The following Federally-funded activities are exempt from establishing Flight Program Standards under this part:

(a) The Armed Forces (which includes the U.S. Coast Guard);

(b) Agencies in the Intelligence Community; and

(c) Entities outside the executive branch of the Federal Government when using aircraft loaned to them by an executive agency (that is, owned by an executive agency, but operated by and on behalf of the loanee) unless the loanee—

(1) Uses the aircraft to conduct official Government business; or

(2) Is required to follow §§102-33.140 through 102-33.185 under a Memorandum of Agreement governing the loan.