OFFICE OF THE UNDERSECRETARY OF DEFENSE
1100 DEFENSE PENTAGON
WASHINGTON, DC 20301-1100
FEB. 19, 1999
MEMORANDUM FOR THE ASSISTANT SECRETARY OF THE ARMY (FM&C)
ATTN: Deputy Director For Investment
SUBJECT: Chem/Demil Program Financial Status
I have been trying to reconcile the reported execution performance of the Chem/Demil program with the contention that there is no funding flexibility available to cover urgent emerging requirements. For starters the FY 1999 program is larger than FY 1998 by over $170 million.
In the case of the R&D element of the program there is a full 20% of the FY 1996 program that remains unexpended. Similarly the FY 1997 is only 66% expended and the 40% of those expenditures did not occur until FY 1998. The procurement program is not executing at a rate consistent with the amounts budgeted. There are over $110 million of unexpended funds from the FY 1993 through FY 1995 programs. Given the equipment lead times it is difficult to understand how the FY 1996 program has over $175 million of the $138 million budgeted as yet unpaid.
The conclusion that I draw from a cursory look at the data is that we are forward financing a substantial portion of the program. To gain a better understanding of the reported data I would like to spend the day Friday the 19th of February with the program managers at Aberdeen Md., going over the more detailed financial data that they have available on location.
In preparation for our visit I would like to work from the program reports as of 30 September 1998 since that is the baseline of my cursory analysis. I will need to reconcile the unpaid obligations to the "material due in" records that they have on file. To the extent possible I am interested in looking at contracts and recorded contract payments to date on those contracts that are over 3 years old and have large unpaid balances. As an example I can not reconcile a $52 million unpaid amount against the FY 1997 O&M program with the types of effort that are typically funded in O&M.
It would also be helpful if we could look at outstanding commitment documents against the FY 1999 program currently under execution.
Ron Garant
Director For Investment<
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