§ 2563. Articles and services of industrial facilities: sale to persons outside the Department of Defense

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1994

   National Defense Authorization Act for Fiscal Year 1995

   Pub. L. 103–337 div. A title III § 339(a)(1) · 108 Stat. 2663

   Enacted · 10 U.S.C. § 2563

   Added Pub. L. 103–337, div. A, title III, § 339(a)(1), Oct. 5, 1994, 108 Stat. 2718, § 2553

   Source evidence

   Code source credit
   Added Pub. L. 103–337, div. A, title III, § 339(a)(1), Oct. 5, 1994, 108 Stat. 2718, § 2553

   Enacted provision · exact public law section
   (1) Subchapter II of chapter 152 of title 10, United States Code, is amended by adding at the end the following new section: “§2553. Articles and services of industrial facilities: sale to persons outside the Department of Defense “(a) Authority To Sell Outside DOD.— (1) The Secretary of Defense may sell in accordance with this section to a person outside the Department of Defense articles and services referred to in paragraph (2) that are not available from any United States commercial source. “(2) (A) Except as provided in subparagraph (B), articles and services referred to in paragraph (1) are articles and services that are manufactured or performed by any working-capital funded industrial facility of the armed forces. “(B) The authority in this section does not apply to sales of articles and services by a working-capital funded Army industrial facility (including a Department of the Army arsenal) that manufactures large caliber cannons, gun mounts, recoil mechanisms, ammunition, munitions, or components thereof, which are governed by regulations required by section 4543 of this title. “(b) Designation of Participating Industrial Facilities.— The Secretary may designate facilities referred to in subsection (a) as the facilities from which articles and services manufactured or performed by such facilities may be sold under this section. “(c) Conditions for Sales.— A sale of articles or services may be made under this section only if— “(1) the Secretary of Defense determines that the articles or services are not available from a commercial source in the United States; “(2) the purchaser agrees to hold harmless and indemnify the United States, except in any case of willful misconduct or gross negligence, from any claim for damages or injury to any person or property arising out of the articles or services; “(3) the articles or services can be substantially manufactured or performed by the industrial facility concerned with only incidental subcontracting; “(4) it is in the public interest to manufacture the articles or perform the services; “(5) the Secretary determines that the sale of the articles or services will not interfere with the military mission of the industrial facility concerned; and “(6) the sale of the goods and services is made on the basis that it will not interfere with performance of work by the industrial facility concerned for the Department of Defense. “(d) Methods of Sale.— (1) The Secretary shall permit a purchaser of articles or services under this section to use advance incremental funding to pay for the articles or services. “(2) In the sale of articles and services under this section, the Secretary shall— “(A) charge the purchaser, at a minimum, the variable costs, capital improvement costs, and equipment depreciation costs that are associated with the articles or services sold; “(B) enter into a firm, fixed-price contract or, if agreed by the purchaser, a cost reimbursement contract for the sale; and “(C) develop and maintain (from sources other than appropriated funds) working capital to be available for paying design costs, planning costs, procurement costs, and other costs associated with the articles or services sold. “(e) Deposit of Proceeds.— Proceeds from sales of articles and services under this section shall be credited to the funds, including working capital funds and operation and maintenance funds, incurring the costs of manufacture or performance. “(f) Relationship to Arms Export Control Act.— Nothing in this section shall be construed to affect the application of the export controls provided for in section 38 of the Arms Export Control Act (22 U.S.C. 2778) to items which incorporate or are produced through the use of an article sold under this section. “(g) Definitions.— In this section: “(1) The term ‘advance incremental funding’, with respect to a sale of articles or services, means a series of partial payments for the articles or services that includes— “(A) one or more partial payments before the commencement of work or the incurring of costs in connection with the manufacture of the articles or the performance of the services, as the case may be; and “(B) subsequent progress payments that result in full payment being completed as the required work is being completed. “(2) The term ‘variable costs’, with respect to sales of articles or services, means the costs that are expected to fluctuate directly with the volume of sales and— “(A) in the case of articles, the volume of production necessary to satisfy the sales orders; or “(B) in the case of services, the extent of the services sold.”.

2. 1999

   Pub. L. 106–65 § 331(a)(2) · 113 Stat. 512

   1. Amended · 10 U.S.C. § 2563(c)

      Pub. L. 106–65, § 331(a)(2), designated existing provisions as par. (1)

   2. Redesignated · 10 U.S.C. § 2563(c)

      Pub. L. 106–65, § 331(a)(2), redesignated former pars. (1) to (6) as subpars. (A) to (F), respectively, of par. (1)

   3. Added · 10 U.S.C. § 2563(c)

      Pub. L. 106–65, § 331(a)(2), added par. (2)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 106–65, § 331(a)(2), designated existing provisions as par. (1), redesignated former pars. (1) to (6) as subpars. (A) to (F), respectively, of par. (1), and added par. (2).

   Enacted provision · exact public law section
   (2) Section 2553(c) of such title is amended— (A) by redesignating paragraphs (1) through (6) as subparagraphs (A) through (F), respectively; (B) by inserting “(1)” before “A sale”; and (C) by adding at the end the following new paragraph: “(2) The Secretary of Defense may waive the condition in paragraph (1)(A) and subsection (a)(1) that an article or service must be not available from a United States commercial source in the case of a particular sale if the Secretary determines that the waiver is necessary for reasons of national security and notifies Congress regarding the reasons for the waiver.”.

