REPAY Act

I 116TH CONGRESS 1ST SESSION H. R. 1033 To amend the Arms Export Control Act to modify certification and report requirements relating to sales of major defense equipment with respect to which nonrecurring costs of research, development, and production are waived or reduced under the Arms Export Control Act, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 7, 2019 Ms. SPEIER (for herself, Mr. JONES, Mr. RASKIN, Mr. MEADOWS, Mr. TED LIEU of California, Mr. KHANNA, and Mr. POCAN) introduced the fol- lowing bill; which was referred to the Committee on Foreign Affairs A BILL To amend the Arms Export Control Act to modify certifi- cation and report requirements relating to sales of major defense equipment with respect to which nonrecurring costs of research, development, and production are waived or reduced under the Arms Export Control Act, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Return Expenses Paid 4 And Yielded Act’’ or ‘‘REPAY Act’’. 5 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 2 •HR 1033 IH SEC. 2. MODIFICATION OF CERTIFICATION AND REPORT 1 REQUIREMENTS RELATING TO SALES OF 2 MAJOR DEFENSE EQUIPMENT WITH RESPECT 3 TO WHICH NONRECURRING COSTS OF RE- 4 SEARCH, DEVELOPMENT, AND PRODUCTION 5 ARE WAIVED OR REDUCED UNDER THE ARMS 6 EXPORT CONTROL ACT. 7 (a) CERTIFICATION.—Section 36(b) of the Arms Ex- 8 port Control Act (22 U.S.C. 2776(b)) is amended by add- 9 ing at the end the following: 10 ‘‘(7)(A) In the case of any letter of offer to sell any 11 major defense equipment for $14,000,000 or more, in ad- 12 dition to the other information required to be contained 13 in a certification submitted to the Congress under this 14 subsection, or a similar certification prior to finalization 15 of a letter of offer to sell, each such certification shall in- 16 clude the value of any charge or charges for the propor- 17 tionate amount of any nonrecurring costs of research, de- 18 velopment, and production of the major defense equipment 19 that was waived or reduced under section 21(e). 20 ‘‘(B) Each such certification shall also include infor- 21 mation on— 22 ‘‘(i) the type of waiver or reduction; 23 ‘‘(ii) the percentage of otherwise obligated non- 24 recurring costs with respect to which the waiver or 25 reduction comprises; 26 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 3 •HR 1033 IH ‘‘(iii) a justification for issuance of the waiver 1 or reduction; 2 ‘‘(iv) in the case of a waiver or reduction made 3 under paragraph (2)(A) of section 21(e)— 4 ‘‘(I) the manner in which a sale would sig- 5 nificantly advance standardization with the for- 6 eign countries or international organization de- 7 scribed in such section; and 8 ‘‘(II) the extent to which the sale’s signifi- 9 cance should be considered relative to the exist- 10 ing capabilities of the foreign country or inter- 11 national organization and the manner in which 12 the major defense equipment would enhance the 13 capacity of the country or organization in joint 14 operations; and 15 ‘‘(v) in the case of a waiver or reduction made 16 under paragraph (2)(B) of section 21(e)— 17 ‘‘(I) the military needs and ability to pay 18 of the foreign country or international organiza- 19 tion; 20 ‘‘(II) the price and capability of other rel- 21 evant options that are or likely would be consid- 22 ered by the foreign country or international or- 23 ganization for purchase in lieu of the major de- 24 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 4 •HR 1033 IH fense equipment described in the letter of offer; 1 and 2 ‘‘(III) the previous buying history and ex- 3 isting capabilities of the foreign country or 4 international organization.’’. 5 (b) REPORT.—Section 36(a) of the Arms Export 6 Control Act (22 U.S.C. 2776(a)) is amended— 7 (1) in paragraph (11), by striking ‘‘and’’ at the 8 end; 9 (2) in paragraph (12), by striking the period at 10 the end and inserting ‘‘; and’’; and 11 (3) by adding at the end the following: 12 ‘‘(13) with respect to requests to waive or re- 13 duce nonrecurring costs with respect to the sale of 14 major defense equipment for $14,000,000 or more 15 under this Act, a report on— 16 ‘‘(A) the total number of such requests 17 that have been approved or denied during the 18 quarter, including the total number of such re- 19 quests that are currently under review and 20 pending a decision; 21 ‘‘(B) for each such request— 22 ‘‘(i) an identification of the foreign 23 country or international organization re- 24 questing the waiver or reduction; 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 5 •HR 1033 IH ‘‘(ii) the total amount of nonrecurring 1 costs to be waived or reduced; 2 ‘‘(iii) a description of the major de- 3 fense equipment to be purchased; and 4 ‘‘(iv) the justification for the waiver or 5 reduction; and 6 ‘‘(C) for each such request that is ap- 7 proved, the actual amount of nonrecurring costs 8 that are waived or reduced that are attributable 9 to quantities of major defense equipment sold 10 under such request.’’