vance United States Government interests in North Atlantic Treaty Organization standardization, standardization with the Armed Forces of Japan, Australia, 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 coproduction arrangements.58

(3) 59 (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 commonfunded 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 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) 60 The President may enter into North Atlantic Treaty Organization standardization agreements in carrying out section 814 of

58 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).

59 Sec. 1002 of the National Defense Authorization Act, Fiscal Year 1989 (Public Law 100-456; 102 Stat. 2037) added sec. 21(e)(3).

60 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.".

the Act of October 7, 1975 (Public Law 94-106), and may enter into similar agreements with Japan, Australia, and New Zealand, and with other countries which are major non-NATO allies, 61 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. 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, United States Code, 62

(h) 63 (1) The President is authorized to provide (without charge) quality assurance, inspection, contract administration services, 64 and contract audit defense services under this section

(A) 63 in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services 65 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 reciprocal basis, without charge, to the United States Government; or

(B) 63 in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services 65 pursuant to the North Atlantic Treaty Organization Infrastructure Program 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) 63 In carrying out the objectives of this section, the President is authorized to provide cataloging data and cataloging services,

61 The words "and with other countries which are major non-NATO allies" were added by sec. 580 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 (Continuing Appropriations for 1988, Public Law 100-202; 101 Stat. 1329-181).

62 Sec. 705(d)X1) of Public Law 102-25 (105 Stat. 120) struck out "section 1105 of the National Defense Authorization Act of Fiscal Year 1987" and inserted in lieu thereof "section 2350a(i)3) of title 10, United States Code". Sec. 1105 of the National Defense Authorization Act, 1987, was repealed in 1989. The last sentence had been added by sec. 580 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1988 (Continuing Appropriations for 1988, Public Law 100-202; 101 Stat. 1329-181).

63 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).

64 The language "contract administration services" was added by sec. 110 of Public Law 99-83 (99 Stat. 197).

65 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).

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) 66 (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,67 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.

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.

Sec. 22.68 Procurement for Cash Sales. (a) Except as otherwise provided in this section, the President may, without requirement

66 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.

67 The reference to the authority under chapter 2B was added by sec. 3 of Public Law 97-392 (96 Stat. 1962).

68 22 U.S.C. 2762. Sec. 25(3) of the FA Act of 1973 amended sec. 22, which formerly read as follows:

"Sec. 22. Procurement for Cash Sales.-The President may, without requirement for charge to any appropriation or contract authorization otherwise provided, enter into contracts for the procurement of defense articles or defense services for sale for United States dollars to any friendly country or international organization if such country or international organization 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 required to meet the payments required by the contract, and any damages and costs that may accrue from the canContinued

for charge to any appropriation or contract authorization otherwise provided, enter into contracts for the procurement of defense articles or defense services for sale for United States dollars to any foreign country or international organization if such country or international organization 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 required 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 Treasury taking into consideration the current average market yield on outstanding short-term obligations 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 arrearage.6

(b) 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 delivery of the defense article or rendering of the defense service and for payment within one hundred and twenty days after the date of billing. This authority may be exercised, however, only if the President also determines that the emergency requirements of the purchaser for acquisition 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 determinations to the Congress together with a special emergency request for authorization and appropriation of addi

cellation of such contract, in advance of the time such payments, damages, or costs are due: Provided, That the President may, when he determines it to be in the national interest accept a dependable undertaking to make full payment within one hundred and twenty days after delivery of the defense articles, or the rendering of the defense services, and appropriations available to the Department of Defense may be used to meet the payments required by the contracts and shall be reimbursed by the amounts subsequently received from the country or international organization: Provided further, That the President may, when he determines it to be in the national interest, enter into sales agreements with purchasing countries or international organizations which fix prices to be paid by the purchasing countries or international organizations for the defense articles or defense services ordered. Funds made available under section 31 for financing sales shall be used to reimburse the applicable appropriations in the amounts required by the contracts which exceed the price so fixed, except that such reimbursement shall not be required upon determination by the President that the continued production of the defense article being sold is advantageous to the Armed Forces of the United States. Payments by purchasing countries or international organizations which exceed the amounts required by such contracts shall be transferred to the general fund of the Treasury. To the maximum extent possible, prices fixed under any such sales agreement shall be sufficient to reimburse the United States for the cost of defense articles or defense services ordered. The President shall submit to the Congress promptly a detailed report concerning any fixed- price sales agreement under which the aggregate cost to the United States exceeds the aggregate amount required to be paid by the purchasing country or international organization. No sales of unclassified defense articles shall be made to the government of any economically developed nation under the provisions of this section unless such articles are not generally available for purchase by such nations from commercial sources in the United States: Provided, however, That the President may waive the provisions of this sentence when he determines that the waiver of such provisions is in the national interest.".

