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    I am being questioned as to why we can use investment funds, specifically 3011, for these items when the investment threshold is $250K. I have done quite a bit of research, but can't quite put my finger on something specific. Can you tell me why/how we can purchase items (to include in this particular P-doc, fuze, grenade hand, practice at a qty of 18,519 with a unit cost of $6.48). Why are these items considered investment and what allows them to be below the investment threshold?


    Answer

    The pertinent reference is DoDR 7000.14-R (DoD Financial Management Regulation), Volume 2A, Chapter 1 (link: http://comptroller.defense.gov/fmr/02a/02a_01.pdf).  Read section 010201 which starts on page 1-14.  This section provides criteria for determining expense versus investment costs and in turn, guidance for which appropriation type to request for a given effort.  You will see the $250K unit cost threshold for expense versus investment costs is not the only criteria.  For instance, if an item being procured has a unit cost less than the $250K threshold but is subject to centralized item management and asset control, in many cases it is to be treated as an investment and thus budgeted in the appropriate procurement appropriation (see criteria in the decision table on page 1-18).
     
    I suspect this may be the case with the items about which you are asking. This would explain why procurement funds were apparently requested and appropriated for this purpose.  Even if the items about which you are asking where erroneously included in a procurement budget request (i.e., they really met the criteria for expenses cited in the FMR reference), the regulation is essentially "trumped" if procurement funds were ultimately appropriated for that purpose. 

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