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Fueling (and Refueling) Partner Nation Operations: One Mission at a Time via Foreign Military Sales.

Foreign Military Sales (FMS) is a subject unfamiliar to most financial managers. The day-to-day operations of the Headquarters Air Mobility Command (AMC) FMS section, while similar to some aspects of typical financial processing, can be quite extraordinary as the team of financial managers and logisticians work with partner nations in the transfer of fuels and fulfillment of aircraft delivery.

While the business of processing fuel and related service transactions is a staple for the AMC team, facilitating partner nation aircraft delivery is also a unique facet of the AMC portfolio. Many of our foreign partners purchase jets from the United States. Transiting the distance from the US to the purchasing nation may require air-to-air refueling (AAR), which incurs costs the US must recoup from the purchasing nation. The FMS team accomplishes this mission by managing FMS cases and refueling funds designated for those operations. This unique FMS team includes two logisticians, two financial management analysts, and a section chief. They work together to manage the AMC FMS operation, which enables our strategic partners to accomplish their missions.

The procurement process starts when FMS partner countries work with the US Embassy's Security Cooperation Officer to determine what defense articles or services the country would like to purchase from the US government. The country submits a Letter of Request (LOR) detailing its requirements. The LOR is routed through the Department of State and the theater Combatant Commander for approval before it finds its way to the Defense Security Cooperation Agency (DSCA). DSCA determines which Implementing Agency (IA) (e.g., US Air Force, US Army, etc.) will receive the LOR for processing. If the Air Force is the proper IA, the Air Force Security Assistance Command (AFSAC) receives the LOR. In our case, AFSAC submits the LOR to the AMC FMS team for preparation of a Price and Availability (P&A) estimate. The P&A is priced based on what it costs the Air Force to provide the item or service. To create a P&A our office needs the number of aircraft to ferry from what location to what location, and date of request. For AMC, most of the P&As are for AAR costs. The goal is to provide a complete cost to the FMS partner with no surprises. The process for other services is very similar to AAR.

Our logisticians prepare the cost estimates based on the number of flying hours needed to perform typical AAR missions. Costs include flying hours, temporary duty (TDY) for the aircrew, fuel, and personnel. Flying hour costs depend on the aircraft performing the AAR, either the KC-10 or the KC-135. Each aircraft has different costs per flying hour and different aircrew sizes. Reimbursable flying hour rates for each airframe are provided by the Deputy Assistant Secretary for Cost and Economics. Tanker flying hours cover all hours, to include staging and de-staging legs, crew TDY, and fuel offloaded. Our team ensures FMS partners are charged exactly what it costs the US government to provide the article or service plus an administrative fee (currently 3.5%). This fee covers the administrative costs to manage the FMS case for the partner country. The AMC FMS team sends the P&A back to AFSAC, who then provides the estimate to the partner country for its decision. If the partner country decides to move forward with the purchase, a Letter of Acceptance (LOA) is prepared, agreed upon, and signed at the appropriate level by the partner country and the US government.

The LOA becomes the contract between the US government and the foreign partner and can be changed only by a formal amendment or modification. Some LOAs require the country to pay the entire amount up front, while others contain a payment schedule the FMS partner must follow to keep on track with the LOA provisions. Depending on the type of case, the LOA can have one or hundreds of lines that are individually funded by the partner country. The partner country submits payment for the FMS case to the Defense Finance and Accounting Service (DFAS), who deposits the funds in the FMS Trust Account. The FMS team doesn't actually sell anything--we ensure that the services provided by flying units or fuel that is offloaded are billed in accordance with established procedures and agreements.

After funds are deposited in the FMS Trust Account, the provisions of the LOA are accomplished. For AMC FMS, this usually means AAR missions requested to support FMS partner aircraft or to ferry aircraft purchased by the FMS partner. These AAR missions are scheduled through the 618th Air Operations Center at Scott AFB. The center schedules a tanker unit (active duty, reserve, or Air National Guard) to provide the AAR support.

After an FMS AAR mission is scheduled, the AMC FMS logisticians extract information that identifies the unit flying the mission, an estimate of how long the mission will be, how many aircraft will be refueled, and when the mission is scheduled. The financial analyst prepares DD Form 448, Military Interdepartmental Purchase Requests (MIPRs), for flying hours and all personnel costs. The performing agency accepts the MIPR and returns a MIPR Acceptance. The MIPR and MIPR Acceptance are forwarded to DFAS Indianapolis to record the obligation. The financial analysts also create cross-organization funding for the aircrews to charge TDY expenses in the Defense Travel System.

After the mission is flown, the AMC FMS logisticians provide the mission details to the financial analysts, who prepare an SF-1080 billing with the final costs. Any increases or decreases to obligations are sent to DFAS for processing. Once adjustments to obligations are completed, the SF-1080 billing is forwarded to DFAS-Indianapolis to charge the FMS Trust Account and reimburse the performing agency. Providing the actuals to DFAS is a key component of auditability.

Today, the FMS team manages 137 open lines on 88 open cases with 41 FMS partners. These lines are worth over $419 million. Some of the cases are recent, but others are over 10 years old and still active. All lines are reconciled annually, ensuring all commitments, undelivered orders outstanding, accrued expenditures unpaid, and accrued expenditures paid, match in all systems. We feel a great responsibility to make sure our FMS partners are charged correctly, and the USAF and DoD are reimbursed correctly.

As all ASMC members know, behind every important mission stands a team of financial managers who make that operation possible. The same holds true for FMS and there is not another team like this in the Air Force. The AMC FMS team proudly works together In this cradle-to-grave operation ensuring FMS processes meet the needs of the US government and our foreign partners. Together, these financial management and logistics professionals ensure FMS partners get what they paid for and ensure the accurate and timely reimbursement of funds, nothing more and nothing less.

Richard B. Dale, Jr., CDFM, DODFMC2, MBA

Mr. Dale is the Chief of Foreign Military Sales, Headquarters Air Mobility Command. He joined HO AMC in November 2015. Mr. Dale I has served in a number of positions during his 40 year career in DoD Financial Management. He is a member of the Land of Lincoln ASMC Chapter and maintains a CDFM and a Level 2 DoD Financial Management Certification.

Caption: Left to right: Robert Boufford, Fran Nicholson, Sarah Leary, and Rick Dale
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Author:Dale, Richard
Publication:Armed Forces Comptroller
Date:Mar 22, 2019
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