Order Code RL31305
Report for Congress
Received through the CRS Web
Authorization and Appropriations
for FY2003: Defense
Updated July 12, 2002
Stephen Daggett and Amy Belasco
Foreign Affairs and National Defense Division
Congressional Research Service ˜ The Library of Congress

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Appropriations are one part of a complex federal budget process that includes budget
resolutions, appropriations (regular, supplemental, and continuing) bills, rescissions,
and budget reconciliation bills. The process begins with the President’s budget
request and is bounded by the rules of the House and Senate, the Congressional
Budget and Impoundment Control Act of 1974 (as amended), the Budget
Enforcement Act of 1990, and current program authorizations.
This report is a guide to one of the 13 regular appropriations bills that Congress
passes each year. It is designed to supplement the information provided by the House
and Senate Appropriations Subcommittees on Energy and Water. It summarizes the
current legislative status of the bill, its scope, major issues, funding levels, and
related legislative activity. The report lists the key CRS staff relevant to the issues
covered and related CRS products.
NOTE: A Web version of this document with active links is
available to congressional staff at:
[http://www.crs.gov/products/appropriations/apppage.shtml].

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Authorization and Appropriations for FY2003: Defense
Summary
On February 4, 2002, the Administration submitted its formal FY2003 budget
request to Congress. The Administration proposed $396.8 billion for the national
defense budget function, about $46 billion above the estimated FY2002 level. The
large increase has not been enough, however, to allay concerns among defense
advocates in Congress, who argue that not enough money is available for needed
weapons modernization programs. Much of the increase in funds is for accounting
changes, including the impact of accrual accounting for military retiree health
benefits, and for costs of the global anti-terrorism campaign. Costs of military
personnel pay and benefits and of day-to-day operation and maintenance also
continue to climb, leaving less than many defense proponents had hoped for new
weapons programs.
Congress is now in the midst of action on annual defense authorization and
appropriations bills. On May 10, the House passed its version of the FY2003 defense
authorization bill, H.R. 4546. The bill authorizes $383.4 billion for national defense,
about $13 billion less than the Administration’s request. The bill does not include
$3.4 billion that the Administration had requested for full accrual accounting of
civilian retirement benefits, nor does it include $10 billion that the Administration
had requested as an unallocated contingency fund for the war against terrorism.
During the week of July 15, the House Armed Services Committee plans to report
a second bill, H.R. 4547, to provide $10 billion in funds for the global
counter-terrorism campaign. Earlier the committee allocated $3.6 billion of the $10
billion in H.R. 4547 to specific programs that otherwise would have been included
in the regular defense authorization.
On June 27, the Senate passed its version of the authorization bill, S. 2514. The
bill authorizes $393.4 billion for national defense, including $10 billion set aside for
counter-terrorism. Also on June 27, the House approved its version of the FY2003
defense appropriations bill, H.R. 5010. It provides $354.7 billion for the defense
programs it covers, $12.1 billion below the Administration request.
Several key issues remain to be resolved. The Senate authorization bill includes
a provision to allow immediate, full concurrent receipt of retired pay and disability
benefits, while the House bill phases in a program to allow concurrent receipt for
those with 60% or greater disabilities. The White House has threatened to veto a bill
that includes either provision. Alternatives to the Crusader artillery system remain
an issue. And the Senate authorization includes a number of provisions that the
Administration objects to, including measures requiring tighter oversight of missile
defense programs, a measure prohibiting development of a nuclear earth-penetrator
warhead, and a measure prohibiting deployment of nuclear armed interceptors for
missile defense.

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Key Policy Staff
Area of Expertise
Name
CRS Division
Telephone
Acquisition
Valerie Grasso
FDT
7-7617
Aviation Forces
Christopher
FDT
7-2577
Bolkcom
Arms Control
Amy Woolf
FDT
7-2379
Arms Sales
Richard Grimmett
FDT
7-7675
Base Closure
David Lockwood
FDT
7-7621
Defense Budget
Stephen Daggett
FDT
7-7642
Defense Budget
Amy Belasco
FDT
7-7627
Defense Industry
Gary Pagliano
FDT
7-1750
Defense R&D
John Moteff
RSI
7-1435
Ground Forces
Edward Bruner
FDT
7-2775
Ground Forces
Steven Bowman
FDT
7-7613
Health Care; Military
Richard Best
FDT
7-7607
Intelligence
Richard Best
FDT
7-7607
Military Construction
Daniel Else
FDT
7-4996
Military Personnel
David Burrelli
FDT
7-8033
Military Personnel
Robert Goldich
FDT
7-7633
Military Personnel;
Lawrence Kapp
FDT
7-7609
Reserves
Missile Defense
Steven Hildreth
FDT
7-7635
Naval Forces
Ronald O’Rourke
FDT
7-7610
Nuclear Weapons
Jonathan Medalia
FDT
7-7632
Peace Operations
Nina Serafino
FDT
7-7667
Radio Frequency,
Lennard Kruger
RSI
7-7070
Military
Readiness
Amy Belasco
FDT
7-7627
Space, Military
Marcia Smith
RSI
7-7076
War Powers
David Ackerman
ALD
7-7965
War Powers
Louis Fisher
G&F
7-8676
War Powers
Richard Grimmett
FDT
7-7675
Abbreviations:
FDT = Foreign Affairs, Defense, and Trade Division
G&F = Government and Finance Division
RSI = Resources, Science, and Industry Division

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Status of Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2003 Defense Authorization Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2003 Defense Appropriations Bill . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2003 Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . 2
FY2002 Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . 3
Overview of the Administration Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Impact of Accrual Accounting for Military and Civilian
Personnel Retirement Benefits on the Defense Budget . . . . . . . . . . . . . 5
“Must Pay” Bills in the Defense Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Impact of Growing Personnel and Operating Costs . . . . . . . . . . . . . . . . 8
Reversing the “Procurement Holiday” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Procurement “Bow Wave” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Defense Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Defense Budget Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Key Issues in Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Counter-Terrorism Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Personnel Pay and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Army Modernization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Navy Shipbuilding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Aircraft Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Missile Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Strategic Nuclear Weapons Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Environmental Restrictions on DOD Training . . . . . . . . . . . . . . . . . . . . . . 34
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Cap on Military Personnel in Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Base Realignment and Closure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Abortions in Military Hospitals Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
FY2002 Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

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For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
List of Tables
Table 1a. Status of FY2003 Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . 3
Table 1b. Status of FY2003 Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . 3
Table 2. National Defense Budget Function and Department of Defense
Budget, FY2000-FY2007, Administration Projections . . . . . . . . . . . . . . . . . 4
Table 3. Effects of Accrual Accounting on the Defense Budget . . . . . . . . . . . . . 6
Table 4. Changes in Requested National Defense Funding by
Appropriations Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 5. Trends in Military Personnel Funding, FY1990-FY2007 . . . . . . . . . . . . 9
Table 6. National Defense Budget Function by Appropriations Title,
FY2000-FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 7. Congressional Budget Resolution, Recommended Amounts for
National Defense, FY2003-FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 8. Congressional Budget Office Estimate of the Costs of the House
Armed Services Committee Increase in Active Duty End-Strength . . . . . . 21
Table 9. Congressional Action on Major Army Acquisition Programs . . . . . . . 24
Table 10. Congressional Action on Major Navy Shipbuilding Programs . . . . . 25
Table 11. Congressional Action on Major Aircraft Programs . . . . . . . . . . . . . . 28
Table 12. Congressional Action on Missile Defense Funding by Program
Element and Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Table A1. Congressional Action on Defense Authorization by Title . . . . . . . . . 41
Table A2. Congressional Action on Defense Appropriation by Title . . . . . . . . . 41

