Color of Money 101

1. Color of Money 101 PEO SYSCOM COMMANDERS’ CONFERENCE Siobhan Tack DAU BCEFM Department Chair, C&NE Region Siobhan.tack@dau.mil 703-805-4449

2. The Budget Process #1 Identify the Requirement #2 Develop A Cost Estimate #3 Apply Appropriations and Funding Policies #4 Budget using PPBS #5 Congress Appropriates through the Enactment Process #6 Get to Work during the Execution Process

3. Lesson Overview • Appropriation Categories • Funding Policies • Congressional Budget Enactment Process • Budget Execution Process

4. Major Appropriation Categories APPN CAT FUNDINGPOLICY SCOPE RDT & E PROC (SCN) O & M MILPER MILCON RDT&E Activities & Expenses End items >= $100K system unit cost, All Centrally managed items, Initial Spares, Labor for certain production-related functions (e.g., item assembly, quality assurance) Replenishment Spares, Fuel, Civilian Salaries, Construction Projects < $750K, Travel, Non-centrally managed end items < $100K system unit cost Military Personnel Expenses Construction Projects >= $750K INCREMENTAL FULL ANNUAL ANNUAL FULL

5. Multiyear Procurement (MYP) • Exception to Full Funding Policy • Commitment to buy a specific quantity of useable end items of a weapon system over a specified number of years (normally, maximum of five years) • Annual Appropriation by Congress for same specified number of years • Purpose: - Reduce program cost growth - Counteract adverse effects of the annual budget and procurement process - Bring stability to acquisition process

6. Advance ProcurementLong Lead Items • Exceptionto Full Funding Policy • Contained in Acquisition Strategy • Approved in Milestone Decision • Separate initial contract • Finances Long Lead (Recurring) Components • To protect production schedule • To maintain a critical skill in the workforce • Generally, Budget Authority requested / granted one Fiscal Year in advance of the related end item contract • Shown as a separate line item on the budget request.

7. Congressional Budget Process Enactment Process • Budget Resolution • Authorization Bill • Appropriations Bill

8. Congressional Enactment Timetable JAN FEB MAR APR MAY JUN JUL AUG SEP OCT 1 15 15 10 30 PRES BUDGET “TARGET” FISCAL YEAR CBO REPORT COMMITTEE INPUTS HRNGS Marks FLOOR HOUSE Budget Resolution BUDGET RESOLUTION Conf ^ SENATE HRNGS Marks FLOOR AuthorizationAct HASC HRNGSMARK-UP FLOOR FLOOR HOUSE AUTHORIZATIONS Conf ^ SENATE SASC HRNGSMARK-UP FLOOR FLOOR HAC HRNGS MARK-UP FLOOR FLOOR HOUSE Appropriations Act Conf APPROPRIATIONS SENATE SAC HRNGS MARK-UP FLOOR FLOOR ^

9. Appeals To Congressional MarksGeneral Rules Between Congress And DoD • Each phase (i.e., Authorization and Appropriation) is separate • Appeal to next Committee of that phase considering the budget request (e.g., appeal to the SASC, SAC and/or the appropriate conference committee) • Appeal to amount closest to President’s Budget • Acceptable to appeal language and production quantities as well as dollar amounts

10. Continuing Resolution • If Congress fails to pass appropriations bills prior to 1 October, it may pass a joint Continuing Resolution which must be signed by the President • Continuing Resolution Authority is stopgap spending authority allowing the federal government to continue operating • Allows obligation of funds at the “current rate of operations” usually based on one of these levels: • ____________________________________ • ____________________________________ • New Start programs and expansion of current program scope NOT PERMITTED Normal rate based on last year’s appropriation Normal rate based on lowest Congressional mark

11. Apportionment Process Provides Budget Authority Congress CRA Fully Fund Quarterly Fund Impoundment: Deferral Rescission Apportionment OMB Withhold General Reductions OSD Comptroller Release Service Comptroller Allocation Sub-Allocation/ Allotment MAJCOM/PEO Comptroller PMO Program Management Office

12. Impact of General Reductions on An Acquisition ProgramJoint Direct Attack Munition (JDAM) Program FY 98 Appropriation (RDT&E) $24.70 M FFRDC $ 0.00 M Consultant 0.37 M Budget Cap 0.14 M National Missile Defense 0.31 M Small Business Innovative Research 2.03 M Inflation Reduction 0.13 M Total General Reductions $ 2.98 M Remainder $21.72 M Taxes Reduction = 12.1 % of Amount Appropriated

13. Apportionment Process Provides Budget Authority CRA Congress Fully Fund Quarterly Fund Impoundment: Deferral Rescission Apportionment OMB Withhold GR OSD Comptroller Release Service Comptroller Allocation Withhold GR/Corporate Bills Sub-Allocation/ Allotment MAJCOM/PEO Comptroller Withhold GR/CB PMO Program Management Office Execution GR=General Reductions

14. Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS Disbursing / Finance Office OSD Comptroller Service Comptroller PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller Commitment C-Color Y-Year A-Amount PMO Program Management Office Contractor

15. Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS Disbursing / Finance Office OSD Comptroller Service Comptroller PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller Obligation Contractor PMO Program Management Office

16. Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS Disbursing / Finance Office OSD Comptroller Service Comptroller Invoice PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller Invoice Contractor PMO Program Management Office • Starts work • Incurs cost

17. Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS Disbursing / Finance Office OSD Comptroller Service Comptroller Check PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller Expenditure Contractor PMO Program Management Office

18. Budget Execution Congress DFAS Region Finance Center US Treasury OMB Expenditure Reporting System DFAS Disbursing / Finance Office OSD Comptroller Service Comptroller PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller Contractor PMO Program Management Office

19. Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS Disbursing / Finance Office Cash OSD Comptroller Service Comptroller Outlay PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller Contractor PMO Program Management Office

20. Apportionment Process Budget Execution Congress DFAS Region Finance Center US Treasury OMB DFAS Disbursing / Finance Office OSD Comptroller How can we get in TROUBLE? Service Comptroller PCO Procuring Contract Officer ACO Administrative Contract Officer MAJCOM/PEO Comptroller PMO Program Management Office Contractor Laws: - Misappropriation - Anti-Deficiency - Bona Fide Need

21. Execution Laws • Misappropriation Act[Title 31,U.S. Code, S1301] • Requires funds to be used only for the purposes and programs for which the appropriation was made. • Anti-Deficiency Act [Title 31, U.S. Code, Sec 1341 & 1517 ] • Prohibits making or authorizing an obligation in excess of the amount available. • Forbids obligation to pay money from the US Treasury in advance of an appropriation. • Requires agency to fix responsibility for violations of the Act. • Bona Fide Need Rule: • Requires funds to be used only for needs or services in the year of the appropriations obligation period.

22. Reprogramming • Process of redirecting fundsfor purposes other than those contemplated at the time of appropriation. • Reprogramming rules are based on agreements between DoD and Congress. • DoD informs Congress of all Reprogramming via a semi-annual report. • Types of Reprogramming actions: • Internal • Below Threshold • Congressional Prior Approval

23. Procurement O&M RDT&E MILPER MILCON Budget Activity Budget Activity Budget Activity Budget Activity Budget Activity Activity Group Activity Group Program Elements Activity Group Line Item Sub Activity Projects Project Sub Activity DoD Appropriation StructureLevel of Control for “Below Threshold” Reprogramming Purposes

24. Below Threshold Reprogramming APPRN MAX INTO MAX OUT LEVEL OF CONTROL OBL AVAIL Greater of -4M or -20% + 4M RDT & E 2 YEARS PROGRAM ELEMENT Greater of -10M or -20% +10M 3 YEARS ( 5 YEARS SCN) PROC LINE ITEM BUDGET ACTIVITY SOME BA 1 SUB-ACTIVITY LIMITATIONS ON DECREASES (OPERATING FORCES) None Unless Specified +15M O & M 1 YEAR +10M Not Specified MILPERS BUDGET ACTIVITY 1 YEAR Lesser of +2M or +25% Not Specified PROJECT MILCON 5 YEARS Reference Source: Memo Change (30 Oct 96) to DoD Financial Management Regulation , Volume 3

25. Congressional Prior Approval • Applies to Actions Involving: • General Transfer Authority (between appropriations) • Major System Procurement Quantity Increases • Congressional Special Interest Items • Amounts exceeding specified thresholds within an appropriation • Initiation of new programs or new starts within existing programs exceeding amounts • Termination of programs meeting certain criteria • Requires: • Approval by USD (Comptroller) • Approval by HAC / SAC and HASC / SASC • Approval by House and Senate Committees on Intelligence (for intelligence assets)

26. Internal Reprogramming Applies To: - Reprogramming actions that do not involve changes from the purpose and amounts justified in budget presentations to Congress Requires: - Approval by the USD (Comptroller)

27. Appropriation Life - Example PROCUREMENT APPROPRIATION EXPIRED ACCOUNT FY 1 FUNDS CANCELLED FY 1 FY 2 FY 3 FY 4 FY 5 FY 6 FY 7 FY 8 FY 9 NEW OBLIGATIONSNO NEW OBLIGATIONSCURRENT APPROPRIATION OBLIGATION ADJUSTMENTS Limited to lesser of: EXPENDITURES - 1% of current appropriation ACCOUNTING IDENTITY - Unexpended balance of cancelled appn 94 95 96 97 98 99 00 01 02 00 01 02