U.S. FMS (United States Foreign Military Sales)

U.S. FMS stands for the United States Foreign Military Sales program. It is a U.S. government-to-government program that allows eligible foreign governments and international agencies, including Canada, to buy U.S. defence articles, services and training. The U.S. Department of State oversees the program, and the U.S. Department of Defense manages and executes it.

FMS is a security-assistance and procurement mechanism, and it is distinct from a direct commercial sale between a company and a foreign buyer. A single Canadian acquisition can combine both routes. Canada's purchase of remotely piloted aircraft systems for the Canadian Armed Forces is one example, since some components were acquired through an FMS with the U.S. government, as described in the National Defence announcement.

The Letter of Request and the Letter of Offer and Acceptance

An FMS case starts with the customer government's Letter of Request (LOR). The U.S. government answers with a Letter of Offer and Acceptance (LOA). Once the customer signs and accepts it, the LOA becomes the government-to-government agreement for the purchase. The CanadaBuys page on United States Foreign Military Sales sets out this sequence.

On the Canadian side, the partner client starts an FMS requirement by sending documents to the Central Allocations Unit at Public Services and Procurement Canada (PSPC). The package includes a signed 9200 Requisition, a Statement of Work or Statement of Requirement, and a Security Requirement Checklist (SRCL).

PSPC (W) as Canada's accredited FMS agency

PSPC's Western office, identified as PSPC (W) and formerly referenced as PWGSC(W), is the sole accredited Canadian procurement agency for dealings with the U.S. Department of Defense on FMS matters. Departments and suppliers do not approach the U.S. Department of Defense directly on these cases. Canadian federal defence procurement more broadly is described on the PSPC defence and marine procurement page.

FMS clauses in CanadaBuys solicitations

Canadian defence solicitations can include a section headed "Insert the following for U.S. Foreign Military Sales (FMS)". Examples appear in National Defence bid solicitations posted on CanadaBuys, such as solicitation W8485-268872A and solicitation W8485-247804A.

These clauses deal mainly with shipping. For an identified FMS contract, Canada selects the carrier, and the contractor may be required to coordinate shipment through the Inbound Logistics Coordination Center (ILCC). The contractor must not ship until the Canadian Special Instructions Indicator (SII) has been complied with. The same wording appears in the Standard Acquisition Clauses and Conditions Manual and in a National Defence request for proposal.

FMS for cryptographic equipment and contract terms

FMS also applies to CSE-approved U.S. government off-the-shelf cryptographic equipment. The Canadian Centre for Cyber Security guidance on purchasing CSE-approved cryptographic equipment names PWGSC(W) as the only Canadian authorized point of contact. The arrangement rests on Canada's acceptance of a U.S. Letter of Offer and Acceptance.

The related ITSG-26 guidance states that FMS contracts may be structured as Indefinite Delivery Indefinite Quantity (IDIQ) contracts, that the FMS agreement is itself a contract, and that FMS pricing is normally non-negotiable and can change before or after delivery.

What U.S. FMS means for a supplier bidding on Canadian public contracts

• Read the solicitation for an FMS insertion. If one is present, the requirement involves a U.S. government-to-government channel.
• Plan shipping around Canada's carrier selection. Do not ship until the SII has been complied with, and expect to coordinate through the ILCC where the clause requires it.
• Direct FMS questions to the contracting authority named in the solicitation. PSPC (W) is the only accredited Canadian agency for dealings with the U.S. Department of Defense.
• Expect U.S. pricing terms on FMS-related items to be set by the U.S. government and not open to negotiation.