1996 US Code
Title 10 - ARMED FORCES
Subtitle A - General Military Law
PART IV - SERVICE, SUPPLY, AND PROCUREMENT
CHAPTER 131 - PLANNING AND COORDINATION
Sec. 2216a - Defense Business Operations Fund

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§2216a. Defense Business Operations Fund

(a) Management of Working-Capital Funds and Certain Activities.—The Secretary of Defense may manage the performance of the working-capital funds and industrial, commercial, and support type activities described in subsection (b) through the fund known as the Defense Business Operations Fund, which is established on the books of the Treasury. Except for the funds and activities specified in subsection (b), no other functions, activities, funds, or accounts of the Department of Defense may be managed or converted to management through the Fund.

(b) Funds and Activities Included.—The funds and activities referred to in subsection (a) are the following:

(1) Working-capital funds established under section 2208 of this title and in existence on December 5, 1991.

(2) Those activities that, on December 5, 1991, were funded through the use of a working-capital fund established under that section.

(3) The Defense Finance and Accounting Service.

(4) The Defense Commissary Agency.

(5) The Defense Reutilization and Marketing Service.

(6) The Joint Logistics Systems Center.

(c) Separate Accounting, Reporting, and Auditing of Funds and Activities.—(1) The Secretary of Defense shall provide in accordance with this subsection for separate accounting, reporting, and auditing of funds and activities managed through the Fund.

(2) The Secretary shall maintain the separate identity of each fund and activity managed through the Fund that (before the establishment of the Fund) was managed as a separate Fund or activity.

(3) The Secretary shall maintain separate records for each function for which payment is made through the Fund and which (before the establishment of the Fund) was paid directly through appropriations, including the separate identity of the appropriation account used to pay for the performance of the function.

(d) Charges for Goods and Services Provided Through the Fund.—(1) Charges for goods and services provided through the Fund shall include the following:

(A) Amounts necessary to recover the full costs of the goods and services, whenever practicable, and the costs of the development, implementation, operation, and maintenance of systems supporting the wholesale supply and maintenance activities of the Department of Defense.

(B) Amounts for depreciation of capital assets, set in accordance with generally accepted accounting principles.

(C) Amounts necessary to recover the full cost of the operation of the Defense Finance Accounting Service.

(2) Charges for goods and services provided through the Fund may not include the following:

(A) Amounts necessary to recover the costs of a military construction project (as defined in section 2801(b) of this title), other than a minor construction project financed by the Fund pursuant to section 2805(c)(1) of this title.

(B) Amounts necessary to cover costs incurred in connection with the closure or realignment of a military installation.

(C) Amounts necessary to recover the costs of functions designated by the Secretary of Defense as mission critical, such as ammunition handling safety, and amounts for ancillary tasks not directly related to the mission of the function or activity managed through the Fund.

(3)(A) The Secretary of Defense may submit to a customer a bill for the provision of goods and services through the Fund in advance of the provision of those goods and services.

(B) The Secretary shall submit to Congress a report on advance billings made pursuant to subparagraph (A)—

(i) when the aggregate amount of all such billings after the date of the enactment of the National Defense Authorization Act for Fiscal Year 1996 reaches 0,000,000; and

(ii) whenever the aggregate amount of all such billings after the date of a preceding report under this subparagraph reaches 0,000,000.

(C) Each report under subparagraph (B) shall include, for each such advance billing, the following:

(i) An explanation of the reason for the advance billing.

(ii) An analysis of the impact of the advance billing on readiness.

(iii) An analysis of the impact of the advance billing on the customer so billed.

(e) Capital Asset Subaccount.—(1) Amounts charged for depreciation of capital assets pursuant to subsection (d)(1)(B) shall be credited to a separate capital asset subaccount established within the Fund.

(2) The Secretary of Defense may award contracts for capital assets of the Fund in advance of the availability of funds in the subaccount.

(f) Procedures For Accumulation of Funds.—The Secretary of Defense shall establish billing procedures to ensure that the balance in the Fund does not exceed the amount necessary to provide for the working capital requirements of the Fund, as determined by the Secretary.

(g) Purchase From Other Sources.—The Secretary of Defense or the Secretary of a military department may purchase goods and services that are available for purchase from the Fund from a source other than the Fund if the Secretary determines that such source offers a more competitive rate for the goods and services than the Fund offers.

(h) Annual Reports and Budget.—The Secretary of Defense shall annually submit to Congress, at the same time that the President submits the budget under section 1105 of title 31, the following:

(1) A detailed report that contains a statement of all receipts and disbursements of the Fund (including such a statement for each subaccount of the Fund) for the fiscal year ending in the year preceding the year in which the budget is submitted.

(2) A detailed proposed budget for the operation of the Fund for the fiscal year for which the budget is submitted.

(3) A comparison of the amounts actually expended for the operation of the Fund for the fiscal year referred to in paragraph (1) with the amount proposed for the operation of the Fund for that fiscal year in the President's budget.

(4) A report on the capital asset subaccount of the Fund that contains the following information:

(A) The opening balance of the subaccount as of the beginning of the fiscal year in which the report is submitted.

(B) The estimated amounts to be credited to the subaccount in the fiscal year in which the report is submitted.

(C) The estimated amounts of outlays to be paid out of the subaccount in the fiscal year in which the report is submitted.

(D) The estimated balance of the subaccount at the end of the fiscal year in which the report is submitted.

