1. WORKING CAPITAL FUNDS (WCF)
SHOW SLIDE 1: WORKING CAPITAL FUNDS (WCF)
SECTION I. : Working Capital Funds
ADMINISTRATIVE DATA
All Courses Including This Lesson
Course Number Version Course Title
01 Planning Programming Budget & Execution Course (PPBE)
Task(s) Task Number Individual
Taught (*) or
Academic Hours
The academic hours required to teach this lesson are as follows:
Resident
Hours/Methods
Academic Hours/Method
0.0 hrs Introduction/Conference Discussion
0.0 hrs Conference Discussion
0.0 hrs Summary
0.0 hrs Total Time
Test Lesson Number
Testing (to include test review)
Hours -0 hrs
Lesson Number -
Prerequisite Lesson(s)
Lesson Number
Lesson Title
Identify the Army’s Manpower Management Process
Security Level: Unclassified
Requirements: There are no clearance or access requirements for the lesson.
Foreign Disclosure Restrictions
FD5. This product/publication has been reviewed by the product developers in coordination with the Fort Jackson Soldier Support Institute foreign disclosure authority. This product is releasable to students from all requesting foreign countries without restrictions.
Instructor Requirements
Must meet physical qualifications IAW AR
Materials Required
Instructor Materials:
Lesson plan slides and Manpower Management Summary Sheet
Student Materials:
Manpower Management Summary Sheet
Classroom, Training Area, and Range Requirements
General Purpose Classroom - 25 Seats
Instructional Guidance
Note: Before presenting this lesson, instructors must thoroughly prepare by studying this lesson and identified reference material.
Also, provide the students with situational awareness of the Operational Environment (OE) variables and actors.
Proponent Lesson Plan Approvals
Name Rank Position Date
Harris, Norman CTR Writer/Developer xx-xxx-xxxx
Bonig, Reid GS-12 Chief - FMITD xx-xxx-xxxx
Davis, Bobby LTC FM-DOT xx-xxx-xxxx
Zellars, Eric COL Commandant xx-xxx-xxxx
Motivator: Anyone ever had to call up DPW to fix leaking pipes – they take their time - not too concerned with customer satisfaction – why? They already have their money - they are funded by DA –whether they help you or not – they already got paid. Anybody run into this problem? A lot of times with housing.
Changed - They don’t get funding straight from DA every year. They get paid after they complete the project. Now customer service comes into play. They are actually paid by the customer / unit they provide the service / support for. So either they provide a good service or else the customer will go somewhere else
No year appropriation
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FINANCIAL MANAGEMENT SCHOOL

2. Terminal Learning Objective
Action:
Conditions:
Standard:
Identify the Working Capital Funds.
Given a summary sheet containing DoDFMR R, Vol 11A, 11B, 2A, and slides.
With 80% accuracy; Recognize types of cost, fund concepts, fund objectives, WCF business areas, and funding sources.
SHOW SLIDE 13: Terminal Learning Objective
A little history - The Defense Business Operating Fund (DBOF) was abolished on 11 Dec 1996, by Program Budget Decision 426 and divided into four funds: Working Capital Fund (WCF), Navy WCF, Air Force WCF and Army WCF.
Currently portions of this program are now combined under the Single Stock Fund which I’m sure some of you have used.
Book info
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FINANCIAL MANAGEMENT SCHOOL

