§7457 Acceptance of Guarantees with Gifts for Major Projects

Summary

The Secretary of the Army may take a donor’s guarantee to finish a major project at the Academy if certain rules are met. The guarantee counts as authority to enter contracts and spend money for the project, so project funds can be used even if the cash on hand (not counting the guarantee) would not be enough to finish it. The Secretary cannot accept a guarantee until 30 days after Congress gets a report about it, or 14 days after an electronic copy of the report is sent. The Secretary also may not mix a donor’s guarantee and regular appropriated funds in the same contract or transaction. A major project is one that costs $1,000,000 or more. A qualified guarantee is a donor’s written promise tied to a gift that will cover a big part of the cost, and to add money if other donors don’t pay. The guarantee must be backed by either an irrevocable standby letter of credit from a major U.S. bank or by a strong account agreement with a major U.S. investment firm. That account agreement must keep enough assets available, give the United States a top security interest, require the account to hold at least 130 percent of the guaranteed amount, and convert assets to Treasury bills if the value falls below the required level. A “major” bank or investment firm means a U.S.-headquartered institution with asset levels the Secretary approves; the bank must be FDIC-insured.