Guide
What are the restrictions on using Foreign Military Financing?
Foreign Military Financing is limited by law and by policy. The lists items partners should generally not buy with it, such as fuel, food and office supplies, unless the Department of State approves an exception; credit-funded cargo must also travel on U.S.-flag ships and aircraft unless a waiver applies.
What are the restrictions on using Foreign Military Financing?
Expenditure of funds is subject to legal and policy restrictions. Organizations () must ensure that the international partners are aware of U.S. policies for the use of . should generally discourage international partners from using funding for those items identified in Table C9.T10. However, in certain circumstances, these items may be permitted to be purchased with funds if the Department determines that providing such items are critical to the mission, the bilateral relationship, or the defense articles or services are in direct support of coalition operations where U.S. forces are present. should initiate early discussion regarding requests to use funds (with (IOPS) and ). To facilitate review of these requests, should submit a detailed justification and rationale for purchasing each item with funds rather than host-nation funds and any other relevant facts in support of the request. This guidance applies to used for standard cases and Direct Commercial Contracts (DCCs).
All items purchased with credit must be transported by U.S. flag vessels when ocean transportation is used. credit agreements may contain provisions for certain waivers that, if approved, permit shipment of up to 50 percent of credit-funded cargo on vessels of the borrowing international partners, and, in certain instances, such cargo may be transported on vessels of a third country. Such waivers are discussed in C9.7.2.8.5 (Transporting Credit Funded Cargoes). credit funds cannot be used to pay the cost of transportation provided by a vessel of non-U.S. registry. credit may be used to pay air transportation costs only if U.S. flag aircraft are used. The Fly America Act (49 U.S.C. 40118) requires first preference for airlift of grant, credit, or guarantee-funded cargo be given to U.S. flag air carriers. Before using a foreign-flag carrier, a shipper or exporter must provide a written explanation to the as to why a U.S. carrier should not be used. If a U.S. carrier code-shares with a foreign carrier to deliver a shipment to an overseas airport, it is still considered carriage by a U.S. flagged carrier.
References
SAMM
- SAMM C9.T10 — Generally Restricted Items for Purchase with Foreign Military Financing
- SAMM C9.7.2.8.3 — Offshore Procurement.
- SAMM C9.7.2.8.5.1 — Ocean Transportation.
- SAMM C9.7.2.8.5.2 — Air Transportation.
Facts referenced
- Share of FMS credit funded cargo that an approved waiver in an FMS credit agreement may permit to ship on vessels of the borrowing country — 50 percent (as of 11 September 2026) — SAMM C9.7.2.8.5.1
Related
Security Assistance Management Manual (SAMM)
DSCA Manual 5105.38-M required under DoD Directive 5105.65, "Defense Security Cooperation Agency" mandatory for use by all DoD Components. The SAMM provides DoD-wide guidance to the Office of the Secretary of Defense (OSD), the Military Departments (MILDEPs), the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, the Combatant Commands, the Defense Agencies, the DoD Field Activities, the Security Cooperation Organizations (SCOs), and all other organizational entities within the DoD engaged in the management or implementation of DoD Security Assistance and Security Cooperation programs over which DSCA has responsibility.
SAMM Glossary, as of 12 September 2026
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Security Cooperation
Activities undertaken by the DoD to encourage and enable international partners to work with the United States to achieve strategic objectives. It includes all DoD interactions with foreign defense and security establishments, including all DoD-administered security assistance programs, that: build defense and security relationships that promote specific U.S. security interests, including all international armaments cooperation activities and security assistance activities; develop allied and friendly military capabilities for self-defense and multinational operations; and provide U.S. forces with peacetime and contingency access to host nations.
SAMM Glossary, as of 12 September 2026
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SCO — Security Cooperation Organization
SAMM Acronyms, as of 12 September 2026
SAMM — Security Assistance Management Manual
SAMM Acronyms, as of 12 September 2026
Glossary entry →Security Assistance Management Manual (SAMM) →
DSCA — Defense Security Cooperation Agency
SAMM Acronyms, as of 12 September 2026
Glossary entry →Defense Security Cooperation Agency (DSCA) →
State (PM) — Department of State, Bureau of Political-Military Affairs
SAMM Acronyms, as of 12 September 2026
FMS — Foreign Military Sale
SAMM Acronyms, as of 12 September 2026
Defense Article (Foreign Assistance Act; Arms Export Control Act, not including commercial sales subject to the International Traffic in Arms Regulation)
Any weapon, weapons system, munition, aircraft, vessel, boat, or other implement of war;
SAMM Glossary, as of 12 September 2026
Industrial Mobilization
The transformation of industry from its peacetime activity to the fulfillment of the military program necessary to support national military objectives. It includes the mobilization of materials, labor, capital, productive facilities, and contributory items and services essential to military programs.
SAMM Glossary, as of 12 September 2026
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Foreign Military Sales (FMS)
A process, authorized by the Arms Export Control Act, through which eligible foreign governments and international organizations may purchase defense articles, services, and training from the United States Government.
SAMM Glossary, as of 12 September 2026
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Implementing Agency (IA)
The military department or defense agency responsible for the execution of military assistance programs. With respect to FMS, the military department or defense agency assigned responsibility by the Defense Security Cooperation Agency to prepare an LOA and to implement an FMS case. The implementing agency is responsible for the overall management of the actions that will result in delivery of the materials or services set forth in the LOA that was accepted by a foreign country or international organization.
SAMM Glossary, as of 12 September 2026
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