[Federal Register Volume 70, Number 74 (Tuesday, April 19, 2005)]
[Proposed Rules]
[Pages 20316-20322]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-7810]



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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Parts 43 and 50

[RIN 0790-AH87]


Personal Commercial Solicitation on DoD Installations

AGENCY: Office of the Secretary of Defense.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the Department regulations 
relating to policy and procedures on personal commercial solicitation 
on DoD installations. The proposed change incorporates current policy 
letters that were issued since the last publication of DoD Directive 
1344.7 in February 1986. These include: policy on use of on-base 
financial institutions and non-profit, tax exempt, private 
organizations to provide financial education; limits on the use of 
commercial sponsorship to obtain personal contact information for 
solicitation; and required reporting of solicitation policy violations 
to higher headquarters. The proposed change also includes a new 
solicitation evaluation form to help installations detect solicitation 
policy violations. This document will not have a significant impact on 
the public.

DATES: Comments must be received by June 20, 2005.

ADDRESSES: Forward comments to: Colonel Michael A. Pachuta 
([email protected]) or Mr. James M. Ellis ([email protected]), 
at DUSD (MC&FP), 241 S. 18th St, Crystal Square 4, Suite 302, 
Arlington, VA 22202.

FOR FURTHER INFORMATION CONTACT: Colonel Michael A. Pachuta or Mr. 
James M. Ellis at (703) 602-4994 or (703) 602-5009 respectively, or 
main (703) 602-5001.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed regulatory action is not a significant regulatory 
action, as defined by Executive Order 12866.

Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))

    This proposed regulatory action will not have a significant adverse 
impact on a substantial number of small entities.

Unfunded Mandates Act of 1995 (Sec. 202, Pub. L. 104-4)

    This proposed regulatory action does not contain a Federal mandate 
that will result in the expenditure by State, local, and tribal 
governments, in aggregate, or by the private sector of $100 million or 
more in any one year.

Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)

    This proposed regulatory action will not impose any additional 
reporting or recordkeeping requirements under the Paperwork Reduction 
Act. A new form is introduced, a sample of which is at attached. It 
will be made available on the DoD Forms Web site (http://www.dtic.mil/whs/directives/infomgt/forms/formsprogram.htm) upon release of the 
issuance. The agent will provide the form to the service member at the 
beginning of their meeting. The form will not be returned to the agent.

Federalism (Executive Order 13132)

    This proposed regulatory action does not have federalism 
implications, as set forth in Executive Order 13132. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.

Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. Chapter 6)

    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. There are some changes in the DoD Instruction 
1344.aa, mostly from existing policy memoranda issued since the last 
update of the DoDD 1344.7, Personal Commercial Solicitation on DoD 
Installations. It updates old and adds some new references. It also 
includes a new Personal Commercial Solicitation Evaluation form.

Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    It has been determined that this rule does not involve a Federal 
mandate that may result in the expenditure by State, local and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more and that such rulemaking will not significantly or 
uniquely affect small governments.

List of Subjects in 32 CFR Parts 43 and 50

    Consumer protection, Federal buildings and facilities, Government 
employees, Life insurance, Military personnel.

    Accordingly, 32 CFR Chapter I, subchapter D is proposed to be 
amended as follows:

PART 43--[REMOVED]

    1. Part 43 is removed.
    2. Part 50 is added to read as follows:

PART 50--PERSONAL COMMERCIAL SOLICITATION ON DOD INSTALLATIONS

Subpart A--General Provisions
Sec.
50.1 Purpose.
50.2 Applicability.
50.3 Policy.
50.4 Responsibilities.
Subpart B--Procedures
50.6 Purpose.
50.7 Applicability and scope.
50.8 Definitions.
50.9 Policy.
50.10 Responsibilities.
50.11 Procedures.
50.12 Information requirements.
Appendix A to Part 50--Life Insurance Products and Securities
Appendix B to Part 50--Overseas Life Insurance Registration Program

    Authority: 5 U.S.C. 301.

Subpart A--General Provisions


Sec.  50.1  Purpose.

    This part updates policy for personal commercial solicitation on 
DoD installations and continues the established annual DoD registration 
requirements for life insurance companies operating on all DoD 
installations.


Sec.  50.2  Applicability.

    This part applies to The Office of the Secretary of Defense, the 
Military Departments, the Organization of the Joint Chiefs of Staff, 
the Combatant Commands, the Defense Agencies, the DoD Field Activities, 
and all other organizational entities in the Department of Defense 
(hereafter referred to collectively as the ``DoD Components''). The 
term ``Military Services'' as used herein refers to the Army, the Navy, 
the Air Force, and the Marine Corps.


Sec.  50.3  Policy.

