Procedures Governing Banks, Credit Unions and Other Financial Institutions on DoD Installations

Federal RegisterAug 11, 1999

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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 231

RIN 0790-AG74

Procedures Governing Banks, Credit Unions and Other Financial

Institutions on DoD Installations

AGENCY: Department of Defense.

ACTION: Proposed rule.

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SUMMARY: This proposed rule reflects the transition of operational

responsibilities for banks and credit unions from the Office of the

Under Secretary of Defense (Comptroller) to the Defense Finance and

Accounting Service; to address changes in financial-related technology

and the vehicles through which financial services are delivered (i.e.,

in-store banking, electronic banking (ATMs)); and incorporates the

procedural guidance contained in other DoD documents.

DATES: Comments must be received by October 12, 1999.

ADDRESSES: Forward comments to: OUSD(C), 1745 Jefferson Davis Highway,

Suite 201, Arlington, VA 22202.

FOR FURTHER INFORMATION CONTACT: T. Summers, 703-602-0299.

SUPPLEMENTARY INFORMATION:

Executive Order 12866, Regulatory Planning and Review

It has been determined that 32 CFR part 231 is not a significant

regulatory action. The rule does not:

(1) Have an annual effect to the economy of $100 million or more or

adversely affect in a material way the economy; a section of the

economy; productivity; competition; jobs; the environment; public

health or safety; or State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another Agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs, or the rights and obligations of

recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

this Executive Order.

Public Law 96-354, Regulatory Flexibility Act (5 U.S.C. 601)

It has been certified that this rule is not subject to the

Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if

promulgated, have a significant economic impact on a substantial number

of small entities. This rule is being promulgated to provide

administrative guidelines for the operation of banks and credit unions

on domestic and overseas installations of the Department of Defense and

address areas such as the solicitation for such services, the types of

services and the logistics support provided.

Public Law 96-511, Paperwork Reduction Act (44 U.S.C. Chapter 35)

It has been certified that this part does not impose any reporting

or recordkeeping requirements under the Paperwork Reduction Act of

1995.

List of Subjects in 32 CFR Part 231

Armed forces, Banks, banking, Credit unions, Federal buildings and

facilities.

Accordingly, 32 CFR part 231 is proposed to be revised to read as

follows:

PART 231--PROCEDURES GOVERNING BANKS, CREDIT UNIONS AND OTHER

FINANCIAL INSTITUTIONS ON DOD INSTALLATIONS

Subpart A--Guidelines

231.1 Overview.

231.2 Policy.

231.3 Responsibilities.

231.4 General policy provisions.

231.5 Procedures-domestic banks.

231.6 Procedures-overseas banks.

231.7 Procedures-domestic credit unions.

231.8 Procedures-overseas credit unions.

231.9 Definitions.

Subpart B-DoD Directive 1000.11

231.10 Financial institutions on DoD installations.

Subpart C--Guidelines for Application of the Privacy Act to Financial

Institution Operations

231.11 Guidelines

Appendix A to Part 231--Sample Operating Agreement

Appendix B to Part 231--In-Store Banking

Appendix C to Part 231--Sample Certificate of Compliance for

Credit Unions

Appendix D to Part 231--Foreign Geographic Field of Membership

(Franchise) Assignment Listing

Authority: 10 U.S.C. 136.

Subpart A--Guidelines

Sec. 231.1 Overview.

(a) Purpose. This part implements DoD Directive 1000.1,\1\

``Financial Institutions on DoD Installations,'' and prescribes

guidance and procedures governing the establishment, support,

operation, and termination of banks and credit unions operating on DoD

installations worldwide, to include military banking facilities (MBFs).

In addition, this part provides guidance intended to ensure that

arrangements for the provision of services by financial institutions

are consistent among DoD Components, and that financial institutions

operating on DoD installations provide, and are provided support

consistent with the guidance and procedures stated in this part.

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\1\ Copies may be obtained at http://web7.whs.osd.mil/

corres.htm.

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(b) Applicability. This part applies to the Office of the Secretary

of Defense (OSD), the Military Departments, the Chairman of the Joint

Chiefs of Staff (JCS), the Combatant Commands, the Inspector General of

the Department of Defense (IG, DoD), the Defense Agencies, the DoD

Field Activities, and all nonappropriated fund instrumentalities

including the Military Exchange Services and morale, welfare and

recreation (MWR) activities.

Sec. 231.2 Policy.

The policy pertaining to financial institutions operating on DoD

installations is contained in DoD Directive 1000.11, ``Financial

Institutions on DoD Installations'' (32 CFR part 230) and in

Sec. 231.4.

Sec. 231.3 Responsibilities.

(a) The Under Secretary of Defense (Comptroller) (USD(C)) shall

develop and monitor policies governing establishment, operation, and

termination of financial institutions on DoD installations and take

final action on requests for exceptions to DoD Directive 1000.11.

(b) The Under Secretary of Defense (Acquisition and Technology)

(USD(A&T)) shall develop and monitor policies and procedures governing

logistical support furnished to financial institutions on DoD

installations, including the use of DoD real property and equipment.

[[Page 43859]]

(USD(P&R)) shall advise the USD(C) on all aspects of on-base financial

institution services that affect the morale and welfare of DoD

personnel.

(d) The Director, Defense Finance and Accounting Service (DFAS)

shall:

(1) Develop procedures governing banks and credit unions on DoD

installations for promulgation in this part.

(2) For domestic DoD installations, coordinate with the Secretaries

of the Military Departments (or designees) on requests from subordinate

installation commanders to establish or terminate banking offices or

on-base credit unions. For overseas DoD installations, coordinate with

the Secretary of the Military Department concerned (or designee) on

requests from subordinate installation commanders to establish or

discontinue the provision of financial services from the on-base

financial institution under contract with the Department of Defense or

to establish or terminate banking offices or credit unions located on

DoD installations.

(3) In coordination with affected DoD Components, authorize the

specific types of banking services that will be provided by overseas

military banking facilities (MBFs) and specify the charges or fees, or

the basis for these, to be levied on users of these services.

(4) Coordinate with the Fiscal Assistant Secretary of the Treasury

on the designation of domestic and overseas MBFs as depositaries and

financial agents of the U.S. Government.

(5) Designate a technical representative to provide policy

direction for the procuring and administrative contracting officer(s)

responsible under the Federal Acquisition Regulation (FAR) for

acquiring banking services required at overseas DoD installations.

(6) Serve as principal liaison with banking institutions having

offices on overseas DoD installations. In this capacity, monitor MBF

managerial and operational policies, procedures, and operating results

and take action as appropriate.

(7) As necessary, assist in the formation of government-to-

government agreements for the provision of banking services on overseas

DoD installations, in accordance with DoD Directive 5530.3. \2\

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\2\ See footnote 1 to Sec. 231.1(a).

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(8) Provide procedural guidance to DoD Components, as required.

(9) Maintain liaison with financial institution trade associations,

leagues, and councils in order to interpret DoD policies toward

respective memberships and aid in resolving mutual concerns affecting

the provision of financial services.

(10) Coordinate with the USD(P&R), through the USD(C), on all

aspects of morale and welfare and with the USD(A&T), through the

USD(C), on all aspects of logistic support for on-base financial

institutions.

(11) Monitor industry trends, conduct studies and surveys, and

facilitate appropriate dialogues on banking and credit union

arrangements and cost-benefit relationships, coordinate as necessary

with DoD Components, financial institutions, and trade associations as

appropriate.

(12) Maintain liaison, as appropriate, with financial institution

regulatory agencies at federal and state levels.

(13) Ensure that recommendations of the Combatant Commands are

considered before processing requests for overseas banking and credit

union service or related actions.

(e) Secretaries of the Military Departments (or designees) shall:

(1) For domestic DoD installations, take action on requests from

subordinate installation commanders to establish or terminate financial

institution operations. For overseas DoD installations, take action in

accordance with guidance contained herein on requests from subordinate

installation commanders to establish or discontinue the provision of

financial services from the DoD contracted bank, or to establish or

terminate other financial institutions located on DoD installations.

(2) Provide for liaison to those financial institutions that

operate banking offices on respective domestic DoD installations.

(3) Oversee the use of banking offices and credit unions on

respective DoD installations within the guidance contained herein and

in DoD Directive 1000.11.

(4) Evaluate the services provided by respective on-base banking

offices and credit unions to ensure that they fulfill the requirements

upon which the establishment and retention of those services were

justified.

(5) Monitor practices and procedures of respective banking offices

and credit unions to ensure that the welfare and interests of DoD

personnel as consumers are protected.

(6) Assist on-base banking offices and credit unions to develop and

expand necessary services for DoD personnel consistent with this part.

(7) Encourage the conversion of existing domestic MBFs on

respective installations to independent or branch bank status where

feasible.

(8) Provide logistical support to overseas MBFs under terms and

conditions identified in this part as well as with the applicable terms

of DoD contracts with financial institutions responsible for the

operations of overseas MBFs.

(9). Refer matters requiring policy decisions or proposed changes

to this part or DoD Directive 100011 to the USD(C) through the

Director, DFAS.

(10) Supervise and encourage the use of financial institutions on

DoD installations to:

(i) Facilitate convenient, effective management of the

appropriated, nonappropriated, and private funds of on-base activities.

(ii) Assist DoD personnel in managing their personal finances

through participation in programs such as direct deposit and regular

savings plans. The use of on-base financial institutions shall be on a

voluntary basis and should not be urged in preference to, or to the

exclusion of, other financial institutions.

(11) Encourage and assist duly chartered financial institutions on

domestic DoD installations to provide complete financial services to

include financial counseling at no charge.

(12) Establish liaison, as appropriate, with federal and state

regulatory agencies and financial institution trade associations,

leagues, and councils.

(13) Provide debt processing assistance to on-base financial

institutions in accordance with the Privacy Act guidelines in subpart B

of this part.

(14) Recognize the right of DoD personnel to organize and join duly

chartered credit unions.

(15) Permit DoD personnel to serve on credit union boards and

committees on a voluntary basis, without compensation, when neither a

conflict of duty nor a conflict of interest is involved, as stated in

DoD Directive 5500.7.\3\

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\3\ See Footnote 1 to Sec. 231.1(a).

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(16) Allow personnel to attend credit union conferences and

meetings in accordance with DoD Directive 1327.5 \4\, Subchapter 630 of

the ``DoD Civilian Personnel Manual,'' DoD 1400.25-M \5\, and

Comptroller General Decision B-212457.

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\4\ See Footnote 1 to Sec. 231.1(a).

\5\ See Footnote 1 to Sec. 231.1(a).

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(f) The Commanders of the Combatant Commands (or designees) shall:

(1) Ensure the appropriate coordination of requests to:

(i) Establish financial institutions in countries not presently

served. Such requests will include a statement that

[[Page 43860]]

the requirement has been coordinated with the U.S. Chief of Diplomatic

Mission or U.S. Embassy and that the host country will permit the

operation.

(ii) Eliminate any or all financial institutions on DoD

installations within a foreign country. Such requests will include a

statement that the U.S. Chief of Diplomatic Mission has been informed

and appropriate arrangements to coordinate local termination

announcements and procedures have been made with the U.S. Embassy.

(2) Monitor and coordinate military banking operations within the

command area. Personnel assigned to security assistance positions will

not perform this function without the prior approval of the Director,

Defense Security Cooperation Agency (DSCA).

(g) The Commanders of Major Commands and subordinate installation

commanders shall:

(1) Monitor the banking and credit union program within their

commands.

(2) Coordinate requests to establish or construct bank and credit

union offices or terminate logistical support to banks and credit

unions within their commands. Personnel assigned to overseas security

assistance positions will not monitor, coordinate, or assist in

military banking operations without the prior approval of the DSCA.

(3) Assign, as appropriate, responsibility for paragraphs (g)(1)

and (g)(2) of this section, to Comptroller or resource management

personnel.

(4) Cooperate with financial institution associations, leagues, and

councils.

(5) Recognize the right of all DoD personnel to organize and join

credit unions and promote the credit union movement in DoD worldwide.

(6) Permit DoD personnel to serve on credit union boards and

committees on a voluntary basis, without compensation, when neither

conflict of duty nor conflict of interest is involved, as stated in DoD

Directive 5500.7.

(7) Allow personnel to attend credit union conferences and meetings

in accordance with DoD Directive 1327.5, Subchapter 630 of the DoD

Civilian Personnel Manual (DoD 1400.25-M), and Comptroller General

Decision B-212457.

(8) Seek the provision of financial services only from existing on-

base financial institutions, proposing alternatives only where on-base

financial institutions fail to respond favorably to legitimate

requirements.

(9) Coordinate appropriate actions with the cognizant Combatant

Command.

Sec. 231.4 General policy provisions.

(a) Security. The installation commander (or designee) and the on

base financial institutions shall work with the installation security

police to establish an understanding as to each entity's

responsibilities. A written agreement shall be established outlining

the security procedures that the financial institution will follow and

the role that the security police will play with regard to alarms,

movement of cash, and procedures to be followed should a robbery occur.

The on-base financial institutions are encouraged to establish an

ongoing relationship with the security police on all matters of asset

protection.

(1) Cash and other assets in on-base banking offices and credit

unions are the property of the financial institutions. Maintenance of

alarms, escorting of cash or use of armored cars, and the guarding of

cash is the sole responsibility of the on-base financial institution.

(2) Military guards, civilian guards (for use within the

installation), military police or other protective service will be

provided without charge in the following cases:

(i) For needed periods for paydays to guard shipments of money that

primarily are for disbursing officer use.

