(2) The establishment of priorities in the procurement, delivery, and allocation of military equipment shall, under the direction of the President, be determined by the Secretary of Defense.

(e) 228 (1) Each contract for sale entered into under sections 21, 22, 29, and 30 227 of this Act, and each contract entered into under section 27(d) of this Act,229 shall provide that such contract may be canceled in whole or in part, or its execution suspended, by the United States at any time under unusual or compelling circumstances if the national interest so requires.

(2)(A) Each export license issued under section 38 of this Act shall provide that such license may be revoked, suspended, or amended by the Secretary of State, without prior notice, whenever the Secretary deems such action to be advisable.

(B) Nothing in this paragraph may be construed as limiting the regulatory authority of the President under this Act.

(3) There are authorized to be appropriated from time to time such sums as may be necessary (A) to refund moneys received from purchasers under contracts of sale entered into under sections 21, 22, 29, and 30 227 of this Act, or under contracts entered into under sec. 27(d) of this Act,229 that are canceled or suspended under this subsection to the extent such moneys have previously been disbursed to private contractors and United States Government agencies for work in progress, and (B) to pay such damages and costs that accrue from the corresponding cancellation or suspension of the existing procurement contracts or United States Government agency work orders involved.

(f) 230 The President shall, to the maximum extent possible and consistent with the purposes of this Act, use civilian contract personnel in any foreign country to perform defense services sold under this Act.

Sec. 43.231 Administrative Expenses.-(a) Funds made available under other law for the operations of United States Government agencies carrying out functions under this Act shall be available for the administrative expenses incurred by such agencies under this Act.

(b) 232 Charges for administrative services calculated under section 21(e)(1)(A) of this Act shall include recovery of administrative expenses and official reception and representation expenses 233 incurred by any department or agency of the United States Government, including any mission or group thereof, in carrying out functions under this Act when

(1) such functions are primarily for the benefit of any foreign country;

228 Subsec. (e) was added by sec. 213 of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 745).

229 The reference to sec. 27(d) was added by sec. 115(b)(3) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 210).

230 Subsec. (f) was added by sec. 605(b) of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 768).

231 22 U.S.C. 2792.

232 Subsec. (b), as added by sec. 214 of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 746), was amended and restated by sec. 7(d) of the International Security Assistance Act of 1977 (Public Law 95-92; 91 Stat. 617).

233 The reference to reception and representation expenses was added by sec. 120(1) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat.

(2) such expenses are not directly and fully charged to, and reimbursed from amounts received for, sale of defense services under section 21(a) of this Act; and

(3) 234 such expenses are neither salaries of the Armed Forces of the United States nor represent unfunded estimated costs of civilian retirement and other benefits.

(c) 235 Not more than $72,500 of the funds derived from charges for administrative services pursuant to section 21(e)(1)(A) of this Act may be used each fiscal year for official reception and representation expenses.

Sec. 44.236 Statutory Construction.-No provision of this Act shall be construed as modifying in any way the provisions of the Atomic Energy Act of 1954, as amended, or section 7307 of title 10 of the United States Code.

Sec. 45. Statutes Repealed and Amended. (a) Sections 521, 522, 523, 524(b)(3), 525, 634(g), and 640 of the Foreign Assistance Act of 1961, as amended, are hereby repealed.

(b) Part III of the Foreign Assistance Act of 1961, as amended, is amended as follows:

(1) Section 622(b) is amended by striking out "or sales".

(2) Section 622(c) is amended by striking out "and sales" and "or sales".

(3) Section 632(d) is amended by striking out "sections 506, 522, and 523," in the first sentence and inserting in lieu thereof "section 506".

(4) Section 634(d) is amended by inserting "or any other" between "under this" and "Act" in the fourth sentence.

(5) Section 644(m) is amended by striking out “and sales” in the first sentence of the paragraph following numbered paragraph (3).

(c) References in law to the provisions of law repealed by subsection (a) of this section shall hereafter be deemed to be references to this Act or appropriate provisions of this Act. Except for the laws specified in section 44, no other provision of law shall be deemed to apply to this Act unless it refers specifically to this Act or refers generally to sales of defense articles and defense services under any Act.

Sec. 46.237 Savings Provisions.-Except as may be expressly provided to the contrary in this Act, all determinations, authorizations, regulations, orders, contracts, agreements, and other actions issued, undertaken, or entered into under authority of any provisions of law repealed by section 45(a) shall continue in full force and effect until modified by appropriate authority.

