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                                                       Calendar No. 949
110th Congress                                                   Report
 2d Session                                                     110-451


                   NAVAL VESSEL TRANSFER ACT OF 2008


               September 10, 2008.--Ordered to be printed

           Mr. Dodd, from the Committee on Foreign Relations,
                        submitted the following


                         [To accompany S. 3052]

    The Committee on Foreign Relations, having had under 
consideration the bill S. 3052 to provide for the transfer of 
naval vessels to certain foreign recipients, reports favorably 
thereon and recommends that the bill do pass.



  I. Purpose..........................................................1
 II. Committee Action.................................................1
III. Discussion.......................................................1
 IV. Cost Estimate....................................................3
  V. Evaluation of Regulatory Impact..................................4
 VI. Changes in Existing Law..........................................4

                               I. Purpose

    The purpose of the Naval Vessel Transfer Act of 2008 is to 
authorize the President to transfer certain specified naval 
vessels to particular countries.

                          II. Committee Action

    S. 3052 was introduced on May 22, 2008 by Sens. Biden and 
Lugar. At a business meeting on July 29, 2008, the committee 
ordered S. 3052 reported favorably by voice vote, with no 

                            III. Discussion

    Pursuant to section 824(b) of the National Defense 
Authorization Act for Fiscal Year 1994, as amended, 10 U.S.C. 
7307(a), 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. Each year, the executive branch 
requests the needed legislation for the ship transfers that it 
wishes to offer to particular countries, either by grant or by 
    S. 3052 would provide the required approval for six 
transfers, as follows:

    To the Government of Pakistan, the Oliver Hazard Perry 
        class guided missile frigate McInerney (FFG-8);

    To the Government of Greece, the Osprey class minehunter 
        coastal ships Osprey (MHC-51) and Robin (MHC-54);

    To the Government of Chile, the Kaiser class oiler Andrew 
        J. Higgins (AO-190); and

    To the Government of Peru, the Newport class amphibious 
        tank landing ships Fresno (LST-1182) and Racine (LST-

These would all be grant transfers under section 516 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2321j).

    Section 2 contains four provisions that are traditional 
elements of ship transfer legislation. Section 2(b) provides 
that the value of a vessel transferred to another country on a 
grant basis pursuant to authority provided by this section 
shall not be counted against the aggregate value of excess 
defense articles transferred to countries in any fiscal year 
under section 516 of the Foreign Assistance Act of 1961 (22 
U.S.C. 2321j). Section 2(c) provides that any expense incurred 
by the United States in connection with a transfer authorized 
by this section shall be charged to the recipient 
(notwithstanding section 516(e)(1) of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2321j(e)(1)). Section 2(d) provides 
that, to the maximum extent practicable, the President shall 
require, as a condition of the transfer of a vessel under this 
section, that the country to which the vessel is transferred 
have such repair or refurbishment of the vessel as is needed, 
before the vessel joins the naval forces of that country, 
performed at a shipyard located in the United States, including 
a United States Navy shipyard. Section 2(e) provides that the 
authority provided by this bill will expire 2 years after the 
date of enactment of the bill.
    On April 25, 2008, the Secretary of the Navy, the Honorable 
Donald C. Winter, wrote to the chairman of the Committee on 
Foreign Relations that: ``Authority to transfer surplus vessels 
is an important aspect of our ship disposition strategy. It 
enables us to manage our inventory while strengthening ties 
with our naval allies by transferring ships that they desire.'' 
Secretary Winter added: ``The ships specified in this proposal 
are no longer required for service by the Navy. Expeditious 
enactment of the proposal is in the best interests of the 
Navy's Maritime Strategy as it will allow us to strengthen the 
capabilities of partner nations.'' An accompanying section-by-
section analysis of the proposal added the following 
information on this bill:

          These proposed transfers would improve the United 
        States' political and military relationships with close 
        allies. They would support strategic engagement goals 
        and regional security cooperation objectives. Active 
        use of former naval vessels by coalition forces in 
        support of regional priorities is more advantageous 
        than retaining vessels in the Navy's inactive fleet and 
        disposing of them by scrapping or another method.
          The United States would incur no costs in 
        transferring these naval vessels. The recipients would 
        be responsible for all costs associated with the 
        transfers, including maintenance, repairs, training, 
        and fleet turnover costs.

                           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, August 8, 2008.

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. 3052, the Naval 
Vessel Transfer Act of 2008.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
                                           Peter R. Orszag.


               Congressional Budget Office Cost Estimate

                                                    August 8, 2008.

                                S. 3052

                   Naval Vessel Transfer Act of 2008

                             JULY 29, 2008

    S. 3052 would authorize the grants of six naval vessels to 
foreign countries. In each case, the bill identifies the vessel 
and the recipient country. The authority to transfer those 
vessels would expire two years after enactment. Under the bill, 
any costs related to the transfer, including costs for 
refurbishment of the vessels, must be paid by the recipient 
country. Such amounts are typically paid directly to the 
private shipyard that does the work.
    Because the bill would authorize the transfer of those 
vessels by grant, instead of by sale, CBO estimates that 
enacting this bill would not affect direct spending or 
revenues. Implementing the bill would have no significant 
effects on spending subject to appropriation.
    S. 3052 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
    The CBO staff contact for this estimate is Sunita D'Monte. 
This estimate was approved by Peter H. Fontaine, 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.