[USC02] 10 USC Ch. 763: PROCUREMENT
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10 USC Ch. 763: PROCUREMENT
From Title 10—ARMED FORCESSubtitle B—ArmyPART IV—SERVICE, SUPPLY, AND PROCUREMENT

CHAPTER 763—PROCUREMENT

Sec.
7532.
Factories and arsenals: manufacture at.
7536.
Equipment: post bakeries, schools, kitchens, and mess halls.
7540.
Architectural and engineering services.
7541.
Army arsenals: treatment of unutilized or underutilized plant-capacity costs.
7542.
Technical data packages for large-caliber cannon: prohibition on transfers to foreign countries; exception.
7543.
Army industrial facilities: sales of manufactured articles or services outside Department of Defense.
7544.
Army industrial facilities: cooperative activities with non-Army entities.

        

Amendments

2018Pub. L. 115–232, div. A, title VIII, §808(e)(4), (f)(1), Aug. 13, 2018, 132 Stat. 1839, redesignated chapter 433 of this title as this chapter and items 4532 to 4544 as 7532 to 7544, respectively.

2014Pub. L. 113–291, div. A, title III, §323(b), Dec. 19, 2014, 128 Stat. 3343, added item 4532 and struck out former item 4532 "Factories and arsenals: manufacture at; abolition of".

2004Pub. L. 108–375, div. A, title III, §353(b), Oct. 28, 2004, 118 Stat. 1861, added item 4544.

2000Pub. L. 106–398, §1 [[div. A], title III, §342(b)], Oct. 30, 2000, 114 Stat. 1654, 1654A-65, added item 4541.

1993Pub. L. 103–160, div. A, title I, §158(a)(2), title VIII, §828(a)(5), Nov. 30, 1993, 107 Stat. 1582, 1713, struck out items 4531 "Authorization", 4533 "Army ration", 4534 "Subsistence supplies: contract stipulations; place of delivery on inspection", 4535 "Exceptional subsistence supplies: purchase without advertising", 4537 "Military surveys and maps: assistance of United States mapping agencies", 4538 "Unserviceable ammunition: exchange and reclamation", and 4541 "Gratuitous services of officers of the Army Reserve" and added item 4543.

1986Pub. L. 99–500, §101(c) [title IX, §9036(b)(2)], Oct. 18, 1986, 100 Stat. 1783–82, 1783-108, and Pub. L. 99–591, §101(c) [title IX, §9036(b)(2)], Oct. 30, 1986, 100 Stat. 3341–82, 3341-108; Pub. L. 99–661, div. A, title XII, §1203(a)(2), Nov. 14, 1986, 100 Stat. 3969, amended analysis identically adding item 4542.

1982Pub. L. 97–258, §2(b)(9)(A), Sept. 13, 1982, 96 Stat. 1056, added item 4541.

1970Pub. L. 91–482, §2A, Oct. 21, 1970, 84 Stat. 1082, struck out item 4539 "Horses and mules".

§7532. Factories and arsenals: manufacture at

The Secretary of the Army shall have supplies needed for the Department of the Army made in factories or arsenals owned by the United States, so far as those factories or arsenals can make those supplies on an economical basis.

(Aug. 10, 1956, ch. 1041, 70A Stat. 254, §4532; Pub. L. 113–291, div. A, title III, §323(a), Dec. 19, 2014, 128 Stat. 3343; renumbered §7532, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Historical and Revision Notes
Revised sectionSource (U.S. Code)Source (Statutes at Large)
4532(a)

4532(b)

5:181–4(e).

50:55.

June 28, 1950, ch. 383, §101(e), 64 Stat. 264.

R.S. 1666.

The words "Except as otherwise provided by law", in 5:181–4(e), are omitted, since there is no law within the scope of the exception. The word "made" is substituted for the words "manufactured or produced". The words "United States" are substituted for the word "Government", in 5:181–4(e). The words "which he considers" are substituted for the words "as, in his judgment", in 50:55. The words "useless or", in 50:55, are omitted as surplusage.

Amendments

2018Pub. L. 115–232 renumbered section 4532 of this title as this section.

