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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

View More

"Fastest 5 Minutes: CMMC, GSA Schedule, and Cost Accounting News (February 14)," Podcast: Fastest 5 Minutes in Government Contracts (February 14, 2020). Contacts: Peter Eyre, David B. Robbins
Client Alert/Newsletter
"Double Take: The DoD OIG Recommends Attempting to Recoup $43 Million in Purportedly Expressly Unallowable Costs Not Previously Disallowed," Government Contracts Bullet Points (February 13, 2020). Contacts: Stephen J. McBrady, Nicole Owren-Wiest, Skye Mathieson, Michelle D. Coleman, Charles Baek, Catherine O. Shames
Client Alert/Newsletter
"Fastest 5 Minutes: How Marijuana Laws Affect Government Contractors (February 12)," Podcast: Fastest 5 Minutes in Government Contracts (February 12, 2020). Contacts: Thomas P. Gies, Trina Fairley Barlow
Client Alert/Newsletter
"New Rules Combating Trafficking in Counterfeit and Pirated Goods Impact E-Commerce," International Trade Bulletin (February 11, 2020). Contacts: John B. Brew, David R. Stepp, Lorraine M. Campos, Paul M. Rosen, Peter Eyre
Client Alert/Newsletter
"ABA Hosts Joint Meeting to Discuss Procurement Collusion Strike Force," Government Contracts Bullet Points (February 11, 2020). Contacts: Shawn R. Johnson, Gail D. Zirkelbach
Client Alert/Newsletter
"Federal Circuit Confirms Qualification as a "U.S.-Made End Product" under the TAA, Does Not Require Substantial Transformation in the U.S.," Government Contracts Bullet Points (February 10, 2020). Contacts: Alan W. H. Gourley, Lorraine M. Campos, Adelicia R. Cliffe
Client Alert/Newsletter
"Let’s Talk FCA: Top False Claims Act Developments of 2019 (February 2020)," Podcast: Let's Talk FCA (February 10, 2020). Contact: Mana Elihu Lombardo
Client Alert/Newsletter
Enhanced Debriefings Work So Why Can't GSA Move Faster To Make Them Permanent? Federal News Network (February 10, 2020)
In the News
"Application of the Spearin Doctrine Entitles Contractor to Recover FCA Litigation Costs," Government Contracts Bullet Points (February 7, 2020). Contacts: Stephen J. McBrady, J. Chris Haile, Nicole Owren-Wiest, Skye Mathieson, Michelle D. Coleman, John Nakoneczny
Client Alert/Newsletter
"Protecting Work Product: When the Threat of Litigation Is Too Remote for Privilege," Government Contracts Bullet Points (February 6, 2020). Contacts: Nicole Owren-Wiest, Stephen M. Byers, Skye Mathieson, Michelle D. Coleman, Charles Baek, John Nakoneczny
Client Alert/Newsletter

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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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