment schedule portion of each pseudo LOA document:

  1. “Upon acceptance, the LOA Implementing Agency will sign one copy of this LOA document and retain the signed copy in case files.

  2. Simultaneously, the LOA Implementing Agency will enter the Accepted milestone into the Defense Security Assistance Management System (DSAMS), enabling the Defense Security Cooperation Agency (DSCA) to proceed with funds collection and case implementation.”

C15.3.6. Notes. Notes on a Pseudo LOA do not represent the terms and conditions of an international agreement, but rather they communicate case information necessary for proper handling of the case and case materiel. Appendix 6 lists standard notes applicable to BPC cases. The IA is responsible for adding non-standard notes, as required. Line item description notes for training, service, or technical assistance lines will include an explanation of the category of service (severable or non-severable) along with the expected period of performance for services.

C15.3.7. Offer of the Pseudo LOA.

C15.3.7.1. Submittal to DSCA CWD. The IA will make every effort to submit Pseudo LOA documents to DSCA CWD early in the fiscal year so they can be Implemented at the earliest opportunity. If the LOA will be funded via FAA Section 632(b), a copy of the 632(b) MOA (and any amendments thereto) will be attached to the LOA package. At the latest, the IA should place the LOA in Writing status in DSAMS with at least 60 days before the BPC program funds expire for new obligation.

C15.3.7.2. DSCA and DoS Approval. After the pseudo LOA is reviewed and approved by DSCA and the IA, it will be coordinated with DoS(PM) via the daily State List. Either during or prior to this review, the Funding Authority will provide DSCA CWD with confirmation that all processes required by law have been completed (including Congressional Notification) and provide assurance of funding.

C15.3.7.3. Fund Source, Availability and Amount. DSCA CWD will place the LOA into Offered status, ensuring the Fund Source, Availability and Amount note cites the current appropriation authority and fund source. Obligation and expenditure of the case funds are subject to the terms, conditions and expiration date specified in the appropriation. Case funds must be obligated prior to the end of their period of availability.

C15.3.7.3.1. Continuing Resolution (CR) Appropriations. Congress may pass a CR appropriation that partially funds BPC programs and for a specific time period, rather than a full year. If a pseudo LOA is Offered using a CR appropriation and the case funds are not subsequently obligated prior to the CR expiration, the funds will generally not be available for use unless the appropriation time period is extended or replaced by a subsequent appropriation. If the CR is extended or replaced by a subsequent appropriation, case activity and funds obligation may proceed (the CR appropriation cited in the Fund Source, Availability and Amount note will need to be revised prior to case closure), subject to the terms and conditions of the new appropriation. If the CR is not extended or replaced, however, any funds not yet obligated become no longer available.

C15.3.7.3.2. Modification to Reflect Final Fiscal Year Appropriations. Every Implemented case that does not cite a final FY appropriation in the Fund Source, Availability, and Amount note will need to be modified prior to case closure to cite the final appropriation. Usually, this is accomplished when other case changes are implemented. For example, a BPC case implemented under the FY11 CR that expired on March 4, 2011, may carry the reference to that CR funding appropriation throughout its execution but will need to be modified sometime prior to case closure to reflect the final FY11 appropriation legislation.

C15.4.1. General. During the implementation phase of a BPC case the pseudo LOA document is Accepted by the IA, funds are placed on the case in the FMS Trust Fund by the Defense Finance and Accounting Service - Indianapolis (DFAS-IN), the case is Implemented, and obligation authority is granted to the IA. If the funds expiration date is imminent, the IA, DSCA (Business Operations Directorate) and DFAS-IN may initiate emergency implementation procedures. See Chapter 9.

C15.4.2. Acceptance. The IA is responsible for entering the Accepted milestone in DSAMS after the pseudo LOA document is Offered. An authorized representative of the IA will sign at the “U.S. Signature” block on the LOA. This is the only physical signature applied to the pseudo LOA document, as the DSCA counter signature data is updated by DSAMS. Neither the Benefitting Country nor the Funding Authority sign the pseudo LOA; the “Purchaser Signature” block is left blank.

