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Chapter 4 – Financial Management
Table of Contents
4.1 Financial Management 4-4
4.2 Responsibilities 4-4
4.2.1 Commanding Officer 4-4
4.2.1.1 Actions 4-5
4.2.2 Comptroller 4-6
4.2.3 Accountable Officials 4-7
4.3 Fiscal Law and Regulations 4-8
4.3.1 Purpose, Time and Amount 4-8
4.3.2 Anti-Deficiency Act Violation Reporting 4-9
4.3.3 Anti-Deficiency Act Violation Penalties 4-9
4.4 Types of Appropriations 4-10
4.4.1 Appropriations 4-10
4.4.1.1 Operations & Maintenance, Navy (O&M,N) 4-10
4.4.1.2 Operations & Maintenance, Naval Reserve (O&M,NR) 4-10
4.4.1.3 Shipbuilding and Conversion, Navy (SCN) 4-11
4.4.1.4 Weapons Procurement, Navy (WPN) 4-11
4.4.1.4.1 Other Procurement, Navy (OPN) 4-11
4.4.1.5 Research, Development, Test and Evaluation (RDT&E) 4-11
4.4.1.6 Navy Working Capital Fund (NWCF) 4-12
4.4.1.7 Foreign Military Sales (FMS) 4-12
4.4.1.8 National Defense Sealift Funds (NDSF) 4-12
4.5 Budgeting and Accounting 4-12
4.5.1 SUPSHIP Mission Budgets 4-12
4.5.2 Navy Enterprise Resource Planning (Navy ERP) 4-13
4.5.2.1 Roles in ERP 4-14
4.5.2.2 ERP Site Leads 4-14
4.5.3 The Standard Accounting and Reporting Systems (STARS) 4-14
4.6 Purpose of Funds Provided to SUPSHIPs 4-15
4.6.1 SUPSHIP Mission Funds 4-15
4.6.2 Ship Construction Funds 4-15
4.6.3 Foreign Military Sales (FMS) Funds 4-16
4.6.4 Ship Repair Funds 4-16
4.6.5 Fleet Modernization Program (FMP) Funds 4-17
4.6.6 Berthing Funds 4-17
4.6.7 Commander Naval Installations (CNI) Funds 4-18
4.6.8 Environmental Compliance Oversight Funds 4-18
4.6.9 Reimbursable Work Orders (RWO) 4-19
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4.7 Funding Methods 4-19
4.7.1 Mission Funding Allotment 4-19
4.7.2 Reimbursable Orders 4-19
4.7.2.1 Types of Reimbursable Orders 4-20
4.7.2.1.1 Project Order (PO) 4-20
4.7.2.1.2 Economy Act Order (EAO) 4-20
4.7.3 Military Interdepartmental Purchase Request (MIPR) 4-21
4.7.4 Direct Citations 4-21
4.7.5 Budget Structure WBS Elements from ERP Activities 4-22
4.8 General Classifications of Funds Transactions 4-22
4.9 Prompt Payment Act, 5 CFR 1315 4-23
4.9.1 Progress Payments and Prompt Payment Requirements 4-23
Chapter 4 Acronyms 4-25
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References
(a) SECNAVINST 7000.27C, Comptroller Organizations
(b)
DoD 7000.14-R, DoD Financial Management Regulation
(c)
SECNAVINST 5200.35G, DoN Managers’ Internal Control (MIC) Program
(d)
31 USC 3528, Responsibilities and Relief from Liability of Certifying Officials
(e)
Public Law 104-106 Section 913
(f)
31 USC 1301(a), Application
(g)
31 USC 1502, Balances Available
(h)
31 USC 1341, Limitations on Expending and Obligating Amounts
(i)
31 USC 1342, Limitation on Voluntary Services
(j)
31 USC 1517, Prohibited Obligations and Expenditures
(k)
31 USC 1349, Adverse Personnel Actions
(l)
31 USC 1350, Criminal Penalty
(m)
31 USC 1518, Adverse Personnel Actions
(n)
31 USC 1519, Criminal Penalty
(o)
NAVSO-P 1000, DoN Financial Policy Manual
(p)
OMB Circular A-123, Management’s Responsibility for Enterprise Risk Management and
Internal Controls
(q)
Standards of Internal Control in the Federal Government (“Green Book”), GAO-14-704
(r)
10 USC 7572, Quarters: Accommodations in Place of for Members on Sea Duty
(s)
Assistant Secretary of the Navy, (Financial Management and Comptroller)
(ASN(FM&C)) memo dated 3 May 2002
(t)
41 USC 23, Orders or Contracts for Material Placed with Government-owned
Establishments Deemed Obligations
(u)
31 USC 1535, Agency Agreements
(v)
Public Law 104-134, Debt Collection Improvement Act of 1996
(w)
5 CFR 1315, Prompt Payment Act (PL 97-177)
Figures
Figure 4-1: SUPSHIP Funding Decision Tree .................................................................... 4-24
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Chapter 4 – Financial Management
Financial Management
A command’s program for the proper administration of funds is an integral part of effective
management. There are specific responsibilities associated with managing public funds
which go to the highest levels of SUPSHIP organizations. The goal of this chapter is to
explain the importance of proper financial management within the SUPSHIPs and with their
customers. This chapter will refer to overarching guidance for Financial Management in the
Department of Defense. The actual references rather than this volume should be consulted
and used to make policy decisions with legal/financial implications. For the Department of
the Navy, SECNAVINST 7000.27
C, Comptroller Organizations, reference (a), is the authority
and provides guidance for the establishment, periodic reviews and approval of Comptroller
organizations. This directive assigns responsibility to the commanding officer for ensuring
the command has a financial management organization capable of proper and effective
administration of funds and complying with applicable laws, regulations, policies, procedures,
and sound financial practices.
Key to achieving this objective is an understanding of the integration of budgeting,
accounting and performance measurement while adhering to the legislative requirements for
financial management in the Federal Government.
Responsibilities
Commanding Officer
The Supervisor of Shipbuilding, as commanding officer, has specific responsibilities with
regard to Financial Management. Commanding officers of activities that receive a sub
allocation of funds from a Navy or Marine Corps organization are responsible under
31 USC
1341 and 31 USC 1517 for the proper administration of all funds received. They are required
to have a qualified Comptroller, to delegate authority to that Comptroller for the appropriation
accounts involved, and to designate specific responsibilities for the authority delegated. The
Comptroller can then delegate authority and/or signature authority for funding documents to
other individuals within the Comptroller organization. All delegations of authority must be
documented in writing and maintained for audit. In addition, commanding officers are
responsible for establishing and maintaining internal control systems to ensure that:
All available funds are identified, controlled and recorded in the official accounting
records from the time received until subdivided to others or obligated and expended.
All available funds are identified with authorized purposes by account and period of
availability for new obligations and period of availability for expenditures.
All special and recurring provisions and limitations on the obligation and expenditure of
funds are identified and documented for all available funds and accounts.
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All proposed obligations of funds are reviewed to ensure that sufficient funds are
available to cover the obligations, that the purpose of the obligations is consistent with
the authorized purposes of the funds or accounts, and that the obligation does not violate
any special or recurring provisions and limitations on the incurrence of obligations.
These internal control requirements apply to all appropriations and funds provided to the
command by apportionments, allocations, allotments, reimbursable orders, or other
means.
All documents associated with financial transactions are well-documented and
accessible per guidance contained in DoD 7000.14-R
, DoD Financial Management
Regulation (DoD FMR), reference (b), and to ensure commands are audit ready.
