Research, Development Test & Evaluation (RDT&E) Appropriations are available for two (2) fiscal years but the incremental funding policy states that the DoD is to budget only for those contract costs expected to be incurred in the first (1) fiscal year. The second year of availability is only there to provide flexibility in the event of schedule slippage. Although, all second year obligations of RDT&E funds must be restricted to only those tasks within the scope of the approved budget year program.

R&D budgets reflect funding required for twelve (12) months’ worth of effort from 1 October through 30 September or some lesser amount if the contract period of performance does not cover the full 12 month period. Congress then authorizes and appropriates RDT&E funds for the specific “increments” of work to be accomplished during the fiscal year for which the funds were requested. The objective of Incremental Funding/Programming Policy (IPP) is to use RDT&E funds during the initial (i.e., first) year of obligational availability. Thus, R&D work is usually programmed on an annual, incremental basis coincident with the fiscal year.

There is an exception to incremental funding for R&D contracts with PoPs less than 18 months (DoD 7000.14-R, Volume 2A, Chapter 1, paragraph 010214 C. b., page 1-43). This permits budgeting for the entire contract price in the first year but only under the circumstances discussed in that paragraph.

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Updated: 7/20/2017

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