ices for elements of the armed forces deployed outside the United States; 4 and

(2) acquire from any government not a member of the North Atlantic Treaty Organization 5 logistic support, supplies, and services for elements of the armed forces deployed (or to be deployed) outside the United States 6 if that country

(A) has a defense alliance with the United States;

(B) permits the stationing of members of the armed forces in such country or the homeporting of naval vessels of the United States in such country;

(C) has agreed to preposition materiel of the United States in such country; or

(D) serves as the host country to military exercises which include elements of the armed forces or permits other military operations by the armed forces in such country.

7

§ 2342.2 Cross-servicing agreements

(a) 8 (1) Subject to section 2343 of this title and to the availability of appropriations, and after consultation with the Secretary of State, the Secretary of Defense may enter into an agreement described in paragraph (2) with—

(A) the government of a North Atlantic Treaty Organization country;

(B) a subsidiary body of the North Atlantic Treaty Organization; or

(C) the government of a country not a member of the North Atlantic Treaty Organization but which is designated by the Secretary of Defense, subject to the limitations prescribed in subsection (b), as a government with which the Secretary may enter into agreements under this section.

(2) An agreement referred to in paragraph (1) is an agreement under which the United States agrees to provide logistic support, supplies, and services to the military forces of a country or subsidiary body referred to in paragraph (1) in return for the reciprocal provision of logistic support, supplies, and services by such government or subsidiary body to elements of the armed forces.

* Sec. 1312(a)(1) of Public Law 102-484 (106 Stat. 2547) struck out "in Europe and adjacent waters" and inserted in lieu thereof "outside the United States", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

5 Sec. 1312(a) 2XA) of Public Law 102-484 (106 Stat. 2547) struck out "in which elements of the armed forces are deployed (or are to be deployed)" at this point, effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

6 Sec. 1312(aX2XB) of Public Law 102-484 (106 Stat. 2547) struck out "in such country or in the military region in which such country is located" and inserted in lieu thereof "outside the United States", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

7 Sec. 1231(9) of Public Law 100-180 (101 Stat. 1160) substituted "Cross-servicing" for "Cross servicing".

8 Sec. 1465 of Public Law 101-510 (104 Stat. 1692) amended and restated subsec. (a). Previously, sec. 1104(a) of Public Law 99-661 (100 Stat. 3963) amended and restated subsec. (a), and added subsecs. (b) through (d).

(b) The Secretary of Defense may not designate a country for an agreement under this section

(1) unless the Secretary, after consultation with the Secretary of State, determines that the designation of such country for such purpose is in the interest of the national security of the United States; and

(2) in the case of a country which is not a member of the North Atlantic Treaty Organization, notifies the Committees on Armed Services and Foreign Relations of the Senate and the Committees on Armed Services and Foreign Affairs of the House of Representatives at least 30 days before the date on which such country is designated by the Secretary under subsection (a).

(c) The Secretary of Defense may not use the authority of this subchapter to procure from any foreign government as a routine or normal source any goods or services reasonably available from United States commercial sources.

(d) The Secretary shall prescribe regulations to ensure that contracts entered into under this subchapter are free from self-dealing, bribery, and conflict of interests.

§ 2343.2 Law applicable to acquisition and cross-servicing agree

ments

(a) Except as provided in subsection (b), acquisition of logistic support, supplies, and services under section 2341 9 of this title and agreements entered into under section 23429 of this title shall be made in accordance with chapter 137 of this title and the provisions of this subchapter.

(b) Sections 10 2207, 2304(a), 2306(a), 2306(b), 2306(e), 2306a, and 2313 of this title and 11 section 3741 of the Revised Statutes (41 U.S.C. 22) 12 shall not apply to acquisitions made under the authority of section 2341 of this title or to agreements entered into under section 2342 of this title.

§ 2344.2 Methods of payment for acquisitions and transfers by the United States

(a) Logistics support, supplies, and services may be acquired or transferred by the United States under the authority of this subchapter on a reimbursement basis or by replacement-in-kind or exchange of supplies or services of an equal value.

13

(b)(1) In entering into agreements with the Government of another North Atlantic Treaty Organization country or other foreign country 14 for the acquisition or transfer of logistic support, sup

9 Sec. 1304(a)(5) of Public Law 99-145 (99 Stat. 741) substituted "2341" for "2321" and "2342" for "2322".

10 Sec. 1233(d) of Public Law 100-456 (102 Stat. 2057) struck out "section" preceding “"2306a". Sec. 7(g)(2) of Public Law 100-26 (101 Stat. 282) substituted "2306a" for "2306(f)". Sec. 961(b) of Public Law 99-145 (99 Stat. 703) substituted "2304(a)" for "2304(g)"; sec. 1304(a)(5) of that Act (99 Stat. 741) substituted "2341" for "2321" and "2342" for "2322".

