Foreign Military Sales (FMS) is a program established by the United States government that enables the sale of U.S. defense articles, services, and training to foreign countries and international organizations. On average, the U.S. sells defense materials and services for approximately $47 billion annually.
FMS contracts are a crucial tool used by the U.S. to strengthen diplomatic and military ties with allies and partners around the world. These contracts involve complex processes and regulations that govern the sale of military equipment and services, and understanding them is critical for both U.S. defense contractors and foreign governments interested in procuring U.S. defense capabilities.
As a leader in military and defense contracting, the team at Greenwood Aerospace understands the finer details of FMS contracts and the regulations behind them. We serve a wide variety of aerospace clients, offering:
- FMS sales and support
- Government procurement services
- Aircraft and parts storage
- Distribution of aircraft services and replacement parts
- Military and defense contracting
- And much more
To learn more about the services from Greenwood Aerospace, you can contact us here or email sales@governmentprocurement.com.
In this guide, we’ll provide an overview of U.S. FMS contracts, including their purpose, benefits, and key elements. We’ll also highlight the roles and responsibilities of the U.S. government agencies, defense contractors, and foreign governments involved in FMS contracts, and shed light on the challenges and considerations associated with this type of international defense procurement.
Finally, we’ll break down these contracts and take a look at the specific countries that engage in U.S. Foreign Military Sales, including major recipients of U.S. defense articles and services.
We answer all your questions about foreign military sales, such as:
- What are Foreign Military Sales contracts?
- Who is responsible for Foreign Military Sales contracts?
- How are Foreign Military Sales contracts regulated?
- Which countries have the highest Foreign Military Sales contracts?
Let’s take a closer look at all the details of Foreign Military Sales.
What Are Foreign Military Sales Contracts?
Foreign Military Sales (FMS) contracts are agreements established between the United States government and foreign governments or international organizations for the sale of U.S. defense articles, services, and training. An FMS contract is basically a document outlining the legal transfer of:
- Military equipment including aircraft, vehicles, weapons, and ammunition
- Quality aircraft parts
- Maintenance services
- Training services
- Logistics support
- Software and hardware services
- Technical assistance
- And more
Not only are FMS contracts essential in supplying ally countries with military aircraft, they are also critical in providing ongoing maintenance and support, and explain how our foreign military allies procure parts for their existing aircraft.
How Are Foreign Military Sales Contracts Regulated?
FMS contracts are authorized under the Arms Export Control Act (AECA) and are administered by the U.S. Department of State's Directorate of Defense Trade Controls (DDTC) in coordination with the U.S. Department of Defense (DoD). These contracts play a crucial role in advancing U.S. foreign policy and national security objectives by strengthening defense relationships with allies and partners around the world.
FMS contracts are based on the principle of government-to-government sales, where the U.S. government acts as an intermediary between U.S. defense contractors and foreign governments. The U.S. government manages the entire FMS process, from the initial request for defense articles or services by a foreign country to the negotiation, approval, and implementation of the contract. The U.S. government also provides oversight and ensures compliance with U.S. laws and regulations, including export control laws and regulations, throughout the entire FMS lifecycle.
FMS contracts are subject to strict regulations and require compliance with U.S. export control laws, including the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR). These regulations are in place to protect U.S. national security, prevent the unauthorized transfer of sensitive defense technologies, and ensure that defense articles and services are used for legitimate purposes by authorized recipients.
Who Is Responsible for Foreign Military Sales Contracts?
Foreign Military Sales contracts involve various stakeholders who have specific roles and responsibilities throughout the FMS process. These stakeholders include:
U.S. Department of State (DOS)
The DOS through its Directorate of Defense Trade Controls (DDTC) is responsible for the administration and oversight of FMS contracts. DDTC is responsible for:
- Reviewing and approving FMS contract proposals
- Issuing export licenses
- Ensuring compliance with U.S. laws and regulations related to defense trade
The DDTC also serves as the primary point of contact for foreign governments during the FMS process, including negotiation and implementation of FMS contracts.
U.S. Department of Defense
The DOD plays a critical role in the FMS process. This includes the Defense Security Cooperation Agency (DSCA), which manages and executes FMS contracts on behalf of the DOD. The DSCA is responsible for coordinating with other DOD components, U.S. defense contractors, and foreign governments to facilitate the transfer of defense articles, aircraft parts distribution, maintenance services, and training.
Additionally, the relevant DOD components, such as the military services and defense agencies, provide technical expertise, pricing information, and support in the negotiation and implementation of FMS contracts.
U.S. Defense Contractors
U.S. defense contractors are responsible for supplying the defense articles, services, and training that are part of FMS contracts. They work with the U.S. government to:
- Develop and submit proposals
- Negotiate contract terms
- Deliver defense articles and services to foreign governments or international organizations
U.S. defense contractors must comply with U.S. laws and regulations related to defense trade, including export control laws and regulations, throughout the FMS process.
Foreign Governments or International Organizations
Foreign governments or international organizations are responsible for initiating the FMS process by expressing their interest in acquiring U.S. defense articles, services, or training. They work with the U.S. government to negotiate the terms and conditions of FMS contracts, provide the necessary funding, and ensure compliance with their own national laws and regulations. They are also responsible for taking delivery of the defense articles and services and using them for legitimate purposes in accordance with the terms of the FMS contracts.
U.S. Congress
The U.S. Congress plays a significant role in the FMS process as it exercises oversight and approval authority over FMS contracts. Congress reviews and approves the sale of defense articles and services to foreign governments through a notification and review process, as required by the AECA.
