Chapter 3: Contingency Funding and Requirements Process
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- Appropriated funds are subject to three basic fiscal constraints:
- Time. Current fiscal year (FY) funds must be used for current needs.
- Purpose. Funds must be expended for the purpose established by Congress.
- Amount. The Antideficiency Act (ADA) prohibits obligating or spending money before it is appropriated, obligating or expending funds in excess of a specific appropriation, accepting voluntary services, and employing personal services in excess of authorized amounts.
- CCOs should consult with their finance office to understand the available types of funding for the respective contingency and to validate that the proper funding is used for the purpose.
- CCOs must understand the different types of funding—for example, military construction (MILCON), operations and maintenance (O&M), and research, development, test, and evaluation (RDT&E)—and the fiscal constraints of each.
- The customer is responsible for requirements generation, from definition through approval; however, CCOs should expect to advise and assist in the development of requirements (for example, by drafting outcome-based requirements).
- The commander, or a designee, is responsible for the validation and approval of requirements.
- Joint requirements review boards (JRRBs) can greatly help in the validation and approval of requirements and ensuring contract actions meet the commander’s needs and the mission.
- A funded commitment document, such as a purchase request (PR), must include a complete description and the appropriate certified funds. A complete line of accounting (LOA) is critical in ensuring funds are certified and available for obligation.
- A CCO must understand the concept of “money as a weapon system” (MAAWS).
Securing adequate and proper funding to meet agency needs when supporting contingency and humanitarian or peacekeeping operations is vital to the mission. CCOs must understand the different funding types available for the operation, procedures to obtain certified funding, and constraints and limitations. They should quickly build a strong professional relationship with their finance office, ideally in the planning stage or at the onset of the operation, and should work to understand the specific program control procedures developed to accommodate the unique circumstances of the contingency. This effort is key in expeditious and efficient contracting support to the requiring activity.
This chapter discusses funding in contingency environments, including the different types of funding that the CCO may face and the constraints, limitations, and rules that the CCO must understand and comply with. It also summarizes the PR and requirements development processes.Back to Top
Congress limits the authority of DoD and other executive agencies to use appropriated funds. Appropriated funds are subject to three basic fiscal constraints: time, purpose, and amount (detailed in the subsections that follow). Also, see the Financial Management Regulation (FMR) Volume 14, Chapter 2, “Violations of the Antideficiency Act,” for more information on funding constraints.
TimeThe time constraint includes two major elements:
- Appropriations have a specified period of availability.
- Appropriations normally must be used for the needs that arise during the period of availability. The general rule is that current funds must be used for current needs.
Period of availability. Most appropriations are available for obligation purposes for a finite period. O&M funds are available for 1 year, procurement funds for 3 years, and MILCON funds for 5 years. If funds are not obligated during their period of availability, they expire and are unavailable for new obligations (such as new contracts or changes outside the scope of an existing contract). Expired funds may be used to adjust existing obligations, such as paying for a price increase after an in-scope change to an existing contract, as noted in 1552 United States Code (U.S.C.), but obligation adjustment reporting (OAR) approval is required before executing such contracting action.
Bona fide needs rule. This rule (31 U.S.C. 1502(a)) is an appropriations and fiscal law. It provides that the appropriations for one FY will be obligated only to meet a genuine need (a bona fide need) arising in (or sometimes before) the FY for that appropriation. This rule restricts the use of existing FY appropriated funds on requirements for the next FY. For example, annual funds appropriated for FY16 must be used to finance a legitimate FY16 need; the appropriation must not be used to fund a need that the customer will not genuinely have until FY17. The bona fide needs rule also justifies the use of previous-year funding when a contract has been terminated.
Contracts crossing FYs. The application of the bona fide needs rule may differ for supplies and services that cross FYs. Defense Federal Acquisition Regulation Supplement (DFARS) 232.703-3 states that the CCO may enter into a contract, exercise an option, or place an order under a contract for severable services for a period that begins in one FY and ends in the next, if the period of the contract awarded, option exercised, or order placed does not exceed one year (10 U.S.C. 2410a). Also, Federal Acquisition Regulation (FAR) 32.703-3 allows for a contract for nonseverable services to cross FYs when it calls for an end product that cannot feasibly be subdivided for separate performance in each FY (consultant services, for example).
Using the option example, the CCO, pursuant to FAR 32.703-2, may execute a contract action properly chargeable to funds of the new fiscal year before the funds are available, provided that the contract includes the clause at FAR 52.232-18, “Availability of Funds,” and is for operation and maintenance (O&M) and continuing services (e.g., rentals, utilities, and supply items not financed by stock funds necessary for normal operations and for which Congress previously had consistently appropriated funds, unless specific statutory authority exists permitting applicability to other requirements.
Services. As briefly mentioned, the application of the bona fide needs rule differs when services cross FYs. The difference is based on whether the services are considered severable or non-severable and whether annual, multiple-year, or no-year funding is being used.
Severable services are continuing and recurring in nature, such as lawn maintenance, janitorial services, or security services. The benefits are realized when the services are provided, even if the contract is not performed to completion. Most base operations support services provided by a contractor supporting a deployed unit are considered severable. Services are considered severable if they can be separated into components that independently provide value to meet customer needs. According to 10 U.S.C. 2410a, funding is permitted for a contract (or other agreement) for severable services using an annual appropriation for a period of as much as 12 months when the contract is awarded, even if the period of performance begins in one FY and continues into a subsequent one. (See DFARS 232.703-1.)
