
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 10USC2401]

 
                         TITLE 10--ARMED FORCES
 
                    Subtitle A--General Military Law
 
                PART IV--SERVICE, SUPPLY, AND PROCUREMENT
 
            CHAPTER 141--MISCELLANEOUS PROCUREMENT PROVISIONS
 
Sec. 2401. Requirement for authorization by law of certain 
        contracts relating to vessels and aircraft
        
    (a)(1) The Secretary of a military department may make a contract 
for the lease of a vessel or aircraft or for the provision of a service 
through use by a contractor of a vessel or aircraft only as provided in 
subsection (b) if--
        (A) the contract will be a long-term lease or charter; or
        (B) the terms of the contract provide for a substantial 
    termination liability on the part of the United States.

    (2) The Secretary of a military department may make a contract that 
is an agreement to lease or charter or an agreement to provide services 
and that is (or will be) accompanied by a contract for the actual lease, 
charter, or provision of services only as provided in subsection (b) if 
the contract for the actual lease, charter, or provision of services is 
(or will be) a contract described in paragraph (1).
    (b)(1) The Secretary may make a contract described in subsection 
(a)(1) if--
        (A) the Secretary has been specifically authorized by law to 
    make the contract;
        (B) before a solicitation for proposals for the contract was 
    issued the Secretary notified the Committee on Armed Services and 
    the Committee on Appropriations of the Senate and the Committee on 
    Armed Services and the Committee on Appropriations of the House of 
    Representatives of the Secretary's intention to issue such a 
    solicitation; and
        (C) the Secretary has notified those committees of the proposed 
    contract and provided a detailed description of the terms of the 
    proposed contract and a justification for entering into the proposed 
    contract rather than providing for the lease, charter, or services 
    involved through purchase of the vessel or aircraft to be used under 
    the contract, and a period of 30 days of continuous session of 
    Congress has expired following the date on which notice was received 
    by such committees.

    (2) For purposes of paragraph (1)(C), the continuity of a session of 
Congress is broken only by an adjournment of the Congress sine die, and 
the days on which either House is not in session because of an 
adjournment of more than three days to a day certain are excluded in a 
computation of such 30-day period.
    (c)(1) Funds may not be appropriated for any fiscal year to or for 
any armed force or obligated or expended for--
        (A) the long-term lease or charter of any aircraft or naval 
    vessel; or
        (B) for the lease or charter of any aircraft or naval vessel the 
    terms of which provide for a substantial termination liability on 
    the part of the United States,

unless funds for that purpose have been specifically authorized by law.
    (2) Funds appropriated to the Department of Defense may not be used 
to indemnify any person under the terms of a contract entered into under 
this section--
        (A) for any amount paid or due by any person to the United 
    States for any liability arising under the Internal Revenue Code of 
    1986; or
        (B) to pay any attorneys' fees in connection with such contract.

    (d)(1)(A) In this section, the term ``long-term lease or charter'' 
(except as provided in subparagraph (B)) means a lease, charter, service 
contract, or conditional sale agreement--
        (i) 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; or
        (ii) the initial term of which is for a period of less than five 
    years but which contains an option to renew or extend the agreement 
    for a period which, when added to the initial term (or any previous 
    renewal or extension), is five years or longer.

Such term includes the extension or renewal of a lease or charter 
agreement if the term of the extension or renewal thereof is for a 
period of five years or longer or if the term of the lease or charter 
agreement being extended or renewed was for a period of five years or 
longer.
    (B) In the case of an agreement under which the lessor first places 
the property in service under the agreement or the property has been in 
service for less than one year and there is allowable to the lessor or 
charterer an investment tax credit or depreciation for the property 
leased, chartered, or otherwise provided under the agreement under 
section 168 of the Internal Revenue Code of 1986 (unless the lessor or 
charterer has elected depreciation on a straightline method for such 
property), the term ``long-term lease or charter'' means a lease, 
charter, service contract, or conditional sale agreement--
        (i) the term of which is for a period of three years or longer; 
    or
        (ii) the initial term of which is for a period of less than 
    three years but which contains an option to renew or extend the 
    agreement for a period which, when added to the initial term (or any 
    previous renewal or extension), is three years or longer.

Such term includes the extension or renewal of a lease or charter 
agreement if the term of the extension or renewal thereof is for a 
period of three years or longer or if the term of the lease or charter 
agreement being extended or renewed was for a period of three years or 
longer.
    (2) For the purposes of this section, the United States shall be 
considered to have a substantial termination liability under a 
contract--
        (A) if there is an agreement by the United States under the 
    contract to pay an amount not less than the amount equal to 25 
    percent of the value of the vessel or aircraft under lease or 
    charter, calculated on the basis of the present value of the 
    termination liability of the United States under such charter or 
    lease (as determined under regulations prescribed by the Secretary 
    of Defense); or
        (B) if (as determined under regulations prescribed by the 
    Secretary of Defense) the sum of--
            (i) the present value of the amount of the termination 
        liability of the United States under the contract as of the end 
        of the term of the contract (exclusive of any option to extend 
        the contract); and
            (ii) the present value of the total of the payments to be 
        made by the United States under the contract (excluding any 
        option to extend the contract) attributable to capital-hire,

    is more than one-half the price of the vessel or aircraft involved.