The proper stewardship of federal resources is a fundamental responsibility of command.
These internal control requirements apply to all appropriations and funds provided to the
command. Further guidance can be found in SECNAVINST 7000.27C and SECNAVINST
5200.35G, DoN Managers’ Internal Control Program (MICP), reference (c).
4.2.1.1 Actions
Commanding officers are obligated to take all necessary actions to establish accountability
and enhance the administrative control of funds, including:
Hiring a qualified Comptroller and establishing an organizational structure which provides
unfettered access and a direct reporting chain from the Comptroller to the commanding
officer.
Establishing and maintaining adequate fiscal controls to prevent over-authorization, over-
commitment, over-obligation, or over-expenditure of funds made available to the activity.
Prompt reporting of any violation is also required.
Issuing an activity instruction providing for the authority, responsibility, and procedures
required in the administrative control of funds.
Delegating funds administration authority to individuals in the Comptroller organization at
the appropriate level to ensure that the individuals are personally aware of the necessary
detail to establish total accountability. These funds administrators should be in a position
that enables them to provide approval or disapproval of financial transactions. Overall
financial management remains the responsibility of the activity Comptroller.
Ensuring that subordinates delegated the authority to act as funds administrators are
authorized in writing, by name, clearly specifying the extent of the authority.
Ensuring that delegated funds administrators are familiar with the statutory
responsibilities inherent in the administration of funds.
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Comptroller
The Comptroller is the senior financial manager within the SUPSHIP command and the chief
financial advisor to the Supervisor. Responsibility for the command’s financial management
and integrity is inherent in this position. The Comptroller shall ensure that the requirements
of DoD FMR are met. In addition, the Comptroller will establish a system of internal controls
to ensure all government resources are used efficiently and effectively to achieve intended
program results, consistent with applicable laws and regulations, and in a way that minimizes
the potential for waste, fraud and mismanagement.
As referenced in enclosure (1) of SECNAVINST 7000.27C
, the Comptroller organization has
overall responsibility for financial management in six major functional areas:
Budget Formulation includes those actions performed in development, review,
justification, and presentation of budget estimates and requires organizations consider
expected demand and the resources required to meet that demand. The focus is on
prioritizing these requirements and requesting adequate resources to achieve the highest
priorities in each year. It also creates a baseline against which actual results can be
compared.
Budget Execution encompasses those budgetary actions required to effectively and
efficiently accomplish the programs for which funds were requested and appropriated.
The process must ensure funds are administered in accordance with applicable laws,
administrative policies and regulations of higher authority.
Managerial Accounting concepts and standards are aimed at providing reliable and
timely information on the full cost of programs. It involves establishing accounting control
over assets provided to the command and the accumulation and preparation of financial
information on a regular basis for analysis and decision-making.
Program Analysis is the process of identification, measurement, analysis, interpretation,
and communication of financial information. This information is used by management to
plan, evaluate, make decisions, and improve operational efficiency within an organization
and assure appropriate use of, and accountability for, its resources.
Performance Measurement is the process of tying financial data to results. It
emphasizes objectively assessing operational performance and effectiveness using
valid, identifiable criteria; analyzing data, information and results; identifying trends and
deviations; and projecting future outcomes to guide programmatic decision-making and
risk management. Because it measures progress towards achievement of goals and
objectives, it is also a long-term planning tool that can justify resource allocation.
Audit Readiness is a state of being prepared at all times to demonstrate proper manual
and automated processes and documentation (e.g. process controls, financial controls,
Information Technology (IT) controls) that are executed in accordance with policy and
appropriate accounting standards. SUPSHIPs can maintain a constant state of audit
readiness by having business processes that are sustainable, traceable and repeatable.
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Inherent in the Comptroller’s responsibilities are the requirements to:
Guard against inadvertent or deliberate violations of statute or regulation
Ensure prompt recording of authorizations, commitments and obligations in budgetary
accounts
Monitor the recording of assets, liabilities and expenses in proprietary accounts
Monitor the processes of pre-validation and certification of payments
Review outstanding commitments and obligations to ensure they are valid
Match disbursements to obligations and accounts payable
Issue and accept funding documents which obligate direct appropriations, working capital
or customer funds
Ensure timely billing of costs incurred against funding documents and the prompt
matching of collections associated with those billings
Certify completeness and accuracy of those transactions included in financial statements
and reports prepared by the Defense Finance and Accounting Service (DFAS) on behalf
of the activity
Accountable Officials
An accountable official is a member of the military or a DoD civilian to whom public funds are
entrusted or who participates in the process of certifying vouchers for payment. Individuals
who are delegated authority by the commanding officer to authorize, commit, obligate, and
expend specific funds related to a specified authority and responsibility are agents of the
Comptroller.
Comptroller personnel are responsible for certifying fund availability and assignment of
proper funding citations on commitment and obligating documents. However, a certification
of fund availability is not a certification for payment. A Departmental Accountable Official
(DAO) is a government employee who participates in the process of certifying vouchers for
payment. Certifying officers and DAO are both considered accountable officials. Certifying
officers ensure transactions are properly documented and computed correctly according to
source documents and that they are correct and proper for payment.
CERTIFYING OFFICERS: Certifying officers must have knowledge, background or
experience in the preparation of a voucher for payment. In support of voucher certifications,
they must check the accuracy of facts stated on a voucher and, in supporting documentation,
verify the computation and determine the legality of a proposed payment. All certifying
officers must have completed an approved certifying officer legislation training course
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applicable to their mission area within two weeks of their appointment and refresher training
annually.
DAOs: DAOs provide information, data or services that certifying officers rely on to certify
vouchers. Examples include: employees who approve vouchers for payment, travel
authorizing officials, purchase cardholders, and officials who approve time and attendance
records. These officials are responsible for providing timely and accurate data to ensure that
payments are supportable, legal and computed correctly. 31 USC 3528
, Responsibilities
and Relief from Liability of Certifying Officials, reference (d), applies.
Certifying officers and DAOs are to be designated in writing using a DD577 which identifies
the types of payments, roles and responsibilities. Both certifying officers and DAOs are
required to be familiar with their responsibilities as detailed in
31 USC 3528 and DoD FMR
Volume 5 Chapter 5 as they are responsible for providing technical input to financial
management processes and under Public Law 104-106 Section 913, reference (e), they
“shall be pecuniarily liable for any wrong payment or over-obligation of government funds
resulting from his or her negligent performance of duties.” For this reason, accountable
officials must uphold the highest standards with regard to proper payments and obligations of
federal funds.
Fiscal Law and Regulations
SUPSHIP funding must be administered in accordance with laws established by Congress,
as well as policies and regulations promulgated by the Navy and DoD, to enforce the
provisions of proper financial management. The Comptroller is the sub-allocation holder,
and with the Supervisor, is ultimately responsible for establishing tight fiscal controls. The
Comptroller will obtain guidance, as needed, from the NAVSEA Comptroller to resolve any
questions on the interpretation of fiscal laws and regulations.
Purpose, Time and Amount
Purpose, time and amount limit the availability of budgetary resources for obligation and
expenditure. The laws that establish funding control requirements are listed below. There
are three laws that apply to amount violations, which form the cornerstone of the Anti-
Deficiency Act (ADA). Violations of the Purpose and Time statutes may result in an ADA
violation if insufficient funds are available in the correct appropriation to rectify the error.