2014Pub. L. 113–291 struck out "; abolition of" after "manufacture at" in section catchline, struck out subsec. (a) designation before "The Secretary", and struck out subsec. (b) which read as follows: "The Secretary may abolish any United States arsenal that he considers unnecessary".

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.

§7536. Equipment: post bakeries, schools, kitchens, and mess halls

Money necessary for the following items for the use of enlisted members of the Army may be spent from appropriations for regular supplies:

(1) Equipment for post bakeries.

(2) Furniture, textbooks, paper, and equipment for post schools.

(3) Tableware and mess furniture for kitchens and mess halls.

(Aug. 10, 1956, ch. 1041, 70A Stat. 254, §4536; renumbered §7536, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Historical and Revision Notes
Revised sectionSource (U.S. Code)Source (Statutes at Large)
4536 10:1334. June 13, 1890, ch. 423 (1st proviso under "Quartermaster's Department"), 26 Stat. 152.

The words "Money necessary * * * may be spent" are substituted for the words "There may be expended * * * the amounts required". The word "bakeries" is substituted for the words "bake house to carry on post bakeries". The words "each and all" are omitted as surplusage.

Amendments

2018Pub. L. 115–232 renumbered section 4536 of this title as this section.

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.

§7540. Architectural and engineering services

(a) Whenever he considers that it is advantageous to the national defense and that existing facilities of the Department of the Army are inadequate, the Secretary of the Army may, by contract or otherwise, employ the architectural or engineering services of any person outside that Department for producing and delivering designs, plans, drawings, and specifications needed for any public works or utilities project of the Department.

(b) The fee for any service under this section may not be more than 6 percent of the estimated cost, as determined by the Secretary, of the project to which it applies.

(c) Sections 305, 3324, and 7204, chapter 51, and subchapters III, IV, and VI of chapter 53 of title 5 do not apply to employment under this section.

(Aug. 10, 1956, ch. 1041, 70A Stat. 255, §4540; Pub. L. 89–718, §28, Nov. 2, 1966, 80 Stat. 1119; Pub. L. 95–454, title VII, §703(c)(3), title VIII, §801(a)(3)(I), Oct. 13, 1978, 92 Stat. 1217, 1222; Pub. L. 96–513, title V, §512(16), Dec. 12, 1980, 94 Stat. 2930; renumbered §7540, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Historical and Revision Notes
Revised sectionSource (U.S. Code)Source (Statutes at Large)
4540(a) 5:221 (1st sentence, less last 15 words). Aug. 7, 1939, ch. 511, §2, 53 Stat. 1240.
4540(b) 5:221 (less 1st sentence).
4540(c) 5:221 (last 15 words of 1st sentence).

In subsection (a), the words "and providing that in the opinion" are omitted as covered by the words "whenever he considers". The words "needed for" are substituted for the words "required for the accomplishment of".

In subsection (c), reference is made in substance to the Classification Act of 1949, instead of the Classification Act of 1923 referred to in the source statute, since section 1106(a) of the Classification Act of 1949, 63 Stat. 972, provides that all references in other acts to the Classification Act of 1923 should be considered to refer to the Classification Act of 1949.

Amendments

2018Pub. L. 115–232 renumbered section 4540 of this title as this section.

1980—Subsec. (c). Pub. L. 96–513 substituted "and 7204, chapter 51, and subchapters III, IV, and VI of chapter 53 of title 5" for "5101–5115, 5331–5338, 5341, 5342, and 7204 of title 5 and subchapter VI of chapter 53 of title 5".

1978—Subsec. (c). Pub. L. 95–454, §801(a)(3)(I), inserted reference to subchapter VI of chapter 53 of title 5.

Pub. L. 95–454, §703(c)(3), substituted "7204" for "7154".

1966—Subsec. (c). Pub. L. 89–718 substituted "Sections 305, 3324, 5101–5115, 5331–5338, 5341, 5342, and 7154 of title 5" for "Sections 1071–1153 of title 5".

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.

Effective Date of 1980 Amendment

Amendment by Pub. L. 96–513 effective Dec. 12, 1980, see section 701(b)(3) of Pub. L. 96–513, set out as a note under section 101 of this title.

