FINANCIAL MANAGEMENT POLICY MANUAL

hand, is a part of the execution phase or acquisition process within the
framework of a program. The number of contracts required to procure a
defense system, the type of contract awarded, and the timing of the award
have no bearing upon whether or not an item is fully funded. However, in
executing a contract, no procurement of material or equipment, or work or
services therefore, shall be directed or implemented unless the full amount
required is available, except for authorized economical order quantity and
advance procurement. Similarly, the value of existing contracts for the
procurement of material or equipment shall not be increased (through
contract modifications) unless the funds are available to fully fund the new
contract price. Limitations of funds clauses shall not be used as a means
of avoiding the requirement to fully fund procurement programs. This
guidance does not, however, affect the proper use of limitations of funds
clauses in incrementally funded development contracts. For multiyear
contracts, the test of full funding does not include the cancellation ceiling
associated with items in the FYDP to be procured in fiscal years not yet
funded (that is, beyond the budget year). When multiyear contracts are
being considered that would exceed the approved FYDP funding in the
outyears, notification of this fact, including identification of specifically
programmed outyear funding offsets prior to awarding the contract must
be provided to the OASN (FM&C), who will forward the notification to
the Under Secretary of Defense (Comptroller) (USD (C)).
4. PROCEDURES FOR EXCEPTIONS.
Exceptions from the provisions of this paragraph will be authorized on a
case-by-case basis. Proposals for exceptions should be included in the
annual budget submission for approval by the Secretary of the Navy and
submission to the Secretary of Defense as part of the annual DON Budget
Submission. All requests for exceptions during budget execution shall be
forwarded via the chain of command to the Comptroller of the Navy for
review and approval. Such requests shall include all justifications made
before the Congressional Appropriations Committees in regard to the
program, the status of the program as shown in the Base for
Reprogramming Actions (DD Form 1414), and any Reprogramming
Action (DD Form 1415). If justified, the request then will be forwarded to
the USD (C) for approval.
(Change 67)
075323 TIME-PHASED PROCUREMENT
1. GENERAL.
The following guidance is applicable to procurement programs. There are
certain nonrecurring costs of certain production items related but not
integral to equipment end-items that are considered part of the overall
acquisition program. Examples are pre-production costs, peculiar support
equipment, training equipment, ship outfitting costs, interim contractor
Financial Management Policy
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