380 
mination to the appropriate congressional commit-
tees and to the Committees on Armed Services of 
the House of the Representatives and the Senate. 
(2) STATEMENT.—Each such determination 
shall be accompanied with a statement that shall in-
clude the following information: 
(A) The country or international organiza-
tion to which the sale is proposed to be made. 
(B) The amount of the proposed sale. 
(C) A description of the defense article or 
service proposed to be sold. 
(D) A full description of the impact which 
the proposed sale will have on the United States 
Armed Forces. 
(E) A justification for such proposed sale, 
including an explanation as to why, in the 
President’s judgment, benefits to United States 
national security from the sale outweighs the 
adverse impact on the readiness of the United 
States Armed Forces. 
SEC. 4320. ACQUISITION OF FOREIGN-UNITED STATES ORI-
GIN DEFENSE ARTICLES. 
(a) IN GENERAL.—The President may acquire a re-
pairable defense article from a foreign country or inter-
national organization if such defense article— 
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(1) previously was transferred to such country 
or organization under this Act or predecessor Act 
(as in effect on the day before the date of the enact-
ment of this Act); 
(2) is not an end item; and 
(3) will be exchanged for a defense article of 
the same type that is in the stocks of the Depart-
ment of Defense. 
(b) LIMITATION.—The President may exercise the 
authority provided in subsection (a) only to the extent that 
the Department of Defense— 
(1)(A) has a requirement for the defense article 
being returned; and 
(B) has available sufficient funds authorized 
and appropriated for such purpose; or 
(2)(A) is accepting the return of the defense ar-
ticle for subsequent transfer to another foreign gov-
ernment or international organization pursuant to a 
letter of offer and acceptance implemented in ac-
cordance with this Act or predecessor Act (as in ef-
fect on the day before the date of the enactment of 
this Act); and 
(B) has available sufficient funds provided by 
or on behalf of such other foreign government or 
international organization pursuant to a letter of 
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offer and acceptance implemented in accordance 
with this Act or predecessor Act (as in effect on the 
day before the date of the enactment of this Act). 
(c) REQUIREMENT.— 
(1) IN GENERAL.—The foreign government or 
international organization receiving a new or re-
paired defense article in exchange for a repairable 
defense article pursuant to subsection (a) shall, upon 
the acceptance by the United States Government of 
the repairable defense article being returned, be 
charged the total cost associated with the repair and 
replacement transaction. 
(2) COST.—The total cost charged pursuant to 
paragraph (1) 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 section 4314(a)(1). 
(d) RELATIONSHIP TO CERTAIN OTHER PROVISIONS 
OF LAW.—The authority of the President to accept the 
return of a repairable defense article as provided in sub-
section (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. 
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383 
SEC. 4321. RETURN OF DEFENSE ARTICLES. 
(a) IN GENERAL.—The President may accept the re-
turn of a defense article from a foreign country or inter-
national organization if such defense article— 
(1) previously was transferred to such country 
or organization under this Act or predecessor Act 
(as in effect on the day before the date of the enact-
ment of this Act); 
(2) is not significant military equipment (as de-
fined in section 4411); and 
(3) is in fully functioning condition without 
need of repair or rehabilitation. 
(b) LIMITATION.—The President may exercise the 
authority provided in subsection (a) only to the extent that 
the Department of Defense— 
(1)(A) has a requirement for the defense article 
being returned; and 
(B) has available sufficient funds authorized 
and appropriated for such purpose; or 
(2)(A) is accepting the return of the defense ar-
ticle for subsequent transfer to another foreign gov-
ernment or international organization pursuant to a 
letter of offer and acceptance implemented in ac-
cordance with this Act or predecessor Act (as in ef-
fect on the day before the date of the enactment of 
this Act); and 
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384 
(B) has available sufficient funds provided by 
or on behalf of such other foreign government or 
international organization pursuant to a letter of 
offer and acceptance implemented in accordance 
with this Act or predecessor Act (as in effect on the 
day before the date of the enactment of this Act). 
(c) CREDIT FOR TRANSACTION.—Upon acquisition 
and acceptance by the United States Government of a de-
fense article under subsection (a), the appropriate Foreign 
Military Sales account of the provider shall be credited 
to reflect the transaction. 
