10 U.S.C. § 7544 — Army industrial facilities: cooperative activities with non-Army entities
submitted 22 years ago by Pub. L. 108-375 to r/title-10-ARMED-FORCES · 1,187 words · no verdicts yet
A working-capital-funded Army industrial facility may cooperate with a non-Army entity on military or commercial projects if specified conditions are met. The section authorizes several arrangement methods, credits proceeds to the working-capital fund, and defines covered entities and costs.
(a) A working-capital-funded Army* industrial facility may contract or make another cooperative arrangement with a non-Army entity for a military or commercial project described in (b), subject to (c). (b) The arrangement may provide for (1) selling facility-made articles or services outside the Army; (2) a non-Army entity doing work at the facility; (3) the facility doing work for that entity; (4) shared work; (5) leasing or other authorized use by the entity of the facility, including excess capacity, or equipment, including excess equipment; or (6) joint offers by the facility and entity for competitive procurements with a Federal agency. (c) The activity is allowed only if (1) the facility can substantially make the article or perform the service without more than incidental subcontracting; (2) it does not interfere with facility work for Defense or its military mission; (3) it maximizes facility capacity, reduces or eliminates ownership cost, reduces the cost of making or maintaining Defense products there, or preserves skills or equipment tied to a core competency; and (4) the non-Army entity protects and reimburses the United States against liability or claims for injury or damage arising from the activity, including from a decision during war or national emergency to suspend or end it or require priority work, except for willful misconduct or gross negligence and except for a purchaser's claim based on United States failure to meet contract quality, schedule, or cost requirements. (d) The responsible commander may (1) use a firm fixed-price or agreed cost-reimbursement contract; (2) use a multiyear contract up to 5 years unless law specifically permits longer; (3) charge enough to recover full costs, including capital improvements and equipment depreciation; (4) allow incremental funding; and (5) accept payment in kind. (e) Sale proceeds go to the working-capital fund that paid the manufacturing or service cost. (f) The responsible major-subordinate-command commander exercises approval authority and may approve by case or class. (g) Except for Defense work, Defense contracts, foreign military sales, or authorized foreign direct commercial sales, the commander may approve a sale only after finding that a United States commercial source cannot provide the needed quantity or quality or meet the needed time. (h) Workload amounts for depot-level maintenance and repair performed by non-Federal personnel supplied by a non-Army entity under this arrangement do not count toward section 2466(a)'s percentage limit. (i) This section does not affect Arms Export Control Act sections 30 and 38 or title 10 section 2667 for leases of non-excess property. (j)(1) "Army industrial facility" includes an ammunition plant, arsenal, depot, or manufacturing plant. (2) "Non-Army entity" includes (A) another Federal agency, (B) an industry or commercial-sales entity, (C) a State or its political subdivision, and (D) a higher-education or vocational-training institution. (3) "Incremental funding" means partial payments made as manufacturing, service performance, or equipment or facility use occurs, ending in full payment when required work is complete. (4) "Full costs" means variable and directly related fixed costs of production or services. (5) "Variable costs" are costs expected to change directly with sales or services provided or equipment or facility use.
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).
A cooperative arrangement entered into by an Army industrial facility under subsection (a) may provide for any of the following activities:
The sale of articles manufactured by the facility or services performed by the facility to persons outside the Department of the Army.
The performance of work by a non-Army entity at the facility.
The performance of work by the facility for a non-Army entity.
The sharing of work by the facility and a non-Army entity.
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.
The preparation and submission of joint offers by the facility and a non-Army entity for competitive procurements entered into with Federal agency.
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:
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.
The activity does not interfere with performance of—
work by the facility for the Department of Defense; or
a military mission of the facility.
The activity meets one of the following objectives:
Maximized utilization of the capacity of the facility.
Reduction or elimination of the cost of ownership of the facility.
Reduction in the cost of manufacturing or maintaining Department of Defense products at the facility.
Preservation of skills or equipment related to a core competency of the facility.
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—
in any case of willful misconduct or gross negligence; and
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.
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—
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;
enter into a multiyear contract for a period not to exceed five years, unless a longer period is specifically authorized by law;
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;
authorize the non-Army entity to use incremental funding to pay* for the articles, services, or use of equipment or facilities; and
accept payment-in-kind.
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.
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.
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.
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).
Nothing in this section shall be construed to affect the application of—
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
section 2667 of this title to leases of non-excess property in the administration of such an arrangement.
In this section:
The term “Army industrial facility” includes an ammunition plant, an arsenal, a depot, and a manufacturing plant.
The term “non-Army entity” includes the following:
A Federal agency (other than the Department of the Army).
An entity in industry or commercial sales.
A State or political subdivision of a State.
An institution of higher education or vocational training institution.
The term “incremental funding” means a series of partial payments that—
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
result in full payment being completed as the required work is being completed.
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.
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.
Source credit: (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.)
- 2004Enacted · Pub. L. 108-375 · 118 Stat. 1859
- 2006Amended · Pub. L. 109-163 · 119 Stat. 3191
- 2006Amended · Pub. L. 109-364 · 120 Stat. 2399
- 2008Amended · Pub. L. 110-181 · 122 Stat. 66
- 2009Amended · Pub. L. 111-84 · 123 Stat. 2253
- 2011Amended · Pub. L. 112-81 · 125 Stat. 1362
- 2018Amended · Pub. L. 115-232 · 132 Stat. 1839
A history note hasn’t been published yet. The record shows enactment by Pub. L. 108-375 on 2004-10-28.
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