ACAP Program and Budget Management 2 — Questions and Answers
Question 1: What is the 'Estimate at Completion (EAC)' in EVM and how is a common formula for it calculated?
- EAC projects the final total cost; a common formula is EAC = Actual Cost to Date + (Budget at Completion - Earned Value) / CPI (Correct answer)
- EAC is the contractor's bid price adjusted for cost growth to date
- EAC equals the original Budget at Completion plus any contract modifications
- EAC is computed as Planned Value minus Cost Variance
Correct answer: EAC projects the final total cost; a common formula is EAC = Actual Cost to Date + (Budget at Completion - Earned Value) / CPI
This EAC formula assumes future work will be performed at the same efficiency as work to date (indexed by CPI), making it a widely used performance-based forecast of final cost.
Question 2: What is the difference between 'obligations' and 'outlays' in Army program budget management?
- Obligations are commitments to spend (e.g., signed contracts); outlays are actual cash disbursements made to contractors (Correct answer)
- Obligations are budget authority granted by Congress; outlays are the costs reported in the program's LCC
- Obligations are O&S costs; outlays are procurement costs for a given fiscal year
- Obligations require congressional approval; outlays do not
Correct answer: Obligations are commitments to spend (e.g., signed contracts); outlays are actual cash disbursements made to contractors
An obligation occurs when the government legally commits funds (e.g., by awarding a contract); an outlay occurs when those funds are actually paid out, often in a later fiscal year.
Question 3: What is 'budget authority' and how is it different from appropriations in Army cost planning?
- Budget authority is the legal authority to obligate funds; appropriations are the specific acts by which Congress provides budget authority (Correct answer)
- Budget authority applies to multi-year funds; appropriations are single-year
- Budget authority is set by the Army; appropriations are set by OSD
- They are synonymous terms in the federal budget process
Correct answer: Budget authority is the legal authority to obligate funds; appropriations are the specific acts by which Congress provides budget authority
Appropriations are one form of budget authority; Congress provides budget authority primarily through annual appropriations acts, but also through contract authority, borrowing authority, and other mechanisms.
Question 4: What is a 'Program Budget Decision (PBD)' and how does it affect Army programs?
- A PBD is an OSD decision document that adds, reduces, or realigns funding in a program's budget submission, directly changing what funds are available (Correct answer)
- A PBD is an Army decision to activate a new acquisition program
- A PBD is a congressional earmark added to the defense appropriations bill
- A PBD is a program office document authorizing a contract modification
Correct answer: A PBD is an OSD decision document that adds, reduces, or realigns funding in a program's budget submission, directly changing what funds are available
PBDs are issued during OSD budget review and can significantly change program funding profiles; cost analysts must track PBDs to maintain accurate budget baselines.
Question 5: What is the purpose of a 'Budget Estimate Submission (BES)' in the Army PPBE process?
- The BES is the Army's formal budget request submitted to OSD that translates the POM into the President's Budget request, with detailed cost justifications for each program (Correct answer)
- The BES is a contractor's budget proposal submitted during source selection
- The BES is the Army's report to Congress on how prior year funds were spent
- The BES is the EVM baseline submitted at contract award
Correct answer: The BES is the Army's formal budget request submitted to OSD that translates the POM into the President's Budget request, with detailed cost justifications for each program
The BES represents the Army's refined budget position submitted to OSD after POM review, incorporating any changes and providing the cost basis for the President's Budget submission.
Question 6: What is 'reprogramming' and when does it require congressional approval in Army budget execution?
- Reprogramming moves funds between programs or accounts; transfers above statutory thresholds require prior approval from congressional defense committees (Correct answer)
- Reprogramming is the Army's internal process for moving funds within a program without approval
- Reprogramming always requires a new appropriations act and applies to all fund movements
- Reprogramming applies only to RDT&E funds and never requires congressional notification
Correct answer: Reprogramming moves funds between programs or accounts; transfers above statutory thresholds require prior approval from congressional defense committees
Below certain dollar thresholds, the DoD can reprogram funds with only a notification to Congress; above those thresholds, prior approval from the relevant committees is required before execution.
ACAP Program and Budget Management 2
What is the 'Estimate at Completion (EAC)' in EVM and how is a common formula for it calculated?