Color of Money 101 PEO SYSCOM COMMANDERS CONFERENCE

Color of Money 101 PEO SYSCOM COMMANDERS’ CONFERENCE Siobhan Tack DAU BCEFM Department Chair, C&NE Region Siobhan. tack@dau. mil 703 -805 -4449

#1 Identify the Requirement #2 Develop A Cost Estimate #3 Apply Appropriations and Funding Policies #4 Budget using PPBS #5 Congress Appropriates through the Enactment Process #6 Get to Work during the Execution Process

Lesson Overview • Appropriation Categories • Funding Policies • Congressional Budget Enactment Process • Budget Execution Process

Major Appropriation Categories APPN CAT SCOPE RDT & E RDT&E Activities & Expenses PROC (SCN) O&M End items >= $100 K system unit cost, All Centrally managed items, Initial Spares, Labor for certain production-related functions (e. g. , item assembly, quality assurance) Replenishment Spares, Fuel, Civilian Salaries, Construction Projects < $750 K, Travel, Noncentrally managed end items < $100 K system unit cost MILPER Military Personnel Expenses MILCON Construction Projects >= $750 K FUNDING POLICY INCREMENTAL FULL ANNUAL FULL

Multiyear Procurement (MYP) • Exception to Full Funding Policy • Commitment to buy a specific quantity of useable end items of a weapon system over a specified number of years (normally, maximum of five years) • Annual Appropriation by Congress for same specified number of years • Purpose: - Reduce program cost growth - Counteract adverse effects of the annual budget and procurement process - Bring stability to acquisition process

Advance Procurement Long Lead Items • Exception to Full Funding Policy – Contained in Acquisition Strategy – Approved in Milestone Decision – Separate initial contract • Finances Long Lead (Recurring) Components – To protect production schedule – To maintain a critical skill in the workforce • Generally, Budget Authority requested / granted one Fiscal Year in advance of the related end item contract • Shown as a separate line item on the budget request.

Congressional Budget Process Enactment Process • Budget Resolution • Authorization Bill • Appropriations Bill

Congressional Enactment Timetable JAN FEB MAR APR 1 15 MAY 15 JUN 10 JUL AUG SEP 30 PRES BUDGET “TARGET” FISCAL YEAR CBO REPORT COMMITTEE INPUTS BUDGET RESOLUTION HOUSE HRNGS Marks FLOOR Budget Conf SENATE HRNGS Marks OCT ^ FLOOR Resolution Authorization AUTHORIZATIONS HOUSE HASC HRNGS SENATE APPROPRIATIONS SASC HRNGS HOUSE MARK-UP HAC HRNGS FLOOR MARK-UP FLOOR Conf FLOOR Conf SENATE SAC HRNGS MARK-UP FLOOR Act ^ Appropriations Act ^

Appeals To Congressional Marks General Rules Between Congress And Do. D • Each phase (i. e. , Authorization and Appropriation) is separate • Appeal to next Committee of that phase considering the budget request (e. g. , appeal to the SASC, SAC and/or the appropriate conference committee) • Appeal to amount closest to President’s Budget • Acceptable to appeal language and production quantities as well as dollar amounts

Continuing Resolution • If Congress fails to pass appropriations bills prior to 1 October, it may pass a joint Continuing Resolution which must be signed by the President • Continuing Resolution Authority is stopgap spending authority allowing the federal government to continue operating – Allows obligation of funds at the “current rate of operations” usually based on one of these levels: Normal rate based on last year’s appropriation • __________________ Normal rate based on lowest Congressional • __________________mark – New Start programs and expansion of current program scope NOT PERMITTED

Apportionment Process Provides Budget Congress Authority CRA Apportionment Release Allocation OMB Impoundment: Fully Fund Quarterly Fund. Deferral Rescission Withhold OSD Comptroller General Reductions Service Comptroller Sub-Allocation/ MAJCOM/PEO Comptroller Allotment PMO Program Management Office

Impact of General Reductions on An Acquisition Program Joint Direct Attack Munition (JDAM) Program FY 98 Appropriation (RDT&E) FFRDC $24. 70 M $ 0. 00 M Consultant 0. 37 M Budget Cap 0. 14 M National Missile Defense 0. 31 M Small Business Innovative Research 2. 03 M Inflation Reduction 0. 13 M Total General Reductions $ 2. 98 M Remainder $21. 72 M Taxes Reduction = 12. 1 % of Amount Appropriated

Apportionment Process Provides Budget Congress Authority CRA Apportionment Release Allocation Impoundment: Fully Fund Quarterly Fund. Deferral Rescission Withhold OSD GR Comptroller OMB Service Comptroller Sub-Allocation/ MAJCOM/PEO Comptroller Allotment Execution GR=General Reductions PMO Program Management Office Withhold GR/Corporate Bills Withhold GR/CB

Budget Execution Congress DFAS Region Finance Center OMB DFAS OSD Comptroller Disbursing / Finance Office Service Comptroller MAJCOM/PEO Comptroller PCO Procuring Contract Officer ACO Administrative Contract Officer Commitment PMO Program Management Office C-Color Y-Year A-Amount Contractor US Treasury

