FINANCIAL MANAGEMENT POLICY MANUAL

statutory authority was granted in 1984 to incur new obligations for
specific purposes in the SCN appropriation beyond the period
specified for the general purposes of the appropriation. The FY 1984
DOD Appropriations Act included language that permitted the
Department to incur new obligations in the SCN appropriation after
the initial five-year period for specific efforts required to deliver a
completed ship. The specific language of the FY 1984 DOD
Appropriations Act is as follows:
"... to remain available for obligation until September 30, 1988:
Provided further, that additional obligations may be incurred after
September 30, 1988, for engineering services, tests, evaluations,
and other such budgeted work that must be performed in the final
stage of ship construction; and each Shipbuilding and Conversion,
Navy, appropriation that is currently available for such obligations
may also hereafter be so obligated after the date of its expiration:
...".
This language, or similar language, has been included in all SCN
appropriations since FY 1984. The intent of this provision is to permit
the Department of the Navy (DON) to complete all elements and
award all contracts that meet the statutory criteria, including the
incurring of new obligations necessary for the completion of each ship
program approved by the Congress. This authority was provided by
the Congress in recognition of the fact that most new ship construction
cannot be completed within the five-year availability period.
The FY 1991 National Defense Authorization Act and the FY 1991
Department of Defense Appropriations Act made significant changes
to the account closure procedures affecting the administration of the
SCN appropriation. In consonance with Congressional intent and the
statutory authority granted to the SCN appropriation, an agreement
was reached with the Department of the Treasury and the Department
of Defense to permit execution of the SCN budget authority within the
purpose of both of these laws.
b. To ensure that the DON complies with the full intent of this
agreement and the SCN statutory authority, the following policy and
procedures for the administration of the SCN account apply:
1. Initial Period of the Appropriation.
During the initial five-year period of the appropriation, SCN funds
may be used for all purposes as set forth in their respective
authorization and appropriations acts for new obligations,
adjustments of obligations and liquidation of obligations for all
ship programs. Characteristic changes to a ship approved after the
initial period of availability of the SCN appropriation must be
funded in subsequent appropriations.
Financial Management Policy
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