11 Sec. 1061(a)(12)(A) of Public Law 102-190 (105 Stat. 1473) struck out "this title," and inserted in lieu thereof "this title and".

12 Sec. 1061(a)(12)(B) of Public Law 102-190 (105 Stat. 1473) struck out reference to sec. 719 of the Defense Production Act of 1950 (50 U.S.C. App. 2168), which was repealed earlier by sec. 5(b) of Public Law 100-679 (102 Stat. 4063).

13 Sec. 938(a) of Public Law 101-189 (103 Stat. 1539) struck out "identical or substantially identical nature" and inserted in lieu thereof "equal value'.

14 Sec. 1104(b)(1) of Public Law 99-661 (100 Stat. 3964) inserted "or other foreign country".

plies, and services on a reimbursement basis, the Secretary of Defense shall negotiate for adoption of the following pricing principles for reciprocal application:

(A) The price charged by a supplying country for logistics support, supplies, and services specifically procured by the supplying country from its contractors for a recipient country shall be no less favorable than the price for identical items or services charged by such contractors to the armed forces of the supplying country, taking into account price differentials due to delivery schedules, points of delivery, and other similar considerations.

(B) The price charged a recipient country for supplies furnished by a supplying country from its inventory, and the price charged a recipient country for logistics support and services furnished by the officers, employees, or governmental agencies of a supplying country, shall be the same as the price charged for identical supplies, support, or services acquired by an armed force of the supplying country from such governmental sources.

(2) To the extent that the Secretary of Defense is unable to obtain mutual acceptance by the other country involved of the reciprocal pricing principles for reimbursable transactions set forth in paragraph (1)—

(A) the United States may not acquire from such country any logistic support, supply, or service not governed by such reciprocal pricing principles unless the United States forces commander acquiring such support, supply, or service determines (after price analysis) that the price thereof is fair and reasonable; and

(B) transfers by the United States to such country under this subchapter 15 of any logistic support, supply, or service that is not governed by such reciprocal pricing principles shall be subject to the pricing provisions of the Arms Export Control Act (22 U.S.C. 2751 et seq.).

(3) To the extent that indirect costs (including charges for plant and production equipment), administrative surcharges, and contract administration costs with respect to any North Atlantic Treaty Organization country or other foreign country 16 are not waived by operation of the reciprocal pricing principles of paragraph (1), the Secretary of Defense may, on a reciprocal basis, agree to waive such costs.

(4) The pricing principles set forth in paragraph (2) and the waiver authority provided in paragraph (3) shall also apply to agreements with North Atlantic Treaty Organization subsidiary bodies under this subchapter.

(c) 17 In acquiring or transferring logistics support, supplies, or services under the authority of this subchapter 18 by exchange of

15 Sec. 11(a)(8) of Public Law 97-22 (95 Stat. 138) substituted "this chapter" for "this Act". References to chapter were subsequently changed to "subchapter" by sec. 931(ex1) of Public Law

101-189.

16 Sec. 1104(b)(2) of Public Law 99-661 (100 Stat. 3964) inserted "or other foreign country". 17 Sec. 938(b) of Public Law 101-189 (103 Stat. 1539) added subsec. (c).

18 Sec. 701(2) of Public Law 102-25 (105 Stat. 115) struck out "chapter" and inserted in lieu thereof "subchapter".

supplies or services, the Secretary of Defense may not agree to or carry out the following:

(1) Transfers in exchange for property the acquisition of which by the Department of Defense is prohibited by law.

(2) Transfers of source, byproduct, or special nuclear materials or any other material, article, data, or thing of value the transfer of which is subject to the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).

(3) Transfers of chemical munitions.

§ 2345.2 Liquidation of accrued credits and liabilities

(a) Credits and liabilities of the United States accrued as a result of acquisitions and transfers of logistic support, supplies, and services under the authority of this subchapter shall be liquidated not less often than once every three months by direct payment to the entity supplying such support, supplies, or services by the entity receiving such support, supplies, or services.

(b) 19 Payment-in-kind or exchange entitlements accrued as a result of acquisitions and transfers of logistic support, supplies, and services under authority of this subchapter shall be satisfied within 12 months after the date of the delivery of the logistic support, supplies, or services.

