Department of Defense

End of Year Funding

Every project initiation assumes some sort of risk, at the cost of budgeted funding up front. Through the life of that project, you either spend that funding to mitigate those risks, or get lucky and avert the risk at less cost than expected. This left over funding should not be looked at as a requirement to be spent, or else the program will not get as much funding the next year. There should be an incentive to spend less than budgeted, such that the agency managing the contract receives 10% of the saved money to be used for internal support, and the remaining 90% of saved funding goes back to the sponsor. The funding sponsor should have incentives to constantly challenge the initial budgeted cost of work, to ensure the initial budget is not unnecessarily inflated to make it easier for a project close out to have a large remaining balance.

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Idea No. 4652