FINANCIAL MANAGEMENT POLICY MANUAL

programs until amortized. When programs are reduced to the extent that
advance procurement contract supports a quantity that exceeds the
approved FYDP, the guidance in item 1. applies for that effort applicable
to the excess quantities, e.g. partial termination, contract modification,
etc.
Obligations and expenditures of a termination liability advance procurement
contract may not be decreased below costs incurred once recorded. In those
instances where administrative procedure provides for an advance
procurement contract to be redefined into the end-item contract awarded in the
subsequent fiscal year, no decrease below costs incurred will be made to the
total obligation recorded in the advance procurement fiscal year at the point of
definition into the end-item contract or later in the acquisition process. In
those instances where the end-item quantity is adjusted from that anticipated
and contracted in the advance procurement instrument, the advance
procurement instrument will remain the document of record without decrease
other than termination in whole or part.
(Change 59)
075328 APPROVAL FOR PRODUCTION
Department of the Navy (DON) system acquisition policy requires that the
appropriate decision authority grant production approval before a system
enters production. Accordingly, it is the policy of the DON to budget initial
production funding for weapons systems and other equipment if approval for
limited or full production can be reasonably expected to be provided in time to
allow full program execution during the fiscal year for which funds are
requested. Additional explanatory guidance is contained in the Budget
Guidance Manual.
(Change 50)
075340 SCOPE
Section III:
SYSTEMS COSTS
Standard terminology for Department of Defense systems acquisition is
required for uniform presentation of requirements in the budgeting and
reporting processes. This section outlines the costs to be included in
procurement appropriation budget line items.
(Change 48)
Financial Management Policy
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