I
104TH CONGRESS
2D SESSION
H. R. 2993
To establish the Forrestal Institute, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 29, 1996
Mr. HOBSON introduced the following bill; which was referred to the
Committee on National Security
A BILL
To establish the Forrestal Institute, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
TITLE I—FORRESTAL INSTITUTE
SECTION 101. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This title may be cited as the
‘‘Forrestal Institute Act of 1997’’.
(b) TABLE OF CONTENTS.—The table of contents of
this title is as follows:
TITLE I—FORRESTAL INSTITUTE
Sec. 101. Short title; table of contents.
Sec. 102. Definitions.
Sec. 103. Purpose of title.
Sec. 104. Establishment of institute.
Sec. 105. Institute powers.
Sec. 106. Process of organization.
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Sec. 107. Board of directors.
Sec. 108. Institute governance.
Sec. 109. Institute capitalization and debt.
Sec. 110. Institute advisory panel.
Sec. 111. Authority of military departments to enter into institute contracts.
Sec. 112. Institute project list.
Sec. 113. Annual reports.
SEC. 102. DEFINITIONS.
For purposes of this title:
(1) The term ‘‘Advisory Panel’’ means the In-
stitute Advisory Panel established by section 110.
(2) The term ‘‘defense energy facility’’ means—
(A) energy production, consuming, or dis-
tribution facility owned or operated by, or
leased to or from, a military department; and
(B) any related infrastructure owned or
operated by a military department, or leased to
or from a military department, located at the
same site as a facility under subparagraph (A).
(3) The term ‘‘Board of Directors’’ means the
Board of Directors of the Forrestal Institute.
(4) The term ‘‘Comptroller General’’ means the
Comptroller General of the United States.
(5) The term ‘‘Institute’’ means the Forrestal
Institute, as authorized to be established by section
104.
(6) The term ‘‘Director’’ means a member of
the Board of Directors.
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(7) The term ‘‘environmental study’’ means a
study intended to satisfy the requirements of the
National Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.) with respect to a defense en-
ergy facility.
(8) The term ‘‘facility audit’’ means a survey of
a defense energy facility that provides sufficiently
detailed information to allow a military department
to make an informed decision whether to proceed
with one or more Institute projects at such defense
energy facility.
(9) The term ‘‘Institute contract’’ means an
agreement for all or part of the Institute project—
(A) directly between the Institute and a
military department,
(B) between or among a military depart-
ment and one or more private parties that has
been negotiated by the Institute, or
(C) among a military department, one or
more private parties and the Institute.
(10) The term ‘‘Institute project’’ means any
construction, operation, refurbishing, rebuilding, up-
grading, or retrofitting of a defense energy facility
or any environmental study or facility audit per-
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formed by a private party for a defense energy facil-
ity.
(11) The term ‘‘military department’’ means
the Department of the Army, the Department of the
Navy, and the Department of the Air Force.
(12) The term ‘‘private party’’ means any en-
tity or organization other than the Department of
Defense, a military department, or the Institute.
SEC. 103. PURPOSE OF TITLE.
The Congress hereby declares that it is the purpose
of this title to establish a not-for-profit private institute—
(1) to help save Federal tax dollars by improv-
ing the energy efficiency, economic performance, and
environmental acceptability of defense facilities;
(2) to help the Department of Defense and the
military departments identify, assess, and satisfy
their energy and related defense energy facility
needs by acquiring Institute projects from private
parties;
(3) to acquire facility audits from private par-
ties for defense facilities to determine the most eco-
nomic and environmentally beneficial means of meet-
ing such needs;
(4) to facilitate Institute contracts between pri-
vate parties and the military departments and to
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enter into Institute contracts with the military de-
partments and private parties;
(5) to function as a central objective source of
energy-related technical, financial, and contracting
expertise and advice for the Department of Defense
and the military departments;
(6) to promote commercially acceptable buying
practices in the performance of Institute projects;
and
(7) to foster synergistic cooperation among de-
fense energy facilities and neighboring energy pro-
ducers and consumers, including local utilities.
SEC. 104. ESTABLISHMENT OF INSTITUTE.
(a) ESTABLISHMENT.—There is hereby authorized to
be established by the Secretary of Defense, in accordance
with section 106, a District of Columbia not-for-profit en-
tity to be known as the ‘‘Forrestal Institute’’.
(b) TREATMENT.—The Institute shall not be an
agency, instrumentality or establishment of the United
States Government or a ‘‘Government corporation’’ or
‘‘Government controlled corporation’’ within the meaning
of chapter 91 of title 31, United States Code. The Insti-
tute shall be subject to the provisions of this title and,
to the extent not inconsistent with this title, to the District
of Columbia Nonprofit Corporation Act (D.C. Code, sec.
