§2770 General Authority

Summary

The President can sell, or have the U.S. make and sell, defense parts and related services to American companies on negotiated cash contracts. Sales must at least cover the government’s costs (replacement or contract/manufacturing cost for parts, actual cost for services). These sales are allowed only if three things are true: the final item will be bought for the armed forces of a friendly country or an international organization; the parts would have been government-furnished if the U.S. were buying the item; and the parts or services are only available from the U.S. government or cannot be bought from U.S. commercial suppliers in time to meet the contractor’s delivery schedule. Ammunition parts may be sold under the same rules if delivery is limited so they go to an approved foreign recipient. Services sold to support these deals must be done in the United States. Money received goes back to the selling agency’s current account. Defense articles and defense services — see section 2794(3) and (4) for their definitions.