Defense Procurement: Full Funding Policy -- Background, Issues, and Options for Congress
Abstract
The full funding policy is a federal budgeting rule imposed on the 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. DoD, in recent budget submissions, has proposed procuring ships and aircraft 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 nonconforming 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. Congress has several options for responding to recent proposals for procuring ships and aircraft with funding mechanisms that do not conform to the full funding policy. This report reviews those options, issues surrounding them, and DoD legislative activity for FY2007. Appendices review DoD legislative activity for FY2003-FY2006 and provide detailed background on the full funding policy.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 20, 2006
- Accession Number
- ADA515563
Entities
People
- Ronald O'Rourke
- Stephen Daggett
Organizations
- Library of Congress