Sec. 47.238 Definitions.-For purposes of this Act, the term

234 Sec. 9104(b)(1) of the Department of Defense Appropriations Act, 1990 (Public Law 101165; 103 Stat. 1152) added par. (3).

235 Subsec. (c), as added by sec. 19(b) of the International Security Assistance Act of 1979 (Public Law 96-92; 93 Stat. 709), was repealed by sec. 734(a)(10) of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1560). The information previously contained in the annual report required by subsec. (c) is now required by sec. 25(ax6) of this Act. Subsequently, a new subsec. (c) was added by sec. 120(2) of Public Law 99-83 (99 Stat. 204).

236 22 U.S.C. 2793.

237 22 U.S.C. 2341 note.

238 22 U.S.C. 2794 note. Sec. 47 was added by sec. 25(12) of the FA Act of 1973.

(1) "excess defense article" has the meaning provided by section 644(g) of the Foreign Assistance Act of 1961;

(2) "value" means, in the case of an excess defense article, except as otherwise provided in sec. 21(a), 239 not less than the greater of— (A) the gross cost incurred by the United States Government in repairing, rehabilitating, or modifying such article, plus the scrap value; or

(B) the market value, if ascertainable;

(3) 240 "defense article", except as provided in paragraph (7) of this section, includes

(A) any weapon, weapons system, munition, aircraft, vessel, boat, or other implement of war,

(B) any property, installation, commodity, material, equipment, supply, or goods used for the purposes of making military sales,

(C) any machinery, facility, tool, material, supply, or other item necessary for the manufacture, production, processing, repair, servicing, storage, construction, transportation, operation, or use of any article listed in this paragraph, and

(D) any component or part of any article listed in this paragraph, but does not include merchant vessels or (as defined by the Atomic Energy Act of 1954) source material (except uranium depleted in the isotope 235 which is incorporated in defense articles solely to take advantage of high density or pyrophoric characteristics unrelated to radioactivity),241 byproduct material, special nuclear material, production facilities, utilization facilities, or atomic weapons or articles involving Restricted Data;

(4) 240 "defense service", except as provided in paragraph (7) of this section, includes any service, test, inspection, repair, training, publication, technical or other assistance, or defense information (as defined in section 644(e) of the Foreign Assistance Act of 1961) used for the purposes of making military sales, but does not include design and construction services under section 29 of this Act; 242

(5) 240 "training" includes formal or informal instruction of foreign students in the United States or overseas by officers or employees of the United States, contract technicians, or contractors (including instruction at civilian institutions), or by correspondence courses, technical, educational, or information publications and media of all kinds, training aid, orientation, training exercise, and military advice to foreign military units and forces;

(6) 240 "major defense equipment" means any item of significant military 243 equipment on the United States Munitions List having

239 This reference to sec. 21(a) was added by sec. 102(b) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat 197).

240 Sec. 215 of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 746) added pars. (3), (4), (5), (6), and (7).

241 The parenthetical phrase was added by sec. 22 of the International Security Assistance Act of 1979 (Public Law 96-92; 93 Stat. 710). See also sec. 110 of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3138), page 507.

242 The words, "but does not include design and construction services under section 29 of this Act" were added by sec. 105(f) of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3135).

243 Sec. 1211 of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 279) inserted "military" in lieu of "combat".

a nonrecurring research and development cost of more than $50,000,000 or a total production cost of more than $200,000,000; (7) 240 "defense articles and defense services" means, with respect to commercial exports subject to the provisions of section 38 of this Act, those items designated by the President pursuant to subsection (a)(1) of such section; 244

(8) 245 "design and construction services" means, with respect to sales under section 29 of this Act, the design and construction of real property facilities, including necessary construction equipment and materials, engineering services, construction contract management services relating thereto, and technical advisory assistance in the operation and maintenance of real property facilities provided or performed by any department or agency of the Department of Defense or by a contractor pursuant to a contract with such department or agency; and 244

(9) 244 "significant military equipment" means articles—

(A) for which special export controls are warranted because of the capacity of such articles for substantial military utility or capability; and

(B) identified on the United States Munitions List.

Chapter 5-SPECIAL DEFENSE ACQUISITION FUND 246 Sec. 51.247 Special Defense Acquisition Fund. (a)(1) Under the direction of the President and in consultation with the Secretary of State, the Secretary of Defense shall establish a Special Defense Acquisition Fund (hereafter in this chapter referred to as the "Fund"), to be used as a revolving fund separate from other accounts, under the control of the Department of Defense, to finance the acquisition of defense articles and defense service in anticipation of their transfer pursuant to this Act, the Foreign Assistance Act of 1961, or as otherwise authorized by law, to eligible foreign countries and international organizations, and may acquire such articles and services with the funds in the Fund as he may determine. Acquisition under this chapter of items for which the initial issue quantity requirements for United States Armed Forces have not been fulfilled and are not under current procurement contract shall be emphasized when compatible with security assistance requirements for the transfer of such items.

