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VOLUME 2B, CHAPTER 9: “DEFENSE WORKING CAPITAL FUND BUDGET
JUSTIFICATION ANALYSIS”
SUMMARY OF MAJOR CHANGES
All changes are denoted by blue font.
Substantive revisions are denoted by an * symbol preceding the section, paragraph,
table, or figure that includes the revision.
Unless otherwise noted, chapters referenced are contained in this volume.
Hyperlinks are denoted by bold, italic, blue, and underlined font.
The previous version dated December 2014 is archived.
PARAGRAPH
EXPLANATION OF CHANGE/REVISION
PURPOSE
All
Changed the term “Budgetary Depreciation” to “Capital
Investment Recovery”
Revision
All
Updated hyperlinks and formatting to comply with current
administrative instructions
Revision
1.1
Identified other Revolving Funds separate from the DWCF.
Revision
1.2
Added Authoritative Guidance Section in compliance with
administrative guidance.
Addition
Policy Memo
Incorporated DWCF cash policy and cancelled “Cash
Management Policy for the Defense Working Capital Fund
Activities (FPM21-03)” published June 25, 2021.
Cancellation
1.5
Clarified CIP using reimbursable authority. Clarified Fund-
9c requirements. Updated
Minor Construction Thresholds.
Added ne
w DBMSC certification requirement for CIP
carryover.
Revision
1.6
Updated that budgeted rates are aggregate composite rates.
Incorporated cash policy revision. Clarified CIP for software
in dual funded organizations. Clarified
unusual and
infrequently occurring losses
not affecting budgetary
resources.
Revision
1.9.7
Updated that Direct Reimbursable Work is work performed
outside the rate structure.
Revision
2.4.8
Updated the CIS database input requirements.
Revision
2.6.2
Updated the definitions of the terms “Replenishment Cost,”
“Provisioning Item” and “Variability Target.”
Revision
2.7.1
Added the terms and definitions for “Mission Cost” and “Non-
mission Cost.”
Addition
Exhibit SM-16a
Added the SM-16a exhibit.
Addition
Exhibit Fund-1
Updated the term “CIS obligations”.
Revision
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PARAGRAPH
EXPLANATION OF CHANGE/REVISION
PURPOSE
Exhibit
Fund 1a
Updated definition that “All entries are obligations” to “All
entries are expenses.”
Revision
Exhibit
Fund-11a
Updated the display for each approved carryover waiver
separately. Updated the Carryover Calculation methodology.
Revision
Exhibit
Fund-12
Added the Fund-12 exhibit. Addition
Exhibit
Fund-13b
Added the Fund-13b exhibit. Addition
Exhibit
Fund-14
Clarified that NOR may be retained to ensure availability of
budgetary resources.
Revision
Exhibit PB-32
Added the PB-32 exhibit.
Addition
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Table of Contents
VOLUME 2B, CHAPTER 9: “DEFENSE WORKING CAPITAL FUND BUDGET
JUSTIFICATION ANALYSIS” ..................................................................................................... 1
1.0 GENERAL ........................................................................................................................ 6
*1.1 Purpose ........................................................................................................................... 6
*1.2 Authoritative Guidance .................................................................................................. 6
1.3 Background .................................................................................................................... 6
*1.4 Cash Management Policy ............................................................................................... 7
*1.5 Capital Investment Program (CIP) Policy .................................................................... 11
1.6 Mobilization/Surge Costs and War Reserve Materiel .................................................. 20
1.7 Military Personnel ........................................................................................................ 21
*1.8 Full Recovery of Costs and the Setting of Prices ......................................................... 21
1.9 Rate Setting for DWCF Activities ................................................................................ 28
1.10 Public-Private Partnerships at Depot Maintenance Activities ..................................... 31
1.11 Military Clothing Items and Individual Equipment ..................................................... 32
*2.0 BUDGET JUSTIFICATION PRESENTATION ......................................................... 32
2.1 Purpose ......................................................................................................................... 32
2.2 Preparation of Materials ............................................................................................... 33
2.3 References .................................................................................................................... 33
2.4 General ......................................................................................................................... 33
2.5 DWCF Application of Commonly Used Financial Management Terms ..................... 37
2.6 Supply Management DWCF Activity Definitions ....................................................... 38
2.7 Non-Supply Definitions ............................................................................................... 44
*3.0 DWCF ACTIVITY EXHIBIT FORMATS ................................................................. 46
3.1 Purpose ......................................................................................................................... 46
3.2 Defense Working Capital Fund Exhibits ...................................................................... 46
Exhibit SM-1 Supply Management Summary .......................................................................... 48
Exhibit SM-3a Requirements to Budget .................................................................................... 50
Exhibit SM-3b By Weapon System Requirements ................................................................... 52
Exhibit SM-4 Inventory Status .................................................................................................. 54
Exhibit SM-5a Markup on Materiel Cost .................................................................................. 57
Exhibit SM-5b OP-32 Price Change to Customers ................................................................... 60
Exhibit SM-6 War Reserve Materiel ......................................................................................... 62
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Table of Contents (Continued)
Exhibit SM-16 Total Cost Per Unit Summary .......................................................................... 64
*Exhibit SM-16a Unit Cost Ratio by Month and Fiscal Year ................................................... 65
*Exhibit Fund-1 Summary of Price and Program Changes – Costs ......................................... 66
*Exhibit Fund-1a Details of Price and Program Changes – Costs ............................................ 68
Exhibit Fund-2 Changes in Costs of Operations ....................................................................... 77
Exhibit Fund-3 Labor and Manpower Breakdown .................................................................... 79
Exhibit Fund-5 Total Cost Per Output Summary ...................................................................... 81
Exhibit Fund-6 Depot Maintenance-6 Percent Capital Investment Plan ................................... 83
Exhibit Fund-7 Customer Rate Computations .......................................................................... 86
Exhibit Fund-8 Air Mobility Command Common User Services ............................................. 88
Exhibit Fund-9a Activity Capital Investment Summary ........................................................... 90
Exhibit Fund-9b Activity Capital Purchase Justification .......................................................... 94
Exhibit Fund-9c Capital Budget Execution ............................................................................... 97
Exhibit Fund-11 Source of New Orders & Revenue ................................................................. 98
*Exhibit Fund-11a Carryover Reconciliation ......................................................................... 100
*Exhibit Fund-12 Customer Orders to Customer Funding Reconciliation ............................. 102
Exhibit Fund-13 Cash Management Plan ................................................................................ 107
*Exhibit Fund-13b Cash Requirements ................................................................................... 108
*Exhibit Fund-14 Revenue and Expenses ............................................................................... 111
Exhibit Fund-15 Fuel Data ...................................................................................................... 114
Exhibit Fund-16 Materiel Inventory Data ............................................................................... 116
Exhibit Fund-19 Military Personnel Strength ......................................................................... 117
Exhibit Fund-22 Summary of Base Support ........................................................................... 118
Exhibit Fund-24 Summary of Personnel Data ......................................................................... 119
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Table of Contents (Continued)
Exhibit Fund-28 Execution Performance Analysis ................................................................. 120
Exhibit Fund-30 Underutilized Plant Capacity ....................................................................... 123
*Exhibit PB-32 Summary of Price and Program Changes ...................................................... 125
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CHAPTER 9
DEFENSE WORKING CAPITAL FUND BUDGET JUSTIFICATION ANALYSIS
1.0 GENERAL
*1.1 Purpose
This chapter describes and documents the policies and procedures for budget formulation
and justification of the Department of Defense (DoD) Working Capital Funds (WCFs), the
Defense Working Capital Fund (DWCF), Building Maintenance Fund (BMF), and the Defense
Counterintelligence and Security Agency (DCSA) WCF. In addition, this chapter provides
guidance for the National Defense Stockpile Fund and Pentagon Reservation Maintenance
Revolving Fund (PRMRF), where applicable. The DWCF is also referred to as the “Fund” in this
chapter.
*1.2 Authoritative Guidance
The National Security Act of 1947, as amended Title 10 United States Code, section 2208
(10 U.S.C. § 2208), and other provisions of 10 U.S.C. § 131 provide the Department’s revolving
fund authority. The BMF, and DCSA WCF were also established under 10 U.S.C. § 2208 as
separate and distinct revolving funds and therefore are not part of the DWCF. The PRMRF was
established by the 1991 National Defense Authorization Act (NDAA) and codified in
10 U.S.C. § 2674.
1.3 Background
1.3.1. The DWCF was established to satisfy recurring DoD requirements using a buyer-
and-seller approach. The customers of the DWCF are the generators of requirements. Federal
customers which operate using appropriated funds justify their budget requests to the Congress.
The requiring activities (i.e. customers) place orders with DoD WCF organizations that have
expertise in the service or product required, and operate under business management principles.
Unlike profit-oriented commercial businesses, the WCF goal is to break even over the long term.
The WCF establishes selling prices in the budget that are normally stabilized or fixed during
execution to mitigate the impact of unforeseen fluctuations that would impact on customers’ ability
to execute the programs approved by the Congress. Exceptions to stabilized prices are listed in
section 1.8 of this document.
1.3.2. The intent of the WCF is to operate as a self-supporting entity to fund business-like
activities. The basic principle of the WCF structure is to create a customer-provider relationship
between military operating units and other federal and non-federal customers and support
organizations. This relationship is designed to make managers of support organizations funded
through WCF and decision-makers at all levels more cost conscious.
1.3.3. Prior to the establishment of an activity as a WCF, the Secretary or Assistant
Secretary of the Military Department or the Director for a Defense Agency, as applicable, must
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prepare, sign, and submit a charter that sets forth the scope of the activity to the Under Secretary
of Defense (Comptroller) (USD(C)) for approval. Four criteria are used in evaluating potential
activities for inclusion into the Fund. The four criteria are: 1) identification of outputs that relate
to products or services provided by the business to customers; 2) establishment of a cost accounting
system to collect costs of producing outputs; 3) identification of customers so that resources can
be aligned with the requirements; and 4) evaluation of buyer-seller advantages and disadvantages
to include assessment of the customers’ ability to influence cost by changing demand.
1.3.4. The DWCF evolved from two distinct types of activities. The first type, the Stock
Funds that procured materiel from commercial sources and held an inventory, are now known as
Supply activities. These activities sell the materiel to authorized customers who need the materiel
to achieve weapon systems readiness or provide required personnel support items. The second
type, known then and now as Industrial Funds, provide industrial and commercial goods and
services such as depot maintenance, transportation, and research and development. Although both
types of revolving funds are financed primarily by reimbursements from customers’ appropriated
accounts, Supply activities use contract authority (CA) and Industrial Funds use reimbursable
authority.
1.3.5. The DoD expanded the use of business-like financial management practices through
the establishment of the Defense Business Operations Fund (DBOF) on October 1, 1991. Building
on Stock and Industrial Fund principles, cost and performance are linked and the Fund’s managers
are expected to operate within cost goals established in operating and capital budgets.
1.3.6. The DBOF combined existing operations that were previously managed as
individual funds into a single Treasury account. On December 11, 1996, the USD(C) reorganized
the DBOF, retaining the numerous benefits and improvements resulting from the implementation
of DBOF while clearly establishing each DoD Component’s responsibility for managing the
functional and financial aspects of their respective WCF activities, by creating four DoD
Component WCFs: Army, Navy, Air Force, and Defense-Wide. On December 16, 1997, a
separate DoD Component WCF was established to consolidate the separate Military Departments’
commissaries into the Defense Commissary Agency effective in FY 1999.
1.3.7. Prior to FY 1992, industrially-funded activities did not receive Annual Operating
Budget (AOB) funding documents. All funding authority was provided through customer orders.
With the implementation of the DBOF, the Office of the Under Secretary of Defense (Comptroller)
(OUSD(C)) began to issue AOBs that provide official and administrative management cost goals
and contract authority for the Capital Investment Program (CIP) for each WCF activity within a
DoD Component. The Department has retained this process for the WCFs.
*1.4 Cash Management Policy
1.4.1. The Components will maintain a positive, daily cash balance at levels exceeding the
minimum necessary to meet operating, capital investment, and other justified requirements
throughout the year and to support continuing requirements into the subsequent year. Cash
generated from operations is the primary means of maintaining adequate cash levels. The ability
to maintain sufficient, appropriate cash levels is dependent on setting rates to recover full costs to
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include prior year losses, projecting workload accurately, and meeting established operational
goals.
1.4.2. Cash management and accountability are integral parts of operational and cost
management. Each DoD Component is responsible for managing its cash at the activity group
level and in compliance with applicable laws and guidelines. Components must manage cash at
each subordinate DWCF sub-account, organization, and activity, since most cash transactions
occur and cash is most effectively controlled at these levels. Components must submit budget
exhibits (Fund-13, and Fund-13b) for each activity group that displays plans to maintain cash
balances within the lower and upper operating range. The ending cash balance must be above the
lower operating range at the end of each budget year. Decentralizing cash management to the
activity group level provides the DoD Components with additional control, because each level of
management becomes an accountable participant in the execution of the cash plan or policy.
1.4.3. In addition to proper rate setting, cash managers at all levels should employ the
management mitigation strategies available to control cash flows and cash balances to the full
extent possible. These cash management tools include, but are not limited to:
1.4.3.1. Negotiating the timing of customer order receipt, completion and the
related collections;
1.4.3.2. Controlling the timing of delivered goods/services from the
supplier/service provider and the related disbursements;
1.4.3.3. Requesting policy waivers when necessary from the OUSD(C)
Program/Budget (P/B) Director or Deputy Director for Revolving Funds, for example: an approval
for an out-of-cycle rate adjustment, or non-recoverable costs to maintain/reduce cash.
1.4.4. The DoD Components and cash managers at all levels should consider the following
when determining appropriate levels of cash to budget and maintain.
1.4.4.1. Effective cash management is dependent on the availability of accurate
and timely data on cash activity, demand planning, rate setting, and operational results.
1.4.4.2. Activities must budget to achieve an operating cash level that will maintain
a positive cash balance throughout the year within the upper and lower operating range, and an
adequate ending balance to support continuing operations into the subsequent year. In determining
required cash levels, activities will document average disbursements and the expected range of
cash balances, adjusted to accommodate seasonality, known changes in the business environment,
and the inherent risk associated with estimation error and unplanned events outside management’s
control.
1.4.4.3. Each DoD Component and subordinate activity, command, or business
line must establish a cash requirement based on business events, trends, activities, and risks
relevant to its operations. The cash requirement will be developed based on four primary elements:
1) the rate of disbursements, 2) the range of operations, 3) risk mitigation, and 4) reserves. The
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amount of cash needed for each of the four cash requirement elements will be determined by the
DoD Component and presented by activity in the exhibit, Fund-13b, Cash Requirements, which
will be reviewed and approved by Revolving Funds Directorate during the Program and Budget
Review (PBR). The four cash requirement elements are explained further in the instructions to the
Fund 13b and also in the following four paragraphs.
1.4.4.4. Rate of Disbursement. The rate of disbursement is the average amount
disbursed between collection cycles. It is calculated by dividing the total amount of disbursements
planned for the year by the number of collection cycles planned for the year. The rate describes
the average amount of cash needed to cover disbursements from one collection cycle to the next.
Changing the number of collection cycles can influence the amount of cash needed to cover the
volatility created by cyclical collections. Both the average disbursements and the number of
collection cycles will be based on authoritative, auditable data.
1.4.4.5. Range of Operations. The range of operations is the difference between
the highest and lowest cash level required based on budget assumptions and past experience. Cash
balances are not static and volatility can be expected due to annual, quarterly, and more frequent
seasonal trends and significant one-time events. Historical trends should be normalized for such
factors as Annual Operating Result (AOR) return/recovery, capital investments, the amount of
work, and changes in operations, and used to estimate future fluctuations in cash flows and
balances. Studying the causes of cash volatility enables the development of strategies for reducing
the range of operation and the amount of cash required for normal operations.
1.4.4.6. Risk Mitigation. Some amount of cash is required, beyond the range of
operation, to mitigate the inherent risk of unplanned and uncontrollable events. Examples of these
risks are budget estimation error, commodity price fluctuation, and other contingency or response
missions. The amount of cash held for risk mitigation will depend on the activity’s sensitivity to
anticipated types of risk, the effectiveness of other cash management and risk mitigation tools, and
management’s level of risk tolerance.
1.4.4.7. Reserves. Cash reserves are funds held for known future requirements.
This element identifies cash on hand that must be kept for specific requirements that are not
expected to disburse until subsequent fiscal years. Examples of reserve requirements include
return of AOR, advances/pre-payments received, liquidation of unexpended appropriations,
liquidation of unpaid obligations, and planned capital investments. Since reserves are only for
specific known requirements, they may not be needed every year.
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1.4.4.8. The following figure depicts how the four elements (rate, range, risk
mitigation, and reserves) come together to build the complete cash requirement.
1.4.4.9. Components will develop monthly phased cash plans, incorporating
collections, disbursements, appropriations, and other cash transactions based on Component
estimates, to facilitate the cash management process. The plans will be initially developed during
the budget process and will be an integral part of the budget document (Fund-13).
1.4.4.10. Components will monitor and control to the extent possible execution of
collections and disbursements to ensure a sufficient cash balance is maintained throughout the
year. Components will also monitor execution against monthly phased plans to increase
management attention on reducing costs, emphasizing timely billing, collecting revenue, and
disbursing. Components should consider leveraging the aforementioned available cash
management tools when cash execution is trending below/above plan for more than three
consecutive months of execution.
1.4.4.11. Components must be able to reconcile and explain variances between
cash balances and AOR. In addition to explaining variances based on operations, components
must also explain events that affect cash but not revenues and expenses.
1.4.5. Transfers of cash between DWCF activities, whether directed internally by the
Components or as the result of audit, Departmental guidance, or Congressional direction, will be
included in all the affected activities’ budgets (Fund-13). Transfers between DoD Component
WCFs (e.g., Army to Air Force) or between the DWCF and appropriation-funded activities require
Congressional approval.
1.4.6. Advance Billings.
1.4.6.1. The term “advance billing” means a billing to a customer by the fund, or a
requirement for a customer to reimburse or otherwise credit the fund, for the cost of goods or
services provided (or for other expenses incurred) on behalf of the customer. The term “customer”
means a requisitioning component or agency.
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1.4.6.2. Except as provided in paragraph f, the total amount of advance billings
executed by the Department for a fiscal year may not exceed the amount specified in
10 U.S.C. § 2208 (l) or as amended by public law.
1.4.6.3. Components may use advance billings of customers as a cash mitigation
strategy. The OUSD(C) or the Military Department, as applicable, must submit written
notification to Congress within 30 days after the end of the month in which the advance billing is
made. The notification must include the reasons for the advance billing, an analysis of the effects
of the advance billing on military readiness, and an analysis of the effects of the advance billing
on the customer. Military Departments must provide the Revolving Fund Directorate copies of all
advance billing notification letters provided to Congress. Defense agencies will submit their
requests to the Revolving Fund Directorate, who will notify Congress on their behalf.
1.4.6.4. Advance billing requires authorization within the activity’s Annual
Operating Budget (AOB). Components will request this authority and, if approved, the Advanced
Billing Authority will be added to their AOB.
1.4.6.5. Advance payments received from non-federal entities are not subject to
10 U.S.C. § 2208, advance billing limitations, and are required by Volume 11B, Chapter 11. The
billing of customers by Supply Management Activities upon shipment rather than delivery also is
not subject to paragraph (l) advance billing limitations.
1.4.6.5.1. 10 U.S.C. § 2208, paragraph (l)(4) provides that advance billing
for background investigations and related services performed by the Defense Counterintelligence
and Security Agency is not subject to section 2208’s congressional notification requirements and
dollar limitations.
*1.5 Capital Investment Program (CIP) Policy
These policy statements address preparation of the PBR submission.
1.5.1. The legal requirements related to the CIP are found in 10 U.S.C. § 2208, paragraphs
(k), (m), and (o). The legal requirements for unspecified minor military construction projects are
found in 10 U.S.C. § 2805.
1.5.2. The CIP may be used by WCF activities to purchase capital assets meeting the
criteria in 10 U.S.C. § 2208, paragraph (k).
1.5.3. With the exception of major military construction and items listed in paragraphs
1.5.6 and 1.5.9 below, acquisition of all capital assets for use by activities within the Fund will be
financed through the Fund using contract authority. Components may not use the CIP to establish
a new or expand an existing organic capability except as specifically justified in the President’s
Budget Request (Exhibit Fund-9b, “Capital Investment Justification”).
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1.5.4. Revolving Fund activities outside the DWCF that are not authorized contract
authority (e.g. the PRMRF) must build the full cost of capital investments into their rate structure
to ensure funds are available prior to obligation.
1.5.5. The CIP consists of the following four major categories of assets: 1) Automated
Data Processing Equipment (ADPE); 2) Non-ADPE Equipment; 3) Software Development,
whether internally or externally developed; and 4) Minor Construction.
1.5.6. The WCF Capital Budget specifically excludes the following items, which must be
financed by appropriated funds.
1.5.6.1. Major Range and Test Facility (MRTF) installations (equipment and
minor construction) that meet the DoD Investment capitalization criteria in accordance with
10 U.S.C. § 2208, paragraph (k).
1.5.6.2. Military and tenant support functions
1.5.6.3. Major weapons systems (such as aircraft, ships, tanks, barges, etc.), and
general-purpose passenger type vehicles
1.5.6.4. Equipment and minor construction projects for mobilization requirements,
but not used during peacetime operations
1.5.6.5. Equipment initially procured and usually furnished as part of a weapons
system and/or support system including modifications (includes initial common support equipment
for depot maintenance support of new weapons systems)
1.5.6.6. Materiel normally funded by appropriated funds and provided to
contractors as Government-Furnished Materiel (GFM). The GFM is incorporated into, used in
conjunction with, or consumed in the production of an end product. The customer must use
appropriated funds to purchase the GFM and provide it at no cost to the WCF
1.5.6.7. Minor construction projects for non-WCF activity or military support
functions
1.5.6.8. Construction and facility investment projects that exceed the amount
specified in 10 U.S.C. § 2805 for funding under Operation and Maintenance appropriations
1.5.6.9. Environmental projects financed or submitted for funding by the
applicable Environmental Restoration Transfer appropriation
1.5.6.10. Capital Investments for morale, welfare, and recreation activities
1.5.6.11. Such other exclusions as may be approved by the USD(C).
1.5.7. The AOB permits a WCF activity to obligate contract authority to purchase capital
assets prior to receiving funded customer orders and collecting cash from customers. Those
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obligations must be funded by offsetting collections since cash does not come with contract
authority.