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Authorization and Appropriations for
FY2003: Defense
Most Recent Developments
On June 27, the House passed its version of the FY2003 defense appropriations
bill, H.R. 5010. The bill provides $354.7 billion for defense programs covered by the
measure, which is $12.1 billion below the Administration request. Later the
committee plans to act on a measure to provide an additional $10 billion that was
requested as an unallocated contingency fund for continuing the global counter-
terrorism campaign.
Also on June 27, the Senate approved its version of the FY2003 defense
authorization bill, S. 2514. The bill authorizes $393.4 billion for national defense.
It includes $10 billion set aside for counter-terrorism but does not include funds for
civilian retirement accrual. On May 10, the House passed its version of the FY2003
defense authorization bill, H.R. 4546, by a vote of 359-58. The bill authorizes $383.4
billion for national defense, about $13 billion less than the Administration’s request.
The bill does not include $3.4 billion that the Administration had requested for full
accrual accounting of civilian retirement benefits, nor does it include $10 billion that
the Administration had requested as an unallocated contingency fund for the war
against terrorism. During the week of July 15, the House Armed Services Committee
plans to report a second bill, H.R. 4547, to provide $10 billion in funds for global
counter-terrorism.
Background
Congress provides funding for national defense programs in several annual
appropriations measures, the largest of which is the defense appropriations bill.
Congress also acts every year on a national defense authorization bill, which
authorizes programs funded in all of the regular appropriations measures. The
authorization bill addresses defense programs in almost precisely the same level of
detail as the defense-related appropriations, and congressional debate about major
defense policy and funding issues usually occurs mainly in action on the
authorization. Because the defense authorization and appropriations bills are so
closely related, this report tracks congressional action on both measures.
The annual defense appropriations bill provides funds for military activities of
the Department of Defense (DOD), including pay and benefits of military personnel,
operation and maintenance of weapons and facilities, weapons procurement, and
research and development, as well as for other purposes.

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CRS-2
Most of the funding in the bill is for programs administered by the Department
of Defense, though the bill also provides (1) relatively small, unclassified amounts
for the Central Intelligence Agency retirement fund and intelligence community
management, (2) classified amounts for national foreign intelligence activities
administered by the CIA and by other agencies as well as by DOD, and (3) very small
amounts for some other agencies. Five other appropriations bills also provide funds
for national defense activities of DOD and other agencies including:
! the military construction appropriations bill, which finances
construction of military facilities and construction and operation of
military family housing, all administered by DOD;
! the energy and water development appropriations bill, which
funds atomic energy defense activities administered by the
Department of Energy;
! the VA-HUD-independent agencies appropriations bill, which
finances civil defense activities administered by the Federal
Emergency Management Agency, activities of the Selective Service
System, and DOD support for National Science Foundation
Antarctic research;
! the Commerce-Justice-State appropriations bill, which funds
national security-related activities of the FBI, the Department of
Justice, and some other agencies; and
! the transportation appropriations bill, which funds some
defense-related activities of the Coast Guard.
Status of Legislation
FY2003 Defense Authorization Bills. On May 1, the House Armed
Services Committee marked up its version of the FY2003 defense authorization bill,
H.R. 4546. The committee also considered, but did not report, a companion measure,
H.R. 4547, to provide funds for the war on terrorism. The House passed H.R. 4546
early on the morning of May 10. On May 9, the Senate Armed Services Committee
completed marking up its version of the FY2003 defense authorization, S. 2514, and
a report was issued on May 15. On June 13, the committee approved an amendment
to be offered on the floor regarding the Crusader artillery system. On June 18, the
full Senate began considering the bill, and the Senate passed the bill on June 27.
FY2003 Defense Appropriations Bill. On June 19, the House Defense
Appropriations Subcommittee marked up its version of the FY2003 defense
appropriations bill, and on June 24, the full committee marked up the bill (H.R.
5010) and ordered it to be reported. The House passed the bill on June 27.
FY2003 Congressional Budget Resolution. On March 20, the House
passed its version of the annual congressional budget resolution, H.Con.Res. 353, and

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CRS-3
the Senate reported its version, S.Con.Res. 100, on March 22. Both versions
recommend funding levels for defense in FY2003 very close to what the
Administration requested. The full Senate has not scheduled floor action, however,
and it is widely expected that the two chambers will not be able to agree on a
common budget. On May 22, as part of the rule governing debate on supplemental
appropriations, the House approved a measure deeming the budget resolution, as
approved in the House, to have been passed for purposes of guiding later action on
funding legislation.
FY2002 Supplemental Appropriations. On March 21, the Administration
submitted a request for $27.1 billion in supplemental FY2002 appropriations for
activities in response to last year’s terrorist attacks, of which $14 billion is for
defense programs. On May 24, the House approved its version of the bill, H.R. 4775,
providing $28.8 billion using Office of Management and Budget (OMB) scoring of
a key provision (as assumed by the appropriations committee) and $30.1 billion using
Congressional Budget Office (CBO) scoring. The Senate approved its version of the
bill on June 7, providing $31.4 billion.
Table 1a. Status of FY2003 Defense Appropriations
Subcommittee
Conference
Markup
House
House
Senate
Senate
Conf.
Report Approval
Public
Report Passage Report Passage Report
Law
House
Senate
House
Senate
6/24/02
6/27/02
6/19/02
–
H.Rept.
–
–
–
–
–
–
413-18
107-532
Table 1b. Status of FY2003 Defense Authorization
Full Committee
Conference Report
Markup
House
House
Senate
Senate
Conf.
Approval
Public Law
Report
Passage Report Passage Report
House
Senate
House
Senate
5/3/02
5/15/02
5/10/02
6/27/02
5/1/02
5/9/02
H.Rept.
S.Rept.
–
–
–
–
359-58
97-2
107-436
107-151
Overview of the Administration Request
On February 4, 2002, the Administration submitted its formal FY2003 budget
request to Congress. The Administration proposed $396.8 billion for the national
defense budget function, about $46 billion above the estimated FY2002 level (not
including supplemental FY2002 appropriations of $14 billion proposed on March

