What is obligation funding

Appropriation Categories are categories of government funding that group funds into areas of interest. Budget authority from Congress is required to incur obligations and pay costs associated with carrying out an acquisition program. Typically, Congress authorizes expenditures through an appropriations act, which details the authorized uses of the funds and the dollar amounts associated with each appropriation.

Definition: Appropriation Accounts are the specific designation of Federal Government funds as contained in an Appropriations Act passed by Congress and signed into law by President with each account having a unique four-digit code.

Appropriation Categories

• Research, Development, Test, and Evaluation (RDT&E): appropriations fund the efforts performed by contractors and government activities required for the Research and Development (R&D) of equipment, material, computer application software, and its Test and Evaluation (T&E) to include Initial Operational Test and Evaluation (IOT&E) and Live-Fire Test and Evaluation (LFT&E). RDT&E also funds the operation of dedicated R&D installations activities for the conduct of R&D programs.
  • Available two (2) Years.
  • Funding Policy: Incremental
  • Procurement: appropriations fund those acquisition programs that have been approved for production (to include Low-Rate Initial Production (LRIP) of acquisition objective quantities), and all costs integral and necessary to deliver a useful end item intended for operational use or inventory upon delivery.
    • Available three (3) Years.
    • Ships available for (5) Years
    • Funding Policy: Full
    • Operation and Maintenance (O&M): appropriations fund expenses such as civilian salaries, travel, minor construction projects, operating military forces, training and education, depot maintenance, stock funds, and base operations support.
      • Available one (1) Year.
      • Funding Policy: Annual
      • Military Personnel (MILPERS): appropriations fund costs of salaries and other compensation for active and retired military personnel and reserve forces based on end strength.
        • Available one (1) Year.
        • Funding Policy: Annual
        • Military Construction (MILCON): appropriations fund major projects such as bases, schools, missile storage facilities, maintenance facilities, medical/dental clinics, libraries, and military family housing.
          • Available five (5) Years.
          • Funding Policy: Full

          Treasury Index Code

          Each Military Department and DoD Wide also has a “Treasury Index Code,” which is a two-digit code (21 for Army, 17 for Navy, 57 for Air Force, and 97 for Defense-Wide) that makes the identifying code for a funding account more specific.

          Main Acquisition Category Guide

          DoD 7000.14-R Volume 2A “Financial Management Regulation (FMR)”: provides general guidance on the formulation and submission of the budget requests to the Office of the Secretary of Defense (OSD). It’s used for a budget review, submission, presentation, and justification to Congress. The guidance for appropriation categories is found in Volume 2A, Chapter 1. The definition from the guidance pertaining to Appropriations is below.

          Guide: DoD Financial Management Regulation 7000.14-A

          Authorization: The act of setting aside funds for specific government purposes. It is the process by which Congress designates a certain amount of money for a particular agency, program, project, or activity. Appropriations are typically authorized through legislation known as appropriations bills, which specify the amounts and purposes for which funds are allocated.

          Appropriations: A provision of legal authority by an act of Congress that permits Federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. An appropriation usually follows the enactment of authorizing legislation. An appropriation act is the most common means of providing budget authority. Appropriations do not represent cash set aside in the Treasury for purposes specified in the appropriation act; they represent limitations of amounts which agencies may obligate during the period specified in the respective appropriation acts. [1]

          AcqNotes Tutorial

          AcqTips:

          • See Authorizations & Appropriations

          AcqLinks and References:

          • [1] DoD 7000.14-R Volume 2A “Financial Management Regulation”
          • Navy Financial Management – Chapter 4
          • DoD Financial Management Overview