1.5.8. As an administrative control of resources subject to the rules of 31 U.S.C. § 1517,
the Anti-Deficiency Act, the AOBs provide a specific amount of CIP contract authority.
Therefore, obligations may not exceed the amount provided on the AOB.
1.5.9. The WCF customers may procure capital assets through direct appropriations for
use by a WCF activity. However, these assets remain the property of the customer and will not be
recorded as Property, Plant and Equipment assets on revolving fund financial statements unless
the asset is transferred to WCF ownership.
1.5.9.1. At the time of transfer, the WCF activity will record the asset at its net
book value and depreciate it for accounting purposes over the remaining useful life. Depreciation
does not have to be incorporated into the WCF rate structure if the WCF did not outlay any cash
resources. If the asset is expected to be replaced at the end of its useful life, then a capital surcharge
may be collected prior to the acquisition of the replacement asset.
1.5.9.2. The appropriate procurement account will continue to fund the purchase
and installation costs for the initial procurement of depot maintenance capital equipment unique
to newly introduced platforms or weapon systems (this includes modifications). The capital
equipment becomes the property of the depot when it is transferred to or otherwise capitalized by
the depot. The depot will treat the equipment as a capital asset and depreciate it for accounting
purposes. Funding of subsequent replacement and maintenance of the equipment in the DWCF
should be included in the DWCF capital and operating budgets.
1.5.10. WCF activities must recover costs to purchase capital assets by including a Capital
Investment Recovery (CIR) factor in rates billed to customers. The CIR factor is the amount added
to the rate to substitute and then liquidate contract authority obligated to purchase capital assets.
To do this, the Component will allocate a portion of the collections from revenue on customer
orders to liquidate the contract authority. This process allocates cash (i.e. FBwT) from the
operating program to the capital program. The amount of collections used to liquidate contract
authority will equal the amount of obligated contract authority at the end of each FY, net of any
decreases to contract authority or contract authority withdrawn. If there are insufficient budgetary
resources to liquidate the full amount of contract authority obligated, then at a minimum, the
Activities must liquidate enough to cover outlays associated with CIP. This will ensure there is
sufficient cash in the capital program to fund outlays associated with the obligated contract
authority. The CIR factor will differ from the depreciation expense. Collections associated with
the CIR fund capital outlays while depreciation expense is an allocation of costs over an asset’s
useful life.
1.5.10.1. In addition to the CIR, a capital surcharge may be used to collect cash for
the capital outlay if minimum balances are not sufficient to provide adequate budgetary resources
to offset budgetary claims (See Volume 3, Chapter 19).
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1.5.11. Guidance on accounting for capital assets is contained in Volume 4, Chapter 24,
Chapter 25, Chapter 26, and Chapter 27.
1.5.12. The following budget exhibits are required to document an activity’s capital budget
request.
1.5.12.1. Exhibit Fund-9a, “Capital Investment Summary,” represents the
summary data of the four asset categories (ADPE, Non-ADPE, Software, and Minor Construction)
at the approved DoD Component aggregate project line item level. The exhibit displays data on
annual capital obligations, cash outlays, and budgeted CIR. The prior-year column on the Exhibit
Fund-9a will show all amounts approved in the most recent President’s Budget, adjusted for actual
project year obligations, additional authorizations and all reprogramming (as depicted on the
Exhibit Fund-9c, “Capital Budget Execution”).
1.5.12.2. Exhibit Fund-9b, “Capital Investment Justification,” provides detailed
cost data and narrative justification for each approved DoD Component aggregate project line item
level. Components will provide a corresponding Exhibit Fund-9b for each aggregate project line
item on the Fund-9a exhibit. The exhibit displays the Benefit to Investment Ratio, Savings to
Investment Ratio and/or the Payback period. Exhibits Fund-9a and Fund-9b data should agree
with, and also should be used for cross-referencing, Exhibit 53 of the Information Technology
budget.
1.5.12.3. Exhibit Fund-9c, “Capital Budget Execution” compares and explains the
differences between the most recent President’s Budget and the current submission by the DWCF
activity for the four asset categories (ADPE, Non-ADPE, Software, and Minor Construction). This
includes prior year (PY) execution adjustments and adjustments to the current year (CY) due to
unexecuted programs or new emerging requirements. Adjustments to project years not displayed
in the budget submission are not recorded on the Fund-9c.
1.5.13. Each proposed CIP project must be reviewed to ensure that it satisfies the
following criteria for justification and backup:
1.5.13.1. The acquisition of a capital asset meets the Department’s long-range
planning and programming objectives and satisfies a documented need for capability to perform
valid operations, functions, or services that cannot be performed as effectively or economically by
the use of existing equipment and facilities or by contract.
1.5.13.2. The acquisition of a capital asset complies with policies and regulations
governing the acquisition and management of facilities, special tooling, and special test equipment
as established by DoD Directive 4275.5, “Acquisition and Management of Industrial Resources,”
as well as other applicable policies and regulations governing the lease and acquisition of
equipment and facilities.
1.5.13.3. The workload projections used to justify capital purchases take into
account the results of inter-service decisions, workload posture planning decisions, readily
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available commercial alternatives, and other reasonable options available for accomplishing
applicable work load.
1.5.13.4. The acquisition of a capital asset efficiently and effectively accomplishes
the objective for which it is justified. The criteria are: improved efficiency (savings) or
effectiveness of operations; replacement of unsafe (locally determined by an authorized safety
representative), beyond economical repair, or inoperative and unusable assets; and environmental,
hazardous waste reduction, or regulatory agency (state, local, or Federal) mandated requirements.
1.5.14. A formal pre investment analysis or a cost comparison is required to justify
investment projects for capital budget submissions in the four investment categories (ADPE, Non-
ADPE, Software, and Minor Construction).
1.5.14.1. Either an economic analysis or cost comparison will be used to support a
project substitution or accomplish a reprogramming request. An economic analysis will be used
for all projects with a cost of $5,000,000 or more. A cost analysis will be used for projects under
$5,000,000.
1.5.14.2. Activities must complete this pre-investment analysis prior to including
the capital asset in the capital budget submission, a reprogramming action, or a project substitution.
The originating office of the DoD Component will maintain these analyses as project
documentation support for the capital budget submission and program execution.
1.5.14.3. A cost comparison for investment projects under $5,000,000 will be
prepared in constant base year dollars and present a differential cost display by year for up to a 6-
year evaluation period, beginning with the budget year for which investment funds are requested.
1.5.14.3.1. Documentation for a cost comparison should describe the
functional process performed; define the need/requirement/objective; identify workload
projections; address feasible alternatives; present total costs attributed to each alternative and the
differential costs/monetary benefits expected in constant and current dollars over the 6-year
evaluation period; and provide significant assumptions, constraints, estimating methods, rationale,
data sources.
1.5.14.3.2. The payback period should be the primary economic indicator
used for cost comparisons to rank order within the investment categories of each activity.
1.5.14.4. A pre-investment economic analysis should be prepared to justify capital
investment projects of $5,000,000 or more. The economic analysis should be prepared on a net
present value (NPV) basis and must comply with applicable DoD or Component guidance and
functional program guidance. The economic analysis initially should be prepared in constant base
year dollars and should present a differential cost display by year over the project’s expected
economic life, beginning with the budget year of the investment fund request.
1.5.14.4.1. Documentation should describe the functional process
performed; define the need/requirement/objective; present and explain workload projections;
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identify feasible alternatives; present total costs and the differential costs/monetary benefits in
constant, discounted, and current dollars over the expected economic life of the project; present
estimating methods/relationships, and data sources; identify significant constraints, assumptions,
and variables; treat sensitivity and uncertainty of key parameters; and address all other quantifiable
benefits as well as any intangible benefits influencing the recommended course of action.
1.5.14.4.2. Quantifiable benefits are all outputs/results achieved in return
for investment dollars associated with an alternative.
1.5.14.4.3. Benefit-to-Investment Ratio (BIR) should be the primary
indicator used to rank order projects of $5,000,000 or more within the investment categories of
each activity. Also consider the payback period in the ranking process.
1.5.14.4.4. Automated economic analysis programs and reports may be
used if the programs provide comparable information to that of standard economic analysis reports.
1.5.14.5. Compute the payback period to compare the period of time, in years,
necessary for an alternative to repay its investment cost based on the monetary benefits expected.
Present this metric in tenths of years (for example, 7.2 years.)
1.5.14.6. Use the BIR to compare project alternatives in terms of all expected
monetary benefits, inclusive of whole and partial manpower productivity savings resulting from
increased efficiency and other cost avoidance achieved over the total project life under evaluation.
Calculate the BIR using discounted constant dollars, as an index value and rounded to two decimal
places. A BIR of greater than one indicates the project is cost-beneficial; the larger the ratio, the
greater the advantage of the project.
1.5.14.7. Calculate the Savings-to-Investment Ratio (SIR) between actual savings
in terms of funds no longer required and the investment cost for Automated Information Systems,
using discounted dollars.
1.5.14.8. A post-investment analysis should also be done after project completion
to assess the actual costs and benefits and inform future investments.
1.5.14.9. Exemptions to the investment analysis include environmental, hazardous
waste reduction, or regulatory agency (state, local, or Federal) mandated requirements. This
includes action directed by a higher DoD or Component authority that precludes a choice among
alternatives, and DoD instruction or other directive that waives the requirement (e.g., equipment
age or condition replacement criteria).
1.5.15. Internal Use Software as defined in DoDI 5000.76 is: Acquired or developed to
meet the entity’s internal or operational needs (intended purpose); A standalone application, or the
combined software components of an IT system that can consist of multiple applications, modules,
or other software components integrated and used to fulfill the entity’s internal or operational
needs (software type); Used to operate an entity’s programs (e.g. financial and administrative
software, including that used for project management); Used to produce the entity’s goods and to
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provide services (e.g., maintenance work order management, loan servicing); or Developed or
obtained for internal use and subsequently provided to other federal entities with or without
reimbursement. This excludes software that is integrated into and necessary to operate general
property, plant, and equipment.
1.5.15.1. Software that is integrated into hardware and is necessary to operate the
hardware, rather than to perform an application, should be budgeted with and capitalized as part
of the hardware. Systems application software, however, should be budgeted separately as either
an expense or a capital investment, depending on whether it meets the criteria for a capital asset.
1.5.15.2. Budget for new acquisitions of and improvements to software by project.
The full scope of a software development project may consist of costs incurred in: 1) Preliminary
Design, 2) Software Development, and 3) Post Implementation. While all of these costs are part
of the project, only the software development phase is capitalized. Refer to Volume 4, Chapter 27
for more information on the accounting requirements.
1.5.15.2.1. The preliminary design phase consists of conceptual
formulation of alternatives, evaluation and testing of alternatives, determining the existence of
needed technology, and final selection of an alternative. This phase consists of all functional
actions, including source selection for COTS and all actions prior to Systems Requirements
Specification for internally developed software. Expense the preliminary design phase costs as
part of the operating budget and identify them on the Exhibit Fund-1a, “Details of Price and
Program Changes - Costs
1.5.15.2.2. Capitalize the software development phase consisting of the
design of a chosen alternative including software configuration and interfaces, coding, installation
of software and related hardware, and testing, which may include parallel processing development
of user manuals and training.
1.5.15.2.3. Expense the post implementation/operational phase costs of
data conversion and application maintenance, including functional training and documentation,
operational testing, and evaluations conducted after technical acceptance of the software.
1.5.15.3. Exclude from the capital budget all costs incurred prior to Milestone 0,
Concept Exploration and Definition. Expense costs such as basic research, study, exploratory
development establishing feasibility and practicality of proposed solutions and rough order of
magnitude estimates. Also expense costs for technical software support and maintenance software
support occurring after system installation.
1.5.15.4. Only include those software development or acquisition efforts for the
benefit of the activity in the DWCF capital budget submissions. Software developed or acquired
for a specific customer order should be charged to and reimbursed by the requesting customer.
Types of cost to be included in a software development project include total labor and non-labor
costs such as: 1) all direct costs for civilian and military personnel; 2) contractor labor; 3) supplies;
4) travel; 5) processing support for testing; 6) indirect production costs; and 7) general and
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administrative (overhead) costs (e.g., base operations support, higher headquarters, and costs for
central design activity-owned assets).
1.5.15.5. Software projects may be accomplished in modules. A module is an
application that may be operated or used independent of other modules within a system. Where
an entire system consists of more than one severable module, request funding for each severable
module in the year that the module is started. Funding requests must be sufficient to complete the
module. If several modules make up a complete ADP system, show the cost of all modules related
to the system.
1.5.15.6. Separately identify ADP equipment and ADP software in the capital
budget.
1.5.15.7. In accordance with 10 U.S.C. § 2222, paragraph (c) and DoDI 5000.75,
current services (CS), development and modernization (DevMod) to a business system with budget
authority and/or spending of $250 million or more over the Future Years Defense Program (FYDP)
for Priority Defense Business Systems or $25 million or more for Fourth Estate Defense Business
Systems over the FYDP must be approved by the Defense Business Council (DBC) , tri-chaired
by the Director, Administration and Management (DA&M), OUSD (C), and DoD CIO for
certification prior to obligating funds.
1.5.16. Unspecified minor military construction projects costing more than the threshold
established in 10 U.S.C. § 2805 must be funded within the DoD Component’s Military
Construction appropriation. Exceptions to this limitation are noted below in 1.5.16.1.
1.5.16.1. Authority provided by 10 U.S.C. § 2805, paragraph (c) to use funds
available for operation and maintenance for unspecified minor construction projects costing not
more than the threshold established therein is available for DWCF-funded unspecified minor
construction. However, projects that have an estimated cost that exceed the thresholds established
in 10 U.S.C. § 2208 that have not been documented in a corresponding budget exhibit (Exhibit
Fund-9b, “Activity Capital Investment Summary”) must be approved through the Congressional
notification process or in a subsequent budget and displayed as an adjustment on the Exhibit
Fund-9c, “Capital Budget Execution.” The approval will be reflected in the Component’s Annual
Operating Budget.
1.5.16.2. In 10 U.S.C. § 2805, paragraph (d), Congress authorized a DoD
Laboratory Revitalization Program that increases to the upper ceiling threshold for certain minor
construction projects at DoD laboratories. The authority is not permanent, but is subject to periodic
congressional extension. Laboratory Revitalization Program projects must be for the revitalization
and recapitalization of Defense laboratories owned by the U.S. and under the jurisdiction of the
Secretary of Defense or a Military Department. In accordance with 10 U.S.C. § 2805, paragraph
(d)(3) any projects using the Laboratory Revitalization Program requires the concerned Secretary
to provide the appropriate Congressional committees a 14 day notification prior to obligation of
funds. Fund activities designated to participate in the DoD Laboratory Revitalization Program
must obtain prior approval from the Director or Deputy Director for Revolving Funds for all
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projects estimated to exceed the thresholds established in 10 U.S.C. § 2208 so that those projects
can be specifically identified in the capital program within the AOB prior to project execution.
1.5.16.3. Capital investment costs financed in the minor construction portion of the
capital budget include project planning and design costs associated with minor construction
projects. Planning and design costs are not included as part of the statutory threshold for minor
construction projects.
1.5.17. DoD Components may reprogram capital funds between DWCF activities, or
categories or projects within a DWCF activity. There is no minimum or maximum limit on this
type of reprogramming. Except as noted below, capital reprogramming does not require the
written approval of the Director or Deputy Director for Revolving Funds in the form of a signed
AOB. The following approval levels and dollar threshold apply to changes to projects approved
in the capital budget including reprogramming, substitutions, cancellations, and additions:
1.5.17.1. Obtain certification from the approval authority as directed in the
guidance displayed in DoDI 5000.75. All transfers between information technology capital
projects (ADP Equipment and Software) must be documented in the Activity’s next AOB, but will
not require a new AOB solely for such documentation.
1.5.17.2. Fund managers may approve transfers between the Non-ADP Equipment
and Minor Construction categories or among their individual projects. Components are required
to document the transfers in the activity’s next AOB, but will not require a new AOB solely for
such documentation. CIP transfers between DWCF activities within a DoD Component (e.g.,
supply to non-supply) must be approved by the Director or Deputy Director for Revolving Funds,
in the form of a signed AOB, before the transfer is executed.
1.5.17.3. Components must charge capital obligation adjustments to the program
year cited in the President’s Budget for the original project. The prior year capital investment
program limitation is equal to actual obligations on September 30 of that fiscal year plus
adjustments approved by the Director or Deputy Director for Revolving Funds to the prior year
program. Fund managers may request approval to carry over authority for any unobligated capital
projects before the end of the fiscal year.
1.5.17.4. Capital obligation authority may be adjusted for prior year within-scope
increases provided that there is contract authority available to finance the increase. Before making
such increases, the Component must have equal off reductions (deobligations) of current year
capital authority to finance the prior year increase. Prior approval from the Director or Deputy
Director for Revolving Funds is only required if cumulative adjustments exceed 20 percent of the
total CIP budget of the current fiscal year. All adjustments should be documented in the activity’s
next AOB, but will not require a new AOB solely for such documentation.
1.5.17.5. For current fiscal year capital projects that will not obligate by
September 30, components must request in writing permission to carry over these projects via a
memo to the Director or Deputy Director for Revolving Funds. If the Director or Deputy Director
for Revolving Funds approves the request in a signed memorandum, the approved carry over
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amounts for projects not obligated by the end of the fiscal year will be carried forward to the next
fiscal year’s AOB.
1.6 Mobilization/Surge Costs and War Reserve Materiel
1.6.1. Mobilization capability costs include the costs to maintain a surge capacity; procure
and maintain approved war reserve materiel levels; and/or maintain other assets, functions, or
capabilities required to meet an operational contingency as documented in Defense planning
guidance or operational plans.
1.6.2. The DWCF activities should identify all costs related to maintaining a capacity to
meet mobilization requirements. These costs are not considered normal operating costs and may
be reimbursed by direct appropriations so that customer rates are not burdened by contingency
requirements.
1.6.2.1. War Reserve Materiel. Obligations for the procurement of war reserve
materiel must be funded by a direct appropriation to the Fund with one exception; if Congress is
notified, and a cost recovery rate is included in the rates, contract authority may be used. Such
appropriated amounts for secondary items must be reflected as a separate goal within the applicable
Supply Management or Commissary Resale activity AOB. Use the SM-6 “War Reserve Materiel”
exhibit to justify War Reserve Materiel Requirements.
1.6.2.2. Unutilized and Underutilized Plant Capacity.
1.6.2.2.1. Unutilized/Underutilized Plant Capacity (UPC) represents costs
associated with maintaining facilities to meet surge capacity needed for mobilization or war. The
UPC is a mobilization requirement budgeted in and funded by Operation and Maintenance
appropriated funds of the DoD Component responsible for the activity’s management. Do not
include UPC costs in the DWCF rate structure. As a general rule, UPC funding includes the pro-
rata facilities support costs for any month in which 1) mobilization facilities are not used or
2) facilities are used 20 percent or less of available work days.
1.6.2.2.2. Mobilization expenses related to UPC may include both
maintenance and labor costs related to mobilization.
1.6.2.2.3. Each non-supply DWCF activity should prepare a UPC Budget
Exhibit (Fund-30). This exhibit documents total capacity, Unutilized Capacity Index, justification,
and cost used in developing the request for UPC. All non-supply DWCF activities should
complete the three capacity-index metrics found in Part I of the exhibit. Any non-supply activity
requesting UPC funding will also complete the funded UPC line in Part I and the UPC justification
in Part II of the exhibit.
1.6.3. Industrial Mobilization Costs. The Army established a category of costs that
includes both UPC and underutilized facilities cost called “Industrial Mobilization Cost.” The
Army will use the Exhibit Fund-30, “Underutilized Plant Capacity” to justify their IMC costs.
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1.6.4. Airlift Readiness Account (ARA). The U.S. Transportation Command
(USTRANSCOM) must maintain sufficient airlift capability to respond to transportation
requirements for a wide variety of mobilization conditions. This requirement exists in both
peacetime and contingency environments. To the extent customer revenue is insufficient to
support the costs of maintaining this capability; the Air Force must provide appropriated funds
from the ARA. USTRANSCOM will coordinate with military services and Combatant
Commanders to understand airlift workload requirements and adjustments to workload projections
on a routine basis. USTRANSCOM must provide the Air Force with the budgeted ARA amount
that will be part of the Transportation Working Capital Fund Budget Estimate Submission (BES)
and President’s Budget with enough lead time for the Air Force to incorporate in its budget
submissions. The Air Force must submit a matching amount in its BES and President’s Budget
submission within its Operation & Maintenance account. USTRANSCOM must submit the
Fund-8, “Air Mobility Command Common User Services” exhibit to justify the ARA requirement.
The USTRANSCOM will record as a funded order and revenue.
1.7 Military Personnel
1.7.1. Components will use the civilian-equivalent rates provided by the OUSD(C) to price
military labor at DWCF activities. The difference between the civilian-equivalent costs, included
in the DWCF budget, and the actual military personnel cost will be budgeted directly in the
appropriate military personnel appropriation. The number of military included in the budget
should be the average strength of military assigned to the DWCF business, using the average fill
rate for the 3 prior fiscal years, unless there is a significant change projected in the budget year.
The fill rate is calculated by dividing actual average strength by the authorized strength for each
grade. The budget amount will equal the average strength for each grade multiplied by the
applicable civilian-equivalency rate.