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CRS-4
21).1 The increase between FY2002 and FY2003 is the largest since at least the first
years of the Reagan Administration. And with supplemental counter-terrorism
funding for FY2001 and FY2002 included, the total increase in defense in the last
year is the largest, in inflation-adjusted dollars, since the Vietnam War. The
Administration projects continued growth in defense through FY2007, though at a
much more modest pace – Table 2 shows the long term trend in defense spending
under the Administration’s plan.
Table 2. National Defense Budget Function and Department of Defense
Budget, FY2000-FY2007, Administration Projections
(current and constant FY2003 dollars in billions)
Actual Actual Estimate Request Proj.
Proj.
Proj.
Proj.
Fiscal Year:
2000
2001
2002
2003
2004
2005
2006
2007
National Defense Budget Function
Budget Authority
Current year dollars
304.1
329.0
350.7
396.8 405.6
426.6
447.7
469.8
Constant FY2002 dollars
329.9
346.5
358.5
396.8 396.1
406.5
416.2
426.1
Real growth/decline
+1.4% +5.0%
+3.5%
+10.7% -0.2% +2.6% +2.4% +2.4%
Outlays
Current year dollars
294.5
308.5
348.0
379.0 393.8
413.5
428.5
442.5
Constant FY2003 dollars
319.5
324.9
355.2
379.0 384.5
394.2
398.4
401.1
Real growth/decline
+4.3% +1.7%
+9.3%
+6.7%+1.5% +2.5% +1.1% +0.7%
Department of Defense
Budget Authority
Current year dollars
290.5
313.0
333.0
378.6 387.4
408.3
429.2
450.9
Constant FY2003 dollars
315.1
329.6
340.4
378.6 378.3
389.0
398.9
409.0
Real growth/decline
+1.7% +4.6%
+3.3%
+11.2% -0.1% +2.8% +2.5% +2.5%
Outlays
Current year dollars
281.2
294.0
330.6
361.0 375.6
395.2
410.2
423.9
Constant FY2003 dollars
305.1
309.6
337.4
361.0 366.7
376.7
381.3
384.2
Real growth/decline
+4.8% +1.5%
+9.0%
+7.0%+1.6% +2.7% +1.2% +0.8%
Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal
Year 2003 , February 2002. Constant dollar figures are CRS calculations using deflators from DOD Comptroller.
1 Early statements by the President and DOD briefing material on the budget request say the
FY2003 increase over FY2002 is $48 billion. This is the increase for Department of
Defense discretionary budget authority if civilian accrual accounting costs are not included
in the FY2002 base.

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CRS-5
Notes: This and other tables in this report use OMB data which reflect enacted and proposed changes in accounting for
retirement benefits. Figures reflect (1) enacted accrual accounting for health care benefits for over-65 military retirees
beginning in FY2003; (2) proposed accrual accounting for health care benefits for under-65 military retirees beginning
in FY2004; and (3) proposed accrual accounting for all civilian retirement pension and health benefits beginning in
FY2003. OMB has also adjusted FY2001 and FY2002 to be consistent with FY2003 and later treatment of civilian
retirement benefits. Data in these tables also reflect OMB scoring of funds provided in the Emergency Terrorism
Response (ETR) supplemental appropriations act approved in September 2001. OMB figures do not show the allocation
of $9.8 billion of funding provided for defense in the ETR supplemental.
The large increase requested for defense has not been enough, however, to allay
the concerns of defense advocates in Congress. In their view, the budget is not
adequate to accommodate needed increases in weapons procurement. In the House,
several Members threatened to vote against the proposed budget resolution because
it set aside $10 billion for defense in a reserve fund available only for costs of the
global counter-terrorism campaign. The Administration requested the $10 billion as
an unallocated contingency fund for costs of counter-terrorism operations in FY2003,
but several members of the Armed Services Committees both in the House and in the
Senate have said they would prefer using that money to increase spending on major
weapons programs, especially shipbuilding.
The Impact of Accrual Accounting for Military and Civilian
Personnel Retirement Benefits on the Defense Budget
One important complicating element of the FY2003 defense budget is a series
of changes in accounting for military and civilian personnel retirement benefits.
Most federal retirement benefits, including benefits for uniformed military service
members and DOD civilian personnel, have long been funded on the basis of
“accrual accounting,” in which the cost of future benefits for current employees is
charged to the employing agency as the benefits are accrued. Under accrual
accounting procedures, federal agencies pay the actuarily determined cost of future
benefits into a fund. Payments to retirees are then charged to the fund, not to the
agency. In the FY2003 and FY2004 defense budgets, three substantial adjustments
involving accrual accounting have a large effect on budget totals. These are:
! Accrual accounting for over-65 health care benefits for
uniformed personnel: The FY2001 Defense Authorization Act,
P.L. 106-398, included a provision, known as “Tricare-for-Life,”
that guarantees DOD-provided health care to over-65 military
retirees and their dependents. Beginning in FY2003, these benefits
are being funded on an accrual basis. This results in (1) an increase
of $8.1 billion in FY2003 in the military personnel accounts to
reflect the accrual cost of future benefits for current uniformed
personnel and (2) a reduction of $5.6 billion in operation and
maintenance accounts to reflect a payment from the health care trust
fund to DOD for providing care to over-65 retirees.
! Accrual accounting for all civilian personnel retirement pension
and health benefits: While most federal civilian retirement benefits
have been funded on an accrual basis, a small part has not been.
Now the Administration is proposing to fund all retirement benefits

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CRS-6
on an accrual basis. In FY2003, the proposed change results in an
increase of $3.3 billion (both in budget authority and in outlays) in
the Department of Defense budget. OMB has adjusted FY2001 and
FY2002 figures – though not figures for earlier years – to be
comparable to the new, proposed treatment of civilian retirement and
health benefits. Thus, OMB figures include $3.0 billion in FY2001
and $3.2 billion in FY2002 Department of Defense budget totals
(both in budget authority and in outlays) for increased civilian
retirement accrual even though this accounting procedure was not in
place in those years.
! Accrual accounting for under-65 health care benefits for
uniformed personnel: Beginning in FY2004, the Administration
is also proposing to finance health care benefits for under-65
military retirees on an accrual basis, in which, again, DOD would
pay into a fund the cost of future benefits for current employees and
would receive reimbursement from the fund for costs of under-65
retiree health care that it provides. Both the contributions to the
fund and reimbursements from the fund are reflected in budget
projections from FY2004 on.
Table 3 shows the year-by-year impact of these changes in accrual accounting on the
defense budget through FY2007.
Table 3. Effects of Accrual Accounting on the Defense Budget
(millions of dollars)
2003
2004
2005
2006
2007
DOD Payments to Accrual Funds
Payments for Accrual of Benefits for 65-and-Over
8,102
8,618
9,151
9,720
10,338
Health
Payments for Accrual of Civilian Benefits
3,356
3,629
3,781
3,938
4,114
Payments for Accrual of Benefits for Under-65
6,484
6,889
7,319
7,778
Health
Total Payments to Funds
11,458
18,731
19,821
20,977
22,230
Receipts by DOD for Provision of Services
Receipts for 65-and-Over Health Care
5,634
5,986
6,361
6,758
7,180
Receipts for Under-65 Health Care
5,579
5,928
6,299
6,692
Total Receipts from Funds
5,634
11,565
12,289
13,057
13,872
Net Effect on DOD Budget
+5,824
+7,166
+7,532
+7,920
+8,358
Source: Office of Management and Budget.

