Application of the Full-Funding Concept

FGMSD-78-18: Published: Feb 23, 1978. Publicly Released: Feb 23, 1978.

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Under the full-funding concept, funds are provided at the outset for the total estimated cost of an item. The concept best applies to major procurements. As used by the Department of Defense, however, it does not provide funding for an entire program in a given year. Instead, it provides for the full cost of funding the number of items for which procurement will be initiated that year. The concept is economically advantageous for many operations and is applicable to most Federal agencies. The lack of full funding has resulted in delays and added costs in water resources projects. Office of Management and Budget (OMB) Circular A-11 provides for full funding of all major procurement and construction programs. However, it provides for inclusion of anticipated future price increases for only certain multiyear programs. Some agencies may use different methodologies for costing out similar long-range programs. In order for Congress to evaluate programs and allocate resources efficiently, demands for resources should be presented more consistently. Full funding can result in savings through multiyear leasing of automatic data processing equipment and multiyear procurement. Congress should provide full funding for certain types of procurement and projects and consider directing the OMB to initiate the design and procedures needed to consistently reflect full new budget authority requirements in budget requests for large, multiyear projects.

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