(ii) At times of unusual risk to the financial institution, such as

cash needed to stock remote automated teller machines.

(iii) To avoid undue insurance costs.

(b) Central locator services. Military locator services shall be

provided per the guidelines in subpart B to this part.

(1) When appropriate, installations will process financial

institution requests for central locator service to obtain military

addresses of active duty personnel. This service will be used to locate

persons for settling accounts, and recovering funds on checks that did

not clear or loans that are delinquent or in default (see DoD Directive

1344.9 \6\). If delinquent loans or dishonored checks are not recouped

within 48 hours, financial institutions operating on DoD installations

may bring this information to the attention of the local commander,

bank liaison officer, or other designee for assistance in effecting

restitution of the amount due, if not otherwise prohibited by law.

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\6\ See footnote 1 to Sec. 231.1(a).

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(2) The Department will assist financial institutions to locate DoD

personnel whose whereabouts cannot be locally determined. The request

should be on the financial institution's letterhead, include the

Service member's name and social security number (SSN), and cite the

cognizant Military Department regulation that authorizes the use of

locator services. If a financial institution needs immediate service,

the institution should contact the bank or credit union liaison

officer.

(i) For addresses of Department of the Army active, retired,

separated and civilian personnel, financial institutions may telephone

(703) 325-3732 or write to: Department of the Army WW Locator, U.S.

Army Enlisted Record and Evaluation Center, 8899 E. 56th Street,

Indianapolis, IN 46249-5301.

(ii) For addresses of Department of the Navy active, retired,

separated and civilian personnel, financial institutions may telephone

(901) 874-3388 or write to: Department of the Navy, Navy Personnel

Command, PERS-312F, 5720 Integrity Drive, Millington, TN 38055.

(iii) For addresses of Department of the Air Force active, retired,

separated and civilian personnel, financial institutions may telephone

(210) 565-2660 or write to: Department of the Air Force Personnel

Command, MSIMDL Suite 50, 550 C Street West, Randolph AFB, TX 78150.

(iv) For addresses of United States Marine Corps active, retired,

separated and civilian personnel, financial institutions may telephone

(703) 784-3942 or write to:

Active:

U.S. Marine Corps-CMC, HQ MC MMS B 10, 2008 Elliot Road, Room 201,

Quantico, VA 22134-5030

Retired-Separated:

Q U.S. MMRS-6, 280 Russell Road, Quantico, VA 22134-5105

Civilian:

Commanding General, 15303 Andrew Road, Kansas City, MO, 64147-1207

unofficial section of that installation's daily bulletin, provided

space is available, to inform DoD personnel of financial services and

announce seminars, consumer information programs, and other matters of

broad general interest. Announcements of free financial counseling

services are encouraged. Such media may not be used for competitive or

comparative advertising of, for example, specific interest rates on

savings or loans.

(2) On-base financial institutions may use installation bulletin

boards, newsletters or web pages to post general information that

complements the installation's financial counseling programs and

promotes financial responsibility and thrift. Message center services

may distribute a reasonable number of announcements to units for use on

bulletin boards so long as this

[[Page 43861]]

does not impose an unreasonable workload.

(3) On-base financial institutions may include a one page insert

into the newcomer's package. This insert would benefit the

installation's newcomers by letting them know what financial services

are available on the installation.

(4) DoD Directive 5120.20 \7\ prevents use of the Armed Forces

Radio and Television Service to promote a specific financial

institution.

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\7\ See footnote 1 to Sec. 231.1(a).

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(5) Off-base financial institutions will not be permitted to

distribute competitive literature or forms on the installation.

However, they may use commercial advertising, mailings or

telecommunications to reach their customers.

(6) Advertising in government-funded (official) installation papers

is not permitted with the exception of insert advertising in the Stars

and Stripes overseas. Installation newspapers funded by local

advertisers are not official publications and, thus, may include paid

bank advertising.

(7) Installation activities, including Military Exchange and

concessionaire outlets, shall not permit the distribution of literature

from off-base financial institutions if there is an on-base financial

institution. This does not prevent Military Exchange Services from

distributing literature on affinity credit cards centrally acquired

through competitive solicitation.

(d) On-base financial institutions are encouraged to install ATMs

at those installation(s) on which they are located.

(1) Financial institutions that propose to install an ATM on DoD

installations shall bear the cost of ATM installation, maintenance, and

operation.

(2) ATM approval authority is as shown.

(i) The installation commander has approval authority when an on-

base financial institution wishes to place an ATM on the installation.

This approval should be reflected as an amendment to the operating

agreement.

(ii) Where there is no on-base financial institution, follow the

solicitation procedures to obtain financial services set forth in

Secs. 231.5(b) and 231.7(b).

(3) The availability of ATM service will not preclude the later

establishment of a banking office should conditions change on an

installation.

(4) Proposals by the installation commander to install ATMs from

other than on-base financial institutions on domestic installations

shall be considered only when ATM service is unavailable or existing

service is inadequate and the on-base financial institution(s) either

declines to provide the service, fails to improve existing service so

that it is adequate, or does not formally respond to the request for

such service within 30 days of the date of the request. Additional ATM

service from other than on-base financial institutions is considered an

exception to policy and, therefore, must be submitted by the

installation commander for approval to the USD(C) through the Secretary

of the Military Department concerned (or designee) and the DFAS. The

procedures to establish an on-base financial institution set forth in

Secs. 231.5(b) and 231.7(b) shall be followed when soliciting for the

additional services. Proposals offering shared-access ATMs shall

receive preference.

(5) ATM service from foreign banking institutions may be authorized

on overseas installations with or without MBFs operated under contract

where the installation or community commander determines that a

bonafide need exists to support local national hires. In such

instances, ATM connectivity shall be limited to host country networks

and the ATMs shall dispense only local currency (no U.S. dollars). The

operating agreement covering ATM service shall be negotiated by the

installation or community commander and coordinated with the Secretary

of the Military Department concerned (or designee) and the appropriate

Combatant Command (or designee) prior to its execution. A copy of the

operating agreement will be forwarded through DoD Component channels to

the DFAS.

(6) Domestic and International Treasury General Accounts. In cases

where authorization will be required for the banking office or on-base

credit union to act as a Treasury General Account (TGA) domestic

depositary (on overseas installations--International Treasury General

Account (ITGA) overseas depository), the financial institution must

satisfy the risk management standard established by the Department of

the Treasury. Local operating funds may be used if the on-base

financial institution requests reimbursement for costs incurred. On-

base financial institutions shall accept deposits for credit to the TGA

(or ITGA) when so authorized.

(7) Staffing. (i) On-base financial institutions are expected to be

staffed adequately commensurate with industry standards for similar

numbers of accountholders and financial services rendered. Staffing at

overseas MBFs operated under contract shall be maintained within

negotiated ceilings.

(ii) All staffing will comply fully with the spirit and intent of

the DoD equal employment opportunity policies and programs in

accordance with DoD Directive 1440.1. \8\

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\8\ See footnote 1 to Sec. 231.1(a).

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(iii) DoD personnel may not serve as directors of domestic or

foreign banking institutions operating banking offices on those DoD

installations where they are currently assigned. However, a member of a

Reserve Component who has been serving as a director of a domestic or

foreign banking institution operating a banking office on a DoD

installation need not resign his or her directorship when called to

active duty.

(iv) DoD personnel may not be detailed to duty with an on-base

financial institution located on a DoD installation. However, off-duty

personnel may be employed by an on-base financial institution subject

to installation commander approval. Such employment must not interfere

with the performance of the individual's official duties and

responsibilities.

(e) Departure clearance. The installation commander establishes the

clearance policy for all DoD personnel leaving the installation. The

on-base financial institutions shall be included as places requiring

clearance. The purpose of a clearance is to report change of address,

reaffirm allotments or outstanding debts, and receive financial

counseling, if desired or appropriate. Clearance may not be denied in

order to collect debts or resolve disputes with financial institution

management.

(f) Financial education. (1) Officials of on-base financial

institutions shall be invited to take part in seminars to educate

personnel on personal financial management and services of financial

institutions. Financial institutions will be encouraged to provide

financial education and counseling services as an integral part of

their financial program. Officials of on-base financial institutions

shall submit advance-briefing texts for approval by the installation

commander to ensure that the program is not used to promote services of

a specific financial institution.

(2) DoD personnel who tender uncollectable checks, overdraw their

accounts or fail to meet their financial obligations in a proper and

timely manner damage their credit reputation and adversely affect the

public image of all government personnel. For uniformed personnel,

military financial counselors and legal advisors shall

[[Page 43862]]

recommend workable repayment plans that avoid further endangering

credit rating and counsel affected personnel to protect their credit

standing and career. Counselors shall ensure that such personnel are

aware of the stigma associated with bankruptcy and shall recommend its

use only when no other alternative will alleviate the situation.

(g) Operating agreements. Before operations of an on base banking

office or credit union begin, a written operating agreement (Appendix A

to this part) shall be negotiated directly between the installation

commander and officials of the designated financial institution. The

operating agreement shall define the basic relationship between the on-

base financial institution and the installation commander and identify

mutual support activities such as hours of operation, service fees and

security provided. The agreement shall not prescribe internal

operations of the financial institution. One copy of the agreement

shall be sent through command channels to the Secretary of the Military

Department concerned (or designee). A copy of the agreement shall be

maintained by the installation commander and the banking office or on-

base credit union. At a minimum, the agreement shall include the

following provisions:

(1) Identification of services to be rendered and the conditions

for service. Full financial services shall be provided where feasible.

Agreements, however, may not restrict either entity's right to

renegotiate services and fees.

(2) Agreement that retail fees and services for products (to

include related minimum balance requirements for noninterest checking,

NOW and savings accounts) offered by financial institutions operating

on domestic installations and domestic credit unions operating on DoD

installations overseas shall not exceed 110 percent of the industry-

wide averages for banks as identified in the ``Annual Report to

Congress on Retail Fees and Services of Depository Institutions,''

published by the Board of Governors of the Federal Reserve System. This

report is submitted to the Congress pursuant to section 1002 of the

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 as

amended by section 108 of the Riegle-Neal Interstate Banking and

Branching Efficiency Act of 1994 and is accessible through the Internet

at http://www.bog.frb.fed.us/boarddocs/RptCongress.

(3) Agreement that, notwithstanding the provisions contained in

paragraph (g)(2) of this section, on-base ATM service offered by

financial institutions operating on domestic installations and domestic

credit unions operating on DoD installations overseas shall be provided

without surcharge.

(4) Agreement by both parties that they will comply with this part.

(5) Agreement by the on base financial institution that it will

furnish copies of its monthly financial reports and other local

publications to the installation commander (or designee).

(6) Agreement that the on-base financial institution will indemnify

and hold harmless the U.S. Government from (and against) any loss,

expense, claim, or demand to which the U.S. Government may be subjected

as a result of death, loss, destruction, or damage in conjunction with

the use and occupancy of the premises caused in whole or in part by

agents or employees of the on-base financial institution.

(7) Agreement that neither the Department of Defense nor its

representatives shall be responsible or liable for the financial

operation of the on-base financial institution or for any loss

(including criminal losses), expense, or claim for damages arising from

operations.

(8) Agreement by the on-base financial institution (or any

successor) that it will provide no less than 180 days advance written

notice before ceasing operations.

(9) Specification of the security services to be provided for

guarding cash shipments for paydays, at times of unusual risk to the

financial institution, and to avoid excessive insurance costs charged

to that institution.

(10) Statement that the physical security for cash and negotiable

items will be in a manner consistent with the requirements of the on-

base financial institution's insurer. A copy of those requirements will

be provided to the installation commander on request.

(11) Statement that the financial institution, whenever possible,

will accommodate local command requests for lectures and printed

materials for consumer credit education programs. Officials invited to

participate in such programs shall not use the occasion to promote the

exclusive services of a particular financial institution.

(12) Agreement of the installation commander to provide support as

identified in this part.

(13) Statement that on-base financial institution operations shall

be terminated in accordance with the provisions outlined in this part.

(h) Installation financial services. (1) Financial services

provided on DoD installations will be as uniform as possible for all

personnel.

(2) As separately negotiated, or based on a fee schedule,

custodians of nonappropriated funds shall compensate on-base financial

institutions for services received. Compensation may be made with

compensating balances or paying fees based on the services provided or

a combination of these payment mechanisms. Fees shall not exceed the

charge customary for the financial institution less an offsetting

credit on balances maintained. Banking offices shall classify

nonappropriated fund accounts as commercial accounts.

(3) At a minimum, banking offices shall provide the same services

to individuals and nonappropriated fund instrumentalities as are

available locally.

(4) On-base financial institutions may conduct operations during

normal duty hours provided they do not disrupt the performance of

official duties. Operating hours shall be set, in consultation with the

bank/credit union liaison officer, to meet the needs of all concerned.

ATMs may be used to expand financial services and operating hours.

(5) DoD personnel may use their allotment of pay privileges to

establish sound credit and savings practices through on-base financial

institutions.

(i) On-base financial institution shall credit customer accounts

not later than the value date of the allotment check or electronic

funds transfer.

(ii) The initiation of an allotment is voluntary (see Volume 7A,

section 4202, of DoD 7000.14-R). Thus, generally, a Service member

cannot be required to initiate an allotment for the repayment of a

loan. Allotments voluntarily established by a Service member for the

purpose of repaying a loan or otherwise providing funds to an on-base

financial institution shall continue in effect at the option of the

allotter.

(6) In accordance with sound lending practice, policies on loans to

individuals are expected to be as liberal as feasible while remaining

consistent with the overall interests of the on-base financial

institution. On-base financial institutions shall conform to the

Standards of Fairness principles before executing loan or credit

agreements. (See DoD Directive 1344.9).

