Navy Working Capital Fund - DON FM&C Website

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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
DEPARTMENT OF THE NAVYNAVY WORKING CAPITAL FUNDSUPPLY MANAGEMENT ‐ NAVYFY 2012 BUDGET ESTIMATESFEBRUARY 2011low demand and consequently was not procured for more than 10 years. Shelf stock hasdepleted requiring new investment in FY 2011 of $16.1M to support this aircraft. Inaddition to the procurement requirement, the increased demand is driving a $10Mincrease in repair requirement. Total requirement above PB 2011 to support this aircraftis $26.1M.EA‐6B Landing GearThe EA‐6B was scheduled to decommission by FY 2013. Date is now extended toFY 2019. For the past several years, spares requirements were met by using StrickenAircraft Reclamation and Disposal Program (SARDIP) assets. However, with service lifeextended to FY 2019, SARDIP assets will be depleted, necessitating procurement ofadditional Landing Gear assets to support remaining life of the aircraft. Dollar value ofthe FY 2011 requirement is $22.9M covering both consumable as well as repairable parts.F/A‐18 Outer Wing PanelsF/A‐18 Accessory Bulletin (AYB 1214) mandates O & I level inspection of outer wingpanel missile support rib for stress corrosion cracking. Based upon engineeringforecasts, a total of 47 will fail inspection and require replacement. Dollar value ofFY 2011 requirement is $24.1MLogistic Engineering Change Proposals (LECP)During the last several years, NWCF‐SM has budgeted $25M annually to execute the LECPprogram. This budget request includes an increase in contract authority to $40M in FY 2011 and$50M in FY 2012 driven by new candidates for reliability improvement. The V‐22, F/A‐18, EA‐6B and AH‐1W platforms are key drivers of increased candidate population. Future year costreductions associated with LECPs represent opportunities for “Tail to Tooth” resource shift.Navy ERP System Implementation StrategyNavy ERP release 1.1 (Single Supply Solution) deployment began in February 2010 andcontinues through FY 2012. As a hedge against potential disruptions to Fleet customer support,this budget includes accelerated requirements, resulting in earlier than normal procurementactions to ensure a full supply pipeline will be maintained. This approach is similar to theprocess used by DLA when their Business Systems Modernization was implemented and isconsidered prudent given the complexity of deploying a new system of this magnitude.
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DEPARTMENT OF THE NAVYFISCAL YEAR (
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February 2011NAVY WORKING CAPITAL F
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February 2011ERP is expected to go
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February 2011(Dollars in millions)N
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February 2011Net Operating Results:
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February 2011Customer Rate Changes:
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February 2011Staffing:Total civilia
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February 2011Performance Budgeting.
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February 2011DEPOT MAINTENANCE SIX
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DEPARTMENT OF THE NAVYNAVY WORKING
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REVENUE AND EXPENSESDEPARTMENT OF T
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CHANGES IN THE COSTS OF OPERATIONSD
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CAPITAL INVESTMENT SUMMARYDEPARTMEN
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PRODUCTIVITY EQUIPMENT1) The new eq
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REPLACE WALK-IN BLAST BOOTH B794 FR
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UPGRADE F402 TEST CELL FRCE - CHERR
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4) If not acquired, the FRCSE engin
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OTHER COMPUTER & TELECOMMUNICATION
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ACTIVITY GROUP CAPITAL INVESTMENT J
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MATERIAL INVENTORY DATADEPARTMENT O
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MATERIAL INVENTORY DATADEPARTMENT O
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DEPARTMENT OF NAVYNAVY WORKING CAPI
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Revenue: Revenue is $579.7 million
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(Dollars in Millions)Carryover ($M)
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Total Cost8 Pricing Adjustments: -2
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DEPARTMENT OF THE NAVYMARINE CORPS
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DEPARTMENT OF THE NAVYMARINE CORPS
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Performance Indicator:DEPARTMENT OF
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DEPARTMENT OF THE NAVYCHANGES IN CO
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Department of the Navy / Naval Air
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FY2010-FY2012Greater than $1M:EA &
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FY2010-2012Greater than $1M:Operati
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FY2010-2012Greater than $1M:SE & AL
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FY2010-2012Greater than $1M:SE/ALRE
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Capital Investment Justification($
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DEPARTMENT OF THE NAVYCAPITAL BUDGE
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Carryover Compliance:DEPARTMENT OF
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SOURCES OF NEW ORDERS & REVENUEDEPA
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CHANGES IN THE COST OF OPERATIONSDE
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Business Area Capital Investment Ju
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REVENUE AND EXPENSEDEPARTMENT OF TH
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SOURCES OF NEW ORDERS & REVENUEDEPA
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CAPITAL INVESTMENT JUSTIFICATION($
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CAPITAL INVESTMENT JUSTIFICATIONFIS
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FUEL DATADEPARTMENT OF THE NAVYSUPP
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SUPPLY MANAGEMENT SUMMARY BY DIVISI
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SUPPLY MANAGEMENT SUMMARY BY DIVISI
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OPERATING REQUIREMENT BY WEAPON SYS
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INVENTORY STATUSDEPARTMENT OF THE N
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INVENTORY STATUSDEPARTMENT OF THE N
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WAR RESERVE MATERIALDEPARTMENT OF T
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WAR RESERVE MATERIALDEPARTMENT OF T
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