What are Excess Defense Articles?

The term Excess Defense Articles (EDA) is applied collectively to U.S. defense articles that are no longer needed by the U.S. armed forces. Such defense articles may be made available for sale under the FMS program [Section 21, AECA] or as grant (no cost) transfers to eligible foreign countries under the provisions of Section 516, FAA.

As defense articles become excess, they are screened to determine whether they may be sold to eligible countries through FMS procedures or transferred as grant-provided items under the various provisions of the FAA. The ultimate responsibility for determining if an item should be identified as excess rests with the MILDEP having control over the item.

Under the EDA process, each MILDEP determines what items are excess. Additionally, the MILDEPs must ensure that the items must also be excess to other MILDEPs, defense agencies, reserve components, and the National Guard before being offered to a foreign government. There are two general ways in which countries can request EDA. Countries may respond to MILDEP surveys of interest for EDA by the requested deadline. Countries may submit short lists of requirements to the MILDEP. Upon receipt, the MILDEP will determine whether the item is available as EDA. If not, the MILDEP will keep the request on file.

EDA sold through FMS procedures are priced on the basis of their condition as described in DoD 7000.14-R, Financial Management Regulation (FMR), Volume 15, Chapter 7. Before allowing the FMS sale of EDA, the President shall determine that the sale will not have an adverse impact on the U.S. technology and industrial base and, particularly, will not reduce the opportunities of the U.S. technology and industrial base to sell new or used equipment to the recipient country [Section 21(k), AECA]. Certain stipulations may also be put in place before excess defense articles are transferred by sale. For example, NDAA FY 2018 dictated that excess high mobility multipurpose wheeled vehicles must receive the same new, modernized powertrain and a modernized, armored or armor-capable compartment restored to like-new condition prior to transfer by sale or grant [Section 1276, P.L. 115-91]. Charges must be levied on such sales as well as on grant transfers (with certain exceptions) for the costs of Packing, Crating, Handling and Transportation (PCH&T). Charges for any requested spares support, training, repair work, or upgrades will also be levied.

P.L. 104-164, 21 July 96, simplified the then existing cumbersome grant EDA program by combining the five different EDA authorities into one. The new authority, a revised Section 516, FAA, authorizes the President to transfer EDA on a grant basis to countries for which receipt of such articles was justified pursuant to the annual Congressional Budget Justification for State, Foreign Operations, and Related Programs, for counternarcotics programs submitted under Section 634, FAA, or for which receipt of such articles was separately justified to Congress, for the FY in which the transfer is authorized. Each year DSCA identifies the eligible countries to Congress, after coordination with State (PM/RSAT). It must be noted that because a country might be eligible for EDA does not mean any EDA is available for transfer or that any available EDA can be transferred.

Grant EDA transfer limitations include the following:

• Item must be drawn from existing DoW stocks.
• No DoW procurement funds are to be used during the transfer.
• Transfer has no adverse impact on U.S. military readiness.
• Transfer is preferable to a transfer on a sales basis, after taking into account the potential proceeds from, and likelihood of, such sales and comparative foreign policy benefits that may accrue to the U.S. as the result of a transfer on either a grant or sales basis.
• Transfer has no adverse impact on U.S. technology and industrial base, and particularly, will not reduce the opportunity for the sale of a new or used article.
• Transfer is consistent with U.S. policy for the eastern Mediterranean (Turkey, Greece, and Cyprus) established under Section 620C, FAA.

A priority in delivery of grant EDA will be given to NATO member countries on the southern and southeastern flank (Portugal, Greece, and Turkey) and to major non-NATO allies (Israel, Egypt, and Jordan) on the southern and southeastern flanks of NATO [Section 516(c)(2), FAA]. The Philippines was legislatively included in this priority group [Section 1234, P.L. 107-228].

After priority in delivery of grant EDA to NATO countries and major non-NATO allies on the southern and southeastern flanks, priority in delivery of grant EDA will be afforded next to countries eligible for assistance authorized by the NATO Participation Act (NPA) of 1994 [Section 609, P.L. 104-208]. Initially, the latter group of eligible countries included Poland, Hungary, the Czech Republic, and Slovenia [Section 606, P.L. 104-208]. In July 1997, an invitation for NATO membership was extended to Poland, Hungary, and the Czech Republic. FY 1999 legislation added Romania, Estonia, Latvia, Lithuania, and Bulgaria to the NPA eligible country list [Section 2703, P.L. 105-277]. Section 4 of the Gerald B.H. Solomon Freedom Consolidation Act of 2002, P.L. 107-187, 10 June 2002, designated Slovakia as eligible to receive assistance under the NPA. This same act also endorsed the admission of the seven countries into the NATO Alliance. An invitation was extended in November 2002 to these same countries for entry into NATO in May 2004. The Senate promptly ratified the April 2003 Presidential proposal for these countries.

The NATO Freedom Consolidation Act of 2007, P.L. 110-17, 9 April 2007, Section 4(b)(1), added the non-NATO countries of Albania, Croatia, Georgia, Macedonia [Former Yugoslav Republic of Macedonia (FYROM)], and the Ukraine to the NPA EDA priority delivery list. This same legislation stated the sense of Congress that these countries be admitted to NATO as they become willing and able with a clear national intent to meet the responsibilities of membership.

The important factor in the acquisition of EDA from any source is the availability of both initial and follow-on support. Sales or transfers of excess defense articles do not follow the total package approach concept. Excess defense articles are transferred “as is, where is,” meaning that EDA does not include spares, support, publications, training or any other aspect of support. Care should be taken to ensure a prospective international partner has either an existing infrastructure or that one can be developed in order to support the introduction of EDA into the international partner’s inventory. Foreign governments interested in acquiring EDA should contact the U.S. SCO in their country. Since EDA is provided on an “as is, where is” basis, the associated costs for any refurbishment and subsequent packaging, crating, handling, and transportation of the defense article are generally the determining factor as to whether or not a country accepts the EDA, even if it is offered on a grant basis. These associated costs prove to be prohibitive to many countries wanting EDA equipment, resulting in a high percentage of EDA offers being declined. Most EDA articles are unserviceable and require major repair. Additionally, spare parts, tools, and manuals, if available, must be purchased separately. In some cases, no follow-on support is available since the MILDEPs no longer field the items. These associated costs often outweigh the benefit of the materiel being offered for transfer.

Major EDA transferred by the MILDEPs are generally priced at the fair market value. Grant-eligible recipients may receive the major end item at no cost, but they still pay, before delivery, for packing, crating, handling and transportation and any refurbishment bought on the case; the FMS administrative surcharge does not apply to the EDA grant line. Major EDA transferred by the MILDEPs is often in poor condition and requires extensive overhaul or refurbishment if the international partner intends to use it as a fully functioning item. The costs of such extensive repairs, if available, must be paid by the receiving international partner through an FMS case.

There has been an increase in interest in the DLA Disposition Services and how countries can find and acquire DoW excess property. The objective of this DLA FMS program is to maximize the reuse of excess property when such sales favorably contribute to both the U.S. and host country’s national security objectives. DLA Disposition Services provides an alternative low-cost method of acquiring non-lethal, demilitarized property through FMS.

DLA Disposition Services is the Department of War's disposal activity. DLA Disposition Services maximizes the return to the U.S. taxpayer by finding new homes for the property in other government agencies, non-profit organizations, the armed services, and foreign governments. Property remaining after this effort is cataloged and sold to the public. FMS is one of the many programs qualified to receive DLA Disposition Services property. To assist in this effort, DLA Disposition Services prepares and manages all of its own cases.