Defense Procurement: Full Funding Policy - Background, Issues, and Options for Congress

^Pr^ep^ar^{ed f}^o^r^M^e^m^b^ers^an^d^Com^mⁱ^t^t^ees^of^C^ong^r^e^ss

The full funding policy is a federal budgeting rule imposed on the Department of Defense (DOD)
by Congress in the 1950s that requires the entire procurement cost of a weapon or piece of
military equipment to be funded in the year in which the item is procured. Although technical in
nature, the policy relates to Congress’s power of the purse and its responsibility for conducting
oversight of DOD programs. Support for the policy has been periodically reaffirmed over the
years by Congress, the Government Accountability Office, and DOD.
In recent years some DOD weapons—specifically, certain Navy ships—have been procured with
funding profiles that do not conform to the policy as it traditionally has been applied to DOD
weapon procurement programs. DOD, in recent budget submissions and testimony, has proposed
or suggested procuring ships, aircraft, and satellites using funding approaches that do not conform
to the policy as traditionally applied. DOD’s proposals would establish new precedents for
procuring other DOD weapons and equipment with non-conforming funding approaches. Such
precedents could further circumscribe the full funding policy. This, in turn, could limit and
complicate Congress’s oversight of DOD procurement programs, or require different approaches
to exercise control and oversight.
A principal effect of the full funding policy is to prevent the use of incremental funding, under
which the cost of a weapon is divided into two or more annual portions. Incremental funding fell
out of favor because opponents believed it could make the total procurement costs of weapons
and equipment more difficult for Congress to understand and track, create a potential for DOD to
start procurement of an item without necessarily stating its total cost to Congress, permit one
Congress to “tie the hands” of future Congresses, and increase weapon procurement costs by
exposing weapons under construction to uneconomic start-up and stop costs. Supporters of
incremental funding, however, could argue that its use in DOD procurement programs could
produce certain advantages in terms of reducing disruption to other programs, avoiding
investment bias against very expensive items, improving near-term production economies of
scale, and preserving flexibility for future Congresses to halt funding for weapons under
construction that have become unnecessary or inappropriate.
Congress has several options for responding to recent proposals for procuring DOD ships and
aircraft with funding mechanisms that do not conform to the full funding policy. These options
could have the effect of terminating, modifying, maintaining, or strengthening the full funding
policy. In weighing these options, Congress may consider several factors, including Congress’s
power of the purse, its ability to conduct oversight of DOD procurement programs, the impact on
future Congresses, DOD budgeting discipline, and the potential impact on weapon costs. The
process of weighing options may involve balancing a need to meet DOD procurement goals
within available funding against the goal of preserving Congress’s control over DOD spending
and its ability to conduct oversight of DOD programs. This report will be updated as events
warrant.

Introduc tion ..................................................................................................................................... 1
Backgr ound ..................................................................................................................................... 1
Description of Policy.................................................................................................................1
Origins, Rationale, and Governing Regulations........................................................................2
A Congressionally Imposed Policy.....................................................................................2
Governing Regulations.......................................................................................................2
Alternative of Incremental Funding....................................................................................3
Non-Conforming Procurements................................................................................................4
Recent Procurements..........................................................................................................4
Proposed or Suggested Procurements.................................................................................6
Issues and Options for Congress...................................................................................................10
Options ........................................................................................................................ ............ 10
Responding to Specific Non-Conforming Proposals........................................................10
General Legislative Options..............................................................................................11
Issues ....................................................................................................................................... 13
Congressional Power of the Purse....................................................................................13
Congressional Oversight of DOD Procurement Programs...............................................14
Future Congresses.............................................................................................................14
DOD Budgeting and Program-Execution Discipline........................................................14
Potential Impact on Weapon Costs...................................................................................15
Legislative Activity For FY2008...................................................................................................16
FY2008 Defense Authorization Bill (H.R. 1585/S. 1547)......................................................16
House ................................................................................................................................ 16
Senate ......................................................................................................................... ....... 16
Appendix A. Prior-Year Legislative Activity................................................................................18
Appendix B. Detailed Background on the Policy..........................................................................45
Author Contact Information..........................................................................................................60

The full funding policy is a federal budgeting rule that has been applied to Department of Defense
(DOD) procurement programs since the 1950s. Although technical in nature, the policy relates to
Congress’s power of the purse and its responsibility for conducting oversight of DOD programs.
The application of the full funding policy to DOD procurement programs has been affirmed at
various times over the last five decades by Congress, the Government Accountability Office
(GAO), and DOD.
In recent years, some DOD weapons—specifically, certain Navy ships—have been procured with
funding profiles that do not conform to the policy as it traditionally has been applied to DOD
weapon procurement programs. DOD, in recent budget submissions and testimony, has proposed
or suggested procuring ships, aircraft, and satellites using funding approaches that do not conform
to the policy as traditionally applied.
DOD’s proposals, if implemented, could establish new precedents for procuring other DOD
weapons and equipment with non-conforming funding approaches. Such precedents could further
circumscribe the full funding policy, which in turn could limit and complicate Congress’s ability
to conduct oversight of DOD procurement programs.
The issue for Congress is how to respond to DOD’s proposals for procuring ships and aircraft for
DOD with funding approaches that do not conform to the full funding policy as traditionally
applied to DOD weapon procurement programs. Congress’s decision on this issue could have
significant implications for Congress’s ability to conduct oversight of DOD procurement
programs. It could also affect DOD’s budgeting practices, budget discipline, and annual funding
requirements.
For additional discussion of this issue as it relates to procurement of Navy ships, see CRS Report
RL32776, Navy Ship Procurement: Alternative Funding Approaches—Background and Options ¹
for Congress, by Ronald O'Rourke.

For DOD procurement programs, the full funding policy requires the entire procurement cost of a
weapon or piece of equipment to be funded in the year in which the item is procured. The rule
applies to all weapons and equipment that DOD procures through the procurement title of the
annual DOD appropriations act. In general, the policy means that DOD cannot contract for the
construction of a new weapon or piece of equipment until the entire cost of that item has been
approved by Congress. Sufficient funding must be available for a complete, usable end item
before a contract can be let for the construction of that item.

¹^C^R^S^R^e^por^{t R}^L³²⁷⁷⁶^,^N^a^v^y^Shi^{p Pr}^oc^ur^e^m^eⁿ^t:^Alte^rⁿ^a^tiv^e^Fu^ndi^{ng A}^ppr^oac^he^s^—^B^a^c^k^g^r^o^un^{d a}ⁿ^d^O^p^tio^ns^f^o^r
^C^ongr^e^s^s^,^by^R^ona^{ld O}^’^R^o^ur^k^e^.

A principal effect of the full funding policy is to prevent the use of incremental funding in the
procurement of DOD weapons and equipment. Under incremental funding, a weapon’s cost is
divided into two or more annual portions, or increments, that reflect the need to make annual
progress payments to the contractor as the weapon is built. Congress then approves each year’s
increment as part of its action on that year’s budget. Under incremental funding, DOD can
contract for the construction of a weapon after Congress approves only the initial increment of its
cost, and completion of the weapon is dependent on the approval of the remaining increments in
future years by that Congress or future Congresses.
There are two general exceptions to the full funding policy. One permits the use of advance ²
procurement funding for components or parts of an item that have long production leadtimes.
The other permits advance procurement funding for economic order quantity (EOQ)
procurements, which normally occur in programs that have been approved for multiyear ³
procurement (MYP).
Congress imposed the full funding policy on DOD in the 1950s to make the total procurement
costs of DOD weapons and equipment more visible and thereby enhance Congress’s ability to
understand and track these costs. Congress’s intent in imposing the policy was to strengthen
discipline in DOD budgeting and improve Congress’s ability to control DOD spending and carry
out its oversight of DOD activities. Understanding total costs and how previously appropriated
funds are used are key components of Congress’s oversight capability.
The full funding policy is consistent with two basic laws regarding executive branch
expenditures—the Antideficiency Act of 1870, as amended, and the Adequacy of Appropriations
Act of 1861. Regulations governing the policy are found in Office of Management and Budget
(OMB) Circular A-11 and DOD Directive 7000.14-R, which provide guidelines on budget

²^A^d^v^a^nc^e^pr^oc^ur^e^m^eⁿ^{t f}^unding^is^pa^r^tia^{l pr}^oc^ur^e^m^eⁿ^{t f}^unding^f^o^r^aⁿ^ite^m^tha^t^a^ppe^a^r^sⁱⁿ^the^bu^dg^e^t^one^or^m^o^r^e^y^e^a^r^s
^prior^to^the^y^e^a^r^the^ite^m^{is proc}^u^r^e^d^{. It is s}^o^m^e^ti^m^e^s^de^s^c^rⁱ^be^{d inf}^o^r^m^a^l^l^y^as^a^“^dow^npay^m^eⁿ^t”^{on a}ⁿ^ite^m^{to be}
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^proc^ure^m^eⁿ^{t f}^unding^{is a}^l^s^o^pr^ov^ide^d^f^o^{r ot}^he^{r DOD w}^e^a^{pons tha}^tⁱⁿ^c^o^rp^ora^t^e^c^o^m^pone^{nts w}^{ith l}^ong^pro^duc^ti^on
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^w^a^r^s^hips^.
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^{to use}^a^si^ng^le^c^ontra^c^t^t^o^pr^oc^ure^m^u^ltiple^c^opie^s^of^a^gⁱ^v^e^{n ite}^m^tha^t^a^r^e^sc^he^dule^d^to^be^p^r^oc^ure^d^a^c^r^{oss a}^se^rie^s^of
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^sⁱ^gⁿ^if^ic^aⁿ^tl^y^r^e^duc^e^d^c^o^s^t^s^on^tha^t^c^o^m^pone^nt.^For^e^x^am^ple^,^aⁿ^M^Y^P^a^r^r^a^ng^e^m^eⁿ^{t to pr}^oc^ur^e^a^t^o^ta^l^of^{12 s}^h^ips^of^a
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^pr^o^pulsⁱ^on^or^s^h^ip-^c^om^ba^{t s}^y^s^t^{em e}^qui^pm^eⁿ^t.

formulation. Support for the policy has been periodically reaffirmed over the years by Congress,
the Government Accountability Office (GAO), and DOD.
For a detailed discussion of the origins, rationale, and governing regulations of the full funding
policy, as well as examples of where Congress, GAO, and DOD have affirmed their support for
the policy, see Appendix B.
Prior to the imposition of the full funding policy, DOD weapon procurement was accomplished
through incremental funding. Incremental funding fell out of favor because opponents believed it
did (or could do) one or more of the following:
• make the total procurement costs of weapons and equipment more difficult for
Congress to understand and track;
• create a potential for DOD to start procurement of an item without necessarily
understanding its total cost, stating that total cost to Congress, or providing fully
for that total cost in future DOD budgets—the so-called “camel’s-nose-under-the-
tent” issue;
• permit one Congress to “tie the hands” of one or more future Congresses by
providing initial procurement funding for a weapon whose cost would have to be
largely funded by one or more future Congresses;
• increase weapon procurement costs by exposing weapons under construction to
potential uneconomic start-up and stop costs that can occur when budget
reductions or other unexpected developments cause one or more of the planned
increments to be reduced or deferred.
Although incremental funding fell out of favor due to the above considerations, supporters of
incremental funding could argue that its use in DOD (or federal) procurement can be
advantageous because it can do one or more of the following:
• permit very expensive items, such as large Navy ships, to be procured in a given
year without displacing other programs from that year’s budget, which can
increase the costs of the displaced programs due to uneconomic program-
disruption start-up and start costs;
• avoid a potential bias against the procurement of very expensive items that might
result from use of full funding due to the item’s large up-front procurement cost
(which appears in the budget) overshadowing the item’s long-term benefits
(which do not appear in the budget) or its lower life cycle operation and support
(O&S) costs compared to alternatives with lower up-front procurement costs;
• permit construction to start on a larger number of items in a given year within
that year’s amount of funding, so as to achieve better production economies of
that item than would have been possible under full funding;
• recognize that certain DOD procurement programs, particularly those
incorporating significant amounts of advanced technology, bear some
resemblance to research and development activities, even though they are
intended to produce usable end items;

• reduce the amount of unobligated balances associated with DOD procurement
programs;
• implicitly recognize potential limits on DOD’s ability to accurately predict the
total procurement cost of items, such as ships, that take several years to build;
and
• preserve flexibility for future Congresses to stop “throwing good money after
bad” by halting funding for the procurement of an item under construction that
has become unnecessary or inappropriate due to unanticipated shifts in U.S.
strategy or the international security environment.
In recent years, some items, notably Navy ships, have been procured with funding profiles that do
not conform to the policy as traditionally applied to DOD procurement programs. In addition,
DOD is now proposing to procure other items, including both ships and aircraft, with funding
profiles that do not conform to the policy as traditionally applied.
As part of its action on the FY1993 defense budget, Congress created the National Defense
Sealift Fund (NDSF)—a revolving fund in the DOD budget for the procurement, operation, and ⁴
maintenance of DOD-owned sealift ships—and transferred procurement of new military sealift
ships and certain Navy auxiliary ships from the Shipbuilding and Conversion, Navy (SCN) ⁵
appropriation account, where they traditionally had been procured, to the NDSF. Since the NDSF
is outside the procurement title of the defense appropriation act, sealift ships procured since
FY1993, including DOD’s new Large, Medium-Speed, Roll-on/Roll-off (LMSR) ships, as well as ⁶
Navy Lewis and Clark (TAKE-1) dry cargo ships procured since FY2003, have not been subject
to the full funding policy as traditionally applied to DOD procurement programs.

⁴^Se^a^lif^{t s}^h^ips^a^r^e^c^a^r^g^o^s^h^ips^t^h^a^t^traⁿ^s^port^m^ilita^r^y^e^quipm^eⁿ^{t a}^nd^s^uppl^ie^s^f^r^om^one^la^{nd m}^a^s^s^{to a}^nothe^r.
^G^o^v^e^rn^m^e^nt-owⁿ^e^d^se^a^lif^{t ships a}^r^e^ope^ra^te^{d by}^the^M^ili^ta^ry^Se^a^lⁱ^f^{t Com}^m^a^{nd using}^m^o^stly^cⁱ^v^ilia^{n c}^r^e^w^s.
⁵^C^ong^r^e^s^s^c^r^e^a^t^e^d^the^N^D^{SF t}^h^r^o^ug^{h Se}^c^tioⁿ¹⁰²⁴^of^the^FY¹⁹⁹³^de^f^e^ns^e^a^u^thor^iz^a^tion^a^c^t⁽^H^.R^.⁵⁰⁰⁶^{; s}^e^e^pa^g^e^s
¹⁷⁸^-¹⁸¹^of^H^.^R^e^{pt. 1}^02-⁹⁶⁶^of^O^c^tobe^r¹^,¹⁹⁹²^{, t}^h^e^c^o^nf^e^r^eⁿ^c^e^r^e^p^o^r^t^oⁿ^t^h^e^a^c^t⁾^,^a^s^a^m^e^nde^{d by}^Tⁱ^t^l^e^V^of^the
^FY¹⁹⁹³^de^f^e^ns^e^a^ppr^opr^ia^ti^ons^a^c^t⁽^H^.R^{. 5}⁵⁰⁴⁾^.
⁶^T^h^e^fⁱ^{rst thre}^e^{ships in}^the^Na^v^y^’^s^12-^sh^{ip L}^e^wⁱ^{s a}^{nd Cla}^r^k^(TA^K^{E-1) c}^l^a^{ss a}^u^x^ilia^ry^{ship prog}^ra^m^w^e^r^e^proc^ure^dⁱⁿ
^t^h^{e S}^C^{N acco}^un^t^u^sⁱⁿ^{g f}^u^l^l^f^undi^ng^{. T}^h^e^A^d^mⁱ^nis^t^r^a^{tion, a}^s^pa^r^t^of^its^pr^op^os^e^d^FY²⁰⁰³^de^f^e^ns^e^budg^e^t^a^{nd FY}²⁰^03-
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^FY²⁰^03-^FY²⁰⁰⁷ⁱⁿ^the^N^D^SF,^w^h^e^r^e^the^y^w^ould^not^be^s^u^bje^c^t^to^the^f^u^{ll f}^undi^ng^pr^ov^is^ion^a^s^tr^a^dⁱ^tiona^lly^a^pplie^d^to
^{DOD p}^r^o^c^u^r^em^en^{t p}^r^o^g^ram^s^.^T^h^{is p}^r^op^o^s^{al w}^a^{s co}ⁿ^s^isten^t^w^ith^con^g^ressioⁿ^a^{l in}^{terest f}^o^{r t}^h^{is ap}^p^r^oach^exp^r^essedⁱⁿ
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^C^o^m^m^itte^e^r^e^por^{t on t}^h^e^FY²⁰⁰¹^de^f^e^ns^e^a^u^thor^iz^a^tion^bi^ll^[^S^{. 2}⁵⁴⁹^]^,^p.^{93; a}^{nd H}^.^R^e^pt.¹⁰^6-⁹⁴⁵^,^th^e^c^onf^e^r^eⁿ^c^e
^re^{port on the}^FY²⁰^{01 de}^f^e^nse^a^u^thoriz^a^tioⁿ^{bill [}^H^.R^.⁴²⁰⁵^]^{, p. 35}^[^S^e^c^tⁱ^{on 12}⁷^]^.)

As discussed in a 1996 CRS report,⁷ although individual LMSRs were ostensibly fully funded
each year by Congress, like ships procured in the SCN account, DOD in some cases actually
applied LMSR funding provided in a given year to partially finance the construction of LMSRs
authorized in various years. For example, although Congress ostensibly approved $546.4 million
in FY1995 for the procurement of two LMSRs, the FY1995 funds were actually applied to help
finance portions of 16 LMSRs whose construction contracts were awarded between FY1993 and
FY1997. In explaining its use of funds in the LMSR program, DOD stated:
^T^h^{e Natio}ⁿ^a^{l Def}^eⁿ^s^{e Seali}^f^t^Fuⁿ^d⁽^NDS^F)^{is n}^o^{t a p}^r^o^c^u^r^e^m^eⁿ^{t ap}^p^r^o^p^r^iatioⁿ^b^u^{t a}
^rev^o^l^vⁱⁿ^g^f^uⁿ^d^{. D}^o^l^l^a^{rs appropri}^a^t^e^{d by}^C^ong^res^s^f^o^{r t}^h^e^fun^d^{are n}^o^t^appropri^a^t^e^{d t}^o
^pu^rch^a^s^e^s^p^ecifⁱ^c^hu^ll^s^asⁱⁿ^t^h^{e cas}^{e of}^,^f^o^{r ex}^a^m^p^l^{e th}^e^Navy^’s^DD^G-^{51 prog}^ra^m^.^R^a^th^er,
^dollars^m^a^{de av}^a^{ilable to t}^h^e^{NDSF are e}^x^ec^u^t^{ed on}^aⁿ^olde^s^t^m^oⁿ^e^y^fⁱ^rs^{t ba}^sⁱ^s^.^T^h^eref^ore^,⁸
^f^u^l^l^fun^dⁱⁿ^g^provⁱ^sⁱ^oⁿ^s^asⁿ^o^rm^al^l^y^un^ders^t^{ood f}^o^{r s}^hⁱ^p^acquⁱ^sⁱ^tⁱ^oⁿ^{do n}^o^t^appl^y^.
The Navy during the 1990s procured several individual ships in the SCN account during the
1990s—including amphibious ships, aircraft carriers, and an attack submarine—with funding
profiles approved by Congress that, for various reasons, do not appear to conform to the full
funding policy as traditionally applied to DOD procurement programs. These ships were listed ⁹
and discussed in CRS testimony to the House Armed Services Committee on March 9, 1999.
More recently, Congress included, in both the FY2000 and FY2001 defense appropriations acts, a
provision in the SCN section stating “That the Secretary of the Navy is hereby granted the
authority to enter into a contract for an LHD-1 [class] Amphibious Assault Ship which shall be
funded on an incremental basis.” The ship in question is LHD-8, which was funded on an
incremental basis, with the final increment provided in FY2006. DOD records the ship in its
budget presentations as an FY2002-procured item.
As part of its proposed FY2005 and FY2006 budget submissions, the Administration proposed,
and Congress approved, funding the two lead Littoral Combat Ships (LCSs) in the Navy’s
research, development, test and evaluation (RDT&E) account rather than the SCN account, where
Navy ships traditionally have been procured. Since the Navy’s RDT&E account is outside the
procurement title of the defense appropriation act, the ships are not subject to the full funding
policy as traditionally applied to DOD procurement programs.

⁷^{CRS Rep}^o^r^{t 9}⁶^-2⁵⁷^,^Se^{alift (}^L^M^S^{R) S}^hⁱ^p^b^u^ildⁱⁿ^{g a}ⁿ^d^Co^nv^e^rsion^Progr^{am: Bac}^k^g^r^o^u^nd^an^d^Stat^u^s^{, by}^V^a^le^rie
^B^a^iley^G^r^a^s^s^o^{. (}^O^{ut of}^prⁱⁿ^{t; a}^v^a^ila^ble^f^r^om^a^u^thor^a^t^7-⁷⁶^17.)
⁸^{DOD in}^f^o^rm^atioⁿ^p^a^p^e^{r o}ⁿ^strate^gⁱ^{c seali}^f^{t acq}^uⁱ^sitioⁿ^p^r^o^g^ra^m^p^r^o^v^id^ed^t^o^CRS^b^y^{U.S. Nav}^y^O^f^fⁱ^{ce o}^f^Legⁱ^slati^v^e
^A^f^f^a^ir^s^,^J^a^nua^r^y^{25, 1}⁹⁹⁵^,^p.^1.
⁹^S^t^at^em^en^t^o^f^Roⁿ^a^l^d^O’Rou^r^ke,^S^p^eci^alⁱ^s^tⁱⁿ^Natⁱ^oⁿ^a^l^Def^eⁿ^s^e,^Coⁿ^g^ressi^oⁿ^a^l^Research^S^e^rvi^ce,^bef^o^{re t}^h^{e Ho}^u^s^e
^Na^tiona^{l Se}^c^u^ri^ty^Co^m^m^itte^e^Subc^om^m^itte^e^{on Mi}^lita^ry^P^r^oc^ure^m^eⁿ^{t He}^a^r^ing^oⁿ^L^ittora^{l W}^a^rf^a^r^e^P^r^ote^c^tion^aⁿ^d^Sh^ip
^Recapⁱ^t^a^lⁱ^zatⁱ^oⁿ^,^M^a^{rch 9}^,¹⁹⁹⁹^,^p^p^.⁸^-¹²^.^Am^oⁿ^g^t^h^{e sh}ⁱ^p^s^dⁱ^scu^s^sed^w^e^{re t}^h^{e a}^m^p^hⁱ^bⁱ^ou^{s sh}ⁱ^p^{s L}^HD-6^,^L^HD-7^,
^L^H^D^-^{8, a}^{nd L}^P^D^-^18,^the^aⁱ^r^c^r^a^f^t^c^a^r^rⁱ^e^r^s^C^V^N^-^{76 a}^{nd C}^V^N^-⁷⁷^{, a}ⁿ^{d the}^a^tta^c^k^s^ubm^a^r^ine^SSN^-²^3.

As part of its action on the FY2002 defense appropriations bill, Congress granted DOD authority
to enter into a 10-year leasing arrangement for 100 aircraft based on the Boeing 767 commercial
aircraft design to serve as Air Force aerial refueling tankers. Although this was a leasing
arrangement rather than a procurement action, some critics argued that the stream of annual lease
payments to be made under the arrangement could be viewed as the equivalent of incremental
funding. As part of its action on the FY2004 defense authorization bill, Congress granted DOD
revised authority to enter into a 10-year leasing arrangement for 20 aircraft and to procure up to ¹⁰

80 additional aircraft under a multiyear procurement contract that uses incremental funding. The ¹¹

tanker lease was ultimately not implemented.
In addition to the recent non-conforming examples cited above, DOD in recent budget
submissions has proposed or suggested procuring additional ships, aircraft, and satellites using
funding approaches that would not conform to the full funding policy as traditionally applied to
DOD procurement programs.
In testimony to the Strategic Forces subcommittee of the Senate Armed Services Committee on
the proposed FY2008 military space programs budget, Ronald Sega, the Undersecretary of the
Air Force, suggested using incremental funding for procuring large, expensive satellites that are ¹²
not procured in large numbers.
The Administration, as part of its FY2007 and FY2008 defense budget submission, proposed to
procure an amphibious assault ship called LHA-6—the lead ship in the LHA (Replacement), or
LHA(R) program—in FY2007 using split funding (a two-year form of incremental funding) in
FY2007 and FY2008.
The Administration, as part of its FY2007 and FY2008 defense budget submissions, proposed to
procure each of the first two DDG-1000 (formerly DD(X)) destroyers in FY2007 using split
funding in FY2007 and FY2008.

¹⁰^For^m^o^r^e^on^the^ta^nk^e^r^le^a^s^ing^pr^opos^a^l^,^s^e^e^C^R^S^R^e^por^t^R^L³²⁰⁵⁶^,^The^Aⁱ^r^For^c^e^K^C^-⁷⁶⁷^Ta^nk^e^r^L^e^as^e^Pr^opos^al:
^{Key Issu}^{es Fo}^{r Co}^ng^ress^{, c}^oor^din^a^te^{d by}^C^h^rⁱ^s^t^op^he^r^B^o^lk^c^o^m^.
¹¹^F^o^{r m}^o^{re o}ⁿ^t^h^{e A}ⁱ^{r F}^o^{rce’s pl}^{ans f}^o^{r m}^o^d^e^rnⁱ^zⁱⁿ^{g i}^t^s^t^aⁿ^k^{er ai}^rcraf^t^f^l^eet^,^{see CRS}^Rep^o^r^t^RL³⁴³⁹⁸^,^{Air F}^o^{rce Air}
^Re^fue^lin^{g: T}^h^e^{KC-X Airc}^raft^Ac^quisiti^on^Pro^g^ram^,^by^Christop^he^{r Bolk}^c^o^m^a^{nd W}^illia^m^Knig^ht.
¹²^So^urc^e^:^T^r^aⁿ^sc^{ript of}^he^a^r^ing^be^f^o^re^Stra^te^gⁱ^c^Forc^e^s^subc^om^m^itte^e^of^Se^na^te^A^r^m^e^{d Se}^rv^ic^e^s^Co^m^m^itte^e^,^A^p^{ril 19,}
²⁰⁰⁷^.^S^e^{ga’s sp}^o^k^en^co^mm^en^t^s^oⁿ^t^h^eⁱ^ssu^{e came i}ⁿ^resp^on^{se t}^o^a^q^u^e^stⁱ^oⁿ^f^r^o^m^S^eⁿ^a^t^o^{r Ino}^f^e.^S^{ee al}^so^Mⁱ^ch^ael^Sⁱ^rak,
^“^S^e^g^a^A^s^k^s^Cong^re^{ss T}^o^A^llow^Iⁿ^c^r^e^m^eⁿ^ta^{l Fun}^dⁱⁿ^g^of^Big^-^Tⁱ^c^k^e^t^Sa^te^llite^s,”^De^fe^nse^Daily^{, A}^p^ril^23,²⁰⁰⁷^.

The Administration, as part of its FY2007 and FY2008 defense budget submission, proposed to
procure the aircraft carrier CVN-78 in FY2008 using split funding in FY2008 and FY2009. About
35.2% of the ship’s estimated procurement cost of $10.5 billion was provided in the form of
advance procurement funding between FY2001 and FY2007, 26.1% is to be provided in the ¹³
procurement year of FY2008, and 38.8% is to be provided in FY2009.
The Administration, as part of its FY2007 budget submission, is proposing to procure F-22
aircraft over the next several years using incremental funding.
The Administration, as part of its FY2005 defense budget submission, proposed procuring the
lead DDG-1000 destroyer in the Navy’s RDT&E account rather than the SCN account. Congress,
in acting on the FY2005 budget, directed that the lead DDG-1000 be funded in the SCN ¹⁴
account.
The Administration, as part of its FY2003, FY2004, and FY2005 defense budgets submissions,
proposed procuring 60 C-17 airlift aircraft under a follow-on multiyear procurement (MYP) ¹⁵
arrangement approved by Congress in FY2002 that would procure at least some of the aircraft ¹⁶
with funding profiles that resembled incremental funding rather than full funding. Under this
approach, the Air Force has requested Congress to appropriate enough money in a given year to
make progress payments on the MYP contract rather than to fully fund a specific number of
aircraft. The affect would be to reduce requested funding in the initial years of the contract and
increase amounts requested in later years. This proposal is of particular note because it would, if
implemented, extend use of something resembling incremental procurement to an area of defense
weapon procurement outside shipbuilding.

¹³^For^m^o^r^e^on^C^V^N^-⁷⁸^{, s}^e^e^C^R^S^R^e^por^{t R}^S²⁰⁶⁴^3,^N^a^{vy Fo}^{rd (}^C^VN-7⁸⁾^Cl^a^{ss Aircra}^ft^Ca^{rrier Prog}^ra^{m: B}^a^ckg^ro^un^d
^aⁿ^d^Issu^{es fo}^{r C}^o^ng^ress^{, by}^R^ona^{ld O}^'^R^our^k^e^.
¹⁴^For^m^o^r^e^on^the^D^D^G^-¹⁰⁰^{0 a}ⁿ^d^L^C^{S pr}^og^r^a^m^s^{, s}^e^e^C^R^S^R^e^por^t^R^L³²¹⁰^9,^N^a^vy^DDG-1⁰⁰⁰^aⁿ^d^DDG-5¹^Destro^yer
^Pr^ogr^am^s^:^B^a^c^k^g^r^o^un^{d, O}^v^e^r^sⁱ^gh^{t I}^s^s^u^e^s^{, a}^{nd O}^p^tio^ns^f^o^r^C^o^ngr^e^s^s^{, by}^R^ona^{ld O}^'^R^our^k^e^{, a}ⁿ^{d C}^R^S^R^e^por^{t R}^L³³⁷⁴^1,
^Nav^y^Littor^a^{l C}^o^mba^t^S^h^ip⁽^L^CS)^Progr^{am: Bac}^k^g^r^o^u^nd,^Ov^e^rsigh^{t Issue}^s^{, a}^{nd O}^p^tio^{ns f}^o^{r Co}^ngre^s^s^{, by}^R^ona^ld
^O^'^R^our^k^e^.
¹⁵^T^h^e^fⁱ^r^s^{t MY}^P^a^r^r^a^ng^e^m^eⁿ^t^f^o^r^the^C^-¹⁷^pr^og^r^a^m^w^a^s^c^o^m^p^le^te^{d w}^{ith the}^pr^oc^ur^e^m^eⁿ^{t of}^{8 C}^-^17sⁱⁿ^FY²⁰⁰³^.
^C^ong^r^e^s^s^,^a^s^pa^r^t^of^its^a^c^tio^{n o}ⁿ^t^h^e^FY²⁰⁰²^de^f^e^ns^e^bu^dg^e^t^{, g}^r^aⁿ^te^{d a}^u^th^or^ity^f^o^r^a^f^o^llow^-^{on MY}^{P a}^r^r^a^ng^em^eⁿ^{t f}^o^r
^the^C^-¹⁷^pr^og^r^a^m^tha^t^be^g^a^{n w}^{ith a}^dditi^ona^l^C^-¹⁷^s^pr^oc^ur^e^dⁱⁿ^FY²⁰⁰^{3. C}^ong^r^e^s^s^pr^ov^ide^d^a^d^v^a^nc^e^pr^oc^ur^e^m^eⁿ^t
^f^unding^f^o^r^th^is^f^o^llow^-^{on MY}^{P a}^r^r^a^ng^em^eⁿ^{t in FY}²⁰⁰²^.
¹⁶^Da^vⁱ^{d A}^.^Fulg^hum^{, “}^M^ilita^ry^Budg^e^t^{Boost Yie}^l^{ds Ma}^rg^ina^l^C^h^aⁿ^g^e^,”^A^vⁱ^a^tⁱ^o^{n Week}^&^Spac^e^Te^c^h^nol^ogy^{, Fe}^br^ua^r^y
^11,²⁰⁰²^{, p}^.¹¹^.

In 2001 and again in 2005, some Navy officials advocated the use of a funding arrangement
called advance appropriations for Navy ships, particularly as a means of increasing the number of
ships that could be placed under construction in the near term with available funding. Use of
advance appropriations would enable the Navy to begin construction on a ship in a given year
even though the budget authority for that year provided only an initial increment of the total
procurement cost of the ship.
Under advance appropriations, funding for the entire procurement cost of a ship would be
approved by Congress in a single decision. In contrast, however, to traditional full funding, in
which the full procurement cost of the ship is assigned to (i.e., scored in) the budget year in which
it is procured, under advance appropriations, the procurement cost of the ship approved in a given
year would be divided into several portions, or increments, that would be scored across several
budget years starting with the original year of procurement.
In contrast to incremental funding, under which Congress must take a positive action each year to
approve the portion of the ship’s cost assigned to that year, with advance appropriations,
Congress each year would need to take a positive action to cancel the portion of the ship’s cost
assigned to that year. Although Navy supporters of the advance appropriation concept stressed
that advance appropriations is a form of full funding rather than incremental funding, they
acknowledge that advance appropriations could be described informally as a legislatively locked-
in counterpart to incremental funding.
OMB Circular A-11 defines advance appropriations as appropriations that are:
• Enacted normally in the current year;
• Scored after the budget year (e.g., in each of one, two, or more later years,
depending on the language); and
• Available for obligation in the year scored and subsequent years if specified in ¹⁷
the language.
The circular allows for the use of advance appropriations to help finance capital assets under
certain circumstances. Specifically, Principle 2 in Appendix J on principles of financing capital
assets, states (italics as in the original):
^R^e^gu^l^a^{r appropri}^a^tⁱ^oⁿ^s^f^o^{r t}^h^{e fu}^l^l^f^uⁿ^dⁱⁿ^g^o^f^{a capi}^t^a^l^pr^oj^ect^{or a u}^s^ef^ul^s^e^gm^en^t^(or
ⁱⁿ^v^e^s^t^m^eⁿ^t^{) of}^{a capital proj}^ectⁱⁿ^th^{e b}^u^dg^et^y^{ear are pref}^erre^{d. If}^th^is^res^u^lt^sⁱⁿ^s^p^ik^es^t^h^at,
ⁱⁿ^th^{e j}^u^dgm^eⁿ^{t of}^OMB^,^canⁿ^o^{t be acco}^m^m^{odated b}^y^t^h^{e ag}^en^c^y^{or th}^{e C}^ong^res^s^{, a}
^co^m^bⁱⁿ^atioⁿ^o^f^r^e^g^u^lar^an^d^ad^v^aⁿ^{ce ap}^p^r^o^p^r^iatioⁿ^s^t^h^{at to}^g^e^th^er^p^r^o^v^id^{e f}^u^ll^f^uⁿ^dⁱⁿ^g^f^o^r^a
^capi^t^a^l^pro^j^ect^or^{a u}^s^efu^l^s^e^gm^ent^{or an}ⁱⁿ^v^e^s^t^m^eⁿ^t^sh^ou^l^d^{be pro}^pos^{ed i}ⁿ^t^h^{e bu}^dg^et^.
^Expl^anatⁱ^o^n:^Prⁱⁿ^cip^l^{e 1}⁽^F^u^l^{l Fu}ⁿ^dⁱⁿ^g⁾ⁱ^s^m^e^{t as}^loⁿ^g^as^{a co}^m^bⁱⁿ^atioⁿ^o^f^r^e^g^u^lar^an^d
^ad^v^aⁿ^{ce ap}^p^r^o^p^r^iatioⁿ^s^p^r^o^v^id^{e b}^u^d^g^{et au}^t^h^o^r^it^y^s^u^f^f^icieⁿ^t^to^co^m^p^{lete t}^h^e^c^a^pⁱ^t^a^l^p^r^o^j^e^c^t^o^r
^use^f^ul^se^g^m^eⁿ^t^o^rⁱⁿ^ve^s^t^m^e^nt^.^Ful^l^fu^ndⁱⁿ^{g i}ⁿ^t^h^e^b^u^d^g^e^t^ye^a^r^wⁱ^t^h^r^e^gu^l^a^r^a^p^p^r^o^p^rⁱ^a^tⁱ^o^ns
^alon^{e is}^pref^{erred becau}^s^e^{it leads}^{to trade}^o^f^f^s^wⁱ^t^hⁱⁿ^th^{e bu}^d^g^et^y^ear^w^ith^s^p^eⁿ^dⁱⁿ^g^f^o^r^o^t^h^e^r

¹⁷^O^M^B^Cⁱ^r^c^ula^r^A^-^{11 (}^J^uly²⁰⁰³^v^e^r^s^ion)^{, A}^ppeⁿ^d^ix^J⁽^P^rⁱ^nc^iple^s^O^f^B^udg^e^ting^For^C^a^pi^ta^{l A}^s^s^e^t^A^c^quis^iti^ons⁾^,
^Se^c^{tion E}^(G^los^s^a^r^y^{). For the}^te^x^t^of^this^d^o^c^u^m^e^{nt on}^the^Iⁿ^te^rne^t^,^g^o^to^http^://w^w^w^.^w^hite^hous^e^.^g^o^v^/^om^b/cⁱ^rc^ula^r^s^/
^a^11/^c^u^r^r^e^nt_y^e^a^r^/^a^pp_j^.p^df^.

^cap^{ital assets a}ⁿ^d^wⁱ^t^h^sp^eⁿ^dⁱⁿ^g^f^o^r^p^u^r^p^o^s^{es o}^t^h^e^r^th^an^c^a^p^{ital assets. I}ⁿ^coⁿ^t^r^a^{st, f}^u^ll
^f^uⁿ^dⁱⁿ^{g f}^o^{r a}^capi^t^a^l^proj^ect⁽ⁱⁿ^v^e^s^t^m^e^nt^{) ov}^er^s^e^v^e^ral^y^ear^s^wⁱ^t^h^regu^l^a^{r appropri}^a^tⁱ^oⁿ^s^f^o^r
^th^{e firs}^t^y^{ear a}ⁿ^{d adv}^aⁿ^{ce ap}^propriation^s^f^o^r^s^u^bs^equ^eⁿ^t^years^m^a^y^bia^s^tradeof^f^sⁱⁿ^t^h^e
^bu^dg^et^y^{ear in}^f^a^v^o^{r of}^th^{e propos}^{ed as}^s^e^{t becau}^s^e^wⁱ^t^h^adv^aⁿ^{ce approp}^riation^s^th^{e fu}^{ll cos}^t
^of^th^e^as^s^e^{t is}ⁿ^o^tⁱⁿ^cl^u^d^{ed in th}^{e b}^u^dg^et^y^ear.^A^d^v^aⁿ^{ce ap}^propriation^s^{, becau}^s^e^t^h^e^y^are
^s^c^{ored in}^th^e^y^{ear t}^h^e^y^beco^m^e^av^ailable^f^o^r^o^b^lig^atioⁿ^,^m^a^y^coⁿ^s^tr^ain^th^{e b}^u^d^g^{et a}^u^t^h^o^r^it^y
^an^{d ou}^t^l^a^y^s^av^aⁱ^l^a^bl^{e f}^o^{r reg}^u^l^a^{r appr}^opri^a^tⁱ^oⁿ^s^of^t^h^at^y^ear.
^I^f^,^ho^w^e^ve^r^,^t^h^e^l^u^m^pⁱⁿ^e^s^s^c^a^u^s^e^d^b^y^r^e^g^u^l^a^r^a^p^p^r^op^riation^s^canⁿ^o^t^be^acco^m^m^{odated w}ⁱ^thⁱⁿ
^an^a^g^en^c^y^o^r^A^p^p^r^o^p^r^iatioⁿ^s^Su^b^c^o^m^m^{ittee, ad}^v^aⁿ^c^e^ap^p^r^o^p^rⁱ^atioⁿ^s^can^a^m^e^lio^r^a^{te th}^a^t
^p^r^o^b^l^em^w^h^ile^still^p^r^o^v^idⁱⁿ^g^th^{at al}^{l o}^f^th^e^b^u^d^g^et^au^th^o^r^it^y^{is e}ⁿ^actedⁱⁿ^ad^v^aⁿ^ce^f^o^r^t^h^e
^c^a^pⁱ^t^a^l^p^r^oj^e^c^t⁽ⁱ^nve^s^t^m^e^nt⁾^o^r^use^f^ul^se^g^m^eⁿ^t^.^T^h^e^l^a^t^t^e^r^he^l^p^{s e}ⁿ^s^u^r^e^t^h^a^t^a^g^eⁿ^cⁱ^e^s^d^e^vel^op
^appro^p^{riate plan}^s^an^{d bu}^dg^ets^an^{d th}^{at all cos}^t^s^an^d^b^eⁿ^e^fⁱ^t^s^ar^{e id}^en^tif^ied^p^r^io^r^to^p^r^o^v^idⁱⁿ^g
^r^e^so^u^r^{ces. I}ⁿ^ad^d^itioⁿ^,^a^m^o^uⁿ^t^{s o}^f^ad^v^aⁿ^{ce ap}^p^r^o^p^r^iatioⁿ^s^can^b^e^m^a^tc^h^e^d^to^f^uⁿ^dⁱⁿ^g
^requ^ire^m^ents^f^o^{r co}^m^p^letⁱ^{ng n}^a^t^u^{ral co}^m^p^oⁿ^en^t^s^o^f^t^h^e^u^s^e^f^u^l^s^e^gm^eⁿ^t.^A^d^v^aⁿ^ce
^appro^p^ri^atⁱ^oⁿ^s^h^a^v^e^t^h^e^s^a^m^e^ben^e^fⁱ^t^s^as^regu^l^a^{r appropri}^a^tⁱ^oⁿ^s^f^o^{r i}^m^prov^{ed pl}^anⁿⁱ^ng^,
^m^aⁿ^a^g^e^m^eⁿ^t^{, an}^{d accoun}^t^a^bi^lⁱ^t^y^of^t^h^{e proj}^ect⁽ⁱⁿ^v^e^s^t^m^eⁿ^t^).
Navy advocates of using advance appropriations for Navy shipbuilding noted that the mechanism ¹⁸
is used by several federal agencies other than DOD.
Although use of advance appropriations for Navy shipbuilding was supported in 2001 by some ¹⁹
Navy officials and some Members of Congress, the Navy in 2001 apparently did not receive
approval from the Office of Management and Budget (OMB) to use the approach for
shipbuilding, and did not officially propose its use as part of its FY2002 budget submission to ²⁰
Congress. Congress in 2001 did not adopt advance appropriations as a mechanism for funding

¹⁸^A^g^en^ci^{es ci}^t^e^d^b^y^t^h^{e Nav}^yⁱⁿ^cl^u^d^e^d^t^h^{e Dep}^a^rt^m^eⁿ^t^{s o}^f^A^g^ri^cu^l^t^u^re,^Co^mm^er^ce,^E^d^u^catⁱ^oⁿ^,^Eⁿ^erg^y^,^Heal^t^h^and
^H^u^m^a^{n Se}^r^v^ic^es^{, H}^ous^ing^aⁿ^{d U}^r^ba^{n D}^e^v^e^lopm^eⁿ^{t, I}ⁿ^te^rⁱ^or^{, J}^u^s^tic^e^,^L^a^bor^{, Sta}^t^e^,^T^r^aⁿ^s^por^ta^tio^{n, a}^{nd T}^r^e^a^s^ur^y^,^a^s
^w^e^{ll a}^s^the^Corpora^tⁱ^{on f}^o^r^Pub^lic^Broa^dc^a^s^ting^,^t^h^e^G^e^ne^ra^{l Se}^rv^ic^e^s^A^d^mⁱ^nistra^{tion, t}^h^e^Inte^rⁿ^a^tioⁿ^a^{l A}^ssist^aⁿ^c^e
^P^r^o^g^ram^,^t^h^{e Nat}ⁱ^oⁿ^a^l^A^e^roⁿ^a^u^tⁱ^c^{s an}^d^S^p^{ace A}^d^mⁱⁿⁱ^st^ratⁱ^oⁿ^,^t^h^e^Natⁱ^oⁿ^a^l^S^cⁱ^eⁿ^{ce F}^o^un^d^a^tⁱ^oⁿ^,^t^h^e^S^mⁱ^t^h^soⁿⁱ^an
^Institutⁱ^oⁿ^{, a}ⁿ^{d t}^h^e^Socⁱ^a^l^Se^c^u^rit^y^A^d^mⁱ^nistra^{tion. (S}^lide^s^f^o^{r Ma}^y^3,²⁰^{01 Na}^v^y^brie^fⁱ^ng^{to CRS,}^A^d^vaⁿ^ce
^Appro^p^ria^tio^{ns for}^Nav^y^S^h^ip^bui^l^dⁱⁿ^g^{, pp.}¹⁹^-²^1.)
^T^h^e^N^a^vy^a^l^s^o^a^r^g^u^e^d^tha^t^c^u^r^r^e^nt^la^w^,^c^ontr^a^r^y^{to s}^o^m^e^a^s^s^e^r^tions^{, doe}^sⁿ^o^t^pr^o^h^ibi^t^t^h^e^us^e^of^a^d^v^a^nc^e^a^ppr^opr^ia^tio^ns^.
^S^p^eci^fⁱ^cal^l^y^,^t^h^{e Nav}^y^argu^ed^t^h^at^:
^{—31 USC}¹³⁴¹^,^[^t^he^{] “}^A^nti-De^fⁱ^cⁱ^eⁿ^c^y^A^c^t,”^prohi^{bits w}^r^iting^a^c^ontra^c^t^w^h^ic^{h “}ⁱ^nv^olv^e^{s the}^g^o^v^e^rⁿ^m^e^{nt in a}
^c^ontr^a^c^t^or^ob^lig^a^tion^f^o^r^the^pa^y^m^eⁿ^{t of}^m^oney^bef^o^r^e^aⁿ^a^ppr^opr^ia^tion^is^m^a^de^unle^s^s^aut^hor^iz^e^d^b^y^law^.”
^—1⁰^USC²³⁰⁶^b^[^t^h^e^p^r^o^v^isioⁿ^c^o^v^e^rin^g^m^u^lti-^y^{ear p}^r^o^c^u^r^emen^{t co}ⁿ^t^racts^]^allo^w^s^[^{DOD an}^d^certain^o^t^h^e^r
^f^e^de^ra^{l ag}^eⁿ^cⁱ^e^s^]^{to e}ⁿ^te^r^int^o^m^u^lti-y^e^a^r^c^ontra^c^t^s^f^o^{r the}^p^u^rc^ha^s^e^of^w^e^a^{pon s}^y^s^t^em^s^,^a^s^long^a^s^[t^he^re^is^]^“^a
^re^a^s^ona^ble^e^x^pe^c^t^a^{tion t}^h^a^t^t^h^ro^u^g^hout^the^c^o^nte^m^pla^t^e^d^c^ontra^c^t^p^e^{riod t}^h^e^he^a^d^of^the^a^g^eⁿ^cy^w^{ill re}^que^s^t
^f^unding^f^o^r^the^c^ontr^a^c^t^a^t^t^h^e^le^v^e^{l r}^e^quir^e^d^{to a}^v^oi^{d c}^o^ntr^a^c^t^c^aⁿ^c^e^lla^tion.”
^—^{31 U}^S^C¹¹⁰⁵^[^a^pr^ov^is^ion^r^e^la^ting^{to t}^h^e^c^o^nteⁿ^ts^of^the^f^e^de^r^a^{l budg}^e^t^aⁿ^{d its}^s^ubm^is^sⁱ^{on t}^o^C^ongr^ess]^r^e^q^uⁱ^r^e^s
^tha^t^[^t^he^e^x^e^c^u^tiv^e^braⁿ^c^h^{] ide}ⁿ^tif^y^{in a}^d^v^a^nc^e^of^ne^e^d^f^u^ture^a^ppro^p^ria^tio^{ns tha}^t^w^{ill ha}^v^e^{to be}^a^p^pr^ov^e^dⁱⁿ^orde^r
^t^o^co^m^p^l^e^t^e^t^h^{e con}^t^ract^.^T^h^{ese ad}^van^{ce ap}^p^r^op^ri^atⁱ^oⁿ^s^h^a^{ve t}^o^b^e^sp^eci^fⁱ^c^a^l^l^y^ap^p^r^o^v^ed^b^y^Coⁿ^g^{ress t}^o^al^l^o^w^[^t^h^e
^execu^tⁱ^v^{e b}^r^an^ch^]^t^o^o^b^lⁱ^g^at^{e t}^h^e^go^vern^m^eⁿ^tⁱⁿ^ad^van^{ce o}^f^recei^p^t^o^f^f^unds^{. (}^S^li^de^s^f^o^r^Ma^y^{3, 20}⁰¹^N^a^vy
^br^ie^fⁱ^ng^{to C}^R^S^,^Adv^a^nc^e^Ap^pr^op^rⁱ^atio^ns^f^o^r^N^a^v^y^S^h^ip^bu^ildiⁿ^g^{, p}^.^16.^Em^pha^sⁱ^s^a^s^{on t}^h^e^br^ie^fⁱ^ng^s^lide^.⁾
¹⁹^C^h^rⁱ^s^tia^{n B}^ohm^f^a^lk^{, “}^O^’^Ke^ef^e^:^A^d^v^a^nce^A^ppr^opr^ia^tio^ns^{, I}^f^U^s^e^d^C^o^r^r^e^c^tly^{, C}^{ould H}^e^lp^N^a^vy^,”^In^si^d^e^t^h^{e N}^a^vy^,
^N^o^v^e^m^b^e^r^26,²⁰^01;^C^h^rⁱ^s^tia^{n B}^o^hm^f^a^lk^{, “}^S^tev^e^ns^P^r^om^ote^s^A^d^v^a^nc^e^A^ppr^opr^ia^ti^ons^t^o^B^oos^t^Shi^p^P^r^od^uc^tio^n,”
^In^si^d^e^t^h^{e Na}^vy^{, Se}^p^t^e^m^be^r^{10, 2}⁰⁰¹^{; Mik}^e^Mc^C^a^r^t^hy^{, “}^C^N^O^A^dvoc^a^t^e^s^A^dva^nc^e^Fundi^ng^of^Shi^p^s^,^”^Def^eⁿ^s^{e Week}^,
^J^u^ly^{16, 2}⁰⁰¹^,^p.^{2; C}^h^rⁱ^s^tia^{n B}^o^h^m^f^a^lk^{, “}^S^eⁿ^ior^N^a^vy^Le^a^d^e^r^s^D^e^sc^rⁱ^be^B^e^ne^f^its^of^A^d^v^a^nc^e^A^ppr^opr^ia^tio^ns^,”^In^si^d^e
^t^h^{e Na}^vy^{, A}^p^{ril 1}⁶^,²⁰⁰¹^{; Christ}^o^phe^{r J. Ca}^ste^lli,^“^C^ong^re^{ss W}^e^ig^h^s^Using^‘A^dv^aⁿ^c^e^A^ppropria^tio^ns^{’ f}^o^r
^Ship^bu^ildiⁿ^g^,^”^In^si^d^e^t^h^{e N}^a^vy^{, A}^p^r^il^9,²⁰^{01; D}^a^le^Eis^m^aⁿ^{, “}^P^laⁿ^W^{ould B}^oos^{t N}^a^v^y^Shipb^u^ildiⁿ^g^,^”^No^rfo^l^k
^Virgini^an-^Pilo^t^,^A^p^r^{il 5, 20}^01.
²⁰^D^a^le^Eis^m^aⁿ^{, “}^W^hite^H^ous^e^R^e^j^e^c^t^s^P^r^o^pos^a^l^T^o^Str^e^tc^{h S}^hⁱ^p^b^u^il^ding^F^uⁿ^d^s^,^”^N^o^r^f^olk^Vir^gⁱⁿⁱ^an-^P^ilot^{, Se}^pte^m^be^r^6,
⁽^c^onti^nue^d.^..)

Navy ships. The House Appropriations Committee, in its report (H.Rept. 107-298 of November
19, 2001) on the FY2002 defense appropriations bill (H.R. 3338), stated that it was
^dis^m^a^y^{ed th}^{at th}^{e Na}^vy^coⁿ^tⁱⁿ^u^e^s^{to adv}^o^{cate th}^{e u}^s^{e o}^f^a^l^t^e^rⁿ^a^t^iv^e^fⁱⁿ^aⁿ^cⁱⁿ^g^m^e^ch^anⁱ^s^m^s^to
^ar^tif^iciall^yⁱⁿ^cr^ea^{se s}^h^ip^b^uⁱ^l^dⁱⁿ^g^r^a^tes,^s^u^ch^as^ad^v^aⁿ^ced^a^p^p^r^o^p^rⁱ^atioⁿ^s^{, o}^rⁱⁿ^cr^e^m^eⁿ^tal
^f^uⁿ^dⁱⁿ^g^o^f^sh^ip^s,^w^h^ic^h^oⁿ^l^y^ser^v^{e to}^d^ecr^{ease co}^{st v}ⁱ^sib^ili^t^y^aⁿ^d^acco^uⁿ^tab^ilit^y^oⁿ^th^e^s^e
ⁱ^m^p^o^r^tan^t^p^r^o^g^r^a^m^s^{. I}ⁿ^atte^m^p^tin^g^to^estab^lⁱ^s^h^ad^v^aⁿ^ced^ap^p^r^o^p^rⁱ^atioⁿ^s^{as a}^leg^iti^m^a^te
^bu^dg^etiⁿ^{g tec}^hⁿⁱ^q^u^{e, t}^h^os^e^Na^vy^adv^o^cates^{of s}^u^{ch practice}^s^w^{ould act}^u^a^ll^y^decreas^{e t}^h^e
^f^l^e^x^ib^ilit^y^o^f^f^u^t^u^r^e^A^d^mⁱⁿⁱ^s^t^r^a^tioⁿ^s^aⁿ^d^Coⁿ^g^r^e^s^s^{es to}^m^a^k^e^r^a^tioⁿ^a^{l cap}^ital^b^u^d^g^etⁱⁿ^g
^d^ecisioⁿ^s^wⁱ^th^r^e^g^a^r^d^to^sh^ip^b^u^ildⁱⁿ^g^p^r^o^g^r^a^m^s^.^A^cco^r^dⁱⁿ^g^l^y^,^th^{e Co}^m^m^{ittee b}^illⁱⁿ^cl^u^d^{es a}
ⁿ^e^w^g^eⁿ^e^ral^provⁱ^sⁱ^{on (s}^ectⁱ^oⁿ⁸¹⁵⁰⁾^w^hⁱ^c^h^prohⁱ^bⁱ^t^s^t^h^{e D}^e^f^eⁿ^s^e^D^e^part^m^eⁿ^t^f^r^o^m²¹
^bu^dg^etⁱⁿ^g^f^o^{r s}^hⁱ^pbui^l^dⁱⁿ^g^prog^ra^m^s^on^t^h^{e bas}ⁱ^s^of^adv^aⁿ^c^e^d^appr^opri^a^tⁱ^oⁿ^s^.
The general provision mentioned above (Section 8150) was not included in the final version of
the bill that was passed by Congress and signed into law (P.L. 107-117 of January 10, 2002).
For discussion of proposals from Navy officials in 2005 for using advance appropriations for
procuring Navy ships, see CRS Report RL32776, Navy Ship Procurement: Alternative Funding ²²
Approaches—Background and Options for Congress, by Ronald O'Rourke.

In response to the proposals listed above to procure ships and aircraft with funding profiles that
do not conform to the policy as traditionally applied to DOD procurement programs, Congress
has six basic options:
• Approve procurement of the items using the proposed non-conforming
approach without added bill or report language. This option, if implemented,
might well be viewed by DOD or others as setting a precedent for applying non-
conforming funding approaches to other DOD procurement programs in the
future.
• Approve procurement of the items using the proposed non-conforming
approach, but with added bill or report language intended to limit the
application of the approach strictly to the specific program in question. This
option would accommodate DOD’s request for FY2003 while attempting to
avoid setting such a precedent. The success of this option in not setting such a

^(...c^on^tin^ue^d)
²⁰⁰¹^;^C^h^ri^stⁱ^a^{n Boh}^m^f^a^l^k^,^“^A^d^v^aⁿ^{ce A}^p^p^r^o^p^rⁱ^a^tⁱ^oⁿ^s^,^No^t^P^a^rt^o^f^F^Y^-0²^Requ^est^,^M^a^y^Resu^rface,^”^Iⁿ^si^d^e^t^h^{e Na}^vy^,
^Ju^l^y¹⁶^,²⁰⁰¹^.
²¹^H^.^R^e^pt.¹⁰^7-²^98,^p.¹^19.
²²^C^R^S^R^e^por^{t R}^L³²⁷⁷⁶^,^N^a^v^y^Shi^{p Pr}^oc^ur^e^m^eⁿ^t:^Alte^rⁿ^a^tiv^e^Fu^ndi^{ng A}^ppr^oac^he^s^—^B^a^c^k^g^r^o^un^{d a}ⁿ^d^O^p^tio^ns^f^o^r
^C^ongr^e^s^s^,^by^R^ona^{ld O}^’^R^o^ur^k^e^.

precedent could depend on the forcefulness of the wording used in the bill or
report language.
• Approve procurement of the items with a conforming funding approach, but
without added bill or report language. This option would avoid setting a
precedent for using non-conforming approaches in the future and perhaps, by
inference, also affirm Congress’s preference for the full funding policy.
• Approve procurement of the items with both a conforming funding
approach and added bill or report language affirming Congress’s preference
for the full funding policy. This option would avoid setting a precedent for using
non-conforming approaches in the future and positively affirm Congress’s
preference for the full funding policy.
• Reject procurement of the requested items entirely, without added bill or
report language. This option might or might not be interpreted by DOD as
affirming Congress’s preference for the full funding provision, depending on
other issues relating to the program (e.g., concerns about need for the program, or
its cost) that might be viewed as having influenced Congress’s decision on it.
• Reject procurement of the items with added bill or report language affirming
Congress’s preference for the full funding policy. This option would positively
affirm Congress’s preference for the full funding provision, particularly if the
added legislation or comment makes it clear that Congress’s decision to not
procure the items was directly related to the proposal to fund them using a non-
conforming approach.
In addition to responding to specific proposals for procuring ships and aircraft with non-
conforming approaches, Congress may consider options for addressing legislatively the
application of the full funding policy to DOD procurement programs generally. In this regard,
Congress could decide to either maintain the status quo or add new bill or report language.
New bill or report language could be aimed at any of the following basic objectives:
• Terminating the application of the full funding policy to DOD procurement
programs. This option could involve dropping the current policy preference for
full funding and permitting DOD to employ either full funding, incremental
funding, or some other funding approach, depending on which approach DOD
deems most appropriate for the program in question. Alternatively, this option
could involve instituting a new policy that prohibits the use of full funding and
perhaps establishes a new policy preference for using incremental funding or
some other funding approach.
• Relaxing or otherwise modifying the application of the policy to DOD
procurement programs. This option could involve permitting non-conforming
approaches to be used for certain categories of weapons or equipment, or for
procurements conducted under certain circumstances. It could also involve
permitting DOD to make greater use of alternative budgeting mechanisms, such
as revolving funds, for procurement of weapons and equipment. As discussed in
Appendix B, a 1996 GAO report examined some alternative mechanisms used at

certain government agencies other than DOD and recommended that “The
Congress should consider enabling agencies to use more flexible budgeting
mechanisms that accommodate up-front funding over the longer term while ²³
providing appropriate oversight and control.”
• Strengthening or expanding the scope of application of the policy as it relates
to DOD programs. This option could involve giving the full funding provision a
specific basis in statute for DOD (or federal) programs, or applying it to DOD
programs funded outside the procurement title of the DOD appropriations act,
such as those funded in the RDT&E account or the National Defense Sealift
Fund.
One recent example of proposed legislation relating to the use of full funding in DOD
procurement programs, mentioned earlier, was Section 8150 of the FY2002 defense
appropriations bill (H.R. 3338) as reported by the House Appropriations Committee (H.Rept.

107-298 of January 10, 2002), which stated:

^N^oⁿ^e^of^t^h^e^fuⁿ^d^s^appropri^a^t^e^{d i}ⁿ^t^hⁱ^s^A^c^t^m^a^y^{be u}^s^{ed t}^o^prepare^{a bu}^dg^et^requ^es^t^f^o^r
^s^u^b^mⁱ^s^sⁱ^on^t^o^C^ong^res^s^b^y^t^h^{e D}^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^{e f}^o^{r f}ⁱ^s^c^al^y^{ear 2003 t}^h^at^con^t^aiⁿ^s^aⁿ^y
^prop^os^al^t^o^acquⁱ^{re sh}ⁱ^p^s^f^o^{r t}^h^{e D}^e^part^m^eⁿ^t^o^f^t^h^{e N}^a^vy^t^h^rou^g^h^t^h^e^us^{e of i}ⁿ^cre^m^eⁿ^t^a^l
^f^uⁿ^dⁱⁿ^g^a^m^o^uⁿ^t^{s o}^r^ad^v^aⁿ^ced^ap^p^r^o^p^r^iatioⁿ^s^.^T^h^{e li}^m^itatioⁿ^ag^aiⁿ^s^{t i}ⁿ^cr^e^m^eⁿ^{tal f}^uⁿ^dⁱⁿ^g
^doesⁿ^o^t^appl^y^t^o^t^h^{e s}^p^eci^fⁱ^c^s^hⁱ^pbuⁱ^l^di^ng^prog^ra^m^s^t^h^at^w^e^{re f}^uⁿ^d^{ed on}^anⁱⁿ^cre^m^eⁿ^t^a^l
^basⁱ^sⁱⁿ^fⁱ^s^cal^y^ear^2002.
As mentioned earlier, this provision was not included in the final version of the bill that was
passed by Congress and signed into law (P.L. 107-117 of January 10, 2002).
A second example concerns the National Defense Airlift Fund (NDAF)—a revolving fund outside
the procurement title of the DOD appropriations act that was similar to the NDSF, but intended
for airlift aircraft such as the C-17. The NDAF was established by report language on the FY2001 ²⁴
defense appropriations bill (H.R. 4576/S. 2593). The conference report on the bill directed that
C-17s be procured in the NDAF rather than the Air Force’s aircraft procurement account, where
airlift planes traditionally had been procured, but also directed that C-17 procurement conform to
the full funding policy:
^T^h^{e con}^f^erees^{direct th}^{at th}^{e D}^e^partm^eⁿ^t^of^D^e^f^eⁿ^s^{e bu}^d^g^et^{for al}^l^f^u^t^u^{re C}^-^{17 procu}^r^e^m^ent
^an^{d su}^pport^cos^t^s^wⁱ^t^hⁱⁿ^t^h^e^N^a^tⁱ^oⁿ^a^l^D^e^f^eⁿ^s^e^Aⁱ^rlⁱ^f^t^Fun^d^{. T}^h^{e conf}^{erees di}^rect^t^h^a^t^f^u^t^u^re
^b^u^d^g^{et d}^o^c^u^m^en^t^s^f^o^{r th}^{e N}^{DAF s}^h^o^u^ld^coⁿ^f^o^r^m^to^t^h^e^req^u^ire^m^en^ts^f^o^{r o}^t^h^e^{r DOD}
^procu^r^em^eⁿ^t^accouⁿ^tsⁱⁿ^cl^u^dⁱⁿ^g^t^h^{e co}ⁿ^t^{ent a}ⁿ^{d f}^o^r^m^{at o}^f^budg^{et e}^x^hⁱ^bit^s^{, reprog}^ra^m^mⁱⁿ^g
^t^h^resh^ol^ds^a^m^ong^procu^r^e^m^eⁿ^t^,^adv^aⁿ^{ced procu}^r^em^eⁿ^t^,^an^{d i}ⁿ^t^e^ri^m^cont^ract^{or s}^u^pport^lⁱⁿ^e
^ite^m^s^,^applⁱ^c^atⁱ^oⁿ^of^t^h^e^pr^ocu^r^em^ent^f^u^l^l^f^undiⁿ^g^p^o^lⁱ^c^y^{, an}^d^C^ong^res^sⁱ^oⁿ^alⁿ^o^tⁱ^fⁱ^c^a^tⁱ^oⁿ^f^o^r²⁵
^ch^ang^e^sⁱⁿ^qu^aⁿ^tit^y^.

