DOD Manual 7110.1-M Department of Defense
BUDGET GUIDANCE MANUAL
Office of the Comptroller of the Department of Defense
Washington, DC 20301-1100
(Program/Budget) May 1990
DEPARTMENT OF DEFENSE
BUDGET GUIDANCE MANUAL
SIXTH REPRINT - 1990
This manual provides standing reference for the preparation,
justification, and execution of budget requirements within the
Department. Budget guidance, published under separate cover, will
provide additional information and requirements unique to each
budget cycle. The Budget Guidance Manual is issued biennially,
consistent with the Department's internal biennial PPBS cycle.
This reprint is for use during all phases of the FY 1992/FY 1993
The following summarizes, by appropriation title, the major
revisions reflected in this reprint:
Military Personnel: New exhibits have been added which provide
additional information regarding retention bonuses, Reserve
personnel costs, and retired pay accrual:
MP-7 - Aviation Retention Bonus
MP-8 - Medical Officer Retention Bonus
MP-9 - Summary of Basic Pay and Retired Pay Accrual Costs
MPR-5 - Summary of Basic Pay and Retired Pay Accrual Costs
MPR-6 - Active Reserve/Guard (AGR) Personnel Costs
PB-30W - Full-Time Support Personnel (Reserve)
Operation and Maintenance: The following exhibits have been
deleted from Operations and Maintenance requirements:
OP-12 - Federal Employees Retirement System Costs
OP-43 - Modernization Program Summary
OP-47 - Ship Repair and Modernization
OP-75 - Flying Hour Costs
PBA-6 - Modernization Program
PBA-14 - Supply Operations
PBA-27 - Personnel Data by Major Force Program
Four new exhibits have been added:
OP-5 (Attachment 7) - Real Property Maintenance & Minor
OP-27H - Historic Building Costs
OP-27P - Real Property Maintenance/Minor Construction
PBA-28 - Tactical Air Forces
In addition, revisions have been made to many Operation and
Maintenance exhibits. Changes are annotated with vertical lines in
the margins of each revised exhibit format page in the appendices.
Procurement: Chapter 241 has been expanded to include policy
sections on "Criteria for Determining Expense and Investment Costs"
and "Full Funding of Procurement Programs."
A new requirement to submit one copy of the "Ship Cost Adjustment
Report" by July 1 of each year has been included in Chapter 244.
Four new exhibits have been added to budget submission requirements
for the procurement accounts:
P-22B - Training Requirements Analysis
P-29a - Outfitting Costs - Comparison with Previous
P-30a - Post Delivery Estimates - Comparison with Previous
P-36 - Deport Level Ship Maintenance Schedule
Exhibit P-33, Missile System Modification, has been modified
slightly and renumbered, and is now Exhibit P-3b. In addition,
revisions have been made to the following exhibits:
P-3 - Weapon System Modifications
P-5 - Aircraft Cost Analysis
P-24 - Ammunition Cost Analysis
P-35 - Major Ship Component Fact Sheet
Research, Development, Test, and Evaluation: A new exhibit RD-2,
RDT&E Budget Review Data is required for the September OSD/OMB
budget submission. The RD-5 exhibit requirement has been deleted
and the Exhibit PB-33B, RDT&E Descriptive Summary, which has
been modified slightly, is to be submitted in its place.
Military Construction/Family Housing: To new chapters have been
added to reflect new submission requirements. Chapter 265
addresses the Base Closure account, and identifies requirements in
support of this effort. Chapter 266 addresses Real Property
Maintenance Activities, and is an expansion of the section formerly
included in the Operation and Maintenance chapters. In addition,
a separate section has been included to address third-party
Revolving Funds: Major changes have been made to the Stock Fund
guidance included in the Manual. Chapter 293 has been revised as
- Narrative has been revised to correct/add definitions of supply
terms bringing the guidance in line with current policy.
The SF-7 Exhibit has been cancelled. The required information will
be obtained from other sources.
- The SF-2, SF-3A, SF-3B, SF-3C, SF-4, SF-6, and SF-9 (by
division) are no long required for the President's budget
- Section 29.3.3 C (Preparation of Material) reflects relabeled
columns for the OSD Budget Estimate to accommodate capability to
identify apportionment year requirements.
- Section 293.4 (Timetable) reflects revised budget preparation
milestones to provide more time to accomplish the required
Revisions have been made to the following Stock Fund exhibits:
SF-1 - Summary Justification
SF-2 - General Narrative Justification
SF-3 - Operating Budget Requirements
SF-3A - Peacetime Inventory Augmentation
SF-3B - Operating Requirements by Weapon System/Category
SF-3C - Mobilization Requirement
SF-4 - Inventory Status
SF-5 - Customer Price Calculation
SF-6 - Reimbursable I) ues
SF-8 - Analysis of Fund Balance with the Treasury
SF-10 - Commodity Summary
Industrial Fund requirements in Chapter 294 have been revised as
- Exhibits IF-2 (Summary of Selected Cost & Personnel Data),
IF-8 (Summary of Cash Balances, sources, and Applications), and
IF-14 (Reconciliation of Costs and Obligations), have been
eliminated. Information provided by these three exhibits will be
derived from other budget materials submitted.
