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1 1 (October 31, 2008)

handle is hein.crs/crsajgs0001 and id is 1 raw text is: Order Code RS22454 Updated October 31, 2008 DOD Leases of Foreign-Built Ships: Background for Congress Ronald O'Rourke Specialist in Naval Affairs Foreign Affairs, Defense, and Trade Division Summary The Department of Defense (DOD) in recent years has leased some foreign-built cargo ships for total periods, including options and renewals, of almost 10 years - a length of time that some observers argue effectively circumvents a legal requirement that U.S. military ships be built in U.S. shipyards. These observers, particularly the American Shipbuilding Association (ASA), have proposed reducing the current five-year legal limit on ship leases to two years for foreign-built ships. DOD has opposed the idea, arguing that its ship leases are the most cost-effective way to meet its needs for the ships in question. This CRS report will be updated when events warrant. Current Law Under 10 U.S.C. §2401, 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. Other laws and regulations relating to DOD leases of equipment include 41 U.S.C. § 11, Appendix B of Office of Management and Budget (OMB) Circular A-11, OMB Circular A-94, and the Budget Enforcement Act of 1990, which is Title XIII of Omnibus Budget Reconciliation Act of 1990 (H.R. 5835/P.L. 101-508 of November 5, 1990).1 Another legal provision - 10 U.S.C. §7309 - states that no vessel to be constructed for any of the armed forces may be constructed in a foreign shipyard. Recent DOD Leases of Foreign-Built Ships DOD's Military Sealift Command (MSC), which operates sealift (i.e., cargo transport and prepositioning) ships, in recent years has leased some foreign-built sealift 110 U.S.C. §2401(a) and (b) state that the secretary of a military department may make a contract for a long-term lease or charter if the secretary has been specifically authorized by law to make the contract. 10 U.S.C. §2401(d)(1)(A) defines a long-term lease or charter as one the term of which is for a period of five years or longer or more than one-half the useful life of the vessel or aircraft.