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CRS-7
“Must Pay” Bills in the Defense Budget
The cost of changes in accrual accounting is only one of a number of so-called
“fact of life” or “must pay” bills in the FY2003 defense budget. Much of the
FY2002-2003 budget increase is taken up by accounting changes, inflation, pay
raises, changes in weapons cost estimates, and costs of the global counter-terrorism
campaign rather than by increases in weapons investment. DOD Comptroller Dov
Zakheim has told congressional committees that such “must pay” bills leave less than
$10 billion for new initiatives.
According to the Defense Department, increased costs include:
! $6.7 billion for inflation;
! $2.7 billion for pay raises;
! $8.1 billion for accrual payments for 65-and-over health care
benefits for current uniformed personnel when they retire (discussed
above);
! $3.3 billion for increased accrual payments to retirement accounts
for current civilian DOD personnel (also discussed above – the
OMB estimate is $3.4 billion for FY2003);
! $7.4 billion for what DOD calls “realistic costing,” half for revised
estimates of weapons costs (including the F-22 fighter and already
contracted Navy ships) and half for closer to full funding of
projected operating costs; and
! $19.4 billion for counter-terrorism, including $10 billion in an
unallocated contingency fund for continuing the war and $9.4 billion
for specific costs associated with ongoing operations.
In all, this adds up to $47.5 billion in new costs, but the total is offset by $9.3 billion
in savings from procurement programs that were in the FY2002 budget but are not
in the FY2003 plan. So an increase of almost $50 billion in the defense budget, by
this account, still leaves relatively little available for new programs.
While the point is generally well taken, some items are missing from the
arithmetic. For one thing, DOD is receiving $5.6 billion in payments from the retiree
health care trust fund in FY2003 to cover costs of providing services to 65-and-over
retirees – money it didn’t receive in FY2002. Also, some counter-terrorism costs
were included in the FY2002 budget, so the increased cost in FY2003 is $16 billion
rather than $19 billion. Moreover, OMB budget figures (though not some of the
figures DOD used in its early briefings on the budget), show $3.2 billion in costs of
civilian accrual accounting in the FY2002 budget for purposes of comparison with
the FY2003 request, so the added cost in FY2003 is only $0.2 billion. And, finally,
a substantial part of the $9.4 billion for specifically allocated war-related funding will
go to procure material, such as Unmanned Aerial Vehicles (UAVs), intelligence
infrastructure, and communications equipment, that will be in the force for some
time – DOD officials have said that at least $3 billion of the amount for
counter-terrorism is for weapons procurement. So, in all, the money available for
new initiatives in FY2003, compared to FY2002, is more like $20-25 billion – not
the whole of the defense budget increase, but still not insubstantial.

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CRS-8
The Impact of Growing Personnel and Operating Costs
The impact of “fact of life” cost increases on the FY2003 budget is relatively
large because of some special factors, but it is by no means unique. Table 4
compares the FY2003 defense request with FY2002 estimated funding by
appropriations title – a fairly common way of looking at the budget – with comments
on major reasons for some of the changes. What stands out is how much of the large
increase between FY2002 and FY2003 is going to military personnel and to operation
and maintenance (O&M) rather than to procurement or to research and development
(though, as noted, some procurement is being financed from war-related funds
requested in the operation and maintenance title).
Table 4. Changes in Requested National Defense Funding by
Appropriations Title
(budget authority in billions of dollars)
Estimate
Request
Fiscal Year:
2002
2003
Change
Notes/Comments
Military Personnel
82.0
94.3
+12.3 +$8.1 health benefits accrual
Operation & Maintenance
129.8
150.4
+20.7 +$15.9 war costs;
-$5.6 health care receipts
Procurement
61.1
68.7
+7.6 +$3.7 for increased cost estimates
RDT&E
48.6
53.9
+5.3 –
Military Construction
6.6
4.8
-1.8 Limited pending 2005 base closures
Family Housing
4.1
4.2
+0.2 –
Other
0.9
2.3
+1.4 –
Subtotal, DOD
333.0
378.6
+45.6 –
Atomic Energy Defense Activities
16.0
16.5
+0.4 –
Other Defense-Related Activities
1.7
1.7
+0.0 –
Total, National Defense
350.7
396.8
+46.1 –
Source: Office of Management and Budget; CRS calculations.
Notes: OMB figures include $3.4 billion for civilian retirement benefits accrual in FY2003 and $3.2 billion in
FY2002. FY2002 estimate does not include $14.1 billion in supplemental appropriations requested for
counter-terrorism operations on March 21, 2002.
Military personnel accounts have grown especially rapidly in recent years
because of pay and benefits increases that Congress approved beginning with the
FY2001 defense authorization act (P.L. 106-398), passed in October, 2000. That bill
included:
! a 4.8% across-the-board pay raise;
! “pay table reform” that provided additional substantial pay raises to
mid-career personnel to bolster retention;
! the first increment of a Clinton Administration proposal to reduce
out-of-pocket off-base housing costs by increasing basic allowance
for housing benefits;

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CRS-9
! “Tricare for Life,” guaranteeing DOD-provided health care to
over-65 military retirees; and
! a requirement that future military pay raises be equal to the
“employment cost index,” a broad measure of personnel costs in the
economy as a whole, plus 0.5%.
Last year, the FY2002 defense authorization bill included some additional changes
in the pay table to further boost income for selected mid-career personnel, and the bill
also increased special pays and bonuses.
Increased pay and benefits appear to have improved military recruitment and
retention, though recent gains may, in part, also be due to a less robust economy. The
increases have also driven up personnel costs dramatically. Table 5 illustrates the
point. Under the Administration’s plan, total military personnel funding will grow
from less than $70 billion as recently as FY1998 (in current year dollars – i.e., not
adjusting for inflation) to $94 billion in FY2003 and to $117 billion by FY2007.
After adjusting for inflation (using the Consumer Price Index), personnel costs will
grow from about $48,000 per active duty troop to more than $65,000 in FY2003
prices over the same period.
Table 5. Trends in Military Personnel Funding, FY1990-FY2007
(budget authority)
Funding
Total
for Active
Funding
Funding
Military
Duty
for Active
for Active
Personnel
Military
Military
Active
Military
Funding
Personnel
Personnel
End-
Personnel
Fiscal
(CY$ in
(CY$ in
(FY2003$ in
Strength
Per Troop
Year
billions)*
billions)*
billions)*
(000s)
(FY2003 $)
1990
78.6
69.8
98.6
2,069
47,656
1991
78.4
75.0
101.1
2,002
50,485
1992
78.8
71.5
93.7
1,808
51,799
1993
76.0
66.5
84.7
1,705
49,652
1994
71.4
61.8
76.7
1,610
47,651
1995
71.6
62.1
75.0
1,518
49,389
1996
69.8
60.4
71.0
1,472
48,227
1997
70.3
60.9
69.8
1,440
48,453
1998
69.8
60.3
68.2
1,406
48,471
1999
70.6
60.7
67.2
1,386
48,519
2000
73.8
63.4
68.0
1,384
49,124
2001
76.9
65.7
68.3
1,385
49,287
2002
82.0
70.3
71.9
1,387
51,834
2003
94.3
79.9
79.9
1,390
57,494
2004
104.0
88.4
86.5
1,390
62,236
2005
108.1
91.7
87.6
1,390
63,048
2006
113.7
96.4
90.0
1,390
64,736
2007
117.4
99.4
90.6
1,390
65,183