Nonseverable services represent a single undertaking that cannot feasibly be subdivided. If the services produce a single or unified outcome, product, or report, they are considered nonseverable. In most cases, contracts or orders for nonseverable services must be funded in full at the time of award with a then-current appropriation. Examples include studies culminating in the delivery of a final report, an engine overhaul, and the painting of a building. The lead-time exception can apply to the start date of service-type contracts.
Supplies. The bona fide need for supplies normally arises when the government actually uses the items. Thus, a command can use a currently available appropriation to procure computers needed and purchased in the current FY. Conversely, commands may not use current-year funds for computers not needed until the next FY. Year-end spending for computers that will be delivered within a reasonable time after the start of the new FY is proper so long as a current need is documented. There are lead-time and stock-level exceptions to the general rule governing the purchase of supplies.
A commander wanted to buy a dozen computers for an anticipated morale, welfare, and recreation (MWR) facility. Work on the facility would not start until the following FY. The commander pressed the CCO to use current FY funds and begin the contracting process to obligate the funding by the September 30 FY obligation deadline. The commander told the CCO, “We could have Skype MWR facilities set up for next year, which will boost morale during the contingency operation. We have money for the computers now, so let’s use it!”
The Bottom Line:
This is a common violation by well-meaning personnel at the end of any given FY. This example does not meet the bona fide need rule because the computers would be purchased in one FY for a need that arises much later in the following FY.
Construction. Construction contracts obligated and awarded late in an FY (in September, for example) must have a performance commencement date within 90 days of award. (See DoD FMR 7000.14-R, Volume 11A, Paragraph 020510.) For example, if a contract was awarded on September 15 with funds from that FY, performance must commence and invoices must be submitted by December 14 of the new FY. Typically, commencement of work can take the form of the contractor’s ordering materials and delivering them to the government and the government’s receiving/taking possession of materials that will remain in its possession rather than being stored by contractors at their business locations, land surveys, groundbreaking activities, and other such functions. The key to defining and identifying performance of work is to include the elements of work on a progress schedule that will serve as the means of allocating a percentage of work performed and invoiced. The Defense Acquisition University (DAU) CON 244 construction contracting course is a good source of additional details.
PurposeIn 31 U.S.C. 1301(a), commonly referred to as the Purpose Statute, the expenditure of funds on objects other than those specified in the appropriations is prohibited. Funds must be expended for the purpose established by Congress. A three-pronged test, known as the “Necessary Expense Doctrine,” states that expenditures must have the following characteristics:
- A logical relation to the appropriation. The expenditure must be for a particular statutory purpose or must be necessary and incident to proper execution of the general purpose of the appropriation. A necessary expense will contribute materially to the effective accomplishment of an authorized function. For example, you may not fund a vehicle lease contract with MILCON funds.
- No prohibition by law. A rationale for the necessity of a certain expenditure to carry out the mission of the agency is not enough to overcome a statutory prohibition. In addition, agencies may presume that restrictions in an appropriations act are effective only for the FY covered unless the legislation clearly indicates that the restriction is permanent. For example, Section 2842(b) of the FY14 National Defense Authorization Act prohibits the use of appropriated funds to design, procure, prepare, install, or maintain an authorized Navy diver’s memorial.
- No provision otherwise. Regardless of a logical relationship between the appropriation and the expense, if another specific appropriation applies to the given purpose of the expense, it must be used. For example, the Comptroller General ruled that the Navy could not use its shipbuilding appropriation to deepen a river channel, allowing submarines under construction to move to deeper water, because the U.S. Army Corps of Engineers (USACE) is specifically funded and responsible for that function per 33 U.S.C. 401, 403, and 407. In addition, running out of money is not an excuse for using another appropriation. If two appropriations are reasonably valid for a specific expenditure, the agency may choose either appropriation. However, once that selection is made, the agency must continue using the chosen appropriation, to the exclusion of any other.
AmountOf paramount concern is ensuring that DoD complies with the ADA, which prohibits obligating or expending federal funds before an appropriation (or in amounts that exceed the appropriation). It is a criminal act to knowingly enter into or authorize government contracts in the absence of sufficient government funds to pay for them. In addition, 31 U.S.C. 1342 prohibits accepting voluntary services and employing personal services that exceed authorized amounts. A knowing and willful violation of 31 U.S.C. 1341(a) or 31 U.S.C. 1342 is punishable by a fine of up to $5,000, 2 years in prison, or both. In addition, if someone violates this law, the matter must be investigated and a written report filed with Congress.
Common problems that trigger ADA violations include the following:
- Without statutory authority, obligating current-year funds (awarding a contract) for the bona fide need of a subsequent FY (such as when activities stockpile supply items in excess of those required to maintain normal inventory levels)
- Exceeding a statutory limit (such as funding a construction project in excess of established thresholds)
- Obligating funds for purposes prohibited by annual or permanent legislation
- Obligating funds for a purpose for which Congress has not appropriated funds (such as improper funding of personal expenses).
During Haiti relief operations, U.S. Army South (ARSOUTH) received humanitarian assistance funds to reimburse the O&M accounts of military units performing humanitarian relief activities. The Army reported that an ADA violation occurred when, on the basis of unsupported credit obligations, ARSOUTH exceeded its real allocation.
The Bottom Line:
Even when supporting contingency, humanitarian, peacekeeping, or other emergency acquisitions, CCOs and supporting acquisition personnel must understand the importance of appropriation law. While CCOs must remain flexible and often must find creative ways to meet mission objectives, they must always do so legally. Sometimes the best intentions are still not legal. "Battlefield constraints" in a contingency environment are no excuse for sidestepping legal requirements. CCOs must use critical thinking skills to find legal ways to accomplish their mission(1).