69 The words beginning with "Interest shall be charged on any net amount * were added by sec. 207(a) of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 738).

tional funds to finance such purchases under this Act.70 Appropriations available to the Department of Defense may be used to meet the payments required by the contracts for the procurement of defense articles and defense services and shall be reimbursed by the amounts subsequently received from the country or international organization to whom articles or services are sold.

(c) 71 The provisions of the Renegotiation Act of 1951 do not apply to procurement contracts, heretofore or hereafter entered into under this section, section 29, or predecessor provisions of law. Sec. 23.72, 73 Credit Sales.-(a) 74 The President is authorized to finance the procurement of defense articles, defense services, and

70 Sec. 207(b) of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 738) amended subsec. (b) by striking out the first sentence and adding in lieu thereof the words to this point. The first sentence of subsec. (b) formerly read as follows: "(b) The President may, when he determines it to be in the national interest, accept a dependable undertaking of a foreign country or international organization with respect to any such sale, to make full payment within 120 days after delivery of the defense articles or the rendering of the defense services.".

Sec. 1007(b)(5) of the DOD Authorization Act, 1985 (Public Law 98-525; 98 Stat. 2579) waived the requirement under sec. 22 for payment in advance of delivery with respect to the purchase by the Federal Republic of Germany of one Patriot missile fire unit. For complete text of sec. 1007(b5), see page 1311.

71 Subsec. (c), as added by sec. 17 of the International Security Assistance Act of 1978 (Public Law 95-384; 92 Stat. 740), was amended and restated by sec. 105(b)2) of the International Security and Development Cooperation Act of 1980 (Public Law 96-553; 94 Stat. 3134). It formerly read as follows:

"(c) The provisions of the Renegotiation Act of 1951 do not apply to contracts for the procurement of defense articles and defense services heretofore or hereafter entered into under this section or predecessor provisions of law.".

72 22 U.S.C. 2763. Sec. 23 was amended and restated by sec. 102 of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 195). It previously read as follows:

"The President is authorized to finance procurements of defense articles, defense services, and design and construction services by friendly foreign countries and international organizations on terms requiring the payment to the United States Government in United States dollars of—

"(1) the value of such articles or services within a period not to exceed twelve years after the delivery of such articles or the rendering of such services; and

"(2) interest on the unpaid balance of that obligation for payment of the value of such articles or services, at a rate equivalent to the current average interest rate, as of the last day of the month preceding the financing of such procurement that the United States Government pays on outstanding marketable obligations of comparable maturity, unless the President certifies to Congress that the national interest requires a lesser rate of interest and states in the certification the lesser rate so required and the justification therefor.".

Prior to that, sec. 45(a)(2) of the FA Act of 1974 amended sec. 23, which formerly read as follows: "Sec. 23. Credit Sales.-The President is hereby authorized to finance procurements of defense articles and defense services by friendly countries and international organizations on terms of repayment to the United States Government of not less than the value thereof in the United States dollars within a period of not to exceed ten years after the delivery of the defense articles or the rendering of the defense services.".

73 Sec. 101(b) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 193) provided an authorization for each of the fiscal years 1986 and 1987 of $5,371,000,000 to carry out sec. 23 and set a ceiling of $553,900,000 for each fiscal year of the amount that may be made available at concessional interest rates.

Congress did not enact an authorization for fiscal year 1992. Fiscal year 1992 appropriations for this activity are: for grants, $3,999,003,921 ($4,059,000,000, reduced by 1.4781 per cent as required by sec. 126 of Public Law 102-145, as amended); for loans, a subsidy appropriation of $49,645,580 ($50,390,400, reduced by 1.4781 per cent), that will support an estimated $394,048,491 in FMF direct concessional loans. For relevant appropriations text, see paragraph on "Foreign Military Financing Program", as amended, title III, Public Law 101-513, page 592.

See also title V of Public Law 102-298 (106 Stat. 217), rescinding certain budget authority, including fiscal year 1992 appropriations under "Foreign Military Financing Program" and authority under "Deobligation/Reobligation Authority", page 734.

In Public Law 101-513, see also "Foreign Military Sales Debt Reform", title III; sec. 515, relating to "Deobligation/Reobligation Authority"; and sec. 533, relating to "Environment and Global Warming".

Sec. 116 of the Further Continuing Appropriations for Fiscal Year 1992 (Public Law 102-145, as amended by Public Law 102-266), provided that the earmark for Morocco in Public Law 101513 under "Foreign Military Financing Program" is not applicable for fiscal year 1992.

Continued