    (a) The DoD shall safeguard and promote the welfare of DoD 
personnel as consumers by setting forth a uniform approach to the 
conduct of all personal commercial solicitation and sales to them by 
dealers and their agents. For those individuals and their companies 
that fail to follow this policy, the opportunity to solicit on military 
installations may be limited or denied as appropriate.
    (b) Command authority shall include authority to approve or 
prohibit all commercial solicitation covered by this Directive. Nothing 
in this part limits an

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installation commander's inherent authority to put time and place 
restrictions on commercial activities at the installation.


Sec.  50.4  Responsibilities.

    (a) The Under Secretary of Defense for Personnel and Readiness 
shall:
    (1) Develop and publish policies and procedures governing personal 
commercial solicitation on DoD installations consistent with the 
policies set forth in this part.
    (2) Maintain, and make available to installation Commanders the 
current master file of all individual agents, dealers, and companies 
who have their privileges withdrawn at any DoD Installation.
    (3) Develop and maintain a list of all State Insurance 
Commissioners' points of contact for DoD matters and forward this list 
to the Military Services.
    (b) The Heads of the DoD Components, or their designees, shall 
ensure implementation of this subpart and subpart B.

Subpart B--Procedures


Sec.  50.6  Purpose.

    (a) This subpart implements Subpart A of this part and establishes 
procedure for personal commercial solicitation on DoD installations.
    (b) Continues the established annual DoD registration requirement 
for the sale of insurance and securities on DoD installations overseas.
    (c) Identifies prohibited practices that may cause withdrawal of 
commercial solicitation privileges on DoD installations and establishes 
notification requirements when privileges are withdrawn.
    (d) Establishes procedures for persons solicited on DoD 
installations to evaluate solicitors.
    (e) Identifies procedures for providing financial education 
programs to military personnel.


Sec.  50.7  Applicability and scope.

    (a) This subpart applies to the Office of the Secretary of Defense, 
the Military Departments, Chairman of the Joint Chiefs of Staff, the 
Combatant Commands, Defense Agencies, DoD Field Activities, and all 
other organizational entities in the Department of Defense (hereafter 
referred to collectively as ``DoD Components'').
    (b) The provisions of this subpart do not apply to services 
furnished by residential service companies, such as deliveries of milk, 
laundry, newspapers and related services to personal residences on the 
installation when such services are requested by the resident and 
authorized by the installation commander.
    (c) This subpart applies to all other personal commercial 
solicitation on DoD installations, including meetings on DoD 
installations of private, non-profit, tax-exempt organizations that 
involve commercial solicitation. Attendance at these meetings shall be 
voluntary and the time and place of such meetings are subject to the 
discretion of the installation commander or his or her designee.


Sec.  50.8  Definitions.

    Agent. An individual who receives remuneration as a salesperson or 
whose remuneration is dependent on volume of sales of a product or 
products. (Also referred to as ``commercial agent'').
    Authorized bank and/or credit union. Bank and/or credit union 
selected by the installation commander through open competitive 
solicitation to provide exclusive on-base delivery of financial 
services to the installation under a written operating agreement.
    Banking institution. An entity chartered by a state or the Federal 
Government to provide financial services.
    Commercial solicitation. The conduct of a private business, 
including the offering and sale of products and services, on a military 
installation. Solicitation on installations is a privilege as 
distinguished from a right, and its control is a responsibility vested 
in the DoD installation commander.
    Commercial sponsorship. The act of providing assistance, funding, 
goods, equipment (including fixed assets), or services to an MWR 
program(s) event(s) by an individual, agency, association, company or 
corporation, or other entity (sponsor) for a specified (limited) period 
of time in return for public recognition or advertising promotions. 
Enclosure 9 of DoD Instruction 1015.10 \1\ provides general policy 
governing commercial sponsorship.
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    \1\ This issuance can be viewed at http://www.dtic.mil/whs/directives/.
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    Credit union. A cooperative nonprofit association, incorporated 
under the Credit Union Act, or similar State statute, for the purpose 
of encouraging thrift among its members and creating a source of credit 
at a fair and reasonable rate of interest.
    DoD installation. Any Federally owned, leased, or operated base, 
reservation, post, camp, building, or other facility to which DoD 
personnel are assigned for duty, including barracks, transient housing, 
and family quarters.
    DoD personnel. All active duty officers (commissioned and warrant) 
and enlisted members of the Military Departments and all civilian 
employees, including nonappropriated fund employees and special 
Government employees, of the Department of Defense.
    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, fund transfers, sale 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.
    General agent. A person who has a legal contract to represent a 
company.
    Insurance carrier. An insurance company issuing insurance through 
an association, reinsuring, or coinsuring such insurance.
    Insurance product. A policy, annuity, or certificate of insurance 
issued by an insurer or evidence of insurance coverage issued by a 
self-insured association, including those with savings and investment 
features.
    Insurer. Any company or association engaged in the business of 
selling insurance policies to DoD personnel.
    Military services. The Army, the Navy, the Air Force, and the 
Marine Corps. Also includes the Coast Guard when operating as a service 
in the Navy.
    Normal home enterprises. Sales or services that are customarily 
conducted in a domestic setting and do not compete with an 
installation's officially sanctioned commerce.
    Personal. Pertaining to a particular individual's private affairs, 
interests, or activities.
    Securities. Mutual funds, stocks, bonds, or any product registered 
with the Securities and Exchange Commission except for any insurance or 
annuity product issued by a corporation subject to supervision by State 
insurance authorities.
    Solicitation. The conduct of any private business, including the 
offering and sale of insurance or securities on a military 
installation.
    Suspension. Temporary termination of privileges pending completion 
of a commander's inquiry or investigation.
    Withdrawal. Termination of privileges for a set period of time 
following completion of a commander's inquiry or investigation.

