NCMA BOSTON CHAPTER’S MARCH WORKSHOPMARCH 10, 2010

FISCAL LAW – POTENTIALLY YOUR WORSE NIGHTMARE

Presented by:Bunnie Pasternak, CFCM, CPCM, Fellow

National Board of Director

Peter Camp, Esq., ESC/JAA

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DISCLAIMER

THE VIEWS EXPRESSED IN THIS PRESENTATION ARE THOSE OF THE INSTRUCTORS AND MAY NOT REFLECT THE OFFICIAL POLICY OR POSITION OF THE DEPARTMENT OF DEFENSE OR THE UNITED STATES AIR FORCE

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AGENDA

• WHY DOES IT MATTER TO YOU?• WHAT’S THE LAW?

– AUTHORIZATIONS VS. APPROPRIATIONS• WHAT ABOUT THE COLORS OF MONEY?

– THE BASIC RULES• THE PITFALLS OF FISCAL LAW

– PURPOSE, TIME, AND AMOUNT (PTA)– THE ANTI-DEFICIENCY ACT (ADA)

• SUMMARY• BACK-UP CHARTS

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DoD Inspector General Reports on Potential Antideficiency Act Violations Resulting from DoD Purchases Made Through Non-DoD

Agencies (FY 2004-07)

• Over the last 4 years, the DoD Office of Inspector General issued 10 reports addressing FY 2004 through FY 2007 DoD purchases through non-DoD agencies.

• These reports address whether the funding policies, procedures, and internal controls of each activity selected for review were in place, compliant, and properly administered.

• Overall, the DoD IG reviewed six non-DoD agencies purchasing goods and services on behalf of DoD.

• The non-DoD agencies processed approximately 91,000 purchases from FY 2004 through FY 2007, valued at approximately $12.0 billion.

• At these agencies, the DoD IG reviewed 658 purchases valued at approximately $1.3 billion.

(DoD IG Report No D-2008-082, April 25, 2008, Executive Summary, Background, p. i)

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THE POWER OF THE PURSE

• “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by law . . . “

– Constitution, Article I, section 9, clause 7

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FISCAL LAW IS COMPRISED OF

• THE LAWS AND POLICY GOVERNING THE EXECUTION OF APPROPRIATIONS

• US CONSTITUTION• UNITED STATES CODE• PUBLIC LAWS• REGULATIONS

– DOD POLICY (DOD 7000.14-R)– SERVICE POLICY (i.e., AFI 65-601)– FAR, DFARS AND SERVICE SUPPLEMENTS

(i.e., 32.7, 37.106, 204.7107, 232.7, e.g., AF FARS 5332.7)

• OPINIONS (COMPTROLLER GENERAL AND FEDERAL COURTS)

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FAR 32.702 POLICY

BEFORE EXECUTING ANY CONTRACT, THE CONTRACTING OFFICER SHALL OBTAIN WRITTEN ASSURANCE FROM RESPONSIBLE FISCAL AUTHORITY THAT ADEQUATE FUNDS ARE AVAILABLE (FORM 9, AFMC 36)

NO OFFICER OR EMPLOYEE OF THE GOVERNMENT MAY CREATE OR AUTHORIZE AN OBLIGATION IN EXCESS OF THE FUNDS AVAILABLE, OR IN ADVANCE OF APPROPRIATIONS (ANTI-DEFICIENCY ACT 31 USC 1341), UNLESS OTHERWISE AUTHORIZED BY LAW.

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CONGRESSIONAL AUTHORIZATION

• Authorization is the legal authority to carry out a program.

– Authorizations generally start with the Congressional Committee with cognizance over the subject matter, e.g. House Armed Services Committee, Senate Armed Services Committee (HASC, SASC). These are standing Committees.

• An authorization does not provide budget authority

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WHAT IS BUDGET AUTHORITY?

“. . . [A]uthority provided by law to enter into obligations which will result in immediate or future outlay involving government funds. . . .” (2 USC Section 622(2))

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CONGRESSIONAL APPROPRIATION

• An act of Congress that permits a federal agency to incur obligations and to make payments out of the Treasury for a specified purpose.

