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‘‘CHAPTER 3A—END-USE MONITORING OF
DEFENSE ARTICLES AND DEFENSE
SERVICES
‘‘SEC. 40A. END-USE MONITORING OF DEFENSE ARTICLES
AND DEFENSE SERVICES.
‘‘(a) ESTABLISHMENT OF MONITORING PROGRAM.—
‘‘(1) IN
GENERAL.—In order to improve ac-
countability with respect to defense articles and de-
fense services sold, leased, or exported under this
Act or the Foreign Assistance Act of 1961 (22
U.S.C. 2151 et seq.), the President shall establish a
program which provides for the end-use monitoring
of such articles and services.
‘‘(2) REQUIREMENTS OF PROGRAM.—To the ex-
tent practicable, such program—
‘‘(A) shall provide for the end-use monitor-
ing of defense articles and defense services in
accordance with the standards that apply for
identifying high-risk exports for regular end-use
verification developed under section 38(g)(7) of
this Act (commonly referred to as the ‘Blue
Lantern’ program); and
‘‘(B) shall be designed to provide reason-
able assurance that—
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‘‘(i) the recipient is complying with
the requirements imposed by the United
States Government with respect to use,
transfers, and security of defense articles
and defense services; and
‘‘(ii) such articles and services are
being used for the purposes for which they
are provided.
‘‘(b) CONDUCT OF PROGRAM.—In carrying out the
program established under subsection (a), the President
shall ensure that the program—
‘‘(1) provides for the end-use verification of de-
fense articles and defense services that incorporate
sensitive technology, defense articles and defense
services that are particularly vulnerable to diversion
or other misuse, or defense articles or defense serv-
ices whose diversion or other misuse could have sig-
nificant consequences; and
‘‘(2) prevents the diversion (through reverse en-
gineering or other means) of technology incorporated
in defense articles.
‘‘(c) REPORT
TO CONGRESS.—Not later than 6
months after the date of the enactment of this section,
and annually thereafter as a part of the annual congres-
sional presentation documents submitted under section
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634 of the Foreign Assistance Act of 1961, the President
shall transmit to the Congress a report describing the ac-
tions taken to implement this section, including a detailed
accounting of the costs and number of personnel associ-
ated with the monitoring program.
‘‘(d) THIRD COUNTRY TRANSFERS.—For purposes of
this section, defense articles and defense services sold,
leased, or exported under this Act or the Foreign Assist-
ance Act of 1961 (22 U.S.C. 2151 et seq.) includes de-
fense articles and defense services that are transferred to
a third country or other third party.’’.
(b) EFFECTIVE DATE.—Section 40A of the Arms Ex-
port Control Act, as added by subsection (a), applies with
respect to defense articles and defense services provided
before or after the date of the enactment of this Act.
SEC. 151. BROKERING ACTIVITIES RELATING TO COMMER-
CIAL SALES OF DEFENSE ARTICLES AND
SERVICES.
(a) IN GENERAL.—Section 38(b)(1)(A) of the Arms
Export Control Act (22 U.S.C. 2778(b)(1)(A)) is amend-
ed—
(1) in the first sentence, by striking ‘‘As pre-
scribed in regulations’’ and inserting ‘‘(i) As pre-
scribed in regulations’’; and
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(2) by adding at the end the following new
clause:
‘‘(ii)(I) As prescribed in regulations issued under this
section, every person (other than an officer or employee
of the United States Government acting in official capac-
ity) who engages in the business of brokering activities
with respect to the manufacture, export, import, or trans-
fer of any defense article or defense service designated by
the President under subsection (a)(1), or in the business
of brokering activities with respect to the manufacture, ex-
port, import, or transfer of any foreign defense article or
defense service (as defined in subclause (IV)), shall reg-
ister with the United States Government agency charged
with the administration of this section, and shall pay a
registration fee which shall be prescribed by such regula-
tions.
‘‘(II) Such brokering activities shall include the fi-
nancing, transportation, freight forwarding, or taking of
any other action that facilitates the manufacture, export,
or import of a defense article or defense service.
‘‘(III) No person may engage in the business of
brokering activities described in subclause (I) without a
license, issued in accordance with this Act, except that no
license shall be required for such activities undertaken by
or for an agency of the United States Government—
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‘‘(aa) for use by an agency of the United States
Government; or
‘‘(bb) for carrying out any foreign assistance or
sales program authorized by law and subject to the
control of the President by other means.
‘‘(IV) For purposes of this clause, the term ‘foreign
defense article or defense service’ includes any non-United
States defense article or defense service of a nature de-
scribed on the United States Munitions List regardless of
whether such article or service is of United States origin
or whether such article or service contains United States
origin components.’’.
