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    Is this an appropriate use of O&M funds?


    Answer

    The answer to this question revolves entirely around what these studies are for.  When determining the correct type of appropriation to use for any task, the reason for the effort will directly lead to the answer.  The Background of this question clearly indicates that the studies have what appear to be two distinct purposes.  We will look at both of the purposes separately.  However, we will start with the second purpose first because there is little gray area involved with it.

    The Background to this question states that the second purpose of these studies is to, “make recommendations to the users concerning better ways to implement these technologies into their operations.”  The DoD Financial Management Regulation 7000.14-R (FMR), Volume 2A, Chapter 1, paragraph 010213, section C.5 has two (2) references with regard to an effort of this nature.

    First, FMR, Volume 2A, Chapter 1, paragraph 010213, section C.5.b says, “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: (3) Testing related to the operation and maintenance of equipment and material acquired for use under appropriations other than RDT&E.”  Since the Background of this question states that these are studies and analysis of deployed technologies and knowledge products, we have made the assumption that they were acquired for use under appropriations other than RDT&E.

    The second FMR reference relevant to the second purpose of these studies can be found at FMR, Volume 2A, Chapter 1, paragraph 010213, section C.5.f.  That section states, “The acquisition of test articles will be financed by O&M or Procurement appropriations (as determined by the Expense and Investment criteria), and personnel and command support will be financed by O&M appropriations for all test and evaluation (T&E) subsequent to acceptance for operational use and T&E to demonstrate the operational employment or develop operational tactics (i.e., subsequent to RDT&E efforts).”  Given these FMR references, it seems evident that the second purpose of these studies should in fact be funded with the O&M appropriation.

    Let us now turn our attention to the first purpose of these studies.  As stated in the question’s Background, the first purpose is to “assess the effectiveness of these new technologies and make recommendations to the RDT&E community concerning areas for future RDT&E expenditures.”  Per the FMR citations given above, it would appear that studies to assess the effectiveness of deployed technologies and knowledge products should be funded with O&M funds.

    We are only left with the question of how to fund studies to “make recommendations to the RDT&E community concerning areas for future RDT&E expenditures.”  FMR, Volume 2A, Chapter 1, paragraph 010213, section B.1.a 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.”  Traditionally, other than for purely theoretical and scientific research projects, the use of RDT&E funding begins following the Materiel Development Decision as defined in the DoD Instruction (DoDI) 5000.02.

     DoDI 5000.02 section 5.d.(1)(a) says, “The Materiel Development Decision is based on a validated initial requirements document (an ICD or equivalent requirements document) and the completion of the Analysis of Alternative (AoA) Study Guidance and the AoA Study Plan.  This decision directs execution of the AoA, and authorizes the DoD Component to conduct the Materiel Solution Analysis Phase.”  Therefore, if the studies referenced in this question are being used to assess operational threats versus capabilities gaps or inform requirements formulation, O&M would be the correct appropriation.  However, if the studies referenced in this question are in support of an AoA within the Materiel Solution Analysis Phase of the Defense Acquisition System (DAS), they would be most appropriately funded with RDT&E.

    Conclusion: Despite the potential need for clarification regarding the effort to “make recommendations to the RDT&E community concerning areas for future RDT&E expenditures,” the most appropriate funding for the studies and analysis referenced in this question appears to be O&M.

    Note: FMR, Volume 2A, Chapter 1, paragraph 010213, section B states, “When after consideration of the following criteria, there is doubt as to the proper assignment of costs between appropriations, the issue should be resolved in favor of using RDT&E funding.”

    Suggestions:  Read DoD Financial Management Regulation 7000.14-R, Volume 2A, Chapter 1, paying particular attention to paragraph 010213.   In addition, it is most strongly recommended that you contact your local comptroller organization, and legal counsel for more information and their policy interpretation of this issue.

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