– House Appropriations Committee, Senate Appropriations Committee (HAC, SAC). These are standing committees and they are “Spending Committees”

• An Appropriation Act is the most common form of budget authority

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Appropriations Committee:• Authorizes use of funds to Accomplish Programs. •Provides Funding (Budget Authority)

Puts money into the checking account

Budget Committees:• Sets overall budget ceilings

Authorization Committees:• Provide Authority to Accomplish Certain Programs

•Specifies Program Levels•Manpower Programs•Number of Aircraft, etc.

• Handles Policy Matters

Opens the checking account

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A COMPARISON

Authorizations

• Provides permission

and direction on how

to spend funds

• Policy oriented

• Separate bills written

in House and Senate• Generally permanent

law• The Authorization Act

does not provide budget authority

Appropriations• Provides budget authority

or permission to draw

funds from the US

Treasury

• Budget oriented

• Bill traditionally

originates in House • Senate modifies House bill

• Generally one-year law

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MilitaryDepartments

DepartmentOf Defense

President(OMB)

Congress

ServiceBudgets

DoD Budget

authorizations process

appropriations process

Apportionment

CBOReport

Concurrent BudgetResolution

BudgetExecution

Testimony & Appeals

FEB APR MAY JUL SEPT OCT

NationalBudget

Allotment

MAR JUN AUG

National Defense Authorization

Act

DoD Appropriations

Act

joint conference

joint conference

THE PROCESS OF ENACTMENT

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OMBOMB

OSDOSD

Treasury Dept

Treasury Dept

Service (Air Force)

Service (Air Force)

PEO/MAJCOM (AFMC)PEO/MAJCOM (AFMC)

Program Managers/UnitsProgram Managers/Units

Budget AuthorityAuthorizationAppropriation

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THE OFFICE OF MANAGEMENT AND BUDGET APPORTIONS

• OMB apportions amounts available for obligation, including budgetary reserves established pursuant to law, in an appropriation or fund account.

– An Apportionment divides amounts available for obligations by specific time periods (quarters or years), activities, projects, objects, or a combination of these.

(Definitions extracted from A Glossary of Terms Used in the Federal Budget Process, GAO, Revised January, 1993 and Cornelius E. Tierney, Federal Accounting Handbook: Policies, Standards, Procedures, Practices, Wiley (2000).)

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OSD ALLOCATES

• An allocation is the amount of budget authority transferred from one agency, bureau, or account that is set aside in a transfer appropriation account to carry out the purpose of the parent appropriation or fund.

– DOD funds the Services through the Office of Secretary of Defense’s Comptroller Office

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SERVICES ALLOT

• The Services and their MAJCOMs generally allot funds, following specific procedures that each Agency establishes within the general requirements stated in applicable OMB Circulars

• An authorization by either the agency head or another authorized employee to his/her subordinates to incur obligations within a specified amount.

• The amount allotted by an agency cannot exceed the amount apportioned by the OMB.

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REMEMBER!

• THE ESTABLISHED RULE IS – EXPENDITURES OF PUBLIC FUNDS IS PROPER

ONLY WHEN AUTHORIZED BY CONGRESS – NOT THAT PUBLIC FUNDS MAY BE EXPENDED

UNLESS PROHIBITED BY CONGRESS• VERY DIFFERENT FROM INTERPRETING THE FAR

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The of MoneyAppropriation 3400 3600 3080/3010/3020

Description Operations & Maintenance

Research & Development

Other Procurement

Time allowed to obligate (get a contract)

1yr

2yrs

3yrs

Time allowed to expend after period of availability for obligation

5yrs

5yrs

5yrs

Total time

6 yrs

7 yrs

8 yrs

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PURPOSE, TIME, AMOUNT

• APPROPRIATIONS PROVIDE AUTHORITY TO INCUR OBLIGATIONS AND TO MAKE DISBURSEMENTS FOR THE PURPOSES, DURING THE TIME LIMITS AND UP TO THE AMOUNT LIMITATIONS SPECIFIED IN THE APPROPRIATION ACT.

(TITLE 31 OF THE UNITED STATES CODE (USC))

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LIMITATIONS ON THE USE OF APPROPRIATED FUNDS

• THE THREE MAIN ELEMENTS OF FISCAL LAW:

– AN AGENCY MAY OBLIGATE AND EXPEND APPROPRIATIONS ONLY FOR A PROPER PURPOSE

– AN AGENCY MAY OBLIGATE ONLY WITHIN THE TIME LIMITS APPLICABLE TO THE APPROPRIATION

– AN AGENCY MUST OBLIGATE FUNDS ONLY WITHN THE AMOUNTS APPROPRIATED BY CONGRESS AND FORMALLY DISTRIBUTED TO THE AGENCY.

