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How is a defense article sold from U.S. stock priced in Foreign Military Sales?

Updated 26 September 2026Checked against the SAMM: 26 September 2026

An item sold from U.S. inventory is priced by where it comes from. Secondary items bought through a working capital fund are priced when they are dropped from inventory, with packing and inland transportation already included. For other stock, the decides whether the article will be replaced: without replacement the purchaser pays the acquisition cost less depreciation; with replacement, normally the estimated cost to replace it, less depreciation of the article sold.

Items from a working capital fund

The DoW purchases most secondary items in DoW inventories through a revolving cost account categorized as a Defense Working Capital Fund (). Each MILDEP operates its own account, and the Defense Logistics Agency () operates a DoW-wide . Continuing operations are funded by reimbursements received. The goal for those accounts is to recoup the full retail costs of obtaining an item and maintaining it in the DoW inventory. The base selling price of articles to international partner must be determined at the time the article is dropped from inventory. Packing, Crating, and Handling () costs and inland transportation costs (typically in to the continental U.S. pickup points of the international partner’s ) are already included in the prices of item deliveries.

A small percentage (typically MILDEP-managed) of DoW-managed secondary items are not typically acquired from the accounts. Examples of those typically non- managed items include ammunition, CADs/PADs (cartridge/propellant activated devices), TRAP (tanks, racks, adapters, and pylons), classified items, /crypto, publications, and maps/charts.

Other stock: sold with or without intent to replace

The base pricing and treatment of reimbursements for non- stock articles sold are dependent upon whether the item(s) being sold requires replacement.

When a determination is made that the item will not be replaced, the price of the item must be DoW’s acquisition cost of the item being sold, less any depreciation, plus the applicable recoupment charge. When the intends to replace the article sold, the price must be one of the following:

References

Drawn exclusively from publicly available authorities.

SAMM

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