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The foreign military sales (FMS) program-a Defense Department operation that manages sales of defense equipment, services and training to allied governments-is becoming a source of increasing dissatisfaction for U.S. industry and government customers trying to buy and sell equipment, military and civilian officials agree.

The issue is gaining attention in the aftermath of the North Atlantic Treaty Organization's (NATO) war against Yugoslavia. European members of NATO are under pressure to modernize their forces in order to keep up with U.S. defense technology. The FMS program is managed by the Defense Security Cooperation Agency (DSCA) and financed through a 2.5 percent surcharge …