Pricing dedicated programs and training teams

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1. Programs built for one partner

Specialized or dedicated training programs are priced on full cost principles, under Chapter 7 of Volume 15 of the Financial Management Regulation (FMR) (FMR Vol. 15, Ch. 7, para. 24.0). The legislative authority behind each program and the terms of its formal agreement must also be taken into account. The chapter then describes a set of current programs run by each military department. Those descriptions show how the authority chosen changes what the partner pays. How ordinary tuition is built is covered in how a full cost tuition rate is built.

2. Three authorities, three outcomes

Several programs for Singapore run under section 21(a)(1)(C) of the Arms Export Control Act, 22 U.S.C. 2761(a)(1)(C). They include the Army’s CH-47 Chinook and AH-64 Apache helicopter training programs (FMR Vol. 15, Ch. 7, para. 24.1.1 and FMR Vol. 15, Ch. 7, para. 24.1.2). As a high-income country, Singapore is eligible for training priced on the additional cost concept, and without a formal agreement the additional cost procedures apply. Activated Reserve or National Guard salaries count as an additional cost. The Air Force’s F-15 and F-16 programs for Singapore follow the same approach (FMR Vol. 15, Ch. 7, para. 24.3.4 and FMR Vol. 15, Ch. 7, para. 24.3.5).

Taiwan’s F-16 training program runs under the same section, but Taiwan is not under special pricing authority and pays the full cost of training (FMR Vol. 15, Ch. 7, para. 24.3.6). The same authority can therefore produce two different prices, depending on the purchaser’s status.

Cooperative programs under section 21(g), 22 U.S.C. 2761(g), work differently (FMR Vol. 15, Ch. 7, para. 24.3.1.2). Once such a cooperative training agreement is signed, it governs the terms if the financial principles rest on reciprocity, even where a NATO or major non-NATO ally also receives International Military Education and Training funds. These reciprocal agreements cover all direct costs and may exclude indirect costs, the administrative surcharge and trainee billeting, unless American forces pay for similar accommodation.

3. The cooperative programs in practice

The Euro-NATO Joint Jet Pilot Training program at Sheppard Air Force Base, Texas, is a multinational cooperative program under section 21(g) (FMR Vol. 15, Ch. 7, para. 24.3.1.1). Its program documents describe it as undertaken "in furtherance of NATO rationalization and standardization" and cite the NATO status of forces agreement. Both the administrative surcharge and the contract administration surcharge are waived for it (FMR Vol. 15, Ch. 7, para. 24.3.1.2).

The Dutch F-16 program and the German Air Force Tornado program also run under section 21(g) (FMR Vol. 15, Ch. 7, para. 24.3.2.1 and FMR Vol. 15, Ch. 7, para. 24.3.3). They must recover all direct costs and may exclude indirect costs, the surcharge and billeting. The statute allows some flexibility in billing indirect costs so the total cost can be shared properly, and unique program agreements may set agreed reimbursement details (FMR Vol. 15, Ch. 7, para. 24.3.2.2). For both, the regulation records that the administrative surcharge has not been excluded (FMR Vol. 15, Ch. 7, para. 24.3.3).

4. Setting up a dedicated program

Dedicated programs may be supported by American personnel, international personnel or both (FMR Vol. 15, Ch. 7, para. 24.4.1). An assessment must decide whether additional American personnel are needed, and care is needed to code them as reimbursable billets and to decide whether they are direct or indirect costs. Where international military members fill instructor billets, the comparable American rate is applied if costs are charged or compensated (FMR Vol. 15, Ch. 7, para. 24.4.2). Future-year estimates are adjusted for inflation using the Comptroller’s rates (FMR Vol. 15, Ch. 7, para. 24.5).

The purchaser pays all start-up costs, including the expenses of implementing agency activities helping to establish the training (FMR Vol. 15, Ch. 7, para. 24.6). The regulation lists environmental analysis, construction or alteration of facilities, a share of jointly used government facilities, equipment, commercially leased space such as off-base offices or modular buildings, and one-time site activation. Where the program agreement does not address attrition, the liability statement goes on the offer (FMR Vol. 15, Ch. 7, para. 24.9.1). The Field Studies Program may be included if the purchaser wants it (FMR Vol. 15, Ch. 7, para. 24.9.2), and the administrative surcharge applies where applicable (FMR Vol. 15, Ch. 7, para. 24.9.4).

5. Training teams

When a team trains away from the normal institution, as a management service team, technical assistance field team, extended training service specialist or mobile training team, its work is priced as a service (FMR Vol. 15, Ch. 7, para. 25.0). Training aids are included. All pay and allowances, travel and per diem of team members are costs of the team, subject to four sets of exceptions. How teams are requested is covered in how a training team is requested.

For teams fully financed by foreign security forces funding, military and civilian pay and allowances are excluded (FMR Vol. 15, Ch. 7, para. 25.1.1 and FMR Vol. 15, Ch. 7, para. 25.1.2), and the liability statement is included (FMR Vol. 15, Ch. 7, para. 25.1.3). For teams fully financed by Foreign Military Financing, International Military Education and Training, Military Assistance Program merger funds or Defense-funded capacity building, military pay is excluded (FMR Vol. 15, Ch. 7, para. 25.2.1). Civilian unfunded retirement is excluded for the same teams (FMR Vol. 15, Ch. 7, para. 25.2.2). A case less than 100 percent financed by such funds is repriced to include full military pay.

For teams paid for by a high-income country, or by a country receiving International Military Education and Training that uses its own funds, the agency decides whether personnel costs are an additional cost to the government (FMR Vol. 15, Ch. 7, para. 25.3). National Guard or Reserve personnel activated solely to conduct sales training are always an additional cost, charged to the countries receiving the training (FMR Vol. 15, Ch. 7, para. 25.4).

Key terms

Dedicated training program	A training program built for one or more specific partners, priced on full cost principles.
Section 21(g) agreement	A cooperative training agreement that may exclude indirect costs, the surcharge and billeting.
High-income country	A purchaser eligible for additional cost pricing of training.
Start-up costs	Costs of establishing a dedicated program, all paid by the purchaser.
Training team	A team training away from the normal institution, priced as a service.

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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