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  • Question

    Can we use FY21 funds for the LRIP 2 delta amount? Assuming those quantities can be delivered in a 12 month period, perhaps it's viable? Any FMR references to tie back to.


    Answer

    There is no restriction in the DoD Financial Management Regulation (FMR) that limits obligations of Weapons Procurement, Navy (WPN) to the first year of availability. FMR Volume 2A, Chapter 1 Paragraph 010213 addresses Low Rate Initial Production (LRIP) units and the proper appropriation to fund them based on how the item will be used but there are no specific limitations given on the year of funding that must be used.  The Bona Fide Need rule will be the presiding law.

    The Bona Fide Need rule (U.S. Code Title 31, Section 1502(a) allows that funding be used for goods and services for which needs arise during the period that appropriation is available for obligation (three years for WPN).  Government agencies may not purchase goods or services they do not require. However, they may use appropriated funds to fill actual requirements as specified by the purpose of an appropriation, or for purposes necessary and incident to that appropriation. Because appropriations are generally only available for limited periods of time, it becomes important to understand when an agency actually requires a good or service (31 U.S.C. § 1552). Until that requirement (need) arises, no authorization exists to obligate appropriated funds. Once the need arises, an agency may only obligate appropriated funds that are current at that time 31 U.S.C. § 1502(a).  The three-year availability of funds authorized for Procurement appropriation provides the necessary flexibility for program execution in those circumstances.  Your organization might  place a limitation on the use of the appropriation beyond the first fiscal year.  This is considered more conservative than intended by Congress, however it is within their prerogative to be more restrictive than what is allowed by the U.S. Code. 

    A second issue that you raised was the 12-month delivery period as part of the full funding policy.  There is no law stating that procurement items must be delivered within a 12 month delivery period.  This 12 month delivery period requirement is part of the full funding budgeting policy that applies to all procurement and military construction appropriations within the Department of Defense (DoD).  The full funding policy is required to be followed, however exceptions can be granted by your chain-of-command. Recommend that you check with your Comptroller and Legal Department on local policy.

     

     

     

     

     

     

     

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