DEPARTMENT OF DEFENSE FINANCIAL MANAGEMENT REGULATION VOLUME 15 SECURITY ASSISTANCE POLICY AND PROCEDURES

Transcription

1 DOD R DEPARTMENT OF DEFENSE FINANCIAL MANAGEMENT REGULATION VOLUME 15 SECURITY ASSISTANCE POLICY AND PROCEDURES MARCH 1993 (with changes through September 1999) UNDER SECRETARY OF DEFENSE (COMPTROLLER)

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3 COMPTROLLER OF THE DEPARTMENT OF DEFENSE WASHINGTON, DC FOREWORD This Volume of the Department of Defense Financial Management Regulation is issued under the authority of DoD Instruction , DoD Financial Management Policy and Procedures. It governs financial management by establishing and enforcing requirements, principles, standards, systems, procedures, and practices necessary to comply with financial management statutory and regulatory requirements applicable to the Department of Defense. It directs financial management requirements, systems, and functions for all appropriated, nonappropriated, working capital, revolving, and trust fund activities. In addition, it directs statutory and regulatory financial reporting requirements. This Volume incorporates material previously issued under DoD M, Foreign Military Sales Finance and Accounting Manual," September 18, 1986, authorized by DoD Instruction , Foreign Military Sales Finance and Accounting, May 8, 1991, which are both hereby canceled. This Volume establishes procedures for security assistance activities involving management, fiscal matters, accounting, pricing, budgeting for reimbursements to DoD appropriation accounts, and revolving funds, auditing, international balance of payments, and matters affecting the DoD budget, consistent with DoD Directive , DoD Policy and Responsibilities Relating to Security Assistance, March 10, This Volume of the Regulation applies to the Office of the Secretary of Defense, the Military Departments, the Chairman of the Joint Chiefs of Staff and the Joint Staff, the Unified and Specified Commands, the Inspector General of the DoD, the Defense Agencies, and the DoD Field Activities (hereafter referred to collectively as DoD Components ). This Volume of the Regulation is effective immediately and is mandatory for use by all DoD Components. Heads of DoD Components shall ensure that it is adhered to in day-to-day operations and in the design, modification, and maintenance of their Component s financial management and reporting system or systems. The Heads of DoD Components shall not issue supplementary directives/regulations without the prior written approval of the Office of the Comptroller of the Department of Defense. The reporting requirements contained in this regulation are exempt from licensing in accordance with paragraph E.4.f., of DoD M, Procedures for Management of Information Requirements. Verbal inquiries regarding Chapter 7 should be directed to the Director, Accounting Policy, Office of the DoD Comptroller, (703) or DSN Questions regarding all other Chapters may be directed to the Deputy Director for Accounting, Defense Finance and Accounting Service, (703) or DSN Written questions or recommendations for changes to this Volume of the Regulation, as well as requests for deviations from or exceptions to specific standards, along with justification, should be forwarded, through channels, to the address below: Office of the Comptroller of the Department of Defense Room 3E822 The Pentagon Washington, DC DoD Components will be provided copies of this Volume of the Regulation through normal publication channels. Other Federal Agencies and the public may obtain copies of this Volume from the Defense Institute of Security Assistance Management (DISAM/DRP), Wright-Patterson Air Force Base, Ohio (DSN ). Donald B. Shycoff Acting Comptroller

4 Volume 15, Table of Contents DoD Financial Management Regulation TABLE OF CONTENTS FOREWORD... i TABLE OF CONTENTS... ii TABLES... xi REFERENCES... xv DEFINITIONS...xvii ABBREVIATIONS AND/OR ACRONYMS...xx CHAPTER 01 GENERAL INFORMATION 0101 INTRODUCTION Purpose Authority Applicability Objectives Volume Organization and Maintenance Interpretations, Recommendations, and Deviations Effective Date and Implementation LEGAL BACKGROUND TREASURY ACCOUNTS Treasury Accounts Applicable to FMS Trust Fund Operations Treasury Accounts Applicable to Appropriations Made Available to Finance Credit Sales and Guaranties Under Sections 23 and 24 of the AECA Treasury Accounts Applicable to Foreign Assistance Act of 1961 Credit Sales TYPES OF FINANCING General Reimbursable Financing Direct Cite Financing Accounting Classification Codes of the FMS Trust Fund CREDITING OF EARNED REIMBURSEMENTS... 4 CHAPTER 02 FINANCE 0201 INTRODUCTION Objectives Responsibilities Source Documents Recognition of Budget Authority by the FMS Trust Fund Recognition of FMS Reimbursable Budget Authority in DoD Appropriation/Fund Accounts FMS Integrated Control System Documents PREPARATION AND PROCESSING OF DD FORMS 2061 AND 2060 FOR OTHER THAN COOPERATIVE LOGISTICS SUPPLY SUPPORT ARRANGEMENTS (CLSSAs) ii

5 DoD Financial Management Regulation Volume 15, Table of Contents General Preparation of DD Forms 2061 and Prior Versions of DD Form PREPARATION AND PROCESSING OF DD FORMS 2061 AND 2060 FOR COOPERA- TIVE LOGISTICS SUPPLY SUPPORT ARRANGEMENT General Preparation PREPARATION AND PROCESSING OF DD FORMS 2060 FOR FMS ADMINISTRATIVE BUDGET AND LOGISTICS EXPENSE General Preparation Year-End Report PREPARATION AND PROCESSING OF DD FORMS 2060 FOR CONTRACT ADMIN- ISTRATIVE SERVICES (CAS) PROVIDED BY DOD ON COMMERCIAL CON- TRACT General PREPARATION AND PROCESSING OF DD FORMS 2060 FOR CONTRACT ADMIN- ISTRATIVE COSTS INCURRED IN SUPPORT OF FMS CONTRACTS DD Form 2060 Processing BUDGET EXECUTION Objectives Responsibilities FMS TRUST FUND BUDGET EXECUTION REPORTS Execution Reports FINANCIAL STATEMENTS Background Statements REPORT ON FMS REIMBURSEMENTS Execution Reports Instructions for ACCT-RPT(M)1002 Report Instructions for ACCT-RPT(M)725 Report Instructions for ACCT-RPT(M)1176 Report CASE EXECUTION Fiscal Year-end Reimbursement of DoD Appropriations DD Form FMS Case Closure Procedures ADVERSE FINANCIAL CONDITION REPORTS General Exception Reporting Requirements iii

