22 U.S.C. § 2761 — Sales from stocks

Page 1207 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 State when executive orders, regulations, or depart- mental directives implementing the amendments by sections 161 and 162 of Pub. L. 103–236 become effective, or 90 days after Apr. 30, 1994, whichever comes earlier, see section 161(b) of Pub. L. 103–236, as amended, set out as a note under section 2651a of this title. Executive Documents DELEGATION OF FUNCTIONS For delegation of functions of the President under this section, see section 1(b) of Ex. Ord. No. 13637, Mar. 8, 2013, 78 F.R. 16129, set out as a note under section 2751 of this title. Functions were previously delegated by Ex. Ord. No. 11958, which was formerly set out as a note under section 2751 of this title and was revoked, subject to a savings provision, by section 4 of Ex. Ord. No. 13637. § 2756. Foreign intimidation and harassment of individuals in United States No letters of offer may be issued, no credits or guarantees may be extended, and no export li- censes may be issued under this chapter with re- spect to any country determined by the Presi- dent to be engaged in a consistent pattern of acts of intimidation or harassment directed against individuals in the United States. The President shall report any such determination promptly to the Speaker of the House of Rep- resentatives, the Committee on Foreign Affairs of the House of Representatives, and to the chairman of the Committee on Foreign Rela- tions of the Senate. (Pub. L. 90–629, ch. 1, § 6, as added Pub. L. 97–113, title I, § 115, Dec. 29, 1981, 95 Stat. 1528; amended Pub. L. 113–276, title II, § 208(a)(1), Dec. 18, 2014, 128 Stat. 2992.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1321, which is classified principally to this chap- ter. For complete classification of this Act to the Code, see Short Title note set out under section 2751 of this title and Tables. AMENDMENTS 2014—Pub. L. 113–276 substituted ‘‘the Speaker of the House of Representatives, the Committee on Foreign Affairs of the House of Representatives, and’’ for ‘‘the Speaker of the House of Representatives and’’. SUBCHAPTER II—FOREIGN MILITARY SALES AUTHORIZATIONS § 2761. Sales from stocks (a) Eligible countries or international organiza- tions; basis of payment; valuation of certain defense articles (1) The President may sell defense articles and defense services from the stocks of the Depart- ment of Defense and the Coast Guard to any eli- gible country or international organization if such country or international organization agrees to pay in United States dollars— (A) in the case of a defense article not in- tended to be replaced at the time such agree- ment is entered into, not less than the actual value thereof; (B) in the case of a defense article intended to be replaced at the time such agreement is entered into, the estimated cost of replace- ment of such article, including the contract or production costs less any depreciation in the value of such article; or (C) in the case of the sale of a defense serv- ice, the full cost to the United States Govern- ment of furnishing such service, except that in the case of training sold to a purchaser who is concurrently receiving assistance under chap- ter 5 of part II of the Foreign Assistance Act of 1961 [22 U.S.C. 2347 et seq.] or to any high- income foreign country (as described in that chapter), only those additional costs that are incurred by the United States Government in furnishing such assistance. (2) For purposes of subparagraph (A) of para- graph (1), the actual value of a naval vessel of 3,000 tons or less and 20 years or more of age shall be considered to be not less than the great- er of the scrap value or fair value (including conversion costs) of such vessel, as determined by the Secretary of Defense. (b) Time of payment Except as provided by subsection (d) of this section, payment shall be made in advance or, if the President determines it to be in the national interest, upon delivery of the defense article or rendering of the defense service. (c) Personnel performing defense services sold as prohibited from performing combat activi- ties (1) Personnel performing defense services sold under this chapter may not perform any duties of a combatant nature, including any duties re- lated to training and advising that may engage United States personnel in combat activities, outside the United States in connection with the performance of those defense services. (2) Within forty-eight hours of the existence of, or a change in status of significant hos- tilities or terrorist acts or a series of such acts, which may endanger American lives or property, involving a country in which United States per- sonnel are performing defense services pursuant to this chapter or the Foreign Assistance Act of 1961 [22 U.S.C. 2151 et seq.], the President shall submit to the Speaker of the House of Rep- resentatives and to the President pro tempore of the Senate a report, in writing, classified if nec- essary, setting forth— (A) the identity of such country; (B) a description of such hostilities or ter- rorist acts; and (C) the number of members of the United States Armed Forces and the number of United States civilian personnel that may be endangered by such hostilities or terrorist acts. (d) Billings; interest after due date, rates of in- terest and extension of due date If the President determines it to be in the na- tional interest pursuant to subsection (b) of this section, billings for sales made under letters of offer issued under this section after June 30, 1976, may be dated and issued upon delivery of the defense article or rendering of the defense service and shall be due and payable upon re- Page 1208 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 ceipt thereof by the purchasing country or inter- national organization. Interest shall be charged on any net amount due and payable which is not paid within sixty days after the date of such billing. The rate of interest charged shall be a rate not less than a rate determined by the Sec- retary of the Treasury taking into consideration the current average market yield on out- standing short-term obligations of the United States as of the last day of the month preceding the billing and shall be computed from the date of billing. The President may extend such sixty- day period to one hundred and twenty days if he determines that emergency requirements of the purchaser for acquisition of such defense arti- cles