---
kind: "section"
citation: "10 U.S.C. § 7544"
title: "10"
title_heading: "Armed Forces"
number: "7544"
heading: "Army industrial facilities: cooperative activities with non-Army entities"
release: "119-102"
url: "https://uscodex.org/usc/10/7544"
units:
  - "Subtitle B — Army"
  - "Part IV — Service, Supply, and Procurement"
  - "Chapter 763 — Procurement"
---

# §7544. Army industrial facilities: cooperative activities with non-Army entities

- (a) **Cooperative Arrangements Authorized.—** A working-capital funded [Army industrial facility](#j-1) may enter into a contract or other cooperative arrangement with a [non-Army entity](#j-2) to carry out with the [non-Army entity](#j-2) a military or commercial project described in [subsection (b)](#b), subject to the conditions prescribed in [subsection (c)](#c).
- (b) **Authorized Activities.—** A cooperative arrangement entered into by an [Army industrial facility](#j-1) under [subsection (a)](#a) may provide for any of the following activities:
  - (1) The sale of articles manufactured by the [facility](/usc/10/227.md?p=b-2) or services performed by the [facility](/usc/10/227.md?p=b-2) to persons outside the [Department](/usc/10/101.md?p=a-6) of the [Army](/usc/10/7001.md).
  - (2) The performance of work by a [non-Army entity](#j-2) at the [facility](/usc/10/227.md?p=b-2).
  - (3) The performance of work by the [facility](/usc/10/227.md?p=b-2) for a [non-Army entity](#j-2).
  - (4) The sharing of work by the [facility](/usc/10/227.md?p=b-2) and a [non-Army entity](#j-2).
  - (5) The leasing, or use under a [facilities](/usc/10/227.md?p=b-2) use contract or otherwise, of the [facility](/usc/10/227.md?p=b-2) (including excess capacity) or equipment (including excess equipment) of the [facility](/usc/10/227.md?p=b-2) by a [non-Army entity](#j-2).
  - (6) The preparation and submission of joint offers by the [facility](/usc/10/227.md?p=b-2) and a [non-Army entity](#j-2) for competitive procurements entered into with Federal [agency](/usc/10/4701.md?p=g-1).
- (c) **Conditions.—** An activity authorized by [subsection (b)](#b) may be carried out at an [Army industrial facility](#j-1) under a cooperative arrangement entered into under [subsection (a)](#a) only under the following conditions:
  - (1) In the case of an article to be manufactured or services to be performed by the [facility](/usc/10/227.md?p=b-2), the articles can be substantially manufactured, or the services can be substantially performed, by the [facility](/usc/10/227.md?p=b-2) without subcontracting for more than incidental performance.
  - (2) The activity does not interfere with performance of—
    - (A) work by the [facility](/usc/10/227.md?p=b-2) for the [Department](/usc/10/101.md?p=a-6) of Defense; or
    - (B) a military mission of the [facility](/usc/10/227.md?p=b-2).
  - (3) The activity meets one of the following objectives:
    - (A) Maximized utilization of the capacity of the [facility](/usc/10/227.md?p=b-2).
    - (B) Reduction or elimination of the cost of ownership of the [facility](/usc/10/227.md?p=b-2).
    - (C) Reduction in the cost of manufacturing or maintaining [Department](/usc/10/101.md?p=a-6) of Defense products at the [facility](/usc/10/227.md?p=b-2).
    - (D) Preservation of skills or equipment related to a core competency of the [facility](/usc/10/227.md?p=b-2).
  - (4) The [non-Army entity](#j-2) agrees to hold harmless and indemnify the [United States](/usc/10/101.md?p=a-1) from any liability or claim for damages or injury to any person or property arising out of the activity, including any damages or injury arising out of a decision by the Secretary of the [Army](/usc/10/7001.md) or the Secretary of Defense to suspend or terminate an activity, or any portion thereof, during a war or national emergency or to require the [facility](/usc/10/227.md?p=b-2) to perform other work or provide other services on a priority basis, except—
    - (A) in any case of willful misconduct or gross negligence; and
    - (B) 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 [United States](/usc/10/101.md?p=a-1) to comply with quality, schedule, or cost performance requirements in the contract to carry out the activity.
- (d) **Arrangement Methods and Authorities.—** To establish a cooperative arrangement under [subsection (a)](#a) with a [non-Army entity](#j-2), the approval authority described in [subsection (f)](#f) for an [Army industrial facility](#j-1) may—
  - (1) enter into a firm, fixed-price contract (or, if agreed to by the [non-Army entity](#j-2), a cost reimbursement contract) for a sale of articles or services or use of equipment or [facilities](/usc/10/227.md?p=b-2);
