Sen. Edward Zorinsky (D-Neb.) said yesterday he will move soon to plug legal loopholes that allow U.S. military equipment worth millions of dollars to be leased, free or at nominal cost, to many countries without congressional knowledge and without any real accountability by the Pentagon.
Backed up by a draft report of a General Accounting Office investigation he initiated, Zorinsky said the situation amounts to an open invitation to circumvent laws and is an insult to taxpayers, and that the alleged lack of control by the Pentagon amounts to "an indication that people in government don't care."
Between 1975 and January 1981, the GAO report stated, $57.9 million in military equipment was leased rent-free. While this is a drop in the bucket in relation to the overall Pentagon budget, included were some items that did not go through the congressional approval process and later became controversial, such as the dispatch last year of 10 helicopters to Honduras and six others to El Salvador in January.
As the GAO report points out, neither country is eligible for such free military assistance under the Foreign Assistance Act, which limits the countries that can receive outright grants of U.S. military equipment to Spain, Portugal, Sudan and the Philippines. Thus, GAO argues, these rent-free leases "strengthen the argument for regarding them as another example of 'hidden' grant aid-type military assistance."
The U.S. Army placed a value of $925,000 on each helicopter, which also meant they could slip controls in the Arms Export Control Act and the recently enacted International Act, which requires reporting to Congress the transfer of property valued in excess of $1 million.
Zorinsky argues that by pricing each helicopter at less than $1 million and sending them one at a time, the Pentagon can get around these requirements. The senator and the GAO also contend these lower assessments on leased equipment are most often based on acquisition costs -- that is, the initial cost to the United States of buying the equipment -- rather than on the cost to replace it later in the U.S. inventory, which would be much higher.
Army and Air Force officials interviewed by GAO agreed that replacement cost would be the best value to use but said they have not done so because of lack of instruction on how leased property should be valued. The GAO concluded after its investigation that lack of attention to management of leases by the military was so widespread that it was virtually impossible to tell if countries were complying with rental terms.
The loophole that GAO and Zorinsky say needs to be closed grows out of another law, Section 2667 of Title 10 of the U.S. Code. It was enacted in 1947 and was intended to let the military lease real and personal property to domestic. U.S. corporations or state and local governments for mutually advantageous reasons. Since this act does not specifically mention lease to foreign countries, it has been increasingly used by the military for that purpose.
The GAO concludes that "this is tantamount to providing grant aid which should only be authorized under the Foreign Assistance Act." Congress, the GAO said, should amend the U.S. Code to prohibit this kind of leasing abroad. Such equipment transfers should be done only under the Foreign Assistance Act, the GAO said.