I 

116TH CONGRESS 

1ST SESSION H. R. 1033 

To amend the Arms Export Control Act to modify certification and report 

requirements relating to sales of major defense equipment with respect 

to which nonrecurring costs of research, development, and production 

are waived or reduced under the Arms Export Control Act, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 7, 2019 

Ms. SPEIER (for herself, Mr. JONES, Mr. RASKIN, Mr. MEADOWS, Mr. TED

LIEU of California, Mr. KHANNA, and Mr. POCAN) introduced the following bill; which was referred to the Committee on Foreign Affairs 

A BILL 

To amend the Arms Export Control Act to modify certification and report requirements relating to sales of major 

defense equipment with respect to which nonrecurring 

costs of research, development, and production are 

waived or reduced under the Arms Export Control Act, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Return Expenses Paid 

5 And Yielded Act’’ or ‘‘REPAY Act’’. 


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1 SEC. 2. MODIFICATION OF CERTIFICATION AND REPORT 

2 REQUIREMENTS RELATING TO SALES OF 

3 MAJOR DEFENSE EQUIPMENT WITH RESPECT 

4 TO WHICH NONRECURRING COSTS OF RE5 SEARCH, DEVELOPMENT, AND PRODUCTION 

6 ARE WAIVED OR REDUCED UNDER THE ARMS 

7 EXPORT CONTROL ACT. 

8 (a) CERTIFICATION.—Section 36(b) of the Arms Ex9 port Control Act (22 U.S.C. 2776(b)) is amended by add10 ing at the end the following: 

11 ‘‘(7)(A) In the case of any letter of offer to sell any 

12 major defense equipment for $14,000,000 or more, in ad13 dition to the other information required to be contained 

14 in a certification submitted to the Congress under this 

15 subsection, or a similar certification prior to finalization 

16 of a letter of offer to sell, each such certification shall in17 clude the value of any charge or charges for the propor18 tionate amount of any nonrecurring costs of research, de19 velopment, and production of the major defense equipment 

20 that was waived or reduced under section 21(e). 

21 ‘‘(B) Each such certification shall also include infor22 mation on— 

23 ‘‘(i) the type of waiver or reduction; 

24 ‘‘(ii) the percentage of otherwise obligated non25 recurring costs with respect to which the waiver or 

26 reduction comprises; 


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1 ‘‘(iii) a justification for issuance of the waiver 

2 or reduction; 

3 ‘‘(iv) in the case of a waiver or reduction made 

4 under paragraph (2)(A) of section 21(e)— 

5 ‘‘(I) the manner in which a sale would sig6 nificantly advance standardization with the for7 eign countries or international organization de8 scribed in such section; and 

9 ‘‘(II) the extent to which the sale’s signifi10 cance should be considered relative to the exist11 ing capabilities of the foreign country or inter12 national organization and the manner in which 

13 the major defense equipment would enhance the 

14 capacity of the country or organization in joint 

15 operations; and 

16 ‘‘(v) in the case of a waiver or reduction made 

17 under paragraph (2)(B) of section 21(e)— 

18 ‘‘(I) the military needs and ability to pay 

19 of the foreign country or international organiza20 tion; 

21 ‘‘(II) the price and capability of other rel22 evant options that are or likely would be consid23 ered by the foreign country or international or24 ganization for purchase in lieu of the major deVerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033

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1 fense equipment described in the letter of offer; 

2 and 

3 ‘‘(III) the previous buying history and ex4 isting capabilities of the foreign country or 

5 international organization.’’. 

6 (b) REPORT.—Section 36(a) of the Arms Export 

7 Control Act (22 U.S.C. 2776(a)) is amended— 

8 (1) in paragraph (11), by striking ‘‘and’’ at the 

9 end; 

10 (2) in paragraph (12), by striking the period at 

11 the end and inserting ‘‘; and’’; and 

12 (3) by adding at the end the following: 

13 ‘‘(13) with respect to requests to waive or re14 duce nonrecurring costs with respect to the sale of 

15 major defense equipment for $14,000,000 or more 

16 under this Act, a report on— 

17 ‘‘(A) the total number of such requests 

18 that have been approved or denied during the 

19 quarter, including the total number of such re20 quests that are currently under review and 

21 pending a decision; 

22 ‘‘(B) for each such request— 

23 ‘‘(i) an identification of the foreign 

24 country or international organization re25 questing the waiver or reduction; 


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1 ‘‘(ii) the total amount of nonrecurring 

2 costs to be waived or reduced; 

3 ‘‘(iii) a description of the major de4 fense equipment to be purchased; and 

5 ‘‘(iv) the justification for the waiver or 

6 reduction; and 

7 ‘‘(C) for each such request that is ap8 proved, the actual amount of nonrecurring costs 

9 that are waived or reduced that are attributable 

10 to quantities of major defense equipment sold 

11 under such request.’’. 

