Title 10 — Armed Forces
Part V · Chapter 257 — Contracts for Long-Term Lease or Charter of Vessels, Aircraft, and Combat Vehicles
§ 3674. Long-term lease or charter defined; substantial termination liability
Statutory text
Long-term Lease or Charter.—
General rule.—
In this chapter, the term “long-term lease or charter” (except as provided in paragraph (2)) means a lease, charter, service contract, or conditional sale agreement—
the term of which is for a period of five years or longer or more than one-half the useful life of the vessel, aircraft, or combat vehicle; or
the initial term of which is for a period of less than five years but which contains an option to renew or extend the agreement for a period which, when added to the initial term (or any previous renewal or extension), is five years or longer.
Such term includes the extension or renewal of a lease or charter agreement if the term of the extension or renewal thereof is for a period of five years or longer or if the term of the lease or charter agreement being extended or renewed was for a period of five years or longer.
Special rule.—
In the case of an agreement under which the lessor first places the property in service under the agreement or the property has been in service for less than one year and there is allowable to the lessor or charterer an investment tax credit or depreciation for the property leased, chartered, or otherwise provided under the agreement under section 168 of the Internal Revenue Code of 1986 (unless the lessor or charterer has elected depreciation on a straightline method for such property), the term “long-term lease or charter” means a lease, charter, service contract, or conditional sale agreement—
the term of which is for a period of three years or longer; or
the initial term of which is for a period of less than three years but which contains an option to renew or extend the agreement for a period which, when added to the initial term (or any previous renewal or extension), is three years or longer.
Such term includes the extension or renewal of a lease or charter agreement if the term of the extension or renewal thereof is for a period of three years or longer or if the term of the lease or charter agreement being extended or renewed was for a period of three years or longer.
Substantial Termination Liability.—
For the purposes of this chapter, the United States shall be considered to have a substantial termination liability under a contract—
if there is an agreement by the United States under the contract to pay an amount not less than the amount equal to 25 percent of the value of the vessel, aircraft, or combat vehicle under lease or charter, calculated on the basis of the present value of the termination liability of the United States under such charter or lease (as determined under regulations prescribed by the Secretary of Defense); or
if (as determined under regulations prescribed by the Secretary of Defense) the sum of—
the present value of the amount of the termination liability of the United States under the contract as of the end of the term of the contract (exclusive of any option to extend the contract); and
the present value of the total of the payments to be made by the United States under the contract (excluding any option to extend the contract) attributable to capital-hire,
is more than one-half the price of the vessel, aircraft, or combat vehicle involved.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021
Pub. L. 116–283 div. A title XVIII § 1825(a) · 134 Stat. 3388
Enacted · 10 U.S.C. § 3674
(Added and amended Pub. L. 116–283, div. A, title XVIII, § 1825(a), (f), Jan. 1, 2021, 134 Stat. 4206, 4207.)
Source evidence
Code source credit
(Added and amended Pub. L. 116–283, div. A, title XVIII, § 1825(a), (f), Jan. 1, 2021, 134 Stat. 4206, 4207.)Enacted provision · exact public law section
