22 U.S.C. § 2762 — Procurement for cash sales

Page 1214 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2762 as a note under section 2751 of this title and was re- voked, subject to a savings provision, by section 4 of Ex. Ord. No. 13637. § 2762. Procurement for cash sales (a) Authority of President; dependable under- taking by foreign country or international organization; interest rates Except as otherwise provided in this section, the President may, without requirement for charge to any appropriation or contract author- ization otherwise provided, enter into contracts for the procurement of defense articles or de- fense services for sale for United States dollars to any foreign country or international organi- zation if such country or international organiza- tion 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 re- quired 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 Treas- ury taking into consideration the current aver- age market yield on outstanding short-term ob- ligations 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 arrear- age. (b) Issuance of letters of offer under emergency determination; availability of appropriations for payment 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 deliv- ery of the defense article or rendering of the de- fense service and for payment within one hun- dred and twenty days after the date of billing. This authority may be exercised, however, only if the President also determines that the emer- gency requirements of the purchaser for acquisi- tion 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 determina- tions to the Congress together with a special emergency request for authorization and appro- priation of additional funds to finance such pur- chases under this chapter. Appropriations avail- able to the Department of Defense may be used to meet the payments required by the contracts for the procurement of defense articles and de- fense services and shall be reimbursed by the amounts subsequently received from the coun- try or international organization to whom arti- cles or services are sold. (c) Applicability of Renegotiation Act of 1951 The provisions of the Renegotiation Act of 1951 do not apply to procurement contracts here- tofore or hereafter entered into under this sec- tion, section 2769 of this title, or predecessor provisions of law. (d) Competitive pricing (1) Procurement contracts made in implemen- tation of sales under this section for defense ar- ticles 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 procure- ments of like items purchased by the Depart- ment of Defense for its own use. (2) Direct costs associated with meeting addi- tional 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 appli- cable to procurement of like items purchased by the Department of Defense for its own use. (Pub. L. 90–629, ch. 2, § 22, Oct. 22, 1968, 82 Stat. 1323; Pub. L. 93–189, § 25(3), Dec. 17, 1973, 87 Stat. 730; Pub. L. 94–329, title II, § 207, June 30, 1976, 90 Stat. 738; Pub. L. 95–384, § 17, Sept. 26, 1978, 92 Stat. 740; Pub. L. 96–533, title I, § 105(b)(2), Dec. 16, 1980, 94 Stat. 3134; Pub. L. 104–107, title V, § 531A(a), Feb. 12, 1996, 110 Stat. 731; Pub. L. 106–113, div. B, § 1000(a)(7) [div. B, title XII, § 1223], Nov. 29, 1999, 113 Stat. 1536, 1501A–498.) 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 ‘‘procure- ment contracts’’ for ‘‘contracts for the procurement of defense articles and defense services’’ and inserted ref- erence 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 pro- visions 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 provi- sions authorizing President to issue letters of offer with provisions for billing on delivery of article or ren- dering of service and payment within 120 days after billing date where President determines that emer- gency conditions exist, for provisions authorizing President to accept a dependable undertaking of a for- eign 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 ren- dering of service. Page 1215 TITLE 22—FOREIGN RELATIONS AND INTERCOURSE § 2763 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’’, des- ignated first proviso as subsec. (b) and inserted ref- erence 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 pay- ments by purchasing countries or international organi- zations. 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 Ex- port 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 effec- tive 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 PROVISIONS Provisions similar to those comprising subsec. (d)(2) of this section were contained in the following appro- priation 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 re- quire 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 pre- viously delegated by Ex. Ord. No. 11958, which was for- merly set out as a note under section 2751 of this title and was revoked, subject to a savings provision, by sec- tion 4 of Ex. Ord. No. 13637. § 2763. Credit sales (a) Financing procurement of defense articles and services, and design and construction services The President is authorized to finance the pro- curement of defense articles, defense services, and design and construction services by friendly foreign countries and international organiza- tions, on such terms and conditions as he may determine consistent with the requirements of this section. Notwithstanding any other provi- sion of law, and subject to the regular notifica- tion requirements of the Committees on Appro- priations, the authority of this section may be used to provide financing to Israel and Egypt for the procurement by leasing (including leasing with an option to purchase) of defense articles from United States commercial suppliers, not including Major Defense Equipment (other than helicopters and other types of aircraft having possible civilian application), if the President determines that there are compelling foreign policy or national security reasons for those de- fense articles being provided by commercial lease rather than by government-to-government sale under this chapter. (b) Repayment period The President shall require repayment in United States dollars within a period not to ex- ceed twelve years after the loan agreement with the country or international organization is signed on behalf of the United States Govern- ment, unless a longer period is specifically au- thorized by statute for that country or inter- national organization. (c) Interest rate; definitions (1) The President shall charge interest under this section at such rate as he may determine, except that such rate may not be less than 5 per- cent per year. (2) For purposes of financing provided under this section— (A) the term ‘‘concessional rate of interest’’ means any rate of interest which is less than market rates of interest; and (B) the term ‘‘market rate of interest’’ means any rate of interest which is equal to or greater than the current average interest rate (as of the last day of the month preceding the financing of the procurement under this sec- tion) that the United States Government pays on outstanding marketable obligations of comparable maturity. (d) Participations in credits References in any law to credits extended under this section shall be deemed to include reference to participations in credits. (e) Payments on account of prior credits or loans (1) Funds made available to carry out this sec- tion may be used by a foreign country to make payments of principal and interest which it owes to the United States Government on account of credits previously extended under this section or loans previously guaranteed under section 2764 of this title, subject to paragraph (2). (2) Funds made available to carry out this sec- tion may not be used for prepayment of prin-