Budget Execution Congress DFAS Region Finance Center OMB DFAS OSD Comptroller Disbursing / Finance Office Service Comptroller MAJCOM/PEO Comptroller PCO Procuring Contract Officer ACO Administrative Contract Officer Obligation PMO Program Management Office Contractor US Treasury

Budget Execution Congress DFAS Region Finance Center OMB DFAS OSD Comptroller Disbursing / Finance Office Service Comptroller MAJCOM/PEO Comptroller Invoice PCO Procuring Contract Officer ACO Administrative Contract Officer Invoice PMO Program Management Office Contractor • Starts work • Incurs cost US Treasury

Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS OSD Comptroller Disbursing / Finance Office Service Comptroller MAJCOM/PEO Comptroller PMO Program Management Office Check PCO Procuring Contract Officer ACO Administrative Contract Officer Contractor Expenditure

Budget Execution Congress DFAS Region Finance Center OMB OSD Comptroller Expenditure Reporting System DFAS Disbursing / Finance Office Service Comptroller MAJCOM/PEO Comptroller PMO Program Management Office PCO Procuring Contract Officer ACO Administrative Contract Officer Contractor US Treasury

Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS OSD Comptroller Disbursing / Finance Office Cash Service Comptroller MAJCOM/PEO Comptroller PMO Program Management Office PCO Procuring Contract Officer ACO Administrative Contract Officer Contractor Outlay

Apportionment Process Budget Execution Congress DFAS Region Finance Center US Treasury OMB OSD Comptroller Service Comptroller MAJCOM/PEO Comptroller DFAS How can we get in TROUBLE? PCO Procuring Contract Officer PMO Program Management Office Disbursing / Finance Office ACO Administrative Contract Officer Contractor Laws: - Misappropriation - Anti-Deficiency - Bona Fide Need

Execution Laws • Misappropriation Act [Title 31, U. S. Code, S 1301] – Requires funds to be used only for the purposes and programs for which the appropriation was made. • Anti-Deficiency Act [Title 31, U. S. Code, Sec 1341 & 1517 ] –Prohibits making or authorizing an obligation in excess of the amount available. –Forbids obligation to pay money from the US Treasury in advance of an appropriation. –Requires agency to fix responsibility for violations of the Act. • Bona Fide Need Rule: – Requires funds to be used only for needs or services in the year of the appropriations obligation period.

Reprogramming • Process of redirecting funds for purposes other than those contemplated at the time of appropriation. • Reprogramming rules are based on agreements between Do. D and Congress. • Do. D informs Congress of all Reprogramming via a semi-annual report. • Types of Reprogramming actions: – Internal – Below Threshold – Congressional Prior Approval

Do. D Appropriation Structure Level of Control for “Below Threshold” Reprogramming Purposes RDT&E Procurement O&M MILPER MILCON Budget Activity Budget Activity Line Item Activity Group Sub Activity Project Program Elements Projects Sub Activity

Below Threshold Reprogramming APPRN MAX INTO RDT & E + 4 M PROC +10 M O&M +15 M MAX OUT Greater of -4 M or -20% Greater of -10 M or -20% None Unless Specified LEVEL OF CONTROL PROGRAM ELEMENT OBL AVAIL 2 YEARS 3 YEARS LINE ITEM ( 5 YEARS SCN) BUDGET ACTIVITY SOME BA 1 SUB-ACTIVITY LIMITATIONS ON DECREASES (OPERATING FORCES) 1 YEAR MILPERS +10 M Not Specified BUDGET ACTIVITY MILCON Lesser of +2 M or +25% Not Specified PROJECT Reference Source: Memo Change (30 Oct 96) to Do. D Financial Management Regulation , Volume 3 5 YEARS

Congressional Prior Approval • Applies to Actions Involving: – General Transfer Authority (between appropriations) – Major System Procurement Quantity Increases – Congressional Special Interest Items – Amounts exceeding specified thresholds within an appropriation – Initiation of new programs or new starts within existing programs exceeding amounts – Termination of programs meeting certain criteria • Requires: – Approval by USD (Comptroller) – Approval by HAC / SAC and HASC / SASC – Approval by House and Senate Committees on Intelligence (for intelligence assets)

Internal Reprogramming Applies To: - Reprogramming actions that do not involve changes from the purpose and amounts justified budget presentations to Congress Requires: - Approval by the USD (Comptroller) in

Appropriation Life - Example PROCUREMENT APPROPRIATION EXPIRED ACCOUNT 94 FY 1 95 FY 2 96 FY 3 NEW OBLIGATIONS 97 4 98 FY 99 FY 5 00 FY 6 NO NEW OBLIGATIONS FY 1 FUNDS CANCELLED 01 7 02 FY 8 FY FY 9 CURRENT APPROPRIATION OBLIGATION ADJUSTMENTS Limited to lesser of: EXPENDITURES - 1% of current appropriation ACCOUNTING IDENTITY balance appn - Unexpend 00 01 02 of cancell