. 11 (c) REPEAL OF WAIVER AUTHORITY IN CASE OF 12 SALES OF MAJOR DEFENSE EQUIPMENT ALSO BEING 13 PROCURED FOR USE BY UNITED STATES ARMED 14 FORCES.—Section 21(e)(2) of the Arms Export Control 15 Act (22 U.S.C. 2761(e)(2)) is amended— 16 (1) in subparagraph (B)— 17 (A) in the matter preceding clause (i)— 18 (i) by striking ‘‘The President’’ and 19 inserting ‘‘Except as provided subpara- 20 graphs (D) and (E), the President’’; and 21 (ii) by striking ‘‘that—’’ and all that 22 follows through ‘‘(i) imposition’’ and in- 23 serting ‘‘that imposition’’; 24 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 6 •HR 1033 IH (B) by striking ‘‘sale; or’’ and inserting 1 ‘‘sale.’’; and 2 (C) by striking clause (ii); and 3 (2) by inserting at the end the following new 4 subparagraphs: 5 ‘‘(D) The President may not waive the charge 6 or charges for a proportionate amount of any non- 7 recurring costs that would otherwise be considered 8 appropriate under paragraph (1)(B) for a particular 9 sale to a country or international organization for a 10 two-year period that begins on any of the following 11 dates: 12 ‘‘(i) The date of approval of a waiver 13 under paragraph (1)(B) of a charge or charges 14 that are valued at $16,000,000 or more under 15 this Act with respect to a sale to the country 16 or organization. 17 ‘‘(ii) The date that is the last day of any 18 five-year period in which the country or organi- 19 zation receives 15 or more waivers of a charge 20 or charges under paragraph (1)(B) with respect 21 to sales to the country or organization. 22 ‘‘(iii) The date that is the last day of any 23 five-year period in which the country or organi- 24 zation receives waivers of a charge or charges 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 7 •HR 1033 IH under paragraph (1)(B) that are valued at 1 $425,000,000 or more under this Act with re- 2 spect to sales to the country or organization. 3 ‘‘(E)(i) In the case of any proposed waiver of 4 the charge or charges which would otherwise be con- 5 sidered appropriate under paragraph (1)(B) for a 6 particular sale to a country or international organi- 7 zation of major defense equipment for $10,000,000 8 or more under this Act, the President shall submit 9 to the Speaker of the House of Representatives, the 10 Committee on Foreign Affairs of the House of Rep- 11 resentatives, and to the chairman of the Committee 12 on Foreign Relations of the Senate a notification 13 with respect to such proposed waiver. 14 ‘‘(ii) The President may not waive such charge 15 or charges if Congress, not later than 60 calendar 16 days after receiving such notification, enacts a joint 17 resolution prohibiting the proposed waiver.’’. 18 (d) MAXIMUM AGGREGATE AMOUNT OF CHARGES 19 FOR ADMINISTRATIVE SERVICES.—Section 21(e) of the 20 Arms Export Control Act (22 U.S.C. 2761(e)) is amend- 21 ed— 22 (1) in paragraph (1), by inserting ‘‘subject to 23 paragraph (4),’’ before ‘‘administrative services’’; 24 and 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 8 •HR 1033 IH (2) by adding at the end the following new 1 paragraph: 2 ‘‘(4)(A) For each fiscal year beginning on or 3 after the date of the enactment of the Return Ex- 4 penses Paid and Yielded Act, the President shall— 5 ‘‘(i) determine a maximum aggregate 6 amount of charges for administrative services 7 that would be required by paragraph (1)(A) 8 based on the ability of the Department of De- 9 fense to issue and administer letters of offer for 10 sale of defense articles or the sale of defense 11 services pursuant to this section or pursuant to 12 section 22 of this Act; and 13 ‘‘(ii) submit to Congress a report that con- 14 tains the determination and specifies the max- 15 imum aggregate amount of charges for adminis- 16 trative services. 17 ‘‘(B)(i) Except as provided in clause (ii), 18 charges for administrative services that are required 19 by paragraph (1)(A) may not exceed the maximum 20 aggregate amount of charges for administrative serv- 21 ices determined under subparagraph (A) for the fis- 22 cal year involved. 