Effective Date of 1978 Amendment

Amendment by section 703(c)(3) of Pub. L. 95–454 effective 90 days after Oct. 13, 1978, see section 907 of Pub. L. 95–454, set out as a note under section 1101 of Title 5, Government Organization and Employees.

Amendment by section 801(a)(3)(I) of Pub. L. 95–454 effective on first day of first applicable pay period beginning on or after 90th day after Oct. 13, 1978, see section 801(a)(4) of Pub. L. 95–454, set out as an Effective Date note under section 5361 of Title 5.

§7541. Army arsenals: treatment of unutilized or underutilized plant-capacity costs

(a) Estimate of Costs.—The Secretary of the Army shall include in the budget justification documents submitted to Congress in support of the President's budget for a fiscal year submitted under section 1105 of title 31 an estimate of the funds to be required in that fiscal year to cover unutilized and underutilized plant-capacity costs at Army arsenals.

(b) Use of Funds.—Funds appropriated to the Secretary of the Army for a fiscal year to cover unutilized and underutilized plant-capacity costs at Army arsenals shall be used in such fiscal year only for such costs.

(c) Treatment of Costs.—(1) The Secretary of the Army shall not include unutilized and underutilized plant-capacity costs when evaluating the bid of an Army arsenal for purposes of the arsenal's contracting to provide a good or service to a Government agency.

(2) When an Army arsenal is serving as a subcontractor to a private-sector entity with respect to a good or service to be provided to a Government agency, the cost charged by the arsenal shall not include unutilized and underutilized plant-capacity costs that are funded by a direct appropriation.

(d) Definitions.—In this section:

(1) The term "Army arsenal" means a Government-owned, Government-operated defense plant of the Department of the Army that manufactures weapons, weapon components, or both.

(2) The term "unutilized and underutilized plant-capacity costs" means the costs associated with operating and maintaining the facilities and equipment of an Army arsenal that the Secretary of the Army determines are required to be kept for mobilization needs, in those months in which the facilities and equipment are not used or are used only 20 percent or less of available work days.

(Added Pub. L. 106–398, §1 [[div. A], title III, §342(a)], Oct. 30, 2000, 114 Stat. 1654, 1654A-64, §4541; renumbered §7541, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Prior Provisions

Prior sections 7541 to 7541b were renumbered sections 8761 to 8761b of this title, respectively.

Amendments

2018Pub. L. 115–232 renumbered section 4541 of this title as this section.

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.

§7542. Technical data packages for large-caliber cannon: prohibition on transfers to foreign countries; exception

(a) General Rule.—Funds appropriated to the Department of Defense may not be used—

(1) to transfer to a foreign country a technical data package for a defense item being manufactured or developed in an arsenal; or

(2) to assist a foreign country in producing such a defense item.


(b) Exception.—The Secretary of the Army may use funds appropriated to the Department of Defense to transfer a technical data package, or to provide assistance, described in subsection (a) if—

(1) the transfer or provision of assistance is to a friendly foreign country (as determined by the Secretary of Defense in consultation with the Secretary of State);

(2) the Secretary of the Army determines that such action—

(A) would have a clear benefit to the preservation of the production base for the production of cannon at the arsenal concerned; and

(B) would not transfer technology (including production techniques) considered unique to the arsenal concerned, except as provided in subsection (e); and


(3) the Secretary of Defense enters into an agreement with the country concerned described in subsection (c) or (d).


(c) Coproduction Agreements.—An agreement under this subsection shall be in the form of a Government-to-Government Memorandum of Understanding and shall include provisions that—

(1) prescribe the content of the technical data package or assistance to be transferred to the foreign country participating in the agreement;

(2) require that production by the participating foreign country of the defense item to which the technical data package or assistance relates be shared with the arsenal concerned;

(3) subject to such exceptions as may be approved under subsection (f), prohibit transfer by the participating foreign country to a third party or country of—

(A) any defense article, technical data package, technology, or assistance provided by the United States under the agreement; and

(B) any defense article produced by the participating foreign country under the agreement; and


(4) require the Secretary of Defense to monitor compliance with the agreement and the participating foreign country to report periodically to the Secretary of Defense concerning the agreement.


