Module 2.1 Execution Phase Flashcards
Constitutional basis for Appropriations
Article 1, Section 9
DoD major appropriation categories
Military Personnel (MILPERS)
Operation and Maintenance (O&M)
Research, Development, Test, & Evaluation (RDT&E)
Procurement
Military Construction (MILCON)
Expense appropriations
O&M and MILPERS
Investment Appropriations
Procurement and MILCON
Could cover both expenses and investments appropriations
RDT&E
Purchase of major end items and defense systems
Initial issue of spares for above items
All costs necessary to deliver a useful end item intended for operational use or inventory
Procurement:
Three years investment type appropriation
Shipbuilding and Conversion
(Navy appropriation is 5 years plus extension for some specific activities)
MILCON categories:
Major military construction projects
Construction of military schools
Construction of military facilities and bases
Development of equipment, material, or computer application software
Developmental Test and Evaluation (DT&E)
Initial Operational Test and Evaluation (IOT&E)
Operational costs for R&D dedicated installations
RDT&E
Prepare annual budget requests on the basis of funding needed to obligate for expenses anticipated to be required to operate and maintain DoD activities for the fiscal year.
Annual Funding: O&M and MILPERS
The rule governing budgeting of RDT&E
Incremental Funding Policy
The annual budget estimates for _____ Projects and programs, including developmental and operational ____ and _____ programs, are prepared on an _______ programmed basis.
RDT&E; Test; Evaluation; Incrementally.
The ___________ budgeting policy, provides that only those funds required for work in a given fiscal year are to be included in the RDT&E budget request for the fiscal year.
Incremental
Who authorize the financing of a total RDT&E requirement that can take more than 12 months but less than 18 months in one fiscal year?
The USD(C), under DoD 7000. 14R, Volume 2A, Chapter 1, Section 10214, Paragraph C.1.b)
The annual budget request must cover the total estimated cost to deliver a given quantity of complete, military usable end items in a 12 month funded delivery period.
Full Funding Policy: Procurement and MILCON
Governing concepts of Full finding policy
Total estimated cost
Useable end items
Funded delivery period
Total estimated cost
Useable end items
Funded delivery period
Full funding policy governing concepts
All funds required to complete the delivery of each buy will be included in the budget request for the year of the planned contract award, regardless of the date the contracted item(s) will be delivered.
Full funding policy
True of False
With respect to Procurement programs, the full funding policy calls for providing funding each fiscal year to procure a specified quantity of complete, usable end items. However, piecemeal procurement of systems is permitted.
FALSE
True of False
With respect to Procurement programs, the full funding policy calls for providing funding each fiscal year to procure a specified quantity of complete, usable end items. Thus, piecemeal procurement of systems is not permitted.
TRUE
True or False
The Component cannot buy one part of the end item one year, another part the next year, and then another part the third year. The Component must contract each year for some number of completely fabricated and ready-to-perform systems or useable building.
True
Funded Delivery Period is a 12-month period starting with the month in which the contractor, by the terms of the planned contract, is expected to deliver the first item of a production contract. The maximum number of production items a DoD Component can budget for is the maximum quantity the contractor can deliver in that 12 month period.
During Contract Execution, which applies?
Contract Provision or Budgeting Policies Provisions?
Contract provisions
The 12-month funded delivery period limitation is relative to budgeting policies
Funds to procure certain components, material, or effort in advance of the end item buy, to preclude serious and costly fluctuation in program continuity.
Advance Procurement
What circumstances justify the use of Advance Procurement?
- Lead time of component greater than life of the appropriation
- Lead time of component significantly longer than remainder of end item
- When necessary to maintain (protect) planned production schedule
What is an Advance Procurement?
It is an appropriate exception to the full-funding policy. An advance procurement is described as funds to procure certain components, material, or effort in advance of the end item buy, to preclude serious and costly fluctuation in program continuity.
What are the budgetary implications of using Advance Procurement?
- Minimum amount budgeted equals termination liability of total cost or long lead time items being procured.
- Budgeted amount generally requested one fiscal year in advance of related end item contract.