(7) On-base financial institutions shall make financial education

and counseling services available without charge to individuals seeking

financial counseling. Such services shall include helping customers to

budget and solve financial problems. Personnel in junior enlisted

grades, or newly married couples who apply for loans, shall be given

special attention and counseling.

[[Page 43863]]

(8) On-base financial institutions must strive to provide the best

service to all customers. On-base financial institutions that evidence

a policy of discrimination in their services are in violation of this

part. In resolving complaints of discrimination, use the procedures

specified in Sec. 231.5(g)(7).

(9) All correspondence regarding on-base financial institutions,

and questions concerning their operation that cannot be resolved

locally shall be referred through command channels to the Secretary of

the Military Department concerned (or designee) for consideration.

Sec. 231.5 Procedures--domestic banks.

(a) Establishment. (1) The following information shall be included

in the installation commander's request to the Secretary of the

Military Department concerned (or designee) for establishment of

banking offices:

(i) The approximate number of DoD personnel at the installation,

and other persons who may be authorized to use the banking office.

(ii) The distance between the installation and the financial

institutions in the vicinity, and the names and addresses of those

institutions.

(iii) Available transportation between the installation and the

financial institutions listed in paragraph (a)(1)(ii) of this section.

(iv) The number of DoD personnel in duty assignments that confine

them to the installation or who cannot obtain transportation (such as

hospital patients).

(v) The approximate loss of duty time due to DoD personnel leaving

the installation for banking services.

(vi) Sources from which the disbursing officer obtains operating

and payroll cash, the frequency of these acquisitions, and the amount

obtained monthly.

(vii) The name and location of the depositary used to make official

deposits for credit to the Treasury General Account (TGA).

(viii) The estimated savings to the disbursing officer if a banking

office is established on the installation.

(ix) A list of organizational and nonappropriated fund accounts,

the name and location of the financial institutions where deposited,

and the average daily activity and balance of each account.

(x) A written description and photographs of the space proposed for

banking office use.

(xi) A statement listing the requirements of the proposed banking

office for safes and a vault; alarm systems; and surveillance

equipment, when necessary.

(xii) Reasons for use of space controlled by the General Services

Administration (GSA). All the GSA-assigned space, whether leased space

or federal office building space, is reimbursable to the GSA at a

standard level user charge. As such, space occupied by a banking office

to serve military needs will be assigned and charged by the GSA.

(xiii) Any other information pertinent to the establishment of a

banking office.

(2) The Secretary of the Military Departments (or designee) shall:

(i) Review each request for the establishment of banking offices.

(ii) Conduct a solicitation for the services when warranted.

(iii) Approve proposals for banking offices.

(iv) Notify the selected financial institution either directly or

through the installation commander. The selected banking institution

will, in turn, obtain operating authority from their regulating

agencies.

(v) Forward proposals to establish TGAs to the DFAS for subsequent

forwarding to the Fiscal Assistant Secretary of the Treasury in

accordance with this part.

(b) Solicitations. The Secretary of the Military Department

concerned (or designee), or the installation commander with advice from

the cognizant Secretary of the Military Department (or designee), shall

conduct solicitations to include pre-proposal conferences for on-base

banking. Subject to the criteria for selection outlined in paragraph

(d) of this section, the preferred sources of on-base financial

services at domestic installations are federally-insured state or

federally-chartered banking institutions operating in the local area.

No commitment may be made to any banking institution regarding its

proposal until a designation is made by the appropriate regulatory

agency.

(1) Solicitations for banking services shall be accomplished in the

following order:

(i) Solicitation letters will be sent to local banking institutions

and a solicitation announcement will be published in the local

newspaper(s) and forwarded to financial institution associations.

(ii) If the Secretary of the Military Department concerned (or

designee) or, where delegated, the installation commander, determines

that the geographic scope of the solicitation needs to be expanded, a

prospectus will be forwarded to financial institutions in a larger

geographic area, as well as financial institution associations and

regulatory authorities in the state where the installation is located.

(iii) If the Secretary of the Military Department concerned (or

designee) or, where delegated, the installation commander, determines

that the geographic scope of the solicitation needs to be expanded

further, the prospectus will be published in the Commerce Business

Daily and financial institution trade journals.

(2) For solicitations conducted at the installation level, the

installation commander shall review proposals to establish banking

offices, select the banking institution making the best offer and

forward a recommendation to the Secretary of the Military Department

concerned (or designee) for final approval.

(3) Banking institutions will not be coerced when banking

arrangements are under consideration or after banking offices are

established. If otherwise proper, this prohibition does not preclude:

(i) Discussions with banking institutions prior to submitting a

proposal for a new banking office.

(ii) Helping banking offices extend their operations in support of

an installation requirement.

(iii) Discussions with banking institutions to improve services or

to create savings for the bank or DoD personnel.

(iv) Seeking proposals for banking service as directed by the

Secretary of the Military Department concerned (or designee).

(v) Negotiations preparatory to signing a banking agreement.

(4) When soliciting for banking services, proposals shall be

evaluated on specific factors identified in the solicitation. These

factors, at a minimum, will be predicated on the services to be

provided as outlined in paragraph 3 of Appendix A to this part, service

fees and charges, and the extent of logistical support required. Prior

to issuance of the solicitation, the preparing office will identify

(for internal use during the subsequent evaluation period) the weights

to be applied to the factors reflected in the solicitation. Proposals

will be evaluated and ultimate selection made based upon the factors

and weights developed for the solicitation.

(5) The Secretary of the Military Department concerned (or

designee), or the installation commander with advice from the cognizant

Secretary of the Military Department (or designee), shall make the

selection of the banking institution based on the provisions outlined

in this section.

[[Page 43864]]

services shall be approved by the installation commander, substantiated

by sufficient evidence and forwarded to the Secretary of the Military

Department concerned (or designee). The installation commander only

under one of the following conditions shall initiate the termination of

banking office operations:

(i) The mission of the installation has changed, or is scheduled to

be changed, thereby eliminating or substantially reducing the

requirement for financial services.

(ii) Active military operations prevent continuation of on-base

financial services.

(iii) Performance of the banking office in providing services is

not satisfactory according to standards ordinarily associated with the

financial services industry or is inconsistent with the operating

agreements or the procedures prescribed in this section.

(iv) Merger, acquisition, change of control or other action results

in violation of the terms and conditions of the existing operating

agreement.

(2) The installation commander shall forward requests for

terminations to the Secretary of the Military Department concerned (or

designee). The Secretary of the Military Department (or designee) shall

coordinate such requests with the USD(C), through the Director, DFAS,

before notification to the appropriate regulatory agency. Subsequent to

this coordination process:

(i) The Secretary of the Military Department (or designee) shall

inform the regulatory agency of the action.

(ii) The installation commander shall revoke the authority of the

financial institution to operate. The lease will be terminated.

(3) Any banking office that intends to terminate its operations

should notify the installation commander at least 180 days before the

closing date. This notification should precede any public announcement

of the planned closure. When appropriate, the commander shall attempt

to negotiate an agreement permitting the banking office to continue

operations until the installation has made other arrangements.

Immediately upon notification of a closing, the commander shall advise

the DoD Component headquarters concerned. If it is determined that

continuation of banking services is justified, action to establish

another banking office shall be taken in accordance with the guidance

prescribed in this section.

(d) Leases or permits for existing government structures. (1) Lease

terms.

(i) The charge for lease of an existing structure shall be

determined by appraisal of fair market rental value.

(ii) The term shall be for 5 years subject to renewal by mutual

agreement and with the understanding that the cognizant Assistant

Secretary of the Military Department (Installations and Logistics) has

the authority to terminate the lease per the cancellation provisions

addressed in paragraphs (e)(3)(i) and (e)(3)(iii) of this section.

Terms in excess of 5 years must be approved by the Secretary of the

Military Department (or designee) following a determination that the

longer term will aid the national defense or be in the public interest.

If space occupied is assigned by GSA, charges to financial institutions

for space and services shall be at the standard level user rate of GSA.

(iii) When banking institutions use their own funds to improve

existing government space, leases, for a period not to exceed 5 years,

may be negotiated for a period commensurate with the appraised value of

the leasehold improvements divided by the annual lease fee. Terms in

excess of 5 years must be approved by the Secretary of the Military

Department (or designee) following a determination that the longer term

will aid the national defense or be in the public interest.

(iv) Banking institutions shall perform all maintenance, repair,

improvements, alterations, and construction on the banking premises.

(v) Banking institutions shall pay for all utilities and custodial,

janitorial, and other services furnished by the government at rates set

forth in the lease or by written agreement between the installation and

the banking institution.

(vi) The banking office shall be housed in a building accessible to

most DoD personnel on the installation and in a location permitting

reasonable security.

(2) Leases executed before [effective date of the final rule] may

not be altered solely as a result of the provisions of this part unless

a lessee specifically requests a renegotiation under these provisions.

Leases may not be negotiated or renegotiated, nor may any rights be

waived or surrendered without compensation to the government.

Compensation to the government may consist of added property value,

added banking services, or both.

(e) Land leases. (1) A lease for construction of a building to

house a bank shall be at the appraised fair market rental value.

Charges shall apply for the term of the lease not to exceed 5 years.

Terms in excess of 5 years shall be approved by the Secretary of the

Military Department (or designee) following a determination that the

longer term will aid the national defense or be in the public interest.

(2) Banking institutions that participate in the construction of a

shopping mall complex will be given a lease at fair market rental value

for a term not to exceed 5 years. Terms in excess of 5 years shall be

approved by the Secretary of the Military Department (or designee)

following a determination that the longer term will aid the national

defense or be in the public interest. The lease shall cover only land

where the banking office physically is located.

(3) Leases shall include the following provisions:

(i) The government has the right to terminate the lease due to

national emergency; installation inactivation, closing, or other

disposal action; or default by the lessee.

(ii) The lessee shall provide written notice 180 days prior to

voluntarily terminating the lease.

(iii) Upon a lease termination, the government has the option to

cause the title of all structures and other improvements to be conveyed

to the United States without reimbursement, or require the lessee to

remove the improvements and restore the land to its original condition.

(4) If determined to be in the government's interest, an existing

lease of land may be extended prior to expiration of its term. Passage

of title to facilities shall be deferred until all extensions have

expired. Such extensions shall be for periods not to exceed 5 years

with lease payments set at the appraised fair market rental of the land

only as determined on the date of each such extension. Banking

institution lessees shall continue to maintain the premises and pay for

utilities and services furnished.

(5) When under the terms of a lease, title to improvements passes

to the government, arrangements normally will be made as follows:

(i) When the square footage involved exceeds that authorized in DoD

4270.1-M,\9\ the banking institution shall be given first choice to

continue occupying the excess space under a lease that provides for

fair market rental for the land underlying that excess space.

---------------------------------------------------------------------------

\9\ See footnote 1 to Sec. 231.1(a).

---------------------------------------------------------------------------

(ii) The charge for continued occupancy of improved space by a

banking office shall be at fair market rental value only for the

associated land. The lessee shall continue to maintain the premises and

pay the cost of utilities and services furnished.

(6) Without exception, those leases executed before [effective date

of the

[[Page 43865]]

final rule] shall not be altered solely as a result of the provisions

of this part unless a lessee specifically requests a renegotiation

under these provisions. Lease contracts may not be negotiated or

renegotiated, nor may any rights thereunder be waived or surrendered,

without compensation to the government.

(f) Construction. Banking institutions may construct buildings

subject to the following provisions:

(1) The building shall be solely for the use of the banking

institution and may not provide for other commercial enterprises or

government instrumentalities.

(2) Construction projects must meet the criteria in DoD 4270.1-M.

(3) Construction projects approval authority.

(i) Projects costing $25,000 or more shall be approved by the Major

Command (or Claimant) with an information copy sent to the Secretary of

the Military Department concerned (or designee). The Secretary of the

Military Department (or designee) will have 30 days to provide comments

to the Major Command (or Claimant) before final approval can be

granted. Major Commands (or Claimants) may accept telephonic

concurrence from the Secretary of the Military Department (or

designee).

(ii) Projects costing less than $25,000, to include interior

alterations and room or office additions to existing banking offices,

shall be approved by installation commanders. Copies of approvals,

including the identification of project cost, shall be furnished to the

Secretary of the Military Department concerned (or designee).

(4) In accordance with applicable Military Department regulations,

the Congress must be notified of all construction projects using other

than appropriated funds and costing over $500,000.

(5) Proposals for construction of structures on installations at

banking institution expense shall be reviewed and reported in

accordance with cognizant Military Department regulations. The

following information shall be listed to support each proposal:

(i) Number of DoD personnel at the installation plus others who may

use the banking office.

(ii) Square footage of the proposed building.

(iii) Land area to be leased to the banking institution.

(iv) Term of the lease.

(v) Estimated cost of construction.

(vi) Estimated fair market value of the land to be leased.

(vii) A statement that the banking institution will be responsible

for utility connections and other utility and maintenance costs.

(viii) A statement that the building will be used only for

financial services.

(ix) A statement that management understands its potential loss of

the building in the event of installation closure or other delimiting

condition.

(x) Justification for a waiver of space criteria if the building

exceeds that specified in DoD 4270.1-M.

(6) Banking institutions shall pay for interior alterations and

maintenance as well as utilities, custodial, and other furnished

services.

(7) Banking institutions shall pay all construction costs.