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Sec.  50.9  Policy.

    It is the policy of the Department of Defense to safeguard and 
promote the welfare of DoD personnel as consumers by setting forth a 
uniform approach to the conduct of all personal commercial solicitation 
and sales to them on DoD installations.


Sec.  50.10  Responsibilities.

    (a) The Principal Deputy Under Secretary of Defense for Personnel 
and Readiness (PDSUD (P&R)), under the Under Secretary of Defense for 
Personnel and Readiness, shall:
    (1) Identify policy and develop procedures governing personal 
commercial solicitation activities conducted on DoD installations.
    (2) Maintain the master file of all individuals and companies who 
have their privileges withdrawn at any DoD installation and disseminate 
this file to installation commanders.
    (3) Maintain a list of State Insurance Commissioner points of 
contact for DoD matters and disseminate this list to the Military 
Services.
    (b) The Heads of the DoD Components, or their designees, shall:
    (1) Ensure implementation of this subpart and compliance with its 
provisions.
    (2) Require installations under their cognizance report each 
instance of withdrawal of commercial solicitation privileges.
    (3) Submit lists of all individuals and companies who have had 
their commercial solicitation privileges withdrawn at installations 
under their cognizance to the PDUSD(P&R) in accordance with this 
subpart.


Sec.  50.11  Procedures.

    (a) General. (1) No person has authority to enter upon a DoD 
installation to transact personal commercial solicitation as a matter 
of right. Personal commercial solicitation will be permitted only if 
the following requirements are met:
    (i) The solicitor is duly licensed under applicable Federal, State, 
or municipal laws and has complied with installation regulations in 
accordance with paragraph (c) of this section.
    (ii) A specific appointment has been made for each meeting with the 
individual concerned and each meeting is conducted only in family 
quarters or in other areas designated by the installation commander.
    (iii) The solicitor agrees to provide each person solicited the 
personal commercial solicitation evaluation included in Appendix A of 
this part during the initial appointment. The person being solicited is 
not required to complete the evaluation. However, completed evaluations 
should be sent by the person who was solicited to the office designated 
by the installation commander on the back of the evaluation form.
    (2) Those seeking to transact personal commercial solicitation on 
overseas installations shall be required to observe, in addition to the 
above, the applicable laws of the host country and, upon request, 
present documentary evidence to the installation commander, or 
designee, that the company they represent, and its agents, meet the 
applicable licensing requirements of the host country.
    (b) Life insurance products and securities. (1) Life insurance 
products and securities offered and sold to DoD personnel shall meet 
the prerequisites described in Appendix A of this part.
    (2) Installation commanders may permit insurers and their agents to 
solicit on DoD installations if the requirements of paragraph (a) of 
this section are satisfied and if they are licensed under the insurance 
laws of the State in which the installation is located. In overseas 
areas, the DoD Components shall limit insurance solicitation to those 
insurers registered under the provisions of Appendix B of this part.
    (3) The conduct of all insurance business on DoD installations 
shall be by specific appointment. When establishing the appointment, 
insurance agents shall identify themselves to the prospective purchaser 
as an agent for a specific company.
    (4) Installation commanders shall designate areas where interviews 
by appointment may be conducted. The opportunity to conduct scheduled 
interviews shall be extended to all solicitors on an equitable basis. 
Where space and other considerations limit the number of agents using 
the interviewing area, the installation commander may develop and 
publish local policy consistent with this concept.
    (5) Installation commanders shall make disinterested third-party 
counseling available to DoD personnel desiring counseling. DoD 
personnel shall be encouraged to seek legal assistance or other advice 
from a disinterested third-party prior to entering a contract for 
insurance.
    (6) In addition to the solicitation prohibitions contained in 
paragraph (c) of this section, the DoD Components shall prohibit the 
following:
    (i) DoD personnel from representing any insurer, dealing directly 
or indirectly on behalf of any insurer or any recognized representative 
of any insurer on the installation, or as an agent or in any official 
or business capacity with or without compensation.
    (ii) The use of an agent as a participant in any Military Service-
sponsored education or orientation program.
    (iii) The designation of any agent or the use by any agent of 
titles (for example, ``Battalion Insurance Counselor,'' ``Unit 
Insurance Advisor,'' ``Servicemen's Group Life Insurance Conversion 
Consultant'') that in any manner suggests or implies any type of 
endorsement from the U.S. Government, the Armed Forces, or any State or 
Federal agency or government entity.
    (iv) The assignment of desk space for interviews for other than a 
specific prearranged appointment. During such appointment, the agent 
shall not be permitted to display desk signs or other materials 
announcing his or her name or company affiliation.
    (v) The use of an installation ``daily bulletin,'' marquee, 
newsletter, web page or other official notice to announce the presence 
of an agent and/or his or her availability.
    (c) Supervision of on-base commercial activities. (1) All pertinent 
installation regulations shall be posted in a place easily accessible 
to those conducting and receiving personal commercial solicitation on 
the installation.
    (2) The installation commander shall make available a copy of 
installation regulations to anyone conducting on-base commercial 
solicitation activities with the warning that failure to abide by the 
regulations may result in the loss of solicitation privileges.
    (3) The installation commander, or designated representative, shall 
inquire into any alleged violations of this Subpart or questionable 
solicitation practices. The DD Form 2885, Personal Commercial 
Solicitation Evaluation, at Appendix A of this part is provided as a 
means to supervise solicitation activities on the installation. The DD 
Form 2885 is available at the Department of Defense Forms web site 
under DefenseLink, Publications.
    (d) Prohibited practices. The following commercial solicitation 
practices shall be prohibited on all DoD installations:
    (1) Solicitation in a ``mass'' or ``captive audience'' of any 
personnel, civilian or military, to include recruits, trainees, and 
transient personnel.
    (2) Making appointments with or soliciting military and DoD 
civilian personnel who are in an ``on-duty'' status.
    (3) Soliciting without appointment in areas utilized for the 
housing or processing of transient personnel, in barracks areas used as 
quarters, in unit