- The following Industrial Fund exhibits have been revised:
IF-A - Summary of Operations
IF-D - Statement of Revenue and Expense
IF-E - Analysis of Changes in Government Equity
IF-F - Parts I through IV
IF-G - Base Operations Support & Personnel Data
IF-4 - Summary of Price and Other Changes
IF-10 - Real Property Maintenance Expenses
IF-11 - Summary of Capital Purchases
IF-12 - Proposed Billing Rate Adjustments
IF-15 - Military Personnel Compensation
- The old ACP exhibits for Capital Purchases have been eliminated
and reformatted as Exhibits IF-16 and IF-17.
- Exhibit IF-18 (Waste Minimization Capitalization Account) has
been added to identify cost-effective waste minimization
Chapter 327 has been added to incorporate both Stock Fund and
Industrial Fund guidance for submission of the President's budget.
Service Industrial Fund and Stock Fund Overview material have been
removed from Chapter 323.
Special Analyses: Chapter 2B2, Information Technology Program, has
been modified significantly and replaced in its entirety. In
Chapter 2B8, Special Interest Areas, three new requirements have
PB-19 - Intermediate Range Nuclear Force
PB-28 - Summary of Funds Budgeted for Environmental Projects
PB-29 - Waste Minimization Capitalization Account
In addition, two chapters have been added to the special analysis
section in Part II and one chapter has been added to the special
programs section in Part III of the manual:
2B5 - Overseas Cost Report
2B18 - DoD Drug Interdiction & Counter-drug Activities
333 - Cost of Medical Activities Report
Other: Chapter 431, "Implementation of Reprogramming of DoD
Appropriated Funds," and Chapter 432, "Implementation of
Reprogramming of Military Construction and Family Housing
Appropriated Funds," have been added to Part IV, Budget
Administration. These chapters are added in conjunction with the
cancellation of DoDD 7250.5, DoDI 7250.10 and DoDI 7250.14.
Chapter 460 has been added to reflect the inclusion of guidance for
the update of the defense Program data base. This chapter is added
in conjunction with the cancellation of DoDI 7045.8.
Chapter 521 has been revised as follows:
- Outlays are to be reported on a net basis by Budget Authority.
- Services will not submit machine readable transactions for
military personnel assigned to Defense Agencies. Defense
Agencies are still required to submit hard copy exhibits.
- The description of diagnostic checks has been expanded.
- A new Name Edit System (NES) Structure and Description file has
The highlights discussed above are not all-inclusive. Those
sections of the manual which have been revised since the last
edition (July 1988) have been indicated by vertical lines in the
margins. As in the past, we request that any questions or comments
that might arise as you review and use the contents of this manual
be directed to the Directorate for Plans and Systems, Room 3A862,
the Pentagon. In this manner, it is hoped that this document will
continue to prove current and useful to all involved in budget
formulation, presentation, and execution.
DOD BUDGET GUIDANCE MANUAL
Table of Contents
PART I - GENERAL POLICIES
112 Proposed Changes in Budget Structure, Appropriation
Language and Requests for Exceptions to OMB Circular A-11
113 Budget Concepts
114 Pay Increases
115 Security Classifications
PART II - BUDGET FORMULATION
Section 1 - Budget Estimates Submission
212 Preparation of the Biennial Budget Estimates
213 Budget Estimates Summaries and Transmittal
214 Supplemental Appropriation Estimates
215 Additional Budget Submissions
218 Automation Requirements
219 Budget Review Procedures
Section 2 - Military Personnel and Retired Military Personnel
222 Military Personnel Appropriations
223 Reserve Component Personnel Appropriations
224 DoD Military Retirement Fund
225 Military Personnel - Civil Functions
Section 3 - Operation and Maintenance
232 Operations Accounts
235 National Board for the Promotion of Rifle Practice, Army
237 Court of Military Appeals, Defense
238 Civil Functions
Section 4 - Procurement
242 Aircraft and Related Procurement
243 Missiles and Related Procurement
244 Ship Procurement
245 Other Procurement
Section 5 - Research, Development, Test and Evaluation
251 Definitions, Policy and Criteria
252 Preparation of Budgets on an Incremental Programming Basis
253 Research, Development, Test and Evaluation Appropriations
Section 6 - Military Construction and Family Housing
262 Military Construction Appropriations
263 Family Housing
264 Homeowners' Assistance Fund, Defense
265 Base Realignment and Closure
266 Real Property Maintenance and Minor Construction
Section 7 - Receipts
271 Offsetting Receipts
Section 9 - Revolving and Management Funds
291 Defense Production Guarantees
292 Laundry Service, Naval Academy
293 Stock Funds
294 Industrial Funds
295 Management and Working Funds
296 Trust and Trust Revolving Funds
