(d) HOW TO FUND A CANCELLATION CEILING

(1) To fund the cancellation ceiling, you should budget, program, and have available funds in the necessary amount. Funds obligated for multi-year contracts should be sufficient to cover any potential termination costs. The costs of cancellation or termination may be paid from (1) appropriations originally available for the performance of the contract concerned; (2) appropriations currently available for procurement of the type of property concerned, and not otherwise obligated; or (3) funds appropriated for those payments. If authorized and appropriated funding for approved multi-year programs is insufficient, DoD should submit a reprogramming request to cover the difference.

(2) This section will take you through the following steps to appropriately fund a cancellation ceiling:

•  Step One: Decide How Much of the Cancellation Ceiling to Fund

•  Step Two: Fund the Recurring Cost Portion (if you decided to in Step One D)

•  Step Three: Fund the Nonrecurring Cost Portion (if you decided to in Step One E)

•  Step Four: Document any Unfunded Portion