Top Benefits of Foreign Military Sales:
- No need for an export license. No worries about whether you’ve filed the paperwork correctly or gotten all the right permissions. In FMS, the Defense Security Cooperation Agency (DSCA) manages all required licenses and Congressional notification (if needed).
- Dramatically reduces the risk of working internationally. Speaking of things the DOD will do, they also make sure you get paid! Your company signs a contract with the DOD, not with the foreign customer, so you’re guaranteed to get paid under USG rules. The foreign government is on the hook to the DOD, so it’s more likely they’ll keep their end of the deal, too. In contrast, if you sell directly to the foreign customer and they break your contract, you’d probably have to seek recourse in international courts. The risk of non-payment or broken contracts is dramatically higher.
- Creates opportunities to build on your USG sales. The basis of FMS is that the USG is procuring goods on behalf of a foreign government. Thus, if you already sell goods to the USG, those same products are ideally suited for FMS. Most probably, the products are already registered as standard military parts and catalogued with an NSN. FMS allows you to expand your market internationally, while using the same procurement procedures you’re already familiar with from your sales to the USG.
- Easier for the foreign customer. Many foreign customers prefer FMS over Direct Commercial Sales since managing the procurement is a lot easier and they’re guaranteed the U.S. government price. As we mentioned last week, sometimes the ease of FMS may outweigh the desire to buy a specific product.
- Gives you access to a broader market. The FMS system makes every allied nation a potential customer by including the U.S. companies’ goods in the standardized catalogue for international sale.
- Reduces risk. FMS reduces the risk involved in working with foreign customers, since an FMS sale is effectively a sale to the USG, not to the end-user.
- Facilitates planning. FMS orders have generous lead times from concept to implementation, allowing plenty of time for planning and production.
- Reduces administrative burden. All international logistics, including export licenses and transportation, are managed by the U.S. DoD.
FMS gives defense manufacturers access to the international defense market with none of the complicated issues usually associated with international sales.
To find out how LMDefense can help your company break into Foreign Military Sales, please visit our Services page.
Read More about FMS on LMDefense:
- Top Benefits of Foreign Military Sales
- FMS Transportation: the Role of the Freight Forwarder
- FMS How-To: What Are DTCs?
- FMS How-To: Pre-LOR Consultations
- FMS How-To: LORs, P+As, and LOAs
More on FMS:
- Foreign Military Sales Sole Source Requirements Updated
- Foreign Military Sales Admin Fee Decreases to 3.5%; Small Case Fee Eliminated
- Growth in Foreign Military Sales — Fluke or Long-Term Trend?
Additional FMS Resources:
The Department of State Directorate of Defense Trade Controls oversees defense export registration and permits.