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(2) A grant may not be awarded under the program, and a contract, cooperative agreement, or other transaction may not be entered into under the program, on any basis other than a cost-sharing basis unless the Secretary of Defense determines that the grant, contract, cooperative agreement, or other transaction, as the case may be, is for a program that

(A) is not likely to have any immediate and direct commercial application; or

(B) is of sufficiently high risk to discourage cost sharing by non-Federal Government sources.

(Added P.L. 103-160, §801(a)(1), Nov. 30, 1993, 107 Stat. 1700; revised in its entirety P.L. 103337, §256(a)(1), Oct. 5, 1994, 108 Stat. 2704.)

SUBCHAPTER V-MISCELLANEOUS TECHNOLOGY BASE POLICIES AND PROGRAMS

Sec.

2531.

2532.

2533.

2534.

2535.

2536.

2537.

2538.

2539. 2539a.

2539b.

Defense memoranda of understanding and related agreements.
Offset policy; notification.

Determinations of public interest under the Buy American Act.

Miscellaneous limitations on the procurement of goods other than United
States goods.

Defense Industrial Reserve.

Award of certain contracts to entities controlled by a foreign government: prohibition.

Improved national defense control of technology diversions overseas.

Industrial mobilization: orders; priorities; possession of manufacturing plants; violations.

Industrial mobilization: plants; lists.

Industrial mobilization: Board on Mobilization of Industries Essential for
Military Preparedness.

Availability of samples, drawings, information, equipment, materials, and
certain services.

§ 2531. Defense memoranda of understanding and related agreements

(a) CONSIDERATIONS IN MAKING AND IMPLEMENTING MOUS AND RELATED AGREEMENTS.-In the negotiation, renegotiation, and implementation of any existing or proposed memorandum of understanding, or any existing or proposed agreement related to a memorandum of understanding, between the Secretary of Defense, acting on behalf of the United States, and one or more foreign countries (or any instrumentality of a foreign country) relating to research, development, or production of defense equipment, or to the reciprocal procurement of defense items, the Secretary of Defense shall

(1) consider the effects of such existing or proposed memorandum of understanding or related agreement on the defense technology and industrial base of the United States; and

(2) regularly solicit and consider comments and recommendations from the Secretary of Commerce with respect to the commercial implications of such memorandum of understanding or related agreement and the potential effects of such memorandum of understanding or related agreement on the international competitive position of United States industry. (b) INTER-AGENCY REVIEW OF EFFECTS ON UNITED STATES INDUSTRY.-Whenever the Secretary of Commerce has reason to believe that an existing or proposed memorandum of understanding

or related agreement has, or threatens to have, a significant adverse effect on the international competitive position of United States industry, the Secretary may request an inter-agency review of the memorandum of understanding or related agreement. If, as a result of the review, the Secretary determines that the commercial interests of the United States are not being served or would not be served by adhering to the terms of such existing memorandum or related agreement or agreeing to such proposed memorandum or related agreement, as the case may be, the Secretary shall recommend to the President the renegotiation of the existing memorandum or related agreement or any modification to the proposed memorandum of understanding or related agreement that he considers necessary to ensure an appropriate balance of interests. (c) LIMITATION ON ENTERING INTO MOUS AND RELATED AGREEMENTS.-A memorandum of understanding or related agreement referred to in subsection (a) may not be entered into or implemented if the President, taking into consideration the results of the inter-agency review, determines that such memorandum of understanding or related agreement has or is likely to have a significant adverse effect on United States industry that outweighs the benefits of entering into or implementing such memorandum or agreement.

(Added as § 2504 P.L. 100-456, §824, Sept. 29, 1988, 102 Stat. 2019, and amended P.L. 101189, §815(a), Nov. 29, 1989, 103 Stat. 1500; P.L. 101-510, § 1453, Nov. 5, 1990, 104 Stat. 1694; redesignated §2531 and amended P.L. 102-484, §§ 4202(a), 4271(c), Oct. 23, 1992, 106 Stat. 2659, 2696.)

§ 2532. Offset policy; notification 6

(a) ESTABLISHMENT OF OFFSET POLICY.-The President shall establish, consistent with the requirements of this section, a comprehensive policy with respect to contractual offset arrangements in connection with the purchase of defense equipment or supplies which addresses the following:

(1) Transfer of technology in connection with offset arrangements.

