DoD 7000.14 -R Financial Management Regulation Volume 11A ...

DoD 7000.14-R

Financial Management Regulation

Volume 11A, Chapter 2 * May 2021

VOLUME 11A, CHAPTER 2: "PROJECT ORDERS"

SUMMARY OF MAJOR CHANGES

Changes are identified in this table and also denoted by blue font.

Substantive revisions are denoted by an (*) symbol preceding the section, paragraph, table, or figure that includes the revision.

Unless otherwise noted, chapters referenced are contained in this volume.

Hyperlinks are denoted by bold, italic, blue and underlined font.

The previous version dated January 2018 is archived.

PARAGRAPH

1.2 (020102)

2.0 (0202)

3.1 (020301)

4.1 (020401)

6.3 (020603)

EXPLANATION OF CHANGE/REVISION Revised the Authoritative Guidance paragraph to list additional sources. Updated the definitions to provide clarification.

Updated to reflect current U.S. Department of the Treasury references and deadlines. Revised to provide more context.

Revised to clarify the process.

PURPOSE Revision Revision Revision Revision Revision

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Financial Management Regulation Table of Contents

Volume 11A, Chapter 2 * May 2021

VOLUME 11A, CHAPTER 2: "PROJECT ORDERS" ................................................................ 1

1.0 GENERAL (0201) ............................................................................................................. 4

1.1

Purpose (020101) ................................................................................................. 4

*1.2

Authoritative Guidance (020102) ........................................................................ 4

*2.0 DEFINITIONS (0202) ................................................................................................... 4

2.1

Project Order (020201) ........................................................................................ 4

2.2

DoD-owned Establishment (020202)................................................................... 5

2.3

Contractual Relationship and Commercial Contracts (020203) .......................... 5

2.4

Allotment (020204) .............................................................................................. 5

2.5

Approved Projects (020205) ................................................................................ 5

3.0 GENERAL POLICY (0203) ............................................................................................. 5

*3.1

Treasury Guidance on Intra-Governmental Transactions (020301) .................... 5

3.2

Recordable Obligation (020302).......................................................................... 6

3.3

Project Order Forms (020303) ............................................................................. 6

3.4

Work Description (020304) ................................................................................. 7

3.5

Use of Standard Line of Accounting (020305) .................................................... 7

4.0 ADVANCE PLANNING (0204)....................................................................................... 7

*4.1

Work Estimates to Performing DoD Establishments (020401) ........................... 7

4.2

Cost Estimates (020402) ...................................................................................... 7

5.0 CONDITIONS GOVERNING ISSUANCE AND ACCEPTANCE OF PROJECT ORDERS (0205).......................................................................................................................... 8

5.1

Contractual Relationship (020501) ...................................................................... 8

5.2

Under the Same Activity Commander (020502) ................................................. 8

5.3

Expiration (020503) ............................................................................................. 8

5.4

DoD-Owned Establishment (020504).................................................................. 8

5.5

Payments (020505)............................................................................................... 8

5.6

Specific, Definite, and Certain (020506) ............................................................. 8

5.7

Certification of Availability for Purpose (020507) .............................................. 9

5.8

Bona Fide Need (020508) .................................................................................... 9

5.9

"Entire/Non-Severable" Versus "Severable" (020509) ....................................... 9

5.10

Commencement of Work (020510) ................................................................... 11

5.11

Contingent Event Prohibition (020511) ............................................................. 11

5.12

Lawful Purpose (020512)................................................................................... 11

5.13

Authorized Purpose (020513) ............................................................................ 11

5.14

Project Order Modifications (020514) ............................................................... 11

5.15

Ability to Perform (020515)............................................................................... 12

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Financial Management Regulation Table of Contents (Continued)

Volume 11A, Chapter 2 * May 2021

5.16

Subsidiary Ordering (020516)............................................................................ 13

5.17

Project Order Default (020517) ......................................................................... 13

5.18

Project Order Financing (020518) ..................................................................... 14

5.19

Direct-Cite Prohibition (020519) ....................................................................... 14

5.20

Reimbursement of Costs Incurred in Performance of a Project Order (020520)14

6.0 CONDITIONS GOVERNING PERFORMANCE OF PROJECT ORDERS (0206) ..... 14

6.1

Timeliness (020601)........................................................................................... 14

6.2

Notification of Delivery Schedule (020602) ...................................................... 15

*6.3

Summary of Costs (020603) .............................................................................. 15

6.4

Expiration Dates (020604) ................................................................................. 15

7.0 REIMBURSEMENTS TO PERFORMING DOD-OWNED ESTABLISHMENTS (0207) ........................................................................................................15

7.1

Reimbursement (020701)................................................................................... 15

7.2

Fixed Price Project Orders (020702).................................................................. 15

7.3

Cost-Reimbursement Project Orders (020703) .................................................. 16

7.4

Unfunded Costs (020704) .................................................................................. 16