PURPOSE (Necessary Expense Doctrine): 31 USC 1301(a)
, Application, reference (f),
states that “appropriations shall be applied only to the objects for which the
appropriations were made except as otherwise provided by law.” There is no
requirement to report a violation of this statute. The accounting, however, must be
corrected to reflect the proper funding. This accounting correction can lead to a
reportable violation of the ADA if the proper funds were not available at the time of the
obligation or expenditure.
TIME (Bona Fide Needs Rule): 31 USC 1502, Balances Available, reference (g),
states that “the balance of an appropriation or fund limited for obligation to a definite
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period is available only for payment of expenses properly incurred during the period of
availability or to complete contracts properly made within that period of availability and
obligated consistent with section 1501 of this title. However, the appropriation or fund is
not available for expenditure for a period beyond the period unless otherwise authorized
by law.”
AMOUNT (ADA): 31 USC 1341
, Limitations on Expending and Obligating Amounts,
reference (h), states that “an officer or employee of the United States may not (A) make
or authorize an expenditure or obligation exceeding an amount available in an
appropriation or fund for the expenditure or obligation; (B) involve the Government in any
contract or other obligation for the payment of money before an appropriation is made,
unless authorized by law.”
AMOUNT (ADA): 31 USC 1342, Limitation on Voluntary Services, reference (i), states
that no officer or employee of the United States will accept voluntary services not
authorized by law, except in cases of emergency involving safety of human life or
protection of property.
AMOUNT (ADA): 31 USC 1517, Prohibited Obligations and Expenditures, reference (j),
states that an officer or employee of the United States may not make or authorize an
expenditure or obligation exceeding an apportionment or the amount permitted by
regulations prescribed.
Anti-Deficiency Act Violation Reporting
When an obligation or expenditure of funds in excess of the amount available in an
appropriation occurs, the violation must be reported in accordance with the
Financial
Management Regulation (FMR), Volume 14. If a violation occurs at the SUPSHIP level, the
SUPSHIP Comptroller is obligated to notify the Supervisor of the violation within ten working
days and must immediately contact SEA 04Z and SEA 01 with all relevant details. NAVSEA
will conduct a preliminary investigation, to include the advice of legal counsel, to determine if
a violation has occurred and the nature and scope of the violation.
Depending upon the findings and if sufficient funds exist within the appropriation at the
NAVSEA headquarters level, the issue may be resolved in-house. If a violation is confirmed
which cannot be resolved at the Headquarters level, the results of the preliminary review
must be submitted up the chain-of-command to the Assistant Secretary of the Navy
(Financial Management and Comptroller), who will review and forward to the Undersecretary
of Defense (Comptroller), who will perform a final review and determination and, when
necessary, prepare the letters reporting the violation to the President, the Office of
Management and Budget and Congress.
Anti-Deficiency Act Violation Penalties
Penalties for violation of 31 USC 1341 and 1342 are contained in 31 USC 1349, Adverse
Personnel Actions, reference (k), and 31 USC 1350, Criminal Penalty, reference (l), while
penalties for violation of 31 USC 1517 are contained in 31 USC 1518, Adverse Personnel
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Actions, reference (m) and 31 USC 1519, Criminal Penalty, reference (n). In both cases,
violators are subject to appropriate administrative discipline including, when circumstances
warrant, suspension from duty without pay or removal from office. For knowing and willful
violations, the penalty is a fine of not more than $5,000, imprisonment of not more than two
years, or both.
Types of Appropriations
Appropriations
An appropriation is the authority provided by an Act of Congress to incur obligations for
specified purposes and to make payments for them out of the Treasury. The following is a
brief description of the types of appropriations often encountered by SUPSHIPs. They are
generally classified as either expenses or investments. Expenses are the costs incurred to
operate and maintain the organization. Investments are costs that result in the acquisition of,
or an addition to, end items. Refer to the Department of the Navy Financial Policy Manual,
NAVS0 P-1000, reference (o), and DoD FMR Volume 1
for more detailed explanations of
appropriations.
4.4.1.1 Operations & Maintenance, Navy (O&M,N)
O&M,N funds are used for expenses, not otherwise provided for, necessary for the operation
and maintenance of the Navy and Marine Corps, as authorized by law. Per the
Expense/Investment criteria, equipment purchases under this appropriation are limited to a
system unit price of less than $250,000. This limitation is subject to change by Congress,
and the current limitation is contained in the DoD FMR Volume 2A. O&M,N funds are
available for new obligations for one fiscal year and are appropriated and authorized for use
on an annual basis. This appropriation funds SUPSHIPs’ operations and includes salaries,
and general and administrative (G&A) costs. G&A includes the costs necessary to support
the SUPSHIP workforce and typically include costs for IT, travel, and training.
4.4.1.2 Operations & Maintenance, Naval Reserve (O&M,NR)
O&M,NR funds are used for expenses, not otherwise provided for, necessary for the
operation and maintenance, including training, organization, and administration, of the Navy
Reserve; repair of facilities and equipment; hire of passenger motor vehicles; travel and
transportation; care of the dead; recruiting; procurement of services, supplies, and
equipment; and communications. Equipment purchases under this appropriation are limited
to a unit price of less than $250,000. O&M,NR funds are available for new obligations for
one fiscal year and are appropriated and authorized for use on an annual basis.
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4.4.1.3 Shipbuilding and Conversion, Navy (SCN)
SCN funds are used for investments to finance the construction of new ships and conversion
of existing ships, including service life extensions and nuclear refueling overhauls. Included
in the SCN appropriation are hull, mechanical and electrical equipment, electronics, guns,
torpedo and missile launching systems, and communications systems. It also includes plant
equipment, ship outfitting and post-delivery projects, machines, and tools. This appropriation
is a multi-year appropriation and normally remains available for obligation for five fiscal years
or the obligation work limiting date (OWLD) of the ship under construction. The OWLD is
established as 11 months following completion of fitting out the ship, and the OWLD date of
the last hull in a class of ships governs when the appropriation is scheduled to expire.
NAVSEA 01 has created an SCN Desk Guide**
to assist in the execution of SCN funds.
4.4.1.4 Weapons Procurement, Navy (WPN)
WPN funds are used for investments to finance the procurement of missiles, torpedoes,
guns, munitions, and supporting equipment, and the installation of modernization equipment.
This appropriation is a multi-year appropriation and remains available for new obligations for
three fiscal years.
Other Procurement, Navy (OPN)
OPN funds are used for investments to finance the procurement, production and
modernization of equipment not otherwise provided for. Such equipment ranges from the
latest electronic sensors to training equipment and spare parts. The system unit price of this
equipment must be in excess of $250,000. This appropriation is a multi-year appropriation
and remains available for obligation for three fiscal years.
4.4.1.5 Research, Development, Test and Evaluation (RDT&E)
RDT&E funds are used for expenses and investments for the development of a new system,
such as basic and applied research, advanced technology development, demonstration and
validation, engineering development, developmental and operational testing, and evaluation
of test results. The cost of operation of dedicated research and development installations
and activities are also appropriated under RDT&E. This appropriation is a multi-year
appropriation and remains available for obligation for two fiscal years; however, RDT&E
follows an incremental funding policy and is budgeted to cover the costs expected to be
incurred during a 12-month period.