²³^G^o^v^e^rn^m^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Bud^g^e^t^I^s^s^u^e^s^:^Bu^dge^ti^ng^for^Fe^de^r^a^{l C}^a^pit^a^l^{, G}^A^O^/^A^I^M^D^-^97-^{5, N}^o^v^e^m^b^e^r
¹⁹⁹^{6, p. 14}^.
²⁴^Se^e^pa^g^e^s^136-¹³^{7 of}^the^Se^na^te^A^ppropria^ti^ons^C^o^m^m^itt^e^e^’^s^re^{port (H}^.Re^p^t.¹⁰^6-2⁹⁸^of^Ma^y^{18, 2}⁰⁰⁰^{) o}ⁿ^t^h^e
^FY²⁰⁰¹^de^f^e^ns^e^a^ppr^opr^ia^ti^ons^bi^{ll (}^S^.²⁵⁹³⁾^{, a}ⁿ^{d pa}^g^e²⁸⁴^of^the^c^onf^e^r^eⁿ^c^e^r^e^por^{t (}^H^.R^e^p^t.¹^06-⁷⁵^{4 of}^J^u^ly^17,
²⁰⁰⁰⁾^of^the^bil^l⁽^H^.R^.⁴⁵⁷⁶⁾^.
²⁵^H^.^R^e^pt.¹⁰^6-⁷^54,^p.²^84.⁽^E^m^pha^sⁱ^s^a^dde^d.)

The NDAF was disestablished as part of Congress’s action on the FY2002 defense appropriations ²⁶
bill, and procurement of C-17s reverted to the Air Force’s aircraft procurement account.
A third example is Section 1007 of the FY1996 defense authorization bill (H.R. 1530) as reported
by the House National Security Committee (H.Rept. 104-131 of June 1, 1995), which would
amend 10 USC 114 at the end by adding the following new subsection:
^(f^{) (1) N}^o^f^uⁿ^d^s^m^a^y^{be approp}^ri^at^{ed, or}^au^t^h^ori^{zed t}^o^be^app^r^opri^a^t^e^d^,^f^o^r^aⁿ^y^fⁱ^s^c^a^l^y^e^a^r^f^o^r
^{a pu}^rpos^{e n}^a^m^e^{d i}ⁿ^parag^r^aph^{(1), (}³^),^(4),^or⁽⁵^{) of}^s^u^bs^ectⁱ^oⁿ^{(a) u}^sⁱⁿ^gⁱⁿ^cre^m^eⁿ^t^a^l
^fu^ndⁱ^ng.
⁽²⁾^Iⁿ^th^e^b^u^d^g^e^t^s^u^b^m^itted^b^y^t^h^{e P}^r^esid^en^t^f^o^r^an^y^fⁱ^scal^y^ear^{, t}^h^{e P}^r^esid^en^t^m^a^yⁿ^o^t
^requ^es^t^appropri^a^tⁱ^oⁿ^s^{, or au}^t^h^ori^zatⁱ^oⁿ^{of appropri}^a^tⁱ^oⁿ^s^{, on}^t^h^e^basⁱ^s^o^fⁱⁿ^cre^m^eⁿ^t^a^l
^f^uⁿ^dⁱⁿ^g^f^o^{r a pu}^rpos^{e s}^p^ecifⁱ^e^dⁱⁿ^parag^r^aph^(1).
⁽³⁾^Iⁿ^th^{is su}^b^s^ec^tioⁿ^,^th^{e ter}^m^‘^‘ⁱⁿ^c^r^e^m^eⁿ^t^a^l^f^uⁿ^dⁱⁿ^g^’^’^m^ean^{s th}^{e p}^r^o^v^isioⁿ^o^f^f^uⁿ^d^{s f}^o^r^a
^fⁱ^scal^y^ear^f^o^r^{a p}^r^o^c^u^r^e^m^en^{t in}^les^s^th^aⁿ^t^h^{e f}^u^{ll a}^m^o^uⁿ^{t r}^e^q^u^ir^ed^f^o^r^p^r^o^c^u^r^em^eⁿ^{t o}^f^a
^co^m^p^{lete a}ⁿ^d^u^s^ab^{le p}^r^o^d^u^{ct, w}ⁱ^t^h^t^h^{e e}^x^p^ectatioⁿ⁽^o^r^p^l^an⁾^f^o^r^ad^d^itioⁿ^a^{l f}^uⁿ^dⁱⁿ^g^to^b^e
^m^a^{de f}^o^{r s}^u^bs^equ^eⁿ^t^fⁱ^s^cal^y^e^ars^{to com}^p^lete^th^{e procu}^r^e^m^en^{t of}^{a com}^p^{lete an}^{d us}^able
^produ^ct^.
⁽⁴⁾^T^hⁱ^s^sub^s^e^c^tⁱ^o^{n d}^o^e^{s no}^t^a^p^p^l^y^wⁱ^t^h^r^e^sp^e^c^t^t^o^fu^ndⁱ^{ng c}^l^a^s^sⁱ^fⁱ^ed^as^adv^aⁿ^ce^procu^r^e^m^ent
^fu^ndⁱ^ng.
This provision was not included in the final version of the bill (S. 1124) that was passed by ²⁷
Congress and signed into law (P.L. 104-106 of February 10, 1996).
In considering options for responding to specific DOD proposals for non-conforming approaches,
or for addressing the issue of full funding in DOD procurement generally, Congress can consider
several factors, including Congress’s power of the purse, congressional oversight of DOD
procurement programs, future Congresses, DOD budgeting and program-execution discipline,
and the potential impact on weapon procurement costs.
As shown in the excerpts from the congressional hearings and reports presented in Appendix B,
the full funding policy has long been considered important to Congress’s ability to control
executive branch spending. DOD spending forms a large part of overall federal spending (and an
even larger share of discretionary federal spending). Procurement of weapons and equipment in
turn forms an important part of overall DOD spending (and an even larger share of the portion of
the DOD budget that is considered more “discretionary” in nature). Congressional hearings and

²⁶^Se^e^the^H^o^us^e^A^ppr^opr^ia^ti^on^C^o^m^m^itte^e^’^s^r^e^por^{t (}^H^.R^e^p^t.¹⁰^7-²⁹⁸^of^N^o^v^e^m^b^e^r^{19, 2}⁰⁰¹⁾^oⁿ^t^h^e^FY²⁰⁰²^de^f^e^ns^e
^a^ppro^p^ria^tio^{ns b}^{ill (H.R}^{. 3}³³⁸^),^p^.²⁶^1.
²⁷^T^h^e^c^onf^e^r^eⁿ^c^e^r^e^por^{t on}^H^.^R^.¹⁵³⁰⁽^H^.R^e^p^t.¹^04-⁴⁰^{6 of}^D^e^c^e^m^b^e^r^13,¹⁹⁹⁵⁾^w^a^s^pa^s^s^e^{d by}^C^ong^r^e^s^s^{but v}^e^toe^d^by
^the^P^r^e^s^ideⁿ^t^oⁿ^J^a^nua^r^y^28,¹⁹⁹⁵^{. C}^ong^r^e^s^s^theⁿ^pa^s^s^e^{d t}^h^e^c^onf^e^r^eⁿ^c^e^r^e^por^t^on^S.¹¹^24,^a^ne^w^v^e^r^s^ion^of^the^bil^l
⁽^H^.R^e^p^{t. 1}^04-⁴⁵^{0, J}^aⁿ^u^a^r^y^{22, 1}⁹⁹⁶⁾^,^w^h^ic^{h the}^P^r^e^sⁱ^d^eⁿ^{t s}ⁱ^gⁿ^e^dⁱⁿ^{to la}^w^.

GAO reports over the years suggest that circumscribing the application of the full funding policy
to DOD procurement programs could reduce congressional control over spending.
As also shown in the excerpts presented in Appendix B, the full funding policy has traditionally
been viewed as beneficial in terms of making the total cost of DOD weapons and equipment more
visible to Congress. As mentioned earlier, understanding total costs and how previously
appropriated funds are used are key components of Congress’s oversight capability. Incremental
funding or other non-conforming funding approaches, by spreading the costs of individual
weapons or pieces of equipment over several years, could complicate the task of understanding
and tracking total weapon costs and the uses of previously appropriated funds, particularly if such
approaches are applied to numerous weapon acquisition programs.
As also shown in the excerpts from the 1996 GAO report presented in Appendix B, however,
GAO’s case studies of certain federal agencies other than DOD suggests that there may be room
under certain circumstances for using alternative funding mechanisms, such as revolving funds, in
a way that preserves congressional control of spending and congressional oversight. The issue is
whether these alternative mechanisms would be appropriate for DOD, which has a much larger
budget and much larger annual capital needs than most other federal agencies.
As discussed in the excerpts presented in Appendix B, use of incremental funding or other non-
conforming approaches could commit future Congresses to providing funding for programs
initiated by previous Congresses, and thereby reduce the flexibility of future Congresses to adapt
current-year budgets to changing needs. Alternatively, as mentioned earlier, it could be argued
that incremental funding can enhance Congress’s ability to respond to changing circumstances by
giving future congresses the ability to stop funding the construction of a weapon that suddenly
becomes unnecessary or inappropriate due to unanticipated shifts in U.S. strategy or the
international security environment. Incremental funding, in this view, could permit Congress to
stop throwing good money after bad.
Independent of its importance to congressional powers and responsibilities, the full funding
policy is viewed by DOD and others as imposing discipline on DOD budgeting practices. As
shown in the excerpts presented in Appendix B, full funding is often viewed as helping to ensure
that DOD officials identify, make investment trade-offs on the basis of, and budget adequately for
the full costs of its weapons and equipment. In addition, DOD has sometimes stated that full
funding is a source of discipline on DOD program managers that encourages them to execute
their programs within cost.
Alternatively, as mentioned earlier, it could be argued that use of incremental funding can assist
in the making of unbiased investment trade-offs by avoiding a potential bias against the
procurement of very expensive items that might result from an item’s large up-front procurement
cost (which appears in the budget) overshadowing its long-term benefits (which do not appear in
the budget) or its lower life cycle operation and support (O&S) costs compared to alternatives
with lower up-front procurement costs. It could also be argued that some DOD procurement

programs incorporate significant amounts of advanced technology and that GAO, in a 2001 letter
report and briefing on incremental funding of capital asset acquisitions, stated that it “recognizes
that some incremental funding for high technology acquisitions is justified because, while such
projects are intended to result in a usable asset, they are closer in nature to research and ²⁸
development activities.”
In addition, it could be argued that use of incremental funding would be advantageous in DOD
budgeting because, as mentioned earlier, it reduces the amount of unobligated balances associated
with DOD procurement programs. Finally, it could be argued that use of incremental funding can
be advantageous in DOD budgeting because it implicitly recognizes potential limits on DOD’s
ability to accurately predict the total procurement costs of items, such as ships, that take several
years to build.
Funding approaches like incremental funding and advance appropriations can permit the military
services to start construction on a greater number of weapons in the near term than would be
possible under full funding. This could make incremental funding and advance appropriations
attractive in the near term to service officials, industry officials, and their supporters, particularly
given the decreased rates of weapon procurement that began in the early 1990s and are currently
programmed by DOD to continue for several more years. The full costs of weapons started under
these approaches, however, would eventually have to be paid in later years (along with the costs
of weapons procured in those later years).
As reflected in some of the excerpts presented in Appendix B, incremental funding traditionally
has been viewed as creating a potential for increasing weapon procurement costs due to
uneconomic start-up and stop costs that can occur when budget reductions or other unexpected
developments cause one or more of the planned increments to be reduced or deferred. A related
argument is that if firms are uncertain about approval of future funding increments for a particular
weapon, they may be less inclined to invest in new and more efficient production technologies for
that weapon, effectively increasing its cost.
It could also be argued, however, that incremental funding or advance appropriations can help
reduce weapon procurement costs in at least two specific cases. The first concerns a very
expensive item, such as a large ship, that is usually procured once every few years. The examples
usually cited are aircraft carriers and amphibious assault ships. If the Navy is not permitted to
have a one-year “spike” in the SCN account in the year that it procures such a ship, then fully
funding the ship within the SCN account could require other planned ship-procurement efforts to
be delayed to the following year. Such a delay, it can be argued, could disrupt the production lines
for those other ships, which could increase their procurement prices due to the resulting shut-
down and start-up costs.
The second concerns a very specific (and perhaps rare) scenario under which a weapon that is
beyond its initial “ramp-up” period of procurement (i.e., a program that is ready from a technical

²⁸^L^e^tte^{r da}^te^{d Fe}^brua^ry^26,²⁰^01,^t^o^Ho^nora^b^le^P^e^te^{V. Dom}^e^nicⁱ^{, C}^h^aⁱ^rm^aⁿ^{, Com}^m^itte^e^{on t}^h^e^Bu^dg^e^t^{, Unite}^d^Sta^t^e^s
^Se^na^te^{, f}^r^om^P^a^{ul L}^.^P^o^sⁿ^e^r^{, Ma}ⁿ^a^gⁱ^ng^Dⁱ^re^c^t^{or, Fe}^de^ra^{l Bu}^dg^e^t^{, S}^t^ra^te^gⁱ^c^Is^s^u^e^s^,^G^o^v^e^rn^m^e^{nt A}^c^c^ounta^b^ility^O^f^fⁱ^c^e^,
^{on t}^h^e^s^u^bje^c^t^“^B^udg^e^t^I^s^s^u^e^s^{: I}ⁿ^c^r^em^eⁿ^ta^{l Fun}^d^ing^of^C^a^pita^{l A}^s^s^e^{t A}^c^quis^itions^.”⁽^G^A^O^-^01-^432R^Iⁿ^c^r^e^m^eⁿ^ta^l
^Fun^d^ing^of^Ca^pita^{l A}^sse^{ts), p. 3.}

and managerial standpoint to execute higher rates of procurement) is, due to near-term budget
constraints, planned for procurement at a very uneconomic rate in the near term, but at a more-
than-economic-rate a few years later. Under such a specific scenario, use of incremental funding
or advance appropriations could permit the service to shift the start of production of some of the
units planned for later years into the near term, improving production economies of scale in the
near term while preserving adequate production economies of scale in later years. If the near-term
gains in economies of scale are greater than the downstream losses in economies of scale, the
result could be a reduced combined procurement cost for all of the weapons in question.
Two factors bear upon the current debate over whether to procure DOD weapons using non-
conforming funding approaches: The first is the relatively low rates at which many DOD weapon
and equipment programs are currently planned for procurement. The second is the interest that
some Members of Congress have in modernizing DOD’s weapons and equipment more quickly
than now planned and in maintaining the financial health of U.S. defense firms, particularly those
that have experienced several years of reduced production rates. One potentially important
question is whether the military services or defense firms are taking advantage of these two
factors to induce Congress to adopt non-conforming funding approaches that could permit
increased weapon-procurement rates in the near term, but also, by reducing adherence to the full
funding policy, permanently weaken Congress’s ability to conduct oversight of DOD programs.
Military and defense-industry officials likely would not admit openly to pursuing such a strategy.
Indeed, they might not even be aware that proposals for non-conforming funding approaches
could pose such a trade-off for Congress. Nevertheless, addressing such proposals may involve
balancing a need to meet DOD procurement goals within available funding against the goal of
preserving Congress’s control over DOD spending and its ability to conduct oversight of DOD
programs.

H.R. 1585S. 1547
The House Armed Services Committee, in its report (H.Rept. 110-146 of May 11, 2007) on the
FY2008 defense authorization bill (H.R. 1585), approved the Navy’s FY2008 request for the
second of two increments of procurement funding for the amphibious assault ship LHA-6, the
second of two increments of procurement funding for the first two DDG-1000 destroyers, and the
first of two increments of procurement funding for the aircraft carrier CVN-78.
The Senate Armed Services Committee, in its report (S.Rept. 110-77 of June 5, 2007) on the
FY2008 defense authorization bill (S. 1547), approved the Navy’s FY2008 request for the second
of two increments of procurement funding for the amphibious assault ship LHA-6, the second of
two increments of procurement funding for the first two DDG-1000 destroyers, and (with a
recommended $20-million reduction) the first of two increments of procurement funding for the

aircraft carrier CVN-78. With regard to Space-Based Infrared Satellite System (SBIRS) High
satellites, the committees report states:
^T^h^{e bu}^dg^et^requ^es^tⁱⁿ^cl^u^d^{ed $587.}^{0 m}ⁱ^l^lⁱ^oⁿⁱⁿ^R^e^s^earch^,^D^e^v^e^l^o^p^m^eⁿ^t^,^T^e^s^t^{, an}^d
^Ev^alu^a^tion^,^Aⁱ^{r Force (R}^DT^{EAF), P}^E⁶⁴^{441F, f}^o^{r Space-}^B^a^s^e^{d In}^f^r^{ared Satellite}^S^y^s^t^e^m
^(SB^I^R^S^{) Hig}^h^.^T^h^{e com}^mⁱ^t^t^{ee recom}^m^eⁿ^d^s^anⁱⁿ^creas^{e of}^$100^{.0 m}^illion^{to addres}^s
ⁿ^oⁿ^r^ecu^rriⁿ^g^aⁿ^{d oth}^e^{r obs}^oles^cen^{ce is}^s^u^es^{to s}^u^{pport SB}^IR^S^High^{GEO s}^a^tellite^s^t^h^r^e^e^aⁿ^d
^f^o^u^r^.^As^{a re}^s^u^l^t^{of t}^h^{e ti}^m^e^elaps^e^{d bet}^w^eeⁿ^t^h^{e acq}^uⁱ^s^iti^on^of^th^e^SB^IR^S^Hi^g^h^GEO
^satellite^{s o}ⁿ^{e a}ⁿ^d^t^w^o^an^d^t^h^{e p}^l^anⁿ^e^d^acq^uⁱ^sitioⁿ^o^f^sa^{tellites t}^h^r^{ee a}ⁿ^d^f^o^u^r^{, so}^m^e
^sⁱ^gnⁱ^fⁱ^c^aⁿ^t^redesⁱ^gn^w^o^rkⁱ^s^neces^s^a^r^y^{. T}^hⁱ^s^g^a^{p h}^a^s^s^e^rv^ed^t^o^hⁱ^gh^lⁱ^gh^t^anⁱ^s^su^{e i}ⁿ^t^h^e
^a^l^l^o^c^a^tⁱ^o^{n b}^e^t^w^e^e^{n r}^e^se^a^r^c^h^aⁿ^d^d^e^ve^l^o^p^m^eⁿ^t^f^undⁱⁿ^g^f^o^r^con^s^t^e^l^l^a^tⁱ^oⁿ^s^wⁱ^t^h^a^sm^al^l^num^ber
^o^f^sa^te^llite^s.^W^h^ile^the^c^o^mmit^t^e^e^d^o^e^{s no}^t^s^u^pportⁱⁿ^c^r^e^m^eⁿ^ta^l^f^uⁿ^dⁱⁿ^g^of^s^a^t^e^l^{lite p}^r^o^g^r^a^m^s^,
^p^r^o^d^u^ctioⁿ^o^r^ac^q^u^isitioⁿ^g^a^p^sⁱⁿ^th^e^s^{e s}^m^{all co}ⁿ^s^te^llatioⁿ^s^{, in}^cer^tain^li^m^ited^cⁱ^r^c^u^m^st^aⁿ^c^e^s
^m^a^y^dⁱ^ctate^tr^eat^m^eⁿ^t^o^f^th^e^s^e^later^sate^llite^{s as}^r^e^sear^ch^an^d^d^e^v^e^lo^p^m^en^{t sa}^tellite^{s. T}^h^is
^p^r^o^b^l^em^{is li}^m^ited^to^coⁿ^s^te^l^l^atioⁿ^s^o^fⁿ^o^m^o^r^e^th^aⁿ^f^o^u^r^{satellites a}ⁿ^d^o^ccu^r^s^w^h^eⁿ
^s^u^bs^taⁿ^{tial n}^oⁿ^r^ec^u^rring^cos^t^s^areⁱⁿ^cu^rred.
^T^h^{e co}^m^mⁱ^{ttee directs}^t^h^{e Secr}^etar^y^{of De}^f^e^ns^e^{to s}^u^b^mⁱ^t^a^{report n}^o^{later t}^h^aⁿ^Au^gus^t
¹^,²⁰⁰⁷^o^u^tlinⁱⁿ^g^t^h^{e b}^u^d^g^etar^y^an^d^p^r^o^g^r^a^m^m^a^{tic i}^m^p^licati^oⁿ^s^o^f^u^tiliziⁿ^g^Re^sear^ch^an^d
^Dev^e^lo^p^m^eⁿ^t^f^uⁿ^d^s^f^o^r^s^m^{all c}^oⁿ^s^tellatⁱ^oⁿ^{s o}^f^sate^llitesⁱⁿ^lⁱ^m^ited^cir^c^u^m^staⁿ^{ces, i}ⁿ^cl^u^dⁱⁿ^g
^w^h^eⁿ^s^u^c^h^{a fu}ⁿ^dⁱⁿ^g^approa^ch^mⁱ^gh^{t be appro}^p^riate.^T^h^{e com}^m^{ittee al}^s^o^directs^th^e
^Secr^etar^y^to^ad^d^r^essⁱⁿ^th^e^r^e^p^o^r^{t alter}ⁿ^ativ^e^ap^p^r^o^ach^es^an^d^o^p^tioⁿ^s^to^f^uⁿ^d^satel^lite
^d^e^v^e^lo^p^m^en^t^an^d^te^stiⁿ^g^,ⁱⁿ^c^l^u^dⁱⁿ^g^t^h^{e e}^s^tab^lis^h^m^en^t^o^f^a^siⁿ^g^l^e^Aⁱ^r^Fo^r^{ce b}^u^d^g^{et li}ⁿ^e^f^o^r
^s^p^{ace res}^earch^{, dev}^e^lop^m^{ent, an}^{d tes}^tⁱⁿ^g^.^(P^ag^{e 230)}

H.R. 5122
In its report (H.Rept. 109-452 of May 5, 2006) on H.R. 5122, the House Armed Services
Committee recommended approval of the Administration’s proposed use of split funding FY2007
and FY2008 for procuring the amphibious assault ship LHA-6, but did not recommend approval
of the Administration’s proposal to use split funding in FY2007 and FY2008 for procuring the
two lead DDG-1000 destroyers. The committee for FY2007 instead recommended full funding
for one DDG-1000, and design funding for a second. The committee also did not recommend
approval of the Administration’s request to use incremental funding for procuring F-22 aircraft.
Regarding shipbuilding programs, the committee’s report also states:
^T^h^{e bu}^dg^et^requ^es^t^reco^m^m^e^ndsⁱⁿ^cre^m^eⁿ^t^a^l^fuⁿ^dⁱⁿ^g^f^o^{r 3 of t}^h^{e 7 s}^hⁱ^p^sⁱⁿ^t^h^{e requ}^e^s^t^,
ⁱⁿ^c^l^udⁱⁿ^{g fo}^r^t^h^e^fⁱ^r^s^t^tⁱ^me^c^oⁿ^s^t^r^uc^tⁱ^o^{n o}^f^a^s^u^r^f^ace^co^m^b^atan^t,^th^eⁿ^e^x^t^-g^en^eratioⁿ^des^t^ro^y^e^r
^D^D⁽^X⁾^.^Fur^t^he^r^m^o^r^e^,^d^u^rⁱⁿ^g^t^h^e^c^o^nsi^d^e^r^a^tⁱ^oⁿ^of^t^h^e^N^a^tⁱ^onal^D^e^f^e^ns^{e A}^u^t^h^ori^zatⁱ^oⁿ^A^c^t^for
^Fⁱ^s^cal^Y^{ear 2006 (P.L}^{. 109-}¹^{63), t}^h^{e N}^a^vy^s^oug^h^t^an^d^w^a^s^g^r^aⁿ^t^e^{d t}^h^{e a}^u^t^h^ori^t^y^t^o^us^e
ⁱⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^f^o^r^th^eⁿ^e^x^t^air^c^r^a^f^t^car^{rier [C}^VN^-^78],^w^h^ic^h^w^ill^{be recorded as}
^procu^r^{ed i}ⁿ²⁰⁰^8.
^T^h^{e co}^m^m^ittee^r^e^m^aⁱⁿ^{s co}ⁿ^cerⁿ^e^d^th^at^th^e^u^s^e^o^fⁱⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^isⁿ^o^{t a so}^l^u^tioⁿ
^t^o^t^h^{e N}^a^vy^’^s^probl^e^mⁱⁿ^fundiⁿ^g^shⁱ^pbuⁱ^l^dⁱⁿ^g^.^Whⁱ^l^eⁱⁿ^cr^e^m^ent^a^l^fuⁿ^dⁱⁿ^g^can^al^l^o^w^t^h^e
^N^a^vy^t^o^sm^oot^h^out^t^h^{e dra}^m^atⁱ^c^s^pⁱ^k^e^sⁱⁿ^shⁱ^pbuⁱ^l^dⁱⁿ^g^fun^dⁱⁿ^g^requⁱ^r^{ed as}^{a re}^s^u^l^t^of
^aircraf^t^{carrier con}^s^tr^u^c^tion^e^v^ery^f^o^u^r^{or f}ⁱ^v^e^y^ear^{s, it d}^o^e^sⁿ^o^t^f^uⁿ^d^a^m^en^ta^ll^yⁱⁿ^cr^ease^th^e
ⁿ^u^m^b^er^o^f^s^h^ip^{s t}^h^{at a}^gⁱ^v^eⁿ^a^m^o^uⁿ^{t o}^f^m^oⁿ^e^y^wⁱ^l^l^p^u^r^c^h^a^{se. D}^u^rⁱⁿ^g^t^h^{e co}^m^m^ittee^’^s
^h^earing^s^on^s^h^ipbu^ildiⁿ^g^,^all^witn^es^s^e^s^e^m^p^h^as^{ized th}^{e i}^m^portan^{ce of}^prog^ra^m^an^{d f}^uⁿ^dⁱⁿ^g
^stab^ilit^y^{as t}^h^{e to}^p^p^r^io^r^ity^f^o^r^r^e^d^u^cin^g^t^h^{e co}^{st o}^f^shⁱ^p^b^u^ildⁱⁿ^g^aⁿ^d^s^u^staⁱⁿⁱⁿ^g^t^h^e
^s^hⁱ^pbuⁱ^l^di^ngⁱⁿ^dus^t^rⁱ^a^l^bas^e^.^T^h^{e com}^mⁱ^t^t^{ee n}^o^t^e^s^t^h^at^C^ong^res^s^adopt^{ed t}^h^{e fu}^l^l^fun^dⁱ^ng
^polⁱ^c^yⁱⁿ^t^h^{e 1950s}ⁱⁿ^part^beca^u^s^e^of^a^con^cerⁿ^t^h^atⁱⁿ^cre^m^ent^a^l^fun^dⁱⁿ^g^w^a^s^det^rⁱ^m^ent^a^l^t^o
^f^uⁿ^dⁱⁿ^g^stab^ilit^y^.^F^u^t^u^r^e^coⁿ^g^r^e^sse^s^m^a^y^fⁱⁿ^d^t^h^e^m^sel^v^es^uⁿ^w^illiⁿ^g^,^o^r^uⁿ^ab^{le, to}^f^uⁿ^d
^co^m^p^letⁱ^oⁿ^o^f^s^h^ip^{s b}^e^g^uⁿⁱⁿ^p^r^io^r^y^ear^{s a}ⁿ^d^oⁿ^l^y^p^a^r^tiall^y^f^uⁿ^d^ed^{. T}^h^{e co}^m^m^{ittee r}^e^m^aⁱⁿ^s
^coⁿ^vⁱⁿ^ced^th^{at t}^h^e^f^u^ll^f^uⁿ^dⁱⁿ^g^p^o^lic^y^{is t}^h^{e co}^r^r^{ect p}^o^licy^f^o^r^f^uⁿ^dⁱⁿ^g^sh^ip^b^u^ildⁱⁿ^g^.
^T^h^{e com}^mⁱ^ttee^uⁿ^d^ers^t^aⁿ^ds^t^h^{at t}^h^{e Depart}^m^eⁿ^t^{of De}^f^e^ns^{e t}^h^is^y^{ear co}ⁿ^s^idered
^s^u^b^mⁱ^s^sⁱ^on^of^{a l}^e^gⁱ^s^l^atⁱ^v^{e propos}^al^t^h^at^w^o^u^l^{d per}^m^an^eⁿ^t^l^y^a^u^t^h^ori^{ze t}^h^{e u}^s^{e of}^“^s^plⁱ^t
^f^uⁿ^dⁱⁿ^g^”^f^o^{r aircra}^f^t^carriers^aⁿ^{d larg}^e^deck^a^m^p^h^ibiou^s^s^hⁱ^p^s^,^an^{d t}^h^e^Navy^’s^fⁱ^s^cal^y^ear
²⁰⁰⁷^s^hⁱ^pbuⁱ^l^dⁱⁿ^g^pl^an^al^read^y^as^s^u^m^e^s^su^c^h^au^t^h^o^rⁱ^t^y^f^o^r^t^h^e^s^e^c^oⁿ^d^L^H^A^c^l^a^s^s^am^p^hⁱ^bⁱ^o^u^s
^assa^u^{lt s}^h^ip^{. T}^h^{e co}^m^mⁱ^{ttee h}^a^{s ap}^p^r^o^v^ed^th^{e u}^s^{e o}^f^sp^lit^f^uⁿ^dⁱⁿ^g^f^o^r^cer^tain^sh^ip^{s in}^cer^taiⁿ
^c^a^s^e^s^.^Ho^w^e^ve^r^,^the^c^o^mmitte^e^d^o^e^{s no}^{t b}^e^lie^ve^tha^t^a^b^l^a^nke^t^p^o^lⁱ^c^y^su^pportⁱⁿ^gⁱⁿ^c^r^e^m^eⁿ^t^a^l
^f^uⁿ^dⁱⁿ^g^f^o^r^an^y^cla^{ss o}^f^sh^ip^is^ap^p^r^o^p^rⁱ^{ate, an}^d^h^a^{s n}^o^{t in}^c^l^u^d^ed^su^ch^{a p}^r^o^v^isioⁿⁱⁿ^t^h^{e b}^ill.
^(Pag^es^68-⁶⁹⁾
Regarding the F-22 program, the committee’s report states:

^T^h^{e com}^mⁱ^t^t^{ee n}^o^t^e^s^t^h^at^t^h^{e Fi}^s^cal^Y^{ear 2007}^bu^dg^et^r^e^q^u^e^s^tⁱⁿ^c^l^u^d^e^d^$²^b^illioⁿ^f^o^r^th^e
^D^e^part^m^eⁿ^t^of^t^h^e^Aⁱ^{r F}^o^rce’^s^F^-^{22 ai}^rcraf^t^prog^ra^m^.^H^o^w^e^{ver, des}^pⁱ^t^e^t^h^e^Fⁱ^s^c^a^l^Y^e^a^r²⁰⁰⁶
^pro^j^ectⁱ^oⁿ^f^o^{r procu}^r^e^m^eⁿ^t^o^f^{29 F}^-^22’^{s i}ⁿ^Fi^s^cal^Y^{ear 2007,}^t^h^e^fun^d^s^requ^e^s^t^e^d^f^o^{r F}ⁱ^s^c^a^l
^Y^{ear 2007}^w^e^{re f}^o^r^s^u^ba^s^s^e^m^b^lⁱ^e^{s an}^dⁿ^o^t^ai^rcra^f^t^.^R^a^t^h^{er t}^h^aⁿ^a^u^t^h^ori^{ze i}ⁿ^cre^m^eⁿ^t^a^l
^fuⁿ^dⁱⁿ^g^fo^r^m^a^j^o^r^aⁱ^r^c^r^a^ft^p^r^o^g^r^a^m^s^,^whⁱ^c^h^C^oⁿ^g^r^e^s^s^h^a^sⁿ^o^t^d^oⁿ^eⁱⁿ^d^ecad^es,^th^e^co^m^m^itte^e
^r^eco^m^m^eⁿ^d^{s an}^ad^d^itioⁿ^a^{l $}¹^.⁴^b^illioⁿ^f^o^r^th^{e f}^u^{ll f}^uⁿ^dⁱⁿ^g^f^o^r^p^r^o^c^u^r^em^eⁿ^t^o^f²⁰^F^-²²
^ai^rcraf^t^{. (P}^ag^{e 14)}
The report also states:
^T^h^e^b^u^d^g^et^r^e^q^u^est^coⁿ^t^ain^e^d^$¹^.⁵^b^illioⁿ^f^o^r^t^h^e^F^-²²^aⁱ^r^c^r^a^f^t^p^r^o^c^u^r^e^m^en^t^p^r^o^g^r^a^m^,^b^u^t
ⁱⁿ^cl^u^d^{ed i}ⁿ^su^ffⁱ^cⁱ^eⁿ^t^fuⁿ^d^s^t^o^procu^r^{e 20 F}^-^{22 ai}^rc^raf^tⁱⁿ^fⁱ^scal^y^{ear 2007..}^..
^T^h^{e bu}^dg^et^requ^estⁱⁿ^cl^u^d^{ed a}ⁿ^F-²²^m^u^l^tⁱ^y^{ear acq}^uⁱ^sⁱ^tⁱ^on^st^rat^e^gy^t^o^procu^r^{e 3 l}^o^t^s^,
ⁿ^u^m^b^{ered as}^{lots 7 th}^rough^9,^each^cons^is^ti^ng^{of 20 aircraf}^t^,^bet^w^eeⁿ^fⁱ^s^cal^y^{ears 2008 an}^d
^2010.^A^s^{part of}^th^is^s^t^rategy^{, t}^h^{e bu}^dg^{et requ}^{est in}^cl^u^d^{ed a plan}^{to in}^cre^m^eⁿ^tall^y^f^uⁿ^d^each
^of^t^h^es^{e t}^h^{ree lots}^ov^{er a t}^h^ree^y^{ear period th}^rou^g^h^b^u^dg^etiⁿ^g^f^o^{r adv}^aⁿ^c^e^procu^r^e^m^eⁿ^{t t}^w^o
^y^ear^{s p}^r^io^r^to^f^u^ll^f^uⁿ^dⁱⁿ^g^,^su^b^a^sse^m^b^l^y^acti^v^itie^{s to}^b^e^b^u^d^g^eted^oⁿ^e^y^ear^p^r^io^r^to^f^u^l^l
^f^uⁿ^dⁱⁿ^g^,^an^{d fin}^a^{l as}^s^e^m^b^l^y^{to be bu}^dg^{eted in}^th^{e th}^ird^y^{ear. Th}^{e co}^m^mⁱ^t^t^e^e^uⁿ^d^e^r^s^t^aⁿ^d^s^t^h^a^t
^th^{e Dep}^a^r^t^m^eⁿ^t^o^f^Def^eⁿ^s^e’^{s F}^-²²^m^u^l^tⁱ^y^ear^acq^uⁱ^sitioⁿ^st^r^a^te^g^y^isⁱⁿ^c^oⁿ^sⁱ^s^t^eⁿ^t^wⁱ^th^th^e^f^u^l^l^-
^f^uⁿ^dⁱⁿ^g^polⁱ^c^y^w^hⁱ^c^h^w^o^u^l^{d al}^l^o^w^f^o^{r adv}^aⁿ^{ce procu}^r^e^m^eⁿ^t^of^l^ong^-^l^{ead i}^t^e^m^s^t^o^prot^ect^a
^delⁱ^v^er^y^s^c^h^e^du^l^e^{, a}ⁿ^{d requ}ⁱ^r^{e a bu}^dg^et^f^o^{r procu}^r^em^eⁿ^t^of^co^m^p^l^e^t^e^an^{d us}^eabl^e^en^{d i}^t^e^m^s
ⁱⁿ^{a f}ⁱ^s^cal^y^ear.
^T^h^e^c^o^m^mⁱ^t^t^e^e^c^oⁿ^sⁱ^d^e^r^s^t^h^e^F^-²²ⁱⁿ^c^r^e^m^eⁿ^t^a^l^f^uⁿ^dⁱⁿ^g^acq^uⁱ^s^itioⁿ^str^a^te^g^y^to^b^e^w^h^o^l^l^y
^uⁿ^{acceptable. T}^h^{e co}^m^mⁱ^ttee^believ^e^s^th^at^t^h^e^f^u^ll^-^f^un^ding^p^o^lic^y^s^h^{ould appl}^y^to^th^e^F^-²²
^ai^rcraf^t^procu^r^em^eⁿ^t^prog^ra^m^,^an^{d any}^ot^h^e^{r D}^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^{e ai}^rcraf^t^procu^r^e^m^eⁿ^t
^p^r^o^g^ram^coⁿ^t^e^m^p^l^atedⁱⁿ^t^h^e^f^o^reseeab^{le f}^u^t^u^{re. T}^h^{e co}^mm^ittee^f^u^rt^h^e^{r b}^e^liev^e^{s t}^h^at
ⁱⁿ^cre^m^eⁿ^tal^fun^d^ing^{of aircraf}^t^procu^r^e^m^en^t^prog^ra^m^s^pres^eⁿ^ts^{an un}^{acceptable bu}^dg^e^ting
^ris^k^th^a^t^{, du}^{e to u}ⁿ^f^o^res^een^cir^c^um^s^t^aⁿ^ces^{, fu}^t^u^{re fu}ⁿ^dⁱⁿ^gⁱⁿ^c^r^e^m^en^t^s^m^a^yⁿ^o^{t be au}^th^o^rⁱ^z^e^d
^an^{d appropri}^a^t^e^{d t}^o^pr^ovⁱ^d^{e t}^h^{e requ}ⁱ^r^{ed fu}ⁿ^dⁱⁿ^{g i}ⁿ^cre^m^eⁿ^t^s^w^hⁱ^c^h^w^oul^{d res}^u^l^tⁱⁿ^partⁱ^a^l^l^y
^co^m^p^leted^eⁿ^d^ite^m^s^th^{at ar}^e^o^fⁿ^o^m^ili^tar^y^v^a^lu^{e to}^th^e^Dep^a^r^t^m^eⁿ^t^o^f^Def^eⁿ^s^{e o}^r^to
^w^a^r^fⁱ^ghtⁱⁿ^{g c}^o^mma^nd^s.
^T^h^er^ef^o^r^{e, th}^{e co}^m^m^ittee^r^eco^m^m^en^d^s^$²^.⁹^b^illioⁿ^to^f^u^l^l^y^f^uⁿ^d^aⁿ^d^p^r^o^c^u^r^{e 2}⁰^F-²²
^aircraf^t^{in f}ⁱ^s^cal^y^{ear 2007, an}ⁱⁿ^creas^{e of}^{$1.4 billion}^.^T^h^{e com}^mⁱ^ttee^v^e^r^y^s^t^ron^g^l^y^u^r^g^e^s
^th^{e Depart}^m^eⁿ^t^of^Def^e^ns^{e an}^{d th}^{e Depart}^m^eⁿ^t^of^t^h^e^Aⁱ^{r Force to res}^t^ru^ctu^r^{e i}^t^s^f^u^tu^r^e^F^-²²
^procu^r^em^eⁿ^t^bu^d^g^et^pl^ans^t^o^com^p^l^y^wⁱ^t^h^t^h^{e fu}^l^l^-f^un^diⁿ^g^p^o^lⁱ^c^y^.^(Pag^{e 105)}
The report also commented on the use of incremental funding for military construction programs,
which are not procurement programs, but rather programs for building military bases and
facilities. Military construction programs are funded through a military construction
appropriations bill that is separate from the DOD appropriation bill, and consequently are not
subject to the full funding policy that covers items funded through the procurement title of the
DOD appropriation bill. Military construction programs have made regular use of incremental
funding. With regard to military construction programs, the report states:
^T^h^{e com}^mⁱ^t^t^{ee i}^s^t^r^ou^bl^{ed by}^t^h^{e Janu}^ar^y^{10, 2006,}^g^uⁱ^d^aⁿ^{ce f}^r^o^m^t^h^{e O}^f^fⁱ^{ce of}
^Man^a^g^e^m^eⁿ^t^an^{d B}^u^dg^{et to ceas}^{e u}^s^{e of}ⁱⁿ^cre^m^eⁿ^{tal fundin}^g^of^m^ilitar^y^coⁿ^s^tr^u^c^tion
^p^r^o^j^{ects ex}^cep^t^f^o^r^th^{e p}^u^r^p^o^s^{es o}^f^b^a^se^r^ealigⁿ^m^eⁿ^{t a}ⁿ^d^clo^s^u^r^{e acti}^v^itie^{s an}^d^p^r^o^j^{ects th}^at
^h^a^v^e^“m^aj^{or n}^a^tion^a^{l s}^e^c^u^rit^yⁱ^m^pacts^.^”
^D^u^{e t}^o^t^h^{e i}^m^pl^e^m^en^t^a^tⁱ^oⁿ^o^f^t^hⁱ^s^guⁱ^d^an^{ce d}^u^ri^ng^t^h^e^fⁱ^s^cal^y^{ear 2007 bu}^dg^et^proces^s^,
^Depart^m^eⁿ^t^o^f^De^f^eⁿ^s^{e co}^m^p^oⁿ^en^t^s^w^e^re^f^o^{rced to cu}^{t a}ⁿ^u^{mber of}ⁱ^m^portan^t^proj^ects^f^r^o^m

^th^{e fis}^cal^y^{ear 2007 p}^r^og^ram^.^As^{a res}^u^l^t^{, s}^e^v^e^{ral cons}^tru^c^ti^on^pro^j^ects^th^{at are critical to}
^m^ilitar^y^readⁱⁿ^es^{s, i}^m^p^o^r^tan^t^t^o^th^{e ef}^f^ect^iv^{e co}ⁿ^d^u^c^{t o}^f^m^ilit^ary^o^p^e^ratioⁿ^s^{, o}^rⁿ^ecessar^y^to
^en^h^aⁿ^{ce qu}^alit^y^of^li^f^e^h^a^v^e^beenⁱⁿ^de^fⁱ^nitel^y^de^f^e^{rred. In}^{at l}^eas^{t on}^{e s}^u^c^h^cas^e^,ⁱⁿ^c^r^em^eⁿ^t^a^l
^ex^ecu^tⁱ^on^w^oul^{d l}ⁱ^k^el^y^{be t}^h^e^m^o^{re e}^f^fⁱ^ci^eⁿ^t^m^eans^of^fuⁿ^dⁱⁿ^g^an^{d cons}^t^r^u^c^tⁱ^ng^t^h^{e proj}^ect^.
^T^h^{e com}^m^itteeⁿ^o^tes^t^h^{at t}^h^e^Depart^m^eⁿ^t^h^a^s^{a record of}^e^f^fectiv^e^m^aⁿ^a^g^e^m^eⁿ^t^w^h^ile
^u^tiliziⁿ^gⁱⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^f^o^r^mⁱ^litar^y^coⁿ^s^tr^u^c^tioⁿ^p^r^o^j^ects.^A^s^s^u^ch^{, t}^h^{e co}^m^m^ittee
^recom^m^eⁿ^d^s^“^r^e-ⁱⁿ^cre^m^eⁿ^ti^ng^{” t}^w^{o proj}^ects^con^t^ain^e^{d in}^th^{e bu}^dg^{et requ}^e^s^{t, in}^cl^u^dⁱⁿ^g
^{recapitalization}^of^h^aⁿ^g^a^{r 5 at}^Nav^a^l^Aⁱ^r^Station^W^h^idbe^y^Is^l^aⁿ^d^{, W}^a^s^hⁱⁿ^gton^{. W}^hⁱ^l^{e this}
^w^o^u^l^{d res}^u^ltⁱⁿ^a^f^uⁿ^dⁱⁿ^g^red^u^ctionⁱⁿ^fⁱ^s^cal^y^{ear 2007 of}^$31,^153,⁰⁰⁰^{, th}^{e co}^m^m^ittee
^recom^m^eⁿ^d^s^fu^{ll au}^t^h^{orization f}^o^{r th}^{e pro}^j^ect^of^$5^7,65^3,0⁰⁰^an^{d ex}^pects^th^{e Secretar}^y^of
^t^h^{e N}^a^vy^t^o^ex^ec^u^t^{e t}^h^{e proj}^ec^t^uⁿ^d^{er prov}^enⁱⁿ^cre^m^eⁿ^t^a^l^f^uⁿ^dⁱⁿ^g^practⁱ^ces^{. (Pag}^{e 431)}
The report similarly states:
^A^sⁿ^o^t^e^{d [earl}ⁱ^e^{r i}ⁿ^t^h^{e report}^]^{, t}^h^{e co}^m^mⁱ^t^t^{ee i}^s^t^r^ou^bl^ed^by^t^h^e^Jan^u^a^r^y^{10, 2006}^,
^g^uⁱ^daⁿ^{ce f}^r^o^m^t^h^{e Off}ⁱ^{ce of}^M^aⁿ^a^g^e^m^eⁿ^t^an^{d B}^u^dg^{et to ceas}^{e u}^s^{e of}ⁱⁿ^cre^m^{ental f}^uⁿ^dⁱⁿ^g^o^f
^m^ilitar^y^coⁿ^s^tr^u^c^tioⁿ^p^r^o^j^ects^ex^cep^{t f}^o^r^th^{e p}^u^r^p^o^s^{es o}^f^b^a^{se r}^ealigⁿ^m^eⁿ^{t an}^d^clo^s^u^r^e
^activ^itie^{s an}^d^p^r^o^j^{ects th}^{at h}^a^v^e^“m^aj^o^rⁿ^a^tioⁿ^a^{l secu}^rⁱ^t^yⁱ^m^p^acts.”
^In^lⁱ^g^h^t^{of t}^h^{e D}^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^e^’^{s prov}^en^{record of}^e^ffectⁱ^v^e^m^aⁿ^a^g^e^m^eⁿ^t^w^hⁱ^l^e
^u^tiliziⁿ^gⁱⁿ^cr^e^m^en^{tal f}^uⁿ^dⁱⁿ^g^f^o^r^m^ilitar^y^coⁿ^s^tr^u^c^tioⁿ^p^r^o^j^ec^{ts, th}^{e co}^m^m^{ittee r}^e^c^o^m^m^eⁿ^d^s
^“^r^e-in^cre^m^eⁿ^tiⁿ^g^”^t^h^{e p}^r^o^j^{ect t}^o^rep^l^{ace a clin}^{ic at MacDill}^{Air Fo}^{rce B}^a^{se, Flo}^r^id^{a. W}^h^ile
^t^hⁱ^s^res^u^l^t^sⁱⁿ^a^fun^dⁱⁿ^g^redu^ctⁱ^{on i}ⁿ^fⁱ^s^cal^y^{ear 2007 of}^$41,4^00,0^{00, t}^h^{e com}^mⁱ^t^t^e^e
^recom^m^eⁿ^d^s^fu^{ll au}^t^h^{orization f}^o^{r th}^{e pro}^j^ect^of^$9^2,00^0,0⁰⁰^an^{d ex}^pects^th^{e Secretar}^y^of
^D^e^f^eⁿ^s^{e t}^o^ex^ec^u^t^{e t}^h^{e proj}^ect^uⁿ^d^{er prov}^enⁱⁿ^cre^m^eⁿ^t^a^l^f^undiⁿ^g^practⁱ^ces^{. (Pag}^{e 434)}
Section 121 of the Senate version of the FY2007 defense authorization bill (S. 2766 would
authorize the use of four-year incremental funding for procuring CVN-78 and future aircraft
carriers, rather than split funding (i.e., 2-year incremental funding) as proposed by the Navy.
Under 4-year incremental funding, the main portion of the procurement cost of CVN-78, for
example, would be divided into four increments that would be provided in FY2008, the ship’s
year of procurement, and the three following years.
Section 121 would also authorize the Navy to contract in FY2007 for the procurement long-lead
items for CVN-79 and CVN-80, aircraft carriers that the Navy plans to procure in FY2012 and
FY2016, respectively. This authority resembles an economic order quantity (EOQ) arrangement,
except that EOQs normally take place within the context of a multiyear procurement (MYP).
These ships have not been approved for MYP, and under past practice would not qualify for it
under the requirements set forth in the law governing MYP arrangements. MYP arrangements are
permitted to cover items to be procured over a period of up to five years, while the authority
granted under Section 121 would cover three ships that the Navy wants to procure over a period
of nine years (FY2008-FY2016).
Section 146 of the bill would prohibit the use of incremental funding for procuring F-22 aircraft.
(The section would also prohibit the Air Force from entering into a multiyear procurement (MYP)
contract for the program in FY2007.)

In its report (S.Rept. 109-254 of May 9, 2006) on S. 2766, the Senate Armed Services Committee
recommended approval of the Administration’s proposed use of split funding FY2007 and
FY2008 for procuring LHA-6 and the two lead DDG-1000s.
With regard to Section 121 on aircraft carriers, the report states:
^T^h^{e com}^m^{ittee reco}^m^m^eⁿ^d^s^a^prov^is^ion^th^at^w^o^u^l^{d au}^t^h^{orize th}^{e Secretar}^y^of^th^e^N^a^v^y
^toⁱⁿ^cr^e^m^en^tall^y^f^uⁿ^d^p^r^o^c^u^r^em^en^{t o}^f^CVN^-²¹^cl^as^s^aircraf^t^carriers^ov^{er f}^o^u^r^y^{ear periods}^,
^com^m^eⁿ^cⁱⁿ^g^wⁱ^t^h^C^V^N^-^{78 procu}^r^e^m^eⁿ^tⁱⁿ^fⁱ^s^cal^y^{ear 2008.}^T^h^{e bu}^dg^et^requ^es^tⁱⁿ^cl^u^d^ed
^$739.^{1 m}^{illion i}ⁿ^S^h^ipbu^ildiⁿ^{g an}^d^C^onv^ersⁱ^oⁿ^{, Na}^vy⁽^S^C^N⁾^f^o^{r C}^V^N^-^{78 adv}^aⁿ^c^e
^procu^r^em^eⁿ^{t an}^{d $45.1 m}^illioⁿⁱⁿ^S^C^{N f}^o^{r C}^V^N^-^{79 adv}^aⁿ^c^{e procu}^r^em^eⁿ^{t. T}^h^{e prov}^is^ion
^w^o^u^l^{d al}^s^o^au^t^h^ori^{ze adv}^aⁿ^ce^procu^r^em^eⁿ^t^f^o^{r C}^V^N^-^{80, co}^mm^en^ci^ngⁱⁿ^fⁱ^s^cal^y^{ear 2007.}
^In^revⁱ^e^wⁱⁿ^g^t^h^{e bu}^dg^e^t^requ^es^{t f}^o^{r f}ⁱ^s^cal^y^{ear 2006, th}^{e co}^m^m^{ittee recei}^v^e^{d tes}^tⁱ^m^oⁿ^y
^f^r^o^m^th^{e Na}^v^y^aⁿ^dⁱⁿ^d^u^s^tr^y^t^h^a^t^th^{e lo}^w^r^a^{te o}^f^s^h^ip^b^u^ildⁱⁿ^g^{was d}^r^ivⁱⁿ^g^hⁱ^g^h^er^co^st^s^,^w^hⁱ^c^h
ⁱⁿ^tu^rⁿ^f^u^r^t^h^e^r^r^e^d^u^ced^sh^ip^b^u^ildⁱⁿ^g^r^a^{tes, cr}^eatiⁿ^g^{a d}^o^wⁿ^w^a^r^d^sp^ir^{al. T}^h^{e co}^m^m^ittee
^b^e^liev^e^{s t}^h^at^stab^{le s}^h^ip^r^e^q^uⁱ^r^e^m^en^t^s^{, i}ⁿ^cr^eased^f^uⁿ^dⁱⁿ^gⁱⁿ^th^e^sh^ip^b^u^ildⁱⁿ^g^b^u^d^g^{et, a}ⁿ^d
ⁱⁿ^cr^eased^f^l^e^x^ib^ilit^y^f^o^r^f^uⁿ^dⁱⁿ^g^lar^g^{e cap}^{ital s}^h^ip^{s ar}^{e cr}^{itical ele}^m^en^t^s^o^f^an^y^str^a^teg^y^t^o
^rev^e^rs^{e t}^hⁱ^s^t^r^en^d.
^T^h^{e S}^ecret^ary^o^f^t^h^{e N}^a^vy^’s^fⁱ^s^cal^y^{ear 2007 report}^t^o^C^oⁿ^g^r^es^s^on^t^h^e^l^ong^-^r^aⁿ^g^e^pl^an
^f^o^r^th^{e co}ⁿ^s^tr^u^c^tioⁿ^o^fⁿ^a^v^a^l^v^e^{ssels id}^eⁿ^ti^fⁱ^{es a r}^e^q^u^ir^e^m^en^t^to^p^r^o^c^u^r^{e th}^{e CVN}^-²¹^class
^aircraf^t^carriers^{at 4-y}^{ear in}^ter^v^als^,^co^m^m^eⁿ^cⁱⁿ^gⁱⁿ^fⁱ^s^cal^y^e^{ar 200}^8.^T^h^{e N}^a^vy^ori^gⁱⁿ^al^l^y
^p^l^a^nne^d^t^o^p^r^o^c^ur^e^t^h^e^fi^r^s^t^CV^N^-²¹^c^l^a^{ss a}ⁱ^r^c^r^a^ft^c^a^r^rⁱ^e^r^,^C^V^N^-^78,ⁱⁿ^fⁱ^s^cal^y^ear^2006.^Sⁱⁿ^c^e
^t^h^en^,^t^h^{e N}^a^vy^h^a^s^del^a^y^e^{d p}^r^ocu^r^e^m^en^t^t^o^2008,^w^hⁱ^c^h^has^del^a^y^e^d^fⁱ^el^di^ng^t^hⁱ^s^vi^t^a^l
^cap^ab^ilit^y^,^w^h^ile^sigⁿⁱ^f^icaⁿ^tl^yⁱⁿ^cr^easiⁿ^g^t^h^{e air}^c^r^a^f^t^car^rⁱ^er^’^s^p^r^o^c^u^r^e^m^eⁿ^t^co^{st. T}^h^e
^com^mⁱ^t^t^{ee bel}ⁱ^e^v^e^{s t}^h^at^procu^rⁱⁿ^{g a}ⁿ^{d del}ⁱ^v^eriⁿ^g^t^h^e^C^V^N^-^{21 clas}^s^aircraf^t^carriers^o^v^{er 4-}
^y^{ear periods}ⁱⁿ^accor^d^an^ce^wⁱ^t^h^th^{e Na}^vy^’^s^long-^rang^{e plan}ⁱ^s^v^{ital to th}^{e Nation}^a^{l Def}^eⁿ^s^e
^Str^a^teg^y^{, an}^d^is^v^{ital to}^th^{e a}^f^f^o^r^d^ab^ility^o^f^t^h^{ese cap}^ital^sh^ip^s.
^Els^e^w^h^{ere i}ⁿ^thⁱ^s^{report, th}^{e c}^o^m^mⁱ^ttee^h^a^s^e^x^pres^s^e^{d co}ⁿ^c^e^rⁿ^wⁱ^t^h^cos^t^g^r^o^w^t^h^{on th}^e
^C^V^N^-^{77 prog}^ram^,^an^{d h}^a^s^u^r^{ged th}^{e Navy}^an^{d t}^h^{e s}^h^{ipbuilder to iden}^tify^opportuⁿ^ities^to
ⁱ^m^p^r^o^v^{e af}^f^o^r^d^ab^ilit^y^o^f^f^u^t^u^r^e^air^c^r^a^f^t^car^rⁱ^er^s.^P^r^o^c^u^r^em^eⁿ^{t d}^e^lay^s^{, ex}^ces^{s in}^f^l^atioⁿ^,^an^d
^m^a^{terial e}^s^calatioⁿ^h^a^v^e^been^{reported as}^sⁱ^gnⁱ^f^ican^{t co}ⁿ^t^rⁱ^b^u^to^r^s^to^CVN^-⁷⁷^co^st^g^r^o^w^th^.
^T^h^{e s}^hⁱ^pbuⁱ^l^d^{er h}^a^s^propos^{ed t}^o^achⁱ^e^v^e^sⁱ^gⁿⁱ^fⁱ^caⁿ^t^CV^N^-²¹^cl^as^s^prog^ra^m^s^a^vⁱ^ngs^t^h^rou^g^h
^{a s}^t^abl^e^procu^r^em^eⁿ^t^pl^an^{, an}^{d t}^h^roug^h^procu^r^e^m^eⁿ^t^of^econ^o^mⁱ^{c order qu}^an^tⁱ^t^y^m^a^t^e^rⁱ^a^l^f^o^r
^C^V^N^-^{79 an}^{d C}^V^N^-^{80 i}ⁿ^con^j^uⁿ^c^tⁱ^on^wⁱ^t^h^CV^N^-^{78 procu}^r^e^m^ent^.
^In^vi^e^w^{of t}^h^{e pot}^en^tⁱ^a^l^f^o^{r s}ⁱ^gnⁱ^fⁱ^cant^prog^ra^m^s^a^vⁱ^ngs^{, t}^h^e^c^o^m^mⁱ^t^t^{ee reco}^m^m^eⁿ^d^s^aⁿ
ⁱⁿ^creas^{e of}^{$50.0 m}ⁱ^llionⁱⁿ^S^C^{N f}^o^{r C}^V^N-^{21 clas}^s^adv^aⁿ^c^{e procu}^r^em^eⁿ^{t, an}^{d directs}^t^h^e
^Secretar^y^of^t^h^{e Navy}^{to revie}^w^ecoⁿ^o^mⁱ^c^{order qu}^an^tⁱ^t^{y an}^{d l}^oⁿ^g^l^{ead t}ⁱ^m^e^m^a^t^e^ri^al
^procu^r^em^eⁿ^t^f^o^{r t}^h^e^C^V^N^-^{21 c}^l^as^s^.^T^h^e^Secretar^yⁱ^s^to^s^u^b^mⁱ^t^{a report to th}^e^cong^res^s^ion^a^l
^def^e^ns^{e co}^m^mⁱ^t^t^ees^wⁱ^t^h^t^h^e^fⁱ^s^cal^y^{ear 2008}^bu^dg^et^requ^es^t^,^ou^t^lⁱⁿⁱⁿ^g^t^h^{e adv}^aⁿ^c^e
^procu^r^em^eⁿ^t^requⁱ^r^e^m^eⁿ^t^s^t^o^pot^en^tⁱ^a^l^l^y^optⁱ^mⁱ^{ze econ}^o^mⁱ^{c order}^qu^an^tⁱ^t^y^s^a^vⁱ^ng^s^aⁿ^d
^es^calation^a^v^oidan^{ce (to i}ⁿ^cl^u^d^{e of}^fs^etti^ng^f^a^c^t^ors⁾^f^o^{r t}^h^e^fⁱ^rs^{t th}^ree^v^e^s^s^els^o^f^t^h^e^C^V^N^-²¹
^clas^s^.^Of^t^h^e^a^m^o^uⁿ^t^a^u^t^h^orized^{to be}^ap^pro^p^{riated f}^o^r^a^d^v^aⁿ^c^e^p^r^o^c^u^r^e^m^en^t^f^o^r^C^V^N-⁷⁹^aⁿ^d
^C^V^N^-^{80, n}^oⁿ^e^of^t^h^{e fun}^d^s^{are av}^{ailable f}^o^{r oblig}^atioⁿ^{prior t}^o³⁰^day^s^f^o^llo^wⁱⁿ^g^{receipt o}^f
^th^{e Secretar}^y^’^s^{report. (P}^ag^{e 6}⁷⁾
With regard to Section 146’s prohibition of incremental funding for the F-22 program, the report
states:
^T^h^{e com}^m^{ittee reco}^m^m^eⁿ^d^s^a^prov^is^ion^th^at^w^o^u^l^{d proh}^{ibit th}^{e Secretar}^y^of^th^e^Aⁱ^r
^{Force f}^r^om^u^sⁱⁿ^gⁱⁿ^cre^m^en^ta^{l fu}ⁿ^dⁱⁿ^g^f^o^{r th}^{e procu}^r^e^m^{ent of}^F-²²^A^aircraf^t^{. In}^th^{e pas}^t^{, th}^e