1.7.2. The amount expensed for military personnel by DWCF activities and the amount
reimbursed to the appropriate military personnel appropriation will equal the amount budgeted.
No adjustments will be made to the DWCF cost of operations to reflect the actual cost of military
personnel employed by DWCF activities. Military Departments having military personnel
assigned to other Components will provide to each Component the number of work years that
should be included in the DWCF budget submission. The DWCF activities that augment their
manpower requirements with National Guard or Reserve personnel, to include those participating
in the Personnel Force Innovation (PFI) program, will reimburse the appropriate military personnel
appropriation at the DWCF civilian-equivalency rates.
1.7.3. The civilian-equivalent costs are provided by the OUSD(C) and are calculated in
accordance with Volume 11A, Chapter 6.
1.7.4. See Volume 2A, Chapter 1 for active duty military personnel pricing policy.
*1.8 Full Recovery of Costs and the Setting of Prices
1.8.1. Managers of DWCF activities within each Component will set their prices based on
full cost recovery, including all general and administrative support. Prices are established by the
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budget process and are represented at the aggregate level in the form of a composite rate. Prices
and corresponding rates should remain fixed during the year of execution (exceptions are listed in
Volume 11B, Chapter 15). This stabilized price policy serves to protect customers from
unforeseen inflationary increases and other cost uncertainties and better assures customers that
they will not have to reduce programs to pay for potentially higher-than-anticipated prices. In
turn, this policy allows activities to execute the budgeted program level and permits a more
effective use of DWCF resources.
1.8.2. Except in unusual circumstances, prices for the budget year will be set to break even
over the long run at the activity level. This means that prices will be set to achieve an AOR of
zero in the budget year, provided that cash and budgetary resources are available to support AOR
returns. In budget execution, activities will incur either a positive or negative operating result.
Accordingly, activities will increase their budget year prices to make up actual or projected losses
of budgetary resources or reduce their budget year prices to return actual excess cash resources or
projected budgetary gains to customers.
1.8.3. An activity may request recovery of AOR outside the budget year. This request
must be included in the budget submission, and must demonstrate that the alternative recovery
period will not adversely affect the cash balance of the activity. A phased recovery schedule must
be provided with the budget.
1.8.4. Special Circumstances: DWCF rules for pricing and operating loss recovery or gain
distribution may be waived or deferred if one or more of the following conditions exist.
1.8.4.1. Fund Liquidity: Component fund managers must maintain a positive cash
balance throughout the year. The cash requirement developed on the exhibit, Fund 13b, Cash
Requirements, provides a management guide for maintaining cash sufficiency. Several factors,
however, could cause activities to operate outside the requirement range. To prevent the buildup
of excess cash balances, or to ensure fund solvency, the Director or Deputy Director for Revolving
Funds may direct out-of-cycle rate adjustments at any time during the fiscal year.
1.8.4.2. Depot Maintenance Additional Requirements: If Component cash
balances are projected to be sufficient (see paragraph 1.4) by the end of the budget year, depot
maintenance activities will recoup losses and return gains in the budget year. However, if cash
balances will be outside the cash requirement range, an out-of-cycle rate adjustment or surcharges
may be directed, to restore cash to appropriate levels, at any time in accordance with paragraph 1
above. Also, unplanned depot losses recouped in subsequent years may be financed with prior
year resources, provided all other criteria associated with prior year upward obligations are met.
1.8.4.3. Contingency or Emergency Operations: Fund managers may waive
DWCF pricing and financing requirements to facilitate Department operations during times of war
or other national emergencies. The DWCF activity must notify the Director and Deputy Director
for Revolving Funds in writing within 30 days of this action.
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1.8.4.4. Impact of Foreign Currency Exchange Rates: A DWCF activity operating
overseas may experience significant operating losses or gains due to changes in foreign currency
exchange rates.
1.8.4.4.1. While these operating losses and gains are normally recovered or
returned through stabilized rate adjustments in budget years, fund managers may propose out-of-
cycle rate adjustments to the Director and Deputy Director for Revolving Funds to address such
losses and gains in execution. In calculating any gain or loss from foreign currency fluctuations,
the DWCF must use the foreign currency exchange rates published as part of the Department’s
budget justification materials submitted to Congress in support of the President’s budget request
and follow applicable procedures in Volume 6A, Chapter 7.
1.8.4.4.2. The DWCF activities are not eligible to participate directly in the
Foreign Currency Fluctuations, Defense (FCF,D) (97-X-0803) and the Foreign Currency
Fluctuations – Construction, Defense (FCF-C,D) (97-X-0801) accounts.
1.8.4.5. In addition to spreading contract costs when developing rates for all
customers, the DWCF activities may incur and recover costs for contracts awarded specifically to
fill the requirements of one customer by charging that customer an amount equivalent to the
DWCF activity’s expense in funding, awarding, and administering the contract.
1.8.4.6. Unbillable costs and operational losses that cannot be billed to an
identifiable customer or that were generated from unforeseen cost overruns are to be treated as
costs in the fiscal year in which the costs were incurred. The resulting operating losses must be
included in calculating net and accumulated operating results.
1.8.4.7. Unless approved in writing by the Director or Deputy Director for
Revolving Funds as an out-of-cycle rate adjustment, the prices must be consistent with the rates
set for all activity products, goods, or services approved during the budget review and documented
in a memorandum signed by the USD(C), or designated representative.
1.8.4.8. Reimbursement procedures humanitarian efforts are as follows:
1.8.4.8.1. Users must pay for the goods and services provided by all DWCF
activities, including deployment or other emergency response for military or humanitarian
assistance.
1.8.4.8.2. See Volume 11B, Chapter 11, Section 2.7 for guidance.
1.8.4.8.3. Consistent with this policy, third party collections for
transportation provided in response to a Request-for-Assistance (RFA) from another government
agency are prohibited. The Military Department that controls the equipment or personnel is
responsible for reimbursing USTRANSCOM. It is then the responsibility of the Military
Department that accepted the RFA to collect any required reimbursements due that Military
Department by the requesting government agency.
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1.8.4.8.4. The sole exception to this policy occurs when the
USTRANSCOM receives an order from the Joint Chiefs of Staff requiring transportation of non-
U.S. owned equipment and/or non-U.S. personnel such as non-reimbursed efforts in support of the
United Nations. In those instances, the Army will pay Surface Deployment and Distribution
Command (SDDC) costs, the Navy will pay Military Sealift Command (MSC) costs, and the Air
Force will pay Air Mobility Command (AMC) costs. Bills may be centralized for more convenient
processing if appropriate; however, billings must be forwarded to the appropriate Military
Department within 30 days from the commencement of service or humanitarian effort. The
Military Departments must pay these bills, including transportation bills, in a timely manner.
1.8.4.8.5. This guidance does not address any contingency operation
designated by the Secretary of Defense as a “National Contingency Operation” under the provision
of the 10 U.S.C. § 127. Special rules apply for such an operation and those rules should be
promulgated separately in conjunction with any designation by the Secretary under the provisions
of that section.
1.8.4.9. Base Realignment and Closure (BRAC) cost reimbursement policies are
as follows:
1.8.4.9.1. BRAC-Related Costs. Costs incurred in implementing the
recommendations of the BRAC Commissions will be funded by the appropriate BRAC account
and are not to be included in the rates and costs of businesses within the Fund. The DWCF
activities may incur BRAC expenses prior to receiving an allocation of BRAC funding; however,
all costs properly charged against the BRAC account must be reimbursed with BRAC funds. The
DWCF activities may not expend funds prior to complying with the notification requirements
imposed by law with respect to the obligation of BRAC funds. The BRAC account must reimburse
all costs incurred by DWCF activities to carry out BRAC prior to the end of the fiscal year in
which costs were incurred. Prior year, current year, or budget year operating losses in DWCF are
not to be budgeted in the base closure accounts. Costs attributable to base closure actions at DWCF
activities to be budgeted in BRAC may include:
1.8.4.9.1.1. BRAC directed reductions-in-force, separation
incentives, plant closures, plant layaway or custody costs, or other BRAC-related expenses, such
as all costs not associated with a valid work order during the year of closure
1.8.4.9.1.2. Environmental restoration and mitigation, to include
reducing, removing, and recycling hazardous waste, and removing unsafe building debris
1.8.4.9.1.3. Planning, to include conducting such advance planning
and design as may be required to transfer from an activity being closed to another military
installation
1.8.4.9.1.4. Outplacement assistance in relocating, training, or
providing other necessary assistance to civilian employees employed by the Department at
installations being closed
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1.8.4.9.1.5. Community programs, to include economic adjustment
assistance to a community in which the closed base is located, or community planning assistance
to the community to which functions will be transferred as a result of closure of a military
installation.
1.8.4.9.2. BRAC and DWCF Rates. Overhead, not specific to BRAC and
not in support of producing goods or services for customers, will be financed in the year the costs
are incurred with the Components’ Operation and Maintenance (O&M) appropriations. The
DWCF losses occurring in years prior to closure will be recovered through the rate structure to the
extent that there are new customer orders. When there are no new customer orders in the budget
year, the Component responsible for the activity incurring the loss will finance, as a pass through
from O&M appropriations to the DWCF, all overhead not included in rates supported by ongoing
work or prior year losses to be recovered in the budget year. All costs at a closing activity in the
year of closure that are not associated with a valid work order or are not valid BRAC costs are
O&M costs and must be budgeted in the fiscal year when they will be incurred.
1.8.4.9.3. BRAC-Related Permanent Change of Station (PCS) Moves for
DWCF Activities. Costs incurred to recruit and hire civilian personnel (including associated PCS
costs) to fill vacant positions at an activity that is being transferred from a closing or realigning
installation to another military installation in accordance with a BRAC recommendation may
properly be considered BRAC costs under the Base Closure and Realignment Act of 1990. As a
matter of Department policy, however, BRAC funds will not be used for such costs except in the
case of DWCF activities, which may temporarily charge such costs against the DWCF, provided
the DWCF is reimbursed with BRAC or O&M funds by the end of the fiscal year in which the
costs are incurred.
1.8.4.10. Funding of Civilian Voluntary Separation Incentive Program will be
financed and included in stabilized rates for civilian separation incentive requirements of assigned
employees unless they must be offered as a result of directed BRAC action, in which case the
appropriate BRAC account will fund the civilian separation incentive.
1.8.4.11. Any DWCF activities that use any of the services as listed in Exhibit
Fund-22, “Summary of Base Support” as tenants must reimburse installation host activities in
accordance with DoDI 4000.19 (Support Agreements) to the extent that the specified support for
the DWCF activity increases the host activity’s direct costs. Costs for DWCF mission products
and services (e.g., depot supply, depot maintenance, facility engineering services, information
processing, communications, and software development) should be based on the approved
stabilized rate. Other support incidental to the DWCF activity’s primary mission or purpose must
be budgeted based on direct costs measurable and directly attributable to the DWCF activity
(e.g., incremental direct cost). Only the incremental direct cost attributable to the DWCF activity
may be chargeable to the DWCF activity. Overhead costs are not to be included as a cost to the
DWCF activity. The cost of operations budgeted for these services either as a host or tenant
activity should be noted on Exhibit Fund-22, “Summary of Base Support” in the fall budget
submission.
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1.8.4.12. First line supervision is that position level immediately over non-
supervisory workers. First line supervisors and above occupy an official supervisory designated
position, and when acting in a supervisory capacity, should have their labor costs charged by the
DWCF activity as an indirect production cost of the cost center supervised, unless all the
supervisor’s time is in direct support of a single project. First line supervisors may be borrowed
and when used as direct labor, DWCF activities must classify the time of the first line supervisor
as direct labor and charge it to the applicable job order rather than as an indirect production cost.
“Crew chiefs,” “snappers,” “team leaders,” and other subordinate job leaders are not first line
supervisors. Volume 11B, Chapter 13 contains additional information related to charging labor
costs.
1.8.4.13. Management Headquarters Costs for DWCF activities may be allocated
using the following guidance:
1.8.4.13.1. A management headquarters is a discrete organization or part of
an organization that has authority over the management of the DWCF activity. The OSD and
Service Departmental activities normally do not have this direct responsibility. All the major
systems/logistics organizations in the Services include headquarters elements directly supporting
DWCF activities that should be funded or reimbursed by the DWCF activities.
1.8.4.13.2. Costs for discrete DWCF management headquarters
organizations and parts of organizations that perform direct DWCF management headquarters
functions can be financed directly in the DWCF or reimbursed by the DWCF activity (whichever
is more practical). In addition, Components may allocate significant costs for common support
functions, such as counsel or personnel services, at DWCF management headquarters to other
users based on workload percentages in those functions.
1.8.4.14. Dual-Funded Organizations are organizations that are funded (including
reimbursable funding) by both the DWCF and other appropriations or accounts.
1.8.4.14.1. Functions. In instances where a non-management headquarters
function is funded with a combination of WCF and General Funds, the function initially will be
funded in its entirety by either the DWCF or General Funds, based on the preponderance of
definable units of measure for the function (e.g., workload, productive hours, outputs, or ultimate
use).
1.8.4.14.1.1. The part of the organization (or funding source
provided) initially funding the function should be reimbursed for appropriate amounts by other
parts of the organization (or financing sources or customers) involved, based on the unit of measure
that was used to determine which organization or funding source would provide initial funding;
and the amount of reimbursement should be based on the relative portion of that unit of measure
attributable to each part of the organization or funding source involved. If the part of an
organization that is within the WCF accounts for more than 50 percent (e.g., 60 percent) of the
unit of measure for a function shared with the part of the organization funded through appropriated
funds, then the WCF portion of the organization initially would fund all of the costs of performing
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that function. However, the applicable part of the organization funded through General Funds
would reimburse the WCF for, and be allocated, the remainder of the costs (e.g., 40 percent).
1.8.4.14.1.2. Notwithstanding this policy, the amount of
reimbursement for base support services provided by the DWCF to tenant activities must be
determined in accordance with the policies in DoDI 4000.19 (Support Agreements).
1.8.4.14.2. Capital Investments. When a capital asset purchased by a WCF
activity is also used by the part of the organization financed by appropriated funds, the Fund
activity will capitalize the asset and bill the appropriated fund customer for the use of the capital
asset. Such billings will use a rate that recoups both the CIR and operating costs. When a capital
asset is financed by General Funds and also used by the DWCF part of the organization, the
General Funds will capitalize the asset and may bill the DWCF for operating costs. General Funds
activities do not bill DWCF activities for depreciation of capital assets.
1.8.4.15. Revenue Recognition Procedures for DWCF activities.
1.8.4.15.1. The DWCF activities must recognize revenue and associated
costs in the same accounting period. There are two types of customer orders: (1) end-product (end-
item) type orders which, at the completion of the customer order, produce a usable end-product
(i.e., overhaul, repair, manufacture, construction, modification, supply transactions, etc.); and
(2) service type orders that provide a service over a specified period of time. Revenue must be
recognized in the same manner (that is, a standard policy for recognizing and reporting revenue
must apply) for all activities within a DWCF activity. The policy varies based on the type of
customer order, the length of time necessary to complete the order, and the value of the order;
however, non-supply DWCF activities must use the “Percentage of Completion Method” for
revenue recognition. The amount of revenue recognized cannot exceed the amount specified in
the order.
1.8.4.15.2. Revenue recognition procedures must include gain and loss
recognition in the same period in order for the activity managers to evaluate the performance of
an organization. The revenue recognition policy does not encompass or establish policies for
billings to customers or payments from customers.
1.8.4.15.3. Volume 11B, Chapter 11 provides specific revenue recognition
guidance by DWCF activity.
1.8.4.16. Customer Workload Changes.
1.8.4.16.1. When a work order or project is canceled or reduced in scope
after a DWCF activity has commenced work or incurred costs, the DWCF activity should charge
the customer for the direct and indirect production costs incurred, plus the applied overhead plus
costs associated with the cancellation or reduction.
1.8.4.16.2. Volume 11B, Chapter 11 provides specific guidance for the
types of directly associated cancellation or reduction costs that can be charged to customers.
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1.8.4.17. Write-offs of unusual or infrequently occurring losses are not chargeable
against Accumulated Operating Results and should not be recovered through increases in customer
rates unless recovery of a cash loss or outlays is required and in accordance with accounting
policies. Examples of unusual or infrequently occurring losses not recovered in rates include
losses resulting from the disposal or divestiture of capital budget items that have not been fully
depreciated at the time they are taken out of service due to BRAC action; or losses associated with
systematic inventory reductions by disposal of assets associated with force drawdowns. Only
unusual or infrequently occurring write-offs that require a cash resource will be separately
identified in the Component’s budget submission using the Fund-14, “Revenue and Expenses”
exhibit.
1.8.4.18. Net Operating Results (NOR) Adjustments. There are instances where
additional adjustments to the Fund-14 and NOR are required. For example: Cash Transfers in and
out of the fund not directly related to operational performance (Direct Appropriations associated
with natural disasters, humanitarian relief, pandemics, cash infusions, and reprogramming actions
e.g., transfers in/out) may use below-the-line adjustments to the NOR to adjust for transfers that
are not directly related to operational performance and subsequently does not support returning or
collecting AOR.
1.9 Rate Setting for DWCF Activities
1.9.1. In accordance with paragraph 1.8 above, stabilized rates reflecting full cost will be
set during the budget process for all individual DWCF activities. The DWCF uses four methods
for rate setting purposes based on the nature of an activity.
1.9.1.1. Percentage Markup on Cost. A cost recovery percentage is applied to the
purchase or repair cost of secondary supply items to recover overhead costs and other pricing
adjustments. This method is typically used for supply management DWCF activities.
1.9.1.2. Direct Labor Hour (DLH). A specific dollar value, including all direct
costs, overhead, and other pricing adjustments, is charged per DLH associated with the completion
of a customer order. This method is typically used for industrial DWCF activities (i.e., depot
maintenance, ordnance, and research and development).
1.9.1.3. Specific Unit of Output. The DWCF activities that provide services via
numerous outputs that do not have a common measure for calculation will establish separate rates
for each output. When multiplied by projected customer workload for each output, the rates will
produce revenue that approximates, to the extent possible, recovery of the full cost, including
approved adjustments, of providing the specific outputs (e.g., transportation, finance and
accounting, information systems, and base support). This includes direct systems reimbursement.
1.9.1.4. Standard Fuel Price (SFP). During the budget development cycle, the
Revolving Funds Directorate will establish the standard fuel price (SFP) for use by the Defense
agencies and military departments to develop their fuel estimates for the budget. The Revolving
Funds Directorate will use the Office of Management and Budget (OMB) economic assumptions
(EA) and the refined product costs experienced by the department to develop the SFP. The SFP
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consists of the refined fuel cost and the non-product cost, which includes cost for Sustainment,
Restoration and Modernization (SRM), terminal operations, transportation, operations and product
losses. During the year of execution, the SFP may be set at the budgeted rate or may be adjusted
due to updated economic assumptions from OMB, the latest refined product cost experienced by
the Department, changes in projected product costs, or the DLA Energy cash balance. The
OUSD(C) must approve the SFP that will be used for the budget and changes thereafter.
1.9.2. Definitions and Procedures
1.9.2.1. Stabilized Price. Under the stabilized price recovery method, customers
are charged for products and services provided by a DWCF activity. Activities establish stabilized
prices for the budget year that are adjusted and approved during the budget review process. The
stabilized rate is determined by projecting workload and costs, including return/recovery of prior
year AOR gains/losses. DWCF activities will charge this annual stabilized rate for all new
customer orders received and accepted during that specific fiscal year, regardless of when the work
is actually executed and billed.
1.9.2.2. Stabilized Price Exceptions. See paragraph 1.10 for guidance applicable
to the sale of goods and services to public-private partnerships by DoD depot maintenance
activities. In the Supply activities, customers are charged the price in effect when the item is
dropped from inventory.
1.9.2.3. OP-32/PB-32 Rate Change. The annually published rate change for
DWCF activities is the percentage change of prices between fiscal years.
1.9.3. Budgeted Rates. The OUSD(C) or designee will review and approve all final
composite rates and prices developed for the President’s budget and documented subsequent in the
OUSD(C) Rates Memo.
1.9.4. Alternative Rate Development. Components may propose methods other than the
standardized rates for recovering the cost of operations so long as they are mathematically
equivalent to the standardized rate. Any alternative pricing methods must be fully documented
and justified in the DoD Components’ PBR. Any method (such as percentage of sales instead of
markup on cost) must demonstrate recovery of all operating costs, provide a comparison of the
current method to the method proposed, show the impact to customer funding requirements, and
provide a timeline for implementation. Any change in the presentation of standardized rates for
budget purposes must be approved in advance by the Director or Deputy Director for Revolving
Funds and documented in the appropriate decision document.
1.9.5. Budget Formulation Rates and Prices. All DWCF activities will establish rates
using the following multiple step process:
1.9.5.1. Each DoD Component must carefully review all projected costs for its
projected operations for the fiscal year, and propose the most cost-efficient operation possible.
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1.9.5.2. Customer requirements must be projected to include all anticipated
workload programmed for accomplishment during the budget year based on identified outputs
such as DLHs by product, tons shipped, line items received, and all other approved output
measures for each activity. Prior year execution must also be factored into the projection of
anticipated customer orders and overhead costs and significant deviations from prior year
workload must be fully explained in both the activity’s and the customer’s budget justification
materials.
1.9.5.3. Components will include adjustments required to comply with OSD and
OMB guidance on the impact of inflation, projected pay changes, and other programmatic and
policy changes in developing proposed rates.
1.9.5.4. Components will propose costs, program levels, and rate changes by
DWCF activity in their Program/Budget estimate submissions. Components may propose
exclusion of customer unique, non-labor direct costs from the stabilized rates, and charge these
costs on an actual cost reimbursable basis. Components must show the impact the change in rates
structure would have on overall stabilized rates. In other words, all costs must be accounted for
and reconciled on the corresponding budget exhibit. Final composite rate and price adjustments
will be documented in a memorandum signed by the USD(C), or designated representative, at the
completion of the budget review. Afterward, any internal realignment of rates within the
composite rate structure must be approved as an out-of-cycle rate adjustment by the Director or
Deputy Director for Revolving Funds.
