
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-107 Section 112]
[CITE: 10USC4543]

 
                         TITLE 10--ARMED FORCES
 
                            Subtitle B--Army
 
                PART IV--SERVICE, SUPPLY, AND PROCUREMENT
 
                        CHAPTER 433--PROCUREMENT
 
Sec. 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.

(Added Pub. L. 103-160, div. A, title I, Sec. 158(a)(1), Nov. 30, 1993, 
107 Stat. 1581; amended Pub. L. 103-337, div. A, title I, Sec. 141, Oct. 
5, 1994, 108 Stat. 2688.)


                               Amendments

    1994--Subsec. (a). Pub. L. 103-337 struck out ``nondefense-related 
commercial'' after ``sell manufactured'' in introductory provisions and 
added pars. (5) to (9).


                               Regulations

    Section 158(c) of Pub. L. 103-160 provided that: ``Regulations under 
subsection (b) of section 4543 of title 10, United States Code, as added 
by subsection (a), shall be prescribed not later than 30 days after the 
date of the enactment of this Act [Nov. 30, 1993].''


Pilot Program on Sales of Manufactured Articles and Services of Certain 
Army Industrial Facilities Without Regard to Availability From Domestic 
                                 Sources

    Pub. L. 105-85, div. A, title I, Sec. 141, Nov. 18, 1997, 111 Stat. 
1652, as amended by Pub. L. 106-65, div. A, title I, Sec. 115, Oct. 5, 
1999, 113 Stat. 533, provided that:
    ``(a) Pilot Program Required.--During fiscal years 1998 through 
2001, the Secretary of the Army shall carry out a pilot program to test 
the efficacy and appropriateness of selling manufactured articles and 
services of Army industrial facilities under section 4543 of title 10, 
United States Code, without regard to the availability of the articles 
and services from United States commercial sources. In carrying out the 
pilot program, the Secretary may use articles manufactured at, and 
services provided by, not more than three Army industrial facilities.
    ``(b) Temporary Waiver of Requirement for Determination of 
Unavailability From Domestic Source.--Under the pilot program, the 
Secretary of the Army is not required under section 4543(a)(5) of title 
10, United States Code, to determine whether an article or service is 
available from a commercial source located in the United States in the 
case of any of the following sales for which a solicitation of offers is 
issued during the period during which the pilot program is being 
conducted:
        ``(1) A sale of articles to be incorporated into a weapon system 
    being procured by the Department of Defense.
        ``(2) A sale of services to be used in the manufacture of a 
    weapon system being procured by the Department of Defense.
    ``(c) Review by Inspector General.--The Inspector General of the 
Department of Defense shall review the experience under the pilot 
program under this section and, not later than July 1, 1999, submit to 
Congress a report on the results of the review. The report shall contain 
the following:
        ``(1) The Inspector General's views regarding the extent to 
    which the waiver under subsection (b) enhances the opportunity for 
    United States manufacturers, assemblers, developers, and other 
    concerns to enter into or participate in contracts and teaming 
    arrangements with Army industrial facilities under weapon system 
    programs of the Department of Defense.
        ``(2) The Inspector General's views regarding the extent to 
    which the waiver under subsection (b) enhances the opportunity for 
    Army industrial facilities referred to in section 4543(a) of title 
    10, United States Code, to enter into or participate in contracts 
    and teaming arrangements with United States manufacturers, 
    assemblers, developers, and other concerns under weapon system 
    programs of the Department of Defense.
        ``(3) The Inspector General's views regarding the effect of the 
    waiver under subsection (b) on the ability of small businesses to 
    compete for the sale of manufactured articles or services in the 
    United States in competitions to enter into or participate in 
    contracts and teaming arrangements under weapon system programs of 
    the Department of Defense.
        ``(4) Specific examples under the pilot program that support the 
    Inspector General's views.
        ``(5) Any other information that the Inspector General considers 
    pertinent regarding the effects of the waiver of section 4543(a)(5) 
    of title 10, United States Code, under the pilot program on 
    opportunities for United States manufacturers, assemblers, 
    developers, or other concerns, and for Army industrial facilities, 
    to enter into or participate in contracts and teaming arrangements 
    under weapon system programs of the Department of Defense.
        ``(6) Any recommendations that the Inspector General considers 
    appropriate regarding continuation or modification of the policy set 
    forth in section 4543(a)(5) of title 10, United States Code.
    ``(d) Update of Report.--Not later than March 1, 2001, the Inspector 
General of the Department of Defense shall submit to Congress an update 
of the report required to be submitted under subsection (c) and an 
assessment of the success of the pilot program.''

                  Section Referred to in Other Sections

    This section is referred to in sections 2208, 2563 of this title.
