(a) Authority To Sell Outside DOD.—Regulations under section 2208(h) of this title shall authorize 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 to sell manufactured articles or services to a person outside the Department of Defense if—
(1) in the case of an article, the article is sold to a United States manufacturer, assembler, developer, or other concern—
(B)
for incorporation into items to be sold to, or to be used in a contract with, an agency of the United States;
(2)
in the case of an article, the purchaser is determined by the Department of Defense to be qualified to carry out the proposed work involving the article to be purchased;
(3)
the sale is to be made on a basis that does not interfere with performance of work by the facility for the Department of Defense or for a contractor of the Department of Defense;
(4)
in the case of services, the services are related to an article authorized to be sold under this section and are to be performed in the United States for the purchaser;
(5)
the Secretary of the Army determines that the articles or services are not available from a commercial source located in the United States;
(6)
the purchaser of an article or service agrees to hold harmless and indemnify the United States, except in a case of willful misconduct or gross negligence, from any claim for damages or injury to any person or property arising out of the article or service;
(b) Additional Requirements.—The regulations shall also—
(1)
require that the authority to sell articles or services under the regulations be exercised at the level of the commander of the major subordinate command of the Army with responsibility over the facility concerned;
(2)
authorize a purchaser of articles or services to use advance incremental funding to pay for the articles or services; and
(3) in the case of a sale of commercial articles or commercial services in accordance with subsection (a) by a facility that manufactures large caliber cannons, gun mounts, or recoil mechanisms, or components thereof, authorize such facility—
(A)
to charge the buyer, at a minimum, the variable costs that are associated with the commercial articles or commercial services sold;
(B)
to enter into a firm, fixed-price contract or, if agreed by the buyer, a cost reimbursement contract for the sale; and
(C)
to 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 commercial articles or commercial services sold.
(c) 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.
(d) Definitions.—In this section:
(3) 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—
(4) 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—
(Added Pub. L. 103–160, div. A, title I, § 158(a)(1), Nov. 30, 1993, 107 Stat. 1581, § 4543; amended Pub. L. 103–337, div. A, title I, § 141, Oct. 5, 1994, 108 Stat. 2688; renumbered § 7543, Pub. L. 115–232, div. A, title VIII, § 808(d), Aug. 13, 2018, 132 Stat. 1839.)