(d) RELATIONSHIP TO CERTAIN OTHER PROVISIONS 
OF LAW.—The authority of the President to accept the 
return of a 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. 
SEC. 4322. SALE OF OBSOLETE NAVAL VESSELS. 
For purposes of section 4311(a), the actual value of 
a naval vessel of 3,000 tons or less and 20 years or more 
of age shall be considered to be not less than the greater 
of the scrap value or fair value (including conversion costs) 
of such vessel, as determined by the Secretary of Defense. 
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385 
SEC. 4323. ANNUAL ESTIMATE AND JUSTIFICATION FOR 
SALES PROGRAM. 
(a) REPORT.—Except as provided in subsection (d), 
not later than February 1 of each year, the President shall 
transmit to the appropriate congressional committees, as 
a part of the annual presentation materials for security 
assistance programs proposed for the next fiscal year, a 
report which sets forth— 
(1) an Arms Sales Proposal covering all sales 
and licensed commercial exports under this title of 
major weapons or weapons-related defense equip-
ment for $7,000,000 or more, or of any other weap-
ons or weapons-related defense equipment for 
$25,000,000 or more, which are considered eligible 
for approval during the current calendar year and 
are deemed most likely actually to result in the 
issuance of a letter of offer or of an export license 
during such year; 
(2) an estimate of the total amount of sales and 
licensed commercial exports expected to be made to 
each foreign country from the United States; 
(3) the United States national security consid-
erations involved in expected sales or licensed com-
mercial exports to each country, an analysis of the 
relationship between anticipated sales to each coun-
try and arms control efforts concerning such country 
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and an analysis of the impact of such anticipated 
sales on the stability of the region that includes such 
country; 
(4) an estimate with regard to the international 
volume of arms traffic to and from countries pur-
chasing arms as set forth in paragraphs (1) and (2), 
together with best estimates of the sale and delivery 
of weapons and weapons-related defense equipment 
by all major arms suppliers to all major recipient 
countries during the preceding calendar year; 
(5)(A) an estimate of the aggregate dollar value 
and quantity of defense articles and defense services, 
military education and training, grant military as-
sistance, and credits and guarantees, to be furnished 
by the United States to each foreign country and 
international organization in the next fiscal year; 
and 
(B) for each country that is proposed to be fur-
nished credits or guaranties under this Act in the 
next fiscal year and that has been approved for cash 
flow financing in excess of $100,000,000 as of Octo-
ber 1 of the current fiscal year— 
(i) the amount of such approved cash flow 
financing; 
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387 
(ii) a description of administrative ceilings 
and controls applied, and 
(iii) a description of the financial resources 
otherwise available to such country to pay such 
approved cash flow financing; 
(6) an analysis and description of the services 
performed during the preceding fiscal year by offi-
cers and employees of the United States Government 
carrying out functions on a full-time basis under this 
Act for which reimbursement is provided under sec-
tion 4402(b) or section 4311(a), including the num-
ber of personnel involved in performing such serv-
ices; 
(7) the status of— 
(A) each loan and each contract of guar-
anty or insurance theretofore made under this 
title, predecessor Acts, or any Act authorizing 
international security assistance, with respect to 
which there remains outstanding any unpaid 
obligation or potential liability; and 
(B) each extension of credit for the pro-
curement of defense articles or defense services, 
and of each contract of guaranty in connection 
with any such procurement, theretofore made 
under this title or predecessor Acts with respect 
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388 
to which there remains outstanding any unpaid 
obligation or potential liability; 
(8)(A) a detailed accounting of all articles, serv-
ices, credits, guarantees, or any other form of assist-
ance furnished by the United States to each country 
and international organization, including payments 
to the United Nations, during the preceding fiscal 
year for the detection and clearance of landmines, 
including activities relating to the furnishing of edu-
cation, training, and technical assistance for the de-
tection and clearance of landmines; and 
(B) for each provision of law making funds 
available or authorizing appropriations for demining 
activities described in subparagraph (A), an analysis 
and description of the objectives and activities un-
dertaken during the preceding fiscal year, including 
the number of personnel involved in performing such 
activities; 
(9) a list of weapons systems that are signifi-
cant military equipment, and numbers thereof, that 
are believed likely to become available for transfer as 
excess defense articles during the next 12 months; 
and 
(10) such other information as the President 
may deem necessary. 