297 National Defense Stockpile and Wm. Langer Jewel Bearing Plant
Section 10 - Special Analyses
2B1 Communications, Command and Control (C3) Program
2B2 Information Technology
2B3 Defense Intelligence Program
2B4 Physical Security Activities
2B5 Overseas Cost Report
2B8 Special Interest Areas
2B9 Major Range and Test Facility Base
2B10 Productivity Improvements
2B12 Alcohol and Drug Abuse Control Programs
2B14 Civilian Civil Rights Programs
2B15 Operational Test and Evaluation Support
2B16 Defense Environmental Restoration Program
2B17 Federal Credit Programs
2B18 DoD Drug Interdiction and Counter-drug Activities
PART III - BUDGET PRESENTATION
Section 2 - Congressional Justification Material
322 Military Personnel Appropriations
323 Operation and Maintenance Appropriations
324 Procurement Appropriations
325 Research, Development, Test and Evaluation and Director of Test
and Evaluation Appropriations
326 Military Construction, Family Housing and Homeowners'
327 Revolving Funds
329 Supplemental and Amended Appropriations Requests
Section 3 - Congressional Justification Material - Special Programs
331 Intelligence Programs/Activities
332 Communications, Command and Control (C3)
333 Cost of Medical Activities Report
Section 4 - Congressional Budget Review
341 Witness Statements
342 Transcript Processing
343 Appeal Process on Congressional Actions
PART IV - BUDGET ADMINISTRATION
Section 1 - Apportionment
412 Apportionment and Reapportionment Schedule (DD Form 1105)
Section 2 - Financial Authorities
422 Temporary Appropriation Warrants
423 Military Construction/Family Housing Fund Release Procedures
Section 3 - Reprogramming
431 Implementation of Reprogramming of DoD Appropriated Funds
432 Implementation of Reprogramming of Military Construction &
Family Housing Appropriated Funds
Section 4 - Appropriation Transfer Authority
441 Appropriation Transfers Authorities
442 Functional Transfers
Section 5 - Funding Review of Prior Year Program Execution
451 Status of Prior Year Military Construction Accounts
Section 6 - General
460 Automated Defense Program (DP) Data Base
461 Automated Procurement Annex Data Base
462 Automated RDT&E Annex Data Base
463 Automated Construction Annex Data Base
PART V - BUDGET AND ACCOUNTING CLASSIFICATIONS
Section 1 - Classifications and Definitions
511 Functional Titles
512 Military Personnel Appropriations
513 Reserve Component Personnel Appropriations
514 DoD Military Retirement Fund
515 Special Programs
516 Research, Development, Test and Evaluation Appropriations
517 Military Construction, Family Housing, and Homeowners'
Section 2 - Coding for Automation
521 Name Edit System (NES) Structure and Description
Appendix A: Military Personnel and Retired Military Personnel
Appendix B: Operation and Maintenance
Appendix C: Procurement
Appendix D: Research, Development, Test and Evaluation
Appendix E: Military Construction and Family Housing
Appendix F: Revolving, Management, and Other Funds
Appendix G: Special Analyses (Applicable to More than One Title)
Appendix H: Other Exhibits (Applicable to More than One Title)
DoD 7110.1-M PART I - GENERAL POLICIES
Chapter 111 - General
111.1 Purpose and Applicability
A. The Department of Defense Budget Guidance Manual is published
under the authority of DoD Instruction 7110.1.
B. The Manual provides general guidance on the formulation and
submission of the budget estimates to the Office of the Secretary
of Defense, the presentation of the budget and congressional
justifications, the administration of the budget, and budgeting and
C. The Budget Guidance Manual is intended as a comprehensive
reference book on budget matters of the Department of Defense.
Budget policy memoranda issued throughout the year will provide any
necessary changes or revisions to this standing document, as well
as special instructions and nonrecurring requirements unique to
that year's budget cycle.
D. The provisions of the Manual apply to all military functions of
the Department of Defense, military assistance, and the following
civil functions of the Department of Defense:
Payment to Military Retirement Fund
Military Retirement Trust Fund
Retired Pay, Defense (expired)
Education Benefits Fund
A. The Manual is organized into five major parts and eight
Part I - General Policies
Part II - Budget Formulation
Part III - Budget Presentation
Part IV - Budget Administration
Part V - Budget and Accounting Classifications
Appendices - Budget Exhibits and Instructions
B. Each part is further subdivided into sections (where necessary)
and chapters. Chapter numbering contains the part and section
identification and adds a sequential number. In some chapters,
alphabetization has been necessary. Paragraph numbering is
formulated from the chapter number plus a decimal point and a
sequential number. Page numbering also uses the chapter number and
adds a hyphen and a sequential number.