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4.4.1.6 Navy Working Capital Fund (NWCF)
The Navy Working Capital Fund (NWCF) is a branch of the family of DoD Working Capital
Funds. The NWCF is a revolving fund, an account or fund that relies on sales revenue
rather than direct Congressional appropriations to finance its operations. It is intended to
generate adequate revenue to cover the full costs of its operations, and to finance the fund’s
continuing operations without fiscal year limitations. A revolving fund is intended to operate
on a break-even basis over time; that is, it neither makes a profit nor incurs a loss.
SUPSHIPs are not NWCF activities, but purchase services from, or work with, NWCF
activities.
On occasion, program offices provide funding to NWCF activities for supplies and/or
services. If that funding needs to be placed on a ship building contract, the originating HQ
WBS element needs to be used to create purchase requests rather than using a WCF
reimbursable network activity.
4.4.1.7 Foreign Military Sales (FMS)
FMS trust fund is a transfer from Department of Treasury, through DoD to the Department of
Navy. FMS case funding is a no-year appropriation advance to finance the cost of FMS
purchases. The associated overhead, which is a one-year appropriation is paid for by FMS
Contract Administration Service (CAS) funding.
4.4.1.8 National Defense Sealift Funds (NDSF)
NDSF are used for the construction, operation, maintenance, and support of strategic sealift
assets, such as dry cargo/ammunition ships (T-AKE) and expeditionary platforms like mobile
bases (T-ESB) and fast transports (T-EPF). The NDSF appropriation is a multi-year
appropriation and shall remain available for obligation for five fiscal years.
Budgeting and Accounting
SUPSHIP Mission Budgets
Funding and manpower controls evolve over time and are based on Program Objective
Memorandum (POM) requests as part of the Planning, Programming, Budgeting and
Execution (PPBE) process within DoD. This process for SUPSHIPs begins 30 months in
advance of the beginning of an execution year. The SUPSHIP Workforce Forecasting Tool -
Pricing Model (SWFT-PM) is the model used to project future year manpower and funding
requirements.
Annual Financial Management Plans are developed by SEA 04Z1 for the SUPSHIP
community and provided to SEA 01 for review, consolidation, and integration into NAVSEA’s
submissions to the Department of Navy, Office of the Secretary of Defense and President’s
budget requests. These budgets normally cover the current year and the next fiscal year,
commonly referred to as “the budget years”. Once financial controls for a fiscal year are
known, the division of mission funding to the individual SUPSHIPs is calculated based on
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projected manning requirements (end strength and Full-Time Equivalent (FTE) controls) and
the amount of funding available in the execution year.
During the year of execution, funds are issued by NAVSEA to the SUPSHIPs on a quarterly
basis using fund centers and functional areas within the Navy Enterprise Resource Planning
System (Navy ERP). The allocations are based on obligation phasing plans developed
between the SUPSHIP Comptrollers and SEA04Z1. Adjustments can occur at any time
during the year of execution to accommodate emergent requirements.
SUPSHIPs must review budget requirements quarterly. Requests for adjustments
(increases and decreases) in a quarterly cash allocation or the annual planning amount will
be provided to SEA04Z1 for coordination. In addition, NAVSEA 04Z will conduct a mid-year
review of SUPSHIP mission funding during the January-March timeframe. If a significant
shortfall exists, the SUPSHIP will provide detailed justification to SEA 04Z1 for inclusion in
NAVSEA mid-year review requests.
Navy Enterprise Resource Planning (Navy ERP)
Navy ERP is an integrated financial, acquisition and logistics information technology system
that provides financial and budgetary management for Navy System Commands
(SYSCOMs). It is deployed to the following SYSCOMs and their field activities: Naval Sea
Systems Command (NAVSEA), Naval Air Systems Command (NAVAIR), Naval Supply
Systems Command (NAVSUP), Space and Naval Warfare Systems Command (SPAWAR),
the Strategic Systems Program (SSP), and the Office of Naval Research (ONR). For these
commands, it is the financial system of record. The system interfaces with many external
automated systems to exchange acquisition, financial, payment, manpower and personnel,
and logistics data.
NAVSEA’s transition into Navy ERP began on 1 October 2010. At that point, Navy ERP
became NAVSEA’s system of record for financial transactions using FY11 funds, with the
exception of ship construction or “complex” contracts, which were delayed until 1 April 2011
while the development and testing of ship construction functionality was completed. The
NAVSEA general fund decided not to convert their legacy data into Navy ERP. As a result,
FY10 and prior funding retain the Standard Accounting and Reporting System (STARS) as
the financial system of record, while any transactions using FY11 funding and beyond are
completed in Navy ERP. The only exception would be some FY11 funds that needed to be
obligated on contracts between 1 October 2010 and 1 April 2011, prior to the complex
contracting functionality deploying.
Navy ERP is used by NAVSEA HQ to receive and distribute funding, and by the SUPSHIP to
establish obligations and commitments, create purchase requests and funding documents,
make payments, perform financial reporting, provide financial auditability, and perform
timekeeping. There are workflows within Navy ERP that route documents for approval via
predetermined steps to ensure that funding transactions are appropriately authorized and
valid. Navy ERP also has a document management system that allows attachments to
provide additional information on transactions (such as purchase requests, sales orders, and
project structures) and for auditability. As an integrated system, financial managers, project
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offices, and contracting officers all have access to the areas they need to perform work
within the system, and although each group has different responsibilities, they are looking at
the same data to accomplish it.
4.5.2.1 Roles in ERP
Navy ERP relies on specific role assignments for access. Roles are requested via a system
called Access Enforcer. Role based training is required prior to obtaining a role, and roles
are monitored closely by the individual commands and the NAVSEA ERP Business Office
(NEBO) to ensure access to information and transactions are provided on an as-needed
basis. In addition, some role combinations are restricted and/or require specific justification
as a part of management and controls that help ensure the accountability of financial data
and prevent waste, fraud, and abuse. OMB Circular A-123
, Management’s Responsibility for
Enterprise Risk Management and Internal Controls, reference (p), states that internal
controls are an integral part of all financial management processes and requires that
reasonable assurance be taken to ensure effective operations, reliable financial reporting,
and compliance with applicable laws and regulations. Further control activities stated in
Standards of Internal Control in the Federal Government (“Green Book”),
GAO-14-704G,
reference (q), prescribe proper segregation of duties (separate personnel with authority to
authorize a transaction, process the transaction, and review the transaction); physical
controls over assets (limited access to inventories or equipment); proper authorization; and
appropriate documentation and access to that documentation. As a result of this guidance, a
separation of duties (SOD) analysis is required to be completed annually by all NAVSEA field
activities for individuals that possess conflicting role combinations, and justification
documentation is required for all SOD role combinations that will be maintained.
4.5.2.2 ERP Site Leads
Navy ERP touches everyone and many processes at the SUPSHIPs. It is important to be
aware of methods to troubleshoot any issues that might arise. Each NAVSEA command,
including the SUPSHIPs, has a site lead for ERP. These site leads can assist in getting the
information necessary to obtain roles or assist in solving other Navy ERP issues that may
arise. The first step and fastest way to resolve an issue is to leverage subject matter experts
within the command or within the SUPSHIP community. If that fails, there is a HEAT ticket
system on the Navy ERP website for registered issues. These HEAT tickets will initially go
to the Navy ERP help desk at NAVAIR, and if they cannot be resolved at that level, may be
forwarded to NEBO for resolution. If the NEBO is unable to resolve the issue, it may
continue to the Navy’s ERP Program Office at NAVSUP for resolution.