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389 
(b) ADDITIONAL INFORMATION.—Not later than 30 
days following the receipt of a request made by any of 
the appropriate congressional committees for additional 
information with respect to any information submitted 
pursuant to subsection (a), the President shall submit 
such information to such committees. 
(c) FORM.—The President shall make every effort to 
submit all of the information required by subsection (a) 
or (b) wholly in unclassified form. Whenever the President 
submits any such information in classified form, the Presi-
dent shall submit such classified information in an adden-
dum and shall also submit simultaneously a detailed sum-
mary, in unclassified form, of such classified information. 
(d) ADDITIONAL REQUIREMENT.—The information 
required by subsection (a)(4) of this section shall be trans-
mitted to Congress not later than April 1 of each year. 
SEC. 4324. SALES TO UNITED STATES COMPANIES FOR IN-
CORPORATION INTO END ITEMS. 
(a) GENERAL AUTHORITY.— 
(1) IN
GENERAL.—Subject to the conditions 
specified in subsection (b), the President may, on a 
negotiated contract basis, under cash terms— 
(A) sell defense articles at not less than 
their estimated replacement cost (or actual cost 
in the case of services); or 
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390 
(B) procure or manufacture and sell de-
fense articles at not less than their contract or 
manufacturing cost to the United States Gov-
ernment, to any United States company for in-
corporation into end items (and for concurrent 
or follow-on support) to be sold by such a com-
pany either— 
(i) on a direct commercial basis to a 
foreign country or international organiza-
tion pursuant to an export license or ap-
proval under section 4301; or 
(ii) in the case of ammunition parts 
subject to subsection (b), using commercial 
practices which restrict actual delivery di-
rectly to a foreign country or international 
organization pursuant to approval under 
section 4301. 
(2) ADDITIONAL
AUTHORITY.—The President 
may also sell defense services in support of such 
sales of defense articles, subject to the requirements 
of this chapter. Such services may be performed only 
in the United States. The amount of reimbursement 
received from such sales shall be credited to the cur-
rent applicable appropriation, fund, or account of 
the selling agency of the United States Government. 
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391 
(b) ADDITIONAL REQUIREMENTS.—Defense articles 
and defense services may be sold, procured and sold, or 
manufactured and sold, pursuant to subsection (a) only 
if— 
(1) the end item to which the articles apply is 
to be procured for the armed forces of a country or 
international organization; 
(2) the articles would be supplied to the prime 
contractor as government-furnished equipment or 
materials if the end item were being procured for the 
use of the United States Armed Forces; and 
(3) the articles and services are available only 
from United States Government sources or are not 
available to the prime contractor directly from 
United States commercial sources at such times as 
may be required to meet the prime contractor’s de-
livery schedule. 
SEC. 4325. FISCAL PROVISIONS RELATING TO FOREIGN 
MILITARY SALES CREDITS. 
(a) IN GENERAL.—Cash payments received under 
sections 4311 and funds received under section 4324 shall 
be available solely for payments to suppliers (including the 
military departments) and refunds to purchasers and shall 
not be available for financing credits. 
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392 
(b) REPAYMENTS
FOR CREDITS, DISPOSITION
OF 
CERTAIN INSTRUMENTS, AND OTHER COLLECTIONS.— 
Amounts received from foreign governments and inter-
national organizations as repayments for any credits ex-
tended pursuant to section 4251, and other collections (in-
cluding fees and interest) shall be transferred to the mis-
cellaneous receipts of the United States Treasury. 
CHAPTER 2—ARMS EXPORT CONTROLS 
SEC. 4331. LICENSING REQUIREMENT FOR EXPORTING OR 
IMPORTING DEFENSE ARTICLES AND DE-
FENSE SERVICES. 
(a) IN GENERAL.—Except as otherwise specifically 
provided in regulations issued under section 4301, defense 
articles, defense services, and design and construction 
services designated by the President under section 4301 
may only be licensed for export or import in accordance 
with this title and regulations issued under this title. 
