Recommendation #6: Increase Availability of Operating Funds

Description and Justification: The Commission strongly recommends allowing a carryover into the next fiscal year of up to five percent of each MILPERS and O&M appropriation. The current one-year period of availability creates incentives to obligate funds in the final days of a fiscal year to avoid losing use of the funding (the so-called “use-it-or-lose-it” effect). The use-it-or-lose-it effect, which is exacerbated by spending delays caused by continuing resolutions, causes sharp spikes in year-end obligations that do not always provide contracting officials with enough time to create quality contracts and can sometimes lead to the use of funds for lower priority programs just to avoid losing the funding. Use-it-or-lose-it also contributes to higher cancellations of O&M funds, which means the funds are lost to DoD and decrease the department’s purchasing power. See pages 75-77 of the Final Report for additional information.

Operation and Maintenance, [Organization]
For expenses, not otherwise provided for, necessary for the operation and maintenance of
[Organization], as authorized by law, [Dollar Amount], of which not to exceed five percent shall remain available for obligation until September 30, 202[x+1].

Military Personnel, [Organization]
For pay, allowances, individual clothing, subsistence, interest on deposits, gratuities, permanent change of station travel (including all expenses there of for organizational movements), and expenses of temporary duty travel between permanent duty stations, for members of the [Organization]; [and for members of the Reserve Officers’ Training Corps where applicable]; and for payments pursuant to section 156 of Public Law 97-377, as amended (42 U.S.C. 402 note), and the Department of Defense Military Retirement Fund, [Dollar Amount], of which not to exceed five percent shall remain available for obligation until September 30, 202[x+1].