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U.S. Code as of:
01/19/04
Section 4543. 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.
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