or defense services exceed the ready avail- ability to the purchaser of funds sufficient to pay the United States in full for them within such sixty-day period and submits that deter- mination to the Congress together with a spe- cial emergency request for the authorization and appropriation of additional funds to finance such purchases under this chapter. (e) Charges; reduction or waiver (1) After September 30, 1976, letters of offer for the sale of defense articles or for the sale of de- fense services that are issued pursuant to this section or pursuant to section 2762 of this title shall include appropriate charges for— (A) administrative services, calculated on an average percentage basis to recover the full es- timated costs (excluding a pro rata share of fixed base operation costs) of administration of sales made under this chapter to all pur- chasers of such articles and services as speci- fied in section 2792(b) of this title and section 2792(c) of this title; (B) a proportionate amount of any non- recurring costs of research, development, and production of major defense equipment (except for equipment wholly paid for either from funds transferred under section 503(a)(3) of the Foreign Assistance Act of 1961 [22 U.S.C. 2311(a)(3)] or from funds made available on a nonrepayable basis under section 2763 of this title); and (C) the recovery of ordinary inventory losses associated with the sale from stock of defense articles that are being stored at the expense of the purchaser of such articles. (2)(A) The President may reduce or waive the charge or charges which would otherwise be con- sidered appropriate under paragraph (1)(B) for particular sales that would, if made, signifi- cantly advance United States Government inter- ests in North Atlantic Treaty Organization standardization, standardization with the Armed Forces of Japan, Australia, the Republic of Korea, Israel, or New Zealand in furtherance of the mutual defense treaties between the United States and those countries, or foreign procurement in the United States under co- production arrangements. (B) The President may waive the charge or charges which would otherwise be considered ap- propriate under paragraph (1)(B) for a particular sale if the President determines that— (i) imposition of the charge or charges likely would result in the loss of the sale; or (ii) in the case of a sale of major defense equipment that is also being procured for the use of the Armed Forces, the waiver of the charge or charges would (through a resulting increase in the total quantity of the equip- ment purchased from the source of the equip- ment that causes a reduction in the unit cost of the equipment) result in a savings to the United States on the cost of the equipment procured for the use of the Armed Forces that substantially offsets the revenue foregone by reason of the waiver of the charge or charges. (C) The President may waive, for particular sales of major defense equipment, any increase in a charge or charges previously considered ap- propriate under paragraph (1)(B) if the increase results from a correction of an estimate (reason- able when made) of the production quantity base that was used for calculating the charge or charges for purposes of such paragraph. (3)(A) The President may waive the charges for administrative services that would otherwise be required by paragraph (1)(A) in connection with any sale to the North Atlantic Treaty Or- ganization (NATO) Support and Procurement Organization and its executive agencies in sup- port of— (i) a support or procurement partnership agreement; or (ii) a NATO/SHAPE project. (B) The Secretary of Defense may reimburse the fund established to carry out section 2792(b) of this title in the amount of the charges waived under subparagraph (A) of this paragraph. Any such reimbursement may be made from any funds available to the Department of Defense. (C) As used in this paragraph— (i) the term ‘‘support or procurement part- nership agreement’’ means an agreement be- tween two or more member countries of the North Atlantic Treaty Organization (NATO) Support and Procurement Organization and its executive agencies that— (I) is entered into pursuant to the terms of the charter of that organization; and (II) is for the common logistic support of activities common to the participating countries; and (ii) the term ‘‘NATO/SHAPE project’’ means a common-funded project supported by allo- cated credits from North Atlantic Treaty Or- ganization bodies or by host nations with NATO Infrastructure funds. (f) Public inspection of contracts Any contracts entered into between the United States and a foreign country under the authority of this section or section 2762 of this title shall be prepared in a manner which will permit them to be made available for public in- spection to the fullest extent possible consistent with the national security of the United States. (g) North Atlantic Treaty Organization standard- ization agreements, similar agreements; re- imbursement for costs; transmittal to Con- gress The President may enter into North Atlantic Treaty Organization standardization agree- ments in carrying out section 814 of the Act of October 7, 1975 (Public Law 94–106), and may enter into similar agreements with countries Page 1209 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 1 So in original. Probably should be ‘‘subparagraph’’. which are major non-NATO allies, for the coop- erative furnishing of training on bilateral or multilateral basis, if the financial principles of such agreements are based on reciprocity. Such agreements shall include reimbursement for all direct costs but may exclude reimbursement for indirect costs, administrative surcharges, and costs of billeting of trainees (except to the ex- tent that members of the United States Armed Forces occupying comparable accommodations are charged for such accommodations by the United States). Each such agreement shall be transmitted promptly to the Speaker of the House of Representatives, the Committee on Foreign Affairs of the House of Representatives, and the Committees on Appropriations, Armed Services, and Foreign Relations of the Senate. (h) Reciprocal quality assurance, inspection, con- tract administrative services, and contract audit defense services; catalog data and serv- ices (1) The President is authorized to provide (without charge) quality assurance, inspection, contract administration services, and contract audit defense services under this section— (A) in