NATO support programs and foreign project contributions

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1. Buying through NATO’s support agency

Title 10 gives the Secretary of Defense several ways to work through North Atlantic Treaty Organization (NATO) bodies and to accept foreign money for particular projects. The first is the Support or Procurement Partnership Agreement (10 U.S.C. 2350d(a)(1)). The Secretary may conclude such agreements with other NATO members that take part in the NATO Support and Procurement Organization and its executive agencies. Their purpose is cooperative acquisition and logistics support for the armed forces of the parties. Each must follow the Organization’s charter and provide for common acquisition and logistics support of activities common to the participants.

An agreement may provide for the United States to transfer logistics support, supplies and services to the Organization (10 U.S.C. 2350d(a)(2)). It may also provide for the United States to acquire armaments and logistics support, supplies and services from it. Under an agreement, the Secretary may let the Organization contract for supplies, services, support and acquisition, including armaments for American requirements (10 U.S.C. 2350d(b)(1)). This applies to the extent the Secretary determines the Organization’s procedures are appropriate.

2. Sharing costs and following the rules

The Secretary may share the set-up costs of facilities the Organization uses to provide cooperative support (10 U.S.C. 2350d(b)(2)). The Secretary may also share the cost of a revolving fund for initial acquisition and replenishment of the Organization’s supply stocks. Every agreement must provide for joint management by the participants, and for equitable sharing of administrative costs and the costs of claims (10 U.S.C. 2350d(c)).

Ordinary rules still apply. Except as the section provides, the provisions of chapter 137 of title 10 apply to contracts the Secretary makes for the acquisition of logistics support under such an agreement (10 U.S.C. 2350d(d)). Transfers of defense articles or services to a NATO member or to the Organization for the purposes of such an agreement must follow chapter 138 of title 10 and the Arms Export Control Act (10 U.S.C. 2350d(e)). The authority adds to, and does not replace, the cross-servicing authority in subchapter I of that chapter and other law (10 U.S.C. 2350d(f)). Cooperative logistics support on sales cases is covered in cooperative logistics supply support arrangements.

3. The NATO airborne warning program

A separate section gives the Secretary special powers under the memorandums of understanding for NATO’s Airborne Warning and Control System (AWACS) program (10 U.S.C. 2350e(a)). The Secretary may waive reimbursement for auditing, quality assurance, codification, inspection, contract administration, acceptance testing, certification, and planning, programming and management services (10 U.S.C. 2350e(a)(1)). The waiver covers those functions when performed by personnel outside the Air Force AWACS program office. The Secretary may also waive any surcharge for administrative services otherwise chargeable (10 U.S.C. 2350e(a)(2)).

The Secretary may also assume contingent liability for three things (10 U.S.C. 2350e(a)(3)). They are program losses from the gross negligence of an American contracting officer, identifiable taxes, customs duties and other charges levied in the United States on the program, and the American share of unfunded termination liability. Contract authority under the section is effective each year only to the extent provided in appropriation acts (10 U.S.C. 2350e(b)). The covered memorandums are the 1978 multilateral memorandum on the NATO E-3A program, a 1984 operations and support memorandum, a 1990 modernization addendum and any follow-on support agreement (10 U.S.C. 2350e(c)).

4. An ombudsman for foreign partners

The Secretary of Defense must designate an official to act as ombudsman for foreign governments that are parties to memorandums of agreement with the United States on defense acquisition matters (10 U.S.C. 2350h). The ombudsman helps those governments’ officials understand and comply with Defense Department procedures and requirements relating to such agreements. Where appropriate, that help extends to the requirements of other departments and agencies.

5. NATO Security Investment Program projects

When NATO designates the United States as host nation for a project under the NATO Security Investment Program, the Secretary of Defense may accept the designation and carry out the project (10 U.S.C. 2350q(a)). Authorized expenditures, meaning project costs NATO has agreed to fund, may be paid from contributions, from Defense program appropriations that NATO directs toward the American share, or both (10 U.S.C. 2350q(b) and 10 U.S.C. 2350q(f)).

The Secretary may accept contributions from NATO and its member nations to carry out such a project (10 U.S.C. 2350q(c)(1)). Contributions go into an account for that project and remain available until spent (10 U.S.C. 2350q(c)(2)). Reimbursements for work already completed are credited to the appropriations used, if still unexpired, or otherwise to the program’s appropriations (10 U.S.C. 2350q(c)(3)). The designated construction agent may treat NATO project authorization amounts as budgetary resources for obligations (10 U.S.C. 2350q(d)). NATO may not agree to fund every necessary cost, such as the construction agent’s personnel costs, contract claims and conjunctive funding requirements that exceed NATO’s project authorization or standards (10 U.S.C. 2350q(e)(1)). The Secretary may then cover those costs from unobligated program military construction funds, on finding that completing the project is in the national interest (10 U.S.C. 2350q(e)(1)).

6. Contributions for relocating forces

The Secretary may also accept contributions from any nation because of, or in support of, relocating elements of the armed forces from or to any location within that nation (10 U.S.C. 2350k(a)). Contributions may be in dollars or the host nation’s currency, go into a separate account for each country, and stay available until spent (10 U.S.C. 2350k(a)). They may pay only for that relocation’s costs, such as design and construction, transportation, communications, supply and administration, and nonmilitary personnel costs (10 U.S.C. 2350k(b)). All other clearly identifiable expenses directly related to the relocation also qualify (10 U.S.C. 2350k(b)). They may come as an irrevocable letter of credit, drawing rights on a blocked host nation bank account, or cash held in a Treasury trust fund that accrues interest under section 9702 of title 31 (10 U.S.C. 2350k(c)). Other burden sharing contributions are covered in foreign contributions and burden sharing.

Key terms

Support or Procurement Partnership Agreement	An agreement for common acquisition and logistics support through NATO’s support agency.
Contingent liability	A cost the United States agrees to bear only if a stated event occurs.
Host nation	The country NATO designates to carry out an investment program project.
Authorized expenditures	Project costs NATO has agreed to fund.
Blocked account	A host nation account that cannot be drawn on without American approval.

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.

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