The conditions on an excess defense articles transfer

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1. Six conditions, all of which must hold

A grant transfer of excess defense articles is not a matter of goodwill between governments. The statute allows the President to transfer them only if a set of conditions is met, and they are cumulative (22 U.S.C. 2321j(b)(1)):

• the articles are drawn from existing stocks of the Department of Defense;
• funds available to the Department for the procurement of defense equipment are not expended in connection with the transfer;
• the transfer will not have an adverse impact on the military readiness of the United States;
• for a grant, that route is preferable to a sale, after weighing the potential proceeds and likelihood of a sale against the comparative foreign policy benefits;
• the transfer will not adversely affect the national technology and industrial base;
• the transfer is consistent with the policy framework for the Eastern Mediterranean established under 22 U.S.C. 2373.

The manual restates the same conditions as planning considerations, and adds two of its own: excess construction equipment cannot be transferred, and grant transfers of ships require specific legislation for each case (SAMM EDA.2.6).

2. The industrial base test

One of those conditions does more work than the others, and it is the one a supplier is most likely to care about. For a grant, the President must determine that the transfer will not have an adverse impact on the national technology and industrial base and, "particularly, will not reduce the opportunities of entities in the national technology and industrial base to sell new or used equipment to the countries to which such articles are transferred" (22 U.S.C. 2321j(b)(1)(E)).

The same test applies to sales. Before entering into a sale of articles excess to Department stocks, the President must make the identical determination (22 U.S.C. 2761(k)).

The manual records where that judgement is made. The Director of the Defense Security Cooperation Agency determines the impact on industry, with input from the Department of Commerce (SAMM EDA.8). A company that believes a proposed excess transfer would displace a commercial sale is therefore arguing against a statutory finding that has to be made in any event.

3. The annual ceiling

There is a hard limit on how much can be given away in a year. "The aggregate value of excess defense articles transferred to countries under this section in any fiscal year may not exceed $500,000,000" (22 U.S.C. 2321j(g)(1)).

Two points about that figure are easy to misread. It applies to grant transfers under section 516, not to sales. And it is measured by current value rather than by original acquisition cost: the manual states that the total current value of all grant transfers in a fiscal year may not exceed that amount (SAMM EDA.2.6.6). The Defense Security Cooperation Agency is responsible for ensuring the ceiling is not breached (SAMM EDA.8).

Congress may exclude the value of naval vessel transfers from the limit when it enacts the legislation authorizing those transfers (SAMM EDA.8). That is why a large ship transfer does not necessarily consume the year's capacity.

4. Priority in the queue

Where demand exceeds what is available, the statute directs the order of delivery. Four groups take priority to the maximum extent feasible over delivery to other countries (22 U.S.C. 2321j(c)(2)):

• member countries of the North Atlantic Treaty Organization on the southern and southeastern flank of the alliance;
• major non-alliance allies on that same flank;
• Taiwan;
• the Philippines.

Where requests exceed assets, an allocation process runs. The implementing agency submits a proposed allocation plan within 30 days of receiving a request. A committee co-chaired by the Defense Security Cooperation Agency and the Department of State then develops a coordinated plan (SAMM EDA.6.1). Its published criteria include conventional arms transfer policy, combatant command priorities, regional balancing, and the potential impact on the ability of industry to sell new or used equipment. They also include the match between requirements and available items, and the partner's ability to use, support and afford to refurbish them.

5. Telling Congress before the transfer

Above a stated line, a transfer waits. Two categories are caught: excess articles that are significant military equipment, and excess articles valued at $7,000,000 or more in original acquisition cost. Neither may be transferred until 30 days after notice has been provided to the named congressional committees (22 U.S.C. 2321j(f)(1)). The requirement applies to transfers under the Foreign Assistance Act and under the Arms Export Control Act alike.

The statute prescribes the content of that notice (22 U.S.C. 2321j(f)(2)):

• the purposes for which the article is being provided, including whether it has been provided to that country before;
• an assessment of the impact on the military readiness of the United States;
• an assessment of the impact on the national technology and industrial base, and on the opportunity to sell new or used equipment to the recipient;
• the current value of the article and its value at acquisition.

Where a proposed transfer falls below the notification line, an internal determination is required instead before items are authorized for transfer (SAMM EDA.6.1). The parallel process for a new sale is described in congressional notification of arms sales.

6. What Congress is told in advance of the year

Excess transfers are also forecast. The annual arms sales report to Congress must include a list of the weapons systems that are significant military equipment, and the numbers of them, "that are believed likely to become available for transfer as excess defense articles during the next 12 months" (22 U.S.C. 2765(a)(13)).

A second reporting duty runs backwards rather than forwards. The justification documents must include a table giving an aggregate annual total of transfers in the preceding year by country. It is stated both in terms of offers and actual deliveries, and in terms of acquisition cost and current value, and it indicates whether each transfer was grant or sale (22 U.S.C. 2321j(h)).

7. Two categories with their own statutes

Naval vessels sit outside the ordinary process. A naval vessel in excess of 3,000 tons, or less than 20 years of age, may not be disposed of to another nation without authorizing legislation. That law must have been enacted after 5 August 1974, and it may authorize the vessel itself or its class (10 U.S.C. 8677(a)). Vessels below those thresholds still require written notice to the armed services committees and a 30 day wait (10 U.S.C. 8677(b)).

Two helicopter types carry a maintenance condition. Before an excess UH-1 or AH-1 is transferred to a foreign country for flight operations, all reasonable efforts must be made to ensure it receives maintenance and repair equivalent to the depot level work it would need in American service. That work is performed at no cost to the Department (10 U.S.C. 2581(a)). The exception is for salvage airframes provided solely as a source of spare parts (10 U.S.C. 2581(b)).

Key terms

Section 516(g)	The $500,000,000 annual ceiling on grant transfers. 22 U.S.C. 2321j(g).
National technology and industrial base	The interest protected by the determination at 22 U.S.C. 2321j(b)(1)(E) and 22 U.S.C. 2761(k).
Congressional notification	The 30 day advance notice for significant military equipment or articles valued at $7,000,000 or more.
Allocation plan	The mechanism used where requests for an item exceed the assets available.
Original acquisition cost	The measure used for the notification threshold, as distinct from the current value used for the ceiling.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

Conditions and ceilings are settled in Washington. What arrives still has to be received, moved and looked after. Sentfore provides secure movement, protective security, accommodation and site support in complex environments, and its principals have worked on overseas defense and security programs. Requirements can be sent through the contact page.