(a) New Chapters.— Part V of subtitle A of title 10, United States Code, as added by section 801 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115–232), is amended by inserting after chapter 255 the following new chapters: “CHAPTER 257— CONTRACTS FOR LONG-TERM LEASE OR CHARTER OF VESSELS, AIRCRAFT, AND COMBAT VEHICLES “Sec. “3671. Requirement for authorization by law of certain contracts relating to vessels, aircraft, and combat vehicles. “3672. Requirement of specific authorization by law for appropriation, and for obligation and expenditure, of funds for certain contracts relating to aircraft, naval vessels, and combat vehicles. “3673. Limitation on indemnification. “3674. Long-term lease or charter defined; substantial termination liability. “3675. Capital lease or lease-purchase treated as an acquisition. “3676. Guidelines. “3677. Contracts for lease or use of vessels for a term of greater than two years but less than five years: prior notice to congressional committees. “3678. Contracts with terms of 18 months or more: limitation. “§ 3671. Requirement for authorization by law of certain contracts relating to vessels, aircraft, and combat vehicles “§ 3672. Requirement of specific authorization by law for appropriation, and for obligation and expenditure, of funds for certain contracts relating to aircraft, naval vessels, and combat vehicles “§ 3673. Limitation on indemnification “§ 3674. Long-term lease or charter defined; substantial termination liability “§ 3675. Capital lease or lease-purchase treated as an acquisition “§ 3676. Guidelines “§ 3677. Contracts for lease or use of vessels for a term of greater than two years but less than five years: prior notice to congressional committees “§ 3678. Contracts with terms of 18 months or more: limitation “CHAPTER 258— OTHER TYPES OF CONTRACTS USED FOR PROCUREMENTS FOR PARTICULAR PURPOSES “Sec. “3681. Leasing of commercial vehicles and equipment. “§ 3681. Leasing of commercial vehicles and equipment” .William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021
Pub. L. 116–283 § 1825(f)(1) · 134 Stat. 3388
Struck · 10 U.S.C. § 3674
Pub. L. 116–283, § 1825(f)(1), transferred subsec. (d) of section 2401 of this title to this section, struck out subsec. (d) designation at beginning
Redesignated · 10 U.S.C. § 3674
Pub. L. 116–283, § 1825(f)(1), transferred subsec. (d) of section 2401 of this title to this section, redesignated pars. (1) and (2) of such former subsec. (d) as subsecs. (a) and (b), respectively
Source evidence
Code amendment note
Pub. L. 116–283, § 1825(f)(1), transferred subsec. (d) of section 2401 of this title to this section, struck out subsec. (d) designation at beginning, and redesignated pars. (1) and (2) of such former subsec. (d) as subsecs. (a) and (b), respectively.Enacted provision · exact public law section
(1) Transfer.— Subsection (d) of section 2401 of such title is transferred to section 3674 of such title, as added by subsection (a), inserted after the section heading, and amended— (A) by striking the subsection designation; and (B) by redesignating paragraphs (1) and (2) as subsections (a) and (b), respectively.William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021
Pub. L. 116–283 § 1825(f)(2)(A) · 134 Stat. 3388
Redesignated · 10 U.S.C. § 3674(a)
Pub. L. 116–283, § 1825(f)(2)(A), (C), (D), (E), after redesignation of section 2401(d)(1) of this title as subsec. (a) of this section, inserted subsec. heading
Redesignated · 10 U.S.C. § 3674(a)
Pub. L. 116–283, § 1825(f)(2)(A), (C), (D), (E), after redesignation of section 2401(d)(1) of this title as subsec. (a) of this section, redesignated subpar. (A)(i) and (ii) and its concluding provisions as par. (1)(A)(i) and (ii) and (B), respectively
Redesignated · 10 U.S.C. § 3674(a)
Pub. L. 116–283, § 1825(f)(2)(A), (C), (D), (E), after redesignation of section 2401(d)(1) of this title as subsec. (a) of this section, redesignated subpar. (B)(i) and (ii) and its concluding provisions as par. (2)(A)(i) and (ii) and (B), respectively
Redesignated · 10 U.S.C. § 3674(a)
Pub. L. 116–283, § 1825(f)(2)(A), (C), (D), (E), after redesignation of section 2401(d)(1) of this title as subsec. (a) of this section, inserted par. headings
Source evidence
Code amendment note
Subsec. (a). Pub. L. 116–283, § 1825(f)(2)(A), (C), (D), (E), after redesignation of section 2401(d)(1) of this title as subsec. (a) of this section, inserted subsec. heading, redesignated subpar. (A)(i) and (ii) and its concluding provisions as par. (1)(A)(i) and (ii) and (B), respectively, redesignated subpar. (B)(i) and (ii) and its concluding provisions as par. (2)(A)(i) and (ii) and (B), respectively, and inserted par. headings.Enacted provision · exact public law section
(A) by striking “(A) In this section” and inserting “ Long-term Lease or Charter.— “(1) General rule.— “(A) In this chapter” ;William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021
Pub. L. 116–283 § 1825(f)(2)(A) · 134 Stat. 3388
