FINANCIAL MANAGEMENT POLICY MANUAL

estimated cost to deliver the contract quantity of complete, militarily
usable items. If a future-year appropriation is required for delivery of the
end-items, the contract is not fully funded. It should be noted that the
actual method of financing a contract is a different consideration than the
budget policy of fully funding a program. Full funding within the
budgetary sense is that the procurement and construction accounts are to
fully fund in one fiscal year the total cost of end-items and construction
projects to be acquired.
Major Procurement Appropriations
Includes those accounts or portions thereof that finance shipbuilding,
aircraft, missile, and weapons procurement within the Department of the
Navy (DON).
Multiyear Contract
A contract covering current and future-year procurement quantities of
items but not more than 5 years' procurement quantities as reflected in the
Future Years Defense Program (FYDP). Each program year is budgeted
and funded annually. At the time of award, funds need only to have been
appropriated for the first year.
Multiyear Procurement
A generic term describing the process, planning, and contract under which
the Government will commit to procurement of the current year
procurement quantity of items and future quantities as long as they are
contained in the FYDP. It does not apply to advance procurement of long
lead-time items.
Nonrecurring Costs
Those production costs generally incurred on a one-time basis including
such costs as plant or equipment relocation; plant rearrangement; special
tooling and special test equipment; pre-production engineering; initial
spoilage and rework; pilot runs; allocable portions of the costs of facilities
to be acquired or established for the conduct of the work; costs incurred
for the assembly, training, and transportation of a specialized work force
to and from the job site; and unrealized labor learning.
Recurring Costs
Production costs that vary with the quantity being produced, such as labor
and materials.
Termination
A procedure that may apply to any Government contract, including
multiyear contracts. Unlike cancellation, which is commonly affected
between fiscal years and must apply to all subsequent fiscal years'
quantities of items, termination may be effected at any time during the life
Financial Management Policy
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