The Planning Directive and the OA request

← All Insights

1. Two working papers behind every case

Every new Foreign Military Sales (FMS) case sent to a purchaser for acceptance, and every case being implemented, needs a Planning Directive and an obligational authority (OA) request (FMR Vol. 15, Ch. 2, para. 4.1). Chapter 2 of Volume 15 of the Financial Management Regulation (FMR) sets the rules. Both are first developed when the Letter of Offer and Acceptance (LOA) data are prepared. The OA request goes in the offer package, and the implementing agency (IA) keeps the Planning Directive as backup. How budget authority and OA work on a case more broadly is covered in budget and obligational authority on a case.

The Planning Directive shows the detailed pricing elements, the planned financing appropriations or direct citation, the OA needed for the current year and an estimate for the budget year (FMR Vol. 15, Ch. 2, para. 4.1.1). The first version may hold abbreviated financial data, but it must be expanded to cover every required cost element once execution begins. Activities supplying the case must give the case manager the data needed (FMR Vol. 15, Ch. 2, para. 4.1.2). The case manager must also make sure the nonrecurring cost recoupment charges are in the offer package and marked for reimbursement to the Special Defense Acquisition Fund.

2. When new versions are needed

Beyond the first version, new Planning Directives and OA requests are prepared in five situations (FMR Vol. 15, Ch. 2, para. 4.1.3). They support amendments and modifications with a financial effect, and price changes of less than 10 percent of the estimated cost of articles and services. They also support variations of more than $100,000 between reimbursable accounts, or between direct cite and reimbursable accounts, found after implementation. Changes in current-year OA within the net case value need them, as does making sure enough OA is available before a budget year starts.

All Planning Directives and OA requests are cumulative, so case managers keep an audit trail linking each to its predecessor (FMR Vol. 15, Ch. 2, para. 4.2). Each carries a control number made up of the purchaser’s country code, the case designator, a Julian date and a serial number (FMR Vol. 15, Ch. 2, para. 4.2.1). All amounts are in American currency (FMR Vol. 15, Ch. 2, para. 4.2.2).

Case managers watch financial performance continuously to make sure there is enough OA for the current year and for completing the case (FMR Vol. 15, Ch. 2, para. 4.2.3). At year end, the OA request must show requirements through the end of the coming fiscal year (FMR Vol. 15, Ch. 2, para. 4.2.4). If budget-year, current-year and prior-year requirements together exceed the case value, the case manager starts an amendment or modification.

3. What the Planning Directive is for

The installation that prepares the offer data for the IA keeps the Planning Directive, form DD 2061, as a working paper with three purposes (FMR Vol. 15, Ch. 2, para. 3.2.4). It identifies the cost elements in the offer prices and helps make sure the case is priced under Defense pricing policy. It lays out, over time, how the case will be executed once accepted and implemented. It also names the appropriations or funds that will pay for the offer. The OA request, form DD 2060 (FMR Vol. 15, Ch. 2, para. 3.2.5.4), is prepared from it, with Part A at case line level and Part B naming the financing appropriations (FMR Vol. 15, Ch. 2, para. 3.2.5.1).

4. Keeping the records straight

The appropriation or fund accounting system must keep an audit trail between each approved OA request and the accounting records (FMR Vol. 15, Ch. 2, para. 3.4.1.2). Defense components that are not IAs but do work for them must check the financing source of each work request (FMR Vol. 15, Ch. 2, para. 3.4.1.4). If it is an IA appropriation, the request is processed as an internal Defense order. Appropriations available for more than one year need an apportionment for anticipated reimbursable orders in the first year, later reduced to orders actually received (FMR Vol. 15, Ch. 2, para. 3.4.2.2). In later years a reapportionment is needed to accept purchaser orders funding within-scope price increases.

5. Budgeting for contract administration

Contract administration services (CAS) on sales cases are funded through a surcharge account, and components submit an annual CAS budget request to the Defense Security Cooperation Agency (DSCA) Comptroller by August 10 (FMR Vol. 15, Ch. 2, para. 5.1). The estimates may cover only CAS work under the Federal Acquisition Regulation and the defense supplement. They exclude work not charged under section 21, such as reciprocal agreements, waivers for NATO and NATO cooperative projects, other special project waivers and work excluded by specific laws.

The request states the CAS work expected to be performed and reimbursed that year, with an OA request covering projected unfunded civilian retirement and military pay for full-time CAS personnel (FMR Vol. 15, Ch. 2, para. 5.1.1). Unfunded civilian retirement is computed on basic pay only, excluding overtime (FMR Vol. 15, Ch. 2, para. 5.1.2). Domestic estimates from the Defense Contract Management Agency use its annual command rate (FMR Vol. 15, Ch. 2, para. 5.1.3), while its overseas estimates use actual employee costs, including equipment, vehicles and computers (FMR Vol. 15, Ch. 2, para. 5.1.4.1).

Before CAS costs are incurred, the component sets up a reimbursable order in the appropriation that will first pay for the work (FMR Vol. 15, Ch. 2, para. 5.2). If the approved OA no longer fits, an updated request goes to the DSCA Comptroller with a cover letter explaining the change (FMR Vol. 15, Ch. 2, para. 5.2.1). At year end the request is updated to the September 30 obligated position, and no new obligations are allowed after that date (FMR Vol. 15, Ch. 2, para. 5.2.2). Proceeds from disposing of equipment bought with the account must go back to the FMS Trust Fund (FMR Vol. 15, Ch. 2, para. 5.2.4).

Key terms

Planning Directive	The DD 2061 working paper showing pricing elements, execution plan and financing.
OA request	The DD 2060 request for obligational authority, with Part A by line and Part B by appropriation.
Cumulative document	Each new version builds on its predecessor, with an audit trail between them.
CAS budget	The annual request for contract administration work reimbursed from the surcharge account.
Command rate	The annual rate used for domestic contract administration budget estimates.

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

Planning on paper is matched by planning for delivery on the ground. 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.