Substituted · 10 U.S.C. § 3674(a)(1)(A)
Pub. L. 116–283, § 1825(f)(2)(A), (B), substituted “In this chapter” for “In this section” in introductory provisions
Substituted · 10 U.S.C. § 3674(a)(1)(A)
Pub. L. 116–283, § 1825(f)(2)(A), (B), substituted “paragraph (2)” for “subparagraph (B)” in introductory provisions
Source evidence
Code amendment note
Subsec. (a)(1)(A). Pub. L. 116–283, § 1825(f)(2)(A), (B), substituted “In this chapter” for “In this section” and “paragraph (2)” for “subparagraph (B)” in introductory provisions.Enacted provision · exact public law section
(A) by striking “(A) In this section” and inserting “ Long-term Lease or Charter.— “(1) General rule.— “(A) In this chapter” ;William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021
Pub. L. 116–283 § 1825(f)(3) · 134 Stat. 3388
Redesignated · 10 U.S.C. § 3674(b)
Pub. L. 116–283, § 1825(f)(3), after redesignation of section 2401(d)(2) of this title as subsec. (b) of this section, inserted heading
Redesignated · 10 U.S.C. § 3674(b)
Pub. L. 116–283, § 1825(f)(3), after redesignation of section 2401(d)(2) of this title as subsec. (b) of this section, substituted “this chapter” for “this section” in introductory provisions
Redesignated · 10 U.S.C. § 3674(b)
Pub. L. 116–283, § 1825(f)(3), after redesignation of section 2401(d)(2) of this title as subsec. (b) of this section, redesignated subpar. (A) as par. (1) and subpar. (B) and its cls. (i) and (ii) as par. (2) and subpars. (A) and (B), respectively
Source evidence
Code amendment note
Subsec. (b). Pub. L. 116–283, § 1825(f)(3), after redesignation of section 2401(d)(2) of this title as subsec. (b) of this section, inserted heading, substituted “this chapter” for “this section” in introductory provisions, and redesignated subpar. (A) as par. (1) and subpar. (B) and its cls. (i) and (ii) as par. (2) and subpars. (A) and (B), respectively.Enacted provision · exact public law section
(3) Amendments to new 3674(b).— Subsection (b) of such section 3674, as so redesignated, is amended— (A) by inserting “Substantial Termination Liability.—” before “For the purposes of”; (B) by striking “this section” and inserting “this chapter”; (C) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively; and (D) in paragraph (2), as so redesignated, by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively.
12 of 12 references resolved to an enrolled provision
Editorial Notes
References in Text
Section 168 of the Internal Revenue Code of 1986, referred to in subsec. (a)(2)(A), is classified to section 168 of Title 26, Internal Revenue Code.
Codification
The text of subsec. (d) of section 2401 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1825(f), was based on Pub. L. 98–94, title XII, § 1202(a)(1), , 97 Stat. 679; Pub. L. 100–26, § 7(h)(1), , 101 Stat. 282; Pub. L. 109–163, div. A, title VIII, § 815(a)(1), , 119 Stat. 3381.
Amendments
2021—Pub. L. 116–283, § 1825(f)(1), transferred subsec. (d) of section 2401 of this title to this section, struck out subsec. (d) designation at beginning, and redesignated pars. (1) and (2) of such former subsec. (d) as subsecs. (a) and (b), respectively.
Subsec. (a). Pub. L. 116–283, § 1825(f)(2)(A), (C), (D), (E), after redesignation of section 2401(d)(1) of this title as subsec. (a) of this section, inserted subsec. heading, redesignated subpar. (A)(i) and (ii) and its concluding provisions as par. (1)(A)(i) and (ii) and (B), respectively, redesignated subpar. (B)(i) and (ii) and its concluding provisions as par. (2)(A)(i) and (ii) and (B), respectively, and inserted par. headings.
Subsec. (a)(1)(A). Pub. L. 116–283, § 1825(f)(2)(A), (B), substituted “In this chapter” for “In this section” and “paragraph (2)” for “subparagraph (B)” in introductory provisions.
Subsec. (b). Pub. L. 116–283, § 1825(f)(3), after redesignation of section 2401(d)(2) of this title as subsec. (b) of this section, inserted heading, substituted “this chapter” for “this section” in introductory provisions, and redesignated subpar. (A) as par. (1) and subpar. (B) and its cls. (i) and (ii) as par. (2) and subpars. (A) and (B), respectively.
Statutory Notes and Related Subsidiaries
Effective Date
Section and amendment by Pub. L. 116–283 effective , with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title.
Credits
(Added and amended Pub. L. 116–283, div. A, title XVIII, § 1825(a), (f), , 134 Stat. 4206, 4207.)