H.R. 3138 — Foreign Military Sales Reform Act of 2025

This section increases dollar thresholds for congressional notification and reporting requirements applicable to certain commercial and government-to-government sales and transfers of defense articles and services under the Arms Export Control Act (AECA). (As background, these thresholds in AECA §§3(d), 36(b), and 36(c) [22 U.S.C. 2753(d), 2776(b), and (c)] determine when the President must notify congressional committees prior to consenting to sales via commercial exports or Foreign Military Sales, or report proposed transfers, allowing Congress 30 days to review and object via joint resolution.) The changes are as follows: (1) In AECA §3(d)— (A) for notifications of commercial sales of major defense equipment, from $14 million to $23 million, and of other defense articles and services, from $50 million to $83 million; and (B) in provisions governing sales to NATO and major non-NATO allies, the same increases. (2) In AECA §36(b)— (A) for prior notifications of Foreign Military Sales exceeding $14 million (major defense equipment), $50 million (other articles/services), or $200 million (total contract value), to $23 million, $83 million, and $332 million, respectively; (B) in provisions for sales to NATO and major non-NATO allies, the same increases; and (C) for notifications of sales under Department of Defense security cooperation authorities (i.e., building partner capacity programs), from $25 million to $42 million (major defense equipment), $100 million to $166 million (other articles/services), and $300 million to $500 million (total contract value). (3) In AECA §36(c), for notifications of proposed transfers of defense articles— (A) from $14 million to $23 million (major defense equipment) and $50 million to $83 million (other articles/services); and (B) for transfers under security cooperation authorities, from $25 million to $42 million (major defense equipment) and $100 million to $166 million (other articles/services). (Thus, fewer proposed sales and transfers will require prior congressional notification.)

This section directs the Office of the Inspector General of the Department of State to submit to Congress a report on any activities involving the structuring of payments to circumvent congressional notification and review thresholds for transfers of defense articles and services under the Arms Export Control Act.

This section prohibits Federal employees from intentionally or knowingly structuring, assisting in structuring, or attempting to structure transfers of defense articles and defense services under the Arms Export Control Act to circumvent congressional reporting thresholds under that Act.

This section establishes penalties for Department of State employees found to have knowingly structured payments relating to transfers of defense articles or defense services to circumvent congressional notification and review requirements under the Arms Export Control Act, (1) barring such employees from federal employment and (2) subjecting them to civil penalties of $100,000.