Foreign Military Sales (FMS) Program

The Foreign Military Sales (FMS) Program is a U.S. government-to-government security-assistance program. Eligible allies and partners, including Canada, use it to acquire U.S. defence articles, services and training. The program is authorized under the U.S. Arms Export Control Act (AECA). The U.S. Department of State oversees it, and the U.S. Department of Defense manages and executes it.

An FMS purchase is not an ordinary commercial contract. The agreement is between the U.S. Government and the foreign government, and the instrument that records it is a Letter of Offer and Acceptance (LOA). Public Services and Procurement Canada (PSPC) describes FMS as a way for Canada and other U.S. allies and partners to obtain defence goods, services and training through government-to-government agreements.

How an FMS case is structured under the LOA

The U.S. Defense Security Cooperation Agency states that an FMS transaction is based on an LOA between the U.S. Government and a foreign government or international organization. Its Foreign Military Sales page identifies the program as authorized by the AECA.

In this structure, Canada participates as a government. It does not buy directly from a commercial supplier under a standard Canadian commercial contract. Related terms you will see in this area include Letter of Request (LOR), FMS case, government-to-government (G2G) procurement, Direct Commercial Sale (DCS) and Indefinite Delivery Indefinite Quantity (IDIQ) contracts.

Where Canada uses FMS

PSPC is the Canadian procurement department involved in FMS acquisitions, and it acquires defence goods and services on behalf of the Canadian Armed Forces and other government departments. The PSPC defence and marine procurement page sets out that role.

FMS is used for major projects and for specific components of larger acquisitions. Some projects are available only through the program:

• PSPC states that the Next Generation Fighting Vehicles project can only be procured through the U.S. FMS program.
• Canada is acquiring three Beechcraft King Air 350ER aircraft through FMS. The aircraft and mission equipment come through a government-to-government agreement, while long-term in-service support is procured competitively.
• For Canada's remotely piloted aircraft systems, some components were acquired through an FMS with the U.S. Government. The main acquisition used a direct commercial sale contract, as described in the National Defence announcement.

FMS clauses in CanadaBuys solicitations

Some Canadian solicitations carry provisions headed "U.S. Foreign Military Sales (FMS)". Examples include a bid solicitation on CanadaBuys and a request for proposals for stokes litters.

These clauses can address logistics. One CanadaBuys solicitation states that Canada is responsible for carrier selection for shipments of goods supplied under the FMS contract. CanadaBuys also maintains a page on United States defence-related procurement.

FMS for cryptographic equipment

The Communications Security Establishment states that FMS procurement of CSE-approved cryptographic equipment is a government-to-government business arrangement. It identifies PWGSC(W) as the only Canadian authorized point of contact for FMS contracts. The sponsoring department must obtain the required approvals and submit a funded requirement to PSPC. PSPC then develops the FMS request and enters into the supporting arrangement. The CSE guidance sets out these steps.

What FMS means for a supplier bidding on Canadian contracts

Do not treat an FMS requirement as an ordinary direct commercial sale. The agreement sits between the U.S. and Canadian governments through an LOA.

Where a Canadian solicitation incorporates FMS terms, follow its specific FMS clauses and its delivery and logistics requirements, including any stated shipment responsibilities. Requirements depend on the particular project, solicitation and FMS case, so read each solicitation's FMS provisions closely before you bid.