CHAPTER 147 - COMMISSARIES AND EXCHANGES AND OTHER MORALE, WELFARE, AND RECREATION ACTIVITIES

Title 10 > CHAPTER 147

Sections (20)

§ 2481 Defense commissary and exchange systems: existence and purpose

(a) Separate Systems.— The Secretary of Defense shall operate, in the manner provided by this chapter and other provisions of law, a world-wide system of commissary stores and a separate world-wide system of exchange stores. The stores of each system may sell, at reduced prices, food and other merchandise to members of the uniformed services on active duty, members of the uniformed services entitled to retired pay, dependents of such members, and persons authorized to use the system under chapter 54 of this title. Any reference in this chapter to “the exchange system” shall be treated as referring to each separate administrative entity within the Department of Defense through which the Secretary has implemented the requirement under this subsection for a world-wide system of exchange stores.

(b) Purpose of Systems.— The defense commissary system and the exchange system are intended to enhance the quality of life of members of the uniformed services, retired members, and dependents of such members, and to support military readiness, recruitment, and retention.

(c) Oversight.— The Secretary of Defense shall designate a senior official of the Department of Defense to oversee the operation of both the defense commissary system and the exchange system. The Secretary of Defense shall establish an executive governing body to provide advice to the senior official designated under paragraph (1) regarding the operation of the defense commissary and exchange systems and to ensure the complementary operation of the systems. The Secretary of Defense shall develop and implement a comprehensive strategy to optimize management practices across the defense commissary system and the exchange system that reduce reliance of those systems on appropriated funding without reducing benefits to the patrons of those systems or the revenue generated by nonappropriated fund entities or instrumentalities of the Department of Defense for the morale, welfare, and recreation of members of the armed forces. The Secretary shall ensure that savings generated due to such optimization practices are shared by the defense commissary system and the exchange system through contracts or agreements that appropriately reflect the participation of the systems in the development and implementation of such practices. If the Secretary determines that the reduced reliance on appropriated funding pursuant to subparagraph (A) is insufficient to maintain the benefits to the patrons of the defense commissary system, and if the Secretary converts the defense commissary system to a nonappropriated fund entity or instrumentality pursuant to paragraph (1) of section 2484(j) of this title , the Secretary shall transfer appropriated funds pursuant to paragraph (2) of such section to ensure the maintenance of such benefits. On not less than a quarterly basis, the Secretary shall provide to the congressional defense committees a briefing on the defense commissary system, including— an assessment of the savings the system provides patrons; the status of implementing section 2484(i) of this title ; the status of implementing section 2484(j) of this title , including whether the system requires any appropriated funds pursuant to paragraph (2) of such section; the status of carrying out a program for such system to sell private label merchandise; and any other matters the Secretary considers appropriate.

(d) Reduced Prices Defined.— In this section, the term “reduced prices” means prices for food and other merchandise determined using the price setting process specified in section 2484 of this title .

§ 2482 Commissary stores: criteria for establishment or closure; store size

(a) Primary Consideration for Establishment.— The needs of members of the armed forces on active duty and the needs of dependents of such members shall be the primary consideration whenever the Secretary of Defense— assesses the need to establish a commissary store; and selects the actual location for the store.

(b) Store Size.— In determining the size of a commissary store, the Secretary of Defense shall take into consideration the number of all authorized patrons of the defense commissary system who are likely to use the store.

(c) Closure Considerations.— Whenever assessing whether to close a commissary store, the effect of the closure on the quality of life of members and dependents referred to in subsection (a) who use the store and on the welfare and security of the military community in which the commissary is located shall be a primary consideration. Whenever assessing whether to close a commissary store, the Secretary of Defense shall also consider the effect of the closure on the quality of life of members of the reserve components of the armed forces.

(d) Congressional Notification.— The closure of a commissary store in the United States shall not take effect until the end of the 90-day period beginning on the date on which the Secretary of Defense submits to Congress written notice of the reasons supporting the closure. The written notice shall include an assessment of the impact closure will have on the quality of life for military patrons and the welfare and security of the military community in which the commissary is located. Paragraph (1) shall not apply in the case of the closure of a commissary store as part of the closure of a military installation under a base closure law.

§ 2483 Commissary stores: use of appropriated funds to cover operating expenses

(a) Operation of Agency and System.— Except as otherwise provided in this title, the operation of the Defense Commissary Agency and the defense commissary system shall be funded using such amounts as are appropriated for such purpose.

(b) Operating Expenses of Commissary Stores.— Appropriated funds shall be used to cover the expenses of operating commissary stores and central product processing facilities of the defense commissary system. For purposes of this subsection, operating expenses include the following: Salaries and wages of employees of the United States, host nations, and contractors supporting commissary store operations. Utilities. Communications. Operating supplies and services. Second destination transportation costs within or outside the United States. Any cost associated with above-store-level management or other indirect support of a commissary store or a central product processing facility, including equipment maintenance and information technology costs. Advertising of commissary sales on materials available within commissary stores and at other on-base locations.

(c) Supplemental Funds for Commissary Operations.— Amounts appropriated to cover the expenses of operating the Defense Commissary Agency and the defense commissary system may be supplemented with additional funds from manufacturers’ coupon redemption fees, handling fees for tobacco products, and other amounts received as reimbursement for other support activities provided by commissary activities. Such appropriated amounts may also be supplemented with additional funds derived from improved management practices implemented pursuant to sections 2481(c)(3) and 2487(c) of this title and the variable pricing program implemented pursuant to section 2484(i) of this title .

