§7457 — Title 10 Armed Forces | U.S. Code

Summary

The Secretary of the Army may accept a donor’s qualified guarantee to help finish a major project for the Academy. If accepted, that guarantee counts as contract authority so project money can be obligated and spent even if the other funds (not counting the guarantee) are not enough to finish the project. The Secretary must wait 30 days after sending a report to Congress about the guarantee, or 14 days if the report is sent electronically under section 480, before accepting it. The Secretary may not use a qualified guarantee and appropriated funds together in the same contract or transaction. Definitions (one line each): Major project = purchase, construction, renovation, or repair of property costing $1,000,000 or more. Qualified guarantee = a written donor promise tied to a specific gift that aims to speed completion, covers shortfalls, and is backed by either an irrevocable standby letter of credit from a major U.S. commercial bank or a qualified account control agreement. Qualified account control agreement = a written deal among the donor, the Secretary, and a major U.S. investment firm that keeps funds available, gives the United States a top-priority security interest, requires the account to hold at least 130 percent of the guaranteed amount, and calls for selling noncash assets and reinvesting proceeds in Treasury bills if the account falls below that level. Major U.S. commercial bank = an insured, U.S.-headquartered bank the Secretary considers large enough. Major U.S. investment management firm = a U.S.-headquartered broker, dealer, investment adviser, or big bank that holds client investments in an amount the Secretary considers large enough.

Title 10, §7457

Armed Forces — Source: USLM XML via OLRC

(a)Subject to subsection (c), the Secretary of the Army may accept from a donor or donors a qualified guarantee for the completion of a major project for the benefit of the Academy.

(b)The amount of a qualified guarantee accepted under this section shall be considered as contract authority to provide obligation authority for purposes of Federal fiscal and contractual requirements. Funds available for a project for which such a guarantee has been accepted may be obligated and expended for the project without regard to whether the total amount of the funds and other resources available for the project (not taking into account the amount of the guarantee) is sufficient to pay for completion of the project.

(c)The Secretary of the Army may not accept a qualified guarantee under this section for the completion of a major project until after the expiration of 30 days following the date upon which a report of the facts concerning the proposed guarantee is submitted to Congress or, if earlier, the expiration of 14 days following the date on which a copy of the report is provided in an electronic medium pursuant to section 480 of this title.

(d)The Secretary of the Army may not enter into any contract or other transaction involving the use of a qualified guarantee and appropriated funds in the same contract or transaction.

(e)In this section:

(1)The term “major project” means a project for the purchase or other procurement of real or personal property, or for the construction, renovation, or repair of real or personal property, the total cost of which is, or is estimated to be, at least $1,000,000.

(2)The term “qualified guarantee”, with respect to a major project, means a guarantee that—

(A)is made by one or more persons in connection with a donation, specifically for the project, of a total amount in cash or securities that, as determined by the Secretary of the Army, is sufficient to defray a substantial portion of the total cost of the project;

(B)is made to facilitate or expedite the completion of the project in reasonable anticipation that other donors will contribute sufficient funds or other resources in amounts sufficient to pay for completion of the project;

(C)is set forth as a written agreement that provides for the donor to furnish in cash or securities, in addition to the donor’s other gift or gifts for the project, any additional amount that may become necessary for paying the cost of completing the project by reason of a failure to obtain from other donors or sources funds or other resources in amounts sufficient to pay the cost of completing the project; and

(D)is accompanied by—

(i)an irrevocable and unconditional standby letter of credit for the benefit of the Academy that is in the amount of the guarantee and is issued by a major United States commercial bank; or

(ii)a qualified account control agreement.

(3)The term “qualified account control agreement”, with respect to a guarantee of a donor, means an agreement among the donor, the Secretary of the Army, and a major United States investment management firm that—

(A)ensures the availability of sufficient funds or other financial resources to pay the amount guaranteed during the period of the guarantee;

(B)provides for the perfection of a security interest in the assets of the account for the United States for the benefit of the Academy with the highest priority available for liens and security interests under applicable law;

(C)requires the donor to maintain in an account with the investment management firm assets having a total value that is not less than 130 percent of the amount guaranteed; and

(D)requires the investment management firm, at any time that the value of the account is less than the value required to be maintained under subparagraph (C), to liquidate any noncash assets in the account and reinvest the proceeds in Treasury bills issued under section 3104 of title 31.

(4)The term “major United States commercial bank” means a commercial bank that—

(A)is an insured bank (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813));

(B)is headquartered in the United States; and

(C)has net assets in a total amount considered by the Secretary of the Army to qualify the bank as a major bank.

(5)The term “major United States investment management firm” means any broker, dealer, investment adviser, or provider of investment supervisory services (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c) or section 202 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2)) or a major United States commercial bank that—

(A)is headquartered in the United States; and

(B)holds for the account of others investment assets in a total amount considered by the Secretary of the Army to qualify the firm as a major investment management firm.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Pub. L. 115–232 renumbered section 4357 of this title as this section. 2003—Subsec. (c). Pub. L. 108–136 inserted before period at end “or, if earlier, the expiration of 14 days following the date on which a copy of the report is provided in an electronic medium pursuant to section 480 of this title”. 2000—Subsec. (e)(5). Pub. L. 106–398 inserted a closing parenthesis after “80b–2)”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2018 AmendmentAmendment 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.

§7457 Acceptance of guarantees with gifts for major projects

Summary

Title 10, §7457

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Citations & Metadata