Sec. 2213.

Than to Armed Forces", and added item for chapter 152.

1990-Pub. L. 101-510, div. A, title VIII, § 823(b)(1), title XVIII, § 1801(a)(2), Nov. 5, 1990, 104 Stat. 1602, 1757, added item for chapter 149, redesignated former item for chapter 149 as item for chapter 150, and added item for chapter 172.

1989-Pub. L. 101-189, div. A, title IX, § 931(e)(2), Nov. 29, 1989, 103 Stat. 1535, substituted "Cooperative Agreements" for "Acquisition and Cross-Servicing Agreements" in item for chapter 138.

1988-Pub. L. 100-456, div. A, title III, §§ 342(a)(2), 344(b)(2), title VIII, § 821(b)(2), Sept. 29, 1988, 102 Stat. 1961, 1962, 2016, substituted "Defense Industrial Base" for "Buy American Requirements" in item for chapter 148, substituted "Property Records and Report of Theft or Loss of Certain Property" for "Property Records" in item for chapter 161, and added item for chapter 171.

Pub. L. 100-370, §§ 1(e)(2), 2(a)(2), 3(a)(2), July 19, 1988, 102 Stat. 845, 854, 855, added items for chapters 134, 146, and 148.

1987-Pub. L. 100-26, § 7(c)(1), Apr. 21, 1987, 101 Stat. 280, substituted "Acquisition and Cross-Servicing Agreements with NATO Allies and Other Countries" for "North Atlantic Treaty Organization Acquisition and Cross-Servicing Agreements" in item for chapter 138, substituted "Major Defense Acquisition Programs" for "Oversight of Cost Growth in Major Programs" and "2430" for "2431" in item for chapter 144, and substituted "2721" for "2701" in item for chapter 161.

1986-Pub. L. 99-661, div. A, title XIII, § 1343(a)(22), Nov. 14, 1986, 100 Stat. 3994, substituted "2341" for "2321" in item for chapter 138.

Pub. L. 99-499, title II, § 211(a)(2), Oct. 17, 1986, 100 Stat. 1725, added item for chapter 160.

Pub. L. 99-433, title VI, § 605(b), Oct. 1, 1986, 100 Stat. 1075a, added item for chapter 144.

1984-Pub. L. 98-525, title XII, § 1241(a)(2), Oct. 19, 1984, 98 Stat. 2606, added item for chapter 142.

1982-Pub. L. 97-295, § 1(50)(E), Oct. 12, 1982, 96 Stat. 1300, added item for chapter 167.

Pub. L. 97-214, § 2(b), July 12, 1982, 96 Stat. 169, added item for chapter 169.

1980-Pub. L. 96-323, § 2(b), Aug. 4, 1980, 94 Stat. 1019, added item for chapter 138.

2214. 2215.

Limitation on acquisition of excess supplies. Transfer of funds: procedure and limitations. Transfer of funds to other departments and agencies: limitation.

1994-Pub. L. 103-355, title II, § 2454(c)(3)(A), title III, § 3061(b), title V, § 5001(a)(2), Oct. 13, 1994, 108 Stat. 3326, 3336, 3350, substituted "Regulations on procurement, production, warehousing, and supply distribution functions" for "Obligation of funds: limitation" in item 2202, struck out item 2212 "Contracted advisory and assistance services: accounting proce dures", and added item 2220.

Pub. L. 103-337, div. A, title III, § 373(b), div. B, title XXVIII, § 2804(b)(2), Oct. 5, 1994, 108 Stat. 2736, 3053, substituted "Reimbursements" for "Availability of reimbursements" in item 2205 and added item 2219.

1993-Pub. L. 103-160, div. A, title XI, § 1106(a)(2), Nov. 30, 1993, 107 Stat. 1750, added item 2215. 1992-Pub. L. 102-484, div. A, title X, § 1024(a)(2), Oct. 23, 1992, 106 Stat. 2488, added item 2218. 1991-Pub. L. 102-190, div. A, title III, § 317(b), Dec. 5, 1991, 105 Stat. 1338, added item 2213.