§ 2484 Commissary stores: merchandise that may be sold; uniform surcharges and pricing

(a) In General.— As provided in section 2481(a) of this title , commissary stores are intended to be similar to commercial grocery stores and may sell merchandise similar to that sold in commercial grocery stores.

(b) Authorized Commissary Merchandise Categories.— Merchandise sold in, at, or by commissary stores may include items in the following categories: Meat, poultry, seafood, and fresh-water fish. Nonalcoholic beverages. Produce. Grocery food, whether stored chilled, frozen, or at room temperature. Dairy products. Bakery and delicatessen items. Nonfood grocery items. Tobacco products. Health and beauty aids. Magazines and periodicals.

(c) Inclusion of Other Merchandise Items.— The Secretary of Defense may authorize the sale in, at, or by commissary stores of merchandise not covered by a category specified in subsection (b). The Secretary shall notify Congress of all merchandise authorized for sale pursuant to this paragraph, as well as the removal of any such authorization. Notwithstanding paragraph (1), the Department of Defense military resale system shall continue to maintain the exclusive right to operate convenience stores, shopettes, and troop stores, including such stores established to support contingency operations. A military exchange shall be the vendor for the sale of tobacco products in commissary stores and may be the vendor for such merchandise as may be authorized for sale in commissary stores under paragraph (1). Except as provided in subparagraph (B), subsections (d) and (e) shall not apply to the pricing of such an item when a military exchange serves as the vendor of the item. Commissary store and exchange prices shall be comparable for such an item. When a military exchange is the vendor of tobacco products or other merchandise authorized for sale in a commissary store under paragraph (1), any revenue above the cost of procuring the merchandise shall be allocated as if the revenue were a uniform sales price surcharge described in subsection (d).

(d) Uniform Sales Price Surcharge.— The Secretary of Defense shall apply a uniform surcharge equal to five percent on the sales prices established under subsection (e) for each item of merchandise sold in, at, or by commissary stores.

(e) Sales Price Establishment.— The Secretary of Defense shall establish the sales price of each item of merchandise sold in, at, or by commissary stores at the level that will recoup the actual product cost of the item. Any change in the pricing policies for merchandise sold in, at, or by commissary stores shall not take effect until the Secretary of Defense submits written notice of the proposed change to Congress and a period of 90 days of continuous session of Congress expires following the date on which notice was received. For purposes of this paragraph, the continuity of a session of Congress is broken only by an adjournment of the Congress sine die, and the days on which either House is not in session because of an adjournment or recess of more than three days to a day certain are excluded in a computation of such 90-day period. The sales price of merchandise and services sold in, at, or by commissary stores shall be adjusted to cover the following: The cost of first destination commercial transportation of the merchandise in the United States to the place of sale. The actual or estimated cost of shrinkage, spoilage, and pilferage of merchandise under the control of commissary stores.

(f) Procurement of Commercial Products Using Procedures Other Than Competitive Procedures.— The Secretary of Defense may use the exception provided in section 3204(a)(5) of this title for the procurement of any commercial product (including brand-name and generic items) for resale in, at, or by commissary stores.

(g) Special Rules for Certain Merchandise.— Notwithstanding the general requirement that merchandise sold in, at, or by commissary stores be commissary store inventory, the Secretary of Defense may authorize the sale of tobacco products as noncommissary store inventory. Except as provided in paragraph (2), subsections (d) and (e) shall not apply to the pricing of such merchandise items. When tobacco products are authorized for sale in a commissary store as noncommissary store inventory, any revenue above the cost of procuring the tobacco products shall be allocated as if the revenue were a uniform sales price surcharge described in subsection (d).

(h) Use of Surcharge for Construction, Repair, Improvement, and Maintenance.— The Secretary of Defense may use the proceeds from the surcharges imposed under subsection (d) only— to acquire (including acquisition by lease), construct, convert, expand, improve, repair, maintain, and equip the physical infrastructure of commissary stores and central product processing facilities of the defense commissary system; and to cover environmental evaluation and construction costs related to activities described in clause (i), including costs for surveys, administration, overhead, planning, and design. In subparagraph (A), the term “physical infrastructure” includes real property, utilities, and equipment (installed and free standing and including computer equipment), necessary to provide a complete and usable commissary store or central product processing facility. The Secretary of Defense may authorize a nonappropriated fund instrumentality of the United States to enter into a contract for construction of a shopping mall or similar facility for a commissary store and one or more nonappropriated fund instrumentality activities. The Secretary may use the proceeds of surcharges under subsection (d) to reimburse the nonappropriated fund instrumentality for the portion of the cost of the contract that is attributable to construction of the commissary store or to pay the contractor directly for that portion of such cost. In subparagraph (A), the term “construction”, with respect to a facility, includes acquisition, conversion, expansion, installation, or other improvement of the facility. The Secretary of Defense may use the proceeds derived from surcharges imposed under subsection (d) in connection with sales of commissary merchandise through initiatives described in subparagraph (B) to offset the cost of such initiatives. Subparagraph (A) applies with respect to initiatives, utilizing temporary and mobile equipment, intended to provide members of reserve components, retired members, and other persons eligible for commissary benefits, but without reasonable access to commissary stores, improved access to commissary merchandise. The Secretary of Defense, with the approval of the Director of the Office of Management and Budget, may obligate anticipated proceeds from the surcharges under subsection (d) for any use specified in paragraph (1), (2), or (3), without regard to fiscal year limitations, if the Secretary determines that such obligation is necessary to carry out any use of such adjustments or surcharges specified in such paragraph. Revenues received by the Secretary of Defense from the following sources or activities of commissary store facilities shall be available for the purposes set forth in paragraphs (1), (2), and (3): Sale of recyclable materials. Sale of excess and surplus property. License fees. Royalties. Fees paid by sources of products in order to obtain favorable display of the products for resale, known as business related management fees. Amounts made available for any purpose set forth in paragraph (1) pursuant to an agreement with a host nation. Amounts appropriated for repair or reconstruction of a commissary store in response to a disaster or emergency. Revenues made available under paragraph (5) for the purposes set forth in paragraphs (1), (2), and (3) may be supplemented with additional funds derived from— improved management practices implemented pursuant to sections 2481(c)(3), 2485(b), and 2487(c) of this title; and the variable pricing program implemented pursuant to subsection (i).

