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  • Question

    Can you start using operations and mainenance to pay PMO civilian salaires after a completeion of a limited fielding? Where can I reference the milestones needed to move from RDTE to O&M for civilian salaries?


    Answer

    The DoD 7000.14-R Financial Management Regulation Volume 2A, Chapter 1, is your guide and provides the following:
    0102 FUNDING POLICIES
    010201. Criteria for Determining Expense and Investment Costs
     
    B. Basic Distinctions Between Expense and Investment Costs. The criteria for cost definitions consider the intrinsic or innate qualities of the item such as durability in the case of an investment cost or consumability in the case of an operating cost and the conditional circumstances under which an item is used or the way it is managed. In all cases where the definitions appear to conflict, the conditional circumstances will prevail. The following guidance is provided to determine whether a cost is either an expense or an investment. All costs are classified as either an expense or an investment.
    1. Expenses are the costs incurred to operate and maintain the organization, such as personal services, supplies, and utilities.
    2. Investments are the costs that result in the acquisition of, or an addition to, end items. These costs benefit future periods and generally are of a long-term character such as real property and personal property.
    C. Policy for Expense and Investment Costs
    1. DoD policy requires cost definition criteria that can be used in determining the content of the programs and activities that comprise the Defense budget. The primary reasons for these distinctions are to allow for more informed resource allocation decisions and to establish criteria for determining which costs are appropriate to the various defense appropriations.
    2. The cost definition criteria contained in this policy are only applicable to the determination of the appropriation to be used for budgeting and execution. Cost definitions for accounting purposes are contained in Volume 1.
    3. Costs budgeted in the Operation and Maintenance (O&M) and Military Personnel appropriations are considered expenses. Costs budgeted in the Procurement and Military Construction appropriations are considered investments. Costs budgeted in the Research, Development, Test and Evaluation (RDT&E), Base Realignment and Closure (BRAC), and Family Housing appropriations include both expenses and investments. Definitions for costs within the Defense Working Capital Funds are provided in Chapter 9 and in Section 010214.
    D. Procedures for Determining Expenses Versus Investments. The following criteria will be used to distinguish those types of costs to be classified as expenses from those to be classified as investments for budgeting purposes:
    1. Expenses. Expenses are costs of resources consumed in operating and maintaining the Department of Defense. When costs generally considered as expenses are included in the production or construction of an investment item, they shall be classified as investment costs. Military personnel costs are an exception to this rule. The following guidelines shall be used to determine expense costs:
    a. Labor of civilian, military, or contractor personnel.
    3. Conditional Cases
    j. The cost of civilian personnel compensation and other direct costs (i.e., travel, office equipment leasing, maintenance, printing and reproduction) incurred in support of procurement and/or production programs by departmental headquarters staff, contracting offices, contract audit offices, system project offices, and acquisition managers are expenses.
     
    Para C3 above states that RDT&E funding may be used for both expenses and investments.  Para D1a states civilian labor is considered to be an expense.  In your case, you can continue to fund civilian personnel with RDT&E if their efforts are directed towards RDTE work.  Civilian personnel costs, not going towards a RDT&E or Procurement effort are properly funded with O&M. 

    Submit your budget justification materials using O&M funding.  If the budget review process at your headquarters, OSD/OMB, or in Congress does not alter the appropriation selection, O&M funds will be appropriated for your efforts. 

    I would consult with your service budget POC to ensure he/she is in agreement with your PMO position.


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