1990-Pub. L. 101-510, div. A, title XIII, § 1331(2), title XIV, §§ 1482(c)(2), 1484(i)(6), Nov. 5, 1990, 104 Stat. 1673, 1710, 1718, struck out item 2213 "Cooperative military airlift agreements", added item 2214, and struck out items 2215 "Reports on unobligated balances" and 2216 "Annual report on budgeting for inflation".

1988-Pub. L. 100-370, § 1(d)(4), July 19, 1988, 102 Stat. 843, added items 2201, 2212, and 2217.

1986-Pub. L. 99-661, div. A, title XIII, § 1307(a)(2), Nov. 14, 1986, 100 Stat. 3981, added items 2215 and 2216.

1982-Pub. L. 97-252, title XI, § 1125(b), Sept. 8, 1982, 96 Stat. 758, added item 2213.

Pub. L. 97-214, § 10(a)(1), July 12, 1982, 96 Stat. 174, struck out item 2212 "Transmission of annual military construction authorization request".

1978-Pub. L. 95-356, title VIII, § 802(a)(2), Sept. 8, 1978, 92 Stat. 585, added item 2212.

1962-Pub. L. 87-651, title II, § 207(b), Sept. 7, 1962, 76 Stat. 523, added items 2203 to 2211.

1958-Pub. L. 85-599, § 3(c), Aug. 6, 1958, 72 Stat. 516, struck out item 2201 "General functions of Secretary of Defense".

§ 2201. Apportionment of funds: authority for exemp tion; excepted expenses

(a) EXEMPTION FROM APPORTIONMENT REQUIREMENT.-If the President determines such action to be necessary in the interest of national defense, the President may exempt from the provisions of section 1512 of title 31 appropriations, funds, and contract authorizations available for military functions of the Department of Defense.

(b) AIRBORNE ALERTS.-Upon a determination by the President that such action is necessary. the Secretary of Defense may provide for the cost of an airborne alert as an excepted expense under section 3732(a) of the Revised Statutes (41 U.S.C. 11(a)).

(c) MEMBERS ON ACTIVE DUTY.-Upon a determination by the President that it is necessary

to increase (subject to limits imposed by law) the number of members of the armed forces on active duty beyond the number for which funds are provided in appropriation Acts for the Department of Defense, the Secretary of Defense may provide for the cost of such additional members as an excepted expense under section 3732(a) of the Revised Statutes (41 U.S.C. 11(a)).

(d) NOTIFICATION TO CONGRESS.-The Secretary of Defense

(1) shall immediately notify Congress of the use of any authority under this section; and

(2) shall submit monthly reports to Congress on the estimated obligations incurred pursuant to subsections (b) and (c).

(Added Pub. L. 100-370, § 1(d)(1)(A), July 19, 1988, 102 Stat. 841.)

HISTORICAL AND REVISION NOTES

Section is based on Pub. L. 99-190, § 101(b) [title VIII, § 8009], Dec. 19, 1985, 99 Stat. 1185, 1204.

In two instances, the source law to be codified by the bill includes provisions that on their face require that the Department of Defense notify Congress of certain actions. These notification requirements were terminated by section 602 of the Goldwater-Nichols Department of Defense Reorganization Act of 1986 (Public Law 99-433), which terminated all recurring reporting requirements applicable to the Department of Defense except for those requirements that were specifically exempted in that section. The source law sections are sections 8009(c) and 8005(j) (proviso) of the FY86 defense appropriations Act (Public Law 99-190), enacted December 19, 1985, which would be codified as section 2201 of title 10 (by section 1(d) of the bill) and section 7313(a) of title 10 (by section 1(n) of the bill). In codifying the authorities provided the Department of Defense by these two provisions of law, the committee believes that it is appropriate to reinstate the congressional notification requirements that go with those authorities. These sections were recurring annual appropriation provisions for many years and were made permanent only months before the enactment of the 1986 Reorganization Act. It is the committee's belief that the failure to exempt these provisions from the general reports termination provision was inadvertent and notes that the notification provisions had in fact previously applied to the Department of Defense for many years. The action of the committee restores the status quo as it existed before the Reorganization Act.