(i) Variable Pricing Program.— Notwithstanding subsection (e), and subject to subsection (k), the Secretary of Defense may establish a variable pricing program pursuant to which prices may be established in response to market conditions and customer demand, in accordance with the requirements of this subsection. Notwithstanding the amount of the uniform surcharge assessed in subsection (d), the Secretary may provide for an alternative surcharge of not more than five percent of sales proceeds under the variable pricing program to be made available for the purposes specified in subsection (h). Subject to subsection (k), before establishing a variable pricing program under this subsection, the Secretary shall establish the following: Specific, measurable benchmarks for success in the provision of high quality grocery merchandise, discount savings to patrons, and levels of customer satisfaction while achieving savings for the Department of Defense. A baseline of overall savings to patrons achieved by commissary stores prior to the initiation of the variable pricing program, based on a comparison of prices charged by those stores on a regional basis with prices charged by relevant local competitors for a representative market basket of goods. The Secretary shall ensure that the defense commissary system implements the variable pricing program by conducting price comparisons using the methodology established for paragraph (2)(B) and adjusting pricing as necessary to ensure that pricing in the variable pricing program achieves overall savings to patrons that are consistent with the baseline savings established for the relevant region pursuant to such paragraph.

(j) Conversion to Nonappropriated Fund Entity or Instrumentality.— Subject to subsection (k), if the Secretary of Defense determines that the variable pricing program has met the benchmarks for success established pursuant to paragraph (2)(A) of subsection (i) and the savings requirements established pursuant to paragraph (3) of such subsection over a period of at least six months, the Secretary may convert the defense commissary system to a nonappropriated fund entity or instrumentality, with operating expenses financed in whole or in part by receipts from the sale of products and the sale of services. Upon such conversion, appropriated funds shall be transferred to the defense commissary system only in accordance with paragraph (2) or section 2491 of this title . The requirements of section 2483 of this title shall not apply to the defense commissary system operating as a nonappropriated fund entity or instrumentality. If the Secretary determines that the defense commissary system operating as a nonappropriated fund entity or instrumentality is likely to incur a loss in any fiscal year as a result of compliance with the savings requirement established in subsection (i), the Secretary shall authorize a transfer of appropriated funds available for such purpose to the commissary system in an amount sufficient to offset the anticipated loss. Any funds so transferred shall be considered to be nonappropriated funds for such purpose. The Secretary may identify positions of employees in the defense commissary system who are paid with appropriated funds whose status may be converted to the status of an employee of a nonappropriated fund entity or instrumentality. The status and conversion of employees in a position identified by the Secretary under subparagraph (A) shall be addressed as provided in section 2491(c) of this title for employees in morale, welfare, and recreation programs, including with respect to requiring the consent of such employee to be so converted. No individual who is an employee of the defense commissary system as of the date of the enactment of this subsection shall suffer any loss of or decrease in pay as a result of a conversion made under this paragraph.

(k) Oversight Required To Ensure Continued Benefit to Patrons.— With respect to each action described in paragraph (2), the Secretary of Defense may not carry out such action until— the Secretary provides to the congressional defense committees a briefing on such action, including a justification for such action; and a period of 30 days has elapsed following such briefing. The actions described in this paragraph are the following: Establishing the representative market basket of goods pursuant to subsection (i)(2)(B). Establishing the variable pricing program under subsection (i)(1). Converting the defense commissary system to a nonappropriated fund entity or instrumentality under subsection (j)(1).

(l) Prohibition on Sale of Garlic From People’s Republic of China.— The Secretary of Defense shall prohibit the sale at any commissary store of fresh or chilled garlic— classified under subheading 0703.20.00 of the Harmonized Tariff Schedule of the United States; and that originated from, or was processed in, the People’s Republic of China.

§ 2485 Commissary stores: operation

(a) Private Operation.— Under such regulations as the Secretary of Defense may approve, private persons may operate selected commissary store functions, except that such functions may not include functions relating to the procurement of products to be sold in a commissary store or functions relating to the overall management of a commissary system or the management of a commissary store. Such functions shall be carried out by personnel of the Department of Defense under regulations approved by the Secretary of Defense.

