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    When does a ACAT program become inactive? We know that program reporting ends when 90% of the funding has been expended and/or 90% of the assets have been delivered, but is that the point when the program becomes inactive? A similar question would be made by substituting "inactive" with "terminated". I have seen arguments that an ACAT is active, and therefore not terminated, until the final asset has been disposed. The Navy provides guidance for determining when a program modification can be made via an ECP or when the modification needs to become its own ACAT (the Navy has ACAT IV and Abbrreviated Acquisition Programs (AAPs) as well). Being able to say the ACAT is active until sometime beyond the "90/90" criteria mentioned abouve would save lots of time and expense.


    Answer

    My understanding of the term "inactive" with regards to reporting "when 90% of the funding has been expended" is derived from the following "USD(AT&L) will consider terminating Selected Acquisition Report (SAR) reporting when 90 percent of expected production deliveries or planned acquisition expenditures have been made, or when the program is no longer considered an ACAT I program in accordance with 10 U.S.C. 2432."  Additionally, there is also a similar cut-offs established for Defense Acquisition Executive Summary (DAES) - reporting is required until Program is 75% delivered or expended, but DAES Unit Cost Reports (UCRs) are still required to be reported until 90% delivered or expended. Your agency may have additional reporting requirements with similar cut-offs.
     
    It is important to note that this termination of reporting requirements may mean that the program is "inactive" with regard to reporting to higher levels of the acquisition chain of command, but it should not imply in any fashion that the program is over or has been "terminated".  The word "terminate" has a much different meaning with regard to contracts and is not intended to mean the same thing in this regard. Generally, a program would NOT be considered inactive until Disposal has been completed (or the funding line has been zeroed out or eliminated).  Although Disposal is the last major effort in the
    Operations & Support phase, Program Managers (PMs) should begin addressing demilitarization and disposal requirements early in the acquisition program to potentially decrease overall system life cycle costs, as well as the costs associated with demilitarization and disposal of the system. Early consideration may lead to effective engineering and design changes that can either extend the life of the program or help to minimize costs and impacts related to demilitarization and disposal.
     
    Normally, ECPs can be incorporated into a contract any time before the end of the period of performance, and if they are approved and incorporated, the requisite funding would need to be identified and added to the associated funding line prior to executing a contract modification.  Additionally, the contract period of performance is the date of the last delivery or the date of some other action as specified in the contract, whichever is later.  The reference to the "90%" rule above would in practical terms mean 90% of the "planned" funding has been expended.  As you have pointed out, each of the Services/Agencies/Activities (US Navy in this case) have their own process and procedures for doing ECPs and a lot of what we would do and could do will depend heavily on the weapon system and the respective cost, timing, and purpose of the ECP.  When an ECP is negotiated, the terms of the contract are very often modified, as necessary, including such things as the price and the delivery schedule, thus affecting the funding and the contract period of performance. There are a number of financial regulations that talk to the type of funding (and thresholds) that can be used for these efforts.
     
    This answer is based on the information provided as we do not have all the facts pertaining to your situation.  Since your email address indicates that you are assigned to a Navy organization, it is strongly recommended that you discuss this issue with your Program Management team, local Navy comptroller, and the responsible contracting agency for specific details and Navy policies to determine the best path forward. 
     

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