[1] United States Navy activities financed through the NWCF perform a wide variety of functions including Supply Management, Depot Maintenance, Research and Development, Transportation, and Base Support.
Success in these endeavors is critical to ensuring that the Department of the Navy can afford both the ongoing support costs of fleet operations and the necessary reinvestment in new platforms and weapons systems.
Stock funds, in use by the Navy since the 1870s, were aimed at financing the procurement of material (spare parts and other items) in volume from commercial sources, to be held in inventory.
This material was intended to be sold to customers, in order to achieve weapon systems readiness or to provide personnel support.
The Defense Authorization Act addressed this issue, requiring that DoD conduct a comprehensive study of DBOF and present its findings along with a proposed improvement plan to Congress for approval.
[3] In December 1996, DBOF was reorganized into four working capital funds (Army, Navy, Air Force, and Defense-Wide).
Business areas receive their initial working capital through an appropriation or transfer of resources from an existing revolving fund.
To maintain full cost recovery and thereby to break even over the long term, NWCF activities generally adjust their rates each year to reflect such realized gains and losses.
Financial resources to replenish the initial working capital and to permit continuing operations are generated by the acceptance of customer orders.
By keeping a positive account balance, and by looking for ways to stretch capital further, revolving fund activities are exercising sound financial management.