6 Volume 15, Table of Contents DoD Financial Management Regulation CHAPTER 03 ACCOUNTING 0301 INTRODUCTION Objectives Accounting Characteristics Responsibilities Source Documents FMS TRUST FUND ACCOUNTING REQUIREMENTS FMS Trust Fund FMS Chart of Accounts Contract Authority Accounting for Obligations Accounting for Receivables Accounting for Inventory Accounting for Trust Fund Equity General Procedures for Processing Accounting Transactions SAAC Analysis of FMS Case Accounting Data SAAC Postings to Surcharge Account Subsidiary Ledgers IMPLEMENTING AGENCY ACCOUNTING REQUIREMENTS Reimbursable Orders Allotments for Direct Citation Supporting DoD Components Fiscal Year-End Reporting Requirements ACTUAL ADMINISTRATIVE EXPENSE ACCOUNTING REQUIREMENTS Reimbursement for FMS Administrative Expenses INTERNAL CONTROL Objectives Internal Control Standards Annual Statement of Assurance Memorandums of Agreement CHAPTER 04 CASH MANAGEMENT 0401 INTRODUCTION Objectives Cash Management Characteristics Responsibilities ESTIMATING CASH ADVANCE REQUIREMENTS Method for Calculating Requirements PAYMENT SCHEDULES Policy General LOA Payments Preparation Forecasting Procedures iv

7 DoD Financial Management Regulation Volume 15, Table of Contents Committed Values Accurate Payment Schedules Delivery Status Revising Case Payment Schedules CONTRACTOR REQUEST FOR PROGRESS PAYMENTS AND REIMBURSEMENT OF COSTS UNDER CONTRACTS INCLUDING FMS REQUIREMENTS General Contractor Allocations Administrative Contracting Officer Allocations DEPOSIT OF CUSTOMER CASH INTO TREASURY ACCOUNTS General Receipt of Checks Wire Transfers EXPENDITURE AUTHORITY General Self-Reimbursement Expenditure Authorizations Direct Cite Expenditure Authorizations Procedures Cash Advances Cash Flow Problems Automated Formats CHAPTER 05 COLLECTING AND REPORTING FMS INDEBTEDNESS AND ARREARAGES 0501 INTRODUCTION Objective Responsibilities COLLECTION PROCEDURES Initial and Follow-Up Actions Referral of Unpaid Bills Collection of Unpaid Bills Identification of Arrearages REPORTING OF FMS ACCOUNTS RECEIVABLE General Basis for Reporting Arrearages on Accounts Receivable Reports Required Interest Charges on FMS Accounts Receivable Arrearages Information Requirements CHAPTER 06 CASE FILES 0601 INTRODUCTION Objective Concepts and Requirements Responsibilities UNIFORM FMS CASE DOCUMENTATION Documentation Requirements v

8 Volume 15, Table of Contents DoD Financial Management Regulation Documentation Maintenance and Disposition CHAPTER 07 PRICING 0701 INTRODUCTION Objectives Responsibilities Estimating Prices for a Letter of Offer and Acceptance Legal Background Crediting of Earned Reimbursements PRICING OF PERSONNEL SERVICES General Civilian Personnel Military Personnel Indigenous Personnel Travel and Living Allowances Special Instructions Applicable to Industrial Funds (Defense Business Operations Funds) CASH SALES OF DEFENSE ARTICLES ISSUED FROM STOCK General Sale Price of Nonexcess Materiel Quotation of Firm Prices Excess Materiel Charges for Nonrecurring Cost CASH SALES OF DEFENSE ARTICLES FROM NEW PROCUREMENT FOR DIRECT DELIVERY AND PARTICIPATION IN NEW PRODUCTION General Items to be Replaced by Later Production (Diversions) Cost Principles Recovery of Nonrecurring RDT&E and Nonrecurring Production Costs Recovery of Contract Administration Services Costs Incurred in Support of New Procurements for FMS Recovery of Contract Administration Services Costs Incurred in Support of Foreign Country Commercial Contracts Recovery of Costs for Government-Furnished Materiel (GFM) Recovery of Other DOD-Funded Services in Support of FMS Procurements Special Considerations Production by a Foreign Government Recoupment of Interest Penalties Due to the Prompt Payment Act of Contract Review ACCESSORIAL COSTS General Packing, Crating, and Handling Transportation ADMINISTRATIVE CHARGES General vi

9 DoD Financial Management Regulation Volume 15, Table of Contents Prescribed Standard Administration Charges Actual Administrative Expenses Administrative Charges on Canceled Cases Waived Administrative Charges COOPERATIVE LOGISTICS SUPPLY SUPPORT ARRANGEMENTS General Customer Equity Pricing Storage Costs Obsolete Materiel Unusual Inventory Loss Normal Operating Inventory Loss Administrative Surcharge STORAGE, REPAIR AND/OR MODIFICATION OF CUSTOMER-OWNED MATERIEL Storage Repair or Modification Administrative Surcharge Special Instructions Applicable to Industrial Funds (Defense Business Operations Funds) COSTS ALLOCABLE FOR JOINTLY USED FACILITIES General Joint Use of Satellites TRAINING OF FOREIGN NATIONALS General Observers Pricing Military Pay DoD Course Cancellations Inflation Factors Annual Publication of Rates NATO Rates IMET Rates Liability for Damages Elimination of the Cost of Military Pay and Entitlements INSTRUCTIONS FOR COMPUTING FMS TRAINING COST Personnel Costs Direct Cost and Training Overhead Indirect Base Operating Costs Administrative Surcharge Shipment of Instructional Materials INCREMENTAL COSTING OF TRAINING Instructors and School Support Staff Travel and Per Diem Equipment Overhaul and Maintenance Simulators vii