C15.4.3. Funding. Before proceeding to implementation, DFAS-IN must confirm that BPC program funds have been collected into the FMS Trust Fund.

C15.4.3.1. DoD Appropriations. DSCA (Business Operations Directorate) sends a funding memo to DFAS-IN with instructions to collect DoD appropriated funds for the BPC case. BPC program funds will either be authorized for release by the Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) or issued on a Military Interdepartmental Purchase Request (MIPR) (DD Form 448) by the Funding Authority. Funds from one fiscal year appropriation or type of appropriation cannot be combined with another fiscal year appropriation or type of appropriation to fund a BPC case.

C15.4.3.2. Non-DoD Appropriations. The signed FAA Section 632(b) MOA serves as documentation to transfer funding from non-DoD Funding Authorities into the FMS Trust Fund. A copy of the signed FAA Section 632(b) MOA will be attached to each funded LOA document, to include LOA Amendments and Modifications. See Figure C15.F1.

C15.4.3.2.1. Signature of the FAA Section 632(b) MOA. When a draft FAA Section 632(b) MOA is received from a non-DoD Funding Authority, the DSCA Program Manager or CPD will obtain coordination from the DSCA General Counsel, Strategy and Business Operations Directorates before submitting the FAA Section 632(b) MOA for DSCA Director signature. Upon final signature on the MOA, the funds are considered obligated by the Funding Authority. The Program Manager or CPD immediately records the FAA Section 632(b) MOA in the Security Cooperation Management Suite (SCMS) of the Security Cooperation Information Portal (SCIP) and uploads a .pdf version of the signed document. The Program Manager or CPD notifies the Funding Authority and the DSCA CFD that the FAA Section 632(b) MOA has been signed.

C15.4.3.2.2. Funds Collection. DSCA (Business Operations Directorate) notifies DFAS of incoming funds after an FAA Section 632(b) MOA has been signed and confirms that an account is established within the FMS Trust Fund to hold the BPC program funds. A single FAA Section 632(b) MOA may provide funding for multiple BPC cases. Each BPC case will be funded by a single MOA and any associated Amendments.

C15.4.3.2.3. FAA Section 632(b) MOA Amendments. A signed FAA Section 632(b) MOA may be amended by joint agreement between DSCA and the Funding Authority during the initial period of funds availability or during a deobligation/reobligation period. Amendments to increase funding on an FAA Section 632(b) MOA will cite the same fiscal year appropriation that originally funded the FAA Section 632(b) MOA (i.e., funds from more than one fiscal year may not be combined on a single FAA Section 632(b) MOA. Amendments that adjust funding amounts or allocations constitute a deobligation and/or reobligation of funds by the Funding Authority. If a new FAA Section 632(b) MOA is signed using funds that were deobligated from an existing FAA Section 632(b) MOA, the reobligated funds retain the characteristics, availability and timeline associated with their appropriation (i.e., the funds availability for IA obligation will end in accordance with the data reflected in Table C15.T2.).

C15.4.4. Implementation. The Defense Integrated Financial System (DIFS) automatically sends the Financial Implementation (FINIMP) Milestone for a BPC case to DSAMS when:

  1. The Basic case or Amendment Amount Due with Acceptance is received in the FMS Trust Fund (or the funds are available in the BPC Program holding account) and placed on the case;

  2. The Basic Case or amendment is implemented in DIFS; and

  3. The DIFS Total Case Value equals the sum of all the DIFS Total Line Values.

The BPC case is Implemented in DSAMS when the FINIMP Milestone is received and obligation authority has been approved by the IA, when required.

C15.4.5. Notification to the SCO. Immediately after a BPC case has been Implemented, the IA will notify the Security Cooperation Organization (SCO) and provide a copy of the Implemented case. The SCO may begin preparations for receipt of the materiel and services, as needed. The SCO will make no guarantee to the Benefitting Country that it will receive assistance, however, until the final delivery of the materiel or services.