---

CRS-10
Source: CRS calculations based on data from the Office of Management and Budget.
*Notes: “CY$” refers to “current year” dollars – i.e., not adjusted for inflation. FY2003 constant
dollar figures are calculated using CPI-W deflators. DOD military personnel deflators are not
appropriate to use because they count the amount of annual pay raises and benefits increases simply
as inflation.
A similar, though much longer-term upward trend applies to operation and
maintenance (O&M) accounts. A very simple measure of the trend is to calculate
total O&M funding per active duty troop in constant, inflation adjusted prices.
Making some adjustments to reduce inconsistencies from year to year, the result
shows a very constant pattern of growth of about 2.5% per year above inflation from
the mid-1950s on – Figure 1 illustrates the trend.
Figure 1. Trend in DOD Operation & Maintenance Funding per
Active Duty Troop, FY1955-2007
120
100
80
Trend: +2.5% per year
60
40
O&M per Troop
20
Trend
0
1955
1965
1975
1985
1995
2005
In the past, Defense Department projections often showed O&M costs per troop
leveling off in the later years of each successive five or six year funding plan. When
costs continued to grow, the Clinton Administration’s response was either to reduce
planned procurement funding in order to shift money into O&M or to increase the
total defense budget to cover at least part of the shortfall. The Bush Administration
appears, at least from this very rough measure, to be more fully funding likely O&M
cost growth, though the projections, as in the past, do appear to level off between
FY2006 and FY2007. DOD Comptroller Dov Zakheim has said that the
Administration is insisting on more realistic estimates both of procurement and of
operating costs.
Continuing, unabated growth in personnel and in O&M costs takes up a
substantial share of projected increases in overall defense spending over the next few
years. Table 6 shows Administration projections of defense funding by

---

CRS-11
appropriations title through FY2007. Between FY2000, the last full year of the
Clinton Administration, and FY2007, overall national defense funding is projected
to increase by $166 billion. Of the increase, $90 billion is for personnel and O&M
and $63 billion is for procurement and R&D.
Table 6. National Defense Budget Function by Appropriations Title,
FY2000-FY2007
(budget authority, current year dollars in billions)
Fiscal Year:
2000
2001
2002
2003
2004
2005
2006
2007
Military Personnel
73.8
76.9
82.0
94.3
104.0
108.1
113.7
117.4
Operation & Maintenance
108.8
117.7
129.8
150.4
140.9
147.0
152.3
155.2
Procurement
55.0
62.6
61.1
68.7
74.7
79.2
86.9
99.0
RDT&E
38.7
41.7
48.6
53.9
57.0
60.7
58.9
58.0
Military Construction
5.1
5.5
6.6
4.8
5.1
6.3
10.8
13.8
Family Housing
3.5
3.7
4.1
4.2
4.3
5.1
4.9
4.8
Other
5.6
4.9
0.9
2.3
1.4
1.9
1.5
2.7
Subtotal, DOD
290.5
313.0
333.0
378.6
387.4
408.3
429.2
450.9
Atomic Energy Defense Activities
12.4
14.4
16.0
16.5
16.5
16.6
16.8
17.1
Defense-Related Activities
1.2
1.6
1.7
1.7
1.7
1.7
1.7
1.7
Total, National Defense
304.1
329.0
350.7
396.8
405.6
426.6
447.7
469.8
Source: Office of Management and Budget.
Note: OMB figures show $3.0 billion in FY2000 and $3.2 billion in FY2001 for full accrual accounting for civilian
retirement benefits, though it was not in effect in those years and is proposed to begin in FY2003.
Reversing the “Procurement Holiday”
One key issue in congressional debate about the defense budget has been
whether the $70 billion or so requested for procurement in FY2003, or even the $99
billion projected for procurement in FY2007, is enough to reverse what former
Secretary of Defense William Perry called the “procurement holiday” in defense
budgets that followed the end of the Cold War. A decline in new weapons purchases,
said Perry in 1996, was justified in the early 1990s, first, because threats had
declined, second, because many new weapons ordered in the 1980s had just entered
the force, and, finally, because older weapons were retired first as the size of the
force declined, so the average age of equipment was dropping even without new
acquisitions. But the holiday would have to end soon, said Perry, in order to avoid
creating an unaffordable “bow wave” of costs in the future to replace large numbers
of rapidly aging weapons.
At the time, the Joint Chiefs set $60 billion per year for procurement by FY1998
as the goal – a target reached in the Clinton Administration’s final budget for
FY2001. In the years since Perry laid out the argument, however, the debate has
shifted. Now the issue – at least among defense advocates – is no longer whether $60

---

CRS-12
billion a year is adequate, but rather, how much more than $60 billion is needed to
meet modernization needs.
Much of the discussion has been shaped by a series of studies of the amounts
needed to sustain a “steady state” procurement rate for major weapons – i.e., how
much is needed to replace the existing stock of weapons with more modern systems
as weapons reach the ends of their planned service lives. A study by the Center for
Strategic and International Studies estimated $160 billion a year – in FY2000 prices –
if strategic nuclear weapons are included in the calculus, and $110 billion a year
without strategic modernization. The Congressional Budget Office made its own
estimate of about $90 billion a year, and the Center for Strategic and Budgetary
Assessments said $80 billion – both also in FY2000 prices. Most recently the
Chairman of the Joint Chiefs, General Richard Myers, said that a Joint Staff study,
not released for public review, concluded that $100-110 billion a year, in FY2001
prices, is needed.2 After adjusting for inflation, the $99 billion projected for
procurement in FY2007 does not quite reach CBO estimates of steady-state
procurement requirements – $99 billion in FY2007 prices equals about $83 billion
in FY2000 prices.
Many members of the congressional defense committees have expressed
concern that the Administration’s budget plan – both in FY2003 and in future years –
does not appear sufficient, despite large increases in the defense total, to finance
planned weapons procurement programs. In the FY2003 request, committee
members have been especially critical of the shipbuilding budget, which calls for
procuring just five new ships. Assuming a 35-year service life for Navy ships, it
would take an average of new 8.5 ships per year to maintain a force of 300 ships in
the fleet. Only in the later years of the FY2003-2007 defense plan does the
shipbuilding rate reach the nominal “steady-state” replacement rate. Some argue that
helicopters, munitions, and other programs are inadequately funded as well.
The Procurement “Bow Wave”
Most recently there have been reports that DOD has been discussing how to
cope with a substantial “bow wave” of procurement costs in FY2007 and beyond.
Analytically, a “bow wave” refers to the normal pattern of funding for weapons
programs. The annual budget for any major acquisition program tends to grow as a
system moves from technology development to full scale engineering development
to production. Then the acquisition cost will decline again as production winds
down. Thus the shape of a bow wave. A very large cumulative bow wave can
2 Daniel Gouré & Jeffrey M. Ranney, Averting the Defense Train Wreck in the New
Millennium, (Washington: Center for Strategic and International Studies, 1999);
Congressional Budget Office, Budgeting for Defense: Maintaining Today’s Forces,
September 2000; Steven M. Kosiak, “Cost of Defense Plan Could Exceed Available
Funding By $26 Billion a Year Over the Long Run,” Center for Strategic and Budgetary
Assessments, April 2, 1998; Steven M. Kosiak, “CSIS “Train Wreck” Analysis of Defense
Department’s Plans-Funding Mismatch Is Off Track,” Center for Strategic and Budgetary
Assessments, February 2000; prepared statement of General Richard B. Myers, Chairman
of the Joint Chiefs of Staff, before the House Armed Services Committee, February 6, 2002.