12 (c) REPEAL OF WAIVER AUTHORITY IN CASE OF

13 SALES OF MAJOR DEFENSE EQUIPMENT ALSO BEING

14 PROCURED FOR USE BY UNITED STATES ARMED

15 FORCES.—Section 21(e)(2) of the Arms Export Control 

16 Act (22 U.S.C. 2761(e)(2)) is amended— 

17 (1) in subparagraph (B)— 

18 (A) in the matter preceding clause (i)— 

19 (i) by striking ‘‘The President’’ and 

20 inserting ‘‘Except as provided subpara21 graphs (D) and (E), the President’’; and 

22 (ii) by striking ‘‘that—’’ and all that 

23 follows through ‘‘(i) imposition’’ and in24 serting ‘‘that imposition’’; 


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1 (B) by striking ‘‘sale; or’’ and inserting 

2 ‘‘sale.’’; and 

3 (C) by striking clause (ii); and 

4 (2) by inserting at the end the following new 

5 subparagraphs: 

6 ‘‘(D) The President may not waive the charge 

7 or charges for a proportionate amount of any non8 recurring costs that would otherwise be considered 

9 appropriate under paragraph (1)(B) for a particular 

10 sale to a country or international organization for a 

11 two-year period that begins on any of the following 

12 dates: 

13 ‘‘(i) The date of approval of a waiver 

14 under paragraph (1)(B) of a charge or charges 

15 that are valued at $16,000,000 or more under 

16 this Act with respect to a sale to the country 

17 or organization. 

18 ‘‘(ii) The date that is the last day of any 

19 five-year period in which the country or organi20 zation receives 15 or more waivers of a charge 

21 or charges under paragraph (1)(B) with respect 

22 to sales to the country or organization. 

23 ‘‘(iii) The date that is the last day of any 

24 five-year period in which the country or organi25 zation receives waivers of a charge or charges 


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1 under paragraph (1)(B) that are valued at 

2 $425,000,000 or more under this Act with re3 spect to sales to the country or organization. 

4 ‘‘(E)(i) In the case of any proposed waiver of 

5 the charge or charges which would otherwise be con6 sidered appropriate under paragraph (1)(B) for a 

7 particular sale to a country or international organi8 zation of major defense equipment for $10,000,000 

9 or more under this Act, the President shall submit 

10 to the Speaker of the House of Representatives, the 

11 Committee on Foreign Affairs of the House of Rep12 resentatives, and to the chairman of the Committee 

13 on Foreign Relations of the Senate a notification 

14 with respect to such proposed waiver. 

15 ‘‘(ii) The President may not waive such charge 

16 or charges if Congress, not later than 60 calendar 

17 days after receiving such notification, enacts a joint 

18 resolution prohibiting the proposed waiver.’’. 

19 (d) MAXIMUM AGGREGATE AMOUNT OF CHARGES

20 FOR ADMINISTRATIVE SERVICES.—Section 21(e) of the 

21 Arms Export Control Act (22 U.S.C. 2761(e)) is amend22 ed— 

23 (1) in paragraph (1), by inserting ‘‘subject to 

24 paragraph (4),’’ before ‘‘administrative services’’; 

25 and 


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1 (2) by adding at the end the following new 

2 paragraph: 

3 ‘‘(4)(A) For each fiscal year beginning on or 

4 after the date of the enactment of the Return Ex5 penses Paid and Yielded Act, the President shall— 

6 ‘‘(i) determine a maximum aggregate 

7 amount of charges for administrative services 

8 that would be required by paragraph (1)(A) 

9 based on the ability of the Department of De10 fense to issue and administer letters of offer for 

11 sale of defense articles or the sale of defense 

12 services pursuant to this section or pursuant to 

13 section 22 of this Act; and 

14 ‘‘(ii) submit to Congress a report that con15 tains the determination and specifies the max16 imum aggregate amount of charges for adminis17 trative services. 

18 ‘‘(B)(i) Except as provided in clause (ii), 

19 charges for administrative services that are required 

20 by paragraph (1)(A) may not exceed the maximum 

21 aggregate amount of charges for administrative serv22 ices determined under subparagraph (A) for the fis23 cal year involved. 

24 ‘‘(ii) The President may waive the requirement 

25 of clause (i) on a case-by-case basis if the amount 


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1 of charges for administrative services that are re2 quired by paragraph (1)(A) with respect to a sale of 

3 defense articles or a sale of defense services would 

4 exceed the maximum aggregate amount of charges 

5 for administrative services determined under sub6 paragraph (A) for the fiscal year.’’. 

