S. 2018, a bill to modify certain limitations and exclusions regarding defense articles and requirements regarding security assistance and sales with respect to the Republic of Cyprus

S. 2018 would allow the Administration to waive restrictions on transferring defense articles to the Republic of Cyprus for a 5-year period. Under current law, the Administration may waive those restrictions for one fiscal year if it determines that doing so is essential to the national security interests of the United States. Extending the waiver authority may affect the timing of foreign military sales and direct commercial sales of defense articles and services to the Republic of Cyprus compared with what would happen under current law and thus could affect the timing of the collection and spending of associated fees. CBO estimates that the net change in direct spending would be less than $500,000.

Both types of sales affect direct spending. U.S. defense articles and services are exported or transferred to foreign countries through the Foreign Military Sales (FMS) program, which is managed by the Department of Defense. Those countries pay all costs associated with such sales, and the amounts received in the FMS trust fund are available for obligation without further appropriation. Cash flows to and from that trust fund are classified as direct spending. The Department of State manages the Direct Commercial Sales program and requires defense manufacturers, exporters, and brokers of defense articles and services to register with its Directorate of Defense Trade Controls. The directorate charges registration fees and can spend those fees without further appropriation.

The CBO staff contact for this estimate is Caroline Dorminey. The estimate was reviewed by Christina Hawley Anthony, Deputy Director of Budget Analysis.