FINANCIAL MANAGEMENT POLICY MANUAL

furnished material, and related labor for government- responsible
defects and deficiencies identified during builders trials,
acceptance trials, and testing during the post delivery period. Post
delivery includes all work required to correct defects or
deficiencies identified during the post delivery period. Post
delivery also includes all work required to correct trial card
deficiencies on a ship of a particular class, as well as on
subsequent ships of that class (whether or not delivered) until the
corrective action for that ship class is completed.
(Change 66)
075324 ADVANCE PROCUREMENT OF LONG LEAD-
TIME ITEMS
1. GENERAL.
The following guidance pertains to procurement programs. Under specific
limited conditions, long lead-time items may be budgeted in advance of
the fiscal year in which the end-item is budgeted. Long lead-time
procurement shall be for components, parts, material or effort of the same
end-item that must be funded in an advance procurement timeframe in
order to maintain a planned production schedule. Advance procurement
requests for long lead-time items shall be limited to the major procurement
appropriations and shall be for those elements of the end-item whose leadtimes
are significantly longer than other elements of the same end-item.
The cost of elements categorized as long lead-time should be a relatively
low percentage of the cost of the end-item. Also, proposals for advance
procurement funding should take full consideration of the applicability of
the items to other programs or as spares in the event that the prospective
program fails to materialize. All advance procurement requests must be
specifically identified in the budget and apportionment submissions.
2. BUDGETING.
Advance procurement will be budgeted only one year in advance of the
end-item funding year. This applies to major weapons systems unable to
deliver within 24 months of authorization, or to protect reorder lead-time.
Nonrecurring costs may be budgeted as advance procurement only in the
first advance procurement year. Exceptions to allow more than one year
of advance procurement will be approved on a case-by-case basis in the
budget review process. Typical exceptions to this policy are advance
economic order quantity (EOQ) procurements associated with multiyear
contracts (discussed below) and exceptionally long lead-time materials,
such as nuclear cores, associated with the shipbuilding program. The
preferred funding method is to budget the full cost of advance
procurement items which would have utility if the subsequent end-item
was not procured. At a minimum, termination liability will be funded for
the items for which the advance procurement request is being made.
Financial Management Policy
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