§7544 Army Industrial Facilities: Cooperative Activities with Non-army Entities

Summary

Army industrial facilities that use working‑capital funds may make contracts or cooperative deals with non‑Army groups to do military or commercial projects, if they follow set rules. These deals can include selling items or services, letting outside parties work at the facility or having the facility work for outside parties, sharing work, leasing space or equipment (including extra capacity), or making joint bids for federal contracts. The facility must be able to do most of the work itself without major subcontracting. The activity must not interfere with Department of Defense work or the facility’s military mission. It must meet one of these goals: better use of the facility, lower ownership costs, lower DoD manufacturing or maintenance costs, or keep important skills or equipment. The outside party must agree to protect the United States from claims or damages that come from the activity, except for willful misconduct or gross negligence and certain purchaser claims about failures in quality, schedule, or cost. The facility commander’s higher‑level commander approves these deals. Contracts may be fixed‑price (or cost‑reimbursement if agreed), can be multiyear for up to five years unless a law allows longer, and may recover full costs including capital improvements and equipment depreciation. Incremental payments and payment‑in‑kind can be allowed. Money from sales goes back into the working‑capital fund that paid the costs. A sale to anyone outside DoD can only happen if the commander finds no U.S. commercial source can meet the need in quantity, quality, or time. Work by non‑Federal personnel under these deals does not count toward the limit in section 2466(a). The rules do not change foreign military sales or export controls in sections 30 and 38 of the Arms Export Control Act (22 U.S.C. 2770 and 2778) or the leasing rules in section 2667. Definitions (one line each): Army industrial facility — includes ammunition plants, arsenals, depots, and manufacturing plants. Non‑Army entity — could be another federal agency, a company, a state or local government, or an educational or vocational school. Incremental funding — a series of partial payments made as work is done that complete full payment when work finishes. Full costs — the fixed and variable costs directly tied to making the items or providing the services. Variable costs — costs that go up or down with the amount of work, sales, or use.