(d) Cooperative Project Agreements.—An agreement under this subsection is a cooperative project agreement under section 27 of the Arms Export Control Act (22 U.S.C. 2767) which includes provisions that—

(1) for development phases describe the technical data to be transferred and for the production phase prescribe the content of the technical data package or assistance to be transferred to the foreign country participating in the agreement;

(2) require that at least the United States production of the defense item to which the technical data package or assistance relates be carried out by the arsenal concerned; and

(3) require the Secretary of Defense to monitor compliance with the agreement.


(e) Licensing Fees and Royalties.—The limitation in subsection (b)(2)(B) shall not apply if the technology (or production technique) transferred is subject to nonexclusive license and payment of any negotiated licensing fee or royalty that reflects the cost of development, implementation, and prove-out of the technology or production technique. Any negotiated license fee or royalty shall be placed in the operating fund of the arsenal concerned for the purpose of capital investment and technology development at that arsenal.

(f) Transfers to Third Parties.—A transfer described in subsection (c)(3) may be made if—

(1) the defense article, technical data package, or technology to be transferred is a product of a cooperative research and development program or a cooperative project in which the United States and the participating foreign country were partners; or

(2) the President—

(A) complies with all requirements of section 3(d) of the Arms Export Control Act (22 U.S.C. 2753(d)) with respect to such transfer; and

(B) certifies to Congress, before the transfer, that the transfer would provide a clear benefit to the production base of the United States for large-caliber cannon.


(g) Notice and Reports to Congress.—(1) The Secretary of the Army shall submit to Congress a notice of each agreement entered into under this section.

(2) The Secretary shall submit to Congress a semi-annual report on the operation of this section and of agreements entered into under this section.

(h) Arsenal Defined.—In this section, the term "arsenal" means a Government-owned, Government-operated defense plant that manufactures large-caliber cannon.

(Added Pub. L. 99–500, §101(c) [title IX, §9036(b)(1)], Oct. 18, 1986, 100 Stat. 1783–82, 1783-107, and Pub. L. 99–591, §101(c) [title IX, §9036(b)(1)], Oct. 30, 1986, 100 Stat. 3341–82, 3341-107, §4542; Pub. L. 99–661, div. A, title XII, §1203(a)(1), Nov. 14, 1986, 100 Stat. 3968; amended Pub. L. 101–189, div. A, title VIII, §806, Nov. 29, 1989, 103 Stat. 1489; Pub. L. 102–190, div. A, title X, §§1061(a)(24), 1086, Dec. 5, 1991, 105 Stat. 1473, 1483; renumbered §7542, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Codification

Pub. L. 99–591 is a corrected version of Pub. L. 99–500.

Pub. L. 99–500, Pub. L. 99–591, and Pub. L. 99–661 added identical sections.

Prior Provisions

A prior section 7542 was renumbered section 8762 of this title.

Amendments

2018Pub. L. 115–232 renumbered section 4542 of this title as this section.

1991—Subsec. (b)(1). Pub. L. 102–190, §1086(a), substituted "friendly foreign country" for "member nation of the North Atlantic Treaty Organization or a country designated as a major non-NATO ally".

Subsec. (c)(3). Pub. L. 102–190, §§1061(a)(24)(A), 1086(b)(1), amended par. (3) identically, substituting "subsection (f)" for "subsection (d)" in introductory provisions.

Subsec. (f). Pub. L. 102–190, §§1061(a)(24)(B), 1086(b)(2), amended subsec. identically, substituting "subsection (c)(3)" for "subsection (b)(3)" in introductory provisions.

1989—Subsec. (b)(1). Pub. L. 101–189, §806(a)(1), substituted "a member nation of the North Atlantic Treaty Organization or a country designated as a major non-NATO ally" for "a friendly foreign country".

Subsec. (b)(2)(B). Pub. L. 101–189, §806(a)(2), inserted ", except as provided in subsection (e)" after "arsenal concerned".

Subsec. (b)(3). Pub. L. 101–189, §806(a)(3), inserted "or (d)" after "subsection (c)".