(b) EXCEPTIONS.—No license may be required for ex-
ports or imports made by or for a Federal agency— 
(1) for official use by personnel of a Federal 
agency; or 
(2) for carrying out any foreign assistance or 
sales program authorized by law and subject to the 
control of the President by other means. 
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393 
SEC. 4332. IMPACT OF MILITARY EXPENDITURES ON DE-
VELOPMENT. 
(a) REVIEW.—The Secretary shall conduct a review 
of the military expenditures of developing countries to— 
(1) identify those countries which the Secretary 
has credible evidence to believe— 
(A) are diverting official development as-
sistance from any source to military purposes; 
(B) are devoting budgetary resources to 
arms purchases to a degree that materially 
interferes with the development of such coun-
tries; or 
(C) are accumulating unsustainable levels 
of debt to finance arms purchases; 
(2) take such action as the Secretary deems ap-
propriate, including cessation of United States arms 
sales and working with other countries to do like-
wise, to reduce the impact of the military activities 
of the countries identified under paragraph (1) and 
acquisition of arms on the economic and political de-
velopment of such countries. 
(b) TIMING
OF REVIEW
AND REPORT
TO CON-
GRESS.—The Secretary shall complete the first review re-
quired under subsection (a) and submit to the appropriate 
congressional committees not later than one year after the 
enactment of this Act a report on all elements of sub-
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394 
section (a), including the actions the Secretary will take 
under subsection (a)(2), and the results of any such ac-
tions taken since the submission of the prior report to 
such committees. Subsequent reviews shall be conducted 
on a quadrennial basis, and reported to the appropriate 
congressional committees on the quadrennial anniversary 
of the first report. 
SEC. 4333. REQUIREMENT FOR REGISTRATION BY EXPORT-
ERS. 
(a) IN GENERAL.—As prescribed in regulations 
issued under section 4301, every person (other than an 
officer or employee of the United States Government act-
ing in an official capacity) who engages in the business 
of manufacturing, exporting, or importing defense articles 
or defense services designated by the President under sec-
tion 4301 shall register with the Department of State, and 
shall pay a registration fee which shall be prescribed by 
such regulations. 
(b) PROHIBITION.— 
(1) IN GENERAL.—Such regulations shall pro-
hibit the return to the United States for sale in the 
United States (other than for the United States 
Armed Forces or its allies or for any State for local 
law enforcement agency) of any military firearms or 
ammunition of United States manufacture furnished 
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395 
to foreign governments by the United States under 
this Act, or predecessor Act, or any other foreign as-
sistance or sales program of the United States, 
whether or not enhanced in value or improved in 
condition in a foreign country. 
(2) EXCEPTION.—The prohibition in paragraph 
(1) shall not extend to similar firearms that have 
been so substantially transformed as to become, in 
effect, articles of foreign manufacture. 
SEC. 4334. IDENTIFICATION OF ALL CONSIGNEES AND 
FREIGHT FORWARDERS. 
The President shall require that each applicant for 
a license to export an item on the United States Munitions 
List identify in the application all consignees and freight 
forwarders involved in the proposed export. 
SEC. 4335. BROKERING ACTIVITIES. 
(a) IN GENERAL.—As prescribed in regulations 
issued under this section, every person (other than an offi-
cer or employee of the United States Government acting 
in an official capacity) who engages in the business of 
brokering activities with respect to the manufacture, ex-
port, import, or transfer of any defense article or defense 
service designated by the President under section 4301, 
or in the business of brokering activities with respect to 
the manufacture, export, import, or transfer of any foreign 
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396 
defense article or defense service (as defined in subsection 
(c)), shall register 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 regulations. 
(b) BROKERING
ACTIVITIES
DESCRIBED.—Such 
brokering activities shall include the financing, transpor-
tation, freight forwarding, or taking of any other action 
that facilitates the sale, manufacture, export, or import 
of a defense article or defense service. 
(c) LICENSING REQUIREMENT.—No person may en-
gage in the business of brokering activities described in 
subsection (a) without a license, issued in accordance with 
this title, except that no license shall be required for such 
activities undertaken by or for a Federal agency— 
(1) for use by a Federal agency; or 
(2) for carrying out any foreign assistance or 
sales program authorized by law and subject to the 
control of the President by other means. 