---

CRS-13
develop if many new systems are scheduled to begin full production at about the
same time.
This situation now appears to be facing the Defense Department at the end of
the decade, when a number of new systems will be in production, including the F-22
and F-35 (Joint Strike Fighter) aircraft, the Comanche helicopter, and several new
Navy ships. According to numerous press accounts, the Defense Department has
been considering how to cope with the substantial projected shortfalls in procurement
funding. The Navy, reportedly, is proposing to cut back substantially on planned
procurement of F-35 fighters, and Secretary of Defense Rumsfeld is reportedly
considering terminating several weapons programs – perhaps some in addition to the
Crusader self-propelled artillery system – in order to safeguard future funds for more
“transformational” weapons (see below).
Defense Transformation
During the presidential election campaign, then-candidate George Bush strongly
endorsed the notion of a defense transformation to meet the needs of a dramatically
new security environment. Both President Bush and Secretary of Defense Rumsfeld
have reaffirmed their commitment to transformation in major policy speeches in
recent months.3 Defense transformation has been defined in very diverse ways,
however, and the Administration has been under some pressure from Congress to
articulate its definition more fully.
Most recently, using categories of transformation laid out in the Quadrennial
Defense Review that was released last September,4 Deputy Secretary of Defense Paul
Wolfowitz gave a rough estimate of the amount of money requested for
transformation-related initiatives in FY2003 and future years. In testimony before
the Senate Armed Services Committee on April 9,5 Wolfowitz said
The six specific transformation goals identified in the QDR are first, to defend
the U.S. homeland and other bases of operation and defeat nuclear, biological
and chemical weapons and their means of delivery. Second, to deny enemy
sanctuary, depriving them of the ability to run or hide, any time, any where.
Third, to project and sustain forces in distant theaters in the face of access denial
threats. Fourth, to conduct effective operations in space. Fifth, to conduct
effective information operations. And sixth, to leverage our information
technology to give our joint forces a common operational picture.
3 Remarks by the President at the Citadel, December 11, 2001; Remarks by U.S. Secretary
of Defense Donald Rumsfeld, National Defense University, Fort McNair, Washington, D.C.,
Thursday, January 31, 2002.
4 U.S. Dept. of Defense, Office of the Secretary, Quadrennial Defense Review Report,
September 30, 2001, 71 p. Available electronically at:
[http://www.defenselink.mil/pubs/qdr2001.pdf]
5 Statement of Deputy Secretary of Defense Paul Wolfowitz before the Senate Armed
Services Committee, Hearing on Transforming the Armed Forces to Meet the Challenges
of the 21st Century, April 9, 2002. The prepared statement is available electronically at:
[http://www.senate.gov/~armed_services/statemnt/2002/April/Wolfowitz.pdf].

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CRS-14
In all, Wolfowitz said, about $21 billion is requested in FY2003 for such
transformational goals, and $136 billion is planned over the next five years.
Defense Budget Total
With a global war against terrorism underway, Congress has not been inclined
to make drastic changes in the Administration’s request for a substantial defense
increase. There has been some skirmishing, however, particularly between the
defense committees and the budget committees, over two issues:
! first, how to treat the Administration’s request for $10 billion in
FY2003 in an unallocated contingency fund for the war against
terrorism and,
! second, how to treat the Administration’s request for full accrual
accounting of civilian retirement benefits, which, across the whole
government, will increase discretionary spending by about $9 billion
and reduce mandatory spending by an equal amount.
For their part, the congressional defense committees would prefer to be able to
allocate the entire amount the Administration requested for national defense – $396.8
billion – as they see fit. The House Budget Committee, however, set aside the $10
billion requested for war costs in reserve funds available only for that purpose. The
House also set aside funds for civilian accrual accounting in a reserve fund, while the
Senate Budget Committee rejected the shift to full accrual accounting altogether.
The House-passed budget resolution also added about $500 million to the
Administration request which is assumed to be available for a phased in program to
allow concurrent receipt of military retirement and disability benefits. Table 7 shows
amounts recommended for national defense in the House and Senate versions of the
budget resolution, compared to the Administration request.

---

CRS-15
Table 7. Congressional Budget Resolution, Recommended
Amounts for National Defense, FY2003-FY2007
(billions of dollars)
Fiscal Year:
2002
2003
2004
2005
2006
2007
House-Passed
Budget Authority
347.514
393.831
401.640
422.740
444.243
466.458
Outlays
344.777
375.261
390.579
409.696
425.090
439.181
Senate Budget Committee
Budget
Authority
393.353 401.073 411.744 422.785 434.118
Outlays
380.145 394.354 405.833 411.587 415.278
Difference (House Minus Senate)
Budget Authority
+0.478
+0.567
+10.996
+21.458
+32.340
Outlays
-4.884
-3.775
+3.863
+13.503
+23.903
Administration Request
Budget Authority
396.801
405.642
426.571
447.702
469.750
Outlays
379.012
393.802
413.527
428.549
442.473
Administration Request, Excluding Civilian Accrual
Budget Authority
393.445
402.013
422.790
443.764
465.636
Outlays
375.656
390.173
409.746
424.611
438.359
Sources: H.Con.Res. 353; S.Con.Res. 100.
The House approved its version of the FY2003 budget resolution, H.Con.Res.
353, on March 20 by a vote of 221-209. In all, the measure recommended $393.8
billion for the national defense budget function in FY2003, but $10 billion of that
amount was in the reserve fund available only for costs of the global war against
terrorism. An additional $3.4 billion, not shown in the national defense total, was
available for defense in the reserve fund to cover costs of accrual accounting, if
Congress approves it. The Senate Budget Committee version of the resolution,
S.Con.Res. 100, was reported on March 22, but has not been brought up on the
Senate floor. The committee recommended $393.4 billion for national defense in
FY2003 and explicitly rejected a shift to full accrual accounting for civilian
employees. The committee also recommended lower levels of defense spending after
FY2004 than either the House or the Administration, though the committee set aside
future funds in a reserve to be available either for defense or deficit reduction.
Recommended national defense funding levels in the budget resolution are not
binding on the appropriations committees, however, which are free to allocate funds
for discretionary programs as they decide.
How to treat the $10 billion that the Administration requested as an unallocated
contingency for war costs has been a matter of continuing discussion. On May 22,
the House approved H.Res. 428, the rule governing debate on the FTY2002
supplemental appropriations bill (H.R. 4775), which includes a provision “deeming”
the budget resolution, as passed by the House, to be in effect for purposes of