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29–501 et seq.). Except as provided in this title, or appli-
cable laws of the United States, the Institute shall have
all the powers of a District of Columbia not-for-profit cor-
poration.
(c) OFFICE.—The Institute shall maintain an office
for the service of process and papers in the District of
Columbia, and shall be deemed, for purposes of venue in
civil actions, to be a resident thereof. The Institute may
establish offices in such other place or places as its Board
of Directors may deem necessary or appropriate for the
conduct of its business.
SEC. 105. INSTITUTE POWERS.
(a) PERFORMANCE OF INSTITUTE CONTRACTS.—The
Institute may enter into an Institute contract to provide
any military department an Institute project, through the
use of private parties, except that in performing any such
contract, the Institute shall procure all subcontracts, sup-
plies, and services involving expenditures of over $100,000
through the use of competitive procedures approved by its
Board of Directors.
(b) NEGOTIATION.—In lieu of performing an Insti-
tute contract directly, the Institute may negotiate Insti-
tute contracts between or among the military departments
and one or more private parties and may solicit and evalu-
ate proposals and bids for such contracts.
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(c) RELATED GENERAL POWERS.—In furtherance of
the powers specified under subsections (a) and (b), the
Institute—
(1) may lease, sublease, purchase, accept gifts
or donations of, or otherwise acquire any real, per-
sonal, or mixed property, or any interest therein,
may own, hold, improve, use, or otherwise deal in or
with such property, and may sell, convey, mortgage,
pledge, lease, sublease, exchange, or otherwise dis-
pose of such property;
(2) may perform management support services
in connection with Institute projects;
(3) may charge to and collect fees for any advi-
sory or management support services performed
thereby, and for any financial assistance provided
thereby with respect to Institute projects;
(4) may, subject to subsection (d) below, make
loans, enter into guaranty agreements, and other-
wise provide financial assistance to a military de-
partment or private parties in connection with the
leasing, ownership, or financing of an Institute
project;
(5) may provide or arrange for environmental
indemnification of private parties for environmental
hazards existing at any defense energy facility at the
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time the Institute undertakes any Institute project
with respect to such facility;
(6) may sue and be sued in its corporate capac-
ity in any court of competent jurisdiction;
(7) may issue notes, bonds, and otherwise incur
debt in accordance with section 109; and
(8) may structure compensation for Institute
contracts as a percentage of the savings to the gov-
ernment to provide additional incentives for the In-
stitute to maximize such savings.
(d) LIMITATIONS.—Notwithstanding this section or
any other provision of this title, the Institute shall not
have any power, directly or indirectly, to invest in an Insti-
tute project or otherwise acquire or retain an ownership
interest in an Institute project or its associated stream
of revenues. The Institute shall have no power to perform
the facility audit, design, construction, rebuilding, upgrad-
ing, retrofitting, or long-term operation of an Institute
project, except through the use of private parties.
SEC. 106. PROCESS OF ORGANIZATION.
(a) INCORPORATION.—(1) Within 30 days after the
date of the enactment of this title, the Secretary of De-
fense shall appoint the Chairman of the Board of Direc-
tors and four additional persons to serve as the
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incorporators thereof. The incorporators may not be offi-
cers or employees of the United States.
(2) Within sixty days after the completion of the ap-
pointments, the incorporators shall take whatever actions
are necessary or appropriate to incorporate the Institute,
including the signing and filing of articles of incorpora-
tion. The incorporators for the Institute shall also serve
as the initial Board of Directors thereof.
(b) INITIAL OPERATIONS.—(1) Within sixty days
after the incorporation of the Institute, the Chairman of
the Board of Directors shall appoint a President of the
Institute from private life who shall serve at the pleasure
of the Board of Directors.
(2) The President shall have such powers and may
exercise such authority as is necessary for the proper oper-
ation of the Institute, including the hiring of employees.
(3) To assist in the start-up of the Institute, the Sec-
retary of Defense may detail, upon receipt of a written
request from either President thereof and approval of the
Military Department concerned if requested from a Mili-
tary Department, appropriate personnel as may be re-
quired for the Institute’s functioning, until such time as
officers and employees of the Institute are hired. No such
detail of personnel shall exceed two years in length. The
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Institute shall reimburse the Department of Defense for
the salary and benefit costs of such detailed personnel.