- Budgeted amount is shown as a separate line entry.
- Minimum amount budgeted equals termination liability of total cost or long lead time items being procured.
- Budgeted amount generally requested one fiscal year in advance of related end item contract.
- Budgeted amount is shown as a separate line entry.
Budgetary implications of using an Advance Procurement
Why should Advance Procurement be used only when the economic benefits are significant?
Because the authorization for the use advance procurement limits the Milestone Decision Authority’s (MDA) flexibility; and It should be used only with MDA concurrence
The process, planning and ultimate contract by which government may for the purchase of supplies or services for more than one, but normally not more than five (5) years. Generally associated with Economic Order Quantity procurement action
Multiyear Procurement
Example of an advance procurement exception
Economic Order Quantity (EOQ)
What is the difference between the MYP and an option-type contract?
Option contract only obligates the Government one year at a time, whereas the MYP contract obligates the government for the full five (5) years of systems at the time of the contract signature, but it is funded annually.
What is the purpose of MYP?
To reduce program cost growth and introduce stability into the acquisition process.
Since the funding of EOQ subsystem purchase associated with a MYP is funded as an ______________, it falls under the ___________ exception to the full funding principle. While funding for EOQ procurement is usually included in ____________ budget requests, an exception can be granted by the USD(C) for it to be included as a recurring cost in the contract cancellation charge.
Advance Procurement
Criteria MYP candidates must meet to limit risks
- Substantial savings (minimum 10% or a little less for costly programs with high dollar value of savings)
- Continuity / Stable requirement (No significant downward change) over the term of the multiyear contract.
- Funding availability and stability
- Design stability
- Realistic cost estimates
- National security enhancement
- Impact on Industrial base
Congress mandated two-step multiyear approval process
- Proposed multiyear contract costs provided with budget submission.
- Proposed multiyear contract costs provided before contract award.
- Contracts
- MIPR (DoD Form 448)
Common obligation documents
- Used to order work or services from another DoD entity for effort that extends beyond the fiscal year for maintenance or production
- When accepted in writing by the performing activity, the amount is recorded as an obligation.
- No de-obligation of the order for the unexecuted portion when the cited appropriation expires (Title 41. U.S. .Code, Section 6307)
Project Orders
Project Orders
Economy Act Orders
Types of MIPR
- Intragovernmental order that does not qualify as a project order.
- An order that will produce a useful service or item by the end of the fiscal year.
- Unexecuted portion of the order must be de-obligated when the cited appropriation expires (Title 31, U,S, Code Section 1535)
Economic Act Order
The ________ is used by a DoD activity (the “requesting agency”) to place an order for supplies or non-personal services with a “performing agency” that could be another DoD activity or a non-DoD Federal activity willing to accept such an order.
MIPR
When the MIPR is used internally with DoD, it could be as a __________ or a ____________ and as a __________ order or an__________ order.
Direct citation; Reimbursable order; Project order; Economic order.
When a MIPR is used between a DoD activity and a non-DoD Federal activity, it could be as a __________ or a ___________ in the form of an economic act order-but not a ___________.
Direct citation; Reimbursable order; Project order.
When a MIPR is used between a DoD activity and a non-DoD Federal activity, could it be as a direct citation or a reimbursable order in the form of a Project order?
No, in an Economic Act order only.
The performing agency awards a contract on behalf of the requesting agency and uses the appropriation fund cite provided by the requesting agency on the MIPR. The order is recorded as an obligation by the requesting agency when it is notified in writing that the performing agency has awarded the contract or when a copy of the contract is received.
Direct Citation
The performing agency accepts funds provided by the MIPR into its own DoD appropriation or business operations (revolving) fund. Funds are normally considered obligated when the performing agency accepts and returns the signed MIPR to the requesting agency. However, unless otherwise provided by law, if the performing agency is not able to provide the ordered goods or services while the funds are “current”, the unused funds should be returned to the requesting agency or they will expire in the possession of the performing agency.