C15.5.1. General. The IA receives obligation authority upon case implementation, and is then responsible for obligating the funds and executing the case to meet Requesting Authority timelines. Unless specifically exempted by law, BPC program funds are subject to applicable U.S. Government (USG) procurement law and policy. The USG is responsible for transporting BPC materiel all the way into the Benefitting Country, according to delivery requirements provided by the Security Cooperation Organization (SCO). The SCO will transfer custody to the Benefitting Country after materiel has been inventoried and when the Benefitting Country is ready to maintain and employ them.

C15.5.2. Funds Obligation. The IA should begin case execution, funds obligation and funds reconciliation immediately following case Implementation. The IA will obligate both DoD and non-DoD appropriations in accordance with the rules described in DoD FMR, Volume 3, Chapter 8, prior to the date upon which the funds availability ends, as provided in Table C15.T2.. The IA and the procuring organization must recognize the funds’ expiring/canceling timeline even though case financial documents will indicate the FMS Trust Fund cite (97 X 8242). See Section C15.3.7.3.1. for specific guidance on handling BPC case funds offered under a CR Appropriation.

C15.5.2.1. Obligation Against Materiel and Services. To ensure funds are obligated prior to their expiration, Requesting Authorities should submit information and documentation to the IA Procuring Agency as early as possible, allowing sufficient time for that agency to submit requisitions or award contracts. The processing time required to obligate funds on contract will depend on the complexity of the requirement. The IA will ensure that participants in the sourcing, procurement and acquisition processes are informed of the BPC case financial timeline. Instructions should be included in funding documents to ensure that all contributors are aware of the expiring/cancelling nature of the case funds. An example of such wording follows:

This funding document contains funds that expire for obligation on 30 Sep 20XX. These funds cancel 30 Sep 20XX and will not be available for any funding adjustments and expenditures/disbursements after that date. All actions and final billings must be complete in sufficient time for cases to be closed before 31 Jul 20XX.

C15.5.2.1.1. Funding Civilian Pay. BPC program funds may be used to reimburse civilian pay expenses consistent with period of performance restrictions (See Section C15.3.4.) and in accordance with the DoD FMR. DSCA does not direct the use of a particular funds obligation vehicle. Each IA should verify with its Financial Management organization(s) which document is most appropriate to use as a valid obligating document.

C15.5.2.1.2. Funding Military Pay. BPC program funds are generally not used to reimburse military salaries, but there are circumstances where reimbursement of military salaries can be made under the Economy Act and in accordance with provisions in the DoD FMR. BPC program funds provided via an FAA Section 632(b) MOA may not be used to reimburse military salaries.

C15.5.2.2. Obligation Against DTS Transportation. The IA will plan for transportation of BPC case materiel from the earliest stages of case development in order to ensure delivery of materiel and services meets the Requesting Authority’s required delivery date (RDD). Below-the-line transportation funds on a case are considered obligated when the item requisitions are filled or the procurement contract is signed. If transportation costs will be paid by a separate transportation case, estimated costs for transportation will be calculated and tracked so that an adequate request for resources can be made. Above-the-line transportation funds are obligated when transportation is contracted or when a manifest is received from the U.S. Transportation Command (USTRANSCOM) (a manifest is issued after the materiel has been loaded on the Defense Transportation System (DTS) conveyance). The IA will confirm with the SCO that shipment delivery information provided in the Memorandum of Request (MOR) (e.g., Military Assistance Program Address Code (MAPAC), point of debarkation (POD), and RDD) is complete and valid. The shipping data will then be submitted by the IA to the Procuring Agency, along with any other specific transportation guidance. When the BPC materiel is ready for shipment, the DoD entity responsible for ensuring DTS transportation will enter the shipment requirements into the DTS booking system.

C15.5.3. Funds Expenditure. Once obligated, BPC case funds may be expended at any time until the funds cancel, at which time they are no longer available for any purpose. The Fund Source, Availability, and Amount note on the LOA will specify the date by which funds must be expended. See Table C15.T2.

