9.20. Co-Operative Logistics (COLOG) and Blanket Order cases with the United States Department of Defense
- This section provides details of the Canada/United States (U.S.) of America Co-Operative Logistics (COLOG) Supply Support Arrangement (CLSSA) and describes specific responsibilities of Public Works and Government Services Canada (PWGSC) in relation to this supply support arrangement.
- The COLOG/CLSSA was initially approved in 1965. PWGSC will make the necessary arrangements to establish with the USG the contractual instruments such as COLOG arrangements or blanket order cases (BOC), thus allowing the Canadian Department of National Defence (DND) to obtain directly from the U.S. Department of Defense (DoD), material and services, as required.
- COLOG/CLSSAs allows for the pre-stock and storage of consumable items that are needed and used by the purchasing country on a recurring basis. Under COLOG arrangements, the purchasing country acquires an equity in the supply system of the appropriate service within the US DoD through a Foreign Military Sales Order (FMSO) I case that establishes stock levels, which is adjusted as required, depending on usage. FMSO I cases are to be viewed as investments into the US DoD supply chain, as such the customary payment exception in section 9.15.40 is not applicable. The associated financial commitment for FMSO I cases must be paid in full upon acceptance by the purchasing country.
- FMSO II cases are used by the purchasing country to requisition consumable items to replenish their in-country stock. FMSO II cases work in conjunction with FMSO I cases. FMSO II cases allows the purchasing country to submit requisitions for consumable items directly into the US DoD supply chain. FMSO II cases are similar to a call up against a standing offer, as such payments to the USG are made after a requisition has been submitted into the US DoD supply chain. For more on payments, see section 9.15.40 Foreign Military Sales agreement administration.
- DND has purchased an equity in each of the three US Forces supply systems, US Army, Air Force and Navy, on an as and when required basis, and pays for only those items it actually draws out of the systems. As such, DND is not required to establish FMSO I cases. However, if an item is unique or where a new weapon system is being introduced a new FMSO I case may be required. These instances are evaluated on a case by case basis.
- Once a FMSO I case has been established, DND leverages the supply chain by establishing FMSO II cases on a yearly basis. There are exceptions when FMSO II cases can be established over multiyear up to 5 years. This requires engagement with the appropriate US DoD entity and their subsequent approval. FMSO II cases must be established before the Department of National Defence (DND) is allowed to acquire consumable items from the US DoD supply systems.
9.20.1 Requisition Receipt
- Contracting officers should refer to 9.15 United States Foreign Military Sales or information concerning the requisition process of the U.S. FMS program.
- The COLOG Operations Office in the Defence and Major Projects Sector (DMPS), Acquisitions Branch, will review requisitions for COLOG and BOC and provide support to these activities, as detailed under the Referral Program activities (see 9.20.20 Referral Program), on behalf of PWGSC.
- Under COLOG arrangements, a participating country is required to purchase an equity in the supply system of the appropriate service within the U.S. DoD through a Stock Level Case, which is adjusted as required, up or down, depending on usage. Canada has purchased an equity in each of the three U.S. Forces supply systems, U.S. Army, Air Force and Navy, on an as and when required basis, and pays for only those items it actually draws out of the systems.
- Since U.S. law prohibits the U.S. DoD from expending its funds on speculative purchases for other than its own Forces, there is a requirement for deposits to be made usually monthly, in advance, by participating foreign nations. The amount of the deposit should correspond to the anticipated delivery value in the succeeding quarter.
- A final accounting is carried out when all items have been delivered or cancelled and all discrepancies have been resolved. This accounting results in a contract amendment requiring either a final payment by Canada or a refund to Canada.
9.20.10 Establishment and Renewal of a Stock Level Case (FMSO I)
- It is necessary to establish a Stock Level Case, also referred to as Foreign Military Sales Order (FMSO I), to obtain COLOG support from the U.S. DoD. When the U.S. Air Force, U.S. Army or U.S. Navy, as applicable, agrees to supply, through COLOG, spare parts to the Armed Forces of a foreign nation, the U.S. material managers involved will take action to augment the U.S. DoD supply systems to correspond to the client's anticipated requirement.
- Stock Level Cases are negotiated as required.
9.20.15 Establishment of a Requisitioning Case (FMSO II)
- PWGSC establishes annually a Requisitioning Case, also known as a Foreign Military Sales Order (FMSO) II, before Department of National Defence (DND) is allowed to draw spare parts from the U.S. DoD supply systems.
- PWGSC has delegated to DND the responsibility for placing orders directly with the U.S. Navy, the U.S. Army and the U.S. Air Force, as applicable, once the appropriate Stock Level Case (FMSO I) and Requisitioning Case (FMSO II) are in place. Requisitions for COLOG eligible items are transmitted directly by DND to U.S. DoD by means of a computer terminal linked to the U.S. Defense Automatic Addressing System Center, which provides direct access to the U.S. military supply systems.
9.20.20 Referral Program
- There are three aspects to the Referral Program:
- referral of items with an extended price of US $20,000 at the time of requisitioning;
- the Quarterly List of all items procured through COLOG;
- the Annual List of items procured through COLOG.
- The following summarizes the Referral Program:
- When the extended price of an item is US $20,000 or more, the DND COLOG Office responsible for submitting requisitions through COLOG on the U.S. DoD systems, will provide information on demand to the PWGSC COLOG Operations Office (Defence and Major Projects Sector [DMPS]).
- The purpose of this referral is to allow DMPS to review the procurement to determine whether procurement through Canadian and/or other sources is more advantageous to Canada.
- The DMPS COLOG Operations Office coordinates the review with input from the PWGSC product managers as required.
- If it is determined that the item is available from the Canadian industry, procurement action should be completed in Canada unless it is established that such action is not justifiable from a cost standpoint or that other conditions are unacceptable, particularly as they pertain to operational requirements. Similarly, if it is determined that the item is available at less cost from any other commercial source of supply, procurement action may be completed commercially unless it is established that such action is not justifiable from a total cost standpoint or that other conditions are acceptable, particularly as they pertain to operational requirement.
- If the item cannot be procured through the Canadian or foreign-based companies, DND will be advised to demand it from the U.S. DoD through COLOG.
- All referrals should be processed as expeditiously as possible. A full reply or at minimum, an interim reply will be provided to DND within 30 days of receipt of the referral.
- The second portion of the demand Referral Program is that the DND COLOG Office, responsible for the COLOG program, will forward quarterly to DMPS a printout, which will list all procurement through COLOG over the last quarter, regardless of value or priority.
- The third portion of the Referral Program is similar to the second portion except that it is based on an annual list being provided by DND of all procurement through COLOG for the last fiscal year. A similar review as the one performed for the quarterly reports may be conducted.
- The purpose of these reviews is to provide an overview of procurement being done through COLOG over a period of time. This would not be visible with only a review of procurement of individual items with a value over US $20,000. This review will allow PWGSC to seek sources based on requirements demanded over time. Often supply of an individual item may not be attractive to a supplier; however, when procurement of individual items over a period of time is collectively viewed, the combined value may be very attractive to a supplier.
9.20.25 COLOG Termination
If Canada decides to terminate COLOG arrangements, there is a process that varies with the U.S. DoD service involved, which will identify those items that Canada is liable to procure from the U.S. DoD.