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    Can the base year of technical support and maintenance on a contract be funded with procurement funds? Does the following statement apply or is there another way of looking at this? DoD 7000.14-R Volume 2A "When costs generally considered as expenses are included in the production or construction of an investment item, they shall be classified as investment costs."


    This response is based on the information provided.  We strongly suggest you discuss with your contracting team, funds manager/certifier and/or legal department as appropriate.  

    The first place to analyze is the budget exhibits for this particular effort. In the Procurement budget exhibits, did you include the support, repair and maintenance for the initial deployment?  Remember that Congress appropriates funds based on the budget exhibits with the expectation we will fund tasks with those appropriations.  One point of reference is the Financial Management Regulation (FMR) 7000.14-R in Volume 2A Chapter 1 states " Procurement appropriations: Acquiring and deploying a complete system with a cost of $250,000 or more is an investment and should be budgeted in a Procurement appropriation. Complete system cost is the aggregate cost of all components (e.g., equipment, integration, engineering support and software) that are part of, and function together, as a system to meet an approved documented requirement."  The interpretation for most programs would be the first year you could fund the support, repair and maintenance of this system but then the succeeding years you would need to budget and fund in the Operations and Maintenance appropriation.


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