(d) REVIEW OF REGISTRATION.—A copy of each reg-
istration made under this section shall be transmitted to 
the Secretary of the Treasury for review regarding law en-
forcement concerns. The Secretary shall report to the 
President regarding such concerns as necessary. 
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397 
SEC. 4336. FOREIGN PERSONS. 
(a) IN GENERAL.—A license to export an item on the 
United States Munitions List may not be issued to a for-
eign person (other than a foreign government or inter-
national organization). 
(b) LICENSE REQUIREMENT.—The President may re-
quire a license or other form of authorization before any 
item on the United States Munitions List is sold or other-
wise transferred to the control or possession of a foreign 
person or a person acting on behalf of a foreign person. 
SEC. 4337. REVIEW OF UNITED STATES MUNITIONS LIST. 
(a) IN GENERAL.—The President shall periodically 
review the items on the United States Munitions List to 
determine what items, if any, no longer warrant export 
controls under this title. The results of such reviews shall 
be reported to the appropriate congressional committees. 
(b) CONGRESSIONAL NOTIFICATION AND REVIEW.— 
The President may not remove any item from the United 
States Munitions List until 45 days after the date on 
which the President has provided notice of the proposed 
removal to the appropriate congressional committees in ac-
cordance with the procedures applicable to reprogramming 
notifications under section 8401, consistent with sub-
section (c) of this section. Such notice shall describe the 
nature of any controls to be imposed on that item under 
any other provision of law, and should provide a descrip-
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398 
tion of the item to be removed such that the appropriate 
congressional committees can fully assess the capabilities 
of the item and the potential impact on United States na-
tional security and foreign policy from its removal from 
the Munitions List. If the President proposes to remove 
classes or categories of items from the United States Mu-
nitions List, without enumerating individual items, then 
the President shall provide the appropriate congressional 
committees with a listing of items approved for export dur-
ing the previous five years that would no longer be re-
quired for licenses under this title by virtue of being re-
moved from the Munitions List. 
(c) CONGRESSIONAL DISAPPROVAL.—The President 
may not remove any item from the United States Muni-
tions List if, during the 45 days required under subsection 
(b), Congress enacts a joint resolution of disapproval of 
the removal of such item, according to the procedures 
under section 4384(c) for consideration of a joint resolu-
tion. 
SEC. 4338. LICENSING OF MISSILES AND MISSILE EQUIP-
MENT OR TECHNOLOGY. 
(a) ESTABLISHMENT
OF LIST
OF CONTROLLED 
ITEMS.—The Secretary, in consultation with the Secretary 
of Defense and the heads of other appropriate Federal 
agencies, shall establish and maintain, as part of the 
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United States Munitions List, a list of all items on the 
MTCR Annex the export of which is not controlled under 
section 6(l) of the Export Administration Act of 1979 (as 
continued in effect under the International Emergency 
Economic Powers Act) or similar provisions of any suc-
cessor Act. 
(b) REFERRAL OF LICENSE APPLICATIONS.— 
(1) IN GENERAL.—A determination of the Sec-
retary to approve a license for the export of an item 
on the list established under subsection (a) may be 
made only after the license application is referred to 
the Secretary of Defense. 
(2) REFERRAL.—Within 10 days after a license 
is issued for the export of an item on the list estab-
lished under subsection (a), the Secretary shall pro-
vide to the Secretary of Defense and the Secretary 
of Commerce the license application and accom-
panying documents issued to the applicant, to the 
extent that the relevant Secretary indicates the need 
to receive such application and documents. 
(c) INFORMATION SHARING.—The Secretary shall es-
tablish a procedure for sharing information with appro-
priate officials of the intelligence community, as deter-
mined by the Director of National Intelligence, and with 
other appropriate Federal agencies, that will ensure effec-
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400 
tive monitoring of transfers of MTCR equipment or tech-
nology and other missile technology. 
(d) EXPORTS
TO SPACE LAUNCH VEHICLE PRO-
GRAMS.— 
(1) IN
GENERAL.—Within 15 days after the 
issuance of a license (including any brokering li-
cense) for the export of items valued at less than 
$50,000,000 that are controlled under this Act pur-
suant to United States obligations under the MTCR 
and are goods or services that are intended to sup-
port the design, utilization, development, or produc-
tion of a space launch vehicle system listed in Cat-
egory I of the MTCR Annex, the Secretary shall 
transmit to Congress a report describing the licensed 
export and rationale for approving such export, in-
cluding the consistency of such export with United 
States missile nonproliferation policy. 