(g) Bank liaison officer (BLO). Each installation commander having

a banking office shall appoint a BLO. The BLO's photograph, name and

duty telephone number shall be displayed prominently at each banking

office on the installation. As appropriate, the BLO's responsibility

shall be assigned to comptroller or resource management personnel.

Employees, officials or directors of a financial institution may not

serve as BLOs. The duties of a BLO are to:

(1) Ensure that the banking institution operating the banking

office has the latest version of this part.

(2) Ensure that traveler's checks and money orders are not being

sold by other on-base organizations when banking offices are open for

business. However, postal units and credit unions are exempt from this

restriction.

(3) Attend financial workshops, conferences, and seminars as

appropriate. Such gatherings offer excellent opportunities for

personnel of financial institutions and the Department to improve the

military banking program. Free discussion among the attendees gives an

excellent forum for planning, developing, and reviewing programs that

improve Military banking and financial services.

(4) Assist, when requested by the banking office manager or the

installation commander, in locating and collecting from individuals

tendering uncollectable checks, overdrawing accounts, or defaulting on

loans (within the guidelines of subpart B of this part) if not

otherwise prohibited by law.

(5) Maintain regular contact with the banking office manager to

confer and discuss quantitative and qualitative improvements in the

services provided. In executing this authority, the BLO shall not

become involved in the internal operations of the banking institution.

(6) Review the schedule of fees annually, and ensure that the

operating agreement is updated at least every 5 years. Renegotiate

services and fees as necessary.

(7) Assist in resolving customer complaints about banking services.

(8) Assist in resolving complaints of discrimination with financial

services by the banking institution. If a complaint cannot be resolved,

a written request for investigation shall be forwarded to the

appropriate regulatory agency. Any such request must document the

problem and command efforts taken toward its resolution. Information

copies of all related correspondence shall be sent through channels to

the Secretary of the Military Department concerned (or designee) for

transmittal to DFAS.

(9) Assist the installation commander to report to the appropriate

regulatory agency any evidence suggesting malpractice by banking office

personnel.

(h) In-store banking. Under the direction and approval of the

installation commander, an on-base financial institution may provide

in-store banking within the premises of the commissary, the Military

Exchange Service or other on-base retail facility.

(1) Provision of the requested services and the associated

stipulations arising from the provision of the requested services shall

be documented as an amendment to the existing operating agreement

between the installation commander and the on-base financial

institution that will provide in-store services.

(2) The amendment to the operating agreement shall be drafted

through close coordination between the requesting DoD Component

representative, the on-base financial institution representative, and

the installation commander. All three parties shall sign the amendment:

the installation commander, the DoD Component that hosts the in-store

banking operations, and the on-base financial institution.

(3) The installation commander shall extend the opportunity to

provide the requested in-store banking services to all financial

institutions located on the installation. The selection process is

outlined in Appendix B of this part.

(4) Space shall be granted through a lease to the banking

institution that will provide in-store service.

(i) Domestic military banking facilities (MBFs) (1) Domestic MBF

establishment. Requests to establish MBFs should be made only when a

need for services cannot be met by other means. During mobilization,

however, MBFs may be designated as an emergency measure.

[[Page 43866]]

(ii) Installation commanders shall send requests for an MBF with

justification for its establishment through the Secretary of the

Military Department concerned (or designee) to the Director, DFAS, for

coordination with the Department of the Treasury. The Department of the

Treasury may approve the designation of an MBF under provisions of 12

U.S.C. 265.

(iii) MBF operations may begin only after approval for MBF status

is granted by the Department of the Treasury.

(5) MBF conversion. (i) Where MBFs exist, installation commanders

shall encourage their conversion to independent or branch banks.

(ii) Proposals from the on-base banking institution to convert an

existing MBF to an independent or branch bank shall be sent through

command channels to the Secretary of the Military Department concerned

(or designee) for approval. The Secretary of the Military Department

(or designee), shall forward the request to the Director, DFAS, for

coordination with the Department of the Treasury.

(iii) Unsolicited proposals from banking institutions to establish

independent or branch banks where an MBF exists shall be forwarded

through command channels to the Secretary of the Military Department

concerned (or designee). Each proposal shall be evaluated on its own

merits.

(A) The installation commander shall inform the banking institution

operating the MBF that an unsolicited proposal for a banking office has

been received and shall offer that incumbent institution the

opportunity to submit its own proposal.

(B) Preference to operate an independent or branch bank shall be

given to the banking institution that has operated the MBF provided

that prior banking service has been satisfactory and that the

institution's proposal is adequate.

(6) MBF termination. The Director, DFAS, shall coordinate the

termination of a financial institution's authority to operate an MBF

with the Department of the Treasury.

Sec. 231.6 Procedures--overseas banks.

(a) General provisions of banking services overseas. The Department

acquires banking services overseas for use by authorized persons and

organizations by:

(1) MBFs operated under contract and authorized by the pertinent

status of forces agreement, other intergovernmental agreements, or

host-country law.

(2) Domestic and foreign banking institutions located on overseas

DoD installations. Each such institution shall be:

(i) Chartered to provide financial services in that country,

(ii) A party to a formal operating agreement with the installation

commander to provide such services, and

(iii) Identified, where applicable, in the status of forces

agreements, other intergovernmental agreements, or host-country law.

(b) Establishment. (1) Overseas MBFs operated under contract.

Installation or community commanders requiring banking services will

send a request through command channels to the Secretary of the

Military Department concerned (or designee) for concurrence and

subsequent transmittal to the Director, DFAS, for approval.

(i) Requests to establish MBFs will include, but are not limited

to, the following information:

(A) The approximate number of DoD personnel at the installation and

in the community and any other persons who may be authorized to use the

MBF.

(B) The distance between the installation and the nearest MBF and

credit union office, the names; addresses, and telephone numbers of the

operators of those institutions; and the installations and communities

where they are located.

the installation or community and the nearest MBF and credit union

office.

(D) The approximate loss of duty time due to DoD personnel leaving

the installation or community to obtain banking services.

(E) Sources from which the disbursing officer obtains operating and

payroll cash, the frequency of these acquisitions, and the amount

obtained monthly.

(F) The name and location of the depository used to make official

deposits for credit to the TGA.

(G) The estimated savings to the disbursing officer if the MBF is

established on the installation.

(H) A list of organizational and nonappropriated fund accounts, the

name and location of the financial institutions where deposited, and

the average daily activity and balance of each account.

(I) A written description and photographs or drawings of the space

proposed for MBF use. The extent and approximate cost of required

alterations, including the construction of counters and teller cages.

(J) A statement that recognizes the logistical support, including

equipment, to be provided by the local command as detailed in paragraph

equipment and the manner in which it will be acquired.

(K) In countries where no MBFs currently are operated under

contract, a statement from the appropriate Combatant Command that the

requirement has been coordinated with the U.S. Chief of Diplomatic

Mission or U.S. Embassy and that the host country will permit the

operation in accordance with Sec. 231.3(f)(1)(i).

(L) Any other pertinent information to justify MBF establishment.

(ii) As a general rule, MBFs may be established only when the

installation or community population meets the following criteria:

(A) Full-time MBF. Except in unusual circumstances, a total of at

least 1,000 permanent military personnel and DoD civilian employees is

necessary to qualify for a full-time MBF.

(B) Part-time MBF. Except in unusual circumstances, a total of at

least 250 permanent military personnel and DoD civilian employees is

necessary to qualify for a part time MBF.

(iii) If the population at a certain remote area is not sufficient

to qualify under the criteria for full-or part-time MBFs, the

installation or community commander will explore all other alternatives

for acquiring limited banking services before requesting establishment

of an MBF as an exception to these provisions. Alternatives to limited

banking services include installation of ATMs and check cashing and

accommodation exchange service by disbursing officers and their agents.

(iv) Establishment of an overseas MBF is predicated on and

requires:

(A) Designation of the MBF contractor as a depositary and financial

agent of the U.S. Government by the Department of the Treasury.

(B) The availability of banking contractors interested in bidding

for the operation of the facility and the viability of such proposals.

banking services.

(D) Establishment of a U.S. Dollar Currency Custody Account to

support banking operations.

(2) Other overseas banking offices. Where a need for financial

services has been identified; either the banking and currency control

laws of certain host countries do not permit MBFs to operate on DoD

installations or MBFs, where permitted, have not been established; and

there is a desire to establish banking services the following applies:

[[Page 43867]]

(i) Installation or community commanders will send requests for

banking services or unsolicited proposals from foreign banking

institutions to their Major Commands (or Claimants) with supporting

data as required in Sec. 231.5 (a).

(ii) Major Commands (or Claimants) will forward installation or

community commander requests to the Secretary of the Military

Department concerned (or designee) for approval. The Secretary of the

Military Department concerned (or designee) will coordinate with DFAS

to seek the designation of the parent foreign banking institution

designated as a depositary and financial agent of the U.S. Government

by the Department of the Treasury.

(iii) Banking offices in this category will become operational only

after the foreign parent banking institution has been designated a

depositary and financial agent of the U.S. Government. The institution

also must indicate a willingness and ability to provide collateral

backing for any official and nonappropriated fund U.S. dollar deposits.

Any collateral pledged must be in a form acceptable to DFAS and the

Department of the Treasury.

(i) Installation or community commanders will provide logistical

support to MBFs. Such support normally includes:

(A) Adequate office space, including steel bars; grillwork;

security doors; a vault, safes, or both; security alarm systems and

camera surveillance equipment (where deemed necessary) that meet

documented requirements of the contractor's insurance carrier;

construction of counters, teller cages, and customer and work areas;

necessary modifications and alterations to existing buildings; and

construction of new MBF premises, if necessary.

(1) The size and arrangement of space should permit efficient

operations. Space assigned may not exceed that prescribed in DoD

4270.1-M.

(2) All maintenance, repair, rehabilitation, alterations, or

construction for banking offices shall comply with guidelines

established by the installation commander.

(B) Office space in a building that is accessible to the most users

and permits the maximum security.

storage space for retention of records, files, and storage of supplies.

(D) DoD housing on a rental basis to key MBF personnel who are

unable to find suitable, reasonably priced housing in the vicinity of

the DoD installation, subject to the assignment procedures and other

requirements of DoD 4165.63-M \10\

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\10\ See footnote 1 to Sec. 231.1(a).

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(E) Air-conditioning, which is considered a normal utility for

banking offices located at installations that qualify for air-

conditioning under applicable regulations. Banking space is classified

as administrative space at Military installations.

(F) Utilities (i.e., electricity, gas, water and sewage), heating,

intrastation telephone service, and custodial and janitorial services

to include garbage disposal and outdoor maintenance (such as grass

cutting and snow removal).

(G) Defense Switching Network (DSN) voice and data communication to

include Internet access.

(H) Military guards, civilian guards (for use within the

installation), military police, or other protective services to

accompany shipments of money. This level of protective service also

shall be provided at other times as required to include alarm system

failures and to avoid undue risks or insurance costs on the part of the

MBF.

(I) U.S. Military Postal Service access under DoD Directive 4525.6

\11\. Use of free intra-theater delivery system (IDS) is authorized for

all routine mail sent and received between Army Post Offices (APOs) and

Fleet Post Offices (FPOs) within a theater.

---------------------------------------------------------------------------

\11\ See footnote 1 to Sec. 231.1(a).

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(J) Office equipment and furniture on memorandum receipt if

available from local stock. If office equipment or furniture is

unavailable, statements of nonavailability will be issued.

(K) Vehicle registration and fuel sales from government-owned

facilities for bank-operated vehicles if not in conflict with host

government agreements. Vehicle registration will be subject to normal

fees.

(L) The local commander for official may issue issuance of

invitational travel orders that authorize travel at no expense to the

U.S. Government on site visits by U.S. based banking institution

officials.

(ii) Suggestions for changes to the contract under which logistical

support is granted may be forwarded through command channels to the

Director, DFAS, for consideration.

(2) Other overseas banking offices. (i) Logistical support provided

to such offices will be negotiated with the parent foreign banking

institution and incorporated into the written operating agreement.

(ii) Logistical support will not exceed that provided to contract

MBFs as specified paragraph (c)(1) of this section.

(d) Operations. (1) General conditions of MBF operation. (i) Before

initiating MBF operations, a written agreement shall be directly

negotiated and signed by the installation or community commander and

management of the banking contractor or other financial institution

concerned. One copy of the agreement with U.S. banking contractors and

two copies of the agreement with institutions other than U.S. banking

contractors will be forwarded through command channels to the Secretary

of the Military Department concerned (or designee). The Secretary of

the Military Department (or designee) shall forward one copy of the

agreement with institutions other than U.S. banking contractors through

command channels to the Director, DFAS. A copy of the agreement also

shall be maintained at all times by the installation or community

commander and the banking institution manager.

(ii) For MBFs operated by U.S. banking contractors, the agreement

shall state operating details not set forth in the contract. Though the

contract limits the number of operating hours per week, local

commanders and MBF managers should set days and hours of operation to

best meet local needs. Operating times may include Saturdays and

evening hours when necessary to complement other retail services for

DoD personnel, provided the contractor can implement that service at no

additional cost to the government. When added cost is involved, the

commander will send a request including reasons for expanded or

modified times of operation, through command channels, to the Secretary

of the Military Department concerned (or designee) for action. If

approved, the request, with recommendations, will be forwarded to the

Director, DFAS.

(2) Overseas MBFs operated under contract. (i) General. Overseas

MBFs shall operate under terms and conditions established at the time

of annual contract negotiations and confirmed in respective contracts

or contracting officer determinations.