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CRS-16
subsequent House action on appropriations and other funding bills. Appropriators
wanted the “deeming” language amended to allow the appropriations committee to
remove the reserve fund designation for the contingency funding, thus letting the
committee use the $10 billion as it decides. In the face of objections from some
conservatives, however, the House leadership did not agree, and the deeming
language refers to the measure as passed by the House on March 20.
Negotiations about this issue have continued, however, and are related to the
broader debate about the total amount available for appropriations. The House-
passed budget resolution provides $759 billion in total discretionary funding to the
appropriations committee, which is equal to the Administration request without the
$9 billion government-wide cost of shifting civilian accrual payments from the
mandatory to the discretionary side of the budget. Of the $759 billion, $10 billion
is only available for war-related costs. The Senate reported version of the budget
resolution, however, provides $768 billion in discretionary funds, though it does not
assume that Congress will approve the shift of accrual funding. As a result, without
either the $9 billion for accrual accounting or the $10 billion for the counter-
terrorism contingency fund, the House would end up marking up appropriations bills
with $19 billion less than the Senate – a prescription for gridlock when conference
committees meet on the various appropriations bills.
A preview of the debate over treatment of the contingency fund in the
appropriations bills played out in initial congressional action on the defense
authorization. On May 1, the House Armed Services Committee marked up its
version of the FY2003 defense authorization bill, H.R. 4546, and the full House
passed the measure on May 9. The bill authorizes $383.4 billion for national
defense. The Committee also considered but did not report a separate bill, H.R.
4547, the “Cost of War Against Terrorism Authorization Act” (COWATAA), to
provide the $10 billion that the Administration requested as a contingency fund for
war costs. Taken together the two bills would provide $393.4 billion for national
defense. The committee allocated $3.6 billion in H.R. 4547, however, to a number
of war-related costs that otherwise would have been included in H.R. 4546. In effect,
this is a way of using part of the $10 billion that the Administration wanted set aside
for war costs to offset committee increases in other parts of the defense budget.
The House Appropriations Committee has taken a similar approach. The bill
that was approved on June 27 provides $354.7 billion for defense activities it covers
(excluding military construction programs, Department of Energy defense-related
activities, and defense-related activities of some other agencies). This is $12.1
billion below the amount requested. Later the committee expects to allocate the $10
billion that is currently reserved for war-related costs. In the meantime, the
additional $2.1 billion reduction in defense is available for other appropriations bills,
including the military construction bill, which is $541 million above the request, and
the energy and water bill, which includes defense-related programs.

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CRS-17
Key Issues in Congress
Along with negotiations about the overall level of defense spending, there has
been considerable debate in Congress about priorities within the budget and about a
number of specific programs. In general, the defense committees have tried to find
somewhat more money for weapons procurement than the Administration requested.
The House Armed Services Committee version of the FY2003 defense authorization
bill finances increased procurement in part by making offsetting savings in the
operation and maintenance accounts and in part by allocating $3.6 billion of
war-related expenses to the $10 billion “Cost of War Against Terrorism
Authorization Act” (H.R. 4547). The House Armed Services Committee also
provided money for an increase in active duty end-strength of about 12,000
personnel, something the services have requested, but that Secretary Rumsfeld has
strongly resisted. The Senate Armed Services Committee bill finances increased
Navy procurement in part by reducing missile defense research and development
funding. The House Appropriations Committee did not increase procurement
significantly, but it remains to be seen what the committee will do when it takes up
legislation to provide $10 billion for war-related costs.
One of the major issues Congress is addressing this year is concurrent receipt
of military retired pay and veterans disability benefits. The House authorization bill
includes a provision to phase in partial concurrent receipt. The Senate bill includes
a measure approved on the floor to provide immediate, full concurrent receipt. The
White House Statement of Administration Policy on the Senate bill threatens to veto
any bill that includes either partial or full concurrent receipt.
Another major issue emerged on the eve of the House Armed Services
Committee markup of the defense authorization bill, when the committee received
word that the Office of the Secretary of Defense (OSD) had decided to terminate the
Army Crusader self-propelled artillery program. Other issues in the House Armed
Services Committee markup included provisions concerning environmental
limitations on military training, missile defense funding, nuclear weapons force
levels, nuclear testing, abortions in overseas military hospitals, a cap on U.S. troop
levels in Colombia, and base realignment and closure provisions. The Rules
Committee did not make in order floor amendments on many of these issues,
however.
A major issue in the Senate version of the authorization bill was the level of
funding for missile defense. The Senate Armed Services Committee reduced
requested missile defense R&D funds by more than $800 million, freeing up funds
for, among other things, increased shipbuilding. Eight Republicans on the
Committee voted against reporting the bill, several citing the missile defense cut as
the reason. In floor action, however, the Senate voted to allocate $815 million in
anticipated inflation savings either to missile defense or to counter-terrorism.
The following discussion provides an overview of major elements of the
Administration’s request and of congressional action to date, with particularly
controversial items highlighted.

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CRS-18
Counter-Terrorism Funding
The Administration requested a total of $19.4 billion in the FY2003 defense
budget for costs of the global campaign against terrorism. Of the total, $10 billion
was requested as an unallocated reserve for future, as yet unplanned military
operations, and the remaining $9.4 billion was requested for specified activities. All
of the money, and an additional $700 million to support programs identified in the
Administration’s Nuclear Posture Review, was requested to be appropriated to the
Defense Emergency Response Fund (DERF), a transfer account from which money
would then be allocated to operating accounts of the services. This would allow the
Defense Department considerable flexibility in using the money, since funds can be
shifted to different activities without going through normal reprogramming
procedures.
The counter-terrorism amounts requested for FY2003 in the regular
appropriations bills are to carry on activities that were financed in FY2001 and
FY2002 mainly through emergency supplemental appropriations. Last autumn,
Congress appropriated $40 billion for responding to the terrorist attacks of September
11, of which $17.1 billion was devoted to defense programs. On March 21, 2002, the
Administration sent Congress a request for an additional $27.1 billion in FY2002
supplemental appropriations for responding to the terrorist attacks, of which $14.0
billion is for defense. Congress is now considering the request. On May 24, the
House approved H.R. 4775, providing $28.8 billion in supplemental funding, of
which $15.8 billion is for defense. On May 22, the Senate Appropriations
Committee reported S. 2551, providing $31 billion in supplemental funding, of
which $14 billion, as requested, is for defense. (For a full discussion, see Amy
Belasco and Larry Nowels, Supplemental Appropriations for FY2002: Combating
Terrorism and Other Issues, CRS Report RL31406.)
Congressional Action. Neither the House nor the Senate Armed Services
Committees, nor the House Appropriations Committee agreed to provide the $9.4
billion requested for specific counter-terrorism programs in the DERF. Instead, all
the committees allocated funding to regular operating and acquisition accounts in the
authorization bills. The Senate Armed Services Committee also reduced funding by
$1.3 billion – the largest reduction is a cut of $820 million in funding for combat air
patrols.
The House and Senate authorizing committees differ in treating the $10 billion
requested for as yet undefined operations. The Senate Armed Services Committee
authorized the appropriation of the full $10 billion in a general provision (Section
1003) of the bill. The House Armed Services Committee established a separate bill,
H.R. 4547, in which to act on the request. The House committee also included in
H.R. 4547 $3.6 billion of funds for specific programs, leaving $6.4 billion to be
allocated later, when the Administration provides a more detailed request for the
funds. In effect, the committee freed up $3.6 billion of funds for other programs in
the regular authorization bill.
The House-passed version of the FY2003 defense appropriations bill does not
include the $10 billion of unallocated funds for war-related costs. The