(Title 31 of the United States Code (USC)

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PURPOSE

• “Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.”

(31 USC 1301)

– PROBABLY THE MOST IMPORTANT RESTRICTION ON SPENDING -- WHERE MORE THAN 90% OF ALL FISCAL LAW VIOLATIONS OCCUR

B-248284.2, 1 Sep 92, to Gen. Counsel, USIA

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TIME

• FUNDS ARE ONLY AVAILABLE FOR OBLIGATION DURING THE AVAILABILITY OF THE APPROPRIATION

(10 USC 2306c)

• DON’T OBLIGATE– BEFORE THE PRESIDENT SIGNS THE

APPROPRIATIONS BILL, OR– AFTER THE AVAILABILITY PERIOD OF THE

FUNDS

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APPROPRIATIONS ARE TIME BOUND

FY '06 FY '07 FY 08 FY '09 FY '10 FY '11 FY '12 FY '13 FY '14 FY '14 FY-15

O&M 3400

RDT&E 3600

PROCUREMENT3080

MILPERS 3300

MILCON 3500

Current. Available for obligation.

Expired. It is available only for recording, adjusting, and .liquidating obligations properly chargeable to that appropriation

Cancelled. Closed Appropriation. Not available for any purpose.

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B-114841, 9 Feb 77, Installment Payments for Real Property

PRIOR YEAR(S), CURRENT YEAR, BUDGET YEAR(S)

AT ANY GIVEN TIME, SEVERAL FISCAL YEARS MAY BE UNDER CONSIDERATION:

FY '08 FY '09 FY '10 FY '11 FY '12

… Prior Year

-1 Prior Year

Current Year

Budget Year

Budget Year + 1 …

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TIME“BONA FIDE NEEDS RULE”

• RULE: A FISCAL YEAR APPROPRIATION MAY BE OBLIGATED ONLY TO MEET– A LEGITIMATE, OR BONA FIDE, – NEED ARISING IN, OR IN SOME CASES

ARISING PRIOR TO BUT CONTINUING TO EXIST IN, THE FISCAL YEAR

– FOR WHICH THE APPROPRIATION WAS MADE.

(31 U.S.C. 1502(A))

• ARE YOU OBLIGATING CURRENT DOLLARS FOR CURRENT NEEDS?– IF NOT, YOU MIGHT BE IN THE MIDDLE OF

A NIGHTMARE

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AMOUNT

• DON’T SPEND IN EXCESS OR IN ADVANCE OF AN APPROPRIATION

– 31 USC 1341(a)(1)(a)

• DON’T OBLIGATE IN EXCESS OF AN APPORTIONMENT OR ALLOCATION.

– 31 USC 1517

• DON’T AUGMENT FROM OTHER SOURCES -MISCELLANEOUS RECEIPTS

– 31 USC 3302(b)

• DON’T ACCEPT VOLUNTARY/FREE SERVICES– 31 USC 1342

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EXPENSE VS. INVESTMENT

• EXPENSE (O&M) VERSUS INVESTMENTS (PROCUREMENT)

• BASIC DISTINCTION BETWEEN EXPENSE AND INVESTMENT COSTS:

– EXPENSES ARE COSTS INCURRED TO OPERATE & MAINTAIN THE ORGANIZATION, SUCH AS PERSONAL SERVICES, SUPPLIES, AND UTILITIES

– INVESTMENTS ARE COSTS RESULTING IN THE ACQUISITION OF, OR AN ADDITION TO, END ITEMS

See DOD Financial Management Regulation, Vol. 2A, Ch. 1, para. 010201

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EXPENSE VS. INVESTMENT

• BASIC EXPENSE COST DETERMINATION GUIDELINES/CRITERIA:– COSTS OF RESOURCES CONSUMED IN OPERATING AND

MAINTAINING. • WHEN COSTS GENERALLY CONSIDERED EXPENSES ARE

INCLUDED IN THE PRODUCTION OR CONSTRUCTION OF AN INVESTMENT ITEM, THEY SHALL BE CLASSIFIED AS INVESTMENT COSTS

• EXPENSE EXAMPLES:– LABOR OF CIVILIAN, MILITARY, OR CONTRACTOR PERSONNEL– RENTAL CHARGES FOR EQUIPMENT AND FACILITIES– FOOD, CLOTHING, AND FUEL– SUPPLIES AND MATERIALS DESIGNATED FOR SUPPLY

