Sec. 808. Financing for programs with priority ratings under the defense priorities and allocation system
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The Secretary of Defense shall ensure that covered financing costs incurred by a contractor through the performance of a covered contract are allowable and allocable as a direct or an indirect cost for such covered contract if such covered financing costs— are reasonable and consistent with prevailing market rates for similar financing; and are incurred to pay a covered financing entity. Requirements of the Department of Defense Supplement to the Federal Acquisition Regulation otherwise applicable to a contract or subcontract described in subsection
(a)shall not be incorporated into any agreement with a covered financing entity relating to covered financing costs. The Secretary of Defense shall ensure that with respect to a covered contract for which covered financing costs are allowable and allocable pursuant to subsection (a), any obligation of the United States to make a payment under such covered contract is subject to the availability of appropriations for that purpose, and that total liability to the Government for the termination of such covered contract shall be limited to the total amount of funding obligated at the time of termination. In this section: The term covered activity means an activity of a prime contractor or subcontractor that supports a covered program, including an activity— to manage an inventory of completed products or components produced for a covered program; to improve inventory management of products or components necessary for sustainment or maintenance of a covered program; to materially expand the capacity of production or sustainment and maintenance of a covered program through capital expenditures; or for any other purpose identified by the Secretary of Defense. The term covered contract means a contract or subcontract entered into by the Secretary of Defense pursuant to a use of the priorities and allocations authorities under the Defense Production Act of 1950 ( 50 U.S.C. 4501 et seq. ), including such a contract or subcontract for export, for performance of a covered activity. The term covered financing costs means interest on debt, bond discounts, or costs of financing and refinancing capital. The term covered financing entity means an entity established pursuant to Federal or State law that— as part of the regular business activities of the entity, extends credit, loans, or other financing to other persons; and is not owned by, controlled by, or under common control with the person receiving such financing. The term covered program means any program under title 10, United States Code, for the production and sustainment of naval combatant surface ships and submarines, air defense capabilities, munitions, aircraft, land systems, combat vehicles, or any other capability designated by the Secretary.