BACKGROUND

Under the procedures in effect before implementation of the RMS, financial management of naval activities was restricted to the materials and services that resulted in expenditures of appropriated funds granted to those activities. Little or no attention was paid to other costs such as military services, material issued at no cost (free issue), or material or services charged to open allotments. These costs were considered as other resources. In this situation, the responsible commander was only controlling a small percentage of his or her operating costs. The RMS was designed to correct this deficiency by providing the responsible commander with a budget that included all cost incurred instead of allotments to cover only limited portions of those costs. The DOD determined that management would be improved significantly if the financing of an activity was related to the total expense of the task or mission assigned and if the expenses were recognized and recorded against the OPTAR at the time they occurred instead of when they were requisitioned or when payment was made. The responsible commander's flexibility to shift resources to meet these changing demands is greatly increased by the fact that his or her budget will contain additional resources that were previously provided by individual allotments.

Four interrelated subsystems make up the RMS to meet the objectives of the DOD. They are as follows:

Programming and budgeting

Management of resources for operating units

Management of inventory and similar assets

Management of acquisition, use, and disposition of capital assets

The first, third, and fourth items are applicable primarily at the department, bureau, or inventory manager level. The AK would be most concerned with the second item. Current guidelines for the management of resources for operating units are found in Financial Management of Resources Operations and Maintenance (Shore Activities), NAVSO P-3006, Financial Management of Resources Fund Administration (Operating Forces), NAVSO P-3013-1, and Financial Management of Resources Operating Procedures (Operating Forces), NAVSO P-3013-2.

OBJECTIVES

The basic objectives of the RMS, as applied to operating units, are as follows: 

l To determine the cost of operation of an activity in terms of total resources consumed or applied. 

l To establish a system of controls that will be of maximum value to commanders. Commanders use these controls to assure that resources are used effectively and efficiently in the accomplishment of the mission of the activity. 

l To furnish operating budget grantors and other levels of management, up to and including the Navy Comptroller, that degree of financial information necessary for effective coordination and control of resources.

These objectives are achieved by implementation of the planning, programming, and budgeting system and the use of such functional terms as funds, appropriations, expense operating budgets, responsibility centers, cost centers, expense elements, and OPTARs. With an understanding of the interlocking functions of all these factors, the fiscal side of supply becomes a clear and purposeful system. The material presented in this TRAMAN provides the necessary background information. Perhaps AKs may not be personally involved in the consolidation of budget estimates; however, it will be helpful if they know how the process is carried out and how the action taken at higher levels may both depend upon and affect what they do locally,

The RMS affects the entire management process in the DOD. The following paragraphs briefly define steps in the management process. Figure 2-1 indicates the normal sequence of the steps in the management cycle.

Planning in DOD is concerned with developing long- and midrange strategy and operational concepts, objectives, and requirements based on continuously projected appraisals of the world situation and on technological and intelligence forecasts.

Programming is concerned with setting specific 5-year defense goals and the schedule for achieving them, grouping functions and activities sharing the same objectives into major programs, and estimating resource requirements for each.

Budgeting is the function of formulating 1-year projections of resource requirements for programs, balancing priorities in the competition for limited resources, and obtaining associated funds.

Accounting is the function of measuring the results of performance (progress and status of

Figure 2-1.-Department of Defense management process.

programs), usually in financial terms, both for functional areas and organizational units.

Reporting is concerned with transmitting financial and nonfinancial information on the status and progress of programs to appropriate management levels.

Auditing is the function of reviewing the accuracy of recorded and reported results, and judging both the adequacy of established policies and procedures and the activity's compliance with them.

RESOURCE MANAGEMENT SYSTEM AT THE OPERATING FORCES LEVEL

Each TYCOM (or equivalent) is responsible for the development of resource requirements, administration of available funds, and continuous analysis of the status of OPTARs issued, including the efficient and effective use of them. Corrective action is taken where necessary in the research and reconciliation of unfilled orders, unmatched expenditures, and expenses incurred.