CDFM Budget and Cost Analysis 4 — Questions and Answers
Question 1: What is 'inflation' versus 'real growth' in the context of DoD budget analysis?
- Inflation reflects actual spending increases; real growth reflects price level changes only
- Inflation accounts for price level changes; real growth reflects actual increases in purchasing power or quantity (Correct answer)
- Inflation is measured by CPI; real growth is measured by the GDP deflator
- Inflation applies only to procurement accounts; real growth applies to O&M accounts
Correct answer: Inflation accounts for price level changes; real growth reflects actual increases in purchasing power or quantity
In budget analysis, inflation adjustments account for changes in price levels (purchasing power erosion), while real growth represents genuine increases in the quantity of resources or capability funded.
Question 2: What is the purpose of a 'crosswalk' in DoD budget analysis?
- A table that reconciles differences in format between two budget presentations of the same data (Correct answer)
- A memorandum authorizing transfer of funds across appropriation accounts
- The process of converting base-year dollars to then-year dollars
- A regulatory review comparing the budget to the approved program baseline
Correct answer: A table that reconciles differences in format between two budget presentations of the same data
A crosswalk is an analytical table that maps or reconciles data presented in one format or organizational structure to another, enabling comparison between budget versions or between budget and program data.
Question 3: Under DoD 7000.14-R (FMR), which event formally records an obligation in the accounting system?
- Congressional enactment of the appropriation
- Delivery of goods or services by a vendor
- A binding legal agreement such as a signed contract or purchase order (Correct answer)
- Submission of an invoice by the contractor
Correct answer: A binding legal agreement such as a signed contract or purchase order
An obligation is recorded when the government enters into a legally binding agreement (contract, order, grant, etc.) that will require payment, not at delivery or invoicing.
Question 4: What distinguishes a 'reprogramming' action from a 'transfer' in DoD budget execution?
- Reprogramming moves funds within an appropriation; transfer moves funds between appropriations (Correct answer)
- Reprogramming requires no congressional approval; transfer always requires a special act
- Reprogramming applies only to RDT&E; transfer applies to all appropriations
- Reprogramming is a below-threshold action; transfer is always an above-threshold action
Correct answer: Reprogramming moves funds within an appropriation; transfer moves funds between appropriations
A reprogramming realigns funds within the same appropriation account, while a transfer moves funds between different appropriation accounts and generally requires statutory authority.
Question 5: In parametric cost estimating, what is the main advantage over the analogous estimating method?
- It requires no historical data and relies entirely on engineering judgment
- It uses statistical relationships to scale estimates, providing greater objectivity for systems without direct analogs (Correct answer)
- It produces lower cost estimates because it accounts for learning curve effects automatically
- It is always more accurate because it uses actual contractor cost data from similar programs
Correct answer: It uses statistical relationships to scale estimates, providing greater objectivity for systems without direct analogs
Parametric estimating uses mathematically derived CERs based on historical data to scale cost by technical parameters, offering more objectivity and scalability than simple analogy when exact analogs are unavailable.
Question 6: What is the significance of the 'breach' threshold under the Nunn-McCurdy Act for a Major Defense Acquisition Program (MDAP)?
- A 15% unit cost increase above the APB objective triggers an automatic program termination
- A 25% unit cost increase above the APB baseline triggers mandatory certification or program termination (Correct answer)
- A 10% schedule slip triggers a Critical Nunn-McCurdy breach requiring Under Secretary approval
- A 50% unit cost increase triggers renegotiation of all existing contracts on the program
Correct answer: A 25% unit cost increase above the APB baseline triggers mandatory certification or program termination
A Critical Nunn-McCurdy breach occurs when the program acquisition unit cost grows 25% or more above the baseline, requiring the USD(AT&L) to certify the program or it is terminated.
Question 7: In the context of the DoD Future Years Defense Program (FYDP), how many years does the FYDP typically span?
- 3 years
- 5 years (Correct answer)
- 10 years
- 20 years
Correct answer: 5 years
The FYDP covers the budget year plus four additional out-years, for a total of five years, reflecting planned resource requirements across the DoD program structure.
CDFM Budget and Cost Analysis 4
What is 'inflation' versus 'real growth' in the context of DoD budget analysis?