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The Arms Export Control Act provides the president with authority to transfer U.S. defense articles and services (including those related to construction) to friendly countries and allies. Under the Foreign Military Sales (FMS) program, the Department of Defense (DOD) procures the goods or services from the U.S. contractor on behalf of the foreign government recipient. Under the Foreign Military Financing (FMF) program, DOD provides grants — principally to Israel and Egypt — for the purchase of U.S. goods and services.

We have nearly 25 years of experience with both of these programs. In fact, we litigated and won the case that established the U.S. government's liability for U.S. contractor claims under FMS contracts.

Although FMS contracts are accordingly now considered virtually the same as any other DOD contract, some differences remain. We continue to counsel clients regularly in connection with agent fees, offset arrangements and costs, and other unique circumstances presented by FMS arrangements. For example, we successfully litigated a claim against the Air Force to recover coproduction costs incurred as a result of Turkey's direction to use an Egyptian subcontractor. 

Although limited to a handful of countries, the FMF program presents significant challenges to U.S. companies whose commercial contracts are financed under it. Instead of regulations, this program operates under a set of guidelines that are enforced through a "certification and agreement" each contractor must execute for the Defense Security Cooperation Agency (DSCA).

These policies are fraught with ambiguities, but since the United States is not a party to the underlying commercial contract, it often looks to the Civil False Claims Act to enforce them. We have extensive experience with each version of these guidelines, originally established in 1984, and with the DSCA officials who formulated them.

While the sensitivity of many matters precludes identification of specific representations, we have counseled and litigated dozens of matters involving some of the most troublesome areas:

  • Undisclosed non-U.S. content
  • Payment of contingent fees (including to employees)
  • Improper use of advance payments
  • In-country support costs

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"Fastest 5 Minutes: COVID Vaccine Requirements for Contractors, Revolving Door, and Small Business Matters," Podcast: Fastest 5 Minutes in Government Contracts (September 21, 2021). Contacts: Peter Eyre, M. Yuan Zhou
Client Alert/Newsletter
"COFC Refuses to Expand Blue & Gold and Requires Army to Consider Performance Risk in Cost Realism Evaluation," Government Contracts Bullet Points (September 20, 2021). Contacts: Anuj Vohra, Robert J. Sneckenberg, William B. O'Reilly, Karla V. Perez Chacon, John E. McCarthy Jr.
Client Alert/Newsletter
"COVID-19 Vaccination and Safety Considerations Following Biden Administration’s New Vaccine Mandate Initiatives," Crowell & Moring Webinar (September 17, 2021). Speakers: Thomas P. Gies, Katie Erno, Janet Walker, Michelle D. Coleman, and Daniel W. Wolff.
"FAR Updated to Conform with Prior SBA Changes to its Regulations," Government Contracts Bullet Points (September 16, 2021). Contacts: Amy Laderberg O'Sullivan, Olivia Lynch, Michael E. Samuels, Zachary Schroeder
Client Alert/Newsletter
“The Next Sixty Years: Trends and Watch Items in Government Contracting,” 60th Annual National Seminar on Government Contracts (September 15, 2021). Speaker: Michelle D. Coleman.
FAR Conformed to the “New” Limitations on Subcontracting Methodology at 13 C.F.R. § 125.6 (September 15, 2021). Authors: Amy Laderberg O'Sullivan, Olivia Lynch, Michael E. Samuels and Zachary Schroeder.
Assessing Good Faith Efforts to Comply with a Small Business Subcontracting Plan (September 15, 2021). Authors: Amy Laderberg O'Sullivan, Olivia Lynch, Michael E. Samuels and Zachary Schroeder.
"President Biden Announces Six-Pronged Plan to Combat COVID-19, With Implications for Both the Private and Public Sector," Labor & Employment Law Alert - US (September 10, 2021). Contacts: Peter Eyre, Thomas P. Gies, Eric Su, Daniel W. Wolff, Michelle D. Coleman, Katie Erno, Christine B. Hawes, Kimberley Johnson
Client Alert/Newsletter
"President Biden Announces National Vaccination Strategy: Contractors Are Subject to New Vaccine Requirements," Government Contracts Bullet Points (September 10, 2021). Contacts: Michelle D. Coleman, Stephen J. McBrady, Nicole Owren-Wiest, Peter Eyre, Thomas P. Gies, Skye Mathieson, John Nakoneczny
Client Alert/Newsletter
"GAO Rules that DoD May Not Require a Small Business Joint Venture Itself to Hold Facility Clearance," Government Contracts Bullet Points (September 8, 2021). Contacts: Peter Eyre, Adelicia R. Cliffe, Jonathan M. Baker, Olivia Lynch, Michael E. Samuels
Client Alert/Newsletter

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