23 ‘‘(ii) The President may waive the requirement 24 of clause (i) on a case-by-case basis if the amount 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 9 •HR 1033 IH of charges for administrative services that are re- 1 quired by paragraph (1)(A) with respect to a sale of 2 defense articles or a sale of defense services would 3 exceed the maximum aggregate amount of charges 4 for administrative services determined under sub- 5 paragraph (A) for the fiscal year.’’. 6 (e) MODIFICATION OF ADMINISTRATIVE EX- 7 PENSES.— 8 (1) IN GENERAL.—Section 43(b) of the Arms 9 Export Control Act (22 U.S.C. 2792(b)) is amend- 10 ed— 11 (A) in paragraph (1), by adding ‘‘and’’ at 12 the end; 13 (B) in paragraph (2), by striking ‘‘; and’’ 14 and inserting a period; and 15 (C) by striking paragraph (3). 16 (2) CONFORMING AMENDMENT.—Section 17 21(e)(1)(A) of the Arms Export Control Act (22 18 U.S.C. 2761(e)(1)(A)) is amended by striking ‘‘and 19 section 43(c)’’. 20 (f) BIENNIAL REVIEW AND MODIFICATION OF USER 21 CHARGES.— 22 (1) IN GENERAL.—Notwithstanding any other 23 provision of law, the Secretary of Defense, acting 24 through the Director of the Defense Security Co- 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 10 •HR 1033 IH operation Agency, shall, not less than once every two 1 years— 2 (A) carry out a review of user charges 3 under the foreign military sales program and, 4 based on the results of the review, modify the 5 user charges as appropriate; and 6 (B) submit to the appropriate congres- 7 sional committees a report that contains the re- 8 sults of the review carried out under subpara- 9 graph (A) and a description of any user charges 10 that, based on the results of the review, were 11 modified under subparagraph (A). 12 (2) APPROPRIATE CONGRESSIONAL COMMIT- 13 TEES DEFINED.—In this subsection, the term ‘‘ap- 14 propriate congressional committees’’ means— 15 (A) the Committee on Armed Services and 16 the Committee on Foreign Affairs of the House 17 of Representatives; and 18 (B) the Committee on Armed Services and 19 the Committee on Foreign Relations of the Sen- 20 ate. 21 SEC. 3. REVIEW AND REPORT ON USE AND MANAGEMENT 22 OF ADMINISTRATIVE SURCHARGES UNDER 23 THE FOREIGN MILITARY SALES PROGRAM. 24 (a) REVIEW.— 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 11 •HR 1033 IH (1) IN GENERAL.—The Secretary of Defense, 1 acting through the Director of the Defense Security 2 Cooperation Agency, shall review options for expand- 3 ing the use of administrative surcharges under the 4 foreign military sales program, including practices 5 for managing administrative surcharges and con- 6 tract administrative services surcharges. 7 (2) MATTERS TO BE INCLUDED.—The review 8 conducted under paragraph (1) shall include the fol- 9 lowing: 10 (A) A determination of which specific ex- 11 penses are incurred by the United States Gov- 12 ernment in operation of the foreign military 13 sales program that the administrative surcharge 14 does not currently pay for. 15 (B) The estimated annual cost of each of 16 such specific expenses. 17 (C) An assessment of the costs and bene- 18 fits of funding such specific expenses through 19 the administrative surcharge, including any 20 data to support such an assessment. 21 (D) An assessment of how the Department 22 of Defense could calculate an upper bound of a 23 target range for the administrative surcharge 24 account and the contract administration serv- 25 VerDate Sep 11 2014 22:37 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1033.IH H1033 tkelley on DSKBCP9HB2PROD with BILLS 12 •HR 1033 IH ices surcharge account, including an assessment 1 of the costs and benefits of setting such a 2 bound. 3 (E) An assessment of how the Department 4 of Defense calculates the lower bound, or safety 5 level, for the administrative surcharge account 6 and the contract administration services sur- 7 charge account, including what specific factors 8 inform the calculation and whether such a 9 method for calculating the safety level is still 10 valid or should be revisited. 11 (F) An assessment of the process used by 12 the Department of Defense to review and set 13 rates for the administrative surcharge and the 14 contract administration services surcharge, in- 15 cluding the extent to which outside parties are 16 consulted and any proposals of the Department 17 of Defense may have for better ensuring that 18 the fee rates are set appropriately. 19 (G) Such other matters as the Secretary of 20 Defense d [Text truncated for display. 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