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  • Question

    Since procurement funding is 3-year funding, can multiple years (FY21, FY22 & FY23) be used to fund a single project execution in FY23?


    Answer

    The Bona Fide Need rule (31 USC, Section 1502) requires appropriated funds to be used only for goods and services for which a need arises during the period of that appropriation's availability for obligation.  As stated in your question, the procurement funding’s period of availability is three years so FY21 funding can be used for a bona fide need of FYs 21, 22, and 23.  This assumes that the project is included in the procurement budget exhibits and congress has authorized and appropriated funding for the project.

    The second issue that comes into play is what is being funded as part of the project.  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.

    The full funding policy has traditionally been viewed as beneficial in terms of making the total cost of DOD weapons and equipment more visible to Congress. Understanding total costs and how previously appropriated funds are used are key components of Congress’s oversight capability. Incremental funding or other nonconforming funding approaches, by spreading the costs of individual weapons or pieces of equipment over several years, could complicate the task of understanding and tracking total costs and the uses of previously appropriated funds, particularly if such approaches are applied to numerous acquisition programs.

    Full funding is often viewed as helping to ensure that DOD officials identify, make investment trade-offs on the basis of, and budget adequately for the full costs of its weapons and equipment. In addition full funding is a source of discipline on DOD program managers that encourages them to execute their programs within cost and within the scope of the budget. 

    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.  The budget documents are prepared by the actual end user of the funds and are 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.  Bottom line you must execute the program in accordance with the budget exhibits that were submitted to justify the program.  An end item cannot be split funded across multiple years unless you have specific authority from Congress to do so.  However other portions of the project could be funded by a different year’s procurement funding.  Without having all the details of your project is is difficult to give a definitive answer.  Recommend that you discuss with your local Comptroller and/or Legal department to ensure compliance with fiscal law.

    Regulations governing the full funding policy are found in Office of Management and Budget (OMB) Circular A-11 and Financial Management Regulations (FMR) Volume 2A Chapter 1 Section 010202. 

     

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