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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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"Dismissal, Says Who? Recent Seventh and Ninth Circuit Decisions Offer Competing Views on DOJ’s Dismissal Authority under the False Claims Act, But Congress May Have the Last Word," Government Contracts Bullet Points (September 18, 2020). Contacts: Brian Tully McLaughlin, Jacinta Alves, Preston L. Pugh, Lyndsay A. Gorton, Sean K. Griffin
Client Alert/Newsletter
"COVID-19 Claims and Requests for Equitable Adjustment Q&A Webinar — 'Tick Tock – Submitting COVID-19 Related Claims and REAs as the Government Fiscal Year Draws to a Close'" Crowell & Moring Webinar (September 17, 2020). Presenters: Stephen J. McBrady, Nicole Owren-Wiest, Skye Mathieson, and Michelle D. Coleman.
"Election 2020: U.S.-China Tensions Will Remain Regardless of Who Wins the White House," Election 2020 Series (September 17, 2020). Contacts: Joshua Boswell, Clark Jennings, Shelley Su
Client Alert/Newsletter
"CFIUS Mandatory Declarations – Bye, Bye NAICS Codes; Hello "Regulatory Authorizations"," Government Contracts Bullet Points (September 15, 2020). Contacts: Alan W. H. Gourley, Maria Alejandra (Jana) del-Cerro, Adelicia R. Cliffe, Caroline E. Brown
Client Alert/Newsletter
"Export Controls for Government Contractors," Crowell & Moring Webinar (September 15, 2020). Presenters: Adelicia R. Cliffe, Maria Alejandra (Jana) del-Cerro, Stephanie L. Crawford, and Chandler S. Leonard.
"Made of Steel – New Buy American Act Rules Change Analysis and Increase Barriers to Offers of Foreign Manufactured End Products and Construction Material, Particularly for Iron or Steel Products," Government Contracts Bullet Points (September 14, 2020). Contacts: Alan W. H. Gourley, Adelicia R. Cliffe, William B. O'Reilly
Client Alert/Newsletter
National Law Journal Names Stephen McBrady a Winning Litigator and D.C. Trailblazer (Sep.11.2020)
Firm News/Announcement
"Fastest 5 Minutes: Supply Chain Security, Teaming Agreements, Cost Claims (September 11)," Podcast: Fastest 5 Minutes in Government Contracts (September 11, 2020). Contacts: Peter Eyre, Christopher D. Garcia
Client Alert/Newsletter
"“Show Us the Money (Trail)”: Estimated Subcontract Costs Disallowed for Lack of Proof," Government Contracts Bullet Points (September 2, 2020). Contacts: Stephen J. McBrady, Nicole Owren-Wiest, Skye Mathieson, Sean K. Griffin
Client Alert/Newsletter
Utilizing e-Marketplaces In Government (video clip) Government Matters (September 2, 2020)
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Crowell & Moring LLP is an international law firm with more than 500 lawyers representing clients in litigation and arbitration, regulatory, and transactional matters. The firm is internationally recognized for its representation of Fortune 500 companies in high-stakes litigation, as well as its ongoing commitment to pro bono service and diversity. The firm has offices in Washington, DC, New York, Los Angeles, San Francisco, Orange County, London, and Brussels.

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