C15.5.3.1. Expenditure Authority. Prior to processing disbursements, the disbursing activity must obtain expenditure authority from Defense Finance and Accounting Service - Indianapolis (DFAS-IN). The IA will maintain oversight of deliverables and coordinate with the Defense Contract Management Agency (DCMA) to ensure inspection, acceptance, and timely processing of contractor invoices. See the Federal Acquisition Regulation (FAR) 32.905.

C15.5.3.2. Reporting. DFAS-IN provides DSCA (Business Operations Directorate) and the Funding Authority with quarterly reports of program activities using DD Form 645, “FMS Billing Statement.” Though cash must be made available for a BPC case before shipment of the articles, this document indicates items shipped and amounts charged.

C15.5.3.3. Review and Reconciliation. The DoD FMR, Volume 3, Chapter 8, requires a Triannual Review of commitments, obligations, accounts payable, and accounts receivable. The IA will review and reconcile financial documentation regularly to identify and correct errors. The goal in performing these reviews is to ensure the full use of appropriations before they expire and to ensure that open obligations are valid and liquidated before the cancellation of the appropriation. This should be a collaborative effort among multiple IA offices, to include Resource Management; Accounting; Program Management; Contracting Office; and Acquisition/Logistics functions. Both case and financial data should be reconciled throughout the execution phase to facilitate timely case closure. During the funds execution period following expiration, price increases and other activities may occur on the BPC case. Appropriation law allows upward obligation adjustments only in select situations. Increases in scope, quantity increases on defined order lines, or extending the period of performance are not usually allowed. DSCA (Business Operations Directorate) will review any price/quantity increase or extension of the period of performance at the line or sub-line level. For adjustments to obligations incurred on a BPC case, fiscal year funds from the original period of availability should be used if available, and current year funds should only be used if there are no more original year funds available. See DoD FMR Volume 3, Chapter 10.

C15.5.3.4. Requests for Additional Funding After Period of Availability Expires. If a situation occurs that requires additional prior year funds or extensions of the period of performance, the IA will identify the amount required, the reason for the additional funds or time, and provide supporting documentation to the DSCA Country Financial Director (CFD). If additional funds are required for a procurement action, a determination by the IA Contracting Officer and an opinion by the IA’s legal counsel are required. The DSCA CFD will determine an appropriate fund source and coordinate approval by the DSCA Principal Director for Business Operations. In certain instances, Office of the Under Secretary of Defense (Comptroller) (OUSD(C)) or Congressional Notification may be required. Once notified by DSCA CFD that the request has been approved, the IA will amend/modify the case and add a case note to the pseudo LOA document providing details of the fund use.

C15.5.3.5. Residual Funds. Often, the value of the Implemented case is greater than the actual funding needed to execute the case. IAs should review their BPC cases/lines for possible excess obligation authority throughout the period of funds availability to ensure any residual funds are quickly identified so they can be returned or redirected. DSCA (Business Operations Directorate) retains residual funds for upward adjustments. The funds are returned to the Funding Authority during the last months before they cancel. Options available to the Requesting Authority for use of residual funds, in priority order, are:

C15.5.3.5.1. Use for other requirements within the existing case, assuming that the requirement is consistent with any Departmental or Congressional authorization or program notification.

C15.5.3.5.2. Modification of the case to reduce case value. DSCA (Business Operations Directorate) will then direct DFAS-IN to return residual funds to the appropriate account. This action does not require an MOR from the Requesting Authority.