MANAGEMENT OF THE DEFENSE WORKING CAPITAL FUNDS– MAINTENANCE, REPAIR, OVERHAUL, REWORK OF EQUIPMENT

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EXPENSE VS. INVESTMENT (Cont’d) • BASIC INVESTMENT COST DETERMINATION

GUIDELINES/CRITERIA: – COSTS TO ACQUIRE CAPITAL ASSETS, SUCH AS REAL PROPERTY

AND EQUIPMENT

• INVESTMENT EXAMPLES: – ITEMS OF EQUIPMENT, INCLUDING ASSEMBLIES, AMMUNITION AND

EXPLOSIVES, MODIFICATION KITS, SPARES AND REPAIR PARTS NOT MANAGED BY THE DEFENSE WORKING CAPITAL FUNDS

– EQUIPMENT ITEMS NOT SUBJECT TO CENTRALIZED ITEM MANAGEMENT AND ASSET CONTROL, AND HAVING A SYSTEM UNIT COST EQUAL TO OR GREATER THAN THE CURRENTLY APPROVED EXPENSE AND INVESTMENT DOLLAR THRESHOLD

• FOR DoD: THRESHOLD IS CURRENTLY $250,000; FOR EVERYONE ELSE IT IS $100,000

– CONSTRUCTION TO INCLUDE THE COST OF LAND AND RIGHTS THEREIN; INCLUDES REAL PROPERTY EQUIPMENT INSTALLED AND MADE AN INTEGRAL PART OF SUCH FACILITIES, RELATED SITE PREPARATION, AND OTHER LAND IMPROVEMENTS

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EXPENSE VS. INVESTMENT (Cont’d)

• KNOWING THE DIFFERENCE IS CRITICAL TO THE PROPER EXECUTION OF INVESTMENT APPROPRIATIONS, BECAUSE –-

– IT ENSURES COMPLIANCE WITH REGULATORY AND POLICY DIRECTION, AS DISCHARGED BY CONGRESSIONAL, GAO, OMB, AND OSD COMPTROLLER GUIDANCE INSTRUMENTS, AND

– AVOIDS INFRACTIONS, WHICH ARE REPORTABLE TO OSD, GAO, AND THE CONGRESS

(GOVERNING POLICY - DOD FMR, VOLUME 2A, CHAPTER 1)

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CROSSING FISCAL YEARS . . .

• ORDINARILY O&M FUNDS ARE NOT ALLOWED TO CROSS FISCAL YEARS– A SERVICE CONTRACT THAT IS FUNDED WITH ANNUAL APPROPRIATIONS

MAY NOT CROSS FISCAL YEARS (FAR 32.703-3)

• DoD HAS AN EXCEPTION BY STATUTE THAT ALLOWS A CONTRACTING OFFICER TO

– ENTER INTO A CONTRACT, EXERCISE AN OPTION, OR PLACE AN ORDER UNDER A CONTRACT FOR SEVERABLE SERVICES

– FOR A PERIOD THAT BEGINS IN ONE FISCAL YEAR AND ENDS IN THE NEXT FISCAL YEAR, IF THE PERIOD OF THE CONTRACT AWARDED, OPTION EXERCISED, OR ORDER PLACED

– DOES NOT EXCEED 1 YEAR, AND

– CURRENT YEAR FUNDS ARE USED TO FULLY FUND THE SEVERABLE SERVICES ACROSS FISCAL YEARS.

(See 10 USC 2410A, DFARS 232.703-3)

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Severable or Non-Severable?Services? Severable? Non-Severable?

e.g., Non-personal services, Advisory and Assistance Services (A&AS), Base Services Can the service be separated into components that independently meet a separate need of the Government?