The Standard Accounting and Reporting Systems (STARS)
STARS was the official accounting system for NAVSEA and most Navy organizations until
the implementation of Navy ERP. Most Navy System Commands have now transitioned to
Navy ERP although Fleet units are still using STARS. NAVSEA financial data resides in
STARS for all FY10 and prior years. The SUPSHIPs have access and use both the STARS-
HCM and the STARS-FL modules to maintain legacy accounting and general ledger data. A
description of the current STARS sites is below:
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STARS-FL Charleston Official accounting system for SUPSHIP Mission Funding and
Reimbursable Funds Administration through FY10. SUPSHIPs continue to use this site to
reconcile FY10 and prior year accounts.
STARS-FL Norfolk Official accounting system for Fleet funded ship work actions.
SUPSHIPs use this site to reconcile accounts prior to FY11. Since implementing ERP in
FY11 SUPSHIPs only use STARS-FL Norfolk to assist in the reconciliation of direct cited
actions.
STARS-HCM Official accounting system for the Navy’s System Commands and PEOs
prior to ERP. These commands implemented ERP at different times and vary as to the
conversion of legacy data. Ship work funded in STARS HCM that was not converted to ERP
will continue to be reconciled from STARS. For NAVSEA General Fund, legacy data was not
converted, and STARS HCM remains the accounting system for all funds FY10 and prior.
These funds are referred to as “legacy funds”. Some FY11 funds are maintained in STARS-
HCM because they were obligated in FY11 prior to the April 1, 2011 Complex Contract
implementation in Navy ERP.
Purpose of Funds Provided to SUPSHIPs
SUPSHIP Mission Funds
The SUPSHIPs are mission-funded activities financed with appropriated O&M,N funds.
Department of the Navy Financial Policy Manual, NAVSO P-1000
, provides guidance in
budget execution and financial management of funds used to finance the salaries and
general and administration expenses (G&A) incurred in the daily operation of the SUPSHIPs.
Ship Construction Funds
The Program Executive Offices (PEOs) budget for and fund ship new construction programs
and carrier refueling overhauls (RCOH) from SCN and RDT&E appropriations. Based on
program managers’ estimates, NAVSEA prepares annual budget requests which are
submitted for review. The budget process follows the same process as SUPSHIP O&M,N,
and calls for sequential submissions up the chain starting with the Navy Budget in the
summer, the Office of the Secretary of Defense (OSD) Budget normally submitted in the fall,
and culminates in the President’s Budget submission to the Office of Management and
Budget (OMB) in February of each year. Once the funding is made available to the program
offices in the year of execution, funding for various items is made available to the SUPSHIPs
in Navy ERP via a Work Breakdown Structure Element (WBSE) as part of a Budget
Structure. The program office creates a Budget Structure that projects their program
spending plan for that year/appropriation. Each WBS reflects a category of cost for the
program. The WBSE is communicated to the SUPSHIP typically through an email and gives
the SUPSHIPs direction on execution (purpose and amount).
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Foreign Military Sales (FMS) Funds
Foreign Military Sales (FMS) provide military assistance through the sale of defense articles
and services to eligible foreign governments and international organizations. Each FMS
project is assigned a case order number for accounting and management purposes. The
United States normally receives full reimbursement for costs associated with these sales.
Most sales are made on a "dependable undertaking" basis. To ensure that the U.S.
Government will not suffer a loss resulting from the sale, the foreign government agrees to
provide cash to cover payments to contractors and to reimburse the Department of the Navy
for work performed. Initially, most obligational authority is in the form of unfunded contract
authority where the cash needed for expenditures is not available. Defense Finance and
Accounting Service (DFAS) is responsible for obtaining the required cash, as needed, from
foreign customers on a quarterly basis. DFAS applies for FMS Authority when an invoice
has FMS lines of accounting. All other lines on the invoice must be pre-validated before
DFAS will apply for the FMS authority. FMS authority is only granted after the first Friday of
the month and not after the third week of the month. Monetary rates come out at the
beginning of the month and DFAS wants to ensure that the current rate is used, hence not
applying until the first Friday. DFAS will not apply after the third week of the month because
they have to ensure that the invoice pays during that month and is paid at the previous rates.
Funding for labor, material, contracts, travel, accessorial, and all other costs of work directly
identifiable to an FMS case is sent from NAVSEA 01 to SUPSHIP via an ERP Direct Cite
(RX) document in ERP. Management Information System for International Logistics (MISIL)
is the financial system of record for FMS. Obligations are created in the ERP system, and
also posted in MISIL. Disbursements are merged from Wide Area Workflow (WAWF) to
MISIL. Funding for FMS Contract Administration Services (CAS) is provided to SUPSHIP
from NAVSEA 01 via an ERP reimbursable (WX) funding document. CAS charges are
expenses not directly identifiable to an FMS case, and consist of administrative overhead
labor and other costs that support all FMS projects. DoD FMR Volume 15
provides
additional information regarding financial management of FMS.
Ship Repair Funds
The Fleet Commands (FLTCOMs) budget and fund ship repairs from O&M,N and O&M,NR
appropriations, as applicable. The funds are normally authorized to SUPSHIP for specific
use by the Type Commander (TYCOM) responsible for a ship. These funds pay for
contractual costs of authorized repairs and for incidental costs, which include:
Naval Supervising Activity (NSA) material
Travel and salary cost for overseas ship checks
Alterations Equivalent to a Repair (AERs) and preparation of drawings or sketches to
be contracted out
Electronics field changes on installed equipment
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SUPSHIPs receive ship repair funds from FLTCOMs on NAVCOMPT Form 2276, commonly
referred to as a Request for Contractual Procurement (RCP), and NAVCOMPT FORM 2275
Order for Work and Services. Details on ship repair funds, including current year and prior
year availabilities, may be found in the Department of the Navy Financial Management Policy
Manual,
NAVSO P-1000, paragraphs 074200 and 074220.
Fleet Modernization Program (FMP) Funds
Installation of equipment is funded with the OPN appropriation in the same fiscal year as
funds that procure the associated equipment. NAVSEA provides funds to SUPSHIPs on
WBS elements for the accomplishment of Title “K” Ship Alterations (SHIPALTs), electronics
field changes for installed equipment, and ordnance alterations (ORDALTs). This funding
covers expenses incidental to the accomplishment of alterations, such as:
Preparation and reproduction of alteration drawings contracted out
Travel costs, other than local, for overseas shipchecks of alterations
Title “D” and “F” SHIPALTS are addressed in paragraph 4.7.2.
Berthing Funds
Berthing is a very complex issue due to the various types of funds that are used to pay these
expenses. 10 USC 7572
, Quarters: Accommodations in Place of for Members on Sea Duty,
reference (r), provides for accommodation of members on sea duty or assigned to duty in
connection with commissioning or fitting out of a ship deprived of quarters, onboard a ship
because of repairs, because the ship is under construction and is not yet habitable, or
because of other conditions that make quarters uninhabitable. Expenses can be funded by
SCN, TDY or military allowances, depending on the type of orders issued to the sailor. For
SCN funded ship availabilities, the cost of berthing is part of the investment cost of the
availability and may be funded by NAVSEA using SCN or O&M,N funds, depending on the
Program Office’s election of funds at the beginning of the availability and must remain in the
chosen appropriation for the life of the availability. For O&M,N funded ship availabilities, the
cost of berthing is funded by the FLTCOM in the O&M,N appropriation. Berthing for
crewmembers of new construction platforms varies based on several factors.