Subsecs. (d), (e). Pub. L. 101–189, §806(b)(2), added subsecs. (d) and (e). Former subsecs. (d) and (e) redesignated (f) and (g), respectively.

Subsec. (f). Pub. L. 101–189, §806(b)(1), redesignated subsec. (d) as (f). Former subsec. (f) redesignated (h).

Subsec. (f)(1). Pub. L. 101–189, §806(c), inserted "or a cooperative project" after "cooperative research and development program".

Subsecs. (g), (h). Pub. L. 101–189, §806(b)(1), redesignated subsecs. (e) and (f) as (g) and (h), respectively.

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.

Effective Date

Pub. L. 99–500, §101(c) [title IX, §9036(c)], Oct. 18, 1986, 100 Stat. 1783–82, 1783-108, Pub. L. 99–591, §101(c) [title IX, §9036(c)], Oct. 30, 1986, 100 Stat. 3341–82, 3341-108, and Pub. L. 99–661, div. A, title XII, §1203(b), Nov. 14, 1986, 100 Stat. 3969, provided that: "Section 4542 [now 7542] of title 10, United States Code, as added by subsection (a), shall apply with respect to funds appropriated for fiscal years after fiscal year 1986."

Rule of Construction for Duplicate Authorization and Appropriation Provisions of Public Laws 99–500, 99–591, and 99–661

For rule of construction for certain duplicate provisions of Public Laws 99–500, 99–591, and 99–661, see Pub. L. 100–26, §6, Apr. 21, 1987, 101 Stat. 274, set out as a note under section 2302 of this title.

§7543. Army industrial facilities: sales of manufactured articles or services outside Department of Defense

(a) Authority To Sell Outside DOD.—Regulations under section 2208(h) of this title shall authorize a working-capital funded Army industrial facility (including a Department of the Army arsenal) that manufactures large caliber cannons, gun mounts, recoil mechanisms, ammunition, munitions, or components thereof to sell manufactured articles or services to a person outside the Department of Defense if—

(1) in the case of an article, the article is sold to a United States manufacturer, assembler, developer, or other concern—

(A) for use in developing new products;

(B) for incorporation into items to be sold to, or to be used in a contract with, an agency of the United States;

(C) for incorporation into items to be sold to, or to be used in a contract with, or to be used for purposes of soliciting a contract with, a friendly foreign government; or

(D) for use in commercial products;


(2) in the case of an article, the purchaser is determined by the Department of Defense to be qualified to carry out the proposed work involving the article to be purchased;

(3) the sale is to be made on a basis that does not interfere with performance of work by the facility for the Department of Defense or for a contractor of the Department of Defense;

(4) in the case of services, the services are related to an article authorized to be sold under this section and are to be performed in the United States for the purchaser;

(5) the Secretary of the Army determines that the articles or services are not available from a commercial source located in the United States;

(6) the purchaser of an article or service agrees to hold harmless and indemnify the United States, except in a case of willful misconduct or gross negligence, from any claim for damages or injury to any person or property arising out of the article or service;

(7) the article to be sold can be manufactured, or the service to be sold can be substantially performed, by the industrial facility with only incidental subcontracting;

(8) it is in the public interest to manufacture such article or perform such service; and

(9) the sale will not interfere with performance of the military mission of the industrial facility.


(b) Additional Requirements.—The regulations shall also—

(1) require that the authority to sell articles or services under the regulations be exercised at the level of the commander of the major subordinate command of the Army with responsibility over the facility concerned;

(2) authorize a purchaser of articles or services to use advance incremental funding to pay for the articles or services; and

(3) in the case of a sale of commercial articles or commercial services in accordance with subsection (a) by a facility that manufactures large caliber cannons, gun mounts, or recoil mechanisms, or components thereof, authorize such facility—

(A) to charge the buyer, at a minimum, the variable costs that are associated with the commercial articles or commercial services sold;

(B) to enter into a firm, fixed-price contract or, if agreed by the buyer, a cost reimbursement contract for the sale; and

(C) to develop and maintain (from sources other than appropriated funds) working capital to be available for paying design costs, planning costs, procurement costs, and other costs associated with the commercial articles or commercial services sold.