    (e)(1) Whenever a request is submitted to Congress for the 
authorization of the long-term lease or charter of aircraft or naval 
vessels or for the authorization of a lease or charter of aircraft or 
naval vessels which provides for a substantial termination liability on 
the part of the United States, the Secretary of Defense shall submit 
with that request an analysis of the cost to the United States 
(including lost tax revenues) of any such lease or charter arrangement 
compared with the cost to the United States of direct procurement of the 
aircraft or naval vessels by the United States.
    (2) Any such analysis shall be reviewed and evaluated by the 
Director of the Office of Management and Budget and the Secretary of the 
Treasury within 30 days after the date on which the request and analysis 
are submitted to Congress. The Director and Secretary shall conduct such 
review and evaluation on the basis of the guidelines issued pursuant to 
subsection (f) and shall report to Congress in writing on the results of 
their review and evaluation at the earliest practicable date, but in no 
event more than 45 days after the date on which the request and analysis 
are submitted to the Congress.
    (3) Whenever a request is submitted to Congress for the 
authorization of funds for the Department of Defense for the long-term 
lease or charter of aircraft or naval vessels authorized under this 
section, the Secretary of Defense--
        (A) shall indicate in the request what portion of the requested 
    funds is attributable to capital-hire; and
        (B) shall reflect such portion in the appropriate procurement 
    account in the request.

    (f) The Director of the Office of Management and Budget and the 
Secretary of the Treasury shall jointly issue guidelines for determining 
under what circumstances the Department of Defense may use lease or 
charter arrangements for aircraft and naval vessels rather than directly 
procuring such aircraft and vessels.

(Added Pub. L. 98-94, title XII, Sec. 1202(a)(1), Sept. 24, 1983, 97 
Stat. 679; amended Pub. L. 98-525, title XII, Sec. 1232(a), Oct. 19, 
1984, 98 Stat. 2600; Pub. L. 100-26, Sec. 7(h)(1), Apr. 21, 1987, 101 
Stat. 282; Pub. L. 103-35, title II, Sec. 201(c)(6), May 31, 1993, 107 
Stat. 98; Pub. L. 104-106, div. A, title XV, Secs. 1502(a)(20), 
1503(a)(21), Feb. 10, 1996, 110 Stat. 504, 512; Pub. L. 106-65, div. A, 
title X, Sec. 1067(1), Oct. 5, 1999, 113 Stat. 774; Pub. L. 106-398, 
Sec. 1 [[div. A], title X, Sec. 1087(a)(13)], Oct. 30, 2000, 114 Stat. 
1654, 1654A-291.)

                       References in Text

    The Internal Revenue Code of 1986, referred to in subsecs. 
(c)(2)(A), (d)(1)(B), is classified generally to Title 26, Internal 
Revenue Code. Section 168 of the Internal Revenue Code of 1986 is 
classified to section 168 of Title 26.


                               Amendments

    2000--Subsec. (b)(1)(B). Pub. L. 106-398 substituted ``Committee on 
Appropriations of the House'' for ``Committees on Appropriations of the 
House''.
    1999--Subsec. (b)(1)(B). Pub. L. 106-65 substituted ``and the 
Committee on Armed Services'' for ``and the Committee on National 
Security''.
    1996--Subsec. (b)(1)(B). Pub. L. 104-106, Sec. 1502(a)(20)(A), 
substituted ``the Committee on Armed Services and the Committee on 
Appropriations of the Senate and the Committee on National Security and 
the Committees on Appropriations of the'' for ``the Committees on Armed 
Services and on Appropriations of the Senate and''.
    Subsec. (b)(1)(C). Pub. L. 104-106, Sec. 1502(a)(20)(B), substituted 
``those committees'' for ``the Committees on Armed Services and on 
Appropriations of the Senate and House of Representatives''.
    Subsec. (c)(2). Pub. L. 104-106, Sec. 1503(a)(21), struck out 
``pursuant to an authorization contained in the Department of Defense 
Authorization Act, 1984 (Public Law 98-94), or in any other law enacted 
after September 24, 1983,'' before ``may not be used''.
    1993--Subsec. (c)(2)(A). Pub. L. 103-35 substituted ``Internal 
Revenue Code of 1986'' for ``Internal Revenue Code of 1954''.
    1987--Subsec. (d)(1)(B). Pub. L. 100-26 substituted ``Internal 
Revenue Code of 1986'' for ``Internal Revenue Code of 1954''.
    1984--Subsec. (c). Pub. L. 98-525, Sec. 1232(a)(1), designated 
existing provisions as par. (1), redesignated as cls. (A) and (B) former 
cls. (1) and (2), respectively, and added par. (2).
    Subsec. (f). Pub. L. 98-525, Sec. 1232(a)(2), struck out at end 
``Such guidelines shall be issued not later than 90 days after the date 
of enactment of this section [Sept. 24, 1983].''