connection with the placement or ad- ministration of any contract or subcontract for defense articles, defense services, or design and construction services entered into after October 29, 1979, by, or under this chapter on behalf of, a foreign government which is a member of the North Atlantic Treaty Organi- zation or the Governments of Australia, New Zealand, Japan, the Republic of Korea, or Israel, if such government provides such serv- ices in accordance with an agreement on a re- ciprocal basis, without charge, to the United States Government; or (B) in connection with the placement or ad- ministration of any contract or subcontract for defense articles, defense services, or design and construction services pursuant to the North Atlantic Treaty Organization Security Investment program in accordance with an agreement under which the foreign govern- ments participating in such program provide such services, without charge, in connection with similar contracts or subcontracts. (2) In carrying out the objectives of this sec- tion, the President is authorized to provide cat- aloging data and cataloging services, without charge, to the North Atlantic Treaty Organiza- tion, to any member government of that Organi- zation, or to the Governments of the Republic of Korea, Australia, New Zealand, Japan, or Israel if that Organization, member government, or the Governments of the Republic of Korea, Aus- tralia, New Zealand, Japan, or Israel provides such data and services in accordance with an agreement on a reciprocal basis, without charge, to the United States Government. (i) Sales affecting combat readiness of Armed Forces; statement to Congress; limitation on delivery (1) Sales of defense articles and defense serv- ices which could have significant adverse effect on the combat readiness of the Armed Forces of the United States shall be kept to an absolute minimum. The President shall transmit to the Speaker of the House of Representatives, the Committees on Foreign Affairs and Armed Serv- ices of the House of Representatives, and the Committees on Armed Services and Foreign Re- lations of the Senate on the same day a written statement giving a complete explanation with respect to any proposal to sell, under this sec- tion or under authority of subchapter II–B, any defense articles or defense services if such sale could have a significant adverse effect on the combat readiness of the Armed Forces of the United States. Each such statement shall be un- classified except to the extent that public dis- closure of any item of information contained therein would be clearly detrimental to the se- curity of the United States. Any necessarily classified information shall be confined to a sup- plemental report. Each such statement shall in- clude an explanation relating to only one such proposal to sell and shall set forth— (A) the country or international organiza- tion to which the sale is proposed to be made; (B) the amount of the proposed sale; (C) a description of the defense article or service proposed to be sold; (D) a full description of the impact which the proposed sale will have on the Armed Forces of the United States; and (E) a justification for such proposed sale, in- cluding a certification that such sale is impor- tant to the security of the United States. A certification described in subparagraph (E) shall take effect on the date on which such cer- tification is transmitted and shall remain in ef- fect for not to exceed one year. (2) No delivery may be made under any sale which is required to be reported under paragraph (1) of this subsection unless the certification re- quired to be transmitted by paragraph 1 (E) of paragraph (1) is in effect. (j) Repealed. Pub. L. 104–106, div. A, title I, § 112, Feb. 10, 1996, 110 Stat. 206 (k) Effect of sales of excess defense articles on national technology and industrial base Before entering into the sale under this chap- ter of defense articles that are excess to the stocks of the Department of Defense, the Presi- dent shall determine that the sale of such arti- cles will not have an adverse impact on the na- tional technology and industrial base and, par- ticularly, will not reduce the opportunities of entities in the national technology and indus- trial base to sell new or used equipment to the countries to which such articles are transferred. (l) Repair of defense articles (1) In general The President may acquire a repairable de- fense article from a foreign country or inter- national organization if such defense article— (A) previously was transferred to such country or organization under this chapter; (B) is not an end item; and (C) will be exchanged for a defense article of the same type that is in the stocks of the Department of Defense. Page 1210 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 (2) Limitation The President may exercise the authority provided in paragraph (1) only to the extent that the Department of Defense— (A)(i) has a requirement for the defense ar- ticle being returned; and (ii) has available sufficient funds author- ized and appropriated for such purpose; or (B)(i) is accepting the return of the defense article for subsequent transfer to another foreign government or international organi- zation pursuant to a letter of offer and ac- ceptance implemented in accordance with this chapter; and (ii) has available sufficient funds provided by or on behalf of such other foreign govern- ment or international organization pursuant to a letter of offer and acceptance imple- mented in accordance with this chapter. (3) Requirement (A) The foreign government or international organization receiving a new or repaired de- fense article in exchange for a repairable de- fense article pursuant to paragraph (1) shall, upon the acceptance by the United States Gov- ernment of the repairable defense article being returned, be charged the total cost associated with the repair and replacement transaction. (B) The total cost charged pursuant to sub- paragraph (A) shall be the same as that charged the United States Armed Forces for a similar repair and replacement transaction, plus an administrative surcharge in accord- ance with subsection (e)(1)(A) of this section. (4) Relationship to certain other provisions of law The authority of the President to accept the return of a repairable defense article as pro- vided in subsection (a) shall not be subject to chapter 137 legacy provisions (as such term is defined in section 3016 of title 10) of title 10 or