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areas, in family quarters areas, and in areas provided by installation 
commanders for interviews by appointment.
    (4) Use of official military identification cards or DoD vehicle 
decals by active duty, retired or reserve members of the Military 
Services to gain access to DoD installations for the purpose of 
soliciting. When entering the installation for the purpose of 
solicitation, solicitors with military identification cards and/or DoD 
vehicle decals must present documentation issued by the installation 
authorizing solicitation.
    (5) Procuring, attempting to procure, supplying, or attempting to 
supply listings of DoD personnel for purposes of commercial 
solicitation, except for releases made in accordance with DoD Directive 
5400.7.\2\
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    \2\ See footnote 1 to paragraph Sec.  50.8.
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    (6) Offering unfair, improper, or deceptive inducements to purchase 
or trade.
    (7) Using promotional incentives to facilitate transactions or to 
eliminate competition.
    (8) Using manipulative, deceptive, or fraudulent devices, schemes, 
or artifices, including misleading advertising and sales literature. 
All financial products, which contain insurance features, must clearly 
explain the insurance features of those products.
    (9) Using oral or written representations to suggest or give the 
appearance that the Department of Defense sponsors or endorses any 
particular company, its agents, or the goods, services, and commodities 
it sells.
    (10) DoD personnel making personal commercial solicitations or 
sales to DoD personnel who are junior in rank or grade except as 
authorized in DoD Directive 5500.7.\3\
    (11) Entering into any unauthorized or restricted area.
    (12) Using any portion of installation facilities, including 
quarters, as a showroom or store for the sale of goods or services, 
except as specifically authorized by DoD Directives 1330.9 \3\ and 
1330.17 \4\ and DoD Instructions 1015.10 \5\ and 1000.15 \6\. This does 
not apply to normal home enterprises that comply with applicable State 
and local laws and installation rules.
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    \3\ See footnote 1 to paragraph Sec.  50.8.
    \4\ See footnote 1 to paragraph Sec.  50.8.
    \5\ See footnote 1 to paragraph Sec.  50.8.
    \6\ See footnote 1 to paragraph Sec.  50.8.
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    (13) Soliciting door to door.
    (14) Unauthorized advertising of addresses or telephone numbers of 
commercial sales activities conducted on the installation, or the use 
of military rank and/or titles for the purpose of personal commercial 
solicitation.
    (15) Contacting DoD personnel by calling a government telephone, 
faxing to a government fax machine or by sending e-mail to a government 
computer, unless a pre-existing relationship exists between the 
parties.
    (e) Denial, suspension and withdrawal of installation solicitation 
privileges. (1) The installation commander shall deny, suspend or 
withdraw permission for a company and its agents, to conduct commercial 
activities on the base if such action is in the best interests of the 
command. The grounds for taking these actions may include, but are not 
limited to, the following:
    (i) Failure to meet the licensing and other regulatory requirements 
prescribed in this subpart, including paragraphs (a) and (b) of this 
section.
    (ii) Commission of any of the practices prohibited in paragraph 
(d)(6) and paragraph (d) of this section.
    (iii) Substantiated complaints and/or adverse reports regarding the 
quality of goods, services, and/or commodities and the manner in which 