^C^ong^res^s^h^a^s^approv^{ed of}ⁱⁿ^cre^m^en^ta^{l fu}ⁿ^dⁱⁿ^g^o^f^certain^s^p^{ace prog}^ram^s^aⁿ^{d a s}^e^lect
ⁿ^u^m^b^er^o^f^sh^ip^b^u^ildⁱⁿ^g^p^r^o^g^r^a^m^s^{. No}^t^w^it^h^s^tan^dⁱⁿ^g^as^ser^tioⁿ^s^to^th^{e co}ⁿ^t^r^a^r^y^{, au}^t^h^o^r^izin^g
ⁱⁿ^cre^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^f^o^{r th}^{e F-22A}^w^o^u^l^{d s}^e^{t a preceden}^{t f}^o^r^f^uⁿ^dⁱⁿ^g^aⁱ^r^c^r^a^f^t^.^Th^e^c^o^m^m^itte^e
^s^eesⁿ^o^j^u^s^tⁱ^f^icat^ion^f^o^{r s}^e^ttiⁿ^g^s^u^c^h^{a preceden}^{t in}^t^h^{e cas}^{e of}^th^{e F}^-²²^A^,^w^h^{ere the}
^D^e^part^m^eⁿ^t^o^f^D^e^f^eⁿ^s^e^h^a^s^propos^{ed i}ⁿ^crem^eⁿ^t^a^l^f^uⁿ^dⁱⁿ^g^m^e^rel^y^a^s^a^w^a^y^of^al^l^e^vⁱ^atⁱ^ng
^cas^h^f^l^o^w^pres^s^u^re^s^on^th^{e o}^v^e^r^{all Departm}^eⁿ^t^{. (P}^ag^{e 94)}
The report similarly states:
^T^h^{e bu}^dg^{et requ}^es^{t in}^cl^u^d^{ed $1,9}^81.^{3 m}ⁱ^l^lionⁱⁿ^Aⁱ^rcraf^t^P^r^ocu^r^em^{ent, Air Force}
^(A^PA^F⁾^as^part^of^aⁿⁱⁿ^cre^m^ent^a^l^fuⁿ^dⁱⁿ^g^s^t^rat^e^gy^t^h^at^w^o^u^l^d^l^{ead t}^o^{a produ}^ctⁱ^oⁿ^profⁱ^l^e^of
^{20 aircraf}^t^{per y}^{ear f}^o^{r a th}^ree-y^ear^m^u^lti^y^{ear procu}^r^e^m^{ent of}^{60 aircraf}^t^{, beg}ⁱⁿⁿⁱ^ngⁱⁿ^fⁱ^s^c^a^l
^y^{ear 2008. N}^o^com^p^l^e^t^e^F^-^22A^ai^rcraft^w^e^{re t}^o^{be pr}^ocu^r^edⁱⁿ^fⁱ^s^cal^y^{ear 2007....}
^T^h^{e com}^m^{ittee does}ⁿ^o^{t ag}^ree^wⁱ^t^h^t^h^{e Depart}^m^e^{nt of}^De^f^e^ns^{e acqu}ⁱ^sⁱ^tⁱ^on^s^t^rate^gy^to
ⁱⁿ^c^r^e^m^eⁿ^t^a^l^l^y^fu^nd^t^h^e^F^-²²^A^.^T^h^e^c^o^mmi^t^t^e^e^s^e^e^s^no^j^u^s^tⁱ^fⁱ^c^ation^f^o^r^s^e^ttiⁿ^g^a^preceden^t^f^o^r
^f^uⁿ^dⁱⁿ^g^ai^rcraf^t^{, as}ⁱⁿ^t^h^{e cas}^e^of^t^h^{e F-}^22A^,^w^h^{ere t}^h^{e D}^e^part^m^e^nt^of^D^e^f^eⁿ^s^e^h^a^s^propos^e^d
ⁱⁿ^cre^m^eⁿ^tal^f^uⁿ^d^ing^m^e^rel^y^a^s^a^w^a^y^{of alle}^vⁱ^atiⁿ^{g cas}^h^f^l^o^w^pres^s^u^res^{on t}^h^{e ov}^eral^l
^D^e^part^m^eⁿ^t^{. (Pag}^es^96-⁹⁷⁾
Section 121 of the conference report on H.R. 5122 (H.Rept. 109-702 of September 29, 2006)
authorizes four-year incremental funding for the CVN-21 class aircraft carriers CVN-78, CVN-
79, and CVN-80. Section 124 authorizes the procurement of the first two DDG-1000 destroyers
in FY2007 using split funding in FY2007 and FY2008, as requested by the Navy. The section
states in part:
^{(c) SENSE OF C}^ONGR^E^{SS O}^N^{FUNDING FO}^R^FO^LL^OW^{-ON SHIP}^S.—I^tⁱ^s^t^h^e^s^eⁿ^s^e^o^f
^Coⁿ^g^r^e^ss^th^a^t^t^h^er^{e i}^s^su^f^f^icieⁿ^t^b^eⁿ^e^f^{it to}^a^u^t^h^o^r^izin^g^th^e^oⁿ^e-^ti^m^e^e^x^cep^tioⁿ^p^r^o^v^id^edⁱⁿ
^t^hⁱ^s^s^ectⁱ^oⁿ^t^o^t^h^e^f^u^l^l^fun^dⁱⁿ^g^polⁱ^c^yⁱⁿ^{order t}^o^s^u^pport^t^h^{e com}^p^etⁱ^tⁱ^v^{e procu}^r^e^m^eⁿ^t^of^t^h^e
^f^o^l^l^o^w^-^oⁿ^shⁱ^p^s^o^f^t^h^{e D}^D^G^-¹^{000 N}^e^x^t^-^G^eⁿ^eratⁱ^oⁿ^D^e^s^t^ro^y^e^{r prog}^ram^.^H^o^w^e^v^e^{r, i}^tⁱ^s^t^h^e
^e^x^p^e^c^t^a^tⁱ^o^{n o}^f^Co^ngr^e^s^s^t^h^a^t^t^h^e^S^e^c^r^e^t^a^r^y^o^f^t^h^e^Navy^w^ill^s^t^r^u^ctu^r^e^t^h^e^DDG^-¹⁰⁰⁰^p^r^og^ram
^s^o^th^{at each}^s^h^{ip, af}^{ter th}^{e f}ⁱ^r^s^t^t^w^{o s}^h^ip^s^,^is^procu^r^{ed u}^sⁱⁿ^g^t^h^e^m^e^t^h^{od of}^f^u^l^l^fuⁿ^dⁱⁿ^gⁱⁿ^a
^sⁱ^ng^{le y}^ear.
Section 134 prohibits the use of incremental funding for the procurement of F-22A fighter
aircraft.
With regard to funding of military construction projects, the conference report states:
^T^h^{e con}^f^ereesⁿ^o^t^e^t^h^at^{, i}ⁿ^a^m^e^m^o^dat^e^{d Jan}^u^a^r^y^{10, 2006}^{, t}^h^e^A^s^s^o^ci^at^e^Dⁱ^rect^{or of}
^N^a^tⁱ^oⁿ^a^l^S^e^c^u^ri^t^y^Prog^ra^m^sⁱⁿ^t^h^e^O^f^fⁱ^{ce o}^f^Man^a^g^e^m^e^nt^an^{d Bu}^dg^et^(O^{MB) prov}ⁱ^d^ed
^g^uⁱ^daⁿ^{ce to th}^{e Un}^{der Secretary}^o^f^Def^eⁿ^s^{e (C}^o^m^p^t^{roller) an}^{d C}^h^ief^Fiⁿ^aⁿ^cⁱ^a^l^Of^fⁱ^c^e^r^a^b^o^u^t
^r^e^q^u^{ests f}^o^rⁱⁿ^cr^e^m^eⁿ^{tal f}^uⁿ^dⁱⁿ^g^o^f^m^ilitar^y^coⁿ^s^tr^u^c^tioⁿ^p^r^o^j^ects.^O^M^B^h^a^s^s^t^a^t^e^d^t^h^eⁱⁿ^t^eⁿ^t
^to^li^m^{it in}^cr^e^m^en^{tal f}^uⁿ^dⁱⁿ^g^o^f^m^ilitar^y^coⁿ^s^tr^u^c^tⁱ^oⁿ^p^r^o^j^ects^to^an^ex^cep^tioⁿ^a^{l p}^r^{actice, as}
ⁱⁿ^teⁿ^d^ed^b^y^OMB^Cir^c^u^l^ar^A—1¹^.^T^h^{is g}^u^id^an^{ce repres}^ents^{a ch}^ang^eⁱⁿ^polic^y^f^o^{r th}^e
^b^u^d^g^etiⁿ^g^o^f^cer^tain^m^ilitar^y^c^oⁿ^s^tr^u^c^tⁱ^oⁿ^p^r^o^j^ects.
^T^h^e^c^oⁿ^f^e^r^e^e^s^a^c^kⁿ^o^wl^e^d^g^e^t^h^a^t^r^e^q^u^e^s^tin^g^f^u^{ll f}^uⁿ^dⁱⁿ^g^to^en^su^r^e^{a m}^ili^tar^y^coⁿ^s^tr^u^c^tioⁿ
^pro^j^{ect res}^u^ltsⁱⁿ^{a co}^m^p^{lete an}^{d u}^s^{eable f}^acilⁱ^t^y^{, or u}^s^eabl^eⁱ^m^prov^e^m^eⁿ^{t to an}^exⁱ^s^ting
^f^acilit^y^,^sh^o^u^ld^b^e^t^h^{e p}^r^e^f^er^r^e^d^p^r^{actice co}ⁿ^sⁱ^s^ten^t^wⁱ^th^la^w^an^d^cu^r^r^eⁿ^t^p^o^lic^y^to^eⁿ^s^u^r^e^aⁿ
^accu^{rate accoun}^ti^ng^{of all obli}^g^ationsⁱⁿ^c^u^{rred by}^t^h^{e Federa}^{l Gov}^e^rnm^eⁿ^t^{. T}^h^{e co}ⁿ^f^erees

^als^o^ackn^o^w^l^edg^e^t^h^at,^f^o^{r cert}^aⁱⁿ^mⁱ^l^itar^y^con^s^tr^u^c^tioⁿ^proj^e^c^ts^esti^m^a^{ted to e}^x^{ceed $50.0}
^m^illioⁿ^aⁿ^d^w^h^{ere t}^h^{e co}ⁿ^s^tr^u^c^tioⁿ^p^e^rio^d^{is p}^l^anⁿ^e^d^to^e^x^ceed²^y^ear^{s, Co}ⁿ^g^r^es^s^h^a^s
^s^u^{pported th}^{e u}^s^{e of}ⁱⁿ^cre^m^eⁿ^t^a^{l f}^uⁿ^d^ing^{to addr}^es^s^th^{e f}^{act that n}^o^{t all}^m^ilitar^y^c^oⁿ^s^t^r^u^c^tⁱ^oⁿ
^f^uⁿ^d^{s ap}^p^r^o^p^r^iated^b^y^Coⁿ^g^r^e^{ss f}^o^r^{a p}^r^o^j^ect^w^{ill b}^e^ex^p^eⁿ^d^e^dⁱⁿ^th^{e f}ⁱ^r^s^t^y^ear^{. I}ⁿ^th^e^s^e
^cas^es^{, t}^h^{e D}^e^part^m^e^nt^of^D^e^f^eⁿ^s^e^h^a^s^h^a^{d t}^h^{e opt}ⁱ^oⁿ^of^reques^tⁱⁿ^g^on^l^y^t^h^os^{e appropri}^a^t^e^d
^a^m^oun^ts^e^x^{pected to be ex}^pen^d^{ed in}^th^{e bu}^dg^et^y^{ear, an}^{d n}^o^ti^fy^ing^poten^{tial c}^oⁿ^t^r^a^c^t^o^r^s^t^h^at
^th^{e p}^r^o^j^ect’^s^co^m^p^letioⁿ^{is s}^u^b^j^{ect to}^su^b^s^eq^u^eⁿ^t^ap^p^r^o^p^r^iatioⁿ^s^{. T}^h^{is o}^p^tioⁿ^th^en^all^o^w^s^th^e
^Dep^a^r^t^m^eⁿ^t^to^ad^d^r^{ess ad}^d^itioⁿ^a^l^m^ilitar^y^r^e^q^u^ir^e^m^en^t^sⁱⁿ^t^h^e^m^ilitar^y^coⁿ^s^tr^u^c^tⁱ^oⁿ^b^u^d^g^et
^requ^es^{t; an}^{d accelerating}^th^{e c}^o^m^p^letⁱ^oⁿ^o^f^c^r^{itical p}^r^o^j^{ects f}^o^r^m^ilitar^y^r^eadⁱⁿ^es^{s, o}^p^e^r^a^tioⁿ^s^,
^an^{d s}^e^rv^ice^m^e^m^b^ers^’^qu^alit^y^of^lif^{e. B}^ecau^s^e^of^t^h^{e eff}ⁱ^cieⁿ^cies^g^aⁱⁿ^{ed by}^t^h^is^m^e^t^h^{od, th}^e
^con^f^erees’^a^g^ree^m^eⁿ^tⁱⁿ^cl^u^d^{es t}^h^{e us}^{e of}ⁱⁿ^cre^m^ent^a^l^fun^dⁱⁿ^gⁿ^o^t^propos^{ed i}ⁿ^t^h^{e b}^u^dg^et
^r^e^q^u^{est f}^o^r^cer^tain^m^ilitar^y^coⁿ^s^tr^u^c^tioⁿ^p^r^o^j^ects.
^T^h^{e con}^f^erees^als^oⁿ^o^{te t}^h^at^t^h^{e Depart}^m^eⁿ^t^h^a^s^requ^e^s^tedⁱⁿ^cre^m^eⁿ^tal^fun^d^ing^f^o^r
^sin^g^le^m^ilitar^y^coⁿ^s^tr^u^c^tioⁿ^p^r^o^j^{ects th}^at^w^{ill co}ⁿ^s^tr^u^c^t^m^u^ltip^{le co}^m^p^{lete a}ⁿ^d^u^s^eab^le
^f^acilit^{ies. T}^h^{e co}ⁿ^f^er^{ees ar}^{e c}^oⁿ^cerⁿ^e^d^th^a^t^t^h^{is p}^r^actice^wⁱ^{ll en}^co^u^r^ag^{e t}^h^{e b}^uⁿ^d^liⁿ^g^o^f
^f^acilit^y^r^e^q^uⁱ^r^e^m^eⁿ^t^sⁱⁿ^to^v^e^r^y^lar^g^{e co}ⁿ^t^r^act^{s, t}^h^er^eb^y^c^u^r^t^ailin^g^coⁿ^t^r^acto^r^co^m^p^etitioⁿ^.
^T^h^eref^{ore, th}^{e conf}^erees^eⁿ^courag^{e t}^h^{e Depart}^m^eⁿ^t^{to av}^{oid t}^h^e^u^s^{e o}^fⁱⁿ^cre^m^eⁿ^tal^fun^d^ing
^r^e^q^u^{ests f}^o^r^p^r^o^j^{ects w}ⁱ^t^h^m^u^l^tip^{le co}^m^p^{lete an}^d^u^s^eab^{le f}^a^{cilities, ex}^cep^{t in}^case^s^w^h^er^e
^operatⁱ^oⁿ^a^l^requⁱ^r^e^m^en^t^s^di^ct^a^t^{e a com}^p^el^lⁱ^ngⁿ^{eed f}^o^r^f^aci^lⁱ^tⁱ^e^s^.^(Pag^es^929-⁹³⁰⁾
H.R. 5631
Section 8008 of H.R. 5631 as reported in the House states in part
^T^h^{at n}^oⁿ^e^o^f^t^h^{e f}^uⁿ^d^{s p}^r^o^v^id^edⁱⁿ^thⁱ^s^A^c^t^m^a^y^{be us}^{ed f}^o^{r a}^m^u^lti^y^{ear con}^t^{ract ex}^ec^u^t^ed
^af^{ter th}^{e date of}^t^h^{e en}^act^m^eⁿ^t^of^thⁱ^s^A^c^{t un}^les^sⁱⁿ^th^{e cas}^e^of^any^s^u^ch^contract—
⁽¹⁾^th^{e Secr}^etar^y^o^f^Def^eⁿ^s^{e h}^a^{s su}^b^m^itted^to^Coⁿ^g^r^e^{ss a b}^u^d^g^e^{t r}^e^q^u^{est f}^o^r^f^u^ll^f^uⁿ^dⁱⁿ^g
^of^unⁱ^t^s^t^o^{be procu}^r^{ed t}^h^rou^{gh t}^h^{e con}^t^ract^an^{d, in}^t^h^{e cas}^{e o}^f^{a con}^t^{ract f}^o^{r procu}^r^em^eⁿ^{t of}
^aircraf^t^{, th}^{at in}^cl^u^d^es^{, f}^o^{r any aircraf}^t^uⁿ^{it to}^{be procu}^r^ed^t^h^rou^g^h^t^h^{e cont}^ract^f^o^r^w^hⁱ^c^h
^procu^r^em^eⁿ^t^f^uⁿ^d^s^{are requ}^est^e^{d i}ⁿ^t^h^at^bu^d^g^et^requ^es^t^f^o^{r produ}^ctⁱ^oⁿ^bey^oⁿ^d^adv^aⁿ^c^e
^p^r^o^c^u^r^em^eⁿ^{t ac}^tiv^itiesⁱⁿ^t^h^e^fⁱ^scal^y^ear^co^v^e^r^e^d^b^y^th^e^b^u^d^g^e^t^{, f}^u^ll^f^uⁿ^dⁱⁿ^g^o^f^p^r^o^c^u^r^e^m^eⁿ^t
^of^s^u^c^h^uⁿⁱ^{t in}^t^h^at^fⁱ^s^cal^y^ear....
In its report (H.Rept. 109-504 of June 16, 2006) on H.R. 5631, the House Appropriations
Committee recommended approval of the Administration’s proposed use of split funding FY2007
and FY2008 for procuring the amphibious assault ship LHA-6, but did not recommend approval
of the Administration’s proposal to use split funding in FY2007 and FY2008 for procuring the
two lead DDG-1000 destroyers. The committee for FY2007 instead recommended full funding
for one DDG-1000. The committee also did not recommend approval of the Administration’s
request to use incremental funding for procuring F-22 aircraft. The committee’s report states:
^F^o^{r f}ⁱ^s^cal^y^{ear 2007, t}^h^{e C}^o^m^mⁱ^t^t^{ee f}^ace^s^s^e^v^e^ral^c^h^al^l^eⁿ^g^e^sⁱⁿ^reco^m^m^eⁿ^dⁱ^ng
^ap^p^r^o^p^rⁱ^atioⁿ^s^f^o^r^th^e^Dep^a^r^t^m^eⁿ^t^o^f^De^f^eⁿ^s^{e a}ⁿ^d^th^{e i}ⁿ^tel^lig^eⁿ^{ce co}^m^m^uⁿⁱ^t^y^{. F}ⁱ^r^s^{t, t}^h^e
^Presⁱ^d^en^t^’^{s bu}^dg^e^t^propos^es^aⁿ^uⁿ^o^rt^h^odox^approach^t^o^fundiⁿ^g^t^w^o^m^a^j^o^{r procu}^r^em^eⁿ^t
^prog^ram^s^{, t}^h^e^F-^{22 f}ⁱ^g^h^t^{er o}^f^t^h^e^Aⁱ^{r F}^o^{rce an}^{d t}^h^{e D}^D⁽^X⁾^d^e^s^t^ro^y^e^{r of}^t^h^{e N}^a^vy^{. I}ⁿ^bot^h
^{cases, th}^{e b}^u^d^g^e^t^r^e^q^u^{est in}^cl^u^d^e^{s in}^cr^e^m^eⁿ^{tal o}^r^p^a^r^{tial f}^uⁿ^dⁱⁿ^g^,^f^o^r^th^{ese t}^w^o^p^r^o^g^r^a^m^s^{. I}ⁿ
^th^{e cas}^{e of}^t^h^{e F}^-^{22, in}^cre^m^eⁿ^{tal fu}ⁿ^dⁱⁿ^gⁱ^s^requ^es^{ted i}ⁿ^th^e^mⁱ^{ddle of}^th^{e produ}^ction^r^uⁿ^.

^T^h^{e u}^s^{e of in}^cre^m^eⁿ^tal^fuⁿ^dⁱⁿ^g^m^o^rt^g^a^g^e^s^t^h^e^fu^tu^{re o}^f^t^h^{e p}^r^ocu^r^e^m^en^t^bu^dg^et^of^t^h^e
^Def^eⁿ^s^{e Dep}^a^rt^m^eⁿ^tⁱⁿ^a^m^aⁿⁿ^{er th}^{at i}^sⁿ^o^{t accep}^tab^l^{e to}^th^{e Co}^m^m^{ittee. In}^ad^d^itioⁿ^,^t^h^e
^preceden^{t of}ⁱⁿ^cre^m^eⁿ^{tal fu}ⁿ^dⁱⁿ^g^f^o^{r th}^es^{e prog}^ra^m^s^cou^l^{d be applied}^{to a}^v^a^riet^y^of^oth^e^r
^p^r^o^c^u^r^em^eⁿ^t^s^{, lead}ⁱⁿ^g^to^{a lo}^{ss o}^f^b^u^d^g^{et tr}^an^sp^ar^en^c^y^an^d^r^e^d^u^cin^g^th^{e ab}^ilit^y^to^p^e^r^f^o^r^m
^ov^ersⁱ^gh^t^.^T^h^eref^{ore, t}^h^{e recomm}^en^datⁱ^oⁿ^sⁱⁿ^t^hⁱ^s^bi^l^lⁱⁿ^c^l^{ude f}^u^l^l^f^uⁿ^dⁱⁿ^{g f}^o^{r on}^e^D^D⁽^X⁾
^des^t^roy^e^{r a}ⁿ^{d t}^h^{e F-}^{22 f}ⁱ^g^h^t^er^prog^ram^.
^F^uⁿ^dⁱⁿ^g^of^$2,568,^111,⁰⁰⁰ⁱ^s^recom^m^eⁿ^d^{ed t}^o^co^m^p^l^e^t^e^ful^l^f^uⁿ^dⁱⁿ^g^o^f^on^{e D}^D⁽^X⁾
^v^e^ss^e^l^.^Thⁱ^sⁱ^s^t^h^{e s}^a^m^e^l^e^v^e^{l as}^th^e^f^uⁿ^dⁱⁿ^g^r^e^q^u^e^s^t^f^o^r^t^h^is^item^,^b^u^t^uⁿ^d^e^r^th^e^Pr^e^sⁱ^d^eⁿ^t^’^s
^bu^dg^{et th}^e^s^{e fun}^d^s^w^o^u^l^{d h}^a^v^e^been^{allocated on}^anⁱⁿ^cr^e^m^eⁿ^{tal b}^a^{sis ag}^aiⁿ^s^{t t}^w^o^s^h^ip^{s. I}ⁿ
^t^h^e^c^a^s^e^o^f^t^h^e^F^-²²^,^t^h^e^C^o^m^mⁱ^t^t^e^e^h^a^s^a^d^d^e^d^$¹^,⁴⁰⁰^,⁰⁰⁰^,⁰⁰⁰^t^o^f^u^l^l^y^p^r^o^c^u^r^e²⁰^ad^d^itioⁿ^a^l
^ai^rcraf^t^{. In}^co^m^bⁱⁿ^atⁱ^oⁿ^wⁱ^t^h^t^h^{e s}^ectⁱ^oⁿ^302(b⁾^al^l^o^catⁱ^oⁿ^f^o^{r t}^h^e^S^u^b^c^om^mⁱ^t^t^e^e^oⁿ^D^e^f^eⁿ^s^e^,
^w^h^ic^h^is^$4,000,00^0,00^{0 bel}^o^w^t^h^{e P}^r^es^iden^t^’^s^requ^e^s^{t, t}^h^is^h^a^sⁿ^ecess^{itated di}^f^f^icu^l^t
^tradeof^f^s^wⁱ^t^hⁱⁿ^t^h^{e bu}^d^g^et^{for th}^{e Depart}^m^eⁿ^t^of^Def^eⁿ^s^{e g}^eⁿ^e^rall^y^an^d^th^e^Aⁱ^{r Force}
^s^p^eci^fⁱ^cal^l^y^.^H^o^w^e^v^e^{r, prov}ⁱ^dⁱⁿ^g^f^u^l^l^f^uⁿ^dⁱⁿ^{g f}^o^{r t}^h^es^e^prog^ra^m^s^t^hⁱ^s^y^ear^av^oi^ds^m^o^re
^dif^fⁱ^c^u^{lt c}^h^oicesⁱⁿ^t^h^e^y^ears^a^h^{ead. (P}^ag^{e 4)}
Regarding the DD(X), the report states:
^T^h^e^Co^mmi^t^t^e^e^r^e^c^o^mme^nd^s^$²^,⁵⁶⁸^,11¹^,00⁰^f^o^{r t}^h^{e p}^r^ocu^r^em^ent^of^{1 D}^D⁽^X⁾^des^t^roy^e^r.
^T^h^{e bu}^dg^et^requ^es^t^e^{d $2,5}^68,^111,0^{00 t}^oⁱⁿ^crem^eⁿ^t^a^l^l^y^f^{und 2 s}^hⁱ^p^s^,^wⁱ^t^h^t^h^{e bal}^aⁿ^{ce of}
^f^uⁿ^dⁱⁿ^g^t^o^{be prov}ⁱ^d^{ed i}ⁿ^fⁱ^s^cal^y^{ear 2008.}^T^h^{e C}^o^m^mⁱ^t^t^e^e^canⁿ^o^t^su^pport^s^u^ch^{a f}^a^r-
^reach^ing^polic^y^c^h^ang^e^w^h^{ich h}^a^sⁱ^m^plicatioⁿ^s^be^y^oⁿ^d^t^h^e^Navy^’s^s^h^ipbuilding^prog^ra^m^.
^F^u^rt^h^e^{r, t}^h^{e N}^a^vy^’s^propos^al^r^e^quⁱ^r^es^s^p^eci^al^l^e^gⁱ^s^l^atⁱ^v^{e au}^t^hori^t^y^t^o^{be ex}^ecu^t^e^{d, an}^{d t}^hⁱ^s
^au^t^h^ori^t^yⁱ^sⁿ^o^tⁱⁿ^cl^u^d^{ed i}ⁿ^t^h^{e H}^o^u^s^e^-^pass^{ed N}^a^tⁱ^oⁿ^a^l^D^e^fen^s^e^A^u^t^h^ori^zatⁱ^on^A^c^t^,²⁰⁰⁷
^(H^.R^{. 5122}^{). (}^P^ag^{e 139}⁾
Regarding the F-22, the report states:
^T^h^{e bu}^dg^et^requ^es^t^propos^es^t^oⁱⁿ^cre^m^eⁿ^t^a^l^l^y^fun^d^t^h^{e F-}^{22 f}ⁱ^g^h^t^{er procu}^r^e^m^eⁿ^t
^prog^ram^.^T^hⁱ^s^propos^alⁱ^s^con^t^rary^t^o^t^h^{e fu}^l^l^f^uⁿ^dⁱⁿ^g^requⁱ^r^e^m^ent^t^h^{e C}^oⁿ^g^r^e^s^s^h^a^s^r^e^q^uⁱ^r^e^d
^f^o^r^air^c^r^a^f^t^p^r^o^c^u^r^e^m^en^{t p}^r^o^g^r^a^m^s^{. T}^h^{e Dep}^a^r^t^m^eⁿ^t^o^f^De^f^eⁿ^s^{e p}^r^esen^ted^th^{e Co}^m^m^ittee
^wⁱ^t^h^e^s^se^ntⁱ^a^l^l^{y t}^w^o^o^p^tⁱ^o^ns^—^a^gr^e^e^t^oⁱⁿ^c^r^e^m^eⁿ^t^a^l^f^u^ndⁱ^ng,^o^r^fi^nd^$¹^,⁴⁰⁰^,⁰⁰⁰^,⁰⁰⁰ⁱⁿ
^s^a^vⁱ^ng^s^f^r^o^m^ot^h^e^{r prog}^ram^s^t^o^f^u^l^l^y^fuⁿ^d^F-^{22 procu}^r^em^eⁿ^t^.^T^h^{e C}^o^m^mⁱ^t^t^e^e^h^a^s^c^h^o^s^en^t^h^e
^{latter option}^an^{d reco}^m^m^eⁿ^d^s^an^addition^a^{l $1,400,00}^0,00^{0 f}^o^{r th}^{e procu}^r^e^m^eⁿ^{t of 20 F-}²²
^aircraf^tⁱⁿ^fⁱ^s^cal^y^{ear 2007. In}^m^a^king^t^h^es^{e c}^h^ang^e^s^aⁿ^{d prov}^iding^t^h^{e addition}^a^l^f^uⁿ^d^s^,^t^h^e
^Co^m^m^{ittee is}^r^e^iter^a^tiⁿ^g^t^h^e^l^oⁿ^g^stan^dⁱⁿ^g^r^e^q^u^ir^e^m^en^{t f}^o^r^f^u^{ll f}^uⁿ^dⁱⁿ^g^o^f^m^a^j^o^r^w^eap^oⁿ
^sy^s^t^e^m^procu^r^e^m^en^t^s^{. (Pag}^{e 163)}
In its report (S.Rept. 109-292 of July 25, 2006) on H.R. 5631, the Senate Appropriations
committee recommends rejecting the Air Force’s request to incrementally fund the next lot of F-

22 fighter aircraft, and approving the Navy’s request to incrementally fund the first two DDG-

1000 destroyers. Regarding the F-22 program, the report states:

^T^h^{e f}ⁱ^s^cal^y^{ear 2007}^bu^dg^et^requ^es^t^s^$1,981,3^02,0⁰⁰^t^o^b^e^gⁱⁿⁱⁿ^c^r^em^eⁿ^t^a^l^l^y^f^uⁿ^dⁱⁿ^g^t^h^e
ⁿ^e^x^t^{lot o}^f^F^-²²^A^aircraf^t^.^T^h^{e C}^o^m^mⁱ^ttee^fⁱⁿ^d^sⁿ^o^co^m^p^el^ling^reas^{on to i}^gⁿ^o^{re t}^h^e^fu^ll
^fu^ndⁱ^ng^p^o^lⁱ^c^y^aⁿ^dⁱⁿ^c^r^e^m^eⁿ^t^a^l^l^y^fun^d^t^hⁱ^s^prog^ra^m^.^T^h^eref^{ore, $1,}⁴⁰⁰^,00⁰^,00⁰^w^a^s^{added t}^o
^t^h^{e bu}^dg^e^t^es^tⁱ^m^a^t^e^t^o^fu^l^l^y^fun^d^t^h^{e propos}^{ed m}^u^l^tⁱ^y^{ear procu}^r^e^m^eⁿ^t^of^aⁱ^rcraf^t^consⁱ^s^t^eⁿ^t
^wⁱ^t^h^t^h^e^g^uⁱ^d^an^{ce i}ⁿ^S^.^{2766, t}^h^{e N}^a^tⁱ^oⁿ^a^l^D^e^f^e^ns^e^A^u^t^h^ori^zatⁱ^oⁿ^A^c^t^f^o^{r F}ⁱ^s^cal^Y^{ear 2007.}
^(P^ag^{e 135}⁾

Regarding the DDG-1000 program, the report states:
^C^oⁿ^s^is^teⁿ^t^wⁱ^t^h^t^h^e^Sen^a^te^-^p^as^s^e^{d au}^t^h^orization^bil^l^an^{d t}^h^{e Na}^vy^’^s^cu^{rrent acqu}ⁱ^s^ition
^s^t^rat^e^gy^{, t}^h^{e C}^o^mmⁱ^t^t^{ee reco}^m^m^eⁿ^d^atⁱ^oⁿ^su^pport^s^t^h^{e bu}^dg^et^requ^es^t^of^$2,5⁶⁸^,¹¹¹^,⁰⁰⁰^f^o^r
^[ⁱⁿ^c^r^e^m^eⁿ^t^al^f^uⁿ^dⁱⁿ^g^o^f^t^h^e]^d^u^{al lead}^s^h^ip^{s. T}^h^e^Co^m^m^ittee^r^e^mⁱⁿ^d^s^th^e^Na^v^y^th^at^thⁱ^sⁱ^s^a
^uⁿⁱ^q^u^{e acq}^uⁱ^sitioⁿ^strateg^y^an^d^sh^o^u^ldⁿ^o^{t b}^e^u^s^ed^{as a p}^r^eced^en^{t f}^o^{r in}^cre^m^en^ta^ll^y^fuⁿ^dⁱⁿ^g
^any^fu^t^u^{re D}^D^G^-^{1000 or an}^y^ot^h^e^{r s}^hⁱ^pbuⁱ^l^di^ng^prog^ra^m^.^(Pag^{e 115)}
In addition, regarding the Navy’s Littoral Combat Ship (LCS), program, the report states:
^Wi^t^h^t^h^e^fⁱ^s^c^a^l^y^{ear 2007 b}^udge^t^s^u^b^mⁱ^ssi^oⁿ^o^f^$520,67^0,0^{00 f}^o^{r t}^h^{e f}ⁱ^f^t^h^aⁿ^{d s}ⁱ^x^t^h^LC^S
^f^lⁱ^g^{ht 0 s}^h^ips^,^th^{e Navy}^re^v^eal^{ed th}^{e L}^C^S^uⁿⁱ^{t cos}^t^es^ti^m^a^te^u^s^{ed as}^{a bas}ⁱ^s^f^o^{r las}^t^y^ear^’^s
^appro^p^riation^w^a^s^ex^cl^u^s^iv^{e o}^f^con^t^{ract c}^h^ang^e^orders^{, pl}^anⁿⁱ^ng^aⁿ^{d eng}ⁱⁿ^eeriⁿ^g^s^e^r^vⁱ^ces^,
^prog^ram^m^aⁿ^a^g^e^m^eⁿ^t^s^u^pport^an^{d ot}^h^e^{r cos}^t^sⁿ^o^tⁱⁿ^cl^u^d^{ed i}ⁿ^t^h^{e sh}ⁱ^p^cons^t^r^u^c^tⁱ^oⁿ^con^t^ract
^{... A}^s^{a res}^u^{lt, t}^h^{e Navy}^is^uⁿ^{able to p}^r^ocu^r^{e both}^th^{e th}^{ird an}^{d f}^o^u^r^t^h^LC^S^f^lⁱ^g^{ht 0 s}^h^ips
^wⁱ^t^h^o^u^{t th}^{e a}^v^ailabⁱ^lⁱ^t^y^o^f^ad^d^itioⁿ^a^l^f^uⁿ^dⁱⁿ^g^.^T^h^{e Co}^m^mⁱ^tte^{e is tr}^o^u^b^l^ed^b^y^th^{is r}^e^v^e^latioⁿ
^an^{d recom}^m^eⁿ^d^s^res^cⁱⁿ^diⁿ^g^[iⁿ^S^ectⁱ^oⁿ^{8043] t}^h^{e i}ⁿ^s^u^f^fⁱ^cⁱ^eⁿ^t^fⁱ^s^cal^y^{ear 2006 f}^uⁿ^d^s
^cu^rren^t^l^y^{allocated to th}^{e f}^o^u^r^t^h^LC^S^f^lⁱ^g^h^t^{0 v}^e^s^s^el.
^T^h^{e C}^o^m^mⁱ^t^t^{ee i}^s^fu^rt^h^e^{r t}^r^oubl^{ed by}^report^s^t^h^at^t^h^{e f}ⁱ^r^s^t^t^w^{o L}^C^S^f^lⁱ^g^h^t^{0 s}^hⁱ^p^s^un^der
^con^s^tru^c^tⁱ^on^{are e}^x^ceeding^th^eⁱ^{r cos}^t^as^prev^ious^l^y^bu^dg^e^t^{ed.... A}^s^{a res}^u^lt,^th^e^C^o^m^mⁱ^ttee
^belⁱ^e^v^e^s^t^h^e^fⁱ^s^cal^y^{ear 2007}^bu^dg^et^requ^e^s^tⁱ^sⁱⁿ^su^ffⁱ^cⁱ^eⁿ^t^t^o^procu^r^{e t}^w^{o sh}ⁱ^p^s^aⁿ^d
^recom^m^eⁿ^d^s^$300,67^0,0^{00 t}^o^f^u^l^l^y^fuⁿ^d^procu^r^e^m^eⁿ^t^o^f^on^e^L^C^S^s^e^a^f^ra^m^e^,^w^hⁱ^c^hⁱ^s^a
^redu^ctⁱ^oⁿ^of^$220,0^00,⁰⁰⁰^an^{d on}^{e s}^eaf^ra^m^e^f^r^o^m^t^h^{e requ}^es^t^.^Th^e^C^o^m^m^{ittee n}^o^te^{s th}^{at t}^h^is
^recom^m^eⁿ^d^atⁱ^oⁿ^pu^t^s^t^h^{e N}^a^vy^oⁿⁱ^t^s^prevⁱ^o^u^s^l^y^es^t^a^blⁱ^s^h^e^{d pat}^h^of^pr^ocu^rⁱⁿ^g^f^o^u^r^L^C^S
^f^lⁱ^g^ht^{0 s}^hⁱ^p^s^b^y^t^h^{e e}ⁿ^{d of}^fⁱ^scal^y^{ear 2007.}^(Pag^es^115-¹¹⁶⁾
Section 8008 of the conference report on H.R. 5631 (H.Rept. 109-676 of September 25, 2006)
states in part that
^T^h^{at n}^oⁿ^e^o^f^t^h^{e f}^uⁿ^d^{s p}^r^o^v^id^edⁱⁿ^thⁱ^s^A^c^t^m^a^y^{be us}^{ed f}^o^{r a}^m^u^lti^y^{ear con}^t^{ract ex}^ec^u^t^ed
^af^{ter th}^{e date of}^t^h^{e en}^act^m^eⁿ^t^of^thⁱ^s^A^c^{t un}^les^sⁱⁿ^th^{e cas}^e^of^any^s^u^ch^contract—
⁽¹⁾^th^{e Secr}^etar^y^o^f^Def^eⁿ^s^{e h}^a^{s su}^b^m^itted^to^Coⁿ^g^r^e^{ss a b}^u^d^g^e^{t r}^e^q^u^{est f}^o^r^f^u^ll^f^uⁿ^dⁱⁿ^g
^of^unⁱ^t^s^t^o^{be procu}^r^{ed t}^h^rou^{gh t}^h^{e con}^t^ract^an^{d, in}^t^h^{e cas}^{e o}^f^{a con}^t^{ract f}^o^{r procu}^r^em^eⁿ^{t of}
^aircraf^t^{, th}^{at in}^cl^u^d^es^{, f}^o^{r any aircraf}^t^uⁿ^{it to}^{be procu}^r^ed^t^h^rou^g^h^t^h^{e cont}^ract^f^o^r^w^hⁱ^c^h
^procu^r^em^eⁿ^t^f^uⁿ^d^s^{are requ}^est^e^{d i}ⁿ^t^h^at^bu^d^g^et^requ^es^t^f^o^{r produ}^ctⁱ^oⁿ^bey^oⁿ^d^adv^aⁿ^c^e
^p^r^o^c^u^r^em^eⁿ^{t ac}^tiv^itiesⁱⁿ^t^h^e^fⁱ^scal^y^ear^co^v^e^r^e^d^b^y^th^e^b^u^d^g^e^t^{, f}^u^ll^f^uⁿ^dⁱⁿ^g^o^f^p^r^o^c^u^r^e^m^eⁿ^t
^of^s^u^c^h^uⁿⁱ^{t in}^t^h^at^fⁱ^s^cal^y^ear;^...
The conference report approves the Navy’s request for the initial (FY2007) increment of
procurement funding for the LHA(R) amphibious assault ship, which the Navy wants to procure
in FY2007 using split funding in FY2007 and FY2008. The conference report approves the
Navy’s request for the initial (FY2007) increment of procurement funding for the first two DDG-
1000 destroyers, which the Navy wants to procure in FY2007 using split funding in FY2007 and
FY2008. The report states:
^T^h^{e con}^f^erees^ag^{ree to prov}^{ide $2,5}^68,1^11,^{000 f}^o^{r th}^{e DDG-}^{1000 (f}^orm^e^rl^y^DDX)
^D^e^s^t^ro^y^e^{r Prog}^ra^m^,^an^{d a}^g^re^{e t}^o^del^e^t^e^l^a^ng^u^a^g^e^propos^{ed by}^t^h^{e H}^o^u^s^{e requi}^ri^ng^f^u^l^l
^f^uⁿ^dⁱⁿ^g^o^f^a^sⁱⁿ^g^l^e^{lead s}^h^{ip. Th}^{e e}^f^f^e^c^t^of^th^{e co}ⁿ^f^ereⁿ^{ce a}^g^ree^m^ent^w^{ould allo}^w^t^h^{e Na}^v^y
^{to s}^p^{lit f}^uⁿ^d^t^wⁱⁿ^{lead s}^h^ips^of^th^{e DDG}^-^{1000 cla}^s^s^,^if^au^t^h^{orized in}^s^e^{parate leg}ⁱ^s^l^atioⁿ^b^y

^th^{e Co}ⁿ^g^r^es^{s. T}^h^{is actio}ⁿⁱ^s^b^eⁱⁿ^g^tak^eⁿ^b^a^sed^u^p^oⁿ^t^h^{e ex}^p^ectatioⁿ^th^{at t}^h^{e to}^{tal co}^{st o}^f
^t^h^es^{e t}^w^o^s^hⁱ^p^sⁱ^s^w^e^l^l^un^ders^t^{ood an}^{d l}^o^w^ri^s^k^{. T}^h^{e conf}^erees^are^wⁱ^l^lⁱⁿ^g^t^o^m^a^k^e^t^hⁱ^s^on^e^-
^ti^m^e^e^x^ception^{to th}^e^f^u^{ll fun}^d^ing^prin^{ciple becau}^s^e^o^f^t^h^{e un}^iqu^e^sⁱ^t^u^ation^wⁱ^t^h^t^h^e
^s^h^ipbuⁱ^l^dingⁱⁿ^du^s^t^{rial ba}^s^e^aⁿ^d^wⁱ^t^h^t^h^{e DDG}^{—1000 pro}^g^r^a^m^{. T}^h^{e conf}^erees^w^illⁿ^o^t
^en^t^e^rt^aiⁿ^fu^t^u^{re requ}^es^t^s^t^o^{fund s}^hⁱ^p^s^ot^h^e^{r t}^h^aⁿ^un^{der t}^h^e^f^u^l^l^f^uⁿ^dⁱⁿ^g^priⁿ^ci^pl^{e, ex}^cept^f^o^r
^th^os^e^hⁱ^s^t^oricall^y^fun^d^{ed in}^t^hⁱ^s^m^aⁿⁿ^{er (aircraf}^t^carriers^an^d^s^o^m^e^larg^{e dec}^k^a^m^p^h^ibious
^ship^s)^.
^T^h^{e u}ⁿ^u^s^u^{al procu}^r^e^m^eⁿ^{t of}^t^wⁱⁿ^{lead s}^h^ips^rais^e^s^th^{e ris}^k^{that f}^u^t^u^{re des}ⁱ^gn^ch^aⁿ^g^e^s^o^r
^p^r^o^d^u^ctioⁿ^p^r^o^b^lem^s^w^{ill i}^m^p^{act t}^w^o^sh^ip^{s u}ⁿ^d^e^r^coⁿ^s^tr^u^c^ti^oⁿ^si^m^u^ltaⁿ^e^o^u^s^l^y^{. T}^h^{is co}^u^l^d
^rais^{e cos}^t^s^sⁱ^gⁿⁱ^fⁱ^caⁿ^t^l^y^co^m^p^a^r^{ed to}^oth^e^{r lead s}^h^{ip prog}^ram^s^{. Ho}^w^e^v^e^{r, th}^{e Na}^vy^belie^v^e^s
^th^{e cos}^t^aⁿ^{d s}^c^h^e^du^le^ris^k^{in the DDG-}^{1000 prog}^ra^m^is^lo^w^eⁿ^oug^h^{to per}^m^{it t}^h^{e t}^wⁱⁿ^lead
^sh^ip^acq^uⁱ^s^itioⁿ^str^a^te^g^y^{. T}^h^e^Nav^y^h^a^{s id}^en^tⁱ^fⁱ^ed^th^{e to}^{tal co}^{st to}^p^r^o^c^u^r^e^t^h^e^twⁱⁿ^l^e^a^d^shⁱ^p^s
^of^t^h^{e D}^D^G^—^{1000 cl}^as^{s as}^$6,^582,2^00,^000.^T^h^{e con}^f^{erees i}ⁿ^sⁱ^s^t^t^h^a^t^t^h^{e N}^a^vy^m^aⁿ^a^g^e^t^hⁱ^s
^prog^ram^wⁱ^t^hⁱⁿ^t^h^at^t^o^t^a^l^cos^t^{, an}^d^wⁱ^l^l^{be u}ⁿ^lⁱ^k^el^y^t^oⁱⁿ^creas^{e fun}^dⁱⁿ^g^t^h^rough^a
^r^e^p^r^o^g^r^a^m^mⁱⁿ^g^o^r^an^ad^d^itioⁿ^a^{l b}^u^d^g^{et r}^e^q^u^{est ex}^cep^{t in}^th^{e case o}^f^em^er^g^eⁿ^c^y^,ⁿ^a^t^u^r^a^l
^di^s^a^s^t^{er, or ot}^h^e^{r i}^m^pact^ari^sⁱⁿ^g^f^r^o^m^ou^t^sⁱ^d^{e t}^h^{e N}^a^vy^’s^shⁱ^p^buⁱ^l^dⁱⁿ^g^prog^ra^m^.^(Pag^{e 18}⁰⁾
In its report (H.Rept. 109-89 of May 20, 2005) on the FY2006 defense authorization bill (H.R.

1815), the House Armed Services Committee states:

^[^C^hi^e^f^o^f^N^a^va^l^O^p^e^r^a^tⁱ^o^ns]^A^d^mi^r^a^l^[^V^e^r^no^n]^C^l^ark^,ⁱⁿ^hⁱ^s^pos^t^u^re^s^t^at^e^m^eⁿ^t^bef^o^re^t^h^e
^H^o^u^s^{e C}^o^m^mⁱ^t^t^{ee on}^A^ppropri^a^tⁱ^oⁿ^s^{, Su}^bco^m^mⁱ^t^t^{ee on}^D^e^f^eⁿ^s^{e s}^t^a^t^e^d^,^“^W^eⁿ^e^e^d^t^o^p^a^r^tⁿ^e^r
^wⁱ^t^h^Coⁿ^g^r^e^{ss a}ⁿ^dⁱⁿ^d^u^str^y^to^r^e^g^aⁱⁿ^o^u^r^b^u^yⁱⁿ^g^p^o^w^e^r^.^A^c^q^u^isitioⁿ^an^d^b^u^d^g^{et r}^e^f^o^r^m^s,
^s^u^c^h^as^m^u^lti^-y^{ear procu}^r^e^m^eⁿ^{t, econ}^o^mⁱ^{c order qu}^an^tit^y^,^an^{d oth}^e^{r approach}^es^h^e^{lp to}
^s^t^{abilize t}^h^{e produ}^ction^path^{, a}ⁿ^{d in}^o^u^{r v}ⁱ^e^w^{, redu}^{ce t}^h^{e per u}ⁿⁱ^{t cos}^t^of^s^h^ips^an^{d i}ⁿ^creas^e
^ou^{r s}^hⁱ^pbuⁱ^l^di^ng^rat^e^{.” T}^h^{e co}^mmⁱ^t^t^{ee does}ⁿ^o^t^a^g^{ree t}^h^at^cre^a^tⁱ^v^e^fⁱⁿ^aⁿ^cⁱⁿ^g^m^e^t^h^odol^ogⁱ^e^s
^th^{at dela}^y^recogⁿⁱ^zⁱ^ng^t^h^{e tru}^e^cos^t^of^s^h^ipbu^ildiⁿ^g^{or th}^{at prov}^{ide ev}^er^-ⁱⁿ^c^reas^ing^a^m^oun^t^s
^of^fun^dⁱⁿ^g^t^o^cov^e^{r t}^h^{e ex}^pl^osi^oⁿⁱⁿ^s^hⁱ^p^cos^t^s^{are res}^ponsⁱ^b^l^e^actⁱ^oⁿ^s^{. In}^cre^m^eⁿ^t^a^l^fuⁿ^dⁱⁿ^g^,
^adv^aⁿ^{ced procu}^r^e^m^eⁿ^t,^m^u^ltⁱ^y^{ear procu}^r^e^m^eⁿ^{t, a}ⁿ^d^v^a^riou^s^creati^v^e^s^h^ip^y^a^rd^w^o^r^k
^allo^catioⁿ^ar^r^aⁿ^g^e^m^eⁿ^t^{s h}^a^v^e^f^a^iled^to^coⁿ^t^r^o^{l th}^e^cos^t^g^r^ow^t^h^of^v^e^s^s^{el clas}^s^e^s^s^u^ch^as^t^h^e
^Virgⁱⁿ^{ia clas}^s^s^u^b^m^ariⁿ^{e, th}^e^replacem^eⁿ^{t a}^m^ph^ibio^u^s^as^s^a^u^{lt s}^h^{ip (LH}^A^(R^{)), th}^e^fu^tu^re
^m^a^j^o^{r s}^u^rf^{ace co}^m^b^ataⁿ^{t s}^h^{ip (DD(X)), an}^{d th}^{e f}^u^tu^{re aircra}^f^t^{carrier C}^V^N^-^{21. (P}^ag^{e 63}⁾
Section 1004 of the bill as reported by the committee states:
^S^E^C^.^{1004. R}^E^PO^R^T^S^O^N^F^E^A^S^IBIL^IT^Y^A^N^D^D^E^SIRA^BIL^I^T^Y^O^F^CA^PIT^A^L
^B^UDGET^I^{NG FOR}^MA^J^O^R^DEFENSE^A^C^QUISIT^I^{ON PR}^OG^R^A^MS.
⁽^a⁾^Cap^{ital B}^u^d^g^etin^g^Defⁱⁿ^e^d^-^Fo^r^th^{e p}^u^r^p^o^s^{es o}^f^th^{is sectio}ⁿ^,^th^{e ter}^m^‘^cap^{ital b}^u^d^g^etin^g^’
^m^eans^{a bu}^dg^{et proces}^s^t^h^at—
⁽¹⁾^id^en^tif^{ies lar}^g^{e cap}^{ital o}^u^tl^a^y^{s t}^h^{at ar}^{e ex}^p^ected^to^b^e^m^a^d^eⁱⁿ^f^u^tu^r^e^y^ear^{s, to}^g^e^th^er
^wⁱ^t^hⁱ^d^eⁿ^tⁱ^fⁱ^catⁱ^oⁿ^of^t^h^{e propos}^ed^m^e^aⁿ^s^t^o^fⁱⁿ^aⁿ^ce^t^h^os^{e o}^u^t^l^a^y^s^aⁿ^{d t}^h^e^ex^pect^{ed ben}^e^fⁱ^t^s
^o^f^th^o^s^{e o}^u^tla^y^s^;

⁽²⁾^sep^a^r^a^tely^id^en^ti^fⁱ^e^s^r^e^v^eⁿ^u^e^{s a}ⁿ^d^o^u^tla^y^s^f^o^r^cap^ital^assets^f^r^o^m^r^e^v^eⁿ^u^es^an^d
^ou^t^l^a^y^s^f^o^{r an}^operatⁱⁿ^g^bu^dg^e^t^;
^{(3) al}^l^o^w^s^f^o^{r t}^h^{e i}^s^su^{e of}^l^ong-^t^e^r^m^debt^t^o^fⁱⁿ^aⁿ^{ce capi}^t^a^lⁱⁿ^v^e^s^t^m^e^nt^s^;^aⁿ^d
^{(4) prov}ⁱ^d^es^t^h^{e bu}^dg^e^t^aut^h^orⁱ^t^y^f^o^{r acqu}ⁱ^riⁿ^g^{a capital a}^s^s^e^t^ov^{er s}^e^v^e^ral^fⁱ^s^cal^y^ears
⁽^r^a^th^er^th^anⁱⁿ^{a si}ⁿ^g^{le f}ⁱ^scal^y^ear^{at th}^{e b}^e^gⁱⁿⁿⁱⁿ^g^o^f^s^u^ch^ac^q^u^isitioⁿ⁾^.
^{(b) R}^e^po^rt^s^R^e^quⁱ^r^ed-^N^o^t^l^a^t^e^{r t}^h^an^Ju^l^y^{1, 2006,}^t^h^{e S}^ecret^ary^of^D^e^f^eⁿ^s^e^aⁿ^d^t^h^e^S^e^c^r^e^t^a^r^y
^o^f^each^m^ilitar^y^d^e^p^a^rt^m^eⁿ^t^sh^{all each}^s^u^b^mⁱ^t^to^Coⁿ^g^{ress a r}^e^p^o^r^{t an}^al^y^zⁱⁿ^g^t^h^{e f}^e^a^s^ib^ilit^y
^an^d^d^e^sir^a^b^ilit^y^o^f^u^sⁱⁿ^g^{a ca}^p^{ital b}^u^d^g^etin^g^s^y^s^t^e^m^f^o^r^th^{e f}ⁱⁿ^aⁿ^cⁱⁿ^g^o^f^m^a^j^o^r^d^e^f^eⁿ^s^e
^acq^uⁱ^sitioⁿ^p^r^o^g^r^a^m^s^{. Eac}^h^su^ch^r^e^p^o^r^{t sh}^{all ad}^d^r^{ess th}^e^f^o^ll^o^wⁱⁿ^g^m^a^tter^s^:
^{(1) T}^h^{e pot}^en^tⁱ^a^l^l^ong-^t^e^r^m^e^f^fect^on^t^h^e^def^eⁿ^s^eⁱⁿ^d^u^s^t^ri^al^ba^s^e^{of t}^h^{e U}ⁿⁱ^t^e^d^S^t^at^{es of}
^c^o^ntⁱⁿ^ui^ng^wⁱ^t^h^t^h^e^c^u^r^r^eⁿ^t^f^u^l^l^up^-^f^r^o^nt^f^u^ndⁱⁿ^g^s^y^st^e^m^f^o^r^m^a^j^o^r^d^e^fe^nse^a^c^q^ui^si^tⁱ^oⁿ
^prog^ram^s^.
^{(2) W}^h^eth^e^{r us}^{e of}^{a capit}^{al bu}^dg^etiⁿ^g^s^y^s^t^e^m^co^u^l^d^{create a}^m^o^{re eff}^ecti^v^e
^d^ecisioⁿ^m^akⁱⁿ^g^p^r^o^cess^f^o^r^loⁿ^g^-^t^er^mⁱⁿ^v^e^st^m^eⁿ^t^sⁱⁿ^m^a^j^o^r^d^e^f^eⁿ^s^{e acq}^uⁱ^sitioⁿ^p^r^o^g^r^a^m^s^.
⁽³⁾^T^h^e^m^a^nne^rⁱⁿ^w^hⁱ^c^{h a}^c^a^pⁱ^t^a^l^b^u^d^g^e^tⁱ^{ng s}^y^s^t^e^m^fo^r^ma^j^o^r^d^e^fe^nse^a^c^q^ui^sⁱ^tⁱ^oⁿ
^prog^ram^s^w^o^u^l^{d aff}^ect^t^h^e^bu^dg^et^pl^annⁱ^ng^an^{d f}^o^r^m^u^l^atⁱ^oⁿ^proces^s^of^t^h^e^mⁱ^lⁱ^t^a^r^y
^depart^m^eⁿ^t^s^.
⁽⁴⁾^T^h^{e ty}^pes^of^fⁱⁿ^aⁿ^c^ial^m^echan^is^m^s^t^h^at^w^{ould be n}^{eeded to}^prov^{ide f}^uⁿ^d^s^f^o^{r s}^u^ch^a
^cap^{ital b}^u^d^g^etiⁿ^g^s^y^ste^m^.
Section 122 of the Senate version of the FY2006 defense authorization bill (S. 1042) as reported
by the Senate Armed Services Committee (S.Rept. 109-69 of May 17, 2005) would permit the
aircraft carrier CVN-78 to be procured with split funding (i.e., incremental funding) during the
period FY2007-FY2010. The section states:
^S^E^C^.^{122. S}^P^L^I^T^F^UNDING^A^U^T^HOR^I^Z^A^T^{ION F}^O^R^C^V^N-⁷⁸^A^I^RC^RAF^T^CAR^R^IER^.
^{(a) A}^U^T^HOR^IT^Y^T^O^{USE SP}^L^I^T^FUNDING-^T^h^{e Secretar}^y^o^f^t^h^{e Na}^v^y^{is a}^u^th^o^r^ized^to
^f^uⁿ^d^t^h^{e det}^aⁱ^l^desⁱ^gn^aⁿ^{d const}^r^u^c^tⁱ^{on of t}^h^e^ai^rcraf^t^carri^{er des}ⁱ^gn^at^ed^C^V^N^-^{78 us}ⁱⁿ^{g s}^p^lⁱ^t
^f^uⁿ^dⁱⁿ^gⁱⁿ^t^h^{e Sh}ⁱ^pbuⁱ^l^dⁱⁿ^g^a^{nd C}^oⁿ^v^e^rsⁱ^oⁿ^,^N^a^vy^accoun^tⁱⁿ^fⁱ^s^cal^y^ear^s^2007,²⁰⁰⁸^,²⁰⁰⁹^,
^an^{d 2010.}
^(b^{) C}^{ONDITION FOR}^OUT^-^Y^EAR^C^ONT^R^A^C^T^P^A^YMEN^TS^-^A^c^oⁿ^t^r^a^c^t^eⁿ^t^e^r^e^dⁱⁿ^t^o^f^o^r
^t^h^e^d^e^t^aⁱ^l^d^e^sⁱ^gⁿ^aⁿ^d^c^o^ns^t^r^uc^tⁱ^oⁿ^o^f^t^h^e^aⁱ^r^c^raf^t^carrier^desⁱ^gⁿ^ated^C^VN-⁷⁸^s^h^al^l^prov^ide^th^at
^any^oblig^atioⁿ^{of t}^h^{e U}ⁿ^{ited S}^t^ates^to^m^a^k^e^{a pa}^ym^en^t^un^{der th}^e^con^t^ract^f^o^{r a}^fⁱ^s^c^a^l^y^ear²⁹
^af^t^e^{r f}ⁱ^s^cal^y^{ear 2006 i}^s^s^u^bj^ect^t^o^t^h^{e av}^ai^l^a^bi^lⁱ^t^y^of^appropri^a^tⁱ^oⁿ^s^f^o^{r s}^u^c^h^fⁱ^s^cal^y^ear.

²⁹^For^m^o^r^e^on^the^C^V^N^-²¹^pr^og^r^a^m^,^s^e^e^C^R^S^R^e^por^{t R}^S²⁰⁶⁴^3,^N^a^{vy Fo}^rd⁽^C^VN-7⁸⁾^Cl^a^{ss Aircra}^ft^Ca^{rrier Pro}^g^r^a^m^:
^B^a^ckg^ro^un^{d an}^d^Iss^u^{es f}^o^{r Con}^g^r^ess^{, by}^R^ona^{ld O}^'^R^our^k^e^,^N^a^v^y^C^V^N^-²¹^Air^c^r^a^{ft C}^a^r^rⁱ^e^r^Pr^ogr^am^:^Bac^k^g^r^o^un^{d a}ⁿ^d
^Issu^{es fo}^{r Con}^g^r^ess^{, by}^R^ona^ld^O^’^R^our^k^e^.

Section 123 of the bill would permit an amphibious assault ship LHA(R) to be procured with split
funding (i.e., incremental funding) in FY2007 and FY2008. The section would also permit
FY2006 funding to be used for advance construction of the ship. The section states:
^S^E^C^.^{123. L}^H^A^R^E^PLA^C^EM^EN^T^(L^H^A^(R^{)) S}^H^IP.
⁽^a⁾^A^M^OUNT^A^U^T^HORI^Z^E^D^FROM^S^C^N^A^C^C^OUNT^FO^R^F^I^S^C^A^L^Y^E^A^R^2006-^O^f^t^h^e
^a^m^oun^t^a^u^t^h^ori^{zed t}^o^{be ap}^propri^a^t^e^{d by}^s^ectⁱ^oⁿ^102(a)^{(3) f}^o^{r f}ⁱ^s^cal^y^{ear 2006 f}^o^r
^s^hⁱ^pbuⁱ^l^di^ng^aⁿ^{d con}^v^e^r^sⁱ^oⁿ^,^N^a^vy^,^$325,4^47,0^{00 s}^h^al^l^{be av}^ai^l^a^bl^e^f^o^{r des}ⁱ^gn^{, adv}^aⁿ^c^e
^procu^r^em^eⁿ^{t, an}^{d adv}^aⁿ^{ce con}^s^tr^u^c^tion^wⁱ^th^res^p^{ect to th}^e^L^H^A^R^e^place^m^eⁿ^t⁽^L^H^A^(R⁾⁾
^ship^.
^{(b) A}^M^OUNT^S^A^U^T^HOR^I^{ZED F}^R^{OM S}^C^N^ACC^OUNT^F^O^{R F}^I^S^C^AL^YE^AR^S²⁰⁰⁷
^A^N^D^2008-^A^m^o^u^nt^s^au^t^h^ori^{zed t}^o^be^app^r^op^ri^at^{ed f}^o^{r f}ⁱ^s^cal^y^ear^s^{2007 an}^d²⁰⁰^{8 f}^o^r
^s^hⁱ^pbuⁱ^l^di^ng^aⁿ^{d con}^v^e^r^sⁱ^oⁿ^,^N^a^vy^,^sh^al^l^{be a}^v^ai^l^a^bl^e^f^o^{r con}^s^t^r^u^c^tⁱ^on^wⁱ^t^h^res^p^ect^t^o^t^h^e
^L^H^A^R^e^place^m^eⁿ^t^s^h^ip.
^{(c) C}^ONT^R^A^C^T^A^U^T^HOR^ITY-
⁽¹^{) DESIGN, A}^D^V^A^N^C^{E P}^R^OC^U^R^EMENT^,^A^ND^A^D^V^ANC^{E C}^O^N^S^T^R^UC^T^I^ON-
^T^h^{e S}^ecret^ary^of^t^h^{e N}^a^vy^ma^y^en^t^e^{r i}ⁿ^t^o^{a con}^t^ract^du^ri^ng^fⁱ^s^cal^y^{ear 2006 f}^o^{r des}ⁱ^gⁿ^,
^adv^aⁿ^{ce procu}^r^e^m^eⁿ^{t, an}^{d adv}^aⁿ^{ce con}^s^tr^u^c^tion^wⁱ^t^h^res^p^{ect to th}^{e L}^H^A^R^e^place^m^eⁿ^t^s^hⁱ^p^.
⁽²^{) DET}^A^IL^DESIGN^A^N^D^C^O^N^S^T^R^UC^T^I^ON-^T^h^{e Se}^cretary^m^a^y^en^terⁱⁿ^to^a
^con^t^ract^du^ri^ng^fⁱ^s^c^a^l^y^{ear 2}^{007 f}^o^{r t}^h^{e det}^aⁱ^l^desⁱ^gn^a^{nd con}^s^t^r^u^c^tⁱ^oⁿ^of^t^h^e^L^H^A
^R^e^place^m^eⁿ^t^s^h^ip.
^(d^{) C}^{ONDITION FOR}^OUT^-^Y^EAR^C^O^NT^R^A^C^T^P^A^YMENT^S^-^A^coⁿ^t^{ract e}ⁿ^teredⁱⁿ^to
^uⁿ^d^er^su^b^s^ectioⁿ⁽^c⁾^sh^{all p}^r^o^vⁱ^d^e^th^{at an}^y^o^b^lig^at^ioⁿ^o^f^th^{e U}ⁿⁱ^t^e^d^S^t^a^t^e^s^t^o^m^a^k^e^a^p^a^y^m^en^t
^uⁿ^d^{er t}^h^{e contract}^f^o^{r a f}ⁱ^s^cal^y^{ear a}^f^ter^fⁱ^s^cal^y^{ear 2006 is}^s^u^bj^{ect to t}^h^{e av}^a^ilabilit^y^of³⁰
^appro^p^riation^s^f^o^{r th}^{at pu}^rpos^{e f}^o^{r s}^u^c^h^fⁱ^s^cal^y^ear.
S.Rept. 109-69 states:
^T^h^{e C}^VN-⁷⁸^wⁱ^{ll be a n}^e^w^clas^s^of^aircraf^t^{carrier, in}^corporatin^g^num^erou^sⁿ^e^w
^techⁿ^o^lo^gⁱ^es^{. T}^h^is^b^u^dg^{et reques}^t^ref^l^ect^s^t^h^{e s}^ecoⁿ^d^on^e-y^e^a^r^s^{lip in}^t^h^{e prog}^ra^mⁱⁿ^receⁿ^t
^y^ears^.^T^h^is^s^lip^w^o^u^l^{d cau}^s^e^a^delayⁱⁿ^th^{e deliv}^er^y^o^f^th^{e C}^VN-^{78 u}ⁿ^{til f}ⁱ^s^cal^y^{ear 2015,}
^wⁱ^t^h^th^e^s^h^ip^{it i}^s^s^c^h^e^d^u^led^{to replace, th}^e^USS^Enterpris^e^(C^VN^-^{65), s}^c^h^e^d^u^{led to be}
^decom^mⁱ^s^sⁱ^on^{ed i}ⁿ^fis^cal^y^{ear 2013.}^A^ddition^a^ll^y^,^t^hⁱ^s^s^{lip tr}^an^s^l^ate^s^{into a cos}^t^g^r^o^w^th^f^o^r
^CVN^-⁷⁸^o^f^ap^p^r^o^xⁱ^m^atel^y^$⁴⁰⁰^.⁰^m^illioⁿ^,^acco^rdⁱⁿ^g^to^th^e^Nav^y^.
^T^h^{e co}^m^m^{ittee i}^s^coⁿ^cerⁿ^e^d^a^b^o^u^{t th}ⁱ^s^d^e^la^y^.^T^h^{e co}^m^m^itte^{e h}^a^{s b}^een^to^ld^t^h^er^{e is}ⁿ^o
^tech^{nical reas}^on^f^o^{r th}^{e dela}^y^,^bu^{t th}^{at t}^h^{e de}^l^a^y^w^a^s^dri^v^eⁿ^by^bu^dg^et^coⁿ^sⁱ^d^eratⁱ^ons^{. Bot}^h
^th^{e Secr}^etar^y^o^f^t^h^{e Nav}^y^aⁿ^d^th^{e C}^h^ief^o^f^Na^v^a^{l o}^p^e^r^a^tioⁿ^s^te^stif^ied^th^{at lar}^g^{e cap}^{ital asset}^s
^su^c^h^{as air}^c^r^a^f^t^car^rⁱ^er^{s ar}^{e d}ⁱ^f^f^icu^{lt to}^f^uⁿ^d^uⁿ^d^e^r^th^{e tr}^ad^itioⁿ^a^l^f^u^ll^-^f^uⁿ^dⁱⁿ^g^p^o^lⁱ^c^y^,^an^d^t^h^a^t
^m^o^re^f^l^e^xⁱ^b^l^e^m^e^t^h^ods^of^fuⁿ^dⁱⁿ^g^m^u^s^t^be^f^oun^{d an}^{d us}^{ed. T}^h^{e prog}^ram^o^f^{record f}^o^{r C}^V^N^-
^{78 h}^a^s^t^h^{e det}^aⁱ^l^desⁱ^gⁿ^an^d^con^s^t^r^u^c^tⁱ^on^fuⁿ^dⁱⁿ^g^s^p^lⁱ^t^bet^w^een^t^w^o^y^ears^.^T^hⁱ^s^provⁱ^sⁱ^oⁿ
^w^o^u^l^d^au^t^h^o^r^{ize th}^a^t^sa^m^e^f^uⁿ^dⁱⁿ^g^to^b^e^sp^{lit o}^v^er^f^o^u^r^y^e^ar^{s, th}^er^eb^y^allo^wⁱⁿ^gⁿ^eed^ed
^f^uⁿ^dⁱⁿ^g^f^l^e^x^ib^ilit^y^.^T^h^{e co}^m^m^{ittee d}ⁱ^r^{ects t}^h^{e Na}^v^y^to^p^r^o^v^id^{e an}^u^p^d^a^ted^f^uⁿ^dⁱⁿ^g^p^r^o^f^ile,

³⁰^For^m^o^r^e^on^the^L^H^A⁽^R^E⁾^pr^og^r^a^m^,^s^e^e^C^R^S^R^e^por^{t R}^L³²⁵¹^3,^N^a^v^y^-^M^a^rine^{Corps Am}^phi^bi^ous^an^{d M}^a^ritime
^Pre^positioⁿⁱ^{ng Sh}^ip^Pr^ogr^am^{s: B}^a^c^k^g^rou^nd^an^{d Ov}^e^rsight^Issue^s^f^o^{r Co}^ngre^s^s^{, by}^R^ona^{ld O}^’^R^our^k^e^.

