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  • Question

    Can we use 3020 to fund a project that we use 3400 for the desing? if not can you reference the page on the AF Reg.


    Answer

    The FMR Volume 2A, chapter 1 provides the basic guidance.  If you are buying an investment item as described below, then procurement funding is appropriate.  If you are buying an expense item, then O&M is appropriate. RDT&E can be use for both expenses and investments.  So it depends on to purpose the 3020 funds.  See the definitions below from
    the FMR and refer to that chapter for further definition.  Also, recommend you consult with your local comptroller or funds certifying official for their guidance.
     
    010201. Criteria for Determining Expense and Investment Costs B. Basic Distinctions Between Expense and Investment Costs. The criteria for cost definitions consider the intrinsic or innate qualities of the item such as durability in the case of an investment cost or consumability in the case of an operating cost and the conditional circumstances under which an item is used or the way it is managed. In all cases where the definitions appear to conflict, the conditional circumstances will prevail. The following guidance is provided to determine whether a cost is either an expense or an investment.  All costs are classified as either an expense or an investment.

    1. Expenses are the costs incurred to operate and maintain the organization, such as personal services, supplies, and utilities.
    2. Investments are the costs that result in the acquisition of, or an addition to, end items. These costs benefit future periods and generally are of a long-term character such as real property and personal property.
     
    C. Policy for Expense and Investment Costs

    3. Costs budgeted in the Operation and Maintenance (O&M) and Military
    Personnel appropriations are considered expenses. Costs budgeted in the Procurement and Military Construction appropriations are considered investments. Costs budgeted in the Research, Development, Test and Evaluation (RDT&E), Base Realignment and Closure (BRAC), and Family Housing appropriations include both expenses and investments.
     
    2. Investments. Investments are costs to acquire capital assets such as real property and equipment. The following criteria shall be used to determine those costs to be classified as investments:
     

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