Congress also appropriates funding for FMS contracts and can impose conditions or restrictions on the sale of defense articles and services, as well as controlling the agencies responsible for government regulations on supply chain management.
As you can see, each stakeholder has specific roles and responsibilities throughout the FMS process. This is critical in ensuring the successful negotiation, approval, and implementation of FMS contracts.
U.S. Foreign Military Sales by Country
The United States is one of the leading suppliers of defense articles, services, and training to foreign governments through FMS contracts. These sales play a key role in achieving U.S. national security objectives and supporting the defense industrial base. By analyzing U.S. FMS data, we can discover interesting insights into various diplomatic and trade relationships. Let’s explore U.S. foreign military sales by country in recent years.
U.S. Foreign Military Sales by Year: 2013 – 2022
Looking at the total value of FMS contracts annually over the past decade, it’s clear that the values fluctuate from year to year. However, between 2012 and 2019, contract values were typically between $40 billion and $60 billion. In 2020, U.S. foreign military sales contracts peaked at $134 billion. There are several factors that may have contributed to the peak in total FMS contract value in 2020.
One major factor is likely the increased global security threats, particularly from state actors such as Russia and China, that have driven many countries to seek closer defense ties with the United States. Additionally, the COVID-19 pandemic may have played a role in driving the increase in FMS contract value, despite the logistical challenges it brought to military supply chains.
Many countries around the world faced significant economic challenges due to the pandemic, and turned to the United States for defense support and assistance. Shifts in U.S. foreign policy also likely contributed to the increase in FMS contract value in 2020. For example, the Trump administration placed a greater emphasis on the role of the defense industry in U.S. foreign policy, which may have led to an increase in FMS contracts during that time.
In 2021, U.S. FMS contracts dropped significantly, despite the U.S. increasing funding to the Foreign Military Financing (FMF) program from $3.3 billion to $3.8 billion. Direct commercial sales arrangements between U.S. defense contractors and foreign governments also dropped almost 17% in 2021. These figures are likely an ongoing effect of the COVID-19 pandemic, and a reflection of the fact that many governments have been forced to rethink their financial activities as a result of the pandemic. More insights can be gleaned if we break the data down further to assess U.S. foreign military sales by country.
U.S. Foreign Military Sales by Country: 2013 – 2022
As you can see from this data, Japan, the United Arab Emirates, and Saudi Arabia account for almost 23% of total U.S. FMS contracts over the last decade. Japan’s FMS spending peaked in 2020, with $23.1 billion (almost 20% of all FMS contracts for 2020) spent on a fleet of 105 F-35 Joint Strike Fighter aircraft and related equipment. This contract made Japan the second-largest operator of F35 aircraft after the United States, and just the fourth country to use the F-35B variant.
Japan is a key ally of the United States and has a long-standing security partnership with the U.S. government. As a result, Japan is a major purchaser of U.S. defense articles and services through FMS contracts, including:
- Military aircraft
- Missile defense systems
- Naval vessels
- AEGIS weapon systems
Geopolitically, Japan is located in a region of the world that has become increasingly volatile in recent years, with rising security concerns over North Korea's nuclear program, China's military modernization, and other regional security challenges. This played a large role in securing the 2020 FMS contract with the Japanese government.
The United Arab Emirates (UAE) signed a U.S. FMS contract worth $24.1 billion, comprised primarily of F-35 aircraft ($10.4 billion) and munitions ($10 billion). The UAE’s strategic location in the Persian Gulf region and proximity to Iran has driven the country to increase defense capabilities and seek closer security cooperation with the United States.
The UAE has also sought to diversify its economy beyond its traditional reliance on oil exports. The defense industry is one area where the UAE has sought to expand its capabilities and build a domestic defense industry. FMS contracts with the United States have played a key role in supporting these efforts by providing the UAE with access to advanced military technology and equipment.
Similarly, Saudi Arabia is a big spender when it comes to U.S. FMS contracts. In 2017 alone, Saudi Arabia spent $2.9 billion on FMS contracts, including:
- Self-propelled Howitzers systems ($1.1 billion)
- TOW missiles ($670 million)
- Missile system support ($500 million)
- Spare parts and repairs for Abrams tanks ($300 million)
- Helicopter maintenance support services ($100 million)
These contracts have supported Saudi Arabia's defense capabilities and contributed to the U.S. government's efforts to promote regional security and stability in the Middle East.
Contact Greenwood for FMS Sales and Support
At Greenwood Aerospace, we have over four decades of experience working with the U.S. and Allied Nations on numerous global projects. We offer FMS sales and support services, and have a proven record of efficiently handling FMS projects from start to finish.
It’s important to understand that FMS contracts don’t end when an aircraft is sold to a foreign country. Once the partner owns the aircraft or other equipment, they need significant, ongoing support. This may be in the form of:
- Personnel training
- Aircraft sustainment
- Spare and replacement parts
- Ongoing maintenance contracts
- And more
It can be difficult to coordinate all of these moving parts. The aviation landscape is made up of parts suppliers, logistics channels, and maintenance consultants, but it can be difficult to connect all the dots to form a comprehensive package.
That’s where Greenwood Aerospace gets involved. As a leader in military and defense contracting, our team can deliver the logistical support and coordination you need.
Contact contact@governmentprocurement.com to learn more about what Greenwood Aerospace can do for you.
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