^fu^l^l^y^fu^ndⁱ^{ng t}^h^e^r^e^m^aⁱⁿⁱ^{ng c}^o^st^{s o}^f^t^h^e^s^hⁱ^p^fr^o^m^fi^sc^a^l^ye^a^r^{s 2}⁰⁰⁷^t^h^r^o^ugh^{2010, w}ⁱ^t^h
^delⁱ^v^er^y^of^t^h^e^fⁱ^s^cal^y^{ear 200}^{7 bu}^dg^et^requ^es^t^.
In its report (H.Rept. 109-119 of June 10, 2005) on H.R. 2863, the House Appropriations
Committee stated, in the section on Navy shipbuilding, that it “supports the LHA(R) [amphibious
assault ship] program, and it directs the Navy to reconsider its proposal to request split funding
for LHA(R) over the FY2007-08 timeframe, and instead follow the full funding principle for this
ship class, to ensure an adequate budget is in hand before contract award.” (Page 146)
In the section on Air Force aircraft procurement, the report stated:
^T^h^e^bu^dg^et^requ^es^tⁱⁿ^cl^u^d^es^$152,40^0,0⁰⁰^f^o^r^p^r^o^c^u^r^e^m^eⁿ^t^o^f^l^oⁿ^g^l^e^a^dⁱ^t^e^m^s^t^o^s^u^pport
^th^{e lo}^w^r^a^{te in}ⁱ^{tial p}^r^o^d^u^ctioⁿ^o^f^fⁱ^v^e^coⁿ^v^eⁿ^tioⁿ^a^{l tak}^e^-^o^f^f^aⁿ^d^lan^dⁱⁿ^g^v^a^rⁱ^aⁿ^{ts o}^f^t^h^{e J}^oⁱⁿ^t
^Strⁱ^k^e^Fi^g^h^ter^.^T^h^{e Co}^m^m^itte^{e n}^o^{tes t}^h^{at u}ⁿ^d^e^r^th^{e r}^e^vⁱ^sed^air^c^r^a^f^t^b^u^ild^seq^u^eⁿ^{ce all o}^f
^t^h^es^{e ai}^rcra^f^t^{do n}^o^t^requⁱ^r^{e f}^u^l^l^fun^dⁱⁿ^g^pri^o^{r t}^o^t^h^{e beg}ⁱⁿⁿⁱⁿ^g^of^fⁱ^s^cal^y^{ear 2008.}
^A^ccording^l^y^,^{a requ}^es^{t to beg}ⁱⁿ^adv^aⁿ^{ce procu}^r^e^m^eⁿ^t^o^f^loⁿ^g^lead^ite^m^s^t^w^o^y^ear^{s p}^r^io^r^,ⁱⁿ
^fⁱ^s^cal^y^{ear 2006,}ⁱ^s^f^uⁿ^dⁱⁿ^g^earl^y^t^oⁿ^{eed an}^{d con}^t^rary^t^o^{a con}^v^eⁿ^tⁱ^oⁿ^a^l^aⁱ^r^c^r^a^f^t^p^r^o^c^u^r^em^en^t
^st^r^a^t^e^g^y^.^A^d^va^nc^e^p^r^o^c^ur^e^m^eⁿ^t^fu^nd^{s s}^h^o^u^l^d^b^e^r^e^q^u^e^s^t^e^dⁱⁿ^t^h^e^Aⁱ^r^F^o^rce’^s^fⁱ^s^cal^y^ear²⁰⁰⁷
^bu^dg^et^su^b^mⁱ^s^sⁱ^oⁿ^{. F}^u^l^l^fuⁿ^dⁱⁿ^g^f^o^{r t}^h^es^e^fⁱ^v^e^ai^rcraf^t^sh^ou^l^d^{be re}^qu^es^t^e^{d i}ⁿ^t^h^e^fⁱ^s^c^a^l^y^e^a^r
²⁰⁰⁸^bu^dg^et^{. (Pag}^{e 172}⁾
In its report (S.Rept. 109-141 of September 29, 2005), the Senate Appropriations Committee
stated, in a section relating to Navy shipbuilding:
^{For f}ⁱ^s^cal^y^{ear 2006,}^th^{e C}^o^mm^{ittee reco}^m^m^eⁿ^d^s^prov^idiⁿ^g^t^h^{e Navy}^addition^a^l
^reprog^ram^mⁱⁿ^g^a^u^t^h^ori^t^y^.^T^hⁱ^s^a^u^t^h^ori^t^y^al^l^o^w^s^t^h^{e N}^a^vy^{, t}^h^roug^h^abov^{e t}^h^resh^ol^d
^reprog^ram^mⁱⁿ^g^procedu^r^es^{, t}^oⁱⁿ^creas^e^fuⁿ^dⁱⁿ^g^f^o^{r prog}^ra^m^s^ex^peri^en^cⁱ^ng^un^f^o^res^e^eⁿ
^s^h^ortf^a^lls^{. T}^h^e^C^o^m^m^ittee^un^ders^tan^d^s^th^a^tⁱⁿ^fⁱ^s^cal^y^e^a^r^{2005 af}^{ter ex}^h^a^u^s^ti^ng^t^h^e
^$100,⁰⁰⁰^,00⁰^of^t^h^{e t}^r^an^s^f^{er a}^u^t^h^ori^t^y^t^h^e^C^ong^res^s^provⁱ^d^{ed, t}^h^{e N}^a^v^y^s^o^u^g^h^t^t^o^u^s^e^d^o^l^l^a^r^s
^sp^ecifⁱ^call^y^ap^p^r^o^p^r^iated^f^o^r^o^u^tfⁱ^ttiⁿ^g^aⁿ^d^p^o^s^{t d}^e^liv^er^y^[^o^f^co^m^p^leted^s^h^ip^s]^to^ad^d^r^ess
^[^s^hi^p^-^c^o^nst^r^uc^tⁱ^o^n]^f^undⁱⁿ^{g s}^h^o^r^t^f^a^l^l^s^.^T^h^e^Co^m^mⁱ^t^t^e^eⁱ^s^c^o^nc^e^r^ne^d^a^b^o^u^t^t^hⁱ^s^c^h^aⁿ^geⁱⁿ
^Nav^y^p^o^lic^y^a^s^it^w^{ill o}ⁿ^l^y^f^u^r^t^h^e^r^o^b^s^cu^r^e^act^u^a^{l p}^r^o^g^r^a^m^c^o^{sts. T}^h^{e n}^e^w^r^e^p^r^o^g^r^a^m^mⁱⁿ^g
^au^th^o^r^it^y^{is p}^r^o^v^id^ed^oⁿ^l^y^wⁱ^t^h^th^{e u}ⁿ^d^er^staⁿ^dⁱⁿ^g^t^h^{at t}^h^is^c^h^an^g^e^wⁱ^llⁿ^o^t^b^e^im^p^l^em^en^t^e^dⁱⁿ
^th^{e f}^u^t^u^r^e^.
^T^h^{e ad}^d^itioⁿ^a^{l rep}^r^o^g^ra^m^mⁱⁿ^g^a^u^t^h^o^r^it^y^esseⁿ^tial^l^y^p^r^o^vⁱ^d^{es th}^e^Na^v^y^{a reacti}^v^e
^m^ech^aⁿⁱ^s^m^{or approach}^{to c}^o^s^t^m^aⁿ^a^g^e^m^eⁿ^t^{. T}^h^{e C}^o^m^m^ittee^believ^e^s^t^h^{e s}ⁱ^t^u^ation^requ^ires
^m^o^re^proactiv^{e prog}^ra^m^,^b^u^dg^etar^y^aⁿ^{d con}^t^ract^m^aⁿ^a^g^e^m^eⁿ^t^an^{d e}ⁿ^cou^r^a^g^es^th^e
^D^e^part^m^eⁿ^t^of^D^e^f^e^ns^{e t}^o^consi^d^er^w^h^et^h^e^{r us}ⁱⁿ^{g adv}^aⁿ^{ce ap}^propri^a^tⁱ^oⁿ^sⁱⁿ^fu^t^u^{re bu}^dg^et^s
^wⁱ^l^lⁱ^m^prov^{e t}^h^{e sh}ⁱ^pbuⁱ^l^dⁱⁿ^g^prog^ram^.^(pag^{e 126)}
The committee also stated:
^T^h^{e f}ⁱ^s^cal^y^{ear 2006}^P^r^es^iden^t’^s^bu^d^g^{et requ}^es^t^s^$225,4^27,⁰^{00 f}^o^{r [th}^e^]DDG-^{51 [des}^troy^er
^prog^ram^]^f^o^r^w^h^at^t^h^{e N}^a^vy^de^s^c^ri^bes^as^“^p^rog^r^a^m^co^m^p^l^e^tⁱ^oⁿ^requⁱ^r^e^m^eⁿ^t^s^aⁿ^{d s}^h^u^t^do^wⁿ
^cos^t^s^.^{” T}^h^es^{e fun}^d^s^{are requ}^es^ted^f^o^{r a}^mⁱ^x^of^C^l^a^s^s^aⁿ^{d s}^h^{ip s}^p^{ecific plan}^{, bas}ⁱ^c

^coⁿ^s^tr^u^c^tⁱ^oⁿ^{, o}^r^dⁿ^an^{ce, cer}^ti^fⁱ^catioⁿ^,^an^dⁱⁿ^sp^ectioⁿ^co^sts.^Su^c^h^co^st^{s ar}^{e tr}^ad^itioⁿ^a^ll^y
ⁱⁿ^cl^u^d^{ed in}^th^{e bu}^dg^{et requ}^es^t^f^o^{r each}^s^h^{ip. Ho}^w^e^v^e^r,^w^h^en^sⁱ^gnⁱⁿ^g^t^h^e^m^u^lti^y^{ear con}^t^ract
^f^o^{r th}^{e co}ⁿ^s^tru^c^tioⁿ^o^f^th^e^fⁱⁿ^a^{l DDGs o}^f^t^h^{e C}^l^a^{ss, t}^h^{e De}^p^a^rtm^eⁿ^t^d^ecid^e^d^to^ch^aⁿ^g^e^it^s
^p^o^licy^aⁿ^d^b^u^d^g^{et f}^o^r^th^e^s^{e co}^{sts a}^f^ter^th^{e last}^sh^ip^w^a^{s ap}^p^r^o^p^r^iated^.^T^h^{e Co}^m^m^ittee^fⁱⁿ^d^s
^th^is^d^ecisioⁿ^tr^o^u^b^lin^g^.^Fir^s^t,^b^u^d^g^etiⁿ^g^f^o^r^s^u^c^h^co^{sts a}^f^ter^p^r^o^c^u^r^em^eⁿ^{t o}^f^t^h^{e last}^v^e^ssel
^obs^cu^res^th^{e act}^u^a^{l cos}^t^{to procu}^r^{e each}^s^h^ip^an^{d ov}^ers^t^at^es^s^a^vⁱ^ng^s^attrib^u^t^{able to th}^e
^m^u^lti^y^{ear con}^t^{ract au}^th^orit^y^uⁿ^d^er^w^h^ic^h^th^e^s^{e s}^h^ip^s^w^e^{re pu}^rch^a^s^e^d.^T^h^{e C}^oⁿ^g^r^es^s
^approv^{ed t}^h^{e N}^a^vy^’s^requ^es^t^f^o^{r m}^u^l^tⁱ^y^{ear procu}^r^e^m^en^t^au^t^h^ori^t^yⁱⁿ^fⁱ^s^cal^y^{ear 2002}
^ass^u^mⁱⁿ^g^{a lev}^e^{l o}^f^sa^vⁱⁿ^g^s^to^th^{e tax}^p^ay^{er t}^h^{at are n}^o^wⁿ^o^{t being}^{realized. Mos}^t
^di^s^c^on^certⁱⁿ^g^abou^t^t^hⁱ^s^ch^aⁿ^{ge i}ⁿ^polⁱ^c^y^aⁿ^{d res}^u^l^t^aⁿ^t^bu^dg^e^t^r^e^q^u^e^s^tⁱ^s^t^h^e^N^a^v^y^’^s^a^s^s^e^r^tⁱ^oⁿ
^th^{at i}^f^th^{ese co}^st^{s ar}^{e n}^o^{t f}^uⁿ^d^e^d^{, th}^{e Nav}^y^w^illⁿ^o^{t b}^e^ab^{le to}^m^{eet its co}ⁿ^t^r^a^c^t^u^a^l^o^b^lⁱ^g^a^tⁱ^oⁿ^s
^an^d^th^{e Ch}^ief^o^f^Na^v^a^{l Op}^eratioⁿ^s^w^{ill n}^o^{t b}^e^ab^{le to}^acce^p^t^d^e^liv^er^y^o^f^th^{ese s}^h^ip^{s. T}^h^e
^Co^m^m^{ittee i}^s^alar^m^e^d^th^{at t}^h^e^Nav^y^w^o^u^l^d^kⁿ^o^wⁱⁿ^g^l^y^si^gⁿ^a^m^u^ltib^illioⁿ^d^o^llar^coⁿ^t^r^{act f}^o^r
^s^hⁱ^p^s^t^h^a^t^w^o^u^l^d^b^e^b^o^t^hⁿ^oⁿ^-^o^p^e^r^a^tⁱ^oⁿ^a^l^aⁿ^d^uⁿ^d^e^lⁱ^v^e^r^a^b^l^e^uⁿ^les^s^ad^d^itioⁿ^a^l^d^o^llar^s^,^o^u^tsid^e
^th^{e co}ⁿ^t^r^act,^w^e^r^e^p^r^o^v^id^ed^{. Th}^e^Co^m^m^ittee^dⁱ^r^{ects t}^h^{e Secr}^etar^y^o^f^th^e^Nav^y^to^p^r^o^v^id^{e a}
^{detailed repo}^{rt of}^{all th}^{e cos}^t^s^requ^{ired to}^com^p^{lete each}^of^th^{e re}^m^aⁱⁿⁱⁿ^g^{11 s}^h^ips^aⁿ^{d a}
^r^a^tioⁿ^a^{le f}^o^r^s^u^c^h^{a co}ⁿ^t^r^act^u^a^{l ar}^r^aⁿ^g^e^m^eⁿ^{t b}^y^Dece^m^b^er¹^,²⁰⁰⁵^.^Un^{til su}^f^f^icieⁿ^t
^ex^p^l^an^atioⁿⁱ^s^p^r^o^v^id^ed^{, th}^e^Co^m^m^ittee^r^eco^m^m^eⁿ^d^{s o}ⁿ^l^y^p^r^o^v^idⁱⁿ^g^f^uⁿ^d^s^f^o^r^p^l^an^s^an^d
^th^o^s^{e co}^s^t^{s d}ⁱ^r^ectl^y^at^tr^ib^u^t^ab^l^e^to^s^h^ip^s^sch^e^d^u^led^to^d^e^li^v^e^rⁱⁿ^th^eⁿ^ear^-^t^er^m^.^{As s}^u^c^h^t^h^e
^C^o^m^mⁱ^t^t^{ee reco}^m^m^eⁿ^d^s^redu^cⁱⁿ^g^t^h^{e bu}^d^g^et^requ^es^t^b^y^$195,654^,00⁰^{. (}^P^ag^{e 127}⁾
The conference report (H.Rept. 109-62 of April 28, 2005) on H.Con.Res. 95, the budget
resolution for FY2006, states:
^T^h^{e con}^f^eren^{ce conf}^erees^un^ders^tan^d^t^h^{e Na}^vy^m^a^y^revⁱ^e^w^w^h^et^h^e^{r adv}^aⁿ^c^e
^appro^p^ri^atⁱ^oⁿ^s^{can i}^m^prov^eⁱ^t^s^procu^r^e^m^eⁿ^t^o^f^shⁱ^p^s^aⁿ^{d prov}ⁱ^d^{e s}^a^vⁱ^ng^{s as}ⁱ^t^desⁱ^gn^sⁱ^t^s
²⁰⁰⁷^bu^dg^{et. In}^addition^,^th^e^con^f^ereesⁱⁿ^teⁿ^d^{to requ}^es^{t the Gov}^e^rnm^eⁿ^t^Accoun^tabilit^y
^Offⁱ^{ce [G}^A^O^{] to as}^s^e^s^s^t^h^{e i}^m^plication^s^of^u^sⁱⁿ^g^adv^aⁿ^{ce appropri}^a^tⁱ^oⁿ^s^t^o^pr^ocu^r^{e s}^hⁱ^p^s^.
The report notes that
^S^ectⁱ^oⁿ^{401 [of}^H^.^C^oⁿ^.^R^e^s^.^{95] ref}^l^ect^s^{an ov}^eral^l^lⁱ^mⁱ^t^on^adv^aⁿ^{ce appropri}^a^tⁱ^oⁿ^s^of
^$23.1⁵⁸^billionⁱⁿ^fⁱ^s^cal^y^{ear 2007,}^w^h^ic^h^is^t^h^{e s}^a^m^e^li^m^{it on adv}^aⁿ^{ce approp}^riation^s^a^s^h^a^s
^b^eenⁱⁿ^clu^d^edⁱⁿ^{all p}^r^ev^io^u^s^li^m^itatioⁿ^s^oⁿ^ad^v^aⁿ^{ce a}^p^p^r^o^p^rⁱ^atioⁿ^sⁱⁿ^p^a^{st b}^u^d^g^et
^r^e^so^lu^tioⁿ^s^.
The report includes the Shipbuilding and Conversion, Navy (SCN) appropriation account in the
list of accounts identified for advance appropriations in the Senate.
S.Con.Res. 18 is the earlier Senate version of the budget resolution. Senate Amendment (S.Amdt.

146) to S.Con.Res. 18 was sponsored by Senator Warner, co-sponsored by several other members,

and submitted on March 15, 2005. It would amend Section 401 of S.Con.Res. 18—the section
that restricts use of advance appropriations—to increase the amount of advance appropriations in
FY2007 and FY2008 by $14 billion, to $37.393 billion. The amendment would also insert a new
provision (Section 409) that would include the Shipbuilding and Conversion, Navy (SCN)

appropriation account on a list of accounts identified for advance appropriations in the joint
explanatory statement of the managers to accompany S.Con.Res. 18. The amendment was ³¹
ordered to lie on the table. The Senate passed S.Con.Res. 18 on March 17, 2005.
In marking up H.R. 4200, the House Armed Services Committee included a provision (Section
804) that, as stated in the committee’s report on the bill (H.Rept. 108-491 of May 14, 2004, page
346), “would amend section 2306b(g) and section 2306c(d) of title 10, United States Code
[provisions relating to DOD multiyear procurement contracts], to require the head of the agency
concerned to provide written notification, to the congressional defense committees, in those
instances when cancellation costs that are above $100 million are not fully funded. The written
notification would include a financial risk assessment for not fully funding the cancellation
ceiling.” The section stated:
^S^E^C^.^{804. F}^{UNDING F}^O^R^C^ONT^RA^C^T^C^E^IL^INGS^F^O^R^C^E^R^T^A^I^{N MU}^L^T^IYEAR
^P^R^OC^UR^EME^N^T^C^ONT^R^A^C^T^S.
^{(a) MUL}^T^IYEA^R^C^ONT^R^A^C^T^{S R}^E^L^A^T^I^{NG T}^O^P^R^OP^ER^T^Y^-^Section²³⁰⁶^b(g⁾^of^title
^{10, U}ⁿⁱ^t^e^{d S}^t^at^es^C^{ode, i}^s^a^m^en^ded—
^{(1) by}ⁱⁿ^s^e^rtⁱⁿ^g^‘⁽^1)’^be^f^o^{re ‘Bef}^{ore any}^’^;
⁽²⁾^b^y^strⁱ^kⁱⁿ^g^‘^C^o^m^m^ittee^’^th^r^o^u^g^h^‘^H^o^u^{se o}^f^Rep^r^es^en^t^a^tⁱ^v^e^s^’^aⁿ^dⁱⁿ^s^e^r^tⁱⁿ^g^‘^c^oⁿ^g^r^e^s^sⁱ^oⁿ^a^l
^d^e^f^eⁿ^s^{e co}^m^m^ittee^s^’^;^aⁿ^d
^{(3) by}^addiⁿ^g^at^t^h^{e en}^{d t}^h^e^f^o^l^l^o^wⁱ^ngⁿ^e^w^parag^r^aph^:
^‘⁽^{2) In}^th^{e cas}^{e of}^{a con}^t^{ract de}^s^c^{ribed in}^s^u^bs^ectioⁿ^(a)^w^ith^a^can^cellation^ceili^ng^d^e^s^c^rⁱ^b^e^d
ⁱⁿ^parag^r^aph^{(1), if}^th^{e bu}^dg^et^f^o^{r th}^{e con}^t^{ract does}ⁿ^o^{t in}^clu^d^{e prop}^os^{ed f}^uⁿ^dⁱⁿ^g^f^o^{r th}^e
^cos^t^s^of^{contract can}^cella^tion^u^p^{to th}^{e ca}ⁿ^ce^llatioⁿ^ceiliⁿ^g^estab^lis^h^e^dⁱⁿ^t^h^{e co}ⁿ^t^r^{act, t}^h^e
^h^{ead of}^t^h^{e ag}^eⁿ^c^y^con^cern^e^{d s}^h^{all, as}^{part of}^th^{e certi}^fⁱ^cation^requ^{ired b}^y^s^u^bs^ectioⁿ
⁽ⁱ⁾⁽¹⁾⁽^A⁾^,^gⁱ^v^e^w^r^itteⁿⁿ^o^ti^fⁱ^ca^tioⁿ^to^th^{e co}ⁿ^g^r^e^ss^ioⁿ^a^{l d}^e^f^eⁿ^s^{e co}^m^m^{ittees o}^f^—
^‘⁽^A⁾^th^{e ca}ⁿ^cellatioⁿ^ceili^ng^a^m^oun^ts^plaⁿⁿ^e^{d f}^o^{r each}^prog^ra^m^y^{ear in}^t^h^{e propos}^ed
^m^u^lti^y^{ear procu}^r^e^m^en^{t contract, tog}^e^th^er^wⁱ^t^h^t^h^{e reas}^on^s^{for th}^{e a}^m^oun^ts^plaⁿⁿ^e^d;
^‘⁽^B⁾^th^{e e}^x^teⁿ^t^to^w^h^ic^h^cos^t^s^of^con^t^{ract ca}ⁿ^cellatⁱ^on^areⁿ^o^tⁱⁿ^cl^u^d^{ed in t}^h^{e bu}^dg^e^t^f^o^{r th}^e
^con^t^{ract; an}^d

³¹^{For a}^dditi^ona^l^disc^ussi^on,^se^e^“^C^ollins^,^W^a^rne^r^T^e^a^m^T^o^Fund^Shⁱ^pbu^ildiⁿ^g^,^”^D^e^fe^ns^e^To^day^{, Ma}^r^c^h¹⁷^{, 20}^05;^aⁿ^d
^Christo^phe^{r J. Ca}^ste^lli,^“^W^a^r^ne^{r Am}^e^ndm^eⁿ^{t On A}^d^v^a^nc^e^A^pprop^ria^tions^For^Shi^p^{s Is W}^ithdra^w^n,”^In^si^d^e^t^h^{e Na}^vy^,
^Ma^r^c^{h 21}^{, 2}⁰⁰⁵^.

^‘⁽^C⁾^{a f}ⁱⁿ^aⁿ^c^ia^{l ris}^k^as^s^e^s^s^m^eⁿ^{t of}ⁿ^o^{t in}^cl^u^d^ing^bu^dg^etiⁿ^g^f^o^r^cos^t^s^of^con^t^ract^c^aⁿ^c^e^l^l^a^tⁱ^oⁿ^,
ⁱⁿ^cl^u^dⁱⁿ^g^propos^{ed f}^uⁿ^dⁱⁿ^g^sou^r^ces^t^o^m^eet^su^ch^caⁿ^cel^l^a^tⁱ^oⁿ^cos^t^{s i}^f^t^h^{e co}ⁿ^t^ractⁱ^s
^can^celed.’
⁽^b⁾^M^U^LT^I^Y^E^A^R^CO^N^T^R^A^C^T^S^R^E^LAT^I^N^G^T^O^SER^V^IC^ES-^Sectioⁿ^2306c(^d⁾^of^{title 10,}
^Uⁿⁱ^t^e^{d S}^t^at^e^s^C^{ode, i}^s^a^m^eⁿ^de^d—
^{(1) i}ⁿ^parag^r^aph^s^(1),^(3),^an^{d (}⁴^{), by}^s^t^ri^kⁱ^ng^‘^c^o^m^mⁱ^t^t^ees^o^f^C^ong^res^sⁿ^a^m^e^{d i}ⁿ^parag^r^aph
^(5)’^an^{d in}^s^e^rtiⁿ^g^‘^c^ong^res^s^ioⁿ^a^{l def}^eⁿ^s^{e co}^m^mⁱ^ttees^’^each^{place it appears}^;^an^d
^{(2) by}^a^m^eⁿ^di^ng^parag^r^aph^{(5) t}^o^{read as}^f^o^l^l^o^w^s^:
^‘⁽^{5) In}^th^{e cas}^{e of}^{a con}^t^{ract de}^s^c^{ribed in}^s^u^bs^ectioⁿ^(a)^w^ith^a^can^cellation^ceili^ng^d^e^s^c^rⁱ^b^e^d
ⁱⁿ^parag^r^aph^{(4), if}^th^{e bu}^dg^et^f^o^{r th}^{e con}^t^{ract does}ⁿ^o^{t in}^clu^d^{e prop}^os^{ed f}^uⁿ^dⁱⁿ^g^f^o^{r th}^e
^cos^t^s^of^{contract can}^cella^tion^u^p^{to th}^{e ca}ⁿ^ce^llatioⁿ^ceiliⁿ^g^estab^lis^h^e^dⁱⁿ^t^h^{e co}ⁿ^t^r^{act, t}^h^e
^h^ead^o^f^th^e^ag^eⁿ^c^y^coⁿ^cerⁿ^e^d^s^h^all^gⁱ^v^e^w^r^itteⁿⁿ^o^ti^fⁱ^catioⁿ^to^th^e^coⁿ^g^r^e^ss^ioⁿ^a^{l d}^e^f^eⁿ^s^e
^com^mⁱ^ttees^of—
^‘⁽^A⁾^th^{e ca}ⁿ^cellatioⁿ^ceili^ng^a^m^oun^ts^plaⁿⁿ^e^{d f}^o^{r each}^prog^ra^m^y^{ear in}^t^h^{e propos}^ed
^m^u^lti^y^{ear procu}^r^e^m^en^{t contract, tog}^e^th^er^wⁱ^t^h^t^h^{e reas}^on^s^{for th}^{e a}^m^oun^ts^plaⁿⁿ^e^d;
^‘⁽^B⁾^th^{e e}^x^teⁿ^t^to^w^h^ic^h^cos^t^s^of^con^t^{ract ca}ⁿ^cellatⁱ^on^areⁿ^o^tⁱⁿ^cl^u^d^{ed in t}^h^{e bu}^dg^e^t^f^o^{r th}^e
^con^t^{ract; an}^d
^‘⁽^C⁾^{a f}ⁱⁿ^aⁿ^c^ia^{l ris}^k^as^s^e^s^s^m^eⁿ^{t of}ⁿ^o^{t in}^cl^u^d^ing^bu^dg^etiⁿ^g^f^o^r^cos^t^s^of^con^t^ract^c^aⁿ^c^e^l^l^a^tⁱ^oⁿ^,
ⁱⁿ^cl^u^dⁱⁿ^g^propos^{ed f}^uⁿ^dⁱⁿ^g^sou^r^ces^t^o^m^eet^su^ch^caⁿ^cel^l^a^tⁱ^oⁿ^cos^t^{s i}^f^t^h^{e co}ⁿ^t^ractⁱ^s
^can^celed.’
In its report (S.Rept. 108-260 of May 11, 2004) on the FY2005 defense authorization bill (S.

2400), the Senate Armed Services Committee stated:

^T^h^{e Fu}^tu^r^e^Year^{s De}^f^eⁿ^s^{e P}^r^o^g^r^a^m^su^b^m^itted^wⁱ^t^h^t^h^{e b}^u^d^g^e^t^r^e^q^u^{est in}^c^l^u^d^ed^f^u^ll^f^uⁿ^dⁱⁿ^g
^f^o^{r th}^e^fⁱ^rs^t^L^H^A⁽^R⁾^-^c^la^s^s^a^m^p^h^ibious^as^s^a^u^l^{t s}^h^{ip in}^fⁱ^s^cal^y^{ear 2008.}^T^h^{e com}^m^itte^e
^uⁿ^d^ers^t^aⁿ^ds^t^h^{at acceleration}^of^thⁱ^s^s^h^{ip, by}^pr^ov^iding^th^e^fⁱ^rs^tⁱⁿ^c^r^em^en^t^o^f^SC^N^f^uⁿ^dⁱⁿ^gⁱⁿ
^fⁱ^s^cal^y^{ear 2005,}^w^o^u^l^{d redu}^c^e^th^{e cos}^t^o^f^this^s^h^{ip b}^y^$150.0^m^illion^.^T^h^e^C^h^ie^f^o^f^Nav^a^l
^Operation^s^an^{d t}^h^e^C^o^m^m^aⁿ^d^an^{t of th}^e^Marin^e^C^o^rps^h^a^v^eⁱⁿ^cl^u^d^{ed th}ⁱ^s^acceleration^oⁿ
^t^h^ei^{r U}ⁿ^fun^d^{ed Pri}^o^ri^t^y^Li^s^t^s^.^T^h^eref^{ore, t}^h^{e co}^m^mⁱ^t^t^{ee recomm}^en^ds^aⁿⁱⁿ^creas^{e of}^$150.0
^m^illioⁿ^f^o^r^ad^v^aⁿ^{ce p}^r^o^c^u^r^e^m^en^{t a}ⁿ^d^ad^v^aⁿ^{ce co}ⁿ^s^tr^u^c^ti^oⁿ^o^f^co^m^p^oⁿ^eⁿ^t^s^f^o^r^th^e^fⁱ^r^s^t
^a^m^p^h^ib^io^u^s^as^sau^l^{t s}^h^ip^o^f^th^e^L^H^A⁽^R)^-^c^la^{ss. (}^p^ag^{e 7}⁴⁾
The report also stated:
^T^o^{ease th}^{e [}^F^-²²^fⁱ^g^h^ter^]^p^r^o^d^u^c^tioⁿ^b^ack^lo^g^,^w^h^ile^m^aⁱⁿ^taiⁿⁱⁿ^g^t^h^{e p}^r^o^d^u^ctioⁿ^r^a^te^{at t}^h^at
^es^t^a^blⁱ^s^h^e^{d f}^o^{r t}^h^{e f}ⁱ^s^cal^y^{ear 2004 c}^oⁿ^t^ract^{, t}^h^{e com}^mⁱ^t^t^e^e^r^e^c^o^m^m^eⁿ^d^s^a^d^e^c^r^e^a^s^eⁱⁿ^A^P^A^F
^of^$280.^{2 m}^illioⁿ^,^f^o^{r a total au}^th^orizatioⁿ^of^{$3.4 billion}^f^o^{r th}^{e procu}^r^e^m^en^{t o}^f^{at leas}^{t 22}
^F/^A^-^{22 aircra}^f^tⁱⁿ^fⁱ^s^cal^y^{ear 2}^005.^T^h^{e co}^m^m^ittee^is^a^w^{are t}^h^{at t}^h^e^Depart^m^eⁿ^t^o^f^De^f^eⁿ^s^e
^h^a^s^approv^{ed t}^h^{e F}^/^A^-^{22 prog}^ra^m^as^a^“^buy^t^o^bu^dg^et^{” progra}^m^{. If}^t^h^{e au}^t^h^ori^{zed l}^e^v^e^l^of
^f^uⁿ^dⁱⁿ^g^is^su^f^f^icieⁿ^t^to^p^r^o^c^u^r^e^m^o^r^e^th^aⁿ²²^air^c^r^a^f^t^{, t}^h^e^Air^Fo^r^ce^m^a^y^d^o^so^a^f^ter^t^h^e
^Secretar^y^{of t}^h^e^Aⁱ^r^{Force prov}^ides^{a le}^{tter to t}^h^e^C^o^m^mⁱ^t^t^ees^on^A^r^m^e^d^Serv^ice^s^{of t}^h^e
^Sen^a^{te an}^{d t}^h^{e Hou}^s^{e of}^R^e^pre^s^en^tatⁱ^v^e^s^certifyⁱⁿ^g^t^h^{at th}^{e c}^oⁿ^t^{ractor is}^deliv^ering^aircraf^t
^wⁱ^t^hⁱⁿ^th^{e con}^t^ract^u^a^{l deliv}^er^y^s^c^h^e^d^u^{le, an}^{d th}^{at t}^h^{e prog}^ra^m^is^fu^ll^y^fun^d^{ed to in}^clu^d^e
ⁱⁿ^itial^s^p^ares^{, log}ⁱ^s^t^ics^,^an^{d tra}ⁱⁿⁱⁿ^g^requ^ire^m^eⁿ^ts^{. (pag}^{e 106)}

Section 8008 of H.R. 4613 as reported by the House Appropriations Committee granted
permission for multiyear procurement programs, with the following provision, among others:
^Pro^v^id^ed^fu^rth^e^r^{, T}^h^{at n}^oⁿ^e^of^t^h^e^fuⁿ^d^s^prov^{ided in}^thⁱ^s^A^c^t^m^a^y^be^u^s^ed^f^o^{r a}^m^u^lti^y^ear
^con^t^{ract ex}^ec^u^t^{ed af}^{ter t}^h^{e dat}^e^of^th^{e e}ⁿ^act^m^eⁿ^t^of^t^hⁱ^s^A^c^t^uⁿ^l^e^s^sⁱⁿ^t^h^{e ca}^s^e^of^aⁿ^y^s^u^ch
^con^t^ract—
^{(1) th}^{e Secretary}^o^f^De^f^e^ns^{e has}^s^u^b^m^{itted to C}^oⁿ^g^r^es^s^{a budg}^{et requ}^es^t^f^o^{r f}^u^{ll fun}^d^ing^of
^uni^t^s^t^o^b^e^p^r^o^c^ur^e^d^t^h^r^o^{ugh t}^h^e^c^o^nt^r^a^c^t^;
⁽²⁾^can^cellatioⁿ^p^r^o^v^isioⁿ^sⁱⁿ^th^{e co}ⁿ^t^r^act^{do n}^o^{t in}^cl^u^d^{e con}^s^ideration^of^recu^rring
^m^a^nuf^act^u^rⁱⁿ^g^cos^t^s^of^t^h^{e cont}^ract^{or as}^s^o^ci^at^{ed w}ⁱ^t^h^t^h^{e produ}^ctⁱ^oⁿ^of^unf^un^{ded u}ⁿⁱ^t^s^t^o^b^e
^deliv^{ered u}ⁿ^d^{er th}^{e contract;}
^{(3) th}^{e con}^t^{ract pr}^ov^ides^th^{at pa}^y^m^eⁿ^t^s^{to th}^e^c^o^nt^r^a^c^t^o^r^und^e^r^t^h^e^c^o^nt^r^act^s^h^al^lⁿ^o^t^be^m^a^de
ⁱⁿ^adv^aⁿ^{ce of}ⁱⁿ^cu^{rred cos}^t^s^on^fun^d^{ed u}ⁿⁱ^t^s^{; an}^d
^{(4) th}^{e con}^t^{ract does}ⁿ^o^{t prov}ⁱ^d^{e f}^o^{r a price adj}^u^s^t^m^e^{nt bas}^e^d^on^{a f}^a^ilu^{re to a}^w^{ard a}^f^o^llo^w^-³²
^on^con^t^ract.
The Aircraft Procurement, Air Force, paragraph of the bill made funds available for the
procurement of Air Force aircraft and related purposes, with the following provisions:
^Pr^ovided^,^T^h^{at am}^oun^t^s^prov^{ided u}ⁿ^d^{er th}^is^h^eadiⁿ^g^s^h^{all be}^u^s^{ed f}^o^{r th}^{e procu}^r^em^eⁿ^t^o^f¹⁵
^C^-^{17 ai}^rcraf^t^:^P^r^o^v^id^ed^fu^rth^e^r^{, T}^h^{at am}^o^uⁿ^t^s^prov^{ided u}ⁿ^d^er^th^is^h^eadiⁿ^g^s^h^al^{l be u}^s^ed^f^o^r
^t^h^{e ad}^v^aⁿ^c^e^procu^r^e^m^eⁿ^t^ofⁿ^o^t^l^e^ss^t^h^aⁿ^{15 C-}^{17 ai}^rcraft^:^Pro^v^id^ed^fu^rth^e^r^{, T}^h^{at t}^h^e
^Secretar^y^of^t^h^e^Aⁱ^{r Force s}^h^al^{l fu}^ll^y^fun^d^th^{e procu}^r^e^m^eⁿ^{t o}^fⁿ^o^{t les}^s^th^aⁿ^{15 C}^-^{17 aircraf}^t³³
ⁱⁿ^fi^s^cal^y^{ear 2006.}
In its report (H.Rept. 108-553 of June 18, 2004) on H.R. 4613, the House Appropriations
Committee stated, at the beginning of its discussion of procurement programs:
^Iⁿ^th^e^Aⁱ^r^c^r^a^f^t^P^r^o^c^u^r^e^m^eⁿ^{t, A}ⁱ^r^Fo^r^{ce sectio}ⁿ^o^f^t^hⁱ^s^r^e^p^o^r^{t th}^{e Co}^m^mⁱ^{ttee d}ⁱ^scu^sse^s
^h^o^w^th^e^Aⁱ^{r Force i}^gⁿ^o^{red th}^e^la^w^aⁿ^{d th}^{e e}^x^pres^sⁱⁿ^{tent of}^C^ong^res^s^b^y^u^s^ing^t^h^{e cu}^rren^t
^m^u^l^tⁱ^y^{ear con}^t^ract^f^o^{r t}^h^{e C-17 ai}^rcraf^t^as^{a v}^e^hⁱ^cl^{e t}^o^support^anⁱⁿ^cre^m^en^t^a^l^fuⁿ^dⁱⁿ^g
^str^a^teg^y^{. I}ⁿ^so^d^oⁱⁿ^g^,^{it also}^h^a^{s in}^ap^p^r^o^p^r^iately^co^m^mⁱ^t^t^ed^th^e^g^o^v^e^rⁿ^m^eⁿ^t^t^o^p^o^t^eⁿ^tⁱ^a^l^Aⁿ^tⁱ^-
^Defⁱ^cieⁿ^c^y^A^c^{t v}ⁱ^o^l^atioⁿ^s^an^d^uⁿ^f^uⁿ^d^ed^liab^ilit^y^co^s^t^{s r}^uⁿⁿⁱⁿ^gⁱⁿ^t^h^{e h}^uⁿ^d^r^e^d^s^o^f^mⁱ^l^lⁱ^ons^of
^d^o^llar^sⁱⁿ^th^{e ev}^eⁿ^{t a f}^o^llo^w^-^oⁿ^coⁿ^t^r^{act f}^o^r^th^{is p}^r^o^g^r^a^m^{is n}^o^{t en}^ter^e^dⁱⁿ^to^b^y^a^d^a^t^e^c^e^r^t^aⁱⁿ^,
^o^r^if^cer^tain^p^r^o^d^u^ctioⁿ^lev^e^l^s^ar^{e n}^o^{t ag}^r^eed^to^.
^R^e^g^r^ettabl^y^,^th^{e C}^o^mm^{ittee has}^learn^e^{d th}^e^Aⁱ^{r Force h}^a^s^als^o^en^{tered in}^{to a s}ⁱ^mⁱ^lar
^m^u^lti^y^{ear con}^t^{ract f}^o^{r t}^h^{e C}^-¹³⁰^J^aircraf^t^{. T}^h^{e cu}^rren^{t pro}^d^u^c^tion^prof^{ile i}ⁿ^cl^u^d^es^th^ree
^aircraf^t^w^h^os^e^m^a^nuf^actu^r^{e h}^a^s^been^approv^{ed in}^th^{e abs}^eⁿ^{ce of}^{a f}^u^l^l^y^f^uⁿ^d^e^d^a^p^p^r^o^p^rⁱ^a^tⁱ^oⁿ
^f^o^{r th}^{is p}^u^rp^o^s^{e. In}^ad^d^itioⁿ^,ⁱⁿ^th^{is co}ⁿ^t^{ract t}^h^{e co}ⁿ^t^racto^r^h^a^{s receiv}^e^d^{a co}^m^mⁱ^t^m^en^{t o}ⁿ

³²^Ita^lic^{s a}^s^{in t}^h^e^orig^ina^l^.
³³^Ita^lic^{s a}^s^{in t}^h^e^orig^ina^l^.

^beh^a^lf^of^t^h^{e g}^o^v^e^rⁿ^m^eⁿ^t^b^y^t^h^{e A}ⁱ^{r Force th}^{at th}^{e annu}^{al produ}^ction^r^a^t^e^wⁱ^l^l^b^e^s^u^s^t^aiⁿ^e^d^a^t
^{16 ai}^rcraf^t^f^r^o^m^{2007 t}^h^rou^g^h^2009,^bet^w^een^Aⁱ^{r F}^o^{rce, N}^a^vy^{, an}^{d Mari}ⁿ^e^C^o^rps^pu^rch^a^s^e^s
^an^d^p^o^t^en^{tial f}^o^r^e^igⁿ^{sales. Fai}^l^u^r^{e to}^ach^iev^e^t^h^{is r}^a^te^w^{ill si}^gⁿⁱ^f^ican^tl^yⁱⁿ^cr^ea^s^e^t^h^e^c^o^s^t^p^e^r
^p^l^an^{e to}^th^{e A}ⁱ^r^Fo^r^{ce, r}^e^p^r^eseⁿ^tiⁿ^g^{a co}ⁿ^tⁱⁿ^g^eⁿ^t^liab^ilit^y^th^e^g^o^v^e^rⁿ^m^eⁿ^t^{is o}^b^lig^ed^to^p^a^y^.
^A^t^p^r^eseⁿ^{t, cu}^r^r^en^{t p}^r^o^j^ectioⁿ^s^su^g^g^e^{st t}^h^{is r}^a^te^w^illⁿ^o^{t b}^e^m^e^t,^wⁱ^t^h^s^h^o^r^tf^al^{ls o}^f⁴^air^c^r^a^f^t
^eachⁱⁿ^{2007 an}^{d 20}^{08 an}^{d 6}^ai^rcraf^tⁱⁿ^{2009. If}^th^es^{e pro}^j^ection^s^h^o^{ld, th}^e^Aⁱ^{r F}^o^{rce an}^{d th}^e
^tax^p^a^y^er^wⁱ^ll^f^o^o^t^t^h^{e b}^ill.^Iⁿ^e^f^f^{ect, t}^h^e^Aⁱ^r^Fo^r^{ce h}^a^{s p}^e^r^m^it^ted^itsel^f^to^b^eco^m^e^{a d}^e^f^acto
^{sales a}^g^en^t^f^o^r^th^{is p}^r^o^g^r^a^m^,^p^u^ttin^g^itⁱⁿ^{a p}^o^s^itioⁿ^toⁱⁿ^si^{st th}^a^t^o^t^h^e^r^ele^m^en^{ts o}^f^t^h^e
^D^e^p^a^r^t^m^e^nt^o^f^D^e^fe^nse^aⁿ^d^t^h^e^Co^ngr^e^s^{s he}^l^pⁱ^t^fi^nd^a^w^a^y^t^o^fu^nd^t^hⁱ^s^p^r^o^d^u^c^tⁱ^o^{n p}^r^ofⁱ^l^e^or
^p^a^y^sigⁿⁱ^f^icaⁿ^t^p^eⁿ^a^lt^ies.
^T^h^{e C}^o^m^m^{ittee realizes}^t^h^at^properly^ad^mⁱⁿⁱ^s^t^ered^m^u^ltⁱ^y^e^a^{r procu}^r^em^eⁿ^ts^caⁿ^res^u^{lt i}ⁿ
^sⁱ^gnⁱ^f^icaⁿ^{t s}^a^vⁱⁿ^g^s^.^Ho^w^e^v^e^{r, t}^h^e^m^u^l^{tiple abu}^s^e^s^of^s^oun^{d con}^t^ractiⁿ^g^priⁿ^ciples^aⁿ^{d f}ⁱ^s^cal
^r^e^sp^oⁿ^sib^ilit^y^b^y^t^h^e^Aⁱ^r^Fo^r^{ce in}^th^{ese i}ⁿ^staⁿ^{ces ca}ⁿⁿ^o^{t an}^d^w^{ill n}^o^{t b}^eco^m^e^a^m^o^d^e^{l f}^o^r
^f^u^tu^r^e^m^u^l^tⁱ^y^ear^acq^uⁱ^sitioⁿ^s^.^A^cco^r^dⁱⁿ^g^l^y^,^t^h^{e Co}^m^mⁱ^tte^{e h}^a^{s r}^eco^m^m^eⁿ^d^ed^se^v^e^r^a^l
^m^odi^fⁱ^cat^ion^s^{to s}^e^c^{tion 8008 of}^t^h^is^{bill, a}ⁿ^{d t}^h^e^C^o^m^mⁱ^t^t^ee^directs^t^h^es^e^requ^ire^m^en^t^s^be
^m^e^{t b}^e^f^o^r^e^f^u^t^u^r^e^m^u^lti^y^ear^p^r^o^d^u^ctioⁿ^coⁿ^t^r^{acts ca}ⁿ^b^e^en^te^r^e^dⁱⁿ^to^:
⁽¹⁾^M^u^l^tⁱ^y^e^a^r^c^o^nt^r^a^c^t^s^mus^t^fo^l^l^o^w^ful^l^f^undⁱ^{ng p}^o^lⁱ^cⁱ^e^{s a}ⁿ^dⁿ^o^t^b^e^use^d^a^s^ve^hi^cl^es^f^o^r
ⁱⁿ^c^r^e^m^eⁿ^t^a^l^l^{y fu}^ndⁱ^ng^p^r^o^c^ur^e^m^eⁿ^t^;
^{(2) C}^oⁿ^t^{ract can}^cella^tion^ceilⁱⁿ^gs^m^a^yⁿ^o^{t i}ⁿ^cl^u^d^{e recu}^rring^m^a^nuf^act^u^r^ing^cos^t^s^of
^un^f^und^e^d^uⁿⁱ^t^s;
⁽³⁾^Co^nt^r^a^c^t^p^a^ymeⁿ^t^s^m^a^{y no}^t^b^e^m^a^d^eⁱⁿ^a^d^va^nc^e^o^f^p^r^o^j^e^c^t^e^d^m^aⁿ^u^f^act^u^rⁱⁿ^g^cos^t^s^(t^o
ⁱⁿ^cl^u^d^{e p}^u^r^c^h^a^{se o}^f^m^a^terⁱ^al^s)^f^o^r^f^uⁿ^d^ed^uⁿ^its;
⁽⁴⁾^A^d^va^nc^e^p^r^o^c^ur^e^m^eⁿ^t^fu^nd^s^m^a^y^no^t^b^e^use^d^t^o^p^a^y^t^h^e^c^o^st^{s o}^f^no^r^m^a^l^fa^b^rⁱ^c^a^tⁱ^oⁿ
^an^{d as}^s^e^m^b^l^y^of^uⁿ^{it co}^m^pon^eⁿ^ts^{. T}^h^{e u}^s^{e of}^t^h^es^e^f^uⁿ^d^s^s^hou^{ld be res}^t^{ricted to l}^oⁿ^g^-^lead
ⁱ^t^e^m^s^{, econ}^o^mⁱ^c^-^{order qu}^an^tⁱ^t^y^buy^s^,^aⁿ^{d t}^h^{e on}^e^-^tⁱ^m^eⁿ^on-recu^rriⁿ^g^cost^s^o^fⁱ^m^provⁱ^ng
^m^aⁿ^u^f^act^u^rⁱⁿ^g^cap^ab^ilities;
⁽⁵⁾^A^d^v^aⁿ^{ce p}^r^o^c^u^r^e^m^eⁿ^{t f}^uⁿ^d^{s ar}^{e li}^m^ited^toⁿ^o^m^o^r^e^th^an¹⁰^p^e^r^cen^{t o}^f^to^tal
^procu^r^em^eⁿ^{t cos}^t^s^;^an^d
^{(6) R}^e^g^u^l^a^{r procu}^r^e^m^eⁿ^t^fuⁿ^d^s^f^o^{r un}ⁱ^t^s^sh^ou^l^d^{be req}^u^es^t^e^d^f^o^{r t}^h^{e appropri}^a^t^e^fⁱ^s^cal
^y^{ear t}^o^{be obl}ⁱ^g^at^{ed t}^o^pa^y^f^o^{r n}^o^r^m^al^f^a^bri^catⁱ^{on an}^{d a}^s^s^e^m^b^l^y^of^fun^d^{ed un}ⁱ^t^s^aⁿ^d
^com^pon^eⁿ^t^s^.
^T^h^{e Co}^m^mⁱ^{ttee also}^tak^e^{s ex}^c^e^p^tioⁿ^to^th^e^Aⁱ^{r Force’}^s^u^s^{e of a u}ⁿⁱ^qu^{e prov}ⁱ^s^ionⁱⁿ^the
^cu^rren^t^C^-¹⁷^m^u^lti^y^{ear con}^t^ra^{ct th}^at^allo^w^s^th^e^con^t^{ractor to add ch}^arg^e^s^{to th}^e^fix^e^{d price}
^con^t^{ract i}^f^a^f^o^llo^w^-^oⁿ^coⁿ^t^ra^{ct is}ⁿ^o^{t a}^w^{arded. T}^h^{e a}^m^{ended g}^eⁿ^e^{ral prov}ⁱ^s^{ion fu}^rt^h^e^r
^dⁱ^r^e^c^t^{s t}^h^a^t^no^ne^w^mul^tⁱ^y^e^a^r^c^o^nt^r^a^c^t^{s p}^r^o^vⁱ^d^e^fo^r^suc^h^a^p^rⁱ^c^e^a^d^j^u^st^me^nt^.⁽^p^a^g^e^s^105-¹⁰⁷⁾
In the section of the report concerning the C-17 program in particular, the report stated:
^T^h^{e C}^o^m^mⁱ^t^t^{ee is}^ex^tre^m^el^y^di^s^p^leas^{ed by}^t^h^e^Aⁱ^r^F^o^r^c^e^’^s^c^oⁿ^tⁱⁿ^u^e^d^u^s^e^o^f^a^f^l^aw^e^d^aⁿ^d
^irres^pon^sⁱ^{ble f}ⁱⁿ^aⁿ^c^ia^{l s}^t^rategy^f^o^{r th}^{e C}^-^{17 m}^u^lti^y^{ear procu}^r^e^m^en^{t con}^t^{ract. In}^fⁱ^s^cal^y^ear
^{2003, t}^h^{e A}ⁱ^r^F^o^{rce propos}^ed^{a bu}^dg^et^requ^es^tⁱ^t^re^f^e^{rred t}^o^as^“^t^rans^f^o^r^m^atⁱ^oⁿ^a^l^”^.^T^h^e
^Co^m^m^ittee,^h^o^w^e^v^e^r^,^sa^w^it^f^o^r^w^h^a^t^it^w^a^s—aⁿⁱⁿ^cr^e^m^eⁿ^tal^fⁱⁿ^aⁿ^cⁱⁿ^g^sc^h^e^m^e^t^h^{at ab}^u^s^ed
^th^{e political}^s^u^{pport f}^o^{r t}^h^is^prog^ram^an^d^f^l^a^uⁿ^t^{ed acq}^uⁱ^sⁱ^tion^regu^latioⁿ^s^aⁿ^{d s}^t^an^dard
^practices^{. In}^th^at^y^{ear, th}^{e C}^ong^res^s^prov^{ided f}^u^l^l^fuⁿ^dⁱⁿ^g^f^o^{r all 15 aircraf}^t^{, an}^{d di}^re^c^t^e^d^t^h^e
^Aⁱ^{r F}^o^{rce t}^o^fu^l^l^y^fun^d^t^h^{e s}^a^m^e^num^{ber i}ⁿ^fi^s^cal^y^{ear 2004}^.

