Department of Defense Management of Unobligated Funds for Acquisition Programs

Abstract

On September 10, 2012, the Under Secretary of Defense (Comptroller) and the Under Secretary of Defense for Acquisition, Technology, and Logistics signed a joint memorandum calling for a change in the management of unobligated funds for acquisition programs. The memo was an attempt to stop the rush to obligate funds by the end of the current fiscal year in order to avoid reduced allocations in the next fiscal year. The memo identified six tenets for adoption throughout the Department of Defense (DoD). Included are tenets to reward acquisition program managers for returning unobligated funds and not to reduce future year program budgets just because current year obligation rates are lower than established benchmarks. The 2014 Annual Report on the Performance of the Defense Acquisition System (OUSD[AT&L], 2014) indicated that the DoD was continuing the effort to change the acquisition culture from focusing on obligation rates. This research analyzes financial obligation rates for acquisition programs and acquisition program contract awards made in the last quarter of the fiscal year to determine if this policy memo has resulted in any change in behavior toward year-end spending. Research finds that the policy memo has not yet had an effect on behavior and that it has not been incorporated into DoD policy regulations.