FINANCIAL MANAGEMENT POLICY MANUAL

performed in connection with delivery thereof. Within DON, the
terms "customer program" and "service account" are sometimes used
as synonyms for "reimbursable budget program" and "direct budget
program," respectively.
b. Procurement Terms.
(1) Direct Citation Procurement.
Direct citation procurement exists when the customer's accounting
data is cited on contracts. A direct citation procurement
transaction is not categorized as a reimbursable transaction.
(2) Replacement
(a) Replacement-in-Kind Procurement. Replacement-in-Kind
(RIK) procurement is procurement initiated to replace material
sold to customers. It is DoD policy that RIK transactions are
administered under the reimbursable budget program authority
when procurement is classified as:
1. replacement procurement for quantities of identical
items furnished to the customer from on-order quantities
under an existing contract financed by direct program
funds;
2. replacement procurement in identical kind for items
sold to customers from inventory or
3. replacement procurement for secondary items, whether
or not identical, is treated as a generic category requiring,
by definition, "replacement-in-kind."
"Identical," as used in items 1 and 2, means the same basic
model and series or mod designation; e.g., sale of and
replacement procurement of an AN/USM 281 Mod 1
oscilloscope.
(b) Replacement Procurement. Replacement procurement is
the acquisition of material items to replace those sold to
customers, wherein the replacement item is not identical by
accomplishes the same basic purpose, e.g., an S-2 aircraft is
sold, but an S-3 aircraft is acquired to replace it. In such a
situation, the reimbursement from the sale will be included
under reimbursable financing but the "buy-back" of the
replacement must be accomplished under the direct budget
program, consistent with the requirements for reprogramming
of funds (see par. 073301).
(c) Unit Cost Less Than $5,000. The replacement of items sold
from inventory with a unit cost of less than $5,000 will be
Financial Management Policy
2-140