§ 2346.2 Crediting of receipts

Any receipt of the United States as a result of an agreement entered into under this subchapter shall be credited to applicable appropriations, accounts, and funds of the Department of Defense. § 2347.2 Limitation on amounts that may be obligated or accrued by the United States

(a)(1) 20 Except during a period of active hostilities involving the armed forces,21 the total amount of reimbursable liabilities that the United States may accrue under this subchapter (before the computation of offsetting balances) with other member countries of the North Atlantic Treaty Organization and subsidiary bodies of the North Atlantic Treaty Organization 22 may not exceed $150,000,000 23 in any fiscal year, and of such amount not more than $25,000,000 in liabilities may be accrued for the acquisition of supplies (other than petroleum, oils, and lubricants).

19 Sec. 1104(c) of Public Law 99-661 (100 Stat. 3965) designated existing provisions as subsec. (a) and added subsec. (b).

20 Sec. 1104(d)(1) of Public Law 99-661 (100 Stat. 3965) designated existing provisions of subsec. (a), as par. (1), and added par. (2).

21 Sec. 1312(bX1XA) of Public Law 102-484 (106 Stat. 2547) struck out "North Atlantic Treaty Organization", and inserted in lieu thereof "armed forces", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

22 Sec. 1312(b)(1)(B) of Public Law 102-484 (106 Stat. 2547) inserted "with other member countries of the North Atlantic Treaty Organization and subsidiary bodies of the North Atlantic Treaty Organization", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

23 Sec. 1001 of Public Law 100-456 (102 Stat. 2037) struck out "$100,000,000" and inserted in lieu thereof "$150,000,000".

(2) 20 Except during a period of active hostilities involving the armed forces, the total amount of reimbursable liabilities that the United States may accrue under this subchapter (before the computation of offsetting balances) with 24 a country which is not a member of the North Atlantic Treaty Organization, but with which the United States has one or more acquisition or cross-servicing agreements, 25 may not exceed $10,000,000 in any fiscal year, and of such amount not more than $2,500,000 in liabilities may be accrued for the acquisition of supplies (other than petroleum, oils, and lubricants). The $10,000,000 limitation specified in this paragraph is in addition to the limitation specified in paragraph (1).

(b)(1) 26 Except during a period of active hostilities involving armed forces, 27 the total amount of reimbursable credits that the United States may accrue under this subchapter (before the computation of offsetting balances) with other member countries of the North Atlantic Treaty Organization and subsidiary bodies of the North Atlantic Treaty Organization 28 may not exceed $100,000,000 in any fiscal year.

(2) 26 Except during a period of active hostilities involving the armed forces, 29 the total amount of reimbursable credits that the United States may accrue under this subchapter (before the computation of offsetting balances) with a country which is not a member of the North Atlantic Treaty Organization, but with which the United States has one or more acquisition or cross-servicing agreements 30 may not exceed $10,000,000 in any fiscal year. Such limi

24 Sec. 1312(b)(2)(A) of Public Law 102-484 (106 Stat. 2547) struck out “in the military region affecting" and inserted in lieu thereof "involving the armed forces, the total amount of reimbursable liabilities that the United States may accrue under this subchapter (before the computation of offsetting balances) with", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

25 Sec. 1312(b)(2)(B) of Public Law 102-484 (106 Stat. 2547) struck out "the total amount of reimbursable liabilities that the United States may accrue under this subchapter (before the computation of offsetting balances) with such country", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

26 Sec. 1104(d)(2) of Public Law 99-661 (100 Stat. 3965) designated existing provisions of subsec. (a), as par. (1), and added par. (2). 27 Sec. 1312(b)(3)(A) of Public Law 102-484 (106 Stat. 2547) struck out """the North Atlantic Treaty Organization" and inserted in lieu thereof "armed forces", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

28 Sec. 1312(b)(3)(B) of Public Law 102-484 (106 Stat. 2547) inserted "with other member countries of the North Atlantic Treaty Organization and subsidiary bodies of the North Atlantic Treaty Organization", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

29 Sec. 1312(b)(4)(A) of Public Law 102-484 (106 Stat. 2547) struck out "in the military region affecting a country referred to in paragraph (1)," and inserted in lieu thereof “involving the armed forces", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act [October 23, 1992] and shall apply to acquisitions of logistics support, supplies, and services under chapter 138 of title 10, United States Code, that are initiated on or after the date of enactment of this Act.".

30 Sec. 1312(b)(4)(B) of Public Law 102-484 (106 Stat. 2547) struck out "from such country (before the computation of offsetting balances)" and inserted in lieu thereof "(before the computation of offsetting balances) with a country which is not a member of the North Atlantic Treaty Organization, but with which the United States has one or more acquisition or cross-servicing agreements", effective pursuant to sec. 1312(c) of that Act "on the date of enactment of this Act

Continued