Budget Highlights Book - DON FM&C Website - U.S. Navy

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February 2010Revitalizing the Force AshoreNAVY WORKING CAPITAL FUND (NWCF)The NWCF is a revolving fund which finances Department of the Navy activitiesthat provide products and services on a reimbursable basis, primarily for othergovernment entities. The revolving fund structure creates a customer‐providerrelationship between operating units and support organizations. After customersreceive annual appropriations, funded orders are sent to the NWCF providers whofurnish the services or products, pay for incurred expenses, and bill the customers,who in turn authorize payment. Unlike profit‐oriented commercial businesses,working capital fund activities strive to break even in prices charged to customers.NWCF activity groups are essential enablers and support elements that are critical tothe success of the DON and many DoD organizations across a number of DoDcapability portfolio areas. They provide a wide range of goods and services tosupport the Department’s ongoing operations to maintain overall military readinessand in support of OCO. There are five NWCF activity groups: SupplyManagement, Depot Maintenance, Research and Development, Base Support, andTransportation. The total annual cost of goods and services to be delivered byNWCF activity groups to their customers in FY 2011 is approximately $27 billion.No major changes to the business base are expected in FY 2011 over FY 2010 levels.Supply ManagementSupply Management performs inventory management functions that result in thesale of aviation and shipboard components, ship’s store stock, and consumables to awide variety of customers. A key component of the logistics capability area, SupplyManagement is the central element to assuring that DON and DoD operating forcesand their equipment are supported with the necessary availability of supplies, spareparts, and components to conduct OCOengagements, various types of training, andany potential contingencies, whether of anirregular nature or of a more conventionalscope. Additionally, contracting, resale,transportation, food service, and otherquality of life programs are also supported.Costs related to supplying material tocustomers are recouped through stabilizedrate recovery elements such as prior yeargains and losses, inventory maintenance, repair costs including attrition, and localFY 2011 Department of the Navy Budget 6‐11
Revitalizing the Force Ashore February 2010elements. Ensuring the right material is provided at the proper place, time, and costis vital to equipping and sustaining our warfighting units. Navy Supply continuesdeployment of the Navy Enterprise Resource Planning (ERP) system.Implementation at the Naval Inventory Control Point began in FY 2010 andcontinues through FY 2011. Three Fleet Industrial Supply Centers (FISCs) will alsocomplete implementation in FY 2011 and the final FISCs, Yokosuka and Sigonella,go live in FY 2012. The phase implementation was scheduled in order to minimizeany impact to the fleet.During this period, the major cost drivers in the supply management inventory areaviation weapons systems for the F/A‐18, H‐60, and the H‐53. Inventory supportingaircraft engines also continues to be a major component of the overall supplymanagement inventory. Additionally, repair and parts demand for the newlysupported V‐22 Osprey have exceeded original forecasts and significantly increasedanticipated costs. The Marine Corps is leading a joint program for procurement ofspares for the Mine Resistant Ambush Protected (MRAP) vehicles while alsosupporting increased customer provisioning and replenishment spares requirementsfor other systems.Depot MaintenanceDepot maintenance functions performed by the Fleet Readiness Centers (FRCs) andMarine Corps Depots ensure that the right types and quantities of weapons systemsand support equipment are repaired, overhauled and updated on schedule so thatdeployed and soon‐to‐deploy units have the battle‐ready items they need to fightand win both ongoing OCO engagements and anypotential confrontations. Depot Maintenancepersonnel not only perform these functions at themajor activity sites, there are also a number offorward‐deployed individuals that perform timecriticalrepair and upgrade functions in‐theater,enduring the same kinds of physical conditions asthe service members they support.The FRCs are a core industrial base essential for mobilization; repair of aircraft,engines, and components; and the manufacture of parts and assemblies. Theyprovide engineering services in the development of hardware design changes andfurnish technical and other professional services on maintenance and logisticsissues. The FRCs provide important support to fleet operations by overhauling andrepairing a wide range of equipment and components. Workload budgeted in FY6‐12 FY 2011 Department of the Navy Budget
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