3. Working Capital Funds: Operate Like a Business
Must produce:
A quality product
On time
At the lowest possible cost
Buyer/Seller relationship
Customers pay for orders
Production dependent on orders
Must be competitive
Operates on a profit/loss basis (goal is to break even)
Use of business performance indicators
SHOW SLIDE 3: WCFs: Operate Like a Business
WCFs have to compete with other WCF’s and outside vendors for business.
If a WCF has no business in two years it can be dissolved. So a working capital fund must produce a quality product, deliver it in a timely manner, at a reasonable cost in order to survive.
The WCFs survive by entering into a buyer seller relationship with its customers.
Meaning customers order from the WCF and then are billed for the things that they request.
The seller can only provide services for paying customers. Why? It is these funds that will be used to sustain the WCF.
Operate - The goal of a working capital fund is to break even.
Use of business performance indicators - Because this fund operates like a business it needs to track all costs and ensure that it is operating in a profitable manner.
It also must keep close tabs to what competitors are doing both in and outside the government if it wants to stay competitive on price and product offerings.
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4. FINANCIAL MANAGEMENT SCHOOL
Fund Concept
SELLER / PROVIDER
PAYMENT
OF BILL
EXPENDITURES
SHOW SLIDE 4: Fund Concept
A provider of a good or service receives an order from a customer, such as an installation.
They use their on-hand labor and materials to provide the service or good to the customer and ship that product to the customer.
This generates a bill that the customer will pay - utilizing the appropriate funds.
These funds/payments will go back to the working capital fund to offset supplies consumed and labor and overhead expenses that can be attributed to providing the service or goods in the first place.
If this transaction works properly the working capital fund should break even since it charges the customer all expenses incurred with the transaction.
Most important thing for a WCF is to capture all costs associated with providing the product or service.
CUSTOMERS
BILLING
PRODUCT OR SERVICE
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5. FINANCIAL MANAGEMENT SCHOOL
Fund Objectives
Create buyer/seller relationship
Adopt business practices
Stabilize rates
Break even
Identify total costs
SHOW SLIDE 5: Fund Objectives
Create buyer/seller relationships - With this program - customers are allowed to "shop around" for their items of support among providers. This process forces AWCF organizations to adopt current business practices to stay competitive or face elimination.
2) Adopt Business Practices - become cost conscience
3) Id Total Costs - all direct, indirect, and any general and administrative costs (expenses) incurred to furnish the item, product or service are included in the unit cost per item.
4) Break Even - Want to break even (Revenues - Costs = Break Even)
Civ business – profit / WCF - Break Even (Long term - break even (can have short term losses / profits)
5) Stabilize Rates – The working capital fund locks prices for the year for planning purposes – so customers can budget. They need to project demand out to figure price (ID all costs). What happens if not planned right – can have a loss (ie – charge 1.00 / widget lock it in – actually 1.10 – lose .10 / widget)
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6. Types of Costs Direct Costs Indirect Costs Other costs to consider
Direct Labor and Materials
Direct Contracts
Indirect Costs
Second Line Supervisors
Indirect Materials
Other costs to consider
General and Admin Expenses
Staff Functions
Base Operations (BASOPS) (big with depots)
SHOW SLIDE 6: Types of Costs
Direct - Costs that are clearly attributable to a specific product or service.
Indirect - Costs that are associated with a product or service, but are not directly attributable to just one product or service
Other costs to consider:
General and admin expenses - Expenses that cannot be reasonably associated with any particular output and are allocated over all the outputs
As stated earlier the key is that a WCF Needs to find total costs - Activity Based Costing is getting big when it comes to this.
- ABC is big with Government Accounting – City of Indianapolis gets a lot of kudos for this
(Business areas)
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7. FINANCIAL MANAGEMENT SCHOOL
DWCF Business Areas
Commissaries
Depot Maintenance
Distribution Depots
Financial Operations
Industrial Plant Equipment
Information Services
Logistics Support Activities
SHOW SLIDE 7: DWCF Business Areas
The following are the business areas that are currently financed through the Defense WCF financial structure
Each business area is an aggregation of activities within a Component that provides goods and services.
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8. More DWCF Business Areas
Printing and Publication Services
Public Works
Reutilization and Marketing Service
Research and Development
Supply Management
Transportation
SHOW SLIDE 8: More DWCF Business Areas
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9. FINANCIAL MANAGEMENT SCHOOL
AWCF Areas
Depot Maintenance
Information Services
Ordnance
Supply Management (including Single Stock Fund)
SHOW SLIDE 9: AWCF Areas
DEP - OH
Ones that are Army specific
AWCF.pdf
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10. FINANCIAL MANAGEMENT SCHOOL
Funding Sources
Congressional Appropriations
Operating Budget – 1st Year Annual Costs (start up costs)
Capital Budget - unit cost of $100,000 or more useful life of two or more years (depreciable assets)
Reimbursements by Customers Orders (also known as “Operating Resources”)
SHOW SLIDE 10: Funding Sources
WCF activities have two sources of funds - Congressional Appropriations and customer reimbursements.
Congressional Appropriations are further subdivided into two categories: operating budgets and capital budgets
Operating budgets - 1st year annual costs to get started. This is appropriated by Congress on a one-time basis.
Capital Budgets - This is a separate appropriation to buy something to help setup the WCF.
The item must cost at least $100,000 or more, have a useful life of two or more years, and be a depreciable assets - examples are in-house or contracted software development or a large one time productivity initiative
The other funding source is Customer Reimbursements. The reimbursements are the income generated from the daily business operations of WCF activities.
Simply put, it is what the buyers pay the sellers
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FINANCIAL MANAGEMENT SCHOOL

11. A “NO YEAR” APPROPRIATION
WCF Treasury Symbol
097XXXX4930
SHOW SLIDE 11: WCF Treasury Symbol
How is it accounted for?
The WCF is a revolving fund.
3rd number is appropriation - so x is “no year” appropriation (no expired or unexpired state)
Bottom line - It doesn't expire
- unless there is no activity in the fund for more than two years or unless designated by the USD (C)
(97 means its DoD)
(How can you get into trouble - Potential funding violations)
A “NO YEAR” APPROPRIATION
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12. Potential Funding Violations
Negative cash balance
Violating floors, ceilings & limitations
Performing work without an order
Cost overruns knowing customer can’t pay
Transferring costs to avoid cost overrun
Using wrong funding source
SHOW SLIDE 12: Potential Funding Violations
WCF business areas and activities must operate under the same fiscal laws as other appropriated funds.
Some of the major causes that could lead to a funding violation are:
Responsibility for prosecuting antideficiency violations is held by the USD (C); however, the activity whose actions led to the violation(s) is held accountable for them.
CHECK ON LEARNING
Q: Is the goal of working capital funds to generate a loss so customer funds may benefit?
A: False
Q: What is the long term financial objective of the WCF?
A: Break Even (Revenues = Costs)
Q: What costs are used to determine prices?
A: Direct and Indirect
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FINANCIAL MANAGEMENT SCHOOL
805A-BSK-1003-VG-10

13. Check On Learning
True / False. Working Capital funds are not concerned with direct and indirect costs.
Q. When do working capital funds reach the expired state?
True / False. The goal of the Working Capital Fund is to generate a loss so customers may benefit

14. Terminal Learning Objective
Action:
Conditions:
Standard:
Identify the Working Capital Funds.
Given a summary sheet containing DoDFMR R, Vol 11A, 11B, 2A, and slides.
Recognize types of cost, fund concepts, fund objectives, WCF business areas, and funding sources.
SHOW SLIDE 13: Terminal Learning Objective
A little history - The Defense Business Operating Fund (DBOF) was abolished on 11 Dec 1996, by Program Budget Decision 426 and divided into four funds: Working Capital Fund (WCF), Navy WCF, Air Force WCF and Army WCF.
Currently portions of this program are now combined under the Single Stock Fund which I’m sure some of you have used.
Book info
11/16/2018
FINANCIAL MANAGEMENT SCHOOL