(2) Application of offset arrangements, including cases in which United States funds are used to finance the purchase by a foreign government.

(3) Effects of offset arrangements on specific subsectors of the industrial base of the United States and for preventing or ameliorating any serious adverse effects on such subsectors.

(b) TECHNOLOGY TRANSFER.-(1) No official of the United States may enter into a memorandum of understanding or other agreement with a foreign government that would require the transfer of United States defense technology to a foreign country or a foreign firm in connection with a contract that is subject to an offset arrangement if the implementation of such memorandum or agreement would significantly and adversely affect the defense industrial base of the United States and would result in a substantial financial loss to a United States firm.

For a provision relating to the Department of Defense offset policy, see section 825 of the National Defense Authorization Act, Fiscal Year 1989 (P.L. 100–456; 102 Stat. 2019), as amended by section 816 of P.L. 101–189, set forth beginning on page 417.

(2) Paragraph (1) shall not apply in the case of a memorandum of understanding or agreement described in paragraph (1) if the Secretary of Defense, in consultation with the Secretary of Commerce and the Secretary of State, determines that a transfer of United States defense technology pursuant to such understanding or agreement will result in strengthening the national security of the United States and so certifies to Congress.

(3) If a United States firm is required under the terms of a memorandum of understanding, or other agreement entered into by the United States with a foreign country, to transfer defense technology to a foreign country, the United States firm may protest the determination to the Secretary of Defense on the grounds that the transfer of such technology would adversely affect the defense industrial base of the United States and would result in substantial financial loss to the protesting firm. The Secretary of Defense, in consultation with the Secretary of Commerce and the Secretary of State, shall make the final determination of the validity of the protesting firm's claim.

(c) NOTIFICATION REGARDING OFFSETS.-If at any time a United States firm enters into a contract for the sale of a weapon system or defense-related item to a foreign country or foreign firm and such contract is subject to an offset arrangement exceeding $50,000,000 in value, such firm shall notify the Secretary of Defense of the proposed sale. Notification shall be made under this subsection in accordance with regulations prescribed by the Secretary of Defense in consultation with the Secretary of Commerce. (d) DEFINITIONS.-In this section:

(1) The term "United States firm" means a business entity that performs substantially all of its manufacturing, production, and research and development activities in the United States.

(2) The term "foreign firm" means a business entity other than a United States firm.

(Added as § 2505 P.L. 100-456, § 825(b), Sept. 29, 1988, 102 Stat. 2020; redesignated § 2532 P.L. 102-484, § 4202(a), Oct. 23, 1992, 106 Stat. 2659.)

§ 2533. Determinations of public interest under the Buy American Act

(a) In determining under section 2 of title III of the Act of March 3, 19937 (41 U.S.C. 10a), popularly known as the 'Buy American Act', whether application of title III of such Act is inconsistent with the public interest, the Secretary of Defense shall consider the following:

(1) The bids or proposals of small business firms in the United States which have offered to furnish American goods. (2) The bids or proposals of all other firms in the United States which have offered to furnish American goods.

(3) The United States balance of payments.

(4) The cost of shipping goods which are other than American goods.

7 In subsection (a), reference to the Act of "March 3, 1993" should be a reference to the Act of "March 3, 1933".

(5) Any duty, tariff, or surcharge which may enter into the cost of using goods which are other than American goods.

(6) A need to ensure that the Department of Defense has access to advanced, state-of-the-art commercial technology.

(7) The need to protect the national technology and industrial base, to preserve and enhance the national technology employment base, and to provide for a defense mobilization base.

(8) A need to ensure that application of different rules of origin for United States end items and foreign end items does not result in an award to a firm other than a firm providing a product produced in the United States.

(9) Any need

(A) to maintain the same source of supply for spare and replacement parts for an end item that qualifies as an American good; or

(B) to maintain the same source of supply for spare and replacement parts in order not to impair integration of the military and commercial industrial base.

(10) The national security interests of the United States. (b) In this section, the term "goods which are other than American goods" means

(1) an end product that is not mined, produced, or manufactured in the United States; or

(2) an end product that is manufactured in the United States but which includes components mined, produced, or manufactured outside the United States the aggregate cost of which exceeds the aggregate cost of the components of such end product that are mined, produced, or manufactured in the United States.