Reimbursable Order
___________ are subject to the same fiscal limitations as the appropriation from which they are funded; therefore, the requesting agency must provide a certification on the order that the funds cited are properly chargeable for the purposes cited in the order.
Economy Act Orders
De-obligation of potentially expiring funds can be an issue. According to the _______, funds must be de-obligated to the extent that the servicing agency has not incurred obligations before the end of the period of availability of the original appropriation cited on the order.
FMR
Funds must be de-obligated by both the __________ and __________ agency to the extend the _________ has not, before the end of availability of the cited appropriation, either provided the ordered goods or services, or entered into an authorized contract with another entity to provide the ordered goods or services.
Requesting; Servicing; Servicing;
- Outstanding fixed-price contracts
- Interest due from government
Contingent Liabilities
Amounts carried on contingent liabilities must be carried as an _____________ until obligation is determined.
outstanding commitment
Amount carried on __________ contract or __________ due from government, must be carried as an outstanding commitment until obligation is determined.
Outstanding fixed-price contract; Interest;
____________ amounts need not to be recorded at the maximum or ceiling prices under the contracts.
Commitment
Commitments should be ___________ estimated to cover sufficiently additional obligations that probably will materialize, based on __________ and __________.
Conservatively; Judgement; Experience.
In determining the amount to be committed, ___________ should be made for the possibilities of downward price revisions and quantity under-runs.
Allowances
___________ liabilities must be supported by __________ detail to facilitate audit.
Contingent; Sufficient.
DoD or military organizations may do work for another agency or organization if:
- Funding is available
- The order is in best interest of the GOV
- The agency or unit filing the order can provide or acquire the ordered goods or services
- Ordered goods or services cannot be provided as conveniently or cheaply by commercial enterprise.
DoD or military organizations may do work for another agency or organization if:
- Funding is available
- The order is in best interest of the GOV
- The agency or unit filing the order can provide or acquire the ordered goods or services
- Ordered goods or services cannot be provided as conveniently or cheaply by commercial enterprise.
Establishes policy, prescribes procedures, and provides oversight for support agreements
USD(A&S)
Represents the DoD, when requested by a DoD Component, in support agreement disputes between a DoD Component and another federal agency or a State, local, or tribal government in the event the DoD Component involved cannot resolve the dispute
Assistant USD(A&S)
Establishes a forum and oversight structure for sharing information, best business practices, and partnering opportunities, and for issue and dispute resolution or assistance in the management of support agreements.
Assistant USD(A&S)
- Establishes financial policy and prescribes guidance related to financial transactions that result from the execution of support agreements and use of G-Invoicing.
- Serves as the DoD liaison to the U.S. Department of the Treasury for coordinating DoD requirements related to G-Invoicing.
USD(C)/CFO
Agreements between entities within the Federal Government.
Intra-Governmental Agreements
Types of intragovernmental agreement
- An intra-agency agreement between two or more entities within a single federal agency. Intra-agency support is executed by a provider and obtained by a receiver in a manner that maximizes the benefit to the DoD.
- An inter-agency agreement between an OSD or DoD Component and one or more non-DoD federal agencies
Agreements are between the DoD and a State, local, or tribal government.
Intergovernmental agreements
Governmental to Non-governmental Agreements
Agreements between an OSD or DoD Component and a non-governmental entity that is a congressionally chartered nonprofit organization pursuant to Title 36, U.S.C. (see DoDI 1000.15 for additional guidance when the non-governmental entity is on the installation).
COST DETERMINATION AND VISIBILITY
OSD or DoD Components providing prepaid or reimbursable support will require that:
- Cost information is quantifiable and provided to all parties
- Inter-service and intra-Governmental support is reimbursable to the extent that provisions of the specified support for a receiver increase the support supplier’s direct costs (incremental direct costs). The performing activity may not make a “profit” on the support provided.
- Costs must be measurable and reasonably attributable to the support received, and must be expressed in units of measure appropriate to the item or type of support provided.
Charges for defense working capital fund (DWCF) support services will be based on?
Volume 11B of DoD 7000.14-R
- Used to document agreements and execute or deliver support with or without reimbursement between any two or more parties.