(2) APPLICABILITY.—The requirement con-
tained in paragraph (1) shall not apply to licenses 
for exports to countries that are members of the 
MTCR as of as of the date of the enactment of this 
Act. 
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401 
SEC. 4339. SPECIAL LICENSING AUTHORIZATION FOR CER-
TAIN 
EXPORTS 
TO 
STRATEGIC 
UNITED 
STATES ALLIES. 
(a) AUTHORIZATION.—The President may provide 
for special licensing authorization for exports of United 
States-manufactured spare and replacement parts or com-
ponents listed in an application for such special licensing 
authorization in connection with defense items previously 
exported to a strategic United States ally. A special licens-
ing authorization issued pursuant to this subsection shall 
be effective for a period not to exceed 5 years. 
(b) CERTIFICATION.—An authorization may be 
issued under subsection (a) only if the applicable govern-
ment of the country described in subsection (a), acting 
through the applicant for the authorization, certifies 
that— 
(1) the export of spare and replacement parts 
or components supports a defense item previously 
lawfully exported; 
(2) the spare and replacement parts or compo-
nents will be transferred to a defense agency of the 
country that is a previously approved end-user of the 
defense item and not to a distributor or a foreign 
consignee of the defense item; 
(3) the spare and replacement parts or compo-
nents will not to be used to materially enhance, opti-
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402 
mize, or otherwise modify or upgrade the capability 
of the defense item; 
(4) the spare and replacement parts or compo-
nents relate to a defense item that is owned, oper-
ated, and in the inventory of the armed forces of the 
country; 
(5) the export of spare and replacement parts 
or components will be effected using the freight for-
warder designated by the purchasing country’s diplo-
matic mission as responsible for handling transfers 
as required under regulations; and 
(6) the spare and replacement parts or compo-
nents to be exported under the special licensing au-
thorization are specifically identified in the applica-
tion. 
(c) LIMITATION.—An authorization may not be 
issued under subsection (a) for purposes of establishing 
offshore procurement arrangements or producing defense 
articles offshore. 
(d) DEFINITION.— 
(1) IN
GENERAL.—In this section, the term 
‘‘United States-manufactured spare and replacement 
parts or components’’ or ‘‘spare and replacement 
parts or components’’ means spare and replacement 
parts or components— 
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403 
(A) with respect to which— 
(i) United States-origin content costs 
constitute at least 85 percent of the total 
content costs; 
(ii) United States manufacturing costs 
constitute at least 85 percent of the total 
manufacturing costs; and 
(iii) foreign content, if any, is limited 
to content from countries eligible to receive 
exports of items on the United States Mu-
nitions List (other than de minimis foreign 
content); 
(B) that were last substantially trans-
formed in the United States; and 
(C) that are not— 
(i) classified as significant military 
equipment; or 
(ii) listed on the MTCR Annex. 
(2) ADDITIONAL RULE.—For purposes of para-
graph (1)(A)(i) and (ii), the costs of non-United 
States-origin content and the costs of non-United 
States manufacturing shall be determined using the 
final price or final cost associated with the non- 
United States-origin content and non-United States 
manufacturing. 
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404 
(e) INAPPLICABILITY PROVISIONS.— 
(1) IN GENERAL.—The provisions of this sec-
tion shall not apply with respect to re-exports or re- 
transfers of spare and replacement parts or compo-
nents and related services of defense items described 
in subsection (a). 
(2) CONGRESSIONAL NOTIFICATION.—The con-
gressional notification requirements contained in this 
title shall not apply with respect to an authorization 
issued under subsection (a). 
CHAPTER 3—LEASES OF DEFENSE 
ARTICLES 
SEC. 4351. LEASING AUTHORITY. 