C. The Appendices to this manual provide the required budget
exhibits and formats along with instructions for their preparation,
automated submission requirements and budget and accounting
A. Changes to the Manual will be issued biennially, at the
beginning of each biennial budget cycle. Pen and ink changes will
not be used.
B. Changes on a page will be indicated by vertical lines in the
margins. If an entire page or exhibit is changed, the vertical
lines will run the length of the page. Each page of a change will
be dated. Complete reprints of the Manual, when issued, will not
reflect dated pages in order to indicate initial issue.
111.4 Reports Control Symbol
The reporting requirements contained herein have been assigned
Report Control Symbol DD-COMP (AR) 1092. Any changes in data
covered by this Report Control Symbol as outlined in this Manual
will be reviewed in accordance with DoD Directive 5000.19, Policies
for the Management and Control of DoD Information Requirements.
For identification and control purposes, the Report Control Symbol
should be used in submitting data required by this Manual.
Chapter 112 - Proposed Changes in Budget Structure, Appropriation
Language and Requests for Exceptions to OMB Circular A-11
112.1 Proposed Changes in Budget Structure and Appropriation
A. Under the provisions of Office of Management and Budget (OMB)
Circular A-11, the following types of changes must be cleared with
1. Changes in the appropriation pattern, including proposed
new accounts and changes in the titles and sequence of existing
2. Changes in the methods of funding a program.
3. Changes in program or budget activity classifications for
the program and financing schedules for all appropriation
accounts and funds.
B. Subsequent to the issuance of Circular A-11 by OMB each year,
the Office of the Department of Defense, Comptroller (DoD(C)) will
request that the DoD components submit be memorandum any proposals
on the items listed above. If acceptable to DoD(C), these
proposals will be forwarded to OMB for approval.
C. Proposed changes in the wording of appropriation language
should be submitted to the Office of the Assistant General Counsel
(Fiscal Matters) as soon as possible after the passage of the
current year's appropriation act. OAGC(FM) will accomplish
coordination with OMB.
112.2 Exceptions to OMB Circular A-11
A. Each year the DoD Comptroller requests certain exceptions to
OMB Circular A-11. Generally, these exceptions concern special
situations that are unique to the Department of Defense.
B. Subsequent to the issuance of Circular A-11 by OMB each year,
the DoD(C), will address any exceptions required to the criteria
defined in the circular. Unless otherwise notified by DoD(C) in
writing, any DoD component recommendations for exceptions to
Circular A-11 should be submitted by memorandum to DoD(C),
Program/Budget, Plans and Systems Directorate, no later than August
1 of each year. If acceptable to DoD(C), these proposals will be
forwarded to OMB for approval. Exceptions concerning the OMB/OSD
joint review will be made by DoD(C). DoD(C) will consolidate all
exception requests and seek from OMB. Components will be advised
of exceptions granted.
Chapter 113 - Budget Concepts
113.1 Budget Terminology
Standard Government-wide definitions of budget terminology are
provided in the Office of Management and Budget issuances, most
notably Circulars A-11 and A-34. For the Department of Defense,
the following are some of the more common budget concepts
applicable to budget formulation:
1. Accrual Basis of Accounting: A method of accounting in
which revenues are recognized in the period earned and costs
are recognized in the period incurred, regardless of when
payment is received or made. There have been many initiatives
over the years to convert the Federal Budget to an accrual
accounting basis. Although the budget is on a cash basis, DoD
accounting is on the accrual basis.
2. Advance Procurement: Authority provided in an
appropriations act to obligate and disburse during a fiscal
year from the succeeding year's appropriation. The funds are
added to the budget authority for the fiscal year and deducted
from the budget authority of the succeeding fiscal year. Used
in major acquisition programs for advance procurement of
components whose long-leadtime require purchase early in order
to reduce the overall procurement leadtime of the major end
item. Advance procurement of long lead components is an
exception to the DoD "full funding" policy.
3. Appeal: A request for reconsideration of an action taken to
adjust, reduce, or delete funding for an item during the
congressional review of the defense budget (authorization and
appropriation). This progress is discussed in Chapter 343.
4. Apportionment: A distribution by the Office of Management
and Budget of amounts available for obligation in appropriation
or fund accounts of the Executive Branch. The distribution
makes amounts available on the basis of specified time periods,
programs, activities, projects, objects, or combinations
thereof. The apportionment system is intended to achieve an
effective and orderly use of funds. The amounts so apportioned
limit the obligations that may be incurred.
5. Appropriations. An authorization by an act of the Congress
that permits Federal agencies to incur obligations and to make
payments out of the Treasury for specified purposes. An
appropriation usually follows enactment of authorizing
legislation. An appropriation act is the most common means of
providing budget authority (see Budget Authority).
