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    Can items purchased from a commercial source that can be used without modification (e.g. COTS and non-developmental items) will be funded in either the Procurement or O&M appropriations, as determined by the expense and investment criteria?


    You did a terrific job in researching your question. As you properly stated, the FMR permits the use of Procurement or O&M dollars for commercial products depending upon the criteria for expense vs. investment. Obviously, your $60M exceeds the criteria to use O&M dollars. Traditionally, procurement dollars are used for IT licenses until the system transitions to sustainment, when O&M is the appropriate funding. In your case, it appears your program is in the sustainment phase. Comptroller analysts often prefer to continue to fund efforts with the appropriation that funded the effort in the previous year.

    This tends to preclude questions from those reviewing your budget justification materials.

    If you feel strongly the IT licenses are a sustainment effort and should be funded with O&M, I suggest you collaborate with your local comptroller and with your service comptroller analysts and determine if it is appropriate to fund the effort with O&M. If they concur, you would then include the O&M funding in your next POM input. Once it clears the service comptroller, the OSD/OMB review, and is appropriated by the Congress the effort will be properly funded with O&M dollars.

    You might also consult with your local acquisition legal support office for another view of the circumstances to support your position.

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