(2) Nothing in this chapter may be construed to limit or impair any responsibilities conferred upon the Secretary of State or the Secretary of Defense under this Act or the Foreign Assistance Act of 1961.

(3) 248 The Fund may be used to keep on continuous order such defense articles and defense services as are assigned by the Depart

244 Sec. 144 of Public Law 104-164 (110 Stat. 1434) struck out "and" at the end of para. (7); struck out the period at the end of para. (8) and inserted in lieu thereof "; and"; and added a new para. (9).

245 Par. (8) was added by sec. 105(f) of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3135).

246 Chapter 5 was added by sec. 108(a) of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1522).

247 22 U.S.C. 2795.

248 Sec. 121 (a) and (b) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 204), added 51(a)(3) and amended sec. 51(b).

Sec. 114(c) of title 10 U.S.C., limited the size of the Special Defense Acquisition Fund to $1,070,000,000.

ment of Defense for integrated management by a single agency thereof for the common use of all military departments in anticipation of the transfer of similar defense articles and defense services to foreign countries and international organizations pursuant to this Act, the Foreign Assistance Act of 1986, or other law.

(4) 249 The Fund shall also be used to acquire defense articles that are particularly suited for use for narcotics control purposes and are appropriate to the needs of recipient countries, such as small boats, planes (including helicopters), and communications equipment.

(b) 248 The Fund shall consist of

(1) collections from sales made under letters of offer issued pursuant to section 21(a)(1)(A) of this Act representing the actual value of defense articles not intended to be replaced in stock,

(2) collections from sales representing the value of asset use charges (including contractor rental payments for United States Government-owned plant and production equipment) and charges for the proportionate recoupment of nonrecurring research, development, and production costs, and

(3) collections from sales made under letters of offer (or transfers made under the Foreign Assistance Act of 1961) of defense articles and defense services acquired under this chapter, representing the value of such items calculated in accordance with subparagraph (B) or (C) of section 21(a)(1) or section 22 of this Act or section 644(m) of the Foreign Assistance Act of 1961, as appropriate,

together with such funds as may be authorized and appropriated or otherwise made available for the purposes of the Fund.

(c)(1) The size of the Fund may not exceed such dollar amount as is prescribed in section 114(c) of title 10, United States Code, 250 For purposes of this limitation, the size of the Fund is the amounts in the Fund plus the value (in terms of acquisition cost) of the defense articles acquired under this chapter which have not been transferred from the Fund in accordance with this chapter.

(2) Amounts in the Fund shall be available for obligation in any fiscal year only to such extent or in such amounts as are provided in advance in appropriation Acts.251

249 Sec. 4 of the International Narcotics Control Act of 1989 (Public Law 101-231; 103 Stat. 1957) added par. (4). Sec. 145(b) of Public Law 104-164 (110 Stat. 1434) struck out designation for subpara. (A), and struck out subpara. (B), which had required that information relating to acquisitions under this section be included in an annual report to Congress.

250 Sec. 114(c) of title 10, U.S.C., was originally codified at sec. 138(g) of title 10, U.S.C.. Sec. 138(g) of title 10, U.S.C., as added by sec. 109(b) of Public Law 97-113 (95 Stat. 1524) and amended by sec. 1103 of the DOD Authorization Act, 1983, (Public Law 97-252; 96 Stat. 738), provided that the Special Defense Acquisition Fund "may not exceed $300,000,000 in fiscal year 1982, may not exceed $600,000,000 in fiscal year 1983, and may not exceed $900,000,000 in fiscal year 1984 or any fiscal year thereafter." The DOD Authorization Act, 1986, sec. 1403, (Public Law 99-145; 99 Stat. 743) changed the amount of the program ceiling to $1,000,000,000. Sec. 1304(a) of the DOD Authorization Act, 1987, (Public Law 99-661; 100 Stat. 3816) increased the ceiling to $1,070,000,000. Public Law 99-433, the DOD Reorganization Act of 1986, redesignated sec. 138(g) of title 10 as sec. 114(c).

251 Title III of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1995 (Public Law 103-306; 108 Stat. 1622), as amended by sec. 536 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1998 (Public Law 105118; 111 Stat. 2416), provided the following:

Continued