10 U.S.C. § 7543 — Army industrial facilities: sales of manu-

Page 3093 TITLE 10—ARMED FORCES § 7543 Government-operated defense plant that manu- factures 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.) Editorial Notes 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 2018—Pub. L. 115–232 renumbered section 4542 of this title as this section. 1991—Subsec. (b)(1). Pub. L. 102–190, § 1086(a), sub- stituted ‘‘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 provi- sions. 1989—Subsec. (b)(1). Pub. L. 101–189, § 806(a)(1), sub- stituted ‘‘a member nation of the North Atlantic Trea- ty 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 sub- secs. (d) and (e). Former subsecs. (d) and (e) redesig- nated (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), redesig- nated subsecs. (e) and (f) as (g) and (h), respectively. Statutory Notes and Related Subsidiaries 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 provi- sions 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 101 of this title. § 7543. Army industrial facilities: sales of manu- factured articles or services outside Depart- ment of Defense (a) AUTHORITY TO SELL OUTSIDE DOD.—Regu- lations under section 2208(h) of this title shall authorize a working-capital funded Army indus- trial facility (including a Department of the Army arsenal) that manufactures large caliber cannons, gun mounts, recoil mechanisms, am- munition, munitions, or components thereof to sell manufactured articles or services to a per- son outside the Department of Defense if— (1) in the case of an article, the article is sold to a United States manufacturer, assem- bler, 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 agen- cy 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 in- volving 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 mis- conduct or gross negligence, from any claim for damages or injury to any person or prop- erty arising out of the article or service; (7) the article to be sold can be manufac- tured, or the service to be sold can be substan- tially 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 perform- ance of the military mission of the industrial facility. (b) ADDITIONAL REQUIREMENTS.—The regula- tions 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 Page 3094 TITLE 10—ARMED FORCES § 7544 subordinate command of the Army with re- sponsibility over the facility concerned; (2) authorize a purchaser of articles or serv- ices to use advance incremental funding to pay for the articles or services; and (3) in the case of a sale of commercial arti- cles or commercial services in accordance with subsection (a) by a facility that manufac- tures large caliber cannons, gun mounts, or re- coil mechanisms, or components thereof, au- thorize such facility— (A) to charge the buyer, at a minimum, the variable costs that are associated with the commercial articles or commercial serv- ices sold; (B) to enter into a firm, fixed-price con- tract or, if agreed by the buyer, a cost reim- bursement contract for the sale; and (C) to develop and maintain (from sources other than appropriated funds) working cap- ital to be available for paying design costs, planning costs, procurement costs, and other costs associated with the commercial arti- cles 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 in- corporate 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 pur- pose. (3) The term ‘‘advance incremental fund- ing’’, with respect to a sale of articles or serv- ices, 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 serv- ices, as the case may be; and (B) subsequent progress payments that re- sult 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 or- ders; 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.) Editorial Notes PRIOR PROVISIONS A prior section 7543 was renumbered section 8763 of this title. AMENDMENTS 2018—Pub. L. 115–232 renumbered section 4543 of this title as this section. 1994—Subsec. (a). Pub. L. 103–337 struck out ‘‘non- defense-related commercial’’ after ‘‘sell manufactured’’ in introductory provisions and added pars. (5) to (9). Statutory Notes and Related Subsidiaries 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 sub- section (b) of section 4543 [now 7543] of title 10, United States Code, as added by subsection (a), shall be pre- scribed not later than 30 days after the date of the en- actment of this Act [Nov. 30, 1993].’’ PILOT PROGRAM ON SALES OF MANUFACTURED ARTI- CLES 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 Depart- ment 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 appro- priateness 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 ac- tivities with non-Army entities (a) COOPERATIVE ARRANGEMENTS AUTHOR- IZED.—A working-capital funded Army indus- trial facility may enter into a contract or other cooperative arrangement with a non-Army enti- ty to carry out with the non-Army entity a mili- tary or commercial project described in sub- section (b), subject to the conditions prescribed in subsection (c). (b) AUTHORIZED ACTIVITIES.—A cooperative ar- rangement 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.