scope:

Purpose.

The purpose of this volume is to:

A. Establish the accounting, pricing, budgeting, and reporting policies and procedures which are necessary to implement the financial management requirements of the Arms Export Control Act (AECA) (reference (a)) and the Foreign Assistance Act (FAA).

B. Establish the accounting, financing, and billing procedures for foreign military sales (FMS) transactions in the FMS Trust Fund (i.e., Advances Foreign Military Sales, Executive) and in the performing appropriations when FMS orders are executed on a reimbursable basis.

C. Establish the pricing and costing criteria for FMS sales of defense articles and defense services (including training) and construction services furnished to friendly foreign governments and international organizations under authority of the AECA.

D. Ensure that the pricing policies are applied in situations where a contractor, involved in direct sales to a foreign government, acts as an agent of the foreign government in executing a purchase agreement with the U. S. Government for Department of Defense (DoD) materiel and services. The policies apply where coproduction, codevelopment, cooperative production, or cooperative development agreements are entered into with foreign governments.

Applicability.

This volume of the Regulation applies to the Office of the Secretary of Defense, the Military Departments, the Chairman of the Joint Chiefs of Staff and the Combatant Commands, the Office of the Inspector General of the Department of Defense, the Defense Agencies, the DoD Field Activities and all other organizational entities of the Department of Defense (hereafter referred to collectively as "DoD Components"). Unless specifically exempted, FMS transactions should follow DoD accounting guidance contained elsewhere in this Regulation.