1.9.5.5. Final approved costs, program levels, and rate changes will be established
by decision documents, after adjustments required to balance changes to customer funding with
anticipated Fund costs, inter-Fund sales and transactions, and adjustments for NOR to bring the
AOR to zero for the budget year for each DWCF activity.
1.9.6. Financing of Unusual or Infrequently Occurring Losses. Alternatives exist for
financing sunk costs when activities terminate capital investments before a project is completed.
These costs may be funded through one-time capital surcharges to operating costs or through the
normal budgeted CIR previously established. If charged to operating costs through a capital
surcharge and depending on the size of the charge, the loss may be recovered through rates over a
2-year period. If a usable product is produced, even though it is less than the planned product,
costs may be reasonably assigned to that product and those costs may be appropriately recovered
through the CIR.
* 1.9.7. Direct Reimbursable Work, Service Level Billings and Other Income. Work
performed may be billable outside the rate structure as approved in the President’s budget. In these
cases, revenue generated by direct reimbursable work, service level billings and any additional
form of “other income” is subtracted from total revenue before the rates are developed. Forms of
direct reimbursable work may include materiel purchases for non-supply activities, provisioning
purchases for supply activities, work performed outside the mission scope of the activity, or if the
customer has a centralized billing process to pay for a significant number of multiple outputs.
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1.10 Public-Private Partnerships at Depot Maintenance Activities
1.10.1. Public-private partnerships are agreements between organic depot maintenance
activities and private industry or other entities to perform work and/or to utilize facilities and
equipment. Partnerships improve utilization of DoD facilities, equipment, and personnel and
enhance support to the warfighter. To advance the goal of increased partnering between DoD and
private industry, this section provides guidance for the pricing of DWCF depot maintenance goods
and services to private sector entities in partnering arrangements. Conditions for the sale of goods
and services to non-DoD entities must be based on specific statutory authority.
1.10.2. In accordance with the authority granted to the Secretary of Defense by
10 U.S.C. § 2208, paragraph (h) to prescribe regulations governing the operation of DWCF
activities and the use of inventories, this guidance is intended to clarify existing legal authority
applicable in certain specific circumstances. The guidance set forth in this section:
1.10.2.1. May not be used to compete for non-defense related work.
1.10.2.2. Does not apply when otherwise precluded by public law.
1.10.2.3. Does not apply to products or services produced under work-share
arrangements in which a DoD sponsor assigns work and separately funds the DoD depot
maintenance activity and the private sector entity.
1.10.2.4. May be used for sales to private sector entities only when the transaction
is part of an arrangement that is officially recognized as a depot maintenance public-private
partnership.
1.10.3. Sales Prices
1.10.3.1. In order to minimize potential DoD operating losses or gains, sales prices
to private sector entities in depot maintenance public-private partnership relationships may be
tailored to the most recent actual and projected costs, rather than the approved stabilized billing
rates charged to DoD customers (10 U.S.C. § 2474).
1.10.3.2. Tailored rates or prices charged for sales to private sector partners, if
used, must ensure full cost recovery for the work involved in producing the specific products and
services. Such tailored rates and prices must include: (a) all direct costs, (b) production or shop
overhead costs that contribute to the final product and (c) a full allocation of General and
Administrative (G&A) overhead costs, distributed on the same basis as for DoD customers. (Since
G&A overhead costs cannot be attributed to specific products or services, there is no basis to
include or exclude specific items of cost from prices charged to customers.)
1.10.3.3. Exceptions to WCF pricing policy for sales to private sector parties in
depot maintenance partnership arrangements, as addressed in subparagraphs 1 and 2 above, do not
change the requirement that sales prices include unfunded costs, as prescribed in Volume 11B,
Chapter 11.
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1.10.4. Fixed Pricing
1.10.4.1. Sales of DoD goods and services to private sector entities on a fixed price
basis are authorized when the work is well defined and there is a reasonable basis upon which to
predict costs. This mirrors private sector practice, improves the ability of private sector partners
to predict production costs, and serves to constrain unit cost by more fully utilizing the production
capacity of DoD maintenance depots. Cost reimbursable pricing is appropriate when future
production costs cannot be reasonably predicted.
1.10.4.2. Multiyear fixed price agreements are authorized when future production
costs can be reasonably predicted and the potential for future operating losses and gains are
minimal. Prices may be fixed at a predetermined level taking into account future year escalation
factors like pay rate changes, general inflation, and the number of units produced. Multiyear fixed
price agreements may also incorporate other pricing techniques such as establishment of a base
price with provisions for economic price adjustments to accommodate inflation.
1.10.5. Advance Payment. When appropriate to the scope of, and risks associated with, a
prospective contract, the DoD partner may elect to accept incremental advance payments.
1.11 Military Clothing Items and Individual Equipment
1.11.1. The Defense Logistics Agency (DLA) Supply Management Activity procures
military clothing requirements and bills users at standard prices. This includes uniforms, combat
equipment, tents, tool sets and kits, hand tools, and cleaning equipment and supplies. The Military
Services must include the costs of new clothing bag items in the Military Personnel appropriation
budget request and new organizational items in the Operation and Maintenance appropriation
budget request. A replacement item must be deemed a new item for the purposes of this policy if
the cost of a replacement item exceeds the cost of the prior item by more than 10 percent in constant
dollars.
1.11.2. The Military Personnel appropriation budget and the Operation and Maintenance
appropriation budget should be sufficient to fund the quantity of the initial buy of an item of
clothing including the establishment of wholesale inventory levels. New clothing items required
prior to receipt of appropriated funds may be funded in these same accounts by reprogramming
action.
*2.0 BUDGET JUSTIFICATION PRESENTATION
2.1 Purpose
This section provides guidance for preparation and submission of budget justification
material and execution review estimates for the DWCF activities.
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2.2 Preparation of Materials
General guidance with regard to format and preparation of material is presented in
Volume 2A, Chapter 1. This chapter provides specific guidance with regard to the back-up
material required for the DWCF and other unit cost budget areas.
2.3 References
Volume 2A, Chapter 1 provides funding policies to include those that impact other
appropriations and accounts. Volume 2A, Chapter 2 provides guidance related to military
personnel costs. Chapter 8 provides guidance related to Real Property Maintenance and Minor
Construction and Volume 2A, Chapter 3 provides guidance related to Operation and Maintenance
costs.
2.4 General
2.4.1. Each DoD Component will submit operating and CIP budget justification material
to the OUSD(C), Revolving Funds Directorate, in preparation for submitting the President’s
budget request to the Congress following a review and approval by the OUSD(C) and the Office
of Management and Budget. Each Defense Agency will prepare and submit their portion of the
Defense-wide volume material to OUSD(C), Revolving Funds Directorate, for review and
approval prior to submission to DLA for incorporation into the Defense-wide justification book.
The DLA may require support from the submitting organizations to assemble the final justification
book containing the Defense-wide DWCF activities. The DLA will supervise printing and
distribution of the Defense-wide justification book for the President’s budget.
2.4.1.1. The DWCF Program Budget/Review focuses on an integrated set of
budgetary schedules for evaluating progress towards meeting cost and productivity targets. Unit
cost goals and customer prices are set for each DWCF activity for the budget year to ensure
resources are available to finance all costs.
2.4.1.2. The Budget Call letter may request updates for selected schedules that
have not yet been documented in this regulation.
2.4.1.3. The documentation supporting the President’s budget should be consistent
with approved costs, work load and productivity assumptions.
2.4.1.4. The DWCF justification books submitted to Congress will be unclassified,
in one volume organized into three sections: Component Overview, Operating Budget, and Capital
Budget. All congressional budget material will be submitted electronically and posted on the
respective Service’s unclassified web site.
2.4.2. The following table lists all required budget justification exhibits.
2.4.2.1. The “Exhibit Requirements” column lists the universe of budget exhibits
for DWCF activities.
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2.4.2.2. The “WCF Activity” column identifies, for each exhibit, which activities
are required to submit the exhibit. Activities must provide the exhibits as follows: “All” indicates
all DWCF activities; “S” indicates Supply activities; “NS” indicates non-Supply activities; “I”
indicates industrial activities; and “D” indicates depot maintenance activities.
2.4.2.3. The remaining three columns are marked “Y” or “N” to indicate that
submission of the exhibit is required (“Y”) or not required (“N”), respectively, to support the PBR,
for the Revolving Funds Directorate’s internal use (the exhibit will not be published) to support
the President’s budget (“Backup to PB”) request, and for publication as part of the congressional
justification materials for the President’s budget request (“President’s Budget”). The single
exception is the Fund-28 Execution Performance Analysis, which must be submitted for budget
execution reviews only.
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1/
OUSD(C) RF electronic format required.
2/
USTRANSCOM must submit separate Fund-15 exhibits for its Commercial and Military
airlift augmentation efforts.
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2.4.3. Component Narrative. A component narrative is required for the President’s budget
submission to the Congress. Each DoD Component will provide a Summary by Component in
table form consisting of cash and net outlays; revenue, expenses, and operating results; civilian
full-time equivalents and military end strength; unit costs, rates, and other key indicators. In
addition, each Component will provide a summary table for each of its DWCF activities. Discuss
any planned changes in DWCF activity make up, location, or product lines. Provide short
explanatory bullets where significant changes occur.
2.4.4. WCF Activity Narrative. For each DWCF activity, the DoD Component will submit
a narrative analysis that, as a minimum, addresses the following areas:
2.4.4.1. A general description of the DWCF activity to include names and locations
of subordinate commands, its outputs and customers, and performance and quality metrics.
Discuss any planned changes in the DWCF activity make up, location, or product lines. Display
cash and net outlays, revenue and expenses, operating results, civilian full-time equivalents and
military end strength, unit costs and rates and other key indicators in tabular form. If a section of
the narrative, an exhibit or set of exhibits is not required by a specific activity, please provide an
explanatory statement. Provide short explanatory bullets where significant changes occur.
2.4.4.2. The analysis should focus on the changes from year to year and how these
changes are related to work load and productivity trends; an analysis of any special business-type
schedules requested in the Budget Call letter; and a discussion of work load and manpower trends,
productivity initiatives/cost reductions, unit costs, and customer prices incorporated in the DWCF
activity budget.
2.4.5. Copies. Numbers of copies of the required materials to be submitted with the annual
budget estimates are identified in Volume 2A, Chapter 1. In addition, for the PBR, an electronic
copy of the justification material for each DWCF activity will be provided to the respective
Revolving Fund analyst and an electronic copy will be made available to the OUSD(C) Program
and Financial Control Directorate on the SIPRNET. The OUSD(C) will notify Fund Managers if
additional copies are required. The Budget Call Letter will provide any additional submission
instructions, such as posting of the electronic copy to the internet.
2.4.6. Classification. The DWCF justification books prepared by the Components are to
be unclassified. Submit any classified exhibits under separate cover.
2.4.7. Formats. Paper copies of justification material will be submitted on
8-1/2 x 11-inch paper. Variations in format to facilitate printing are permissible. Additionally,
modifications may be made to exhibit formats with the approval of the respective Revolving Fund
analyst to eliminate redundant information or provide further clarification.
* 2.4.8. Database Requirements. Consistent with the guidance contained in Volume 2A,
Chapter 1, the DWCF budget estimates for financing and civilians will be entered into the
Comptroller Information System (CIS). The CIS is typically loaded in August before the review
of the justification material. The CIS entries are in obligations, as opposed to expenses. The
financing entries for federal and non-federal orders correspond to new orders displayed on the
Fund-11 and must be entered. System requirements may affect the minimum amount of required
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financing entered into the database. Specific instructions on entering CIS data can be found on
the SIPRNET CIS website.
2.4.8.1. The DWCF Operating Budgets will be entered into the CIS as new
obligations. However, certain budget exhibits may reflect expense rates where applicable. Each
component is responsible for ensuring that expenses and obligations reconcile in the budget
justification and that each depicts a reasonable estimate of costs. For non-supply activities,
inconsistencies will become apparent in the final rate worksheet reconciliation to CIS entries.
2.4.8.2. The DWCF Capital Budgets will be entered into the CIS as the amount of
contract authority expected to be obligated in that fiscal year. This amount should be equal to the
program totals displayed on the Fund-9c “Capital Budget Execution” exhibit. The CIP prior year
carryover request amounts are not entered into CIS for the CY. The actuals for CIP PY Obligations
in CIS must reflect the total obligations from AR(M) 1307 Statement of Operations, Part VI –
Capital Program, Obligations This Fiscal Year Column, inclusive of all program years.
2.4.8.3. Enter estimates of civilian full-time equivalents (FTEs) for civilian
personnel data and military end strength for military personnel data.
2.4.8.4. Changes to CIS data submitted by the DoD Components will be recorded
in a decision document or technical adjustment. Technical adjustments may be used when a DoD
Component requests minor changes due to new information or correction of errors during the PBR.
The changes to the budget reflected in the final decision document will be expressed as obligations,
FTEs for civilian personnel, and end strength for military personnel, and adjusting entries will be
generated. Final composite rate and price adjustments will be documented in a memorandum
signed by the USD(C), or designee, at the completion of the PBR.
2.4.9. Special Schedules - For the Supply Management activities, the narrative must
include a section on workload and economic assumptions. These assumptions must include the
following data for the prior, current, and budget fiscal years: items managed (#), requisitions
received (#), receipts (#), issues (#), contracts executed (#), and supply materiel availability (%).
2.5 DWCF Application of Commonly Used Financial Management Terms
2.5.1. Commitment. A firm administrative reservation of funds, based on firm
procurement directives, orders, requisitions, authorizations to issue travel orders, or requests which
authorize the recipient to create obligations without further recourse to the official responsible for
certifying the availability of funds. The recording of a commitment reserves funds for future
obligations. The DWCF activities are not limited to the amount of commitments that can be
incurred in the course of operations (unlike other DoD appropriations). Annual Operating Budgets
(AOBs) provide legal and administrative restrictions only on the amount of contract authority that
may be obligated in a given fiscal year.
2.5.2. Direct Appropriations. Amounts appropriated by the Congress to the DWCF for
war reserve materiel, Defense Commissary Agency, or other purposes.
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2.5.3. End of Period (EOP). The last day of a specified fiscal year, normally September
30, used to determine the closing status of resources.
2.5.4. Outlays. Disbursements issued from the U.S. Treasury for goods and services
received. Gross outlays are equal to the cumulative amount of disbursements made for the fiscal
period to date. Net outlays are equal to gross outlays less the cumulative amount of collections
received for the fiscal period to date, plus/minus transfers out/in, minus Direct Appropriations
received.
2.6 Supply Management DWCF Activity Definitions
2.6.1. This section provides standard definitions to Supply Management terminology
associated with the development of budget justification material. The category of the term,
Financial Management (FM), Logistics, or both is indicated in parenthesis.
* 2.6.2. Definition of Terms Used in Supply Management DWCF Activities
2.6.2.1. Acquisition Leadtime (Logistics). The interval in months between the
initiation of procurement action and the receipt into the supply system of the production model
(excludes prototypes) purchased as the result of such actions. Acquisition Leadtime is composed
of two elements, production leadtime and administrative leadtime.
2.6.2.2. Administrative Leadtime (Logistics). That portion of the Acquisition
Leadtime that begins with the identification of the need to buy and the contract award. The time
between the initiation of paperwork and contract.
2.6.2.3. Allocation (FM). Following approval of apportionment /
reapportionment requests by OMB, OUSD(C) P/B allocates funds to the Military Services and
Defense Agencies. Funds distributed by OUSD(C)/PB may be further subdivided through sub-
allocation and sub-allotment to lower levels within the organizations or across organizations for
execution.
2.6.2.4. Beginning of Period (BOP) (both). The start of a specified fiscal year,
normally on October 1, used to determine the opening “snapshot” status of resources. Typically,
the end of period accounting balances from the previous fiscal year become the BOP balances of
the current FY; BOP balances may be adjusted for price changes.
2.6.2.5. Capitalized Inventory (Both). On-hand and on-order inventories of
supplies funded by other appropriations and funds are considered as contributed capital as of the
date when management responsibility for the items is undertaken (see Provisioning).
2.6.2.6. Capitalization (Both). The process whereby the Fund assumes
management responsibility and ownership of assets (such as inventory) without reimbursing other
DoD appropriations or funds.
2.6.2.7. Contingency Retention Stock (Logistics). That portion of the quantity of
an item excess to the Approved Acquisition Objective for which there is no predictable demand or
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quantifiable requirement and that normally would be allocated as potential reutilization stock,
except for a determination that the quantity will be retained for possible contingencies. This is a
budget stratification category and is not the same as “War Reserve Materiel,” which is held for
immediate use of military deployments.
2.6.2.8. Cost of Goods (Materiel) Sold (COGS) (FM). The COGS is the expensed
value of the items sold at the standard or exchange price, respectively. The COGS cannot be
recorded until a sale occurs even though the purchase and cash outlay occurred in a previous fiscal
year. The COGS is based on inventory valuation that may not be directly related to actual cash
required to purchase inventory for the continuity of operations (see Materiel Cost Adjustment).
2.6.2.9. Cost Recovery Elements/Surcharges (FM). Factors added to the
acquisition cost or repair cost price of an item to arrive at the customer’s standard or exchange
price. Cost Recovery Elements/Surcharges include: (1) transportation deliveries from production
site to points of use or storage (Second Destination Transportation (SDT)); (2) inventory
obsolescence and loss, for the costs of pilferage, damage, deterioration, physical inventory
shortages and excess; (3) inventory maintenance; (4) supply operations support costs; (5) inventory
augmentation; (6) CIR factor; (7) cash surcharge; and (8) Depot Level Reparable (DLR) carcass
attrition costs, if applicable.
2.6.2.10. Decapitalization (Both). The transfer of DWCF assets (such as
inventory) to other appropriations or funds without reimbursement. Transfers of on order
inventory between DWCF DoD Components are not considered de-capitalizations. Gains and
losses of cash, relative to continuing operations at the DWCF activity level, should be taken into
consideration to establish an acceptable reimbursement process based on validated undelivered
orders (dues in).
2.6.2.11. Demand (Customer Order) (Both). Demand is an indication of a
requirement (i.e., requisition, request, issue, reparable generation, etc.) for issue of serviceable
materiel. Demands are categorized as either recurring or nonrecurring and are also referred to as
funded orders. Demands for reparable items should indicate whether or not a carcass will be
returned.
2.6.2.12. Economic Retention Stock (Logistics). That portion of the quantity of an
item greater than the Approved Acquisition Objective determined to be more economical to retain
for future peacetime issue than to dispose and satisfy projected future requirements through
procurement or repair. To warrant economic retention, items must have a reasonably predictable
demand rate. The use of available resources for replenishment and growth of economic retention
stock should be evaluated relative to the need to reduce potential inventory shortages in other
commodities that have higher reoccurring demands.
2.6.2.13. Exchange Price (EP) (FM). In a system that supports exchange pricing,
this is the price charged to customers returning a DLR part that needs repair and purchasing a
serviceable one (new or repaired). Equates to the latest repair price plus wash out costs
(condemnations) per item plus pricing elements necessary to recover other operating costs. (Note:
If no carcass (unserviceable item) is returned, the customer must be charged the full standard
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price.) The discount the customer receives for exchanging a DLR part that needs repair will be
the same for all items in the same Interchangeable and Substitutable (I&S) family, with the
exception of any obsolete items that are no longer suitable substitutes in an I&S family. This
applies to both exchange sales and primary inventory control activity (PICA) / secondary inventory
control activity (SICA) transactions where the customer pays full price and then receives a
payment for returning the DLR.
2.6.2.14. Expendable Supplies and Materiel (Logistics). Supplies, sometimes
referred to as consumable supplies and materiel, that are consumed (e.g., paint, fuel, cleaning,
preserving materiel, surgical dressings, drugs, and medicines) or lose their identity in use.
2.6.2.15. Initial Spare and Repair Parts (both). Those spares and repair parts
introduced through the provisioning process to establish inventory levels prior to reoccurring
demands for that item. These inventory levels must be provided or funded by other DoD
appropriations (see Volume 4, Chapter 4). Components may request, subject to approval by the
Director or Deputy Director for Revolving Funds a cost recovery element in the pricing structure
to cover these requirements (See Volume 11B Chapter 15).
2.6.2.16. Insurance Item (Logistics). A non-demand-based stocked essential item
for which no failure is predicted through normal usage. However, if a failure were to be
experienced or a loss occur through accident, abnormal equipment or system failure, or other
unexpected occurrence, lack of replacement would seriously hamper the operational capability of
a weapon system.
2.6.2.17. Inventory (Supply) (both). Materiel titled to the U.S. Government, held
for sale or issue, held for repair, or held pending transfer to disposal.
2.6.2.17.1. Consumer Level of Materiel and Supplies: Materiel and
Supplies, usually of limited range and depth, held only by the final element in an established supply
distribution system for the sole purpose of internal consumption. Materiel and Supplies at the
consumer level is normally no longer considered DWCF inventory.
2.6.2.17.2. Intermediate Level of Inventory (Local): Materiel and Supplies
held between the wholesale and consumer levels, regardless of funding source.
2.6.2.17.3. Wholesale Level of Inventory (National): Inventory, regardless
of funding sources, over which the inventory manager at the inventory control point level has asset
knowledge and exercises unrestricted asset control to meet worldwide inventory management
responsibilities.
2.6.2.17.4. Inventory Augmentation (Both). A growth in inventory beyond
initial stockage levels that is not demand based. This includes changes in engineering estimates
resulting in higher stockage levels. Costs may be recouped by direct appropriation or a cost
recovery element in the pricing structure to cover these requirements (See Volume 11B,
Chapter 15).
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2.6.2.17.5. Retail Inventory. Supplies/materiel held at a second point of
sale below the wholesale level (e.g., management of DLA inventory purchases within a specific
Military Department).