they are offered for sale.
    (iv) Knowing and willful violations of Pub. L. 90-321.
    (v) Personal misconduct by a company's agent or representative 
while on the installation.
    (vi) The possession of or any attempt to obtain supplies of 
allotment forms used by the Military Departments, or possession or use 
of facsimiles thereof.
    (vii) Failure to incorporate and abide by the Standards of Fairness 
policies contained in DoD Directive 1344.9.\7\
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    \7\ See footnote 1 to paragraph Sec.  50.8
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    (2) The installation commander may determine that circumstances 
dictate the immediate suspension of solicitation privileges while an 
investigation is conducted. Upon suspending solicitation privileges, 
the commander shall promptly inform the agent and the company the agent 
represents, as well as the Office of the PDUSD(P&R)), in writing.
    (3) In suspending or withdrawing solicitation privileges, the 
commander shall determine whether to limit it to the agent alone or 
extend it to the company the agent represents. This decision shall be 
based on the circumstances of the particular case, including, but not 
limited to, the nature of the violations, frequency of violations, the 
extent to which other agents of the company have engaged in such 
practices, and any other matters tending to show the individual's and 
the company's culpability.
    (4) If the investigation determines an agent or company does not 
possess a valid license or has failed to meet other State or Federal 
regulatory requirements, the installation commander shall notify the 
appropriate regulatory authorities.
    (5) In a withdrawal action, the commander shall afford the 
individual or company an opportunity to present facts on an informal 
basis for the consideration of the installation commander. The 
installation commander shall make a final decision regarding withdrawal 
based upon the entire record in each case.
    (6) The installation commander shall inform the Military Department 
concerned of any denial, suspension or withdrawal of solicitation 
privileges and the Military Department shall inform the Office of the 
PDUSD(P&R). If warranted, the installation commander may recommend to 
the Military Department concerned that the action taken be extended to 
other DoD installations. The Military Department may extend the action 
to other military installations in the Military Department. The 
PDUSD(P&R), following consultation with the Military Department 
concerned, may order the action extended to other Military Departments.
    (7) All suspensions or withdrawals of privileges shall be for a set 
period of time, at the end of which the individual or company may 
reapply for permission to solicit through the installation commander or 
Military Department originally imposing the restriction. The Office of 
the PDUSD(P&R) shall be notified when such suspensions or withdrawals 
are lifted.
    (8) The Secretaries of the Military Departments may direct the 
Armed Forces Disciplinary Control Boards in all geographical areas in 
which the grounds for withdrawal action have occurred to consider all 
applicable information and take action the Boards deem appropriate.
    (9) Nothing in this subpart limits the authority of the 
installation commander or other appropriate authority from requesting 
or instituting other administrative and/or criminal action against any 
person including those who violate the conditions and restrictions upon 
which installation entry is authorized.
    (f) Advertising and commercial sponsorship. (1) The Department of 
Defense expects voluntary observance of the highest business ethics by 
commercial enterprises soliciting DoD personnel through advertisements 
in