Yes. The service is “severable”

As a general rule, severable services are the bona fide needs of the fiscal year in which performed. (Matter of Incremental Funding of Multiyear Contracts, B-241415, 71 Comp. Gen 428 (1992)). Therefore, funding of severable service contracts generally may not cross fiscal years and the Service should fund the services with current year dollars.

Does the service produce a single or unified outcome, product or report that cannot be subdivided for separate performance in different fiscal years?

Yes. The service is “non-severable”.

In consequence, the Service must fund the entire effort with dollars that are current (available) for obligation at the time the contract is executed. (DFAS-IN 37-1, tbl. 8-1)

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B-259274, 22 May 96, Funding of Maintenance Contract Extending Beyond Fiscal Year

RDT&EAPPROPRIATION SPECIFIC POLICY

• INCREMENTAL FUNDING– FUND ONLY WHAT CAN BE EXECUTED IN THE

FIRST YEAR• INCLUDE ONLY THOSE COSTS IN THE

BUDGET REQUEST EXPECTED TO BE INCURRED/ PERFORMED FOR THAT FISCAL YEAR OR 12 MONTH PERIOD FOR SEVERABLE SERVICES

• CLAUSES TO BE USED• COST CONTRACTS – LIMITATION OF FUNDS (LOF)

(FAR 52.232.22) • FFP CONTRACTS – LIMITATION OF GOVERNMENT’S

OBLIGATION (LOGO)(DFARS 252.232-7007)

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PROCUREMENT APPROPRIATION SPECIFIC POLICY

• FULL FUNDING AN END ITEM IS FULLY FUNDED WHEN IT MEETS THE FOLLOWING CRITERIA:

– FUNDS ARE PROGRAMMED, BUDGETED AND APPROVED TO COVER THE TOTAL ESTIMATED COST OF THE CONTRACT QUANITY OF END ITEMS AT THE TIME OF CONTRACT AWARD

– THE ITEM MUST BE A COMPLETE, USABLE END ITEM

– NO FUTURE-YEAR APPROPRIATION IS REQUIRED FOR DELIVERY OF THE END ITEM AUTHORIZED AND APPROVED BY CONGRESS

– YOU CAN’T BUY AN END ITEM WITH TWO (OR MORE) DIFFERENT YEARS OF MONEY

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FULL FUNDING EXCEPTIONS

– ADVANCE PROCUREMENT • ALLOWS PROGRAMS TO ORDER ITEMS THAT HAVE A

LONG LEAD IN ADVANCE OF ORDERING THE COMPLETE, USABLE END ITEM.

– ADVANCE ECONOMIC ORDER QUANTITY (EOQ) PROCUREMENT

• THIS APPLIES TO MULTI-YEAR PROCUREMENTS WHEN IT IS ADVANTAGEOUS TO THE GOVERNMENT TO BUY A LARGE QUANTITIES OF ITEMS UP-FRONT.

CONGRESSIONAL AUTHORIZATION IS REQUIRED PRIOR TO EXECUTING ONE OF THESE EXCEPTIONS

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WHAT IS THE ADA?• THE PRIMARY “ENFORCEMENT DEVICE” TO

ENSURE CONGRESS’ POWER TO DETERMINE HOW MUCH MONEY CAN BE SPENT BY A GIVEN AGENCY OR PROGRAM

• CODIFIED IN THREE MAJOR STATUTES– 31 U.S.C. § 1341 LIMITATIONS ON EXPENDING AND

OBLIGATING AMOUNTS [“ANTI-DEFICIENCY ACT”]– 31 U.S.C. § 1342 LIMITATION ON VOLUNTARY SERVICES– 31 USC § 1517 PROHIBITED OBLIGATIONS AND

EXPENDITURES

(AFI 65-608, Chapter “Antideficiency Act Violations”)

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WHAT CONSTITUTES AN ADA VIOLATION?