(b) EFFECTIVE DATE.—Section 38(b)(1)(A)(ii) of
the Arms Export Control Act, as added by subsection (a),
shall apply with respect to brokering activities engaged in
beginning on or after 120 days after the enactment of this
Act.
SEC. 152. RETURN AND EXCHANGES OF DEFENSE ARTICLES
PREVIOUSLY TRANSFERRED PURSUANT TO
THE ARMS EXPORT CONTROL ACT.
(a) REPAIR OF DEFENSE ARTICLES.—Section 21 of
the Arms Export Control Act (22 U.S.C. 2761) is amend-
ed by adding at the end the following new subsection:
‘‘(l) REPAIR OF DEFENSE ARTICLES.—
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‘‘(1) IN GENERAL.—The President may acquire
a repairable defense article from a foreign country
or international organization if such defense arti-
cle—
‘‘(A) previously was transferred to such
country or organization under this Act;
‘‘(B) is not an end item; and
‘‘(C) will be exchanged for a defense article
of the same type that is in the stocks of the De-
partment of Defense.
‘‘(2) LIMITATION.—The President may exercise
the authority provided in paragraph (1) only to the
extent that the Department of Defense—
‘‘(A)(i) has a requirement for the defense
article being returned; and
‘‘(ii) has available sufficient funds author-
ized and appropriated for such purpose; or
‘‘(B)(i) is accepting the return of the de-
fense article for subsequent transfer to another
foreign government or international organiza-
tion pursuant to a letter of offer and acceptance
implemented in accordance with this Act; and
‘‘(ii) has available sufficient funds provided
by or on behalf of such other foreign govern-
ment or international organization pursuant to
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a letter of offer and acceptance implemented in
accordance with this Act.
‘‘(3) REQUIREMENT.—(A) The foreign govern-
ment or international organization receiving a new
or repaired defense article in exchange for a repair-
able defense article pursuant to paragraph (1) shall,
upon the acceptance by the United States Govern-
ment of the repairable defense article being re-
turned, be charged the total cost associated with the
repair and replacement transaction.
‘‘(B) The total cost charged pursuant to sub-
paragraph (A) shall be the same as that charged the
United States Armed Forces for a similar repair and
replacement transaction, plus an administrative sur-
charge in accordance with subsection (e)(1)(A) of
this section.
‘‘(4) RELATIONSHIP TO CERTAIN OTHER PROVI-
SIONS OF LAW.—The authority of the President to
accept the return of a repairable defense article as
provided in subsection (a) shall not be subject to
chapter 137 of title 10, United States Code, or any
other provision of law relating to the conclusion of
contracts.’’.
(b) RETURN OF DEFENSE ARTICLES.—Section 21 of
such Act (22 U.S.C. 2761), as amended by this Act, is
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further amended by adding at the end the following new
subsection:
‘‘(m) RETURN OF DEFENSE ARTICLES.—
‘‘(1) IN GENERAL.—The President may accept
the return of a defense article from a foreign coun-
try or international organization if such defense arti-
cle—
‘‘(A) previously was transferred to such
country or organization under this Act;
‘‘(B) is not significant military equipment
(as defined in section 47(9) of this Act); and
‘‘(C) is in fully functioning condition with-
out need of repair or rehabilitation.
‘‘(2) LIMITATION.—The President may exercise
the authority provided in paragraph (1) only to the
extent that the Department of Defense—
‘‘(A)(i) has a requirement for the defense
article being returned; and
‘‘(ii) has available sufficient funds author-
ized and appropriated for such purpose; or
‘‘(B)(i) is accepting the return of the de-
fense article for subsequent transfer to another
foreign government or international organiza-
tion pursuant to a letter of offer and acceptance
implemented in accordance with this Act; and
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‘‘(ii) has available sufficient funds provided
by or on behalf of such other foreign govern-
ment or international organization pursuant to
a letter of offer and acceptance implemented in
accordance with this Act.
‘‘(3) CREDIT FOR TRANSACTION.—Upon acqui-
sition and acceptance by the United States Govern-
ment of a defense article under paragraph (1), the
appropriate Foreign Military Sales account of the
provider shall be credited to reflect the transaction.
‘‘(4) RELATIONSHIP TO CERTAIN OTHER PROVI-
SIONS OF LAW.—The authority of the President to
accept the return of a defense article as provided in
paragraph (1) shall not be subject to chapter 137
of title 10, United States Code, or any other provi-
sion of law relating to the conclusion of contracts.’’.
(c) REGULATIONS.—Under the direction of the Presi-
dent, the Secretary of Defense shall promulgate regula-
tions to implement subsections (l) and (m) of section 21
of the Arms Export Control Act, as added by this section.
SEC. 153. NATIONAL SECURITY INTEREST DETERMINATION
TO WAIVE REIMBURSEMENT OF DEPRECIA-
TION FOR LEASED DEFENSE ARTICLES.
