Limitation on outside income for individuals in Office of the Secretary of Defense

1101. Limitation on outside income for individuals in Office of the Secretary of Defense Section 131 of title 10, United States Code, is amended by adding at the end the following: (e) (1) Any covered employee who is employed by, or detailed or otherwise assigned to, the Office of the Secretary of Defense may not receive any outside earned income during the period such individual is so employed, detailed, or assigned unless the individual notifies the relevant designated agency ethics official and such official reviews such income and issues a determination (in writing) that— (A) the outside earned income received is unrelated to the duties the individual has performed or is expected to perform for the United States; and (B) the individual— (i) does not have official business in front of the Department of Defense; and (ii) the individual is not working on behalf of, or representing, a foreign agent or government. (2) Any determination under paragraph (1) shall be published on the public website of the Office of Government Ethics not later than 15 days after such determination is made. (3) Notwithstanding any other provision of law, a covered employee who receives outside earned income shall file a public financial disclosure report pursuant section 13103(a) of title 5 not later than 30 days after receiving such income. (4) In this subsection— (A) the term covered employee means— (i) any special Government employee (as that term is defined in section 202 of title 18); (ii) an officer or employee who is serving without compensation; and (iii) any member of a reserve component of the Army, Navy, Marine Corps, Air Force, or Space Force; (B) the term designated agency ethics official has the meaning given that term in section 13101 of title 5; and (C) the term outside earned income — (i) means wages, salaries, honoraria, commissions, professional fees and any other form of compensation for services other than salary, benefits, and allowances paid by the United States Government; and (ii) does not include the following: (I) Items that may be accepted under applicable standards of conduct gift regulations if they were offered by a prohibited source. (II) Income attributable to service with the military reserves or national guard. (III) Income from pensions and other continuing benefits attributable to previous employment or services. (IV) Income from investment activities where the individual's services are not a material factor in the production of income. (V) Copyright royalties, fees, and their functional equivalent, from the use or sale of copyright, patent and similar forms of intellectual property rights, when received from established users or purchasers of those rights. (VI) Actual and necessary expenses incurred by the employee in connection with an outside activity. Where such expenses are paid or reimbursed by another person, the amount of any such payment shall not be counted as compensation or outside earned income. Where such expenses are not paid or reimbursed, the amount of compensation or earned income shall be determined by subtracting the actual and necessary expenses incurred by the employee from any payment received for the activity. (5) Not later than 180 days after the date of the enactment of the National Defense Authorization Act for Fiscal Year 2027, the Secretary of Defense, in concurrence with the Office of Government Ethics, shall issue such regulations as the Secretary determines necessary to carry out this subsection. .