United States Navy Working Capital Fund - History of The NWCF

History of The NWCF

Historically, the U.S. military has had two categories of revolving funds; stock funds and industrial funds.

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. Industrial funds, in use by the Navy since the 1940s, provided industrial and commercial goods and services such as depot maintenance, transportation, and research and development. The 1949 amendments to the National Security Act of 1947 authorized the United States Secretary of Defense to establish revolving funds as the business model for the operation of these funds.

In 1991, all of DoD’s stock and industrial funds were rolled into a single revolving fund, the Defense Business Operations Fund (DBOF), along with five additional defense commercial operations or business areas previously funded with direct appropriations. DBOF was capitalized at a level significantly less than the sum of the stock and industrial funds it replaced. The consolidation of stock and industrial funds caused overall cash levels to be reduced, by allowing funds or capital to be shared across all of the activities, resulting in cash flow problems. 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.

In December 1996, DBOF was reorganized into four working capital funds (Army, Navy, Air Force, and Defense-Wide). With the addition of a fifth fund—the Defense Commissary Agency in 1999—the new organization was now officially called the Defense Working Capital Fund (DWCF). The five funds and their corresponding business areas provide goods and services to DoD and authorized non-DoD activities.