How does repair and return work in Foreign Military Sales?

Often, it is less expensive to repair items than it is to discard them and order new items. The U.S. military services make extensive use of returns from repairs; in some cases, returns from repairs are the only source of supply. The FMS repairable program provides a country the means of obtaining repair services without the necessity of establishing an in-country capability, which can be a long-term and normally uneconomical investment because of a relatively small number of weapon systems in use. When an in-country capability does exist, the FMS repairable program can supplement this capability when necessary.

Often, international partners will opt to return repair items to U.S. facilities for repair or modification. The scope of work performed under the FMS repairable program is usually referred to as “depot-level repairs.” This means the repair, overhaul, or rebuild of unserviceable assets requires maintenance beyond the capability (equipment and/or skills) available in field- or organization-level activities. The repairs are accomplished by the service depots or by commercial firms under contract to the depots. The choice of this option is often based largely on economics. Rather than investing heavily in facilities, skills, tools, test equipment, etc., the international partner may find that U.S., or other external depot repair service, is more advantageous. When an international partner follows this course of action and uses FMS cases for the repair of items, close coordination with and among the servicing depot facilities is required. The maintenance facility can determine when the item should be returned and estimate the cost of repairs. The ILCO coordinates repair services and instructs the international partner to send the item to the appropriate depot repair facility. The ICP is responsible for procuring the needed repair parts, and for getting them to the depot assigned the overhaul/rebuilding task.

The country has certain basic responsibilities under the FMS repairable program. The country must establish an FMS case in order to get the items repaired.

The country should only return economically repairable items to the U.S. If the repair facility deems an item not economically repairable, it will not be repaired without specific authorization from the country.

The country normally moves the item to the United States itself or through its freight forwarder, and is responsible for port handling, broker fees and customs clearance; onward movement to the repair facility depends on the Delivery Term Code, and the Defense Transportation System can be used in special circumstances. International partners must understand that materiel being returned to the U.S. for repair, regardless of the type of repair program, must clear U.S. customs. International partners or their designated freight forwarders must cite International Traffic in Arms Regulations (ITAR) exemption 22 CFR 123.4 (unclassified) with U.S. customs at the primary U.S. port of entry, along with a copy of the LOA, which authorizes the materiel’s repair.

Two concepts are used in obtaining repairs under the FMS repairable program: repair and return and repair and replace.

To participate in the repair and return program, the international partner must establish an FMS case for repair services with the MILDEP. This may be a blanket order or a defined order case. Under the repair and return concept, the country enters its unserviceable item into the U.S. repair cycle, and, upon completion of repairs, the same item is returned to the country. The U.S. Air Force and U.S. Army call this program “repair and return.” The U.S. Navy calls this program “Repair of Repairables” (RoR).

The repair program is normally limited to items for which the MILDEP has established a depot-level repair program. The international partner must request approval for repair through the ILCO from the inventory manager (IM) before shipping materiel to the U.S. for repair. After receiving approval and shipping instructions from the IM, the international partner ships the materiel to the designated repair facility where it is entered into the repair queue. After repairs are completed, the item is shipped back to the international partner.

In the repair and return or RoR program, the cost to the country is the actual cost of the repair in accordance with DoD 7000.14-R, Financial Management Regulation (FMR), Volume 15, Chapter 7.

Under the repair and replace program, also known as direct exchange (DX), the unserviceable item is returned to the repair activity and, if it can be economically repaired or overhauled, a replacement item is issued from the U.S. military service’s stocks. The country’s unserviceable item is repaired or overhauled and returned to the U.S. military service’s stocks. Under this program, countries are charged the estimated average cost of repairs (also referred to as the net cost or exchange price). With the exception of the administrative and special requirements, i.e., packing, crating and handling, the same costs will be assessed to international partners as are charged to U.S. forces. The DX program is usually available through either a blanket order case or as a CLSSA.

The U.S. Navy’s repair and replace program is called the repairable item replacement option. Under this program, international partners can draw directly from the U.S. Navy stock system (through a CLSSA) for specifically identified weapons replaceable assemblies, system replaceable assemblies, and other designated repairable spares that are managed and have been approved by NAVSUP Weapon Systems Support in conjunction with the U.S. Navy’s systems commands. If the requested materiel is available in the U.S. Navy’s stock system, it is shipped immediately upon request. Then, the international partner sends the failed item to a U.S. Navy designated receiving point for further transfer to a depot for repair. Upon completion of repairs to the returned item, it is returned to U.S. Navy stock. International partners are charged the difference between a condition “A” item and the value of the failed item carcass.

Under the U.S. Air Force’s repair and replace program, international partners can draw directly from USAF sources of supply (through a CLSSA or blanket order case) for items listed on a preauthorized materiel repair requirements list (MRRL). International partners send their failed items to a designated USAF receiving depot. Upon receipt at the depot, a replacement requisition is generated and the international partner is charged the average repair cost for that particular item (also known as the “exchange price”). If the carcass is determined to be non-repairable, then the international partner is charged the full price for a condition “A” item.