any other provision of law relating to the con- clusion of contracts. (m) Return of defense articles (1) In general The President may accept the return of a de- fense article from a foreign country or inter- national organization if such defense article— (A) previously was transferred to such country or organization under this chapter; (B) is not significant military equipment (as defined in section 2794(9) of this title); and (C) is in fully functioning condition with- out need of repair or rehabilitation. (2) Limitation The President may exercise the authority provided in paragraph (1) only to the extent that the Department of Defense— (A)(i) has a requirement for the defense ar- ticle being returned; and (ii) has available sufficient funds author- ized and appropriated for such purpose; or (B)(i) is accepting the return of the defense article for subsequent transfer to another foreign government or international organi- zation pursuant to a letter of offer and ac- ceptance implemented in accordance with this chapter; and (ii) has available sufficient funds provided by or on behalf of such other foreign govern- ment or international organization pursuant to a letter of offer and acceptance imple- mented in accordance with this chapter. (3) Credit for transaction Upon acquisition and acceptance by the United States Government of a defense article under paragraph (1), the appropriate Foreign Military Sales account of the provider shall be credited to reflect the transaction. (4) Relationship to certain other provisions of law The authority of the President to accept the return of a defense article as provided in para- graph (1) shall not be subject to chapter 137 legacy provisions (as such term is defined in section 3016 of title 10) of title 10 or any other provision of law relating to the conclusion of contracts. (Pub. L. 90–629, ch. 2, § 21, Oct. 22, 1968, 82 Stat. 1323; Pub. L. 94–329, title II, §§ 205, 206, June 30, 1976, 90 Stat. 736, 738; Pub. L. 95–384, § 16, Sept. 26, 1978, 92 Stat. 740; Pub. L. 96–92, § 12, Oct. 29, 1979, 93 Stat. 705; Pub. L. 96–533, title I, §§ 102, 103, 105(b)(1), 115(b)(2), Dec. 16, 1980, 94 Stat. 3132, 3134, 3140; Pub. L. 97–113, title I, §§ 103, 104, Dec. 29, 1981, 95 Stat. 1521; Pub. L. 97–392, § 3, Dec. 29, 1982, 96 Stat. 1963; Pub. L. 98–473, title I, § 101(1) [title III, § 301], Oct. 12, 1984, 98 Stat. 1884, 1895; Pub. L. 99–83, title I, §§ 107(a), 108–111, Aug. 8, 1985, 99 Stat. 196, 197; Pub. L. 100–202, § 101(e) [title V, § 580], Dec. 22, 1987, 101 Stat. 1329–131, 1329–181; Pub. L. 100–456, div. A, title X, § 1002, Sept. 29, 1988, 102 Stat. 2037; Pub. L. 101–165, title IX, § 9104(c), Nov. 21, 1989, 103 Stat. 1152; Pub. L. 102–25, title VII, § 705(d)(1), Apr. 6, 1991, 105 Stat. 120; Pub. L. 102–484, div. A, title I, § 114, Oct. 23, 1992, 106 Stat. 2333; Pub. L. 103–236, title VII, § 731(d), Apr. 30, 1994, 108 Stat. 503; Pub. L. 104–106, div. A, title I, § 112, div. D, title XLIII, § 4303(a), Feb. 10, 1996, 110 Stat. 206, 658; Pub. L. 104–164, title I, §§ 104(b)(1), 112(c)(2), 147(a)(3)(A), (b), 152(a), (b), July 21, 1996, 110 Stat. 1426, 1428, 1435, 1438, 1439; Pub. L. 104–201, div. B, title XXVIII, § 2802(d)(2), Sept. 23, 1996, 110 Stat. 2787; Pub. L. 106–113, div. B, § 1000(a)(7) [div. B, title XII, § 1222], Nov. 29, 1999, 113 Stat. 1536, 1501A–498; Pub. L. 109–102, title V, § 534(l)(1), (2), Nov. 14, 2005, 119 Stat. 2211; Pub. L. 110–429, title II, § 203(b)(1), (3), (4), Oct. 15, 2008, 122 Stat. 4845; Pub. L. 111–266, title III, § 301(1), Oct. 8, 2010, 124 Stat. 2804; Pub. L. 113–66, div. A, title XII, § 1250(b), Dec. 26, 2013, 127 Stat. 926; Pub. L. 113–276, title II, § 208(a)(1), (2), Dec. 18, 2014, 128 Stat. 2992, 2993; Pub. L. 115–232, div. A, title XII, § 1279(b), Aug. 13, 2018, 132 Stat. 2072; Pub. L. 117–81, div. A, title XVII, § 1702(l)(3), Dec. 27, 2021, 135 Stat. 2160.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1321, which is classified principally to this chap- ter. For complete classification of this Act to the Code, see Short Title note set out under section 2751 of this title and Tables. The Foreign Assistance Act of 1961, referred to in sub- secs. (a)(1)(C) and (c)(2), is Pub. L. 87–195, Sept. 4, 1961, Page 1211 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 75 Stat. 424, which is classified principally to chapter 32 (§ 2151 et seq.) of this title. Chapter 5 of part II of such Act is classified generally to part V of subchapter II (§ 2347 et seq.) of chapter 32 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 2151 of this title and Tables. Section 814 of the act of October 7, 1975 (Public Law 94–106), referred to in subsec. (g), is not classified to the Code. CODIFICATION Amendment by Pub. L. 98–473 is based on section 102 of S. 2346, Ninety-eighth Congress, as introduced in the Senate Feb. 27, 1984, which was enacted into permanent law by Pub. L. 98–473. AMENDMENTS 2021—Subsecs. (l)(4), (m)(4). Pub. L. 117–81 substituted ‘‘chapter 137 legacy provisions (as such term is defined in section 3016 of title 10)’’ for ‘‘chapter 137’’. 2018—Subsec. (e)(3)(A). Pub. L. 115–232, § 1279(b)(1)(A), substituted ‘‘North Atlantic Treaty Organization (NATO) Support and Procurement Organization’’ for ‘‘North Atlantic Treaty Organization (NATO) Support Organization’’ in introductory provisions. Subsec. (e)(3)(A)(i). Pub. L. 115–232, § 1279(b)(1)(B), sub- stituted ‘‘support or procurement partnership agree- ment’’ for ‘‘support partnership agreement’’. Subsec. (e)(3)(C)(i). Pub. L. 115–232, § 1279(b)(2), in in- troductory provisions, substituted ‘‘ ‘support or pro- curement partnership agreement’ ’’ for ‘‘ ‘weapon sys- tem partnership agreement’ ’’ and ‘‘North Atlantic Treaty Organization (NATO) Support and Procurement Organization’’ for ‘‘North Atlantic Treaty Organization (NATO) Support Organization’’. 2014—Subsec. (g). Pub. L. 113–276, § 208(a)(1), sub- stituted ‘‘the Speaker of the House of Representatives, the Committee on Foreign Affairs of the House of Rep- resentatives, and’’ for ‘‘the Speaker of the House of Representatives and’’. Subsec. (i)(1). Pub. L. 113–276, § 208(a)(2), inserted ‘‘, the Committees on Foreign Affairs and Armed Serv- ices of the House of Representatives,’’ after ‘‘the Speaker of the House of Representatives’’ in introduc- tory provisions. 