PRIOR PROVISIONS

A prior section 2201, act Aug. 10, 1956, ch. 1041, 70A Stat. 119, prescribed the general functions of the Secretary of Defense, prior to repeal by Pub. L. 85-599, § 3(c), Aug. 6, 1958, 72 Stat. 516. See section 113 of this title.

§ 2202. Regulations_on procurement, production, warehousing, and supply distribution functions The Secretary of Defense shall prescribe regulations governing the performance within the Department of Defense of the procurement, production, warehousing, and supply distribution functions, and related functions, of the Department of Defense.

(Aug. 10, 1956, ch. 1041, 70A Stat. 120; Dec. 4, 1987, Pub. L. 100-180, div. A, title XII, § 1202, 101 Stat. 1153; Oct. 13, 1994, Pub. L. 103-355, title III, § 3061(a), 108 Stat. 3336.)

The words "an officer or agency may only" are substituted for the words "no officer or agency • shall except". The word "of", before the words "the Department", is substituted for the words "in or under". The words "under regulations prescribed" are substituted for the words "in accordance with regulations issued". The words "after the effective date of this section" and 41:162(b) are omitted as executed. The words "or equipment” are omitted as covered by the definition of "supplies" in section 101(26) of this title.

AMENDMENTS

1994-Pub. L. 103-355 amended heading and text generally. Prior to amendment, text read as follows: "(a) Notwithstanding any other provision of law, an officer or agency of the Department of Defense may obligate funds for procuring, producing, warehousing, or distributing supplies, or for related functions of supply management, only under regulations prescribed by the Secretary of Defense. The purpose of this section is to achieve the efficient, economical, and practical operation of an integrated supply system to meet the needs of the military departments without duplicate or overlapping operations or functions.

"(b) Except as otherwise provided by law, the availability for obligation of funds appropriated for any program, project, or activity of the Department of Defense expires at the end of the three-year period beginning on the date that such funds initially become available for obligation unless before the end of such period the Secretary of Defense enters into a contract for such program, project, or activity."

1987-Pub. L. 100-180 designated existing provisions as subsec. (a) and added subsec. (b).

EFFECTIVE DATE OF 1994 AMENDMENT

For effective date and applicability of amendment by Pub. L. 103-355, see section 10001 of Pub. L. 103-355, set out as a note under section 251 of Title 41, Public Contracts.

§ 2203. Budget estimates

To account for, and report, the cost of performance of readily identifiable functional programs and activities, with segregation of operating and capital programs, budget estimates of the Department of Defense shall be prepared, presented, and justified, where practicable, and authorized programs shall be administered, in such form and manner as the Secretary of Defense, subject to the authority and direction of the President, may prescribe. As far as practicable, budget estimates and authorized programs of the military departments shall be uniform and in readily comparable form. The budget for the Department of Defense submitted to Congress for each fiscal year shall include data projecting the effect of the appropriations requested for materiel readiness requirements. The Secretary of Defense shall provide that the budget justification documents for such budget include information on the number of employees of contractors estimated to be working on contracts of the Department of Defense during the fiscal year for which the budget is submitted. Such information shall be set forth in

terms of employee-years or such other measure as will be uniform and readily comparable with civilian personnel of the Department of Defense.

(Added Pub. L. 87-651, title II, § 207(a), Sept. 7, 1962, 76 Stat. 520; amended Pub. L. 97-295, § 1(21), Oct. 12, 1982, 96 Stat. 1290; Pub. L. 99-661, div. A, title III, § 311, Nov. 14, 1986, 100 Stat. 3851.)

HISTORICAL AND REVISION NOTES

1986-Pub. L. 99-661 inserted provisions that budget justification documents information

include

ed for fiscal years 1978 and 1979 and in the five-year defense program, and to inform Congress of any subsequent changes in the aforementioned materiel readiness requirements and the reasons for such changes.