In contingency environments, the importance of establishing procedures for generating PRs and developing requirements cannot be overstated. Contracting personnel need to receive clearly written, comprehensive requirements documents, detailed enough to guarantee the right goods and services are obtained. This ensures that what is contracted for meets the commander’s needs. Once a need is identified, securing adequate funding and generating contract requirements come next in the contingency contracting process. They can be accomplished simultaneously, or one at a time, but one thing is sure: both need to occur before contract award. The CCO should ensure the procedures are adequate and communicated to supporting personnel.
Requirements from customers. Two questions normally arise in regard to customer requirements while supporting contingency and humanitarian/peacekeeping operations:
- How do customers submit requirements?
- What information is needed from customers to initiate the contracting process to obtain needed goods and services, such as a statement of work (SOW), a funding document, justification, and approval?
CCOs should ensure procedures and tools, such as DAU's Acquisition Requirements Roadmap Tool (ARRT) suite and the Contingency Acquistion Support Model (cASM), are in place to assist the requiring activity in submitting well-defined requirements in a timely fashion. Streamlined procedures may need to be developed at the onset of a contingency.
CCOs must clearly communicate that requiring activities are the “requirements owners” and that the requiring activity is ultimately responsible to clearly articulate the following to the CCO prior to soliciting industry:
- A clear description of the required commodity, services, or construction to include technical data and standards.
- A cost estimate based on market research.
- Requested commodity and/or service delivery dates/period of required performance.
- Appropriate quality assurance standards.
- Appropriate funding and approval documentation.
Prioritization of requirements. During the initial stages of a contingency, the CCO needs to know the deployed commander’s priorities. At the onset of a contingency, CCOs may find themselves in the undesirable position of being the requestor, approving official, certifying officer, and filling other duties necessary to ensure rapid delivery of goods and services. (The CCO should maximize separation of duties to the maximum extent practicable to mitigate any perception of impropriety.) The CCO’s first priority is normally to respond to basic life-support requirements (including water, security, food, and interpreter). The contracting office will be inundated with requests for goods and services from many different sources, and while most requests will be legitimate, they may not be a priority for the deployed commander. Knowing the deployed commander’s priorities helps in prioritizing requirements. The mechanism for this prioritization may be a readiness center, a contingency support staff, or a requirements board. If not addressed, the responsible contracting office will prioritize requirements. CCOs and supporting units should be prepared to have a prioritization system developed for the respective operation before deployment.
Defense Priorities and Allocation System. Pursuant to FAR 18.109, Priorities and Allocations, the Defense Priorities and Allocations System (DPAS) supports approved national defense, emergency preparedness, and energy programs and was established to facilitate rapid industrial mobilization in case of a national emergency. CCOs should be familiar with the DPAS requirements in FAR 11.602 and FAR 11.603. DPAS is a means to ensure timely availability of industrial resources to meet national defense requirements and a way to provide a framework for rapidly expanding industrial resources in a national emergency. The Department of Commerce (DOC) DPAS regulation embodied in 15 CFR 700 contains a Special Priorities Assistance process for resolving disputes between the government and industry and provides a mechanism for optimizing delivery of urgently needed material during wartime or contingency operations(2).
Purchase requests. PRs are initiated by the requiring activity. They are used to initiate a specific contract action and briefly explain what is to be procured by the CCO. PRs also give the CCO the required authorizations that confirm certified funding is available for the respective contract action. They can be verbal requests at the initial stages of a contingency, but once operations stabilize they should take the form of a formal document from the requiring activity. For verbal requests, the CCO should get an adequate description of the requirement from the COR and give the customer a suspense date to provide backup paperwork that can be filed with the contract. Regardless of the type of PR instrument, generic descriptions should be avoided because they can cause confusion and slow down the contract process.
PR documents. PR documents, also known as “requisition documents,” are critical to the contracting process. Without a properly prepared PR, an authorized purchase can be extremely difficult to make and can result in the procurement of inadequate supplies, services or construction. Also, PRs provide visibility into the pre-award phase, so CCOs should ensure they are filed properly. During initial deployment, any format may be used for submission of a PR. However, the following requirements must be fulfilled, even with a verbal request:
- Approval of the request by the deployed commander or a designee.
- Certification of funds through the appropriate function and a fund cite in the PR.
- Enough funding to cover the purchase.
During sustainment operations, an appropriate requisition document must be used to request supplies, services, or construction. Each organization receives additional guidance and procedures after the deployed commander, in conjunction with the CCO, establishes them.
PR funding documents can be submitted on many forms, including the following:
- Air Force (AF) Form 9, “Request for Purchase”
- Department of the Army (DA) Form 3953, “Purchase Request and Commitment”
- Navy (NAVSUP) Form 1250-2, “Non-NSN Requisition”
- Department of Defense (DD) Form 448, “Military Interdepartmental Purchase Request (MIPR),” and DD Form 448-2, “Acceptance of MIPR”
- Air Force Form 4009, “Government Purchase Card Fund Cite Authorization”
- DD Form 1149, “Requisition and Invoice/Shipping Document”
- DD Form 1391, “FY_ Military Construction Project Data” (used by DoD to submit requirements and justifications in support of funding requests for military construction to Congress)
- Navy Comptroller (NAVCOMPT) Form 2276, “Request for Contractual Procurement.”