^Uⁿ^f^o^rt^un^at^el^y^,^f^o^{r f}ⁱ^s^c^a^l^y^{ear 2004}^an^{d n}^o^w^wⁱ^t^h^t^h^{e f}ⁱ^s^cal^y^{ear 2005 D}^e^f^eⁿ^s^{e bu}^dg^et
^r^e^q^u^e^s^t^,^t^h^e^Aⁱ^r^Fo^r^c^e^ha^s^c^o^ntⁱ^nue^dⁱ^t^s^fi^na^ncⁱ^a^l^s^l^ei^g^h^t^-^o^f^-^h^aⁿ^d^on^t^h^{e C-}^{17 prog}^ram^.^Bas^e^d
^on^{a recen}^tl^y^con^c^l^u^{ded in}^v^e^s^t^ig^ation^b^y^t^h^{e C}^o^m^mⁱ^ttee^’^s^S^u^rv^e^y^s^an^{d Inv}^e^s^t^ig^at^ion^s^s^t^a^f^f^,
^th^{e C}^o^m^mⁱ^{ttee learn}^e^{d th}^e^Aⁱ^{r Force is}^u^sⁱⁿ^g^{a co}^m^bⁱⁿ^a^tⁱ^oⁿ^o^f^a^d^v^aⁿ^c^e^p^r^o^c^u^r^em^en^t^f^uⁿ^dⁱⁿ^g
^an^{d ex}^orbitan^t^can^cel^lation^cei^ling^s^to^k^eep^th^{e co}ⁿ^t^r^acto^r^to^{a p}^r^o^d^u^c^tioⁿ^sc^h^e^d^u^le^w^h^ich
^ha^{s a}^s^maⁿ^y^a^s⁵^aⁱ^r^c^r^a^ft^a^t^aⁿ^y^gi^veⁿ^tⁱ^meⁱⁿ^t^h^e^p^r^o^d^u^c^tⁱ^oⁿ^lⁱⁿ^e^fo^r^w^hⁱ^c^h^f^und^s^ha^ve^no^t
^been^appropriated^.^{Not on}^{ce in}^t^h^{e pas}^t^h^a^s^t^h^e^C^o^m^m^itteeⁱⁿ^{dicated its}^approv^al^f^o^{r u}^sⁱⁿ^g
^adv^aⁿ^{ce procu}^r^e^m^eⁿ^t^f^uⁿ^d^ing^{to proceed w}ⁱ^t^h^produ^ction^of^aircraf^t^f^o^r^w^h^ic^h^f^u^l^l
^a^p^p^r^op^rⁱ^a^tⁱ^o^{ns ha}^ve^no^t^b^e^eⁿ^a^p^p^r^o^v^e^d^.^N^o^{r is}^th^e^C^o^m^m^{ittee a}^w^{are of any}^c^h^aⁿ^g^eⁱⁿ
^D^e^part^m^eⁿ^t^of^D^e^f^e^ns^{e (D}^O^D^{) f}ⁱ^s^cal^polⁱ^c^y^{or reg}^u^l^atⁱ^oⁿ^s^t^h^at^w^o^u^l^{d perm}ⁱ^t^t^hⁱ^s^{. A}^s^bot^h
^{DOD an}^d^O^f^fⁱ^{ce o}^f^Maⁿ^a^g^e^m^eⁿ^t^an^d^B^u^d^g^et^fⁱⁿ^aⁿ^c^{ial o}^f^fⁱ^{cials p}^u^{t it to}^C^o^m^mⁱ^t^t^ee
ⁱⁿ^v^e^s^tⁱ^g^at^ors^,^t^h^e^Aⁱ^r^F^o^{rce h}^a^{d “}^pus^h^e^d^t^h^{e e}ⁿ^v^e^l^ope.”^Aⁿ^d,ⁱⁿ^t^h^e^C^o^m^mⁱ^t^t^e^e^’^s^vⁱ^e^w^,^t^h^e
^‘^e^nv^el^ope’^h^a^s^been^p^u^sh^{ed t}^{oo f}^a^r.
^Moreov^{er, th}^{e A}ⁱ^{r Force als}^oⁱⁿ^clu^d^{ed a}^p^r^o^v^isioⁿⁱⁿ^t^h^{e seco}ⁿ^d^C-¹⁷^m^u^lti^y^ear
^p^r^o^c^u^r^em^eⁿ^{t co}ⁿ^t^r^{act t}^h^{at ass}^u^m^e^{s ad}^d^itioⁿ^a^l^f^uⁿ^dⁱⁿ^g^f^o^r^aⁱ^r^c^r^a^f^t^w^{ill b}^e^ap^p^r^o^v^ed^f^o^llo^wⁱⁿ^g
^th^{e e}ⁿ^{d o}^f^t^h^{e co}ⁿ^t^{ract. Ot}^h^e^r^wⁱ^s^{e, t}^h^{e Depart}^m^e^nt^wⁱ^{ll b}^e^{liable to pa}^y^t^h^e^con^t^ractor
^sigⁿⁱ^f^icaⁿ^{t ter}^mⁱⁿ^atioⁿ^co^{sts. Th}^{is co}ⁿ^tⁱⁿ^g^eⁿ^t^liab^ilit^y^p^l^{aces a}^b^u^rd^enⁿ^o^{t j}^u^{st o}ⁿ^th^e^c^u^r^r^eⁿ^t
^C^ong^res^s^,^b^u^t^on^t^h^eⁿ^e^x^t^C^ong^res^s^a^s^w^e^l^l^{, an}^{d coul}^{d be i}ⁿ^t^e^rpret^e^{d as}^{a v}ⁱ^ol^atⁱ^oⁿ^o^f^t^h^e
^An^ti^-^D^e^f^icieⁿ^c^y^A^c^t.
^In^{order t}^o^p^r^ev^en^{t s}^u^ch^f^u^tu^re^fⁱⁿ^aⁿ^c^{ial c}^h^ican^er^y^oⁿ^th^{e part of}^th^e^Aⁱ^{r Force or an}^y
^o^t^h^e^r^m^ilitar^y^ser^v^{ice, th}^{e Co}^m^m^{ittee in}^c^l^u^d^{es a n}^e^w^g^eⁿ^e^r^a^{l p}^r^o^v^isioⁿ^th^{at si}^gⁿ^if^ican^t^l^y
^a^m^en^d^s^au^t^h^orit^y^{carried in pas}^t^Def^eⁿ^s^e^A^p^p^r^o^p^r^iatioⁿ^s^act^{s r}^e^g^a^r^dⁱⁿ^g^m^u^lti^y^ear
^p^r^o^c^u^r^em^eⁿ^{t co}ⁿ^t^r^act^{s. T}^h^{is p}^r^o^v^isioⁿⁱ^s^dⁱ^scu^ssed^else^w^h^er^eⁱⁿ^thⁱ^s^r^e^p^o^r^{t. W}^ith^r^e^g^a^r^d^t^o
^th^{e c}^u^rren^t^fun^d^ing^s^h^ortf^a^{ll i}ⁿ^fⁱ^s^cal^y^{ear 2005, th}^e^C^o^m^m^{ittee h}^a^s^{added an}^additioⁿ^a^l
^$158,⁶⁰⁰^,00⁰^an^{d on}^{e aircra}^f^t^{. B}^{ill la}ⁿ^g^u^a^g^eⁱ^s^al^s^oⁱⁿ^c^l^u^d^e^dⁱⁿ^t^h^e^Aⁱ^rcraf^t^P^r^ocu^r^e^m^ent
^parag^r^aph^directin^g^th^a^t^fuⁿ^d^s^prov^{ided are}^f^o^{r th}^{e procu}^r^em^en^{t of}^{15 aircraf}^tⁱⁿ^fⁱ^s^cal^y^ear
^2005,^t^h^at^adv^aⁿ^{ce procu}^r^em^eⁿ^t^fuⁿ^d^s^{are prov}ⁱ^d^ed^f^o^{r t}^h^e^procu^r^em^eⁿ^t^of^{15 ai}^rcraf^tⁱⁿ
^fⁱ^s^cal^y^{ear 2006, an}^{d t}^h^at^t^h^e^Secret^ary^{of t}^h^e^Aⁱ^r^F^o^{rce sh}^al^l^f^u^l^l^y^f^uⁿ^d^t^h^{e procu}^r^e^m^en^t^of
^{15 ai}^rcraf^tⁱⁿ^fⁱ^s^cal^y^{ear 2006. I}ⁿ^pl^aci^ng^t^hⁱ^s^requⁱ^r^e^m^eⁿ^t^u^p^on^t^h^e^Aⁱ^r^F^o^r^c^e^,^t^h^e^C^o^m^m^ittee
^w^o^u^l^{d n}^o^{te th}^{e co}^m^mⁱ^t^m^eⁿ^{t of}^th^{e Secretar}^y^of^t^h^{e Air Force,}^du^ring^{a pu}^blⁱ^c^h^e^a^rⁱⁿ^g^oⁿ^t^h^is
^m^a^tter^,^to^w^o^r^k^w^ith^t^h^{e Co}^m^m^{ittee to}^{“set it r}ⁱ^g^h^t^{”. T}^h^{e Co}^m^mⁱ^{ttee an}^ticip^ate^s^th^{at th}^e
^Secretar^y^w^{ill do j}^u^s^t^th^{at. (pag}^{e 192)}
In a follow-on section concerning interim contractor support (ICS) for the C-17 fleet, the report
stated:
^In^t^h^{e precedin}^{g part of}^thⁱ^s^r^e^{port, th}^{e C}^o^m^mⁱ^{ttee e}^x^pres^s^e^s^its^dis^p^leas^u^r^e^wⁱ^t^h^th^e
^f^uⁿ^dⁱⁿ^g^s^t^rate^gy^t^h^e^Aⁱ^{r Force h}^a^s^e^m^plo^y^{ed to ex}^ecu^{te th}^e^C^-^{17 p}^r^og^ram^.^T^h^{at s}^t^rategy^h^a^s
^r^e^su^ltedⁱⁿ^aⁿⁱⁿ^cr^e^m^eⁿ^{tal f}^uⁿ^dⁱⁿ^g^sch^e^m^e^f^o^r^th^{e C}^-¹⁷^th^{at th}^{e Co}^m^m^ittee^fⁱⁿ^d^s
^uⁿ^{acceptable. In}^{order t}^o^f^u^ll^y^f^uⁿ^d^{15 aircraf}^tⁱⁿ^fⁱ^s^cal^y^{ear 2005,}^th^{e bu}^dg^{et requ}^es^t^m^u^s^t
^{be am}^eⁿ^{ded to prov}^{ide f}^o^r^on^{e addition}^a^{l aircraf}^t^an^{d $158,6}^00,^000.^T^h^eref^{ore, th}^e
^C^o^m^m^{ittee prov}^idesⁱⁿ^crea^s^e^{d f}^uⁿ^dⁱⁿ^g^f^o^{r on}^{e addition}^a^{l C}^-^{17 in}^fis^cal^y^{ear 2005, an}^d
^r^e^d^u^c^e^d^fu^ndⁱⁿ^{g i}ⁿ^t^hⁱ^s^a^c^c^o^uⁿ^t^b^y^a^lⁱ^ke^a^m^o^unt^.
^T^h^{e C}^o^m^m^ittee^fⁱⁿ^d^s^{it pu}^zzlⁱⁿ^{g th}^at^th^e^{Air Force ref}^u^s^e^s^{to f}^u^l^l^y^fuⁿ^d^{aircraft i}ⁿ
^produ^ctⁱ^oⁿ^,^y^e^t^t^h^{e f}ⁱ^s^cal^y^{ear 2005}^re^qu^es^t^f^o^r^C-¹⁷^IC^Sⁱⁿ^cl^u^d^es^fuⁿ^dⁱⁿ^g^of^$176,000,⁰⁰⁰
ⁱⁿⁿ^e^w^cap^ab^ilit^y^b^l^o^c^k^u^p^g^r^ad^{es an}^dⁱ^m^p^r^o^v^e^m^eⁿ^{ts to}^th^{e ex}ⁱ^s^tiⁿ^g^f^l^{eet. I}ⁿ^b^u^d^g^et
^j^u^s^tⁱ^fⁱ^c^a^tⁱ^oⁿ^m^a^t^e^ri^al^s^,^t^h^e^Aⁱ^r^F^o^{rce i}^d^en^tⁱ^fⁱ^e^s^$114,0^00,0⁰⁰^of^t^hⁱ^s^a^m^oun^t^asⁿ^{eeded t}^o
^ad^d^r^{ess u}ⁿ^f^uⁿ^d^ed^r^e^q^u^ir^e^m^en^t^s^{. T}^h^{e Co}^m^m^ittee^wⁱ^s^h^es^to^s^eⁿ^d^{a v}^e^r^y^clear^m^e^ssa^g^e^—^it
^c^o^nsi^d^e^r^{s f}^u^l^l^f^u^ndⁱⁿ^{g o}^f^t^h^e^aⁱ^r^c^r^a^ftⁱⁿ^p^r^o^d^u^c^tⁱ^oⁿ^t^o^be^t^hⁱ^s^prog^ra^m^’^s^num^ber^on^e^unf^un^de^d
^requ^ire^m^ent.^On^ce^th^e^Aⁱ^r^Force^uⁿ^d^ers^t^aⁿ^d^s^t^h^is^m^e^s^s^a^g^e^aⁿ^d^p^r^o^vⁱ^d^e^s^t^h^e^r^e^s^o^u^r^c^e^sⁿ^e^e^d^ed
^to^b^rⁱⁿ^g^t^h^{is p}^r^o^g^r^a^mⁱⁿ^lin^e^wⁱ^t^h^{a tr}^ad^itioⁿ^a^{l, f}^u^ll^y^f^uⁿ^d^e^d^p^r^o^c^u^r^em^eⁿ^{t p}^r^o^g^r^a^m^,^t^h^e

^Co^mmi^t^t^e^e^wⁱ^l^l^eⁿ^t^e^r^t^aⁱ^{n a}ⁿ^{y f}^undⁱⁿ^{g r}^e^q^u^e^s^t^s^fo^{r n}^e^w^capabi^lit^y^{to t}^h^{e ex}ⁱ^s^tiⁿ^g^f^l^{eet. (pag}^e
¹⁹³⁾
In its discussion of the Army’s proposal for funding the construction a theater support vessel
(TSV) through the Army’s research and development account, the report stated:
^Fⁱ^s^cal^y^{ear 2005 i}^s^t^h^{e f}ⁱ^rs^t^y^e^a^rⁱⁿ^w^hⁱ^c^h^fuⁿ^dⁱⁿ^g^h^a^s^been^requ^es^t^e^{d t}^o^c^oⁿ^s^t^r^u^c^t^s^u^ch^a
^ve^s^s^e^l^.^T^h^e^Co^mmi^t^t^e^e^no^t^e^{s t}^h^a^t^t^h^e^t^o^t^a^l^c^o^st^o^f^t^hⁱ^s^ve^sse^lⁱ^s^a^p^p^r^o^xⁱ^m^a^t^el^y^$141,600^,00⁰^,
^an^d^th^{e A}^r^m^y^h^a^d^p^l^anⁿ^e^d^toⁱⁿ^cr^e^m^eⁿ^tall^y^f^uⁿ^d^{its co}ⁿ^s^tr^u^c^tioⁿ^o^v^er^th^{e co}^u^r^{se o}^f^fⁱ^scal
^y^ears^{2005 th}^rou^g^h^{2007. T}^h^{e C}^o^m^m^ittee^fⁱ^r^m^l^y^belie^v^e^s^t^h^a^t^th^{e Depart}^m^eⁿ^t^s^h^ou^ld^fu^ll^y
^f^uⁿ^d^m^a^j^o^{r in}^v^e^s^t^m^eⁿ^tⁱ^t^e^m^s^aⁿ^{d accordin}^g^l^y^h^a^s^{added s}^u^ffⁱ^c^ien^t^f^uⁿ^d^ingⁱⁿ^th^e^fⁱ^s^c^a^l^y^ear
²⁰⁰⁵^{bill to com}^p^{lete th}ⁱ^s^v^e^s^s^{el. (pag}^es^254-^{255; s}^{ee als}^o^pa^g^e²⁴⁹⁾
The committee in the above passage is applying the traditional full funding policy to this vessel
even though it is being acquired through the Army’s research and development account, which
falls outside the procurement title of the DOD appropriations act.
In its discussion of the Navy’s proposal for funding the construction of the lead Littoral Combat
Ship (LCS) through the Navy’s research and development account, the report stated:
^T^h^{e C}^o^m^mⁱ^t^t^{ee recom}^m^eⁿ^d^ati^oⁿⁱⁿ^cl^u^d^esⁱⁿ^creasⁱⁿ^g^th^{e bu}^d^g^{et requ}^es^{t f}^o^r^t^h^e^c^oⁿ^s^t^r^u^c^ti^oⁿ
^of^t^h^e^fⁱ^rs^t^Flⁱ^g^h^t⁰^L^C^S^b^y^$107,0^00,0^{00, f}^u^l^l^y^f^uⁿ^dⁱⁿ^g^t^hⁱ^s^cons^t^r^u^c^tⁱ^oⁿ^eff^o^rt^at
^$214,⁰⁰⁰^,00⁰^{. T}^h^{e f}ⁱ^s^cal^y^e^a^r^{2005 requ}^es^tⁱⁿ^cl^u^d^{ed on}^l^y^$107,000^,00⁰^f^o^{r t}^h^e^fi^rs^t
ⁱⁿ^cr^e^m^eⁿ^{t o}^f^t^h^e^{LCS co}ⁿ^s^tr^u^c^tioⁿ^.^B^u^d^g^{et d}^o^c^u^m^eⁿ^tatioⁿⁱⁿ^dⁱ^cates^th^e^Nav^y^p^l^aⁿ^s^to
^requ^es^{t an}^addition^a^{l $107,}⁰⁰^0,000^f^o^{r th}^{e s}^econ^d^an^{d f}ⁱⁿ^a^lⁱⁿ^cre^m^eⁿ^{t f}^o^{r th}^{e f}ⁱ^rs^{t s}^h^{ip in}
^fⁱ^s^cal^y^{ear 2006.}^T^h^{e C}^o^m^mⁱ^t^t^{ee s}^t^ron^g^l^y^oppos^esⁱⁿ^cre^m^en^t^a^l^f^uⁿ^dⁱⁿ^g^o^f^s^hⁱ^p^con^s^t^r^u^c^tⁱ^on
^an^{d t}^h^ere^f^{ore h}^a^s^provⁱ^d^{ed a t}^o^t^a^l^of^$214,0^00,0^{00 i}ⁿ²⁰⁰^{5 f}^o^r^con^s^t^r^u^c^tⁱ^on^of^t^h^e^fⁱ^rs^t^LC^S^,
^f^u^l^l^y^fuⁿ^dⁱⁿ^g^t^h^{e cons}^t^r^u^c^tⁱ^on^requⁱ^r^e^m^entⁱⁿ^on^e^y^{ear. (pag}^{e 288-}^289;^s^{ee al}^s^o^pag^e²⁷⁴⁾
The committee in the above passage is applying the traditional full funding policy to this ship
even though it is being acquired through the Navy’s research and development account, which
falls outside the procurement title of the DOD appropriations act.
In its discussion of the Navy’s newest plan for procuring a new amphibious assault ship known as
the LHA(R), or more simply as LHA, in FY2008, the report stated that
^th^{e Navy}^’sⁿ^e^w^plaⁿ^pres^um^es^desⁱ^gn^ing^{a s}^h^{ip th}^at^w^o^u^l^{d alt}^e^{r th}^e^am^p^hⁱ^bⁱ^o^u^sⁿ^a^tu^r^e^o^f^t^h^e
^L^H^A^,^an^{d t}^h^en^{, propos}ⁱⁿ^g^anⁱⁿ^cre^m^eⁿ^t^a^l^l^y^fuⁿ^d^e^d^c^oⁿ^s^t^r^u^c^tⁱ^oⁿ^p^r^o^g^r^a^m^{.... Sh}^o^u^{ld th}^{e Na}^vy
^an^{d Marin}^e^C^o^rps^deter^mⁱⁿ^{e t}^h^{at t}^h^{e re}^-^s^tr^u^c^tu^{re o}^f^t^h^e^L^H^A⁽^R⁾^prog^ra^mⁱ^s^t^h^e^w^a^y^a^h^ea^d
^f^o^r^th^e^f^u^tu^r^e^{, a}^f^u^ll^y^f^uⁿ^d^ed^p^r^o^g^r^a^m^f^o^r^d^e^si^gⁿ^aⁿ^d^coⁿ^s^t^r^u^c^tioⁿ^o^f^{a s}^h^ip^to^m^{eet t}^h^is
^r^e^q^uⁱ^r^e^m^eⁿ^t^s^h^o^u^l^d^b^eⁱⁿ^c^l^ud^e^dⁱⁿ^a^fut^u^r^e^b^u^d^g^e^t^r^e^q^u^e^s^t^.^T^h^e^Co^mmi^t^t^{ee w}^{ill n}^o^t^s^u^pport^a
^prop^os^al^w^hⁱ^c^h^s^ugg^es^t^s^t^h^a^t^con^s^t^r^u^c^tⁱ^on^{be i}ⁿ^cre^m^ent^a^l^l^y^fuⁿ^d^{ed. (pag}^{e 289)}
In its discussion of the Navy’s plan to fund the construction of a planned new class of ships
known as Maritime Prepositioning Force (Future) (MPF[F]) ships through the National Defense
Sealift Fund (NDSF) starting in FY2007, the report stated:
^Bu^dg^et^docum^en^t^a^tⁱ^on^provⁱ^d^{ed t}^o^C^oⁿ^g^r^essⁱⁿ^s^u^pport^of^t^h^{e f}ⁱ^s^cal^y^{ear 2005 bu}^dg^et
^r^e^q^u^{est p}^r^o^v^id^edⁿ^oⁱⁿ^f^o^r^m^atioⁿ^d^e^tailin^g^h^o^w^t^h^{e MP}^F(^F)^f^uⁿ^d^s^w^e^r^e^to^b^e^sp^en^t.^T^h^{e o}ⁿ^l^y
ⁱⁿ^f^o^r^m^atioⁿ^p^r^o^v^id^ed^states^th^{at lead}^h^u^{ll co}ⁿ^s^tr^u^c^tioⁿ^co^s^t^s^ar^{e to}^b^eⁱⁿ^cr^e^m^eⁿ^tall^y^f^uⁿ^d^ed
^begⁱⁿⁿⁱⁿ^gⁱⁿ^fⁱ^s^cal^y^{ear 2007.}^R^e^qu^es^t^s^f^o^{r addition}^a^{l inf}^o^r^m^ation^yⁱ^{elded n}^o^{detail of}^th^e
^p^l^anⁿ^e^d^ex^p^eⁿ^d^it^u^r^{es d}^u^{e to}^{a n}^o^t^y^e^{t co}^m^p^leted^st^u^d^y^b^y^th^e^Cen^t^e^r^f^o^r^N^a^v^a^l^Aⁿ^a^l^y^s^is^.^Th^e
^Co^m^m^itteeⁿ^o^{tes t}^h^at^w^h^ile^d^e^tail^w^a^sⁿ^o^t^p^r^o^v^id^ed^to^C^oⁿ^g^r^es^{s, t}^h^{e tr}^ad^{e p}^r^es^s^w^a^s

^p^r^o^v^id^ed^so^m^eⁱⁿ^f^o^r^m^at^ioⁿ^an^d^p^rⁱⁿ^ted^ar^{ticles q}^u^o^tin^g^seⁿⁱ^o^r^N^a^v^y^o^f^fⁱ^cⁱ^a^l^s^oⁿ^p^l^aⁿ^s^f^o^r^t^h^e
^pos^sⁱ^bl^{e con}^s^t^r^u^c^tⁱ^on^of^a^f^l^eet^of^MPF⁽^F⁾^s^hⁱ^p^s^.
^T^h^e^C^o^m^mⁱ^t^t^e^e^b^e^lⁱ^e^v^e^s^t^h^e^N^a^v^y^m^u^s^t^p^r^o^vⁱ^d^e^s^u^f^fⁱ^c^ien^t^j^u^stif^icat^ioⁿ^o^f^its^r^e^q^u^es^ts^f^o^r
^appro^p^{riated f}^uⁿ^d^s^.^W^h^{ile t}^h^{e C}^o^m^m^{ittee appreciates}^th^{at t}^h^{e ti}^mⁱⁿ^gⁱⁿ^h^e^reⁿ^tⁱⁿ^t^h^{e bu}^dg^et
^p^r^o^{cess d}^o^e^{s n}^o^{t al}^w^a^y^s^f^a^v^o^r^r^a^pⁱ^d^tr^an^sitioⁿ^toⁿ^e^w^id^ea^s,^{it is}ⁿ^o^{t r}^easoⁿ^ab^{le to}^r^e^q^u^e^s^t
^C^oⁿ^g^r^e^s^s^p^r^o^vⁱ^d^e^f^uⁿ^d^s^f^o^r^a^p^r^o^g^r^a^m^wi^t^hⁿ^o^j^u^s^tⁱ^fⁱ^c^a^tⁱ^oⁿ^e^x^cep^t^th^{at w}^h^ic^h^is^p^rⁱⁿ^tedⁱⁿ^th^e
^tr^ad^{e p}^r^{ess. Fu}^r^t^h^e^r^m^o^r^{e, t}^h^e^Nav^y^is^w^e^{ll a}^w^ar^{e o}^f^th^e^Co^m^m^ittee^’^s^vⁱ^e^w^s^wⁱ^t^h^r^e^sp^{ect t}^o
ⁱⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^o^f^p^r^o^g^r^a^m^s^{. T}^h^{e Co}^m^m^ittee^fⁱⁿ^d^{s li}^ttle^h^u^m^o^rⁱⁿ^b^eⁱⁿ^g^as^k^e^d^to^f^uⁿ^d
^an^un^j^u^s^tⁱ^f^{ied requ}^es^{t of}ⁿ^early^$100^m^illion^,^f^o^r^w^h^{at is}ⁱⁿ^t^eⁿ^d^{ed u}^pon^its^m^a^t^u^ration^to
^becom^e^aⁿⁱⁿ^cre^m^eⁿ^t^a^l^l^y^fun^d^{ed prog}^ram^.^(pag^{e 352)}
The committee in the above passage is suggesting that it will prefer to apply the traditional full
funding policy to these ships even though they are to be acquired through the NDSF, which falls
outside the procurement title of the DOD appropriations act.
In its report (S.Rept. 108-284 of June 24, 2004) on the FY2005 defense appropriations bill (S.

2559), the Senate Appropriations Committee stated:

^T^h^{e C}^o^m^mⁱ^t^t^{ee s}^u^pport^s^t^h^{e bu}^dg^et^requ^es^t^f^o^{r t}^h^{e L}ⁱ^t^t^o^r^a^l^C^o^m^b^a^t^S^hⁱ^p^[^L^C^S^]^aⁿ^d^c^oⁿ^s^en^t^s
^t^o^t^h^e^N^a^vy^{’s requ}^es^t^t^o^fuⁿ^d^con^s^t^r^u^c^tⁱ^on^o^f^t^h^e^fi^rs^t^prot^ot^y^p^e^shⁱ^p^f^o^{r eac}^h^{of t}^w^o^s^hⁱ^p
^desⁱ^gn^sⁱⁿ^t^h^e^R^e^s^earc^h^aⁿ^{d D}^e^v^e^l^o^p^m^eⁿ^t^,^N^a^vy^accoun^t^.^A^pprov^al^f^o^{r fu}ⁿ^dⁱⁿ^g^L^C^Sⁱⁿ^t^h^e
^res^earch^an^{d dev}^e^lop^m^en^{t a}^ccouⁿ^tⁱ^s^s^t^rict^l^y^bas^e^{d on}^t^h^{e ackn}^o^w^l^edg^e^m^eⁿ^t^of^th^e
^p^r^o^t^o^t^y^p^{ical n}^a^t^u^r^e^an^d^hⁱ^g^h^le^v^e^{l o}^f^techⁿⁱ^{cal r}ⁱ^s^kⁱⁿ^h^e^r^eⁿ^tⁱⁿ^th^{is p}^r^o^g^r^a^m^.^T^h^{e Co}^m^m^ittee
^fⁱⁿ^d^s^LC^S^t^o^{be u}ⁿⁱ^qu^{e an}^{d un}^lⁱ^k^e^any^ot^h^e^{r s}^hⁱ^pbuⁱ^l^di^ng^pro^g^r^a^m^t^h^{e N}^a^vy^h^a^s^prevⁱ^ous^l^y
^pu^rs^u^e^d;^an^{d t}^h^ere^f^{ore, g}^r^ants^th^{e Na}^vy^’s^requ^es^t^f^o^{r t}^h^eⁱⁿ^cr^eas^{ed f}^l^e^x^ibili^t^y^t^h^at^fuⁿ^dⁱⁿ^g
^wⁱ^t^hⁱⁿ^t^h^{e res}^earch^an^{d dev}^e^lo^pm^eⁿ^{t accoun}^{t a}^f^f^o^rds^.^Ho^w^e^{ver, th}^{e C}^o^m^m^{ittee directs}^t^h^at
^{all f}^o^llo^w^-^oⁿ^s^h^ips^be^y^oⁿ^d^on^{e prot}^oty^p^{e f}^o^{r each}^LC^{S s}^h^ip^desⁱ^gⁿ^{be f}^u^ll^y^f^uⁿ^d^{ed in}^th^e
^S^h^ipbu^ildiⁿ^g^an^{d C}^oⁿ^v^e^rsion^,^Navy^acco^uⁿ^t^{. (P}^ag^es^156-¹⁵⁷⁾
The conference report (H.Rept. 108-622 of July 20, 2004) on H.R. 4613 contained bill language
in the Aircraft Procurement, Air Force section stating that
^T^h^at^a^m^oun^t^s^provⁱ^d^ed^uⁿ^d^er^t^hⁱ^s^h^eadiⁿ^g^sh^al^l^be^u^s^ed^f^o^{r t}^h^{e procu}^r^e^m^eⁿ^t^o^f^{15 C-}¹⁷
^ai^rcraf^t^:^Provⁱ^d^{ed f}^u^rt^h^e^{r, T}^h^at^a^m^oun^t^s^provⁱ^d^{ed u}ⁿ^d^{er th}ⁱ^s^h^eadin^g^s^h^al^{l be u}^s^{ed f}^o^{r th}^e
^adv^aⁿ^{ce procu}^r^e^m^eⁿ^{t of}ⁿ^o^{t le}^s^s^th^aⁿ^{15 C}^-^{17 aircraf}^{t: P}^r^ov^{ided f}^u^rth^e^{r, T}^h^{at th}^{e Secretar}^y
^o^f^th^e^Air^Fo^r^{ce sh}^al^{l f}^u^ll^y^f^uⁿ^d^th^{e p}^r^o^c^u^r^e^m^en^{t o}^fⁿ^o^{t le}^ss^th^aⁿ¹⁵^C-¹⁷^air^c^r^a^f^tⁱⁿ^fⁱ^scal
^y^{ear 2006:}^P^r^ovⁱ^d^{ed f}^u^rt^h^e^{r, T}^h^at^t^h^{e S}^ecret^ar^y^o^f^t^h^e^Aⁱ^{r F}^o^{rce s}^h^al^l^al^l^o^cat^{e a redu}^ctⁱ^oⁿ^of
^$158,⁶⁰⁰^,00⁰^p^r^op^ortion^a^tel^y^{to each}^bu^dg^{et activ}^it^y^,^acti^v^it^y^g^r^ou^{p, s}^u^bacti^v^it^y^g^r^o^u^p^,^aⁿ^d
^each^prog^ra^m^,^proj^{ect, an}^{d act}^iv^it^y^fun^d^{ed by}^t^h^is^{appropriation}^.^(P^ag^{e 13)}
The conference report stated:
^T^h^{e con}^f^erees^h^a^v^e^prov^{ided an}^addition^a^{l $158,}^600,⁰⁰⁰ⁱⁿ^f^uⁿ^dⁱⁿ^g^f^o^{r t}^h^{e procu}^r^e^m^ent
^of^{15 C-}^17sⁱⁿ^fⁱ^s^cal^y^{ear 2005. L}^aⁿ^g^u^a^g^e^h^a^s^al^s^o^beenⁱⁿ^cl^{uded i}ⁿ^“Aⁱ^r^craf^t^Procu^r^e^m^en^t^,
^Aⁱ^r^Fo^r^{ce” r}^e^q^u^irⁱⁿ^{g the}^Aⁱ^r^Fo^r^{ce to}^p^r^o^c^ur^{e 15}^air^c^r^a^f^t^{in f}ⁱ^s^c^a^l^y^e^a^r^2005;^pr^ovⁱ^d^e^a^d^v^aⁿ^c^e
^procu^r^em^eⁿ^t^f^o^{r 15 ai}^r^c^raf^tⁱⁿ²⁰⁰^6;^an^{d t}^o^f^u^l^l^y^fun^d^{15 ai}^r^c^raf^tⁱⁿ^fⁱ^s^cal^y^{ear 2006}^.^T^h^e
^con^f^erees^a^g^ree^wⁱ^t^h^th^{e Ho}^u^s^{e lan}^g^u^a^g^e^reg^a^rdⁱⁿ^g^t^h^e^Aⁱ^r^F^o^r^{ce in}^ter^p^r^e^tatioⁿ^o^f^m^u^l^tiy^e^a^r

^procu^r^em^eⁿ^t^regu^l^a^tⁱ^oⁿ^sⁱⁿ^t^hⁱ^s^an^{d t}^h^{e C-}^{130J pr}^og^ra^m^.^T^h^{e con}^f^eren^{ce report}ⁱⁿ^cl^u^d^es^a
^g^eⁿ^e^ral^provⁱ^sⁱ^{on [S}^ectⁱ^oⁿ^{8008] am}^eⁿ^di^ng^m^u^l^tⁱ^y^{ear procure}^m^en^t^con^t^ract^requⁱ^r^e^m^eⁿ^t^s
^p^r^o^p^o^s^edⁱⁿ^th^{e Ho}^u^s^{e b}^{ill to}^p^r^ev^en^{t t}^h^{is ap}^p^r^o^achⁱⁿ^t^h^{e f}^u^tu^r^e^.
^A^ge^ne^r^a^l^r^e^d^u^c^tⁱ^oⁿⁱⁿ^fu^ndⁱⁿ^g^fo^r^Aⁱ^r^c^r^a^ft^P^r^o^c^ur^e^m^eⁿ^t^,^Aⁱ^r^Fo^r^c^e^,^ha^s^b^e^eⁿⁱⁿ^c^l^ud^e^d
^accordin^g^l^y^wⁱ^th^{a requ}^ire^m^eⁿ^{t th}^{at th}^{e redu}^ctioⁿ^{be applied}^e^q^u^itabl^y^acros^s^a^l^l^e^l^em^eⁿ^ts^o^f
^t^hⁱ^s^appropri^a^tⁱ^oⁿ^.^(Pag^{e 21}⁵⁾
Section 8008—the usual section in the DOD appropriations bill that grants authority for multiyear
procurement contracts—stated in part
^T^h^{at n}^oⁿ^e^o^f^t^h^{e f}^uⁿ^d^{s p}^r^o^v^id^edⁱⁿ^thⁱ^s^A^c^t^m^a^y^{be us}^{ed f}^o^{r a}^m^u^lti^y^{ear con}^t^{ract ex}^ec^u^t^ed
^af^{ter th}^{e date of}^t^h^{e en}^act^m^eⁿ^t^of^thⁱ^s^A^c^{t un}^les^sⁱⁿ^th^{e cas}^e^of^any^s^u^ch^contract—
^{(1) th}^{e Secretary}^o^f^De^f^e^ns^{e has}^s^u^b^m^{itted to C}^oⁿ^g^r^es^s^{a budg}^{et requ}^es^t^f^o^{r f}^u^{ll fun}^d^ing^of
^uni^{ts to}^b^e^p^r^o^c^ur^ed^thr^o^{ugh t}^h^{e co}^ntr^act^{.... (}^P^{age 2}¹⁾
With regard to the Navy’s DDG-1000 destroyer program, the report stated:
^T^h^{e con}^f^erees^ag^{ree t}^o^provⁱ^d^e^{a t}^o^t^a^l^of^$^305,⁵¹⁶^,00⁰^f^o^{r a}^d^v^aⁿ^{ce procu}^r^e^m^eⁿ^t^f^o^{r t}^h^e
^D^D⁽^X⁾^cl^as^s^o^f^shⁱ^p^sⁱⁿ^s^t^ea^{d of}^$320,^516,^{000 as}^p^r^opo^s^e^{d by}^t^h^e^S^eⁿ^a^t^e^an^dⁿ^o
^appro^p^ri^atⁱ^oⁿ^as^propos^{ed by}^t^h^{e H}^o^u^s^{e. T}^h^{e conf}^erees^di^re^ct^t^h^e^N^a^vy^t^oⁱⁿ^cl^u^d^{e fu}^t^u^re
^f^uⁿ^dⁱⁿ^g^requ^e^s^t^s^f^o^{r t}^h^{e D}^D⁽^X⁾ⁱⁿ^t^h^{e Sh}ⁱ^pbuⁱ^l^dⁱⁿ^g^an^{d C}^onv^ersⁱ^on^{, N}^a^vy^appropri^a^tⁱ^oⁿ^.
^Wi^t^hⁱⁿ^t^h^e^f^uⁿ^d^s^provⁱ^d^{ed, $221,11}^6,0^{00 i}^s^on^l^y^f^o^{r des}ⁱ^gn^an^{d adv}^aⁿ^{ce procu}^r^e^m^eⁿ^t
^requⁱ^r^e^m^ent^s^ass^o^ci^at^ed^wⁱ^t^h^t^h^{e f}ⁱ^r^s^t^shⁱ^p^of^t^h^{e D}^D⁽^X⁾^cl^ass^an^{d $84,40}^0,00^{0 i}^s^on^l^y^f^o^r
^desⁱ^gn^an^{d adv}^aⁿ^{ce procu}^r^e^m^en^{t requ}^ire^m^eⁿ^t^s^as^s^o^ciated^with^cons^tru^c^tioⁿ^of^t^h^{e s}^econ^d
^s^h^{ip at an}^alterⁿ^ati^v^{e s}^econ^d^s^o^u^r^{ce s}^h^ip^y^a^rd.^T^h^{e con}^f^erees^{direct th}^{at n}^o^f^uⁿ^d^s^s^h^{all be}
^av^ailable^f^o^{r th}^{e procu}^r^e^m^en^t^of^long^leadti^m^e^m^a^terial^f^o^{r i}^t^e^m^s^th^a^t^{are depen}^d^en^t^u^pon
^delⁱ^v^er^y^of^{a D}^D⁽^X⁾^k^e^y^t^echnol^ogy^un^l^e^ss^t^h^at^t^e^c^hⁿ^o^l^ogy^has^uⁿ^d^erg^oⁿ^e^t^e^s^tⁱⁿ^g^,^t^h^ereb^y
^redu^ci^ng^ri^s^k^t^o^ov^eral^l^prog^ra^m^cos^t^s^.
^T^h^{e con}^f^erees^{direct th}^a^t^fu^ll^fuⁿ^dⁱⁿ^g^of^t^h^{e re}^m^aⁱⁿⁱⁿ^g^fin^a^{ncial requ}^ire^m^eⁿ^t^f^o^{r th}^es^e
^sh^ip^s,ⁿ^o^tⁱⁿ^c^l^u^dⁱⁿ^g^tr^ad^itioⁿ^a^{l ad}^v^aⁿ^{ce p}^r^o^c^u^r^e^m^eⁿ^t^r^e^q^u^ir^e^m^en^ts,^sh^a^{ll b}^eⁱⁿ^cl^u^d^edⁱⁿ^a
^f^u^t^u^{re bu}^d^g^et^requ^es^t^.^(Pag^{e 188)}
With regard to the Navy’s Littoral Combat Ship (LCS) program, the report stated that “The
conferees agree with the Senate that all follow-on ships, beyond one of each prototype design,
should be fully funded in the Shipbuilding and Conversion, Navy appropriation.” (Page 310)
The conference report (H.Rept. 108-354 of November 7 (legislative day, November 6), 2003) on
H.R. 1588 contained a provision (Section 135) that, as stated on page 541 of the report, “would
authorize the Secretary of the Air Force to enter into a lease for no more than 20 aerial refueling
tanker aircraft, and would further authorize the Secretary of the Air Force to enter into a multiyear

procurement program, using incremental funding, for up to 80 aerial refueling aircraft for not in
excess of 10 program years beginning as early as FY2004.” Section 135 stated, in part:
^(b^{) MUL}^T^IYEA^R^P^R^OC^UR^E^M^ENT^A^U^T^HOR^IT^Y.—(1⁾^B^e^gⁱⁿⁿⁱⁿ^g^wⁱ^th^t^h^e^fⁱ^scal^y^ear
²⁰⁰⁴^pr^og^ra^m^y^{ear, t}^h^{e S}^ecret^a^r^y^of^t^h^e^Aⁱ^{r F}^o^{rce m}^a^y^,ⁱⁿ^acc^ordan^ce^wⁱ^t^h^s^ectⁱ^oⁿ^2306b^o^f
^{title 1}⁰^,^Un^ited^{States Co}^d^e^{, en}^terⁱⁿ^to^{a m}^u^lti^y^ear^coⁿ^t^r^{act f}^o^r^th^{e p}^u^r^c^h^a^s^e^o^f^t^aⁿ^k^e^r^aⁱ^r^c^r^a^f^t
ⁿ^eces^s^a^r^y^to^m^{eet t}^h^{e requ}^irem^ents^of^th^e^Air^{Force f}^o^r^w^h^ich^leas^ing^of^ta^nk^{er aircraf}^tⁱ^s
^prov^{ided f}^o^{r u}ⁿ^d^{er th}^e^m^u^ltⁱ^y^{ear aircraf}^t^leas^{e pilot prog}^ram^bu^t^f^o^r^w^h^ic^h^t^h^{e num}^{ber o}^f
^tan^k^e^r^air^c^r^a^f^t^leased^uⁿ^d^e^r^th^{e au}^th^o^r^it^y^o^f^s^u^b^s^ectioⁿ⁽^a⁾^{is in}^s^u^f^fⁱ^cⁱ^en^t.
⁽²⁾^T^h^{e total n}^u^m^b^{er of}^tank^e^r^aircraf^t^pu^rch^a^s^e^{d th}^roug^h^a^m^u^ltⁱ^y^{ear con}^t^{ract un}^{der th}ⁱ^s
^s^u^bs^ectioⁿ^m^a^yⁿ^o^t^ex^ceed^80.
^{(3) N}^o^t^wⁱ^t^h^s^t^aⁿ^dⁱⁿ^{g su}^bs^ectⁱ^oⁿ^(k^{) o}^f^s^ectⁱ^{on 2306b of}^tⁱ^t^l^e^{10, U}ⁿⁱ^t^{ed S}^t^at^e^s^C^{ode, a}
^con^t^ract^un^{der t}^hⁱ^s^su^bs^ectⁱ^oⁿ^m^a^y^be^f^o^{r any}^peri^{od n}^o^tⁱⁿ^e^x^cess^of^{10 prog}^ram^y^ears^.
⁽⁴⁾^A^m^u^lti^y^ear^coⁿ^t^r^{act u}ⁿ^d^e^r^th^{is s}^u^b^s^ectioⁿ^m^a^y^b^eⁱⁿ^itia^t^e^d^o^r^coⁿ^tin^u^e^d^f^o^r^an^y^fⁱ^sca^l
^y^{ear f}^o^r^w^h^ic^h^s^u^f^f^icien^t^fun^d^s^{are av}^{ailable to}^pa^y^th^{e co}^s^t^s^of^s^u^{ch con}^t^ract^f^o^{r th}^at^fⁱ^s^cal
^y^ear,^wⁱ^th^o^u^{t reg}^a^{rd to}^w^h^et^h^e^{r f}^uⁿ^d^s^{are av}^aila^{ble to pa}^y^t^h^e^cos^t^s^of^s^u^ch^coⁿ^t^{ract f}^o^{r any}
^s^u^bs^eq^u^eⁿ^t^fⁱ^s^c^a^l^y^{ear. Su}^c^h^c^oⁿ^t^{ract s}^h^al^{l prov}^{ide, h}^o^w^e^v^e^{r, th}^{at perf}^orm^aⁿ^{ce un}^{der th}^e
^con^t^{ract du}^riⁿ^g^t^h^{e s}^u^bs^equ^eⁿ^t^y^{ear or}^y^ear^s^{of t}^h^{e con}^t^{ract is}^coⁿ^tⁱⁿ^g^eⁿ^t^u^pon^the
^ap^p^r^o^p^rⁱ^atioⁿ^o^f^f^uⁿ^d^{s an}^d^sh^a^{ll also}^p^r^o^v^id^{e f}^o^r^{a can}^cel^lati^oⁿ^p^a^y^m^en^t^to^b^e^m^a^d^e^to^th^e
^con^t^{ractor if}^s^u^c^h^appropriatioⁿ^s^{are n}^o^t^m^a^de.
In its report (H.Rept. 108-187 of July 2, 2003) on H.R. 2658, the House Appropriations
Committee stated:
^T^h^{e C}^o^m^mⁱ^t^t^ee^h^a^s^a^l^t^e^{red t}^h^e^pres^en^t^a^tⁱ^{on of}^t^h^e^fⁱ^s^c^a^l^y^ear^{2004 re}^qu^es^t^e^{d S}^hⁱ^pbui^l^dⁱ^ng
^an^{d C}^oⁿ^v^e^rsi^oⁿ^,^N^a^vy^(SC^N⁾^appro^p^ri^atⁱ^oⁿ^l^a^ng^u^a^g^e^b^y^m^e^r^gⁱ^{ng t}^h^e^appropri^a^tⁱ^oⁿ^f^o^{r fu}^l^l
^f^uⁿ^dⁱⁿ^g^wⁱ^t^h^t^h^{e ap}^p^r^o^p^r^iatioⁿ^f^o^r^ad^v^aⁿ^ced^p^r^o^c^u^r^e^m^en^{t. T}^h^{e Co}^m^mⁱ^t^t^ee’^{s i}ⁿ^teⁿ^tioⁿ^{is to}
^prov^{ide a certain}^le^v^e^{l o}^f^fⁱⁿ^a^{ncial f}^l^e^x^ibili^t^y^{to better acco}^m^m^odate^ch^aⁿ^g^e^s^bas^e^{d o}ⁿ^cos^t
^g^r^o^w^t^h^{. T}^hⁱ^s^reco^m^m^eⁿ^d^atⁱ^oⁿ^,ⁱ^f^properl^yⁱ^m^pl^e^m^eⁿ^t^e^{d b}^y^t^h^{e N}^a^vy^,^sh^ou^l^d^al^l^o^w^f^o^r
^m^aⁿ^a^gⁱ^ng^cos^t^s^wⁱ^t^hⁱⁿ^t^h^e^prog^ra^m^t^h^ereb^y^lⁱ^mⁱ^tⁱ^ng^t^h^eⁿ^ece^s^sⁱ^t^y^o^f^reprog^ra^m^mⁱ^ng^f^uⁿ^d^s
^f^r^o^m^oth^e^{r h}ⁱ^gh^priority^prog^ra^m^s^{to accom}^m^{odate cos}^t^g^r^o^w^t^hⁱⁿ^{a s}^h^{ip clas}^s^.^T^h^e
^C^o^m^mⁱ^t^t^{ee res}^e^r^v^es^t^h^{e ri}^gh^t^t^o^rev^e^rt^t^o^t^h^{e prev}ⁱ^o^u^s^m^e^t^{hod of}^ap^prop^ri^atⁱⁿ^g^f^uⁿ^d^s^f^o^r
^S^C^N^sh^ou^l^d^t^h^{e N}^a^vyⁿ^o^t^properl^y^m^aⁿ^a^g^e^t^h^e^m^e^r^gⁱⁿ^{g of}^t^h^es^{e appropri}^a^tⁱ^oⁿ^s^{. (pag}^{e 150)}
In its report (S.Rept. 108-87 of July 10, 2003) on the FY2004 defense appropriations bill (S.

1382), the Senate Appropriations Committee stated:

^T^h^{e C}^o^m^m^{ittee i}^s^a^w^{are th}^a^t^th^{e Depart}^m^e^{nt of}^th^{e Navy}^plaⁿ^s^{to f}^uⁿ^d^th^{e pu}^rch^a^s^e^of
^s^h^ipsⁱⁿ^fⁱ^s^cal^y^{ear 2005 w}ⁱ^t^hⁱⁿ^t^h^{e R}^e^s^earch^an^{d Dev}^e^lopm^eⁿ^{t, Na}^vy^accoun^{t. T}^h^es^e
^s^hⁱ^p^s^—^t^h^e^fⁱ^r^s^tⁱⁿ^t^h^eⁱ^r^c^l^a^s^s^—^t^h^e^D^D⁽^X⁾ⁿ^e^x^t^-^g^eⁿ^e^r^a^tⁱ^oⁿ^d^e^s^t^r^o^y^e^r^an^d^th^{e L}^itto^r^a^l^Co^m^b^at
^Sh^{ip [LC}^S^{] are cu}^rren^t^l^y^plaⁿ^{ned to}^{be p}^r^ocu^r^{ed w}ⁱ^t^h^res^{earch an}^{d dev}^e^l^o^p^m^en^t^d^o^l^l^a^r^s^wⁱ^t^h
^th^{e s}^econ^d^s^h^{ip in}^each^clas^s^{to be p}^r^ocu^r^{ed w}ⁱ^t^h^S^h^ipbu^{ilding an}^{d C}^oⁿ^v^e^rs^ion^,^N^a^v^y^[S^C^N^]
^f^uⁿ^d^sⁱⁿ^fi^s^cal^y^{ear 2006.}

^T^h^{e C}^o^m^mⁱ^t^t^{ee un}^ders^tan^d^s^t^h^{at th}^{ere are}^s^e^e^m^ing^adv^aⁿ^t^ag^es^{to th}ⁱ^s^approach^—
^r^e^d^u^cin^g^p^r^io^r^y^ear^s^h^ip^b^u^ildⁱⁿ^g^co^st^{s an}^d^p^r^o^v^idⁱⁿ^g^t^h^ese^p^r^o^g^r^a^m^s^wⁱ^t^h^th^{e ad}^d^itioⁿ^a^l
^f^l^e^x^ib^ilit^y^t^h^at^isⁱⁿ^h^e^r^eⁿ^tⁱⁿ^r^e^sear^c^h^aⁿ^d^d^e^v^e^lo^p^m^en^t^f^uⁿ^dⁱⁿ^g^.^T^h^e^Co^m^m^ittee^is
^coⁿ^cerⁿ^e^d^,^h^o^w^e^v^e^r^,^th^{at t}^h^e^Dep^a^r^t^m^eⁿ^t^wⁱ^{ll n}^o^{t r}^eap^th^{e b}^eⁿ^e^fⁱ^t^s^{it see}^k^{s. Ce}ⁿ^t^r^a^{l to}^th^e
^arg^u^m^eⁿ^t^t^h^at^su^pport^s^buⁱ^l^dⁱⁿ^g^t^h^{e f}ⁱ^rst^s^hⁱ^pⁱⁿ^{a cl}^as^s^wⁱ^t^h^res^earch^an^{d dev}^e^l^o^p^m^eⁿ^t
^f^uⁿ^dⁱⁿ^gⁱ^s^t^h^{e n}^ece^s^sⁱ^t^y^{to lear}ⁿ^les^s^on^s^f^r^o^m^t^h^{e res}^earc^h^{, dev}^e^lop^m^eⁿ^{t an}^{d te}^s^tⁱⁿ^g^beiⁿ^g
^don^{e. If}^t^h^e^Navy^plaⁿ^s^,^a^sⁱ^t^c^u^rren^tl^y^does^,^to^fun^d^th^e^s^ecoⁿ^d^s^h^{ip i}ⁿ^eac^h^o^f^t^h^es^e^clas^s^e^s
ⁱⁿ^fⁱ^s^cal^y^{ear 2006 i}ⁿ^SC^N^b^e^f^o^{re act}^u^a^l^coⁿ^s^t^r^u^c^tⁱ^{on ev}^eⁿ^begⁱⁿ^s^on^t^h^{e res}^earc^h^an^d
^d^e^ve^l^o^p^m^eⁿ^t^f^und^e^d^shi^p^s,^t^h^e^dⁱ^stⁱⁿ^c^tⁱ^o^{n b}^e^t^w^e^eⁿ^fu^ndⁱⁿ^{g i}ⁿ^res^earch^an^d^dev^e^l^o^p^m^ent^an^d
^S^C^N^on^l^y^beco^m^e^s^on^{e of}^f^u^l^l^-^f^uⁿ^dⁱⁿ^g^.
^T^h^eref^{ore, th}^{e C}^o^m^mⁱ^{ttee directs}^t^h^{at i}^f^t^h^es^e^s^h^ip^s^—^t^h^{e DD}^{(X) an}^{d LC}^S—are^fuⁿ^d^ed
ⁱⁿ^r^e^sear^c^h^aⁿ^d^d^e^v^e^lo^p^m^eⁿ^t,^{all r}^e^sear^ch^an^d^d^e^v^e^lo^p^m^eⁿ^{t acq}^uⁱ^s^itioⁿ^r^u^les^w^ill^ap^p^l^y^,
ⁱⁿ^cl^u^d^ing^techn^o^logy^readiⁿ^es^s^revⁱ^e^w^s^,^m^iles^t^oⁿ^{e decis}ⁱ^ons^{, an}^{d tes}^t^an^{d ev}^alu^a^tion^bef^o^r^e
^t^h^es^e^s^hⁱ^p^s^m^a^y^en^t^e^{r Sh}ⁱ^pbuⁱ^l^diⁿ^g^aⁿ^{d C}^onv^ersⁱ^on^{, N}^a^vy^f^o^{r procu}^r^em^eⁿ^t^.
^I^f^th^{e Na}^v^y^c^h^o^o^s^esⁿ^o^{t to}^f^o^llo^w^t^h^{e acq}^uⁱ^sitioⁿ^p^o^{licies r}^e^q^u^ir^ed^o^f^r^e^sear^ch^an^d
^d^e^v^e^lo^p^m^en^{t p}^r^o^g^r^a^m^s^b^e^f^o^r^e^th^e^y^eⁿ^ter^p^r^o^c^u^r^e^m^eⁿ^t,^f^uⁿ^dⁱⁿ^g^f^o^r^th^e^s^{e f}ⁱ^r^s^{t s}^h^ip^{s i}ⁿ^t^h^eir
^class^s^h^{all b}^e^r^e^q^u^e^s^tedⁱⁿ^Shⁱ^p^b^u^ildⁱⁿ^g^aⁿ^d^Coⁿ^v^e^r^s^ioⁿ^,^Na^v^y^,^as^h^a^{s b}^een^t^h^{e tr}^ad^itioⁿ^.
^(pag^es^154-¹⁵⁵⁾
The conference report (H.Rept. 108-283 of September 24, 2003) on H.R. 2658 stated:
^T^h^e^con^f^erees^ag^ree^wⁱ^th^t^h^e^S^eⁿ^a^te^con^cernⁱⁿ^g^t^h^e^N^a^v^y^’^s^p^l^aⁿ^s^t^o^f^uⁿ^d^t^h^e^p^u^r^c^h^a^s^e^o^f
^s^hⁱ^p^s—^D^D⁽^X⁾^aⁿ^d^L^C^S—ⁱⁿ^fi^s^cal^y^{ear 2005}^wⁱ^t^hⁱⁿ^t^h^e^R^e^search^{, D}^e^v^e^l^o^p^m^en^t^,^T^e^s^t^an^d
^Ev^alu^a^tion^(R^DT^&^E^{) approp}^rⁱ^ation^.^T^h^{e con}^f^erees^believ^e^th^{at th}^e^u^s^{e of}^res^earch^aⁿ^d
^dev^e^l^o^p^m^en^t^fuⁿ^dⁱⁿ^g^t^o^proc^u^r^{e f}ⁱ^rs^t^s^hⁱ^p^s^of^{a cl}^as^sⁱ^s^notⁱⁿ^k^eepiⁿ^g^wⁱ^t^h^bu^dg^e^t^ar^y
^g^uⁱ^delⁱⁿ^e^s^reg^a^rdiⁿ^g^f^u^l^l^-fuⁿ^dⁱⁿ^g^.^T^h^{e conf}^erees^a^g^{ree t}^h^at^sh^ou^l^d^t^h^e^fⁱ^s^cal^y^{ear 2005}
^requ^es^{t i}ⁿ^cl^u^d^{e t}^h^es^e^s^h^ips^—^{DD(X) an}^d^LC^S^—^wⁱ^t^hⁱⁿ^R^D^T^&^{E, all}^res^{earch an}^d
^d^e^v^e^lo^p^m^en^t^acq^uⁱ^sitioⁿ^r^u^les^sh^a^l^l^a^p^p^l^y^,ⁱⁿ^cl^u^dⁱⁿ^g^t^e^chⁿ^o^l^o^g^y^r^e^a^dⁱⁿ^es^s^r^e^vⁱ^ew^s,^mⁱ^l^e^s^t^oⁿ^e
^decisⁱ^on^s^,^an^{d tes}^t^aⁿ^{d ev}^al^u^a^tⁱ^on^bef^o^{re th}^es^{e s}^h^ips^m^a^y^traⁿ^sⁱ^tⁱ^on^{to procu}^r^em^eⁿ^{t. (pag}^e
²⁹²⁾
In its markup of the FY2003 defense authorization bill (H.R. 4546), the House Armed Services
Committee included a provision (Section 141) that specifically requires the use of full funding for
executing multiyear procurement (MYP) arrangements approved in the future, unless otherwise
authorized by Congress. The provision would prohibit, unless specifically authorized by law, the
use in future MYP arrangements of, among other things, funding approaches resembling
incremental funding—including funding approaches like the one the Air Force proposed, as part
of its FY2003 defense budget and FY2003-FY2007 FYDP, for the follow-on MYP arrangement
for the C-17 program. Section 141 would not, however, apply to the follow-on C-17 MYP
arrangement itself, because the section would cover MYP arrangements that are authorized in the

future and the follow-on MYP arrangement for the C-17 program was approved by Congress in

2001 as part of its action on the FY2002 defense budget. The provision read as follows:

^S^E^C^.^{141. R}^E^V^I^S^I^O^N^S^T^O^M^U^L^T^IY^EA^R^C^O^N^T^RA^C^T^IN^G^A^U^T^H^O^R^IT^Y^.
^{(a) USE OF P}^R^OC^UR^EMEN^T^A^{ND A}^D^V^ANC^{E P}^R^OC^UR^EMENT^FUNDS^-^S^e^c^tⁱ^oⁿ
²³⁰⁶^{b(i) of}^{title 10, Un}^{ited Sta}^t^es^C^{ode, is}^a^m^eⁿ^{ded b}^y^adding^{at t}^h^{e e}ⁿ^{d th}^e^f^o^llo^wⁱⁿ^gⁿ^e^w
^p^a^r^a^gr^a^p^h:
^“⁽^4)(A⁾^Un^le^s^s^oth^e^r^wⁱ^s^{e a}^u^t^h^{orized b}^y^la^w^,^t^h^e^Secretar^y^of^Def^eⁿ^s^e^m^a^y^oblig^ate
^f^uⁿ^d^s^f^o^{r procu}^r^em^eⁿ^{t of}^an^{end item}^uⁿ^d^{er a}^m^u^lti^y^{ear con}^t^{ract f}^o^{r th}^{e pu}^rch^a^s^e^o^f^p^r^o^p^e^r^t^y
^on^l^y^f^o^{r procu}^r^em^eⁿ^{t of}^{a co}^{mplete an}^{d u}^s^{able en}^{d ite}^m^.
^“⁽^B⁾^Un^le^{ss o}^t^h^e^r^w^ise^au^th^o^rⁱ^zed^b^y^la^w^,^t^h^{e Secretar}^y^{of D}^e^f^e^ns^e^m^a^y^oblig^ate^fun^d^s
^appro^p^{riated f}^o^{r an}^y^fⁱ^s^cal^y^e^a^r^f^o^{r adv}^aⁿ^{ce procu}^r^e^m^eⁿ^{t un}^d^e^{r a m}^u^ltⁱ^y^{ear con}^t^ract^f^o^{r th}^e
^pu^rch^a^s^e^of^propert^y^on^l^y^f^o^{r t}^h^{e procu}^r^e^m^en^t^of^t^h^os^{e l}^ong-^l^{ead i}^t^e^m^sⁿ^ece^s^s^a^r^yⁱⁿ^ord^e^r^t^o
^m^eet^{a pl}^ann^e^{d del}ⁱ^v^er^y^s^c^h^e^du^l^e^f^o^{r co}^m^p^l^e^t^e^m^a^j^o^{r en}^{d i}^t^e^m^s^t^h^at^{are prog}^ra^m^m^e^{d un}^der
^th^{e con}^t^{ract to be acqu}ⁱ^red^wⁱ^t^h^fun^d^s^a^ppropri^a^t^e^{d f}^o^{r a}^s^u^bs^equ^e^nt^fⁱ^s^cal^y^ear.”.
⁽^b⁾^EFFECTI^V^{E DA}^T^E^-^P^a^r^a^g^r^ap^h⁽⁴⁾^o^f^sectioⁿ²³⁰⁶^b⁽ⁱ⁾^o^f^{title 1}⁰^,^Un^ited^States
^C^{ode, as}^{added by}^s^u^bs^ec^{tion (a), s}^h^allⁿ^o^{t appl}^y^wⁱ^{th res}^p^{ect to any}^m^u^l^tⁱ^y^{ear co}ⁿ^t^ract
^au^th^o^r^ized^b^y^la^w^b^e^f^o^r^e^th^{e d}^a^{te o}^f^th^{e e}ⁿ^act^m^eⁿ^t^o^f^thⁱ^s^A^c^t.
The conference report (H.Rept. 107-772 of November 12, 2002) on the FY2003 defense
authorization bill (H.R. 4546) contained a provision (Section 820), similar to Section 141 of the
House-reported version of H.R. 4546, that requires the use of full funding for executing multiyear
procurement (MYP) arrangements approved in the future:
^S^E^C^.^{820. R}^E^V^I^S^I^O^N^S^T^O^M^U^L^T^IY^EA^R^C^O^N^T^RA^C^T^IN^G^A^U^T^H^O^R^IT^Y^.
^{(a) USE OF P}^R^OC^UR^EMEN^T^A^{ND A}^D^V^A^N^C^{E P}^R^OC^U^R^EMENT^{FUNDS.—Sectio}ⁿ
²³⁰⁶^{b(i) of}^{title 10, Un}^{ited Sta}^t^es^C^{ode, is}^a^m^eⁿ^{ded b}^y^adding^{at t}^h^{e e}ⁿ^{d th}^e^f^o^llo^wⁱⁿ^gⁿ^e^w
^p^a^r^a^gr^a^p^h:
^“⁽^4)(A^{) T}^h^{e Secretary}^of^De^f^eⁿ^s^e^m^a^y^oblig^ate^f^uⁿ^d^s^f^o^{r procu}^r^em^en^t^o^f^aⁿ^en^dⁱ^t^e^m^uⁿ^d^e^r^a
^m^u^l^tⁱ^y^{ear con}^t^ract^f^o^{r t}^h^e^pu^r^c^h^a^s^e^o^f^propert^y^on^l^y^f^o^{r procu}^r^e^m^eⁿ^t^{of a co}^m^p^l^e^t^e^aⁿ^d
^u^s^ab^{le en}^d^ite^m^.
^“⁽^B⁾^T^h^{e Secretar}^y^of^Def^eⁿ^s^e^m^a^y^obli^g^ate^fuⁿ^d^s^appropr^{iated f}^o^{r a}ⁿ^y^fⁱ^s^cal^y^ear^f^o^r
^adv^aⁿ^{ce procu}^r^e^m^eⁿ^t^un^{der a c}^oⁿ^t^ract^f^o^{r t}^h^{e pu}^rch^a^s^e^of^propert^y^on^l^y^f^o^{r t}^h^{e procu}^r^em^en^t
^of^th^os^{e long-}^{lead ite}^m^sⁿ^ecessaryⁱⁿ^{order to}^m^{eet a plann}^e^{d deliv}^er^y^s^c^h^e^d^u^l^e^f^o^r^c^o^m^p^l^e^t^e
^m^a^j^o^{r en}^{d item}^s^th^{at are prog}^ra^m^m^e^{d u}ⁿ^d^{er th}^{e con}^t^rac^t^{to be ac}^qu^{ired w}^ith^f^uⁿ^d^s
^a^p^p^r^op^rⁱ^a^t^e^d^fo^r^a^sub^s^e^q^ueⁿ^t^fⁱ^sc^a^l^y^e^a^r⁽ⁱ^nc^l^udi^ng^an^econ^o^mⁱ^{c order qu}^an^tⁱ^t^y^of^su^c^h^l^oⁿ^g^-
^{lead ite}^m^s^w^h^eⁿ^au^t^h^{orized by}^la^w⁾^.”
⁽^b⁾^EFFECT^I^V^E^DA^T^E^.—(¹⁾^P^a^r^a^g^r^ap^h⁽⁴⁾^o^f^sectioⁿ²³⁰⁶^b⁽ⁱ⁾^o^f^{title 1}⁰^,^Un^ited^States
^C^{ode, as}^adde^{d by}^s^u^bs^ectⁱ^oⁿ^{(a), s}^h^al^lⁿ^o^t^appl^y^wⁱ^t^h^res^p^ect^t^o^aⁿ^y^c^oⁿ^t^r^a^c^t^aw^a^r^d^e^d^b^e^f^o^r^e
^th^{e d}^a^{te o}^f^th^{e e}ⁿ^act^m^eⁿ^t^o^f^t^h^is^A^c^t.