7 (e) MODIFICATION OF ADMINISTRATIVE EX8 PENSES.— 

9 (1) IN GENERAL.—Section 43(b) of the Arms 

10 Export Control Act (22 U.S.C. 2792(b)) is amend11 ed— 

12 (A) in paragraph (1), by adding ‘‘and’’ at 

13 the end; 

14 (B) in paragraph (2), by striking ‘‘; and’’ 

15 and inserting a period; and 

16 (C) by striking paragraph (3). 

17 (2) CONFORMING AMENDMENT.—Section 

18 21(e)(1)(A) of the Arms Export Control Act (22 

19 U.S.C. 2761(e)(1)(A)) is amended by striking ‘‘and 

20 section 43(c)’’. 

21 (f) BIENNIAL REVIEW AND MODIFICATION OF USER

22 CHARGES.— 

23 (1) IN GENERAL.—Notwithstanding any other 

24 provision of law, the Secretary of Defense, acting 

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1 operation Agency, shall, not less than once every two 

2 years— 

3 (A) carry out a review of user charges 

4 under the foreign military sales program and, 

5 based on the results of the review, modify the 

6 user charges as appropriate; and 

7 (B) submit to the appropriate congres8 sional committees a report that contains the re9 sults of the review carried out under subpara10 graph (A) and a description of any user charges 

11 that, based on the results of the review, were 

12 modified under subparagraph (A). 

13 (2) APPROPRIATE CONGRESSIONAL COMMIT14 TEES DEFINED.—In this subsection, the term ‘‘ap15 propriate congressional committees’’ means— 

16 (A) the Committee on Armed Services and 

17 the Committee on Foreign Affairs of the House 

18 of Representatives; and 

19 (B) the Committee on Armed Services and 

20 the Committee on Foreign Relations of the Sen21 ate. 

22 SEC. 3. REVIEW AND REPORT ON USE AND MANAGEMENT 

23 OF ADMINISTRATIVE SURCHARGES UNDER 

24 THE FOREIGN MILITARY SALES PROGRAM. 

25 (a) REVIEW.— 


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1 (1) IN GENERAL.—The Secretary of Defense, 

2 acting through the Director of the Defense Security 

3 Cooperation Agency, shall review options for expand4 ing the use of administrative surcharges under the 

5 foreign military sales program, including practices 

6 for managing administrative surcharges and con7 tract administrative services surcharges. 

8 (2) MATTERS TO BE INCLUDED.—The review 

9 conducted under paragraph (1) shall include the fol10 lowing: 

11 (A) A determination of which specific ex12 penses are incurred by the United States Gov13 ernment in operation of the foreign military 

14 sales program that the administrative surcharge 

15 does not currently pay for. 

16 (B) The estimated annual cost of each of 

17 such specific expenses. 

18 (C) An assessment of the costs and bene19 fits of funding such specific expenses through 

20 the administrative surcharge, including any 

21 data to support such an assessment. 

22 (D) An assessment of how the Department 

23 of Defense could calculate an upper bound of a 

24 target range for the administrative surcharge 

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1 ices surcharge account, including an assessment 

2 of the costs and benefits of setting such a 

3 bound. 

4 (E) An assessment of how the Department 

5 of Defense calculates the lower bound, or safety 

6 level, for the administrative surcharge account 

7 and the contract administration services sur8 charge account, including what specific factors 

9 inform the calculation and whether such a 

10 method for calculating the safety level is still 

11 valid or should be revisited. 

12 (F) An assessment of the process used by 

13 the Department of Defense to review and set 

14 rates for the administrative surcharge and the 

15 contract administration services surcharge, in16 cluding the extent to which outside parties are 

17 consulted and any proposals of the Department 

18 of Defense may have for better ensuring that 

19 the fee rates are set appropriately. 

20 (G) Such other matters as the Secretary of 

21 Defense determines to be appropriate. 

22 (b) REPORT.—Not later than 120 days after the date 

23 of the enactment of this Act, the Secretary of Defense, 

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1 operation Agency, shall submit to the congressional de2 fense committees a report on— 

3 (1) the findings of the review conducted under 

4 paragraph (1); and 

5 (2) any legislative changes needed to allow the 

6 surcharge under the foreign military sales program 

7 to pay for any expenses currently not covered by ad8 ministrative surcharge under the foreign military 

9 sales program. 

10 (c) FOREIGN MILITARY SALES PROGRAM DE11 FINED.—In this subsection, the term ‘‘foreign military 

12 sales program’’ means the program authorized under 

13 chapter 2 of the Arms Export Control Act (22 U.S.C. 

14 2761 et seq.). 

15 SEC. 4. PERFORMANCE MEASURES TO MONITOR FOREIGN 

16 MILITARY SALES PROGRAM. 

17 (a) IN GENERAL.—The Secretary of Defense, acting 

18 through the Director of the Defense Security Cooperation 

19 Agency and in consultation with the heads of other rel20 evant components of the Department of Defense, shall en21 hance the ability of the Department of Defense to monitor 

22 the performance of the foreign military sales program by 

23 taking the following actions: 

24 (1) Develop performance measures to monitor 

25 the timeliness of deliveries of defense articles and 


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1 defense services to purchasers in accordance with 

2 the delivery schedule for each sale under the foreign 

3 military sales program. 