Electronic business tools for requirements generation. The Contingency Acquisition Support Model (cASM) is a web-based tool used to plan, generate, staff for approval, and track acquisition-ready requirements packages. This tool enables users to get requirements on contract more efficiently. cASM’s output produces a complete, approved, and electronically signed requirements package (RP). Electronic business (e-business) tools like cASM can greatly assist the CCO and supporting acquisition personnel in fulfilling contracting process requirements through automation and the quick transfer of data. The Contingency Business Environment (CBE) Guidebook contains additional information on e-business tools and how to get them operational in theater.
Lines of approval. The first step in any requirement is identifying the activity that will serve as the office of primary responsibility (OPR) for the need and determining whether that office has a mechanism to support the requirement. For example, if the requirement is for a vehicle, the CCO would contact the transportation OPR to confirm whether it can fill the need. If not, the CCO would prepare the appropriate documentation to locally lease or purchase the item needed for the requirement. In most cases, a senior official is designated as the approving authority for all local PRs. The deployment commander may retain this authority or delegate it to the staff, depending primarily on the size of the deployed force. Either way, the CCO must obtain approval from the designated approval authority for any item bought locally.
Personnel who can submit purchase requests. The CCO should consult the chief of the contracting office (COCO) and the deployed commander to identify supported units, identify acquisition support personnel, and establish the local lines of authority for requestors and approving officials. In most cases, the deputy chief of staff designates (in writing) specific personnel from each functional area to approve PRs for that area and to submit PRs to contracting.
Personnel who can obligate the government. When spending public funds, DoD must substantiate its requirements and strictly control its contracting function. Officially appointed people with express written authority to bind the U.S. government to a contractual agreement accomplish this control. A warranted contracting officer is the only agent who represents the government in this capacity. Pursuant to FAR 1.603-3(b) and FAR 13.201(a), agency heads are encouraged to delegate micro-purchase authority. This delegated authority to non-contracting officers (field ordering officers, for example) must be in accordance with agency procedures.
This unique personal responsibility means that supervisors, commanders, and others with administrative control over CCOs must avoid directing CCOs to take action that might violate laws or contracting regulations (see Chapters 2 and 5).
Purchase descriptions and statements of work. As noted, all PRs must include a good description of the required services or supplies and a certification of funding. Descriptions can include a text summary, part numbers, specifications, pictures of the items, or other administrative details that enable a CCO to prepare and issue a solicitation and a develop a contract document (see the “Requiring Activity Checklist” in the Critical Checklists appendix for additional information on PR inclusion requirements). For services and construction requirements, the CCO needs a complete SOW, statement of objectives (SOO), or performance work statement (PWS), as well as the name of the contracting officer’s representative (COR) who will provide technical support. A sufficient SOW defines all non-specification requirements for contractor efforts, either directly or with the use of specific cited documents. The SOW becomes part of the contract, so it must clearly portray the expectations of the customer. When appropriate, the SOW should be performance or outcome based. This type of SOW is also referred to as a PWS because it clearly describes specific and objective terms with measurable outcomes. It should tell the contractor the work that needs to be accomplished, not how to accomplish it. This approach makes it easier for the contractor to understand the document and easier for the CCO to point out deficiencies if performance does not meet specified standards. See FAR subpart 37.6 for more information on performance-based acquisition.
Contracting activities and their customers should consider technical needs and business strategies when defining and specifying requirements. CCOs must ensure that specifications reflect only those supplies, services, or construction needed to meet the mission requirements and that the SOW, SOO, or PWS do not unnecessarily restrict competition or innovation. In addition, commercial item descriptions should be used as often as practicable, and functional specifications should be used instead of detailed design specifications when reasonable.
Describing agency needs. Identifying and describing needs serve two purposes: (1) enable the CCO to determine what is needed by the end user and where in the marketplace the supplies or services reside and (2) allow the vendor to submit an accurate response and ultimately deliver the right supplies or perform the proper services. Adequate descriptions ensure customers receive what they need at the best value possible.
As noted, the customer’s item descriptions, specifications, and technical requirements always should be clear and concise and detailed enough to make agency needs fully understood. Ambiguous descriptions delay contracting actions and can lead to the purchase of the wrong product or service. PR descriptions and other supporting documentation should note the essential physical and functional characteristics of the supplies or services required. The minimum requirements of the government should be expressed in the description. However, you should not confuse minimum requirements with minimum descriptive data—and should include as much information as possible to describe exactly what you need. The principal features of a purchase description can be determined by answering the following questions:
- What is it?
- What is it made of (paper or wood, for example)?
- What are its principal descriptive characteristics (such as size, color, and shape)?
- What does it do (such as holds, drives, connects)?
- What is it used for (is its purpose indicated)?
- How is it used (such as by itself or with other equipment)?
- Where is it used (such as component part or complete assembly)?
Requirements Packages. For certain acquisitions, additional documentation is submitted alongside the PR as required by the CCO.
Construction contracts.For construction projects, required documentation includes the following:
- An independent government cost estimate (IGCE), from a party other than the vendor or contractor
- Drawings and specifications, which must be submitted to the CCO for review before the contract is finalized
- An itemized cost breakdown supporting liquidated damages
- A schedule of material submittals
- A progress schedule
- Accurate quantities, conversions, and units of issue
- A government-furnished property schedule
- A government estimate of completion costs and a bidding schedule.
For MILCON projects, the CCO must understand the requirements development and design process when anticipating a design-build acquisition strategy. During the requirements development process, DD Form 1391, “FY__ Military Construction Project Data,” describes the user’s facility needs. During the design process, the SOW describes the work to be performed by the contractor, and the contractor’s design drawings show different stages of project design(3).
