SECURITY COOPERATION REINVENTION

1
REINVENTION
FINANCE INITIATIVES
2
FINANCE INITIATIVES

• Standby Letter of Credit in Lieu of Termination
  Liability Prepayments
• Improved Payment Schedule Methodology
• Improved Case Closure and Reconciliation

3
STANDBY LETTER OF CREDIT (SBLC) IN LIEU OF
TERMINATION LIABILITY PREPAYMENTS

• WHAT Adaptation of commercial banking practice
  to FMS
• WHY Provide FMS customers with additional
  flexibility for addressing termination liability
  (T/L) requirements.
• ACCOMPLISHED
• Developed package of SBLC documents
• Conducted orientation briefings with initial
  participants
• Secured DoD Comptroller approval
• TO DO
• Commence initial implementation phase
• Update SAMM and DoD FMR (Volume 15)

4
FMS SBLC HOW IT WILL WORK

• FMS customer expresses interest
• DSCA determines SBLC amount
• FMS customer sends application package to DSCA
  for review
• SBLC documents signed and implemented
• DSCA notifies Implementing Agencies DFAS
• DSCA monitors SBLC at least quarterly and
  requests amendments as appropriate
• If termination actions apply
• DSCA sends sight draft to bank
• Bank remits payment to countrys FMS Trust Fund
  account
• DFAS pays termination costs from FMS Trust Fund
  account
• Once DSAMS is reprogrammed, Implementing Agencies
  reflect SBLC impact on payment schedules

5
IMPROVED PAYMENT SCHEDULE METHODOLOGY

• WHAT Improvement to the process by which USG
  establishes and updates FMS case payment
  schedules.
• WHY Address FMS customer perception that
  payment schedule for FMS cases are outdated and
  inaccurate.
• ACCOMPLISHED
• Developed updated payment schedule policies
• Established payment schedule review revision
  criteria
• Enhanced level of detail and information to be
  used
• Developed process for and validated curves
• Required deposits changing conditions be
  incorporated
• Identified system reprogramming requirements
• TO DO
• Reprogram DSAMS DIFS implement as community is
  trained

6
IMPROVED CASE CLOSURE AND RECONCILIATION

• WHAT Leveraging and improvement of
  opportunities using the Accelerated Case Closure
  Procedures (ACCP)
• WHY Satisfy FMS customers and increase
  efficiencies by continually improving closure
  methodologies.
• ACCOMPLISHED
• Briefed several non-ACCP participating countries
• Enlisted all Implementing Agencies into closure
  process
• Standardized criteria for case reviews
  reconciliations
• Established Fall 2001 closure review schedule
• Promoted tools policies available to expedite
  closure
• TO DO
• Conclude briefings conduct closure reviews
• Conduct Closure/Reconciliation Conference (7-9
  Nov)

7
FINANCE IPT POLICY DOCUMENTS

• Will be posted on DSCA web site, Policy section
• DSCA Policy 01-22 pertains
• Policy Documents Contain
• Cover memo from DSCA Director
• SBLC procedures
• Payment schedule policy guidance
• Lexicon defining terms (e.g., major case)
• Case review and reconciliation matrix
• Payment schedule variance report (and lexicon)
• Illustrations of payment schedule revisions
• Life cycle matrix for payment schedules
• Line-level roll-up case payment schedule
  illustration
• Fall 2001 DSCA/MILDEP closure review approach
  schedule

8
SUMMARY OF BENEFITS

• Payment Case
• SBLC Schedules Closure
• Increased flexibility X X X
• Increased efficiency X X X
• Better tools/resources X X
  X
• Reduced cycle times X X
• Improved policies X X X
• Increased customer X X X
• satisfaction