  - (2) enter into a multiyear contract for a period not to exceed five years, unless a longer period is specifically authorized by law;
  - (3) charge the [non-Army entity](#j-2) the amounts necessary to recover the [full costs](#j-4) of the articles or services provided, including capital improvement costs, and equipment depreciation costs associated with providing the articles, services, equipment, or [facilities](/usc/10/227.md?p=b-2);
  - (4) authorize the [non-Army entity](#j-2) to use [incremental funding](#j-3) to [pay](/usc/10/101.md?p=a-15) for the articles, services, or use of equipment or [facilities](/usc/10/227.md?p=b-2); and
  - (5) accept payment-in-kind.
- (e) **Proceeds Credited to Working Capital Fund.—** The proceeds received from the sale of an article or service pursuant to a contract or other cooperative arrangement under this section shall be credited to the working capital [fund](/usc/10/2871.md?p=6) that incurs the cost of manufacturing the article or performing the service.
- (f) **Approval Authority.—** The authority of an [Army industrial facility](#j-1) to enter into a cooperative arrangement under [subsection (a)](#a) shall be exercised at the level of the commander of the major subordinate command of the [Army](/usc/10/7001.md) that has responsibility for the [facility](/usc/10/227.md?p=b-2). The commander may approve such an arrangement on a case-by-case basis or a class basis.
- (g) **Commercial Sales.—** Except in the case of work performed for the [Department](/usc/10/101.md?p=a-6) of Defense, for a contract of the [Department](/usc/10/101.md?p=a-6) of Defense, for foreign military sales, or for authorized foreign direct commercial sales (defense articles or defense services sold to a foreign government or international organization under export controls), a sale of articles or services may be made under this section only if the approval authority described in [subsection (f)](#f) determines that the articles or services are not available from a commercial source located in the [United States](/usc/10/101.md?p=a-1) in the required quantity or quality, or within the time required.
- (h) **Exclusion From Depot-Level Maintenance and Repair Percentage Limitation.—** Amounts expended for the performance of a depot-level maintenance and repair workload by non-Federal Government personnel at an [Army industrial facility](#j-1) shall not be counted for purposes of applying the percentage limitation in [section 2466(a) of this title](/usc/10/2466.md?p=a) if the personnel are provided by a [non-Army entity](#j-2) pursuant to a cooperative arrangement entered into under [subsection (a)](#a).
- (i) **Relationship to Other Laws.—** Nothing in this section shall be construed to affect the application of—
  - (1) foreign military sales and the export controls provided for in sections 30 and 38 of the Arms Export Control Act ([22 U.S.C. 2770](/usc/22/2770.md) and 2778) to activities of a cooperative arrangement entered into under [subsection (a)](#a); and
  - (2) [section 2667 of this title](/usc/10/2667.md) to leases of non-excess property in the administration of such an arrangement.
- (j) **Definitions.—** In this section:
  - (1) The term “Army industrial facility” [includes](/usc/10/101.md?p=g-4) an ammunition plant, an arsenal, a depot, and a manufacturing plant.
  - (2) The term “non-Army entity” [includes](/usc/10/101.md?p=g-4) the following:
    - (A) A Federal [agency](/usc/10/4701.md?p=g-1) (other than the [Department](/usc/10/101.md?p=a-6) of the [Army](/usc/10/7001.md)).
    - (B) An entity in industry or commercial sales.
    - (C) A [State](/usc/10/2815a.md?p=g-2) or political subdivision of a [State](/usc/10/2815a.md?p=g-2).
    - (D) An institution of higher education or vocational training institution.
  - (3) The term “incremental funding” means a series of partial payments that—
    - (A) are made as the work on manufacture or articles is being performed or services are being performed or equipment or [facilities](/usc/10/227.md?p=b-2) are used, as the case may be; and
    - (B) result in full payment being completed as the required work is being completed.
  - (4) The term “full costs”, with respect to articles or services provided under a cooperative arrangement entered into under [subsection (a)](#a), means the [variable costs](#j-5) and the fixed costs that are directly related to the production of the articles or the provision of the services.
  - (5) The term “variable costs” means the costs that are expected to fluctuate directly with the volume of sales or services provided or the use of equipment or [facilities](/usc/10/227.md?p=b-2).