(ii) Authorized customers. DoD banking contracts specify the

personnel authorized to receive service. Additionally, overseas major

commanders may approve banking services for other individuals that

qualify for individual logistic support under the regulations of the

DoD Component concerned, provided that the use of banking services is

not prevented by status of forces agreements, other intergovernmental

agreements, or host-country law.

(iii) Services rendered. DoD banking contracts specify the services

to be

[[Page 43868]]

rendered and related charges. Suggestions for expansion or modification

of authorized services, fees or charges may be forwarded through DoD

Component channels to DFAS. Proposals for any new service must be

coordinated with the appropriate Combatant Command and U.S. Chief of

Diplomatic Mission or U.S. Embassy to make certain that the proposal

does not conflict with the status of forces agreements, other

intergovernmental agreements, or host-country law.

(iv) Regulation to be provided. The DFAS shall advise each U.S.

banking contractor operating an overseas MBF of this part and furnish a

copy to the contractor.

(v) Conditions of operation. (A) Part-time and payday service MBFs

will provide limited services that mirror, to the extent feasible,

those provided by full-time MBFs. Since part-time MBFs operate out of

nearby MBFs, installation or community commanders shall provide and

fund transportation and guards for their operation.

(B) Any deficiency of banking services under DoD banking contracts

shall be reported to the manager of the MBF within 7 calendar days of

noting the deficiency. If the problem has not been corrected within 30

calendar days after being noted, the commander shall report the problem

through DoD Component channels to DFAS.

establish cash management practices that minimize the cash required to

conduct business.

(D) Commanders shall assist MBF contractors to develop and update

contingency plans for banking services in the event of hostilities or

other emergencies.

(E) MBF provision of foreign currency shall be in accordance with

Volume 5, Chapter 13 of DoD 7000.14-R.

(3) Other overseas banking offices. (i) Authorized customers. The

list of authorized customers shall be negotiated between the

installation commander and the bank and shall be reflected in the bank

operating agreement. Those customers identified as authorized in the

operating agreement shall be in accordance with applicable status of

forces agreements, other intergovernmental agreements, or host-country

law.

(ii) Services rendered. Services and charges shall parallel,

whenever practical, the services and charges of MBFs operated under

contract. Specific services shall be negotiated and included in the

agreement with the foreign banking institution. A copy of the agreement

shall be sent through DoD Component channels to the DFAS.

(iii) Operating agreements. Before agreements are executed, they

will be coordinated with and approved by the appropriate Combatant

Command (or designee).

(iv) Conditions of operation. A banking institution shall provide

equipment (except that furnished by the installation or community),

supplies, and trained bank personnel.

(4) Relocation of MBF. (i) When an MBF is moved from one location

to another at the same installation or community, the commander shall

notify the cognizant Military Department, through command channels. The

Military Department shall forward the information to the DFAS.

(ii) For all other relocations, prior approval from the DFAS must

be obtained through DoD Component channels.

(5) Comments. Installation or community commanders shall send their

banking comments through DoD Component channels to the DFAS for any of

the following:

(i) Major changes in installation population that would affect use

of the MBF.

(ii) Opinion that the space assigned is not adequate for the

efficient operation of the MBF. Include a statement concerning

corrective action.

(iii) Suggestions that might improve the MBF operation, increase

efficiency, or decrease costs.

(iv) Pending developments that may have a material impact on the

MBF operation.

(6) Bank liaison officer. The duties of the BLO are outlined in

Sec. 231.5 (g).

(e) Termination. Requests to eliminate any or all MBFs in a foreign

country must include documentation that the U.S. Chief of Diplomatic

Mission has been informed and arrangements for local termination

announcements and procedures have been made with the U.S. Embassy.

(1) Overseas MBFs operated under contract. In cases where an

installation or community no longer can justify overseas MBF

operations, the commander shall notify the Secretary of the Military

Department concerned (or designee) through command channels.

(i) The report shall state whether a part-time MBF should be

established and specify the days each week that the MBF would be

needed.

(ii) The Secretary of the Military Department (or designee) shall

send this report with recommendations to the DFAS.

(2) Other overseas banking offices. Termination actions, when

required, shall be taken in accordance with the applicable clauses in

the operating agreement. Notice of intent to terminate, including the

closing date, shall be sent through DoD Component channels to DFAS,

which shall notify the Department of the Treasury so that the foreign

banking institution's authority as a depositary and as a financial

agent of the U.S. Government at that location may be revoked.

Sec. 231.7 Procedures-domestic credit unions.

(a) General policy. Given their role in promoting morale and

welfare, on base credit unions shall be recognized and assisted by DoD

Components at all levels. These credit unions shall provide services to

DoD personnel of all ranks and grades within their respective fields of

membership.

(b) Establishment. A demonstrated need for credit union services

may be addressed by establishing a new full-service credit union or by

opening a branch office or facility of an existing credit union under

the common bond principle.

(1) DoD personnel seeking to establish a new full-service credit

union shall submit a proposal to the installation commander for review.

In addition to the information identified in Sec. 231.5(a)(1), the

proposal shall include a request for the establishment of a field of

membership that includes all personnel at the installation. Upon

installation commander concurrence, the proposal shall be forwarded

through DoD Component channels to the Secretary of the Military

Department (or designee).

(2) The Secretary of the Military Department concerned (or

designee) shall:

(i) Obtain a list of credit unions that are eligible to serve the

installation's military members and civilian employees from the

National Credit Union Administration (NCUA) Regional Office that has

geographic jurisdiction and the appropriate state regulatory agency.

(ii) Prepare and send formal solicitation letters to eligible

credit unions informing them of an opportunity to establish a branch

office at the installation.

(iii) In coordination with the installation commander, establish

the criteria for selection of a specific credit union in accordance

with Sec. 231.5(b)(4). Proposals shall be evaluated, and a selection

made, based upon the factors and weights developed for the

solicitation.

(3) Upon approval by the Secretary of the Military Department (or

designee), the NCUA or appropriate state regulatory agency shall be

notified and

[[Page 43869]]

asked to establish or amend the selected credit union's charter to

include the new location. For Federal credit unions, no specific NCUA

approval is required to open a branch.

(4) No commitment may be made to a credit union regarding its

proposal until the appropriate regulatory agency has announced a

selection.

a credit union plans to end operations on a DoD installation, it shall

be required to notify the installation commander 180 days before the

closing date. Such notification shall be required to precede public

announcement of the planned closure. When appropriate, the commander

shall attempt to negotiate an agreement permitting the credit union to

continue operations until the installation has made other arrangements.

(ii) The installation commander shall inform the Secretary of the

Military Department concerned (or designee) immediately upon receiving

notification of a closing. The report shall include a recommendation

about continued credit union service on the installation. Paragraph (b)

of this section applies if continued service is needed.

(2) Termination for cause. If, after discussion with credit union

officials, an installation commander determines that the operating

policies of a credit union are inconsistent with this part, a

recommendation for termination of logistical support and space

arrangements may be made through the Secretary of the Military

Department concerned (or designee). A credit union shall be removed

from the installation only with approval of the Secretary of the

Military Department (or designee) after coordination with DFAS and the

appropriate regulatory agency.

(3) Termination in the interest of national defense. At the option

of the government, leases may be terminated in the event of national

emergency or as a result of installation deactivation, closing, or

other disposal action.

(d) Use of space, logistical support, and military real property

for domestic credit unions. (1) Criteria for use of space on

Government-owned real property. (i) Criteria governing the assignment

of space and construction of new space for credit unions are in DoD

4270.1-M.

(ii) A credit union may be furnished space on a DoD installation at

one or more locations for periods not to exceed 5 years. Terms in

excess of 5 years must be approved by the Secretary of the Military

Department concerned (or designee) following a determination that the

longer term will aid the national defense or be in the public interest.

The cumulative total of space furnished shall be subject to the

limitations of DoD 4270.1-M.

(A) The furnishing of office space (including ATM placement) to on-

base credit unions is governed by the Federal Credit Union Act (12

U.S.C. 1751). The provision of no-cost office space is limited to

credit unions having a membership at least 95 percent of which is

composed of individuals who are, or who were at the time of admission

into the credit union, military personnel or federal employees, or

members of their families. This percentage criterion applies only to

members who use the on-base office, not to the total credit union

membership. A written statement, prepared on the credit union's

letterhead and signed by either the president of its board of directors

or its general manager to the effect that the credit union meets the 95

percent criterion, shall be required to justify and document the

allotment of free government space. A certification also shall be

required whenever there is a merger, takeover, or significant change in

a field of membership. This certification shall be required to serve as

justification and documentation for the continued allocation of free

government space including space renovated with credit union funds. The

statement shall be updated on renewal of lease. (See Appendix A to this

part for a sample format of the statement.)

(B) Credit unions that fail to meet the 95 percent criterion shall

be charged fair market rental for space provided. Except where more

than one credit union exists on an installation prior to July 1, 1999,

credit unions giving less than full service or not serving all assigned

DoD personnel are not authorized free space.

its own funds to expand, modify, or renovate government-owned space, it

may be provided a no-cost permit or license for a period not to exceed

5 years. Duration of the permit or license shall be commensurate with

the extent of the improvements as determined by the DoD Component

concerned. Terms in excess of 5 years must be approved by the Secretary

of the Military Department concerned (or designee) following a

determination that the longer term will aid the national defense or be

in the public interest. The permit or license shall be effective until

the agreed date of expiration or until the credit union ceases to

satisfy the 95 percent criterion. In this latter case, the no-cost

permit shall be cancelled in favor of a lease immediately negotiated at

fair market value under the provisions of paragraph (d) of this

section. If the credit union desires, this lease at fair market value

may extend through the period identified in the original license not to

exceed 5 years. When the term proposed exceeds 5 years, the Secretary

of the Military Department concerned (or designee) must approve the

longer term following a determination that the longer term will aid the

national defense or be in the public interest.

(D) Similarly, a credit union not meeting the 95 percent criterion

that uses its own funds to expand, modify, or renovate government-owned

space, may be provided a lease at fair market value for a period not to

exceed 5 years. Duration of this lease shall be commensurate with the

extent of the improvements as determined by the DoD Component

concerned.

(2) Logistical support. When available, custodial and janitorial

services, heating and air conditioning, utilities (i.e., electricity,

gas, water, and sewage), fixtures, and maintenance shall be furnished

at no cost to credit unions occupying free space in government

buildings. However, credit unions shall be required to pay for all

communication services to include telephone lines, long distance data

services and Internet connections. Credit unions also shall pay for

space alterations. Should a credit union fail to meet the 95 percent

membership criterion, any logistical support furnished shall be on a

reimbursable basis.

(e) Credit unions offering ATM service shall do so in accordance

with Sec. 231.4(d) except that the installation commander may provide

ATMs to on-base credit unions under certain circumstances such as when

it is advantageous to the government to have one or more ATMs but the

acquisition cost to the credit union is prohibitive. In all such cases,

installation costs and all logistics support must be borne by the

credit union.

(f) Staffing. (1) On-base credit unions shall provide full service.

To do so, credit union offices shall be staffed by:

(i) A loan officer authorized to act for the credit committee.

(ii) An individual authorized to sign checks.

(iii) A qualified financial counselor available to serve members

during operating hours.

(2) Exceptions to paragraph (f)(1)(i) of this section may be

approved by the installation commander with advice from the Secretary

of the Military Department concerned (or designee) in the case of newly

organized credit unions.

[[Page 43870]]

(3) When an on-base credit union can support only minimum staffing,

one of the positions required in paragraph (f)(1)(i) or (f)(1)(ii) of

this section also may be subsumed under the counselor duties.

(4) Credit union remote service locations at the same installation

may be staffed with one person alone, provided that a direct courier or

an electronic or automated message service links each remote location

to the credit union's main office.

(5) All credit union staffing shall comply fully with the spirit

and intent of the DoD equal employment opportunity policies and

programs, in accordance with DoD Directive 1440.1.

(g) Credit union liaison officer (CULO) When a credit union office

is located on an installation, the commander shall appoint a CULO. As

appropriate, the CULO responsibility should be assigned to comptroller

or resource management personnel. The CULO's photograph, name and duty

telephone number shall be displayed conspicuously at each credit union

office on the installation. Anyone who serves as a credit union board

member or in any other official credit union capacity may not serve as

a CULO. The duties of a CULO are the same as the duties listed for a

BLO (see Sec. 231.5(g)).

(h) In-store banking. In-store banking services may be provided in

accordance with Sec. 231.5(h) except that:

(1) Credit unions interested in submitting proposals to provide

requested in-store banking services shall provide a statement from the

National Credit Union Administration (NCUA) certifying the credit

union's authority to offer the requested financial services to the

commissary, the Military Exchange Services, or other on-base

facilities.

(2) Space granted to a credit union selected to provide in-store

banking services should be issued through a no cost license in

accordance with the Federal Credit Union Act (12 U.S.C. 1751).

Sec. 231.8 Procedures--overseas credit unions.

(a) General policy. (1) Credit union services to authorized persons

and organizations may be provided by domestic on-base credit unions

operating under a geographic field of membership (franchise). The

Foreign Geographic Field of Membership (Franchise) Assignment listing

is included at Appendix D to this part.

(2) The extension of credit union service overseas is encouraged

consistent with the principles prescribed for domestic credit unions

and with applicable status of forces agreements or other

intergovernmental agreements, or host-country law. Where permitted by

the applicable status of forces agreement or other intergovernmental

agreements, or host-country law, the ultimate decision to provide

services overseas rests with the credit union itself.

(3) Where permitted by the status of forces agreements or other

intergovernmental agreements, or host-country law, only Federal credit

unions or federally insured state chartered credit unions may operate

on overseas DoD installations.