- Used to document support agreements without an expectation of reimbursement between an OSD or DoD Component and one or more other parties.
- An agreement to which a non-appropriated fund instrumentality is a party.
Memorandum of Agreement (MOA)
- Used to document a mutual understanding between any two or more parties that does not contain an expectation of payment, and under which the parties do not rely on each other to execute or deliver on any responsibilities.
Memorandum of Understanding (MOU)
Support agreements for temporarily assigning federal civil service personnel between federal entities in accordance with Section 3341 of Title 5, U.S.C., cannot be executed via an MOU
Broad areas of recurring inter-service and intra-Governmental support and cooperation that did not require reimbursement should be document with?
An MOA or MOU
Recurring inter-service and intra-Governmental support is documented on?
DD Form 1144 Support Agreement or similar
Costs that can be linked to the specific support provided.
Direct Costs
Support that benefits a receiver without creating additional cost to the supplier (e.g., gate guards, fire protection) may be included in which form?
DD Form 1144, but be identified as “non-reimbursement.”
Provision of a single item or one-time service, sales of Working Capital mission products and services, and intra-Governmental sales specifically directed or authorized by law, may be accomplished on the basis of….
Order or Requisition
No support agreement required
Provision of a single item or one-time service, sales of Working Capital mission products and services, and intra-Governmental sales specifically directed or authorized by law, may be accomplished on the basis of an _______ or ________ without preparing a support agreement.
Order; Requisition.
Suppliers of support associated with a support agreement must, upon request, furnish data used to determine the _________ (“i.e., cost per unit of support) and the quantity of support.
Basis for reimbursement
After an agreement is concluded, an order placed by the organization doing the work _________ the appropriation of the _________ agency or unit.
Obligates; Ordering.
The __________ agency must comply with any restrictions in the appropriations cited by the ordering agency. Reimbursables are not a means to circumvent appropriation restrictions. The ____________ agency must include the estimated amount of reimbursables in its budget submission and must receive an OMB apportionment for that amount.
Performing agency
Budgeting for reimbursable work requires careful management. If the ordering activity, for some unexpected reasons, requires less of the reimbursable work, the __________ agency can experience a significant budgetary impact. If these adjustments occur late in the fiscal year, the potential for violations of _____________ greatly increases.
Performing; Antideficiency Act.
Reimbursable funded activities are required to ___________ on every transaction (i.e., no profit or loss).
Break even
No-cost agreements with city, county, State, and Federal Governments and with non-profit organizations should be executed with ______ and ______.
MOAs; MOUs
Agreements that require the Department to reimburse a non-profit organization or city, county, or State Government (other than National Guard units) must be executed with a _________.
Contract
Agreement with city, county, and State Governments for the use of Government property may be executed through a _________.
A Lease
Costs that will not be included in reimbursement charges, with the exception of those included in stabilized rates charged for Working Capital mission products and services.
Indirect Costs
Suppliers of inter-service an intra-Governmental support are permitted to ________ reimbursement from receivers who use or benefit from available support without appreciably increasing the Supplier’s costs (i.e., revenues would be less than the anticipated expense of billing and disbursing funds).
Waive
Shifting of funds within the same appropriation account?
Reprogramming action
Shifting of funds between two different appropriations account?
Transfer action
Sets the policies for Reprogramming and Transfers
Congress
- Sets an annual maximum dollar amount that can be transferred between appropriations?
- Where can the specified amount be found?
- Congress
- Defense Appropriations Act
- Sets an annual maximum dollar amount that DoD can Reprogram within specific appropriations?
- Where can the specified amount be found?
- Congress
- Within specific appropriation as “Below Threshold Reprogramming” (BTR) actions.
What is a “Realignment of Appropriated Funds”?
A shifting of funds from the purpose for which they were appropriated to another purpose. Reprogramming or Transfers of Funds can be made with proper approvals.
A transfer of funds that occurs between two different appropriations requires __________ transfer authority and requires the prior approval of the ___________ Services and _____________ Committees prior to implementation.
Statutory; Armed; Appropriations.