4 (2) Identify key choke points, processes, and 

5 tasks that contribute most significantly to delays, 

6 shortcomings, and issues in the foreign military sales 

7 program. 

8 (3) Review existing performance measures for 

9 the foreign military sales program to determine 

10 whether such measures need to be updated, replaced, 

11 or supplemented to ensure that all key aspects of the 

12 foreign military sales program’s efficiency and serv13 ice of United States national interests are able to be 

14 monitored and informed by reliable data. 

15 (b) REPORT ON PERFORMANCE MEASURES.— 

16 (1) IN GENERAL.—Not later than 180 days 

17 after the date of the enactment of this Act, the Sec18 retary of Defense, acting through the Director of the 

19 Defense Security Cooperation Agency, shall submit 

20 to the congressional defense committees a report 

21 that lists the performance measures developed and 

22 identified under subsection (a). 

23 (2) MATTERS TO BE INCLUDED.—The report 

24 required by paragraph (1) shall— 


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1 (A) define the performance measures, in2 cluding targets set for the performance meas3 ures; 

4 (B) identify the data systems used to mon5 itor the performance measures; 

6 (C) identify any concerns related to the re7 liability of the data used to monitor the per8 formance measures; and 

9 (D) report the results for the performance 

10 measures for the most recent fiscal year. 

11 (3) PLAN.—If the performance measures devel12 oped and identified under subsection (a) cannot be 

13 included in the report required by paragraph (1) for 

14 the most recent fiscal year based on reliable and ac15 cessible data, the report shall include a plan for en16 suring that such data will be monitored within a de17 fined period of time. 

18 (4) UPDATE.— 

19 (A) IN GENERAL.—For each fiscal year 

20 after the fiscal year in which the report re21 quired by subsection (b) is submitted to the 

22 congressional defense committees, the Secretary 

23 of Defense shall submit to the congressional de24 fense committees an update of the report re25 quired by paragraph (1). 


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1 (B) MATTERS TO BE INCLUDED.—Each 

2 update of the report required by paragraph (1) 

3 shall also include the following: 

4 (i) For any performance measures 

5 that indicate a decreased level of perform6 ance from the prior year— 

7 (I) a description of the factors 

8 that led to such decreased level of per9 formance; and 

10 (II) plans to improve such level 

11 of performance. 

12 (ii) For any performance measures 

13 that remain unable to be monitored due to 

14 lack of reliable and accessible data, an up15 date on plans to improve the monitoring of 

16 data. 

17 (c) BRIEFING.—Not later than 180 days after the 

18 date on which the Secretary of Defense, acting through 

19 the Director of the Defense Security Cooperation Agency, 

20 submits to the congressional defense committees the re21 port required by subsection (b), the Comptroller General 

22 of the United States shall provide a briefing to the con23 gressional defense committees on the report, including an 

24 evaluation of the performance measures developed and 

25 identified under subsection (a). 


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1 SEC. 5. REPORT AND BRIEFING ON ADMINISTRATIVE 

2 BUDGETING OF FOREIGN MILITARY SALES 

3 PROGRAM. 

4 (a) IN GENERAL.—Not later than one year after the 

5 date of the enactment of this Act, the Comptroller General 

6 of the United States shall provide a briefing to the con7 gressional defense committees and submit to the congres8 sional defense committees a report on the methodology 

9 used by the Department of Defense to determine future10 year needs for administrative surcharges under the foreign 

11 military sales program. 

12 (b) MATTERS TO BE INCLUDED.—The briefing and 

13 report required by subsection (a) shall include the fol14 lowing: 

15 (1) A description of the methodology the De16 partment of Defense used to develop the overall ad17 ministrative budget of the foreign military sales pro18 gram and the administrative budgets for each other 

19 relevant component of the Department of Defense 

20 that receives funds from the foreign military sales 

21 program. 

22 (2) An assessment of the extent to which the 

23 methodology described in paragraph (1) reflects rel24 evant best practices. 

25 (3) Any other related matters the Comptroller 

26 General determines to be appropriate. 


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1 SEC. 6. DEFINITIONS. 

2 In this Act: 

3 (1) CONGRESSIONAL DEFENSE COMMITTEES.— 

4 The term ‘‘congressional defense committees’’ has 

5 the meaning given such term in section 101 of title 

6 10, United States Code. 

7 (2) FOREIGN MILITARY SALES PROGRAM.—The 

8 term ‘‘foreign military sales program’’ means the 

9 program authorized under chapter 2 of the Arms 

10 Export Control Act (22 U.S.C. 2761 et seq.). 

Æ 


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