10 U.S.C. § 8475: Acceptance of guarantees…

Summary

The Secretary of the Navy can accept a special promise from one or more donors to finish a big project at the Naval Academy. If accepted, the promised amount counts as contract authority so the Navy can obligate and spend money on the project even if the other funds it has (not counting the promise) would not cover the whole cost. The Secretary cannot accept the promise until at least 30 days after Congress gets a report about it, or 14 days after an electronic copy of the report is sent under section 480, whichever comes sooner. The Navy may not use that promise and regular appropriated funds together in the same contract or deal. Definitions (one line each): Major project — a purchase, build, repair, or renovation project that will cost at least $1,000,000. Qualified guarantee — a written donor promise tied to a cash or securities gift that is meant to help finish the project, expects other donors to give more, requires the donor to cover any shortfall, and is backed by either a firm bank letter of credit or a qualified account control agreement. Qualified account control agreement — an agreement with the donor, the Secretary, and a major investment firm that keeps enough funds available, gives the U.S. first legal claim on the account, requires the account to hold at least 130 percent of the guaranteed amount, and has the firm sell noncash assets and buy Treasury bills under section 3104 if the account falls below that level. Major U.S. commercial bank — an insured bank headquartered in the United States with net assets the Secretary deems large. Major U.S. investment management firm — a U.S.-based broker, dealer, investment adviser, or big bank that holds assets for others in an amount the Secretary deems large.

Title 10, §8475

Armed Forces, Source: USLM XML via OLRC

(a)Acceptance Authority.—

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)Obligation Authority.—

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)Notice of Proposed Acceptance.—

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)Prohibition on Commingling of Funds.—

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)Definitions.—

In this section: (1) Major project.—

(2)Qualified guarantee.—

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)Qualified account control agreement.—

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)Major united states commercial bank.—

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)Major united states investment management firm.—

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

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