[[Page 20320]]

unofficial military publications in describing goods, services, 
commodities, and the terms of the sale (including guarantees, 
warranties, and the like).
    (2) The advertising of credit terms shall conform to the provisions 
of 15 U.S.C. 1601 as implemented by Federal Reserve Board Regulation Z.
    (3) Solicitors may provide commercial sponsorship to DoD MWR 
programs or events in accordance with DoD Instruction 1015.10.\8\ 
However, sponsorship may not be used as a means to obtain personal 
contact information for any participant at these events without written 
permission from the individual participant. In addition, commercial 
sponsors may not use sponsorship to advertise products and/or services 
not specifically agreed to in the sponsorship agreement.
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    \8\ See footnote 1 to paragraph Sec.  50.8.
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    (4) The Commander may permit organizations to display sales 
literature in designated locations subject to command policies. 
Distribution of competitive literature or forms by off-base banks and/
or credit unions is prohibited on installations where an authorized on-
base bank and/or credit union exists.
    (g) Educational programs. (1) The Military Departments shall 
develop and disseminate information and provide educational programs 
for members of the Military Services on their personal financial 
affairs, including such subjects as 15 U.S.C. 1601 insurance, 
Government benefits, savings, and budgeting. The services of 
representatives of authorized on-base banks and credit unions may be 
used for this purpose. Under no circumstances shall commercial agents, 
including representatives of loan, finance, insurance or investment 
companies be used for this purpose. Presentations shall only be 
conducted at the express request of the installation commander.
    (2) The Military Departments shall also make qualified personnel 
and facilities available for individual counseling on loans and 
consumer credit transactions in order to encourage thrift and financial 
responsibility and promote a better understanding of the wise use of 
credit, as prescribed in DoD Directive 1344.9.\9\
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    \9\ See footnote 1 to paragraph Sec.  50.8.
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    (3) Military members shall be encouraged to seek advice from a 
legal assistance officer, the installation finance counselor, their own 
lawyer or a financial counselor, before making a substantial loan or 
credit commitment.
    (4) Each Military Department shall provide advice and guidance to 
military personnel who have a complaint under 15 U.S.C. 1601 or who 
allege a criminal violation of its provisions, including referral to 
the appropriate regulatory agency for processing of the complaint.
    (5) Banks and credit unions operating on DoD installations are 
required to provide financial counseling services as an integral part 
of their financial services offerings. Representatives of and materials 
provided by authorized banks and/or credit unions located on military 
installations may be used to provide the educational programs and 
information required by this subpart subject to the following 
conditions:
    (i) If the bank or credit union operating on a DoD installation has 
any affiliation with a company that sells or markets insurance or other 
financial products, the installation commander shall consider that 
company's history of complying with this subpart prior to requesting 
the on-base financial institution provide financial education.
    (ii) All prospective educators must agree to use appropriate 
disclaimers in their presentations and on their educational materials, 
which clearly indicate that they do not endorse or favor any commercial 
supplier, product or service or promote the services of a specific 
financial institution.
    (6) Use of other non-governmental organizations to provide 
financial education programs is limited as follows:
    (i) Under no circumstances shall commercial agents, including 
employees or representatives of commercial loan, finance, insurance or 
investment companies, be used.
    (ii) The limitation in paragraph (g)(6)(i) of this section does not 
apply to educational programs and information regarding the Survivor 
Benefits Program and other governmental benefits provided by tax-exempt 
organizations under 26 U.S.C. 501(c)(23) or by any organization 
providing such a benefit pursuant to a contract with the Government.
    (iii) Educators from non-governmental, non-commercial organizations 
expert in personal financial affairs and their materials may, with 
appropriate disclaimers, provide the educational programs and 
information required by this subpart if approved by a Presidentially-
appointed, Senate-confirmed civilian official of the Military 
Department concerned. Presentations by approved organizations shall be 
conducted only at the express request of the installation commander. 
The following criteria shall be used when considering whether to permit 
a non-governmental, non-commercial organization to present an 
educational program or provide materials on personal financial affairs:
    (A) The organization must qualify as a tax-exempt organization 
under section 501(c)(3) or 501(c)(23) of 26 U.S.C.
    (B) If the organization has any affiliation with a company that 
sells or markets insurance or other financial products, the approval 
authority shall consider that company's history of complying with this 
subpart.
    (C) All prospective educators must use appropriate disclaimers in 
their presentations and on their educational materials, which clearly 
indicate that they and the Department of Defense do not endorse or 
favor any commercial supplier, product, or service or promote the 
services of a specific financial institution.


Sec.  50.12  Information requirements.

    (a) The reporting requirements concerning the withdrawal of 
solicitation privileges have been assigned Reporting Control Symbol 
(RCS) DD-P&R(AR)2182.
    (b) The information collected on the DD Form 2885, ``Personal 
Commercial Solicitation Evaluation'' has been assigned Report Control 
Symbol (RCS) DD-P&R(AR)XXXX.
    (c) These reporting requirements have been assigned in accordance 
with DoD Publication 8910.1-M.\10\
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    \10\ See footnote 1 to paragraph Sec.  50.8.
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Appendix A to Part 50--Life Insurance Products and Securities

A. Life Insurance Product Content Prerequisites

    1. Companies must provide DoD personnel a separate written 
description for each product or service they intend to market to DoD 
personnel on DoD installations. These descriptions must be written 
in a manner that DoD personnel can easily understand, and fully 
disclose the fundamental nature of the policy.
    2. Insurance products, other than certificates or other evidence 
of insurance issued by a self-insured association, offered and sold 
worldwide to personnel on DoD installations, must:
    a. Comply with the insurance laws of the State or country in 
which the installation is located and the requirements of this 
Instruction.
    b. Contain no restrictions by reason of military service or 
military occupational specialty of the insured, unless such 
restrictions are clearly indicated on the face of the contract.
    c. Plainly indicate any extra premium charges imposed by reason 
of military service or military occupational specialty.
    d. Contain no variation in the amount of death benefit or 
premium based upon the length of time the contract has been in 
force, unless all such variations are clearly described therein.

