Can you use 3600 funding to procure the development of a new/significantly modified training course?
These questions that ask "Can I use xxx funds for XXX effort" are always tough to answer, based on the amount of information provided. Sometimes "it depends". If legal is involved then they may have a better perspective since they are closer to appropriation law than contracting officers. After talking to a fnancial management prof, it appears O&M (3400) would have likely been the most proper appropriation to use here (given that the COTS software was initially funded with O&M and the fact that it is a training course (and training is generally most properly O&M funded)).
Now we cant state with certainty that the use of RDTE (3600) funds were inappropriate or wrong here. The following would be the likely reason why RDTE could have been used:
The most applicable policy on this question is likely the "Product Improvement Funding Policy", which is outlined officially in the DoD Financial Management Regulations (FMR), Volume 2A, Chapter 1, 010212 C. 7:
If the modification "Increases Performance", one could potentially justify the use of RDTE (3600). The tricky thing will be if O&M (3400) was used to purchase the initial COTS product that will be modified, then legal might balk at the use of RDTE funds for the modification. One factor with anything software related is that because of the inherent ambiguity between what effort is maintenance (O&M) vs what effort is an enhancement (RDTE), some services and commands have blanket policies to always use certain appropriations to keep things consistent. Another factor here is whether these particular RDTE funds were appropriated by Congress to cover this "procurement of the development of a new/significantly modified training course". If they were provided that way by Congress, then the command is certainly justified in using those RDTE (3600) funds for this effort.
So to summarize in a nutshell, if it's for training, then O&M is appropriate....but if the funds for the original buy were appropriated as RDTE, then they would be justified to continue using 3600 funds for subsequent purchases.