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Advance Procurement

ABUS 002

DAU GLOSSARY DEFINITION

Authority provided in an appropriations act to obligate and disburse during a fiscal year before that in which the related end item is procured. The funds are added to the budget authority for the fiscal year and deducted from the budget authority of the succeeding fiscal year. Used in major acquisition programs for advance procurement of components whose long-lead-times require purchase early in order to reduce the overall procurement lead-time of the major end item. Advance procurement of long lead components is an exception to the DoD “full funding” policy and must be part of the President's budget request.

General Information

An alternative option for DoD acquisition programs to utilize when completing production efforts with procurement funding. 

Advance procurement requests for long lead-time items shall be limited to the end items in major procurement appropriations. Long lead-time procurements shall be for components, parts, and material whose lead-times are greater than the life of the appropriation (3-5 years). In some circumstances, Advance Procurement is also warranted when items have significantly longer lead-times than other components, parts, and material of the same end item or when efforts must be funded in an advance procurement timeframe in order to maintain a planned production schedule.

Programs can benefit from using Advance Procurement by protecting the production schedule and maintaining a workforce with critical skills during the production phase. Advance procurement is an exception to procurement's traditional full funding policy in that it must be contained in the program's acquisition strategy, approved by the program's Milestone Decision Authority, and requested as a separate line item within the program's budget exhibits to Congress.  Programs can only execute with Advance Procurement if the request is included within the President's Budget request and funding is appropriated by Congress.

For new development programs, the planned production schedule should be based on a full funding basis without the use of long lead material. Planning the program content this way provides additional flexibility should development delays arise. When advance procurement is part of the program, however, the cost of components, material, parts, and effort budgeted for advance procurement shall be relatively low compared to the remaining portion of the cost of the end item.

Each budget request for advance procurement shall represent, at a minimum, the termination liability associated with the total cost of the long lead-time components, material, parts, and effort for which the advance procurement request is being made. The termination liability should not cover the cost of the end item budgeted in the following fiscal year(s). The full cost of components, material, parts, and effort included in the advance procurement request should be budgeted in the FYDP consistent with full funding procedures. The budget requests will properly debit and credit advance procurement budget requests as defined in Exhibits P-1, P-5, P-10 and P-40 instructions.

Funds appropriated for any fiscal year for advance procurement can be obligated only for the procurement of those long lead items that are necessary in order to meet a planned delivery schedule for complete major end items programmed under the contract to be acquired within procurement funds appropriated for a subsequent fiscal year.