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pro rata share of fixed base operations costs) 65 of administration of sales made under this Act to all purchasers of such articles and services as specified in section 43(b) and section 43(c) of this Act; 66

(B) 67 a proportionate amount of any nonrecurring 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 or from funds made available on a nonrepayable basis under section 23 of this Act); 68 and

(C) 69 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) 70 (A) The President may reduce or waive the charge or charges which would otherwise be considered appropriate under paragraph (1)(B) 71 for particular sales that would, if made, significantly advance United States Government interests in North Atlantic Treaty Organization standardization, standardization with the Armed Forces of Japan, Australia, or New Zealand in further

65 The wording in parentheses was added by sec. 109 of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197).

66 Sec. 9104(c)(1) of the Department of Defense Appropriations Act, 1990 (Public Law 101–165; 103 Stat. 1152), inserted reference to secs. 43(b) and (c).

67 Section 9104(c)(3) of the Department of Defense Appropriations Act, 1990 (Public Law 101165; 103 Stat. 1152), deleted par. (1)(B) which read “(B) any use of plant and production equipment in connection with such defense articles;" and redesignated (C) and (D) as (B) and (C), respectively.

Sec. 710 of the Security Assistance Act of 2000 (Public Law 106-280; 114 Stat. 864) provided the following:

"SEC. 710. WAIVER OF CERTAIN COSTS.

"Notwithstanding any other provision of law, the President may waive the requirement to impose an appropriate charge for a proportionate amount of any nonrecurring costs of research, development, and production under section 21(e)(1)(B) of the Arms Export Control Act (22 U.S.C. 2761(e)(1)(B)) for the November 1999 sale of five UH-60L helicopters to the Republic of Colombia in support of counternarcotics activities.".

68 Sec. 9104(c)(2) of the Department of Defense Appropriations Act, 1990 (Public Law 101–165; 103 Stat. 1152), inserted parenthetical language here.

69 This subparagraph was added by sec. 16 of the International Security Assistance Act of 1978 (Public Law 95-384; 92 Stat. 740) as (D), and redesignated as (C) by the Department of Defense Appropriations Act, 1990 (Public Law 101-165; 103 Stat. 1152).

70 Sec. 4303(a) of the National Defense Authorization Act for Fiscal Year 1996 (Public Law 104-106; 110 Stat. 658) conditionally amended para. (2) by inserting subpara. designation “(A)”, and adding subparas. (B) and (C). Sec. 4303(b) of that Act stated the conditions for incorporating the amendment as follows:

"(b) CONDITIONS.-Subsection (a) shall be effective only if

"(1) the President, in the budget of the President for fiscal year 1997, proposes legislation that if enacted would be qualifying offsetting legislation; and "(2) there is enacted qualifying offsetting legislation.

"(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 legisla

tion.

"(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 estimates that are made by the Director of the Congressional 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.". The required offsetting legislation was enacted as sec. 3303(e) of the National Defense Authorization Act for Fiscal Year 1997 (Public Law 104-201; 50 U.S.C. 98d note).

71 Sec. 9104(c)(3) of the Department of Defense Appropriations Act, 1990 (Public Law 101-165; 103 Stat. 1152) made a conforming amendment here to show redesignation of par. (B) and (C),

ance of the mutual defense treaties between the United States and those countries, or foreign procurement in the United States under coproduction arrangements.72

(B) 70 The President may waive the charge or charges which would otherwise be considered appropriate 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 equipment purchased from the source of the equipment 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 appropriate under paragraph (1)(B) if the increase results from a correction of an estimate (reasonable when made) of the production quantity base that was used for calculating the charge or charges for purposes of such paragraph.

(3) 73 (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 Maintenance and Supply Agency of the North Atlantic Treaty Organization in support of—

(i) a weapon system partnership agreement; or
(ii) a NATO/SHAPE project.

(B) The Secretary of Defense may reimburse the fund established to carry out section 43(b) of this Act 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 "weapon system partnership agreement" means an agreement between two or more member countries of the Maintenance and Supply Agency of the North Atlantic Treaty Organization that

(I) is entered into pursuant to the terms of the charter of that organization; and

(II) is for the common logistic support of a specific weapon system common to the participating countries; and (ii) the term "NATO/SHAPE project" means a common-funded project supported by allocated credits from North Atlantic Treaty Organization bodies or by host nations with NATO Infrastructure funds.

(f) Any contracts entered into between the United States and a foreign country under the authority of this section or section 22 of

72 The words "standardization with the *** and those countries," were added by sec. 104 of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1521).

73 Sec. 1002 of the National Defense Authorization Act, Fiscal Year 1989 (Public Law 100456; 102 Stat. 2037) added sec. 21(e)(3).

this Act shall be prepared in a manner which will permit them to be made available for public inspection to the fullest extent possible consistent with the national security of the United States.

(g) 74 The President may enter into North Atlantic Treaty Organization standardization agreements in carrying out section 814 of the Act of October 7, 1975 (Public Law 94-106), and may enter into similar agreements with countries 75 which are major non-NATO allies, for the cooperative furnishing of training on a 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 extent 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 and the Committees on Appropriations, Armed Services, and Foreign Relations of the Senate.76

(h) 77 (1) The President is authorized to provide (without charge) quality assurance, inspection, contract administration services,78 and contract audit defense services under this section

(A) 77 in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services 79 entered into after the date of enactment of this subsection by, or under this Act on behalf of, a foreign government which is a member of the North Atlantic Treaty Organization, if such government provides such services in accordance with an agreement on a re

74 Subsec. (g) was added by sec. 108(b) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197).

Subsec. (g) was previously repealed by the Foreign Assistance Appropriations Act, 1985 (sec. 101 of the Continuing Appropriations Act, 1985; Public Law 98-473; 98 Stat. 1895). This amendment had been included as sec. 102(b) of S. 2346, as introduced on February 27, 1984. Public Law 98-473 enacted sec. 102 of S. 2346. Subsec. (g) previously read as follows:

"(g) The President may enter into North Atlantic Treaty Organization standardization agreements in carrying out section 814 of the Act of October 7, 1975 (Public Law 94-106), and may enter into similar agreements with Japan, Australia, and New Zealand, for the cooperative furnishing of training on a 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 extent 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 and the Committees on Appropriations, Armed Services, and Foreign Relations of the Senate.".

