22 U.S.C. § 2761 — Sales from stocks

(a) Eligible countries, payment, and valuation. (1) The President may sell defense articles and defense services from Department of Defense and Coast Guard stocks to an eligible country or international organization if it agrees to pay in United States dollars: (A) for an article not planned for replacement when the agreement is made, at least its actual value; (B) for an article planned for replacement, the estimated replacement cost, including contract or production costs minus depreciation; or (C) for a service, the United States Government's full cost of providing it. For training sold to a purchaser that is concurrently receiving assistance under chapter 5 of part II of the Foreign Assistance Act of 1961, or to a high-income foreign country as described in that chapter, the payment is only the additional costs the United States Government incurs in furnishing that assistance. (2) For paragraph (1)(A), the actual value of a naval vessel that is 3,000 tons or less and at least 20 years old must be treated as at least the greater of its scrap value or its fair value, including conversion costs, as the Secretary of Defense determines. (b) Time of payment. Except as subsection (d) provides, payment must be made in advance. If the President decides that paying upon delivery of the article or performance of the service is in the national interest, payment may instead be made then. (c) Personnel providing defense services may not perform combat duties. (1) Personnel providing defense services sold under this chapter may not, outside the United States, perform combatant duties connected with those services. This includes training or advising duties that could involve United States personnel in combat activities. (2) Within 48 hours after significant hostilities or terrorist acts, or a series of them, begin or change status, the President must send a written report to the Speaker of the House and the President pro tempore of the Senate if the events involve a country where United States personnel are providing defense services under this chapter or the Foreign Assistance Act of 1961 and may endanger American lives or property. The report may be classified if necessary and must state: (A) the country; (B) what the hostilities or terrorist acts are; and (C) how many United States Armed Forces members and United States civilian personnel may be endangered. (d) Billing, interest, and extending the payment date. If the President makes the national-interest determination described in subsection (b), a billing for a sale under a letter of offer issued after June 30, 1976, may be dated and issued when the article is delivered or the service is performed. The purchasing country or organization must pay when it receives the bill. Interest must be charged on any net amount that remains due and unpaid 60 days after the billing date. The rate may not be below a rate the Secretary of the Treasury determines after considering the average market yield on outstanding United States short-term obligations on the last day of the month before billing. Interest is calculated from the billing date. The President may extend the 60-day period to 120 days if the purchaser's emergency need for the articles or services exceeds its ready access to enough funds to pay in full within 60 days. The President must submit that determination to Congress with a special emergency request for authorization and appropriations to finance the purchase under this chapter. (e) Charges and reducing or waiving them. (1) After September 30, 1976, each letter of offer issued under this section or section 2762 for selling defense articles or services must include appropriate charges for: (A) administrative services, calculated by an average percentage that recovers the full estimated cost of administering sales under this chapter to all purchasers, excluding a proportional share of fixed-base operating costs, as specified in sections 2792(b) and 2792(c); (B) a proportional share of nonrecurring research, development, and production costs for major defense equipment, except equipment paid for entirely with funds transferred under section 503(a)(3) of the Foreign Assistance Act of 1961 or with nonrepayable funds under section 2763; and (C) ordinary inventory losses connected with selling from stock articles stored at the purchaser's expense. (2)(A) The President may reduce or waive the paragraph (1)(B) charge for a particular sale that would significantly advance United States interests in NATO standardization, standardization with the Armed Forces of Japan, Australia, the Republic of Korea, Israel, or New Zealand in support of mutual-defense treaties, or foreign procurement in the United States under coproduction arrangements. (B) The President may waive that charge for a particular sale if deciding that: (i) charging it would likely cause the sale to be lost; or (ii) for major defense equipment also being bought for the Armed Forces, waiving it would increase the total quantity bought from the equipment source, reduce the unit cost, and produce United States savings on Armed Forces equipment that substantially offset the lost charge revenue. (C) For a particular sale of major defense equipment, the President may waive an increase in a previously appropriate paragraph (1)(B) charge if the increase comes from correcting an estimate of the production-quantity base that was reasonable when made. (3)(A) The President may waive paragraph (1)(A) administrative charges for a sale to the NATO Support and Procurement Organization or its executive agencies supporting: (i) a support or procurement partnership agreement; or (ii) a NATO/SHAPE project. (B) The Secretary of Defense may reimburse the fund established under section 2792(b) for the waived amount from any Department of Defense funds. (C) In this paragraph, “support or procurement partnership agreement” means an agreement between at least two member countries of the NATO Support and Procurement Organization and its executive agencies that (I) is made under that organization's charter and (II) provides common logistic support for activities common to the participating countries. “NATO/SHAPE project” means a common-funded project supported by credits allocated by NATO bodies or by host nations with NATO Infrastructure funds. This section does not otherwise define those quoted