(b) Establishment. (1) Commanders shall notify the Secretary of the

Military Department concerned (or designee), through command channels,

when overseas credit union services are needed. Such requests shall

include:

(i) Full information about available space and logistical support.

(ii) The name and location of the nearest credit union facility or

branch.

(iii) The distance between the installation and the nearest credit

union facility or branch.

(iv) The availability of any official or public transportation.

(v) The number of DoD personnel in duty assignments that confine

them to the installation or who cannot obtain transportation (such as

hospital patients).

(vi) In countries not presently served, a statement concurred in by

the Combatant Command that the requirement has been coordinated with

the U.S. Chief of Diplomatic Mission or U.S. Embassy. The statement

shall include that the host country will permit the operations, with

any conditions imposed by the host country identified.

(2) Subsequent to approval of the request from the installation or

community commander to establish an overseas credit union facility, the

Secretary of the Military Department concerned (or designee) shall

solicit proposals for the provision of full credit union services as

follows:

(i) Where there is a DoD designated geographic field of membership

(franchise) with a specific field of membership, the Secretary of the

Military Department (or designee) shall direct the installation or

community commander to contact the servicing defense credit union and

request that a branch or facility be established. The basic decision

concerning such extensions of service rests with the servicing credit

union.

(ii) Where there is no DoD designated geographic field of

membership (franchise), the Secretary of the Military Department (or

designee) shall:

(A) Coordinate requests, through the DFAS, to obtain a geographic

field of membership (franchise). A geographic field of membership

(franchise) is the authorization granted to a credit union by the

Office of the Under Secretary of Defense (Comptroller) to provide

financial services in a specific geographic region located outside the

United States and its territories.

(B) Solicit proposals from credit unions currently operating on DoD

installations.

(D) Coordinate with field commands, as needed.

(E) Recommend selection to National Credit Union Administration

(NCUA) or appropriate state regulatory agency with a copy to the DFAS

and the OUSD(C), requesting that the appropriate field of membership

adjustment be made. Such a recommendation shall identify the primary

installations on which the credit union would operate and, if

applicable, the contiguous geographic boundaries for future facilities

and branches.

(3) Where there is an existing field of membership, the Secretary

of the Military Department concerned (or designee) shall take the

following actions:

(i) If a credit union on an installation terminates operation,

afford any other credit union having a geographic field of membership

(franchise) within that country an opportunity to assume the franchise

being vacated. If all such institutions decline, the geographic field

of membership (franchise) shall be offered to the federally insured

defense credit union community. If, as a result of a credit union

decision to decline service to an installation or a termination action,

another credit union is assigned the former geographic field of

membership (franchise) or portion thereof, the NCUA or the applicable

state regulatory agency shall be notified and requested to make

appropriate field of membership adjustments.

(ii) When other credit union(s) having a geographic field of

membership (franchise) within a country decline the opportunity, or

there is no other credit union having a franchise within that country,

the provisions of paragraph (b)(2)(ii) of this section apply.

(4) No commitment may be made to a credit union regarding its

proposal until the appropriate regulatory agency has announced a

selection.

provide logistical credit union support. Such support normally shall

include:

[[Page 43871]]

(1) Adequate office space, including steel bars; grillwork;

security doors; a vault, safes or both; security alarm systems and

camera surveillance equipment (where deemed necessary) that meet

documented requirements of the contractor's insurance carrier;

construction of counters, teller cages, and customer and work areas;

necessary modifications and alterations to existing buildings; and

construction of a new premises, if necessary. The size and arrangement

of space should permit efficient operations. The credit union shall pay

for all improvements to the space given. Space assigned may not exceed

that prescribed in DoD 4270.1-M.

(2) DoD housing on a rental basis to key credit union personnel

unable to find suitable, reasonably priced housing in the vicinity of

the DoD installation, if available.

(3) Utilities (i.e., electricity, gas, water and sewage), heating,

intrastation telephone service, and custodial and janitorial services

to include garbage disposal and outdoor maintenance (such as grass

cutting and snow removal).

(4) Defense Switched Network (DSN) voice and data communication to

include internet access.

(5) U.S. Military Postal Service support under DoD Directive 4525.6

(reference (q)). Use of free intra-theater delivery system (IDS) is

authorized for all routine mail sent and received between Army Post

Offices (APOs) and Fleet Post Offices (FPOs) within a theater.

(d) Travel. Travel by credit union officials must be at no expense

to the U.S. Government. Overseas commanders may issue invitational

travel orders for official on-base visits by credit union officials at

no cost to the U.S. Government.

(e) Operations. (1) An overseas credit union shall confine its

field of membership to individuals or organizations eligible by law or

regulation to receive services and benefits from the installation.

Services shall not be provided to those personnel precluded such

services by applicable status of forces agreements, other

intergovernmental agreements, or host-country law.

(2) The Department assigns overseas credit unions a prescribed

geographic field of membership (franchise). However, any credit union

may continue to serve its members stationed overseas by mail or

telecommunications.

(3) A credit union proposing any new service not authorized by the

operating agreement must coordinate the establishment of the new

service through the cognizant Component command to the Combatant

Command. The new service can be offered only after the appropriate

command's approval and coordination with the U.S. Chief of Diplomatic

Mission or U.S. Embassy to ensure that the service does not conflict

with the status of forces agreements, other intergovernmental

agreements, or host-country law.

(4) Credit unions that operate full service branches shall have

U.S. currency and coin available for member transactions. In areas

served by currency custody accounts, transactional U. S. currency and

coins shall be made available from the servicing MBF with no direct or

analysis charge to the credit union, provided settlement is made via

the local MBF account or equivalent arrangements are made with the MBF.

(5) In countries served by MBFs operated under contract, credit

unions shall purchase foreign currency only from the servicing MBF.

(i) The bulk rate purchase price shall apply to currency used by

the credit union to make payments to vendors or to make payroll

payments.

(ii) Credit unions that desire and are authorized to provide

accommodation exchange services to its members shall acquire foreign

currency from the servicing MBF at the MBF accommodation rate and sell

it at a rate of exchange no more favorable than that available to

customers of the MBF.

(6) The NCUA may review operations of overseas credit union offices

either when it examines the main credit union or at other times of its

choosing. For federally insured, state chartered credit unions, the

applicable state regulatory agency also may examine credit unions

operations.

Sec. 231.9 Definitions.

Automated teller machine (ATM). An electronic machine that

dispenses cash, and may perform such other functions as funds transfers

among a customer's various accounts and acceptance of deposits.

Equipment generally is activated by a plastic card in combination with

a personal identification number (PIN). Typically, when the

cardholder's account is with a financial institution other than that

operating the ATM, its use results in the assessment of a fee from the

ATM network (Armed Forces Financial Network (AFFN), Cirrus, PLUS)

handling the transaction. Shared access, which is predicated on a

formal agreement between financial institutions, refers to ATMs that

may be used by cardholders of more than one financial institution

without being assessed a network fee.

Banking institution. An entity chartered by a state or the federal

government to provide financial services.

Banking office. A branch bank, or independent bank operated by a

banking institution on a domestic DoD installation or by a foreign

banking institution on an overseas DoD installation.

Branch bank. A separate unit chartered to operate at an on-base

location geographically remote from its parent banking institution.

Credit union. A cooperative nonprofit association, incorporated

under the Federal Credit Union Act, 12 U.S.C. 1751 et seq., or similar

state statute, for the purposes of encouraging thrift among its members

and creating a source of credit at a fair and reasonable rate of

interest.

Credit union facility. A facility employing a communications system

with the parent credit union to conduct business at remote locations

where a full-service credit union or credit union branch is

impractical. Credit union facilities need not provide cash transaction

services but must disburse loans and shares by check or draft and

provide competent financial counseling during normal working hours.

Defense credit union. A state or federally insured credit union

with a field of membership composed primarily of DoD personnel.

Discrimination. Any differential treatment in provision of

services, including loan services, by a financial institution to DoD

personnel and their dependents on the basis of race, color, religion,

national origin, sex, marital status, age, rank, or grade. However, if

uniformly applied, the amount of credit extended may be directly based

on an applicant's total income.

DoD Component. For the purposes of this part, DoD Components

include the Office of the Secretary of Defense, the Military

Departments, the Joint Chiefs of Staff, the Joint Staff and the

supporting Joint Agencies, the Combatant Commands, the Inspector

General of the Department of Defense, the Uniformed Services University

of the Health Sciences, the Defense Agencies, the DoD Field Activities,

and all nonappropriated fund instrumentalities including the Military

Exchange Services, and Morale, Welfare and Recreation activities.

DoD Personnel. All military personnel; DoD civil service employees;

other civilian employees, including special government employees of all

offices, Agencies, and Departments performing functions on a DoD

installation (including nonappropriated

[[Page 43872]]

fund instrumentalities); and their dependents. On domestic DoD

installations, retired U.S. military personnel and their dependents are

included.

Domestic DoD installation. For the purposes of this part, a

military installation located within a state of the United States, the

District of Columbia, Guam or the Commonwealth of Puerto Rico.

Fair Market Rental. A reasonable charge for on-base land,

buildings, or building space. Rental is determined by a government

appraisal based on comparable properties in the local civilian economy.

However, the appraiser will consider that on-base property may not

always be comparable to similar property in the local commercial

geographic area. Examples of circumstances that may affect fair market

rental include limitations of usage and access to the financial

institution by persons other than those on the installation, proximity

to the community center or installation business district, and the

government's right to terminate the lease or take title to improvements

constructed at the financial institution's expense.

Field of membership. A group of people entitled to credit union

membership because of a common bond of occupation, association,

employment, or residence within a well-defined neighborhood, community

or rural district. A field of membership is defined in the credit

union's charter by the appropriate regulatory agency.

Financial institution. This term encompasses any banking

institution, credit union, and subordinate office or facility, each as

separately defined in this section.

Financial services. Those services commonly associated with

financial institutions in the United States, such as electronic banking

(e.g., ATMs and personal computing banking), in-store banking,

checking, share and savings accounts, funds transfers, sales of

official checks, money orders, and travelers checks, loan services,

safe deposit boxes, trust services, sale and redemption of U.S. Savings

Bonds, and acceptance of utility payments and any other services

provided by financial institutions.

Foreign banking institution. A bank located outside the United

States chartered by the country in which it is domiciled.

Full service credit union. A credit union that provides full-time

counter transaction services, to include cash operations, and is

staffed during normal working hours by a loan officer, a person

authorized to sign checks, and a qualified financial counselor. In

overseas areas, ``full service'' includes cash operations where not

prevented by:

(a) Status of forces agreements, other intergovernmental

agreements, or host-country law.

(b) Physical security requirements that cannot be resolved by the

credit union or local command.

Geographic field of membership (franchise). Authorization granted

to a credit union by the Office of the Under Secretary of Defense

(Comptroller) to provide financial services in a specific geographic

region located outside the United States and its territories.

Independent bank. A bank specifically chartered to operate on a DoD

installation or DoD installations whose directors and officers usually

come from the local business and professional community. Such

operations are thus differentiated from county-wide or state-wide

branch systems consisting of a head office and one or more

geographically separate branch offices.

In-store banking. An expansion of financial services provided by an

on-base financial institution within the premises of the commissary,

exchange, and/or other on base retail facility.

Malpractice. Any unreasonable lack of skill or fidelity in

fiduciary duties or the intentional violation of an applicable law or

regulation or both that governs the operations of the financial

institution. A violation shall be considered intentional if the

responsible officials know that the applicable action or inaction

violated a law or regulation.

Military banking facility (MBF). A banking office located on a DoD

installation and operated by a financial institution that the

Department of the Treasury has specifically authorized, under its

designation as a ``Depository and Financial Agent of the U.S.

Government,'' to provide certain banking services at the installation.

National bank. An association approved and chartered by the

Comptroller of the Currency to operate a banking business.

On-base. Refers to physical presence on a domestic or overseas DoD

installation.

Operating agreement. A mutual agreement between the installation

commander and the on-base financial institution to document their

relationships.

Overseas DoD installation. A military installation (or community)

located outside the states of the United States, the District of

Columbia, Guam or the Commonwealth of Puerto Rico.

Part-time MBF. A MBF that operates fewer than 5 days a week

exclusive of additional payday service. When only payday service is

provided, the MBF may be termed a ``payday service facility.''

Regulatory agency. Includes the Office of the Comptroller of the

Currency, Department of the Treasury; the Federal Deposit Insurance

Corporation; the Board of Governors of the Federal Reserve System; the

respective Federal Reserve District Banks; the National Credit Union

Administration; the various state agencies and commissions that oversee

financial institutions; and, for military banking facilities (MBFs),

the Fiscal Assistant Secretary of the Treasury (or designee).

State bank. An institution organized and chartered under the laws

of one of the states of the United States to operate a banking business

within that state.

Surcharge. A fee typically assessed on nonaccountholders to access

an ATM. In accordance with Federal Reserve Board Regulation E, such a

fee must be disclosed at the ATM either through a sign or screen

disclosure. For the purposes of this chapter, surcharges are limited to

ATMs.

Subpart B--DoD Directive 1000.11

Sec. 231.10 Financial institutions on DoD installations.

(a) Purpose. This subpart:

(1) Updates policies and responsibilities for financial

institutions that serve Department of Defense (DoD) personnel on DoD

installations worldwide. Associated procedures are contained in DoD

7000.14-R.

(2) Ensures that arrangements for the provision of services by

financial institutions are consistent among the DoD Components, and

that financial institutions operating on DoD installations provide, and

are provided, support consistent with the policies stated in this

subpart.