7.5

Working Capital Fund (020705) ........................................................................ 17

7.6

Non-Working Capital Fund (020706) ................................................................ 17

7.7

Reimbursable Costs (020707) ............................................................................ 17

7.8

Termination Costs (020708) .............................................................................. 18

7.9

Billing (020709) ................................................................................................. 18

8.0 ACCOUNTING FOR COST OF PERFORMANCE (0208) .......................................... 18

8.1

Administration (020801) .................................................................................... 18

8.2

Working Capital Fund (020802) ........................................................................ 18

8.3

Obligation Authority (020803) .......................................................................... 18

8.4

Costs Accounts (020804) ................................................................................... 19

8.5

Billings (020805) ............................................................................................... 19

9.0 EXEMPTIONS (0209) .................................................................................................... 19

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Financial Management Regulation CHAPTER 2

Volume 11A, Chapter 2 * May 2021

PROJECT ORDERS

1.0 GENERAL (0201)

1.1 Purpose (020101)

This chapter prescribes the financial management guidance and policy involving project orders issued pursuant to the authority in Title 41, United States Code, section 6307 (41 U.S.C. ? 6307). The United States Coast Guard (USCG) has similar project order authority contained in 14 U.S.C. ? 712. Chapter 1 provides the overall guidance and discussion of general reimbursement procedures and related supporting documentation.

*1.2 Authoritative Guidance (020102)

The following accounting policy and related requirements prescribed by this chapter are in accordance with the applicable provisions of:

1.2.1. 41 U.S.C. ? 6307, Contracts with Federal Government-owned establishments and availability of appropriations

1.2.2. 14 U.S.C. ? 712, Contracts with Government-owned establishments for work and material

1.2.3. 31 U.S.C. ?? 1501-1502, and 31 U.S.C. ?? 1535-1536.

1.2.4. Government Accountability Office (GAO) Red Book, Volume 2, Chapter 7, section B.1, Principles of Federal Appropriations Law

1.2.5. U.S. Department of the Treasury (Treasury) Financial Manual, Volume 1, Part 2, Chapter 4700 (1-TFM 2-4700), Federal Entity Reporting Requirements for the Financial Report of the United States Government

*2.0 DEFINITIONS (0202)

2.1 Project Order (020201)

41 U.S.C. ? 6307 provides the Department of Defense (DoD) with the authority to place an order or contract for work, material, or the manufacture of material pertaining to an approved project from Federal Government-owned and operated activities. USCG has similar project order authority contained in 14 U.S.C. ? 712 to accept orders from, and enter into reimbursable agreements with, establishments, agencies, and departments of the DoD.

These Project Orders must be for "non-severable" work or service, which are separate and distinct from the Economy Act Orders discussed in Chapter 3. When placed with, and accepted

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by a separately managed DoD-owned establishment or the USCG, the project order serves to obligate an appropriation(s) in the same manner as an order or contract with a commercial enterprise. The appropriations related to project orders remain available to pay the obligation to a DoD-owned establishment or the USCG just as appropriations remain available to pay an obligation to a commercial manufacturer or private contractor.

2.2 DoD-owned Establishment (020202)

A "DoD-owned establishment" for the purpose of this chapter is any DoD-owned and operated activity (that is, not contractor owned or operated). Such activities include working capital fund activities; other revolving fund activities; and those appropriated fund activities engaged in reimbursable operations that reasonably are not severable into fiscal year segments and where such operations can be forecasted with reasonable accuracy. Examples of such activities include equipment overhaul or maintenance shops, manufacturing or processing plants or shops, research-and-development laboratories, computer software design activities, testing facilities, proving grounds owned and operated by the Department, and engineering and construction activities.

2.3 Contractual Relationship and Commercial Contracts (020203)

Terms such as "contractual relationship," and "commercial contracts," are used to indicate the close relationship between project orders and commercial contracts in the particular circumstances involved. The use of these and similar terms do not subject project orders to the provisions of the Federal Acquisition Regulation, project order agreement, or responsibilities (legal or otherwise) not provided for in this chapter.

2.4 Allotment (020204)

Per Office of Management and Budget Circular A-11, allotments are subdivisions of apportionments that are made by the heads of agencies to incur obligations within a prescribed amount. For the purposes of this chapter, subdivision includes the approved operating budgets for the operation of the Military Departments.

2.5 Approved Projects (020205)

As interpreted by GAO, the term "approved projects" simply refers to projects approved by officials having legal authority to do so.

3.0 GENERAL POLICY (0203)

*3.1 Treasury Guidance on Intra-Governmental Transactions (020301)

3.1.1. Section 4708, "Intra-governmental Quarterly and Year-end Requirements," of the 1-TFM 2-4700 discusses the requirements necessary to properly report intragovernmental transactions resulting from business activities (i.e., buy/sell transactions) between two federal government entities, called trading partners. It further references the Appendix 5, "Overall

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