(Added as § 2501 P.L. 100-370, § 3(a)(1), July 19, 1988, 102 Stat. 855; redesignated § 2506 P.L. 100-456, 8821(b)(1XA), Sept. 29, 1988, 102 Stat. 2014; redesignated $2533 P.L. 102-484, §4202(a), Oct. 23, 1992, 106 Stat. 2659; amended P.L. 103-337, §812(a), (b)(1), Oct. 5, 1994, 108 Stat. 2815, 2816.)

§2534. Miscellaneous limitations on the procurement of goods other than United States goods

(a) LIMITATION ON CERTAIN PROCUREMENTS.-The Secretary of Defense may procure any of the following items only if the manufacturer of the item satisfies the requirements of subsection (b):

• Section 832 of the National Defense Authorization Act for Fiscal Years 1992 and 1993 (P.L. 102-190, 105 Stat. 1446; 10 U.S.C. 113 note) provides:

SEC. 832. REQUIREMENTS RELATING TO EUROPEAN MILITARY PROCUREMENT PRACTICES.

(a) EUROPEAN PROCUREMENT PRACTICES.-The Secretary of Defense shall

(1) compute the total value of American-made military goods and services procured each year by European governments or companies;

(2) review defense procurement practices of European governments to determine what factors are considered in the selection of contractors and to determine whether American firms are discriminated against in the selection of contractors for purchases by such governments of military goods and services; and

(3) establish a procedure for discussion with European governments about defense contract awards made by them that American firms believe were awarded unfairly. (b) DEFENSE TRADE AND COOPERATION WORKING GROUP.-The Secretary of Defense shall establish a defense trade and cooperation working group. The purpose of the group is to evaluate the impact of, and formulate United States positions on, European initiatives that affect United States defense trade, cooperation, and technology security. In carrying out the responsibilities of the working group, members of the group shall consult, as appropriate, with personnel in the Departments of State and Commerce and in the Office of the United States Trade Representative.

(c) [omitted]

(1) BUSES.-Multipassenger motor vehicles (buses).

(2) CHEMICAL WEAPONS ANTIDOTE.-Chemical weapons antidote contained in automatic injectors (and components for such injectors).

(3) AIR CIRCUIT BREAKERS.-Air circuit breakers for naval vessels.

(4) VALVES AND MACHINE TOOLS.-Items in the following categories:

(A) Powered and non-powered valves in Federal Supply Classes 4810 and 4820 used in piping for naval surface ships and submarines.

(B) Machine tools in the Federal Supply Classes for metal-working machinery numbered 3405, 3408, 3410 through 3419, 3426, 3433, 3438, 3441 through 3443, 3445, 3446, 3448, 3449, 3460, and 3461.

(5) BALL BEARINGS AND ROLLER BEARINGS.-Ball bearings and roller bearings, in accordance with subpart 225.71 of part 225 of the Defense Federal Acquisition Regulation Supplement, as in effect on October 23, 1992.

(b) MANUFACTURER IN THE NATIONAL TECHNOLOGY AND INDUSTRIAL BASE.

(1) GENERAL REQUIREMENT.-A manufacturer meets the requirements of this subsection if the manufacturer is part of the national technology and industrial base.

(2) MANUFACTURERS OF CHEMICAL WEAPONS ANTIDOTE.—In the case of a procurement of chemical weapons antidote referred to in subsection (a)(2), a manufacturer meets the requirements of this subsection only if the manufacturer

(A) meets the requirement set forth in paragraph (1); (B) is an existing producer under the industrial preparedness program at the time the contract is awarded;

(C) has received all required regulatory approvals; and (D) when the contract for the procurement is awarded, has in existence in the national technology and industrial base the plant, equipment, and personnel necessary to perform the contract.

(c) APPLICABILITY TO CERTAIN ITEMS.

(1) AIR CIRCUIT BREAKERS.-Subsection (a) does not apply to a procurement of spares or repair parts needed to support air circuit breakers produced or manufactured outside the United States.

(2) VALVES AND MACHINE TOOLS. (A) Contracts to which subsection (a) applies include the following contracts for the procurement of items described in paragraph (4) of such subsection:

(i) A contract for procurement of such an item for use in property under the control of the Department of Defense, including any Government-owned, contractor-operated facility.

(ii) A contract that is entered into by a contractor on behalf of the Department of Defense for the purpose of pro

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