10 Volume 15, Table of Contents DoD Financial Management Regulation Supplies, Materiel, Training Aids, and Ammunition Base Support Cost Instructor Training Facilities and Equipment Information Program Administrative Surcharge Exclusions OTHER CASH SALES AND LEASING OF DEFENSE ARTICLES General DoD Support Costs Administrative Surcharge Pricing EXPANSION OF FACILITIES General Reimbursement of Proportionate Share PRICING FOR USE OF TECHNOLOGY General Pricing of Technical Data Packages PUBLICATION PRICING General Publication Pricing Factors Development of a Per Copy Selling Price Other Applicable Costs SPECIAL DEFENSE ACQUISITION FUND (SDAF) General Sales Involving the Special Defense Acquisition Fund Quotation of Stabilized Prices Charges for Nonrecurring Costs Recovery of Contract Administration Costs Incurred in Support of New Procurements for the Fund Special SDAF Surcharge Exceptions CASE MANAGEMENT LINE General EXCEPTION TO PRICING POLICIES AND COST RECOUPMENT WAIVERS General Request for Exception to Policies or Directives PERIODIC REVIEW AND UPDATING OF RATES General Revising Rates FINAL ACCOUNTING General viii

11 DoD Financial Management Regulation Volume 15, Table of Contents 0722 LOGISTICS SUPPORT CHARGE Applicability Purpose Actual Logistics Support Expenses Prescribed Logistics Support Charge Administration of the Logistics Support Charge CHAPTER 08 BILLING AND REIMBURSEMENT 0801 INTRODUCTION Objectives Responsibilities FMS BILLING STATEMENT General Final Statement DD Form 645 Entries FMS Delivery Listing Magnetic Tapes FMS CUSTOMER REQUESTS FOR BILLING AND SUPPLY ADJUSTMENTS General ROD Response Codes Reply Listing IMPLEMENTING AGENCY PERFORMANCE REPORTS OR REQUESTS FOR REIMBURSEMENT Reporting Deliveries Delivery Reporting Codes Interfund Transactions SAAC Computations TRANSPORTATION COST LOOK-UP TABLE Procedures for Transportation Cost Look-up BILLING ACTUAL COST FOR CHARGES APPLIED BY SAAC Charges Applied by SAAC SAAC MANAGEMENT CONTROL PROGRAM General SUPPORTING DOD COMPONENT PERFORMANCE REPORTS/REQUEST FOR REIMBURSEMENTS General Processing Requisitions PERFORMANCE AND DELIVERY REPORTING Reports Reject Codes Reconciling Reports Reporting Examples ix

12 Volume 15, Table of Contents DoD Financial Management Regulation APPENDIX A - TRUST FUND ACCOUNTS APPENDIX B - NONRECURRING COST RECOUPMENT CHARGES APPENDIX C - PAY TABLES SUBJECT INDEX x

13 DoD Financial Management Regulation Volume 15, Table of Contents TABLES Table Title Page TABLE FMS TRUST FUND ACCOUNTING CLASSIFICATION CODES... 4 TABLE UNITED STATES OF AMERICA LETTER OF OFFER AND ACCEPTANCE... 8 TABLE UNITED STATES DEPARTMENT OF DEFENSE OFFER AND ACCEPTANCE (DD FORM 1513) TABLE UNITED STATES OF AMERICA AMENDMENT TO LETTER OF OFFER AND ACCEPTANCE TABLE UNITED STATES OF AMERICA MODIFICATION TO OFFER AND ACCEPTANCE TABLE UNITED STATES DEPARTMENT OF DEFENSE AMENDMENT TO OFFER AND ACCEPTANCE (DD FORM ) TABLE UNITED STATES DEPARTMENT OF DEFENSE NOTICE OF MODIFICATION OF OFFER AND ACCEPTANCE (DD FORM ) TABLE FMS PLANNING DIRECTIVE (DD FORM 2061) TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) TABLE GENERATION OF BUDGET AUTHORITY (NEW CASES) TABLE DD FORM 2061 COMPLETION PROCEDURES TABLE PRICING ELEMENTS AND THEIR FINANCING APPROPRIATIONS TABLE FMS PLANNING DIRECTIVE (DD FORM 2061) EXAMPLE TABLE DD FORM 2060 COMPLETION PROCEDURES TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE EXAMPLE OF RBI/RBF INTERFACE TRANSACTION DETAIL TABLE UNITED STATES DEPARTMENT OF DEFENSE OFFER AND ACCEPTANCE (DD FORM 1513) EXAMPLE TABLE FMS PLANNING DIRECTIVE (DD FORM 2061) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE UNITED STATES DEPARTMENT OF DEFENSE OFFER AND ACCEPTANCE (DD FORM 1513) EXAMPLE TABLE FMS PLANNING DIRECTIVE (DD FORM 2061) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE FMS OBLIGATIONAL AUTHORITY (DD FORM 2060) EXAMPLE TABLE REPORT OF BUDGET EXECUTION (ACCT-RPT(M) 1176) TABLE SCHEDULE SUPPORTING RCS: ACCT-RPT(M) 1176 FOR 11X TABLE REPORT OF BUDGET EXECUTION (ACCT-RPT(M) 1176) TABLE APPROPRIATION STATUS BY FISCAL YEAR PROGRAM AND SUBACCOUNTS. 67 TABLE STATUS OF CONTRACT AUTHORITY (TFS FORM 7304) TABLE YEAR-END CLOSING STATEMENT (TFS FORM 2108) TABLE APPROPRIATION STATUS BY FISCAL YEAR PROGRAM AND SUBACCOUNTS RCS: ACCT-RPT(M) TABLE REPORT ON REIMBURSEMENTS, RCS: ACCT-RPT(M) TABLE FINAL CASE CLOSURE CERTIFICATE TABLE INTERIM FMS CASE CLOSURE CERTIFICATE TABLE FMS CASE CLOSURE ANALYSIS TABLE UNIFORM CHART OF FMS GENERAL LEDGER ACCOUNTS FOR THE FOREIGN MILITARY SALES TRUST FUND xi