(c) Relationship to Arms Export Control Act.—Nothing in this section shall be construed to affect the application of the export controls provided for in section 38 of the Arms Export Control Act (22 U.S.C. 2778) to items which incorporate or are produced through the use of an article sold under this section.

(d) Definitions.—In this section:

(1) The term "commercial article" means an article that is usable for a nondefense purpose.

(2) The term "commercial service" means a service that is usable for a nondefense purpose.

(3) The term "advance incremental funding", with respect to a sale of articles or services, means a series of partial payments for the articles or services that includes—

(A) one or more partial payments before the commencement of work or the incurring of costs in connection with the production of the articles or the performance of the services, as the case may be; and

(B) subsequent progress payments that result in full payment being completed as the required work is being completed.


(4) The term "variable costs", with respect to sales of articles or services, means the costs that are expected to fluctuate directly with the volume of sales and—

(A) in the case of articles, the volume of production necessary to satisfy the sales orders; or

(B) in the case of services, the extent of the services sold.

(Added Pub. L. 103–160, div. A, title I, §158(a)(1), Nov. 30, 1993, 107 Stat. 1581, §4543; amended Pub. L. 103–337, div. A, title I, §141, Oct. 5, 1994, 108 Stat. 2688; renumbered §7543, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Prior Provisions

A prior section 7543 was renumbered section 8763 of this title.

Amendments

2018Pub. L. 115–232 renumbered section 4543 of this title as this section.

1994—Subsec. (a). Pub. L. 103–337 struck out "nondefense-related commercial" after "sell manufactured" in introductory provisions and added pars. (5) to (9).

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.

Regulations

Pub. L. 103–160, div. A, title I, §158(c), Nov. 30, 1993, 107 Stat. 1582, provided that: "Regulations under subsection (b) of section 4543 [now 7543] of title 10, United States Code, as added by subsection (a), shall be prescribed not later than 30 days after the date of the enactment of this Act [Nov. 30, 1993]."

Pilot Program on Sales of Manufactured Articles and Services of Certain Army Industrial Facilities Without Regard to Availability From Domestic Sources

Pub. L. 107–314, div. A, title I, §111(c), Dec. 2, 2002, 116 Stat. 2473, directed the Inspector General of the Department of Defense to review the experience under the pilot program carried out under section 141 of Pub. L. 105–85 (formerly set out below) and, not later than July 1, 2003, submit to Congress a report on the results of the review.

Pub. L. 105–85, div. A, title I, §141, Nov. 18, 1997, 111 Stat. 1652, as amended by Pub. L. 106–65, div. A, title I, §115, Oct. 5, 1999, 113 Stat. 533; Pub. L. 107–107, div. A, title I, §112, Dec. 28, 2001, 115 Stat. 1029; Pub. L. 107–314, div. A, title I, §111(a), (b), Dec. 2, 2002, 116 Stat. 2473; Pub. L. 108–375, div. A, title VIII, §844, Oct. 28, 2004, 118 Stat. 2019, provided that during fiscal years 1998 through 2009, the Secretary of the Army was to carry out a pilot program to test the efficacy and appropriateness of selling manufactured articles and services of Army industrial facilities under this section without regard to the availability of the articles and services from United States commercial sources, with a report due to Congress by the Inspector General by July 1, 1999.

§7544. Army industrial facilities: cooperative activities with non-Army entities

(a) Cooperative Arrangements Authorized.—A working-capital funded Army industrial facility may enter into a contract or other cooperative arrangement with a non-Army entity to carry out with the non-Army entity a military or commercial project described in subsection (b), subject to the conditions prescribed in subsection (c).

(b) Authorized Activities.—A cooperative arrangement entered into by an Army industrial facility under subsection (a) may provide for any of the following activities:

(1) The sale of articles manufactured by the facility or services performed by the facility to persons outside the Department of the Army.

(2) The performance of work by a non-Army entity at the facility.

(3) The performance of work by the facility for a non-Army entity.

(4) The sharing of work by the facility and a non-Army entity.