MODIFICATIONS IN UNITED STATES STRATEGIC ARMS PROGRAMS ON RecommendATION OF PRESIDENT Pub. L. 95-79, title VIII, § 813, July 30, 1977, 91 Stat. 337, provided that in authorizing procurement under section 101 of that Act and research and development under section 201 of that Act, Congress was asserting its readiness to consider, in accordance with the processes set forth in the Congressional Budget and Impoundment Control Act of 1974 [2 U.S.C. 621 et seq.] and the Budget and Accounting Act, 1921 [31 U.S.C. 1101 et seq.], such modifications in United States strategic arms programs as the President might recommend to facilitate either negotiation or agreement in the Strategic Arms Limitation Talks.

§ 2204. Obligation of appropriations

To prevent overdrafts and deficiencies in the fiscal year for which appropriations are made, appropriations made to the Department of Defense or to a military department, and reimbursements thereto, are available for obligation and expenditure only under scheduled rates of obligation, or changes thereto, that have been approved by the Secretary of Defense. This section does not prohibit the Department of Defense from incurring a deficiency that it has been authorized by law to incur.

(Added Pub. L. 87-651, title II, § 207(a), Sept. 7, 1962, 76 Stat. 520.)

HISTORICAL AND REVISION NOTES

on

number of employees estimated to be working during the fiscal year, such information to be set forth in terms of employee-years or other measure as is uniform and comparable with civilian personnel of the Department of Defense.

1982-Pub. L. 97-295 inserted provision requiring that the budget for the Department of Defense submitted annually to Congress include data projecting the effect of the appropriations requested for materiel readiness requirements.

PRESIDENTIAL RECOMMENDATIONS RESPECTING MODIFICATIONS IN CRUISE MISSILE PROGRAM Pub. L. 95-184, title II, § 203, Nov. 15, 1977, 91 Stat. 1382, provided that in authorizing funds under that Act (Pub. L. 95-184], Congress was asserting its readiness to consider, in accordance with the processes set forth in the Congressional Budget and Impoundment Control Act of 1974 [2 U.S.C. 621 et seq.] and the Budget and Accounting Act, 1921 [31 U.S.C. 1101 et seq.), such modifications in the United States cruise missile programs as the President might recommend to facilitate either negotiation or agreement in arms limitation or reduction talks.

REPORT TO CONGRESSIONAL COMMITTEES ON MATERIAL READINESS REQUIREMENTS FOR ARMED FORCES Pub. L. 95-79, title VIII, § 812, July 30, 1977, 91 Stat. 336, as amended by Pub. L. 97-295, § 6(b), Oct. 12, 1982, 96 Stat. 1314, directed Secretary of Defense to submit to Congress, not later than February 15, 1978, a report setting forth quantifiable and measurable material readiness requirements for the Armed Forces, including the Reserve components thereof, monthly readiness status of the Armed Forces, including the reserve components thereof, during fiscal year 1977, and any changes in such requirements and status project

2204

Source (Statutes at Large)

July 26, 1947, ch. 343, § 404; added Aug. 10. 1949, ch. 412, § 11 (7th par.), 63 Stat. 587.

The words "on and after the beginning of the next fiscal year following August 10, 1949," are omitted as executed. The last sentence is substituted for the proviso in 5 U.S.C. 172c.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 2384a of this title.

§ 2205. Reimbursements

(a) AVAILABILITY OF REIMBURSEMENTS.-Reimbursements made to appropriations of the Department of Defense or a department or agency thereof under sections 1535 and 1536 of title 31, or other amounts paid by or on behalf of a department or agency of the Department of Defense to another department or agency of the Department of Defense, or by or on behalf of personnel of any department or organization, for services rendered or supplies furnished, may be credited to authorized accounts. Funds so credited are available for obligation for the same period as the funds in the account so credited. Such an account shall be accounted for as one fund on the books of the Department of the Treasury.