14 Volume 15, Table of Contents DoD Financial Management Regulation TABLE ILLUSTRATION OF PRO FORMA ENTRIES FOR THE FMS TRUST FUND TABLE REPORT ON FINANCIAL POSITION TABLE FORMAT FOR THE DOD STATUS-OF-ALLOTMENT TABLE STATUS OF DIRECT ALLOTMENT "RE" TRANSACTION TABLE REPLACEMENT TRANSACTIONS TABLE NEW PROCUREMENT TRANSACTIONS TABLE ITEM NOT TO BE REPLACED TRANSACTIONS TABLE ANNUAL STATEMENT OF ASSURANCE FORMAT FOR CERTIFICATION OF FEEDER SYSTEMS TABLE CUMULATIVE MONTHLY PAYMENT SCHEDULE AND TERMINATION LIABILITY (TL) PERCENTAGES TABLE ILLUSTRATION ON USE OF PERCENTAGES TO ESTIMATE CASH ADVANCE REQUIREMENTS TABLE ILLUSTRATION OF TABLE PAYMENT SCHEDULE IN TERMINATION LIABILITY WORKSHEET FORMAT TABLE ILLUSTRATION OF TABLE PAYMENT SCHEDULE IN TERMINATION LIABILITY WORKSHEET FORMAT TABLE INSTRUCTIONS FOR PREPARING "BK" TRANSACTIONS, QUARTERLY FORECAST OF FINANCIAL REQUIREMENTS FOR IN-PROCESS CASES TABLE ILLUSTRATIONS OF PAYMENT SCHEDULE REVISIONS TABLE DEPOSIT TICKET (SF 215) TABLE FEDERAL RESERVE FUND TRANSFER FORMAT TABLE EXAMPLE OF NOTIFICATION OF EXPENDITURE AUTHORITY REQUEST/FEEDBACK TABLE ANALYZING THE STATUS OF COUNTRY DEPOSITS TABLE CASE-LEVEL FOLLOW-UP EXAMPLE LETTER TABLE COUNTRY-LEVEL FOLLOW-UP EXAMPLE LETTER TABLE ILLUSTRATION OF THE TIME OF FOLLOW-UP ACTIONS TABLE KEY CASE PLANNING MILESTONES TABLE CASE CLOSURE CHECKLIST SHEET TABLE COST ELEMENTS TABLE SPECIAL DEFENSE ACQUISITION FUND ACCOUNT SYMBOLS TABLE CIVILIAN PERSONNEL SERVICES PRICE COMPUTATION EXAMPLE TABLE MILITARY PERSONNEL SERVICES PRICE COMPUTATION EXAMPLE TABLE MILITARY PERSONNEL SERVICES PRICE COMPUTATION EXAMPLE TABLE MILITARY PERSONNEL SERVICES PRICE COMPUTATION EXAMPLE TABLE PRICE COMPUTATION EXAMPLE NONEXCESS DEFENSE BUSINESS OPERATIONS FUND REPAIR PART FROM STOCK TABLE PRICE COMPUTATION EXAMPLE NONEXCESS PROCUREMENT FUNDED ITEM FROM STOCK NOT TO BE REPLACED TABLE PRICE COMPUTATION EXAMPLE NONEXCESS PROCUREMENT FUNDED ITEM FROM STOCK TO BE REPLACED TABLE 703-4A PRICE COMPUTATION EXAMPLE NONEXCESS PROCUREMENT FUNDED ITEMS FROM STOCK TO BE REPLACED TABLE 703-4B CONSTANT PERCENTAGE METHOD OF DEPRECIATION TABLE PRICE COMPUTATION OF OVERHAUL COSTS PREVIOUSLY INCURRED FOR A PROCUREMENT-FUNDED ITEM SOLD TO FOREIGN MILITARY SALES CUSTOMERS TABLE PRICE COMPUTATION EXAMPLE EXCESS DEFENSE BUSINESS OPERATIONS FUND ITEM TABLE PRICE COMPUTATION EXAMPLE EXCESS PROCUREMENT FUNDED xii