(5) The leasing, or use under a facilities use contract or otherwise, of the facility (including excess capacity) or equipment (including excess equipment) of the facility by a non-Army entity.

(6) The preparation and submission of joint offers by the facility and a non-Army entity for competitive procurements entered into with Federal agency.


(c) Conditions.—An activity authorized by subsection (b) may be carried out at an Army industrial facility under a cooperative arrangement entered into under subsection (a) only under the following conditions:

(1) In the case of an article to be manufactured or services to be performed by the facility, the articles can be substantially manufactured, or the services can be substantially performed, by the facility without subcontracting for more than incidental performance.

(2) The activity does not interfere with performance of—

(A) work by the facility for the Department of Defense; or

(B) a military mission of the facility.


(3) The activity meets one of the following objectives:

(A) Maximized utilization of the capacity of the facility.

(B) Reduction or elimination of the cost of ownership of the facility.

(C) Reduction in the cost of manufacturing or maintaining Department of Defense products at the facility.

(D) Preservation of skills or equipment related to a core competency of the facility.


(4) The non-Army entity agrees to hold harmless and indemnify the United States from any liability or claim for damages or injury to any person or property arising out of the activity, including any damages or injury arising out of a decision by the Secretary of the Army or the Secretary of Defense to suspend or terminate an activity, or any portion thereof, during a war or national emergency or to require the facility to perform other work or provide other services on a priority basis, except—

(A) in any case of willful misconduct or gross negligence; and

(B) in the case of a claim by a purchaser of articles or services under this section that damages or injury arose from the failure of the United States to comply with quality, schedule, or cost performance requirements in the contract to carry out the activity.


(d) Arrangement Methods and Authorities.—To establish a cooperative arrangement under subsection (a) with a non-Army entity, the approval authority described in subsection (f) for an Army industrial facility may—

(1) enter into a firm, fixed-price contract (or, if agreed to by the non-Army entity, a cost reimbursement contract) for a sale of articles or services or use of equipment or facilities;

(2) enter into a multiyear contract for a period not to exceed five years, unless a longer period is specifically authorized by law;

(3) charge the non-Army entity the amounts necessary to recover the full costs of the articles or services provided, including capital improvement costs, and equipment depreciation costs associated with providing the articles, services, equipment, or facilities;

(4) authorize the non-Army entity to use incremental funding to pay for the articles, services, or use of equipment or facilities; and

(5) accept payment-in-kind.


(e) Proceeds Credited to Working Capital Fund.—The proceeds received from the sale of an article or service pursuant to a contract or other cooperative arrangement under this section shall be credited to the working capital fund that incurs the cost of manufacturing the article or performing the service.

(f) Approval Authority.—The authority of an Army industrial facility to enter into a cooperative arrangement under subsection (a) shall be exercised at the level of the commander of the major subordinate command of the Army that has responsibility for the facility. The commander may approve such an arrangement on a case-by-case basis or a class basis.

(g) Commercial Sales.—Except in the case of work performed for the Department of Defense, for a contract of the Department of Defense, for foreign military sales, or for authorized foreign direct commercial sales (defense articles or defense services sold to a foreign government or international organization under export controls), a sale of articles or services may be made under this section only if the approval authority described in subsection (f) determines that the articles or services are not available from a commercial source located in the United States in the required quantity or quality, or within the time required.

(h) Exclusion From Depot-Level Maintenance and Repair Percentage Limitation.—Amounts expended for the performance of a depot-level maintenance and repair workload by non-Federal Government personnel at an Army industrial facility shall not be counted for purposes of applying the percentage limitation in section 2466(a) of this title if the personnel are provided by a non-Army entity pursuant to a cooperative arrangement entered into under subsection (a).

(i) Relationship to Other Laws.—Nothing in this section shall be construed to affect the application of—

(1) foreign military sales and the export controls provided for in sections 30 and 38 of the Arms Export Control Act (22 U.S.C. 2770 and 2778) to activities of a cooperative arrangement entered into under subsection (a); and

(2) section 2667 of this title to leases of non-excess property in the administration of such an arrangement.


(j) Definitions.—In this section:

(1) The term "Army industrial facility" includes an ammunition plant, an arsenal, a depot, and a manufacturing plant.