(a) IN GENERAL.—The President may lease defense 
articles in the stocks of the Department of Defense to a 
foreign country or international organization if— 
(1) the President determines that there are 
compelling foreign policy and national security rea-
sons for providing such articles on a lease basis 
rather than on a sales basis under this subtitle; 
(2) the President determines that the articles 
are not for the time needed for public use; 
(3) the President first considers the effects of 
the lease of the articles on the national technology 
and industrial base, particularly the extent, if any, 
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405 
to which the lease reduces the opportunities of enti-
ties in the national technology and industrial base to 
sell new equipment to the country or countries to 
which the articles are leased; and 
(4) the country or international organization 
has agreed to pay in United States dollars all costs 
incurred by the United States Government in leasing 
such articles, including reimbursement for deprecia-
tion of such articles while leased, the costs of res-
toration or replacement if the articles are damaged 
while leased, and, if the articles are lost or destroyed 
while leased— 
(A) in the event the United States intends 
to replace the articles lost or destroyed, the re-
placement cost (less any depreciation in the 
value) of the articles; or 
(B) in the event the United States does 
not intend to replace the articles lost or de-
stroyed, an amount not less than the actual 
value (less any depreciation in the value) speci-
fied in the lease agreement. 
(b) EXCEPTIONS.— 
(1) IN
GENERAL.—The requirement of sub-
section (a)(4) shall not apply to leases entered into 
for purposes of cooperative research or development, 
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407 
(II) with respect to one country 
or international organization for each 
lease. 
(3) RULE OF CONSTRUCTION.—Paragraph (2) 
does not constitute authorization of appropriations 
for payments by the United States for leased arti-
cles. 
(c) DURATION.— 
(1) IN GENERAL.—Each lease agreement under 
this section shall be for a fixed duration which may 
not exceed— 
(A) 5 years; and 
(B) a specified period of time required to 
complete major refurbishment work of the 
leased articles to be performed prior to the de-
livery of the leased articles, of not to exceed 5 
years. 
(2) 
TERMINATION.—Each 
lease 
agreement 
under this section shall provide that, at any time 
during the duration of the lease, the President may 
terminate the lease and require the immediate re-
turn of the leased articles. 
(3) DEFINITION.—In this subsection, the term 
‘‘major refurbishment work’’ means work for which 
the period of performance is 6 months or more. 
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408 
(d) LIMITATION.—Defense articles in the stocks of 
the Department of Defense may be leased or loaned to 
a foreign country or international organization only under 
the authority of this chapter or chapter 3 of subtitle B, 
and may not be leased to a foreign country or inter-
national organization under the authority of section 2667 
of title 10, United States Code. 
SEC. 4352. CERTIFICATION FOR LEASING. 
(a) IN GENERAL.—Before entering into or renewing 
any agreement with a foreign country or international or-
ganization to lease any defense article under this chapter, 
or to loan any defense article this title for a period of 1 
year or longer, the President shall transmit to the appro-
priate congressional committees and the Committees on 
Armed Services of the House of Representatives and the 
Senate, a written certification which specifies— 
(1) the country or international organization to 
which the article is to be leased or loaned; 
(2) the type, quantity, and value (in terms of 
replacement cost) of the article to be leased or 
loaned; 
(3) the terms and duration of the lease or loan; 
and 
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409 
(4) a justification for the lease or loan, includ-
ing an explanation of why the article is being leased 
rather than sold under this subtitle. 
(b) WAIVER.— 
(1) IN
GENERAL.—The President may waive 
the requirements of this section if the President 
states in the certification required by subsection (a) 
that an emergency exists which requires that it is in 
the national security interests of the United States 
to enter into the lease or loan immediately. 
(2) JUSTIFICATION.—If the President states in 
the certification that such an emergency exists, the 
President shall set forth in the certification a de-
tailed justification for the President’s determination, 
including a description of the emergency cir-
cumstances that necessitate that the lease be entered 
into immediately and a discussion of the national se-
curity interests involved. 
(c) DEADLINE.—The certification required by sub-
section (a) shall be transmitted— 
(1) not less than 15 calendar days before the 
agreement is entered into or renewed in the case of 
an agreement with a strategic United States ally; or 
(2) not less than 30 calendar days before the 
agreement is entered into or renewed in the case of 
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410 
an agreement with any other country or organiza-
tion. 
SEC. 4353. APPLICATION OF OTHER PROVISIONS OF LAW. 