• VIOLATION OF THE BONA-FIDE NEED RULE– WRONG FISCAL YEAR VIOLATED – 31 U.S.C. 1502(a)– MAY LEAD TO AN ADA VIOLATION

• VIOLATION OF THE PURPOSE STATUTE– OBLIGATION CHARGED AGAINST INAPPROPRIATE ACCOUNT

– 31 U.S.C. 1301– MAY LEAD TO AN ADA VIOLATION

• OBLIGATE/EXPEND IN EXCESS OF OR IN ADVANCE OF AN APPROPRIATION – 31 U.S.C. 1341(a)

– AUTOMATIC ADA VIOLATION

• OBLIGATE/EXPEND IN EXCESS OF AN APPORTIONMENT OR AN ADMINISTRATIVE SUBDIVISION – 31 U.S.C. 1517 (a)

– AUTOMATIC ADA VIOLATION

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RAMIFICATIONS OF ADA VIOLATION

• CRIMINAL PENALTIES (MONETARY FINE AND IMPRISONMENT)

• DISCIPLINARY SANCTIONS THAT ATTACH TO GOVERNMENT CIVILIAN AND MILITARY PERSONNEL WHO VIOLATE THE ADA

• A DOD CIVILIAN OR MILITARY MEMBER MAY BE HELD PERSONALLY LIABLE FOR THE RECOUPMENT OF FUNDS

DEPENDING ON THE SERVICE – THERE MIGHT BE AN EXPANSIVE VIEW OF THE RANGE OF RESPONSIBILITY FOR ADA VIOLATIONS

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TOP ADA CAUSES

• MAJOR CATEGORIES OF VIOLATIONS:– EXCEED MINOR CONSTRUCTION

ADMINISTRATIVE LIMIT– EXCEED FUNDS AVAILABLE– USE O&M TO ACQUIRE EQUIPMENT ITEMS

THAT EXCEED THE DESIGNATED AMOUNT FOR MANDATORY USE OF PROCUREMENT FUNDS (EXPENSE VERSUS INVESTMENT THRESHOLD)

– OBLIGATE IN ADVANCE OF FUNDS BEING AVAILABLE

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Light Refreshments Leading to Air War College’sADA Violation

ADA Report 09-03

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B-310108, 6 Feb 08, Forest Service—Apportionment Limitation for Aviation Resources

The Emergency Exception to the ADA

Be sure it’s a real emergency before you use it!

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ADA Report 09-04ADA Report 09-05

IT MIPRS to NIH and DOI leading to ADA Violations due to failure to return unused 3400 funds—funds were rolled over and reused by the purchasing agency the next year

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DOD IG Report No. D-2008-082

Review of 6 Non-DOD Agencies’ MIPR purchases, FY04-07Total: 91K Purchases, $12BTotal Reviewed: 658, $1.3B

Findings: •493 Potential ADA Violations (75%)•$518.5M (40%)

•Bona Fide Needs Rule•Prior Year Funds for Current Needs•Advance Payments

•Purpose Statute•Use of Entirely Wrong Funds

DOD IG Report No. D-2008-066

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A FOUR PRONG TEST TO AVOID AN ADA NIGHTMARE

(1) IDENTIFY THE APPROPRIATION PROPOSED FOR OBLIGATION AND EXPENDITURE

(2) DETERMINE WHETHER THE APPROPRIATION IS AVAILABLE FOR THE PURPOSE SERVED BY THE OBLIGATION AND EXPENDITURE

(3) DETERMINE WHETHER THE APPROPRIATION IS AVAILABLE AT THE TIME OF THE OBLIGATION AND EXPENDITURE

(4) DETERMINE WHETHER THE APPROPRIATION IS AVAILABLE IN THE AMOUNT OF THE OBLIGATION AND EXPENDITURE

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THE BOTTOM LINE • YOU CAN’T SPEND

– MORE MONEY THAN YOU LEGALLY HAVE – MONEY ON AN EFFORT THAT WASN’T APPROVED BY

CONGRESS, OR

– IN ADVANCE OF AN APPROPRIATION

• YOU CANNOT RECEIVE SERVICES WITHOUT PAYING FOR THEM

• WHEN THERE HAS BEEN A VIOLATION, IT HAS TO BE REPORTED

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CONTACT INFORMATION

National Contract Management Association21740 Beaumeade CircleSuite 125Asburn, VA 20147Phone: 800-344-8096 or (703) 448-9231Fax: (703) 448-0939

Bunnie Pasternak, CFCM, CPCM, Fellow

National Board of DirectorPhone: (781) 266-0331E-mail: bernice.pasternak@us.af.mil

Peter Camp, Esq., ESC/JAPhone: (781) 377-4076E-mail: peter.camp@hanscom.af.mil

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DEFENSE COMMITTEES

• Authorization• House Armed Services Committee (HASC)