⁽²⁾^No^thⁱⁿ^gⁱⁿ^t^h^is^sectioⁿ^s^h^al^{l b}^e^coⁿ^s^tr^u^e^d^to^au^th^o^r^{ize th}^{e ex}^p^eⁿ^d^it^u^r^e^o^f^f^uⁿ^d^s^uⁿ^d^e^r^aⁿ^y
^con^t^{ract a}^w^{arded bef}^o^{re th}^{e da}^{te of}^t^h^{e en}^ac^t^m^eⁿ^{t o}^f^t^h^is^A^c^t^f^o^{r any}^pu^rpos^{e oth}^e^{r t}^h^aⁿ^t^h^e
^pu^rpos^{e f}^o^r^w^hⁱ^c^h^s^u^c^h^f^uⁿ^d^s^h^a^v^e^been^a^u^t^h^ori^{zed an}^{d appr}^opri^a^t^e^d.
In their report, the conferees noted that this section amended the language of the House-reported
Section 141 to
^p^e^r^mⁱ^t^th^{e p}^u^r^c^h^a^{se o}^f^ecoⁿ^o^mⁱ^{c o}^r^d^e^r^q^u^an^titie^{s o}^f^loⁿ^g^-^l^ead^ite^m^s^w^h^er^{e au}^th^o^r^ized^b^y
^la^w^.^T^h^{e con}^f^eren^{ce a}^m^eⁿ^d^m^eⁿ^t^w^o^u^l^{d als}^o^clarify^th^atⁿ^o^thⁱⁿ^gⁱⁿ^th^{e s}^ect^ion^a^u^th^o^rⁱ^z^e^s^t^h^e
^u^s^{e of}^f^uⁿ^d^s^av^ai^{lable u}ⁿ^d^{er con}^t^racts^a^w^{arded pr}^io^r^to^th^{e ef}^f^ectiv^{e d}^a^{te o}^f^th^e^p^r^o^vⁱ^sⁱ^oⁿ^f^o^r
^any^p^u^rpos^{e ot}^h^e^{r t}^h^aⁿ^t^h^{e pu}^r^pos^{e f}^o^r^w^hⁱ^c^h^su^ch^fuⁿ^d^s^w^e^{re au}^t^h^ori^{zed an}^{d appropri}^a^t^e^d.
^C^oⁿ^s^eq^u^e^nt^l^y^{, al}^t^h^ough^t^h^{e s}^e^ctⁱ^oⁿ^w^o^u^l^dⁿ^o^t^appl^y^t^o^con^t^r^act^s^a^w^{arded bef}^o^{re t}^h^{e dat}^e^of
^en^act^m^eⁿ^t^,^f^uⁿ^d^s^av^a^{ilable u}ⁿ^d^{er s}^u^ch^con^t^ract^s^cou^l^{d n}^o^{t be}^u^s^{ed in}^a^m^aⁿⁿ^{er t}^h^a^t^w^o^u^l^d^b^e
ⁱⁿ^coⁿ^s^isteⁿ^t^wⁱ^t^h^t^h^{e r}^e^q^u^ir^em^en^ts^o^f^th^e^sectioⁿ^uⁿ^les^s^s^u^ch^f^uⁿ^d^s^w^e^r^e^au^th^o^r^ized^aⁿ^d
^appro^p^ri^at^{ed f}^o^{r s}^u^ch^pu^rpos^es^{. (pag}^{e 673)}
In its report (H.Rept. 107-532 of June 25, 2002) on the FY2003 defense appropriations bill (H.R.
5010), the House Appropriations Committee stated the following regarding the Air Force’s
FY2003 proposal to procure 60 C-17 airlift aircraft under a follow-on multiyear procurement
(MYP) arrangement approved by Congress in FY2002 that would procure at least some of the
aircraft with funding profiles that resemble incremental funding rather than full funding:
^T^h^{e A}ⁱ^{r F}^o^{rce h}^a^s^adopt^{ed a b}^u^d^g^e^tⁱ^ng^approach^f^o^{r t}^h^{e C}^-¹⁷^t^h^at^del^a^y^s^t^h^{e n}^{eed t}^o
^r^e^q^u^e^s^t^$¹^,⁵⁰⁰^,⁰⁰⁰^,⁰⁰⁰ⁱⁿ^b^udge^t^a^u^t^h^o^rⁱ^t^y^untⁱ^l²⁰⁰⁷^an^{d 2}^008.^In^s^t^{ead of}^f^o^l^l^o^wⁱ^ng^t^h^e
^tr^ad^itioⁿ^a^l^m^e^t^h^o^d^o^f^r^e^q^u^estiⁿ^g^f^uⁿ^dⁱⁿ^g^eq^u^a^{l to}^th^{e co}^{st o}^f^th^{e p}^l^an^{es b}^eⁱⁿ^g^b^u^{ilt, t}^h^{e Air}
^{Force h}^a^s^m^a^tc^h^e^{d its}^f^uⁿ^dⁱⁿ^g^requ^es^{t to}^w^h^eⁿ^pa^y^m^eⁿ^t^s^{are du}^{e to th}^{e contractor. T}^h^{e A}ⁱ^r
^Fo^r^{ce calls th}ⁱ^s^ch^aⁿ^g^e^“^t^r^aⁿ^s^f^o^r^m^at^ioⁿ^”^{. T}^h^{e p}^r^o^p^e^r^ter^m^isⁱⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^an^d^{it i}^s
ⁱⁿ^coⁿ^s^isteⁿ^t^wⁱ^t^h^{DOD fiscal p}^o^lic^y^.^A^l^th^o^u^g^h^th^{e p}^l^an^e^s^{are d}^e^lⁱ^v^e^r^e^d^oⁿ^t^h^e^s^a^m^e^s^c^h^e^d^u^l^e
^an^{d at th}^{e s}^a^m^e^cos^t^uⁿ^d^{er either app}^r^oach^{, in}^c^r^e^m^eⁿ^t^a^l^f^undⁱ^{ng a}^l^l^o^w^s^p^r^o^g^ra^m^s^t^o^pu^s^h^o^f^f
^on^{to f}^u^tu^re^y^ear^s^cos^t^s^t^h^{at s}^hou^{ld be cov}^e^{red n}^o^w^.
^L^a^st^y^ear^,^w^h^eⁿ^th^e^Coⁿ^g^r^e^s^s^w^a^{s co}ⁿ^s^id^erⁱⁿ^g^m^u^lti^y^ear^p^r^o^c^u^r^e^m^eⁿ^{t a}^u^t^h^o^r^it^y^f^o^r^t^h^e
^C^-^{17, t}^h^e^Aⁱ^{r F}^o^{rce s}^oug^h^t^bi^l^l^l^a^ng^u^a^g^e^s^p^eci^fⁱ^call^y^au^t^h^orizing^thⁱ^sⁿ^e^w^approach^{. T}^h^e
^C^ong^res^s^approv^{ed t}^h^e^m^u^l^tⁱ^{year, bu}^t^denⁱ^{ed t}^h^e^{Air Force’s}^requ^es^t^f^o^{r s}^p^{ecial a}^u^t^h^orit^y^.
^Nev^e^rth^e^les^s^,^t^h^e^Aⁱ^r^{Force proceeded w}ⁱ^th^t^h^{e i}ⁿ^cre^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^aⁿ^{d rein}^{terpreted th}^e
^r^e^g^u^l^a^tⁱ^oⁿ^s^a^s^p^e^r^mⁱ^t^tⁱⁿ^g^t^hⁱ^s^a^p^p^r^o^a^c^h^.^F^o^{r e}^x^a^m^p^l^{e, w}^h^ile^t^h^e^DOD^Fin^aⁿ^c^ial^Man^a^g^e^m^eⁿ^t
^Re^g^u^l^a^tⁱ^o^{ns (}^F^M^R⁾^d^e^fi^ne^A^d^va^nc^e^P^r^o^c^ur^e^m^eⁿ^t^a^s^b^eⁱⁿ^{g fo}^r^“l^oⁿ^g^l^eadtⁱ^m^eⁱ^t^e^m^s^”,^t^h^e^Aⁱ^r
^Fo^r^{ce b}^e^liev^e^s^th^at^t^h^{is ca}ⁿ^b^eⁱⁿ^ter^p^r^e^ted^to^ap^p^l^y^to^aⁿ^y^co^m^p^oⁿ^en^{t o}^f^th^e^air^c^r^a^f^t^o^r^ev^eⁿ
^{to f}ⁱⁿ^a^{l a}^s^s^e^m^b^l^y^.^W^h^ile^t^h^e^FMR^ca^lls^f^o^{r adv}^aⁿ^{ce procure}^m^en^t^{to be}^“^r^elati^v^el^y^lo^w^”
^com^p^{ared t}^o^t^h^{e cos}^t^o^f^t^h^{e en}^dⁱ^t^e^m^,^t^h^e^Aⁱ^{r F}^o^{rce propos}^al^w^o^u^l^{d, i}ⁿ^s^o^m^e^cas^e^s^{, fu}ⁿ^d^h^a^l^f
^o^f^th^{e co}^{st o}^f^t^h^{e air}^p^lan^e^with^ad^v^aⁿ^ced^p^r^o^c^u^r^e^m^en^{t. Th}^e^Aⁱ^r^Fo^r^{ce p}^o^s^itioⁿ^isⁿ^o^t
^coⁿ^s^is^ten^t^wⁱ^th^aⁿ^y^r^easoⁿ^ab^leⁱⁿ^ter^p^r^e^tatioⁿ^o^f^t^h^{e FM}^R.
^T^h^eref^{ore, t}^h^{e C}^o^mmⁱ^t^t^ee^h^a^sⁱⁿ^cl^u^d^{ed bi}^l^l^l^a^ngu^ag^e^requⁱ^rⁱⁿ^g^t^h^at^t^h^e^fⁱ^s^cal^y^{ear 2003}
^C^-^{17 A}^d^v^aⁿ^{ce P}^r^ocu^r^e^m^eⁿ^{t be u}^s^{ed to s}^u^{pport th}^{e acqu}ⁱ^s^{ition in}^fⁱ^s^c^a^l^y^{ear 2004}^o^f¹⁵^C^-¹⁷
^ai^rcraf^t^(t^h^e^pl^ann^e^{d produ}^ctⁱ^oⁿ^rat^e^{) an}^{d di}^rects^th^e^Aⁱ^{r Force to in}^clu^d^{e th}^e^f^uⁿ^d^s^to
^com^p^l^e^t^e^t^h^{e pu}^rc^h^a^s^e^of^t^h^{ose 15 C}^-^17sⁱⁿⁱ^t^s^{2004 bu}^dg^et^s^u^b^mⁱ^s^sⁱ^on^.

^T^h^{e C}^o^m^m^{ittee directs}^t^h^{e Under Secretary}^of^De^f^eⁿ^s^{e (}^C^o^m^pt^rol^l^e^{r) t}^o^res^t^ru^ct^u^r^{e t}^h^e
^ou^t^y^ear^fuⁿ^dⁱⁿ^{g f}^o^{r t}^h^e^C-^{17 prog}^ram^t^o^briⁿ^gⁱ^tⁱⁿ^t^o^co^m^p^lⁱ^aⁿ^ce^wⁱ^t^h^t^h^{e proper u}^s^{e of}
^adv^aⁿ^{ce procu}^r^e^m^eⁿ^t^as^defⁱⁿ^e^{d i}ⁿ^t^h^{e F}^M^R^.^T^h^{e C}^o^m^mⁱ^t^t^{ee i}^s^fu^l^l^y^s^u^pportⁱ^v^{e of}^t^h^{e C-}¹⁷
^p^r^o^g^r^a^m^an^d^th^e^m^u^lti^y^ear^p^r^o^c^u^r^e^m^eⁿ^{t o}^f⁶⁰^ad^d^itioⁿ^a^l^ai^r^p^lan^e^{s a}ⁿ^d^dⁱ^r^ects^th^a^t^t^h^ese
^ch^ang^e^s^{be i}^m^ple^m^en^{ted i}ⁿ^a^m^aⁿⁿ^{er t}^h^at^w^o^u^l^dⁿ^o^{t adv}^e^rs^e^l^y^a^f^f^ect^th^{e cos}^t^{or deliv}^er^y^of
^t^h^es^{e pl}^aⁿ^es^{. (Pag}^{e 168)}
In its report (S.Rept. 107-213 of July 18, 2002) on H.R. 5010, the Senate Appropriations
Committee “recommends several actions to restore fiscal discipline to the Department [of
Defense].” (Pages 4-5) Among these were recommendations to fully fund the C-17 multiyear
procurement request and to reduce amounts requested for advance procurement for Navy
shipbuilding programs.
With regard to the C-17 multiyear procurement funding request, the committee stated:
^T^h^{e A}ⁱ^{r F}^o^{rce h}^a^sⁿ^o^t^requ^es^t^e^{d s}^u^ffⁱ^cⁱ^eⁿ^t^f^uⁿ^dⁱⁿ^gⁱⁿⁱ^t^s^bu^d^g^et^propos^al^t^o^f^u^l^l^y^f^uⁿ^d
^t^h^{e pu}^rc^h^a^s^e^of^{15 [C-}^{17] ai}^rcraf^t^per^y^{ear. In}^s^t^{ead, i}^t^h^a^s^c^h^os^en^t^o^requ^es^t^oⁿ^l^y^t^h^{e a}^m^o^uⁿ^t
^of^fuⁿ^d^s^{it e}^x^pects^{to oblig}^{ate each}^y^{ear to s}^t^{art th}^{e produ}^{ction of}^{15 aircraf}^t^{, an}^{d f}ⁱⁿ^aⁿ^{ce t}^h^e
^r^e^m^aⁱⁿⁱⁿ^g^co^s^t^sⁱⁿ^later^y^ear^s^.^T^h^is^fⁱⁿ^aⁿ^cⁱⁿ^g^sc^h^e^m^e^r^uⁿ^s^co^uⁿ^ter^to^t^h^e^‘^f^u^ll^f^uⁿ^dⁱⁿ^g^’
^prin^ciples^w^h^ic^h^gu^{ide Federal}^Gov^e^rnm^eⁿ^t^procu^r^e^m^eⁿ^{t practice, an}^{d th}^us^creates^{a fu}^t^u^re
^liab^ilit^y^f^o^r^th^e^Air^Fo^r^{ce an}^d^Coⁿ^g^r^e^{ss. Fo}^r^t^h^{ese r}^easoⁿ^{s, t}^h^{e Co}^m^m^{ittee d}ⁱ^sap^p^r^o^v^{es t}^h^e
^Aⁱ^r^Force’^s^C^-¹⁷^fⁱⁿ^aⁿ^cⁱⁿ^g^propos^{al. In}^s^t^{ead t}^h^e^C^o^m^m^itte^{e reco}^m^m^eⁿ^ds^{an in}^crea^s^e^o^f
^$585,⁹⁰⁰^,00⁰^t^o^f^u^l^l^y^fun^d^t^h^{e pu}^rch^a^s^e^of^{15 C-}^{17 ai}^rcraf^tⁱⁿ^fⁱ^s^cal^y^{ear 2003.}^T^h^e
^Co^m^m^itteeⁱⁿ^ten^d^s^to^w^o^r^k^wⁱ^th^t^h^e^Aⁱ^r^Fo^r^{ce o}^v^er^t^h^{e co}^mⁱⁿ^g^m^oⁿ^t^h^s^to^eⁿ^s^u^r^e^t^h^{at p}^l^aⁿ^s
^f^o^{r ex}^ecu^tⁱ^ng^t^h^{e re}^m^aⁱⁿ^{der of}^t^h^{e C-}^{17 m}^u^l^tⁱ^-^y^{ear procu}^r^e^m^en^t^prog^ra^m^{are bot}^h^cos^t
^ef^f^e^c^tiv^{e a}ⁿ^d^coⁿ^sⁱ^s^teⁿ^t^wⁱ^t^h^f^u^ll^f^uⁿ^dⁱⁿ^g^p^rⁱⁿ^cip^l^e^s^{. (}^P^ag^{e 1}⁴⁷⁾
With regard to requests for advance procurement funding for Navy shipbuilding programs, the
committee stated:
^T^h^{e C}^o^m^m^itteeⁿ^o^tes^t^h^{at t}^h^e^Navy^’s^requ^es^t^s^f^o^{r adv}^aⁿ^ce^procu^r^em^eⁿ^t^fuⁿ^dⁱⁿ^g^f^o^r
^s^h^ipbuⁱ^l^ding^prog^ra^m^s^h^a^v^eⁱⁿ^creas^{ed in}^recen^t^y^ears^.^A^l^m^o^s^t^uⁿⁱ^v^e^rs^all^y^a^m^oⁿ^g^prog^ra^m^s^,
^th^{e c}^u^m^u^la^tiv^e^a^m^o^u^{nt requ}^es^t^e^{d f}^o^{r adv}^aⁿ^c^e^procu^r^e^m^ent^f^uⁿ^d^s^e^x^ceeds^{30 percen}^{t of the}
^to^{tal co}^{st o}^f^th^e^v^e^sse^l.
^As^s^t^{ated in}^{DOD Directi}^v^{e 7000.14-}^R^,^adv^aⁿ^c^e^p^r^o^c^u^r^e^m^en^t^r^e^q^u^e^s^t^s^s^h^ou^l^d^b^e^lⁱ^mⁱ^t^e^d
^{to th}^os^{e ite}^m^s^w^hos^{e lead-ti}^m^es^{are g}^r^{eater th}^aⁿ^th^{e l}ⁱ^f^e^o^f^t^h^{e appropriation}^an^d^w^h^{ere the}
^lead-^tⁱ^m^{e of}^anⁱ^t^e^m^f^a^{r ex}^cee^ds^th^{e produ}^ction^ti^m^e^of^t^h^{e en}^{d ite}^m^it^s^e^l^f^{. T}^h^{e reg}^u^l^atioⁿ
^f^u^rt^h^e^{r s}^t^a^t^es^t^h^{at t}^h^{e a}^m^oun^t^s^bu^dg^{eted f}^o^{r adv}^aⁿ^{ce procu}^r^e^m^{ent s}^h^ou^{ld be relati}^v^e^l^y^lo^w
^com^p^{ared t}^o^t^h^{e re}^m^aⁱⁿⁱⁿ^g^por^tⁱ^oⁿ^of^t^h^{e cos}^t^of^t^h^{e e}ⁿ^{d i}^t^e^{m. H}^o^w^e^v^e^{r, bas}^e^{d on}^det^aⁱ^l^e^d
^inf^o^r^m^ation^recei^v^e^{d f}^r^o^m^th^e^Depart^m^eⁿ^t^{, t}^h^{e C}^o^m^mⁱ^t^t^{ee f}ⁱⁿ^d^s^c^o^uⁿ^t^l^e^s^sⁱⁿ^c^oⁿ^sⁱ^s^t^eⁿ^cⁱ^e^sⁱⁿ
^th^{e Nav}^y^’^s^ad^h^e^r^eⁿ^{ce to}^thⁱ^s^p^o^lic^y^.
^As^th^e^C^o^m^mⁱ^{ttee en}^dea^v^ors^t^o^as^sⁱ^s^t^t^h^{e Na}^vyⁱⁿⁱⁿ^creasⁱ^{ng f}^uⁿ^dⁱⁿ^g^f^o^{r s}^h^ipbu^ilding
^p^r^o^g^r^a^m^s^{, in}^ad^d^itioⁿ^to^p^r^o^vⁱ^dⁱⁿ^gⁱⁿ^cr^eased^f^uⁿ^dⁱⁿ^g^o^v^er^t^h^{e b}^u^d^g^{et r}^e^q^u^{est, it}^fⁱⁿ^d^{s t}^h^{at a}
^portion^of^th^e^f^uⁿ^d^s^requ^e^s^ted^f^o^{r adv}^aⁿ^{ce procu}^r^e^m^en^t^w^o^u^l^{d be m}^o^{re eff}^ecti^v^el^y^u^s^{ed to}
^a^l^l^e^vi^a^t^e^t^h^e^c^o^s^t^s^a^s^s^o^cⁱ^a^t^e^d^wⁱ^t^h^c^o^m^p^l^e^tⁱ^o^{n o}^f^p^rⁱ^o^r^y^e^a^r^[^N^a^v^y^s^hⁱ^p^b^uⁱ^l^dⁱⁿ^g^]^prog^ram^s^....
^T^h^{e Co}^m^m^ittee^’^{s r}^eco^m^m^en^d^a^tioⁿ^f^u^l^l^y^f^uⁿ^d^{s t}^h^{e i}ⁿ^cr^eased^co^{sts as}^so^ciated^wⁱ^t^h^t^h^e
^“^s^w^a^p^”^o^f^DDG-⁵¹^an^d^L^P^D-¹⁷^class^w^o^rk^lo^ad^a^m^oⁿ^g^t^h^e^tw^o^m^aⁱⁿ^shⁱ^p^b^uⁱ^l^d^e^r^s^.^F^u^r^t^h^e^r^,ⁱ^t
^f^u^ll^y^f^uⁿ^d^s^t^h^{e en}^{tire DDG}^-^{51 clas}^s^{prior y}^ear^co^m^p^letioⁿ^bⁱ^l^l^th^r^o^u^g^h^o^u^t^t^h^{e Fu}^tu^r^e^Year^s

^Def^eⁿ^s^{e P}^l^an^{, pa}^y^s^$150,0^00,^{000 tow}^a^rds^th^e^L^P^D^-^{17 clas}^s^fⁱ^s^cal^y^{ear 2004 bill an}^{d f}^u^ll^y
^f^uⁿ^d^s^bot^h^t^h^{e f}ⁱ^s^cal^y^{ear 2003}^an^{d f}ⁱ^s^cal^y^{ear 2004 c}^o^s^t^s^as^s^o^ci^at^ed^wⁱ^t^h^t^h^{e V}^A^[Vⁱ^r^gⁱⁿⁱ^a]
^C^l^ass^su^b^m^ariⁿ^{e prog}^ra^m^.^(Pag^{e 127)}
The conference report (H.Rept. 107-732 of October 9, 2002) on H.R. 5010 stated the following
with regard to the C-17 multiyear procurement funding request:
^In^t^h^e^D^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^e^’^s^fⁱ^s^cal^y^{ear 2003 bu}^dg^et^s^u^b^mⁱ^s^sⁱ^on^{, t}^h^e^Aⁱ^r^F^o^{rce di}^d
ⁿ^o^t^requ^est^a^su^ffⁱ^cⁱ^eⁿ^t^a^m^o^u^nt^t^o^fu^l^l^y^fun^d^t^h^e^pu^rc^h^a^s^e^o^f¹⁵^C^-^{17 car}^g^o^ai^rcraf^t^per^y^ear.
^In^s^t^{ead, it requ}^e^s^{ted on}^l^y^t^h^e^a^m^oun^{t o}^f^f^uⁿ^d^sⁱ^t^ex^{pected t}^o^oblig^{ate each}^y^{ear to}^s^t^art
^produ^ction^of^{15 aircraf}^t^{, an}^d^fⁱⁿ^aⁿ^{ced t}^h^{e re}^m^aⁱⁿⁱⁿ^g^cos^t^sⁱⁿ^later^y^ears^.^T^h^is^fⁱⁿ^aⁿ^cⁱⁿ^g
^sc^he^me^r^uⁿ^s^c^o^uⁿ^t^e^r^t^o^t^h^e^“^f^u^l^l^fu^ndⁱⁿ^g”^p^rⁱⁿ^cⁱ^p^l^e^s^w^hⁱ^c^h^gui^d^e^Fe^d^e^r^a^l^go^ve^rⁿ^m^e^nt
^p^r^o^c^u^r^em^eⁿ^{t p}^r^{actice, an}^d^t^h^er^eb^y^cr^eate^s^{a f}^u^t^u^r^e^liab^ilit^y^f^o^r^th^e^Aⁱ^r^Fo^r^{ce an}^d^Coⁿ^g^r^es^s.
^F^o^{r t}^hⁱ^s^reas^oⁿ^{, t}^h^{e co}ⁿ^f^erees^dⁱ^s^a^pprov^{e t}^h^e^Aⁱ^{r F}^o^rce’s^C-^{17 f}ⁱⁿ^aⁿ^cⁱⁿ^g^propos^al^{. A}^s^s^u^c^h^,
^t^h^{e con}^f^ereⁿ^{ce ag}^ree^m^en^tⁱⁿ^cl^u^d^es^anⁱⁿ^creas^{e of}^$585,900^,⁰⁰⁰^ov^{er t}^h^{e bu}^dg^et^requ^es^t^t^o
^f^u^ll^y^fuⁿ^d^t^h^{e pu}^rch^a^s^e^of^{15 C}^-^{17 aircraf}^tⁱⁿ^fⁱ^s^cal^y^{ear 2003. A}^ddition^a^ll^y^,^t^h^{e conf}^eree^s
^ag^r^{ee to}^r^e^tain^Ho^u^s^{e la}ⁿ^g^u^a^g^e^w^h^ic^h^dⁱ^r^{ects th}^{at fu}ⁿ^d^s^m^a^de^av^{ailable w}ⁱ^t^hⁱⁿ^th^{e “A}^ircra^f^t
^P^r^o^c^ur^em^eⁿ^t,^Air^Fo^r^{ce” account b}^e^u^s^ed^f^o^r^ad^{vance p}^r^o^c^ur^e^m^en^{t o}^f¹⁵^aⁱ^r^c^r^a^f^t^.⁽^p^a^g^e²⁰⁶⁾

This appendix provides a detailed discussion of the origins, rationale, and governing regulations
of the full funding policy, as well as examples of where Congress, GAO, and DOD have affirmed
their support for the policy.
The full funding policy, also known as up-front funding, is consistent with two basic laws
regarding executive branch expenditures—the Antideficiency Act of 1870, as amended, and the
Adequacy of Appropriations Act of 1861. As summarized in a 1996 GAO report:
^T^h^{e A}ⁿ^tid^e^f^icieⁿ^c^y^A^c^{t, as a}^m^en^d^e^d^,^im^p^l^e^m^eⁿ^ts^Coⁿ^g^r^e^ss^’^s^coⁿ^s^tit^u^tioⁿ^a^{l o}^v^er^sⁱ^g^h^t^o^f^th^e
^ex^ecu^tⁱ^v^e^bran^c^h^’s^ex^pen^d^it^u^r^{e of}^f^uⁿ^d^s^.^T^h^{e act ref}^l^ects^la^w^s^en^acte^d^b^y^th^e^C^oⁿ^g^r^e^s^s^sⁱⁿ^c^e
¹⁸⁷⁰^t^o^res^pon^{d t}^o^abu^s^es^{of bu}^dg^et^au^t^h^ori^t^y^aⁿ^{d t}^o^g^aⁱⁿ^m^o^{re ef}^f^ectⁱ^v^{e cont}^rol^ov^er
^appro^p^ri^atⁱ^oⁿ^s^{. T}^h^{e cent}^r^al^provⁱ^sⁱ^{on of t}^h^{e act}^{(31 U}^.^S^.^C^.¹³⁴¹^(a)(1^{)) prev}^en^t^s^a^g^eⁿ^ci^e^s
^f^r^o^m^eⁿ^t^e^riⁿ^gⁱⁿ^t^o^oblⁱ^g^atⁱ^{ons pri}^o^{r t}^o^an^approp^ri^atⁱ^oⁿ^{or f}^r^omⁱⁿ^cu^rriⁿ^g^oblⁱ^g^atⁱ^ons^t^h^at
^ex^{ceed an}^{appropriation}^,^abs^eⁿ^t^s^p^eci^fⁱ^c^s^t^at^u^t^or^y^a^u^t^h^orit^y^.^T^h^u^s^{, a}^g^en^cie^s^m^a^yⁿ^o^{t e}ⁿ^ter
ⁱⁿ^t^o^con^t^ract^s^t^h^a^t^oblⁱ^g^at^{e t}^h^e^g^o^v^e^rnm^e^nt^t^o^pay^f^o^{r g}^oods^an^{d s}^e^rvⁱ^ces^uⁿ^l^e^s^s^t^h^{ere are}
^su^f^f^icieⁿ^t^f^uⁿ^d^{s av}^ailab^l^{e to}^co^v^e^r^th^eir^co^{st in}^fu^{ll. Ins}^t^{ead, ag}^en^cie^s^m^u^s^t^b^u^d^g^e^t^f^o^r^t^h^e^f^u^ll
^cos^t^of^con^t^ract^s^u^p^-f^ron^t^.^A^l^s^o^{, t}^h^e^A^d^equ^a^c^y^of^A^pprop^ri^atⁱ^oⁿ^s^A^c^t^{(40 U}^.^S^.^C^.^11),
^es^t^a^blⁱ^s^h^e^{d i}ⁿ^{1861, proh}ⁱ^bⁱ^t^s^ag^en^ci^e^s^f^r^o^m^en^t^e^ri^ngⁱⁿ^t^o^a^con^t^ract^un^l^e^s^s^t^h^{e co}ⁿ^t^ractⁱ^s³⁴
^au^th^{orized b}^y^la^w^{or th}^{ere is}^aⁿ^appropr^iatioⁿ^to^co^v^e^r^th^{e co}^s^t^of^th^{e con}^t^ract.
Circular A-11 from the Office of Management (OMB)³⁵ provides guidance to executive branch
agencies on the preparation of budget submissions to Congress. The current version of the
circular was issued on July 25, 2003. Section 31.4 of the circular, which covers the full funding
policy, states in part:
^R^e^qu^es^t^s^f^o^{r acqu}ⁱ^s^itioⁿ^{of capital as}^s^e^ts^m^u^s^t^propos^{e fu}^ll^fun^d^ing^{to co}^v^e^{r t}^h^e^fu^{ll cos}^t^s^o^f
^th^{e proj}^ect^or^{a u}^s^ef^{ul s}^e^gm^eⁿ^{t of}^th^{e pro}^j^{ect, con}^s^is^ten^t^wⁱ^t^h^th^{e polic}^y^s^t^{ated in}^s^e^c^tion
^300.6⁽^{b). S}^p^eci^fⁱ^cal^l^y^{, requ}^es^t^s^f^o^{r procu}^r^e^m^eⁿ^t^prog^ra^m^s^mu^s^t^provⁱ^d^e^f^o^{r fu}^l^l^fun^dⁱⁿ^g^o^f
^th^{e e}ⁿ^{tire co}^s^t^{.... R}^e^m^e^m^b^er^that^A^d^mⁱⁿⁱ^s^t^{ration polic}^y^aⁿ^{d t}^h^e^An^tide^f^icieⁿ^c^y^A^c^t^requ^ire
^y^o^{u t}^o^ha^ve^s^u^f^fⁱ^cⁱ^e^nt^b^u^d^g^e^t^a^u^t^h^o^rⁱ^t^{y o}^r^o^t^he^r^b^u^d^g^e^t^a^r^y^r^e^so^ur^c^e^s^t^o^c^o^ve^r^t^h^e^f^u^l^l^a^m^oun^t
^o^f^uⁿ^coⁿ^d^itioⁿ^a^{l o}^b^lig^atioⁿ^s^uⁿ^d^e^r^an^y^coⁿ^t^r^act.
Section 300.6(a) of the circular states (italics as in the original):
^(a)^Backgr^o^und.

³⁴^G^o^v^e^rn^m^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Bud^g^e^t^I^s^s^u^e^s^:^Bu^dge^ti^ng^for^Fe^de^r^a^{l C}^a^pit^a^l^{, G}^A^O^/^A^I^M^D^-^97-^{5, N}^o^v^e^m^b^e^r
¹⁹⁹^{6, p. 28}^.
³⁵^For^t^h^e^te^x^t^of^this^doc^um^eⁿ^{t on t}^h^e^Iⁿ^te^rⁿ^e^t^,^g^o^t^o^h^ttp:^//w^w^w^.^w^hite^hous^e^.^g^o^v^/^om^b/cⁱ^r^c^ula^r^s^/^a^11/03^toc^.^htm^l^.

^Good^bu^dg^eting^requ^ires^t^h^{at appro}^p^riation^s^f^o^{r th}^{e fu}^{ll cos}^t^s^of^as^s^e^{t acqu}ⁱ^s^ition^{be e}ⁿ^a^c^t^e^d
ⁱⁿ^ad^v^aⁿ^{ce to}^h^e^lp^eⁿ^s^u^r^e^t^h^a^t^{all co}^st^{s a}ⁿ^d^b^eⁿ^e^f^{its ar}^e^f^u^ll^y^ta^k^eⁿⁱⁿ^to^acco^uⁿ^t^w^h^eⁿ
^d^e^cⁱ^sⁱ^oⁿ^s^a^r^e^m^a^d^e^a^b^o^u^t^p^r^o^vⁱ^dⁱⁿ^g^r^e^s^o^u^r^c^e^s^.^F^o^r^m^o^s^t^s^p^eⁿ^dⁱⁿ^g^oⁿ^acq^uⁱ^sitioⁿ^s^,^t^h^is^r^u^leⁱ^s
^f^o^llo^w^e^{d th}^rou^g^h^{out th}^{e Gov}^e^rⁿ^m^eⁿ^t^{. W}^h^eⁿ^{capital as}^s^e^t^s^{are f}^uⁿ^d^e^dⁱⁿⁱⁿ^c^r^em^en^ts^,^wⁱ^t^h^ou^t
^certain^t^yⁱ^f^or^w^h^eⁿ^fu^tu^re^fundin^g^w^{ill be a}^v^{ailable, it ca}ⁿ^aⁿ^{d occas}^ion^a^ll^y^does^res^u^ltⁱⁿ
^poor^planⁿⁱⁿ^g^,^acquⁱ^s^itioⁿ^{of as}^s^e^tsⁿ^o^{t fu}^ll^y^j^u^s^tⁱ^f^{ied, h}ⁱ^gh^{er acqu}ⁱ^sⁱ^tⁱ^on^cos^t^s^,^proj^ect
⁽ⁱⁿ^v^e^st^m^eⁿ^t⁾^d^e^la^y^s^{, can}^cellati^oⁿ^o^f^m^a^j^o^rⁱⁿ^v^e^st^m^eⁿ^t^{s, th}^{e lo}^{ss o}^f^s^uⁿ^k^co^{sts, o}^rⁱⁿ^ad^eq^u^a^t^e
^f^uⁿ^dⁱⁿ^g^to^m^aⁱⁿ^tain^aⁿ^d^o^p^e^r^a^{te th}^{e asse}^ts.
Section 300.6(b) of the circular states in part (italics as in the original):
^(b)^Fu^{ll fu}ⁿ^dⁱⁿ^g^p^o^licy.
^T^h^{e f}^u^{ll fun}^d^ing^polic^y^(s^{ee s}^e^ction^31.4)^requ^ires^th^{at each}^us^efu^l^s^e^gm^en^{t (or}^m^odu^{le) of}^a
^cap^{ital in}^v^e^st^m^eⁿ^t^b^e^f^u^ll^y^f^uⁿ^d^ed^wⁱ^t^h^eith^er^r^e^g^u^lar^anⁿ^u^a^{l ap}^p^r^o^p^r^iatioⁿ^s^o^r^a^d^v^aⁿ^ce
^appro^p^ri^atⁱ^oⁿ^s^{. F}^o^{r def}ⁱⁿⁱ^tⁱ^ons^of^t^h^es^{e t}^e^r^m^s^,^s^{ee s}^ectⁱ^oⁿ^300.^{4 or}^t^h^{e G}^l^o^s^s^a^ry^o^f^A^p^p^eⁿ^dⁱ^x
^J^.^A^ppen^d^ix^J^elabo^r^ates^on^th^{e f}^u^ll^f^uⁿ^dⁱⁿ^g^con^{cept (s}^ee^A^ppen^d^ix^J^s^ection^C^,^Prⁱⁿ^cⁱ^p^l^e^s^o^f
^Fi^na^ncⁱ^ng)^.
Appendix J, Section C, lists four principles for financing capital assets. Principle 1, on full
funding, states (italics as in the original):
^B^u^d^g^{et au}^t^h^o^r^it^y^s^u^f^f^icien^t^to^co^m^p^{lete a u}^s^e^f^u^l^se^g^m^eⁿ^{t o}^f^{a cap}^ita^l^p^r^o^j^e^c^t⁽ⁱⁿ^v^e^stm^eⁿ^t⁾⁽^o^r
^th^{e e}ⁿ^tir^{e cap}^ital^p^r^o^j^{ect, if}^it^isⁿ^o^{t d}ⁱ^vⁱ^sib^l^{e i}ⁿ^to^u^s^e^f^u^l^seg^m^en^ts)^m^u^st^b^e^ap^p^r^o^p^r^iated
^bef^o^{re any}^oblⁱ^g^atⁱ^ons^f^o^{r t}^h^e^u^s^e^f^u^l^s^e^gm^ent^{(or pro}^j^ect^{) (o}^rⁱⁿ^v^e^s^t^m^eⁿ^t⁾^m^a^y^{be i}ⁿ^c^u^rred.
^Expl^anatⁱ^o^n:^G^o^od^bu^dg^etⁱⁿ^g^requⁱ^r^es^t^h^a^t^approp^ri^atⁱ^oⁿ^s^f^o^{r t}^h^{e fu}^l^l^cos^t^s^of^as^s^e^t
^acq^uⁱ^sitioⁿ^b^e^en^actedⁱⁿ^ad^v^aⁿ^{ce to}^h^e^lp^en^s^u^r^e^th^{at all co}^st^{s an}^d^b^eⁿ^e^fⁱ^t^s^ar^{e f}^u^ll^y^ta^k^eⁿ
ⁱⁿ^{to accou}ⁿ^{t at th}^{e ti}^m^e^decisⁱ^on^s^are^m^a^{de to}^prov^{ide res}^o^u^r^ces^{. Fu}^ll^f^uⁿ^d^ing^wⁱ^t^h^regu^lar
^appro^p^riation^sⁱⁿ^th^{e bu}^d^g^et^y^e^{ar als}^o^leads^to^tr^a^d^e^o^ffs^wⁱ^t^hⁱⁿ^th^e^bu^dg^{et y}^{ear w}ⁱ^t^h^s^p^en^diⁿ^g
^f^o^{r oth}^e^{r capital as}^s^e^ts^an^d^wⁱ^t^h^s^p^en^diⁿ^g^f^o^{r pu}^rpos^es^oth^e^{r th}^an^{capital as}^s^e^ts^.^Fu^l^l^f^uⁿ^dⁱⁿ^g
ⁱⁿ^creas^{es t}^h^e^opport^uⁿⁱ^t^y^t^o^us^{e perf}^or^m^aⁿ^ce-^ba^s^e^{d f}ⁱ^x^e^{d pri}^{ce con}^t^ract^s^,^al^l^o^w^s^f^o^r^m^o^re
^ef^ficient^w^o^r^k^planⁿⁱ^ng^an^d^m^aⁿ^a^g^e^m^eⁿ^t^of^th^{e capital proje}^c^t⁽^o^rⁱⁿ^v^e^s^t^m^eⁿ^t⁾^,^aⁿ^dⁱⁿ^c^r^e^a^s^e^s
^th^{e acco}^uⁿ^tab^ilit^y^f^o^r^th^{e ac}^hⁱ^ev^e^m^eⁿ^{t o}^f^th^{e b}^a^seliⁿ^e^g^o^als.
^W^h^eⁿ^f^u^l^l^fu^ndⁱ^{ng i}^s^no^t^fo^l^l^o^w^e^d^aⁿ^d^c^a^pⁱ^t^a^l^p^r^oj^e^c^t^{s (}^o^{r i}^nve^st^me^nt^s)^o^r^use^f^ul^se^g^m^eⁿ^t^s
^ar^{e f}^uⁿ^d^edⁱⁿⁱⁿ^cr^e^m^eⁿ^ts,^wⁱ^th^o^u^{t cer}^tain^t^yⁱ^f^o^r^w^h^eⁿ^f^u^t^u^r^e^f^uⁿ^dⁱⁿ^g^wⁱ^{ll b}^e^av^ailab^l^{e, t}^h^e
^res^u^{lt is}^s^o^m^e^ti^m^e^s^{poor plan}ⁿⁱⁿ^g^,^acquⁱ^s^itioⁿ^of^as^s^e^t^sⁿ^o^{t fu}^l^l^y^j^u^s^tⁱ^f^{ied, h}ⁱ^g^h^e^r^a^c^q^uⁱ^s^itioⁿ
^cos^t^s^,^can^cel^lation^o^f^m^a^j^o^{r in}^v^e^s^t^m^eⁿ^t^s^,^t^h^{e lo}^{ss o}^f^s^uⁿ^k^co^{sts, o}^rⁱⁿ^ad^eq^u^a^{te f}^uⁿ^dⁱⁿ^g^to
^m^aⁱⁿ^taiⁿ^an^d^o^p^e^r^a^{te th}^{e asset}^s^.
Section 010202(A) of DOD Directive 7000.14-R on budget formulation and presentation
(updated June 23, 2004) states (underlining as in the original):
^P^o^licy^f^o^r^F^u^ll^Fuⁿ^dⁱⁿ^g^.^I^tⁱ^s^th^e^p^o^lic^y^o^f^t^h^{e Dep}^a^r^t^m^eⁿ^t^o^f^De^f^eⁿ^s^{e to}^f^u^ll^y^f^uⁿ^d
^p^r^o^c^u^r^em^eⁿ^t^s^th^a^t^{are co}^v^e^red^wⁱ^t^hⁱⁿ^th^{e p}^r^o^c^u^r^e^m^en^t^{title o}^f^t^h^{e a}ⁿⁿ^u^al^DOD
^A^p^p^r^o^p^r^iatioⁿ^s^A^c^{t. T}^h^er^{e ar}^e²^b^a^{sic p}^o^{licies co}ⁿ^cerⁿⁱⁿ^g^f^u^{ll f}^uⁿ^dⁱⁿ^g^.
¹^.^T^h^{e f}ⁱ^r^s^{t i}^s^to^p^r^o^v^id^{e f}^uⁿ^d^{s at th}^{e o}^u^t^s^et^f^o^r^th^{e to}^{tal e}^s^ti^m^a^ted^co^{st o}^f^{a g}ⁱ^v^eⁿ^p^r^o^g^r^a^m^so
^th^{at th}^e^C^ong^res^s^aⁿ^{d th}^{e pu}^{blic can}^{be f}^u^ll^y^a^w^{are of}^th^{e di}^m^eⁿ^s^ioⁿ^s^an^{d cos}^t^w^h^eⁿ^the
^prog^ramⁱ^s^fⁱ^r^s^t^pres^en^t^e^{d i}ⁿ^t^h^{e bu}^dg^et^.

^2.^T^h^{e s}^econ^d^is^to^prov^{ide f}^u^ndin^g^each^fⁱ^s^cal^y^{ear to pr}^ocu^r^{e a com}^p^{lete, u}^s^{able en}^{d ite}^m^.
^In^oth^e^r^w^o^rds^,^aⁿ^en^d^ite^m^bu^dg^{eted i}ⁿ^a^fⁱ^s^cal^y^{ear cann}^o^{t depen}^d^u^pon^a^fu^t^u^re^y^ear^’^s
^f^uⁿ^dⁱⁿ^g^to^co^m^p^lete^th^e^p^r^o^c^u^r^e^m^eⁿ^{t. Ho}^w^e^v^e^r^,^e^f^fⁱ^cien^t^p^r^o^d^u^ctioⁿ^o^f^m^a^j^o^r^d^e^f^eⁿ^s^e
^s^y^ste^m^{s h}^a^{s n}^ece^ssita^ted^t^w^o^g^eⁿ^e^r^a^{l e}^x^cep^tioⁿ^s^to^t^h^{is p}^o^lⁱ^c^y^—^ad^v^aⁿ^{ce p}^r^o^c^u^r^e^m^eⁿ^{t f}^o^r
^lon^g^lead^-^tⁱ^m^{e ite}^m^s^aⁿ^{d adv}^aⁿ^{ce econ}^o^mⁱ^{c or}^{der qu}^an^tⁱ^t^{y (EO}^Q⁾^procu^r^em^ent^.^EO^Qⁱ^s
^no^r^m^a^l^l^y^a^sso^cⁱ^a^t^e^d^wⁱ^t^h^mu^l^tⁱ^y^e^a^r^p^r^o^c^ur^e^m^eⁿ^t^s^b^u^t^c^aⁿ^b^e^r^e^q^u^e^s^t^e^d^fo^r^a^nnua^lⁱ^z^e^d
^p^r^o^c^ur^e^m^eⁿ^t^s^oⁿ^aⁿ^e^x^c^e^p^tⁱ^oⁿ^b^a^si^{s fo}^r^un^u^s^ua^l^cⁱ^r^c^u^m^st^aⁿ^c^e^{s (}^s^uc^{h a}^s^co^m^bⁱⁿ^ed^part^s^buy^s
^f^o^{r a bl}^{ock of s}^a^t^e^l^lⁱ^t^e^s⁾^{. Bot}^h^e^f^f^o^rt^s^m^u^s^t^{be i}^d^en^tⁱ^fⁱ^edⁱⁿ^aⁿ^E^x^hi^bi^t^P-^10,^A^d^v^aⁿ^ce
^P^r^o^c^u^r^em^eⁿ^t,^w^h^eⁿ^th^{e B}^u^d^g^e^{t Esti}^m^a^{te S}^u^b^m^is^sioⁿ^{is s}^u^b^m^itted^to^{OSD an}^d^w^h^eⁿ^th^e³⁶
^P^r^esid^en^t’^{s b}^u^d^g^{et r}^e^q^u^es^{t is s}^u^b^m^it^ted^to^th^{e Co}ⁿ^g^r^e^s^s^.
This section presents excerpts from five sources that discuss in some detail the origins of and
rationale for the full funding policy. The excerpts also provide examples of how support for the
policy has been periodically reaffirmed over the years by Congress, the Government
Accountability Office (GAO), and DOD. The documents are a 1969 GAO report, a 1973 House
Appropriations Committee report, a 1978 House Budget Committee hearing, a 1996 GAO report,
and a 2001 GAO letter report and briefing.

³⁶^U^.^{S. D}^e^pa^r^t^m^e^{nt of}^D^e^f^e^ns^e^,^C^o^m^p^tr^olle^r^,^Fin^ancⁱ^a^{l M}^a^na^ge^m^e^{nt Re}^gul^ati^on,^v^o^l.^2A^{, B}^udg^e^t^For^m^ula^{tion a}ⁿ^d
^P^r^esen^tati^oⁿ^,^W^a^shⁱⁿ^gtoⁿ^,²⁰⁰⁴^.⁽^{DOD 7}⁰⁰⁰^.¹⁴^-R,^J^uⁿ^e²⁰⁰⁴⁾^p^p^.¹^-¹³^an^{d 1}^-¹⁴^.^F^o^{r th}^e^{text o}^f^th^is^dⁱ^{rective o}ⁿ^th^e
^Inte^rne^t^{, g}^o^to:^htt^p^://w^ww^.dtic^.m^il/c^om^ptrolle^r/^fm^r/02a^/.
^P^a^r^a^g^r^a^phs^{3 a}ⁿ^d⁴^of^Se^c^tion⁰¹⁰²⁰²⁽^B⁾^de^fⁱ^ne^a^d^v^a^nc^e^pr^oc^ur^e^m^eⁿ^{t a}^{nd e}^c^o^nom^ic^or^de^r^q^u^aⁿ^ti^t^y⁽^E^O^Q⁾
^pr^oc^ur^e^m^eⁿ^{t a}^s^f^o^llow^s⁽^unde^r^liniⁿ^g^a^s^{in t}^h^e^or^ig^ina^l⁾^:
^{3. A}^d^v^a^nc^e^P^r^oc^ur^e^m^eⁿ^{t (}^L^ong^Le^a^d^-^tim^e^I^t^em^s⁾^{. A}^dva^nc^e^pr^oc^ur^em^eⁿ^{t r}^e^que^s^t^s^f^o^r^long^le^a^d^tⁱ^m^e
^ite^m^s^sha^{ll be}^lim^ite^{d to}^the^eⁿ^{d it}^e^m^{s in m}^a^jor^pr^oc^ur^e^m^eⁿ^{t a}^ppr^o^p^r^ia^tions^.^L^ong^le^a^d^-^tim^e
^p^r^o^c^u^r^em^en^t^s^sh^al^l^b^e^f^o^{r co}^m^p^on^en^t^s^,^p^a^rt^s,^and^m^a^t^e^ri^al^w^h^o^s^{e l}^ead^-tⁱ^m^e^s^{are gre}^a^t^e^{r t}^h^an^t^h^{e l}ⁱ^f^e
^o^f^t^h^{e ap}^p^r^o^p^rⁱ^a^tⁱ^oⁿ⁽³^-⁵^y^ears).^Iⁿ^so^m^e^ci^rcu^m^st^an^ces,^A^d^van^{ce P}^r^o^c^u^r^em^en^tⁱ^s^al^so^w^a^rran^t^ed
^w^h^eⁿ^ite^m^s^ha^v^e^sigⁿⁱ^f^ic^aⁿ^tl^y^lon^g^e^{r le}^a^d^-tim^e^s^thaⁿ^ot^he^{r c}^o^m^pon^eⁿ^{ts, pa}^{rts, a}^{nd m}^a^te^ria^l^of^the
^sa^m^e^en^dⁱ^t^e^m^o^r^w^h^en^e^f^f^o^rt^{s mu}^st^b^e^f^u^nd^edⁱⁿ^{an ad}^van^{ce p}^r^o^c^u^r^em^en^t^tⁱ^m^e^f^r^a^m^{e i}ⁿ^o^r^d^e^r^t^o
^m^a^inta^{in a}^pla^nne^d^pr^od^uc^tio^{n s}^c^he^dule^.^For^ne^w^de^v^e^lopm^eⁿ^{t pr}^o^g^r^am^s^,^the^pla^nne^d^pr^od^uc^tioⁿ
^s^c^he^dule^s^h^oul^d^be^ba^s^e^{d o}ⁿ^a^f^u^l^l^f^undi^ng^ba^sⁱ^s^w^ithout^the^us^e^of^long^le^a^d^m^a^te^rⁱ^a^l^{. P}^l^aⁿⁿⁱ^ng^the
^prog^ra^m^c^onteⁿ^{t this}^w^a^y^prov^ide^s^a^dditi^ona^{l f}^l^e^x^ibility^s^houl^d^de^v^e^lopm^eⁿ^{t de}^la^y^s^a^r^is^e^.^W^h^eⁿ
^a^d^v^a^nc^e^pr^oc^ur^e^m^eⁿ^{t is}^pa^r^t^of^th^e^pr^og^r^a^m^,^how^ev^e^r^{, the}^c^o^s^t^of^c^o^m^pone^nts^,^m^a^te^rⁱ^a^l^{, pa}^r^t^s^,^aⁿ^d
^e^f^f^o^r^t^budg^e^t^e^d^f^o^r^a^d^v^a^nc^e^pr^oc^u^r^em^eⁿ^{t s}^h^a^{ll be}^r^e^la^tiv^e^l^y^low^c^o^m^p^a^r^e^d^{to the}^r^e^m^a^ining^por^ti^on
^of^the^c^o^s^t^of^the^eⁿ^{d ite}^m^.^Ea^c^h^budg^e^t^r^e^q^u^e^s^{t f}^o^r^a^d^v^a^nc^e^pr^oc^u^r^em^eⁿ^{t s}^h^a^{ll r}^e^pr^e^s^eⁿ^{t, a}^t^a
^mⁱⁿⁱ^m^u^m^,^the^te^rm^ina^{tion lia}^b^ilit^y^a^s^s^o^cⁱ^a^t^e^d^w^{ith the}^tota^{l c}^o^s^t^of^the^lo^ng^le^a^d^-tim^e^c^o^m^pone^nts^,
^m^a^te^rⁱ^a^l^{, pa}^r^t^s^,^a^{nd e}^f^f^o^r^t^f^o^r^w^hⁱ^c^{h the}^a^d^v^a^nc^e^pr^oc^ur^e^m^eⁿ^{t r}^e^qu^e^s^{t is}^be^ing^m^a^de^{. T}^h^e
^te^r^m^ina^{tion lia}^bili^ty^s^houldⁿ^o^{t c}^o^v^e^r^the^c^o^s^t^of^the^eⁿ^{d ite}^m^budg^e^t^e^dⁱⁿ^the^f^o^llowⁱ^ng^fⁱ^s^c^a^l
^y^e^a^r⁽^s⁾^.^T^h^e^f^u^{ll c}^o^s^t^of^c^o^m^pone^nts^,^m^a^te^rⁱ^a^l^{, pa}^r^t^s^,^a^{nd e}^f^f^o^r^t^inc^l^ude^dⁱⁿ^the^a^d^v^a^nc^e
^pr^oc^ur^e^m^eⁿ^{t r}^e^que^s^t^s^h^oul^d^be^b^u^d^g^e^te^{d in t}^h^e^FY^D^P^c^ons^is^te^nt^w^{ith f}^u^{ll f}^uⁿ^d^ing^pr^oc^e^dur^e^s^{. T}^h^e
^budg^e^t^re^q^u^e^s^ts^w^{ill pro}^p^e^r^ly^de^{bit a}ⁿ^d^c^r^e^d^{it a}^d^v^a^nc^e^pr^oc^ure^m^eⁿ^{t bu}^dg^e^t^re^que^s^t^s^a^s^de^fⁱ^ne^{d i}ⁿ
^Ex^hibits^P-^1,^P^-⁵^,^P^-¹⁰^a^{nd P-}⁴⁰ⁱⁿ^s^t^r^u^c^tⁱ^ons^.
^{4. Ec}^o^nom^ic^Orde^{r Qua}ⁿ^ti^ty^(EO^Q^{) P}^r^oc^ure^m^eⁿ^{t. EOQ is n}^o^rm^a^l^l^y^a^ssocⁱ^a^t^e^d^w^ith^m^u^ltiy^e^a^r
^pr^oc^ur^e^m^eⁿ^ts^{but c}^aⁿ^be^r^e^q^u^e^s^te^{d f}^o^r^aⁿⁿ^u^a^liz^e^d^pr^oc^ur^e^m^eⁿ^ts^on^aⁿ^e^x^c^e^p^tion^ba^sⁱ^s^f^o^r^un^us^ua^l
^cⁱ^rc^um^st^aⁿ^c^e^s^(suc^{h a}^s^c^o^m^b^ine^d^pa^{rts buy}^{s f}^o^{r a}^bloc^k^of^sa^te^llite^{s). It is t}^h^e^g^e^ne^ra^{l pol}^ic^y^of^the
^D^e^pa^rtm^e^{nt of}^D^e^fe^ns^e^{not t}^o^c^r^e^a^t^e^unf^unde^{d c}^oⁿ^t^ra^c^t^lia^bil^itie^s^f^o^{r EO}^Q^pr^oc^ure^m^eⁿ^ts^{. Ra}^the^r^,
^f^unding^f^o^r^EO^Q^pr^oc^ur^e^m^eⁿ^ts^s^h^a^{ll be}ⁱⁿ^c^l^u^d^e^dⁱⁿ^a^d^v^a^nc^e^pr^oc^u^r^em^eⁿ^{t budg}^e^t^r^e^q^u^e^s^ts^uⁿ^le^s^s^aⁿ
^e^x^c^e^p^{tion to}^the^g^e^ne^ra^{l p}^o^lic^y^{is g}^r^aⁿ^te^{d by}^the^{USD (Com}^ptrolle^r⁾^{. T}^h^e^{EOQ proc}^u^r^e^m^eⁿ^t^m^a^y
^s^a^tis^f^y^pr^oc^ur^e^m^eⁿ^{t r}^e^quir^e^m^e^nts^f^o^r^{no m}^o^r^e^thaⁿ^fⁱ^v^e^pr^og^r^a^m^y^e^a^r^s^.^Uⁿ^le^s^s^{it w}^ould^be^m^o^r^e
^e^f^f^e^c^tiv^e^{to f}^u^ll^y^f^{und t}^h^e^EO^Q^,^o^r^the^U^S^D⁽^C^o^m^p^tr^olle^r⁾^ha^s^g^r^aⁿ^t^e^{d a}ⁿ^e^x^c^e^p^tion^to^the^g^e^ne^r^a^l
^polic^y^{to a}^llow^inc^l^usⁱ^oⁿ^of^EO^Q^c^o^s^t^s^{in a}^c^aⁿ^c^e^lla^tio^{n c}^l^a^u^s^e^{, t}^h^e^a^d^v^a^nc^e^pr^oc^ur^e^m^eⁿ^{t f}^unding
^f^o^{r an}^E^{OQ p}^r^o^c^u^r^em^en^t^sh^al^l^co^ver,^at^a^mⁱⁿⁱ^m^u^m^,^the^e^s^tim^a^t^e^d^te^rm^ina^{tion lia}^bili^ty^of^the^EOQ
^pr^oc^ur^e^m^eⁿ^t.

A 1969 GAO report on the full funding provision³⁷ outlined the origins, rationale, and early DOD
regulations governing the policy. Although it is a long excerpt (about 4 pages as reprinted here), it
is significant as an early and detailed recapitulation of the history of the full funding policy:
^T^h^{e co}ⁿ^cep^{t o}^f^f^u^{ll f}^uⁿ^dⁱⁿ^g^w^a^{s in}^itial^l^y^ap^p^lied^to^Nav^y^s^h^ip^b^u^ildⁱⁿ^g^a^u^th^o^rⁱ^z^e^d^b^y^th^e³⁸
^act^of^Marc^h^{10, 1951 (6}^{5 S}^t^at^{. 4).}^P^r^io^r^to^th^{e e}^x^ecu^tⁱ^oⁿ^o^f^t^h^{e act, th}^e^Nav^y^s^h^ip^b^u^ildⁱⁿ^g
^p^r^o^g^r^a^m^o^p^e^r^a^t^e^d^und^e^r^c^o^nt^r^act^au^t^h^ori^zatⁱ^ons^wⁱ^t^h^fuⁿ^d^s^appropri^a^t^e^{d i}ⁿ^an^nu^alⁱⁿ^cre^m^ent^s
^as^es^ti^m^a^{ted to be re}^qu^{ired f}^o^r^con^t^{ract ex}^pen^d^it^u^r^es^du^ring^t^h^e^b^u^d^g^e^t^y^e^a^r^.^A^f^t^e^r^p^a^s^s^a^g^e^o^f
^th^{e act, th}^{e C}^ong^res^s^approp^{riated f}^uⁿ^d^s^f^o^{r th}^{e en}^{tire cos}^t^of^N^a^v^y^s^hⁱ^p^b^uⁱ^l^dⁱⁿ^g^p^r^o^g^r^a^m^s^as
^t^h^{en env}ⁱ^s^a^g^e^{d on t}^h^e^basⁱ^s^o^f^prev^ai^lⁱ^ng^pri^ces^{, reg}^a^rdl^e^{ss of}^t^h^{e peri}^{od of}^ex^pen^dⁱ^t^u^r^es
^uⁿ^d^{er t}^h^eⁱⁿ^di^vⁱ^du^al^con^t^ract^s^.^{No prov}^is^ioⁿ^w^a^s^m^a^de^f^o^{r anticipated in}^creas^e^sⁱⁿ^cos^t^s^of
^m^a^t^e^ri^al^s^aⁿ^{d l}^a^bor.
^In^{a letter dated Ma}^y^{15, 195}^{7, to th}^{e Secretar}^y^of^De^f^eⁿ^s^{e, C}^oⁿ^g^r^e^s^s^m^an^[Georg^e
^Her^m^an^{] Ma}^h^oⁿ^,^as^C^h^air^m^an^of^th^{e Depart}^m^eⁿ^t^of^De^f^e^ns^{e S}^u^bco^m^m^{ittee, Hou}^s^e
^Co^m^m^{ittee o}ⁿ^A^p^p^r^o^p^r^iatioⁿ^s^{, stated}^{, in}^p^a^r^t^{, th}^at:

³⁷^Ex^cerp^t^f^r^o^m^{GAO rep}^o^r^{t o}^f^Feb^r^u^a^ry¹⁷^,¹⁹⁶⁹^{, en}^t^itled^“A^p^p^licat^ioⁿ^o^f^th^{e F}^u^{ll F}^uⁿ^dⁱⁿ^g^Coⁿ^cep^t^an^d^Aⁿ^aly^s^{is o}^f
^th^{e Un}^ob^ligated^and^Un^exp^e^nd^{ed Balan}^{ces in}^S^e^lected^A^p^p^r^op^riati^oⁿ^s^,^”^rep^rⁱⁿ^{ted as En}^clo^s^u^r^{e I t}^o^{GAO letter rep}^o^r^t
^B^-¹⁶⁵⁰⁶⁹^of^Fe^br^ua^r^y^{23, 1}⁹⁷⁸⁽^l^e^tte^r^{to T}^h^e^H^oⁿ^o^r^a^ble^B^u^tle^r^D^e^r^r^ic^k^,^C^h^aⁱ^r^m^aⁿ^{, B}^udg^e^t^P^r^oc^e^s^s^Ta^s^k^For^c^e⁾
^“^r^e^g^a^r^ding^the^a^d^vⁱ^s^a^bility^a^{nd f}^e^a^s^ibility^of^a^pplyⁱ^ng^the^f^u^{ll f}^unding^c^onc^e^p^{t t}^o^a^d^diti^ona^l^prog^ra^m^s^a^{nd a}^c^tiv^itie^sⁱⁿ
^the^Fe^de^ra^{l Bu}^dg^e^t^.”
³⁸^T^h^{e GAO rep}^o^r^{t do}^{es no}^{t exp}^l^aiⁿ^ho^w^o^r^w^h^y^th^{e p}^rⁱⁿ^ci^p^l^{e cam}^e^to^b^e^a^p^p^lie^d^{to th}^{e s}^h^ipb^uⁱ^ldⁱⁿ^g^p^r^o^g^ram^th^{at was}
^a^u^thor^iz^e^d^by^{this la}^w^.^T^h^e^e^x^plaⁿ^a^tio^{n a}^ppa^reⁿ^tly^lie^{s outside}^t^h^e^t^e^xt^o^f^t^hⁱ^s^actⁱ^t^s^el^f^,^siⁿ^{ce t}^h^{e act}^d^o^e^{s no}^t^con^t^aiⁿ
^an^y^l^aⁿ^g^u^a^g^e^t^h^at^oⁿⁱ^t^s^f^{ace cre}^a^t^e^{s a st}^at^u^t^o^r^y^b^a^si^{s f}^o^{r t}^h^{e f}^u^l^l^f^unding^p^o^lic^y^.^D^e^s^c^rⁱ^be^{d a}^s^“A^{n A}^c^{t to a}^u^th^or^iz^e^the
^c^ons^tr^uc^ti^on^of^m^ode^rⁿ^na^v^a^{l v}^e^ss^e^l^s^,^a^{nd f}^o^r^ot^he^r^p^u^r^p^os^e^s^,”^the^a^c^t^is^s^o^m^e^w^h^a^t^aⁿ^a^l^og^ous^{to t}^h^e^Ship^bu^ildiⁿ^g^aⁿ^d
^Conv^e^r^sion,^Na^vy^{(SCN) porti}^on^of^toda^y^’^{s de}^f^e^nse^a^u^thoriz^a^tio^{n a}^{nd a}^p^pro^p^ria^tⁱ^on^bills.^{It sim}^p^ly^a^u^th^oriz^e^s^the
^c^ons^tr^uc^ti^on,^a^c^quisⁱ^tⁱ^oⁿ^{, c}^o^nv^e^r^sⁱ^on^of^N^a^vy^s^h^ips⁽^S^e^c^tions^1,²⁾^,^a^u^thor^iz^e^s^the^a^ppr^opr^ia^tio^{n of}^s^u^c^h^s^u^m^s^a^s^m^a^y
^b^eⁿ^ecessar^y^f^o^{r th}^{ese sh}^ip^{s (Sect}^ioⁿ³⁾^,^p^l^{aces lim}^{its o}ⁿ^sellin^g^,^tran^sf^errin^g^{, o}^r^o^t^h^e^rw^{ise d}ⁱ^sp^o^sⁱⁿ^g^o^f^Nav^y^sh^ip^s
⁽^S^e^c^tion⁴⁾^{, a}^{nd r}^e^s^cⁱⁿ^ds^a^u^t^hor^iz^a^tions^f^o^r^N^a^vy^s^h^ips^m^a^de^{in f}^our^la^w^s^pa^s^s^e^{d be}^tw^e^eⁿ¹⁹⁴^{1 a}ⁿ^{d 1}⁹⁴³⁽^S^e^c^tioⁿ⁵⁾^.
^T^h^e^la^s^t^of^the^s^e^pr^ov^is^ions^,^h^o^w^e^v^e^r^,^m^a^y^hav^e^s^o^m^e^b^e^a^r^ing^{on t}^h^e^situa^tⁱ^on^le^a^d^ing^to^the^a^d^o^p^tio^{n of}^the^f^u^ll^nd^st
^f^unding^p^o^lic^y^:^A^s^r^e^pr^inte^{d i}ⁿ^Uⁿ^ite^d^Sta^t^e^s^C^ode^C^oⁿ^g^r^e^s^sⁱ^on^al^and^Admⁱ^nis^t^r^a^tiv^e^Se^r^v^ic^e⁽⁸²^Cong^.,¹^sess.^,
¹⁹⁵^{1, v}^o^l^.^2,^pp.¹³³⁶^-1³³^{7), t}^h^e^Se^na^te^A^r^m^e^{d Se}^rv^ic^e^s^Com^m^itte^e^,^{in its}^re^port^(S.Re^p^t.¹¹^{8, Fe}^br^ua^ry^{21, 19}⁵¹⁾^oⁿ
^the^bil^l⁽^H^.R^.¹⁰⁰¹⁾^s^t^a^t^e^d^:
^Se^c^tion⁵^of^the^bill^r^e^s^c^inds^c^e^r^ta^{in of}^the^outs^t^a^ndi^ng^a^u^th^or^iz^a^tio^ns^[^f^or^s^h^ips^]^pr^e^s^eⁿ^tly
^he^ld^by^the^N^a^vy^{. I}^t^is^the^opiⁿⁱ^oⁿ^of^the^c^o^m^m^itte^e^tha^t^{this is a}ⁿⁱⁿ^c^o^m^p^le^te^a^pproa^c^h^t^o^a
^p^r^ob^l^e^m^w^hⁱ^c^h^m^u^st^b^e^so^l^v^ed^at^t^h^{e earl}ⁱ^e^st^p^o^ssi^b^l^{e m}^o^men^t^.^Ch^e^c^{ks i}ⁿ^dⁱ^cat^{e t}^h^at^t^h^{ere are man}^y
^a^dditi^ona^{l a}^u^th^oriz^a^tio^{ns still}^outs^t^a^ndi^ng^un^de^{r w}^h^ic^{h the}^Na^v^y^c^o^{uld c}^onstr^uc^{t or c}^onv^e^r^t^[^s^hi^p^]
^t^oⁿⁿ^age^whic^{h mak}^e^s^{it e}^x^t^re^me^ly^diffic^{ult f}^o^{r t}^h^e^c^o^mmitt^e^e^{to v}ⁱ^s^u^alize^{just w}^h^a^t^{is t}^h^e^c^u^rre^nt
^situati^oⁿ^ins^o^far^{as a}^u^t^horiza^tio^{n to}^c^o^ns^tr^uc^{t v}^e^s^s^e^ls^is^c^onc^e^r^ne^d.
^A^c^co^rdⁱⁿ^gl^y^,^t^h^{e Nav}^y^Dep^a^rt^meⁿ^t^h^a^s^b^eenⁱⁿ^st^r^u^ct^ed^t^o^s^u^b^mⁱ^t^t^o^t^h^{e C}^oⁿ^g^{ress at}^t^h^e
^e^a^r^lie^{st possible}^da^te^le^gⁱ^sla^tion^w^h^ic^{h w}^{ill c}^l^e^aⁿ^{up a}^ll^outstaⁿ^diⁿ^g^[^s^hi^p^]^a^u^t^hor^iz^a^{tions w}^h^ic^{h a}^r^e
ⁿ^o^tⁿ^eed^ed^t^oⁱ^m^p^l^em^en^t^t^h^{e p}^r^esen^t^[ⁿ^aval^m^o^d^e^rnⁱ^zatⁱ^o^{n] p}^r^o^g^ram^.^T^h^{e co}^mmi^t^t^ee^w^a^{s i}ⁿ^f^o^r^m^ed
^t^h^at^su^{ch l}^e^gi^sl^atⁱ^oⁿ^h^a^{s b}^een^d^r^aft^e^d^an^{d i}^sⁱⁿ^[^t^h^e^]^p^r^o^{cess o}^f^b^eⁱ^{ng cl}^eared^b^y^t^h^{e ex}^ecu^tⁱ^v^e
^braⁿ^c^h^f^o^{r su}^bm^{ission to}^the^C^oⁿ^g^r^e^{ss. For this re}^a^s^oⁿ^the^c^o^m^m^itt^e^e^doe^{s no}^{t in}^te^nd^to
^re^c^o^m^m^e^{nd a}ⁿ^y^c^h^aⁿ^g^e^{s in se}^c^{tion 5}^of^the^b^{ill a}^s^it^pa^sse^{d the}^H^o^u^s^e^{but f}^u^lly^e^x^pe^c^t^{s tha}^t^this
^plaⁿ^of^c^aⁿ^c^e^lling^{old a}^u^th^oriz^a^tⁱ^ons^be^c^o^m^p^le^te^d^{in a}^sy^ste^m^a^tic^m^a^nne^{r w}^{ithin t}^h^e^shor^te^{st tim}^e
^pos^sⁱ^ble^.⁽^E^m^pha^sⁱ^s^a^dde^d.)
^T^h^e^c^o^m^m^itte^e^’^{s re}^{port a}^l^{so sta}^t^e^s^{: “}^T^he^{bill a}^u^t^horiz^e^s^a^to^ta^{l of}¹^{40 m}^a^{jor ne}^w^v^e^ss^e^l^s^w^e^ig^hing^a^ppr^ox^im^a^t^e^l^y
⁵⁰⁰^,0⁰⁰^to^ns^{, a}ⁿ^{d t}^h^e^c^onv^e^r^sⁱ^on^of²⁹²^v^e^s^s^e^ls^{. T}^h^e^c^o^s^t^of^the^pr^og^r^a^m^is^$1,⁰⁷^0,9⁴⁹^,⁰^{00 f}^o^r^ne^w^c^ons^tr^uc^ti^{on a}^nd
^$1,²⁹^7,1⁴³^,⁰^{00 f}^o^r^c^o^nv^e^r^sⁱ^on,^to^ta^ling^$2^,3^58,⁰⁹^2,⁰⁰^0.”^T^h^is^m^a^y^be^a^s^t^a^t^e^m^eⁿ^{t of}^the^fully^fu^nde^d^c^o^st^of^the^sh^ips
^{in q}^u^e^s^tio^n.

