FMS CUSTOMER FINANCIAL MANAGEMENT HANDBOOK (BILLING)

[Pages:213]FMS CUSTOMER FINANCIAL MANAGEMENT HANDBOOK

(BILLING)

Jointly Developed By

Defense Institute of

Security Assistance Management

Defense Finance and Accounting Service,

Denver Center, DFAS-AY/DE

Tenth Edition

Library of Congress Catalog Card No. 96-71924

ACKNOWLEDGEMENTS

DEFENSE INSTITUTE OF SECURITY ASSISTANCE MANAGEMENT

DEFENSE FINANCE AND ACCOUNTING SERVICE, DIRECTORATE

FOR SECURITY ASSISTANCE

Dr. Ronald H. Reynolds Commandant

Gregory Keiling Director

AUTHORS AND CONTRIBUTORS

John Clelan, DISAM Steve Cheresnick, DFAS-AY/DE

Ned Sworts, DFAS-AY/DE

Avis Grunewald, DFAS-AY/DE Danny Gaddy, DFAS-AY/DE

EDITORIAL ASSISTANTS Patricia Vocke, DISAM

GRAPHICS Danny Palmer, DISAM

12 June 2002 - Printing

PREFACE

The FMS Customer Financial Management Handbook (Billing) is intended to provide an explanation of the financial aspects of the U.S. Foreign Military Sales (FMS) program, with emphasis on FMS billing and reporting. This publication describes "how" the FMS financial system works and, in many instances, delineates "why" this financial system is designed to function as it does. While the U.S. Department of Defense (DoD) is always receptive to suggestions to improve FMS financial procedures, readers of this publication should observe that many such procedures are followed because of legal requirements contained in U.S. Public Law. As a result, DoD very often has little flexibility in the financial administration of the FMS Program. This publication does not take precedence over officially published U.S. Government directives, instructions, or manuals and is intended as a guide only. Additionally, this publication goes to press in a time of dynamic changes in the Security Assistance arena. Some changes may even occur while this handbook is being printed.

Any requests for clarification or suggestions for improvement or content should be addressed to the Defense Finance and Accounting Service, Directorate of Security Assistance (DFAS-AY/DE), 6760 E. Irvington Place, Denver, Colorado 80279-2000, Telephone DSN 926-7383 or Commercial (303) 676-7383, Data Facsmile DSN 9266394, Commercial (303) 676-6394; or the Defense Institute of Security Assistance Management (DISAM/DR), 2335 Seventh Street, Wright-Patterson AFB, Ohio 454337803, Telephone DSN 785-3196 or Commercial (937) 255-3196, Data Facsimile DSN 785-4685, Commercial (937) 986-4685.

May, 2000

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TABLE OF CONTENTS

Preface

PART I -- GENERAL OVERVIEW

1. An Introduction to the Foreign Military Sales Program Purpose The What, Why, When and How of FMS What Why When How Basic FMS Policies Summary

2. FMS: Organizations and Processes Purpose USG Organizations for FMS Department of State Secretary of State Under Secretary of State Bureau of Politico-Military Affairs Department of Treasury Department of Commerce Department of Defense Secretary of Defense Office of the Secretary of Defense Joint Chiefs of Staff, Unified Commands, and Overseas Activities Defense Agencies Secretaries of the Military Departments FMS Process Letter of Request/Offer Process Letter of Acceptance (LOA)/Implementation Process Execution/Performance Reporting Process Flow of Funds Data Sources for DD Form 645 Summary

3. FMS: Offer and Acceptance Documentation Purpose Letter of Offer and Acceptance FMS Record Keys Notes, Standard Terms & Conditions, and LOA Information

Page

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1-1 1-1 1-1 1-1 1-2 1-2 1-2 1-4

2-1 2-1 2-1 2-1 2-1 2-1 2-2 2-2 2-2 2-2 2-2 2-3 2-4 2-5 2-6 2-6 2-7 2-7 2-7 2-11 2-12

3-1 3-1 3-1 3-13

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FMS Payment Schedule Concept Definitions Payment Schedule Development Relationship of Payment Schedule to the DD Form 645