Service contracts.For services requests, required documentation includes the following:
- A complete SOW, SOO, or PWS
- An IGCE
- Contact information for the COR and quality assurance evaluator (QAE) providing the technical support
- A quality assurance surveillance plan (QASP) that explains how the agency will survey, observe, test, sample, evaluate, and document the contractor’s performance in meeting the SOW requirements.
CCOs should reaffirm the requiring activity’s responsibilities, such as the QASP, and work with the requirements generating officials, often the COR, training them on development of the required documentation where needed. CCOs should ensure the SOW, SOO, or PWS include a detailed, performance-oriented description of what is expected of the contractor to meet government needs, not how the work should be accomplished. The SOW and the QASP should be developed concurrently and should include specific information on the evaluation of performance standards specified in the contract. When a service contract is anticipated inside the United States, the contracting officer must ensure the requirements in FAR part 22 are followed regarding the application of labor laws, specifically the Service Contract Act.
COR nomination package. The requiring activity shall provide the COR nomination package to the contracting office as part of the purchase request. The request for a nomination package and completing the nomination package is a collaborative effort between the requiring activity, COR management, and the contracting officer. It must be completed as early in the acquisition process as possible to allow COR participation in pre-award activities. In all cases, nomination package(s) must be submitted before contract award the DoD Contracting Officer’s Representative Tracking (CORT) Tool. A sample nomination form can be found at the DAU Acquisition Community Connection’s COR Nomination Letter webpage.
CORs must be designated and authorized in writing by the contracting officer as noted in FAR 2.101. CORs must be trained, and meet the minimum standards, as outlined in DODI 5000.72 “DoD Standard for Contracting Officer’s Representative (COR) Certification.” DoD Components may add to these minimum requirements, as appropriate. Training requirements for the COR are directly related to the type of standards for the contract, work or requirement to be performed, and the dollar value and complexity of the effort.
The procedures at DFARS Procedures, Guidance, and Information (PGI) 201.602-2 provide additional information regarding designation, assignment, and responsibilities of a COR.
Finance and contracting relationship. The relationship between contracting and finance personnel is extremely important, especially in contingency environments. CCOs should reach out to Finance personnel as early as practicable to fully understand the funds certification process for the respective contingency. An established relationship will ultimately help the CCO and requiring activity obtain certified funding and the supporting documentation needed to initiate the contracting process in a more expeditious manner. Close coordination between the CCO and the budget and certifying officials is also necessary to identify and track actual obligations and expenditures so that the funding data can be accurately reported to both the contracting and finance offices.
Forensic accounting. CCOs should keep in mind that forensic accounting is conducted during contingency and humanitarian or peacekeeping operations. Under this investigative accounting, experts from agencies like the Defense Contract Audit Agency, Air Force Office of Special Investigation, Army Criminal Investigation Command, and Naval Criminal Investigative Service may review the accounting practices in a combat zone to ensure illegal activities are not taking place and fiscal law requirements are being met. Some reviews may take place weeks to months after the CCO obligated the funds, or even years later, when the CCO has already redeployed or returned home. Forensic accounting professionals examine and track financial transactions to determine whether the funding ends up in the wrong hands or is being used improperly to make purchases outside the funds’ original (and legally authorized) purpose.Back to Top
As briefly mentioned, commanders in the field must prioritize requirements, especially during the onset of a contingency. Ideally, contracting leadership, such as the COCO, briefs deployed commanders on how contracting can support the mission, that contracting as a function is the commander’s business(4), and that it is a key component in implementing operational contract support (OCS). This is critical during initial operations. Part of the commander’s responsibility is to set the priority for purchases. This helps contracting prioritize contact actions that are needed to support mission objectives. This is vital in the initial stages, given the need to ensure basic life support items are secured, and continues throughout a contingency. Depending on the requirement and the source of funding, the appropriate commander must approve and prioritize the PRs.
OCS planning and acquisition boards. OCS planning and the use of contracting-related boards help ensure proper acquisition planning, contracting integration, and prioritization of customer requirements before arrival at contracting. The use of OCS boards, cells, and working groups bolsters OCS planning efforts and the prioritization of requirements. Acquisition boards also help ensure senior leadership is part of the contracting process, overall planning, and decision-making. Joint Publication (JP) 4-10, Operational Contract Support, details OCS planning and coordination boards, cells, and working groups. The CCO should become familiar with this publication before and during deployment.
The JRRB, Joint Contracting Support Board (JCSB), and Combatant Commander Logistics Procurement Support Board (CLPSB) ensure OCS actions—including any operational-specific theater business clearance (TBC) directives—are properly synchronized across the joint force(5). Like other related joint force command-level boards, they can be held as needed, meet simultaneously, or be merged.
Joint Requirements Review Board. The joint task force or sub-unified commander establishes the JRRB to review, validate, approve, and prioritize contract support requirements(6). The JRRB can also assist by providing acquisition strategy ideas and discussing potential areas where contract consolidation makes sense. The JRRB is an operations-focused (rather than contracting-focused) board designed to control mission-critical, high-dollar contract requests and ensure other sources of support (such as organic military, multinational, and host nation) have been properly considered before commercial support solutions. The JRRB should be established for sustained operations, but it also provides value during short-term joint operations when needed. In some operations, service components may establish their own requirements review boards. These service component boards are often used to ensure service requirements packages are properly prepared, justified, and prioritized before being submitted to the JRRB. The JRRB also serves as the subordinate joint forces commander’s (JFC’s) venue to assess possible operational impacts of specific contract support requests and, when necessary, provide operationally focused guidance on acquisition strategy to the JCSB. For example, relaying that a required service is a potential high-security threat and providing direction to avoid the use of local national (LN) companies for the respective requirement. Figure 3-1 illustrates the JRRB process.
