Appropriated Funds to Support Contracts

To execute an acquisition program, budget authority provided by Congress is needed in order to incur obligations and make payments. Budget authority is most commonly provided by an appropriations act, in which Congress specifies the purpose(s) for which each particular appropriation may be used as well as the amount of budget authority provided under each appropriation. DoD receives many appropriations, most of which can be grouped into the five major categories: Research, Development, Test and Evaluation (RDT&E); Procurement; Operation and Maintenance (O&M); Military Personnel (MILPERS); and Military Construction (MILCON). Volume 2A, Chapter 1, of the DoD Financial Management Regulation [DoD 7000.14-R (FMR)] provides guidance as to the proper use of these appropriations categories to finance acquisition program efforts.

Appropriation categories may be considered broad, generic groupings or “types” of federal government funds. Appropriation categories commonly used by acquisition programs are listed below:

• Research, Development, Test and Evaluation (RDT&E) appropriations fund the efforts performed by contractors and government activities required for the Research and Development (R&D) of equipment, material, computer application software, and its Test and Evaluation (T&E) to include Initial Operational Test and Evaluation (IOT&E) and Live Fire Test and Evaluation (LFT&E). RDT&E also funds the operation of dedicated R&D installations activities for the conduct of R&D programs.
• Procurement appropriations fund those acquisition programs that have been approved for production (to include Low Rate Initial Production (LRIP) of acquisition objective quantities), and all costs integral and necessary to deliver a useful end item intended for operational use or inventory upon delivery.
• Operation and Maintenance (O&M) appropriations fund expenses such as civilian salaries, travel, minor construction projects, operating military forces, training and education, depot maintenance, stock funds, and base operations support.
• Military Personnel (MILPERS) appropriations fund costs of salaries and other compensation for active and retired military personnel and reserve forces based on end strength.
• Military Construction (MILCON) appropriations fund major projects such as bases, schools, missile storage facilities, maintenance facilities, medical/dental clinics, libraries, and military family housing.

While grouping appropriation funds into broad categories make it convenient for general discussion purposes such as linking a specific budgeting policy to each category, a more definitive breakout of federal government funds is that of appropriation account or expenditure account. Federal agencies submit their budget requests to Congress – and Congress appropriates funding in the annual appropriation acts – by the more specific appropriation expenditure account terminology. There are hundreds of individual appropriation expenditure accounts associated with DoD. The Financial Management Service of Department of Treasury is responsible for maintaining the listing of all current appropriation expenditure accounts of the federal government. This listing is published in the Federal Account Symbols and Titles (FAST) book, which may be viewed at http://www.fms.treas.gov/fastbook.

Table 1 lists the four-digit codes for DoD's most commonly used appropriation expenditure accounts. Note that each Military Department (and DoD Wide) also has a “Treasury Index Code,” which is a two-digit code (21 for Army; 17 for Navy; 57 for Air Force; and 97 for Defense Wide) to give greater specificity to the identifying code for an appropriation account.