Reprogramming and Reimbursements in the Last Quarter
An Army garrison commander has $1.4 million in O&M funds remaining in the last quarter of the fiscal year. She wants to spend $650,000 to replace a failed chiller in a child development center, $300,000 to buy 40 ruggedized laptops at $7,500 each, $200,000 to cover a shortfall in a facilities sustainment contract, and $90,000 for an environmental compliance study required by an EPA consent order. None of these requirements is in the approved spending plan. The command’s expense/investment threshold is $250,000 per item, and its reprogramming threshold is the lower of $500,000 or 10% of the affected program. The O&M program is $18 million. A tenant command reimbursed the garrison $1.1 million for utilities that the garrison paid from O&M; the reimbursement was deposited to the O&M account. The commander asks whether she can use the reimbursement and the remaining O&M to cover all four requirements without higher headquarters approval.
1. Classify each of the four requirements by color of money and determine whether it is an O&M expense or an investment/procurement requirement.
Read the worked answer
The chiller is the difficult item. If the work restores the failed component to its original condition, does not increase capacity, and does not extend the facility’s useful life, it can be an O&M repair. If it replaces a capital asset or is a modernization, it is an investment item and must use procurement or MILCON funds. Because the cost exceeds the $250,000 per-item expense/investment threshold, the commander must document the repair characterization; the threshold does not automatically convert every repair into procurement, but it requires a purpose review. The 40 laptops cost $7,500 each, below the $250,000 per-item threshold, so they are O&M expense items, not procurement, assuming they are not part of a larger capitalized system. The $200,000 facilities sustainment shortfall is O&M. The $90,000 environmental compliance study is O&M and is legally required under the consent order.
2. Do any of these actions require reprogramming or higher headquarters approval? Apply the $500,000/10% threshold.
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Ten percent of the $18 million O&M program is $1.8 million; the lower threshold is therefore $500,000. The $650,000 chiller action exceeds $500,000 on its face, so it requires reprogramming approval if it is an O&M action. The $300,000 laptop purchase, the $200,000 sustainment shortfall, and the $90,000 study are each below $500,000, but the commander cannot simply ignore the spending plan. Local funds-control review is still required, and the actions may need to be grouped if they form a single program change. If the chiller is determined to be procurement, it must be funded with the correct appropriation and may require a different approval threshold. The commander should not obligate the chiller without higher-headquarters reprogramming approval and a documented purpose determination.
3. Can the commander use the $1.1 million utility reimbursement for these requirements? What restrictions apply?
Read the worked answer
The reimbursement is an offsetting collection to the O&M appropriation that incurred the utility cost. It is available only for the same purpose and period as that appropriation, and only to the extent the garrison actually incurred the reimbursable cost. It can support valid O&M requirements in the current fiscal year, such as the sustainment shortfall or the environmental study, but it cannot be used for procurement/investment items or to cure an overobligation. If the chiller is an O&M repair, the reimbursement could be a funding source, but the $650,000 reprogramming threshold still applies. The commander must also confirm that the reimbursement was deposited to the correct account and is not a miscellaneous receipt; using it for unrelated requirements would be a purpose violation. The reimbursement does not create new authority to bypass the spending plan or higher-headquarters approval.