Reprogramming Funds

The following learning objectives are covered in this lesson:

• Select the appropriate public law (i.e., Misappropriation Act, Anti-deficiency Act, Bona Fide Need) that applies to the use of appropriated funds under specific circumstances.
• Given a funding shortfall, apply the rules governing reprogramming of appropriated funds in each appropriation category to resolve the problem.
• Identify the role of Operational Assessment (OA) in reducing program risk.
• Identify the risks and benefits associated with
•  
•  DT/OT.

1. Congress has passed laws to ensure the proper use of the funds they make available for defense acquisition programs:

• The Misappropriation Act states that funds appropriated by Congress can only be used for the programs and purposes for which the appropriation was made. Using Research, Development, Test and Evaluation (RDT&E) funds to pay for the procurement of items, for example, would violate the Misappropriation Act.
• The Anti-Deficiency Act prohibits the obligation of funds in excess of an appropriated amount or in advance of receiving an appropriation. In other words, you can't spend more funds than you have or before you have them. Incurring a contractual obligation without having the funds to cover it, for example, would violate the Anti-Deficiency Act.
• The Bona Fide Need Rule states that funds appropriated for a particular area can only be used during the period in which the appropriation is available for new obligations. If a research and development contract were awarded with FY03 RDT&E funds, and a new requirement arises in FY05 beyond the scope of that contract, then using FY03 RDT&E funds to pay for the new requirement would violate the Bona Fide Rule.

2. Although there are strict rules governing the use of appropriated funds, Congress recognizes that there are certain situations where some flexibility is needed. Reprogramming is the use of funds for purposes other than those intended by Congress at the time originally appropriated. Note that reprogramming only applies to funds that have already been appropriated by Congress.

Prior approval from Congress is required to move funds between appropriations, to increase the quantities of major systems procured, new starts, or for designated special interest items. However, most reprogramming actions in DoD are approved at the service or agency level, without the involvement of Congress, using below threshold reprogramming. Below threshold reprogramming allows the transfer of funds among programs within an appropriation category, subject to certain limitations. Up to $20 million of procurement funds can be transferred into a line item, and up to $10 million of RDT&E funds can be transferred into a program element, through below-threshold reprogramming.

3. An Early Operational Assessment (EOA) is typically conducted sometime before the Design Readiness Review held in the System Development and Demonstration phase (SDD). Using prototype systems, the EOA identifies potential operational effectiveness and suitability issues during system development. An Operational Assessment (OA) is conducted before Milestone C. Using engineering development models or pre-production systems, the OA provides operational effectiveness and suitability data before low rate initial production is begun.

4. Sometimes developmental and operational testing are combined to save resources, time and money. DT and OT are typically combined when the data, resources, objectives, test scenarios, and measures of effectiveness of both tests are similar and compatible. DoD policy encourages combined testing as long as the objectives of both types of testing are met. Combined testing eliminates redundant activities and raises operational concerns in time to make changes in the system design. However, combined tests require extensive coordination, are more difficult to design, and risk compromising test objectives.

Combining DT and OT does not remove the requirement to conduct initial operational test and evaluation (IOT&E), which is required by law for ACAT I and ACAT II programs. IOT&E uses production representative systems and typical user personnel in a scenario that is as realistic as possible. Successful IOT&E is required for the milestone decision authority to make the full-rate production decision.