2013—Subsec. (e)(3)(A). Pub. L. 113–66, § 1250(b)(1), sub- stituted ‘‘North Atlantic Treaty Organization (NATO) Support Organization and its executive agencies’’ for ‘‘Maintenance and Supply Agency of the North Atlan- tic Treaty Organization’’ in introductory provisions. Subsec. (e)(3)(A)(i). Pub. L. 113–66, § 1250(b)(2), sub- stituted ‘‘support partnership agreement’’ for ‘‘weapon system partnership agreement’’. Subsec. (e)(3)(C)(i). Pub. L. 113–66, § 1250(b)(1), sub- stituted ‘‘North Atlantic Treaty Organization (NATO) Support Organization and its executive agencies’’ for ‘‘Maintenance and Supply Agency of the North Atlan- tic Treaty Organization’’ in introductory provisions. Subsec. (e)(3)(C)(i)(II). Pub. L. 113–66, § 1250(b)(3), sub- stituted ‘‘activities’’ for ‘‘a specific weapon system’’. 2010—Subsec. (e)(2)(A). Pub. L. 111–266 inserted ‘‘Israel,’’ before ‘‘or New Zealand’’. 2008—Subsec. (e)(2)(A). Pub. L. 110–429, § 203(b)(1), in- serted ‘‘the Republic of Korea,’’ before ‘‘or New Zea- land’’. Subsec. (h)(1)(A). Pub. L. 110–429, § 203(b)(3), inserted ‘‘the Republic of Korea,’’ before ‘‘or Israel’’. Subsec. (h)(2). Pub. L. 110–429, § 203(b)(4), substituted ‘‘, to any member government of that Organization, or to the Governments of the Republic of Korea, Aus- tralia, New Zealand, Japan, or Israel if that Organiza- tion, member government, or the Governments of the Republic of Korea, Australia, New Zealand, Japan, or Israel’’ for ‘‘or to any member government of that Or- ganization if that Organization or member govern- ment’’. 2005—Subsec. (h)(1)(A). Pub. L. 109–102, § 534(l)(1), in- serted ‘‘or the Governments of Australia, New Zealand, Japan, or Israel’’ after ‘‘North Atlantic Treaty Organi- zation’’. Subsec. (h)(2). Pub. L. 109–102, § 534(l)(2), which di- rected the substitution of ‘‘, to any member of that Or- ganization, or to the Governments of Australia, New Zealand, Japan, or Israel if that Organization, member government, or the Governments of Australia, New Zealand, Japan, or Israel’’ for ‘‘or to any member gov- ernment that Organization if that Organization or member government’’, could not be executed because the phrase ‘‘or to any member government that Organi- zation if that Organization or member government’’ does not appear in text. 1999—Subsec. (a)(1). Pub. L. 106–113 inserted ‘‘and the Coast Guard’’ after ‘‘Department of Defense’’ in intro- ductory provisions. 1996—Subsec. (a)(1)(C). Pub. L. 104–164, § 112(c)(2), in- serted ‘‘or to any high-income foreign country (as de- scribed in that chapter)’’. Subsec. (e)(2). Pub. L. 104–106, § 4303(a), designated ex- isting provisions as subpar. (A) and added subpars. (B) and (C). Subsec. (g). Pub. L. 104–164, § 147(a)(3)(A), (b), sub- stituted ‘‘similar agreements with countries’’ for ‘‘similar agreements with Japan, Australia, and New Zealand, and with other countries’’ in first sentence and struck out at end ‘‘As used in this subsection, the term ‘major non-NATO allies’ means those countries designated as major non-NATO allies for purposes of section 2350a(i)(3) of title 10.’’ Subsec. (h)(1)(B). Pub. L. 104–201 substituted ‘‘Secu- rity Investment program’’ for ‘‘Infrastructure Pro- gram’’. Subsec. (j). Pub. L. 104–106, § 112, struck out heading and text of subsec. (j). Text read as follows: ‘‘(1) Funds received from the sale of tanks under this section shall be available for the upgrading of tanks for fielding to the Army. ‘‘(2) Funds received from the sale of infantry fighting vehicles or armored personnel carriers under this sec- tion shall be available for the upgrading of infantry fighting vehicles or armored personnel carriers for fielding to the Army. ‘‘(3) Paragraphs (1) and (2) apply only to the extent provided in advance in appropriations Acts. ‘‘(4) This subsection applies with respect to funds re- ceived from sales occurring after September 30, 1989.’’ Subsec. (k). Pub. L. 104–164, § 104(b)(1), substituted ‘‘the President shall determine that the sale of such ar- ticles will not have an adverse impact on the national technology and industrial base and, particularly, will not reduce the opportunities of entities in the national technology and industrial base to sell new or used equipment to the countries to which such articles are transferred.’’ for ‘‘the President shall first consider the effects of the sale of the articles on the national tech- nology and industrial base, particularly the extent, if any, to which the sale reduces the opportunities of en- tities in the national technology and industrial base to sell new equipment to the country or countries to which the excess defense articles are sold.’’ Subsec. (l). Pub. L. 104–164, § 152(a), added subsec. (l). Subsec. (m). Pub. L. 104–164, § 152(b), added subsec. (m). 1994—Subsec. (k). Pub. L. 103–236 added subsec. (k). 1992—Subsec. (j). Pub. L. 102–484 added subsec. (j). 1991—Subsec. (g). Pub. L. 102–25 substituted ‘‘section 2350a(i)(3) of title 10’’ for ‘‘section 2767a of this title’’. 1989—Subsec. (e)(1)(A). Pub. L. 101–165, § 9104(c)(1), in- serted reference to section 2792(b) and (c) of this title. Subsec. (e)(1)(B). Pub. L. 101–165, § 9104(c)(2), (3), redes- ignated subpar. (C) as (B) and inserted exception for equipment wholly paid for from funds transferred under the Foreign Assistance Act of 1961 or from funds made available under section 2763 of this title. Former sub- par. (B), which included charges for any use of plant and production equipment in connection with defense articles, was struck out. Subsec. (e)(1)(C), (D). Pub. L. 101–165, § 9104(c)(3), re- designated subpar. (D) as (C). Former subpar. (C) redes- ignated (B). Subsec. (e)(2). Pub. L. 101–165, § 9104(c)(4), substituted reference to par. (1)(B) for reference to pars. (1)(B) and (1)(C). Page 1212 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 1988—Subsec. (e)(3). Pub. L. 100–456 added par. (3). 1987—Subsec. (g). Pub. L. 100–202 inserted ‘‘and with other countries which are major non-NATO allies,’’ after ‘‘New Zealand,’’ and inserted last sentence defin- ing ‘‘major non-NATO allies’’. 1985—Subsec. (a)(1). Pub. L. 99–83, § 107(a)(1), (2), des- ignated existing provisions as par. (1), and substituted ‘‘(A)’’, ‘‘(B)’’, and ‘‘(C)’’ for ‘‘(1)’’, ‘‘(2)’’, and ‘‘(3)’’, re- spectively. Subsec. (a)(1)(C). Pub. L. 99–83, § 108(a), inserted provi- sions relating to training sold to a purchaser receiving assistance under chapter 5 of part II of the Foreign As- sistance Act of 1961. Subsec. (a)(2). Pub. L. 99–83, § 107(a)(3), added par. (2). Subsec. (e)(1)(A). Pub. L. 99–83, § 109, inserted provi- sions excluding pro rata share of fixed base operation costs. Subsec. (g). Pub. L. 99–83, § 108(b), added subsec. (g). Subsec. (h)(1). Pub. L. 99–83, §§ 110, 111(1), (2), des- ignated existing provisions as par. (1), inserted applica- bility to contract administrative services, and sub- stituted ‘‘(A)’’ and ‘‘(B)’’ for ‘‘(1)’’ and ‘‘(2)’’, respec- tively. Subsec. (h)(2). Pub. L. 99–83, § 111(3), added par. (2). 