2.6.2.18. Inventory Cost Categories (FM)
2.6.2.18.1. Operating Costs. All costs not associated with the purchase or
repair of materiel that must be incurred in order for the DoD Components to manage a supply
DWCF activity. Does not include materiel-related costs, which constitute the basis for cost of
goods sold.
2.6.2.18.2. War Reserves. Direct appropriation funding is required to
procure items for war reserve stocks. These materiels are required to support approved force
mobilization objectives. The approved force mobilization objective is the quantity required, in
addition to peacetime assets normally available on any given date, to equip and support the
approved force structure.
2.6.2.18.3. Historic Cost. The price paid for an item at the time it was
purchased from a supplier.
2.6.2.18.4. Moving Average Cost (MAC): A historical cost method of
valuing inventory. Each time a new quantity is purchased, the average value of all items on hand
is recalculated. This value is used for accounting purposes including the COGS value on the
Fund-14 “Revenue and Costs.”
2.6.2.18.5. Replenishment Cost. The current price of an item from a vendor
that will result in a cash outlay resulting from an obligation in the current fiscal year.
2.6.2.19. Numeric Stockage Objective (NSO) Item (Logistics). A non-demand-
based, stocked, essential item for which, although failure may be predicted, the probability of
demand is so low that it does not meet the stockage criteria at a given activity and, as a demand-
based item, would not be stocked. Since the lack of a replacement item would seriously hamper
the operational capability of a weapon or weapon systems, the item is therefore stocked; using
direct appropriations, as non-demand-based. Also included in this category are:
2.6.2.19.1. Items needed to support particular programs of a nonrecurring
or sporadic nature (e.g., set assembly, non-repetitive overhaul programs) where re-procurement is
not required once the particular program has been completed.
2.6.2.19.2. Items that are procured on a life-of-type basis or which are
“bought out” at the termination of a production program.
2.6.2.19.3. Items that are not fully consumed during a one-time or non-
repetitive program but which should be retained for possible future need on a similar program.
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2.6.2.20. Inventory on Order (Logistics). The quantities of materiel required to
sustain operations in the interval between requisitions and the arrival of successive shipments; the
amount of inventory required to satisfy current demands when leadtimes are taken into account.
These quantities should be based on the established replenishment period (i.e., monthly, quarterly,
etc.). This is also referred to as the “Pipeline,” “Undelivered Orders,” or “Due ins from
Procurement and Repair.”
2.6.2.21. Other War Reserve Materiel Requirements (Logistics). The total war
reserve materiel requirement less the sum of the pre-positioned war reserve requirements. These
are also known as non-prepositioned requirements.
2.6.2.22. Pre-positioned War Reserve Materiel Requirement (PWRMR)
(Logistics). That portion of the war reserve stocks required to be on hand on M-Day which
approved Defense Guidance dictates be reserved and/or positioned at or near the point of planned
use or issued to the user prior to hostilities, to reduce reaction time and to assure timely support of
a specific force/project until replenishment can be effected.
2.6.2.23. Price Stabilization (FM). The Department’s policy that requires
components to maintain the standard price of each cataloged supply item throughout each fiscal
year except for correction of errors (See Volume 11B Chapter 15).
2.6.2.24. Materiel Cost Adjustment (MCA) (FM). The amount of cost increase
realized from suppliers above the MAC, used on the SM-5b “OP-32 Price Change.” (MAC +
Inflation + MCA = Replenishment Costs.) This amount is typically above the standard rate of
inflation. Standard inflation should be accounted for in the “Materiel Inflation Adjustment”
recovery element; it should not be double counted in the MCA. For example, if a new part has
been upgraded by the manufacturer, the price may increase by 10 percent. In this case, 2 percent
may be “normal inflation” and 8 percent can be attributable to the MCA. In some cases, normal
inflation may be the only recovery element required. For pricing purposes, inflation and an MCA
may have to be applied as a cost recovery element to ensure receipt of sufficient budgetary
resources to support the cash outlays required for replenishment.
2.6.2.25. Production Lead Time (Logistics). The time interval between the letting
of a contract or the placing of an order and the first significant receipt into the supply system of
materiel purchased as a result of such action.
2.6.2.26. Provisioning Item (Logistics). Spares and repair parts required as both
demand and non-demand-based levels in the supply system to support new fielding of end items.
Typically, these are new inventory requirements or increased requirements for system
modifications or service life extensions (including clothing and textiles) that require direct
appropriations by other DoD Components to establish the supply chain. This includes required
safety stocks and other inventory stratification categories. In some cases, upon approval by the
Director or Deputy Director for Revolving Funds, customers may be charged for the establishment
of new inventory as a recovery element. An agreement between the program manager and the
DWCF activity should be made prior to the obligation of any DWCF resources (See Volume 11B,
Chapter 15).
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2.6.2.27. Provisioning Item (Outfitting) (Both). That portion of Provisioning
consisting of items for which a sale is anticipated to an appropriated outfitting (buy-out) account.
Direct appropriations are required to establish inventory levels for these items until requirements
can be forecast based on actual demands for their replenishment using obligation authority.
2.6.2.28. Reclassification (Logistics). The logistics term referring to the transfer
of assets between inventory strata (e.g., from Economic Retention to Contingency), used on the
SM-4 “Inventory Status.
2.6.2.29. Repair Cycle Level (Logistics). The quantity of reparable items required
to sustain operations during the repair cycle that commences when a maintenance replacement
takes place and ends when the unserviceable asset is returned to stock in a serviceable condition.
This includes such stages as removed, awaiting shipment, in transit, in pre-repair screening, in
process of repair, and being returned to serviceable stock. Any extraordinary awaiting-parts delays
and any intentional extended-transit, storage, or repair-process delays should be excluded from the
repair cycle.
2.6.2.30. Reparable Item (Logistics). An item of supply subject to economical
repair and for which the repair (at either depot or field level) is considered in satisfying computed
requirements at any inventory level.
2.6.2.31. Replenishment Spare and Repair Parts (Logistics). Demand-based spare
and repair parts required for re-supplying current inventory levels. Inventory levels may increase
above initial stockage when there is a concurrent increase in customer orders. Fewer inventories
will be required when there is a decrease in customer orders. These include both reparable and
consumable parts in support of fielded items.
2.6.2.32. Requisitioning Objective (also known as the “Authorized Acquisition
Objective”) (Logistics). The maximum quantities of materiel to be maintained on hand and on
order to sustain current operations and core war reserve. It will consist of the sum of stocks
represented by the operating level, safety level, and the order and shipping time or procurement
time, as appropriate.
2.6.2.33. Safety Level of Supply (Logistics). The quantity of materiel required to
be on hand to permit continuous operations in the event of minor interruption of normal
replenishment or unpredictable fluctuations in demand.
2.6.2.34. Standard Price (both). The price that customers are charged for DoD
Inventory Control Point (ICP)-managed items (excluding subsistence). The standard price remains
constant (stabilized price) throughout a fiscal year except for the correction of significant errors.
The standard price is computed based on various factors, including the replenishment cost of the
item plus surcharges to recover costs for transportation; inventory loss, obsolescence and
maintenance; CIR; and supply operations. (Note: See Exchange Price for prices of Depot Level
Reparables in systems that support exchange prices.)
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2.6.2.35. Stockage Objective (Logistics). The maximum authorized quantity of
materiel on hand to sustain current operations. It consists of the sum of stock represented by the
operating level, the safety level, the repair cycle level, and authorized additive levels.
2.6.2.36. Stratification Process (Both). A uniform portrayal of requirements and
asset application that is a computer-generated simulation of actions causing changes in the supply
position, e.g., procurement, repair, receipt, issue, terminations, and disposal of materiel.
2.6.2.37. Unfunded Requirement for Spares (both). The difference between the
spare and/or repair parts requirement computed in accordance with DoD Policy
(e.g., DoDI 4140.01, “DoD Supply Chain Materiel Management Policy”) and the amount of that
requirement that is funded.
2.6.2.38. Unobligated Commitments (FM). Amount of commitments incurred this
fiscal year to date that have not resulted in obligation at the end of the report period.
2.6.2.39. Variability Target (FM). The projected amount of additional contract
authority reflected on the SM-1 “Supply Management Summary” exhibit to allow supply activities
to respond to variances in costs and/or unexpected changes in recurring customer demands during
the execution year. The release of the variability target is associated with increased mission
requirements due to the operating tempo of the military departments. Budgetary resources are
provided by increased sales associated with customer purchases and the accompanying cash flow.
The variability target may not be used as a source for inventory augmentation or provisioning
because these requirements should be supported by appropriated funds or a cash surcharge element
of the cost recovery rate in follow-on years, to ensure the needed balance between budgetary and
proprietary resources.
2.6.2.40. Anticipated Recoveries of Prior Year Contract Authority. Components
must estimate additional contract authority requirements and include on SM-1 Supply
Management Summary by Division exhibit.
2.6.2.41. War Reserves (both). Stocks of materiel amassed in peacetime to meet
the increase in military requirements forecasts contingent on an outbreak of war. War reserves are
intended to provide the interim support essential to sustain operations until re-supply can be
effected.
2.7 Non-Supply Definitions
* 2.7.1. Definitions Used in Non-Supply Activities
2.7.1.1. Maintenance Depot. Industrial DWCF facilities whose primary missions
are to overhaul, manufacture, and re-manufacture weapon systems, ordnance, or other forms of
equipment. These activities include Army and Marine Corps Maintenance Depots, Ordnance
Depots, Arsenals, Navy Fleet Readiness Centers, and Air Force Aviation Depots.
2.7.1.2. DLH Rate. The stabilized rate method that assigns revenue per DLH. The
DLH rate is computed by dividing the sum of all direct and indirect production labor, non-labor,
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and materiel, and general and administrative expenses, adjusted for direct reimbursements, NOR,
and Capital Investment Program (CIP) or Cash surcharges, by the total number of DLHs (or other
outputs) anticipated to be accomplished during the fiscal year.
2.7.1.3. DLH. The DLHs, sometimes referred to as Direct Product Standard
Hours, are the hours required to perform the direct work on a product, or to perform a billable
service for customers. The DLHs generally include the hands-on maintenance, repair, overhaul,
test, and related direct production effort that follows the established sequence and content of work
necessary to accomplish the billable job. The DLHs do not include the support work or man-hours
identified as either indirect production (such as supervisory) or general and administrative in
nature. The DLHs are estimated for budget purposes by product or service, based on industrial or
management engineering standards developed using time, method, and motion studies, historical
usage averages, or professional estimating and evaluation (E&E) techniques.
2.7.1.4. Fixed Price Catalogs. Depot Maintenance activities may maintain a
catalog of products and services (major end items, componentry, depot level reparable,
modification kits, etc.) with their associated rework, repair, overhaul, installation, etc., based on
the Standard Depot Level Maintenance (SDLM) or Planned Depot Maintenance (PDM) work
package DLHs. The DLHs associated with the product or service multiplied by the stabilized
composite rate for a fiscal year constitutes the firm fixed price for the catalog item. Catalogs may
be maintained in hard copy or in electronic databases accessible to customers.
2.7.1.5. Total Cost of Goods Sold. The total expenses incurred in the operating
budget of the activity associated with the revenue planned to be recognized for the budgeted fiscal
year.
2.7.1.6. Carryover. The dollar value of work that has been ordered and funded
(obligated) by customers, typically using other DoD appropriations, but not yet completed by
DWCF activities at the end of the fiscal year. Carryover consists of the unfinished portion of work
accepted but not yet completed.
2.7.1.7. Mission Costs. Total costs incurred to support the mission (repair of end
items; selling of inventory; providing payroll services) of the DWCF activity.
2.7.1.8. Non-mission Costs. Additional costs incurred to provide services related
to, but not essential to, the function of the DWCF activity. Income associated with these additional
costs should be recognized as “Other Income” (Installation services; system implementation; other
supply reimbursable operations).
2.7.2. Clarification of Rate Estimation. During the budget review process, each non-
supply DWCF activity will use proposed new customer orders for each budget year to establish
rates that will remain stabilized through the execution year. Accurate customer order projections
are essential in determining the annual increase or decrease in rates.
2.7.2.1. Industrial activities (to include the maintenance and repair function of base
support activities) will identify total DLHs required to accomplish the budget year’s work
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program. The work program is the total number of DLHs planned to be executed in support of
known and projected customer requirements during execution of the budget. All DLHs should be
identified in the budget, even though some workload may be direct reimbursable rather than rate
based.
2.7.2.2. Total costs estimated to be incurred in execution of this workload will be
projected. This process should include application of general inflation, pay raise, and other
inflation or OUSD(C)-directed price adjustments, as specified in the OUSD (Comptroller) budget
formulation Budget Guidance. The sum of all these costs (including supplies, materiel, pay, CIR,
and other charges, etc.) is the estimate of the total costs.
2.7.2.3. Customer requirements must be projected and separately identified to
include: current (on hand) unfilled customers’ orders expected to be executed during the budget
year (carry-in or backlog), and work in process that will be completed; new orders anticipated to
be accepted and executed during the budget year; and orders anticipated to be accepted but not
executed during the year (anticipated carry-over).
2.7.2.4. Workload mix (outputs), availabilities, and production schedules must be
assessed, along with any other factors that may impact program outputs such as policy changes,
productivity initiatives, planned workload competitions, plant capacity, and other factors. Based
on these factors, the work counts associated with each major workload category (output or product)
will be identified and reported.
2.7.2.5. Total costs required to execute the planned program to produce the outputs
in the approved execution program will be identified and reported in budget exhibits, with
significant changes from the prior year highlighted in the Exhibit Fund-2, “Changes in the Costs
of Operations.”
*3.0 DWCF ACTIVITY EXHIBIT FORMATS
3.1 Purpose
The formats provided on the following pages reflect guidance presented in previous
sections of this chapter. Adhere to these formats unless they are modified in a submission budget
guidance. Modifications may be made to exhibit formats with the approval of the respective
Revolving Fund analyst to eliminate redundant information or provide further clarification.
3.2 Defense Working Capital Fund Exhibits
SM-1 Supply Management Summary by Division........................................................ ....... 48
SM-3a Requirements to Budget..................................................................................... ....... 50
SM-3b Weapon System Requirements.......................................................................... ....... 52
SM-4 Inventory Status................................................................................................... ....... 54
SM-5a Markup on Materiel Cost................................................................................... ....... 57
SM-5b OP-32 Price Change……...........................................................................................60
SM-6 War Reserve Materiel.......................................................................................... ....... 62
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SM-16 Unit Cost Summary............................................................................................ ....... 64
SM-16a Unit Cost Ratio by Month and Fiscal Year..................................................... ........ 65
Fund-1 Summary of Price and Program Changes – Costs............................................. ....... 66
Fund-1a Details of Price and Program Changes - Costs................................................ ....... 68
Fund-2 Changes in the Costs of Operation.................................................................... ....... 77
Fund-3 Labor Cost Breakdown...................................................................................... ....... 79
Fund-5 Total Cost Per Output Summary............................................................................... 81
Fund-6 Depot Maintenance 6% Capital Investment Plan (Depots Only) ..................... ....... 83
Fund-7 Customer Rate Computations............................................................................ ....... 86
Fund-8 Air Mobility Command Common User Services.............................................. ....... 88
Fund 9a Activity Capital Investment Summary…….............................................................90
Fund-9b Activity Capital Purchase Justification……............................................................94
Fund-9c Capital Budget Execution…….................................................................................98
Fund-11 Source of New Orders & Revenue……...................................................................99
Fund-11a Carryover Calculation Summary……...................................................................101
Fund-12 Customer Orders to Customer Funding Reconciliation.……….…………………103
Fund 13 Cash Management Plan……...................................................................................108
Fund-13b Cash Requirements…......…………………………………………..…………...109
Fund-14 Revenue and Costs……..........................................................................................112
Fund-15 Fuel Data................................................................................................................115
Fund-16 Materiel Inventory Data……..................................................................................117
Fund-19 Military Personnel by Average End Strength…….................................................118
Fund-22 Summary of Base Support…................................................................................. 119
Fund-24 Summary of Personnel Data…...............................................................................120
Fund-28 Execution Performance Quarterly Analysis……....................................................121
Fund 30 Underutilized Plant Capacity…..............................................................................124
OP-8 Part 1, Civilian Personnel Costs……...............................................................................*
OP-8 Part 2, Reimbursable Civilian Personnel Costs…….........................................................*
PB-15 Advisory and Assistance Services……..........................................................................*
PB-22 Headquarters Cost…......................................................................................................*
PB-32 Summary of Price and Program Changes……………………………………………126
PB-54 Civilian Personnel Hiring Plan…..................................................................................*
*Formats and Instructions for these exhibits are in Volume 2B, Chapter 3 for the OP-8 exhibits
and Volume 2B, Chapter 19 for the PB-15, PB-22 and PB-54 exhibits. These exhibits should
be included as part of the DoD Component’s Appropriated Budget Justification
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Exhibit SM-1 Supply Management Summary
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Exhibit SM-1 Supply Management Summary (Continued)
INSTRUCTIONS FOR PREPARATION OF
SUPPLY MANAGEMENT SUMMARY (EXHIBIT SM-1)
The purpose of the SM-1, Supply Management Summary by Activity Division exhibit, is to
provide summary obligation justification for the DoD Component DWCF activity. This exhibit is
also used to reconcile CIS data for supply activities. Instructions for preparation of SM-1 exhibit
follow:
1. Prepare the SM-1 exhibit for each year being reviewed (i.e., prior year, current year, and
budget year).
2. Present dollars in millions to the third decimal place for CIS reconciliation.
3. The current year request should represent current identified requirements and may not be
equal to previous amounts approved in prior year budget submissions. The minimum
information required for each activity division is as follows:
Net Customer Orders (New orders from Fund-11 less Credit Returns)
Net Sales
Operating Obligations
Mobilization Obligations
Direct Appropriations
Total Operating Obligations- This amount is entered into the program line in the CIS.
Total Capital Obligations- This amount is entered into the capital line in CIS.
Variability Target- This amount is not entered into CIS but is documented on the budget
exhibit for inclusion in the apportionment from OMB.
Anticipated recoveries of prior year contract authority
Target Total
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Exhibit SM-3a Requirements to Budget
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Exhibit SM-3a Requirements to Budget (Continued)
INSTRUCTIONS FOR PREPARATION OF
REQUIREMENTS TO BUDGET (EXHIBIT SM-3a)
The purpose of the SM-3a Requirements to Budget exhibit provides backup information to
support obligations based on inventory requirements determined by customer demand. That is,
the SM-3a Requirements to Budget exhibit identifies resources required to replenish sales of
inventory for each fiscal year (i.e., prior year, current year, budget year).
1. Prepare an SM-3a exhibit for each DWCF Supply activity (not each division). Non-
inventory costs, as reflected on the Fund-1/1a Summary/Details of Price, Program and Other
Changes exhibits, are considered “Overhead and Other Management Costs”. Total obligations
reported on this exhibit represent obligations for inventory procurement and repair. Present
dollars in millions to the third decimal place.
2. Use the latest inventory cycle available since the exhibit is due in September. Instead of
using the standard price, it is recommended that MAC value be used and the MCA applied as a
growth factor to the MAC for each fiscal year. This will represent the projected price change over
time. If a standard price is used, the overhead costs (surcharge) must be removed as part of this
exhibit to get to a more representative cost of inventory and the MCA will not be added.
3. The exhibit does not reconcile to the total inventory; rather, it will focus on the time-phased
customer demands (sales or exchanges) including any backorders. Inventory available (i.e., on
hand and projected serviceable deliveries from buy or repair), that will satisfy those demands will
be applied against the customer requirements. Finally, the portion of the customer demands that
will not be satisfied with the current projected funded deliveries will be calculated so they can be
satisfied through funding for new purchases or repairs. Documented unfunded requirements will
also include the other projected funding needs (e.g., first destination transportation and projected
repair cost increases). This exhibit will only reflect mobilization requirements to reconcile to the
SM-1 exhibit; it will not include unfunded WRM demands.
4. The exhibit will include new requirements (e.g., initial provision and establishing a new
stock number to replace an existing one) paid through the DWCF and reimbursed by including a
cost recovery element in prices. It will also require all DoD Components to show (as a memo
entry) other requirements (sponsor-owned stock, BP 28, etc.) not in the DWCF. Note: the memo
entry on this exhibit provides reconciliation for other inventory purchased outside of the DWCF
that may later migrate into DWCF.
5. Section A of the exhibit will reflect the Customer Demands (historical & projected for the
first fiscal year and projected for the following 2 fiscal years). Section B of the exhibit will reflect
the inventory (serviceable on hand and projected deliveries from buy or repair) for each of the
3 fiscal years. Section C of the exhibit will reflect the funding requirements (part of the budget)
and any other unfunded (deferred) requirements. Section D of the exhibit will reflect the initial
provision (memo entry) that is not funded through the DWCF. It is the total initial provisioning
dollar value not under DWCF that is on hand or projected to be delivered by the BOP.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-3b By Weapon System Requirements
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-3b By Weapon System Requirements (Continued)
INSTRUCTIONS FOR PREPARATION OF
WEAPON SYSTEM REQUIREMENTS (EXHIBIT SM-3B)
The SM-3B Weapon System Requirements exhibit provides a breakout of the operating
obligation request by type of supply system action (procurement versus repair) and by weapon
system or category.
1. For the OSD/OMB budget review, prepare the SM-3B for each DWCF Supply activity
(wholesale division) that provides military spare parts (excludes fuel, medical/dental, subsistence,
etc.). For each division, prepare one Exhibit SM-3B for each fiscal year (CY, BY).