75 Sec. 147(b) of Public Law 104-164 (110 Stat. 1435) struck out "similar agreements with Japan, Australia, and New Zealand, and with other countries" and inserted in lieu thereof "similar agreements with countries". Sec. 580 of Public Law 100-202 (101 Stat. 1329-181) had added "and with other countries which are major non-NATO allies".

76 Sec. 147(a)(3)(A) of Public Law 104-164 (110 Stat. 1435) struck out the last sentence of subsec. (g). Originally added by sec. 580 of Public Law 100-202 (101 Stat. 1329-181), and amended by sec. 705(d)(1) of Public Law 102-25 (105 Stat. 120), the sentence read: " As used in this subsection, the term "major non-NATO allies" means those countries designated as major nonNATO allies for purposes of section 2350a(i)(3) of title 10, United States Code.".

77 Sec. 12 of the International Security Assistance Act of 1979 (Public Law 96-92; 93 Stat. 705) redesignated subsec. (h) as subsec. (i) and added this new subsec. (h).

Subsequently, sec. 111 (1), (2), and (3) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197), inserted the designation (1) after subsec. (h), added par. (2) and redesignated what was previously pars. (1) and (2) as subpars. (A) and (B) of the newly designated (h)(1).

78 The language "contract administration services" was added by sec. 110 of Public Law 9983 (99 Stat. 197).

79 The reference to design and construction services was added by sec. 115(b) of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3134).

ciprocal basis, without charge, to the United States Government; or

(B) 77 in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services 79 pursuant to the North Atlantic Treaty Organization Security Investment program 80 in accordance with an agreement under which the foreign governments participating in such program provide such services, without charge, in connection with similar contracts or subcontracts.

(2) 77 In carrying out the objectives of this section, the President is authorized to provide cataloging data and cataloging services, without charge, to the North Atlantic Treaty Organization or to any member government of that Organization if that Organization or member government provides such data and services in accordance with an agreement on a reciprocal basis, without charge, to the United States Government.

(i) 81 (1) Sales of defense articles and defense services 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 and the Committees on Armed Services and Foreign Relations of the Senate on the same day a written statement giving a complete explanation with respect to any proposal to sell, under this section or under authority of chapter 2B,82 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 unclassified except to the extent that public disclosure of any item of information contained therein would be clearly detrimental to the security of the United States. Any necessarily classified information shall be confined to a supplemental report. Each such statement shall include an explanation relating to only one such proposal to sell and shall set forth

(A) the country or international organization 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, including a certification that such sale is important to the security of the United States.

80 Sec. 2802(d)(2) of the National Defense Authorization Act for Fiscal Year 1997 (Public Law 104-201; 110 Stat. 2787) struck out "North Atlantic Treaty Organization Infrastructure Program" and inserted in lieu thereof "North Atlantic Treaty Organization Security Investment program".

81 Subsec. (i), originally added as subsec. (h) by sec. 206 of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 738), was redesignated as subsec. (i) by sec. 12 of Public Law 96-92.

82 The reference to the authority under chapter 2B was added by sec. 3 of Public Law 97392 (96 Stat. 1962).

A certification described in subparagraph (E) shall take effect on the date on which such certification is transmitted and shall remain in effect 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 required to be transmitted by paragraph (E) of paragraph (1) is in effect.

(83*** [Repealed-1996]

(k) 84 Before entering into the sale under this Act of defense articles that are excess to the stocks of the Department of Defense, the President shall determine that the sale of such articles 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. (1) 85 REPAIR OF DEFENSE ARTICLES.

(1) IN GENERAL.-The President may acquire a repairable defense article from a foreign country or international organization if such defense article—

(A) previously was transferred to such country or organization under this Act;

(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. (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 article being returned; and

(ii) has available sufficient funds authorized 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 organization pursuant to a letter of offer and acceptance implemented in accordance with this Act; and

83 Sec. 112 of the National Defense Authorization Act for Fiscal Year 1996 (Public Law 104106; 110 Stat. 206) repealed subsec. (j), originally added by sec. 114 of the National Defense Authorization Act for Fiscal Year 1993 (Public Law 102-484; 106 Stat. 2333). The subsec. read as follows:

"(j) TANK AND INFANTRY VEHICLE UPGRADES. (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 section 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 received from sales occurring after September 30, 1989.".

84 Sec. 731(d) of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 (Public Law 103-236; 108 Stat. 503) added subsec. (k). Sec. 104(b)(1) of Public Law 104-164 (110 Stat. 1426) struck out "the President shall first consider the effects of the sale of the articles on the national technology and industrial base, particularly the extent, if any, to which the sale reduces the opportunities of entities in the national technology and industrial base to sell new equipment to the country or countries to which the excess defense articles are sold." and inserted the text beginning "the President shall ***”.

85 Sec. 152(a) of Public Law 104-164 (110 Stat. 1438) added subsec. (1). Subsec. (c) (22 U.S.C. 2761 note) of that section provided: "Under the direction of the President, the Secretary of Defense shall promulgate regulations to implement subsections (1) and (m) of section 21 of the Arms Export Control Act.".

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