FINANCIAL MANAGEMENT POLICY MANUAL

existing prior year orders may be authorized in subsequent years.
(3) Reimbursable Budget Program Replacement Procurement.
Replacement (RIK or replacement) procurement financed with
funds resulting from the reimbursable budget program authority is
limited to the replacement of on-order or on-hand items which
have been or will be furnished to customers and must be
accomplished during the period of availability of the appropriation
account for incurring obligations. Any replacement procurement,
excepting RIK of secondary items, is initiated by submission of a
request to the Director, Office of Budget (FMB) for approval.
Upon approval, RIK is accomplished by citation of funds
reprogrammed into the appropriate direct program. Both below
and above threshold reprogramming to finance replacement under
the direct procurement budget program requires approval by FMB,
OUSD(C), the Office of Management and Budget (OMB), and
Congress, as appropriate. RIK or replacement shall be initiated
only when items are below authorized inventory objectives for the
fiscal year in which the stock issue is made, compared to total
inventories including material on order and programmed for
funding during the same fiscal year period. Revenue derived from
sales of prepositioned war reserve stocks (PWRS), for which RIK
is not required, will be treated as free assets and may be reinvested
in PWRS under direct program authority upon approval by FMB to
reprogram the funds.
(4) Application of Free Assets.
Non-FMS free assets are utilized to finance direct budget programs
or applications between appropriations, subject to
apportionment/reapportionment and reprogramming approvals.
Prior FMB approval is required for below threshold actions as well
as above threshold actions. See subpar. 2b(3) for policy regarding
FMS free assets. At least annually by the end of the fiscal year, all
identified FMS free assets collected in any account, current or
prior year, resulting from sales of articles from defense inventories,
including both stock fund and procurement appropriation items,
will be deposited to miscellaneous receipts of the Treasury,
173041.1202.
d. Reimbursable Subhead Structure.
The reimbursable budget program under each DON procurement
appropriation is administered by means of a subhead structure, which
identifies meaningful details of the program. The first digit identifies
the administering office, the second identifies the corresponding direct
Financial Management Policy
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