15 DoD Financial Management Regulation Volume 15, Table of Contents ITEM FROM STOCK TABLE PRICE COMPUTATION EXAMPLE SALE OF EXCESS SHIP TABLE FORMAT FOR MDE CALCULATIONS TABLE MDE WORKSHEET FORMAT TABLE NONRECURRING COST CHARGES FOR MDE TABLE RECOUPMENT OF NONRECURRING COSTS ON SALES OR LICENSING OF U.S.G. ITEMS TABLE RECOUPMENT OF NONRECURRING COSTS FOR MAJOR DEFENSE EQUIPMENT, NEW MODELS DERIVED FROM EXISTING MODELS TABLE PRICE COMPUTATION EXAMPLE NEW PROCUREMENT TABLE STANDARD TRANSPORTATION PERCENTAGES TABLE FIVE PERCENT ADMINISTRATIVE FEE COMPUTATION FMSO I - ON-HAND MATERIEL (PART I) TABLE PRICE COMPUTATION EXAMPLE OVERHAUL OF CUSTOMER-OWNED MATERIEL TABLE PRICING MATRIX FOR TRAINING TABLE DEVELOPMENT OF FAMILY HOUSING CHARGES FOR FMS STUDENTS TABLE CALCULATION OF DEPRECIATION CHARGES FOR LEASED DEFENSE ARTICLES WITH ILLUSTRATIVE ENTRIES TABLE DEVELOPMENT OF FMS PUBLICATION PRICING TABLES TABLE SAMPLE PRICING GUIDE FOR TECHNICAL PUBLICATIONS TABLE GUIDE FOR PUBLICATIONS PRICING (PER COPY) TABLE SPECIAL DEFENSE ACQUISITION FUND (SDAF) PRICE COMPUTATION EXAMPLES TABLE CASE FUNDING MATRIX TABLE PRICE COMPUTATION EXAMPLES - LOGISTICS SUPPORT CHARGE (LSC) TABLE FOREIGN MILITARY SALES BILLING STATEMENT (DD FORM 645) EXAMPLE TABLE FOREIGN MILITARY SALES DELIVERY LISTING EXAMPLE TABLE FOREIGN MILITARY SALES BILLING STATEMENT (DD FORM 645) EXAMPLE TABLE OMNIBUS STATEMENT OF ACCOUNT (DD FORM 645) EXAMPLE TABLE FOREIGN MILITARY SALES DELIVERY LISTING TABLE MATERIEL/SERVICE TRANSACTION TABLE TRAINING TRANSACTION TABLE ADMINISTRATIVE TRANSACTION TABLE ACCESSORIAL/ADDITIONAL COST TRANSACTION TABLE FOREIGN MILITARY SALES REPLY LISTING TO CUSTOMER REQUESTS FOR ADJUSTMENTS TABLE DELIVERY TRANSACTION (N) TABLE SURCHARGE MATRIX TABLE 804-3A TRANSPORTATION CHARGES BASED ON DELIVERY TERM CODES FOR INVENTORY ITEMS SHIPPED BY DEFENSE BUSINESS OPERATIONS FUNDS TABLE 804-3B TRANSPORTATION CHARGES BASED ON DELIVERY TERM CODES FOR INVENTORY ITEMS NOT SHIPPED BY DEFENSE BUSINESS OPERATIONS FUNDS TABLE 804-4A TRANSPORTATION CHARGES BASED ON TRANSPORTATION BILL CODES FOR INVENTORY ITEMS SHIPPED BY DEFENSE BUSINESS OPERATIONS FUNDS TABLE 804-4B TRANSPORTATION CHARGES BASED ON TRANSPORTATION BILL CODES FOR INVENTORY ITEMS NOT SHIPPED BY DEFENSE BUSINESS OPERATIONS FUNDS TABLE DELIVERY TRANSACTION EXAMPLE CIVILIAN PERSONNEL SERVICES xiii

16 Volume 15, Table of Contents DoD Financial Management Regulation TABLE DELIVERY TRANSACTION EXAMPLE NONEXCESS DEFENSE BUSINESS OPERATIONS FUND REPAIR PART FROM STOCK TO CLSSA CUSTOMER IN FY TABLE DELIVERY TRANSACTION EXAMPLE NONEXCESS PRINCIPAL OR MAJOR ITEM FROM STOCK NOT TO BE REPLACED TABLE DELIVERY TRANSACTION EXAMPLE NONEXCESS PROCUREMENT FUNDED ITEM FROM INVENTORY TO BE REPLACED TABLE DELIVERY TRANSACTION EXAMPLE SALE OF AN EXCESS SHIP TABLE (a) DELIVERY TRANSACTION EXAMPLE "DELIVERY" FROM NEW PROCUREMENT TABLE (b) DELIVERY TRANSACTION EXAMPLE "DELIVERY" FROM NEW PROCUREMENT TABLE (c) DELIVERY TRANSACTION EXAMPLE "DELIVERY" FROM NEW PROCUREMENT TABLE DELIVERY TRANSACTION EXAMPLE "PROGRESS PAYMENT" TO A CONTRACTOR TABLE DELIVERY TRANSACTION EXAMPLE "PROGRESS PAYMENT" NONRECURRING COST TABLE DELIVERY TRANSACTION EXAMPLE "PROGRESS PAYMENT" GOVERNMENT-FURNISHED MATERIEL FROM STOCK TABLE DELIVERY TRANSACTION EXAMPLE "PROGRESS PAYMENT" PCH&T APPLICABLE TO GFM TABLE DELIVERY TRANSACTION EXAMPLE OVERHAUL OF CUSTOMER-OWNED MATERIEL TABLE DELIVERY TRANSACTION EXAMPLE ACTUAL BELOW THE LINE TRANSPORTATION TABLE DELIVERY TRANSACTION EXAMPLE STORAGE CHARGE - 2 MONTH PERIOD (OTHER THAN FMSO AND DEFENSE BUSINESS OPERATIONS FUND) TABLE DELIVERY TRANSACTION EXAMPLE STUDENT TRAINING AT NAVY LOCATION PGS ENGINEERING SCIENCE COURSE IN TABLE DELIVERY TRANSACTION EXAMPLE "RECOUPMENT OF INTEREST PENALTIES" TABLE DELIVERY TRANSACTION EXAMPLE "INTEREST ON ARREARAGES" TABLE CONUS TRANSPORTATION COSTS TABLE OVERSEAS TRANSPORTATION COSTS TABLE EXAMPLE OF PHYSICAL DELIVERY OF MATERIEL/ PERFORMANCE OF SERVICE TABLE EXAMPLE OF FINANCIAL PERFORMANCE REPORTING xiv