(b) Contracts With Other Agencies and Instrumentalities.— The Defense Commissary Agency, and any other agency of the Department of Defense that supports the operation of the commissary system, may enter into a contract or other agreement with another element of the Department of Defense or with another Federal department, agency, or instrumentality to provide or obtain services beneficial to the efficient management and operation of the commissary system. However, the Defense Commissary Agency may not pay for any such service provided by the United States Transportation Command any amount that exceeds the price at which the service could be procured through full and open competition, as such term is defined in section 107 of title 41 . A commissary store operated by a nonappropriated fund instrumentality of the Department of Defense shall be operated in accordance with section 2483 of this title . Subject to such section, the Secretary of Defense may authorize a transfer of goods, supplies, and facilities of, and funds appropriated for, the Defense Commissary Agency or any other agency of the Department of Defense that supports the operation of the commissary system to a nonappropriated fund instrumentality for the operation of a commissary store.

(c) Governing Board.— Notwithstanding section 192(d) of this title , the Secretary of Defense shall establish a governing board for the commissary system to provide advice to the Secretary regarding the prudent operation of the commissary system and to assist in the overall supervision of the Defense Commissary Agency. The Secretary may authorize the board to have such supervisory authority as the Secretary considers appropriate to permit the board to carry out its responsibilities. The Secretary of Defense shall determine the membership of the governing board, which shall include, at a minimum, appropriate representatives from each military department. The chairman of the governing board shall be a commissioned officer or member of the senior executive service who has demonstrated experience or knowledge relevant to the management of the defense commissary system. In selecting other members of the governing board, the Secretary shall give priority to persons with experience related to logistics, military personnel, military entitlements or other experiences of value of management of commissaries. The governing board shall be accountable only to the Secretary of Defense and to the civilian officer of the Department of Defense who is assigned the responsibility for the overall supervision of the Defense Commissary Agency pursuant to section 192(a) of this title . The Director of the Defense Commissary Agency shall be accountable to and report to the board.

(d) Assignment of Active Duty Members.— Except as provided in paragraph (2), members of the armed forces on active duty may not be assigned to the operation of a commissary store. The Secretary of Defense may assign an officer on the active-duty list to serve as the Director of the Defense Commissary Agency. Not more than 18 members (in addition to the officer referred to in subparagraph (A)) of the armed forces on active duty may be assigned to the Defense Commissary Agency. Members who may be assigned under this subparagraph to regional headquarters of the agency shall be limited to enlisted members assigned to duty as advisers in the regional headquarters responsible for overseas commissaries and to veterinary specialists.

(e) Reimbursement for Use of Commissary Facilities by Military Departments.— The Secretary of a military department shall pay the Defense Commissary Agency the amount determined under paragraph (2) for any use of a commissary facility by the military department for a purpose other than commissary sales or operations in support of commissary sales. The amount payable under paragraph (1) for use of a commissary facility by a military department shall be equal to the share of depreciation of the facility that is attributable to that use, as determined under regulations prescribed by the Secretary of Defense. The Director of the Defense Commissary Agency shall credit amounts paid under paragraph (1) for use of a facility to an appropriate account to which proceeds of a surcharge applied under section 2484(d) of this title are credited. This subsection applies with respect to a commissary facility that is acquired, constructed, converted, expanded, installed, or otherwise improved (in whole or in part) with the proceeds of a surcharge applied under section 2484(d) of this title .

(f) Donation of Unusable Food.— The Secretary of Defense may donate food described in paragraph (2) to any of the following entities: A charitable nonprofit food bank that is designated by the Secretary of Defense or the Secretary of Health and Human Services as authorized to receive such donations. A State or local agency that is designated by the Secretary of Defense or the Secretary of Health and Human Services as authorized to receive such donations. A chapter or other local unit of a recognized national veterans organization that provides services to persons without adequate shelter and is designated by the Secretary of Veterans Affairs as authorized to receive such donations. A not-for-profit organization that provides care for homeless veterans and is designated by the Secretary of Veterans Affairs as authorized to receive such donations. Food that may be donated under this subsection is commissary store food, mess food, meals ready-to-eat (MREs), rations known as humanitarian daily rations (HDRs), and other food available to the Secretary of Defense that— is certified as edible by appropriate food inspection technicians; would otherwise be destroyed as unusable; and in the case of commissary store food, is unmarketable and unsaleable. In the case of commissary store food, a donation under this subsection shall take place at the site of the commissary store that is donating the food. This subsection does not authorize any service (including transportation) to be provided in connection with a donation under this subsection.

(g) Collection of Dishonored Checks.— The Secretary of Defense may impose a charge for the collection of a check accepted at a commissary store that is not honored by the financial institution on which the check is drawn. The imposition and amounts of charges shall be consistent with practices of commercial grocery stores regarding dishonored checks. The following persons are liable to the United States for the amount of a check referred to in paragraph (1) that is returned unpaid to the United States, together with any charge imposed under that paragraph: The person who presented the check. Any person whose status and relationship to the person who presented the check provide the basis for that person’s eligibility to make purchases at a commissary store. Any amount for which a person is liable under subparagraph (A) may be collected by deducting and withholding such amount from any amounts payable to that person by the United States. Amounts collected as charges imposed under paragraph (1) shall be credited to the commissary trust revolving fund. Appropriated funds may be used to pay any costs incurred in the collection of checks and charges referred to in paragraph (1). An appropriation account charged a cost under the preceding sentence shall be reimbursed the amount of that cost out of funds in the commissary trust revolving fund. In this subsection, the term “commissary trust revolving fund” means the trust revolving fund maintained by the Department of Defense for surcharge collections and proceeds of sales of commissary stores.