2. Definitions.
a. Special Purchases column includes outfitting, special programs and any initial
spares financed through a cost recovery element on the SM-5a Markup on Materiel Cost exhibit.
b. Basic Purchases column consists of replacement spares based on demands.
c. Basic Rework column is repair obligations for sales replacement.
d. Initial Spares column includes any new inventory levels financed through other
DoD appropriations in this column. In theory, this column should reconcile with the P-18 exhibits
provided with the Initial Spares Budget Activity of the DoD Component’s procurement
appropriations.
e. Total Program column shows the total operating obligation request for each
weapon system.
f. Non-MCRS Percent (Non-Mission Capable Rate Supply) column shows the
percentage, by weapon system, that is not mission capable due to the lack of spare parts. Report
this rate target for each budgeted fiscal year.
3. Present dollars in millions to the third decimal place. Weapon systems, as defined by
the applicable Service, may be aggregated into categories when individual systems are less than
$25 million. The Director or Deputy Director for Revolving Funds will approve appropriate levels
of aggregation. Common parts may be grouped by category such as radios or may be allocated to
specific systems such as F-16 aircraft. Obligation authority requests for non-weapon system-
related requirements, such as reverse engineering and forging & casting, must be separately
identified.
4. Estimated data may be used and noted as such until accurate systems can be developed
to provide accurate data.
5. This form will be prepared at replenishment cost or repair cost as appropriate.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-4 Inventory Status
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-4 Inventory Status (Continued)
The SM-4 Inventory Status exhibit shows estimated inventory levels that will result from
the proposed budgets and operating levels. Prepare the SM-4 at the MAC value for the prior fiscal
year, current year, and budget year for each supply management DWCF activity for each
Program/Budget and President’s Budget submission. A consolidated summary for the total Supply
activity will be prepared for the OSD/OMB Review. The TOTAL column in the prior fiscal year
exhibit must reflect the amount from supply management general ledgers used in preparation of
fiscal and accounting reports. Amounts in the DEMAND BASED, MOBILIZATION, and NON-
DEMAND BASED columns may be statistically derived from related inventory reports.
Instructions for preparation of SM-4 Inventory Status are as follows:
1. Inventory, BOP. Amounts of inventory on hand and in transit reported must equal
amounts reported as of the end of the prior year. If not, explain any difference in a footnote. The
DoD Component must have title to all inventory listed here.
2. BOP Inventory Adjustments. Enter any adjustments required to the beginning position.
3. Purchases. Add the amount of inventory value on which title has passed or will pass to
the reporting supply management division during the period of the report.
4. Gross Sales at MAC value. Materiel sold to customer during the period of the report.
Should match the Cost of Goods Sold base value.
5. Inventory Adjustments.
a. Capitalizations (Net). Report the inventory value of materiel capitalized or de-
capitalized during the period of the report. Show a net de-capitalization with (-) preceding value.
b. Returns from Customers for Credit. Show the cumulative amount of materiel
returned from customers on which title has passed to the reporting supply management division
during the period of the report for which credit has been given. For fuel returns, show the
cumulative amount of fuel returned based on market price valuation of current inventory.
c. Returns from Customers without Credit. Show the cumulative amount of
materiel returned from customers on which title has passed to the reporting supply management
division during the period of the report for which credit was not given.
d. Returns to Suppliers. Show as a negative number the cumulative amount of
materiel returned to supplier during the period of the report.
e. Transfers to Property Disposal. Show the net amount of materiel transferred
to/from the DLA Disposition Service on which title has been passed to DLA.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-4 Inventory Status (Continued)
f. Issues/Receipts without Reimbursement. Show the net cumulative amount of
materiel issued or received without reimbursement during the period of the report. This item could
include transfers from other divisions or materiel categories, etc., as required. Show net issued
with (-) preceding value.
g. Other. Identify and report the amounts of other adjustments to inventory.
Include all other adjustments to inventory such as adjustments for physical inventory count and
unusual or infrequently occurring losses (fire, weather). Explain with footnotes if necessary.
Show (+) or (-) as appropriate.
h. Total Adjustments. Add 5a through 5g.
6. Inventory EOP. Report the amount of inventory available at the end of the reporting
period, including all on hand, in transit, work-in-process, and other stocks to which the reporting
stock fund division holds title.
7. Inventory EOP, Revalued (MAC, Discounted). Enter any adjustments required to
the ending position.
8. Inventory on Order, EOP (memo). Report the amount of demand based and
mobilization undelivered orders (excluding in transit) for materiel outstanding at the end of the
period.
9. Narrative. Provide additional information and description as needed.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-5a Markup on Materiel Cost
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-58
Exhibit SM-5a Markup on Materiel Cost (Continued)
INSTRUCTIONS FOR PREPARATION OF EXHIBIT SM-5a
MARKUP ON MATERIEL COST
The SM-5a Markup on Materiel Cost exhibit shows how to calculate the Standardized Rate
for Supply DWCF activities. Each Service/Agency will provide a consolidated exhibit for the sum
of all wholesale divisions managed by that Service/Agency. All Components will report expenses.
The CY requested on this exhibit will match all CY data represented on all other reconciling budget
exhibits (Fund-14, Fund-1). The CY approved represents what was submitted in previous budgets;
in theory, all adjustments from previous budgets will be reflected in the AOR adjustment line of
the budget year (BY).
Materiel Costs Section. There are three factors that make up materiel costs. Total Materiel Costs
is the denominator in the Markup on Materiel Cost calculation.
a. Materiel Costs without Inflation. This is a representation of the historic value of
inventory (and repair costs). The official valuation methodology for the DWCF is MAC, based
on proprietary accounting. However, valuing inventory solely at the MAC value for budget
purposes will not generate sufficient resources for cash outlays to maintain current inventory
levels.
b. Materiel Inflation (normal inflation). This line represents the amount of “normal
inflation” as approved by OMB and OUSD(C) in published memoranda. The line must be used
by the DoD Component to break out this normal inflation separately from any other materiel cost
growth for reconciliation purposes; it is a mandatory line and these costs must not be included in
line C as part of the “MCA”. Do not double count “normal inflation” on both lines.
c. Materiel Cost Adjustments (MCAs) (includes obsolescence, losses and washouts). All
other adjustments involving the actual purchase or repair of inventory above that of the previous
year. This line must not include normal inflation. Materiel costs associated with losses,
obsolescence and wash out (condemnation) of reparable are also included in this line.
Overhead Costs (Fund-1/1a) Section. Total overhead costs should reconcile to the Fund-1
Summary of Price, Program and Other Changes exhibit less the amount displayed (if any) on the
Fund-14 Revenue and Costs exhibit for direct reimbursable revenue. In theory, direct reimbursable
revenue should not include a cost recovery rate and should cover all costs involved for the work
performed. CIR is shown as a price adjustment instead of an overhead cost because it is a cash
recovery element for capital obligations. Overhead categories directly relate to the corresponding
line on the Fund-1/1a Summary/Detail of Price, Program and Other Changes exhibit.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-5a Markup on Materiel Cost (Continued)
Pricing Adjustments Section. Pricing adjustments increase or decrease budgetary resources but
are not related to Materiel or Overhead costs. There are three types of price adjustments.
Exhibit SM-5a Markup on Materiel Cost (Continued)
a. Capital Investments. Represents the amount of cost incurred to purchase capital assets
through the CIP. This is a mandatory line.
b. AOR Recovery. This amount should be equal to the NOR for the respective year on the
Fund-14. This is a mandatory line.
c. Cash Adjustment. May be used to adjust the cash resources available to that specific
DWCF activity (not as an adjustment to the cash available at the DoD Component level). All cash
adjustments at the DWCF activity level should reconcile to the Fund-13, Cash Management Plan.
This is not a mandatory line.
Markup on Materiel Cost Section. Line 4. Total Markup on Materiel Cost (Standardized Rate (a/b)
equals (Line 2. Total Overhead Costs + Line 3. Total Pricing Adjustments) divided by Line 1.
Total Materiel Costs, displayed as a percentage. Adding Materiel Costs, Total Overhead Costs,
and Total Pricing Adjustment equals total wholesale revenue as displayed on the SM-16 Unit Cost
Summary exhibit. Total wholesale revenue, retail revenue and direct reimbursables equals total
Gross Sales as displayed on the Fund-14 Revenue and Costs and SM-16 Unit Cost Summary
exhibits.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-5b OP-32 Price Change to Customers
OP-32 Price Change to Customers
CY
(Approve d)
BY
A. Total Materiel Costs without Inflation (Line 1a)
Price Growth for OP-32
Materiel Inflation (if used) plus MC A (Line 1b + Line 1c)
Total Overhead Costs plus Total Pricing Adjustments
(Line 2 + Line 3)
B. Total Additional Price to Customer
C. Additional Price Percentage (B/A)
D. OP-32 Price Change (Percent Change in Additional
Price Percentage from CY (Approved) to BY)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-5b OP-32 Price Change to Customers (Continued)
INSTRUCTIONS FOR PREPARATION OF EXHIBIT SM-5b
OP-32 PRICE CHANGE TO CUSTOMERS
The OP-32 Price Change to Customers exhibit may be presented on the same page as the
SM-5a Markup on Materiel Cost exhibit. For the President’s Budget Justification Book, the
published OP-32 Price Change to Customers exhibit for the PY, CY, and BY will be presented in
the narrative section with a brief explanation of the change from the previous year. The SM-5b
OP-32 Price Change to Customers exhibit will be required as a backup exhibit to the President’s
Budget. All figures for the OP-32 Price Change are depicted in the SM-5a Markup on Materiel
Cost exhibit.
A. Total Materiel Costs without Inflation (Line 1a). These are the amounts displayed on the
SM-5a Markup on Materiel Cost exhibit that represent changes in purchases without inflation or
pricing factors.
B. Total Additional Price to Customer.
Materiel Inflation plus MCA. The amount of “normal inflation” (SM-5a Line 1b) plus
other Materiel Costs not accounted for by “normal inflation” (SM-5a Line 1c).
Total Overhead Costs plus Pricing Adjustments. This should be equal to the SM-5a
Markup on Materiel Cost exhibit Line 4a.
C. Additional Price Percentage. This represents the composite cost recovery rate (CRR) for the
activity, this divides the Total Additional Price to Customer (B) by the Total Materiel Costs
without Inflation (A) and is displayed as a percentage.
D. OP-32 Price Change. The OP-32 price change is the percentage of change from the prior year
approved CRR to the current budget year’s CRR. The formula for the percentage change to
customers is: ((1+BY Line C) divided by (1+ CY (Approved) Line C)) minus 1.
This change represents the change in price at the item level that were affected by both price and
program changes in the customer budget.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-6 War Reserve Materiel
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-6 War Reserve Materiel (Continued)
WAR RESERVE MATERIEL (WRM)
EXHIBIT SM-6
The purpose of the WRM exhibit is to notify Congress of the Department’s intentions
regarding the management of secondary item war reserves. Stockpile status and costs sections
show the current and budgeted amounts for the inventory and the costs associated with maintaining
these levels. The budget request section notifies Congress of the amounts of obligations to be used
to acquire or maintain war reserve items and quantities. “Protected status” applies to items that
may not be sold. “Other” applies to WRM that must be sold and replenished due to stock rotation
or shelf-life issues. Exhibit instructions are as follows:
1. Stockpile Status (Same instructions as the SM-4 Inventory Status exhibit). Components
should use the “reclassification” line to transfer inventory into the “protected” WRM category
from “WRM Other,” if desired.
2. Stockpile Costs. The WRM stockpile costs are those incurred in the WCF to store WRM
materiel, to manage WRM stocks to include a portion of total Inventory Control Point costs
(normally based on surcharges for purchased/repaired items funded with the obligations identified
below), and any other DWCF costs to maintain the WRM inventory.
3. WRM Budget Request. This area addresses the amounts of obligation authority to be
used specifically for WRM items or WRM quantities, whether from an appropriation, from cash
balances, or from future sales.
a. Additional WRM Investment. (Normally reimbursed or funded by an
appropriation.) The amount of obligations to purchase or repair new or additional items that will
increase the value of the total WRM inventory.
b. Replenishment/Repair WRM Reinvestment. The amount of obligation authority
to be used to replenish or repair WRM inventory that is sold, and the amount to be used to reinvest
in new inventory with the funds from the sale of old inventory. Should normally be a one for one
or dollar for dollar (excluding surcharges) replacement.
c. Stock Rotation/Obsolescence. (Separate from the stock replenishment from sales
above). This is to replace stocks that are not sold but must be rotated or replaced periodically
because of shelf life or obsolescence (can be related to an appropriation, if required, but normally
maintains, and not increases, the value of the WRM inventory).
d. Assemble/Disassemble. The amount of obligations to be used to change the
configuration of WRM inventory items.
e. Other. As appropriate.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit SM-16 Total Cost Per Unit Summary
Instructions: This exhibit is a backup that reconciles the Budget Authority request to the SM-1
Supply Management Summary by fiscal year. Unit cost is calculated by dividing total obligations
by sales associated with the obligations incurred. All amounts displayed must correspond to the
applicable budget exhibit for reconciliation purposes.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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*Exhibit SM-16a Unit Cost Ratio by Month and Fiscal Year
Instructions: This exhibit is a backup that reconciles the SM-16, Total Cost Per Unit Summary
to the SM16a the monthly and cumulative executed and planned Unit Cost Ratio. The Unit cost is
calculated by dividing total monthly obligations by monthly net sales associated with the obligations
incurred. All amounts displayed must correspond to the applicable budget exhibit for reconciliation
purposes.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-66
*Exhibit Fund-1 Summary of Price and Program Changes – Costs
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-67
Exhibit Fund-1 Summary of Price and Program Changes – Costs (Continued)
Instructions for Preparation of Exhibit Fund-1
Summary of Price, Program, and Other Changes
This exhibit reflects the total obligations (including direct reimbursements from non-rate
based work) to accomplish the DWCF activity mission. The Fund-1 is the Summary Exhibit that
consolidates the information from the Fund-1A Details of Price, Program and Other Changes
exhibit. The Components are required to address changes in cost between fiscal years as either
price or program. Price changes are restricted by the inflation index published in OUSD(C)
guidance with the exception of price increase resulting from another DWCF activity’s rate
changes.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-68
*Exhibit Fund-1a Details of Price and Program Changes – Costs
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-69
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-70
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-71
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-72
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-73
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-74
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-75
Exhibit Fund-1a Details of Price and Program Changes - Costs (Continued)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-76
Exhibit Fund-1a Details in Price and Program Changes – Costs (Continued)
Definitions of Fund-1a Categories - Cost
Details of Price, Program, and Other Changes (Operating Budget)
General. The Fund-1a exhibit reflects the total costs of supporting the applicable activity for each
fiscal year PY, CY, and BY. Components must address changes in cost between years as price-
or program-driven for each line item. All entries are expenses. Round data to at least the nearest
tenth of a million (e.g., show $10.4 million, not $10 million).
Military Personnel Compensation - Chapter 26 depicts cost elements for Military
Personnel.
Civilian Personnel Compensation - The cost elements include VERA and RIF as well as
the costs to offset the short-term costs of buyouts. Line 112 Retirement Fund Offset (15 percent
of Employee’s final basic pay) applies to employees who take a buyout and voluntary early
retirement under the Civil Service Retirement System (CSRS).
Cost of Goods Sold – This element represent the cost of goods sold for Supply Activities
Travel – These elements represent the cost of transportation of people.
Materiel & Supplies - These elements support internal materiel, equipment, and supply costs
associated with operations. Distinguish between costs associated with materiel purchased from
Fund businesses and that purchased from non-Fund businesses.
General Property, Plant & Equipment non-capital – These elements are for equipment
purchases made with operating funds for non-capital assets.
Other Revolving Fund Purchases - Purchases from other DoD WCF activities (to include
the PRMRF and BMF) to support the internal operations of the activity. Include purchases by
supply activities from depot maintenance activities in the respective 600 Other Revolving Fund
Purchases category. Report purchases from the DWCF supply activities to support internal
General and Administrative operations (not consumed as part of direct or indirect business
operations) in category 400. Lines 601-675 should include purchases made at stabilized rates.
Transportation – These elements represent the transportation of things.
General Property, Plant, and Equipment (Depreciation) – These elements are for the
depreciation of general property, plant, and equipment.
Other Purchased Services
Line 941 Technical Drawings (Supply Operations only) - The amount entered for
Technical Drawings represent purchases from contractors.
Line 942 Forgings & Castings (Supply Operations only)- The amount entered for
Forgings and Castings represent purchases from contractors.
Purchases of engineering services, other than those shown on lines 932-934, should
be included on line 969, Other Engineering Services and Support.
Delete lines for which there are no costs, for any of the included years (PY, CY, BY), from the
submitted exhibit (rather than including them with an amount of zero).
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit Fund-2 Changes in Costs of Operations
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-78
Exhibit Fund-2 Changes in Costs of Operations (Continued)
Instruction for the Preparation of the Fund-2 Exhibit
Changes in the Cost of Operations
The Fund-2 exhibit will explain the changes in the operating budget (costs) from one fiscal
year to the next (i.e., FY to CY to BY) at a meaningful level of detail, relating program changes to
changes in the level of work load (Unit Cost outputs) to the maximum extent possible. A Fund-2
exhibit for each non-supply DWCF activity is required. Strategies and plans to improve activity
productivity and quality are of particular interest. Reform initiatives which impact changes in
costs and rates should also be documented. Accordingly, the cost impacts of productivity
initiatives should be separately identified on this schedule. Each DWCF activity should include a
paragraph outlining major productivity improvement plans and associated resources including but
not limited to capital investment, education and training initiatives, process improvements,
consolidation and streamlining, work force motivations, and incentives.
Provide a narrative explanation for changes. Round data to at least the nearest tenth of a
million (e.g., show $ 10.4 million, not $ 10 million).
For changes in cost due to productivity initiatives, list the detailed initiatives and amounts
for each. Distinguish the cost reductions associated by individual productivity initiatives.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-79
Exhibit Fund-3 Labor and Manpower Breakdown
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-80
Exhibit Fund-3 Labor and Manpower Breakdown (Continued)
Instruction for the Preparation of Exhibit Fund-3
Labor and Manpower Breakout
The Fund-3 exhibit stratifies, by fiscal year (i.e., PY, CY, BY), the total DWCF activity
costs in the operating budget by Direct, Indirect Production, and General and Administrative
(G&A) (overhead) categories. For the G&A category, only the military and civilian personnel
carried in and paid for by the DWCF activity should be reflected in the personnel FTE and end
strength numbers. This includes personnel paid from the activity payroll such as assigned security
guards and personnel working in the office of the DWCF activity director. However, this does not
include the personnel assigned to a general & administrative activity that provides base operations
support to the activity unless they are carried in the end strength of the DWCF activity.
For installations owned and operated by a DWCF activity whose primary mission is other
than installation management, costs associated specifically with installation management should
be identified as G&A Other. These costs will be considered separate and distinct from mission
G&A costs.
Compute FTEs by dividing the applicable total number of hours by the number of hours in
a work year (e.g., 2080; see OMB Circular A-11 for the correct hours for each year).
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-81
Exhibit Fund-5 Total Cost Per Output Summary
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-82
Exhibit Fund-5 Total Cost Per Output Summary (Continued)
Instruction for the Preparation of Exhibit Fund-5
Total Cost Per Output Summary
The Fund-5 is required for all activities except supply activities. Only a single line is
required for industrial activities summarizing the cost rate (not the standardized rate for revenue
collection) per DLH for the PY, CY and BY. Activities that have multiple outputs and use a
standardized rate based on a revenue per specific unit of output (Transportation, Base Support,
DFAS, DISA) should report the cost per specific unit of output (not revenue rate) as depicted on
the DWCF activity’s respective annual operating budget (AOB).
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-83
Exhibit Fund-6 Depot Maintenance-6 Percent Capital Investment Plan
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-84
Exhibit Fund-6 Depot Maintenance -6 Percent Capital Investment Plan (Continued)
Instructions for the Preparation of Exhibit Fund-6,
Depot Maintenance –6 Percent Capital Investment Plan
Minimum Capital investment for certain depots is required in accordance with 10 U.S.C. § 2476.
Instructions for preparation of Exhibit Fund-6 are as follows:
A. Prepare a Summary Exhibit Fund-6 that provides the total for the activity and a separate
Fund-6 for each maintenance depot to include Army Depots, Navy Aviation Depots, Navy
Shipyards, Marine Corps Depots, and Air Force Depots.
B. Dollars in millions and tenths of a million.
C. The following will be defined:
1. Revenue (Avg): Only revenue for Maintenance, Repair and Overall will be
included in accordance with amendment (1).
2. Revenue (3 Year Average): The preceding 3 years of actual or estimated revenue
divided by three for Prior Year, Current Year, and Budget Year columns.
3. Categories of applicable capital investment:
a. Modernization. Typically refers to upgrades associated with the
available current technology.
b. Efficiency. Typically refers to efforts to improve workflow and
increase throughput while maintaining or reducing current costs. Also may refer to improved
quality of work performed.
c. If a modernization leads to an efficiency, then the investment is
still considered a modernization. An efficiency not dependent on a modernization is classified an
efficiency. If an investment has elements of both, the DoD Component should record the best
representation that can be determined.
d. A narrative should be included with the Exhibit Fund-6 to
address the following:
1. A specification of any statutory, regulatory, or
operational impediments to achieving the minimum percentage requirement.
2. A description of the benchmarks for capital investment
established for each covered depot and military department and the relationship of the benchmarks
to applicable performance measurement methods used in the private sector.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
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Exhibit Fund-6 Depot Maintenance -6 Percent Capital Investment Plan (Continued)
3. If the minimum percentage requirement is not met for a
military department for the fiscal year covered by the report, a statement of the reasons why the
requirement was not met and a plan of actions for meeting the requirement for the fiscal year
beginning in the year in which the report is submitted.
e. The legislation provides waiver authority for the Secretary of
Defense if the Secretary determines that the waiver is necessary for reasons of national security
and notifies congressional defense committees.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-86
Exhibit Fund-7 Customer Rate Computations
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-87
Exhibit Fund-7 Customer Rate Computations (Continued)
Instructions for the Preparation of Exhibit Fund-7,
Customer Rate Computations
The purpose of this exhibit is to establish a standardized rate to customers that reconciles
Revenue, Total Costs, and NOR for industrial DWCF activities using DLHs.