(b) Applicability. This subpart applies to the Office of the

Secretary of Defense, the Military Departments, the Joint Chiefs of

Staff, the Joint Staff and the supporting Joint Agencies, the Combatant

Commands, the Inspector General of the Department of Defense, the

Uniformed Services University of the Health Sciences, the Defense

Agencies, the DoD Field Activities, and all nonappropriated fund

instrumentalities including the Military Exchange Services and morale,

welfare and recreation (MWR) activities.

5 of DoD 7000.14-R.

(d) Policy. (1) The following pertains to financial institutions on

domestic DoD installations:

[[Page 43873]]

(i) Except where they already may exist as of July 1, 1999, no more

than one banking institution and one credit union shall be permitted to

operate on a DoD installation.

(ii) Upon the request of an installation commander and with the

approval of the Secretary of the Military Department concerned (or

designee), duly chartered financial institutions may be authorized to

provide financial services on DoD installations to enhance the morale

and welfare of DoD personnel and facilitate the administration of

public and quasi-public monies. Arrangement for the provision of such

services shall be in accordance with this subpart and related

issuances.

(iii) Financial institutions, or branches thereof, shall be

established on DoD installations only after approval by the Secretary

of the Military Department concerned (or designee) and the appropriate

regulatory agency.

(A) Only banking institutions insured by the Federal Deposit

Insurance Corporation (FDIC) and credit unions insured by the National

Credit Union Share Insurance Fund (NCUSIF) shall operate on DoD

installations. These financial institutions may be either state or

federally chartered. Foreign banking institutions operating on overseas

DoD installations and chartered to provide financial services in that

country are excepted from this requirement.

(B) Military banking facilities (MBFs) shall be established on DoD

installations only when a demonstrated and justified need cannot be met

through other means. Normally, MBFs shall be authorized only at

overseas locations. They may be considered for use at domestic DoD

installations only when DoD Components have been unable to obtain,

through normal means, financial services from a state or federally

chartered financial institution authorized to operate in that state. In

times of mobilization, it may become necessary to designate additional

MBFs as an emergency measure. The Director, Defense Finance and

Accounting Service (DFAS) may recommend the designation of banking

facilities to the Department of the Treasury under provisions of 12

U.S.C. 265.

Component. Solicitations for such services shall be issued, or

proposals accepted, only in accordance with the policies identified in

this subpart. DoD Components shall rely on commercially available

sources in accordance with DoD Directive 4100.15.\12\

---------------------------------------------------------------------------

\12\ See footnote 1 to Sec. 231.1(a).

---------------------------------------------------------------------------

(D) Retail fees and services for products (to include related

minimum balance requirements for noninterest checking, Negotiable Order

of Withdrawal (NOW) and savings accounts) offered by financial

institutions operating on domestic installations and domestic credit

unions operating on DoD installations overseas shall not exceed 110

percent of the industry-wide averages for banks in the ``Annual Report

to Congress on Retail Fees and Services of Depository Institutions,''

published by the Board of Governors of the Federal Reserve System.

(iv) Installation commanders shall not seek the provision of

financial services from any entity other than the on-base banking

office or credit union. The Director, DFAS, with the concurrence of the

Under Secretary of Defense Comptroller (USD(C)), may approve exceptions

to this policy. Such requests for exception shall be proposed through

the Secretary of the Military Department concerned (or designee).

(v) Financial institutions authorized to locate on DoD

installations shall be provided logistic support as set forth in Volume

5 of DoD 7000.14-R.

(vi) Military disbursing offices, nonappropriated fund

instrumentalities including MWR activities, the Military Exchange

Services and other DoD Component activities requiring financial

services shall use on-base financial institutions to the maximum extent

feasible and consistent with sound management practice.

(vii) The Department encourages the delivery of retail financial

services on DoD installations via nationally networked automated teller

machines (ATMs). ATMs are considered electronic banking services and,

as such, shall be provided only by duly chartered financial

institutions.

(A) Notwithstanding the provisions contained in paragraph

(d)(1)(iii)(D) of this section, on-base ATM service offered by

financial institutions operating on domestic installations and domestic

credit unions operating on DoD installations overseas shall be provided

without surcharge.

(B) Proposals by the installation commander to install ATMs from

other than on-base financial institutions shall comply with the

provisions of paragraph (d)(1)(iv) of this section and will be

considered only when ATM service is unavailable or existing service is

inadequate and the on-base financial institution(s) either declines to

provide the service, fails to improve the existing service so that it

is adequate or does not formally respond to the request within 30 days

of the date of the request.

(viii) Expansion of financial services (to include in-store

banking) provided by on-base financial institutions must be approved by

the installation commander. Such requests for expansion of services

should be coordinated with the installation bank/credit union liaison

officer prior to the commander's consideration. Approved expansion of

services will be documented as an amendment to the existing operating

agreement between the installation commander and the on-base financial

institution. The amendment to the operating agreement and any required

lease (to include a change to an existing lease) shall be in place

prior to the initiation of new financial services or offices.

(ix) The installation commander shall ensure, to the maximum extent

feasible, that all financial institutions operating on his or her

installation are given the opportunity to participate in pilot programs

to demonstrate new financial-related technology (e.g., smart cards) or

establish new business lines (e.g., in-store banking) where a

determination has been made by the installation commander that the

offering of such services is warranted.

(x) Requests for termination of financial services must be approved

by the installation commander, substantiated by sufficient evidence and

forwarded to the Secretary of the Military Department concerned (or

designee). The Secretary of the Military Department (or designee) shall

coordinate such requests with the Under Secretary of Defense

(Comptroller), through the Director, DFAS, before notification to the

appropriate regulatory agency.

(2) The following pertains to financial institutions on overseas

DoD installations:

(i) The extension of services by MBFs and credit unions overseas

shall be consistent with the policies stated in this subpart and with

the pertinent status of forces agreement, other intergovernmental

agreement, or host-country law.

(ii) The policies governing the operation of financial institutions

on domestic DoD installations identified in paragraph (d)(1) of this

section shall apply to financial institutions operating overseas.

(iii) Financial services at overseas DoD installations may be

provided by:

(A) Domestic on-base credit unions operating overseas under a

geographic franchise and, where applicable, as authorized by the

pertinent status of forces agreement, other intergovernmental

agreement, or host-country law.

[[Page 43874]]

(B) MBFs operated under and authorized by the pertinent status of

forces agreement, other intergovernmental agreement, or host-country

law.

installations that are:

(1) Chartered to provide financial services in that country, and

(2) A party to a formal operating agreement with the installation

commander to provide such services, and

(3) Identified, where applicable, in the status of forces

agreements, other intergovernmental agreements, or host-country law.

(iv) Financial institutions authorized to locate on DoD

installations shall be provided logistical support as set forth in the

Volume 5 of DoD 7000.14-R.

(v) In countries served by MBFs operated under contract,

nonappropriated fund instrumentalities and on-base credit unions that

desire and are authorized to provide accommodation exchange services

shall acquire foreign currency from the MBF at the MBF accommodation

rate; and shall sell such foreign currency at a rate of exchange that

is no more favorable to the customer than that available from the MBF.

(vi) Additional guidance pertaining to financial services overseas

is set forth in Volume 5 of DoD 7000.14-R.

(e) Responsibilities. (1) The Under Secretary of Defense

(Comptroller) (USD(C)) shall develop and monitor policies governing

establishment, operation, and termination of financial institutions on

DoD installations and take final action on requests for exceptions to

this subpart.

(2) The Under Secretary of Defense (Acquisition and Technology)

(USD(A&T)) shall develop and monitor policies and procedures governing

logistical support furnished to financial institutions on DoD

installations, including the use of DoD real property and equipment.

(3) The Under Secretary of Defense (Personnel and Readiness)

(USD(P&R)) shall advise the USD(C) on all aspects of on-base financial

institution services that affect the morale and welfare of DoD

personnel.

(4) DoD Component responsibilities pertaining to this Directive are

set forth in Volume 5 of DoD 7000.14-R.

Subpart C--Guidelines for Application of the Privacy Act to

Financial Institution Operations

Sec. 231.11 Guidelines.

(a) The following guidelines govern the application of DoD

Directive 5400.11 to those financial institutions that operate under

this subpart:

(1) Financial institutions and their branches and facilities

operating on DoD military installations do not fall within the purview

of 5 U.S.C. 552 et seq.

(i) These financial institutions do not fit the definition of

``agency'' to which the Privacy Act applies, that is, any executive

department, Military Department, government corporation, government-

controlled corporation, or other establishment in the executive branch

of the government (including the Executive Office of the President), or

an independent regulatory agency (5 U.S.C. 552(e) and 552a(a)(1)).

(ii) These financial institutions are not ``government

contractors'' within the meaning of 5 U.S.C. 552a(o), as they do not

operate a system of records on behalf of an agency to accomplish an

agency function. According to the Office of Management and Budget

Privacy Act Guidelines, the provision relating to government

contractors applies only to systems of records actually taking the

place of a Federal system which, but for the contract, would have been

performed by an agency and covered by the Privacy Act. Clearly, the

subject institutions do not meet these criteria.

(iii) Since the Act does not apply to them, these financial

institutions are not required to comply with 5 U.S.C. 552a(e)(3) in

obtaining and making use of personal information in their relationships

with personnel authorized to use such institutions. Thus, these

institutions are not required to inform individuals from whom

information is requested of the authority for its solicitation, the

principal purpose for which it is intended to be used, the routine uses

that may be made of it, or the effects of not providing the

information. There also is no requirement to post information of this

nature within on-base banking and credit union offices.

(2) The financial institutions concerned hold the same position and

relationship to their account holders, members, and to the government

as they did before enactment of OMB Circular A-130. Within their usual

business relationships, they still are responsible for safeguarding the

information provided by their account holders or members and for

obtaining only such information as is reasonable and necessary to

conduct business. This includes credit information and proper

identification, which may include social security number, as a

precondition for the cashing of checks.

(3)(i) Financial institutions may incorporate the following

conditions of disclosure of personal identification in all contracts,

including loan agreements, account signature cards, certificates of

deposit agreements, and any other agreements signed by their account

holders or members:

I hereby authorize the Department of Defense and its various

Components to verify my social security number or other identifier

and disclose my home address to authorized (name of financial

institution) officials so that they may contact me in connection

with my business with (name of financial institution). All

information furnished will be used solely in connection with my

financial relationship with (name of financial institution).

(ii) When the financial institution presents such signed

authorizations, the receiving military command or installation shall

provide the appropriate information.

(4) Even though an agreement described in paragraph (a)(3) of this

section has not been obtained, the Department of Defense may provide

these financial institutions with salary information and, when

pertinent, the length or type of civilian or military appointment,

consistent with DoD Directives 5400.11 and 5400.7. Some examples of

personal information pertaining to DoD personnel that normally can be

released without creating an unwarranted invasion of personal privacy

are name, rank, date of rank, salary, present and past duty

assignments, future assignments that have been finalized, office phone

number, source of commission, and promotion sequence number.

(5) When DoD personnel with financial obligations are reassigned

and fail to inform the financial institution of their whereabouts, they

should be located by contacting the individual's last known commander

or supervisor at the official position or duty station within that

particular DoD Component. That commander or supervisor either shall

furnish the individual's new official duty location address to the

financial institution, or shall forward, through official channels, any

correspondence received pertaining thereto to the individual's new

commander or supervisor for appropriate assistance and response.

Correspondence addressed to the individual concerned at his or her last

official place of business or duty station shall be forwarded as

provided by postal regulations to the new location. However, once an

individual's affiliation with the Department of Defense is terminated

through separation or retirement, the Department's ability to render

locator assistance (i.e., disclose a home address) is severely

curtailed unless the public

[[Page 43875]]

interest dictates disclosure of the last known home address. The

Department may, at its discretion, forward correspondence to the

individual's last known home address. The Department may not act as an

intermediary for private matters concerning former DoD personnel who

are no longer affiliated with the Department.

(b) Questions concerning this guidance should be forwarded through

channels to the Deputy Chief Financial Officer, Office of the Under

Secretary of Defense (Comptroller), The Pentagon, Washington, DC 20301-

1100.

Appendix A to Part 231--Sample Operating Agreement

Operating Agreement Between Military Installations and Banks/Credit

Unions

Note: The following operating agreement template identifies

general arrangement and content. Content of the actual operating

agreement may vary according to the circumstances of each

installation.

Operating Agreement Between (Name of Installation), (State or Country

Installation Located) and (Name of Bank/Credit Union).

This Agreement is made and entered into this day by and between

the installation commander of (Name of Installation) in his or her

official capacity as installation commander, hereinafter referred to

as the ``Commander'' and the (Name of Bank/Credit Union), having its

principal office at (Location of Home Office) hereinafter referred

to as the ``Bank/Credit Union,'' together hereinafter referred to as

``the parties.'' Whereas the Commander and the Bank/Credit Union

enter into this Operating Agreement upon the mutual consideration of

the promises, covenants, and agreements hereinafter contained:

1. The parties understand and agree that this Agreement shall in

no way modify, change, or alter the terms and conditions of Lease

Number (number of lease) covering the use of real property described

therein, and this Agreement shall continue, subject to the

termination provisions herein-after set forth, during the terms of

said lease and any extensions thereof. In the case of a bank

operating a military banking facility (MBF) overseas, this agreement

will not change the conditions of the contract between the bank and

the Department of Defense.