[[Page 20321]]

    3. To comply with paragraphs A.1.a. through A.1.d. of this 
appendix, an appropriate reference stamped on the first page of the 
contract shall draw the attention of the policyholder to any 
restrictions by reason of military service or military occupational 
specialty, extra premium charges and any variations in the amount of 
death benefit or premium based upon the length of time the contract 
has been in force.
    4. Variable life insurance products may be offered provided they 
meet the criteria of the appropriate insurance regulatory agency and 
the Securities and Exchange Commission.
    5. Insurance products shall not be sold disguised as 
investments. If there is a savings component to an insurance 
product, the agent shall provide the customer written documentation, 
which clearly explains how much of the premium goes to the savings 
component per year broken down over the life of the policy. This 
document must also show the total amount per year allocated to 
insurance premiums. The customer must be provided a copy of this 
document that is signed by the insurance agent.

B. Sale of Securities

    1. All securities must be registered with the Securities and 
Exchange Commission.
    2. All sales of securities must comply with the appropriate 
Securities and Exchange Commission regulations.
    3. All securities representatives must apply to the commander of 
the installation on which they desire to solicit the sale of 
securities for permission to solicit.
    4. Where the accredited insurer's policy permits, an overseas 
accredited life insurance agent--if duly qualified to engage in 
security activities either as a registered representative of the 
National Association of Securities Dealers or as an associate of a 
broker or dealer registered with the Securities and Exchange 
Commission--may offer life insurance and securities for sale 
simultaneously. In cases of commingled sales, the allotment of pay 
for the purchase of securities cannot be made to the insurer.

C. Use of the Allotment of Pay System

    1. Allotments of military pay for life insurance products shall 
be made in accordance with DoD Publication 7000.14-R.\11\
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    \11\ See footnote 1 to paragraph Sec.  50.8.
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    2. For personnel in pay grades E-1, E-2, and E-3, at least 7 
calendar days shall elapse for counseling between the signing of a 
life insurance application and the certification of an allotment. 
The purchaser's commanding officer may grant a waiver of this 
requirement for good cause, such as the purchaser's imminent 
permanent change of station.

D. Associations--General

    The recent growth and general acceptability of quasi-military 
associations offering various insurance plans to military personnel 
are acknowledged. Some associations are not organized within the 
supervision of insurance laws of either a State or the Federal 
Government. While some are organized for profit, others function as 
nonprofit associations under Internal Revenue Service regulations. 
Regardless of the manner in which insurance is offered to members, 
the management of the association is responsible for complying fully 
with the policies contained in this part.

Appendix B to Part 50--Overseas Life Insurance Registration Program

A. Registration Criteria

    1. Initial registration.
    a. Insurers must demonstrate continuous successful operation in 
the life insurance business for a period of not less than 5 years on 
December 31 of the year preceding the date of filing the 
application.
    b. Insurers must be listed in Best's Life-Health Insurance 
Reports and be assigned a rating of B+ (Very Good) or better for the 
business year preceding the Government's fiscal year for which 
registration is sought.
    2. Re-registration.
    a. Insurers must demonstrate continuous successful operation in 
the life insurance business, as described in paragraph A.1.a. of 
this appendix.
    b. Insurers must retain a Best's rating of B+ or better, as 
described in paragraph A.1.b. of this appendix.
    c. Insurers must demonstrate a record of compliance with the 
policies found in this Instruction.
    3. Waiver provisions. Waivers of the initial registration or re-
registration provisions shall be considered for those insurers 
demonstrating substantial compliance with the aforementioned 
criteria.