^“^T^h^e^g^eⁿ^e^ral^prev^ai^lⁱ^ng^practⁱ^{ce of}^t^hⁱ^s^C^o^m^mⁱ^t^t^{ee i}^s^t^o^provi^{de fu}ⁿ^d^{s at}^t^h^e^ou^t^s^et^f^o^r
^th^{e to}^{tal e}^s^ti^m^a^ted^co^{st o}^f^a^gⁱ^v^eⁿ^ite^m^so^t^h^{at t}^h^e^Coⁿ^g^r^e^s^s^an^d^th^e^p^u^b^{lic ca}ⁿ^clear^l^y
^s^{ee an}^{d h}^a^v^e^{a co}^m^p^{lete kn}^o^w^led^g^{e of}^th^e^f^u^l^l^di^m^e^ns^ions^an^{d cos}^t^of^any^ite^m^or
^prog^ram^w^h^eⁿⁱ^tⁱ^s^fⁱ^rs^t^pres^eⁿ^t^e^{d f}^o^{r an}^approp^ri^atⁱ^oⁿ^.
^“^D^u^r^ing^t^h^{e cou}^r^s^e^of^t^h^es^e^h^earing^s^{, t}^h^{e C}^o^m^mⁱ^{ttee h}^a^s^learn^e^{d th}^{at on}^{e or}^m^o^re
^con^t^racts^h^a^v^e^beeⁿ^ex^ec^u^t^ed^{for m}^a^{terial on}^{a partiall}^y^f^uⁿ^d^e^d^basⁱ^s^wⁱ^t^h^t^h^{e apparen}^t
^ex^p^ectatioⁿ^o^f^co^m^p^letiⁿ^g^t^h^e^fⁱⁿ^aⁿ^cⁱⁿ^g^b^y^u^lti^m^a^tel^y^f^u^ll^y^o^b^lig^atiⁿ^g^t^h^{e tr}^an^sactioⁿ^s
^wⁱ^t^h^s^u^cceediⁿ^g^y^ears^appropr^iation^s^.”
* * * * *
^“^I^{t i}^s^reco^m^m^eⁿ^d^{ed t}^h^{at all}^neces^s^a^r^y^{action be ta}^k^e^{n to prev}^en^t^s^u^c^h^{practice i}ⁿ^th^e
^f^u^tu^r^e^an^d^toⁱⁿ^s^u^r^e^th^{at p}^r^o^c^u^r^e^m^en^{t f}^uⁿ^d^s^are^ad^mⁱⁿⁱ^s^t^ered^s^o^as^t^o^a^c^c^o^m^p^l^is^h^th^e^f^u^l^l
^prog^ram^f^o^{r w}^hⁱ^c^h^t^h^e^approp^ri^atⁱ^oⁿ^w^a^s^j^u^s^tⁱ^fⁱ^e^d.”
^On^Ma^y²¹^,¹⁹⁵⁷^,^th^{e Off}ⁱ^c^e^o^f^th^{e Secretary}^o^f^De^f^eⁿ^s^{e issu}^ed^{DOD Directi}^v^e
^7200.^4[,]^“^F^un^di^ng^of^Procu^r^em^ent^C^oⁿ^t^ra^c^t^s^aⁿ^d^Iⁿ^t^e^r^d^e^p^a^r^t^m^eⁿ^t^a^l^R^e^q^u^es^t^s^an^d^O^r^d^e^r^s^f^o^r
^P^r^o^c^u^r^em^eⁿ^t,”^w^h^ic^h^h^a^d^b^e^enⁱⁿ^p^r^ep^ar^atioⁿ^.^T^h^is^dⁱ^r^ectiv^e^w^a^{s r}^e^sp^oⁿ^si^v^e^to^th^e
^s^u^g^g^e^s^tⁱ^oⁿ^s^ex^pres^s^e^{d b}^y^C^o^ng^res^s^m^aⁿ^Mah^oⁿⁱⁿ^hⁱ^s^l^e^t^t^e^{r of}^Ma^y^{15, 19}^57.^T^h^{e di}^rectⁱ^v^e
^w^a^sⁱ^s^su^{ed f}^o^{r t}^h^{e pu}^rpos^{e of}^en^su^ri^ng^t^h^{e orderl}^y^ex^ec^u^tⁱ^o^{n of}^t^h^{e procu}^r^e^m^ent^prog^ra^m^s
^wⁱ^t^hⁱⁿ^t^h^{e appropriation}^s^an^{d f}^uⁿ^d^s^a^v^{ailable. It s}^t^atesⁱⁿ^{part, th}^at:
^“^N^o^p^r^o^c^u^r^e^m^eⁿ^{t o}^f^m^a^terⁱ^al,^eq^uⁱ^p^m^eⁿ^{t, o}^r^w^o^r^k^o^r^ser^v^ice^sⁱⁿ^coⁿⁿ^ectioⁿ^t^h^er^e^w^it^h
^s^h^{all be directed or au}^th^{orized u}ⁿ^l^e^s^s^adeq^u^a^{te appropriation}^s^an^{d fun}^d^s^{are av}^ai^lable
^uⁿ^d^er^t^h^{e ap}^p^licab^{le Dep}^a^r^t^m^eⁿ^t^o^f^De^f^eⁿ^s^{e F}ⁱⁿ^aⁿ^c^{ial P}^l^aⁿ⁽¹⁾^f^o^r^o^b^lig^atioⁿ^,⁽²⁾^set
^as^{ide in}^th^e^f^o^r^m^of^{a co}^m^mⁱ^t^m^{ent, or (3)}^s^e^{t as}^{ide in}^{a res}^e^rv^{e accou}ⁿ^{t in}^aⁿ^agg^r^eg^ate
^a^m^oun^t^su^ffⁱ^cⁱ^eⁿ^t^{(a) t}^o^com^p^l^e^t^e^t^h^{e procu}^r^em^eⁿ^t^of^{a s}^p^eci^fⁱ^{ed num}^{ber of}^en^{d i}^t^e^m^s
⁽ⁱⁿ^c^lu^dⁱⁿ^g^,^w^h^er^{e ap}^p^licab^{le, i}ⁿ^{itial sp}^ar^{es an}^d^sp^ar^{e p}^a^r^t^s)^u^s^ab^{le eit}^h^e^rⁱⁿ^s^e^r^vⁱ^c^e^uⁿⁱ^t^s
^{or f}^o^{r tes}^t^an^{d ev}^al^u^a^tion^,^o^r^{(b) w}^h^en^s^p^eci^fⁱ^call^y^provⁱ^d^{ed f}^o^{r u}ⁿ^d^{er a cu}^rren^t
^apportⁱ^oⁿ^m^eⁿ^t^of^f^uⁿ^d^s^,^t^o^com^p^l^e^t^e^{a pre-}^produ^ctⁱ^oⁿ^prog^ra^m^{or procu}^r^{e com}^pon^en^t^s
ⁱⁿ^adv^aⁿ^{ce o}^f^t^h^{e fis}^cal^y^{ear i}ⁿ^w^h^ic^h^t^h^{e related prog}^ra^m^m^e^d^en^{d ite}^m^is^{directed to be}
^procu^r^ed.”
^T^h^{e directiv}^{e als}^o^requ^ires^th^a^t:
^“^{... all es}^ti^m^a^te^s^s^h^{all be bas}^e^{d u}^pon^th^{e lates}^t^av^ailable^fⁱ^r^m^prices^{. In}^th^{e e}^v^eⁿ^{t fir}^m
^prices^{are n}^o^{t av}^{ailable th}^{e bes}^t^cu^rren^t^w^o^rkⁱⁿ^g^es^ti^m^a^te^of^cos^t^s^h^{all be us}^{ed an}^d
^ad^j^u^st^m^eⁿ^t^s^w^{ill b}^e^m^a^d^e^p^r^o^m^p^t^l^y^w^h^en^e^v^id^eⁿ^{ce o}^f^si^gⁿⁱ^fⁱ^caⁿ^t^v^a^rⁱ^atioⁿⁱⁿ^co^s^t^s
^becom^e^s^av^ailable.”
^T^h^{e directiv}^{e ex}^pres^s^e^{d f}^uⁿ^d^ing^policies^f^o^{r al}^l^p^r^o^c^u^r^e^m^en^t^ac^tⁱ^oⁿ^s^s^u^b^s^e^q^u^eⁿ^t^t^o^fⁱ^s^c^al
^y^{ear 1957 an}^{d requ}ⁱ^r^es^t^h^at^al^l^procu^r^em^eⁿ^t^sⁿ^o^t^w^hol^l^y^cons^umm^a^t^e^{d bu}^t^eⁿ^t^e^{red i}ⁿ^t^o^u^p
^an^{d i}ⁿ^cl^u^dⁱⁿ^g^fⁱ^s^c^a^l^y^{ear 1957 be}^m^odi^fⁱ^{ed t}^o^conf^or^m^t^o^t^h^e^fu^l^l^f^uⁿ^dⁱ^{ng con}^cept^.
^P^r^ocu^r^em^eⁿ^ts^f^r^o^m^res^earc^h^an^{d dev}^e^lop^m^en^{t ap}^p^r^o^p^r^ia^tioⁿ^s^ar^{e n}^o^t^su^b^j^{ect to}^th^e
^provⁱ^sⁱ^oⁿ^s^o^f^t^h^{e di}^rectⁱ^v^{e, a}^{nd ot}^h^e^{r procu}^r^em^eⁿ^t^s^m^a^y^be^s^p^eci^fⁱ^cal^l^y^e^x^cept^e^{d b}^y^t^h^e
^Secretar^y^of^Def^eⁿ^s^e^f^r^o^m^its^p^r^ov^is^ions^{. Un}^{der th}^es^{e prov}ⁱ^s^ioⁿ^s^,^e^x^c^e^p^tⁱ^oⁿ^s^w^e^r^e^g^r^an^t^e^d^t^o
^th^e^Aⁱ^r^Fo^r^{ce f}^o^r^activ^ities^uⁿ^d^e^r^t^ak^en^uⁿ^d^e^r^p^r^o^c^u^r^e^m^en^t^ap^p^r^o^p^r^iatioⁿ^s^f^o^r^d^e^v^e^lo^p^m^eⁿ^t-
^t^y^p^e^p^r^o^j^e^c^t^s^,^s^u^c^h^a^s^t^h^eⁱⁿ^t^e^r^m^e^dⁱ^a^t^e^r^aⁿ^g^e^b^a^lli^{stic m}ⁱ^ss^ile^an^d^th^eⁱⁿ^ter^c^oⁿ^tin^eⁿ^tal^b^a^lli^sti^c
^mⁱ^s^s^ile.
^T^h^o^ugh^t^h^e^dⁱ^r^e^c^tⁱ^v^e^d^o^e^{s no}^t^e^m^p^l^o^y^t^h^e^t^e^r^m^“^f^ul^l^f^u^ndⁱⁿ^g,^”ⁱ^t^s^t^a^t^e^s^t^h^e^c^o^nc^e^p^t^s
^w^h^ic^h^ex^p^r^{ess t}^h^{e es}^sen^{tials o}^f^f^u^ll^f^uⁿ^dⁱⁿ^g^.

^Fu^r^t^h^e^r^,ⁱⁿ^{a letter}^d^a^ted^J^uⁿ^e²²^,¹⁹⁵⁷^,^to^th^{e Ch}^air^m^aⁿ^o^f^t^h^{e Su}^b^c^o^m^mⁱ^{ttee o}ⁿ^th^e
^Dep^a^r^t^m^eⁿ^t^o^f^De^f^eⁿ^s^{e, Se}ⁿ^a^t^e^Co^m^m^ittee^oⁿ^A^p^p^r^o^p^r^iatioⁿ^s^{, t}^h^e^Assi^stan^{t Secr}^etar^y^o^f
^Def^eⁿ^s^{e (C}^o^m^{ptroller) s}^u^mm^a^r^{ized th}^{e an}^s^w^ers^{to certain}^qu^e^s^tⁱ^oⁿ^s^w^hⁱ^c^h^h^a^d^a^rⁱ^s^eⁿ^d^u^rⁱⁿ^g
^th^{e h}^eariⁿ^g^s^on^{DOD appropriation}^s^con^cerning^DOD^Directiv^{e 7200.4.}^T^h^is^letter,
^s^u^bs^eq^u^eⁿ^t^l^y^{placed i}ⁿ^t^h^{e record of}^th^{e h}^eariⁿ^g^s^{, e}^x^plain^e^d^th^{e prov}^is^ion^s^o^f^t^h^{e s}^u^bj^ect
^dⁱ^r^ectiv^{e an}^d^itsⁱ^m^p^l^e^m^eⁿ^tati^oⁿⁱⁿ^f^u^lf^ill^m^eⁿ^t^o^f^t^h^{e f}^u^ll^f^uⁿ^dⁱⁿ^g^p^rⁱⁿ^cip^l^e^w^h^ic^h^,^itⁿ^o^ted^,
^h^a^{d been}^applⁱ^e^{d g}^eⁿ^e^ral^l^y^b^y^t^h^e^C^ong^res^sⁱⁿ^provⁱ^dⁱⁿ^g^f^uⁿ^d^s^f^o^{r D}^O^D^procu^r^e^m^eⁿ^t
^p^r^o^g^ram^s^{. DOD o}^f^fⁱ^cials^{still c}^{ite th}^{e letter as au}^t^h^o^r^itativ^{e i}ⁿ^d^e^scribⁱⁿ^g^th^eⁱ^r^p^r^o^c^e^d^u^r^e^s^.^Iⁿ
^illu^str^a^tioⁿ^o^f^t^h^e^f^u^l^l^f^uⁿ^dⁱⁿ^g^p^rⁱⁿ^cip^l^{e, th}^e^A^s^sistaⁿ^{t Secr}^et^ar^y^statedⁱⁿ^hⁱ^{s le}^tter^th^at:
^“^I^{t h}^a^{s th}^e^m^e^r^{it o}^f^p^r^o^v^idⁱⁿ^g^,^{at o}ⁿ^{e ti}^m^e^{, f}^o^r^th^{e to}^{tal esti}^m^a^ted^co^{st o}^f^{a g}ⁱ^v^eⁿ^ite^m^o^r
^prog^ram^s^o^t^h^{at t}^h^e^C^ong^res^s^aⁿ^{d pu}^{blic ca}ⁿ^clearl^y^s^ee^its^fu^l^l^di^m^eⁿ^s^ioⁿ^s^aⁿ^{d cos}^t^s^at
^th^{e ti}^m^e^{it is}^fⁱ^r^s^{t p}^r^esen^ted^f^o^r^ap^p^r^o^v^{al an}^d^ap^p^r^o^p^r^iatioⁿ^s^.^As^y^o^u^ar^e^w^e^{ll a}^w^ar^{e th}^is
^s^y^s^t^e^m^prov^ides^th^a^t^w^h^eⁿ^aⁿ^y^Depart^m^eⁿ^t^directs^{a co}ⁿ^t^racting^offⁱ^{cer to procu}^r^{e a}
^hu^nd^r^e^d^aⁱ^r^c^r^a^ft^,^t^a^nk^s,^e^t^c^.^,^fu^nd^s^must^b^e^a^v^aⁱ^l^a^bl^e^(an^d^s^e^t^asⁱ^d^e—^s^o^m^e^f^o^r^oblⁱ^g^atⁱ^oⁿ
^{at o}ⁿ^{ce an}^d^so^m^e^f^o^r^o^b^lig^atioⁿ^{at a later}^d^a^te)^to^co^v^e^r^t^h^{e t}^o^{tal esti}^m^a^ted^co^{st to}^b^e
ⁱⁿ^c^u^r^r^e^dⁱⁿ^c^o^m^p^l^e^tⁱⁿ^g^d^e^lⁱ^v^e^r^y^o^f^oⁿ^e^h^uⁿ^d^r^e^d^u^s^a^b^l^e^eⁿ^dⁱ^t^e^m^s^p^l^u^s^t^h^eⁱ^rⁱⁿ^itial^sp^ar^es
^an^{d s}^p^{are parts}^w^h^en^requ^ired.^”
^T^h^{e letter f}^r^om^th^e^A^s^sⁱ^s^t^aⁿ^{t Secretary}^als^o^{clarified th}^e^u^s^{e of}^fu^{ll fu}ⁿ^dⁱⁿ^g^of
^prepro^du^ction^preparation^s^f^o^{r n}^e^w^ite^m^s^to^{be procu}^r^{ed a}ⁿ^{d placed in}^pro^d^u^c^tionⁱⁿ^a
^s^u^bs^eq^u^eⁿ^t^y^{ear. T}^h^{e latter clar}^if^{ied als}^o^th^{e treat}^m^eⁿ^t^of^adv^aⁿ^c^e^p^r^o^c^u^r^em^eⁿ^t^o^f^l^oⁿ^g^-^l^e^a^d^-
^ti^m^e^co^m^pon^eⁿ^t^s^{, bu}^dg^{et es}^ti^m^a^tiⁿ^g^,^aⁿ^{d cos}^tⁱⁿ^creas^e^s^un^d^e^{r th}^{e fu}^ll^f^uⁿ^d^ing^con^cept.
^T^h^{e m}^ili^tar^y^ser^v^{ices is}^su^ed^f^o^r^m^{al i}^m^p^l^e^m^en^ta^tioⁿⁱⁿ^str^u^c^tioⁿ^s^oⁿ^th^e^f^u^{ll f}^uⁿ^dⁱⁿ^g
^con^cept^at^di^f^f^e^ren^t^poiⁿ^t^sⁱⁿ^tⁱ^m^e^{. T}^h^{e S}^ecret^ary^of^t^h^{e N}^a^{vy In}^s^t^ru^ctⁱ^oⁿ^7043.^{2 w}^a^s^dat^e^d
^Juⁿ^e^{22, 19}^{57. A}^r^m^y^R^e^gu^l^a^tⁱ^on^s^37-⁴²^w^a^s^[sⁱ^c^{] i}^s^s^u^{ed on}^Ju^l^y^{1, 1957}^{. A}^l^e^t^t^e^{r f}^r^o^m^t^h^e
^Depu^t^y^C^h^ie^f^of^Sta^f^f^,^Materi^{al, Un}^ited^States^{Air Force, t}^o^th^{e C}^o^mm^an^der,^Aⁱ^r^Force
^Mat^e^ri^el^C^o^m^m^aⁿ^d^{, i}^m^pl^e^m^eⁿ^tⁱⁿ^g^D^O^D^Dⁱ^rectⁱ^v^{e 7200.4}^w^a^s^dat^e^{d A}^u^gu^st^{20, 19}^57.
^Asⁿ^o^ted^[abov^e],^th^{e Air Force w}^a^s^g^r^an^ted^e^x^ceptions^f^r^o^m^t^h^{e fu}^{ll fu}ⁿ^dⁱⁿ^g
^requⁱ^r^e^m^ent^s^f^o^{r cert}^aⁱⁿ^progra^m^s^.^Iⁿ^t^h^e^fⁱ^s^c^a^l^y^{ear 1963 bu}^dg^et^{, t}^h^es^eⁱⁿ^c^l^u^d^{ed t}^h^e
^A^T^LA^S^,^T^I^T^A^N^,^MIN^U^T^E^M^A^N^,^an^{d S}^K^Y^B^O^L^T^mⁱ^s^sⁱ^l^e^procu^r^em^eⁿ^t^prog^ra^m^s^w^hⁱ^c^h
^w^e^r^eⁱⁿ^c^r^e^m^eⁿ^t^a^l^l^y^fu^nd^e^d^t^o^c^o^ve^r^oⁿ^l^y^e^x^p^e^ndⁱ^t^ur^e^s^p^l^{us c}^o^nt^r^a^c^t^o^r^c^o^mmi^t^m^eⁿ^t^s^.
^T^h^{e A}^s^sistaⁿ^t^Secr^etar^y^o^f^D^e^f^eⁿ^s^{e (}^C^o^m^p^t^r^o^ller⁾^f^e^{lt, h}^o^w^e^v^e^r^,^th^at^th^{e cap}^ab^ilit^y
^ex^is^{ted in}^{1962 to}^dev^e^{lop real}^is^{tic prog}^ra^m^s^an^{d bu}^dg^e^t^s^f^o^{r A}ⁱ^{r Force ballis}^tic^mⁱ^s^sⁱ^les^on
^{a f}^u^l^l^y^fuⁿ^d^{ed bas}ⁱ^s^aⁿ^{d es}^t^a^blⁱ^s^h^{a cons}ⁱ^s^t^eⁿ^t^polⁱ^c^y^f^o^r^f^uⁿ^dⁱⁿ^g^al^l^procu^r^e^m^eⁿ^t^prog^ra^m^s^.
^Su^bs^equ^eⁿ^t^l^y^{, t}^h^{e Depu}^t^y^As^sⁱ^s^t^{ant Secretar}^y^of^Def^eⁿ^s^{e (C}^o^m^p^t^{roller) is}^s^u^ed
ⁱⁿ^s^t^r^u^ctions^{to th}^e^m^ilitar^y^s^e^r^v^ices^on^Marc^h^{30, 19}^{62, th}^{at th}^{e fis}^cal^y^{ear 1964}^bu^dg^{et be}
^dev^e^l^{oped on}^t^h^{e bas}ⁱ^s^of^provi^diⁿ^gⁿ^e^w^oblⁱ^g^atⁱ^oⁿ^a^l^a^u^t^h^ori^t^y^t^o^fu^l^l^y^fun^d^al^l^bu^dg^et^lⁱⁿ^e
^ite^m^s^an^{d s}^p^eci^fⁱ^call^y^th^e^Aⁱ^r^Force’^s^A^T^LA^{S, T}^I^T^A^{N, MI}^NUT^EMA^N^{, an}^{d SKYB}^O^L^T
^mⁱ^ssⁱ^l^e^procu^r^e^m^eⁿ^t^prog^ra^m^s^.
^It^w^a^s^recogn^ized^wⁱ^t^h^t^h^{e Off}ⁱ^{ce of}^th^{e Secretar}^y^of^Def^eⁿ^s^{e t}^h^a^t^t^h^e^im^p^l^em^en^t^a^ti^oⁿ^o^f
^th^{e f}^u^{ll f}^uⁿ^dⁱⁿ^g^p^o^lic^y^w^o^u^l^d^r^e^q^u^ir^{e a ch}^an^g^eⁱⁿ^Aⁱ^r^Fo^r^{ce m}ⁱ^ss^{ile co}ⁿ^t^r^actin^g^f^r^o^m^t^h^e
^“w^ork^e^f^f^o^{rt” bas}ⁱ^s^{to t}^h^{e bas}ⁱ^s^of^th^{e total cos}^t^of^deliv^er^y^f^o^{r a s}^p^ecifⁱ^{c num}^{ber of}^mⁱ^s^s^ile^s^.
^T^h^{e ex}^cep^tioⁿ^f^o^r^Aⁱ^r^Fo^r^{ce b}^a^llistic^mⁱ^s^s^iles,^w^h^ich^h^a^d^b^e^enⁱⁿ^ef^f^ect^f^o^r^sev^e^r^a^l^y^ear^s,
^repres^en^{ted a carry}^-^o^v^e^{r of}^res^earch^an^{d dev}^e^lop^m^eⁿ^{t fun}^d^ing^policies^of^t^h^os^{e ite}^m^s^.
^S^hⁱ^pbuⁱ^l^dⁱⁿ^g^h^a^s^been^t^h^{e proc}^u^r^e^m^eⁿ^t^prog^ra^m^m^o^s^t^c^oⁿ^sⁱ^s^t^eⁿ^t^l^y^r^e^vⁱ^ew^e^d^aⁿ^d^r^e^vⁱ^s^e^d
^wⁱ^t^hⁱⁿ^DOD^wⁱ^t^h^resp^{ect to}^f^u^l^l^f^uⁿ^dⁱⁿ^g^.^T^h^{is is d}^u^{e to}^th^{e len}^g^th^o^f^p^r^o^c^u^r^e^m^en^t^l^e^a^d^tⁱ^m^e^,³
^{to 7 y}^ears^depen^d^ing^pri^m^aril^y^on^th^{e t}^y^{pe o}^f^s^h^{ip. P}^r^oce^d^u^r^es^h^a^v^e^been^re^fⁱⁿ^e^{d as}^th^eⁿ^eed
^aros^{e f}^r^o^m^t^h^e^unⁱ^q^u^eⁿ^a^t^u^{re of}^t^h^{e produ}^ct^{. Pri}^o^{r t}^o^t^h^{e f}ⁱ^s^c^a^l^y^{ear 1961 bu}^dg^et^{, s}^hⁱ^p^cos^t

^es^tⁱ^m^a^t^e^s^w^e^{re bas}^e^{d on t}^h^e^desⁱ^gn^coⁿ^cept^an^d^l^a^{bor an}^d^m^a^t^e^ri^al^rat^e^s^e^xⁱ^s^tⁱ^ng^at^t^h^{e t}ⁱ^m^e
^th^{e e}^s^ti^m^a^tes^w^e^r^e^p^r^ep^ar^ed^w^ithⁱⁿ^cr^ease^s^o^v^er^th^eⁱⁿ^itial^es^ti^m^a^te^{s b}^eⁱⁿ^g^p^r^o^v^id^ed^f^o^r^b^y
^requ^es^ting^addition^a^l^fuⁿ^d^sⁱⁿ^s^u^bs^eq^u^eⁿ^t^y^ears^{or by}^redu^cⁱⁿ^g^s^h^ipbuilding^prog^ra^m^s^.
^T^h^{e f}ⁱ^s^cal^y^{ear 1961}^bu^dg^{et initiated a n}^e^w^polic^yⁱⁿ^fⁱⁿ^aⁿ^cⁱⁿ^g^s^h^ipbu^ildiⁿ^g^prog^ra^m^s
^ter^m^{ed “}^eⁿ^d^cos^t^{” bu}^d^g^etiⁿ^g^.^C^oⁿ^s^tru^c^tioⁿ^an^{d conv}^ersⁱ^oⁿ^cos^t^es^ti^m^a^tesⁱⁿ^th^{at b}^u^dg^et
^repres^en^t^e^{d t}^h^e^f^u^l^l^a^m^o^uⁿ^t^re^quⁱ^r^{ed t}^o^co^m^p^l^e^t^e^a^l^l^s^hⁱ^p^sⁱⁿ^t^h^e^{1961 f}ⁱ^s^cal^y^ear^an^{d pri}^o^r
^y^ears^’^prog^ra^m^s^an^{d i}ⁿ^cl^u^d^{ed allo}^w^aⁿ^ces^f^o^{r s}^u^{ch g}^r^o^w^t^h^f^actors^as^desⁱ^gn^aⁿ^d^mⁱⁿ^o^r
^ch^aracteris^tic^s^ch^aⁿ^g^e^s^aⁿ^{d chan}^g^e^sⁱⁿ^{labor an}^d^m^a^{terial ra}^tes^w^h^ich^w^o^u^l^{d aff}^{ect cos}^t^s
^d^u^rⁱⁿ^g^c^o^nst^r^uc^tⁱ^o^{n a}ⁿ^d^c^o^nve^r^sⁱ^o^{n p}^e^rⁱ^o^d^s^.
^T^h^r^o^ugh^t^h^e^fi^sc^a^l^ye^a^r^{1965 bu}^dg^et^{, t}^h^{e proj}^ect^{ed c}^o^s^t^sⁱⁿ^cl^u^d^{ed es}^tⁱ^m^a^t^es^f^o^{r t}^h^e
^correctⁱ^oⁿ^of^defⁱ^ci^en^ci^e^sⁱⁿ^aⁿ^e^w^shⁱ^p^t^h^roughⁱ^t^s^fⁱ^rs^t^ov^er^h^a^u^l^{. T}^hⁱ^s^peri^od^w^a^s^c^u^rt^ai^l^e^d
^by^N^a^v^S^hⁱ^ps^Iⁿ^s^t^r^u^ctⁱ^{on 7301}^.25A^{, dat}^e^{d N}^o^v^e^m^b^er^{24, 19}^{67, t}^o^{a peri}^{od of}¹¹^m^oⁿ^t^hs
^f^o^llo^wⁱ^ng^preli^mⁱⁿ^ar^y^acceptaⁿ^{ce trials}^{or th}^rou^g^h^p^o^s^t^s^h^ak^ed^owⁿ^a^v^ai^l^a^b^ilit^y^,^w^h^ic^h^e^v^e^r^is
^earlⁱ^e^{r, f}^o^{r f}ⁱ^s^cal^y^{ear 1964 an}^{d s}^u^bs^equ^eⁿ^t^shⁱ^p^prog^ra^m^s^.
^A^recen^t^Na^vy^P^r^og^ra^m^/^B^u^dg^e^t^Deci^sⁱ^oⁿ^[^,^]^“^S^C^N^[^S^hⁱ^p^b^uⁱ^l^dⁱⁿ^g^an^d^C^oⁿ^v^e^r^sⁱ^oⁿ^,^N^a^v^y^]
^Fⁱⁿ^aⁿ^cⁱ^a^l^Polⁱ^c^y^an^{d F}^uⁿ^dⁱⁿ^g^of^Pri^o^r^Y^ear^Prog^ram^s^{,” approv}^{ed by}^t^h^e^D^e^pu^t^y^S^e^c^r^e^t^a^r^y^o^f
^D^e^fe^nse^oⁿ^D^e^c^e^mb^e^r⁹^,¹⁹^68,^r^e^fi^ne^d^t^h^e^d^e^fⁱⁿⁱ^tⁱ^o^{n o}^f^f^u^l^l^fu^ndⁱ^{ng a}^sⁱ^t^a^p^p^lⁱ^e^d^t^o^shi^p^s.
^Esti^m^a^tes^f^o^r^o^u^t^f^ittiⁿ^g^an^d^p^o^std^e^liv^er^y^d^e^fⁱ^cieⁿ^c^y^co^r^r^ect^ioⁿ^s^w^o^u^l^d^b^e^f^uⁿ^d^ed^w^h^eⁿ
^requ^{ired, th}^{at is}^f^uⁿ^d^{ed on}^{a lead-}^tⁱ^m^{e bas}ⁱ^s^rath^{er th}^aⁿ^as^{part of}^th^{e bas}ⁱ^{c es}^ti^m^a^{te. T}^h^is
^ch^an^g^eⁱⁿ^ap^p^licatioⁿ^o^f^t^h^{e f}^u^ll^f^uⁿ^dⁱⁿ^g^coⁿ^cep^{t to}^s^h^ip^b^u^ildⁱⁿ^g^p^u^t^sh^ip^b^u^ildⁱⁿ^g
^procu^r^em^eⁿ^{t on}^t^h^{e s}^a^m^e^basⁱ^s^as^aircraf^t^aⁿ^{d electron}ⁱ^cs^procu^r^em^eⁿ^t^wⁱ^th^res^p^{ect to}
^p^o^s^t^d^e^lⁱ^v^e^r^y^c^o^st^{s a}ⁿ^d^o^u^t^fⁱ^t^tⁱⁿ^g.^I^t^a^l^so^r^e^sul^t^e^dⁱⁿ^a^sub^s^t^a^ntⁱ^a^l^redu^ctⁱ^oⁿ^of^fⁱ^s^cal^y^ear¹⁹⁶⁹
^an^d^p^r^io^r^y^ear^s^’^f^uⁿ^dⁱⁿ^g^r^e^q^uⁱ^r^e^m^en^t^s^f^o^r^s^h^ip^b^u^ildⁱⁿ^g^p^r^o^g^r^a^m^s^{still i}ⁿ^p^r^o^cess.
^B^u^reau^of^th^{e B}^u^d^g^{et [n}^o^w^O^f^fⁱ^{ce of}^Man^a^g^e^m^e^{nt an}^{d B}^u^dg^{et] C}ⁱ^rcu^l^{ar No. A-}^11,
ⁱ^s^su^{ed i}ⁿ^Ju^l^y^{1962, s}^t^at^{ed t}^h^at^:
^“Req^u^e^st^s^f^o^r^m^a^j^o^r^p^r^o^c^u^r^em^en^{ts a}ⁿ^d^coⁿ^s^tr^u^c^tⁱ^oⁿ^p^r^o^g^r^a^m^s^w^{ill p}^r^o^v^id^e^f^o^r^f^u^l^l
^fⁱⁿ^aⁿ^cⁱⁿ^g^of^t^h^{e co}^m^p^{lete cos}^t^...”
^A^revi^sⁱ^oⁿ^t^o^Cⁱ^rcu^l^ar^A-¹¹³⁹^on^Ju^l^y^{25, 1968, s}^t^at^ed:
^“Req^u^e^st^f^o^r^m^a^j^o^r^p^r^o^c^u^r^em^eⁿ^{t p}^r^o^g^r^a^m^s^w^{ill p}^r^o^v^id^e^f^o^r^f^u^ll^fⁱⁿ^aⁿ^cⁱⁿ^g^o^f^t^h^{e e}ⁿ^tir^e
^cos^t^.”
^A^l^t^h^o^u^g^h^th^{e B}^u^r^e^a^u^o^f^th^{e B}^u^d^g^{et u}^s^e^s^th^{e ter}^m^{s “f}^u^ll^fⁱⁿ^aⁿ^cⁱⁿ^g^,^”^“^c^o^m^p^l^e^t^e^c^o^s^t^,^”^aⁿ^d
^“^eⁿ^{tire cos}^t^{” a}ⁿ^{d th}^{e O}^f^fⁱ^{ce, S}^ecretary^o^f^De^f^e^ns^{e, us}^es^t^h^{e t}^e^r^m^“^t^{otal cos}^t^of^aⁿ^eⁿ^d-^ite^m^”
^as^s^t^at^{ed i}ⁿ^D^O^D^Ins^t^ru^ctⁱ^oⁿ^5000.^{8 “}^G^l^o^s^s^a^r^y^of^T^e^r^m^{s U}^s^{ed i}ⁿ^t^h^e^A^r^ea^s^of^Fⁱⁿ^aⁿ^cⁱ^a^l^,
^Sup^p^l^y^aⁿ^d^Iⁿ^st^a^l^l^a^tⁱ^o^{n M}^a^na^g^e^m^eⁿ^t^,^:^d^a^t^e^d^J^une¹⁵^,¹⁹⁶¹^,ⁱ^tⁱ^s^g^eⁿ^e^ral^l^y^uⁿ^d^ers^t^ood^t^h^at^al^l
^f^o^u^r^ter^m^{s r}^e^f^e^r^to^th^{e sa}^m^e^coⁿ^cep^{t as d}^o^e^{s th}^{e ter}^m^“f^u^ll^f^uⁿ^dⁱⁿ^g^.^”
^T^o^sup^p^l^e^m^eⁿ^t^t^h^e^c^o^nc^e^p^t^o^f^f^u^l^l^f^u^ndⁱⁿ^g^as^ex^pres^s^e^{d i}ⁿ^D^O^D^Dⁱ^rectⁱ^v^{e 7200.4}^qu^ot^ed
^[abov^e],^w^e^h^a^v^e^f^o^r^m^ul^at^{ed t}^h^e^f^o^l^l^o^wⁱ^ng^e^x^pres^sⁱ^{on of t}^h^{e co}ⁿ^cept^bas^e^{d on ou}^r
^dⁱ^scu^s^sioⁿ^s^wⁱ^t^h^{DOD p}^e^rsoⁿⁿ^el.
^Fu^ll^f^uⁿ^dⁱⁿ^g^ex^ist^s^w^h^eⁿ^ad^eq^u^a^{te o}^b^lig^atioⁿ^a^{l au}^t^h^o^r^it^y^{is a}^v^ail^a^b^l^eⁱⁿ^th^e^p^r^o^c^u^r^em^eⁿ^t
^ap^p^r^o^p^rⁱ^atioⁿ^to^m^e^e^t^th^{e c}^u^r^r^en^tl^y^esti^m^a^ted^co^{st o}^f^{a b}^u^d^g^e^{t lin}^{e ite}^m^.^A^b^u^d^g^{et li}ⁿ^e

³⁹^T^h^{e GAO rep}^o^r^{t at t}^h^{is po}^{int stat}^{es in}^{a f}^o^o^t^no^{te: “T}^h^e^revisioⁿ^tre^a^ted^th^{e f}ⁱⁿ^aⁿ^cⁱⁿ^{g o}^f^coⁿ^s^tr^u^c^{tion p}^r^o^g^ram^s
^sep^a^ratel^y^.^”

^ite^mⁱⁿ^clu^d^es^{a s}^p^eci^fⁱ^{c qu}^antit^y^o^f^en^{d ite}^m^s^{, th}^{e procu}^r^e^m^eⁿ^{t of}^w^hⁱ^c^h^is^a^u^th^o^rⁱ^z^e^d^t^o
^b^eⁱⁿ^itiatedⁱⁿ^t^h^{e p}^r^o^g^r^a^m^y^e^a^r^.
In its report (H.Rept. 93-662 of November 26, 1973) on the FY1974 DOD Appropriation Bill
(H.R. 11575), the Committee on Appropriations affirmed the full funding policy and issued a
warning against the abuse of the exception permitting advance procurement funding:
^T^h^{e C}^o^m^mⁱ^t^t^{ee is}^con^cern^e^d^th^{at t}^h^{ere is}^{a g}^r^o^wⁱⁿ^g^ten^d^eⁿ^c^yⁱⁿ^t^h^{e Depart}^m^eⁿ^t^of
^Def^eⁿ^s^{e (D}^{OD) to abus}^{e t}^h^{e adv}^aⁿ^c^e^procu^r^e^m^eⁿ^{t e}^x^ce^p^tioⁿ^to^t^h^{e lo}ⁿ^g^-^e^s^t^ab^lis^h^e^d
^priⁿ^ci^pl^{e of}^“f^u^l^l^fuⁿ^dⁱⁿ^g^”^t^h^e^procu^r^em^eⁿ^t^appropri^a^tⁱ^oⁿ^s^{. It}ⁱ^sⁱ^m^port^aⁿ^t^t^o^un^d^e^r^s^t^aⁿ^d^t^h^at
^t^h^{e t}^echnⁱ^qu^{e of}^“^a^dv^aⁿ^{ce procu}^r^e^m^eⁿ^t^”ⁱ^sⁱⁿ^t^eⁿ^d^{ed t}^o^be^a^w^e^l^l^defⁱⁿ^e^{d an}^{d n}^a^rro^w^l^y^-
^applⁱ^e^d^exceptioⁿ^t^o^{a g}^eⁿ^e^ral^ru^l^e^{. T}^h^{e bas}ⁱ^{c ru}^l^e^of^fⁱⁿ^aⁿ^cⁱ^{ng procu}^r^em^eⁿ^t^appropri^a^tⁱ^oⁿ^s^,
^com^m^oⁿ^l^y^kⁿ^o^wⁿ^a^s^“f^ull^fu^ndin^g^”^,^is^th^at^{each annu}^{al b}^u^dg^etar^y^requ^es^t^f^o^{r a}^qu^aⁿ^tit^y^o^f
^en^d^ite^m^s^o^f^m^ilitar^y^eq^uⁱ^p^m^en^t^wⁱ^{ll co}ⁿ^t^aiⁿ^all^o^f^th^e^o^b^lig^atioⁿ^a^l^a^u^th^o^r^it^y^r^e^q^u^ir^ed^to
^d^e^liv^er^th^o^s^{e en}^d^ite^m^sⁱⁿ^{a co}^m^p^{lete a}ⁿ^d^m^ilitarⁱ^l^y^u^s^ef^u^l^f^a^s^h^ioⁿ^.^Said^an^o^t^h^e^r^w^a^y^,ⁿ^o
^procu^r^em^eⁿ^t^bu^dg^e^t^requ^es^t^shou^l^d^{be de}^pen^d^en^t^u^pon^fu^t^u^{re y}^{ear appro}^p^ri^atⁱ^oⁿ^s^t^o^m^a^k^eⁱ^t
^w^hol^e.
^T^hⁱ^s^ge^ne^r^a^l^r^u^l^e^o^f^“^f^ul^l^f^undⁱ^ng”ⁱ^s^w^e^l^l^d^e^fi^ne^dⁱⁿ^D^O^D^{’s o}^wⁿ^Dⁱ^r^e^c^tⁱ^v^e^7200.^4.^T^hⁱ^s
^s^a^m^e^directiv^{e al}^s^o^clearl^y^defⁱⁿ^e^s^an^{d li}^mⁱ^t^s^th^{e on}^{e recog}ⁿⁱ^z^e^{d ex}^ceptⁱ^oⁿ^t^o^“^f^u^l^l^f^uⁿ^dⁱⁿ^g^”^,
^{i.e., th}^{e ad}^v^aⁿ^{ce p}^r^o^c^u^r^em^eⁿ^t^techⁿⁱ^q^u^{e. W}^h^er^{e an}^en^d^ite^m^o^f^m^ilitar^y^h^a^r^d^w^a^r^e^coⁿ^t^ain^s
^com^pon^eⁿ^t^s^m^eetiⁿ^g^s^p^{ecified criteria, it is}^perm^is^sⁱ^{ble f}^o^{r thos}^e^c^o^m^p^oⁿ^en^t^s^t^o^b^e^b^u^d^g^e^t^ed
ⁱⁿ^th^e^y^{ear prior to th}^{e y}^{ear i}ⁿ^w^h^ic^h^th^{eir i}ⁿ^teⁿ^d^{ed en}^{d ite}^m^s^w^{ill be bu}^dg^eted....
^T^h^e^fo^r^e^goⁱⁿ^{g r}^u^l^e^s^ha^ve^b^e^eⁿ^c^a^r^e^f^ul^l^y^d^r^a^w^{n a}^f^t^e^r^e^x^t^eⁿ^sⁱ^v^e^dⁱ^sc^u^ssi^oⁿ^{s b}^e^t^w^e^eⁿ
^C^ong^res^sⁱ^oⁿ^{al s}^t^a^f^f^m^e^m^b^ers^an^{d repres}^en^tativ^e^s^of^th^{e DO}^{D. T}^h^ey^repres^en^{t s}^oun^{d polic}^y^.
^Unf^o^rtun^atel^y^,^t^h^{e Depart}^m^e^{nt of}^Def^eⁿ^s^e^h^a^sⁿ^o^{t al}^w^a^y^s^adh^e^{red to th}^es^{e ru}^le^s^....
^T^h^{e Secretary}^of^Def^eⁿ^s^{e i}^s^requ^es^{ted to pers}^on^ally^revie^w^adv^aⁿ^{ce procu}^r^e^m^en^t
^f^uⁿ^dⁱⁿ^g^requ^e^s^t^s^propos^{ed f}^o^{r t}^h^{e fi}^s^cal^y^{ear 1975 bu}^dg^etⁱⁿ^lⁱ^g^h^t^of^t^h^{e f}^o^reg^oⁱⁿ^g^di^rectⁱ^oⁿ
^an^{d DOD Directiv}^{e 7200.4. If}^th^{ere are f}^u^t^u^{re abu}^s^e^s^of^th^{e a}^d^v^aⁿ^{ce procu}^r^e^m^eⁿ^{t fun}^d^ing⁴⁰
^coⁿ^cep^{t, th}^e^Co^m^m^ittee^w^ill^h^a^v^e^to^r^ecoⁿ^s^id^er^t^h^{e ad}^v^aⁿ^ce^p^r^o^c^u^r^em^eⁿ^{t tec}^hⁿⁱ^q^u^{e i}^t^sel^f^.
The full funding policy was reviewed at a 1978 hearing before a House Budget Committee task
force on budget process. The hearing focused on the Carter Administration’s proposal to expand ⁴¹
the application of the full funding policy to additional programs in the Federal budget.
At this hearing, John R. Quetsch, Principal Deputy Assistant Secretary (Comptroller), Department
of Defense, provided DOD’s perspective on the full funding policy. He began by summarizing the
history of the policy in a fashion very similar to the above excerpt from the 1969 GAO report: He
stated that the policy was first applied to the Navy shipbuilding program authorized by the act of ⁴²
March 10, 1951, and “That once the principle was established for shipbuilding it was gradually

⁴⁰^H^.^R^e^{pt. 93-}⁶⁶^{2, pp.}¹^47-¹⁴^8.
⁴¹^{U.S. C}^ong^re^{ss, House}^Com^m^itte^e^{on t}^h^e^Bu^dg^e^t^{, T}^a^sk^Forc^e^{on B}^udg^e^t^P^r^oc^e^ss,^F^u^{ll F}^uⁿ^dⁱ^ng^{of C}^apit^a^l
^Ex^pe^ndit^u^r^e^s^,^h^eariⁿ^g,⁹⁵^th^Co^ng^{., 2}^nd^s^e^s^s^{., Fe}^br^ua^r^y^22,¹⁹^{78 (}^W^a^s^hing^to^{n: G}^P^O^,¹⁹⁷⁸⁾^.
⁴²^Se^c^r^e^t^a^r^y^Q^u^e^t^s^c^h’^s^te^s^tⁱ^m^ony^{, lik}^e^the¹⁹^{69 G}^A^O^r^e^por^{t, doe}^s^not^e^x^plaⁱ^{n h}^o^w^or^w^h^y^the^pr^incⁱ^ple^c^a^m^e^{to be}
⁽^c^onti^nue^d.^..)

applied to procurement programs in general.” He cited the May 15, 1957 letter to the Secretary of
Defense from Representative Mahon and the Secretary’s issuance on May 21, 1957, of DOD
Directive 7200.4, which he, like GAO, characterized as “responsive to the suggestions expressed
by Congressman Mahon in his letter of May 15, 1957.” He stated that
^In^{1961, becau}^s^e^{of t}^h^{e problem}^{s t}^h^at^w^e^re^de^v^e^loping^a^s^a^res^u^lt^{of t}^h^{e e}^x^ception^f^o^r
^s^h^ipbuⁱ^l^ding^w^h^ereiⁿ^cos^t^s^f^o^r^ch^ang^e^s^aⁿ^d^es^calation^w^e^r^eⁿ^o^t^b^eⁱⁿ^gⁱⁿ^c^l^u^d^e^dⁱⁿ^t^h^e^o^rⁱ^gⁱⁿ^al
^bu^dg^et^requ^es^t^,^t^h^{e D}^e^part^m^e^nt^[of^D^e^f^e^ns^{e] prop}^os^{ed, an}^d^b^o^t^h^t^h^{e H}^o^u^s^e^A^ppropri^a^tⁱ^oⁿ^s
^C^o^m^mⁱ^t^t^{ee a}ⁿ^{d t}^h^e^S^eⁿ^a^t^e^A^ppropri^a^tⁱ^oⁿ^s^C^o^m^mⁱ^t^t^{ee c}^oⁿ^c^u^{rred t}^h^e^f^uⁿ^d^s^sh^oul^{d be}
ⁱⁿ^cl^u^d^{ed f}^o^{r al}^l^predi^c^t^e^{d c}^o^s^t^s^t^h^rough^co^m^p^l^e^tⁱ^oⁿ^o^f^shⁱ^p^con^s^t^r^u^c^tⁱ^on^.
He stated that as a result of GAO’s 1969 report, “DOD directive 7200.4 was updated and
strengthened on October 30, 1969. This version of the directive continues in full force and effect
today.” He then noted the endorsement of the policy in the 1973 House Appropriation Committee ⁴³
report. As part of a list of “some considerations which are derivative from the policy,” he stated:
^On^ce^f^uⁿ^d^s^{are appropriated b}^y^t^h^{e C}^oⁿ^g^r^e^s^s^,^t^h^{e prin}^cⁱ^{ple creates}^{an in}^ceⁿ^tⁱ^v^e^f^o^{r us}^{to tr}^y
^{to m}^aⁿ^a^g^e^th^{e prog}^ra^m^wⁱ^t^h^{in ou}^{r es}^ti^m^a^te....
^T^h^e^w^h^o^l^e^s^y^st^e^m^fo^r^t^h^e^r^e^p^r^o^g^r^a^mmiⁿ^g^o^f^f^und^s^fo^r^procu^r^e^m^ent^an^{d m}ⁱ^lⁱ^t^a^r^y^con^s^t^r^u^c^tⁱ^oⁿ
^p^r^o^g^r^a^ms,^a^s^y^s^t^e^m^w^hⁱ^c^{h ha}^s^b^e^eⁿ^c^a^r^e^f^ul^l^y^w^o^r^k^e^d^ou^t^wⁱ^t^h^t^h^e^C^ong^res^s^ov^{er m}^a^ny^y^ears^,
^is^{predicated on}^th^{e fu}^ll^f^uⁿ^dⁱⁿ^g^prin^{ciple. If}^w^e^w^e^r^e^ab^{le to}^ap^p^l^y^{all c}^u^r^r^eⁿ^t^y^ear^f^uⁿ^d^{s to}
^cu^rren^t^y^{ear requ}^ire^m^en^t^s^aⁿ^{d def}^e^{r con}^s^ideratioⁿ^o^f^co^st^g^r^o^w^t^h^to^t^h^e^y^earⁱⁿ^w^h^ich^th^e
^ex^p^eⁿ^d^it^u^r^e^w^o^u^l^d^b^e^r^e^q^u^ir^ed^{, th}^{e Co}ⁿ^g^r^es^{s an}^d^th^{e p}^u^b^lic^w^o^u^l^d^lo^{se su}^b^s^taⁿ^tia^l
^vⁱ^sⁱ^bilⁱ^t^y^....
^If^m^a^j^o^{r pr}^ocu^r^e^m^en^t^aⁿ^{d con}^s^t^r^u^c^tⁱ^on^prog^ra^m^s^w^e^{re i}ⁿ^cre^m^eⁿ^t^a^l^l^y^fun^d^{ed, f}^u^t^u^re
^C^ong^res^s^e^s^w^o^u^l^{d be co}^m^m^itt^{ed to f}ⁱⁿ^aⁿ^c^ing^t^h^{e balan}^{ce of}ⁱⁿ^cre^m^eⁿ^tal^s^t^arts^....
^In^cre^m^eⁿ^tal^fuⁿ^dⁱⁿ^g^w^o^u^l^{d i}ⁿ^j^ect^m^o^re^un^certain^t^y^{into ou}^{r p}^l^an^ning^aⁿ^{d ca}^u^s^e^t^h^{e def}^eⁿ^s^e
ⁱⁿ^d^u^s^tr^y^to^b^e^m^o^re^s^k^ep^tica^l^o^f^th^e^stab^ilit^y^o^f^{DOD p}^r^o^c^u^r^e^m^eⁿ^{t a}ⁿ^d^coⁿ^s^tru^c^tⁱ^oⁿ
^prog^ram^s^{. T}^h^is^,^w^e^believ^e^,^wou^l^{d tran}^s^l^{ate i}ⁿ^{to h}ⁱ^gh^{er cos}^t^s^beca^u^s^e^l^oⁿ^g^-^t^e^r^m^,^c^o^s^t^-^s^avⁱⁿ^g
^cap^{ital in}^v^e^st^m^eⁿ^t^{s ar}^{e h}ⁱ^g^h^l^y^d^e^p^eⁿ^d^en^{t u}^p^oⁿ^p^e^r^ceiv^e^d^p^r^o^g^r^a^m^stab^ilit^y^.

^(...c^on^tin^ue^d)
^a^pplie^{d to the}^s^hⁱ^p^b^u^il^ding^pr^og^r^a^m^tha^t^wa^{s a}^u^thoriz^e^d^by^{this la}^w^.
⁴³^H^e^a^l^s^o^no^te^{d t}^h^a^t^t^h^e^H^ous^e^A^ppro^p^ria^tio^ns^Com^m^ittee^affⁱ^r^m^e^d^the^f^u^{ll f}^undi^ng^p^o^lic^y^{in its}^re^por^{t (H}^.Re^p^t.^94-
⁵³⁰^{, Oc}^to^be^{r 3,}¹⁹⁷⁵^{) o}ⁿ^t^h^e^FY1⁹⁷⁶^m^ilita^r^y^c^onstr^uc^tioⁿ^A^ppro^p^r^ia^{tions bill (H}^.R.¹⁰⁰²^{9). T}^h^e^c^o^m^m^itte^e^’^s
^a^f^fⁱ^r^m^a^{tion, w}^h^ic^{h a}^p^pe^a^r^{s on}^pa^g^e^{s 22-23}^{, re}^la^te^{s to m}^ilita^ry^c^onstruc^tio^{n pr}^oje^c^t^{s ra}^the^r^t^h^aⁿ^t^o^t^h^e^proc^ure^m^eⁿ^{t of}
^w^e^a^pons^aⁿ^{d e}^q^uⁱ^pm^eⁿ^{t in t}^h^e^D^O^D^a^ppro^p^ria^tio^ns^b^{ill. T}^h^e^c^o^m^m^itte^e^s^t^a^t^e^d^tha^t^it
ⁿ^o^t^{es t}^h^{e co}^mm^en^t^s^o^f^t^h^{e Co}^mmi^t^t^{ee o}ⁿ^A^r^m^e^d^S^e^rvi^c^{es o}^f^t^h^{e S}^eⁿ^a^t^e^oⁿ^ph^asiⁿ^{g o}^rⁱⁿ^crem^en^tⁱⁿ^g
^the^a^u^th^oriz^a^tioⁿ^of^m^a^{jor proje}^c^t^{s. T}^h^e^Com^m^itt^e^e^a^g^re^e^s^w^{ith the}^Com^m^itte^e^{on A}^r^m^e^{d Se}^rv^ic^e^s
^of^the^Se^na^te^’s^c^o^m^m^eⁿ^ts^{on the}^unde^sⁱ^ra^b^ility^of^s^u^c^h^proc^e^d^ure^s^,^a^{nd w}ⁱ^s^h^e^s^{to re}^mⁱ^{nd t}^h^e
^s^e^r^v^ic^es^a^{nd the}^D^e^pa^r^t^m^e^{nt of}^D^e^f^e^ns^e^tha^t^{it is}^t^h^e^p^o^lic^y^of^the^C^o^m^m^itte^e^{on A}^ppr^opr^ia^ti^ons^of
^the^H^ous^e^of^R^e^pr^e^s^eⁿ^ta^tiv^e^s^{to p}^r^ov^ide^f^u^{ll f}^undi^ng^of^m^a^jor^c^ons^tr^uc^tio^{n pr}^og^r^a^m^s^f^o^r^the
^m^ilita^r^y^{. In thos}^e^f^e^w^s^itua^tions^w^h^e^r^e^pha^s^e^{d f}^unding^isⁿ^ecessar^y^t^o^p^r^o^vⁱ^d^{e ad}^equ^a^t^e
^c^ong^r^e^s^sⁱ^ona^{l c}^o^ntr^o^l^ov^e^r^the^us^e^of^a^ppr^opr^ia^te^{d f}^unds^{, pa}^r^tia^{l f}^u^ndi^ng^of^c^e^r^ta^{in pr}^o^j^e^c^t^s^m^a^y^be
^ne^c^e^s^s^a^r^y^{, but the}^s^e^ins^t^aⁿ^c^e^s^a^r^e^f^e^w^a^{nd f}^a^r^be^tw^ee^{n a}^nd^us^ua^lly^r^e^s^u^{lt f}^r^om^une^x^p^e^c^t^e^d
^de^v^e^lopm^eⁿ^ts^{in a}^m^a^jor^c^ons^tr^uc^tion^pr^og^r^a^m^or^po^or^m^a^na^g^e^m^e^{nt. I}ⁿ^pa^r^tic^ula^r^,^pa^r^tia^{l f}^uⁿ^d^ing^is
^not^to^be^r^e^c^o^m^m^e^nde^{d a}^s^a^w^a^y^of^s^h^a^r^ing^the^w^e^a^{lth by}^divⁱ^ding^a^s^e^r^v^ic^e^’^s^a^nnua^{l c}^o^ns^tr^uc^ti^on
^budg^e^t^be^tw^e^eⁿ^a^s^m^aⁿ^y^m^a^jor^c^l^aⁱ^m^a^nts^a^s^pos^sⁱ^ble^.