Appropriations do not represent cash actually set aside in the
Treasury for purposes specified in the appropriation act; they
represent limitations of amounts which agencies may obligate
during the time period specified in the respective
6. Authorization (Authorizing Legislation): Basic substantive
legislation enacted by the Congress which sets up or continues
the legal operation of a Federal program or agency either
indefinitely or for a specific period of time or sanctions a
particular type of obligation or expenditure within a program.
Such legislation is normally a prerequisite for subsequent
appropriations or other kinds of budget authority to be
contained in appropriation acts. It may limit the amount of
budget authority to be provided subsequently or may authorize
the appropriation of "such sums as may be necessary."
7. Biennial Budget: The FY 1986 Department of Defense
Authorization Act required the submission of two-year budgets
for the Department of Defense and related agencies beginning
with FY 1988/FY 1989. The Department has fully
institutionalized a biennial cycle for the Planning,
Programming, and Budgeting System (PPBS), including the Defense
Guidance (DG), the Program Objective Memorandum (POM), the
Budget Guidance Manual (BGM) and budget formulation memoranda.
A biennial budget, as currently structured, represents program
budget estimates for a two-year period in which fiscal year
requirements remain separate and distinct.
8. Budget Activity: Categories within each appropriation and
fund account which identify the purposes, projects, or types of
activities financed by the appropriation or fund.
9. Budget Amendment: A formal request submitted to the
Congress by the President, after his formal budget transmittal
but prior to completion of appropriation action by the
Congress, that revises previous requests, such as the amount of
10. Budget Authority: The authority becoming available during
the year to enter into obligations that result in immediate or
future outlays of Government funds.
11. Budget Deficit: The amount by which the Government's
budget outlays exceed its budget receipts for any given period.
Deficits are financed primarily by Treasury borrowing from the
12. Budget Receipts: Amounts received by the Federal
Government from the public that arise from the exercise of
governmental or sovereign power (primarily tax revenues, but
also receipts from premiums of compulsory social insurance
programs, court fines, license fees, etc.); premiums from
voluntary participants in Federal social insurance programs;
and gifts and contributions. Excluded from budget receipts are
collections resulting from business-type transactions and
payments between government accounts as a result of
13. Concurrent Resolution: A resolution passed by both Houses
of Congress, but not requiring the signature of the President,
setting forth, reaffirming, or revising the congressional
budget for the United States Government for a fiscal year. A
concurrent resolution on the budget, due by April 15, must be
adopted before legislation providing new budget authority, new
spending authority, new credit authority or changes in revenues
or the public debt limit is considered. Other concurrent
resolutions for a fiscal year may be adopted at any time
following the first required concurrent resolution for that
14. Constant Dollars: A dollar value adjusted for changes in
prices. Constant dollar series are derived by dividing current
dollar estimates by appropriate price indices, a process
generally known as deflating. The result is a time series as
it would presumably exist if prices were the same throughout as
in the base year - in other words, as if the dollar had
constant purchasing power. Any changes in such a series would
reflect only changes in the real (physical) volume of output.
Constant dollar figures are commonly used for gross national
product and its components.
15. Continuing Resolution: Legislation enacted by the Congress
to provide budget authority for specific ongoing activities in
cases where the regular fiscal year appropriation for such
activities has not been enacted by the beginning of the fiscal
year. The continuing resolution usually specifies a maximum
rate at which the agency may incur obligations, based on the
rate of the prior year, the President's budget request, or an
appropriation bill passed by either or both Houses of the
16. Controlability: The ability under existing law to control
budget authority or outlays during a given fiscal year.
"Relatively uncontrollable" usually refers to spending that
cannot be increased or decreased without changes in existing
substantive law. At the Federal budget level, the largest part
of such spending is the result of open-ended programs and fixed
costs, such as social security and veterans' benefits. For
defense, controlability is limited by the payments due under
obligations incurred during prior years.
17. Current Services Estimates: Estimated budget authority and
outlays for the upcoming fiscal year based on continuation of
existing levels of service, i.e., assuming that all programs
and activities will be carried on at the same level as in the
fiscal year in progress and without policy changes in such
programs and activities. These estimates of budget authority
and outlays, accompanied by the underlying economic and
programmatic assumptions upon which they are based (such as the
rate of inflation, the rate of real economic growth, pay
increases, etc.), are required to be transmitted by the
President to the Congress.
18. Defense Management Report Decisions (DMRDs): The Defense
Management Report of July 1989 mandated that DoD reduce its
budget by $30 billion over the FY 1991-FY 1995 period through
management efficiencies. To accomplish this goal, DoD has
established DMRDs as part of the annual budget process. This
process has three phases:
Phase I consists of identification of management issues to
pursue (early spring). The Comptroller will make these
Phase II consists of research and analysis of the identified
management issues (spring and summer).
Phase III consists of the conversion of selected management
issues into DMRDs during the fall budget review. The format
for DMRDs will be similar to that of PBDs.