Any reference to sales of defense articles under this 
subtitle in any provision of law restricting the countries 
or organizations to which such sales may be made shall 
be deemed to include a reference to leases of defense arti-
cles under this chapter. 
SEC. 4354. LOAN OF MATERIALS, SUPPLIES, AND EQUIP-
MENT FOR RESEARCH AND DEVELOPMENT 
PURPOSES. 
(a) AUTHORITY TO LOAN.— 
(1) IN GENERAL.—Except as provided in sub-
section (c), the Secretary of Defense, with the con-
currence of the Secretary, may loan to a country 
that is a strategic United States ally or a major 
United States ally materials, supplies, or equipment 
for the purpose of carrying out a program of cooper-
ative research, development, testing, or evaluation. 
The Secretary of Defense may accept as a loan or 
a gift from a country that is a strategic United 
States ally or a major United States ally materials, 
supplies, or equipment for such purpose. 
(2) AGREEMENT.—Each loan or gift trans-
action entered into by the Secretary of Defense 
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411 
under this section shall be provided for under the 
terms of a written agreement between the Secretary 
of Defense and the country concerned. 
(3) TESTING OR EVALUATION.—A program of 
testing or evaluation for which the Secretary of De-
fense may loan materials, supplies, or equipment 
under this section includes a program of testing or 
evaluation conducted solely for the purpose of stand-
ardization, interchangeability, or technical evaluation 
if the country to which the materials, supplies, or 
equipment are loaned agrees to provide the results 
of the testing or evaluation to the United States 
without charge. 
(b) MATERIALS, SUPPLIES, OR EQUIPMENT.—The 
materials, supplies, or equipment loaned to a country 
under this section may be expended or otherwise consumed 
in connection with any testing or evaluation program with-
out a requirement for reimbursement of the United States 
if the Secretary of Defense— 
(1) determines that the success of the research, 
development, test, or evaluation depends upon ex-
pending or otherwise consuming the materials, sup-
plies, or equipment loaned to the country; and 
(2) approves of the expenditure or consumption 
of such materials, supplies, or equipment. 
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412 
(c) STRATEGIC
AND CRITICAL MATERIALS.—The 
Secretary of Defense may not loan to a country under this 
section any material if the material is a strategic and crit-
ical material and if, at the time the loan is to be made, 
the quantity of the material in the National Defense 
Stockpile (provided for under section 3 of the Strategic 
and Critical Materials Stock Piling Act (50 U.S.C. 98b)) 
is less than the quantity of such material to be stockpiled, 
as determined by the President under section 3(a) of such 
Act. 
SEC. 4355. SPECIAL LEASING AUTHORITY. 
The authority of section 4251 may be used to provide 
financing to Israel and Egypt for the procurement by leas-
ing (including leasing with an option to purchase) of de-
fense articles from United States commercial suppliers, 
other than major defense equipment (other than heli-
copters and other types of aircraft having possible civilian 
application), if the President determines that there are 
compelling foreign policy or national security reasons for 
the articles to be provided by commercial lease rather than 
by government-to-government sale under this subtitle. 
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413 
CHAPTER 4—RETRANSFERS OF UNITED 
STATES DEFENSE ARTICLES 
SEC. 4361. AUTHORITY TO APPROVE RETRANSFERS. 
(a) IN GENERAL.—Subject to subsection (b), the Sec-
retary is authorized, consistent with the provisions of this 
chapter, to approve a retransfer of any defense article or 
defense service transferred to a foreign country pursuant 
to the authority of this Act to another country. 
(b) ADDITIONAL
REQUIREMENT.—The Secretary 
may not give consent to a retransfer of a defense article 
or defense service to a foreign country under subsection 
(a) if the United States is prohibited from transferring 
the defense article or defense service to the country, or 
would not license the export of such defense article or de-
fense service to such country. 
SEC. 4362. DEMILITARIZATION FOR RETRANSFER OF SIG-
NIFICANT DEFENSE ARTICLES. 
The Secretary may not give consent to the retransfer 
of any significant defense articles on the United States 
Munitions List or successor list for controlling the export 
of United States munitions and related items, unless the 
foreign country requesting consent to retransfer— 
(1) agrees to demilitarize the defense articles 
prior to transfer; or 
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