Looking back over my DAU blog 'catalog,’ I realized somewhat belatedly that I have never written a blog on this topic even though DAU International Center faculty members are routinely asked about it by a broad range of U.S. and foreign government and industry personnel. 

This question is posed many different ways, but I have observed that the assumption that lies behind such inquiries typically boils down to something along the following lines, “FMS and ICP programs and transactions are basically the same thing, but DoD international acquisition experts have given them different names to confuse the rest of us for reasons no one can understand.”

At one point in my career, we had an Under Secretary (Acquisition, Technology & Logistics) who, for the first six months of his tenure, was convinced they were the essentially same except for the transaction mechanisms' names:

• FMS Letters of Offer and Acceptance (LOAs) 
• ICP International Agreements.

Spoiler Alert

The Under Secretary was wrong … they are not the same thing! 

Fundamental Differences

The DAU presentation chart below used in one of our International Acquisition courses highlights the key differences between them:

As you can see, the primary difference between FMS and ICPs is that the former establishes a buyer-seller relationship between the foreign customer nation and the U.S. Government while the latter establishes a partnership arrangement between one or more foreign partner nations and the U.S. Department of Defense.

The respective lists under the FMS and ICP headings highlight key differences in the nature of the sale or partnership transactions described in FMS LOAs and ICP International Agreements.

What Else is Different?

The second major difference between FMS and ICPs, as shown in the presentation chart below, is when FMS versus ICPs are established during the acquisition lifecycle:

FMS is typically used to establish defense sales arrangements for U.S. DoD-developed defense articles and services – referred to as “Programs of Record (PORs)” – resulting from Middle Tier Acquisition (MTA) or Major Capability Acquisition (MCA) development programs.  However, FMS can also be used to sell defense articles and services developed by U.S. industry (Non-PORs) that come in various ‘shapes and sizes.’  

ICPs can be used throughout the DoD acquisition lifecycle including:

• Pre-acquisition cooperative Science & Technology (S&T) projects.
• Pre-acquisition technology base Research, Development, Test & Evaluation (RDT&E) projects.
• MTA rapid development or MCA development phase programs.
• MTA Rapid Fielding or MCA Production and Deployment programs.
• MTA or MCA Operations & Support phase sustainment and follow-on development program efforts.

That said, readers should be aware that ICP international agreements established for MTA or MCA Production and Deployment programs involve what are typically referred to as Production, Sustainment & Follow-on Development (PSFD) ICP International Agreements that involve combined procurement and delivery of cooperatively produced and sustained defense articles on behalf of the U.S. DoD and partner nations.  The Joint Strike Fighter (JSF) program is one example of a PSFD International Agreement, but there are many others.     

What about Benefits?

The third area of difference between FMS and ICPs is in the area of benefits.  The presentation chart below describe the benefits to the U.S. DoD that are realized from typical FMS versus typical ICP transactions.

Unlike the first two areas, there are about as many similarities as there are differences between FMS and ICP benefits.  The main differences occur in the early phases of the DoD acquisition lifecycle, where traditional FMS program arrangements play no role.  ICP International Agreements are the only mechanism that DoD can use to establish bilateral and multilateral cooperative S&T and RDT&E projects with partner nations. In the latter phases of the DoD acquisition lifecycle – engineering & manufacturing development and production & deployment – both FMS and ICP mechanism can be used, albeit in different ways. 

Rules versus Exceptions

Like most aspects of DoD international acquisition & exportability, some FMS and ICP transactions involve complexities that deviate from the norm.  This blog describes typical FMS and ICP projects and programs that fall within the Pareto (80-20 rule) distribution.  My next blog on this topic will address some of the unusual aspects of what happens in the 20% of FMS and ICP projects and programs that are exceptions to the general rule.

Summary

I hope this blog has convinced you that FMS and ICP international acquisition transactions are not the same thing with a different label.  You will be much more effective in both internal DoD discussions as well as external engagements with representatives from allied and friendly nations once you have grasped this key principle.

Remember the Under Secretary I used to work for who thought that FMS and ICP were same thing? After six months, the ‘light bulb’ went on.  Once he understood the differences between FMS and ICP, he became an outstanding advocate regarding the use of these two complementary international acquisition mechanisms with both DoD Program Managers and PEOs and allied and friendly nation counterparts.

Hopefully you’ll be able to do the same in your workplace environment!

Until next time. Prof K