C15.5.4. Transportation and Delivery of Materiel and Services. The IA has overall responsibility for transportation and delivery of BPC case materiel and services. The IA will make its best efforts to deliver BPC equipment and training/services within 12 months of case implementation or prior to the RDD, whichever is later. FAA Section 632(b) MOA documents may specify an RDD (referred to as the end of the period of performance) that is earlier than the end of the funds availability period (e.g., the FAA Section 632(b) MOA for PCCF (G9) specifies a period of performance that extends only through FY14, though the funds remain available through FY16). The IA will ensure that transportation requirements and schedules are communicated appropriately to the procuring activity and the SCO. The SCO will provide shipping documents (e.g., bills of lading or manifests) to the Benefitting Country representative so that materiel off-load, Customs clearance, security, staging, storage, onward movement and integration can be arranged. The IA will confirm that the SCO and Benefitting Country are ready to receive the materiel and proper arrangements have been made to move the cargo to a secure location before delivery.

C15.5.4.1. Materiel Accountability. The IA will enter serial numbers, vehicle identification numbers (VINs), and country of origin (for those defense articles that have them) into the Security Cooperation Management Suite (SCMS) on the Security Cooperation Information Portal (SCIP) prior to the materiel shipment. For radios with serial numbered components only, the IA should enter the serial number of the receiver/transmitter. SCMS should be referenced during case planning to identify the status of already-programmed BPC cases by country. See Section C13.6.3.2.

C15.5.4.2. Materiel Preparation. The IA and SCO should use the Enhanced Freight Tracking System (EFTS) in SCIP to track transportation of all BPC materiel. The IA will ensure that specific requirements for materiel packing and shipping are properly addressed, and that necessary plans have been made for EEUM, classified, or sensitive materiel.

C15.5.4.3. Export Authorization. BPC defense articles and services are exported as USG-owned materiel to the SCO (or USG representative) in the Benefitting Country. The defense articles will remain USG-owned materiel until they pass through Customs and are transferred to the Benefitting Country. See Section C15.5.5. Contractors that execute BPC cases are required to comply with the International Traffic in Arms Regulation (ITAR) in their dealings with the USG and Benefitting Country.

C15.5.4.4. Advance Notice of Delivery. Advance Notice of Delivery. Approximately two weeks prior to materiel delivery, or as soon as possible thereafter, the SCO will provide the Benefitting Country MoD (or other government ministry, as appropriate) with a written notice of the pending delivery. The notice should state what materiel or service is arriving for the Benefitting Country, when (if known) and where the materiel will be delivered, and which unit is to receive the materiel or service. The materiel shipment information should be attached to the notice, which may be used by the Benefitting Country to facilitate Customs processing. See Figure C15.F3. and Figure C15.F4.

Figure C15.F4. Example Notice of Delivery

C15.5.4.5. Arrival. BPC case materiel will be delivered to the Mark For address (or text address) available at the time of booking. The SCO should provide the IA with any corrections to this information as soon as they are known. BPC materiel will normally be processed through Customs by Benefitting Country officials upon arrival and before being released into the SCO’s custody. With Benefitting Country Customs Office approval, materiel may be released to the SCO's custody in advance of Customs procedures if that will facilitate processing. The SCO will report the receipt date of BPC materiel to the DSCA CPD or in the Enhanced Freight Tracking System (EFTS). Charges related to detention and demurrage will be funded with current year BPC program funds, either as a separate line on the BPC case or under a Transportation case.

C15.5.4.6. Delivery Reporting. SCOs must report the delivery of BPC materiel within 30 days. Items are considered delivered when transferred to a representative of the recipient nation. Table C15.T6. provides options for reporting shipment deliveries. At least one of the methods listed in C15.T6. should be used to report delivery:

Table C15.T6. – Delivery Reporting Options

# Method Description

1

Direct Data Entry into EFTS (On-line Single Receipt)

This reporting capability allows the user to confirm receipt directly and then print a bar-coded Issue Release Receipt Document (DD1348) for single shipments in EFTS. This method of reporting uses information already resident in SCIP and EFTS and is most useful when shipping documentation is missing, but required for follow-on functions such as bar code scanning, inventory management, and stock issue.

