Navy Working Capital Fund - DON FM&C Website

DEPARTMENT OF THE NAVYNAVY WORKING CAPITAL FUNDSUPPLY MANAGEMENT ‐ NAVYFY 2012 BUDGET ESTIMATESFEBRUARY 2011Executive Summary:Significant Changes Since the FY 2011 President’s Budget:The following significant changes have occurred since the FY 2011 President’s Budget:Efficiencies and Cost ReductionsNAVSUPʹs FY 2012 budget estimates reflect the impact of a number of efficiency efforts,overhead cuts, and other cost reductions to include: Navy Enterprise Resource Planning (ERP)legacy IT system retirement, Strategic Sourcing, and reduction of facilities sustainment costs to80 percent of requirements. The impact of these efficiencies on budget estimates is a reductionof $0.5 million in FY 2011 and $48.3 million in FY 2012 for a total cumulative savings of $48.8million that was reapplied to the DoNʹs force structure and modernization requirements.Consumable Item Transfer (CIT)NWCF‐SM CIT is a biennial event that typically occurs in the odd numbered years. Exclusionsto the rule include items that are design unstable, are covered under Performance BasedLogistics contracts, or are major end items. A recent Department of Defense (DoD) FinancialManagement Regulation (FMR) change allows all services to request reimbursement from theDefense Logistics Agency (DLA) for the value due‐in at the time of each transfer. NWCF‐SMhad two substantial transfers in FY 2009, with another transfer scheduled in FY 2011. Inaccordance with FMR guidance, NAVSUP is requesting reimbursement from DLA for on‐orderpre‐award and post‐award procurement actions. FY 2010 DLA receipt validations arecompleted and reimbursement of $48M to Funds Balance with Treasury (FBwT) occurred inSeptember, 2010. FY 2011 validations are completed and $60M is expected to reimburse FBwTin January, 2011. FY 2012 revised reimbursement estimate is $78M.Emergent Special Program RequirementsSince PB 2011, NAVSUP has identified several special program requirements requiringincreased contract authority in FY 2011. Acquisition and/or repair of material starting inFY 2011 is necessary to support projected customer demands a lead‐time away, generally inFY 2012/2013 timeframe. Key drivers include:CH‐53D HelicopterThe CH‐53D aircraft is deployed in support of Overseas Contingency Operations.Despite the fact that this platform is currently 43 years old, it is undergoing a ProgramLife Extension from 2007 to 2018, which translates to demand increases. A newrequirement addition from the PB 2011 baseline is the H‐53’s Tail Pylon which isexperiencing increased demand and wear‐out rate. This item has historically been in