19. Defense Program (DP): The Defense Program (formerly FYDP)
is the program and financial plan for the Department of Defense
as approved by the Secretary of Defense. The DP arrays cost
data and force structure over a six-year period (force
structure for an additional 3 years), portraying this data by
major force program for internal DoD review and by
appropriation for congressional review.
20. Deferral of Budget Authority: Any action or inaction by
any officer or employee of the United States that withholds,
delays, or effectively precludes the obligation or expenditure
of budgetary resources, including the establishment of reserves
under the Antideficiency Act, as amended by the Impoundment and
Control Act. Section 1013 of the Impoundment Control Act of
1974 requires a special message from the President to the
Congress reporting a proposed deferral of budget authority.
Deferrals may not extend beyond the end of the fiscal year in
which the message reporting the deferral is transmitted and may
be overturned by the passage of an impoundment resolution by
either House of Congress.
21. Disbursements: In budgetary usage, gross disbursements
represent the amount of checks issued, cash, or other payments
made, less refunds received. Net disbursements represent gross
disbursements less income collected and credited to the
appropriation or fund account, such as amounts received for
goods and services provided.
22. Expenditures: A term generally used interchangeably with
23. Expired Appropriation: An appropriation that is no longer
available for obligation but is still available for payment of
existing obligations. (See "M" Accounts.)
24. Federal Debt: Federal debt consists of public debt and
agency debt. Public debt is that portion of the Federal debt
incurred when the Treasury Department or Federal Financing Bank
(FFB) borrows funds directly from the public or another fund or
account. Agency debt is that portion of the Federal debt
incurred when a Federal agency authorized by law, other than
Treasury or the Federal Financing Bank, borrows funds directly
from the public or another fund or account.
25. Fiscal Year: Any yearly accounting period without regard
to its relationship to a calendar year. The fiscal year for
the Federal Government begins on October 1 and ends on
September 30. The fiscal year is designated by the calendar
year in which it ends. Fiscal years are further designated as
Budget Year 1: The first fiscal year of a two-year period for
which the budget is being considered
Budget Year 2: The second fiscal year of a two-year period for
which the budget is being considered
Current Year: The fiscal year in progress.
Past Year: The fiscal year immediately preceding the current
year; the last completed fiscal year.
26. Full Funding Policy: The practice of funding the total
cost of major procurement and construction projects in the
fiscal year in which they will be initiated.
27. Impoundment: Any action or inaction by an officer or
employee of the United States that precludes the obligation or
expenditure of budget authority provided by the Congress.
28. Impoundment Resolution: A resolution of the House of
Representatives or the Senate disapproving a deferral of budget
authority set forth in a special message ordinarily transmitted
by the President under section 1013 of the Impoundment Control
Act of 1974. Passage of an impoundment resolution by either
House of Congress has the effect of overturning the deferral
and requires that such budget authority be made available for
29. Incremental Funding: The phasing of total funding of
programs or projects over two or more fiscal years based upon
levels and timing of obligational requirements for the funds.
Differs from full funding concept where total funds for a
program or project are provided in the fiscal year of program
or project initiation, regardless of the obligational
requirement for the funds.
30. "M" Account: Unliquidated obligations under an
appropriation are transferred to (merged into) an "M" account
at the end of the second full fiscal year following expiration.
The "M" account remains available for the payment of
unliquidated obligations charged to various-year appropriation
31. Multiyear Procurement: Procurement of a particular end
item or system under a multiyear contract approved by specific
provision of law. For the Department of Defense, multiyear
procurement contracting of military hardware or systems must be
specifically, and individually, approved by the Congress.
32. Object Classification: A uniform classification
identifying the transactions of the Federal Government by the
nature of the goods or services purchased without regard to the
agency involved or the purpose of the programs for which they
33. Obligations: Amounts of orders placed, contracts awarded,
services received, or similar transactions made by Federal
agencies during a given period, which will require outlays
during the same or some future period.
34. Outlays: The amount of checks issued, interest accrued on
most public debt, and similar transactions and cash disbursed;
net of refunds and reimbursements. Outlays are also referred to
as expenditures or net disbursements.
35. President's Budget: The budget for a particular fiscal
year transmitted to the Congress by the President in accordance
with the Budget and Accounting Act of 1921, as amended. Some
elements of the budget, such as the estimates for the
legislative branch and the judiciary, are required to be
included without review by the Office of Management and Budget
or approval by the President.
36. Program Budget Decision (PBD)/Defense Management Report
Decision (DMRD): A budget decision document issued during the
joint review of Service budget submissions by analysts of the
Office of the Secretary of Defense (OSD) and the Office of
Management and Budget (OMB). PBDs/DMRDs reflect the decisions
of the Secretary of Defense as to appropriate program and
funding to be included in the annual defense budget request
which, in turn, is included in the President's Budget.
