§7543 Army Industrial Facilities: Sales of Manufactured Articles or Services Outside Department of Defense

Summary

Army industrial plants that are funded with working capital, including Department of the Army arsenals, may sell certain big guns, gun mounts, recoil parts, ammunition, munitions, or related services to buyers outside the Department of Defense if nine rules are met. The sale must be for allowed uses (like helping a U.S. company develop new products, put parts into items for U.S. agencies or friendly foreign governments, or for commercial products), the buyer must be judged capable, the sale must not hurt the plant’s work for the military, services must relate to an allowed article and be done in the United States, the Secretary of the Army must find no U.S. commercial source is available, the buyer must agree to protect the United States from claims except for willful misconduct or gross negligence, the plant must do most work itself, it must be in the public interest, and the military mission must not be harmed. Army rules must let the major subordinate command commander approve sales, allow buyers to pay by advance incremental funding, and let certain plants at least charge their variable costs, use fixed-price (or agreed cost-reimbursement) contracts, and build working capital from non-appropriated sources for commercial work. Export controls under section 38 of the Arms Export Control Act still apply. Definitions (one line each): “commercial article” = usable for nondefense purposes; “commercial service” = service usable for nondefense purposes; “advance incremental funding” = partial payments, some before work starts and more as work proceeds until paid in full; “variable costs” = costs that change with the amount produced or the amount of services sold.