DOD Leases of Foreign-Built Ships: Background for Congress
LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
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Prior to the enactment of the FY2008 defense authorization act H.R. 4986P.L. 110-181 of January 28, 2008, 10 U.S.C. Section 2401 stated DOD may not lease a vessel or aircraft for a period of more than five years unless it is specifically authorized by law to make such a lease. Operating under this provision, the Department of Defense DOD in recent years used lease options and renewals to lease some foreign-built cargo ships for total periods of almost 10 years-a length of time that some observers argue effectively circumvented a legal requirement that U.S. military ships be built in U.S. shipyards. These observers, particularly the American Shipbuilding Association ASA, proposed reducing the current five-year legal limit on ship leases to two years for foreign-built ships. DOD opposed the idea, arguing that its ship leases are the most cost-effective way to meet its needs for the ships in question. Section 1011 of the FY2008 defense authorization act amended 10 U.S.C. Section 2401 to permit the Secretary of a military department to lease a vessel for a period of greater than two years, but less than five years, only if the Secretary provides a notification of the lease to the House and Senate Armed Services and Appropriations committees including a detailed description of its terms, a justification for entering it rather than purchasing the vessel, a determination that entering into it is the most cost-effective option and a plan for meeting the requirement upon the leases completion, and a period of 30 days of continuous session of Congress has expired.
- Economics and Cost Analysis
- Marine Engineering