Impact of foreign military sales case payment schedule improvements on Defense Security Assistance Management System

DISAM Journal, Spring, 2003 by David A. Rude, Nels E. Berdahl

LOA Amendments

For payment schedule revisions reflected on LOA Amendments and Modifications, the amount paid by the FMS purchaser is now shown on those documents. Figure 2 is an example of an amendment which increases the total case value, and where customer payments have been made in accordance with the previous (basic LOA) schedule.

Whether collections to date are equal to, exceed, or are less than the financial requirements for the next payment due on the case has a corresponding influence on remaining payments, including the "Amount Due with Amendment Acceptance." The term "Initial Deposit" is no longer used on LOA amendments. Notes immediately following the amendment payment schedule will provide information to the customer regarding the calculation of the "Amount Due with Amendment Acceptance," where appropriate.

LOA Modifications

When a modification increases the total case value, the change in financial requirements will generally be reflected in the next and/or subsequent payments in the billing cycle following implementation of the modification. Changes in active case payment schedules can be expected due to the shift from Case to Line Level calculation and also due to the new method of calculating Termination Liability.

Figure 3 illustrates a modification which decreases the total case value by $70,039. In this illustration, the customer would receive a bill in April with a payment due in June based on the previously implemented payment schedule. The "Amount Received from Purchaser" reflects payments as recorded in the Defense Integrated Financial System (DIES) at the time the implementing agency prepared the modification. The majority ($53,208) of the total amount of the reduction is reflected in the "Current U.S. Government Financial Requirements" value. The remainder of the reduction is seen in the 15 September and 15 December payments.

Summary

Again, the goal of the new payment schedule functionality is to more closely align case payment schedules with the expected expenditure profile for the case. Customers can expect to see adjustments in payment schedules on documents constructed in the new environment (deployment at press time was scheduled for May 5, 2003). We look forward to increased customer satisfaction, and better utilization of payment schedules as an accurate predictor of financial performance, as a result of these changes.

Questions about changes in LOA, LOA Amendment and LOA Modification payment schedules should be directed to DSCA-COMPT/FMS Financial Policy. Questions regarding DSAMS training should be directed to Implementing Agency focal points, and other DSAMS-specific questions, should be forwarded to the DSAMS Help Desk.

Figure 1

LOA for SBLC Country

To assist in fiscal planning, the USG provides the following anticipated
cost of this LOA:

Estimated Payment Schedule

                                                  Termination
  Payment Date             Quarterly  Cumulative   Liability

Initial Deposit              $53,568     $68,198    $14,630
    15 Sep 2003              $99,679    $165,147    $11,900
    15 Dec 2003              $57,832    $238,519    $27,440
    15 Mar 2004              $97,228    $356,179    $47,872
    15 Jun 2004             $145,605    $506,888    $52,976
    15 Sep 2004             $172,850    $649,666    $22,904
    15 Dec 2004             $107,671    $738,241     $3,808
    15 Mar 2005              $35,537    $769,970         $0
(12) Other (Storage)
(13) Total Estimated Cost

                           USG Financial
  Payment Date             Requirements

Initial Deposit               $53,568
    15 Sep 2003              $153,247
    15 Dec 2003              $211,079
    15 Mar 2004              $308,307
    15 Jun 2004              $453,912
    15 Sep 2004              $626,762
    15 Dec 2004              $734,433
    15 Mar 2005              $769,970
(12) Other (Storage)              675
(13) Total Estimated Cost    $769,970

Figure 2

Amendment which Increases Total Case Value

Estimated Cost Summary              Previous (B)     Revised

(8) Net Estimated Cost                $1,074,054  $1,269,175
(9) Packing, Crating, and Handling             0           0
(10) Administrative Charge                26,852      31,730
(11) Transportation                           93          93
(12) Other                                     0           0
(13) Total Estimated Cost             $1,100,999  $1,300,998

To assist in fiscal planning, the USG provides the following revised
anticipated costs of this LOA:

Estimated Payment Schedule

Payment Date                       Quarterly  Cumulative

Previous Payments Scheduled Date              $158,238
(15 March 2003)
Current USG Financial Reqirements             $309,713
Amount Received from Purchaser     $158,238
Due with Amendment Acceptance      $151,475   $309,713
15 Dec 2003                        $182,915   $492,628
15 Mar 2004                        $247,527   $740,155
15 Jun 2004                        $238,471   $978,626
15 Sep 2004                        $92,673    $1,071,299
15 Dec 2004                        $99,200    $1,170,499
15 Mar 2005                        $67,400    $1,237,899
15 Jun 2005                        $63,099    $1,300,998

Note: The "Due with Amendment Acceptance" reflected above includes
amounts earlier for payments earlier shown as due 15 September 2003 and
other requirements for the period through the payment due 15 December
2003 as shown above. Any payments made by the Purchaser that exceeds the
"Amount received from Purchaser" as shown above are to be deducted from
the "Due with Amendment Acceptance" amount.

Figure 3

Modification Reducing Total Case Value

Estimated Cost Summary              Previous (B)     Revised

(8) Net Estimated Cost                $2,139,416  $2,071,085
(9) Packing, Crating, and Handling             0           0
(10) Administrative Charge                53,486      51,778
(Notes (s) 23)
(11) Transportation                            0           0
(12) Other                                     0           0
(13) Total Estimated cost             $2,192,902  $2,122,863

To assist in fiscal planning, the USG provides the following revised
anticipated costs of this LOA.

Estimated Payment Schedule

Payment Date                         Quarterly  Cumulative

Previous Paments Scheduled Date                 $1,267,120
(15 Mar 2003)
Current USG Financial Requirements              $1,213,912
Amount Received from Purchaser      $1,267,120
15 Sep 2003                            688,084  $1,901,996
15 Dec 2003                           $220,867  $2,122,863