(h) Release of Certain Commercially Valuable Information to Public.— The Secretary of Defense may limit the release to the public of any information described in paragraph (2) if the Secretary determines that it is in the best interest of the Department of Defense to limit the release of such information. If the Secretary determines to limit the release of any such information, the Secretary may provide for limited release of such information in accordance with paragraph (3). Paragraph (1) applies to the following: Information contained in the computerized business systems of commissary stores or the Defense Commissary Agency that is collected through or in connection with the use of electronic scanners in commissary stores, including the following information: Data relating to sales of goods or services. Demographic information on customers. Any other information pertaining to commissary transactions and operations. Business programs, systems, and applications (including software) relating to commissary operations that were developed with funding derived from commissary surcharges. The Secretary of Defense may, using competitive procedures, enter into a contract to sell information described in paragraph (2). The Secretary of Defense may release, without charge, information on an item sold in commissary stores to the manufacturer or producer of that item or an agent of the manufacturer or producer. The Secretary of Defense shall establish performance benchmarks and shall submit information on customer satisfaction and performance data to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives. The Secretary of Defense may, by contract entered into with a business, grant to the business a license to use business programs referred to in paragraph (2)(B), including software used in or comprising any such program. The fee charged for the license shall be based on the costs of similar programs developed and marketed by businesses in the private sector, determined by means of surveys. Each contract entered into under this paragraph shall specify the amount to be paid for information released or a license granted under the contract, as the case may be. Information described in paragraph (2) may not be released, under paragraph (3) or otherwise, in a form that identifies any customer or that provides information making it possible to identify any customer. Amounts received by the Secretary under this section shall be credited to funds derived from commissary surcharges applied under section 2484(e) of this title , shall be merged with those funds, and shall be available for the same purposes as the funds with which merged.

(i) Expert Commercial Advice.— The Secretary of Defense may enter into a contract with an entity to obtain expert commercial advice, commercial assistance, or other similar services not otherwise carried out by the Defense Commissary Agency, to implement section 2481(c), subsections (i) and (j) of section 2484, and section 2487(c) of this title .

§ 2487 Relationship between defense commissary system and exchange stores system

(a) Separate Operation of Systems.— Except as provided in paragraph (2), the defense commissary system and the exchange stores system shall be operated as separate systems of the Department of Defense. Paragraph (1) does not apply to the following: Combined exchange and commissary stores operated under the authority provided by section 2489 of this title . NEXMART stores of the Navy Exchange Service Command established before October 1, 2003 .

(b) Consolidation or Other Organizational Changes of Defense Retail Systems.— The operation and administration of the defense retail systems may not be consolidated or otherwise merged unless the consolidation or merger is specifically authorized by an Act of Congress. In this subsection, the term “defense retail systems” means the defense commissary system and exchange stores system and other revenue-generating facilities operated by nonappropriated fund instrumentalities of the Department of Defense for the morale, welfare, and recreation of members of the armed forces.

(c) Common Business Practices.— Notwithstanding subsections (a) and (b), the Secretary of Defense may establish common business processes, practices, and systems— to exploit synergies between the defense commissary system and the exchange system; and to optimize the operations of the defense retail systems as a whole and the benefits provided by the commissaries and exchanges. The Secretary may authorize the defense commissary system and the exchange system to enter into contracts or other agreements— for products and services that are shared by the defense commissary system and the exchange system; and for the acquisition of supplies, resale goods, and services on behalf of both the defense commissary system and the exchange system. For the purpose of a contract or agreement authorized under paragraph (2), the Secretary may— use funds appropriated pursuant to section 2483 of this title to reimburse a nonappropriated fund entity or instrumentality for the portion of the cost of a contract or agreement entered by the nonappropriated fund entity or instrumentality that is attributable to the defense commissary system; and authorize the defense commissary system to accept reimbursement from a nonappropriated fund entity or instrumentality for the portion of the cost of a contract or agreement entered by the defense commissary system that is attributable to the nonappropriated fund entity or instrumentality.

(d) Access of Exchange Stores System to Federal Financing Bank.— To facilitate the provision of in-store credit to patrons of the exchange stores system while reducing the costs of providing such credit, the Army and Air Force Exchange Service, Navy Exchange Service Command, and Marine Corps exchanges may issue and sell their obligations to the Federal Financing Bank as provided in section 6 of the Federal Financing Bank Act of 1973 ( 12 U.S.C. 2285 ).

§ 2488 Combined exchange and commissary stores

(a) Authority.— The Secretary of Defense may authorize a nonappropriated fund instrumentality to operate a military exchange and a commissary store as a combined exchange and commissary store on a military installation.

(b) Limitations.— Not more than ten combined exchange and commissary stores may be operated pursuant to this section. The Secretary may select a military installation for the operation of a combined exchange and commissary store under this section only if— the installation is to be closed, or has been or is to be realigned, under a base closure law; or a military exchange and a commissary store are operated at the installation by separate entities at the time of, or immediately before, such selection and it is not economically feasible to continue that separate operation.

(c) Operation at Carswell Field.— Combined exchange and commissary stores operated under this section shall include the combined exchange and commissary store that is operated at the Naval Air Station Fort Worth, Joint Reserve Center, Carswell Field, Texas, under the authority provided in section 375 of the National Defense Authorization Act for Fiscal Year 1995 ( Public Law 103–337 ; 108 Stat. 2736 ).

