What is the Foreign Military Sales administrative surcharge?

The FMS Administrative surcharge is collected to cover the USG costs of administering FMS and “FMS-like” (i.e., BPC) programs, as defined by the Case-Related Manpower Functions and Funding Source Manpower Matrix (SAMM C9.T2A and C9.T2B). It is included as a percentage of applicable line items as a below-the-line charge on the case and the quarterly bill. It is applied to the selling price with the exception of program management lines, Small Case Management Lines (SCML), and approved waivers. The FMS administrative surcharge percentage is subject to change without prior approval of the international partner. The FMS administrative surcharge applicable to each line on the LOA is to be specified as a note to each LOA document. For cost increases within the scope of the basic LOA, modifications retain the administrative rates associated with the lines modified. When an amendment adds a new line to an existing case, the FMS administrative surcharge rate in effect at that time is applied. For any case that is closed, the USG will retain funds to pay for estimated administrative costs associated with the case, even if no articles or services have been delivered ($0 delivered value). The “FMS Administrative Surcharge” below-the line costs are shown on the LOA’s block ten (10) in the Estimated Cost Summary.

The following is a list of the FMS Administrative Surcharge rates that are included as a percentage of the applicable LOA line items as a below-the-line charge on the case [SAMM C9.T4].

• 3.2 percent for both standard and nonstandard articles/services for case lines accepted on or after 1 June 2018
• 3.5 percent for both standard and nonstandard articles/services for case lines accepted on or after 1 November 2012, and before 1 June 2018
• 3.8 percent for both standard and nonstandard articles/services for case lines accepted on or after 1 August 2006, and before 1 November 2012
• 2.5 percent for standard articles/services for case lines implemented on or after 1 June 1999 and before 1 August 2006
• 3.0 percent for standard articles/services for case lines implemented on or after 1 October 1977, and before 1 June 1999
• 2.0 percent for cases signed prior to 1 October 1977
• 5 percent for non-standard articles/services for case lines for non-standard items implemented before 1 August 2006
• 5 percent for CLSSA Foreign Military Sales Order (FMSO) I cases

Costs associated with administering FMS must always be paid and/or collected AECA, Section 21(e)(2). If a waiver of the FMS Administrative Surcharge for the international partner is approved in one of the circumstances described below, it must still be recouped from another funding source.