For surface ships, crew members are ordered to ships under construction as either a
member of the Pre-Commissioning Unit (PCU) that is geographically located at the
shipbuilder’s yard, or as part of the Pre-Commissioning Detachment (PCD) which is located
at a fleet concentration area, normally in the projected homeport of the ship being built. For
nuclear-powered ships, crew members are ordered directly to the PCU at the shipbuilder’s
yard. PCU members are ordered to the ship in increments. Some of these increments are
for a period of time greater than 180 days before delivery. In these circumstances, the
member is issued orders “For Duty In Connection With Fitting Out (DUTY CFO) (ACC-106)”,
which allows the member to execute a Permanent Change of Station (PCS). The member is
entitled to:
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Move family members/household goods to the PCU
Receive basic allowance for housing (BAH) or government quarters, if available
A second set of PCS orders will be issued entitling the member to move family members and
household goods to the ship's ultimate homeport once it has been designated.
If the crew member will be at the PCU less than 180 days, the orders are written as
Temporary Duty In Connection With Fitting Out (TEMDU CFO/ACC-352), with the ultimate
duty station designated as the ship in its selected homeport. These orders do not authorize
PCS to the shipbuilder’s yard. The member is entitled to per diem while on TEMDU at the
PCU, and to move family members/household goods to the post-commissioning homeport
after the Chief of Naval Operations (CNO) makes the official homeport announcement. Per
diem ceases at the scheduled date of delivery for surface ships and at the designated move
aboard date for carriers and submarines. Carrier and submarine move aboard dates are
generally earlier than the delivery date. At delivery the ship should be habitable. If the Navy
accepts delivery of a ship that is uninhabitable, program managers are responsible to pay for
pre-com crew housing using SCN end cost or O&M,N funds until the ship becomes
habitable.
The administrative division of the PCU processes military orders for assigned crewmembers
and verifies who is entitled to government quarters. The PCU is also responsible for
providing that information to the installation responsible for arranging military or commercial
berthing. If SCN funded berthing is required, the SUPSHIP Comptroller receives funding
from the program office in order to pay the cost of the required berthing. Certification of
entitlement from the PCU is used to validate the payment. After commissioning, berthing
expenses become the responsibility of the Fleet.
The feeding or messing of the pre-com crews is not an allowable cost. Military members
receive a Basic Allowance for Subsistence (BAS) which is a cash allowance to offset the cost
of a member’s meals.
Commander Naval Installations (CNI) Funds
Commander Naval Installations Command (CNIC) has overall shore installation
management responsibility and authority as the Budget Submitting Office (BSO) for
installations support and is the Navy point of contact for installation policy and program
execution oversight. Base support responsibilities vary by region and SUPSHIP. In some
cases, funding is transferred to the SUPSHIPs for purchase of cell phones, long distance
service, and vehicles.
Environmental Compliance Oversight Funds
Environmental Compliance Oversight funds are used to support the SUPSHIPs’
Environmental, Safety and Health (ESH) programs. This funding supports salaries of civilian
personnel involved in ESH programs, projects to ensure that contractor oversight in the ESH
arena is effectively conducted, and awareness training that is provided to the contractor,
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SUPSHIP and ship’s force personnel. Environmental funding is coordinated between
NAVSEA 04Z and 04RE and provided to the SUPSHIPs as part of mission funding.
Reimbursable Work Orders (RWO)
In addition to the funding provided for contractual obligations, SUPSHIP customers provide
reimbursable funding to pay for non-mission work accomplished by the SUPSHIPs.
Examples include out-of-build yard post shakedown availabilities (PSAs), Deputy Program
Manager’s Representatives and production controllers. This funding is provided annually,
and is documented via the RWO process. To determine whether work is considered mission
or non-mission, see the SUPSHIP Funding Decision Tree, Figure 4-1
.
Funding Methods
Mission Funding Allotment
An allotment is a distribution of budget authority to an execution level accounting entity. It
authorizes the incurrence of obligations in a specified amount for the purpose of the
SUPSHIP mission as described in the budget submission. NAVSEA provides O&M,N
funding to each SUPSHIP’s highest level fund center within Navy ERP. The SUPSHIP
Comptroller monitors and controls the allocation to lower levels within the command using
statistical project structures. All funding is required to be administered in accordance with
existing laws and statutes, some of which are described in paragraph 4.3
of this chapter.
Reimbursable Orders
Reimbursable orders are written agreements between components of the Federal
Government requiring the performance of work or services by one component and payment
by the other component which cover the cost of property, work or services. The DoD FMR
Volume 3, Chapter 15 provides general reimbursement policy. DoD FMR Volume 11A
contains more detailed guidance regarding reimbursable operations, policies and
procedures. All funded, reimbursable orders, including those of an Economy Act Order
(EAO) per Assistant Secretary of the Navy (Financial Management and Comptroller)
(
ASN(FM&C)) memo dated 3 May 2002, reference (s), are subject to the recipient activity
projecting that at least 51 percent of the funds will be used for "in-house" work. “In-house”
work is defined as the cost of all direct labor, materials and supplies, travel and minor
equipment. If less than 51 percent of the work will be in-house effort, the funding for tasks to
be contracted out should be provided on a Request for Contractual Procurement (RCP).
SUPSHIPs should not accept reimbursable orders when no in-house salaries are to be
charged, with the exception of reimbursable documents for the sole purpose of executing
MILSTRIP requisitions. MILSTRIP requisitions are a specific exception to the 51% rule
granted due to limitations in the ERP system. Reimbursable order accounting requires
additional SUPSHIP effort in order to support documentation and accounting workload.
Policy
In accordance with FMR Volume 11A, an activity performing a service or furnishing material
to another entity shall be reimbursed unless the performing entity has been provided
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appropriated funds for that purpose. Because SUPSHIPs are provided appropriated funds
for the purpose of performing their assigned mission, they may only accept reimbursable
orders for work that falls outside the scope of their mission. Failure to comply with this
requirement could result in a violation of 31 USC 1301 (Purpose Act), and possibly
31 USC
1341 (ADA) as well.
The SUPSHIP Funding Decision Tree, Figure 4-1, was developed to assist SUPSHIPs in
determining whether a customer requested task falls within or outside the scope of the
SUPSHIP mission. The decision tree asks a series of general questions that apply to all
tasks, and if necessary, follows with additional questions based on the nature of the tasking
and the mission area under which the tasking would fall. SUPSHIP personnel should
request SEA 04Z1 assistance in resolving any tasking that is not clearly addressed by the
Decision Tree.
4.7.2.1 Types of Reimbursable Orders
Project Order (PO)
A project order is a specific, definite and certain order issued under the authority contained in
41 USC 23
, Orders or Contracts for Material Placed with Government-owned Establishments
Deemed Obligations, reference (t), for the production of material; for repair, maintenance, or
overhaul; or for other specific work and services to be performed. It serves to specifically
define the work to be accomplished and the terms of the order in much the same manner as
contracts with a commercial enterprise. Project orders, once issued, can carry over until
completion. However, similar to contracts, project orders must be for hardware or a 'non-
severable' service only.
Funds shall be obligated when the performing activity signs acceptance of the project order.