(b) FIXED RATE FOR REIMBURSEMENT FOR CERTAIN SERVICES.-The Secretary of Defense and

the Secretaries of the military departments may charge a fixed rate for reimbursement of the costs of providing planning, supervision, administrative, or overhead services incident to any construction, maintenance, or repair project to real property or for providing facility services, irrespective of the appropriation financing the project or facility services.

(Added Pub. L. 87-651, title II, § 207(a), Sept. 7, 1962, 76 Stat. 520; amended Pub. L. 96-513, title V, § 511(71), Dec. 12, 1980, 94 Stat. 2926; Pub. L. 97-258, § 3(b)(4), Sept. 13, 1982, 96 Stat. 1063; Pub. L. 103-337, div. B, title XXVIII, § 2804(a), (b)(1), Oct. 5, 1994, 108 Stat. 3053.)

"Reimburse

1994-Pub. L. 103-337 substituted ments" for "Availability of reimbursements" as section catchline, designated existing provisions as subsec. (a) and inserted subsec, heading, and added subsec. (b).

1982-Pub. L. 97-258 substituted "sections 1535 and 1536 of title 31" for "the Act of March 4, 1915 (31 U.S.C. 686)".

1980-Pub. L. 96-513 substituted "the Act of March 4, 1915 (31 U.S.C. 686)" for "section 686 of title 31".

EFFECTIVE DATE OF 1980 AmendmeNT

Amendment by Pub. L. 96-513 effective Dec. 12, 1980, see section 701(b)(3) of Pub. L. 96-513, set out as a note under section 101 of this title.

§ 2206. Disbursement of funds of military department to cover obligation of another agency of Department of Defense

As far as authorized by the Secretary of Defense, a disbursing official of a military department may, out of available advances, make disbursements to cover obligations in connection with any function, power, or duty of another department or agency of the Department of Defense and charge those disbursements on vouchers, to the appropriate appropriation of that department or agency. Disbursements so made shall be adjusted in settling the accounts of the disbursing official.

(Added Pub. L. 87-651, title II, § 207(a), Sept. 7, 1962, 76 Stat. 520; amended Pub. L. 97-258, § 2(b)(1)(A), Sept. 13, 1982, 96 Stat. 1052.)

§ 2207. Expenditure of appropriations: limitation

Money appropriated to the Department of Defense may not be spent under a contract other than a contract for personal services unless that contract provides that

(1) the United States may, by written notice to the contractor, terminate the right of the contractor to proceed under the contract if the Secretary concerned or his designee finds, after notice and hearing, that the contractor, or his agent or other representative, offered or gave any gratuity, such as entertainment or a gift, to an officer, official, or employee of the United States to obtain a contract or favorable treatment in the awarding, amending, or making of determinations concerning the performance, of a contract; and

(2) if a contract is terminated under clause (1), the United States has the same remedies against the contractor that it would have had if the contractor had breached the contract and, in addition to other damages, is entitled to exemplary damages in an amount at least three, but not more than 10, as determined by the Secretary or his designee, times the cost incurred by the contractor in giving gratuities to the officer, official, or employee concerned. The existence of facts upon which the Secretary makes findings under clause (1) may be reviewed by any competent court.

(Added Pub. L. 87-651, title II, § 207(a), Sept. 7, 1962, 76 Stat. 520.)

The following substitutions are made: "spent" for "expended"; "United States" for "Government"; "if a contract is terminated under clause (1)" for "that in the event any such contract is so terminated"; and "has... that it would have had if" for "shall be entitled to pursue . . . as it could pursue in the event of". The word "official" is inserted for clarity. The words "entered into after June 30, 1954" are omitted as executed.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 2343 of this title.

§ 2208. Working-capital funds

(a) To control and account more effectively for the cost of programs and work performed in the Department of Defense, the Secretary of Defense may require the establishment of working-capital funds in the Department of Defense to

(1) finance inventories of such supplies as he may designate; and

(2) provide working capital for such industrial-type activities, and such commercialtype activities that provide common services within or among departments and agencies of the Department of Defense, as he may designate.

