§7543 Army industrial facilities: sales of manufactured articles or services outside Department of Defense

Summary

Allows Army industrial plants that are funded from working capital to sell certain weapons parts or related services to people or companies outside the Department of Defense if a set of conditions are met. Sales are allowed when a U.S. company will use the item to develop new products, put it into items sold to or used for contracts with the U.S. government or with friendly foreign governments, or use it in commercial products. The Department of Defense must find the buyer qualified. Sales must not get in the way of the plant’s work for the military. Services must relate to an approved item and be done in the United States. The Army Secretary must find there is no U.S. commercial source. The buyer must agree to protect the United States from damage claims, except when harm results from intentional wrongdoing or gross carelessness. The plant must do most of the work itself, the sale must be in the public interest, and it must not hurt the plant’s military mission. Regulations must let the commander in charge of the facility approve sales. Buyers may pay with advance incremental funding (partial payments, including some before work starts and progress payments as work continues). Plants that make large-caliber cannons, gun mounts, recoil mechanisms, or parts may at least charge their variable costs, may use firm fixed-price contracts or cost-reimbursement if the buyer agrees, and may keep non-appropriated working capital for design, planning, procurement, and related costs. Export controls under section 38 of the Arms Export Control Act still apply. Definitions: commercial article/service = usable for nondefense purposes; advance incremental funding = staged payments with at least one before work starts; variable costs = costs that change with production or service volume.