§2770 General authority

Summary

The President may, by negotiated cash contract, sell defense items or have them made and then sell them to a U.S. company that will put those parts into finished products to be sold to a friendly foreign country or an international organization under an export license in section 2778. Sales must cover at least replacement cost (or actual cost for services), or at least the contract or manufacturing cost if the U.S. buys or makes the item. Ammunition parts can use commercial practices that prevent direct delivery to the foreign buyer if approved under section 2778. Support services can be sold too, but they must be done in the United States. Money received goes back to the selling agency’s current appropriation, fund, or account. These deals are allowed only if three rules are met: the finished item is being bought for a friendly country or organization; the parts would have been government-furnished if the item were for U.S. forces; and the parts or services are only available from U.S. government sources or not available from U.S. commercial sources in time for the contractor’s delivery schedule. “Defense articles” and “defense services” are defined in section 2794(3) and (4).