The accounting is the responsibility of the accepting activity. The funds provided on a project
order cannot be exceeded without written amendment by the ordering activity and are
subject to the same fiscal limitations that are contained within the appropriation from which
they are funded. Expiration dates of project orders may not extend beyond the point in time
in which the ordering appropriation will be cancelled (generally, five years after the
appropriation expires for new obligations). Because of the expiring funds limitation, the order
must stand the test of a bona fide need to be issued in the current fiscal year and a bona fide
intent that the performing activity intends to proceed with the execution of the request without
undue delay.
Project orders are subject to the recipient activity projecting that at least 51 percent of the
funds will be used for "in-house" work. If less than 51 percent of the work will be in-house
effort, the funding for tasks to be contracted out should be provided on an RCP, Request for
Contractual Procurement. When funding is sent via a Project Order to another Navy activity,
for legacy funds, the NAVCOMPT Form 2275 is used, however in ERP the
NAVCOMPT
Form 2276A is generated.
Economy Act Order (EAO)
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Like the project order, an Economy Act Order provides authority for federal agencies to order
goods and services from other federal agencies, including other military departments and
defense agencies. The order is issued, however, under the authority contained in 31 USC
1535, Agency Agreements, reference (u), and is intended for work or services of a recurring
nature where the scope of the work is not specific. These orders are typically used for inter-
service support agreements for services such as administrative or janitorial work, utilities,
and transportation. However, services such as testing and evaluation and level of effort
work-years may be covered by an EAO. Funding for EAOs for legacy funds is sent using the
NAVCOMPT Form 2275, however in ERP a NAVCOMPT Form 2276A is generated. This
form is commonly called a “work request.” EAOs are subject to the recipient activity
projecting that at least 51 percent of the funds will be used for "in-house" work. If less than
51 percent of the work will be in-house effort, the funding for tasks to be contracted out
should be provided on an RCP, Request for Contractual Procurement. MILSTRIP
requisitions, funded reimbursably from funding sources external to ERP, are a specific
exception granted due to limitations in the ERP system.
Funds for EAOs are obligated upon documented acceptance by the performing activity. The
accounting for these funds becomes the responsibility of the performing activity. The funds
provided by an EAO cannot be exceeded without written amendment by the ordering activity.
An EAO citing an annual or multi-year appropriation must serve a bona fide need arising or
existing in the fiscal year (or years) for which the appropriation is available for obligation.
Work requests must terminate upon expiration of the appropriation cited on the document.
Military Interdepartmental Purchase Request (MIPR)
MIPRs provide authority to order material, supplies, equipment, work, and services between
Department of Defense activities and federal agencies. MIPRs can be received or issued by
SUPSHIPs for orders placed with non-Navy DoD activities and federal agencies via
DD Form
448. For MIPRs issued by the SUPSHIPs, obligations will be recorded upon contract award
for direct cite MIPRs, and upon acceptance for reimbursable orders. Examples of MIPR use
include: orders placed with the GSA, Federal Prison Industries, Government Printing
Offices, Defense Supply Agencies, printing plants authorized to be established by the Joint
Committee on Printing, and the Navy Publications and Printing Service Management Office.
Many orders placed with these agencies are required by law.
Direct Citations
Direct citations are requests from one government activity to another to obtain material,
equipment or services. The requesting activity provides their accounting data and the
performing activity cites the requesting activity's complete line of accounting directly on the
document. If both activities are in ERP, the line of accounting is conveyed using Budget
Structure WBS elements or Network Activities. For Navy Activities outside of Navy ERP,
requests for Contractual Procurement (RCP) can be issued on either the
NAVCOMPT Form
2276 or 2276A to pass direct citation authority. The accounting function remains the
responsibility of the requesting activity and its AAA. When the performing activity signs
acceptance, they are agreeing to award the contract; however, direct cite obligations are not
recorded until the contract is awarded. The performing activity must comply with fiscal law
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and all restrictive statements contained in the document and ensure that confirmed copies of
the contracts or orders that result are promptly provided to the requesting activity and its
AAA for posting of obligations and expenditures. The reimbursable portion of a NAVCOMPT
2276A will be obligated upon acceptance. The funding cited on the document will not be
exceeded without an amendment issued by the requesting activity.
Budget Structure WBS Elements from ERP Activities
Once a program has created their Budget Structures and associated WBS elements, they
can use those WBS elements to pass funds to other activities for various execution
purposes. For activities within Navy ERP, the Budget Structure WBS element acts for the
line of accounting and is provided for direct citation on contract award, as well as other
funding transactions like outfitting, pre-commissioning, MILSTRIPs, P-Card, etc.
General Classifications of Funds Transactions
All expenditures must be preceded by an authorization to expend from the available funds.
In theory, every transaction progresses through four stages: initiation, commitment,
obligation, and expenditure. The four stages of funds transactions are described as follows:
Initiation: An administrative reservation of funds based on procurement directives,
requests, or equivalent instruments that authorize preliminary negotiations, but require
that funds be certified by the official responsible for the administrative control of funds
before incurrence of the obligation. Initiations are entered into memorandum accounts to
help keep pre-commitment actions, such as approved procurement programs, within the
available subdivision of funds. Initiations identify funds to be set aside for planning
purposes before establishment of commitments or obligations. Initiations will not be
maintained as a part of the official fiscal records. At the field level, this is done on an
exception basis, for example in planning yard contracts.
Commitment: An administrative reservation of funds based on firm procurement
requests, unaccepted customer orders, directives, authorizations to issue travel orders,
or equivalent instruments which authorize the recipient to create obligations without
further recourse to the official responsible for certifying the availability of funds. A
commitment is generally recorded when the Comptroller signs the document to certify
that the funds are available and properly cited for the effort. Only warranted or
authorized personnel can legally obligate government funds. In ERP, a commitment is
recorded when a PR is created and saved. It is then sent through workflow to the
Comptroller for approval before a legal obligation can occur.
Obligation: A legally binding agreement or action that will result in outlays, immediately
or in the future. An obligation is a recording of funds when an order is placed, contract is
awarded, service is received, travel orders are issued, and similar transactions are
entered into requiring future payment of money in an agreed amount. By law, obligations
must be supported by documentary evidence of a mutual agreement in writing. Each
individual transaction must meet the test of the following principles:
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o A determination that the specific goods, supplies or services required according
to a contract entered into or an order placed obligating an appropriation to meet a
bona fide need of the fiscal year charged; and
o Contracts entered into or orders placed for goods, supplies or services will be
executed only with a bona fide intent that the performing activity will commence
work and perform the contract without unnecessary delay.
Expenditure: An accounts payable transaction and its corresponding disbursement that
results in a reflection of expenditures. The Debt Collection Improvement Act of 1996,
Public Law 104-134
, reference (v), requires payments on all federal contracts to be made
via Electronic Funds Transfer (EFT) if the solicitation was issued after June 26, 1996.
DoD FMR Volume 5 Chapter 11 applies. All DoD Vendors are required to be registered
in the System for Award Management (SAM) database as DFAS payment offices and the
SUPSHIPs use the EFT data provided in the SAM in order to issue EFT payments.
There are only limited exceptions to this mandate.
Prompt Payment Act, 5 CFR 1315
In 1982, Congress enacted the Prompt Payment Act, PL 97-177 (now 5 CFR 1315),
reference (w). The Prompt Payment Act was passed to help ensure federal agencies pay
vendors in a timely manner, pay interest when payments are made late, and take discounts
only when payments are made by the discount date. The Prompt Payment Act requires an
assessment of late interest penalties against agencies that pay vendors after a payment due
date. The late payment interest rate was established under the Contract Disputes Act and is
referred to as the "Renegotiation Board Interest Rate," the "Contract Disputes Act Interest
Rate," and the "Prompt Payment Act Interest Rate."
Progress Payments and Prompt Payment Requirements
Per DoD FMR Volume 10 chapter 7, progress payments and interim vouchers on cost
contracts are not subject to the Prompt Payment Act. They are considered to be contract
financing payments and are paid based on specific payment terms contained in the contract.
Department of Defense policy is to make contract financing payments as expeditiously as
possible. The standard due date unless otherwise specified is 7 days for progress payments
on fixed price contracts and 14 days for interim vouchers on cost contracts.
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Figure 4-1: SUPSHIP Funding Decision Tree
Adminis trative
Clerical, legal, personnel
admin, training, ESH, IT
support, etc.
Contracting/Financial
ACO, PCO, MSR/ABR
support, cost accounting,
etc.
Ma ter ia l/ILS
Matl/equipment mgmt,
inventory control, shipping,
receiving, etc.
Technical
Eng, design, waivers/dev, QA,
config. control, testing,
certification, trials, etc.
Sta rt
Project Mgmt/Coord.
Waterfront management &
coordination of a project in
execution/production.
Is task primarily associated
with admin support to the
command (SUPSHIP)?
Is task requested by a
DoD customer?
For repair/modernization/
RCOH work, is task in support
of contract/contractor under
commands cogni zan ce p er
DCMA CAS Directory?
Gener al
No
Yes
Yes
Yes
Yes
Reimb.
Funding
Reimb.
Funding
Mission
Funding
Mission
Funding
Mission
Funding
Is task related to management
of o ff -ship berthing and
messing facilities for ships
for ce?
Is task related to training or
certification of ships force?
Mission
Funding
Does task involve functions
transferred to NAVSUP? (see
NFLC MOA)
Does task involve managing/resolving
tech issues not associated with an
assigned or anticipated contract?
Is task part of preliminary design/build
team processes or IPTs that influence
contract desi gn or d etail d esig n a nd ar e
not an en gineeri ng sur veil lan ce ta sk
per FAR 42.302(40)?
Is task primarily related to
managing material,
equipment, or equipment
maintenance for ships force
work?
Is task primarily associated with
oversight, testing, crew trng/cert, or
trials for major ship systems procured
through a contract not under SUPSHIP
cognizance?
Is task primarily related to maintaining
configuration control of class standard
components?
Is task primarily involved with
managing class-wide or programmatic
issues wi th oth er SUPSH IPs, or with
shipbuilders not under command’s
cognizance?
Is task related to lo ng -term, life cycle
initiatives on one or more in-service
ships?
Pass to
NAVSUP
Reimb.
Funding
Yes
Yes
Yes
No
No
No
No
Yes
Yes
Yes
No
No
No
No
No
Yes
No
Yes
No
No
No
NOTE: If necessary, solicit
RMC support for tasks in
suppor t of repair /moderni zatio n
work that would normally be
performed by local RMC.
Mission
Funding
Yes
No
Yes
Is task related to a cu stom er
teaming or improvement initiative
that requires departure from
SOM gu ida n ce?
Yes
No
No
(see note
below)
Is contract for ship design,
ship construction or repair?
NOTE: If task is a CAS
function but SUPSHIP is not
designated CAS activity,
refer to the appropriate
MOAs between DC MA and
SUPSHIPs.
Is work being performed by
a contr actor assigned i n
CAS-D to a SUPSHIP in
the listed geographic area?
No
Is task non-O&M N fun de d a nd is
the work accomplished by a
production controller or the
deputy PMR in direct support of
the pr ogram?
Is the SUPSHIP the PCO or
assigned as the AC O?
Yes
No
NOTE: N FLC Annex
employees are responsible
for providing their own
equipment but are allowed to
hook up to network due to
collo catio n, so su pp or t is
provided as part of mission
but they provide own equip.
General Function Specific
Yes
Reimb.
Funding
Yes
Is task primarily in support of an
Advance Procurement contract for
which the SUPSHIP is not ACO?
Yes
No
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Chapter 4 Acronyms
AAA Authorized Accounting Activity
ADA Anti-Deficiency Act
AER Alteration Equivalent to a Repair
ASN(FM&C)
Assistant Secretary of the Navy (Financial Management and
Comptroller
BAH Basic Allowance for Housing
CAS Contract Administration Service
CFR Code of Federal Regulations
CNI Commander, Naval Installations
CNIC Commander, Naval Installations Command
CNO Chief of Naval Operations
DAO Departmental Accountable Official
DFAS Defense Finance and Accounting Service
DoD Department of Defense
DoN Department of the Navy
EAO Economy Act Order
EFT Electronic Funds Transfer
ERP Enterprise Resource Planning
ESH Environmental, Safety and Health
FLTCOMs Fleet Commands
FMP Fleet Modernization Program
FMS Foreign Military Sales
FMR Financial Management Regulation
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FTE Full Time Equivalent
G&A General and Administrative
GSA General Services Administration
HQ Headquarters
IT Information Technology
LOA Letter of Authority
MICP Managers’ Internal Control Program
MILSTRIP Military Standard Requisitioning and Issue Procedures
MIPR Military Interdepartmental Purchase Request
MISIL Management Information System for International Logistics
NAVAIR Naval Air Systems Command
NAVCOMPT Navy Comptroller
NAVSEA Naval Sea Systems Command
NAVSEASYSCOM Naval Sea Systems Command
NAVSO-P Navy Financial Policy Manual
NAVSUP Naval Supply Systems Command
NDSF National Defense Sealift Funds
NEBO NAVSEA ERP Business Office
NFLC NAVSUP Fleet Logistics Center
NSA Naval Supervising Activity
NWCF Navy Working Capital Fund
O&M,N Operations and Maintenance, Navy
O&M,NR Operations and Maintenance, Navy Reserve
OMB Office of Management and Budget
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ONR Office of Naval Research
OPN Other Procurement, Navy
ORDALT Ordnance Alteration
OSD Office of the Secretary of Defense
P-Card Purchase Card
PCD Pre-Commissioning Detachment
PCS Permanent Change of Station
PCU Pre-Commissioning Unit
PEO Program Executive Office
PL Public Law
POM/PR Program Objective Memorandum/Program Review
PPBE Planning, Programming, Budgeting and Execution
PSA Post Shakedown Availability
RCOH Refueling Complex Overhaul
RCP Request for Contractual Procurement
RDT&E Research, Development, Test and Evaluation
RWO Reimbursable Work Order
SAM System for Award Management
SCN Ship Construction, Navy
SECNAVINST Secretary of the Navy Instruction
SHIPALT Ship Alteration
SOM SUPSHIP Operations Manual
SPAWAR Space and Naval Warfare Systems Command
SSP Strategic Systems Program
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STARS Standard Accounting and Reporting System
STARS-FL Standard Accounting and Reporting System Field Level
STARS-HCM
Standard Accounting and Reporting System Headquarters
Claimant Module
SUPSHIP Supervisor of Shipbuilding, Conversion and Repair, USN
SWFT-PM SUPSHIP Workforce Forecasting Tool/Pricing Model
SYSCOMs Systems Commands
TDY Temporary Duty
TEMDU CFO Temporary Duty in connection with Fitting Out
TYCOM Type Commander
USC United States Code
WBSE Work Breakdown Structure Element
WBS Work Breakdown Structure
WCF Working Capital Fund
WPN Weapons Procurement, Navy