U.S. Code » Title 22 » Chapter CHAPTER 39— ARMS EXPORT CONTROL › Subchapter SUBCHAPTER II— FOREIGN MILITARY SALES AUTHORIZATIONS

22 U.S.C. § 2762

Procurement for cash sales

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(a) Authority of President; dependable undertaking 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 authorization otherwise provided, enter into contracts for the procurement of defense articles or defense services for sale for United States dollars to any foreign country or international organization if such country or international organization 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 required 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 Treasury taking into consideration the current average market yield on outstanding short-term obligations 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 arrearage.

(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 delivery of the defense article or rendering of the defense service and for payment within one hundred and twenty days after the date of billing. This authority may be exercised, however, only if the President also determines that the emergency requirements of the purchaser for acquisition 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 determinations to the Congress together with a special emergency request for authorization and appropriation of additional funds to finance such purchases under this chapter. Appropriations available to the Department of Defense may be used to meet the payments required by the contracts for the procurement of defense articles and defense services and shall be reimbursed by the amounts subsequently received from the country or international organization to whom articles 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 heretofore or hereafter entered into under this section, section 2769 of this title, or predecessor provisions of law.

(d) Competitive pricing(1) Procurement contracts made in implementation of sales under this section for defense articles 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 procurements of like items purchased by the Department of Defense for its own use.(2) Direct costs associated with meeting additional 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 applicable 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 NotesReferences 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 “procurement contracts” for “contracts for the procurement of defense articles and defense services” and inserted reference 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 provisions 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 provisions authorizing President to issue letters of offer with provisions for billing on delivery of article or rendering of service and payment within 120 days after billing date where President determines that emergency conditions exist, for provisions authorizing President to accept a dependable undertaking of a foreign 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 rendering of service.

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”, designated first proviso as subsec. (b) and inserted reference 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 payments by purchasing countries or international organizations.

Statutory Notes and Related SubsidiariesEffective 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 Export 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 effective 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 appropriation 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 require 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 DocumentsDelegation 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 previously delegated by Ex. Ord. No. 11958, which was formerly set out as a note under section 2751 of this title and was revoked, subject to a savings provision, by section 4 of Ex. Ord. No. 13637.

Notes of Decisions
Cited in 11 cases, 1976–2020 · leading case: Bae Sys. Tech. Solution & Servs., Inc. v. Repub. of Korea's Def. Acquisition Prog. Admin., 884 F.3d 463 (4th Cir. 2018).
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Bae Sys. Tech. Solution & Servs., Inc. v. Repub. of Korea's Def. Acquisition Prog. Admin., 884 F.3d 463 (4th Cir. 2018). · cites it 2× “See 22 U.S.C. § 2762 (a) (authorizing President to engage in FMS transactions if the foreign government agrees "to pay the full amount of such contract which will assure the United States Government against any loss on the contract"); see also SAMM § C9.”
United States v. Gen. Elec. Corp., 727 F.2d 1567 (Fed. Cir. 1984). · cites it 2× “Congress provided in the Arms Export Control Act, 22 U.S.C. § 2762 : (a) Except as otherwise provided in this section, the President may, without requirement for charge to any appropriation or contract authorization otherwise provided, enter into contracts for the procurement of…”
United States Ex Rel. Hayes v. CMC Elec. Inc., 297 F. Supp. 2d 734 (D.N.J. 2003). · cites it 4× “§ 2761 and 2) sales of procured items, 22 U.S.C. § 2762 . 2 22 U.S.C. § 2762 provides that when procurement contracts are entered by the United States, the foreign country or organization to which the items will be sold must cover the entire cost of the procurement contract.”
State v. Altus Fin., S.A., 116 P.3d 1175 (Cal. 2005). “(See 22 U.S.C. § 2762 , under which the President may sell defense articles and services to eligible foreign entities.”
Hughes Aircraft Co. v. United States, 209 Ct. Cl. 446 (Ct. Cl. 1976). “1323 , as amended 22 U.S.C. §2762 , similarly provides: § 2762.”
United States Ex Rel. Campbell v. Lockheed Martin Corp., 282 F. Supp. 2d 1324 (M.D. Fla. 2003). “…is in arrears under all of the outstanding unliquidated dependable undertakings, considered collectively.... 22 U.S.C. § 2762 (a) (emphasis added).”
Sec'y of State for Defence v. Trimble Navigation Ltd., 484 F.3d 700 (4th Cir. 2007). · cites it 2× “See 22 U.S.C. § 2762 (a); Trimble I, 422 F.3d at 167 .”
Hyperion, Inc. v. United States, 120 Fed. Cl. 504 (Fed. Cl. 2015). “§§ 2751 -2799aa-2, particularly 22 U.S.C. § 2762 . See Def.’s Mot. at 14-23.”
Lockheed Martin Corp. v. Hegar, 550 S.W.3d 855 (Tex. App. 2018). · cites it 2× “2018) (citing 22 U.S.C. § 2762 ). Heroth , 565 F.Supp.2d at 62 .”
BAE Sys. Tech. v. Repub. of Korea's Def. (4th Cir. 2018). · cites it 2× “contractors and subsequent resale to a foreign government, as authorized under 22 U.S.C. § 2762 (a). Not implicated in this case are U.”
Lockheed Martin Corp. v. Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas, & Ken Paxton, Attorney Gen. of the State of Texas (Tex. 2020). · cites it 2× “F3; see 22 U.S.C. § 2762 (providing that in an FMS sale to a foreign government, the foreign government must provide the U.”
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