The Foreign Military Sales process is how an allied government buys American defense equipment, services, or training through the U.S. government rather than directly from a contractor. A foreign government sends a written Letter of Request, the State and Defense Departments review it, Congress is notified if the dollar value crosses set thresholds, and the U.S. then issues a Letter of Offer and Acceptance that the buyer signs and funds. From that point the Department of Defense acts as the buyer’s purchasing agent, using its own procurement system to place contracts with U.S. industry, arrange shipping, and enforce long-term conditions on how the equipment is used.1Defense Security Cooperation Agency. Foreign Military Sales
The Defense Security Cooperation Agency runs day-to-day operations. The State Department decides which countries may participate and approves each sale individually. Because the U.S. government sits in the middle of the transaction, the foreign buyer gets the same quality controls, pricing protections, and oversight that the U.S. military receives when buying the same equipment.
Who Can Buy Through FMS
Only sovereign countries and certain international organizations recognized by the United States can buy through this channel. Section 3 of the Arms Export Control Act, at 22 U.S.C. § 2753, sets four conditions: the President must find that the sale strengthens U.S. security and promotes world peace; the buyer must agree not to transfer the equipment outside its own government without U.S. consent; the buyer must protect the equipment with security comparable to what the U.S. military uses; and the country must be otherwise eligible under U.S. law.2Office of the Law Revision Counsel. 22 USC 2753 – Eligibility for Defense Services or Defense Articles
NATO and similar organizations can participate under multilateral agreements. Private companies, individuals, and non-governmental groups cannot. Those buyers have to use Direct Commercial Sales instead, dealing with a U.S. manufacturer under an export license from the State Department’s Directorate of Defense Trade Controls. Countries under U.S. sanctions or arms embargoes are categorically excluded, and eligibility is reviewed continuously, so a country’s access can be suspended if diplomatic relations shift.
One boundary worth flagging before a request is drafted: even an eligible country cannot receive equipment for a specific military or police unit if the Secretary of State has credible information that the unit committed a gross violation of human rights. The Leahy Law, at 22 U.S.C. § 2378d, applies at the unit level. A single qualifying incident by one member blocks the whole unit, and restoring eligibility requires the foreign government to investigate, prosecute, and punish the responsible individuals to the Secretary’s satisfaction.3Office of the Law Revision Counsel. 22 USC 2378d – Limitation on Assistance to Security Forces
Step 1: The Letter of Request
The process starts when the foreign partner submits a Letter of Request. There is no mandatory format, but the document must be in writing and detailed enough for a U.S. program office to price. Partners usually work with the in-country Security Cooperation Office to build it out.4Defense Security Cooperation Agency. Security Assistance Management Manual – Chapter 5
At a minimum the request has to identify the specific articles or services, the quantity, the desired configuration, the required delivery date, and the years of support needed. It must also state what the buyer is asking for: a Price and Availability estimate, useful for budgeting, or a formal Letter of Offer and Acceptance, which is an actual offer to sell.
The most common early mistake is asking only for the primary hardware. A workable request also covers logistics support, operator and maintenance training, spare parts, specialized tools, and technical publications for the equipment’s service life. Skipping any of those produces equipment the buyer cannot sustain. Operational context matters too, because desert, maritime, and high-altitude environments each drive different configurations.
Step 2: State and Defense Department Review
Once submitted, the request moves through parallel reviews. State evaluates foreign policy alignment, regional stability, and human rights considerations. Defense reviews the technical side to confirm that the transfer will not compromise classified technology or degrade U.S. military readiness.
Anything classified or sensitive triggers a separate technology security review. The National Disclosure Policy Committee decides what classified military information can be shared with which countries. Only the Secretary or Deputy Secretary of Defense can override the committee and authorize a unilateral exception.5Defense Security Cooperation Agency. Security Assistance Management Manual – Chapter 3 – Technology Transfer and Disclosure Some categories, such as sensitive compartmented intelligence and communications security data, require approval from agencies outside the Defense Department, and those reviews add time. Buyers asking for cutting-edge systems should plan for a longer review than buyers asking for mature ones.
Step 3: Congressional Notification
Sales above set dollar values must be formally notified to Congress before a final offer can go out. Under 22 U.S.C. § 2776(b), the thresholds depend on the buyer’s relationship with the United States.
For countries that are not NATO members, Australia, Israel, Japan, South Korea, or New Zealand:
- Major defense equipment: $14 million or more
- Defense articles and services: $50 million or more
- Design and construction services: $200 million or more
For NATO members, Australia, Israel, Japan, South Korea, and New Zealand:
- Major defense equipment: $25 million or more
- Defense articles and services: $100 million or more
- Design and construction services: $300 million or more
After notification a mandatory waiting period runs. NATO members, Australia, Israel, Japan, South Korea, and New Zealand get a 15-day formal review; every other country gets 30 days. Particularly sensitive technology, such as Missile Technology Control Regime Category I items, can trigger a 40-day review.4Defense Security Cooperation Agency. Security Assistance Management Manual – Chapter 5 During that window Congress can introduce a joint resolution of disapproval to block the sale. If no resolution passes, the executive branch proceeds.
Step 4: The Letter of Offer and Acceptance
When the reviews clear, the U.S. government issues a Letter of Offer and Acceptance. It spells out the exact equipment and services, the price, the delivery timeline, and all applicable fees. The standard expiration is 85 days from military department approval: 25 days for internal administrative processing and 60 days for the partner to review and respond. Some countries have negotiated longer review windows.7Defense Security Cooperation Agency. DSCA 25-67
The buyer accepts by signing and returning the document. Along with the signed agreement, the buyer deposits funds into the Foreign Military Sales Trust Fund, a single account at the U.S. Treasury that holds deposits from every purchasing country and tracks them by case and financing source. Those deposits pay contractors as production and delivery milestones are reached.8Defense Security Cooperation Agency. Foreign Military Sales Trust Fund The buyer puts up the capital before the U.S. government commits to contracts on its behalf.
