The Army has ordered 30 rifles using the RDTE appropriation to conduct testing. However, before the 30 rifles have been received, the Army wants to procure another 116 rifles to do a "user evaluation" of the rifle, and they want to use Procurement (WTCV) funds. We believe the reason they want to use Procurement funds is that's the only type of funds they have available at the moment.
Many of us in the business office believe that the proper appropriation to procure these rifles is the RDTE appropriation, because a "user evaluation" is a testing activity, plus, the system has never been type classified. However, Army G-8 is sending us $ 1 M in Procurement (WTCV) funds and expects us to use those funds to buy 116 rifles.
The PM is siding with G-8, and they claim the reason this is "OK" is that after the user evaluation, the rifles are expected to be "reset" and then fielded. However, many of us in the business office are concerned this action may violate fiscal law. Can you point us to the section of law or regulation that would shed light on this subject?
Thank you in advance for your assistance.
The criteria for when to use a specific type of appropriation can be found in DoD Financial Management Regulation 7000.14-R (FMR), Volume 2A, Chapter 1. In that reference, there are discussions on the uses of RDT&E, Procurement, and O&M funding.
Open full Question Details
With regard to your specific situation, a couple of thoughts come to mind, to which you will have to determine the answers:
1.) Since Army DCS G-8 has stated that the interim solution for SDM-R “will be the H&K G28E,” Is that enough for the PM to claim that the weapon system has been Type Classified?
2.) While “user evaluation” is certainly a type of testing activity, does it rise to the level of Operational Test & Evaluation (OT&E) that would require the use of RDT&E funds to complete? Will this “user evaluation” be done by an independent operational test organization, which would require the use of RDT&E funds (as outlined in FMR, Volume 2A, Chapter 1, Paragraph 010213, Section 2.b)? Or, will the “user evaluation” simply be completed by placing the weapon into the hands of the soldiers who would be expected to use it, allowing them to carry it, fire it at the range, and maintain it, and then ask them for their informal feedback on its performance. If this is the case, RDT&E funds would not be necessary for this testing.
3.) Is the H&K G28E considered a Non-Developmental Item (NDI)? FMR, Volume 2A, Chapter 1, Paragraph 010209 states, “Items purchased directly from a commercial source that can be utilized without alteration or modification are classified as COTS or NDI. All COTS and NDIs, including the first article and associated first article acceptance testing should be funded in the Procurement or O&M appropriations, as determined by the Expense and Investment criteria. If an end item requires design and development in order to accept the COTS or NDI, or if Operational Test & Evaluation (OT&E) is required to determine military suitability and effectiveness; or if Live Fire Test & Evaluation (LFT&E) is required to determine whether the COT/NDI possesses survivability and lethality characteristics needed by operational forces, then the entire effort is not COTS or NDI, and funding for that effort should be budgeted in RDT&E. If a COTS or NDI is required for RDT&E test purposes, the cost is funded in RDT&E.” The assumption can safely be made that OT&E and/or LFT&E are required, which is why the first thirty (30) rifles were purchased with RDT&E funds. However, the follow-on 116 rifles are hopefully not required for those OT&E/LFT&E test efforts and thus would be purchased with Procurement funds.
Conclusion: Depending on what you determine with regards to the above thoughts, it is entirely possible to justify the use of Procurement funds for the additional 116 rifles. While it would certainly add programmatic risk, there is nothing in DoD Instruction 5000.02 that prohibits development and procurement activities from being done in parallel, particularly in an attempt to maintain an aggressive schedule. However, due to the additional risk, that parallel path should be included in the program office’s Acquisition Strategy documentation and approved by higher authority. Regardless of which appropriation is considered appropriate under the given circumstances, the program office must provide specific justification in the budget request documentation (P-Forms or R-Forms) prepared for the POM/BES submission to OSD and the subsequent President’s Budget submission to Congress.
Suggestions: First, read FMR, Volume 2A, Chapter 1, paying particular attention to Paragraph 010209 and Paragraph 010213, Sections B.1.a, and C.5. Second, conduct some research to determine if the Army has a financial regulation that is more prohibitive than the FMR and would disallow the use of Procurement funds in a situation such as yours. Finally, we most strongly recommend that you contact your local comptroller organization, and legal counsel, for more information and their policy interpretation of this issue.