Source: JP 4-10
Figure 3-1. JRRB Process
Joint Contracting Support Board. The JCSB is the primary mechanism for coordinating and deconflicting common contracting actions between theater and external support contracting activities executing or delivering contracted support in the operational area—normally a joint operational area (JOA). It is also the major mechanism for implementing JRRB guidance in determining the appropriate contracting mechanism—theater support, Air Force Contract Augmentation Program (AFCAP) or Logistics Civil Augmentation Program (LOGCAP) task orders, and other common external contracts—for major, common services. The JCSB has two goals: (1) ensure contract support actions support the JFC’s OCS-related command guidance (such as maximizing the use of LN firms and reducing costs) and (2) maximize contracting capabilities of the JOA while minimizing the competition for limited vendor capabilities. The JCSB proposes, and the combatant commander establishes, specific theater contracting business requirements, usually in the form of TBC. This is vital in the success of OCS when integrating contracted support and especially in the management of contractors deploying into and out of a theater of operations. The JCSB can recommend and determine where contract requirements can be consolidated and can act as a forum for contract support activities to share information, coordinate acquisition strategies, and combine like requirements. These functions are key in fulfilling the contracting process in a JOA, an environment rife with high-priority and duplicative requirements. For example, the JCSB may work on specific contract transition actions, such as moving the requirements off a cost-type CAP task order to fixed-price individual theater support contracts or other types of contracts as appropriate.
Combatant Commander Logistic Procurement Support Board. The CLPSB ensures that contracting and other related logistics efforts are properly coordinated across the entire area of responsibility (AOR). Normally chaired by a geographic combatant command (GCC) J4 (Logistics) representative, it includes representatives from each service component command, combat support agency, and other military and U.S. government agencies or organizations concerned with contracting matters. Although the CLPSB and JCSB perform similar functions, the CLPSB coordinates general acquisition policy and addresses major contracting-related issues across the AOR, while the JCSB focuses more on coordinating daily contracting support in a specific JOA.
Table 3-1 shows the differing functions of the three boards.
|Level: combatant commander||Level: subordinate joint force commander||Level: subordinate joint force commander|
|Focuses on general responsibilities and AOR-wide issues related to contracting support.||Focuses on the requirements priorities and sources of support.||Focuses on how contracting will procure support within the joint operations area.|
Table 3-1. Contracting-Related BoardsBack to Top
In any contingency, CCOs should consult with the relevant finance office to ensure the proper use of each type of funding under their control. If non-DoD funding is provided (such as by the Department of State), CCOs should consult with the head of the contracting activity (HCA) and finance office to ensure it is properly used. Rules apply to each type of funding to prevent misuse. The following sections describe typical types of funding used during contingencies.
Military Construction. This appropriation is available for 5 years. Congress appropriates funds (under 10 U.S.C.) for MILCON of permanent improvements using separate annual appropriation acts. The term “military construction” includes “any construction, development, conversion, or extension of any kind carried out with respect to a military installation whether to satisfy temporary or permanent requirements(7).” Military installation has a very broad definition and may include foreign real estate under the operational control of the U.S. military. Construction projects that exceed $1.5 million in value require specific approval by Congress. Also, in contingencies, the Secretary of Defense has the authority and flexibility—in the interest of national security and national interests—to authorize MILCON not otherwise authorized by law(8).
Operations and Maintenance. This appropriation is available for 1 year. O&M funds, appropriated under 10 U.S.C., are used for base operations support, expenses incurred during training exercises, deployments, minor construction projects, and the operation and maintenance of installations. Commands may use O&M appropriations for all necessary and incidental operational expenses.
O&M—not MILCON—funds pay for maintenance and repair work. “Maintenance” is recurring work to prevent deterioration (to preserve or maintain a facility so that it is usable for its designated purpose). “Repair” is the restoration of a facility so that it can be used for its designated purpose by overhauling, reprocessing, or replacing parts or materials that have deteriorated because of the elements (or wear and tear) and have not been corrected through maintenance. When construction and maintenance (or repair) are performed together as an integrated project, each type of work is funded separately unless the work is so integrated that the separation of construction from maintenance or repair is not possible. In the latter case, all work is funded as construction.
Special authorities allow for limited use of O&M for MILCON projects:
- 10 U.S.C. 2805(c) “Unspecified minor construction”
- Contingency construction authority (CCA) under Section 2808 of the National Defense Authorization Act (NDAA) of 2004, as most recently amended in Section 2806 of NDAA FY15
- Section 1206 of NDAA 2006 (which will become codified as 10 U.S.C. 2282, pursuant to section 1205 of NDAA FY15
- MILCON under counter-narcotics authority section 1004.
A contracting officer awarded a construction contract for a new $11 million building using O&M funds. Although the building would benefit supporting mission objectives, the O&M funds were improperly used in this case. O&M funds are normally only used for minor construction projects up to $750,000. MILCON funds should have been used for the $11 million major construction project. By the time the error was discovered, the contract was 70 percent complete, and the contacting officer had to terminate the contract for convenience to stop the misuse of funds. The termination for convenience (T4C) action resulted in a contractor claim. This became an administrative nightmare for all parties. The Armed Services Board of Contract Appeals finally resolved the matter—5 years after the projected completion date!
The Bottom Line:
No matter how high the operations tempo, you must comply with fiscal law—do it right the first time, rather than redoing it and replaying it in court.
