DoD Financial Management Regulation Volume 2A, Chapter 1 ... - AcqNotes

DoD Financial Management Regulation

Volume 2A, Chapter 1

+ December 2005

SUMMARY OF MAJOR CHANGES TO

DOD 7000.14-R, VOLUME 2A, CHAPTER 1

¡°GENERAL INFORMATION¡±

Substantive revisions are denoted by a ? preceding the section, paragraph, table

or figure that includes the revision

PARAGRAPH

010212.B.5

EXPLANATION OF CHANGE/REVISION

PURPOSE

Correction to reflect the Department¡¯s current

capitalization threshold for software, which is

currently $100,000.

Correction

DoD Financial Management Regulation

Volume 2A, Chapter 1

+June 2004

CHAPTER 1

GENERAL INFORMATION

Table of Contents

GENERAL POLICIES ...............................................................................................................................1

0101

010101

Purpose ..................................................................................................................................................1

010102

Organization ..........................................................................................................................................1

010103

Changes to Volume 2.............................................................................................................................1

010104

Reports Control Symbol ........................................................................................................................1

010105

Requests for Exceptions to OMB Circular A-11 ...................................................................................1

010106

Proposed Changes in Budget Structure and Appropriation Language ..................................................2

010107

Budget Terminology/Definitions ...........................................................................................................2

010108

Security Classifications..........................................................................................................................9

010109

Budget and Performance Metrics Integration ........................................................................................9

0102

FUNDING POLICIES ..............................................................................................................................11

010201

Criteria for Determining Expense and Investment Costs.....................................................................11

010202

Full Funding of Procurement Programs...............................................................................................14

010203

Multiyear Procurement. .......................................................................................................................16

010204

Buy-to-Budget for Acquisition of End Items ........................................................................................18

010205

Transportation......................................................................................................................................19

010206

Engineering Change Orders.................................................................................................................20

010207

Factory Training ..................................................................................................................................20

010208

Interim Contractor Support..................................................................................................................20

010209

Commercial Off-the-Shelf (COTS) and Non-Developmental Item (NDI) Procurement.....................20

010210

Spares and Repair Parts .......................................................................................................................20

010211

Direct and Reimbursable Budget Plans. ..............................................................................................21

010212

Budgeting for Information Technology and Automated Information Systems ...................................22

010213

Research, Development, Test and Evaluation (RDT&E) - Definitions and Criteria ...........................23

010214

RDT&E - Incremental Programming and Budgeting Basis.................................................................31

010215

Defense Working Capital Funds - Operating Budget ..........................................................................32

010216

Defense Working Capital Funds - Mobilization/Surge Costs..............................................................32

010217

Defense Working Capital Funds - War Reserve Materiel ...................................................................33

010218

Defense Working Capital Funds - Military Personnel Costs...............................................................33

010219

Defense Working Capital Funds - Full Recovery of Costs/Setting Prices...........................................33

010220

Defense Working Capital Funds - Capital Budgeting .........................................................................35

010221

Defense Working Capital Funds - Base Support .................................................................................35

010222

Defense Working Capital Funds - Dual Funded Organizations ..........................................................36

010223

Defense Working Capital Funds - Customer Mandated Schedule ......................................................36

010224

Glossary of Terms ¨C Procurement .......................................................................................................37

010225

Glossary of Terms ¨C RDT&E ..............................................................................................................40

0103

PROGRAM AND BUDGET REVIEW SUBMISSION .........................................................................42

010301

General.................................................................................................................................................42

010302

Distribution ..........................................................................................................................................44

010303

Preparation of the Biennial Budget Estimates .....................................................................................53

010304

Second Year of the Department¡¯s Two-year Budget Review Cycle - Budget Material........................55

010305

Budget Estimates Summaries and Transmittal.....................................................................................56

010306

Supplemental Appropriations Submissions .........................................................................................57

010307

Additional Budget Submissions (ABS) ...............................................................................................57

010308

Major Budget Issues (MBIs)................................................................................................................58

010309

Budget Review Procedures..................................................................................................................58

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DoD Financial Management Regulation

Volume 2A, Chapter 1

+June 2004

CHAPTER 1

GENERAL INFORMATION

Table of Contents

0104

CONGRESSIONAL JUSTIFICATION/PRESENTATION .................................................................61

010401

General.................................................................................................................................................61

010402

Supplemental and Amended Appropriations Requests........................................................................64

010403

Distribution/Internet Posting of Budget Material ................................................................................65

010404

Witness Statements ..............................................................................................................................93

010405

Transcript Processing...........................................................................................................................94

010406

Appeal Process on Congressional Actions ..........................................................................................95

0105

BUDGET AUTOMATION REQUIREMENTS .....................................................................................97

010501

Automated Military Personnel Programs Database............................................................................97

010502

Automated Operation and Maintenance Programs Databases ...........................................................98

010503

Automated Procurement Programs Database ......................................................................................99

010504

Automated RDT&E Programs Database ...........................................................................................101

010505

Automated Construction Program Database......................................................................................102

010506

CIS Automation Requirements for the Biennial Program and Budget Review Submission .............104

010507

CIS Budget Structure Listing (BSL)..................................................................................................106

0106

UNIFORM BUDGET AND FISCAL ACCOUNTING CLASSIFICATIONS ..................................109

010601

General...............................................................................................................................................109

010602

Functional Titles ¨C Military Functions ..............................................................................................109

010603

Definitions of Functional Titles and Subdivisions - Military ............................................................110

010604

Functional Titles and Definitions ¨C Other Defense Civil Programs..................................................118

0107

AUTOMATED FUTURE YEARS DEFENSE PROGRAM (FYDP) DATABASES ........................119

010701

Standard Data Collection System (SDCS ..........................................................................................119