For industrial activities, program financing (revenue) is a function of the estimated of the
total cost of goods sold (total expenses) adjusted for NOR, Capital Requirements and other
surcharges, divided by the programmed output (total DLHs), to identify an initial revenue rate per
DLH.
The number of military and civilian DLHs associated with carry-in workload (unfilled
customer orders on hand at the start of the current year) times the prior year stabilized rate (rate in
effect when the carry-in orders were accepted) will be identified as revenue earned in the current
fiscal year. The DLHs and associated dollars will be subtracted from the BY total DLHs and
revenue as identified above.
Part I: All revenue associated with direct reimbursable costs (non-rate based
workload) and orders received in the current year must be removed with the associated DLHs in
order to forecast a BY Revenue Rate for new orders. Total revenue must cover all projected costs
and NOR adjustments as depicted on the Fund-14. The BY revenue rate is the revenue expected
from new orders divided by the DLHs associated with that workload.
Part II: The NOR adjustment must be subtracted from the total rate based revenue
(not just the new order revenue) because total expenses in the BY will be a combination of CY
and BY workload. Subtracting a negative NOR will add to the costs reflecting costs greater than
revenue as depicted on the Fund-14. The BY cost rate is total rate based costs divided by total rate
based DLHs (not just new order revenue DLHs). The BY cost rate, total rate based costs, and total
rate based DLHs should reconcile to the Fund-5.
Part III: Total Fund-1 Summary of Price, Program, and Other Changes costs
should reconcile with total rate based costs and direct reimbursables.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-88
Exhibit Fund-8 Air Mobility Command Common User Services
FY PY FY CY FY B Y
1.
Beginning Accumulated Operating Results
2. Cost of Operations
a. Channel Passenger
b.
Channel Cargo
c.
Special Assignment Airlift Mission (SAAM)/JETP
d. Training
Total Costs
3.
A. Rate and Reimbursable Revenue
a. Channel Passenger
b. Channel Cargo
c.
SAAM/JETP
d. Training
3A. Total Rate and Reimbursable Revenue
B. Airlift Readiness Revenue
a. Channel Passenger
b.
Channel Cargo
c.
SAAM/JETP
d. Training
e.
AOR Recovery
3B. Total Airlift Readiness Revenue
Total Revenue
4. Net Operating Results
5. Ending Accumulated Operating Results
COMMON USER TRANSPORTATION SERVICES
TRANSPORTATION WORKING CAPITAL FUND
($ in Millions)
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-89
Exhibit Fund-8 Air Mobility Command Common User Services (Continued)
Instruction for the Preparation of Exhibit Fund-8
Common User Transportation Services
This exhibit displays the costs, revenues, NOR, and AOR of USTRANSCOM’s operations, with emphasis on the explanation of
item 3B, Total Airlift Readiness Revenue. The USTRANSCOM must include a narrative outlining reasons for variances greater than
20 percent for each line of Airlift Readiness Revenue from one year to the next.
For changes in Airlift Readiness Revenue, distinguish the factor(s) that causes the change (e.g., utilization factors, airlift rates
set to compete with private sector rates, commercial transportation prices, aircraft maintenance prices).
Round data to the nearest tenth of a million.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-90
Exhibit Fund-9a Activity Capital Investment Summary
*Fund 9a Summary exhibit must reconcile to the Fund 9b project justification.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-91
Exhibit Fund-9a Activity Capital Investment Summary (Continued)
Instructions for the Fund-9a Exhibit
Capital Investment Summary
General - The aggregate project line items listed for each major category are the minimum
submission requirements. Projects may be added or modified to meet the specific requirements of
the DWCF activity as long as there is a corresponding Fund-9b that describes what is being
purchased and the reason for the requirement. The summary item description and the aggregate
project amounts on the Fund-9a must correspond to the individual Fund-9b. All Prior Year projects
will be shown by line item detail cross-referenced to the corresponding Fund-9b. In addition, the
ADPE and Telecommunications equipment and software development Fund-9b Exhibit line
number assigned should also be used for cross-referencing within the Information Technology
Exhibits as outlined in Chapter 18 of this regulation. Use the approved DWCF activity name. The
four major categories for Capital Investment Programs are as follows:
(1) Non-ADPE & Telecommunication Equipment > $250K: Equipment, other than
ADPE and Telecommunications Resources. A separate Fund-9b will be provided for each
aggregate project. Each project will include cost estimates for at least the subcategories shown
above (unless no equipment of that kind is purchased). Other project categories may be added.
(2) ADPE & Telecommunications > $250K: ADPE and Telecommunications
Equipment Component will provide a Fund-9b for each of the aggregate projects listed above
(unless no equipment of that kind is being purchased). Other project categories may be added.
One Fund-9b narrative may address all projects under $5,000,000 by category (e.g. “Other ADPE
Support Equipment under $5,000,000”). Items that exceed $5,000,000 will be addressed
separately in the narrative.
(3) Software Development > $250K
a. Software Development must be shown on a separate Fund-9b by item
detail for projects equal to or greater than $5,000,000. All software projections must comply with
DoD Chief Information Officer (CIO) requirements/approvals.
b. One Fund-9b may be submitted for software development under
$5,000,000 that does not need DoD CIO approval. This Fund-9b may be submitted with a general
statement of the enhancements that will be provided. In addition, the Fund-9bs must include a
system delivery date/s. If it is a spiral development, all delivery dates and amounts to be
capitalized will be included in the Fund-9bs.
(4) Minor Construction within the thresholds contained in 10 U.S.C. § 2805.
a. Minor Construction may be combined into one Fund-9b as long as each
project listed is below the threshold. The Fund-9b must contain a statement that no Minor
Construction project exceeds the current MILCON threshold.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-92
Exhibit Fund-9a Activity Capital Investment Summary (Continued)
b. All special categories of minor construction will be listed and justified
separately (such as Navy R&D). 10 U.S.C. § 2805, paragraph (d) authorizes activities to use up
to of funds available for operation and maintenance for unspecified minor construction projects
for laboratory revitalization and recapitalization. However, Congressional notification is still
required for projects exceeding the threshold.
1. Section 1.4, Policy, provides specific guidelines for inclusion or exclusion of an item in
the capital budget, and the necessary analysis required to substantiate a capital budget request.
2. Definitions for these capital budget categories are provided below:
A. Non-ADPE Equipment exceeding the capitalization threshold will be
capitalized and depreciated. Equipment should be aggregated into projects by like-types. There
is no limit on the number of projects that may be used.
B. ADPE and Telecommunications Equipment having a system unit cost
exceeding the capitalization threshold will be capitalized and depreciated.
(1) ADPE and telecommunications resources consist of computer
hardware, operating system software (including utility and communications software) and
telecommunications equipment as defined in OMB Circular A-11.
(2) ADPE costs will be displayed in five parts: (1) Computer Hardware
(Production), (2) Computer Hardware (Network) (3) Computer Software (Operating System), (4)
Telecommunications, and (4) Other Support Equipment. The last category includes investments
such as uninterrupted power sources and air conditioning that must be purchased to support
computer and telecommunications resources.
C. Software Development/Modernization with a system unit or lifecycle cost
exceeding the capitalization threshold will be capitalized and depreciated. Internally developed
software and externally developed Software will be listed separately.
(1) Software development includes the actual development and acquisition
of the information system as defined in OMB circular A-11. This category does not include
software developed for a customer for use in a weapon system.
(2) Software development/modernization will be budgeted by project. A
project is defined as any change, modernization, or improvement to a system, subsystem or
severable module of a system that by itself will provide an economic benefit or improvement in a
business process. This must include all changes or improvements needed to interface or integrate
with other ancillary systems. A project has a start and stop date, a specific amount of funds, and
results in a usable end product.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-93
Exhibit Fund-9a Activity Capital Investment Summary (Continued)
(3) Software development/modernization projects will exclude CIP ADPE
investments. These will be identified separately in the ADPE and telecommunications section of
the Fund-9a and Fund-9b.
D. Minor Construction projects financed by the activity and exceeding the
capitalization threshold will be capitalized and depreciated.
E. Column Entries
(1) Item Description. Enter the projects/item descriptive title of Software
projects to be procured.
(2) Quantity. As applicable, enter the quantity of items procured/estimated
to be procured during, as FY PY, FY CY, and FY BY.
(3) Amount should reflect all costs associated with program changes
through the date of preparation of the exhibit regardless of whether such changes have been
previously reported. Costs will be expressed in millions of dollars to at least the nearest tenth (i.e.,
$2.6 million).
F. Capital Outlays – For each fiscal year, indicate the estimated total cash outlays
for all capital budgeted items (above and below threshold) expended in that fiscal year regardless
of the year in which the project was originally obligated.
G. Capital Investment Recovery (CIR) – For each fiscal year, show the estimated
budget CIR that will be included in customer rates for all capital assets in that year. This amount
will agree with the CIR reported on the Revenue and Expense Statement (Fund-14) and in the CIR
Section of the Fund-1a.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-94
Exhibit Fund-9b Activity Capital Purchase Justification
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-95
Exhibit Fund-9b Activity Capital Investment Justification (Continued)
Instructions for the Preparation of Exhibit Fund-9b
Capital Investment Justification
I. General
A. The purpose of this exhibit is to provide narrative justification in support of each
project/line item detailed on the Fund-9a. A separate Fund-9b justification is required for each
applicable software investments. For ADPE Telecommunication Equipment items that are equal
to or greater than $5,000,000, a separate Fund-9b is not required and may be summarized into the
categories displayed in the Fund-9a. Software projects over $5,000,000 and/or that need DoD CIO
approval must be line itemed with individual Fund-9bs. It is important that the Fund-9b be
completed and accurate as it is the primary justification for activity’s capital purchases.
B. Separate Fund-9b exhibits will be submitted for each project/line item on the Fund-9a
where there is an entry in either the current year or budget year(s) columns. Prior year capital
investments do not require Fund-9bs for projects with only a PY entry.
II. Headings
A. For the PBR, insert “FY XX OSD/OMB submission” (XX is used for illustration
purposes only. Insert the applicable fiscal year in lieu of XX).
B. Identify the applicable DoD Component/DWCF activity for the proposed capital
investment. Use the approved DWCF activity name. Identify the activity that will benefit from
the capital item, if possible.
C. For each project/line item (e.g., forklifts), indicate the item description contained in
Exhibit Fund-9a.
D. Project/Item Description. Enter a line item identification number to cross-reference the
corresponding entry on the Fund-9a along with a description of the investment.
III. Column Entries
A. Element of Cost. For items purchased under the Project/Line Item, provide applicable
subcategories (i.e., vehicles may be broken down into cars, trucks, buses, etc.). For Software
provide the item, and if applicable, break into module delivery subcategories.
B. Quantity. Provide the approximate number of items to be purchased under the
subcategory or as applicable for software.
C. Per Unit Cost. Enter the actual or estimated unit cost, when appropriate, for each
element listed. Express unit costs in thousands of dollars, to the nearest tenth (i.e.,
$20.1 thousand). Unit costs should be expressed in terms of “the year” costs.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-96
Exhibit Fund-9b Activity Capital Investment Justification (Continued)
D. Total Costs. Enter the total cost of Element of Cost and where applicable, taking into
consideration the quantity to be estimated to be procured and the unit costs.
IV. Narrative Justification
A. Provide complete narrative description for each applicable project/line item. This
narrative justification should include sufficient information to serve as the sole justification for
funding the project/line item. Include a brief description for special interest items such as ADPE
Equipment equal to or great than $5,000,000. The narrative description should include, but not be
limited to:
1. The nature, purpose, and intended use of the project or item(s).
2. Indicate whether an economic analysis was performed (all items within a project require
the appropriate analysis).
3. Indicate the dollar value of estimated savings/cost avoidance after the equipment is
installed or the project is complete and the fiscal year when the savings/cost avoidance should
begin. If no savings/cost avoidance should result from the purchase, an explanation must be
provided to indicate why.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-97
Exhibit Fund-9c Capital Budget Execution
Instructions:
Complete for each fiscal year required in the Program/Budget Submission (i.e., PY, CY, and FY
preferably all on one page), summarized by major category. The “Current Projected Column” is
the program approved in the current President’s Budget submission.
Initial Request. For the PY, this will be the CY column of the previous year’s President’s Budget.
For the CY, this will be the BY column of the previous year’s President’s Budget. For the BY,
only the “Initial Request Column” will be filled in (the BY will be displayed for comparison
purposes).
Current Projected Costs. For the PY, this is the amount approved at the end of the fiscal year. For
the CY, this is the amount in the current President’s budget. The delta between the Initial Request
and Current Projected Costs will be displayed in the “Approved Change” column. The BY is only
used for display purposes.
Explanation. Provide a brief and concise explanation why the changes needed to occur.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-98
Exhibit Fund-11 Source of New Orders & Revenue
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-99
Exhibit Fund-11 Source of New Orders & Revenue (Continued)
Instructions for the Preparation of Exhibit Fund-11
Source of New Orders & Revenue
This Exhibit will identify the customers of each DWCF activity by DoD Component and
the appropriation level. Be specific as to the source of funding by listing the appropriation name.
Entries such as OSD or Army are not acceptable on this Exhibit. Lack of specificity will indicate
that the funding source is unknown and may not be considered as a legitimate source of funding.
The identification will be on the basis of funded orders so that DWCF activity may be linked to
the appropriations for goods and services.
For line 1.a (Orders from DoD Components), show the amounts by appropriation (i.e.,
Operation and Maintenance, Army National Guard; RDT&E, Army; etc.) for orders accepted
within the submitting Service/Component. For orders accepted from other DoD Components,
show the appropriation detail for significant customers.
For line 1.b (Orders from Other Fund Activities), show the orders accepted from other
Defense WCF activities. Be specific as to the activity.
The Total for New Orders on Line 1 must match data provided on other reconciling
exhibits.
For line 2, Carry-In Orders, display the carry-in orders from prior fiscal years. For the
Supply Management activities, carry-in orders represent back orders. This is line 3090 on the SF-
133 “Uncollected Federal Payments” less accounts receivable. Accounts receivable is typically
displayed on the sub-activity SF-133 as supplemental information.
For line 3, Total Gross Orders, add the sum of lines 1, Total for New Orders, and line 2,
Carry-In Orders.
Line 4, Revenue, will equal total gross sales shown on the Revenue and Expense Statement.
Line 5, End of Year Work-in-Process, should equal orders from line 3, Total Gross Orders
that will not be sold in the current year. For Supply Management activities, this line should equal
backorders.
Components will submit summary Fund-11 exhibits for activities that have subdivisions
and will submit a summary Fund 11 at the Component level.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-100
*Exhibit Fund-11a Carryover Reconciliation
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-101
Exhibit Fund-11a Carryover Reconciliation (Continued)
Instructions for Carryover Calculations
for the Preparation of Exhibit Fund-11a, Carryover Reconciliation
The reporting of carryover will be accomplished on the Fund 11a exhibit, Carryover
Reconciliation. The Fund-11a exhibit, Carryover Outlay Calculation, displays and reconciles the
detail of the Fund-11 exhibit by providing revenue, customer orders, and months of carryover by
fiscal year, appropriation.
Carryover calculation. All DoD Components should pay close attention to their carryover amounts
as reported on the AR(M) 1307 as “unfilled customer orders”. Components must budget to end
each fiscal year with between five and seven months of carryover. The following metrics will be
used to assess each fiscal year in the budget exhibit: ≥5 and <7 of carryover is green (within range);
>3 and <5 and ≥7 and <8 months of carryover is yellow (at risk); ≤3 or ≥ 8 months of carryover is
red (out of range). Components must include justification for carryover that is rated yellow or red.
The justification for a yellow or red rating for each year must include the mitigating actions that
will be taken to get to green including a timeline for when that will occur.
PART A - Carryover Calculation Categories.
Line 1 (Total New Orders) displays the new orders projected to be received during the fiscal
year.
Line 2 (Net Carry-in Orders) displays the orders projected to be carried into the fiscal year
from the prior fiscal year.
Line 3 (Total Gross Orders) is the sum of lines 1 and 2.
Line 4 (Revenue) displays the revenue projected to be earned during the fiscal year.
Line 5 (Carryout) equals line 3 minus line 4 and displays the carryout projected at the end of
the fiscal year.
Line 6 (Workload Completed Per Month) equals line 4 divided by 12 and calculates the
average revenue per month.
Line 7 (Months of Carryover)
PART B.- Carryover $ Value & Months by Location Activity
Line 1 (Activity 1) Enter the Fund-11 projected dollar value of carryover and months of
carryover for Activity 1
Line 2 (Activity 2) Enter the Fund-11 projected dollar value of carryover and months of
carryover for Activity 2
Line 3 (Activity 3) Enter the Fund-11 projected dollar value of carryover and months of
carryover for Activity 3
Continue with as many Activities that are within your Component.
Total. Sum the projected dollar value of carryover for all Activities
PART C. - Carryover $ Value by Appropriation & Service
On each line, enter the projected dollar value of carryover for the appropriation.
Total. Sum the projected dollar value of carryover for all appropriations.
