275. Memorandum From Secretary of State Vance to President Carter 1

SUBJECT

  • Foreign Military Sales Procedures Regarding C–130 Aircraft

When you approved my recommendation of June 212 to continue designation of the Lockheed C–130 military transport aircraft as “significant combat equipment”, you also asked me to inform you what had been done to improve Foreign Military Sales (FMS) procedures as they relate to the sale of these aircraft. You also inquired whether a non-weapon configuration would make it possible to sell these aircraft with minimum delay.

The C–130 is basically a military transport aircraft. It is not normally equipped with weapons, and has been sold to many countries. Thus far you have approved the sale of C–130s without armament configuration to Sudan, the Philippines, Korea, Bolivia and Zaire. The C–130 may be sold commercially if the total value of the sale is less than $25 million. Since three C–130s and related equipment cost more than [Page 686]this, commercial sales are effectively restricted to no more than two aircraft. Lockheed also makes a civilian model of the C–130 (the L–100 series) which does not meet some of the military specifications. In any event, most governments appear to prefer to purchase the military model on a government-to-government basis under FMS procedures.

The time required to process the government-to-government sale of a C–130 is divided as follows: 1) USG approval process (i.e., from receipt of a country request to purchase through completion of the statutory Congressional notification) and 2) the subsequent contracting process (time required for negotiation and signature of a contract with Lockheed) after the Congressional review period is completed.

Some delay in the USG approval process is attributable to the present requirement that, with the exception of NATO countries, Australia, New Zealand and Japan, we are required to send all proposed C–130 sales which require Congressional notification to you for approval. In order to save processing time, I recommend that you authorize me to approve sales of non-weapon configured C–130 aircraft worldwide, and refer to you only those proposed sales which clearly involve sensitive political aspects—e.g., for countries like Egypt.

With regard to the time involved in the contracting process, the Department of Defense informs me that in the past protracted negotiations between the U.S. Air Force and Lockheed appear to have been caused by Lockheed attempting to obtain the most favorable price in the knowledge that a government-to-government agreement had already been reached for a sale. The Department of Defense claims to have largely resolved with Lockheed the matter of delays in contract pricing by taking actions to enable Lockheed to continue its C–130 production line without interruption. Specifically, once a sale has received the required Executive and Congressional approvals, DOD now enters into letter contracts which permit Lockheed to proceed with production pending negotiation of a definitized contract. The Department of Defense informs me that it is also working more closely with Lockheed to avoid a production gap in the C–130 line due to crew training problems or delays in providing support equipment from US Government sources. We hope these actions will result in the contracting for sale of C–130 aircraft in a time span consistent with both the US and the contractor’s interests.

Recommendation:

That you authorize me to approve the sale worldwide of non-weapon configured C–130 aircraft, including notifications to Congress.3

  1. Source: Carter Library, National Security Affairs, Staff Material, Global Issues, Mathews Subject File, Box 4, Arms Transfers: Policy (General): 6–12/77. Confidential.
  2. See Document 273.
  3. Carter checked the “Disapprove” option and underneath wrote “Send to me for immediate approval—minimize delays—Indicate time required for each transaction. J.C.”