(E) A statement of how much of the estimated balance at the end of the fiscal year in which the report is submitted will be needed to pay outlays in the immediately following fiscal year that are in excess of the amount to be credited to the subaccount in the immediately following fiscal year.

(i) Definitions.—In this section:

(1) The term “capital assets” means the following capital assets that have a development or acquisition cost of not less than 0,000:

(A) Minor construction projects financed by the Fund pursuant to section 2805(c)(1) of this title.

(B) Automatic data processing equipment, software.

(C) Equipment other than equipment described in subparagraph (B).

(D) Other capital improvements.

(2) The term “Fund” means the Defense Business Operations Fund.

(Added Pub. L. 104–106, div. A, title III, §371(a)(1), Feb. 10, 1996, 110 Stat. 277, §2216; renumbered §2216a and amended Pub. L. 104–201, div. A, title III, §§363(c), 364, title X, §1074(a)(10), Sept. 23, 1996, 110 Stat. 2493, 2494, 2659.)

Repeal of Section

For contingent effective date of repeal of section by section 363(c) of Pub. L. 104–201, see section 363(c) of 104–201, set out in a Requirement for Preparation of Plan for Improved Operation of Working-Capital Funds and Effect of Failure To Produce an Approved Plan note below.

References in Text

The date of the enactment of the National Defense Authorization Act for Fiscal Year 1996, referred to in subsec. (d)(3)(B)(i), is the date of enactment of Pub. L. 104–106, which was approved Feb. 10, 1996.

Prior Provisions

Provisions similar to those in this section were contained in section 311(b)–(e) of Pub. L. 103–337, section 333(a), (b) of Pub. L. 103–160, section 342 of Pub. L. 102–484, as amended, and section 316 of Pub. L. 102–190, as amended, which were set out as notes under section 2208 of this title, prior to repeal by Pub. L. 104–106, div. A, title III, §371(b).

Amendments

1996—Pub. L. 104–201, §1074(a)(10), renumbered section 2216 of this title as this section.

Subsec. (i)(1). Pub. L. 104–201, §364, substituted “0,000” for “,000”.

Requirement for Preparation of Plan for Improved Operation of Working-Capital Funds and Effect of Failure To Produce an Approved Plan

Section 363 of Pub. L. 104–201 provided that:

“(a) Plan for Improved Operation of Working-Capital Funds.—Not later than September 30, 1997, the Secretary of Defense shall submit to Congress a plan to improve the management and performance of the industrial, commercial, and support type activities of the military departments or the Defense Agencies that are currently managed through the Defense Business Operations Fund.

“(b) Elements of Plan.—The plan required by subsection (a) shall address the following issues:

“(1) The ability of each military department or Defense Agency to set working capital requirements and set charges at its own industrial and supply activities.

“(2) The desirability of separate business accounts for the management of both industrial and supply activities for each military department or Defense Agency.

“(3) Liability for operation losses at industrial and supply activities.

“(4) Reimbursement to the Department of Defense by each military department or Defense Agency of its fair share of the costs of legitimate common business support services (such as accounting and financial services and central logistics services) provided by the Department of Defense.

“(5) The role of the Department of Defense in setting charges or imposing surcharges for activities managed by the business accounts of a military department or Defense Agency (except for the common business support cost described in paragraph (4)), and what such charges should properly reflect.

“(6) The appropriate use of operating profits arising from the operations of the industrial and supply activities of a military department or Defense Agency.

“(7) The ability of a military department or Defense Agency to purchase industrial and supply services from, and provide such services to, other military departments or Defense Agencies.

“(8) Standardization of financial management and accounting practices employed by the business accounts of a military department or Defense Agency.

“(9) Reporting requirements related to actual and projected performance of business management account activities of a military department or Defense Agency.

“(c) Effect of Failure to Submit or Approve of Plan.—(1) Unless, before October 1, 1999, the Secretary of Defense submits the plan required by subsection (a) and Congress enacts a provision of law described in paragraph (2) that approves of the plan as submitted or in an amended form, then section 2216a of title 10, United States Code, regarding the Defense Business Operations Fund (as redesignated by section 1074(a)(10) of this Act), shall be repealed effective as of that date.

“(2) The provision of law referred to in paragraph (1) is a provision of law that—

“(A) is enacted after the submission of the plan required by subsection (a);

“(B) specifically refers to the plan and this section; and

“(C) specifically states that the plan required by subsection (a) is approved as submitted or with such amendments as may be contained in such law.

“(d) Basis for Charges for Goods And Services; Comptroller General Review.—(1) In the development of the proposed budget for the Defense Business Operations Fund for a fiscal year, the Secretary of Defense shall ensure that accurate and realistic pricing and quantity estimates are used regarding the goods and services to be provided by working-capital funds and industrial, commercial, and support type activities managed through the Fund.

“(2) The Secretary of Defense shall make available to the Comptroller General information used to establish the charges for goods and services to be provided by working-capital funds and industrial, commercial, and support type activities managed through the Fund. The Comptroller General shall conduct an annual review of the adequacy of the basis for the charges. Not later than 30 days after the date on which the Secretary submits the annual report and proposed budget for the Fund under subsection (h) of section 2216a of title 10, United States Code, as redesignated by section 1074(a)(10) of this Act, the Comptroller General shall submit to Congress a report containing the results of the review.”