(d) Adjustments and Surcharges.— Adjustments to, and surcharges on, the sales price of a grocery food item sold in a combined exchange and commissary store under this section shall be provided for in accordance with the same laws that govern such adjustments and surcharges for items sold in a commissary store of the Defense Commissary Agency.

(e) Use of Appropriated Funds.— If a nonappropriated fund instrumentality incurs a loss in operating a combined exchange and commissary store at a military installation under this section as a result of the requirement set forth in subsection (d), the Secretary may authorize a transfer of funds available for the Defense Commissary Agency to the nonappropriated fund instrumentality to offset the loss. The total amount of appropriated funds transferred during a fiscal year to support the operation of a combined exchange and commissary store at a military installation under this section may not exceed an amount that is equal to 25 percent of the amount of appropriated funds that was provided for the operation of the commissary store of the Defense Commissary Agency on that installation during the last full fiscal year of operation of that commissary store.

(f) Nonappropriated Fund Instrumentality Defined.— In this section, the term “nonappropriated fund instrumentality” means the Army and Air Force Exchange Service, Navy Exchange Service Command, Marine Corps exchanges, or any other instrumentality of the United States under the jurisdiction of the armed forces which is conducted for the comfort, pleasure, contentment, or physical or mental improvement of members of the armed forces.

§ 2489 Overseas commissary and exchange stores: access and purchase restrictions

(a) Authority to Establish Restrictions.— The Secretary of Defense may establish restrictions on the ability of eligible patrons of commissary and exchange stores located outside of the United States to purchase certain merchandise items (or the quantity of certain merchandise items) otherwise included within an authorized merchandise category if the Secretary determines that such restrictions are necessary to prevent the resale of such merchandise in violation of treaty obligations of the United States or host nation laws (to the extent such laws are not inconsistent with United States laws).

(b) Limitations on Use of Authority.— In establishing a quantity or other restriction, the Secretary— may not discriminate among the various categories of eligible patrons of the commissary and exchange system; and shall ensure that the restriction is consistent with the purpose of the overseas commissary and exchange system to provide reasonable access for eligible patrons to purchase merchandise items made in the United States.

§ 2491 Uniform funding and management of morale, welfare, and recreation programs

(a) Authority for Uniform Funding and Management.— Under regulations prescribed by the Secretary of Defense, funds appropriated to the Department of Defense and available for morale, welfare, and recreation programs may be treated as nonappropriated funds and expended in accordance with laws applicable to the expenditures of nonappropriated funds. When made available for morale, welfare, and recreation programs under such regulations, appropriated funds shall be considered to be nonappropriated funds for all purposes and shall remain available until expended.

(b) Conditions on Availability.— Funds appropriated to the Department of Defense may be made available to support a morale, welfare, or recreation program only if the program is authorized to receive appropriated fund support and only in the amounts the program is authorized to receive.

(c) Conversion of Employment Positions.— The Secretary of Defense may identify positions of employees in morale, welfare, and recreation programs within the Department of Defense who are paid with appropriated funds whose status may be converted from the status of an employee paid with appropriated funds to the status of an employee of a nonappropriated fund instrumentality. The status of an employee in a position identified by the Secretary under paragraph (1) may, with the consent of the employee, be converted to the status of an employee of a nonappropriated fund instrumentality. An employee who does not consent to the conversion may not be removed from the position because of the failure to provide such consent. The conversion of an employee from the status of an employee paid by appropriated funds to the status of an employee of a nonappropriated fund instrumentality shall be without a break in service for the concerned employee. The conversion shall not entitle an employee to severance pay, back pay or separation pay under subchapter IX of chapter 55 of title 5, or be considered an involuntary separation or other adverse personnel action entitling an employee to any right or benefit under such title or any other provision of law or regulation. In this subsection, the term “an employee of a nonappropriated fund instrumentality” means an employee described in section 2105(c) of title 5 .

§ 2491a Department of Defense golf courses: limitation on use of appropriated funds

(a) Limitation.— Except as provided in subsection (b), funds appropriated to the Department of Defense may not be used to equip, operate, or maintain a golf course at a facility or installation of the Department of Defense.

(b) Exceptions.— Subsection (a) does not apply to a golf course at a facility or installation outside the United States or at a facility or installation inside the United States at a location designated by the Secretary of Defense as a remote and isolated location. The Secretary of Defense shall prescribe regulations governing the use of appropriated funds under this subsection.

§ 2491b Use of appropriated funds for operation of Armed Forces Recreation Center, Europe: limitation

(a) Limitation.— Except as provided in subsection (b), funds appropriated to the Department of Defense may not be used to operate the Armed Forces Recreation Center, Europe.

(b) Exception.— Subsection (a) does not apply to the use of funds for the payment of utilities, the maintenance, repair, or renovation of real property, and the transportation of products made in the United States.