17 DoD Financial Management Regulation Volume 15, References REFERENCES (a) Public Law , The Foreign Military Sales Act of 1968, was amended by Public Law , The International Security Assistance and Arms Export Control Act of 1976, and they are commonly referred to as the Arms Export Control Act (AECA). Previous legislation included The Mutual Security Act of 1954, as amended, and "The Foreign Assistance Act (FAA) of 1961," as amended. Both the AECA and the FAA are amended by annual legislation usually entitled, The International Security and Development Cooperation Act of (year). Examples include Public Law and Other related legislation includes laws such as Public Law , Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1989, October 1, 1988, 102 Stat 2268 (b) DoD Instruction , DoD Financial Management Policy and Procedures, June 1992 (c) DoD Instruction , Foreign Military Sales Finance and Accounting, May 8, 1991 (canceled by this issuance) (d) DoD M, Department of Defense Budget Guidance Manual, May 1990, authorized by DoD Instruction , DoD Budget Guidance, October 30, 1980 (e) DoD M, Security Assistance Management Manual, October 1988, authorized by DoD Directive , Defense Security Assistance Agency (DSAA), August 10, 1978 (f) DoD Directive , Administrative Control of Appropriations, May 7, 1984 (g) Federal Acquisition Regulation (FAR), and Defense FAR Supplement (DFARS), April 1984 (h) DoD M, DoD Procedures for Management of Information Requirements, September 30, 1987 (i) Public Law , AECA [see reference (a)], as amended, 82 Stat 1323 (22 U.S.C. 2762) (j) Public Law Federal Managers Financial Integrity Act of 1982, September 8, 1982, as amended, 96 Stat 814 [31 U.S.C. 3512(b)] (k) DoD Instruction , Collecting and Reporting of Foreign Indebtedness Within the Department of Defense, June 23, 1977 (Note: to be incorporated as Volume 6, Chapter 12 of this Regulation and canceled upon issuance of Volume 6) (l) Treasury Fiscal Requirements Manual (Transmittal Letter No. 171), January 27, 1974 (m) Chapter 104, Interstate Commerce Act of 1887, February 4, 1887, as amended, 24 Stat 379 (49 U.S.C , 10761) and The Elkins Act (49 U.S.C ) (n) Defense Appropriation Acts; For example, The Department of Defense Appropriation Act of 1983, Section 747; Public Law 96-29, The DoD 1979 Supplemental Appropriation Authorization Act ; Public Law , The FY 1980 DoD Appropriation Authorization Act ; Public Law , Department of Defense Appropriations Act, 1981, 94 Stat 1077; and Public Law , Department of Defense Appropriations Act, 1990, November 21, 1989, 103 Stat 1152 (22 U.S.C. 2761) (o) DoD Directive , Retention and Transfer of Materiel Assets, May 24, 1988 (p) DoD M, Defense Reutilization and Marketing Manual, March 1990, authorized by DoD Directive , DoD Personal Property Utilization and Disposal Program, December 5, 1980 (q) DoD Instruction , Disposition of Proceeds from DoD Sales of Personal Property, July 10, 1989 (r) DoD Directive , Recoupment of Nonrecurring Costs (NC) on Sales of U.S. Items, January 13, 1993 xv

18 Volume 15, References DoD Financial Management Regulation (s) Public Law , Prompt Payment Act," May 21, 1982, as amended, 96 Stat 85 (31 U.S.C, ) (t) DoD Directive , Cooperative Logistics Supply Support Arrangements, February 12, 1981 (u) DoD R, "Stock Fund Operations," June, 1986 (v) DoD M, Manual for the Department of Defense Food Service Program, November 1978, authorized by DoD Directive , Department of Defense Food Service Program, June 4, 1991 (w) Joint Regulation DLAR , AR 12-12, NAVMATINST A, AFR 67-7 and MCO C, Processing Discrepancy Reports Against Foreign Military Sales Shipments, June 21, 1984 (x) DoD M, Military Standard Billing System (MILSBILLS), January 1985, authorized by DoD Directive , Administration of Military Standard Logistics Systems, November 18, 1983 (y) DoD Manual , "Physical Security of Sensitive Conventional Arms, Ammunitions, and Explosives," February 1983 (z) DoD Directive , DoD Policy and Responsibilities Relating to Security Assistance, March 10, (aa) GAO Policy and Procedures Manual for Guidance of Federal Agencies Title 2--Accounting, Appendix 11, Internal Control Standards, November 14, (bb) DoD Directive , DoD Credit Management and Debt Collection Program, October 31, NOTE: 1 For information only. Not found in text. xvi

19 DoD Financial Management Regulation Volume 15, Definitions DEFINITIONS 1. Above-the-line-Cost. Cost identified as specific FMS line items for articles or services or as part of a specific line on an LOA (see Table 201-1). Applicable costs are added to arrive at the estimated cost shown on the LOA format. 2. Accrued Expenditures. The term used for the credits entered into the budgetary accounts to recognize liabilities incurred for (1) services performed by employees, contractors, other Government accounting entities, vendors, carriers, grantees, lessors, etc.; (2) goods and other tangible property received; and (3) items such as annuities or insurance claims for which no current service is required. Accrued expenditures are categorized as either paid or unpaid. A. Accrued Expenditure-Paid. The budgetary account which matches the proprietary account funds disbursed. It represents the dollar value of goods and services received for which payment has been made. B. Accrued Expenditure-Unpaid. The budgetary account which matches the proprietary account accounts payable. It represents the dollar value of goods and services received for which payment has not been made. 3. Allotment. Authority issued to a DoD Component to incur commitments and obligations within a specified amount. In the FMS program there are two types of allotments: A. Allotment for Actual Administrative Expenses. All of the actual cost incurred by DoD Components in administering the FMS program are funded by this allotment. The allotment is issued on a quarterly basis and may not be exceeded. B. Allotment for Program Implementation. An allotment of FMS case contract authority for use on a direct cite basis, citing the allotment holder s accounting station. This type of allotment is made when SAAC determines it does not have the accounting capability to support detailed accounting requirements below the FMS case level, i.e., commitments, obligations and disbursements resulting from contract award to implement individual FMS case line items. The amount released on each FMS case is a specific limitation and the monthly status-of-allotment report must show the status of each case. 4. Anticipated Reimbursements. Anticipated Reimbursements refers to the dollar value of reimbursable orders that has been included in the DoD Component s budget. Applicable amounts are not available for obligation until an actual customer order has been received. There are two general type of anticipated FMS reimbursements. A. Apportioned Anticipated Reimbursements. Initial and interim reports of budget execution reflect apportioned anticipated reimbursements but commitments and obligations cannot exceed the value of approved amounts reflected in column 10 of the DD Form September 30 budget execution reports will reduce the amount of anticipated reimbursement to agree with DD Form 2060 actual orders. In the event the reimbursable program is subject to apportionment action, DD Form 2060 orders received in excess of the apportionment are not available for obligation until the apportionment for reimbursable orders is increased through the Defense budget process. B. Automatically Apportioned Anticipated Reimbursements. When anticipated reimbursements are subject to automatic apportionment, the value of any DD Form 2060 reimbursable order is available for obligation. 5. Arrearage. In FMS, a country-level arrearage occurs on a net cash basis wherein total accrued expenditures exceed total available cash resources. 6. Attrition. The destruction of a DoD capital asset when a foreign student was in physical control of the asset or was a direct result of negligence, simple or gross. xvii

