§8475 — Title 10 Armed Forces | U.S. Code

Summary

The Secretary of the Navy may accept a qualified guarantee from a donor to help finish a major project for the Naval Academy. If accepted, that guarantee counts as contract authority and lets the Navy obligate and spend money on the project even if the other funds available (not counting the guarantee) are not enough to finish it. The Navy cannot accept a guarantee until 30 days after a report about it is sent to Congress, or until 14 days after an electronic copy of the report is provided, if that happens sooner. The Navy also may not use a guarantee and appropriated funds together in the same contract or transaction. Major project: a purchase, construction, renovation, or repair of property costing $1,000,000 or more. Qualified guarantee: a donor’s written promise tied to a donation that covers a substantial part of the project, is meant to speed completion while other donors are expected to contribute, requires the donor to add cash or securities if other funds fall short, and is backed either by an irrevocable standby letter of credit from a major U.S. commercial bank for the guarantee amount or by a qualified account control agreement. Qualified account control agreement: a deal among the donor, the Secretary, and a major U.S. investment management firm that keeps funds available, gives the U.S. a top-priority security interest, requires the donor to keep assets equal to at least 130% of the guarantee, and forces sale of noncash assets and reinvestment in Treasury bills if the account falls below that level. Major U.S. commercial bank and major U.S. investment management firm: U.S.-headquartered, insured or regulated firms with asset sizes the Secretary considers large enough.

Title 10, §8475

Armed Forces — Source: USLM XML via OLRC

(a)Subject to subsection (c), the Secretary of the Navy may accept from a donor or donors a qualified guarantee for the completion of a major project for the benefit of the Naval 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 Navy 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 Navy 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 Navy, 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 Naval 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 Navy, 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 Naval 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 Navy 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 Navy to qualify the firm as a major investment management firm.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Pub. L. 115–232 renumbered section 6975 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)” in introductory provisions.

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.

§8475 Acceptance of guarantees with gifts for major projects

Summary

Title 10, §8475

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Citations & Metadata