Research, Development, Test, and Evaluation. This appropriation is available for 2 years. RDT&E funds are used to finance research and development (R&D) of equipment, systems, material, and computer application software and the corresponding test and evaluation (T&E). These funds generally are not used to support contingency operations.
Nonappropriated funds (NAF). NAF are monies derived from sources other than congressional appropriations and commissary surcharge funds, primarily from the sale of goods and services to DoD military and civilian personnel and their family members. They are used to support or provide MWR programs(9). A CCO does not often come across NAF in contingency environments.
NAF issues. Any available NAF can be used to purchase plaques, mementos, coins, organizational mugs, and T-shirts (items that may not in general be purchased with appropriated funds). However, coins, mementos, and unauthorized personal gifts pose a recurring challenge. If the coins are merely mementos to build good will with local officials, they cannot be purchased with O&M funds. Commanders and CCOs must differentiate between tokens of appreciation and mementos (personal gifts), which cannot be purchased with appropriated funds, and awards that may be funded by appropriated funds. In addition, coins purchased with appropriated funds must not contain the name of a specific commander. The bottom line is that commanders may use O&M funds to purchase unit coins to recognize outstanding contributions, but not to give as mementos or to create goodwill with the local community.
Mixed funding. Construction and architecture-engineer (A-E) contracts that cite both appropriated funds and NAF should be written as appropriated-fund contracts, with all appropriated-fund requirements. Additional information on mixed funding is available in Air Force Manual 64-302 (paragraph 4.2.1) and in Office of the Chief of Naval Operations Instruction (OPNAVINST) 11010.20G. For information on A-E contracting and associated funding, see the USACE Proficiency Guide for Construction, Architect-Engineer (A-E) & Contingency Contracting.
Official representation funds. Another funding option is the commander’s official representation funds (ORF), with a legal basis in 10 U.S.C. 127, “Emergency and extraordinary expenses.” Commanders have some discretion to use these funds without the normal statutory controls, but strict regulatory controls govern their use, as noted in DoD Directive 7250.13, Official Representation Funds; Air Force Instruction (AFI) 65-603, Official Representation Funds: Guidance and Procedures; Army Regulation (AR) 37-47, Official Representation Funds of the Secretary of the Army; and Secretary of the Navy Instruction (SECNAVINST) 7042.7, Guidelines for Use of Official Representation Funds. Basically, ORF may be used only to provide official courtesies to authorized guests, which may include foreign dignitaries. The courtesies may include gifts, mementos, or tokens. The same rules for coins normally apply.
Combatant Commander Initiative Fund (CCIF). The CCIF is controlled by the Chairman of the Joint Chiefs of Staff, who is authorized to provide funds to combatant commanders from O&M appropriations to cover emergencies and extraordinary expenses. CCIF funds are used to enhance warfighting and force capability, readiness, and sustainability.
Emergency and extraordinary expenses (E&EE). Service secretaries may use E&EE funds for unanticipated emergencies or extraordinary expenses. Such funds can be expended on unanticipated, short-notice construction, but typically are not. The amount appropriated for E&EE is fairly small, and if the project cost exceeds $500,000, the Secretary of Defense must notify the appropriate congressional committees.
Procurement appropriation. Procurement appropriations are used to finance non-construction investment items, such as the data, factory training, support equipment, and interim contractor support needed for procurement of a new weapon system(10). These funds are used for new obligations, but only for the three FYs designated in the appropriation act and identified in the Treasury Department’s official symbols and titles for federal accounts. For example, the appropriation is available for obligation from October 1, 2016, through September 30, 2017, but then expires for new obligations. When the appropriation expires, it may be used only to liquidate obligations and make authorized obligation adjustments for an additional 5 years under its original Treasury symbol. If the CCO cannot obligate specific programs in the period for which funds were justified and approved, the CCO must budget any additional funding required to complete them in future years under new requirements, as explained in DoD FMR 7000.14-R.
The rules on using procurement funds are complicated, especially regarding the purchase of any kind of system. When an item of equipment or a system has a unit cost of more than $250,000, legal counsel should be consulted to determine whether procurement funds may be used. O&M funds should not fill the role of procurement funds, so legal counsel is needed to ensure their appropriate use.
Overseas humanitarian, disaster, and civic aid (OHDACA) appropriation. Funding for OHDACA is used to provide such relief to foreign countries. The OHDACA appropriation supports the Secretary of Defense and combatant commanders’ security cooperation strategies to build indigenous capabilities and cooperative relationships with allies, friends, civil society, and potential partners. The appropriation provides low-cost, nonobtrusive but highly effective activities that help partners help themselves, improves access to areas not otherwise available to U.S. forces, and build collaborative relationships with the host nation’s civil society(11). The use of OHDACA funds requires DoD to provide 15 days advance notice to Congress before transferring any defense articles or services to another nation or an international organization for use in United Nations peace-related operations or any other international peacekeeping, peace enforcement, or humanitarian assistance operation not authorized by law (10 U.S.C. 2561). Additional guidance on OHDACA is available at the Defense Security Cooperation Agency’s Humanitarian Assistance, Disaster Relief, and Mine Action webpage.
Humanitarian and civic assistance. “Humanitarian and civic assistance” (HCA) is the DoD term for relief and development activities that take place in the context of an overseas military exercise, training event, or operation. Under the HCA program, U.S. military personnel participating in overseas deployments also carry out humanitarian activities such as road and school construction, vaccination of children and animals, and well digging. HCA programs often are executed with the assistance of host-country civilian and military personnel. U.S. National Guard or reserve units also perform many HCA activities. DoD Instruction 2205.02, June 23, 2014, provides information on HCA activities and funding.