(c) ADDITIONAL INSTITUTES.—The Secretary shall
have the authority to establish up to five Institutes, if in
his judgment additional Institutes would encourage in-
creased administrative and technical expertise and effi-
ciency through competition between Institutes and/or re-
gionalization or specialization of responsibilities.
SEC. 107. BOARD OF DIRECTORS.
(a) APPOINTMENT.—The Institute shall be managed
by or under the direction of its Board of Directors, which
shall consist of five individuals who shall be appointed as
follows:
(1) A Chairman of the Board of Directors who
shall be appointed by the Secretary of Defense from
private life.
(2) Four individuals who shall be appointed by the
Secretary of Defense from private life.
(b) TERM.—The term of each Director shall be three
years. Any Director appointed by the Board of Directors
to fill a vacancy may be appointed only for the unexpired
term of the succeeded Director.
(c) 
COMPENSATION.—Directors, 
including 
each
Chairman, shall serve on a part-time basis and shall be
paid at a commercially reasonable rate established by the
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paragraph (1). The Comptroller General shall report to
Congress and the Institute the results of any such review
and shall include in such report any recommendations
based on such review.
(3) All books, accounts, financial records, reports,
files, papers, and property belonging to or used by the In-
stitute and its auditing firm that the Comptroller General
considers necessary to the performance of any audit or
review under this section shall be made available to the
Comptroller General.
(e) CONFLICTS OF INTEREST.—(1) Except as per-
mitted by paragraph (3), no Director of the Institute shall
vote on any matter respecting any application, contract,
claim, or other particular matter pending before the Insti-
tute, in which, to his or her knowledge, he or she, his or
her spouse, parent, minor child, partner, or an organiza-
tion (other than the Institute) in which he or she is serving
as officer, director, trustee, partner, or employee, or any
person or organization with whom he or she is negotiating
or has any arrangement concerning prospective employ-
ment, has a financial interest.
(2) Action by a Director contrary to the prohibition
contained in paragraph (1) shall be grounds for removal
of such Director by the Board of Directors, but any such
action shall not impair or otherwise affect the validity of
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any otherwise lawful action by the Institute in which such
Director participated.
(3) The prohibition contained in paragraph (1) shall
not apply if the Director first advises the Board of Direc-
tors of the nature of the particular matter in which he
or she proposes to participate and makes full disclosure
of such financial interest, and the Board of Directors de-
termines by majority vote that such financial interest is
too remote or too inconsequential to affect the integrity
of such Director’s services for the Institute in that matter.
The Director involved shall not participate in such deter-
mination.
(4) No person or entity that is an employee of the
Institute shall be allowed to enter into an Institute con-
tract for, or to propose for or to bid on, an Institute con-
tract for materials to be furnished or work to be performed
pursuant to or in connection with an Institute contract.
(5) No part of the income or assets of the Institute
shall inure to the benefit of any director, employee, or
other individual except as salary or reasonable compensa-
tion for services.
SEC. 109. INSTITUTE CAPITALIZATION AND DEBT.
(a) FEDERAL CONTRIBUTION.—In order to provide
the institute with initial capital adequate to exercise its
functions and responsibilities, there is authorized to be
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transferred to the Institute from the Department of De-
fense from funds otherwise available for energy savings
an amount not to exceed $5,000,000 for the fiscal year
1997, and $5,000,000 for the fiscal year 1998 (with each
of these amounts to be available until expended). Repay-
ment of these funds shall be made to the Department from
compensation from a percentage of savings to the govern-
ment in excess of operational costs, at the discretion of
the Board of Directors.
(b) ISSUANCE AND SALE OF DEBT INSTRUMENTS.—
For the purposes of maintaining working capital, the In-
stitute may issue, sell, and have outstanding such notes,
bonds, and other debt instruments having such maturities
and bearing such rate or rates of interest as may be deter-
mined by the Board of Directors in an amount not to ex-
ceed $10,000,000.
(c) RULES OF CONSTRUCTION.—No instrument that
is issued, insured, or guaranteed by, or otherwise is an
obligation of the Institute, nor any contractual undertak-
ing by the Institute, shall be construed to be an obligation
or undertaking of the United States, or an obligation or
undertaking which is guaranteed by the full faith and
credit of the United States.
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SEC. 110. INSTITUTE ADVISORY PANEL.
(a) ESTABLISHMENT.—There is hereby established
an Institute Advisory Panel to advise the Board of Direc-
tors of the Institute. The Institute Advisory Panel shall
review the Institute’s operations and advise the Institute
regarding such other matters as the Board of Directors
may request of the Institute Advisory Panel from time to
time.