(2) The term "non-Army entity" includes the following:

(A) A Federal agency (other than the Department of the Army).

(B) An entity in industry or commercial sales.

(C) A State or political subdivision of a State.

(D) An institution of higher education or vocational training institution.


(3) The term "incremental funding" means a series of partial payments that—

(A) are made as the work on manufacture or articles is being performed or services are being performed or equipment or facilities are used, as the case may be; and

(B) result in full payment being completed as the required work is being completed.


(4) The term "full costs", with respect to articles or services provided under a cooperative arrangement entered into under subsection (a), means the variable costs and the fixed costs that are directly related to the production of the articles or the provision of the services.

(5) The term "variable costs" means the costs that are expected to fluctuate directly with the volume of sales or services provided or the use of equipment or facilities.

(Added Pub. L. 108–375, div. A, title III, §353(a), Oct. 28, 2004, 118 Stat. 1859, §4544; amended Pub. L. 109–163, div. A, title III, §321, Jan. 6, 2006, 119 Stat. 3191; Pub. L. 109–364, div. A, title X, §1071(a)(29), Oct. 17, 2006, 120 Stat. 2399; Pub. L. 110–181, div. A, title III, §328(a), Jan. 28, 2008, 122 Stat. 66; Pub. L. 111–84, div. A, title III, §324(a), Oct. 28, 2009, 123 Stat. 2253; Pub. L. 112–81, div. A, title III, §323(a), Dec. 31, 2011, 125 Stat. 1362; renumbered §7544, Pub. L. 115–232, div. A, title VIII, §808(d), Aug. 13, 2018, 132 Stat. 1839.)

Prior Provisions

Prior sections 7544 to 7547 were renumbered sections 8764 to 8767 of this title, respectively.

Amendments

2018Pub. L. 115–232 renumbered section 4544 of this title as this section.

2011—Subsec. (a). Pub. L. 112–81, §323(a)(1), struck out second sentence which read as follows: "This authority may be used to enter into not more than eight contracts or cooperative agreements in addition to the contracts and cooperative agreements in place as of the date of the enactment of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181)."

Subsec. (k). Pub. L. 112–81, §323(a)(2), struck out subsec. (k). Prior to amendment, text read as follows: "The authority to enter into a cooperative arrangement under subsection (a) expires September 30, 2014."

2009—Subsec. (a). Pub. L. 111–84 inserted "in addition to the contracts and cooperative agreements in place as of the date of the enactment of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181)" after "not more than eight contracts or cooperative agreements".

2008—Subsec. (a). Pub. L. 110–181, §328(a)(1), inserted at end "This authority may be used to enter into not more than eight contracts or cooperative agreements."

Subsec. (k). Pub. L. 110–181, §328(a)(2), substituted "2014" for "2009".

2006—Subsec. (d). Pub. L. 109–364 substituted "Arrangement" for "Arangement" in heading.

Pub. L. 109–163, §321(b)(1), substituted "subsection (f)" for "subsection (e)" in introductory provisions.

Subsecs. (e), (f). Pub. L. 109–163, §321(b)(2), (3), added subsec. (e) and redesignated former subsec. (e) as (f). Former subsec. (f) redesignated (g).

Subsec. (g). Pub. L. 109–163, §321(b)(4), substituted "subsection (f)" for "subsection (e)".

Pub. L. 109–163, §321(b)(2), redesignated subsec. (f) as (g). Former subsec. (g) redesignated (h).

Subsecs. (h), (i). Pub. L. 109–163, §321(b)(2), redesignated subsecs. (g) and (h) as (h) and (i), respectively. Former subsec. (i) redesignated (j).

Subsec. (j). Pub. L. 109–163, §321(b)(2), redesignated subsec. (i) as (j). Former subsec. (j) redesignated (k).

Pub. L. 109–163, §321(a), substituted "September 30, 2009." for "September 30, 2009, and arrangements entered into under such subsection shall terminate not later than that date."

Subsec. (k). Pub. L. 109–163, §321(b)(2), redesignated subsec. (j) as (k).

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of this title.