Attachment #1 - Security Assistance Management Manual (SAMM), E-Change 527

1. Delete from Chapter 15:

C15.3.4.3. "Cross Fiscal Year" Authority. Congress provided the Section 2282 Program with "cross-fiscal year" authority, applicable to both contracted and government-sourced services funded with Section 2282 program funds (See FY 2009 NDAA, P.L. 110-417, Section 2282(b)). The cross fiscal year provision was retained in the Section 2282 authority. This authority provides a time-limited exception to the bona fide needs rule, which requires that appropriated funds be used only for goods and services during the period of availability for new obligations. Pursuant to the cross fiscal year authority, amounts available for a fiscal year may be used for programs that begin in the fiscal year when funds are available for obligation and end in the subsequent fiscal year. Services and training are obligated during the period of availability, even though the actual commencement of services and training may occur in a later fiscal year. This authority does not extend the period of availability for new obligations; all Section 2282 or Section 2282 funds must be obligated prior to the end of the period of availability. Performance of program services may extend to the end of the subsequent fiscal year (to include services such as travel and government civilian services as they pertain to TDY that is appropriately charged to the program). Funded civilian personnel are not required to cease their Section 2282 or Section 2282 related activities at the end of the appropriation fiscal year. If military pay is part of the reimbursable expense (i.e., under contingency operations), it may be reimbursed from Section 2282 or Section 2282 funds.

C15.3.4.4. Full Operational Capability. Section 2282 retains "the cross fiscal year" authority language as described in Section C15.3.4.3. and adds the "full operational capability" provision in 10 U.S.C. Section 2282(c)(4)(B). The Full Operational Capability authority provides an additional time-limited exception to the bona fide needs rule to allow the use of funds from the original period of availability into the fiscal year after the partner nation takes receipt of the equipment and the next fiscal year. Full operational capability authority does not extend the period of availability for new obligations; all Section 2282 funds must be obligated prior to the end of the fiscal year of Congressional Notification.

C15.3.4.4.1. Full Operational Capability authority is available only if the equipment under the 2282 program is delivered to the USG before the end of second fiscal year (the fiscal year after Congressional Notification). If articles are not delivered to the USG by the fiscal year after the fiscal year of Congressional Notification, the time extension provided in the full operational capability provision does not apply. In such cases, cross-fiscal year authority is still available to procure and deliver long-lead items. Funds for services, other than initial operator and maintenance training, following delivery of the equipment default to the limitations of the cross fiscal year authority. Therefore, if such services require additional funds, the CCMD must request current year funds from OSD (SO/LIC).

C15.3.4.4.2. To enable the partner nation to achieve full operational capability, funding for supplies, training, defense services, and small-scale military construction associated with the equipment necessary may be used in the fiscal year the partner nation takes receipt of such equipment and the next fiscal year.

2. Insert to Chapter 15:

C15.3.4.3. Exceptions to the Bona Fide Need Rule. The Bona Fide Need (BFN) (31 U.S.C. 1502) rule is a general fiscal principal that requires appropriations to be obligated only for payment of bona fide need of the requiring agency during the period of availability of funds. An existing exception to BFN that can be applied to 10 U.S.C. 333 programs is the use of the production/lead time exception. Additionally, 10 U.S.C. 333 contains two time limited exceptions to the BFN rule: Cross Fiscal Year (CFY) Authority and Full Operational Capability (FOC) Authority. The CFY and FOC exceptions to the BFN allow for the execution of funds in future years as long as funds are obligated during the funds' original period of availability.

C15.3.4.3.1. Production/Long- Lead Time Exception. Limited contractor-provided non-severable services (e.g. initial operator training or construction) are permissible to support the delivery of articles and equipment with a long-lead production time when the desired non-severable services or training would fall outside of the allowable period of performance under another authority. Non-severable service contracts may be awarded to support the fielding of a long- lead production article but must be funded entirely with appropriations available for new obligations at the time the contract is awarded, and the period of performance may extend across Fiscal Years (FYs) to support the equipment whenever it is delivered prior to the funds' cancellation date. Therefore, the period of performance for the associated contractor-provided severable services cannot extend beyond a 12-month period as authorized by 10 U.S.C. 2410(a).

C15.3.4.3.1.1. Production/Long Lead Time Exception Impact on Cross Fiscal Year and Full Operational Capability. An individual Section 333-funded program using the long-lead time exception is facilitating delivery of equipment outside the authorized period of performance permitted by the CFY or FOC authority. Therefore, any program using the production/long lead time exception is not eligible to use CFY or FOC authority to execute other aspects of the Section 333 program and must revert back to fiscal rules for Operations and Maintenance (O&M) appropriations. Use of the production/long-lead exception could impact other planned activities in the Section 333 program and Implementing Agencies (IAs) will coordinate the use of this exception with DSCA (Office of International Operations, Regional Execution Directorate, Global Capability Development Division (IOPS/REX/GCD)) during the program design phase and prior to Congressional Notification (CN). DSCA (IOPS/REX/GCD) must communicate to all supporting IAs and non-traditional implementers if the production/long lead time exception will be used for a planned program and that any period of performance conforms to the applicable fiscal rules.

C15.3.4.4. Cross Fiscal Year Authority. Specifically, CFY authority per 10 USC 333(g)(2)(A) allows amounts available in a Fiscal Year (FY) to carry out a Section 333 program to be used for programs under that authority that begin in that FY and end not later than the end of the second FY thereafter. CFY is the default funds availability provision.

