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  • Question

    The base had a requirement for a piece of equipment (range retrieval system) over $250 k which included the equipment and installation. HQ determined that O&M funds could not be used for this because it is a "system" requiring different funding. I'm being asked to purchase only the equipment for under $250k with FY-20 funds and then purchase the installation services next FY. To me, this is splitting a requirement to get around a threshold and possibly violates the bona fide need rule since we'd have a piece of equipment on base that could not be used until the install service is paid for at some unknown point in the future.


    Answer

    The full funding policy is a federal budgeting rule imposed on the Department of Defense (DOD) by Congress in the 1950s that requires the entire procurement cost of a weapon or piece of military equipment to be funded in the year in which the item is procured.  The policy relates to Congress’s power of the purse and its responsibility for conducting oversight of DOD programs. Support for the policy has been periodically reaffirmed over the years by Congress, the Government Accountability Office, and DOD.

    Full Funding of Procurement Programs

    A. General. A budgeting rule that requires the total estimated cost of a military useable end item, be funded in the fiscal year in which the item is procured. Under the full funding policy, the entire procurement cost of a weapon or piece of military equipment is to be funded in the year in which the item is budgeted. An end item budgeted in a fiscal year cannot depend upon a future years funding to complete the procurement. Regulations governing the full funding policy are found in Office of Management and Budget (OMB) Circular A-11 and DoD Directive 7000.14-R Volume 2A Chapter 1 Section 010202

    The full funding policy is intended to prevent the use of incremental funding, under which the cost of a weapon system is divided into two or more annual portions or increments. Thus, full funding provides disciplined approach for program managers to execute their programs within cost and available funding.

    Under the full funding policy, the entire procurement cost of a weapon or piece of military equipment is to be funded in the year in which the item is budgeted. For programs that are not considered major platforms, the program justification and quantities are to be included in all P-series exhibits (e.g., P-40, P-5, P-5a, etc.).  The budget documents are prepared by the actual end user of the funds and is filtered through agency command channels until it is ultimately reviewed by the Office of Management and Budget and submitted by the President as part of the federal government’s overall budget request. These justification documents contain a description of the proposed purpose for the requested appropriations and the associated quantities that will be procured. Unless otherwise prohibited, an agency may reasonably assume that appropriations are available for the specific requested purpose that was shown in the budget exhibits.  In some instances, installation costs can be split from the funding of the end item based on the lead time for the item and the platform on which the item is being installed.  The budget exhibits must reflect that installation costs will be funded separately.  If your program has not historically funded the installation in a separate year, you cannot choose to do so for the convenience of the program or to get the cost below the $250K investment threshold.

    Bottom line you must execute the program in accordance with the budget exhibits that were submitted to justify the program.  Installation cannot be split our from the the end item if your budget doesn’t reflect that acquisition approach unless you have specific authority from Congress to do so.  

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