[Senate Report 110-139]
[From the U.S. Government Publishing Office]
Calendar No. 292
110th Congress Report
SENATE
1st Session 110-139
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NAVAL VESSEL TRANSFER ACT OF 2007
_______
July 31, 2007.--Ordered to be printed
Mr. Biden, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany S. 1565]
The Committee on Foreign Relations, having had under
consideration a bill (S. 1565) to provide for the transfer of
naval vessels to certain foreign recipients, reports favorably
thereon and recommends that the bill do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................1
IV. Cost Estimate....................................................2
V. Evaluation of Regulatory Impact..................................3
VI. Changes in Existing Law..........................................3
I. PURPOSE
This bill authorizes the transfer of a total of eight
excess naval vessels--two Oliver Hazard Perry class guided
missile frigates and six Osprey class coastal minehunters--to
Turkey, Lithuania, and Taiwan.
II. COMMITTEE ACTION
S. 1565 was introduced by Senator Biden on June 7, 2007.
Senator Lugar was an original cosponsor, and Senator Hagel
joined as a cosponsor on June 27, 2007. On June 27, 2007, the
Committee ordered the bill reported favorably by voice vote.
III. DISCUSSION
Section 824(b) of the National Defense Authorization Act
for Fiscal Year 1994, as amended (10 U.S.C. 7307(a)), requires
that a naval vessel that is in excess of 3,000 tons or that is
less than 20 years of age may not be disposed of to another
nation unless the disposition of that vessel is approved by law
enacted after August 5, 1974. Accordingly, section 2(a) of S.
1565 authorizes a grant of two guided missile frigates to
Turkey, one coastal minehunter ship to Turkey, and two coastal
minehunter ships to Lithuania. Section 2(b) authorizes the sale
and transfer of two coastal minehunter ships to Taiwan, and one
coastal minehunter ship to Turkey.
The U.S. Navy, with the approval of the Office of
Management and Budget, requested the authority to transfer the
ships named in the bill and assured the Committee on Foreign
Relations that the transfer of these excess defense articles
would not degrade the capabilities of the U.S. Navy and would
enable three allies to carry out important naval security
missions. The U.S. Navy estimates (using a formula in which the
original acquisition value of each ship is multiplied by a
coefficient based upon the condition of the ship) that the sale
of three coastal minehunter ships will result in payments of
$52.7 million by Taiwan and Turkey.
The bill also contains other provisions that are
traditionally included in ship transfer bills. Section 2(c)
provides that the value of any vessels transferred on a grant
basis will not count against the annual cap on transfers of
excess defense articles contained in Section 516 the Foreign
Assistance Act of 1961. Section 2(d) requires that the
recipient country pay for any costs incurred by the United
States in connection with the transfer. Section 2(e) directs
that, to the maximum extent possible, any repairs required for
one of these vessels before being transferred should be carried
out at a shipyard within the United States. Finally, section
2(f) provides that authority for ships to be transferred under
this Act shall be available for two years after the date of
enactment of this Act.
IV. COST ESTIMATE
In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the committee provides this
estimate of the costs of this legislation prepared by the
Congressional Budget Office.
United States Congress,
Congressional Budget Office,
Washington, DC, July 10, 2007.
Hon. Joseph R. Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1565, the Naval
Vessels Transfer Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sam
Papenfuss.
Sincerely,
Peter R. Orszag
Congressional Budget Office Cost Estimate
July 10, 2007.
S. 1565
S. 1565 would authorize the transfer of eight naval vessels
to foreign countries: five by grant and three by sale. In each
case, the bill identifies the vessel, the type of transfer, and
the recipient country. The authority to transfer those vessels
would expire two years after enactment. Under the bill, any
cost of refurbishment and transfer must be paid by the
recipient country and is typically paid directly to the private
shipyard that does the work.
Based on information from the Navy regarding the value of
those ships and recent experience with actual sales and grants,
CBO estimates that the sales would increase offsetting receipts
by a total of $53 million--$12 million in 2008 and $41 million
in 2009. (Asset sales are a credit against direct spending.)
Implementing the bill would not have a significant effect on
spending subject to appropriation.
S. 1565 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandate Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Sam Papenfuss.
This estimate was approved by Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. CHANGES IN EXISTING LAW
In compliance with paragraph 12 of Rule XXVI of the
Standing Rules of the Senate, the committee notes that no
changes to existing law are made by this bill.