FINANCIAL MANAGEMENT POLICY MANUAL

treated as a RIK if an improved model of the same end item is
being procured, it performs the same warfighting capability,
and the inventory objective presented to Congress is not
exceeded. Items satisfying all of these criteria will be financed
with the reimbursable proceeds of the sale of the end items
issued from inventory without processing a DD-1415
reprogramming action. The amount applied toward the RIK
may not exceed the proceeds of the sale.
(3) Free Assets.
Free assets are the revenues derived from the sale of material that
does not require replacement or will not be replaced. The free
assets resulting from these sales would accrue under a
reimbursable program. Free assets derived from Foreign Military
Sales (FMS) stock issues are required by law to be deposited to
either miscellaneous receipts of the Treasury, 173041.1202.
c. Guidance
(1) Objective.
Direct citation of customer funds for procurement should be used
whenever possible since this avoids complex reimbursable
accounting. This policy is mandatory for Military Assistance
Program procurements. When an order consists solely of
procurement involving no in-house work or services to complete
the order, customer funds shall be cited directly to the contract.
When a procurement order requires a major portion of the work to
be performed with in-house capabilities, the total order may be
accepted on a reimbursable basis.
(2) Basis of Reimbursable Budget Program.
In a procurement appropriation, anticipated reimbursements will be
based upon:
1. estimates of customer orders to be accepted in the first year
of an appropriation for items of the type normally procured for
DON use which are to be financed under the procurement
appropriation for direct delivery to the customer, and
2. estimates of customer orders to be accepted in the first year
of an appropriation for items which will be furnished from
inventory or which are on-order under an existing contract.
On 30 September of each fiscal year, the balance of anticipated
amounts of reimbursable orders not realized will be reduced to
zero. In the case of multiple-year appropriations, there cannot be
any anticipation for new orders in the second or following years of
appropriation availability; however, anticipated adjustments to
Financial Management Policy
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