Changes to Foreign Military Sales Administrative Surcharge Structure and Rate
DEFENSE SECURITY COOPERATION AGENCY WASHINGTON DC
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On 15 March 2006, the Defense Security Cooperation Agency DSCA announced a package of reforms aimed at ensuring the continued solvency of the foreign military sales FMS Trust Fund Administrative Account. Included in these changes is an increase to the FMS administrative surcharge rate assessed against all FMS and FMS-like cases. The surcharge rate, 2.5 percent since 1999, will be 3.8 percent effective with cases or new case line items accepted on or after 1 August 2006. Other changes in the package include elimination of the Logistics Support Charge in fiscal year FY 2008, a requirement to collect a minimum amount against all FMS cases, and a commitment to clarify and consistently implement the standard level of service covered by these charges. This total package of reforms represents some very significant changes that will have both short-term and long-term benefits to the security assistance community. This article discusses the history and factors behind the decision to implement these changes and the overall impact they will have on our programs.
- Administration and Management
- Economics and Cost Analysis
- Military Forces and Organizations