Foreign disaster assistance. To prevent the loss of life, the President may direct the Secretary of Defense to provide disaster assistance (including transportation, supplies, services, and equipment) outside the United States in response to human-made or natural disasters.
Commanders’ Emergency Response Program (CERP). CERP was designed to enable local commanders to respond to urgent humanitarian relief and reconstruction requirements in their AORs and, where authorized by Congress, by implementing programs that immediately help the indigenous population. See DoD FMR 7000.14-R, Volume 12, Chapter 27, CERP, for specific and current information on CERP and use of the funds.
Bulk funding. If a bulk-funded PR is issued to the contracting office, that office is responsible for maintaining a record of obligations and the remaining balance of funds. Under the bulk-funding concept and system, the CCO receives authorization from the certifying officer to obligate funds on purchase documents against a specified lump sum reserved for that purpose over a specified period. Strict control of the bulk funds is necessary to preclude the misuse of funds.
Request and authority to cite funds. When approved by the accounting and finance officer or official designee, the bulk-funding document certifies that funds are available and records them as commitments in the accounting records. If a bulk-funding document is issued to the contracting organization, the CCO is responsible for keeping a record of obligations and the remaining balance of funds (on the reverse of the form). Because the accounting classifications for supplies and services differ, separate bulk-funding documents are required for each.
Other funding procedures. The CCO or the customer should contact the budget office and other sources, such as the Defense Logistics Agency and the embassy, for applicable procedures to fund other types of purchases, such as the following:
- Vehicle rentals for recreational activities (such as trips and tours) and recreational supplies (such as balls and bats) that will be used for MWR or NAF (after consulting with the NAF fund manager, if available)
- Medical supplies and services (such as medicine, doctor services, and hospitalization)
- Food (such as fresh fruits, vegetables, and bread) that require a subsistence fund cite
- Legal claims payable to the host government, foreign companies and citizens, and other U.S. government agencies
- Equipment, services, and facilities provided by the host government, normally under a host-nation support (HNS) agreement or an acquisition and cross-servicing agreement (ACSA) that contains the methods of payment (or, if no HNS or ACSA is in effect with the country in which the CCO is deployed, the disbursing office, which is still the organization the CCO contacts to determine the method or procedures for payment)(12)
- Goods and services needed to support requirements for aircraft accidents and related incidents not previously covered.
Funds certification officer. The funds certification officer certifies on the PR that funds are available before processing by the contracting office under peacetime conditions. During contingencies, the issue of funding becomes more complicated because of the urgency and source of the requirements. Funds certification is designated by comptroller personnel and cannot be further delegated. The total amount of funds certified and the final obligated amount must be designated in U.S. dollars. Conversion rates at the time of fund certification should be noted.
Fund cites. Accounting classification codes, also known as lines of accounting or as fund cites, are required on all PRs. Table 3-2 shows an example fund cite.
Fund cite: 57 0 3400 310 67A2 231010 01 59290 503300 ESP 8Z
Agency 57: Air Force (17 is the Navy and Marine Corps; 21 is the Army, and 97 is DoD)
FY 0: FY10 funds
Type of appropriation 3400: Active duty O&M, where 3400 is the Air Force
Emergency and Special Program Code 8Z: Tracks expenses for specific contingency operations. DoD assigns the alphanumeric code. All contingency expenses should include a contingency-specific code.
Fund cite: 021 202010D13 A76CC 131096QLOG 6100.260B ARMY GFEBS-DR 76CCMSE S21001
Agency 21:ARMY (17 is the Navy and Marine Corps; 96 is the Corp of Engineers, and 97 is DoD)
Type of appropriation 2020: (Active Duty O&M, where 2020 is Army)
1: Years of Availability
0: Supplemental Appropriation ID
D: Fund Group Designator
13 Fiscal year of issue
Table 3-2. How to Read a Fund Cite
For additional information on fund cites, see the Fiscal Law Deskbook published by the Judge Advocate General’s Legal Center and School.
The following references were not mentioned in this chapter but offer additional information related to the contigency funding and requirements process:
- 10 U.S.C. 2241, Availability of Appropriations for Certain Purposes
- 31 U.S.C. 1501(a), Documentary Evidence Requirement for Government Obligations
- 31 U.S.C. 1517(a), Prohibited Obligations and Expenditures.
2. DoD, “Title I: Defense Priorities and Allocations System,” Manufacturing and Industrial Base Policy.
3. Inspector General, DoD, Guidance Needed to Prevent Military Construction Projects from Exceeding the Approved Scope of Work, DODIG-2012-057, February 27, 2012.
4. See the independent reports of the Gansler Commission and the Commission on Wartime Contracting; the Secretary of Defense memorandum “Strategic and Operational Planning for Operational Contract Support and Workforce Mix," January 24, 2011; and Commander of International Security Assistance Force (COMISAF)/Commander, U.S. Forces–Afghanistan (USFOR-A), memorandum, “COMISAF's Counterinsurgency (COIN) Contracting Guidance,” September 8, 2010.
12. ACSAs generally may extend for an indefinite period because they do not require the obligation of funds. CCOs should check with their J4 representative as to whether ACSAs are available that may meet supply/service needs in the operational area before entering the contract process. The ACSA Global Automated Tracking and Reporting System (AGATRS) is the system of record to automate the ACSA process and track and provide visibility worldwide. The Department of Defense Contingency Business Environment Guidebook details the use of AGATRs.Back to Top