A recent policy update changes the requirements for sole source requests in Foreign Military Sales (FMS) cases. Previously, the foreign government had to provide a justification for sole source requests. With the new policy guidance, a justification for sole source is not required, and sole source requests will be approved unless there is “an indication that the request [is] improper or unethical.”
Here’s the updated technical language from the Security Assistance Management Manual (SAMM), shortened for brevity:
An authorized official of the purchasing government may submit a written request […] that the Implementing Agency […] procure a defense article(s) and/or service(s) from a specific organization or entity, or that competition be limited to specific organizations or entities. […] FMS customers need not provide a rationale for the request.
Under this policy, the foreign government customer may request a specific prime contractor and even identify subcontractors in their Letter of Request for the FMS case.
Why does this matter for U.S. Defense Companies?
Companies put in lots of work to generate international sales – attending trade conferences, marketing, even making product alterations for the international market. After all this, the last thing they want is for the Foreign Military Sales case to be assigned to their competitor!
With the “normal” FMS process (see my FMS timeline here), the defense company has little influence over the outcome of the competitive procurement – their bid is evaluated against all others based primarily on price. It’s possible that after putting in the time to develop a sale, the procurement is awarded to another company that can offer cut-throat prices. The FMS procurement process generates enough uncertainty that many defense companies prefer Direct Commercial Sales, where they have more influence in the negotiation of the sale.
This process should make it much easier for Defense Companies to work with foreign government customers through Foreign Military Sales. As we discussed in a previous post, companies can (and should) use Pre-LOR Consultations to define and solidify an international sale. With the updated sole source requirements, companies can feel more confident that they will actually receive the sale that they generate overseas.
Read more about Foreign Military Sales: