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

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The full funding policy is a federal budgeting rule imposed on the Department of Defense DOD 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. The policy relates to Congresss power of the purse and its responsibility for conducting oversight of DOD programs. Support for the policy has been periodically reaffirmed over the years. In recent years some DOD weapons have been procured with funding profiles that do not conform to the policy. DOD has proposed procuring ships and aircraft using funding approaches that do not conform to the policy. DODs 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 Congresss 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 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. Congress has several options for responding to recent procurement proposals. 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 Congresss power of the purse, ability to conduct oversight of DOD procurement programs, and the potential impact on weapon costs.

Subject Categories:

  • Economics and Cost Analysis
  • Government and Political Science
  • Military Forces and Organizations
  • Logistics, Military Facilities and Supplies

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