Which option best describes the funding for the industrial fund?

• A. RDT&E
• B. O&M
• C. MILCON
• D. Procurement

Answer: (B)

Industrial funds are established to operate government-owned activities that provide services to internal customers. They are designed to be self-sustaining by recovering their day-to-day operating costs through charges to these internal users. That makes operating and maintenance funding the appropriate source, since O&M covers the ongoing expenses of running facilities, paying personnel, maintaining equipment, and delivering services.

RDT&E funds are for research and development, MILCON funds pay for construction, and Procurement funds are for acquiring new weapons and major equipment. None of these fund the day-to-day operations of an industrial activity, so they wouldn’t finance an industrial fund. Therefore, the funding source for an industrial fund is O&M.