DoD Components are required to provide Congress with a ____________(DD Form 1416, Report of Programs) that reflects congressionally approved programs as enacted, supplemental funding, rescissions, implemented reprogramming actions, congressionally directed undistributed amounts and transfers, and below-threshold reprogramming actions.
Quarterly Report
Most common type of revolving fund in the Department of Defense
Defense Working Capital Funds (DWCF)
How do DWCF receive their funds?
By charging customers for the goods and services provided; however, the goal of WCFs is to break-even over the long term
DWCF activity must have a __________ signed by the Secretary or Assistant Secretary of Military Department
Charter
Four (4) Criteria for inclusion into the DWCF
- Identification of outputs
- Establishment of cost accounting system
- Identification of customers
- Evaluation of buyer-seller advantages and disadvantages
Goal of Revolving Funds
- Break-even, not-for-profit organizations
- Selling prices established in the budget are stabilized or fixed
- DWCF prices are set or adjusted to bring the Accumulated Operating Result (AOR) to zero over the long term.
How are revenues generated in DWCFs?
From customers buying goods or services
How are obligations incurred in DWCFs?
From funds collected from customers. (used to pay for the acquisition of resources needed to operate the WCF.
In DWCF apportioned by OMB, the ability to incur obligation is limited to the amount of __________ approved for obligation during the budget _________ as amended by unanticipated events during execution.
Authority; Review.
True of False
Although there is no appropriation for day to day operations of the WCFs, an “Apportionment and Reapportionment schedule” is required to be submitted to OMB for approval of the amount of obligation authority needed for operation of the WCF for a fiscal period, usually a full fiscal year.
True
Budgetary resources available for apportionment action include:
- New budget authority (appropriation)
- Available unobligated balances at the beginning of the fiscal period
- Reimbursements and other income (Offsetting collections)
- Recoveries of prior-year obligations
- Restorations
- Anticipated contract authority
Unapportioned appropriations
Funds appropriated, not yet apportioned by OMB
Unallotted apportionments
Funds apportioned, not yet allotted by DoD
Unobligated allotments
Funds allotted by DoD, not yet obligated
Unpaid obligations
Funds obligated, not yet paid
Paid obligations
Funds obligated and paid
Expired appropriations
Portion of the total appropriation no longer available for new obligations
Funds not appropriated by Congress, coming primarily from the sale of goods and services to DoD military and civilian personnel and their family members and are used to support Morale, Welfare, and Recreation (MWR)
Non-Appropriated Funds (NAF)
These funds are managed as separate accounts. although not appropriated by Congress, they are considered GVT funds and are subject to audits. DoD has about 460 NAF in six (6) program groups (MWR is one of the six).
Morale, Welfare, and Recreation
Appropriated vs. Non-Appropriated Support
Category⇒⇒Appropriated⇒⇒NAF
Category A⇒ 100% APF ⇒⇒⇒ 0% NAF
Category B⇒
Category C⇒
What is the approximate support for Categories B and C?
Category A⇒ 100% APF ⇒⇒⇒ 0% NAF
Category B⇒ 65% APF ⇒⇒⇒ 35% NAF
Category C⇒ 0 % APF ⇒⇒⇒ 100% NAF
MWR programs receive ___________ support of various percentages depending on the type of program.
Appropriated Fund (APF)
Category A: Mission Sustaining Programs
Category B: Community Support Programs
Category C: Revenue Generating Programs
MWR types of program
These programs are considered most essential in meeting the organizational objectives of the military services and shall be supported almost entirely with appropriated funds (APF) and no or limited use of NAF where APF are prohibited by law.
Category A - Mission Sustaining Programs
These programs are closely related, in terms of supporting the military mission, to those in Category A. They satisfy the basic physiological and psychological needs of Service members and families, providing, to the extent possible, the community support systems that make DoD installations like home.
Category B - Community Support Programs
Activities in this group have the business capability of generating enough income to cover most of their operating expenses, but lack the ability to sustain themselves based purely o their business activity; consequently, they receive limited APF support.
Category C - Revenue Generating Programs