                             Effective Date

    Section 1202(a)(3) of Pub. L. 98-94 provided that: ``Section 2401 of 
title 10, United States Code, as added by paragraph (1), shall not apply 
in the case of any lease or charter agreement entered into by the 
Department of Defense before December 1, 1983.''


Long-Term Lease or Charter Authority for Certain Double-Hull Tankers and 
                          Oceanographic Vessels

    Pub. L. 103-160, div. A, title I, Sec. 126, Nov. 30, 1993, 107 Stat. 
1567, as amended by Pub. L. 104-106, div. D, title XLIII, 
Sec. 4321(i)(1)(A), Feb. 10, 1996, 110 Stat. 676, provided that:
    ``(a) Authority.--The Secretary of the Navy may enter into a long-
term lease or charter for any double-hull tanker or oceanographic vessel 
constructed in a United States shipyard after the date of the enactment 
of this Act [Nov. 30, 1993] using assistance provided under the National 
Shipbuilding Initiative.
    ``(b) Conditions on Obligation of Funds.--Unless budget authority is 
specifically provided in an appropriations Act for the lease or charter 
of vessels pursuant to subsection (a), the Secretary may not enter into 
a contract for a lease or charter pursuant to that subsection unless the 
contract includes the following provisions:
        ``(1) A statement that the obligation of the United States to 
    make payments under the contract in any fiscal year is subject to 
    appropriations being provided specifically for that fiscal year and 
    specifically for that lease or charter or that kind of vessel lease 
    or charter.
        ``(2) A commitment to obligate the necessary amount for each 
    fiscal year covered by the contract when and to the extent that 
    funds are appropriated for that lease or charter, or that kind of 
    lease or charter, for that fiscal year.
        ``(3) A statement that such a commitment given under paragraph 
    (2) does not constitute an obligation of the United States.
    ``(c) Inapplicability of Certain Laws.--A long-term lease or charter 
authorized by subsection (a) may be entered into without regard to the 
provisions of section 2401 or 2401a of title 10, United States Code.
    ``(d) Definition.--For purposes of subsection (a), the term `long-
term lease or charter' has the meaning given that term in subparagraph 
(A) of section 2401(d)(1) of title 10, United States Code.''


  Limitation on Use of Funds for Contracts for Lease or Charter of Any 
                      Vessel, Aircraft, or Vehicles

    Pub. L. 101-165, title IX, Sec. 9081, Nov. 21, 1989, 103 Stat. 1147, 
directed that no funds available to Department of Defense could be used 
to enter into any contract with term of eighteen months or more or to 
extend or renew any contract for term of eighteen months or more, for 
any vessel, aircraft, or vehicle, through lease, charter, or similar 
agreement without previously having been submitted to Committees on 
Appropriations, with further requirement with respect to contractual 
agreements which imposed certain termination liability on Government, 
prior to repeal by Pub. L. 103-355, title III, Sec. 3065(b), Oct. 13, 
1994, 108 Stat. 3337. See section 2401a of this title.


                         Issuance of Guidelines

    Section 1232(a)(2) of Pub. L. 98-525 provided in part that 
guidelines required to be issued under subsec. (f) of this section shall 
be issued not later than Oct. 31, 1984.


  Limitation on Funds Available to Department of Defense To Enter Into 
                    Contracts During Fiscal Year 1984

    Section 1202(d) of Pub. L. 98-94 provided that: ``Funds available to 
the Department of Defense may not be used to enter into any contract 
during fiscal year 1984 under section 2401 of title 10, United States 
Code, as added by subsection (a), the term of which is for 3 years or 
more, inclusive of any option for contract extension or renewal, for any 
vessels, aircraft, or vehicles, through a lease, charter, or similar 
agreement, that imposes an estimated termination liability (excluding 
the estimated value of the leased item at the time of termination) on 
the United States exceeding 50 percent of the original purchase value of 
the vessel, aircraft, or vehicle involved for which the Congress has not 
specifically provided budget authority for the obligation of 10 percent 
of such termination liability.''


   Limitation on Use of Funds Appropriated Pursuant to Authorizations 
       Contained in Department of Defense Authorization Act, 1984

    Section 1202(b) of Pub. L. 98-94, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``Funds 
appropriated pursuant to an authorization contained in this Act may not 
be used to indemnify any person under the terms of a contract entered 
into with the United States under section 2401 of title 10, United 
States Code (as added by subsection (a))--
        ``(1) for any amount paid or due by any person to the United 
    States for any liability arising under the Internal Revenue Code of 
    1986 [Title 26, Internal Revenue Code]; or
        ``(2) to pay any attorneys' fees in connection with such 
    contract.''

                  Section Referred to in Other Sections

    This section is referred to in section 7233 of this title.