Payment is generally required in advance. The President can authorize payment upon delivery if it serves the national interest, and in that case interest accrues on any balance unpaid more than 60 days after billing, at a rate tied to the current yield on short-term U.S. Treasury obligations.9Office of the Law Revision Counsel. 22 USC 2761 – Sales From Stocks
Some partners do not pay out of their own treasury. The Foreign Military Financing program provides grants or loans that eligible countries use to fund FMS purchases, with the Secretary of State deciding who receives financing and how much.10Defense Security Cooperation Agency. Foreign Military Financing
Fees Built Into Every Case
Two fees apply on top of the equipment price. Every FMS case carries a 3.2% administrative surcharge on total case value, effective since June 2018, to cover the overhead of running the sale through the U.S. procurement system.11Defense Security Cooperation Agency. Administrative Surcharge Rate Change Contract Administration Services fees add roughly 1.0% of contract value for most cases: 0.45% for quality assurance, 0.45% for contract administration, and 0.10% for audits. Contracts administered overseas by permanent Defense Contract Management Agency staff add another 0.20%.12Defense Security Cooperation Agency. Table C9.T4 – Table of Charges
On a $500 million case the surcharge alone is $16 million, and Contract Administration Services add about $5 million more. Build both into the initial budget request so the Letter of Offer does not come as a surprise.
Offset agreements sit outside all of this. A buyer can negotiate an offset directly with the U.S. contractor, requiring the contractor to reinvest a percentage of the contract value in the buyer’s economy through technology transfers, local production, or subcontracting. The U.S. government takes no part in those negotiations, and Defense Department contracting officers are prohibited from encouraging, entering into, or committing any U.S. company to an offset. The government assumes no obligation to administer or finance one.13Federal Register. Defense Federal Acquisition Regulation Supplement – Offset Costs (DFARS Case 2015-D028)
Step 5: Production, Shipping, and Title Transfer
With the case funded, the U.S. government places contracts, manages production, and arranges transportation. The buyer selects a freight forwarder, a private company that receives, consolidates, and ships the materiel to its final destination. The freight forwarder must be registered with the State Department’s Directorate of Defense Trade Controls and comply with export regulations, and must hold appropriate security clearances if it will handle classified material. The buyer’s U.S. embassy identifies the chosen freight forwarder in writing; Defense Department personnel cannot recommend one.14Defense Security Cooperation Agency. Security Assistance Management Manual – Chapter 7 – Transportation
Title and risk of loss pass to the buyer earlier than many buyers expect. Unless the Letter of Offer says otherwise, title transfers at the initial point of shipment. For items procured from a manufacturer, that means the factory loading dock. For items drawn from Defense Department inventory, it means the depot. Once title passes, the U.S. government bears no responsibility for loss or damage in transit. If you want insurance, arrange it through the freight forwarder.
Step 6: End-Use Monitoring and Transfer Restrictions
Buying through FMS attaches permanent obligations. Under the Arms Export Control Act and the Foreign Assistance Act, every recipient must agree to use the equipment only for its intended purpose, maintain security comparable to U.S. standards, and allow U.S. representatives to inspect and verify compliance.15Defense Security Cooperation Agency. Security Assistance Management Manual – Chapter 8 – End Use Monitoring
The Golden Sentry program handles this monitoring. Most items get routine monitoring. Sensitive equipment falls under Enhanced End-Use Monitoring, which requires physical security assessments of storage facilities and serial-number inventories, both at initial delivery and annually. Storage facilities must meet specified physical security standards or use approved compensatory measures, and the buyer must report any losses, expenditures, or disposal of monitored items to the in-country Security Cooperation Organization.
Categories subject to Enhanced End-Use Monitoring include night vision devices, man-portable air defense systems such as the Stinger, advanced anti-tank missiles such as the Javelin, beyond-visual-range air-to-air missiles, cruise missiles, ballistic missile defense interceptors, certain unmanned aircraft systems such as the Reaper and Global Hawk, communications security equipment, and aircraft infrared countermeasure systems.16Defense Security Cooperation Agency. End-Use Monitoring of Defense Articles and Services When inspectors identify problems, the buyer has 60 days from formal notification to submit a corrective action report. In hostile environments where U.S.-led inspections are not feasible, buyers may be authorized to self-report through barcode scanning, on-hand inventory reports, and loss documentation under a pre-approved concept of operations.
Transferring the equipment onward is not the buyer’s decision alone. A buyer that wants to move U.S.-origin equipment to another country, dispose of it, or change its intended use must get written approval from the Department of State first. The rule covers everything acquired through FMS, including technical data and training.17Defense Security Cooperation Agency. Third Party Transfer
A lighter path exists between close allies. Countries with blanket assurance agreements skip individual assurance paperwork for each transfer. Members of the Defense Trade Security Initiative, which includes NATO countries, Japan, Australia, and Sweden, have limited advance consent for government-to-government transfers among themselves, provided the items are worth less than $7 million, are not classified, and are already in the proposed recipient’s inventory.
Violations of end-use or transfer conditions can lead to suspension of deliveries, refusal of new orders, or termination of existing contracts. In practice the U.S. has generally used options short of termination, such as freezing deliveries and blocking new sales, against countries including Argentina, Israel, Indonesia, and Turkey.