DOD Leases of Foreign-Built Ships: Background for Congress

Ronald O'Rourke
Specialist in Naval Affairs

Prior to the enactment of the FY2008 defense authorization act (H.R. 4986/P.L. 110-181 of January 28, 2008), 10 U.S.C. §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. §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 lease's completion), and a period of 30 days of continuous session of Congress has expired. 

The explanatory statement on the final version of the FY2010 DOD appropriations act (H.R. 3326/P.L. 111-118 of December 19, 2009) directed the Navy to update its March 2008 report on the leasing of foreign-built ships and address impacts on American seafarers, sealift capabilities, and naval shipbuilding. .


Date of Report: March 30, 2010
Number of Pages: 10
Order Number: RS22454
Price: $29.95

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