(b) Upon the request of the Secretary of Defense, the Secretary of the Treasury shall establish working-capital funds established under this section on the books of the Department of the Treasury.

(c) Working-capital funds shall be charged, when appropriate, with the cost of

(1) supplies that are procured or otherwise acquired, manufactured, repaired, issued, or used; and

(2) services or work performed;

including applicable administrative expenses, and be reimbursed from available appropriations or otherwise credited for those costs, including applicable administrative expenses and costs of using equipment.

(d) The Secretary of Defense may provide capital for working-capital funds by capitalizing inventories. In addition, such amounts may be appropriated for the purpose of providing capital for working-capital funds as have been specifically authorized by law.

(e) Subject to the authority and direction of the Secretary of Defense, the Secretary of each military department shall allocate responsibility for its functions, powers, and duties to accomplish the most economical and efficient organization and operation of the activities, and the most economical and efficient use of the inventories, for which working-capital funds are authorized by this section.

(f) The requisitioning agency may not incur a cost for supplies drawn from inventories, or services or work performed by industrial-type or commercial-type activities for which working-capital funds may be established under this section, that is more than the amount of appropriations or other funds available for those purposes.

(g) The appraised value of supplies returned to working-capital funds by a department, activity, or agency may be charged to that fund. The proceeds thereof shall be credited to current applicable appropriations and are available for expenditure for the same purposes that those appropriations are so available. Credits may not be made to appropriations under this subsection as the result of capitalization of inventories under subsection (d).

(h) The Secretary of Defense shall prescribe regulations governing the operation of activi

ties and use of inventories authorized by this section. The regulations may, if the needs of the Department of Defense require it and it is otherwise authorized by law, authorize supplies to be sold to, or services to be rendered or work performed for, persons outside the Department of Defense. However, supplies available in inventories financed by working capital funds established under this section may be sold to contractors for use in performing contracts with the Department of Defense. Working-capital funds shall be reimbursed for supplies so sold, services so rendered, or work so performed by charges to applicable appropriations or payments received in cash.

(i) For provisions relating to sales outside the Department of Defense of manufactured 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, see section 4543 of this title.

(j) The Secretary of a military department may authorize a working capital funded industrial facility of that department to manufac ture or remanufacture articles and sell these articles, as well as manufacturing or remanufacturing services provided by such facilities, to persons outside the Department of Defense if

(1) the person purchasing the article or service is fulfilling a Department of Defense contract; and

(2) the Department of Defense solicitation for such contract is open to competition between Department of Defense activities and private firms.

(k) The Secretary of Defense shall provide that of the total amount of payments received in a fiscal year by funds established under this section for industrial-type activities, not less than 3 percent during fiscal year 1985, not less than 4 percent during fiscal year 1986, and not less than 5 percent during fiscal year 1987 shall be used for the acquisition of capital equipment for such activities.

(Added Pub. L. 87-651, title II, § 207(a), Sept. 7, 1962, 76 Stat. 521; amended Pub. L. 97-295, § 1(22), Oct. 12, 1982, 96 Stat. 1290; Pub. L 98-94, title XII, § 1204(a), Sept. 24, 1983, 97 Stat. 683; Pub. L. 98-525, title III, § 305, Oct. 19, 1984, 98 Stat. 2513; Pub. L. 100-26, § 7(d)(2), Apr. 21, 1987, 101 Stat. 280; Pub. L. 101-510, div. A, title VIII, § 801, title XIII, § 1301(6), Nov. 5, 1990, 104 Stat. 1588, 1668; Pub. L. 102-172, title VIII, § 8137, Nov. 26, 1991, 105 Stat. 1212; Pub. L. 102-484, div. A, title III, § 374, Oct. 23, 1992, 106 Stat. 2385; Pub. L. 103-160, div. A, title I, § 158(b), Nov. 30, 1993, 107 Stat. 1582.)

HISTORICAL AND REVISION NOTES