• Five Subcommittees

• Senate Armed Services Committee (SASC)

• Six Subcommittees • House Permanent Select Committee on Intelligence (HPSCI)• Senate Select Committee on Intelligence (SSCI)

• Appropriations• House Appropriations Committee (HAC)

• Defense Subcommittee (HAC-D)

• Senate Appropriations Committee (SAC)• Defense Subcommittee (SAC-D)

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FY99 C-5 ProgramBudget Justification (P-Doc)

This line item funds modifications to the C-5 aircraft. The four engine C-5 carries outsized and heavy cargo (tanks, helicopters, etc.) between main operating bases. The primary modification budgeted in FY99 is the TF-39 High pressure Turbine (HPT). Other

modifications enhance operational capability while improving flight safety, reliability and maintainability. The specific modifications budgeted and programmed are below.

MOD MODIFICATION COST TOTALNR TITLE FY-97 FY-98 FY-99 FY-00 FY-01 FY-02 FY-03 TO GO PROG.3150 NAVSTAR GLOBAL POSITIONING 11.9 8.3 6.7 5.3 88.54252 AIRLIFT DEFENSIVE SYSTEMS 1.3 4.3 2.7 2.8 5.1 30.86032 COMPARTMENT FLOOR CORROS 0.4 0.3 0.76037 TF39 ENGINE HIGH PRESSURE 19.7 34.2 33.1 37.0 41.1 24.9 190.06038 AVIONICS MODERN PROGRAM 113.4 53.7 123.2 107.0 200.6 597.996001 STATION KEEPING EQUIPMENT 10.8 2.4 13.6 10.2 0.4 37.596004 SINCGARS 7.9 13.1 13.2 34.399999X LOW COST MODIFICATI 0.9 0.1 0.1 2.8Z88888 REPROGRAMMINGS 1.7 1.7

TOTAL FOR C-5 61.6 81.2 63.6 193.0 121.0 154.4 107.5 200.6

BUDGET ITEM JUSTIFICATION(EXHIBIT P-40)

DateFebruary 1998

P-1 ITEM NOMENCLATURE: C-5APPROPRIATION/BUDGET ACTIVITY AIRCRAFT PROCUREMENT-AIR FORCE/Aircraft Modifications

P-1 SHOPP LISTITEM NO. 035

PAGE NO.214

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OPERATION & MAINTENANCE ANNUAL APPROPRIATION

• OPERATION, MAINTENANCE AND ADMINISTRATION OF THE ACTIVITIES NOT COVERED BY OTHER APPROPRIATIONS

- CIVILIAN PAY- O&M OF AIRCRAFT AND MISSILES- REPAIR AND MAINTENANCE OF FACILITIES- CONTRACTOR LOGISTICS SUPPORT- MISSION PROGRAM SUSTAINMENT- BASE OPERATIONS

– AVAILABLE FOR OBLIGATION FOR UP TO ONE YEAR

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ANNUAL & MULTI-YEAR APPROPRIATIONS

• ANNUAL APPROPRIATIONS– ACTIVE/AVAILABLE FOR OBLIGATION FOR A SINGLE

YEAR • OPERATIONS & MAINTENANCE (AF: 3400)• MILITARY PERSONNEL (AF: 3500))

• MULTI-YEAR APPROPRIATIONS– ACTIVE/AVAILABLE FOR OBLIGATION FOR MORE

THAN ONE YEAR • MILITARY CONSTRUCTION (AF: 3300)• RDT&E (AF: 3600)• AVIONICS & AIRCRAFT (AF: 3010)• MISSILE PROCUREMENT (AF: 3020)• OTHER PROCUREMENT (AF: 3080)

– EACH SERVICE HAS IT OWN FUND DESIGNATORS AS PREVIOUSLY SHOWN

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RESEARCH, DEVELOPMENT, TEST & EVALUATIONMULTI-YEAR APPROPRIATION

• CONTRACTUAL SERVICES AND ASSOCIATED COSTS

– STUDIES AND ADVANCED DEVELOPMENT– PROTOTYPE ARTICLES– RE-DESIGN DURING DEVELOPMENT– DT&E AND IOT&E– DEVELOPMENT/DESIGN/PURCHASE INSTALLATION AND ACCEPTANCE