§ 2491c Retention of morale, welfare, and recreation funds by military installations: limitation

Amounts may not be retained in a nonappropriated morale, welfare, and recreation account of a military installation of an armed force in excess of the amount necessary to meet cash requirements of that installation. Amounts in excess of that amount shall be transferred to a single nonappropriated morale, welfare, and recreation account for that armed force. This section does not apply to the Coast Guard. (Added Pub. L. 103–337, div. A, title III, § 373(a) , Oct. 5, 1994 , 108 Stat. 2736 , § 2219; amended Pub. L. 104–106, div. A, title III, § 341 , Feb. 10, 1996 , 110 Stat. 265 ; renumbered § 2491c, Pub. L. 108–375, div. A, title VI, § 651(d) , Oct. 28, 2004 , 118 Stat. 1972 .)

§ 2492 Nonappropriated fund instrumentalities: contracts with other agencies and instrumentalities to provide and obtain goods and services

An agency or instrumentality of the Department of Defense that supports the operation of the exchange system, or the operation of a morale, welfare, and recreation system, of the Department of Defense may enter into a contract or other agreement with another element of the Department of Defense or with another Federal department, agency, or instrumentality— to provide or obtain goods and services beneficial to the efficient management and operation of the exchange system or that morale, welfare, and recreation system; or to provide or obtain food services beneficial to the efficient management and operation of the dining facilities on military installations offering food services to members of the armed forces. (Added Pub. L. 104–201, div. A, title III, § 341(a)(1) , Sept. 23, 1996 , 110 Stat. 2488 , § 2482a; renumbered § 2492, Pub. L. 108–375, div. A, title VI, § 651(c)(3) , Oct. 28, 2004 , 118 Stat. 1972 ; amended Pub. L. 113–291, div. A, title VI, § 632 , Dec. 19, 2014 , 128 Stat. 3405 .)

§ 2492a Limitation on Department of Defense entities competing with private sector in offering personal information services

(a) Limitation.— Notwithstanding section 2492 of this title , the Secretary of Defense may not authorize a Department of Defense entity to offer or provide personal information services directly to users using Department resources, personnel, or equipment, or compete for contracts to provide such personal information services directly to users, if users will be charged a fee for the personal information services to recover the cost incurred to provide the services or to earn a profit. The limitation in paragraph (1) shall not be construed to prohibit or preclude the use of Department resources, personnel, or equipment to administer or facilitate personal information services contracts with private contractors.

(b) Exceptions.— The limitation in subsection (a) shall not apply if the Secretary of Defense determines that— a private sector vendor is not available to provide the personal information services at specific locations; the interests of the user population would be best served by allowing the Government to provide such services; or circumstances (as specified by the Secretary for purposes of this section) are such that the provision of such services by a Department entity is in the best interest of the Government or military users in general.

(c) Personal Information Services Defined.— In this section, the term “personal information services” means the provision of Internet, telephone, or television services to consumers.

§ 2493 Fisher Houses: administration as nonappropriated fund instrumentality

(a) Fisher Houses and Suites Defined.— In this section: The term “Fisher House” means a housing facility that— is located in proximity to a health care facility of the Army, the Air Force, or the Navy; is available for residential use on a temporary basis by authorized Fisher House residents; and is constructed and donated by— the Zachary and Elizabeth M. Fisher Armed Services Foundation; or another source, if the Secretary of the military department concerned designates the housing facility as a Fisher House. The term “Fisher House” includes the Fisher House for the Families of the Fallen and Meditation Pavilion at Dover Air Force Base, Delaware, so long as such facility is available for residential use on a temporary basis by authorized Fisher House residents. The term “Fisher Suite” means one or more rooms that— meet the requirements of subparagraphs (A) and (B) of paragraph (1); are constructed, altered, or repaired and donated by a source described in subparagraph (C) of that paragraph; and are designated by the Secretary of the military department concerned as a Fisher Suite. The term “authorized Fisher House residents” means the following: With respect to a Fisher House described in paragraph (1) that is located in proximity to a health care facility of the Army, the Air Force, or the Navy, the following persons: Patients of that health care facility. Members of the families of such patients. Other persons providing the equivalent of familial support for such patients. With respect to the Fisher House described in paragraph (2), the following persons: The primary next of kin of a member of the armed forces who dies while located or serving overseas. Other family members of the deceased member who are eligible for transportation under section 453(f) of title 37 . An escort of a family member described in clause (i) or (ii).

(b) Nonappropriated Fund Instrumentality.— The Secretary of each military department shall administer all Fisher Houses and Fisher Suites associated with facilities of that military department as a nonappropriated fund instrumentality of the United States.

(c) Governance.— The Secretary of each military department shall establish a system for the governance of the nonappropriated fund instrumentality required by subsection (b) for that military department.

(d) Central Fund.— The Secretary of each military department shall establish a single fund as the source of funding for the operation, maintenance, and improvement of all Fisher Houses and Fisher Suites of the nonappropriated fund instrumentality required by subsection (b) for that military department.

(e) Acceptance of Contributions; Imposition of Fees.— The Secretary of a military department may— accept money, property, and services donated for the support of a Fisher House or Fisher Suite associated with facilities of that military department; and may impose fees relating to the use of such Fisher Houses and Fisher Suites. All monetary donations, and the proceeds of the disposal of any other donated property, accepted by the Secretary of a military department under this subsection shall be credited to the fund established under subsection (d) for the Fisher Houses and Fisher Suites associated with facilities of that military department and shall be available to that Secretary to support all such Fisher Houses and Fisher Suites.

(f) Base Operating Support.— The Secretary of a military department may provide base operating support for Fisher Houses associated with facilities of that military department.

