What guidance/regulation is available to reference on correct appropriation pre/during/post Developmental/Operational Test for a weapon system with Spiral Acquisition development not fully receiving Operational Test acceptance for that Spiral increment?
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.
The use of RDT&E is addressed in FMR, Volume 2A, Chapter 1, Paragraph 010213 where Section B.1.a specifically states, “RDT&E will finance research, development, test and evaluation efforts performed by contractors and government installations, including procurement of end items, weapons, equipment, components, materials and services required for development of equipment, material, or computer application software; its Development Test and Evaluation (DT&E); and its Operational Test and Evaluation (OT&E) as provided for in paragraph C.5. (Test Articles and Test Support) below.” Paragraph 010213, Section C.5.a says, “As a general rule, the procurement of test articles and test support, including "Special Support" costs and "Command Support" costs (see Glossary), for all RDT&E tests preceding and leading to acceptance for operational use will be RDT&E funded.” Finally, with regard to the FMR, Paragraph 010213, Section C.5.b states, “Conduct of testing that is not associated with RDT&E, or testing conducted after fielding or acceptance for operational use, such as the examples noted below, will be financed in the Procurement or O&M appropriations, as appropriate.”
Since it appears that this is an Air Force (AF) program, I went to see what the AF regulations had to say on the subject. Air Force Instruction (AFI) 65-601v1, Chapter 4, Section 220.127.116.11 states, “Use RDT&E funds for major upgrades increasing performance envelope, development activities bringing a program to its objective system, COTS requiring engineer design, integration, and T&E to meet objective performance.” Chapter 14, Section 18.104.22.168 says, “Use RDT&E to fund for development (preproduction) prototypes for Developmental Test and Evaluation (DT&E) and operational testing that support or result in full-rate production (FRP) or acceptance for operational use (i.e., fielding). Note: The types of operational testing and all derivatives are defined in AFI 99-103.” And finally, Chapter 14, Section 22.214.171.124 states, “Use RDT&E for items requiring engineering, design, integration, test, or evaluation before FRP, fielding, or acceptance for operational use.”
There seems to be a common theme that runs through all of these references. RDT&E (3600) is to be used before Full Rate Production (FRP), fielding, or acceptance for operational use and O&M (3400) is to be used after fielding or acceptance for operational use.
With respect to OT&E and what constitutes acceptance for operational use, the Defense Acquisition Guidebook (DAG), which can quickly be found at https://www.dau.mil, addresses this at Chapter 8. Specifically with regards to OT&E for software, detailed information can be found in the DAG Chapter 8-3.17 and in Department of Defense Instruction (DoDI) 5000.02, Enclosure 5, Section 7.
Conclusion: With regard to your specific situation, there really is only one question: Has Spiral 1.0 been officially fielded, or acceptance for operational use? If the answer is yes, then O&M (3400) funds would be appropriate to use to pay for and resolve Spiral 1.0 OT DRs. If, on the other hand, Spiral 1.0 has NOT been officially fielded, or acceptance for operational use, then O&M (3400) funds would NOT be appropriate to use to pay for and resolve its OT DRs. RDT&E (3600) funding would be.
Suggestions: First, read FMR, Volume 2A, Chapter 1, paying particular attention to Paragraph 010213, Sections B.1, and C.5. Second, read AFI65-601v1, with emphasis on Chapters 4 and 14. Third, read DoDI 5000.02 Enclosures 1 and 5, and the DAG CH 8-3.17. 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.