20 Volume 15, Definitions 7. Below-the-line-Costs. Costs identified in the LOA (See Table 201-1) in lines 9 through 12. Applicable costs are added to line 8, net estimated costs, to arrive at line 13, estimated total costs. Normally, SAAC retains the obligational authority necessary to execute these applicable costs. 8. Contract/Budget Authority. Authority provided by law to enter into obligations (in support of FMS cases) without all of the cash necessary to liquidate the obligations. There are two basic types of budget authority resulting from operation of the FMS program: A. Contract/Budget Authority in DoD Appropriation/Fund Account. In the direct program portion of the budget, this authority results from the appropriation process. For the reimbursable portion of the budget, the authority results from receipt of customer orders. In the case of the FMS program, the customer order (and hence budget authority) results from receipt by the implementing agency of a reimbursable order issued by the Security Assistance Accounting Center (SAAC) for all or a portion of an FMS case. B. Contract/Budget Authority in the Trust Fund. This authority represents that portion of the FMS case which will be implemented in the current fiscal year. That portion of an FMS case that may not be implemented in the current fiscal year is an uncommitted acceptance. Uncommitted acceptances are not budget authority but are reported in schedules attached to the DD Form 1176, Report on Budget Execution. 9. Defense Business Operations Fund. A working capital fund. 10. Defense Stock. The term "stock" includes defense articles on hand that are available for prompt delivery. It also includes defense articles (contract) on order that are available for delivery within a reasonable time from the date of order by an eligible foreign government or international organization without increasing outstanding contracts or entering into new contracts. Any orders received from and eligible foreign government or international organization which cannot be filled in this manner fall within the provisions DoD Financial Management Regulation of Section 22 of the Arms Export Control Act [reference (a)]. 11. Dependable Undertaking. A firm commitment made by a foreign government or international organization to pay the full cost of and to assure the U.S. Government against any loss on a contract for new production or the performance of a defense service. 12. Direct Cite. Citation of the Trust Fund, 97-11X8242, as the financing source on documents leaving the DoD system, contracts with commercial firms, General Services Administration, Department of Transportation, etc. The term direct cite is not valid if any DoD organization establishes a reimbursable order to a DoD appropriation account, or Defense Business Operations Fund. 13. Distributed Costs. Refers to a cost which has been identified or allocated to an FMS case. 14. Estimated Actual Charges. A systematic and documented estimate of actual cost. The procedure is used in the absence of an established cost accounting system and the procedure is sometimes referred to as a cost finding technique. 15. Expenditure Authority. Authority issued by SAAC to a disbursing activity authorizing the disbursement of an FMS country s funds. See Section 406 for complete details. 16. Full Value for DoD Stocks and Services. A selling price computed in accordance with Chapter 7 of this Volume. 17. Financing Appropriation. The appropriation account originally increased as a result of the performing DoD Component s acceptance of a reimbursable order from the SAAC. This activity is reflected as FMS reimbursables. 18. FMS Case. A DD Form 1513, United States Department of Defense Offer and Acceptance, which has been accepted by a foreign country. 19. FMSO. A term which stands for Foreign Military Sales Order and used to describe LOAs which implement Cooperative Logistics Supply Support Arrangements. Two LOAs are written; xviii

21 DoD Financial Management Regulation a FMSO I and a FMSO II. The FMSO I, Part A, represents the on-hand value of DoD CONUS inventories required to support FMS customer requisitions. The FMSO I, Part B, provides the obligational authority to fund the remaining portion of the order. The FMSO II is the annual consumption case, and all FMSO deliveries are reported against this case. 20. Implementing Agency. The Military Department or Defense Agency assigned responsibility by the Defense Security Assistance Agency to prepare a DD Form 1513 and to implement the case. The implementing agency is responsible for overall management of the actions which will result in delivery of the materiels or services set forth in the Letter of Offer and Acceptance (LOA) which was accepted by a foreign country or international organization. 21. Indebtedness. Indebtedness refers to financial obligations of FMS customers to make payment(s) to the U.S. Government in accordance with the provisions of the Letters of Offer and Acceptance. 22. Major Defense Equipment (MDE). MDE are those items of significant military equipment, as identified in the International Traffic in Arms Regulation U.S. Munitions List, which have incurred a nonrecurring cost for RDT&E of $50 million or a total production cost of $200 million or more. 23. Net Case Value. Total amount of cost reflected above-the-line on the LOA as amended or modified. 24. Nonstandard Article. For FMS purposes, a nonstandard article is one that the DoD does not manage, either because applicable end items have been retired or because they were never purchased for DoD Components. Volume 15, Definitions ments and obligations directly against the Trust Fund and column 10 reimbursable orders. 27. Omnibus Billing Statement of Account. A statement of additional charges or credits to cases that have been recategorized from active to inactive status. 28. Reimbursable Order. A DD Form 2060 with a dollar value in column 10. Applicable amounts must be reflected in reimbursement reports as an FMS Trust Fund reimbursable activity. 29. Secondary Appropriation. An appropriation account increased as a result of reimbursable orders from an implementing agency which cite one of the implementing agency s appropriation accounts. Activity in a secondary appropriation is not categorized as an FMS reimbursable. 30. Staging Cost. The cost incurred by the Department of Defense in consolidation of materiel before shipment to an FMS customer. Includes costs incident to storage and control of inventory, consolidation of incoming articles into a single shipment, and a break in CONUS transportation. 31. Trust Fund. The Trust Fund, Advances, Foreign Military Sales, Executive (97-11X8242). 32. Uncommitted Acceptance. The portion of the dollar value for FMS which cannot be executed and which has not been released to an implementing agency. 33. Undistributed Cost. A cost or disbursement to a budget authority which has not been allocated to a specific case. 34. Working Capital Fund. The Defense Business Operations Fund. 25. Nonstandard Service. For FMS purposes a nonstandard service is a service that the DoD does not routinely purchase or perform. 26. Obligational Authority. Total authority received through use of the DD Form Includes column 11 authority to incur commitxix