The total value of carryover from Part C and Part B must equal the total value of carryout from
Line 5 of Part A.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-102
*Exhibit Fund-12 Customer Orders to Customer Funding Reconciliation
1. New Orders PY CY BY PY CY BY PY PY CY CY BY BY
a. Orders from DoD Components: $ $ $ $ $ $ $ % $ % $ %
Army $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance $ $ $ $ $ $ $ % $ % $ %
Army $ $ $ $ $ $ $ % $ % $ %
Recovery Act, Army $ $ $ $ $ $ $ % $ % $ %
Army Reserve $ $ $ $ $ $ $ % $ % $ %
Recovery Act, Army Reserve $ $ $ $ $ $ $ % $ % $ %
Army National Guard $ $ $ $ $ $ $ % $ % $ %
Research Development Testing & Evaluation $ $ $ $ $ $ $ % $ % $ %
Army $ $ $ $ $ $ $ % $ % $ %
Recovery Act, Army $ $ $ $ $ $ $ % $ % $ %
Procurement $ $ $ $ $ $ $ % $ % $ %
Aircraft Procurement, Army $ $ $ $ $ $ $ % $ % $ %
Missile Procurement, Army $ $ $ $ $ $ $ % $ % $ %
Weapons & Tracked Vehicles, Army $ $ $ $ $ $ $ % $ % $ %
Ammunition, Army $ $ $ $ $ $ $ % $ % $ %
Other, Army $ $ $ $ $ $ $ % $ % $ %
Military Construction $ $ $ $ $ $ $ % $ % $ %
Army $ $ $ $ $ $ $ % $ % $ %
Army Reserve $ $ $ $ $ $ $ % $ % $ %
Army National Guard $ $ $ $ $ $ $ % $ % $ %
Military Personnel $ $ $ $ $ $ $ % $ % $ %
Army $ $ $ $ $ $ $ % $ % $ %
Army Reserve $ $ $ $ $ $ $ % $ % $ %
Army National Guard $ $ $ $ $ $ $ % $ % $ %
Family Housing $ $ $ $ $ $ $ % $ % $ %
Construction, Army $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance, Army $ $ $ $ $ $ $ % $ % $ %
Other $ $ $ $ $ $ $ % $ % $ %
Salaries and Expenses, Cemeterial Expenses $ $ $ $ $ $ $ % $ % $ %
Wildlife Conservation, etc., Military Reserve $ $ $ $ $ $ $ % $ % $ %
Chemical Agents and Munitions Destruction, Army $ $ $ $ $ $ $ % $ % $ %
National Science Center, Army $ $ $ $ $ $ $ % $ % $ %
Afghanistan Infrastructure Fund $ $ $ $ $ $ $ % $ % $ %
Iraq Security Forces Fund $ $ $ $ $ $ $ % $ % $ %
Iraq Train and Equip Fund, Army $ $ $ $ $ $ $ % $ % $ %
Foreign Military Financing, Funds $ $ $ $ $ $ $ % $ % $ %
Appropriated to the President $ $ $ $ $ $ $ % $ % $ %
Army Other $ $ $ $ $ $ $ % $ % $ %
Source of New Orders
Customer Funding Delta
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-103
Exhibit Fund-12 Customer Orders to Customer Funding Reconciliation (Continued)
Navy $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance $ $ $ $ $ $ $ % $ % $ %
Navy $ $ $ $ $ $ $ % $ % $ %
Navy Reserve $ $ $ $ $ $ $ % $ % $ %
Research Development Testing & Evaluation $ $ $ $ $ $ $ % $ % $ %
Navy $ $ $ $ $ $ $ % $ % $ %
Procurement $ $ $ $ $ $ $ % $ % $ %
Aircraft Navy $ $ $ $ $ $ $ % $ % $ %
Weapons Navy $ $ $ $ $ $ $ % $ % $ %
Ammunition, Navy & Marine Corps $ $ $ $ $ $ $ % $ % $ %
Navy Other $ $ $ $ $ $ $ % $ % $ %
Military Construction $ $ $ $ $ $ $ % $ % $ %
Construction, Navy & Marine Corps $ $ $ $ $ $ $ % $ % $ %
Shipbuilding, Navy $ $ $ $ $ $ $ % $ % $ %
Military Personnel $ $ $ $ $ $ $ % $ % $ %
Navy $ $ $ $ $ $ $ % $ % $ %
Navy Reserve $ $ $ $ $ $ $ % $ % $ %
Family Housing $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance, Navy & Marine Corps $ $ $ $ $ $ $ % $ % $ %
Other $ $ $ $ $ $ $ % $ % $ %
Other Navy Appropriations $ $ $ $ $ $ $ % $ % $ %
National Defense Sealift Fund, Navy $ $ $ $ $ $ $ % $ % $ %
General Gift Fund, Navy $ $ $ $ $ $ $ % $ % $ %
Wildlife Conservation, etc. Military $ $ $ $ $ $ $ % $ % $ %
Reservations, Navy $ $ $ $ $ $ $ % $ % $ %
Air Force $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance $ $ $ $ $ $ $ % $ % $ %
Air Force $ $ $ $ $ $ $ % $ % $ %
Air Force Reserve $ $ $ $ $ $ $ % $ % $ %
Air National Guard $ $ $ $ $ $ $ % $ % $ %
Research Development Testing & Evaluation $ $ $ $ $ $ $ % $ % $ %
Research, Development, Testing & Evaluation, Air
Force
$ $ $ $ $ $ $
%
$
%
$
%
Procurement $ $ $ $ $ $ $ % $ % $ %
Air Force Procurement Accounts $ $ $ $ $ $ $ % $ % $ %
Aircraft, Air Force $ $ $ $ $ $ $ % $ % $ %
Missile, Air Force $ $ $ $ $ $ $ % $ % $ %
Other, Air Force $ $ $ $ $ $ $ % $ % $ %
Military Construction $ $ $ $ $ $ $ % $ % $ %
Military Personnel $ $ $ $ $ $ $ % $ % $ %
Air Force $ $ $ $ $ $ $ % $ % $ %
Air Force Reserve $ $ $ $ $ $ $ % $ % $ %
Air Force National Guard $ $ $ $ $ $ $ % $ % $ %
Family Housing $ $ $ $ $ $ $ % $ % $ %
Other $ $ $ $ $ $ $ % $ % $ %
International Military Education and Training $ $ $ $ $ $ $ % $ % $ %
Air Force Other $ $ $ $ $ $ $ % $ % $ %
Source of New Orders
Customer Funding
Delta
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-104
Exhibit Fund-12 Customer Orders to Customer Funding Reconciliation (Continued)
Marine Corps $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance $ $ $ $ $ $ $ % $ % $ %
Marine Corps $ $ $ $ $ $ $ % $ % $ %
Marine Corps Reserve $ $ $ $ $ $ $ % $ % $ %
Research Development Testing & Evaluation $ $ $ $ $ $ $ % $ % $ %
Procurement $ $ $ $ $ $ $ % $ % $ %
Military Construction $ $ $ $ $ $ $ % $ % $ %
Military Personnel $ $ $ $ $ $ $ % $ % $ %
Military Personnel $ $ $ $ $ $ $ % $ % $ %
Reserve Personnel $ $ $ $ $ $ $ % $ % $ %
Family Housing $ $ $ $ $ $ $ % $ % $ %
Other $ $ $ $ $ $ $ % $ % $ %
Defense-Wide $ $ $ $ $ $ $ % $ % $ %
Operations & Maintenance $ $ $ $ $ $ $ % $ % $ %
Research Development Testing & Evaluation $ $ $ $ $ $ $ % $ % $ %
Procurement $ $ $ $ $ $ $ % $ % $ %
Procurement, Defense-wide $ $ $ $ $ $ $ % $ % $ %
National Guard and Reserve Equipment, Defense-
$ $ $ $ $ $ $ % $ % $ %
Military Construction $ $ $ $ $ $ $ % $ % $ %
Military Personnel $ $ $ $ $ $ $ % $ % $ %
Family Housing $ $ $ $ $ $ $ % $ % $ %
Other $ $ $ $ $ $ $ % $ % $ %
Defense Health Program, Defense-wide $ $ $ $ $ $ $ % $ % $ %
DoD, Base Closure Account, 1990 $ $ $ $ $ $ $ % $ % $ %
DoD, Base Closure Account, 2005 $ $ $ $ $ $ $ % $ % $ %
DoD, Base Closure Account $ $ $ $ $ $ $ % $ % $ %
Defense Emergency Response Fund, Defense-wide $ $ $ $ $ $ $ % $ % $ %
Support for International Sporting Competitions,
Defense-wide
$ $ $ $ $ $ $
%
$
%
$
%
Employee & Employer Contributions, Foreign $ $ $ $ $ $ $ % $ % $ %
Government Social Security & Related Programs,
$ $ $ $ $ $ $ % $ % $ %
Chemical Agent & Munitions Destruction, Defense-
$ $ $ $ $ $ $ % $ % $ %
OSD Appropriated $ $ $ $ $ $ $ % $ % $ %
DoD, Acquisition Workforce Development Fund $ $ $ $ $ $ $ % $ % $ %
Source of New Orders
Customer Funding
Delta
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
* August 2022
9-105
Exhibit Fund-12 Customer Orders to Customer Funding Reconciliation (Continued)
b. Orders from other Fund Activities $ $ $ $ $ $ $ % $ % $ %
Army $ $ $ $ $ $ $ % $ % $ %
Army Working Capital Funds $ $ $ $ $ $ $ % $ % $ %
Navy $ $ $ $ $ $ $ % $ % $ %
Navy Working Capital Funds $ $ $ $ $ $ $ % $ % $ %
Air Force $ $ $ $ $ $ $ % $ % $ %
Air Force Working Capital Funds $ $ $ $ $ $ $ % $ % $ %
Marine Corps $ $ $ $ $ $ $ % $ % $ %
Defense-wide $ $ $ $ $ $ $ % $ % $ %
Civil Corps of Engineers $ $ $ $ $ $ $ % $ % $ %
OSD, Defense Working Capital Fund $ $ $ $ $ $ $ % $ % $ %
Defense Agencies, Defense Working Capital Fund $ $ $ $ $ $ $ % $ % $ %
DLA, Defense Working Capital Fund $ $ $ $ $ $ $ % $ % $ %
DFAS, Defense Working Capital Fund $ $ $ $ $ $ $ % $ % $ %
DECA, Defense Working Capital Fund $ $ $ $ $ $ $ % $ % $ %
National Defense Stockpile Transaction Fund $ $ $ $ $ $ $ % $ % $ %
Pentagon Reservation Maintenance Revolving Fund $ $ $ $ $ $ $ % $ % $ %
Other $ $ $ $ $ $ $ % $ % $ %
Other Working Capital Funds $ $ $ $ $ $ $ % $ % $ %
Global HIV/AIDS Initiative $ $ $ $ $ $ $ % $ % $ %
Global Health Programs, State $ $ $ $ $ $ $ % $ % $ %
DoD-VA Health Care Sharing Incentive Fund $ $ $ $ $ $ $ % $ % $ %
Lease of DoD Real Property $ $ $ $ $ $ $ % $ % $ %
Other DoD $ $ $ $ $ $ $ % $ % $ %
c. Total DoD $ $ $ $ $ $ $ % $ % $ %
d. Other Orders: $ $ $ $ $ $ $ % $ % $ %
Exchange Activities $ $ $ $ $ $ $ % $ % $ %
Trust Funds $ $ $ $ $ $ $ % $ % $ %
Non-Federal Agencies
Federal Agencies
Foreign Military Sales
Total for New Orders $ $ $ $ $ $ $ % $ % $ %
Source of New Orders
Customer Funding
Delta
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-12 Customer Orders to Customer Funding Reconciliation (Continued)
Instructions for the Preparation of Exhibit Fund-12
The source of new orders section displays data directly from the Fund-11. The customer funding
section displays data from the Program Resources Collection Process (PRCP) system entered by
the DoD Components consisting of funding levels for each sub-object class related to each
Component’s Working Capital Fund Activity Group. The delta section displays the value and
percentage difference between the source of new orders section and the customer funding
section. Customer funding – source of new orders = delta ($). Delta ($) / customer funding =
delta (%).
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Exhibit Fund-13 Cash Management Plan
Provide a monthly and cumulative phasing for each and every activity group displaying disbursements, collections, transfers in, transfers
out, appropriations, net outlays, and beginning and ending cash balances for the prior, current, and budget year(s). Put each year on a
separate page.
Cash balance at the beginning of the FY (+/-) Total Change in Cash = Cash Balance at the end of the FY.
Submit Excel workbook (by activity including total fund roll up) to the OUSD(C) Revolving Funds Directorate’s cash manager.
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*Exhibit Fund-13b Cash Requirements
The Fund 13b exhibit provides each activity group’s average rate of disbursement and stratifies its cash requirement based on the
amount of cash held for current year operations, subsequent operations and risk mitigation.
Submit Excel workbook to the OUSD(C) Revolving Funds Directorate’s cash manager.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-13b Cash Requirements (Continued)
Instructions for Cash Requirements
1. Rate of Disbursement (Average Amount Disbursed per Collection Cycle) = Result of dividing Line 1a divided by Line 1b.
1a. Total Disbursements – total amount budgeted for disbursement from the exhibit Fund-13.
1a. Number of Collection Cycles – the total number of collections cycles planned for the year.
2. Range of Operation – header, no entry required
2a. Upper Estimate of Expected Operating Range – The maximum cash level expected based on budgeted assumptions and historical
trends.
2b. Lower Estimate of Expected Operating Range – The lowest cash level expected based on budgeted assumptions and historical
trends. Provide an explanation if the lower bound does not equal the sum of Line 3 and Line 4.
3. Risk Mitigation (Cash held to mitigate specified risks) – Total amount of cash held for risk mitigation. The specific risks for which
cash is being reserved should be provided along with amounts on lines 3a., 3b., etc. Examples of specified risks include, but are not
limited to, items such as budget estimation error and commodity price fluctuation.
4. Reserves (Cash held to meet specified future requirements) – Total amount of cash held through the fiscal year to meet specified
requirements in subsequent years. A description of the requirements for which cash is being held should be provided along with
amounts on lines 4a., 4b., etc. Examples include, but are not limited to, unexpended appropriations, planned capital investments, and
funds retained to support the return of accumulated operating results (AOR) in subsequent fiscal years.
5. For further explanation of each of the four major elements of the cash requirement, see paragraphs 090103.A.4.d-g.
6. A narrative is required describing the methodology and makeup of 1 through 4 above as appropriate.
Note: A graphic display of the elements included in the exhibit, Fund-13b, Cash Requirements, is provided on the following page.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-13b Cash Requirements (Continued)
Graphic Display of Elements included in Exhibit 13b, Cash Requirements
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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*Exhibit Fund-14 Revenue and Expenses
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-14 Revenue and Expenses (Continued)
Instructions for Statement of Revenue and Costs
Keyed to Statement Footnotes
Note: Information on this exhibit should reconcile to other exhibits that display Revenue and Costs
(Fund-7, Customer Rate Computations; SM-5a, OP-32 Price Change; Fund-11, Source of Revenue;
Fund-1/1a, Summary/Details of Price, Program, and Other Changes).
A. For supply management activities, the line should reflect Gross sales. Credit returns should be
displayed in the Refunds/Discounts line.
B. Capital Surcharge represents the increase in prices (and projected revenue) due to surcharging the
capital budget requirement to provide sufficient cash to support the capital budget. This line is blank
if a capital surcharge is not included in price (also see note F).
C. Other income is to include pass-through revenue such as direct reimbursable.
D. Cost of materiel sold from inventory includes the MAC value of materiel sold from inventory and
the cost of repair. Both wholesale and retail costs should be included. For Supply activities, this figure
does not represent required budgetary resources for inventory. If additional resources are required, a
surcharge pricing element should be added on the SM-5a and an “Inventory Retention” category as an
operating adjustment should be identified on the Fund-14. At the discretion of the Supply activity,
“Inventory Retention” may also be used to display the difference of Total Materiel Costs on the SM-
5a and Materiel Costs without inflation. In either case, the final NOR should be the same.
E. Capital Investment Recovery (CIR) reflects the estimated recoupment of all assets defined by the
capital program in terms of recoupment of outlays.
F. This represents the “gross” result from operations, prior to adjustments.
G. Includes all “Other Adjustments” to NOR; multiple lines may be used. For example, Capital
Surcharge reservation here should offset capital surcharge in revenue. Include any appropriations
realized to offset current period costs (e.g., pass-through appropriations to cover underutilized plant
capacity). Appropriations for war reserve materiel do not offset current period expenses, do not affect
NOR, and should be subtracted if reported as part of revenue or be reported as an adjustment below
NOR. This includes:
Transfers to correct for prior period over- or under-pricing;
1. Other approved transfers for collections from customers for which an expense has not been
recorded;
2. Other collections (that are not transferred out, but placed in some sort of reserve) from
customers for which an expense has not been recorded; or,
3. Unfunded expenses resulting from a policy change, which must be deleted prior to determining
NOR.
4. Changes in Work-in-Process or Inventory for activity retention.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-14 Revenue and Expenses (Continued)
H. The NOR is the fiscal year gain or loss from operations. The NOR will be carried into Accumulated
Operating Results (inception to date) in the equity portion of the balance sheet. NOR and AOR are key
performance indicators. Sufficient unobligated and cash resources must be available to return AOR.
If not, then the minimum cash retention becomes a non-recoverable adjustment. Likewise, non-supply
activities must have sufficient PY unobligated balances to return AOR. If not, then AOR must be
retained and a non-recoverable cash surcharge may be required in order to generate sufficient budgetary
resources. In addition, CIR for DWCF activities do not typically represent the total CIP cash
requirement.
I. The Deferred AOR are revenue, expenses, gains, or loss transactions that impact WCF cash and are
temporarily deferred in the budget to be recovered/returned in a future year.
J. The Non-Recoverable AOR are revenue, expenses, gains, or loss transactions that do not impact
WCF cash and are permanent (though they could be reversed if necessary). Common examples of non-
recoverable is the depreciation of real property purchased with MILCON and reported by the WCF
activity or equipment purchased with appropriated funds and then transferred without reimbursement
to a Depot for use. The Depot records the depreciation but does not include those costs when
developing their rates.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-15 Fuel Data
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-15 Fuel Data (Continued)
Instructions for the Preparation of Exhibit Fund-15 Fuel Data
The purpose of Fund-15, Fuel Data, exhibit is to provide reconciliation between the Defense Logistics Agency (DLA) Energy
activity, and the customer budgets. Prepare the Fund-15 exhibit for the prior year actual, current year, and budget year. The DLA
Energy activity will prepare the exhibits for both petroleum and aerospace fuel products. Prepare the exhibit for each division that
procures petroleum fuel products and a consolidated exhibit. Instructions for preparation of Fund-15, Fuel Data:
1. Barrels. Use 42 gallons per barrel. Show barrels in nearest tenth of million barrels.
2. Cost per Barrel. Use cost in dollars and cents per barrel.
3. Extended Price. Multiply number of barrels by cost per barrel. Use dollars in millions and display results in tenths of a
million.
4. Product. List by product.
5. Stabilized Price. Show current approved stabilized price.
The USTRANSCOM must submit separate Fund 15 exhibits for its Organic, Commercial and Military airlift missions.
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-16 Materiel Inventory Data
Purchases
A. Purchases to Support Customer Orders (+)
B. Purchase of long lead items in advance of customer orders (+)
C. Other Purchases (list) (+)
D. Total Purchases
Materiel Inventory Adjustments
A. Materiel Used in Maintenance (and billed/charged to customer orders) (-)
B. Disposals, theft, losses due to damages (-) *
C. Other reductions (list) (-)
D. Total inventory adjustments
Materiel Inventory EOP
Materiel inventory for the purposes of this exhibit is inventory that will be consumed in production
to complete a finished product (i.e., bolts, screws, clamps, metal plates, etc.). It does not include
operating materiels such as pens, pencils, paper, staples and toner cartridges.
Complete one exhibit for each fiscal year (i.e., PY, CY, and BY) for the non-supply activities (i.e.,
depot maintenance, etc.). Inventory pricing will be based on current policy on inventory valuation.
*This would also include reductions due to obsolescence. All other reasons for inventory
reductions would be listed in item C.
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-19 Military Personnel Strength
Instructions: For each fiscal year, show the average strength of active military personnel,
including those participating in the Personnel Force Innovation program, performing work for the
WCF. Display the increase or decrease in average strength from the current year to the budget
year in the “Change CY/BY” column.
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-22 Summary of Base Support
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-24 Summary of Personnel Data
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-28 Execution Performance Analysis
ACCUMULATED OPERATING RESULTS: Actual through quarter and end-of-year projection. For all activities, including Supply,
provide the reconciliation between December’s AOR reported on the 1307 report and the amount you use for budget purposes.
NOR ($M)
------------------------
Revenue ($M)
Costs ($M)
OUTLAYS
------------------------
Collections
Disbursements
CASH BALANCE WITH TREASURY: Actual through quarter and estimated end-of-year projection.
Accounts Receivable
Total Unliquidated Advance Billings
(Liability)
ANALYSIS and RECOMMENDED ACTIONS
YEAREND PROJECTIONS AND ASSUMPTIONS
DoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-28 Execution Performance Analysis (Continued)
CAPITAL INVESTMENT PROGRAM OBLIGATIONS and OUTLAYS: FY to date and end-of-year projection only.
ANALYSIS and RECOMMENDED CORRECTIVE ACTIONS:
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-28 Execution Performance Analysis (Continued)
Instructions for the Preparation of Exhibit Fund-28
Execution Performance Analysis
The OUSD(C) P/B Revolving Funds Directorate conducts first, second, and third quarter Budget
Execution Reviews (BERs) each fiscal year for the DWCF, PRMRF/BMF, and DCSA WCF. Each
Component is required to complete the Fund-28, Execution Performance Analysis, for each of
their business areas and is expected to be prepared to discuss, by separate business areas on the
items presented in the Fund-28. An official BER announcement memorandum is sent out each of
the three quarters with instructions, suspense dates, and any changes to the list.
All Components must complete a Fund-28 Execution Performance Analysis, for each of their
activity groups. The Accounting Report (Monthly) 1307 or Standard Form (SF) 133, Report on
Budget Execution and Budgetary Resources, should be the source for the financial data. If
another source is used, identify the source and provide the actual documents as supplemental
information. Components will also identify any areas of concern and examples of improving
efficiency or effectiveness of operations, either realized or planned. Use the narrative tab for your
write-up.
BER Reporting will include the following:
1. The FY CY phasing plans for cash and NOR found in the FY BY President’s Budget.
2. Must utilize the SF-133 and 1307 report data for the reporting periods December (Q1)
/March (Q2)/June (Q3) for the FY.
3. Cash levels by business activity, and EOY projections as for the reporting period.
4. Total New Orders vs. Plan and EOY projections.
5. Financial data variances from plan and EOY projections.
6. Obligations, Revenues, Costs, Collections, Disbursement, Net Operating Result (NOR),
and Accumulated Operating Result (AOR) actual data for the reporting period.
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-30 Underutilized Plant Capacity
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit Fund-30 Underutilized Plant Capacity (Continued)
Instructions for the Preparation of Exhibit Fund-30
Unutilized and Underutilized Plant Capacity (UPC)
PART I.
The purpose of this exhibit is to determine capacity indices and mobilization funding
requirements for DWCF industrial activities. Unutilized (Reserve), Underutilized Plant Capacity
and Industrial Mobilization Capacity costs should be excluded from the DWCF rate structure.
Overburdening the customer for costs associated with idle expansion capability is not a fair
reflection of operating costs associated with workload. In many cases, these costs must be incurred
by a federal facility where the private sector can choose to downsize its operations.
Appropriated funding supports equipment that is utilized 20 percent or less of capacity
(hereafter referred to as “unutilized”) and has a requirement to support surge and/or replenishment.
It is not excess capacity; it is necessary to support core industrial maintenance requirements.
This exhibit may apply to all industrial activities (mostly Depots and Ordnance activities)
whether or not the respective Service is identifying UPC funding as part of the topline submission
in the O&M budget submission. Thus, at a minimum, the capacity-related indices for items
numbered one through three should be completed for each industrial activity.
There are four types of facilities that may qualify:
1. Ammunition Storage
2. Ammunition Production
3. Maintenance
4. Manufacturing
Each qualifying facility must be identified and listed separately.
PART II.
For each activity with an amount in the Funded UPC (i.e., 1.F., 2.J., 3.F., 4.F.) category
identified in the exhibit Fund 30 format, the following is required:
A. Narrative describing the nature of these UPC costs being incurred at the activity.
Provide justification as to what is being accomplished with these funds.
B. Breakdown of costs by element.
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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*Exhibit PB-32 Summary of Price and Program Changes
INSTRUCTIONS FOR PREPARATION OF
THE SUMMARY OF PRICE AND PROGRAM CHANGES (EXHIBIT PB-32)
The PB-32 Rates Changes exhibit provides a breakout of the detailed price and program that
drive the rate changes from prior year (PY), current year (CY), and budget year (BY), by sub-
object classification, as applicable.
1. For the OSD/OMB budget review, prepare the PB-32 to show the rate (percent) of price
and program growth for the various object sub classifications.
2. The price growth column should show the amount of price growth for various object
sub-classifications. The rate of price change for lines 401, 411-415, 502-506, 601-693, and 701-
721 should agree with applicable rates approved by OSD.
3. Program amounts should be consistent with Fund purchases included in Object Class
25.3. For, AMC, MSC, and MTMC costs displayed for items; 702, 703, 705, 706, 707, 708, 711,
714, 718, 719, 720, and 771 should include all purchases from these transportation funds. These
amounts should exclude all non-Defense Working Capital Fund purchases such as reimbursement
to MTMC of non-Defense Working Capital Fund (overseas) port operations.
4. Line 703 JCS Exercises includes only those services in support of JCS exercises and
paid only by The Joint Staff (TJS).
5. Includes centrally managed items procured by the Defense Working Capital Fund from
sources other than Defense Working Capital Fund or non-Defense Stock Funds.
6. Budget year (BY program amounts should reflect stabilized rates as requested by the
Service (OSD submission) or as approved by OSD (President’s Budget), as applicable, to include
the impact of biennial budget years’ pay raises.
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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C. Exhibit PB-32 Summary of Price and Program Changes (Continued)
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit PB-32 Summary of Price and Program Changes (Continued)
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit PB-32 Summary of Price and Program Changes (Continued)
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit PB-32 Summary of Price and Program Changes (Continued)
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit PB-32 Summary of Price and Program Changes (Continued)
2BDoD 7000.14-R Financial Management Regulation Volume 2B, Chapter 9
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Exhibit PB-32 Summary of Price and Program Changes (Continued)