## Source credit

(Added Pub. L. 108–375, div. A, title III, § 353(a), Oct. 28, 2004, 118 Stat. 1859, § 4544; amended Pub. L. 109–163, div. A, title III, § 321, Jan. 6, 2006, 119 Stat. 3191; Pub. L. 109–364, div. A, title X, § 1071(a)(29), Oct. 17, 2006, 120 Stat. 2399; Pub. L. 110–181, div. A, title III, § 328(a), Jan. 28, 2008, 122 Stat. 66; Pub. L. 111–84, div. A, title III, § 324(a), Oct. 28, 2009, 123 Stat. 2253; Pub. L. 112–81, div. A, title III, § 323(a), Dec. 31, 2011, 125 Stat. 1362; renumbered § 7544, Pub. L. 115–232, div. A, title VIII, § 808(d), Aug. 13, 2018, 132 Stat. 1839.)

## Notes

### Editorial Notes

### Prior Provisions

Prior sections 7544 to 7547 were renumbered sections 8764 to 8767 of this title, respectively.

### Amendments

2018—Pub. L. 115–232 renumbered section 4544 of this title as this section.

2011—Subsec. (a). Pub. L. 112–81, § 323(a)(1), struck out second sentence which read as follows: “This authority may be used to enter into not more than eight contracts or cooperative agreements in addition to the contracts and cooperative agreements in place as of the date of the enactment of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181).”

Subsec. (k). Pub. L. 112–81, § 323(a)(2), struck out subsec. (k). Prior to amendment, text read as follows: “The authority to enter into a cooperative arrangement under subsection (a) expires September 30, 2014.”

2009—Subsec. (a). Pub. L. 111–84 inserted “in addition to the contracts and cooperative agreements in place as of the date of the enactment of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181)” after “not more than eight contracts or cooperative agreements”.

2008—Subsec. (a). Pub. L. 110–181, § 328(a)(1), inserted at end “This authority may be used to enter into not more than eight contracts or cooperative agreements.”

Subsec. (k). Pub. L. 110–181, § 328(a)(2), substituted “2014” for “2009”.

2006—Subsec. (d). Pub. L. 109–364 substituted “Arrangement” for “Arangement” in heading.

Pub. L. 109–163, § 321(b)(1), substituted “subsection (f)” for “subsection (e)” in introductory provisions.

Subsecs. (e), (f). Pub. L. 109–163, § 321(b)(2), (3), added subsec. (e) and redesignated former subsec. (e) as (f). Former subsec. (f) redesignated (g).

Subsec. (g). Pub. L. 109–163, § 321(b)(4), substituted “subsection (f)” for “subsection (e)”.

Pub. L. 109–163, § 321(b)(2), redesignated subsec. (f) as (g). Former subsec. (g) redesignated (h).

Subsecs. (h), (i). Pub. L. 109–163, § 321(b)(2), redesignated subsecs. (g) and (h) as (h) and (i), respectively. Former subsec. (i) redesignated (j).

Subsec. (j). Pub. L. 109–163, § 321(b)(2), redesignated subsec. (i) as (j). Former subsec. (j) redesignated (k).

Pub. L. 109–163, § 321(a), substituted “September 30, 2009.” for “September 30, 2009, and arrangements entered into under such subsection shall terminate not later than that date.”

Subsec. (k). Pub. L. 109–163, § 321(b)(2), redesignated subsec. (j) as (k).

### Statutory Notes and Related Subsidiaries

### Effective Date of 2018 Amendment

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.