Defense articles no longer needed by the U.S. armed forces and eligible for transfer range from rations and uniforms to used vehicles, cargo aircraft, and ships.  According to the State Department, "EDA articles are transferred in an 'as is, where is' condition to the recipient….with the recipient responsible for any required refurbishment and repair of the items as well as any associated transportation costs."¹

Although most transfers of surplus U.S. stocks are given away at no cost, they may also be sold, loaned, or leased to the recipient country. All EDA transactions, like Foreign Military Sales (FMS) purchases, are coordinated by Security Assistance Organizations (SAOs) at U.S. embassies, individual armed services, and the Defense Security Cooperation Agency (DSCA).

The armed service overseeing a transfer determines the current value of EDA, which normally ranges between 5 and 50 percent of the articles' original value. The General Accounting Office has found values assigned by the services to be "generally unreliable," since they tend to be lower than normal.²

The maximum amount of EDA that a foreign government may acquire during any given fiscal year is $350 million, measured by current value (although exceptions can be made for high-cost items).

Limitations

Section 516 places the following restrictions on the President's power to transfer EDA to Latin America and the Caribbean:

1. The items must be drawn from existing Defense Department stocks;
2. The Defense Department cannot buy the items for the sole purpose of transferring them;
3. Giving up the defense articles must not harm the U.S. armed forces' level of readiness;
4. Transfers on a sales basis are preferred, after taking into account the potential proceeds from such sales and comparative foreign policy benefits of a grant; and
5. The transfer must not harm the U.S. technological and industrial base, and must not compete with the sale of a new or used article.

Under section 516, priority in delivery of EDA is given to NATO member countries and "major non-NATO allies" As of 2005, Argentina is the United States' only major non-NATO ally in the Western Hemisphere.

Transportation costs and any costs associated with refurbishing and repairing the transferred items must be paid by the recipient. The President can waive EDA transportation charges if:

1. He or she determines that to do so is in the U.S. national interest;
2. The recipient is a developing country receiving less than 10 million in other military assistance during the current fiscal year;
3. The total weight of the transfer does not exceed 25,000 pounds; and
4. The transportation is carried out on a "space available" basis.

Notification

If the original value of a proposed EDA transfer exceeds 7 million, section 516 requires that the President provide 30 days' advance notice to the Senate Foreign Relations Committee, the House International Relations Committee, and the Senate and House Appropriations Committees. This notification must include the following information:

1. A statement outlining the purposes for which the article is being provided, indicating whether the article has been provided to that country in the past;
2. An assessment of the transfer's impact on U.S. military readiness;
3. An assessment of the transfer's impact on the U.S. technological and industrial base, and of possible competition with sales of new or used equipment to that country; and
4. A statement of the article's current value and original value.

Reporting

Section 516 requires that the annual Congressional Presentation include amounts of EDA transferred to every country in the past fiscal year, separating sales and grants.

An accounting of EDA transfers to every country, broken down by category, is included in a report on arms sales required by section 655 of the FAA.

The Defense Department also maintains EDA information on an on-line computer "bulletin board," which can be accessed on the Defense Security Cooperation Agency's website at <http://www.dsca.osd.mil/programs/eda/search.asp>.