1984—Subsec. (a)(3). Pub. L. 98–473 struck out ‘‘sold to a purchaser who is concurrently receiving assistance under chapter 5 of part II of the Foreign Assistance Act of 1961’’ after ‘‘in the case of training’’. Subsec. (g). Pub. L. 98–473 struck out subsec. (g) which related to NATO standardization agreements and similar agreements with Japan, Australia, and New Zealand. 1982—Subsec. (i)(1). Pub. L. 97–392 inserted reference to proposals to sell under the authority of subchapter II–B. 1981—Subsec. (c)(2). Pub. L. 97–113, § 103, substituted provision for a report within forty-eight hours of exist- ence of or change in status of significant hostilities or terrorist acts or series of such acts, which may endan- ger American lives or property for provision for a re- port within 48 hours after outbreak of significant hos- tilities and omitted provision for statement of relation between the defense services and hostilities in the country, the location and precise nature of personnel activities, and likelihood of personnel engagement in the hostilities. Subsec. (e)(2). Pub. L. 97–113, § 104, authorized reduc- tion or waiver of charges for use and nonrecurring re- search, development, and production costs respecting sales significantly advancing United States interests in standardization with Armed Forces of Japan, Aus- tralia, or New Zealand in furtherance of the mutual de- fense treaties between the United States and those countries. 1980—Subsec. (a)(3). Pub. L. 96–533, § 115(b)(2), included payment, in case of training sold to a purchaser cur- rently receiving international military education and training assistance, of additional costs incurred by the United States Government in furnishing the training. Subsec. (c). Pub. L. 96–533, § 102, designated existing provision as par. (1), substituted ‘‘training and advising that may engage United States personnel in combat ac- tivities’’ for ‘‘training, advising, or otherwise providing assistance regarding combat activities’’, and added par. (2). Subsec. (g). Pub. L. 96–533, § 103, authorized the Presi- dent to enter into standardization agreements with Japan, Australia, and New Zealand. Subsec. (h). Pub. L. 96–533, § 105(b)(1), substituted ‘‘de- fense articles, defense services, or design and construc- tion services’’ for ‘‘defense articles or defense services’’ in two places. 1979—Subsecs. (h), (i). Pub. L. 96–92 added subsec. (h) and redesignated former subsec. (h) as (i). 1978—Subsec. (e)(1)(D). Pub. L. 95–384 added subpar. (D). 1976—Subsec. (a). Pub. L. 94–329, § 205, designated ex- isting provisions as subsec. (a) and substituted provi- sions authorizing President to sell defense articles and defense services from Department of Defense stocks to eligible countries and international organizations who agree to pay specified values for such articles and serv- ices in United States dollars, for provisions requiring that payment for defense articles and defense services from stocks be made in advance, or if in the best inter- est of the United States as determined by the Presi- dent, within a reasonable period not to exceed 120 days after delivery of the articles or rendering of the serv- ices. Subsecs. (b) to (h). Pub. L. 94–329, §§ 205, 206, added subsecs. (b) to (h). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–106, div. D, title XLIII, § 4303(b)–(d), Feb. 10, 1996, 110 Stat. 659, provided that: ‘‘(b) CONDITIONS.—Subsection (a) [amending this sec- tion] shall be effective only if— ‘‘(1) the President, in the budget of the President for fiscal year 1997, proposes legislation that if en- acted would be qualifying offsetting legislation; and ‘‘(2) there is enacted qualifying offsetting legisla- tion. ‘‘(c) EFFECTIVE DATE.—If the conditions in subsection (b) are met, then the amendments made by subsection (a) shall take effect on the date of the enactment of qualifying offsetting legislation [Sept. 23, 1996]. ‘‘(d) DEFINITIONS.—For purposes of this section: ‘‘(1) The term ‘qualifying offsetting legislation’ means legislation that includes provisions that— ‘‘(A) offset fully the estimated revenues lost as a result of the amendments made by subsection (a) for each of the fiscal years 1997 through 2005; ‘‘(B) expressly state that they are enacted for the purpose of the offset described in subparagraph (A); and ‘‘(C) are included in full on the PayGo scorecard. ‘‘(2) The term ‘PayGo scorecard’ means the esti- mates that are made by the Director of the Congres- sional Budget Office and the Director of the Office of Management and Budget under section 252(d) of the Balanced Budget and Emergency Deficit Control Act of 1985 [2 U.S.C. 902(d)].’’ [Qualifying offsetting legislation was enacted by Pub. L. 104–201, § 3303, listed in a Materials in the National Defense Stockpile table under section 98d of Title 50, War and National Defense.] EFFECTIVE DATE OF 1985 AMENDMENT Amendment by Pub. L. 99–83 effective Oct. 1, 1985, see section 1301 of Pub. L. 99–83, set out as a note under sec- tion 2151–1 of this title. EFFECTIVE DATE Section effective July 1, 1968, see section 41 of Pub. L. 90–629, set out as a note under section 2751 of this title. REGULATIONS Pub. L. 104–164, title I, § 152(c), July 21, 1996, 110 Stat. 1439, provided that: ‘‘Under the direction of the Presi- dent, the Secretary of Defense shall promulgate regula- tions to implement subsections (l) and (m) of section 21 of the Arms Export Control Act [22 U.S.C. 2761(l), (m)], as added by this section.’’ TRANSFER OF FUNCTIONS For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relat- ing thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. IMPROVEMENTS TO DEFENSE ACQUISITION WORKFORCE FOR FOREIGN MILITARY SALES Pub. L. 118–159, div. A, title XII, § 1210(b), (c), Dec. 23, 2024, 138 Stat. 2098, provided that: Page 1213 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2761 ‘‘(b) FOREIGN MILITARY SALES CONTINUOUS PROCESS IMPROVEMENT BOARD.— ‘‘(1) ESTABLISHMENT.