3. 1999

   Pub. L. 106–65 § 331(b) · 113 Stat. 512

   1. Added · 10 U.S.C. § 2563(g)(2); 10 U.S.C. § 2563(g)(3)

      Pub. L. 106–65, § 331(b), added par. (2)

   2. Redesignated · 10 U.S.C. § 2563(g)(2); 10 U.S.C. § 2563(g)(3)

      Pub. L. 106–65, § 331(b), redesignated former par. (2) as (3)

   Source evidence

   Code amendment note
   Subsec. (g)(2), (3). Pub. L. 106–65, § 331(b), added par. (2) and redesignated former par. (2) as (3).

   Enacted provision · exact public law section
   (b) Clarification of Commercial Nonavailability.— Section 2553(g) of such title is amended— (1) by redesignating paragraph (2) as paragraph (3); and (2) by inserting after paragraph (1) the following new paragraph: “(2) The term ‘not available’, with respect to an article or service proposed to be sold under this section, means that the article or service is unavailable from a commercial source in the required quantity and quality or within the time required.”.

4. 2000

   Pub. L. 106–398 § 1(dA) · 114 Stat. 1654

   Changed · 10 U.S.C. § 2563

   Pub. L. 106–398 renumbered section 2553 of this title as this section

   Source evidence

   Code amendment note
   Pub. L. 106–398 renumbered section 2553 of this title as this section.

   Enacted provision · exact public law section
   SECTION 1. ENACTMENT OF FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT. The provisions of H.R. 5408 of the 106th Congress, as introduced on October 6, 2000, are hereby enacted into law.

5. 2001

   National Defense Authorization Act for Fiscal Year 2002

   Pub. L. 107–107 § 343(a)(1) · 115 Stat. 1012

   Substituted · 10 U.S.C. § 2563(c)(1)(B)

   Pub. L. 107–107, § 343(a)(1), substituted “as provided in paragraph (3)” for “in any case of willful misconduct or gross negligence”

   Source evidence

   Code amendment note
   Subsec. (c)(1)(B). Pub. L. 107–107, § 343(a)(1), substituted “as provided in paragraph (3)” for “in any case of willful misconduct or gross negligence”.

   Enacted provision · exact public law section
   (1) in paragraph (1)(B), by striking “in any case of willful misconduct or gross negligence” and inserting “as provided in paragraph (3)”; and

6. 2001

   National Defense Authorization Act for Fiscal Year 2002

   Pub. L. 107–107 § 343(a)(2) · 115 Stat. 1012

   Added · 10 U.S.C. § 2563(c)(3)

   Pub. L. 107–107, § 343(a)(2), added par. (3)

   Source evidence

   Code amendment note
   Subsec. (c)(3). Pub. L. 107–107, § 343(a)(2), added par. (3).

   Enacted provision · exact public law section
   (2) by adding at the end the following new paragraph: “(3) Paragraph (1)(B) does not apply in any case of willful misconduct or gross negligence or in the case of a claim by a purchaser of articles or services under this section that damages or injury arose from the failure of the Government to comply with quality, schedule, or cost performance requirements in the contract to provide the articles or services.”.

7. 2018

   John S. McCain National Defense Authorization Act for Fiscal Year 2019

   Pub. L. 115–232 div. A title VIII § 809(a) · 132 Stat. 1636

   Substituted · 10 U.S.C. § 2563(a)(2)(B)

   Pub. L. 115–232 substituted “section 7543” for “section 4543”

   Source evidence

   Code amendment note
   Subsec. (a)(2)(B). Pub. L. 115–232 substituted “section 7543” for “section 4543”.

   Enacted provision · exact public law section
   (a) Title 10, United States Code.— Each provision of title 10, United States Code (including the table of subtitles preceding subtitle A), that contains a reference to a section or chapter redesignated by this part is 10 USC prec. 101, 125, 162, 347, 532, 616, 624, 631–634, 637–638b, 641, 652, 688, 1074h, 1134a, 1135, 1174, 1176, 1370, 1402, 1402a, 1406, 1407, 1409, 1447, 1488, 1552, 2208, 2218, 2433, 2474, 2522, 2547, 2563, 2575, 2780, 7023, 7032, 7033, 7036, 7278, 7282, 7285, 7311, 7314, 7317, 7318, 7324, 7325, 7326, 7329, 7343, 7345, 7361, 7362, 7433a, 7442, 7443, 7482–7484, 7629, 7722, 7806, 8023, 8027, 8032, 8033, 8036, 8037, 8042, 8043, 8083, 8084, 8089, 8139, 8146, 8219, 8243, 8286, 8298, 8307, 8323, 8325–8327, 8330, 8331, 8333, 8335, 8336, 8371, 8372, 8451a, 8454, 8456, 8458, 8470a, 8474, 8476, 8481, 8545, 8549, 8585–8587, 8675, 8686, 8722, 8723, 8725, 8730, 8731, 8737, 8766, 8855, 8859, 8860, 8881, 8892–8894, 8897, 9023, 9032, 9033, 9039, 9062, 9081, 9229, 9278, 9282, 9285, 9311, 9314, 9317, 9318, 9324–9326, 9329, 9343, 9345, 9361, 9362, 9414a, 9415, 9417, 9433a, 9442, 9443, 9482–9484, 9491m, 9494, 9496, 9498, 10154, 10171–10174, 12009, 12645–12647, 12741, 14108, 14311. amended so that the reference refers to the number of the section or chapter as redesignated.

   Effective date note
   Amendment 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.

10 of 10 references resolved to an enrolled provision