B. Application Instructions

    1. Applications Filed Annually. Insurers must apply by June 30th 
of each year for solicitation privileges on overseas U.S. military 
installations for the next fiscal year beginning October 1st. 
Applications e-mailed, faxed or postmarked after June 30, shall not 
be considered.
    2. Application prerequisites. A letter of application, signed by 
the President, Vice President, or designated official of the 
insurance company shall be forwarded to the Principal Deputy Under 
Secretary of Defense (Personnel and Readiness), Attention: Morale, 
Welfare and Policy Directorate, 4000 Defense, The Pentagon, 
Washington, DC 20301-4000. The registration criteria in paragraph 
A.1.a. or b. of this appendix, must be met to satisfy application 
prerequisites. The letter shall contain the information set forth in 
the following paragraphs, submitted in the order listed. Where not 
applicable, state in the letter.
    a. The overseas commands (e.g., U.S. European Command, U.S. 
Pacific Command, U.S. Central Command, U.S. Southern Command) where 
the company is presently soliciting, or planning to solicit on U.S. 
military installations.
    b. A statement that the company has complied with, or shall 
comply with, the applicable laws of the country or countries wherein 
it proposes to solicit. ``Laws of the country'' means all national, 
provincial, city, or county laws or ordinances of any country, as 
applicable.
    c. A statement that the products to be offered for sale conform 
to the standards prescribed in appendix A of this part and contain 
only the standard provisions such as those prescribed by the laws of 
the State where the company's headquarters are located.
    d. A statement that the company shall assume full responsibility 
for the acts of its agents with respect to solicitation. If 
warranted, the number of agents may be limited by the overseas 
command concerned.
    e. A statement that the company shall only use agents who have 
been licensed by the appropriate State and registered by the 
overseas command concerned to sell to DoD personnel on DoD 
installations.
    f. Any explanatory or supplemental comments that shall assist in 
evaluating the application.
    g. If the Department of Defense requires facts or statistics 
beyond those normally involved in registration, the company shall 
make separate arrangements to provide them.
    h. A statement that the company's general agent and other 
registered agents are appointed in accordance with the prerequisites 
established in section C. of this appendix.
    3. If a company is a life insurance company subsidiary, it must 
be registered separately on its own merits.

C. Agent Requirements

    The overseas Combatant Commanders shall apply the following 
principles:
    1. An agent must possess a current State license. This 
requirement may be waived for a registered agent continuously 
residing and successfully selling life insurance in foreign areas, 
who, through no fault of his or her own, due to State law (or 
regulation) governing domicile requirements, or requiring that the 
agent's company be licensed to do business in that State, forfeits 
eligibility for a State license. The request for a waiver shall 
contain the name of the State or jurisdiction that would not renew 
the agent's license.
    2. The general agents and agents may represent only one 
registered commercial insurance company. This principle may be 
waived by the overseas commander if multiple representations are in 
the best interest of DoD personnel.
    3. An agent must have at least 1 year of successful life 
insurance underwriting experience in the United States or its 
territories, generally within the 5 years preceding the date of 
application, in order to be approved for overseas solicitation.
    4. The overseas commanders may exercise further agent control 
procedures as deemed necessary.
    5. An agent, once registered in an overseas area, may not change 
affiliation from the staff of one general agent to another and 
retain registration.

D. Announcement of Registration

    1. Registration by the Department of Defense upon annual 
applications of insurers shall be announced as soon as practicable 
by notice to each applicant and by a list released annually in 
September to the appropriate overseas commanders. Approval does not 
constitute DoD endorsement of the insurer or its products. Any 
advertising by insurers or verbal representation by its agents, 
which suggests such endorsement, is prohibited.

[[Page 20322]]

    2. In the event registration is denied, specific reasons for the 
denial shall be submitted to the applicant.
    a. The insurer shall have 30 days from the receipt of 
notification of denial of registration (sent certified mail, return 
receipt requested) in which to request reconsideration of the 
original decision. This request must be accompanied by 
substantiating data or information in rebuttal of the specific 
reasons upon which the denial was based.
    b. Action by the PDUSD(P&R) or designee on a request for 
reconsideration is final.
    c. An applicant that is presently registered as an insurer shall 
have 90 calendar days from final action denying registration in 
which to close out operations.
    3. Upon receiving an annual letter approving registration, each 
company shall send to the applicable overseas Combatant Commander a 
verified list of agents currently registered for overseas 
solicitation. Where applicable, the company shall also include the 
names and prior military affiliation of new agents for whom original 
registration and permission to solicit on base is requested. 
Insurers initially registered shall be furnished instructions by the 
Department of Defense for agent registration procedures in overseas 
areas.
    4. Material changes affecting the corporate status and financial 
conditions of the company that may occur during the fiscal year of 
registration must be reported to MWR Policy at the address in 
paragraph B.2. of this appendix, as they occur.
    a. The Office of the PDUSD(P&R) reserves the right to terminate 
registration if such material changes appear to substantially affect 
the financial and operational criteria described in section A of 
this appendix on which registration was based.
    b. Failure to report such material changes may result in 
termination of registration regardless of how it affects the 
criteria.
    5. If an analysis of information furnished by the company 
indicates that unfavorable trends are developing that may possibly 
adversely affect its future operations, the Office of the PDUSD(P&R) 
may, at its option, bring such matters to the attention of the 
company and request a statement as to what action, if any, is 
contemplated to deal with such unfavorable trends.

    Dated: April 14, 2005.
Jeannette Owings-Ballard,
OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 05-7810 Filed 4-18-05; 8:45 am]
BILLING CODE 5001-06-P