TESTING OF EQUIPMENT/INSTRUMENTATION REQUIRED FOR RDT&E– COMMERCIAL COMPONENT CONFIGURATION CHANGES– ONE-OF-A-KIND ARTICLES, INCLUDING SUPPORT EQUIPMENT– SPECIALIZED EQUIPMENT, INSTRUMENTATION AND FACILITIES IN

SUPPORT OF AN RDT&E CONTRACTOR AT GOVERNMENT-OWNED AND COMPANY-OPERATED ACTIVITIES

– END ITEMS, WEAPONS, EQUIPMENT COMPONENTS, MATERIEL, AND SERVICES REQUIRED FOR RDT&E ACTIVITIES.

– TDY IN DIRECT SUPPORT OF AN RDT&E MISSION PROGRAM

• AVAILABLE FOR OBLIGATION FOR UP TO TWO YEARS

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MILITARY PERSONNEL ANNUAL APPROPRIATION

• PAY AND ALLOWANCES OF MILITARY PERSONNEL

• PERMANENT CHANGE OF STATION COSTS

• OTHER MILITARY PERSONNEL COSTS

– AVAILABLE FOR OBLIGATION FOR UP TO ONE YEAR

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MILITARY CONSTRUCTION MULTI-YEAR APPROPRIATION

• LAND ACQUISITIONS

• CONSTRUCTION & ACQUISITION OF FACILITIES

• ALTERATIONS OF EXISTING FACILITIES

– AVAILABLE FOR OBLIGATION FOR UP TO FIVE YEARS

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PROCUREMENT MULTI-YEAR APPROPRIATION

• ELECTRONIC AND TELECOMMUNICATIONS EQUIPMENT

• MUNITIONS AND ASSOCIATED EQUIPMENT

• VEHICULAR EQUIPMENT

• OTHER BASE MAINTENANCE AND SUPPORT EQUIPMENT

– AVAILABLE FOR OBLIGATION FOR UP TO THREE YEARS

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AIRCRAFT PROCUREMENT MULTI-YEAR APPROPRIATION

• AIRCRAFT WEAPON SYSTEMS• MODIFICATIONS• DIRECT GROUND SUPPORT EQUIPMENT• SPARES AND REPAIR PARTS• WAR CONSUMABLES• SPECIAL PURPOSE AUTOMATIC DATA PROCESSING

EQUIPMENT• PRE-DELIVERY FUEL• SIMULATORS AND TRAINING DEVICES

– AVAILABLE FOR OBLIGATION FOR UP TO THREE YEARS

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MISSILE PROCUREMENT MULTI-YEAR APPROPRIATION

• MISSILE WEAPON SYSTEMS• MODIFICATIONS,

MODERNIZATIONS, RETROFIT AND UPDATE

• SPARES AND REPAIR PARTS WAR CONSUMABLES SITE ACTIVATION

• SPECIAL PURPOSE ADPE• LAUNCH VEHICLES

– AVAILABLE FOR OBLIGATION FOR THREE YEARS

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THE ANTI-DEFICIENCY ACT (ADA) IS A SERIES OF IMPORTANT STATUTES

• 31 U.S.C. § 1341 LIMITATIONS ON EXPENDING AND OBLIGATING AMOUNTS [“ANTI-DEFICIENCY ACT”]

• 31 U.S.C. § 1342 LIMITATION ON VOLUNTARY SERVICES• 31 U.S.C. § 1350 CRIMINAL PENALTY• 31 U.S.C. § 1351 REPORTS ON VIOLATIONS• 31 U.S.C. § 1511 DEFINITION AND APPLICATION• 31 U.S.C. §.1512 APPORTIONMENT AND RESERVES• 31 U.S.C. § 1513 OFFICIALS CONTROLLING APPORTIONMENTS• 31 U.S.C. § 1514 ADMINISTRATIVE DIVISION OF APPORTIONMENTS• 31 U.S.C. § 1515 AUTHORIZED APPORTIONMENTS NECESSITATING

DEFICIENCY OR SUPPLEMENTAL APPROPRIATIONS• 31 U.S.C. § 1516 EXEMPTIONS• 31 U.S.C. § 1517 PROHIBITED OBLIGATIONS AND EXPENDITURES• 31 U.S.C. § 1518 ADVERSE PERSONNEL ACTIONS

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