2. The Bank/Credit Union agrees to operate a (State Bank,

National Bank, Independent Bank, Branch Bank, Military Banking

Facility or Credit Union) on-base in accordance with the policies

and procedures set forth in Volume 5, Chapter 34 of the DoD

Financial Management Regulation or, for the Overseas Military

Banking Program (OMBP), the policies and procedures set forth in

Volume 5, Chapter 34 of the DoD Financial Management Regulation and

the applicable DoD contract. The hours of operations shall be

between (Hour Office Opens) and (Hour Office Closes), and on the

following days (Week Days Office Open), except on government

holidays when the Bank/Credit Union may be closed. The Program

Office for the OMBP shall notify the commander of any changes to the

DoD contract.

3. The Bank/Credit Union shall provide the following services:

a. Services for Individuals

(1) Demand (checking) account services.

(2) Cashing personal checks and government checks for

accountholders.

(3) Maintaining savings accounts and (any other interest-bearing

accounts).

(4) Selling official checks, money orders, and traveler's

checks.

(5) Selling and redeeming United States savings bonds.

(6) Providing direct deposit service.

(7) Electronic banking (Automated Teller Machines).

b. Services for Disbursing Officers

(1) Furnishing cash (if the financial institution's terms for

doing so is consistent with sound management practices).

(2) Accepting deposits for credit to the Treasury General

Account (where the financial institution has entered into an

agreement with the Department of the Treasury).

c. Services for Nonappropriated Fund Instrumentalities and Private

Organizations

(1) Demand (checking) account services, including wire

transfers.

(2) Savings accounts and nonnegotiable certificates of deposit

or other interest-bearing accounts offered by the bank.

(3) Currency and coin for change.

4. Service charges shall be as follows:

a. Service for Individuals.

(1) No fees shall be charged to individuals for the services

listed in subpara graph 3.a.(2), 3.a.(5) and 3.a.(7), above, except

that checks drawn on other financial institutions may be treated in

accordance with the financial institution's established policy. Any

charge to cash a government check shall not exceed that typically

charged by financial institutions in the vicinity of the

installation.

(2) Checking and savings accounts. Fees for individual checking

and savings accounts shall be the customary service charges of the

bank/credit union or those negotiated for base personnel per the

attached schedule.

(3) Sale of official checks, money orders, traveler's checks and

other types of financial paper. Charges for these services shall be

the customary charges of the financial institution operating the on-

base banking/credit union office.

b. Service for Disbursing Officers. No charge shall be made for

the services listed in subparagraph 3.b.(2), above. Compensation to

the financial institution shall be per its separate agreement with

the Department of the Treasury. Charges, if any, for the services

stated in subparagraph 3.b.(1) shall be as locally negotiated with

the financial institution.

c. Nonappropriated Fund Instrumentalities and Private

Organizations. State the charges or refer to a schedule of charges

for funds and organizations that do not participate in a central

banking program. For those activities participating in a central

banking program, determine the compensation to the financial

institution by account analysis.

5. It is agreed that the Bank/Credit Union shall:

a. Notify the Commander of any proposed changes to the attached

schedule of fees and services at least 30 days prior to

implementation.

b. Follow the requirements in Volume 5, Chapter 34 of the DoD

Financial Management Regulation and any changes thereto.

c. Comply with Department of the Treasury requirements for

establishment and operation of a Treasury General Account where the

bank/credit union agrees to act as a depository for government

funds.

d. Absolve the (Military Service) and its representatives of

responsibility or liability for the financial operation of the bank/

credit union; and for any loss (including losses due to criminal

activity), expenses, or claims for damages arising from bank/credit

union operations.

e. Indemnify, and hold harmless the United States from (and

against) any loss, expense, claim, or demand, including attorney

fees, court costs, and costs of litigation, to which the government

may be subjected as a result of death, loss, destruction, or damage

in connection with the use and occupancy of (Military Service)

premises occasioned in whole or in part by officers, agents or

employees of the institution operating a bank/credit union office.

f. Favorably respond, whenever feasible, to reasonable local

command requests for lectures and printed materials to support

consumer credit education programs, financial management program and

newcomer's briefings.

g. Prominently post in the lobby of the bank/credit union the

name, duty telephone number and photograph of the Bank/Credit Union

Liaison Officer.

h. Allow, with reasonable notification, authorized auditors or

installation comptroller representatives to verify financial

operational data provided by the institution at the request of the

installation commander.

i. Accept the government travel card in all on-base ATMs

operated by the bank/credit union.

j. Abide by the installation fire protection program, including

immediate correction of fire hazards noted by the installation fire

inspector during periodic fire prevention inspections.

6. The Commander shall provide the following space and support:

a. Space requirements for bank/credit union operations will be

administered in accordance with the existing lease. (Show Number of

Lease).

b. Utilities (i.e., electricity, gas, water and sewage),

heating, intrastation telephone service, and custodial and

janitorial services to include garbage disposal and outdoor

maintenance (such as grass cutting and snow removal) on a

reimbursable basis.

c. Assistance in locating military personnel and civilian

employees who tender uncollectable checks, overdraw their accounts,

default on loans, or otherwise owe money to (or are owed money by)

the Bank/Credit Union.

d. Making recovery of funds in such cases as allowed by

regulation.

7. Termination of this Agreement shall be consistent with the

termination provision of

[[Page 43876]]

the real property lease and Volume 5, Chapter 34, of the DoD

Financial Management Regulation. The Secretary of the (Military

Department) shall have the right to terminate this Agreement at any

time. Any termination of the right of the Bank/Credit Union to

operate on the installation shall render this Agreement terminated

without any applicable action by the Commander.

8. Any provision of this Agreement that is contrary to or

violates any laws, rules, or regulations of the United States, its

agencies, or the state of (State Bank/Credit Union Located) that

apply on federal installations shall be void and have no force or

effect; however, both parties to this Agreement agree to notify the

other party promptly of any known or suspected continuing violation

of such laws, rules, or regulations.

9. So long as this Agreement remains in effect, it shall be

reviewed jointly by the Commander and the Bank/Credit Union at least

once every 5 years to ensure compatibility with current DoD

issuances and to determine if any changes are required to the

Agreement.

In witness whereof, the Commander, and the Bank/Credit Union, by

their duly authorized office, have hereunto set their hands this day

of (Day, Month, Year).

----------------------------------------------------------------------

Bank/Credit Union Official

----------------------------------------------------------------------

Installation Commander

Appendix B to Part 231--In-Store Banking

A. Selection Process. The purpose of this guidance is to assure

an impartial and thorough process to select the best on-base

financial institution to provide in-store banking services when such

services are desired and approved by the installation commander.

1. Consistent with DoD Component delegation, the final decision

to solicit for an in-store banking office rests with the

installation commander.

2. The DoD Component seeking in-store banking (e.g., Defense

Commissary Agency, Military Exchange Services and MWR activities)

shall draft the solicitation letter.

3. The solicitation letter shall be reviewed by the installation

legal counsel prior to its release.

4. Close coordination among all cognizant DoD elements is

essential throughout the selection process.

5. The Bank/Credit Union Liaison Officer(s) shall be the focal

point(s) of the selection process.

6. During the selection process, all communication between

requesting DoD Component and the financial institutions shall be

channeled through the Bank/Credit Union Liaison Officer(s).

B. Specific Procedures:

1. The need for in-store banking service may be identified from

either:

a. An unsolicited proposal from an on-base financial

institution,

b. A DoD Component's request, or

c. An installation commander's request.

2. The cognizant installation commander is responsible for

assessing the environment and authorizing the Bank/Credit Union

Liaison Officer(s) to pursue the acquisition of in-store banking

services. If no authorization is given, no further action is

required.

3. The cognizant installation commander shall determine whether

a solicitation is required. (A solicitation shall be required

whenever there is two or more financial institutions on a DoD

installation). If no solicitation is required, then the Bank/Credit

Union Liaison Officer shall work directly with the on base financial

institution to obtain the requested services. Where there is neither

a banking office nor an on-base credit union, the solicitation

process outlined in paragraph 340502, as supplemented by the

provisions outlined in paragraph A, above, apply.

4. The requesting DoD Component shall prepare a solicitation

letter and present the letter, through the Bank/Credit Union Liaison

Officer, to the installation commander for signature. The

solicitation letter shall identify the financial services being

requested and classify these services as either mandatory or

optional. In addition, the solicitation letter shall highlight any

services that will be weighed as more important than others during

the evaluation of the proposals. Any space consideration and terms

of the proposed agreement also shall be identified in the letter.

5. In order to maintain the integrity of the solicitation

process, all communications among the requesting agency, the

installation commander, and the interested financial institutions

shall be directed through the Bank/Credit Union Liaison Officer(s).

The Bank/Credit Union Liaison Officer(s) shall forward the

solicitation letter to both on-base financial institutions. All

proposals shall be referred to the requesting DoD Component for

evaluation and subsequent selection. Credit union proposals must

contain certification from the NCUA or appropriate state regulatory

agency that the provision of the requested services complies fully

with regulatory guidelines and statute. The requesting DoD Component

shall submit a written recommendation, and supporting rationale, to

the installation commander for final approval. The installation

commander shall approve or disapprove the requesting DoD Component's

recommendation and notify the requesting agency of that decision.

6. The Bank/Credit Union Liaison Officer(s) shall notify in

writing the selected financial institution and request that

institution to coordinate with the proper activity to begin any

construction, modifications or renovations necessary to open the in-

store banking office. The cognizant facility management personnel

shall begin the process of obtaining the necessary outgrant

instruments. Concurrently, the requesting DoD Component

representative and the financial institution representative shall

draft the appropriate amendment to the operating agreement. The

amendment shall contain provisions regarding: (a) the roles and

responsibilities of all parties involved, (b) the financial services

to be provided, and (c) the logistical support arrangements to

include custodial services and security provisions. The amendment

shall be coordinated with the Bank/Credit Union Liaison Officer(s)

prior to forwarding that document to the installation commander for

signature. The amendment shall be signed by the installation

commander and the appropriate representatives from the financial

institution and the requesting DoD Component.

Appendix C to Part 231--Sample Certificate of Compliance for Credit

Unions

Certificate of Compliance

I, (name), general manager of the (credit union), located at

(place), certify that this credit union complies with the

requirements of the Federal Credit Union Act, section 124 (12 U.S.C.

1770), for the allotment of space in Federal buildings without

charge for rent or services. At least 95 percent of the (credit

union and branch) current membership is composed of persons who are

now, or were when they joined this credit union, military personnel

or Federal employees, or members of their families.

Date-------------------------------------------------------------------

Name-------------------------------------------------------------------

(President of the board of directors or general manager)

(Note: The Certificate of Compliance is posted on credit union

letterhead)

Appendix D to Part 231--Foreign Geographic Field of Membership

(Franchise) Assignment Listing

Credit Union services to authorized persons and organizations on

DoD installations overseas are provided by domestic defense credit

unions operating under a geographic field of membership (franchise).

The DoD geographic fields of membership (franchises) are as follows:

Bahrain

Navy Federal Credit Union

Belgium

Andrews Federal Credit Union

Canada

Navy Federal Credit Union

Cuba

Navy Federal Credit Union

Diego Garcia

Navy Federal Credit Union

Federal Republic of Germany

Andrews Federal Credit Union:

State of Hessen

State of Nordrhein Westfalen

Hamlen Pymont--Sub District of Hannover County/District State of

Niedersachsen

Mainz--Sub District of County/District Rheinhessen State of

Rheinlandpfalz

Bad Kreuznach--Sub District of Koblenz County/District State of

Rheinlandpfalz

County/District of Unterfranken--State of Bayern

Finance Center Federal Credit Union:

State of Bayern excluding County/District of Unterfranken

Pentagon Federal Credit Union:

State of Hamburg

State of Schleswig Holstein

[[Page 43877]]

State of Bremen

State of Niedersachsen excluding Hamlen Pymont Sub District

Hannover County/District

Service Federal Credit Union:

State of Berlin

State of Baden-Wurttemburg

State of Saarland

State of Rheinlandpfalz excluding:

Bad Krueznach--Sub District of Koblenz

Mainz--Sub District of Rheinhessen

Greece/Crete

Army and Air Force Mather Federal Credit Union

Navy and Marine Corps--Navy Federal Credit Union

Hong Kong

Navy Federal Credit Union

Iceland

Navy Federal Credit Union

Italy

Army and Air Force--Global Credit Union

Navy and Marine Corps Navy--Federal Credit Union

Japan

Army and Air Force--United Services of America Federal Credit Union

Navy and Marine Corps--Navy Federal Credit Union

Korea

United Services of America Federal Credit Union

The Netherlands

Andrews Federal Credit Union

Okinawa (Prefecture of Japan)

Army and Air Force--Pentagon Federal Credit Union

Navy and Marine Corps--Navy Federal Credit Union

The Philippines

Army and Air Force--Alaska USA Federal Credit Union

Navy/Marine Corps--Navy Federal Credit Union

Portugal

Pentagon Federal Credit Union

Spain

Army and Air Force--Pentagon Federal Credit Union

Navy and Marine Corps--Navy Federal Credit Union

Turkey

Pentagon Federal Credit Union

United Kingdom

Army and Air Force--Keesler Federal Credit Union

Navy/Marine Corps--Navy Federal Credit Union

World-Wide

Tower Federal Credit Union (representative offices only)

Security Service Federal Credit Union (representative offices only)

Note: Questions concerning this guidance should be forwarded

through channels to the Deputy Chief Financial Officer, Office of

the Under Secretary of Defense (Comptroller), The Pentagon,

Washington, DC 20301-1100.

Dated: August 5, 1999.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 99-20509 Filed 8-10-99; 8:45 am]

BILLING CODE 5001-10-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.