—The Secretary of Defense shall establish a Foreign Military Sales Continuous Process Improvement Board (in this section referred to as the ‘Board’) to serve as an enduring governance structure within the Department of Defense that re- ports to the Secretary on matters relating to the for- eign military sales process so as to enhance account- ability and continuous improvement within the De- partment, including the objectives of— ‘‘(A) improving the understanding, among offi- cials of the Department, of ally and partner re- quirements; ‘‘(B) enabling efficient reviews for release of tech- nology; ‘‘(C) providing ally and partner countries with relevant priority equipment; ‘‘(D) accelerating acquisition and contracting support; ‘‘(E) expanding the capacity of the defense indus- trial base; ‘‘(F) working with other departments and agen- cies to promote broad United States Government support; and ‘‘(G) any other matters determined by the Sec- retary to be relevant to the Board. ‘‘(2) MEMBERSHIP.—The Board shall be composed of not fewer than seven members, each of whom shall have expertise in security cooperation, security as- sistance, defense acquisition, business process re- form, or any disciplines the Secretary determines to be important to the functioning of the Board. ‘‘(3) SUNSET.—This subsection shall terminate on December 31, 2030. ‘‘(c) DEFINITIONS.—In this section: ‘‘(1) The term ‘defense acquisition workforce’ means the Department of Defense acquisition work- force described in chapter 87 of title 10, United States Code. ‘‘(2) The term ‘nonprofit organization’ means an or- ganization described in section 501(c)(3) of the Inter- nal Revenue Code of 1986 [26 U.S.C. 501(c)(3)] and ex- empt from tax under section 501(a) of such Code[.] ‘‘(3) The term ‘security cooperation workforce’ has the meaning given the term in section 384 of title 10, United States Code.’’ NOTIONAL MILESTONES AND STANDARD TIMELINES FOR CONTRACTS FOR FOREIGN MILITARY SALES Pub. L. 115–91, div. A, title VIII, § 887, Dec. 12, 2017, 131 Stat. 1506, as amended by Pub. L. 116–283, div. A, title VIII, § 887, Jan. 1, 2021, 134 Stat. 3791, provided that: ‘‘(a) ESTABLISHMENT.— ‘‘(1) IN GENERAL.—The Secretary of Defense shall es- tablish specific notional milestones and standard timelines for the Department of Defense to achieve such milestones in its processing of a foreign mili- tary sale (as authorized under chapter 2 of the Arms Export Control Act (22 U.S.C. 2761 et seq.)). Such milestones and timelines— ‘‘(A) may vary depending on the complexity of the foreign military sale; and ‘‘(B) shall cover the period beginning on the date of receipt of a complete letter of request (as de- scribed in chapter 5 of the Security Assistance Management Manual of the Defense Security Co- operation Agency) from a foreign country and end- ing on the date of the final delivery of a defense ar- ticle or defense service sold through the foreign military sale. ‘‘(2) REPORT.—Not later than 180 days after the date of the enactment of this Act [Dec. 12, 2017], the Sec- retary shall submit to the appropriate committees of Congress a report describing the milestones and timelines developed pursuant to paragraph (1) of this section. ‘‘(b) SUBMISSIONS TO CONGRESS.— ‘‘(1) QUARTERLY NOTIFICATION.—During the period beginning 180 days after the date of the enactment of this Act and ending on December 31, 2022, the Sec- retary shall submit to the appropriate committees of Congress, on a quarterly basis, a report that includes a list of each foreign military sale with a value great- er than or equal to the dollar threshold for congres- sional notification under section 36 of the Arms Ex- port Control Act (22 U.S.C. 2776)— ‘‘(A) for which the final delivery of a defense arti- cle or defense service has not been completed; and ‘‘(B) that has not met a standard timeline to achieve a notional milestone as established under subsection (a). ‘‘(2) ANNUAL REPORT.—Not later than November 1, 2019, and annually thereafter until December 31, 2022, the Secretary shall submit to the appropriate com- mittees of Congress a report that summarizes— ‘‘(A) the number, set forth separately by dollar value and notional milestone, of foreign military sales that met the standard timeline to achieve a notional milestone established under subsection (a) during the preceding fiscal year; and ‘‘(B) the number, set forth separately by dollar value and notional milestone, of each foreign mili- tary sale that did not meet the standard timeline to achieve a notional milestone established under subsection (a), and a description of any extenuating factors explaining why such a sale did not achieve such milestone. ‘‘(3) APPLICABILITY.—The requirements of this sub- section apply only to foreign military sales processes within the Department of Defense. ‘‘(c) DEFINITIONS.—In this section— ‘‘(1) the terms ‘defense article’ and ‘defense service’ have the meanings given those terms, respectively, in section 47 of the Arms Export Control Act (22 U.S.C. 2794); and ‘‘(2) the term ‘appropriate committees of Congress’ means— ‘‘(A) the Committee on Armed Services and the Committee on Foreign Relations of the Senate; and ‘‘(B) the Committee on Armed Services and the Committee on Foreign Affairs of the House of Rep- resentatives.’’ INTERNATIONAL SALES PROCESS IMPROVEMENTS Pub. L. 114–328, div. A, title XII, § 1297, Dec. 23, 2016, 130 Stat. 2563, provided that: ‘‘(a) PLAN REQUIRED.—Not later than 180 days after the date of the enactment of this Act [Dec. 23, 2016], the Secretary of Defense shall develop a plan to improve the management and use of fees collected on transfer of defense articles and services via sale, lease, or grant to international customers under programs over which the Defense Security Cooperation Agency has adminis- tration responsibilities. The plan shall include options to use fees more effectively— ‘‘(1) to improve the staffing and processes of the li- censing review cycle at the Defense Technology Secu- rity Administration and other reviewing authorities; and ‘‘(2) to maintain a cadre of contracting officers and acquisition officials who specialize in foreign mili- tary sales contracting. ‘‘(b) PROCESS FOR GATHERING INPUT.—The Secretary of Defense shall establish a process for contractors to provide input, feedback, and adjudication of any dif- ferences regarding the appropriateness of governmental pricing and availability estimates prior to the delivery to potential foreign customers of formal responses to Letters of Request for Pricing and Availability.’’ Executive Documents DELEGATION OF FUNCTIONS For delegation of certain functions of the President under this section, see section 1(c) of Ex. Ord. No. 13637, Mar. 8, 2013, 78 F.R. 16129, set out as a note under sec- tion 2751 of this title. Functions were previously dele- gated by Ex. Ord. No. 11958, which was formerly set out Page 1214 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2762 as a note under section 2751 of this title and was re- voked, subject to a savings provision, by section 4 of Ex. Ord. No. 13637. § 2762. Procurement for cash sales (a) Authority of President; dependable under- taking by foreign country or international organization; interest rates Except as otherwise provided in this section, the President may, without requirement for charge to any appropriation or contract author- ization otherwise provided, enter into contracts for the procurement of defense articles or de- fense services for sale for United States dollars to any foreign country or international organi- zation if such country or international organiza- tion provides the United States Government with a dependable undertaking (1) to pay the full amount of such contract which will assure the United States Government against any loss on the contract, and (2) to make funds available in such amounts and at such times as may be re- quired to meet the payments required by the contract, and any damages and costs that may accrue from the cancellation of such contract, in advance of the time such payments, damages, or costs are due. Interest shall be charged on any net amount by which any such country or international organization is in arrears under all of its outstanding unliquidated dependable undertakings, considered collectively. The rate of interest charged shall be a rate not less than a rate determined by the Secretary of the Treas- ury taking into consideration the current aver- age market yield on outstanding short-term ob- ligations of the United States as of the last day of the month preceding the net arrearage and shall be computed from the date of net arrear- age. (b) Issuance of letters of offer under emergency determination; availability of appropriations for payment The President may, if he determines it to be in the national interest, issue letters of offer under this section which provide for billing upon deliv- ery of the defense article or rendering of the de- fense service and for payment within one hun- dred and twenty days after the date of billing. This authority may be exercised, however, only if the President also determines that the emer- gency requirements of the purchaser for acquisi- tion of such defense articles and services exceed the ready availability to the purchaser of funds sufficient to make payments on a dependable undertaking basis and submits both determina- tions to the Congress together with a special emergency request for authorization and appro- priation of additional funds to finance such pur- chases under this chapter. Appropriations avail- able to the Department of Defense may be used to meet the payments required by the contracts for the procurement of defense articles and de- fense services and shall be reimbursed by the amounts subsequently received from the coun- try or international organization to whom arti- cles or services are sold. (c) Applicability of Renegotiation Act of 1951 The provisions of the Renegotiation Act of 1951 do not apply to procurement contracts here- tofore or hereafter entered into under this sec- tion, section 2769 of this title, or predecessor provisions of law. (d) Competitive pricing (1) Procurement contracts made in implemen- tation of sales under this section for defense ar- ticles and defense services wholly paid for from funds made available on a nonrepayable basis shall be priced on the same costing basis with regard to profit, overhead, independent research and development, bid and proposal, and other costing elements, as is applicable to procure- ments of like items purchased by the Depart- ment of Defense for its own use. (2) Direct costs associated with meeting addi- tional or unique requirements of the purchaser shall be allowable under contracts described in paragraph (1). Loadings applicable to such direct costs shall be permitted at the same rates appli- cable to procurement of like items purchased by the Department of Defense for its own use. (Pub. L. 90–629, ch. 2, § 22, Oct. 22, 1968, 82 Stat. 1323; Pub. L. 93–189, § 25(3), Dec. 17, 1973, 87 Stat. 730; Pub. L. 94–329, title II, § 207, June 30, 1976, 90 Stat. 738; Pub. L. 95–384, § 17, Sept. 26, 1978, 92 Stat. 740; Pub. L. 96–533, title I, § 105(b)(2), Dec. 16, 1980, 94 Stat. 3134; Pub. L. 104–107, title V, § 531A(a), Feb. 12, 1996, 110 Stat. 731; Pub. L. 106–113, div. B, § 1000(a)(7) [div. B, title XII, § 1223], Nov. 29, 1999, 113 Stat. 1536, 1501A–498.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (b), was in the original ‘‘this Act’’, meaning Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1321, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 2751 of this title and Tables. The Renegotiation Act of 1951, referred to in subsec. (c), is act Mar. 23, 1951, ch. 15, 65 Stat. 7, which was classified principally to section 1211 et seq. of the former Appendix to Title 50, War and National Defense, prior to its omission from the Code. AMENDMENTS 1999—Subsec. (d). Pub. L. 106–113 designated existing provisions as par. (1) and added par. (2). 1996—Subsec. (d). Pub. L. 104–107 added subsec. (d). 1980—Subsec. (c). Pub. L. 96–533 substituted ‘‘procure- ment contracts’’ for ‘‘contracts for the procurement of defense articles and defense services’’ and inserted ref- erence to contracts entered into under section 2769 of this title. 1978—Subsec. (c). Pub. L. 95–384 added subsec. (c). 1976—Subsec. (a). Pub. L. 94–329, § 207(a), inserted pro- visions requiring interest to be charged on any net amount a country or international organization is in arrears and the rate of interest to be determined by the Secretary of Treasury considering current average market yield of short-term obligations of United States on a particular day. Subsec. (b). Pub. L. 94–329, § 207(b), substituted provi- sions authorizing President to issue letters of offer with provisions for billing on delivery of article or ren- dering of service and payment within 120 days after billing date where President determines that emer- gency conditions exist, for provisions authorizing President to accept a dependable undertaking of a for- eign country or international organization with respect to sales of defense articles and services and to make payment within 120 days of delivery of article or ren- dering of service.