§2762 — Title 22 Foreign Relations and Intercourse | U.S. Code

Summary

Allows the President to sign contracts to sell U.S. defense articles or services for U.S. dollars to a foreign country or international group if that buyer gives a firm promise to (1) pay the full contract price so the U.S. won’t lose money, and (2) provide the needed cash in advance of when payments, damages, or cancellation costs are due. If a buyer falls behind overall on its promises, interest will be charged on the net overdue amount. The Treasury sets a minimum interest rate based on the average market yield on short-term U.S. debt at the end of the month before the overdue date, and interest runs from the date the net arrearage began. The President can allow billing at delivery and require payment within 120 days when it’s in the national interest and the buyer truly lacks ready funds, but he must tell Congress and ask for emergency money to cover the purchases. Defense Department funds may be used temporarily and must be paid back when the buyer pays. The Renegotiation Act of 1951 does not apply to these contracts. If sales are paid from nonrepayable funds, pricing rules (profit, overhead, research, bid costs, and other cost items) must match those used when the Defense Department buys the same items for itself. Extra direct costs for special buyer needs are allowed and may carry the same add-ons as Defense Department purchases.

Title 22, §2762

Foreign Relations and Intercourse — Source: USLM XML via OLRC

(a)Except as otherwise provided in this section, 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 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.

(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 additional funds to finance such purchases under this chapter. 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)The provisions of the Renegotiation Act of 1951 do not apply to procurement contracts heretofore or hereafter entered into under this section, section 2769 of this title, or predecessor provisions of law.

(d)(1)Procurement contracts made in implementation of sales under this section for defense articles 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 procurements of like items purchased by the Department of Defense for its own use.

(2)Direct costs associated with meeting additional 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 applicable to procurement of like items purchased by the Department of Defense for its own use.

Notes & Related Subsidiaries

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 “procurement contracts” for “contracts for the procurement of defense articles and defense services” and inserted reference 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 provisions 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 provisions authorizing President to issue letters of offer with provisions for billing on delivery of article or rendering of service and payment within 120 days after billing date where President determines that emergency conditions exist, for provisions authorizing President to accept a dependable undertaking of a foreign 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 rendering of service. 1973—Pub. L. 93–189 designated text preceding first proviso as subsec. (a) and inserted “Except as otherwise provided in this section,” before “the President”, designated first proviso as subsec. (b) and inserted reference to acceptance of a dependable undertaking of a foreign country or international organization, and struck out further provisions setting forth Presidential powers with respect to sales agreements with and payments by purchasing countries or international organizations.

Statutory Notes and Related Subsidiaries

Effective Date

of 1996 Amendment; Implementing

Regulations

Pub. L. 104–107, title V, § 531A(b), Feb. 12, 1996, 110 Stat. 731, provided that: “section 22(d) of the Arms Export Control Act [subsec. (d) of this section], as added by subsection (a)— “(1) shall take effect on the 60th day following the date of the enactment of this Act [Feb. 12, 1996]; “(2) shall be applicable only to contracts made in implementation of sales made after such

Effective Date

and “(3) shall be implemented by revised procurement

Regulations

, which shall be issued prior to such

Effective Date

.”

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. Similar ProvisionsProvisions similar to those comprising subsec. (d)(2) of this section were contained in the following appropriation acts: Pub. L. 106–113, div. B, § 1000(a)(2) [title V, § 556], Nov. 29, 1999, 113 Stat. 1535, 1501A–100. Pub. L. 105–277, div. A, § 101(d) [title V, § 536], Oct. 21, 1998, 112 Stat. 2681–150, 2681–181. Pub. L. 105–118, title V, § 535, Nov. 26, 1997, 111 Stat. 2416. Pub. L. 104–208, div. A, title I, § 101(c) [title V, § 533A], Sept. 30, 1996, 110 Stat. 3009–121, 3009–153. Pub. L. 104–107, title V, § 531A(c), Feb. 12, 1996, 110 Stat. 731. Requirement To Use Firm Fixed-Price Contracts for Foreign Military Sales Pub. L. 116–92, div. A, title VIII, § 807(c), Dec. 20, 2019, 133 Stat. 1486, provided that the

Regulations

prescribed pursuant to section 830(a) of title VIII of div. A of Pub. L. 114–328, formerly set out as a note below, would not take effect until Dec. 31, 2020. Pub. L. 114–328, div. A, title VIII, § 830, Dec. 23, 2016, 130 Stat. 2282, as amended by Pub. L. 115–91, div. A, title VIII, § 812, Dec. 12, 2017, 131 Stat. 1461, which directed the Secretary of Defense to prescribe

Regulations

to require firm fixed-price contracts for foreign military sales not later than 180 days after Dec. 23, 2016, and to establish a pilot program for acceleration of foreign military sales, was repealed by Pub. L. 116–283, div. A, title VIII, § 888, Jan. 1, 2021, 134 Stat. 3791.

Executive Documents

Delegation of Functions For delegation of functions of the President under subsec. (a) of this section, see section 1(d) 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.

§2762 Procurement for cash sales

Summary

Title 22, §2762

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Regulations

Effective Date

Regulations

Effective Date

Effective Date

Regulations

Regulations

Executive Documents

Savings Provision

Citations & Metadata