FMS Pricing Elements General LOA Materiel/Services Costs Administrative/Accessorial Costs Terms of Sale Other Terms and Conditions Having Financial Implications Type of Assistance Codes

Amendments and Modifications to the LOA Amendment Modification Impact of Amendments and Modifications

Summary

4. The Foreign Military Sales Billing System Purpose The Billing Cycle Inputs to DFAS-AY/DE Payment Schedules FMS Detail Delivery Transaction Cash Accounting FMS Trust Fund FMS Customer Funds Crossleveling DFAS-AY/DE Report FMS Billing Statement (DD Form 645) FMS Delivery Listing FMS Reply Listing to Customer Requests for Adjustments FMS Financial Forecast Holding Account Statement FMS Case Closure Standard Case Closure Procedures Accelerated Case Closure Procedures (ACC) Summary

5. DFAS-AY/DE Customer Assistance Purpose DFAS-AY/DE Organizatio Overall Structure Functional Area Points of Contact Visits to DFAS-AY/DE Policy Visit Requests DFAS-AY/DE Visits to Customer Sit Summary

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Page

3-14 3-14 3-14 3-14 3-15 3-17 3-17 3-18 3-20 3-22 3-24 3-25 3-25 3-25 3-25 3-26 3-26

4-1 4-1 4-1 4-1 4-2 4-2 4-2 4-3 4-4 4-5 4-6 4-6 4-7 4-7 4-7 4-8 4-9 4-10 4-11

5-1 5-1 5-1 5-1 5-1 5-1 5-1 5-2 5-2

PART II -- FMS BILLING DOCUMENTS

6. The Foreign Military Sales Billing Statement (DD Form 645) Purpose Introduction General Information Regarding DD Form 645 Function and Content Cycle Types of Statements Explanation of Entries on the DD Form 645 Sample Documents Entries on DD Form 645 Other Information Summary

7. FMS Delivery Listing Purpose General Information Function and Format Cycle Explanation of Entries on the FMS Delivery Listing Automated Products Summary

8. FMS Financial Forecast Purpose General Information Function and Format Cycle Explanation of Entries on the FMS Financial Forecast Header Information Lower Portion Summary

9. FMS Reply Listing to Customer Requests for Adjustments Purpose General Information Function and Format Cycle Explanation of Entries on the Reply Listing Header Information Lower Portion Summary

Page

6-1 6-1 6-1 6-1 6-1 6-2 6-2 6-2 6-11 6-15 6-16

7-1 7-1 7-1 7-1 7-1 7-12 7-13

8-1 8-1 8-1 8-1 8-3 8-3 8-3 8-5

9-1 9-1 9-1 9-1 9-3 9-3 9-3 9-4

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10. Holding Account Statement Purpose General Information Function Cycle Explanation of Entries on the Holding Account Statement Summary

11. Accelerated Case Closure Suspense Account Statement General Information

PART III -- APPENDICES

A. FMS Delivery Listing Document Identifiers and Headings B. Generic Surcharge Table C. Routing Identifier Codes (RIC) D. Price Codes (PRC CD) E. FMS MILSTRIP Document Number (Construction of) F. Implementing Agency (IA) Codes G. Delivery Term Codes (DTC) and Related Charges H. Type of Assistance (T/A) Codes I. Julian Date Calendar J. Unit of Issue (UI) Abbreviations K. Offer/Release Codes L. Mode of Shipment (MOS) Codes M . Adjustment Reply Codes (ARC) N. Transportation Bill Codes (TBC) and Related Charges O. Delivery Source Codes (DSC) and Accessorial Computation Matrix P. Abbreviations and Acronyms (Part 1)

Glossary of Selected Terms (Part 2)

Index

Page

10-1 10-1 10-1 10-1 10-1 10-2

11-1

A-1 B-1 C-1 D-1 E-1 F-1 G-1 H-1 I-1 J-1 K-1 L-1 M-1 N-1 O-1 P-1 P-14

Index-1

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