(b) MEMBERS.—The Institute Advisory Panel shall
be comprised of the Assistant Secretary of Defense for
Economic Security and such representatives from the pri-
vate sector as each Board of Directors may select to en-
sure that the views of the financial community and the
various segments of the energy industry (including the en-
ergy service companies, the independent power producers,
the utilities, and architectural and engineering companies)
are available to each Board of Directors. The Assistant
Secretary of Defense for Economic Security shall be the
Chairperson of the Institute Advisory Panel.
(c) MEETINGS.—The Institute Advisory Panel shall
meet with each Board of Directors not less than semi-
annually.
SEC. 111. AUTHORITY OF MILITARY DEPARTMENTS TO
ENTER INTO INSTITUTE CONTRACTS.
(a) GENERAL AUTHORITY.—Any military depart-
ment may select the Institute to perform one or more In-
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stitute contracts for the performance of the Institute
project based upon an evaluation of technical proposals
submitted by the Institute; provided all goods and services
contracted for pursuant to any such Institute contract
shall be supplied by subcontractors selected in accordance
with section 105. Institute contracts may be for one or
more Institute projects, and any military department may
enter into a single Institute contract with the Institute au-
thorizing multiple Institute projects to be performed on
behalf of such military department. No Institute contract
may exceed a period of 30 years.
(b) EXCEPTION FROM CONTRACT REQUIREMENTS.—
Except as provided in subsection (c) and in order to foster
the growth of standard industry practices in Federal pro-
curement, no Federal law, rule, or regulation dealing with
the solicitation, award, execution, delivery or performance
of public or Federal contracts (including chapter 137 title
10, United States Code) shall apply to any Institute con-
tract or any subcontract awarded thereunder.
(c) CONTINUED APPLICATION OF CERTAIN REQUIRE-
MENTS.—The following provisions shall apply to every In-
stitute contract and any subcontracts awarded under the
Institute contract:
(1) The Act of March 3, 1931 (40 U.S.C. 276a
et seq.), commonly known as the Davis-Bacon Act.
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(2) The dispute resolution procedures of the
Contract Disputes Act of 1978 (41 U.S.C. 601 et
seq.).
(d) SALE OF EXCESS ELECTRIC POWER.—The sale
of electric power produced in excess of the amount needed
by a military department as a result of an Institute con-
tract shall be subject to applicable Federal and State law
governing the sale and transmission of electric power and
the provision of electric utility services, including State
utility commission rulings and electric utility franchises or
service territories established pursuant to State law or reg-
ulation.
(e) TERMINATION CLAUSE.—Institute contracts may
contain a clause authorizing the termination of an Insti-
tute contract for the convenience of the Government. Such
clause may permit anticipatory profits and consequential
damages to the extent of termination.
(f) LEASE OF REAL PROPERTY AUTHORIZED.—The
Secretary of a military department may lease, at fair mar-
ket value, real and related personal property under the
jurisdiction and control of the Secretary in connection
with an Institute project undertaken pursuant to an Insti-
tute contract for a period not in excess of fifty years. The
interest of a lessee of property leased under this section
may be taxed by State or local governments.
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(g) RULE OF CONSTRUCTION.—No officer, director,
or employee of the Institute shall be construed to be a
‘‘procurement official’’ as such term is used in the Office
of Federal Procurement Policy Act.
(h) CONSULTATION WITH LOCAL PUBLIC UTIL-
ITY.—Any public utility supplying electric energy or natu-
ral gas to a military installation shall be notified by the
Institute of any proposed Institute contract or Institute
project at such installation and the military department
and the Institute issuing any such proposal for such Insti-
tute contract or Institute project shall consult with such
utility relative to its ability to serve the installation’s needs
and the effect of the proposal on such utility. Nothing
herein shall preclude such public utility from bidding upon
and receiving the award of such Institute contract.
SEC. 112. INSTITUTE PROJECT LIST.
Within one hundred and eighty days after the date
of the incorporation of the Institute, the Secretaries of the
Military Departments will develop and submit to the Insti-
tute a list of defense energy facilities potentially suitable
to the test of Institute contracts pursuant to the authority
of this title. The Secretary of a Military Department may
contract with the Institute to aid in the preparation of
this list.
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SEC. 113. ANNUAL REPORTS.
The Institute shall prepare and submit to the Sec-
retary of Defense within ninety days after the close of each
fiscal year an annual report of its activities. Such report
shall contain—
(1) a general description of the Institute’s oper-
ations;
(2) a summary of the Institute’s operating and
financial performance; and
(3) a copy of the financial statements of the In-
stitute for the related fiscal year together with the
audit report on such statements prepared pursuant
to section 108(d).
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