10 U.S.C. § 8685 — Preservation of Navy shipbuilding capability

submitted 29 years ago by Pub. L. 105-85 to r/title-10-ARMED-FORCES · 494 words · no verdicts yet

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The Navy may sign 'shipbuilding capability preservation agreements' with shipbuilders to change how indirect costs are reimbursed. Under these agreements, a shipbuilder can only charge the Navy indirect costs its private work doesn't already cover. The Secretary can adjust the rules and applies them to current and future Navy contracts.

(a) Shipbuilding Capability Preservation Agreements — The Secretary of the Navy may sign a "shipbuilding capability preservation agreement" with a shipbuilder, applying the cost-reimbursement rules in (b) to a Navy ship-construction contract with that shipbuilder. The Secretary can do this whenever it would help meet the policy goals in section 4811(b). (b) Cost Reimbursement Rules — (1) When figuring how much to reimburse a shipbuilder for indirect costs on a Navy ship contract, the Secretary must let the shipbuilder charge its private-sector work only its "allocable indirect private sector costs," subject to (3). (2) Those allocable indirect private-sector costs equal the sum of: (A) the extra indirect costs caused by the private work; and (B) the amount by which the private work's revenue exceeds the sum of its direct costs and its extra indirect costs. (3) The total allocable indirect private-sector costs for a covered contract cannot exceed what the shipbuilder would normally have allocated to private work under its own established accounting practices during the agreement period. (c) Authority To Modify Cost Reimbursement Rules — The Secretary may modify the (b) rules for a particular agreement if doing so better fits that situation and still serves the section 4811(b) policy goals. (d) Applicability — (1) An agreement under (a) applies to: (A) a Navy contract with the shipbuilder already in effect when the agreement is signed; and (B) a Navy contract awarded during the agreement's term. (2) The Secretary may apply the (b) rules only to indirect costs the shipbuilder incurred on or after November 18, 1997, under a private-sector contract that took effect on or after January 26, 1996.

the actual law source: uscode.house.gov ↗public domain

(a)Shipbuilding Capability Preservation Agreements.—

The Secretary of the Navy may enter into an agreement, to be known as a “shipbuilding capability preservation agreement”, with a shipbuilder under which the cost reimbursement rules described in subsection (b) shall be applied to the shipbuilder under a Navy contract for the construction of a ship. Such an agreement may be entered into in any case in which the Secretary determines that the application of such cost reimbursement rules would facilitate the achievement of the policy objectives set forth in section 4811(b) of this title.

(b)Cost Reimbursement Rules.—

The cost reimbursement rules applicable under an agreement entered into under subsection (a) are as follows:

(1)

The Secretary of the Navy shall, in determining the reimbursement due a shipbuilder for its indirect costs of performing a contract for the construction of a ship for the Navy, allow the shipbuilder to allocate indirect costs to its private sector work only to the extent of the shipbuilder’s allocable indirect private sector costs, subject to paragraph (3).

(2)

For purposes of paragraph (1), the allocable indirect private sector costs of a shipbuilder are those costs of the shipbuilder that are equal to the sum of the following:

(A)

The incremental indirect costs attributable to such work.

(B)

The amount by which the revenue attributable to such private sector work exceeds the sum of—

(i)

the direct costs attributable to such private sector work; and

(ii)

the incremental indirect costs attributable to such private sector work.

(3)

The total amount of allocable indirect private sector costs for a contract covered by the agreement may not exceed the amount of indirect costs that a shipbuilder would have allocated to its private sector work during the period covered by the agreement in accordance with the shipbuilder’s established accounting practices.

(c)Authority To Modify Cost Reimbursement Rules.—

The cost reimbursement rules set forth in subsection (b) may be modified by the Secretary of the Navy for a particular agreement if the Secretary determines that modifications are appropriate to the particular situation to facilitate achievement of the policy set forth in section 4811(b) of this title.

(d)Applicability.—

(1)

An agreement entered into with a shipbuilder under subsection (a) shall apply to each of the following Navy contracts with the shipbuilder:

(A)

A contract that is in effect on the date on which the agreement is entered into.

(B)

A contract that is awarded during the term of the agreement.

(2)

In a shipbuilding capability preservation agreement applicable to a shipbuilder, the Secretary may agree to apply the cost reimbursement rules set forth in subsection (b) to allocations of indirect costs to private sector work performed by the shipbuilder only with respect to costs that the shipbuilder incurred on or after November 18, 1997, under a contract between the shipbuilder and a private sector customer of the shipbuilder that became effective on or after January 26, 1996.

Source credit: (Added Pub. L. 105–85, div. A, title X, § 1027(a)(1), Nov. 18, 1997, 111 Stat. 1878, § 7315; amended Pub. L. 106–65, div. A, title X, § 1066(a)(29), Oct. 5, 1999, 113 Stat. 772; renumbered § 8685, Pub. L. 115–232, div. A, title VIII, § 807(d)(2), Aug. 13, 2018, 132 Stat. 1836; Pub. L. 116–283, div. A, title XVIII, § 1867(e)(3), Jan. 1, 2021, 134 Stat. 4282.)

history & why it existsrecord from the source credit

1997Enacted · Pub. L. 105-85 · 111 Stat. 1878
1999Amended · Pub. L. 106-65 · 113 Stat. 772
2018Amended · Pub. L. 115-232 · 132 Stat. 1836
2021Amended · Pub. L. 116-283 · 134 Stat. 4282

A history note hasn’t been published yet. The record shows enactment by Pub. L. 105-85 on 1997-11-18.

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