I have a question for all of the US Veterans

[RFCalifornia]

I sell to a number of customers and and have previously sold to State and Federal agencies

At one point I was selling to the the Coast Guard but after 9/11 they required me to get a clearance, which I didn't want to do (too much of a fan of 420, and there were better accounts to have that didn't require it)

Anywho, around November/December, the Coast Guard would go on a serious buying spree. They told me their budget would be shrunk if they didn't use it all. So we sold product at list price, and they didn't care.

Is this one of the reasons why our military budget is so bloated?

Is this why the military buys equipment they didn't even ask for?

[Wounded Bear]

2. It is a problem that cuts across the whole government...

it may be a myth, but there is the sense that if they don't use their entire budget by the end of the fiscal year, that next year's budget will be cut by that amount. I'm not sure how true that is, but the feeling is there. Oh, it happens in the private sector, too. There's often a spending spree at the end of the fiscal year.

People whine about stuff left in Afghanistan, but hell, I remember throwing shit off the boat coming back from Europe (not from a war zone) because it wasn't on the books and it was easier to dump it than try to go through all the paper work to 'recover' it into the system.

Yeah, the military is kind of inherently wasteful. We could probably cut the Pentagon budget by 25% and folks wouldn't really notice much.

[maxrandb]

3. OMN Appropriations must be spent, or obligated during the fiscal year

Other types of appropriations have different, or open ended expiration dates.

For OMN funding, it is true that it must be obligated by 30 September of the fiscal year it was appropriated for.

It's not so much that failure to spend it will reduce the next years appropriations, but here is what happens.

Certain programs are unable to obligate the funds they've been allocated. This could be due to change in operations, contracts that can't be awarded by 30 September, or a whole host of other reasons.

At the same time, other programs have expended funds, and still have valid needs they can fund.

What we used to do, is, starting around August, we would start gathering funds that some programs hadn't spent, and giving it to programs that had valid needs.

What probably happened in your case is that the Coast Guard program you were working with was suddenly given some additional funds to spend.

[Dan]

4. Yearly budget .... Use to be called

Use it, or lose it.

Applies to future year, if you don’t use all of the budget allocated for the current year, then the next year your budget is reduced. Use it or lose it.

So, toward the end of the fiscal year, they will buy anything at any cost.

[maxrandb]

7. That's not really how it works

Military budgets are planned years in advance. There is only a small part of the funding that is OMN and expires at the end of the fiscal year.

For example, it takes approximately 7 years to build an Aircraft Carrier. We couldn't function if all the funds went away every year.

I will give you an example from when I used to do financial management for DOD. One year our Air OPS program planned to do a contract to purchase a Stair Truck (the mobile set of stairs you sometimes see pulling up to a plane to disembark passengers).

Anyway, they processed the contract and obligated the funds to purchase this ground equipment in the amount of $75K.

Around about August, the contractor relayed that they would be unable to deliver the product. That $75K came back to Air OPS with less than two months remaining in the fiscal year.

Despite what some folks believe, Air OPS could not just go out and buy $75K worth of pens to make sure they "spent all their money".

So, what we do in that case is look for programs that are under-funded and still have critical, valid needs. In this case Port Ops was delaying maintenance on pusher-boats because they didn't have sufficient funds remaining. We transferred 67K to Port Ops to obligate and expend the funds on a Maintenance Contract.

That didn't mean that Air Ops was shorted $75k in the next year. They still had a valid requirement for a Stair Truck.

We used to get 20-30 hours of overtime per week the month of September. There were times on September 30th that we would start the day at 6AM, and still be obligating funds until midnight.

But, you still had to have a valid need for what you were buying, and it had no impact on what you were budgeted for in the next fiscal year.

I know it looks like folks are just willy-nilly spending at the end of the fiscal year, but trust me, our goal was to have 90% of our OMN obligated by August.

The scramble comes from programs not being able to spend what they have, and other programs being given funds they weren't planning for.

Again, and I want to emphasize this, you can't just buy a bunch of stuff to make sure you spend the money. There have to be valid needs.

[Dan]

8. I accept what you say,

But that is the way it seemed with our military units/company. Of course, at a company level we didn’t build aircraft carriers, just had the needed funds to keep the company rolling.

[maxrandb]

11. Yeah, it happened to me too

We'd get told "hey, you just got x amount of funds, let's look at what we need and get it spent".

It wasn't until I retired and went to the government service side of financial management that I saw it from the other side.

[retread]

5. This isn't confined to the military. At least in the large companies I worked for there was always a

rush to spend allocated money and complete projects management had drug their feet on through the year.

[Mr.Bill]

6. I worked for a printing company once who had Apple as a client.

Once their buyer demanded we double our price or she would look like a fool for arguing for the budget she thought she needed for it.

One of the many reasons I have never bought an Apple product.

[pfitz59]

9. Use it or lose it

I was a pilot, and we used to do "boondoggle" training hops IOT to meet our fuel allocation. It was fun, but wasteful

[Stinky The Clown]

10. That is true of all federal agencies, not just DOD.