Guide

What do the standard terms of a Foreign Military Sales Letter of Offer and Acceptance mean?

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

Every Foreign Military Sales Letter of Offer and Acceptance carries the same set of standard terms and conditions, whether or not they are attached to a particular copy. They set out what the U.S. Government commits to, what the purchaser agrees to, who carries the risk, and the financial, transportation, warranty and dispute terms; the version in effect when the LOA is prepared and signed applies for the life of the case.

In this topic

What does the U.S. Government promise in a Foreign Military Sale?
Section 1 of the Letter of Offer and Acceptance standard terms sets out the U.S. Government's obligations: standard items without regard to make or model, procurement on the same terms the U.S. uses for itself, best efforts on cost and delivery rather than a guarantee, a right to cancel or suspend in the national interest, and rules for U.S. personnel performing services.
What does a Foreign Military Sales purchaser agree to?
Section 2 of the Letter of Offer and Acceptance standard terms sets out the purchaser's side: it may cancel at its own cost, uses what it buys only for the listed purposes, transfers nothing to a third party without U.S. consent, protects classified items as the U.S. would, permits end-use monitoring, and deals with any offset directly with the U.S. contractor.
Who bears the risk of loss in a Foreign Military Sale?
The purchaser. Under Section 3 of the Letter of Offer and Acceptance standard terms, because the U.S. Government buys and furnishes the items on a non-profit basis, the purchaser indemnifies it against loss or liability and relieves its contractors of liability for loss or damage to property — the same risk the U.S. Government carries when it buys for itself.
What are the payment terms of a Foreign Military Sale?
Section 4 of the Letter of Offer and Acceptance standard terms sets out the money side: the purchaser pays the U.S. Government the total cost even when it exceeds the estimates, pays in U.S. dollars on the terms of sale stated in the LOA and whenever billed, pays interest on arrears, and gets back anything paid beyond the final cost that is not needed for arrears on its other cases.
Who is responsible for shipping in a Foreign Military Sale?
Under Section 5 of the Letter of Offer and Acceptance standard terms, title passes to the purchaser at the initial point of shipment, even when the U.S. Government arranges onward transport. The purchaser furnishes shipping instructions, insures the shipment, clears customs, and reports shortages, damage and other discrepancies to the U.S. Government on a Supply Discrepancy Report within the time limits the terms set. Loss or damage caused by a carrier is claimed against the carrier instead.
Does a Foreign Military Sale come with a warranty?
Only a warranty of title, unless the purchaser asks for more. Under Section 6 of the Letter of Offer and Acceptance standard terms, the U.S. Government will try to obtain a warranty the purchaser requests, at the purchaser's cost, exercises contract warranties on the purchaser's behalf, and repairs or replaces items supplied from U.S. stocks that were defective before title passed.
How are disputes resolved in a Foreign Military Sale?
By consultation between the two governments. Section 7 of the Letter of Offer and Acceptance standard terms makes the LOA subject to U.S. law and regulation, including U.S. procurement law, and commits the U.S. Government and the purchaser to settle any disagreement between themselves rather than refer it to an international tribunal or a third party.

What do the standard terms of a Letter of Offer and Acceptance mean?

A contract must clearly delineate what actions each party has committed to perform. A contract that poorly defines who, what, when, where, how, at what cost, and under what conditions these actions will occur, could lead to confusion and may be unenforceable. In this regard, every FMS LOA contains a set of standard terms and conditions, which apply whether or not they are physically attached to a particular case. The standard terms and conditions must, however, be included in the original LOA sent to the international partner for review and acceptance.

The same set of standard terms and conditions applies to all FMS LOAs and is exactly the same for all international partners; however, DSCA periodically updates the terms and conditions to reflect current policy and incorporate standard notes. The terms and conditions in effect at the time the basic LOA is prepared and signed are the conditions that apply throughout the life of the FMS case.

SAMM C5.6.5.4.1 — Standard Terms and Conditions and Letter of Offer and Acceptance Information.

Standard Terms and Conditions ( See Figure C5.F9.) are an official part of each LOA, whether or not they are attached to a particular copy. The Standard Terms and Conditions that are in effect at the time the LOA is prepared and signed are the conditions that apply throughout the life of the FMS case. An LOA Information document (See Figure C5.F10.) provides information describing some of the codes and language used on the LOA. Both the LOA Standard Terms and Conditions and the LOA Information documents must be attached to the original LOA that is sent to the purchaser for review or acceptance. The MILDEP Case Manager must retain a copy of the LOA and all attachments in the official case file.

Figure C5.F8. Sample Letter of Offer and Acceptance · view figure

Figure C5.F9. Letter of Offer and Acceptance Standard Terms and Conditions · view figure

Figure C5.F10. Letter of Offer and Acceptance Information · view figure

Figure C5.F11. Instructions for Preparing a Letter of Offer and Acceptance · view figure

Policy in force, not yet in the manual: DSCA 00-07 (16 May 2000): “AT measures, if determined to be required for a system, must be addressed in the LOA (see paragraph G.13. of the attached guidance). Specifically, maintenance and logistics restrictions due to AT must be stated in the LOA.”

Policy in force, not yet in the manual: DSCA 16-16 (15 March 2016): “The Canadian Department of National Defence and the U.S. Department of State have agreed that the word "employee" as used in LOA Standard Terms and Conditions entered into between Canada and the United States will include "embedded contractors" working within the Canadian Department of National Defence who meet the specifics of section 120.39 of the International Traffic in Arms Regulations (ITAR).”

Synced 11 September 2026 · View on samm.dsca.mil

It is important to note that the LOA standard terms and conditions do not apply to BPC cases used to implement BPC programs. The reason for this difference is that, under BPC cases, the USG is actually selling defense articles and services to another component of the USG rather than directly to an international partner. BPC assistance cannot be provided unless the partner has concluded a binding bilateral agreement with the USG under Section 505 of the Foreign Assistance Act.

What are the seven sections of the standard terms?

The standard terms and conditions are categorized into seven sections. These LOA terms and conditions establish certain rights and responsibilities for each of the parties in the LOA. The terms and conditions also delineate certain limitations or constraints associated with the sale.

Section 1 Conditions—United States Government (USG) Obligations

Section 2 Conditions—General Purchaser Agreements

Section 3 Indemnification and Assumption of Risks

Section 4 Financial Terms and Conditions

Section 5 Transportation and Discrepancy Provisions

Section 6 Warranties

Section 7 Dispute Resolution

References

Drawn exclusively from publicly available authorities.

SAMM

SAMM C5.6.5.4.1 — Standard Terms and Conditions and Letter of Offer and Acceptance Information.

Pipeline stageLOA Offered Pipeline stagePartner Acceptance GuideWhat is the difference between an amendment and a modification to a Letter of Offer and Acceptance?

What do the standard terms of a Foreign Military Sales Letter of Offer and Acceptance mean?

What do the standard terms of a Letter of Offer and Acceptance mean?

What are the seven sections of the standard terms?

References

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