Defense Acquisition Course - ACQ 101 Module
Seven Answered 100% Correctly
Key Elements of Financial Management
1. Cost Estimation
2. Defense Appropriations and Funding Policies
3. Resource Allocation Process
4. Expiration of Budget Authority & Reprogramming
Budget Authority
the authority provided by law to enter in obligations that will result in immediate or future
outlays. Also characterized by the period of availability by the timing of congressional
action, or by the manner used to determine the amount available. Similar to a "spending
limit" that is provided by Congress for a program
Commitment
the administrative reservation of funds, usually by the local comptroller, in anticipation of
a future obligation. Also the response to a request for a spending action. It ensures that
the funds are available: in the amount requested, in the correct fiscal year, and in the
proper appropriation
Obligation
the legal reservation of funds to make a future payment of money. Also incurred as
soon as an order is placed or a contract is awarded for the delivery of goods and
performance of service. When the local Procuring Contract Officer (PCO) sigma a
contract, an obligation is created and the Government is legally liable to pay for those
goods and services
Expenditure
a charge against available funds. It results from a voucher, claim, or other document
approved by competent authority. Also the issuance of a Government check. It
represents the presentation of a check or electronic transfer of funds to the performer of
work. In the program office prior to releasing a Request for Proposal (RFP) the
comptroller must verify that you have sufficient Budget Authority in the correct
appropriation and fiscal year
Outlay
occurs when the vendor cashes the expenditure check and money flows from the
Treasury to the vendor or supplier. With EFT the time between expenditure and outlay
can be instantaneous. In the Government when the check clears the Treasury
Department and funds are paid out, there is an outlay of the Government funds.
Cost estimating is done at:
1. Program Level
2. Component headquarters level
3. Defense staff level
Life Cycle Cost (LCC)
, the cost to the Government of acquisition and sustainment of a system over its useful
life
LCC consists of:
-Research and Development Costs
-Procurement and Military Construction
-Operating and Support Costs
-Disposal Costs
These costs include both _______ and indirect costs of the acquisition program.
direct
Life Cycle Cost Estimate
the estimated cost of developing, producing, deploying, maintaining, operating, and
disposing of a system over its entire lifespan.
The LCC is scoped around three topics:
1. Work Breakdown Structure (WBS)
2. Appropriation Categories
3. Life Cycle Cost Categories
WBS provides a framework for
program and technical planning, cost estimating, resource allocations, performance
measurements, and status reporting
Name the five major Appropriation Categories
1. Operations and Maintenance (O&M)
2. Military Personnel
3. Research, Development, Test & Evaluation (RDT&E)
4. Procurement
5. Military Construction
Research & Development Costs
include all costs associated with the research and development phases.
Ex. materiel solution analysis, technology maturation, risk reduction, and engineering
and manufacturing development
Investment Costs
include cost of investment phase and the total cost of procuring the prime equipment its
related support equipment, facilities, initial spares, and fielding of the system.
Ex: mainly incurred in the Production & Deployment Phase
Operations & Support Costs
encompasses the largest percentage of program costs. include all of the following costs
incurred in using the system:
Personnel
Fuel
Maintenance
Sustaining Investment
Training
Disposal Costs
include the cost to dispose of the system after its useful life. associated with disposing
of the materiel system and include environmental and related costs
Name the four cost estimation techniques.
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