010702

FYDP Structure Management (FSM) System ...................................................................................121

0108

AUTOMATED COMMUNICATIONS, COMMAND AND CONTROL, INTELLIGENCE,

SURVEILLANCE AND RECONNAISSANCE (C3ISR) DATABASE ..............................................................123

0109

SELECT AND NATIVE PROGRAMMING (SNaP) DATA INPUT SYSTEM ¨C BASIC

GUIDANCE FOR INPUT THROUGH SNaP OF PROGRAMMING DETAIL DATA AND SELECTED

BUDGET EXHIBITS FOR JOINT USE OF THE PROGRAM AND BUDGET REVIEW............................124

010901

Select and Native Programming (SNaP) Data Collection System. ....................................................124

0110

GENERAL GUIDANCE SUBMISSION FORMATS..........................................................................126

011001

Purpose ..............................................................................................................................................126

011002

Exhibits in Support of Section 0103 ¨C Program and Budget Review Submission ............................127

011003

Exhibits in Support of Section 0104 - Congressional Justification/Presentation...............................127

011004

Exhibits in Support of Section 0105 ¨C Budget Automation Requirements .......................................127

011005

Exhibits in Support of Section 0107 ¨C Automated FYDP Databases Requirements .........................127

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DoD Financial Management Regulation

Volume 2A, Chapter 1

CHAPTER 1

+June 2004

GENERAL INFORMATION

0101

010101

GENERAL POLICIES

Purpose

A. Volume 2 of the Financial Management Regulation (FMR) provides general guidance on the

formulation and submission of the budget requests to the Office of the Secretary of Defense for the program and

budget review submission and the presentation and justification of the budget requests to the Congress. This

volume is established under the authority of DoD Instruction 7000.14.

B. Volume 2 of the FMR is intended as a comprehensive reference book on budget matters of the

Department of Defense. Budget policy memoranda issued throughout the year will provide any necessary changes

or revisions to this standing document, as well as special instructions and nonrecurring requirements unique to that

year¡¯s budget cycle.

C.

The provisions of Volume 2 apply to all military and specified civil functions of the Department of

Defense.

D. An introduction to the total Financial Management Regulation, DoD 7000.14-R can be found in

Volume 1 of the Regulation.

010102

Organization

A. Volume 2 is organized into 19 chapters that provide specific guidance, required budget exhibits and

formats along with instructions for their preparation, and automated submission requirements.

010103

Changes to Volume 2

A. Changes to Volume 2 will be issued biennially, prior to the program and budget review of the initial

biennial budget cycle. Pen and ink changes will not be issued.

B. Generally, significant changes on a page will be indicated by the paragraph or section containing a

change being printed in ITALICS.

010104

Reports Control Symbol

Data requirements established by this volume are exempt from the requirement for assignment of a

Report Control Symbol.

010105

Requests for Exceptions to OMB Circular A-11

A. Each year the Office of Management and Budget (OMB) issues Circular No. A-11 which addresses

the preparation and submission of budget estimates for all Federal agencies.

B. Federal agencies are allowed to request exceptions to the requirements of Circular A-11 by

submitting in writing to OMB all required exceptions by August 1. Exceptions approved by OMB are valid only for

1 year.

C. Each year the USD(Comptroller) requests certain exceptions to OMB Circular A-11. Generally,

these exceptions concern special situations that are unique to the Department of Defense.

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DoD Financial Management Regulation

Volume 2A, Chapter 1

+June 2004

1. Subsequent to the issuance of Circular A-11 by OMB each year, any DoD Component

requiring an exception to the requirements of Circular A-11 should submit in writing the specific section for which

an exception is required and provide adequate rationale to justify the exception. The memorandum addressing the

requested exceptions should be submitted directly to the Office of the USD(Comptroller), Program/Budget, Plans

and Systems Directorate (Room 3A862, telephone (703) 697-9171) no later than July 15 of each year.

2. If the requested exception is acceptable to the USD(Comptroller), these proposals will be

consolidated and forwarded to OMB for approval. Components will be advised of any exceptions approved by

OMB.

3. All DoD Components are required to comply with any requested exceptions not approved and

to properly reflect the information in the budget submissions.

010106

Proposed Changes in Budget Structure and Appropriation Language

A.

Under the provisions of OMB Circular A-11, the following types of changes must be cleared with

OMB:

1. Changes in the appropriation pattern, including proposed new accounts and changes in the

titles and sequence of existing accounts.

2.

Changes in the methods of funding a program.

3. Changes in program or budget activity classifications for the program and financing schedules

for all appropriation accounts and funds.

B. Any proposed changes on the items listed above must be submitted by memorandum to the Office

of the USD(Comptroller) that explains the proposal and the rationale for the changes. If acceptable to the

USD(Comptroller), these proposals will be forwarded to OMB for approval.

C. Proposed changes in the wording of appropriation language should be submitted to the Office of the

Deputy General Counsel (Fiscal) (Room 3D961, telephone (703)695-5864) as soon as possible after the passage of

the current year¡¯s appropriations acts. ODGC(Fiscal) will coordinate changes with OMB.

010107

Budget Terminology/Definitions

A. Standard Government-wide definitions of budget terminology are provided in the Office of

Management and Budget¡¯s issuances, most notably Circular A-11 (Section 20).

B. For the Department of Defense, some of the more common budget concepts applicable to budget

formulation follow:

1. Accrual Basis of Accounting: A method of accounting in which revenues are recognized in

the period earned and costs are recognized in the period incurred, regardless of when payment is received or made.

There have been many initiatives over the years to convert the Federal Budget to an accrual accounting basis.

Although the budget is on a cash basis, DoD accounting is on the accrual basis.

2. Advance Procurement: 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.

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