C15.3.4.4.1. Section 333 Program Definition and Synchronized Start. A Section 333 program, defined as the provision of a particular capability to a specific country (or countries) within a tranche of a CN, begins when the first field activity obligates the first dollar for the program, not when DSCA receives an apportionment from the Office of the Secretary of Defense, Comptroller (OSD (C)). Examples of a valid obligation include, but are not limited to, signing a contract, approving travel orders, or receiving acceptance on a project order. The planned execution timeline provided to Congress is to be based on when the first field activity will obligate the first dollar and officially start the program. To achieve a synchronized start among all offices supporting a single program requires significant communication and coordination led by DSCA (IOPS/REX/GCD), which also ensures all periods of performance conform to the permissible periods of performance authorized by Section 333.

C15.3.4.4.2. Qualifying for Cross Fiscal Year. The program's planned period(s) of performance may not exceed the time period authorized by CFY. The period of performance begins when the program incurs its first financial obligation. Estimated delivery of articles must occur prior to the end of the CFY time period. If the period of performance or delivery of articles of any line on any case (or any Direct Funds equivalent) associated with the program exceeds that which is authorized by CFY, then all case lines in all cases (and direct funds equivalent) associated with the program must revert back to standard laws and policies governing federal appropriations.

C15.3.4.5. Full Operational Capability Authority. 10 USC 333(g)(2)(B) authorizes an additional exception to the BFN rule, allowing follow-on support (FOS) (in the form of additional defense articles, training, defense services, supplies including consumables, and small-scale construction) for equipment requiring FOC, as denoted on the CN. These FOC activities may begin in the FY when the Benefitting Country takes receipt of the equipment, and may continue until the end of the second FY thereafter.

C15.3.4.5.1. Qualifying for Full Operational Capability. In order for a Section 333 program to qualify for FOC, the USG must receive all equipment requiring FOS and/or services to ensure the Benefitting Country achieves FOC for such equipment before the end of the FY after the FY in which the program incurs the first financial obligation. If all such equipment is delivered to the USG during this time, the USG may provide the Benefitting Country with the FOS associated with the delivered equipment.

C15.3.4.5.2. If the USG does not receive all equipment requiring FOS and/or services before the end of the FY after the first obligation, the program does not qualify for FOC and must revert to the period of performance authorized under CFY authority or basic fiscal law requirements.

C15.3.4.5.3. The USG will make every effort to deliver the equipment to the Benefitting Country within 120 days after acceptance of the items by the USG.

C15.3.4.5.4. Training-only programs do not qualify for FOC authority as FOC authority only applies to the delivery of equipment.

C15.3.4.5.5. Use of Multiple BFN exceptions. The CFY and FOC exceptions are legally available options for DoD to execute Section 333 programs through a multi-year deliberate planning process to deliver enduring capabilities to Benefitting Countries. IAs may utilize both CFY and FOC authorities while executing a single Section 333 program.

C15.3.4.5.6. Program Completion and Case Closure. As a matter of law, FOC activities and long- lead production equipment delivery (and associated non-severable services) must be completed prior to funds cancellation. This also facilitates timely case closure of Letters of Offer and Acceptance (LOAs) and assists in the assessment, monitoring, and evaluation of security cooperation initiatives.

C15.3.4.6. Economy Act Limitations. DSCA transfers funds to IAs and Direct Funds Recipients to execute Section 333 programs under the authority of the Economy Act (31 U.S.C. 1535). The Economy Act requires the supporting organization to de-obligate and return to the ordering agency any funds for services (to include training services) not provided or requirements not legally obligated on contract, project order, travel order, or by a working capital fund (e.g. Defense Working Capital Fund (DWCF)) before the appropriation expires. IAs and Direct Funds Recipients must return de-obligated and unused funds to DSCA no later than the end of the first quarter following the expiration of the funds' period of availability. The performance timelines authorized by CFY and FOC authority do not negate this Economy Act requirement.

C15.3.4.6.1. Support services provided by USG personnel (except when operating under a project order or a working capital funds like the DWCF (See DoD Financial Management Regulation (FMR) Volume 11A, Chapter 2), are considered obligated only when the support service is actually provided, not when funds are provided.

C15.3.4.6.2. For case lines supported by USG personnel (with a Source of Supply Code of "S" or "X") where period of performance dates extend beyond funds' expiration, the line note must include language stating USG services are funded with working capital funds or by project order. For Source of Supply Code "X" case lines, if USG personnel are not funded with either working capital funds or by project order, the line note must include language stating USG services will end when funds expire.

C15.3.4.6.3. Travel orders for a Benefitting Country or USG personnel not operating under a project order or a working capital fund, like DWCF, cannot be issued after the appropriation expires.

C15.3.4.6.4. For any service lines the case note must indicate if severable e non-severable services will be provided.

3. Renumber remaining sub-sections in C15.3.4. as needed.

4. Update the LOA note in Appendix 6:

Availability of Funds Across Fiscal Years

Attachment 2
Execution Scenarios

For a copy of this attachment, please contact the policy memo POC: Ms. Caroline Chin, DSCA (Office of Strategy, Plans, and Policy, Execution Policy and Analysis Directorate (SPP/EPA)), caroline.s.chin.civ@mail.mil or (703) 697-9073.