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    Can I exempt or are these contracts already exempt from COR designation as these contracts do not fall under the services requirements for appropriated funds and are not reported to congress on the budget? Are they exempt from AFFARS and DFARS? IAW 46.406 I do not see that these are consistent with or required by legislation, executive orders, or agency policies concerning mutual international programs


    Answer

    In a word, the answer is “no” FMS contracts are not exempt from having a COR assigned, unless…
     
    You referenced: 46.406 -- Foreign Governments, in your question, for the benefit of readers, here is the text:
     
    “Government contract quality assurance performed for foreign governments or international agencies shall be administered according to the foreign policy and security objectives of the United States. Such support shall be furnished only when consistent with or required by legislation, executive orders, or agency policies concerning mutual international programs.”

    Bold italics added for emphasis.
     
    So now we need to determine what our agency (DoD) policies are.  I’ll turn to DoD Instructions and the Defense Federal Acquisition Regulation Supplement (DFARS).
     
    You’ll notice DoDI 5000.72 DoD Standard for COR Certification and DFARS 201.602-2 (and associated PGI) make no mention of CORs being exempt for FMS.  In fact, the DFARS guidance (PGI) is very specific on when a COR does not need to be assigned.  In addition, see DFARS 225.7301 General:
     
    (a)  The U.S. Government sells defense articles and services to foreign governments or international organizations through FMS agreements. The agreement is documented in a Letter of Offer and Acceptance (LOA) (see the Defense Security Cooperation Agency (DSCA) Security Assistance Management Manual (DSCA 5105.38-M)).
     
    (b)  Conduct FMS acquisitions under the same acquisition and contract management procedures used for other defense acquisitions.
    Again, bold italics added for emphasis.
     
    Because the DFARS does not require/allow you to delegate to a COR anything that is being delegated to DCMA, a COR will not be needed for any of those delegates tasks/duties.

    For your contract not being delegated to DCMA, you need to decide from the LOA what quality assurance requirements are going to be incorporated into the contract. 
    By this we mean, what type of inspection and how will we perform “acceptance” so that the contractor can be paid.  If the LOA determines that the foreign government will do inspection… then you do not need to delegate that task to a COR.  Now you have to determine who will do acceptance.  If you don’t assign that to a COR, the contracting officer will have to do it.  This brings us back to
    DFARS PGI 201.602-2 and the need to annotate the contract file why you did not designate a COR.


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