(a) IN GENERAL.—Section 61(a) of the Arms Export
Control Act (22 U.S.C. 2796(a)) is amended—
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(1) in the second sentence, by striking ‘‘, or to
any defense article which has passed three-quarters
of its normal service life’’; and
(2) by inserting after the second sentence the
following new sentence: ‘‘The President may waive
the requirement of paragraph (4) for reimbursement
of depreciation for any defense article which has
passed three-quarters of its normal service life if the
President determines that to do so is important to
the national security interest of the United States.’’.
(b) EFFECTIVE DATE.—The third sentence of section
61(a) of the Arms Export Control Act, as added by sub-
section (a)(2), shall apply only with respect to a defense
article leased on or after the date of the enactment of this
Act.
SEC. 154. ELIGIBILITY OF PANAMA UNDER ARMS EXPORT
CONTROL ACT.
The Government of the Republic of Panama shall be
eligible to purchase defense articles and defense services
under the Arms Export Control Act (22 U.S.C. 2751 et
seq.), except as otherwise specifically provided by law.
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TITLE II—TRANSFER OF NAVAL
VESSELS TO CERTAIN FOR-
EIGN COUNTRIES
SEC. 201. AUTHORITY TO TRANSFER NAVAL VESSELS.
(a) EGYPT.—The Secretary of the Navy is authorized
to transfer to the Government of Egypt the ‘‘OLIVER
HAZARD PERRY CLASS’’ frigate GALLERY. Such
transfer shall be on a sales basis under section 21 of the
Arms Export Control Act (22 U.S.C. 2761; relating to the
foreign military sales program).
(b) MEXICO.—The Secretary of the Navy is author-
ized to transfer to the Government of Mexico the
‘‘KNOX’’ class frigates STEIN (FF 1065) and MARVIN
SHIELDS (FF 1066). Such transfers shall be on a sales
basis under section 21 of the Arms Export Control Act
(22 U.S.C. 2761; relating to the foreign military sales pro-
gram).
(c) NEW ZEALAND.—The Secretary of the Navy is
authorized to transfer to the Government of New Zealand
the ‘‘STALWART’’ class ocean surveillance ship TENA-
CIOUS. Such transfer shall be on a sales basis under sec-
tion 21 of the Arms Export Control Act (22 U.S.C. 2761;
relating to the foreign military sales program).
(d) PORTUGAL.—The Secretary of the Navy is au-
thorized to transfer to the Government of Portugal the
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‘‘STALWART’’ class ocean surveillance ship AUDA-
CIOUS. Such transfer shall be on a grant basis under sec-
tion 516 of the Foreign Assistance Act of 1961 (22 U.S.C.
2321j; relating to transfers of excess defense articles).
(e) TAIWAN.—The Secretary of the Navy is author-
ized to transfer to the Taipei Economic and Cultural Rep-
resentative Office in the United States (which is the Tai-
wan instrumentality designated pursuant to section 10(a)
of the Taiwan Relations Act) the following:
(1) The ‘‘KNOX’’ class frigates AYLWIN (FF
1081), PHARRIS (FF 1094), and VALDEZ (FF
1096). Such transfers shall be on a sales basis under
section 21 of the Arms Export Control Act (22
U.S.C. 2761; relating to the foreign military sales
program).
(2) The ‘‘NEWPORT’’ class tank landing ship
NEWPORT (LST 1179). Such transfer shall be on
a lease basis under section 61 of the Arms Export
Control Act (22 U.S.C. 2796).
(f) THAILAND.—The Secretary of the Navy is author-
ized to transfer to the Government of Thailand the
‘‘KNOX’’ class frigate OUELLET (FF 1077). Such
transfer shall be on a sales basis under section 21 of the
Arms Export Control Act (22 U.S.C. 2761; relating to the
foreign military sales program).
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SEC. 202. COSTS OF TRANSFERS.
Any expense of the United States in connection with
a transfer authorized by this title shall be charged to the
recipient.
SEC. 203. EXPIRATION OF AUTHORITY.
The authority granted by section 201 shall expire at
the end of the 2-year period beginning on the date of the
enactment of this Act.
SEC. 204. REPAIR AND REFURBISHMENT OF VESSELS IN
UNITED STATES SHIPYARDS.
The Secretary of the Navy shall require, to the maxi-
mum extent possible, as a condition of a transfer of a ves-
sel under this title, that the country to which the vessel
is transferred have such repair or refurbishment of the
vessel as is needed, before the vessel joins the naval forces
of that country, performed at a shipyard located in the
United States, including a United States Navy shipyard.
Passed the House of Representatives April 16, 1996.
Attest:
ROBIN H. CARLE,
Clerk.