FINANCIAL MANAGEMENT POLICY MANUAL

support (described in 075343), initial spare and repair parts,
documentation, and systems software and integration costs. Planning and
budgeting will be accomplished in a manner to ensure completion of the
nonrecurring effort or delivery of these production items consistent with
the planned delivery of the associated end-items. That is, the
programming and budgeting will be on a time-phased "lead-time away" or
"need to commit" basis. However, funds may not be budgeted for support,
trainers, or data for obligation before the design or specifications of such
items are essentially complete. These items will be programmed on an
"ability to contract" basis as well as on a "lead-time away" basis. In
general, all integrated logistics support costs and systems
software/integration costs necessary to support the initial quantity of enditems
will be budgeted in the initial procurement year. Circumstances
may warrant a budget request for nonrecurring costs and production items
related to the end-item earlier than lead-time considerations dictate, e.g.,
procurement of spare parts along with production end-items to ensure
configuration control. In the case of engineering changes occurring during
the production process, all associated nonrecurring costs will be funded by
the first benefiting fiscal year appropriation; i.e., the appropriation that
financed the first end-items affected by the change during production.
Exceptions will be on a case-by-case basis and will be recognized during
the Program Management Proposal (PMP) process. Recurring costs will
be funded by the fiscal year appropriation that financed the affected item.
2. PRODUCTION SUPPORT SERVICES.
Certain production support services (described in par. 075342) should be
budgeted on an annualized basis instead of a fully funded basis to
minimize unobligated balances in the procurement appropriations. The
following guidance is provided:
a. Acceptance Test and Evaluation (AT&E).
(1) AT&E which is necessary to allow Government acceptance of
an item from a contractor, i.e., to satisfy acceptance requirements
specified in the contract, should be fully funded in the fiscal year
program that the item is budgeted;
(2) AT&E which is not necessary to allow Government
acceptance of an item from a contractor, but is performed for the
Government's own assurance that the item fulfills the contract
specifications should be budgeted on an annual basis;
As an example, since most operational safety and improvement
programs involve commercial off-the-shelf or non-developmental
items that do not have a research and development phase, testing
required for articles beginning in the production phase is categorized
as AT&E and appropriately financed by procurement appropriations
on an annualized basis.
Financial Management Policy
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