22 Volume 15, Abbreviations & Acronyms DoD Financial Management Regulation ABBREVIATIONS AND/OR ACRONYMS AAO AC ACC ACO ACOCS ACRN Admin ADP ADSN AECA AF AFB AFLC AFMC AFSAC AFSAT AFSC AFSPACE- COM AMC AMC APO APOE APPROP ASSN ATC AWACS approved acquisition objective acquisition cost Air Combat Command administrative contracting officer Army Customer Order Control System accounting classification reference number administrative surcharge automated data processing accounting and disbursing station number Arms Export Control Act Air Force Air Force base Air Force Logistics Command Air Force Materiel Command (combines AFSC and AFLC) Air Force Security Assistance Center Air Force Security Assistance Training Air Force Systems Command Air Force Space Command Army Military Command Air Mobility Command (combines Air Force SAC/MAC /TAC) Air Force/Army post office aerial port of entry appropriation accounting station symbol number Air Training Command Airborne Warning and Control System CNO CONUS CPC CR CSA DARPA DB DBOF DECA DEPSECDEF DCAA DCS DCMC DFAS DIFS DISAM DLA DMA DNA DOD DODCCP DODD DSAA DSARC DSC DSSN DTC DTS Chief of Naval Operations continental United States copy production cost credit Chief of Staff Army Defense Advanced Research Projects Agency debit Defense Business Operations Fund Defense Commissary Agency Deputy Secretary of Defense Defense Contract Audit Agency Defense Courier Service Defense Contract Management Command Defense Finance and Accounting Service Defense Integrated Financial System Defense Institute for Security Assistance Management Defense Logistics Agency Defense Mapping Agency Defense Nuclear Agency Department of Defense DoD Central Control Point Department of Defense directive Defense Security Assistance Agency Defense Systems Acquisition Review Council delivery source code disbursing station symbol number delivery term code Defense Transportation System BA BAQ BOQ BOS budget authority basic allowance for quarters base officers quarters base operations support EA ECP ETSS expenditure authority engineering change proposal extended training services specialists CAS CCBL CC CCM CFO CLSSA CMCS contract administration services collect commercial bill of lading country code command country manager chief financial officer cooperative logistics supply support arrangement Case Management Control System FAA FAS FICS FMFIA FMS FMT FOB Foreign Assistance Act free along side FMS Integrated Control System Federal Manager s Financial Integrity Act foreign military sales foreign military training freight-on-board xx

23 DoD Financial Management Regulation Volume 15, Abbreviations & Acronyms FPO FRB FRBNY FRFT FRS FY FYDP GBL GFM GLA GSA IA ICP IF ILC IMET IMETP ILSDP IPO ITO LOA LOGAIR LOI LOR LSC MAC MAP MASL MCP MDE MILDEP MILSBILLS MILSTRIP MIPR MGT MOM MMOU MP MSC MST fleet postal office Federal Reserve Bank Federal Reserve Bank of New York Federal Reserve Funds Transfer Federal Reserve System fiscal year five year defense program government bill of lading government furnished materiel General Ledger accounts General Services Administration implementing agency inventory control point industrial fund International Logistics Center International Military Education and Training International Military Education and Training Program international logistics supply delivery plan international program office (Navy) individual travel order letter of offer and acceptance AFLC logistical airline letter of offer and intent letter of request logistics support surcharge Military Airlift Command military assistance program military articles and services list management control program major defense equipment military department military standard billing system military standard requisitioning and inventory procedures military interdepartmental purchase request management military ordinary mail multinational memorandum of understanding military personnel Military Sealift Command management service team MTMC MTT MWO NAC NATO NAVILCO NC NMDE NSN OA OASD OCONUS O&M OSD P&A PBAS PC&H PCH&T PCS POD POE POL PTC Q RCS R&D RDT&E RIC ROD RSN SAAC SAAM SAC SAMIS SAMM Military Traff ic Management Command mobile training team modification work order National Advisory Council on International Monetary and Financial Policies North Atlantic Treaty Organization US Navy International Logistics Center nonrecurring cost non-major defense equipment national stock number obligational authority Office of the Assistant Secretary of Defense overseas continental United States operations and maintenance Office of the Secretary of Defense price and availability program budget and accounting system packing, crating, and handling packing, crating, handling, and transportation permanent change of station port of debarkation port of embarkation petroleum, oil, and lubricants positive transaction control quantity report control symbol research and development research, development, test, and evaluation routing identifier code report of discrepancy record serial number Security Assistance Accounting Center special assignment airlift mission Strategic Air Command Security Assistance Management Information System Security Assistance Management Manual xxi

24 Volume 15, Abbreviations & Acronyms DoD Financial Management Regulation SAO SAR SC SDAF SECDEF SF SGL TAC TAC TAFT TAT TBC TCN TDP TDY TF TFCS TL TRADOC TRANS TRC UCA ULO USA USAF USASAC USCG USG USMC USN VI-IA VOQ WCN WIP security assistance organization selected acquisition report special cost Special Defense Acquisition Fund Secretary of Defense standard form Standard General Ledger Tactical Air Command transportation account code technical assistance field team technical assistance team transportation bill code transportation control number technical data package temporary duty Trust Fund Treasury Financial Communications System termination liability Army Training and Doctrine Command transportation transaction reply code uniform chart of accounts unliquidated obligation United States Army United States Air Force United States Army Security Assistance Command United States Coast Guard United States Government United States Marine Corps United States Navy variable housing allowance visiting officer s quarters worksheet control number work-in-process xxii