Security Cooperation Program (SCP) Shipments: …

1 Defense Transportation Regulation Part II 17 July 2020 Cargo Movement II-E-1 APPENDIX E Security Cooperation Program (SCP) SHIPMENTS: FOREIGN MILITARY SALES (FMS) AND BUILDING PARTNER CAPACITY COOPERATIVE programs A. GENERAL 1. The SCPs are United States Government (USG) programs that regulate the transfer of USG defense articles and services to foreign governments as either government-to-government sales or government-to-government transfers. Authority and procedures for the SCP come from several levels of the USG. These include Congressional legislation; Presidential Determinations (PD); and by rules, regulations, and procedures published by the Departments of State, Commerce, and Defense. Within the Department of Defense (DoD), each of the Services issues its own SCP rules, regulations, and procedures.

2 The Services are called Implementing Agencies (IA) or Sponsoring United States ( ) Military Services when they work in the SCP. The SCP is divided into two sub- programs , the FMS Program and a collection of other Security Cooperation Building Partner Capacity SCP programs . 2. FMS is the major SCP. FMS customer countries buy defense articles and services from the DoD or the USG. FMS purchasers, then, pay with cash, credit, grant, or non-repayable credit. 3. The difference between title/ownership and possession/custody is a very important subject in the FMS Program . The DoD may transfer custody or possession to an FMS purchaser at a shipment s point of origin, a purchaser s Continental United States (CONUS)-located facility or freight forwarder, at an overseas port of debarkation (POD), or at an inland destination in the purchaser s country or even a third-party country.

3 Movement can be totally non-Defense Transportation System (DTS), partially DTS, or totally DTS. Regardless of where custody passes, title or ownership passes to the purchaser at a shipment s point of origin. Any exception to this procedure must be specifically addressed in an FMS case (Letter of Offer and Acceptance [LOA]). 4. A Delivery Term Code (DTC) identifies an FMS shipment s custody transfer point. This point is determined between the purchaser and the USG in an FMS case/LOA. Although a DTC is negotiated in the LOA process, it can be at least partially determined by what is being sold. For example; Sensitive Arms, Ammunition, and Explosives (AA&E) must be under DoD control at least through a DoD-controlled port of embarkation (POE). Therefore, a minimum of DTC 8 must be assigned.

4 5. Besides DTCs, other data needed to process and ship FMS material are entered into LOAs. This other data includes Type Assistance/Funding Codes and address codes. IAs transfer the data to Defense Logistics Manual (DLM) , Military Standard Requisitioning and Issue Procedures (MILSTRIP), requisitions to have material released from the DoD s Logistic System to FMS purchasers. MILSTRIP data provides DoD/USG shipping activities information needed to correctly ship FMS material. In addition to the custody transfer point, this coded data identifies the IA, the ship-to and mark-for addresses, and the FMS cases. 6. For FMS, title or ownership passes to the purchasers/recipients for most shipments at their points of origin. DoD/USG-procured transportation may be furnished as a reimbursable service.

5 The USG will never be held responsible for damage or loss that may occur in transit. FMS purchasers are told in the LOA process that they should buy commercial insurance if they want to recover full costs for in transit loss or damage. DoD shipping activities or transportation agencies must submit tracer or claims actions against carriers on behalf of FMS purchasers if loss or damage occurs during DoD-procured transportation. Defense Transportation Regulation Part II 17 July 2020 Cargo Movement II-E-2 7. Non-FMS SCP includes both grant programs , such as the Presidential Drawdowns and International Military Education and Training programs , and specially funded Building Partner Capacity programs , such as Counter-Narcotics programs and National Defense Authorization Act programs .

6 Shipments made under a Building Partner Capacity Program are processed by shippers in the same way as FMS Program shipments. MILSTRIP is also used to release and route Building Partner Capacity SCP shipments. The procedures for transporting material under Building Partner Capacity Grant Program SCP differ from FMS/ Building Partner Capacity procedures in the following ways: a. All Building Partner Capacity shipments move via the DTS to recipient country PODs (offloaded) (DTC 9), or to final destination (DTC 7). b. For Grant Program Building Partner Capacity material, title or ownership passes to purchasers/recipients at the destination. DoD/USG-procured transportation is furnished as part of the transfer agreement. The standard terms and conditions expressed in a standard FMS LOA do not apply to Grant Program Building Partner Capacity transfers.

7 The USG is responsible for damage or loss that may occur in transit. DoD shipping activities or transportation agencies must submit tracer or claims actions against carriers on behalf of the USG if loss or damage occurs during DoD-procured transportation. 8. See Chapter 205 for information on the movement of conventional arms, ammunition, and explosives; Classified (Secret and Confidential), Sensitive, and Controlled cryptographic items; and material under a Transportation Protective Service (TPS). 9. Clarification of the term freight forwarder. This term is used throughout the Defense Transportation Regulation (DTR). It is important to distinguish the difference between a freight forwarder as a transportation service provider approved by the DoD for DoD cargo and an FMS freight forwarder who acts as an agent in the United States for the foreign customer country to receive their cargo and provide other services in addition to transportation ( , customs brokerage, storage).

8 All mention of the term freight forwarder in this appendix refers to the latter context 10. DTS is described as the following: Any movement of FMS and Building Partner Capacity SCP material done by DoD-operated or DoD-procured transportation. For DoD cargo, DTS is that portion of the worldwide transportation infrastructure that supports the DoD s transportation needs across the range of military operations. The DTS consists of those common-user military and commercial assets, services, and systems organic to, contracted for, or controlled by the DoD, except for those that are Service-unique or theater-assigned. Overseas movement via a carrier paid with a bill of lading (BL) or electronic data interchange (EDI) that cites a DoD-controlled fund is a DTS movement.

9 If FMS cargo moves to a freight forwarder in the CONUS (DTC 5) under a prepaid BL, it is DTS transportation. If FMS material moves to a DoD port for pickup by an FMS purchaser (DTC 8), the inland movement and port handling is DTS. A Notice of Availability (NOA) and other special FMS procedures apply to these shipments, but tracing and claim responsibility belong to the DoD because the transportation has been procured by DoD activities. B. RESPONSIBILITIES 1. For DTS surface-moved FMS and all Building Partner Capacity SCP cargo, Military Surface Deployment and Distribution Command (SDDC) Operations will: a. Determine proper freight classification, rates, charges, rules, and regulations that apply to SCP traffic. DoD tenders also apply to the movement of SCP shipments.

10 Defense Transportation Regulation Part II 17 July 2020 Cargo Movement II-E-3 b. Negotiate with all commercial-for-hire carriers to establish or modify rates, classification descriptions and ratings, charges, rules, regulations, or accessorial freight services. c. Ensure that rates and charges that involve accessorial freight services incidental to a line-haul transportation movement under SDDC routing control are solicited as follows: (1) Rates and charges for performance of transportation (does not include accessorial freight services). (2) Rates and charges for performance of transportation plus accessorial freight services. d. Advise IAs and other DoD agencies of the results of negotiation actions taken. e. Recommend litigation in transportation and traffic management areas to protect and promote the interests of the DoD SCP.