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1 (May 22, 2008)

handle is hein.crs/crsuntaaaaz0001 and id is 1 raw text is: Order Code RS22454 Updated May 22, 2008 SCRS Report for Congress 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. Issue For Congress The issue for Congress is whether to retain the current five-year limit on Department of Defense (DOD) ship leases, or reduce the limit to two years for leases of foreign-built ships. The decision that Congress reaches could have implications for DOD capabilities, defense funding requirements, and the shipbuilding and merchant marine industries. 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 XII of Omnibus Budget Reconciliation Act of 1990 (H.R. 5835/P.L. 101-508 of November 5, 1990).1 Another 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. Congressional Research Service The Library of Congress Prepared for Members and Committees of Congress