Comparing full funding to incremental funding in terms of its effects on unobligated balances, he
stated:
^No^w^,ⁱ^f^th^{e obj}^ectiv^e^w^e^{re to redu}^{ce u}ⁿ^obli^g^{ated balan}^ces^{, t}^h^isⁱⁿ^cre^m^eⁿ^{tal approach}
^d^o^e^{s th}^{at. Ho}^w^e^v^e^r^,^so^m^e^uⁿ^o^b^lⁱ^g^ated^b^a^lan^ces^w^o^u^l^d^{still b}^e^r^e^q^u^ir^ed^to^c^o^v^e^r
^coⁿ^tin^g^eⁿ^c^{ies, ter}^mⁱⁿ^a^tioⁿ^lia^b^{ilities, an}^d^o^t^h^e^r^uⁿ^cer^taiⁿ^tie^s.
^T^h^{e k}^e^y^poiⁿ^t^{, i}ⁿ^m^y^j^u^dgm^eⁿ^t^,^cen^t^e^rs^on^t^h^e^f^act^t^h^at^t^h^e^ex^pen^dⁱ^t^u^res^,^un^{der bot}^h
^approach^es^{, are th}^{e s}^a^m^e^{. It is}^ex^pen^d^it^u^r^es^aⁿ^dⁿ^o^t^uⁿ^o^b^lⁱ^g^a^t^e^d^b^a^l^aⁿ^c^e^s^w^hⁱ^c^hⁱⁿ^f^l^u^eⁿ^c^e^th^e
^Gov^e^rnm^e^nt^’sⁿ^{eed t}^o^borrow^m^oⁿ^e^y^.^Sⁱⁿ^{ce t}^h^{e approach}^es^{are equ}^a^{l in}^thⁱ^s^reg^a^{rd, th}^e
^Dep^a^r^t^m^eⁿ^t^o^f^Def^eⁿ^s^{e co}ⁿ^tⁱⁿ^u^e^{s to}^p^r^ef^er^f^u^ll^f^uⁿ^dⁱⁿ^g^f^o^r^p^r^o^c^u^r^em^eⁿ^{t a}ⁿ^d^m^ilitar^y
^con^s^tru^c^tⁱ^on^becau^s^e^o^f^th^{e s}^t^ron^g^e^r^m^aⁿ^a^g^e^m^eⁿ^t^con^t^{rol an}^{d dis}^c^iplin^{e i}ⁿ^h^e^reⁿ^tⁱⁿ^t^hⁱ^s
^p^o^licy^.
^Whⁱ^l^e^t^h^{ere i}^s^t^h^e^t^e^m^p^t^a^tⁱ^oⁿ^t^o^redu^{ce a}^gⁱ^v^e^{n fi}^s^cal^y^ear^’^s^bu^dg^et^b^y^aban^doni^ng^t^h^e
^f^u^l^l^fuⁿ^dⁱⁿ^{g pol}ⁱ^c^y^aⁿ^{d appl}^yⁱⁿ^g^pri^o^r^y^ear^uⁿ^oblⁱ^g^at^{ed bal}^aⁿ^ces^{, t}^hⁱ^s^t^e^m^p^t^a^tⁱ^oⁿ^sh^oul^{d be}
^r^e^sisted^{. T}^h^{e n}^e^{t r}^e^su^lt^w^o^u^l^d^b^e^{little ch}^an^g^eⁱⁿ^o^u^r^anⁿ^u^a^{l r}^e^q^u^ests^f^o^r^ap^p^r^o^p^rⁱ^atioⁿ^s^.
^In^s^t^{ead of}^dealⁱⁿ^g^wⁱ^t^h^t^h^{e fu}^l^l^cos^t^ofⁿ^e^w^s^t^art^sⁱⁿ^ou^r^procu^r^em^eⁿ^t^aⁿ^{d con}^s^t^r^u^c^tⁱ^on
^prog^ram^s^{, t}^h^e^C^ong^res^s^w^o^u^l^d^h^a^v^e^t^o^addres^sⁿ^o^t^onl^y^t^h^{e i}ⁿ^cre^m^en^t^a^l^cos^t^s^ofⁿ^e^w^s^t^art^s^,
^bu^t^al^s^o^t^h^{e i}ⁿ^cre^m^eⁿ^t^a^l^requⁱ^r^e^m^ent^s^of^pre^vⁱ^o^u^s^l^y^approv^{ed prog}^ram^s^{. I}ⁿ^t^h^{e ab}^s^eⁿ^c^e^of
^any^adv^aⁿ^t^a^g^es^ofⁱⁿ^cre^m^eⁿ^tal^f^uⁿ^dⁱⁿ^gⁱⁿ^th^{e areas}^of^redu^{ced ex}^pen^d^itu^res^{or requ}^ire^m^eⁿ^ts
^f^o^{r bu}^dg^{et a}^u^th^orit^y^,^th^{e ad}^van^t^ag^e^s^of^fu^ll^f^uⁿ^dⁱⁿ^gⁱⁿ^t^h^e^oth^e^{r areas}^I^m^eⁿ^tion^e^{d are}⁴⁴
^ev^iden^t.
When asked whether DOD has experienced any operational or procedural problems with the full
funding policy, he replied:
^W^e^h^a^v^e^{. W}^e^lik^{e th}^{e polic}^y^,^bu^{t n}^o^thⁱⁿ^g^is^f^r^{ee. T}^h^{ere ar}^{e t}^w^{o k}ⁱⁿ^d^s^of^proble^m^s^,
^basⁱ^call^y^—th^o^s^eⁱⁿ^tern^a^l^an^{d th}^os^{e ex}^terⁿ^{al. T}^h^{e ex}^tern^{al on}^e^s^{I th}^ink^y^o^u^{are f}^a^m^ili^a^r^wⁱ^th^;
^p^r^im^ar^il^y^t^h^{e cr}^iticis^m^o^f^o^u^r^uⁿ^o^b^lⁱ^g^ated^b^a^lan^ces.
^We^basⁱ^call^y^f^eelⁱ^f^y^o^u^g^o^for^th^e^prin^cⁱ^{ple w}^h^ichⁱ^s^g^{ood y}^ou^h^a^v^e^to^accept^t^h^e
^uⁿ^o^b^lⁱ^g^ated^b^a^lan^{ces. I}^w^ill^dⁱ^scu^s^{s th}^{e i}ⁿ^terⁿ^{al o}ⁿ^{es. B}^a^sicall^y^{, t}^h^e^y^ar^{e th}^{e h}^u^m^aⁿ
^resⁱ^s^t^aⁿ^{ce to dis}^c^iplin^{e. W}^e^ex^{pect a f}^u^ll^y^f^uⁿ^d^{ed prog}^ram^t^o^b^e^s^o^m^e^s^o^r^t^o^f^c^o^m^mⁱ^tm^en^t^oⁿ
^t^h^{e part}^of^t^h^{e prog}^ram^m^aⁿ^a^g^e^{r t}^h^at^h^e^can^produ^{ce t}^h^at^prog^ra^m^,^t^h^at^eⁿ^{d res}^u^l^t^,^t^h^at^t^hⁱⁿ^g^,
^at^t^h^at^pri^{ce a}ⁿ^d^w^h^a^t^of^t^eⁿ^h^a^ppen^sⁱ^s^peopl^{e do n}^o^t^lⁱ^k^e^t^o^{do t}^h^at^{. T}^h^e^y^w^aⁿ^t^t^o^g^e^t^t^h^ei^r
^f^ootⁱⁿ^t^h^{e door—}^t^h^e^y^w^a^nt^t^o^g^e^t^u^s^;^t^h^e^y^w^a^nt^t^o^g^e^t^O^M^B;^t^h^e^y^w^a^nt^t^o^g^e^t^t^h^e^C^ong^ress
^co^m^mⁱ^tted^to^p^r^o^g^r^a^m^s^to^t^h^{e p}^oⁱⁿ^t^w^h^er^e^w^e^h^a^v^e^to^b^a^{il th}^e^m^o^u^t.^A^l^m^o^{st all t}^h^{e in}^terⁿ^al
^procedu^r^{e p}^r^obl^em^s^st^e^m^f^r^om^t^h^a^t^.
^W^e^h^a^v^e^{to rev}ⁱ^e^w^,^as^al^m^o^s^t^e^v^er^y^lev^e^l^{in DOD}^does^,^th^e^cos^t^es^tⁱ^m^a^t^es^to^m^a^k^e^s^u^re
^th^e^y^{are realis}^{tic an}^{d ach}^ie^v^a^b^l^{e. W}^e^h^a^v^eⁿ^o^{t al}^w^a^y^s^been^s^u^cces^s^f^u^l^.
^Ag^aiⁿ^,^g^oⁱⁿ^g^b^ack^to^th^{e s}^h^ip^b^u^ildⁱⁿ^g^p^r^o^g^r^a^m^w^h^ich^is^m^o^{st d}^r^am^atic,^w^e^h^a^v^e^to
ⁱⁿ^cl^u^d^{e li}ⁿ^e^ite^m^s^f^o^{r cos}^t^g^r^o^w^t^h^aⁿ^{d es}^cala^tion^beca^u^s^{e o}^u^{r orig}ⁱⁿ^al^es^ti^m^a^te^s^w^e^reⁿ^o^t
^adequ^a^t^e^partⁱ^c^u^l^arl^yⁱⁿ^{a peri}^{od of}^hⁱ^gh^an^{d un}^predi^c^t^e^{d i}ⁿ^fl^atⁱ^oⁿ^.
^W^e^h^a^v^e^resⁱ^s^t^{ed t}^h^{at in}^{recent y}^ears^s^u^cces^s^f^u^l^l^y^bu^{t it ca}ⁿ^{be a pro}^b^lem^w^h^en^y^o^u^run⁴⁵
ⁱⁿ^{to un}^ex^{pected i}ⁿ^flation^or^any^ot^h^e^{r un}^e^x^pect^{ed a}^m^oun^t^s^.

⁴⁴^Ibid^.,^pp.¹⁰^-1^4.
⁴⁵^Ibid^.,^pp.¹⁶^-1^7.

When asked whether he thought DOD has saved any money by using the full funding approach,
he replied:
^Y^e^s^,^sⁱ^{r, s}^o^m^e^tⁱ^m^e^{s at}^s^o^m^e^ex^pens^{e t}^o^ot^h^e^{r prog}^ra^m^s^,^t^h^atⁱ^sⁱⁿ^eⁿ^f^o^rciⁿ^{g t}^h^e
^dⁱ^scip^lin^e.
^Iⁿ^s^o^m^e^c^a^s^e^s^,^r^a^t^h^e^r^t^h^aⁿ^c^o^m^e^b^a^c^k^t^o^t^h^e^C^oⁿ^g^r^e^s^s^f^o^r^th^e^[^a^d^d^itioⁿ^a^lⁿ^eed^ed^]^m^oⁿ^e^y^,
^w^e^h^a^v^e^h^a^{d t}^o^can^cel^prog^ram^sⁱⁿ^{order t}^o^com^p^l^e^t^e^ot^h^e^r^s^{, or h}^a^v^e^h^a^{d t}^o^redu^ce^s^o^m^e
^prog^ram^sⁱⁿ^{order t}^o^com^p^l^e^t^e^ot^h^e^rs^{, bu}^t^w^e^cert^aⁱⁿ^l^y^f^eel^t^h^{e di}^s^cⁱ^p^lⁱⁿ^e^on^t^h^{e prog}^ra^m
^m^aⁿ^a^g^e^{r h}^a^s^{paid of}^f^s^u^bs^tan^tⁱ^a^ll^y^becaus^e^h^e^does^kn^o^w^t^h^a^t^h^e^h^a^s^m^a^{de a co}^m^mⁱ^t^m^eⁿ^t
^an^d^h^e^wⁱ^ll^h^a^v^e^to^liv^e^wⁱ^t^h^it^an^d^th^at^h^e^o^r^so^m^e^f^e^llo^w^p^r^o^g^r^a^m^m^aⁿ^a^g^e^r^w^ill^su^f^f^er^if^h^e⁴⁶
^doesⁿ^o^{t com}^eⁱⁿ^{at t}^h^{e bu}^dg^et^{ed price.}
Later in the hearing, he stated:
^B^y^ap^p^r^o^p^r^iatin^g^t^h^e^m^oⁿ^e^y^oⁿ^{a f}^u^ll^fⁱⁿ^dⁱⁿ^g^b^a^sis,^y^o^u^a^u^to^m^a^tⁱ^call^y^s^u^b^j^{ect it to}^th^e
^r^e^p^o^r^tin^g^aⁿ^d^acco^uⁿ^tiⁿ^g^dⁱ^sc^ip^lin^{e o}^f^t^h^{e a}^g^eⁿ^ciesⁱⁿ^v^o^l^v^ed^{. I}ⁿ^ad^d^itioⁿ^,^y^o^u^h^a^v^e^an
^oblⁱ^g^at^{ed bal}^aⁿ^{ce t}^o^l^ook^at^un^{der f}^u^l^l^fun^dⁱⁿ^g^.
^Y^o^u^{do n}^o^t^h^a^v^e^any^un^oblⁱ^g^a^t^{ed bal}^aⁿ^{ces t}^o^l^{ook at}^uⁿ^d^erⁱⁿ^cre^m^eⁿ^t^a^l^fun^dⁱⁿ^g^.^Y^o^u
^h^a^v^eⁿ^o^m^e^a^s^u^r^{e o}ⁿ^t^h^{e book}^s^.^Y^o^u^h^a^v^eⁿ^o^ori^gⁱⁿ^al^pl^aⁿ^w^hⁱ^c^h^y^o^u^caⁿ^h^o^l^d^t^h^{e a}^g^en^c^y^t^o
^an^{d act}^u^a^l^l^y^e^x^pect^t^h^e^m^t^o^re^fl^ect^on^t^h^{e book}^s^.^T^h^e^y^can^co^m^e^u^p^ev^er^y^y^{ear an}^{d e}^x^pl^aiⁿ
^w^h^at^h^a^ppen^e^{d in}^th^{e preceding}^y^{ear, bu}^tⁿ^o^{t b}^y^m^oⁿ^t^h^[s^ic].
^Y^o^{u c}^a^nno^t^se^e^ho^w^t^h^e^p^r^o^j^ec^t^m^a^na^ge^rⁱ^s^sp^eⁿ^dⁱ^{ng a}^g^aⁱⁿ^s^t^hi^{s o}^rⁱ^gⁱⁿ^a^l^e^s^tⁱ^ma^t^e^aⁿ^d
^hⁱ^{s obl}ⁱ^g^atⁱ^oⁿ^a^g^aiⁿ^s^t^hⁱ^s^ori^gⁱⁿ^al^e^s^tⁱ^m^a^t^e^{. It}^[^f^u^l^l^fuⁿ^dⁱⁿ^g^]^gⁱ^v^e^s^y^{ou on}^t^h^e^book^s^o^f^t^h^e⁴⁷
^Gov^e^rnm^e^{nt, a record.}
At this same hearing, W. Bowman Cutter, Executive Associate Director for Budget at OMB,
testifying in support of the Carter Administration’s proposal to apply the full funding concept
more comprehensively through the federal budget, stated:
^T^h^{e P}^r^esid^en^{t b}^e^liev^e^{s t}^h^at^fu^l^l^f^uⁿ^dⁱⁿ^gⁱ^s^d^e^sirab^l^{e b}^ecau^se^it:
^Pr^ovi^d^es^{a cl}^ear^e^{r under}^s^t^andi^{ng of}^t^h^{e t}^o^t^a^l^ef^f^ect^of^budget^pr^opos^al^s^,^si^nc^e^f^u^l^l^f^undⁱⁿ^g
^r^e^q^u^ir^{es ap}^p^r^o^p^r^iatioⁿ^sⁱⁿ^ter^m^{s o}^f^to^{tal co}^s^t^s^f^o^r^an^eⁿ^tir^{e p}^r^o^j^{ect at th}^{e ti}^m^e^aⁿ^y^f^uⁿ^dⁱⁿ^g^is
^provⁱ^d^ed.
^Iⁿ^crea^{ses flexib}^ilityⁱⁿ^p^r^o^g^r^a^mmin^g^an^d^t^h^{e ab}^ilit^y^o^f^th^e^Go^v^e^rⁿ^m^eⁿ^t^to^sp^eed^u^p^th^e
^p^r^o^j^{ect if}^ch^an^g^e^{s i}ⁿ^ecoⁿ^o^mⁱ^c^coⁿ^d^itioⁿ^s^w^a^rran^{t accelerati}^oⁿ^.
^Per^mⁱ^t^s^cons^t^r^uctⁱ^{on pr}^ogr^ess^at^m^o^r^e^economⁱ^c^r^a^t^e^s^with^r^e^s^u^ltⁱⁿ^g^savⁱⁿ^g^{s to}^th^e
^G^o^v^e^rnm^e^nt^b^y^provⁱ^dⁱⁿ^g^prog^ra^m^con^tⁱⁿ^uⁱ^t^y^aⁿ^{d el}ⁱ^mⁱⁿ^atⁱⁿ^g^un^econ^o^mⁱ^c^s^t^a^r^t^-^u^p^aⁿ^d^s^t^op⁴⁸
^cos^t^s^th^at^s^o^m^e^tⁱ^m^e^s^acco^m^p^aⁿ^yⁱⁿ^cre^m^en^ta^{l fu}ⁿ^dⁱⁿ^g^.
Donald Scantlebury, Director of Financial and General Management Studies at GAO, stated at the
hearing:

⁴⁶^I^b^id^{., p. 17.}
⁴⁷^Ibid^.,^{p 2}²^.
⁴⁸^Ibⁱ^d^.^,^p^.⁵^.^It^alⁱ^c^{s as i}ⁿ^t^h^e^o^rⁱ^gⁱⁿ^al^.^S^{ee al}^so^p^a^{ge 4}^.

^T^h^{e s}ⁱ^gⁿⁱ^fⁱ^caⁿ^{ce of}^t^h^{e fu}^ll^-f^un^ding^con^{cept is}^t^h^{at it per}^m^it^s^an^ag^eⁿ^c^y^{to con}^t^ract^f^o^{r th}^e
^f^u^{ll co}^st^o^f^aⁿⁱ^t^e^m^o^r^ite^m^s^,^su^c^h^a^s^sh^ip^s,^wⁱ^t^h^t^h^e^kⁿ^o^w^l^ed^g^e^t^h^at^f^u^{ll o}^b^lⁱ^g^atioⁿ^a^l
^au^th^o^r^it^yⁱ^s^av^a^ilab^l^{e to}^co^m^p^l^e^{te th}^{e ite}^m^o^r^ite^m^s^an^d^t^h^{at c}^o^m^p^letⁱ^oⁿ^o^f^th^e^w^o^r^k^wⁱ^l^lⁿ^o^t
^{be h}^e^l^d^u^p^{or s}^t^ret^c^h^e^{d ou}^t^b^y^bu^dg^et^cu^t^s^{or f}^uⁿ^dⁱⁿ^g^del^a^y^s^.
^P^r^io^r^to^th^{e in}^stit^u^tioⁿ^o^f^f^u^ll^f^uⁿ^dⁱⁿ^g^,^f^uⁿ^d^s^w^e^r^e^p^r^o^v^id^edⁱⁿ^anⁿ^u^{al i}ⁿ^cr^e^m^eⁿ^ts.
^S^hⁱ^pbuⁱ^l^dⁱⁿ^g^h^a^s^oft^eⁿ^beeⁿ^u^s^{ed as an}^e^x^a^m^p^l^{e of}^e^x^pl^aiⁿⁱ^ng^t^h^e^fu^l^l^-f^un^di^ng^coⁿ^cept
^becau^s^e^of^t^h^{e leng}^t^h^of^procu^r^e^m^eⁿ^{t lead}^w^h^ic^h^rang^es^f^r^o^m^{3 to 7 y}^ears^depen^dⁱⁿ^g
^prim^aril^y^on^t^h^{e t}^y^{pe of}^s^h^{ip.... Each}^y^{ear auth}^orit^y^w^a^s^g^r^aⁿ^t^e^{d f}^o^{r on}^ly^a^p^o^r^tⁱ^oⁿ^o^f^t^h^e^s^hⁱ^p
^{or s}^h^ips^beiⁿ^g^con^t^racted^f^o^{r. Ov}^{er t}^h^{e le}^ng^{th of th}^e^con^t^{ract bu}^d^g^{et redu}^ct^ion^s^an^d
^coⁿ^s^tr^ain^t^{s co}^u^l^d^d^e^la^y^tⁱ^m^e^l^y^co^m^p^letioⁿ^o^f^t^h^{e s}^h^ip^{s an}^d^r^e^su^{lt i}ⁿ^ad^d^itioⁿ^a^{l co}^{st o}^f^th^e
^{total s}^h^ip....
^W^e^b^e^liev^e^th^{at f}^u^{ll f}^uⁿ^dⁱⁿ^g^h^a^{s th}^{e ad}^v^aⁿ^t^ag^{e o}^f^p^e^r^mⁱ^ttin^g^a^g^en^cie^s^to^co^m^p^l^e^t^e^l^oⁿ^g^-⁴⁹
^t^e^r^m^proj^ect^s^at^optⁱ^m^um^e^f^fi^cⁱ^en^c^y^aⁿ^{d redu}^ces^del^a^y^s^{caused by}^fun^dⁱⁿ^g^res^t^raiⁿ^t^s^.
A 1996 GAO report on budgeting for federal capital assets⁵⁰ stated:
^Desp^{ite th}^{e p}^o^t^en^{tial p}^r^o^b^l^em^s^f^o^rⁱⁿ^dⁱ^vⁱ^d^u^{al ag}^eⁿ^cies,^u^p^-^f^r^oⁿ^t^f^uⁿ^dⁱⁿ^g^{is cr}^{itical t}^o
^s^a^f^e^gu^ardin^g^C^ong^res^s^’s^abili^t^y^{to con}^t^{rol ov}^{erall f}^e^{deral e}^x^pen^d^it^u^r^es^an^{d to as}^s^e^s^s^t^h^e
ⁱ^m^pact^of^t^h^e^f^e^deral^bu^dg^et^on^t^h^{e econ}^o^m^y^{. Wi}^t^h^o^u^t^u^p^-^f^r^on^t^fuⁿ^dⁱⁿ^g^,^proj^ect^s^m^a^y^be
^uⁿ^d^er^ta^k^eⁿ^wⁱ^th^o^u^{t ad}^eq^u^a^te^atten^tioⁿ^b^eⁱⁿ^g^gⁱ^v^eⁿ^to^t^h^eⁱ^r^o^v^er^{all co}^{sts a}ⁿ^d^b^eⁿ^e^f^its.
^Mo^r^e^o^v^er^{, f}^a^ilu^r^e^to^f^u^ll^y^f^uⁿ^dⁱⁿ^g^p^r^o^j^ects^bef^o^{re th}^ey^ar^{e u}ⁿ^d^ertak^eⁿ^can^dis^t^{ort th}^e
^allocation^of^b^u^dg^{e res}^o^u^r^ces^an^{d obs}^cu^{re t}^h^{e i}^m^{pact of}^f^e^{deral bu}^dg^etar^y^actioⁿ^on^th^e
^priv^{ate s}^{ector. On}^l^y^{a f}^e^w^a^g^encies^{, in}^cl^u^d^ing^th^e^A^r^m^y^C^o^rps^of^En^gⁱⁿ^eers^(on^e^of^ou^r^c^a^s^e
^s^t^u^d^ie^s⁾^h^a^v^e^been^ex^e^m^{pted f}^r^om^t^h^{e u}^p^-^f^r^{ont fu}ⁿ^dⁱⁿ^g^requ^irem^eⁿ^t^.^D^e^s^pⁱ^t^e^t^h^es^e^a^g^eⁿ^ci^e^s^’⁵¹
^u^s^e^o^fⁱⁿ^cr^e^m^eⁿ^{tal f}^uⁿ^dⁱⁿ^g^,^O^M^B^ha^{s t}^a^keⁿ^st^e^p^{s t}^o^eⁿ^c^o^ur^ag^{e con}^s^is^teⁿ^t^application^o^f⁵²
^up^-^f^r^o^nt^fu^ndⁱ^{ng a}^c^r^o^ss^go^ve^rⁿ^m^e^ntⁱⁿ^t^h^e^f^u^t^u^r^e^.
The report amplified on these points two pages later:
^A^l^t^h^o^u^gh^pos^sⁱ^bl^y^probl^e^m^atⁱ^c^f^o^{r i}ⁿ^di^vⁱ^d^u^al^ag^eⁿ^ci^es^,^u^p^-f^ron^t^f^uⁿ^dⁱⁿ^g^h^a^s^l^ong^been
^recogⁿⁱ^{zed as}^aⁿⁱ^m^portaⁿ^t^{tool f}^o^r^m^aⁱⁿ^taiⁿ^ing^g^o^v^e^rⁿ^m^e^nt^wⁱ^{de fis}^{cal co}ⁿ^t^{rol. T}^h^e
^r^e^q^u^ir^e^m^en^{t t}^h^{at b}^u^d^g^{et a}^u^t^h^o^r^it^y^b^e^p^r^o^v^id^ed^u^p^-^f^r^oⁿ^t^{, b}^e^f^o^r^e^th^e^g^o^v^e^rⁿ^m^eⁿ^t^en^ter^sⁱⁿ^to
^any^co^m^mⁱ^t^m^eⁿ^t,^w^a^s^es^tabli^s^h^e^{d ov}^{er 100}^y^ears^ag^{o i}ⁿ^t^h^e^A^d^e^q^u^a^cy^of^A^p^p^r^o^p^rⁱ^a^tⁱ^oⁿ^s^A^c^t
^an^{d th}^e^An^tideficien^c^y^A^c^t.^T^h^es^{e acts}^res^pon^{ded to pas}^t^problem^sⁱⁿ^w^h^ich^a^g^en^cie^s
^com^mⁱ^{tted t}^h^e^g^o^v^e^rnm^eⁿ^t^to^pay^m^eⁿ^ts^t^h^{at e}^x^{ceeded th}^{e re}^s^o^u^r^ces^m^a^{de av}^ai^{lable to t}^h^e^m
^by^C^ong^res^s^.
^T^h^{e i}^m^port^aⁿ^{ce of}^t^h^{e pri}ⁿ^ci^pl^e^w^a^s^reiⁿ^f^o^{rced by}^t^h^{e 1967 R}^e^port^of^t^h^{e Pres}ⁱ^d^en^t^’^s
^C^o^m^mⁱ^ssⁱ^{on on Bu}^dg^et^C^oⁿ^c^e^p^t^s^,^w^hⁱ^c^{h e}^m^p^h^asⁱ^zed^t^h^e^pri^m^ar^y^pu^rpos^es^o^f^t^h^e^bu^dg^et^as
^b^eⁱⁿ^g^t^h^{e e}^f^fⁱ^cⁱ^en^{t a}^llo^catioⁿ^o^f^r^e^so^u^r^{ces a}ⁿ^d^th^e^f^o^r^m^u^l^atioⁿ^o^f^fⁱ^{scal p}^o^lic^y^to^b^eⁿ^e^f^{it t}^h^e

⁴⁹^Ibid^{., p. 6.}
⁵⁰^G^o^v^e^rn^m^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Bud^g^e^t^I^s^s^u^e^s^:^Bu^dge^ti^ng^for^Fe^de^r^a^{l C}^a^pit^a^l^{, G}^A^O^/^A^I^M^D^-^97-^{5, N}^o^v^e^m^b^e^r
¹⁹⁹^6.
⁵¹^T^h^{e GAO rep}^o^r^{t h}^a^{s a f}^o^o^tⁿ^o^t^{e a}^t^th^is^p^oⁱⁿ^t^d^e^fⁱⁿⁱⁿ^gⁱⁿ^crem^en^{tal fu}ⁿ^dⁱⁿ^{g as f}^o^llo^w^s^{: “In}^c^re^m^eⁿ^t^{al fu}ⁿ^dⁱⁿ^{g o}^ccu^rs
^w^h^eⁿ^the^C^ong^r^e^s^s^pr^ovⁱ^d^e^s^f^und^s^f^o^r^a^c^a^p^ita^{l a}^c^quis^iti^on^ba^s^e^{d o}ⁿ^the^ob^lig^a^tions^e^s^tim^a^t^e^d^{to be}ⁱⁿ^c^u^r^r^e^{d w}^{ith a}
^fⁱ^s^c^a^l^y^e^a^r^w^h^eⁿ^s^u^c^h^f^unds^w^ill^not^pro^duc^e^a^us^a^b^le^a^s^s^e^t.”
⁵²^G^A^O^/^A^I^MD^-^97-^{5, o}^p^{. c}ⁱ^t^.,^p.^34.

^na^tⁱ^o^na^l^e^c^o^no^my.^T^h^e^up^-^f^r^o^nt^f^u^ndⁱⁿ^{g r}^e^q^uⁱ^r^e^m^eⁿ^t^a^d^v^a^nc^e^s^b^o^t^h.^I^tⁱ^s^e^sse^ntⁱ^a^l^fo^r
^ef^{ficient res}^o^u^r^{ce al}^location^de^cisⁱ^ons^becau^s^e^it^h^e^{lped ens}^u^r^e^th^at^th^e^C^ong^res^s^cons^iders
^t^h^e^f^u^l^l^cos^t^o^f^al^l^propos^{ed co}^mmⁱ^t^m^e^nt^s^aⁿ^d^m^a^k^e^s^t^r^ade-^o^f^f^s^bas^e^{d on}^fu^l^l^cos^t^s^.^T^o^be
^u^s^e^f^u^lⁱⁿ^t^h^e^f^o^r^m^u^l^atioⁿ^o^f^fⁱ^s^{cal p}^o^licy^,^t^h^{e b}^u^d^g^et^m^u^{st b}^e^ab^{le to}^hⁱ^g^h^lig^h^t^t^h^{e i}^m^p^a^c^t^o^f
^t^h^e^f^e^deral^bu^dg^et^oⁿ^t^h^{e eco}^nom^y^.^F^o^{r t}^hⁱ^s^p^u^rpos^{e, t}^h^{e requ}ⁱ^r^e^m^eⁿ^t^f^o^{r u}^p^-^f^r^ont^fun^dⁱ^ng
^als^o^s^e^r^v^es^t^h^e^C^ong^res^s^w^e^ll.^T^h^{e poin}^t^at^w^h^ic^h^capital^s^p^eⁿ^ding^h^a^s^t^h^{e lar}^g^es^t^an^d^m^o^s^t
^{direct econ}^o^mⁱ^{c i}^m^{pact o}ⁿ^th^e^priv^{ate s}^ector^occu^rs^{at t}^h^{e poin}^t^t^h^{e co}^m^mⁱ^t^m^eⁿ^{t is}^m^a^de—
^th^{at is}^,^u^p^-f^ron^t^—ⁿ^{ot ov}^{er t}^h^{e ex}^{pected lif}^eti^m^{e of}^{a lo}ⁿ^g^-^lⁱ^v^{ed as}^s^e^t.
^Failu^{re to recog}ⁿⁱ^{ze th}^e^f^u^l^l^cos^t^of^{a particu}^l^{ar t}^y^{pe of}^ex^pe^ndi^t^u^re^w^h^en^bu^d^g^et^deci^sⁱ^ons
^{are bei}ⁿ^g^m^a^{de cou}^l^{d l}^{ead t}^o^di^s^t^ortⁱ^oⁿ^sⁱⁿ^t^h^{e allocation}^o^f^res^o^u^r^ces^{. In}^ot^h^e^r^w^o^rds^,ⁱ^f
^particu^l^{ar t}^y^pes^of^s^p^en^diⁿ^g^,^s^u^ch^as^f^o^{r phy}^sⁱ^{cal as}^s^e^t^s^,^w^e^{re g}ⁱ^v^eⁿ^pref^{erential t}^r^e^a^t^m^eⁿ^tⁱⁿ
^t^h^{e bu}^dg^et^b^y^vi^rt^u^e^of^recogni^zi^ng^on^l^y^{a f}^r^actⁱ^oⁿ^of^t^h^ei^{r t}^o^t^a^l^cos^t^{, t}^h^enⁱ^tⁱ^s^lⁱ^k^e^l^y^t^h^at
^relativ^el^y^m^o^re^s^p^en^ding^f^o^{r th}^os^{e t}^y^pes^{of as}^s^e^ts^w^o^u^l^{d occu}^{r. W}^h^{ile adv}^o^cates^f^o^r
^pu^rch^a^sⁱ^ng^s^o^m^e^f^e^deral^ass^e^t^s^m^a^y^s^e^e^t^hⁱ^s^as^{a de}^sⁱ^rabl^{e en}^{d, s}^u^c^h^aⁿ^ou^t^c^o^m^e^m^a^yⁿ^o^t
^accu^ratel^y^re^f^l^{ect t}^h^eⁿ^a^tion’^sⁿ^eeds^.^In^particu^l^{ar, ot}^h^e^{r t}^y^pe^s^of^f^e^{deral s}^p^en^ding^t^h^{at als}^o
^p^r^o^v^id^{e lo}ⁿ^g^-^ter^m^b^eⁿ^e^f^its^b^u^{t th}^{at ar}^{e n}^o^{t p}^h^y^sica^{l as}^{sets (}ⁱⁿ^c^l^u^dⁱⁿ^g^r^e^sear^ch^an^d
^dev^e^l^o^p^m^en^t^an^d^s^p^en^diⁿ^g^f^o^{r h}^u^m^aⁿ^capi^t^a^l⁾^w^o^u^l^{d be ar}^bi^t^r^ari^l^y^di^s^a^dv^aⁿ^t^a^g^e^{d i}ⁿ^t^h^e
^b^u^d^g^{et p}^r^o^{cess, ev}^eⁿ^ifⁿ^a^tioⁿ^a^{l p}^r^io^r^{ities r}^e^m^aⁱⁿ^uⁿ^c^h^a^lleⁿ^g^e^d^.
^Fu^r^t^h^e^r^m^o^r^{e, f}^a^il^u^r^{e to}^f^u^ll^y^f^uⁿ^d^cap^{ital p}^r^o^j^{ects at th}^{e ti}^m^e^t^h^{e co}^m^mⁱ^t^m^eⁿ^{t is en}^ter^e^dⁱⁿ^to
^can^f^o^{rce f}^u^tu^{re C}^oⁿ^g^r^es^s^e^s^a^{nd adm}ⁱⁿⁱ^s^t^ratioⁿ^s^{to ch}^oos^{e betw}^eeⁿ^h^a^vⁱⁿ^g^an^uⁿ^u^s^a^b^l^e^a^s^s^e^t
^an^d^coⁿ^tⁱⁿ^uⁱⁿ^g^p^r^o^j^ects’^f^uⁿ^dⁱⁿ^g^f^o^r^y^ear^{s e}^v^en^a^f^ter^p^r^io^r^ities^m^a^y^h^a^v^e^c^h^an^g^e^d^.^Fo^r
^ex^a^m^pl^e,ⁱ^f^t^h^e^C^ong^res^s^provⁱ^d^es^fuⁿ^dⁱⁿ^g^f^o^{r on}^l^y^part^{of a proj}^ect^an^{d t}^h^at^partⁱ^sⁿ^o^t
^u^s^{able abs}^eⁿ^t^co^m^p^le^tion^of^t^h^{e en}^{tire pro}^j^{ect, th}^en^th^{e C}^ong^r^e^s^s^an^{d th}^e^a^d^mⁱⁿⁱ^s^t^r^a^tⁱ^oⁿ^m^a^y
^f^{eel co}^m^p^elled^to^coⁿ^tin^u^e^f^uⁿ^dⁱⁿ^gⁱⁿ^t^h^e^f^u^tu^r^e^to^a^v^oⁱ^d^w^a^s^tin^g^t^h^{e in}^{itial, p}^a^r^tial^f^uⁿ^dⁱⁿ^g
^th^at^w^a^{s alr}^ead^y^sp^eⁿ^{t. T}^h^u^s^,^if^cap^{ital p}^r^o^j^{ects ar}^e^b^e^g^uⁿ^wⁱ^t^h^o^u^t^f^u^{ll f}^uⁿ^dⁱⁿ^g^,^f^u^tu^r^e
^C^ong^res^s^e^s^aⁿ^{d ad}^mⁱⁿⁱ^s^t^rations^m^a^y^,ⁱⁿ^e^f^f^{ect, be}^f^o^{rced to com}^mⁱ^{t a}^g^r^{eater s}^h^{are of}^th^eir
^anⁿ^u^{al r}^e^so^u^r^ces^to^f^u^l^f^illiⁿ^g^p^a^{st co}^m^mⁱ^t^m^eⁿ^t^s^an^d^th^u^s^h^a^v^e^less^f^l^e^x^ib^ili^t^y^to^r^e^sp^oⁿ^d^to⁵³
ⁿ^e^w^{or ch}^angⁱⁿ^gⁿ^eeds^as^t^h^e^y^aris^e.
In the final chapter of its report, GAO stated:
^Fu^ll^u^p^-^f^r^oⁿ^t^f^uⁿ^dⁱⁿ^g^{is o}ⁿ^{e o}^f^th^{e to}^o^l^{s th}^{at h}^a^{s b}^eenⁱ^m^p^o^r^taⁿ^t^to^f^acilitatⁱⁿ^g^fⁱ^{scal co}ⁿ^t^r^o^l
^an^{d com}^p^aris^oⁿ^s^of^t^h^{e lon}^g^-^t^e^r^m^cos^t^s^of^s^p^en^diⁿ^g^alterⁿ^ati^v^es^.^Aⁿ^e^s^s^eⁿ^tⁱ^a^l^p^a^r^t^o^f^p^r^u^d^eⁿ^t
^c^a^pⁱ^t^a^l^p^l^aⁿⁿⁱ^ng^mu^st^b^e^aⁿ^a^d^he^r^e^nc^e^t^o^f^u^l^l^up^-fr^oⁿ^t^f^undⁱⁿ^g.^W^h^eⁿ^f^u^l^l^u^p^-f^ron^t^f^uⁿ^dⁱⁿ^gⁱ^s
ⁿ^o^{t p}^r^acticed^{, th}^{e Co}ⁿ^g^r^e^{ss r}ⁱ^s^k^{s co}^m^mⁱ^ttiⁿ^g^t^h^{e g}^o^v^e^rⁿ^m^eⁿ^t^to^cap^{ital acq}^uⁱ^sitioⁿ^s^wⁱ^t^h^o^u^t
^d^e^ter^mⁱⁿⁱⁿ^g^w^h^e^t^h^e^r^t^h^{e p}^r^o^j^e^c^{t is af}^f^o^r^d^ab^{le o}^v^er^th^{e lo}ⁿ^g^-^t^er^m^.^Iⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^al^so
^com^p^el^s^fu^t^u^{re C}^ong^res^s^e^s^{to f}^uⁿ^d^{a pro}^j^{ect in}^order^to^prev^en^t^w^a^s^tⁱⁿ^g^r^e^s^o^u^r^c^e^s^p^r^e^vⁱ^o^u^s^ly
^appro^p^{riated. A}^s^bu^dg^{et cons}^t^r^ain^t^s^con^t^inu^e^{, in}^cre^m^eⁿ^tal^f^uⁿ^d^ing^m^a^y^lock^t^h^e^C^ong^res^s
ⁱⁿ^t^o^fu^t^u^{re s}^p^eⁿ^di^ng^pat^t^e^rns^aⁿ^{d redu}^{ce f}^l^e^xⁱ^bⁱ^lⁱ^t^y^t^o^res^{pond t}^oⁿ^e^wⁿ^eeds^.^Iⁿ^t^h^{e b}^u^dg^et
^p^r^o^{cess, f}^u^ll^y^f^uⁿ^d^ed^p^r^o^j^ects^m^a^y^b^e^dⁱ^sad^v^aⁿ^ta^g^e^dⁱⁿ^co^m^p^e^titioⁿ^wⁱ^thⁱⁿ^cr^e^m^en^tall^y
^f^uⁿ^d^{ed projects}^—^ev^eⁿ^w^h^eⁿ^t^h^{e fu}^ll^y^fun^d^{ed pro}^j^ects^actu^a^l^l^y^cos^t^les^sⁱⁿ^t^h^{e long}^run^.
However, full up-front funding can impede agencies’ ability to economically acquire capital in an
environment of resource constraints. Full up-front funding of relatively expensive capital
acquisitions can consume a large share of an agency’s annual budget, thereby forcing today’s
decision-makers to pay all at once for projects with long-lived benefits. While various capital
budgeting proposals have been advanced to address this, the proposals themselves have raised
significant concern because of their potential diminution of fiscal accountability and control.
Consequently, agencies need financing tools that can provide the fiscal control of up-front

⁵³^Ibid^.,^pp.³⁶^-3^7.

funding and can enable them to make prudent capital decisions within the current unified budget ⁵⁴
frame work.
GAO observed and concluded the following:
^T^h^{e r}^e^q^u^ir^em^eⁿ^{t o}^f^f^u^{ll u}^p^-^f^r^oⁿ^{t f}^uⁿ^dⁱⁿ^g^{is an}^esseⁿ^{tial to}^oⁱⁿ^h^e^lpⁱⁿ^g^t^h^{e Co}ⁿ^g^r^e^ss^m^a^k^e
^trade-^of^fs^a^m^oⁿ^g^v^a^riou^s^s^p^e^ndin^g^alterⁿ^ativ^e^s^{. Ho}^w^e^v^e^{r, in}^an^envⁱ^ronm^{ent of}^con^s^traiⁿ^e^d
^bu^dg^etar^y^res^o^u^r^ces^{, ag}^eⁿ^ciesⁿ^{eed tools}^th^{at can}^h^e^{lp f}^acil^{itate th}^es^{e trade}^-^off^s^aⁿ^{d th}^at
^en^{able th}^e^m^{to acco}^m^m^{odate u}^p^-f^ron^t^f^uⁿ^dⁱⁿ^g^.^F^u^rt^h^e^r^m^or^{e, to s}^u^cces^s^f^u^l^l^yⁱ^m^p^l^e^m^eⁿ^t⁵⁵
^G^P^R^A^’^s^requⁱ^r^e^m^eⁿ^t^f^o^{r prog}^ra^m^perf^or^m^aⁿ^ce^m^easu^r^es^,^m^a^na^ge^r^s^wⁱ^l^l^a^l^so^ne^e^d^t^o^kno^w
^th^{e f}^u^{ll co}^st^{s o}^f^t^h^eir^p^r^o^g^r^a^m^s^—iⁿ^c^lu^dⁱⁿ^g^cap^{ital u}^s^a^g^e.
^S^o^m^e^h^a^v^e^reco^m^m^eⁿ^{d t}^h^at^t^h^{e g}^o^v^e^rnm^eⁿ^t^adopt^{a f}^u^l^l^-^s^cal^{e capi}^t^a^l^bu^dg^et^{, bu}^t^t^hⁱ^s^rai^s^e^s
^m^a^j^o^{r bu}^dg^{et con}^t^{rol is}^s^u^es^an^d^m^a^yⁿ^o^{t be n}^eces^s^a^r^y^{to addres}^s^ag^en^c^y^-iden^tⁱ^f^ie^d⁵⁶
ⁱ^m^pedi^m^eⁿ^t^s^{to capital}^s^p^en^diⁿ^g^.^R^a^t^h^{er, ou}^{r cas}^e^s^t^u^d^ies^dem^o^ns^t^r^at^{e t}^h^at^m^o^re^m^odes^t
^t^o^o^l^s,^suc^h^a^s^r^e^vo^l^vⁱ^ng^fu^nd^s,ⁱ^nve^st^me^nt^co^m^pon^ent^s^{, an}^{d bu}^dg^etⁱⁿ^g^f^o^{r s}^t^an^d^-^al^on^{e s}^t^a^g^e^s^,
^can^h^e^{lp acco}^m^m^{odate u}^p^-^f^r^oⁿ^{t fun}^d^ing^wⁱ^t^h^ou^{t ra}ⁱ^s^ing^t^h^e^con^g^r^es^sⁱ^on^{al or f}ⁱ^s^{cal con}^t^rol⁵⁷
ⁱ^s^su^es^of^{a s}^e^parat^e^capi^t^a^l^budg^et^.
As a “matter for congressional consideration,” the GAO report recommended the following:
^A^l^t^h^o^u^g^h^r^e^q^u^irⁱⁿ^g^th^a^t^b^u^d^g^e^t^au^t^h^o^r^it^y^f^o^r^th^e^f^u^ll^co^{st o}^f^a^c^q^u^isitioⁿ^s^b^e^p^r^o^v^id^ed^b^e^f^o^r^e
^an^acq^uⁱ^sitioⁿ^is^m^a^d^e^allo^{ws th}^e^Coⁿ^g^r^e^s^s^to^coⁿ^t^r^o^{l ca}^p^{ital sp}^en^dⁱⁿ^g^at^th^e^ti^m^e^a
^com^mⁱ^t^m^eⁿ^t^is^m^a^{de, it als}^o^pr^es^en^t^s^ch^a^lleng^es^{. B}^eca^u^s^{e t}^h^e^en^{tire cos}^t^f^o^{r th}^e^s^{e relati}^v^e^l^y
^ex^p^eⁿ^s^iv^{e acq}^uⁱ^sitioⁿ^s^m^u^{st b}^e^ab^so^r^b^e^dⁱⁿ^th^{e an}ⁿ^u^{al b}^u^d^g^et^o^f^aⁿ^a^g^en^cy^o^r^p^r^o^g^r^a^m^,^fⁱ^x^e^d
^assets^m^a^y^see^m^p^r^o^h^ib^itiv^e^l^y^ex^p^eⁿ^s^iv^{e d}^e^sp^{ite t}^h^eir^loⁿ^g^-^t^e^r^m^b^eⁿ^e^f^its.
^T^hⁱ^s^r^e^p^o^r^t^d^e^sc^rⁱ^b^e^{s so}^m^e^s^t^r^a^t^e^gi^e^s^t^h^a^t^a^nu^mb^e^r^o^f^a^g^eⁿ^cⁱ^e^s^ha^ve^use^d^t^o^ma^na^ge^t^hⁱ^s
^dile^m^m^a^{. T}^h^{e C}^oⁿ^g^r^es^s^s^h^o^u^l^d^con^s^{ider en}^abli^ng^a^g^en^cie^s^t^o^u^s^e^m^o^re^f^l^e^x^{ible bu}^d^g^eting
^m^ech^aⁿⁱ^s^m^s^t^h^at^acco^m^m^{odate u}^p^-^f^r^ont^f^uⁿ^dⁱⁿ^{g ov}^{er t}^h^e^lon^g^e^{r ter}^m^w^h^ile^prov^iding
^appro^p^ri^at^{e ov}^ersⁱ^gh^t^an^{d co}^nt^rol^.^F^o^{r ag}^eⁿ^ci^{es h}^a^vⁱ^ng^proven^fⁱⁿ^aⁿ^cⁱ^a^l^m^aⁿ^a^g^e^m^eⁿ^t^aⁿ^d
^cap^{ital p}^l^anⁿⁱⁿ^g^cap^ab^{ilities a}ⁿ^d^r^e^lativ^el^y^s^m^{all o}ⁿ^g^oⁱⁿ^g^c^a^p^{ital n}^eed^{s, th}^e^s^{e tech}ⁿⁱ^q^u^e^s
^cou^l^{d in}^clu^d^{e rev}^o^l^v^ing^fun^d^s^an^{d in}^v^e^s^t^m^eⁿ^t^co^m^pon^ents^{. S}^u^c^h^t^e^chⁿⁱ^q^u^e^s^en^a^b^l^e^a^g^eⁿ^ci^es
^{to accum}^u^{late res}^o^u^r^ces^ov^er^{a period}^of^y^ear^sⁱⁿ^{order to f}ⁱⁿ^aⁿ^{ce certai}ⁿ^{capital n}^eeds^,
^p^r^o^m^o^t^e^f^u^{ll co}^stiⁿ^g^o^f^p^r^o^g^r^a^m^s^an^d^acti^v^it^{ies b}^yⁱⁿ^clu^dⁱⁿ^g^co^{sts r}^e^lated^to^cap^ital^u^s^a^g^eⁱⁿ
^p^r^o^g^r^a^m^b^u^d^g^{ets, an}^d^p^r^o^v^id^{e a d}^e^g^r^ee^o^f^f^uⁿ^dⁱⁿ^g^p^r^ed^ictab^ilit^y^to^aidⁱⁿ^loⁿ^g^-^r^an^g^e
^pl^anⁿⁱ^ng^{. A}^s^G^P^RA^m^o^v^e^t^o^w^a^{rd fu}^l^lⁱ^m^pl^e^m^eⁿ^t^a^tⁱ^oⁿ^,^t^h^e^s^{e an}^{d ot}^h^e^{r t}^ool^s^m^a^y^t^a^k^e^on
ⁱⁿ^c^r^e^a^sⁱ^ngⁱ^m^p^o^r^t^a^nc^eⁱⁿ^he^l^pⁱ^ng^ma^na^ge^r^s^aⁿ^d^t^h^{e C}^ong^ress^t^oⁱ^d^en^tⁱ^f^y^prog^ra^m^cos^t^s^an^{d t}^o⁵⁸
^m^o^{re e}^f^fⁱ^cieⁿ^tl^y^m^aⁿ^a^g^e^capit^{al as}^s^e^ts^.

⁵⁴^I^b^id^{., p. 81.}
⁵⁵^T^h^is^is^a^r^e^f^e^r^e^nce^{to the}^G^o^v^e^rⁿ^m^e^nt^P^e^r^f^or^m^a^nc^e^a^{nd R}^e^s^u^lts^A^c^{t of}¹⁹⁹^3.
⁵⁶^T^h^{e GAO rep}^o^r^{t w}^a^{s b}^a^sed^oⁿ^ca^{se stu}^dⁱ^{es o}^f^fⁱ^{ve go}^v^e^rn^m^eⁿ^t^ageⁿ^{cies: th}^{e A}^r^my^Co^rp^{s o}^f^En^gin^eers,^th^{e Co}^ast
^G^u^a^r^{d, the}^Iⁿ^te^r^a^g^e^nc^y^Fle^e^t^Ma^na^g^e^m^e^{nt Sy}^s^t^em⁽^I^F^MS)^a^nd^P^u^bl^ic^B^u^ild^ing^s^Se^r^v^ic^e⁽^P^B^S⁾^of^the^G^e^ne^r^a^{l Se}^r^v^ic^e^s
^A^d^mⁱ^nis^t^r^a^{tion (}^G^SA⁾^,^a^{nd the}^U^.^{S. G}^e^olog^ic^a^l^Sur^v^ey⁽^U^SG^S)^{. T}^h^e^r^e^por^{t a}^l^s^o^pr^ov^ide^s^s^u^p^p^le^m^e^nta^r^y^inf^o^r^m^a^tion
^{on t}^h^e^F^o^o^d^aⁿ^{d D}^r^ug^A^d^mⁱ^nis^t^r^a^tion⁽^F^D^A⁾^,^the^For^e^s^t^Se^r^v^ic^e^,^th^e^Iⁿ^f^o^r^m^a^{tion T}^e^c^hnol^og^y^Se^r^v^ice⁽^I^T^S)^of^G^S^A^,
^an^d^t^h^{e Natio}ⁿ^a^l^Ocean^{ic an}^d^A^t^m^o^sp^h^e^{ric A}^d^mⁱⁿⁱ^stratioⁿ^(NOAA^).
⁵⁷^G^A^O^/^A^I^MD^-^97-^{5, o}^p^{. c}ⁱ^t^.,^p.^80.
⁵⁸^Ibid^.,^pp.⁸⁴^-8^5.

In response to an August 2000 request from the Senate Budget Committee, the GAO prepared a
briefing on incremental funding of capital asset acquisitions, including an assessment of “the
implications for future DOD budgets if the Navy’s shipbuilding and conversion account were to
change from incremental to full funding....” The briefing was given to the staff of Senate Budget
Committee in December 2000, and was subsequently given to staff from the Senate Armed
Services Committee, the Senate Appropriations Committee, and the House Appropriations
Committee.
In February 2001, GAO prepared a letter to the Senator Pete Domenici, the chairman of the
Senate Budget Committee, and other congressional recipients, summarizing the briefing and ⁵⁹
enclosing the briefing slides. As summarized in the letter, the GAO briefing concluded the
following, in part:
^If^th^{e Navy}^s^h^ipbu^ildiⁿ^g^aⁿ^{d con}^v^e^rs^ioⁿ^accouⁿ^t^w^e^{re to be}^m^o^v^e^{d f}^r^o^m^f^u^{ll to in}^cre^m^eⁿ^ta^l
^fu^ndⁱ^ng^fo^r^a^gi^ve^{n p}^e^rⁱ^o^d^o^f^tⁱ^m^e^,^t^hⁱ^s^w^o^ul^d^no^t^a^l^l^o^w^t^h^e^N^a^v^y^t^o^p^r^o^c^ur^e^m^o^r^e^shi^p^s^f^o^r^a
^gⁱ^v^eⁿ^a^m^o^uⁿ^t^o^f^f^uⁿ^dⁱⁿ^g^.^Ad^dⁱ^tⁱ^oⁿ^a^l^s^hⁱ^p^s^w^o^u^l^d^r^e^q^uⁱ^r^e^a^d^dⁱ^tⁱ^oⁿ^a^l^f^uⁿ^dⁱⁿ^g^.^Af^ter^th^eⁱⁿ^itial
^y^{ear, in}^cre^m^en^tal^fuⁿ^dⁱⁿ^g^redu^ces^t^h^{e a}^m^o^uⁿ^t^of^bu^d^g^{et auth}^orit^y^a^v^{ailable to fun}^dⁿ^e^w
^s^h^ipsⁱⁿ^any^gⁱ^v^eⁿ^fⁱ^s^cal^y^{ear becau}^s^e^{a portion}^of^th^{e fu}ⁿ^dⁱⁿ^g^m^u^s^t^b^e^d^e^v^o^t^e^d^t^o^c^o^m^p^l^e^tⁱⁿ^g
^sh^ip^{s p}^a^r^tiall^y^f^uⁿ^d^edⁱⁿ^p^r^io^r^y^ear^{s. I}ⁿ^ad^d^itioⁿ^,^t^h^er^{e is r}ⁱ^sk^o^f^co^{st g}^r^o^w^t^h^as^so^ciated^wⁱ^t^h
^{all capital proj}^ects^—^cos^t^g^r^ow^t^h^h^a^s^occu^rred^wⁱ^t^h^fu^ll^{y f}^uⁿ^d^{ed proj}^ects^as^w^e^{ll as}
ⁱⁿ^cr^e^m^eⁿ^tall^y^f^uⁿ^d^ed^p^r^o^j^{ects. A}ⁿ^y^co^st^g^r^o^w^t^h^oⁿ^sh^ip^{s p}^a^r^tiall^y^f^uⁿ^d^edⁱⁿ^p^r^io^r^y^ear^s
^w^o^u^l^d^f^u^r^t^h^e^r^r^e^d^u^{ce t}^h^e^f^uⁿ^dⁱⁿ^g^av^a^ilab^l^{e f}^o^rⁿ^e^w^s^h^ip^{s. I}ⁿ^ad^d^itioⁿ^,^co^sts^an^d
^com^mⁱ^t^m^eⁿ^t^s^con^tⁱⁿ^u^e^be^y^{ond t}^h^e^y^{ear depi}^ct^{ed i}ⁿ^t^h^{e bri}^e^fiⁿ^g^s^lⁱ^d^esⁱⁿ^al^l^s^c^eⁿ^ari^o^s^.
^T^h^er^{e ar}^{e sev}^e^r^a^{l o}^t^h^e^r^b^u^d^g^e^t^ar^yⁱ^m^p^licatioⁿ^s^a^s^w^e^l^l^as^a^c^q^u^isitioⁿ^m^aⁿ^a^g^e^m^eⁿ^tⁱ^s^s^u^es
^r^e^lated^toⁱⁿ^cr^e^m^en^ta^{l f}^uⁿ^dⁱⁿ^g^f^o^r^th^{e Na}^v^y^an^d^f^o^r^ag^en^ci^{es in}^g^eⁿ^e^r^a^{l. I}ⁿ^g^eⁿ^e^r^a^{l, f}^u^ll
^f^uⁿ^dⁱⁿ^g^eⁿ^s^u^r^e^{s th}^{at t}^h^{e f}^u^{ll es}^ti^m^a^ted^co^{sts o}^f^decisⁱ^oⁿ^s^{are recog}ⁿⁱ^{zed at th}^{e ti}^m^e^th^{at t}^h^e
^co^m^mⁱ^t^m^eⁿ^{t i}^s^m^a^d^e^{. I}ⁿ^cr^e^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^er^o^d^e^{s f}^u^t^u^r^e^fⁱ^sca^l^f^l^e^x^ib^ilit^y^f^o^r^p^r^o^g^r^a^m^s^su^c^h
^as^s^h^ipbuⁱ^l^ding^becau^s^e^f^uⁿ^d^ing^is^dedicated^{to com}^p^leting^procu^r^e^m^eⁿ^ts^beguⁿⁱⁿ^prevⁱ^o^u^s
^y^ear^s.^A^cco^r^dⁱⁿ^g^to^DO^{D an}^d^OMB^o^f^fⁱ^cⁱ^{als, i}ⁿ^cr^e^m^en^ta^l^f^uⁿ^dⁱⁿ^g^al^so^li^m^its^co^st^vⁱ^sⁱ^b^ilit^y
^an^d^acco^uⁿ^tab^ilit^y^.^T^h^{ese o}^f^fⁱ^{cials b}^e^lie^v^e^t^h^{at acq}^uⁱ^sitioⁿ^e^s^ti^m^a^{tes ar}^{e l}ⁱ^k^e^l^y^toⁱⁿ^cr^ease
^becau^s^e^t^h^ere^w^{ould be an in}^ceⁿ^tⁱ^v^{e to}^“^l^o^w^ball”^{the es}^ti^m^a^{te at}^th^e^begⁱⁿⁿ^ing^.
^A^d^d^itioⁿ^a^l^l^y^,^coⁿ^t^r^acto^r^s^m^a^y^h^e^d^g^e^th^eir^b^e^{ts o}ⁿ^p^r^icin^g^b^e^cau^se^th^e^y^m^a^yⁿ^o^{t b}^e^ab^le^to
^tak^e^adv^aⁿ^t^a^g^{e o}^f^econ^o^mⁱ^es^of^s^cale^th^a^t^caⁿ^co^m^e^wⁱ^t^h^l^oⁿ^g^e^r^-^ter^m^an^d^m^o^{re certain}
^c^o^m^m^itm^en^ts^.
^T^h^{e u}^s^{e of}ⁱⁿ^cre^m^{ental fu}ⁿ^dⁱⁿ^g^an^{d leas}^e^-^pu^rc^h^a^s^e^arrang^e^m^entsⁱⁿ^th^{e pas}^t^h^a^s^h^a^{d s}^o^me⁶⁰
ⁿ^e^g^a^tⁱ^v^e^cons^equ^eⁿ^ces^{. F}^o^{r exa}^m^pl^{e, a 1996 G}^A^O^report^citedⁱⁿ^cr^e^m^eⁿ^{tal f}^uⁿ^dⁱⁿ^g^{as a}
^k^e^y^f^act^{or un}^derl^yⁱ^ng^D^e^part^m^e^nt^of^En^er^gy^proj^ect^cos^t^ov^erru^ns^an^{d s}^c^h^e^du^l^e^del^a^y^s^.⁶¹
^Aⁿ^ot^h^e^{r G}^A^O^report^f^o^uⁿ^d^th^a^t^th^{e u}^s^{e of}^long-^ter^m^lea^s^es^f^o^{r au}^x^iliar^y^s^h^ip^sⁱⁿ^th^{e 1970s}
^an^{d 1980s}^res^u^l^t^e^{d i}ⁿ^hⁱ^gh^{er cos}^t^s^{per s}^hⁱ^p^.

⁵⁹^L^e^tte^r^da^te^{d Fe}^br^ua^r^y^26,²⁰^01,^t^o^T^h^e^H^oⁿ^o^r^a^ble^P^e^te^{V. D}^o^m^e^nicⁱ^{, C}^h^aⁱ^r^m^aⁿ^{, C}^o^m^m^itte^e^{on the}^B^udg^e^t^{, U}ⁿ^ite^d
^Sta^t^e^s^Se^na^te^{, f}^r^om^P^a^{ul L}^.^P^o^sⁿ^e^r^{, Ma}^na^gⁱ^ng^Dⁱ^r^e^c^t^or^,^Fe^de^r^a^{l B}^u^dg^e^t^{, Str}^a^te^gⁱ^c^I^s^s^u^e^s^{, G}^o^v^e^rⁿ^m^e^{nt A}^c^c^ounta^b^ili^ty
^Offⁱ^c^e^,^Bud^g^e^t^Issue^s^{: Inc}^r^e^m^eⁿ^t^a^{l F}^uⁿ^dⁱⁿ^{g o}^f^Ca^pit^a^{l Asse}^{t Ac}^q^uⁱ^s^itions^,^G^A^O^-^01-⁴³^2R^.
⁶⁰^T^h^{e GAO letter rep}^o^r^{t at t}^h^{is po}ⁱⁿ^{t cites th}^{e f}^o^ll^o^wⁱⁿ^{g GAO rep}^o^r^t^:^D^e^par^tm^eⁿ^t^{of E}ⁿ^e^r^gy^:^O^p^por^t^u^nity^to^I^m^pr^ov^e
^M^ana^ge^m^e^{nt of}^M^a^jor^Sy^s^t^e^m^Ac^quis^iti^ons⁽^G^A^O^/R^C^E^D^-^97-^17,^N^o^v^e^m^b^e^r^26,¹⁹⁹⁶⁾^.
⁶¹^T^h^{e GAO letter rep}^o^r^{t at t}^h^{is po}ⁱⁿ^{t cites th}^{e f}^o^ll^o^wⁱⁿ^{g GAO rep}^o^r^t^:^D^e^fe^ns^e^Ac^quis^iti^ons^:^Hⁱ^s^t^or^ic^al^Ana^l^y^s^e^s^of
^N^a^v^y^Shi^{p Le}^as^e^s⁽^G^A^O^/N^SI^A^D^-^99-¹²^{5, J}^u^ne²⁵^,¹⁹⁹⁹⁾^.

^P^r^o^m^o^tⁱⁿ^g^e^f^f^e^c^tⁱ^v^e^m^aⁿ^a^g^e^m^eⁿ^t^o^f^cap^{ital asset acq}^uⁱ^sitioⁿ^s^{is i}^m^p^o^r^tan^t^{. W}^e^r^eco^gⁿⁱ^{ze th}^a^t
^so^m^eⁱⁿ^cre^m^eⁿ^tal^f^uⁿ^dⁱⁿ^g^f^o^{r h}ⁱ^g^h^tec^hⁿ^o^lo^g^y^acq^uⁱ^sitioⁿ^sⁱ^s^j^u^sti^f^ied^b^ecau^se,^w^h^{ile s}^u^ch
^pro^j^ects^{are in}^teⁿ^d^{ed to res}^u^l^tⁱⁿ^a^us^{able as}^s^e^t,^t^h^e^y^{are cl}^os^{er in}ⁿ^a^t^u^{re to res}^{earch an}^d⁶²
^d^e^ve^l^o^p^m^eⁿ^t^a^c^tⁱ^vⁱ^tⁱ^e^s.^H^o^w^e^ve^r^,^fo^r^o^t^h^e^r^capi^t^a^l^pr^oj^e^c^t^s^,^as^w^e^h^a^v^e^prevⁱ^ous^l^y^report^e^d,
^f^u^ll^f^uⁿ^dⁱⁿ^g^is^anⁱ^m^p^o^r^tan^t^to^o^l^f^o^r^m^aⁱⁿ^taⁱⁿⁱⁿ^g^g^o^v^e^rⁿ^m^eⁿ^t^wⁱ^d^e^fⁱ^{scal co}ⁿ^t^r^o^{l. Fail}^u^r^{e to}
^recogⁿⁱ^{ze t}^h^e^fu^l^l^cos^t^s^{of propos}^{ed com}^mⁱ^t^m^eⁿ^t^s^w^h^eⁿ^b^u^dg^et^deci^sⁱ^oⁿ^s^are^m^a^{de coul}^d⁶³
^lead^to^dⁱ^sto^r^tioⁿ^sⁱⁿ^t^h^{e allo}^catioⁿ^o^f^r^e^so^u^r^ces.
^Ro^na^l^d^O^’^Ro^ur^ke ^St^e^p^he^{n D}^a^g^g^e^t^t
^Sp^{ecialist i}ⁿ^Nav^a^l^A^f^f^a^ir^s^Sp^{ecialist i}ⁿ^Def^eⁿ^s^{e P}^o^licy^aⁿ^d^B^u^d^g^ets
^rorou^r^k^e^@^c^rs^.l^oc.g^ov^{, 7-}⁷⁶¹⁰^s^d^ag^g^e^t^t^@^cr^s^.^l^o^c.g^o^v^,^7-⁷⁶⁴²

⁶²^T^h^{e GAO letter rep}^o^r^{t at t}^h^{is po}ⁱⁿ^{t cites th}^{e f}^o^ll^o^wⁱⁿ^{g GAO rep}^o^r^t^s^:^Ac^c^r^{ual B}^u^d^g^e^tin^g:^Ex^pe^rⁱ^eⁿ^c^e^s^{of O}^t^he^r
^Natio^{ns a}ⁿ^d^Implic^a^tio^{ns for}^the^Untie^d^State^s⁽^G^A^O^/^A^I^M^D^-^00-^{57, Fe}^b^r^ua^r^y^{18, 2}⁰⁰⁰⁾^aⁿ^d^B^u^dg^et^Issu^{es: B}^u^dg^etⁱⁿ^g
^{for Fe}^de^ral^Cap^ital⁽^G^A^O^/^A^I^M^D-^97-^{5, N}^o^v^e^m^b^e^r^12,¹⁹⁹⁶⁾^.
⁶³^L^e^tte^r^da^te^{d Fe}^br^ua^r^y^26,²⁰^01,^t^o^T^h^e^H^oⁿ^o^r^a^ble^P^e^te^{V. D}^o^m^e^nicⁱ^{, op}^{. c}^it.,^p^p^.^2-^3.^T^h^e^pa^s^s^a^g^e^as^qu^ote^d^he^r^e
^o^mⁱ^t^s^re^f^e^ren^c^e^s^at^t^h^{e en}^d^o^f^eac^h^p^a^ragrap^h^t^o^t^h^{e sp}^eci^fⁱ^{c b}^rⁱ^e^fⁱⁿ^g^slⁱ^d^{es t}^h^at^di^scu^{ss t}^h^e^p^oⁱⁿ^t^{s m}^a^d^eⁱⁿ^each
^pa^r^a^g^r^a^ph.