10 U.S.C. § 7544 — Army industrial facilities: cooperative activities with non-Army entities

(a) Cooperative Arrangements Authorized. A working-capital-funded Army industrial facility can contract or otherwise cooperate with a non-Army entity to do a military or commercial project described in (b), if the conditions in (c) are met. (b) Authorized Activities. A cooperative arrangement can cover: (1) selling articles the facility makes, or services it performs, to people outside the Army; (2) a non-Army entity doing work at the facility; (3) the facility doing work for a non-Army entity; (4) the facility and a non-Army entity sharing work; (5) leasing or otherwise letting a non-Army entity use the facility (including excess capacity) or its equipment (including excess equipment); or (6) the facility and a non-Army entity jointly submitting bids for competitive federal contracts. (c) Conditions. An arrangement under (a) can only proceed if: (1) for articles or services the facility provides, it can substantially make or perform them with only incidental subcontracting; (2) the activity doesn't interfere with the facility's DOD work or military mission; (3) it meets at least one of these goals: maximizing the facility's capacity use, cutting ownership costs, cutting the cost of making or maintaining DOD products there, or preserving core skills or equipment; and (4) the non-Army partner agrees to hold the U.S. harmless and indemnify it against damage or injury claims — including claims from suspending or ending the activity during a war or emergency, or requiring priority work — except for willful misconduct or gross negligence, and except for a buyer's claim that the U.S. itself failed to meet the contract's quality, schedule, or cost terms. (d) Arrangement Methods and Authorities. To set up an arrangement, the approving official under (f) can: (1) use a firm fixed-price contract (or cost-reimbursement, if the partner agrees); (2) sign a multiyear contract up to 5 years, unless another law allows longer; (3) charge the partner the full cost of the articles, services, or equipment/facility use, including capital-improvement and depreciation costs; (4) let the partner pay with incremental funding; and (5) accept payment in kind. (e) Proceeds Credited to Working Capital Fund. Money from a sale under this section goes into the working-capital fund that paid the cost of making the article or performing the service. (f) Approval Authority. Only the commander of the facility's major subordinate Army command can approve these arrangements, either case by case or by class. (g) Commercial Sales. Outside of DOD work, DOD contracts, foreign military sales, or authorized direct commercial sales, an arrangement can happen only if the approving official decides the articles or services aren't available, in the needed quantity, quality, or time, from a U.S. commercial source. (h) Exclusion From Depot-Level Maintenance Limit. Money spent on depot-level maintenance and repair by non-federal personnel at an Army industrial facility doesn't count toward the percentage cap in section 2466(a), if those personnel came from a non-Army entity under a cooperative arrangement. (i) Relationship to Other Laws. Nothing here changes how export controls (sections 30 and 38 of the Arms Export Control Act, 22 U.S.C. 2770 and 2778) apply to a cooperative arrangement's activities, or how section 2667 (leasing non-excess property) applies to running one. (j) Definitions. (1) "Army industrial facility" includes an ammunition plant, arsenal, depot, or manufacturing plant. (2) "Non-Army entity" includes another federal agency, a private industry or commercial entity, a state or local government, or a higher-education or vocational school. (3) "Incremental funding" means partial payments made as the work, service, or use happens, adding up to full payment as the work finishes. (4) "Full costs" means the variable and fixed costs directly tied to making the articles or providing the services. (5) "Variable costs" means costs expected to rise and fall directly with sales or service volume.