terms. (f) Public inspection of contracts. Contracts between the United States and a foreign country under this section or section 2762 must be prepared so they can be made available for public inspection to the fullest extent consistent with United States national security. (g) NATO and similar training agreements. The President may enter into NATO standardization agreements to carry out section 814 of the Act of October 7, 1975, and similar agreements with countries that are major non-NATO allies, for the cooperative provision of training on a bilateral or multilateral basis. The agreements' financial rules must be reciprocal. They must require reimbursement of all direct costs, but may exclude indirect costs, administrative surcharges, and trainee billeting costs, except to the extent United States Armed Forces members in comparable lodging are charged for that lodging by the United States. Each agreement must promptly be sent to the Speaker, the House Committee on Foreign Affairs, and the Senate Committees on Appropriations, Armed Services, and Foreign Relations. (h) Reciprocal services and catalog information. (1) The President may provide free quality assurance, inspection, contract-administration, and contract-audit defense services under this section: (A) for placing or administering a contract or subcontract for defense articles, defense services, or design and construction services entered into after October 29, 1979, by or under this chapter for a NATO-member foreign government or the governments of Australia, New Zealand, Japan, the Republic of Korea, or Israel, if that government provides the same services free to the United States Government under a reciprocal agreement; or (B) for placing or administering such a contract or subcontract under the NATO Security Investment Program, under an agreement in which participating foreign governments provide the same services free for similar contracts or subcontracts. (2) To carry out this section, the President may provide free catalog data and catalog services to NATO, a member government, or the governments of the Republic of Korea, Australia, New Zealand, Japan, or Israel, if the recipient provides the same data and services free to the United States Government under a reciprocal agreement. (i) Sales affecting combat readiness. (1) Sales that could significantly harm the combat readiness of the United States Armed Forces must be kept to an absolute minimum. On the same day, the President must send the Speaker of the House of Representatives, the House Committees on Foreign Affairs and Armed Services, and the Senate Committees on Armed Services and Foreign Relations a written statement fully explaining any proposal under this section or subchapter II-B to sell articles or services that could have that effect. The statement must be unclassified unless disclosure of an item would clearly harm United States security. Necessary classified information must be in a supplemental report. Each statement may address only one proposal and must state: (A) the proposed recipient country or organization; (B) the proposed sale amount; (C) what article or service would be sold; (D) the full effect on the United States Armed Forces; and (E) why the sale is justified, including certification that it is important to United States security. The certification begins when transmitted and lasts no more than one year. (2) A sale that must be reported under paragraph (1) may not be delivered unless the certification required by paragraph (1)(E) is in effect. (j) Repealed. This subsection was repealed by the cited 1996 public law. (k) Effect of excess-article sales. Before selling under this chapter an article excess to Department of Defense stocks, the President must determine that the sale will not harm the national technology and industrial base, especially by reducing entities' opportunities in that base to sell new or used equipment to the countries receiving the articles. (l) Repairable defense articles. (1) The President may acquire a repairable article from a foreign country or organization if it was previously transferred there under this chapter, is not an end item, and will be exchanged for an article of the same type in Department of Defense stocks. (2) The President may use this authority only to the extent that the Department of Defense either: (A) (i) needs the returned article and (ii) has enough authorized and appropriated funds for the purpose; or (B) (i) is accepting it for later transfer to another foreign government or organization under a letter of offer and acceptance carried out under this chapter and (ii) has enough funds supplied by or for that other government or organization under such a letter. (3)(A) When the United States accepts the returned article, the foreign government or organization receiving the new or repaired replacement must be charged the total cost of the repair and replacement transaction. (B) That cost must equal the amount charged to the United States Armed Forces for a similar transaction, plus the administrative surcharge under subsection (e)(1)(A). (4) The President's authority to accept the return of a repairable article under subsection (a) is not subject to chapter 137 legacy provisions of title 10, as that quoted term is defined in section 3016 of title 10, or any other law about making contracts. (m) Return of defense articles. (1) The President may accept an article returned by a foreign country or organization if it was previously transferred there under this chapter, is not significant military equipment as defined in section 2794(9), and is fully functional without repair or rehabilitation. (2) This authority may be used only to the extent that the Department of Defense either: (A) (i) needs the returned article and (ii) has enough authorized and appropriated funds; or (B) (i) accepts it for later transfer to another government or organization under a letter of offer and acceptance carried out under this chapter and (ii) has enough funds supplied by or for that other government or organization under such a letter. (3) When the United States acquires and accepts the article, the provider's appropriate Foreign Military Sales account must be credited to show the transaction. (4) This authority is not subject to chapter 137 legacy provisions of title 10, as defined in section 3016 of title 10, or any other law about making contracts.