2

Manual Entry into EFTS (On-line Multiple Receipts)

The manual data entry capability allows information already resident in SCIP and EFTS to be used to report deliveries. SCIP and EFTS will pre-populate proper data fields and SCOs will confirm receipt of a specific shipment at a given time and location. This method is quick and useful for users who do not need a coded Issue Release Receipt Document (DD1348) or who do not maintain a separate spreadsheet to track deliveries.

3

Shipment Delivery Report Upload

The Shipment Delivery Report allows a single Excel spreadsheet to be loaded directly to EFTS. Receipt data entered in the spreadsheet is saved as a file on the user’s PC or laptop and should be loaded directly into EFTS the next time the SCO accesses to SCIP. This reporting method is intended for users with limited access to SCIP/EFTS and allows the SCO to maintain a local copy of receipt information.

4

Shipment Delivery Report E-mail (Off-line Reporting)

The Shipment Delivery Report provides an off-line method to maintain a single Excel spreadsheet (XLS file) and submit reports to EFTS by email to navsup_wss_eftssco@navy.mil as shipments are received. The template for the spreadsheet can be found in SCIP and on Publications page of the DISCS web page.

Other formats for reporting must be approved by DSCA/STR and DSCA/PGM.

Instructions and forms for direct and manual reporting in EFTS can be found at the EFTS Tab located in the Case Execution Community of SCIP (https://www.scportal.us.home/) and on the Publications page of the ISCS web page.

C15.5.4.7. Joint Inventory. The SCO and the Benefitting Country representative will conduct a joint materiel inventory using the shipper’s manifest while the materiel remains in the custody of the SCO. The SCO will inform the IA of any materiel suspected to be missing, to verify that it has not been included in a subsequent delivery.

C15.5.4.8. Discrepancy Reporting. BPC materiel that is confirmed to be missing will be reported by the SCO on a Transportation Discrepancy Report (TDR) and items that are damaged or defective will be reported by the SCO on a Supply Discrepancy Report (SDR), in accordance with guidance for FMS purchasers. See Section C6.4.10.

C15.5.5. Transfer and Receipt of Materiel and Services. The SCO will retain title and custody of the BPC equipment until the Benefitting Country is ready to receive the equipment. A Transfer and Receipt document (or a comparable form established for this purpose) is used to record the title transfer and serves as a reminder to the Benefitting Country of their obligations regarding the use, disposition, and security of the defense articles and services in accordance with the Foreign Assistance Act (FAA) Section 505 Agreement. See Figure C15.F5.

Figure C15.F5. Transfer & Receipt Document

C15.5.5.1. Preparation. The Transfer and Receipt document will be prepared by the SCO. The Transfer and Receipt document will not be used for Coalition Readiness Support Program (CRSP) equipment because CRSP equipment is loaned to the Benefitting Country and title is not transferred. See Section C15.3.7.1.

C15.5.5.2. Attachments. The SCO will attach a materiel inventory list to the Transfer and Receipt document, similar in content and format to the template provided in Figure C15.F6.

C15.F6. Materiel Inventory

C15.5.5.3. Presentation. When title transfer is appropriate, or when defense services are ready to begin, the SCO and the Benefitting Country representative will sign the Transfer and Receipt document, acknowledging that the Benefitting Country is assuming title, custody, and responsibility for the items or services being transferred.

C15.5.5.4. Documentation. The SCO will provide a copy of the signed Transfer and Receipt document to the IA. The IA will retain this documentation in case files, and provide it to the DSCA CPD upon request. If the Benefitting Country representative does not sign the Transfer and Receipt document, the SCO will provide an explanatory memo to the IA, along with the unsigned document and attachments. The SCO and the Benefitting Country will track and conduct End Use Monitoring (EUM) inspections as required by the DoD Golden Sentry program and guidance in Chapter 8, maintaining appropriate records of EEUM items within the SCIP EUM community.

