Steve Cohen: “this is an amendment which I am offering, actually, on behalf of the administration. It is something that involves what…”

“this is an amendment which I am offering, actually, on behalf of the administration. It is something that involves what we call research and development recoupment. The state of affairs is as such: The U.S. companies that sell defense equipment abroad are charged a fee by the Department of Defense for the purpose of recouping the research and development investment that the Department has made in developing the equipment. These fees can run anywhere from 5 percent of the unit cost to as high as 25 percent of the unit cost. These recoupment fees often put our industries at a substantial competitive disadvantage because the fees result in higher sales costs, leading some of the buyers to simply purchase foreign-produced systems, instead. The Bush administration eliminated the R&D recoupment fee for commercial arms sales, but in the case of foreign military sales, so-called FMS, those in which the U.S. Government acts as a middleman, the fee is actually required by law. Last year--let me emphasize this--last year the Defense Authorization Act included a provision to allow the President to waive the fee under two conditions.”