(i) Step One: Decide How Much of the Cancellation Ceiling to Fund.

(A) Step One A: Determine How Much of the Cancellation Ceiling is based on Recurring Costs. In Chapter 6, you estimated the cancellation ceiling based on nonrecurring and recurring costs. Refer to your working papers to obtain this dollar amount.

(B) Step One B: Determine How Much of the Cancellation Ceiling is based on Nonrecurring Costs. Obtain this dollar amount from the same working papers you referred to in Step One A. The sum of the numbers you derive in Steps One A and One B will equal the total amount of the cancellation ceiling.

(C) Step One C: Check the Governing Appropriations Act and Regulations. Do they require you to fund the EOQ advance procurement to the limits of the Government's liability? If so, you must fund the recurring cost portion of the cancellation ceiling. If not, you can choose whether to fund it. To make this decision, follow Step One D. You probably have the flexibility to decide whether to fund the nonrecurring cost portion of the cancellation ceiling. Verify this by reviewing the pertinent legislation and funding directives. If the choice is yours, Step One E will help you make the decision.

(D) Step One D: Decide Whether to Fund the Recurring Cost Portion. In making this decision, consider the following:

(1) The results of Step One C. If Congress mandates that this amount be funded, you must fund it. To do otherwise, you must obtain permission from the Congress in the Appropriations Act for the year in which your multi-year contract will be initiated. If DoD 7000.14-R, Volume 2A, Chapter 1 requires that this amount be funded, you must fund it unless you obtain a waiver to the policy, as prescribed by the directive. (If Congress requires this amount to be funded, the waiver to the DoD Regulation will be in addition to the special Appropriations Act language.)

(2) The mechanics of funding this amount (described in Step Two, below). Whether the amount of funding you expect to request and/or have for the contemplated multi-year procurement will be adequate to meet other funding requirements as well as this one.

(E) Step One E: Decide Whether to Fund the Nonrecurring Cost Portion of the Cancellation Ceiling. In making this decision, consider the following:

(1) The results of Step One C.

(2) The mechanics of funding this amount (described in Step Three, below).

(3) Whether the amount of funding you expect to request and/or have for the contemplated multi-year procurement will be adequate to meet other funding requirements as well as this one.