37. Program Decision Memorandum (PDM): A document containing
the decisions by the Secretary of Defense on the program and
resource levels identified in the Program Objectives
38. Program Objectives Memorandum (POM): The final product of
the programming process within the Department of Defense, the
Program Objectives Memorandum (POM) displays the resource
allocation decisions of the Military Departments in response to
and in accordance with Defense Guidance.
39. Program Year: The fiscal year in which authorization was
provided and in which funds were appropriated for a particular
program, regardless of the fiscal year in which funds for that
program might be obligated.
40. Reapportionment: A revision by the Office of Management
and Budget of a previous apportionment of budgetary resources
for an appropriation or fund account. A revision would
ordinarily cover the same period, project, or activity covered
in the original apportionment.
41. Reappropriation: Congressional action to restore the
obligational availability, whether for the same or different
purposes, of all or part of the unobligated portion of budget
authority that has expired or would otherwise expire in an
annual or multiple-year account. Obligational authority in a
current account may also be extended by a subsequent
42. Reconciliation Process: A process used by the Congress to
reconcile amounts determined by tax, spending, and debt
legislation for a given fiscal year with the ceilings enacted
in the second and required concurrent resolution on the budget
for that year. Section 310 of the Congressional Budget and
Impoundment Control Act of 1974 provides that the second
required concurrent resolution on the budget, which sets
binding totals for the budget, may direct committees to
determine and recommend changes to laws, bills, and
resolutions, as required to conform with the binding totals for
budget authority, revenues, and the public debt.
43. Recovery of Prior Year Obligations: Amounts made available
in no-year and unexpired multiple-year accounts through
downward adjustment of prior year obligations.
44. Reimbursements: Sums received by the Government for
commodities sold or services furnished either to the public or
to another Government account that are authorized by law to be
credited directly to specific appropriation and fund accounts.
These amounts are deducted from the total obligations incurred
(and outlays) in determining net obligations (and outlays) for
45. Reprogramming: Utilization of funds in an appropriation
account for purposes other than those contemplated at the time
of appropriation. Reprogramming is generally accomplished
pursuant to consultation with and approval by appropriate
46. Rescission: The consequence of enacted legislation which
cancels budgetary resources previously provided by the Congress
prior to the time when the authority would otherwise lapse.
Section 1012 of the Impoundment Control Act of 1974 requires a
special message from the President to the Congress reporting
any proposed rescission of budgetary resources. These proposals
may be accepted in whole or in part through the passage of a
rescission bill by both Houses of the Congress.
47. Rescission Bill: A bill or joint resolution that provides
for cancellation, in whole or in part, or budgetary resources
previously granted by the Congress. Under Section 1012 of the
Impoundment Control Act of 1974, unless Congress approves a
rescission bill within 45 days continuous session after receipt
of the proposal, the budgetary resources must be made available
48. Revolving Fund: A fund established to finance a cycle of
operations through amounts received by the fund. Within the
Department of Defense, such funds include stock funds and
industrial funds, as well as other working capital funds.
49. Sequestration: The reduction or cancellation of new budget
authority; unobligated balances, new loan guarantee commitments
or limitations; new direct loan obligations, commitments, or
limitations; spending authority; and obligation limitations. As
delineated in the Deficit Control Act of 1985 (Gramm-Rudman-
Hollings), sequestration is necessary if the projected deficit
for a given fiscal year exceeds the maximum deficit amount for
50. Supplemental Appropriation: An act appropriating funds in
addition to those in an annual appropriation act. Supplemental
appropriations provide additional budget authority beyond
original estimates for programs or activities (including new
programs authorized after the date of the original
appropriation act) for which the need for funds is too urgent
to be postponed until enactment of the next regular
51. Total Obligational Authority (TOA) Availability: The sum
of (1) all budget authority granted (or requested) from the
Congress in a given year, (2) amounts authorized to be credited
to a specific fund, and (3) unobligated balances of budget
authority from previous years which remain available for
obligation. In practice, this term is used primarily in
discussing the Department of Defense budget, and most often
refers to TOA as "program" which equates to only (1) and (2)
52. Transfer Authority: Authority provided by the Congress to
transfer budget authority from one appropriation or fund
account to another.
Chapter 114 - Pay Increases
An analysis of increased pay costs covering military, classified
civilian, and local national personnel is required as part of
justification materials submitted in support of budget estimates
and requests for apportionment. Such an analysis also may be
required in responding to a specific request from the Office of
Management and Budget. These analysis generally serve as the basis
for requesting pay supplemental appropriations, but, upon request,
they will also reflect the impact of such pay increases in the
following fiscal year.
114.2 Basis of Pay Cost Estimates
The amount of increased pay costs will be calculated on the basis
of rates established in applicable executive orders, and comparable
rates authorized for administrative pay systems.