§ 2494 Nonappropriated fund instrumentalities: furnishing utility services for morale, welfare, and recreation purposes

Appropriations for the Department of Defense may be used to provide utility services for— buildings on military installations authorized by regulation to be used for morale, welfare, and recreation purposes; and other morale, welfare, and recreation activities for members of the armed forces. (Added Pub. L. 108–375, div. A, title VI, § 651(c)(4) , Oct. 28, 2004 , 118 Stat. 1972 .)

§ 2495 Nonappropriated fund instrumentalities: purchase of alcoholic beverages

(a) The Secretary of Defense shall provide that— covered alcoholic beverage purchases made for resale on a military installation located in the United States shall be made from the most competitive source and distributed in the most economical manner, price and other factors considered, except that in the case of malt beverages and wine, such purchases shall be made from, and delivery shall be accepted from, a source within the State in which the military installation concerned is located.

(b) If a military installation located in the contiguous States is located in more than one State, a source of supply in any State in which the installation is located shall be considered for the purposes of subsection (a)(2) to be a source within the State in which the installation is located.

(c) In the case of covered alcoholic beverage purchases of distilled spirits, to determine whether a nonappropriated fund instrumentality of the Department of Defense provides the most economical method of distribution to package stores, the Secretary of Defense shall consider all components of the distribution costs incurred by the nonappropriated fund instrumentality, such as overhead costs (including costs associated with management, logistics, administration, depreciation, and utilities), the costs of carrying inventory, and handling and distribution costs. The Secretary shall use the agencies performing audit functions on behalf of the armed forces and the Inspector General of the Department of Defense to make determinations under this subsection.

(d) In this section: The term “covered alcoholic beverage purchases” means purchases of alcoholic beverages by a nonappropriated fund instrumentality of the Department of Defense with nonappropriated funds. The term “State” includes the District of Columbia.

§ 2495a Overseas package stores: treatment of United States wines

The Secretary of Defense shall ensure that each nonappropriated-fund activity engaged principally in selling alcoholic beverage products in a packaged form (commonly referred to as a “package store”) that is located at a military installation outside the United States shall give appropriate treatment with respect to wines produced in the United States to ensure that such wines are given, in general, an equitable distribution, selection, and price when compared with wines produced by the host nation. (Added Pub. L. 100–180, div. A, title III, § 311(a)(1) , Dec. 4, 1987 , 101 Stat. 1073 , § 2489; renumbered § 2495a, Pub. L. 108–375, div. A, title VI, § 651(b)(2) , (c)(5), Oct. 28, 2004 , 118 Stat. 1971 , 1972.)

§ 2495b Sale or rental of sexually explicit material prohibited

(a) Prohibition of Sale or Rental.— The Secretary of Defense may not permit the sale or rental of sexually explicit material on property under the jurisdiction of the Department of Defense.

(b) Prohibition of Officially Provided Sexually Explicit Material.— A member of the armed forces or a civilian officer or employee of the Department of Defense acting in an official capacity may not provide for sale, remuneration, or rental sexually explicit material to another person.

(c) Resale Activities Review Board.— The Secretary of Defense shall establish a nine-member board to make recommendations to the Secretary regarding whether material sold or rented, or proposed for sale or rental, on property under the jurisdiction of the Department of Defense is barred from sale or rental by subsection (a). The Secretary of Defense shall appoint six members of the board to broadly represent the interests of the patron base served by the defense commissary system and the exchange system. The Secretary shall appoint one of the members to serve as the chairman of the board. At least one member appointed under this subparagraph shall be a person with experience managing or advocating for military family programs and who is also an eligible patron of the defense commissary system and the exchange system. The Secretary of each of the military departments shall appoint one member of the board. A vacancy on the board shall be filled in the same manner as the original appointment. The Secretary of Defense may detail persons to serve as staff for the board. At a minimum, the Secretary shall ensure that the board is assisted at meetings by military resale and legal advisors. The recommendations made by the board under paragraph (1) shall be made available to the public. The Secretary of Defense shall publicize the availability of such recommendations by such means as the Secretary considers appropriate. Members of the board shall be allowed travel expense, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5 while away from their homes or regular places of business in the performance of services for the board.

(d) Regulations.— The Secretary of Defense shall prescribe regulations to implement this section.

(e) Definitions.— In this section: The term “sexually explicit material” means an audio recording, a film or video recording, or a periodical with visual depictions, produced in any medium, the dominant theme of which depicts or describes nudity, including sexual or excretory activities or organs, in a lascivious way. The term “property under the jurisdiction of the Department of Defense” includes commissaries, all facilities operated by the Army and Air Force Exchange Service, the Navy Exchange Service Command, the Navy Resale and Services Support Office, Marine Corps exchanges, and ships’ stores.

§ 2496 Sale of certain goods from the Xinjiang Uyghur Autonomous Region prohibited

(a) Prohibition.— The Secretary of Defense may not knowingly permit the sale, at a commissary store or military exchange, of any good, ware, article, or merchandise— containing any product mined, produced, or manufactured, wholly or in part, by forced labor from the XUAR; or from an entity that has used labor from within or transferred from XUAR as part of a “poverty alleviation” or “pairing assistance” program.

(b) Definitions.— In this section: The term “forced labor” means any work or service that is exacted from any person under the menace of any penalty for nonperformance and that the worker does not offer to perform. The term “XUAR” means the Xinjiang Uyghur Autonomous Region of the People’s Republic of China.