The small case management line

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1. A charge designed to discourage small cases

Every foreign military sales case costs the United States something to administer, whether it is worth ten million dollars or twenty thousand. Between 2006 and 2012 that problem was addressed with a blunt instrument: a floor on what each case had to contribute.

The reasoning is recorded. A measure was introduced to reduce the volume of small dollar cases, on the basis that a certain level of administrative support is needed to implement and execute any case at all (SAMM C9.4.7). The figure was not arbitrary. "Based on analysis of data, the amount determined appropriate to charge was $15,000" (SAMM C9.4.7).

It worked, and was withdrawn. The review found that the small case management line had served its purpose in reducing the number of small dollar cases, and it was rescinded for cases accepted on or after 3 July 2012 (SAMM C9.4.7). One sentence keeps it alive. "DSCA reserves the right to reinstitute the application of the SCML" (SAMM C9.4.7).

2. How the top up worked

The mechanism was arithmetic rather than policy. Cases accepted in the six year window had to collect a minimum amount of administrative surcharge unless exempt. Where the case was small enough that the calculated surcharge came to less than 15,000 dollars, a separate line was added so that the surcharge and the line together reached that figure (SAMM C9.4.7.2).

The published example makes it concrete. A case with a calculated surcharge of 500 dollars carried a line of 14,500 (SAMM C9.4.7.2). The buyer paid 15,000 either way. How the surcharge itself is calculated is covered in what goes into the price.

Two features stopped the charge compounding. "The FMS Administrative Surcharge is not assessed against the SCML" (SAMM C9.4.7.2.4), and where the surcharge was waived the line went with it: "When the FMS Administrative Surcharge is waived for a case, the SCML will be considered part of that waiver and will not be charged" (SAMM C9.4.7.2.3).

3. The line that cannot be removed

The value moved with the case. "The value of the SCML line item will be adjusted accordingly as a result of changes in case value when the case is amended or modified" (SAMM C9.4.7.2.1).

But the line itself is permanent. Once added it cannot be deleted, and if the calculated surcharge reaches 15,000 dollars on its own the line is reduced to zero and stays on the case (SAMM C9.4.7.2.2). A line at zero is not the same as no line, and the reason appears at closure: "The SCML will not be deleted as it must remain on the case and in the Defense Integrated Financial System (DIFS) system to provide an audit trail to the supporting data for previously billed amounts" (SAMM C9.4.7.5.1).

Movement is one way in practice. "Cases with an existing SCML where the case value decreases will not have the SCML value increased" (SAMM C9.4.7.1.1.3). A line once zeroed by growth is not restored if the case later shrinks, and a case falling below the threshold is not required to add one: "Cases that decrease in dollar value below $400,000 will not be required to add the SCML" (SAMM C9.4.7.1.1.1).

4. Who it applied to, and who escaped

The test turned on the source of the money. The requirement applied to cases funded with anything other than grant financing, and to cases funded from several sources. It also caught a case funded wholly by grant where the purchaser had received more than 400,000 dollars in such funds the previous fiscal year (SAMM C9.4.7.3.1).

The exemption is the mirror image. A purchaser funding the case wholly from grant money, having received between 1 and 400,000 dollars the previous year, fell outside the requirement, and "Any exceptions to this policy require the approval of the Director, DSCA" (SAMM C9.4.7.3.2). Grant financing is described in what foreign military financing is.

Two other exemptions are narrower. "The SCML requirement does not apply to Excess Defense Articles (EDA) cases that are written solely for the purpose of transferring the grant item" (SAMM C9.4.7.3.3), because those cases have no value at all. Add transportation or refurbishment and the exemption disappears, which is the pattern described in who pays for excess defense articles. Cases established for presidential drawdowns under one country code were also outside it (SAMM C9.4.7.3.4).

5. How the line was written

The drafting instructions are unusually precise for a single line, and they explain how the money was collected. "The MASL line and generic code used for the SCML is: (R6C) SMALLCASESUPT SMALL CASE SUPPORT EXPENSES" (SAMM C9.4.7.4.1).

Availability was set to one month, and the manual says why: it ensures the entire value of the line is included in the initial deposit (SAMM C9.4.7.4.2). The whole charge was therefore paid up front rather than drawn down over the life of the case. Source of supply was coded S, and the delivery term and offer release codes were left blank, printing as a dash on the document.

Pricing was locked down as well. A single category code was required, "No Indirect Pricing Components (IPCs) should be used against this line" (SAMM C9.4.7.4.3), and the line type was entered as case expense. A standard note had to appear on every case carrying the line (SAMM C9.4.7.4.4).

6. Closing a case that still carries one

Legacy cases from that window are still closing, which is why the closure rules remain in the manual. Where deliveries exceed the current case value, an amendment is needed before closure, and it must include an appropriate reduction to the existing line (SAMM C9.4.7.5.1). If the increase is enough for the surcharge to reach 15,000 dollars on its own, the line goes to zero and stays.

Closing at a lower value never increases the charge. A case proposed to close below its current value keeps the existing line value and is certified for closure on that basis (SAMM C9.4.7.5.2). A case that never had one does not acquire one at the end, even if the recalculated surcharge has fallen below the threshold (SAMM C9.4.7.5.3).

One rounding rule closes the loop. Where the delivered surcharge on other lines pushes the delivered value of the line above its ordered value by less than a dollar, the finance service may charge the difference to the first viable other line. No modification to the case is required (SAMM C9.4.7.5.4). Closure generally is covered in how a case is reconciled and closed.

7. What a supplier can take from this

Nothing here applies to a new case, and that is the first thing to know. Anyone reading the section without its opening paragraph could spend a long time applying a rescinded requirement.

It still matters in two situations. A case accepted between 2006 and 2012 and still open carries the line, at zero or otherwise, and it cannot be removed at closure. And the underlying arithmetic explains why very small cases have long been discouraged: the fixed cost of administering one does not shrink with its value, whether or not a named line is collecting it.

Key terms

Small case management line	The line that topped the administrative surcharge up to fifteen thousand dollars.
Rescission	The withdrawal of the requirement for cases accepted on or after 3 July 2012.
Reduced to zero	The only way the line can be removed from view, since it cannot be deleted.
One month availability	The coding that forced the whole value into the initial deposit.

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

Small cases carry the same fixed administrative cost as large ones, and the same delivery problems. Sentfore provides secure movement, protective security, facilities and life support for defense programs in complex environments. Requirements can be sent through the contact page.