The billing statement and delivery listing

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1. The bill as a claim

Chapter 8 of Volume 15 of the Financial Management Regulation sets the policies for billing Foreign Military Sales purchasers (FMR Vol. 15, Ch. 8, para. 1.1). It also covers how Defense Department components report deliveries and progress payments to obtain reimbursement, and how components bill one another for support on a case. The bill itself carries legal weight. The DD Form 645, the billing statement, and the special billing arrangement statements issued by the Defense Security Cooperation Agency (DSCA) "represent an official claim for payment by the U.S. Government" (FMR Vol. 15, Ch. 8, para. 3.1.1).

The Defense Finance and Accounting Service (DFAS) issues quarterly statements based on the payment schedules that the implementing agency attached to the Letter of Offer and Acceptance (LOA) (FMR Vol. 15, Ch. 8, para. 2.2). There is one exception. Where a requisition case is running ahead of or behind schedule, DFAS must bill on the agency’s quarterly forecast or on the committed value of requisitions instead. The quarterly cycle and due dates are covered in payment schedules, billing and late payment.

2. What the statement shows

Each statement covers one quarter of activity (FMR Vol. 15, Ch. 8, para. 3.1.1). The December bill, for example, reflects physical deliveries, services performed and work in process from October 1 through December 31. It also shows cash collections recorded through the date the statement is prepared, and a forecast of advance cash requirements through June. It is mailed around January 15, with payment due March 15.

The statement accounts for all costs incurred under each trust fund case (FMR Vol. 15, Ch. 8, para. 3.1.2). Its detail mirrors the line items of the LOA, with deliveries and services shown against those lines. The administrative surcharge, accessorial costs and work in process are listed separately. When a case is closed and moved to inactive status, DFAS sends a final statement at the end of that calendar quarter, annotated to tell the purchaser of the change (FMR Vol. 15, Ch. 8, para. 3.3).

3. The delivery listing

Behind the statement sits the delivery listing, prepared from the agencies’ integrated control system (FMR Vol. 15, Ch. 8, para. 3.4). It is an itemized list of everything physically delivered and every service performed in the period. Each entry is cross-referenced to specific document numbers, so that purchasers can validate receipt of the materiel or services. The listing also shows how DFAS computed the charges applied by the organization that filled the order.

For cases where payment falls due on delivery under sections 21(d) or 22(b) of the Arms Export Control Act, each case must have an accurate delivery schedule (FMR Vol. 15, Ch. 8, para. 3.2). DFAS bills the charges, and interest is charged under the Department’s policy on debts owed by foreign entities.

4. Asking for an adjustment

A purchaser that finds an error in the statement or the delivery listing must submit a formal request for adjustment (FMR Vol. 15, Ch. 8, para. 4.1.1). Requests about materiel, service performance and accessorial charges go to the implementing agency. Requests about the administrative surcharge alone go to DFAS.

All requests use Standard Form 364, the Report of Discrepancy, also called a Supply Discrepancy Report (FMR Vol. 15, Ch. 8, para. 4.1.2). The form must state clearly the adjustment or billing action requested. Components process eligible reports under the Defense Logistics Management Standards, then report the outcome to DFAS with adjustment reply codes in the delivery transaction. A letter is used where no code fits (FMR Vol. 15, Ch. 8, para. 4.2). DFAS mails a reply listing with the next billing statement, showing the action taken on each report, by country and case (FMR Vol. 15, Ch. 8, para. 4.3). The clocks and value thresholds on those reports are covered in supply discrepancy reports and the deadlines on them.

5. How deliveries reach the bill

An implementing agency must report accrued expenditures and physical deliveries in its financial or logistics system within 30 days of the shipment or performance (FMR Vol. 15, Ch. 8, para. 2.3.2). Costs of services, inventory items and new procurement reach DFAS through delivery reports (FMR Vol. 15, Ch. 8, para. 5.1.1). The agency must keep proof of shipment permanently, signed by the purchaser or its representative, such as a freight forwarder.

DFAS must pay earned reimbursements in those reports within 20 working days of receipt (FMR Vol. 15, Ch. 8, para. 5.1.2). If a cash flow problem prevents payment, DFAS notifies the Director of DSCA immediately. DSCA then tells the country if its funding is short, or the Comptroller’s office if appropriated funding is short. The Director must then tell agencies to suspend further deliveries from stock and further services. The only exception is a determination that billing on delivery, with payment due in 60 days, is in the national interest.

6. Charges DFAS computes

From the delivery data, DFAS computes several charges itself (FMR Vol. 15, Ch. 8, para. 5.3). The contract administration charge is a percentage of reported payments to contractors, unless it has been waived or found not applicable (FMR Vol. 15, Ch. 8, para. 5.3.1). The packing, crating and handling surcharge applies to shipments of materiel outside the working capital fund (FMR Vol. 15, Ch. 8, para. 5.3.2).

Transportation is estimated on the LOA as a below-the-line charge where the actual cost is unknown (FMR Vol. 15, Ch. 8, para. 5.3.3). Containerization, storage in transit and escorts are not in the standard percentages; they go above the line and are adjusted to actual cost. The administrative surcharge is assessed on reported performance, at the rules in effect when the LOA or amendment was accepted, and it does not apply to work in process (FMR Vol. 15, Ch. 8, para. 5.3.4).

Key terms

DD Form 645	The quarterly billing statement, an official claim for payment by the United States.
Delivery listing	The itemized list of deliveries and services behind each statement, cross-referenced to document numbers.
Report of Discrepancy (SF 364)	The form a purchaser uses to request any billing or supply adjustment.
Adjustment reply code	The code a component uses to report the action taken on a discrepancy report.
Work in process	Accrued expenditures shown separately on the bill and not subject to the administrative surcharge.

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.

How Sentfore supports this

Deliveries shown on the bill often depend on transport and security in the last stretch. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.