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Changes During the Life of Your FMS Program

Occasionally, during the life of your FMS program, changes will need to be made to the LOA. An error may need to be corrected, your country may want to add additional items or quantities, or you may want to add or reduce the value of the FMS case. Depending upon what needs to be done and why, the changes may be initiated by the USG or by you. These changes will take the form of Amendments or Modifications.

Amendments: Any revision to an LOA that requires your acceptance must be done using an Amendment. Amendments might include changes in the scope of an FMS case, such as the type or number of items to be provided. Before they can be implemented, Amendments must be accepted by both the USG and by you, the FMS customer, in the same manner as the original LOA. Some Amendments may require initial deposits - just like basic cases; these funds must be received before the Amendment will be implemented. As with Basic LOAs, “pen and ink” changes can be made to LOA Amendments. To learn more about LOA Amendments and when it is appropriate to use them, see SAMM Section C6.7.1.

Modifications: Any revision that does not require your government’s acceptance may be done using a Modification. Modifications do not change the scope of a case (such as the type or number of items being purchased) and are usually used to correct administrative errors or for unilateral USG changes that must be made to the case. Remember, the information in an LOA constitutes the USG’s best estimate of what an item or service will cost and when it can be delivered. If that estimate changes (due, for instance, to a shortage of a particular item causing a slowdown in overall production), the USG may need to adjust the LOA accordingly. Although customer acceptance of a Modification is not necessary, the Implementing Agency will provide a copy to your country’s authorized representative for the FMS case and request acknowledgement. Except for DSCA-issued changes to an LOA’s financing terms, pen and ink changes to Modifications are not authorized. Changes initiated after a Modification has been implemented must be accomplished using another Modification or Amendment, as appropriate. To learn more about LOA Modifications and when it is appropriate to use them, see SAMM Section C6.7.2.

Cancellations: It is possible for your country to cancel an FMS case after it has been implemented. However, because the USG can neither profit from nor lose money in the execution of an FMS case on behalf of a foreign country, your government will be responsible for any termination costs (any up-front costs the contractor has already incurred in producing, or preparing to produce the defense articles ordered on the FMS case) as well as any USG administrative costs associated with the case. The SAMM discusses Cancellations in Section C6.8.

Case Closure: Case Closure can begin when all conditions of the LOA are satisfied - meaning, among other things, that all supplies and services have been delivered to your government and all warranty periods have elapsed. We call this “Supply and Services Complete”. See SAMM Section C16.2.12. for more detail about what constitutes supply and services complete. Aside from bringing an FMS case to successful conclusion, case closure is often important to an FMS customer because it permits the return of any surplus funds to that government for use toward other projects. Key to closure is the reconciliation of financial information with supply and logistics status - essentially, it amounts to confirming that your country received what it was supposed to, at the correct cost, and that the USG will not be left with any debts or extra funds. U.S. law forbids either. For more complex cases, the reconciliation and case closure process can sometimes be lengthy. Reconciliation for closure begins at Supply and Services Complete and continues until the case is "final" closed. However, active case review and reconciliation should occur throughout the life of every FMS case, from LOA implementation until the case is Supply and Services Complete. The Implementing Agency Case Manager is responsible for reconciliation. The quality of the active reconciliation that occurs from LOA implementation to Supply and Service Complete will directly impact the speed and level of difficulty of the closure reconciliation. Chapter 16 of the SAMM is dedicated to Case Closure and Reconciliation.