114.3 Absorption of Pay Increases
OMB normally directs agencies to absorb the costs of pay increases
to the fullest extent possible. Pay supplementals are authorized
to be proposed only where a determination has been made that full
absorption is not possible.
A. In developing pay costs, consideration must be given to the
additional payments for increased pay costs required to be made to
other accounts and other Government agencies for work being done on
a reimbursable basis, as well as offsets to increased pay costs
derived from reimbursements from other accounts or agencies.
B. Pay increase costs incurred by revolving and management funds
should be completely recovered through increased charges in regular
billings. Excepted from inclusion herein are Industrial Funds
where rate stabilization policy applies and anticipated pay raises
are included in the initial budget submission for the period.
Shortfalls between budgeted and actual raises in Industrial Funds
also are excluded from supplemental consideration.
C. Reimbursements for military and civilian personnel detailed to
other Government agencies will be charged in accordance with DoD
Instruction 7230.5, and existing reimbursable agreements.
D. Whenever feasible, except for Industrial Fund charges, rates
for reimbursable personal services should be revised at the time of
the pay increase to provide for proper reflection of the pay
114.5 Reporting Required
A. Exhibit PB-5, provided in Appendix H, will be used for
increased pay cost reporting unless otherwise directed. In
addition to providing pay cost data for all appropriation accounts
and funds, Exhibit PB-5 will include data for Homeowners'
Assistance, as applicable, and for civil functions such as
Cemeterial Expenses and Wildlife Conservation.
1. For Industrial Funds, including the Defense Communications
and Defense Supply Agency portions of the Defense Industrial
Fund, the costs should be shown in Columns (2) and (3) on the
Industrial Fund line and offset by an entry in Column (5) to
reflect reimbursement from other accounts.
B. A short narrative explanation of the methods used in computing
the increased pay costs should accompany the analysis. This
narrative will separately address military, classified civilians,
U.S. wage board and foreign national direct personnel.
C. All pay costs should be carefully developed and fully
documented. In the case of military personnel, this documentation
will include the average strength upon which pay increase costs are
based, and details on the amounts for basic pay and related items
affected by the pay increases. For classified civilians, this
documentation will include man-years and related object class
detail. For U.S. wage board man-years and foreign national direct
personnel, the documentation will indicate the man-years involved,
percentages increase, and the relationship to prior-year
experience. Detailed supporting data should be maintained by the
Component to be made available upon call.
Chapter 115 - Security Classifications
A. Instructions concerning premature disclosure of budget
information prior to presentation to the Congress are contained in
OMB Circular A-11.
B. Instructions concerning security classification of the budget
estimates submissions to OSD are contained in Chapter 213.
C. Instructions concerning security classification of
Congressional justification material are contained in Part III.
115.2 Classification of Procurement Exhibit P-1 Line Items and
RDT&E Program Element Listings and Construction Annex (C-1)
A. Procurement Exhibit P-1 Line Items
Exhibit P-1 line items will only be classified in those situations
where the existence of the item, project or program is classified
or where classified elements of operations plans or force structure
are revealed for any year following the current fiscal year being
proposed for budget presentation. In this connection, missile
quantities will not be classified unless such quantities, standing
alone, give an accurate readiness posture or would permit quantity
calculations of total stockpiles of nuclear warheads.
B. RDT&E Program Elements
1. Dollar amounts for specific program elements will be
classified not less than SECRET when it is considered that the
element reveals significant information concerning the trends
and emphasis of the United States Research and Development
2. Specific program elements will also be classified when the
existence of the program is classified or where classified
program information is revealed.
C. The Construction Annex (C-1) is designed to be an unclassified
document. See Chapter 463 for instructions.
115.3 Security Classification of National Foreign Intelligence
Program (NFIP) Budget Resource Information
A. Unless other specific NFIP program guidance in effect requires
a higher classification:
1. Information which, standing alone or in aggregate, reveals
any Program Element total of the funding or manpower
requirements of any program in the NFIP will be classified
2. Information which permits the disclosure of any Program
Element total of the funding or manpower requirements of any
program in the NFIP, for example, through a subtractive
process, will be classified CONFIDENTIAL.
3. Information which, standing alone or in aggregate, reveals
overall DoD Component funding or manpower levels of the NFIP or
its programs will be classified SECRET.
4. Whenever NFIP funding and manpower resource detail is
combined with other unclassified programs in such a way as to
effectively mask the NFIP resource Program Element total, such
combined resource Program Element total may be treated as
B. Documents containing NFIP resource detail that is classified on
the basis of this guidance shall be marked:
CLASSIFIED BY DCI memo on 22 Dec 81
DECLASSIFY ON OADR
C. The above guidance applies only to the program and budget
Requests for clarification of the foregoing classification guidance
should be forwarded to DUSD (Policy), Director on Information
Security. Questions of application will be coordinated with the
Intelligence Community Staff and responses will be disseminated to
all interested DoD components.