C15.6.1. General. The Implementing Agency (IA) will expend funds or reduce case value before the end of the cancelling year of the funds (i.e., generally the fifth year after the funds expire for new obligation) or other statutorily authorized period. To allow time for residual funds to be redirected or returned before this deadline, DSCA requires that BPC cases funded with expiring/cancelling funds be closed by the IA no later than July 31st of the cancelling year. This means that the IA must ensure that vendors have submitted all invoices and that all outstanding obligations have been paid in full before then. The IA will update the Estimated Closure Date milestone in DSAMS, if appropriate, and begin closure of a BPC case as soon as the case is supply service complete. For further information on case reconciliation and closure, refer to Chapter 16 and Appendix 7, Reconciliation and Closure Guide (RCG).

C15.6.2. Closure Facilitation. Prior to June 30th of the fiscal year preceding funds cancellation, each IA will provide case closure contact information to DSCA (Business Operations Directorate). The individual serving as a closure facilitator for the IA is expected to lead the stakeholders within the respective IA and ensure timely closure of BPC cases. The closure facilitator will direct stakeholders to review cancelling BPC cases as listed in the Security Cooperation Management Suite (SCMS) and identify any case at risk of not closing by July 31st. The closure facilitator will also identify to DSCA (Business Operations Directorate) valid, unliquidated obligations subject to closure/cancellation to determine whether funds are available for future adjustments or payments against such obligations. See DoD Financial Management Regulation (FMR), Volume 3, Chapter 10, 100201.D.

C15.6.3. Reporting Case Financial Status. The IA will input closure status/issues for all cases funded with funds that cancel in the current year on the form at Table C15.T7, available in SCMS (Input Case Option). DSCA (Business Operations Directorate) will download this information monthly beginning in November, bi-weekly beginning in July, and weekly beginning in September.

Table C15.T7. BPC Case Financial Status Update

Case Country Case Status Implemented Case Value Disbursements Undisbursed Value Date Closed or Estimated Closure Date Status/ Issues

 

 

 

 

 

 

Est. MMM YYYY

 

 

 

 

 

 

 

Est. MMM YYYY

 

 

 

 

 

 

 

Est. MMM YYYY

 

C15.6.3.1. Reconciling Balances. The IA and DFAS-IN will ensure accounting balances have been reconciled and all performance and disbursements have been properly reported. The IA will also ensure approved outstanding Supply Discrepancy Reports (SDRs) applicable to BPC cases have been submitted to Defense Finance and Accounting Service - Indianapolis (DFAS-IN) for action. BPC cases which have associated open contracts can be closed if no unliquidated obligations exist on those contracts. IAs will prepare the closure certificate and any other necessary supporting documentation in accordance with established procedures. Closure certificates will be sent electronically to DFAS-IN.

C15.6.3.2. Closing a case with open contracts. A BPC case may be closed even when an underlying contract remains open as long as the contract lines pertaining to the BPC case are closed and there are no unliquidated obligations.

C15.6.4. Closure in DIFS. DFAS-IN will review the closure certificate and perform actions to close the pseudo LOA document in the Defense Information Finance System (DIFS). DFAS-IN should close cases containing no inhibitors within 30 days of receipt of the closure certificate and “C1” closure transaction. When DFAS closes the case in DIFS, DIFS sends a transaction to CISIL, MISIL or CMCS to close the case in those systems. When that closure transaction processes, those systems send a transaction to update the status in DSAMS to Closed. IAs can review closure information by referring to their MILDEP systems or to SCIP.

C15.6.5. Financial Activity After Funds Cancel.

C15.6.5.1. Adding Funds to an Open Case. If additional funds are required on a case for which funds have canceled, the IA must contact DSCA (Business Operations Directorate). Under specific conditions, a currently available appropriation may be approved by DSCA (Business Operations Directorate) to pay this requirement. The total of all payments from the current appropriation must not exceed the amount specified in DoD FMR, Volume 3, Chapter 10, 100201.F.

C15.6.5.2. Reopening a Closed Case. It will be necessary for an IA to reopen a BPC case once closed if there is financial activity that impacts the closed case. Should this occur, the IA will send a request to reopen the case, with sufficient justification, to DSCA (Business Operations Directorate) for review and approval.