Keeping and losing the dependable undertaking

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1. Who decides

Under the Security Assistance Management Manual (SAMM), only partners eligible for dependable undertaking (DU) receive payment schedules, while others must pay cash with acceptance (SAMM C9.9.1.1). Under DU the purchaser firmly commits to pay the whole contract amount, with funds made available ahead of need as billed (SAMM C9.8.3.1). The Director of the Defense Security Cooperation Agency (DSCA) holds the authority under section 22(a) of the Arms Export Control Act, delegated from the President through the Secretary of Defense (SAMM C9.8.3.1.1). DSCA’s Chief Financial Officer (CFO) decides eligibility case by case for any eligible country or organization that clearly shows an ability and willingness to pay.

The manual splits the approvals (SAMM C9.8.3.4). The CFO approves DU for partners whose risk rating shows a positive likelihood of timely payment, and keeps the list of eligible partners. The Director approves it for partners whose rating shows a higher risk of non-payment. DSCA’s financial policy directorate prepares the second and third tier evaluations and updates the list each quarter or as needed. Country finance directors supply the financial data and decide whether DU suits each offer. The directorate also answers general questions about the term, while country finance directors answer questions about a specific country (SAMM C9.8.3.4). The rating test and the three tiers are covered in terms of sale and the dependable undertaking.

2. When there is no usable rating

The main factor is the partner’s Interagency Country Risk Assessment System (ICRAS) rating (SAMM C9.8.3.3). Its record of programs and payments, the size of the planned procurement and any history of debt relief also count (SAMM C9.8.3.2). For countries and organizations without an acceptable rating, DSCA has other tools. It may use a commercial credit rating service, its own DU assessment tool, the country’s payment history on sales, or a combination of these. The ratings themselves are sensitive and are not releasable.

Only partners listed as eligible for Foreign Military Sales (FMS) under the Arms Export Control Act can be considered at all (SAMM C9.8.3.3). The manual explains why the rating matters. A rating below the threshold signals a higher chance of non-payment, and non-payment could require an appropriation funded by American taxpayers.

3. Eligible does not mean offered

DU is not a blanket authority (SAMM C9.8.3.3.1). A country presumed eligible may still be refused the term on a particular case, if other factors suggest a different term of sale is wiser. Information that might affect eligibility should reach the CFO as soon as possible, so the decision can be reviewed. The lower tiers are narrow in the same way. Under the second tier, approval may cover individual cases only, and the third tier may allow a small amount of DU on individual cases only (SAMM C9.8.3.3).

4. The written exception

A partner, its Security Cooperation Organization (SCO), DSCA’s international operations office or the implementing agency may ask in writing to offer one case or amendment on DU to a partner not otherwise eligible (SAMM C9.8.3.3.3). The Director decides, based on a second and third tier analysis by the financial policy directorate. The evidence is gathered by DSCA’s international operations office and evaluated once complete. It includes earlier sales experience, the country information paper, the country team assessment and any Combatant Command endorsement. An exception covers only the case or amendment assessed, and gives no general eligibility. Where any American grant assistance is involved, the request must be coordinated with two State Department offices.

The manual lists six documents for the final evaluation (SAMM C9.8.3.3.3). They are the Letter of Request or other reliable statement of the requirement, and a program history form summarizing the partner’s financial record. Quarterly national fund payment history for the last five to seven years is also required, excluding Foreign Military Financing and other sources. The SCO’s country team assessment and the Combatant Command endorsement should each address the partner’s ability to pay and budget for the requirement. Last is DSCA’s weighted DU assessment form.

5. Keeping the status

Partners with DU must pay completely and on time to keep it (SAMM C9.8.3.3.2). A partner whose rating drops below the threshold can still use the term while it keeps paying on time and keeps active programs. Repeated missed payments, consistent partial payments or inactive programs lead to loss of DU on future offers. A partner meeting the eligibility tests can have its term reviewed at the request of DSCA, the SCO or the partner itself.

Monitoring is continuous (SAMM C9.8.3.3.2.1). The country finance director reviews payment timeliness quarterly and at least yearly, for any term that carries a payment schedule, including the risk assessed and credit assured schedules. DSCA’s financial policy directorate also reviews rating changes over the last seven years. Recommendations are discussed with the State Department and the implementing agencies, then go to the CFO. DSCA tells the State Department of any change it is considering to a country’s status (SAMM C9.8.3.3.4). Country finance directors flag partners with recurring payment problems, and the eligible list is reviewed every quarter and sent to the CFO for approval (SAMM C9.8.3.5). DSCA also represents the Defense Department on the ICRAS working group, and informs the CFO before engaging State where a rating change affects eligibility (SAMM C9.8.3.5).

6. When payments fail

Where a partner cannot support a case’s financial needs, the country finance director follows the collection steps in the Financial Management Regulation (SAMM C9.8.3.6). If those fail, the director tells the CFO and proposes courses of action, and the CFO informs the DSCA Director and engages State’s leadership. Options may include scaling down or shutting down a program, diplomatic channels, or referral to the Justice Department. If nothing works, the manual says there may be a need to seek an appropriation from Congress funded by American taxpayers.

Key terms

Dependable undertaking	The term of sale under which a purchaser commits to pay in full and may pay against a schedule.
ICRAS	The interagency country risk rating on which DU eligibility mainly rests.
Policy exception	A Director-approved use of DU on one case for a partner not otherwise eligible.
DU assessment tool	DSCA’s weighted assessment used when no acceptable rating exists.
Country finance director	The DSCA official who monitors a partner’s payments and advises on its term of sale.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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