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CRS-19
Appropriations Committee plans to consider acting on the $10 billion later, once the
Administration has prepared a specific request for allocating the funds.
Personnel Pay and Benefits
The Administration request includes a 4.1% pay raise for military personnel;
additional selective pay increases for mid-grade personnel of up to 4.4%; the
extension of special pays and bonuses to bolster retention of personnel with critical
skills; and continued incremental increases in the basic allowance for housing
intended to eliminate out-of-pocket off-base housing costs by FY2005.
Congressional Action. Both the House and the Senate Armed Services
Committees approved the Administration’s proposed pay and benefits increases. A
number of significant personnel related issues have emerged, however, including
concurrent receipt of retirement and disability benefits, House cuts in funding for
health benefits accrual, and a House and Senate increase in active duty military end-
strength. The House Appropriations Committee provided full funding for the pay
raise and for housing and other benefits but limited funding for some enlistment and
reenlistment bonuses to last year’s level, and it did not endorse an increase in end-
strength.
Concurrent Receipt of Retirement and Disability Benefits. The House
Armed Services Committee approved the first increment of a plan to phase in a
measure that would allow military retirees with a disability of up to 60% to receive
both disability benefits and retirement pensions. Under current law, retirement
benefits are reduced by the amount of disability benefits received. Allowing phased
in, partial concurrent receipt, as in the House bill, will cost an estimated $516 million
in FY2003, $5.8 billion over the five years from FY2003 through FY2007, and $17
billion over ten years through FY2012. These amounts will be scored not as
discretionary funding in the defense bills, but as mandatory spending coming either
from the military retirement trust fund or from the Veteran’s Administration.
The measure will also require an increase in contributions to the military
retirement fund to cover the accrual cost of the increased benefits provided to current
military personnel. The House measure provides that the accrual payments will be
made from the general Treasury, however, rather than from discretionary funds in the
defense budget. Including both increased payments to retirees and payments from
the general fund into the military retirement fund, the Congressional Budget Office
estimates that the total budget cost of the House plan will be $1.1 billion in FY2003,
$8.8 billion over the five years, FY2003-FY2007, and $22.6 billion over the next ten
years through FY2012.6
The Senate Armed Services Committee included a similar, phased in, partial
measure in its reported bill, but the committee also voted to offer an amendment on
the floor that would immediately allow full concurrent receipt of disability and retired
pay regardless of the level of disability. Senators Levin and Warner brought up that
6 Congressional Budget Office, “Cost Estimate, H.R. 4546, Bob Stump National defense
Authorization Act for Fiscal year 2003,” p. 13 and p. l 5.

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CRS-20
amendment on the floor on June 19, and it was approved by a voice vote. The Senate-
passed measure does not insulate the Defense Department from the accrual costs of
the increased benefits as the House measure does. This version of concurrent receipt
would cost $4.3 billion in FY2003, $25.8 billion over the next five years, and $61.0
billion over the next ten years. Of those amounts, the Defense Department would
have to provide $1.1 billion in FY2003, $2.5 billion over the next five years and $6.4
billion over the next ten years in its budget to cover accrual payments for its current
military personnel.
For its part, the Administration is opposed to permitting concurrent receipt. In
its “Statement of Administration Policy” on the defense authorization bill (available
at [http://www.whitehouse.gov/omb/legislative/sap/107-2/S2514-s.html]), the White
House threatened to veto the defense authorization if it provides for either partial or
full concurrent receipt.
House Reduction in Funding for Estimated Cost of Retiree Health
Care Benefits. When it submitted its budget request, the Administration estimated
that the Defense Department would have to pay $8.1 billion in FY2003 into the
retiree health care reserve fund for accrual costs of 65-and-over health care benefits
(see above). Recently, officials have said that DOD actuaries are expected to reduce
the estimated cost later this year, but they do not have any firm figures as yet. The
House Armed Services Committee reduced military personnel funding by $810
million, 10% of the estimated cost of health benefits accrual. Representative Spratt,
the second ranking Democrat on the committee, criticized this measure, saying that
the $810 million is at the upper limit of the amount DOD said might be saved. If
defense actuaries do not revise their cost estimate as much, there could be a shortfall
of several hundred million dollars in military personnel accounts. The House
Appropriations Committee reduced funding for health benefits accrual by $405
million, the lower end of DOD estimates of likely savings.
Increase in Personnel End-Strength. The House Armed Services
Committee also approved an increase of 12,552 in active duty end-strength, including
increases in full time guard and reserve personnel. The House-passed authorization
bill provides $528 million in FY2003 to cover associated costs in the military
personnel accounts. Each of the military services has requested an increase of
personnel end-strength recently, with Army seeking the largest increment of as many
as 40,000 additional soldiers. Secretary Rumsfeld has resisted increases, however,
arguing repeatedly that added personnel would be very expensive over the long term
and that measures should instead be taken to reduce demands on the force. It is not
clear whether the House Armed Services Committee intends the end-strength
increase to be a temporary measure related to the war against terrorism or a
permanent addition to the force. Once fully phased in, an increase of 12,552 in
end-strength would cost more than $1 billion a year in the personnel accounts, with
additional costs required in operation and maintenance accounts to fully train,
sustain, and equip the added troops.
The Senate Armed Services Committee did not include an increase in end-
strength in the authorization bill it reported. But on the floor on June 27, the Senate
approved an amendment offered by Senators Cleland and McCain to increase

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CRS-21
authorized active duty end-strength by 12,000. Senator Cleland urged an additional
increase of 26,000 service members, mostly in the Army, over the next five years.
The House Appropriations Committee did not approve an increase in end-
strength, arguing that requirements are uncertain. The committee report says that any
increase that might be needed in FY2003 should be addressed in a supplemental
appropriations request.
Table 8. Congressional Budget Office Estimate of the Costs of
the House Armed Services Committee Increase in Active Duty
End-Strength
(budget authority in millions of dollars)
2003
2004
2005
2006
2007
House – H.R. 4546
528
1,089
1,122
1,155
1,191
Source: Congressional Budget Office.
Army Modernization
The Army’s modernization plan involves three overlapping initiatives – one to
upgrade and recapitalize the existing “legacy” force of heavy armored forces; a
second to build new, more easily deployable “interim brigade combat teams”; and a
third to develop the “objective force” of the future. Key elements of legacy force
modernization include upgrading existing weapons with digitized communications
links and new surveillance and reconnaissance capabilities. The most controversial
elements of the plan are the Comanche helicopter, which has experienced repeated
development delays and cost increases, and the Crusader artillery system. The central
element of the interim force is a new light armored vehicle. Although Congress has
generally supported the interim force concept, there has been some debate about the
characteristics of the armored vehicle. In the past, the issue was whether it should
be a tracked vehicle instead of the wheeled system the Army has selected. More
recently, the issue has been whether the new vehicle will be transportable on C-130
airlift aircraft. The key element of the objective force is the “Future Combat
System,” which is now defined as an integrated suite of capabilities, including new
armored systems and also improved communications, intelligence, and surveillance
capabilities. The Army’s FY2003 budget request includes funds to accelerate FCS
development.
Congressional Action. Congress has generally supported the Army’s
modernization plan, including plans for the interim combat brigade teams and
development of the Future Combat System. But several issues have been
contentious, including funding for the Crusader artillery system, and for some Army
helicopter programs.
Crusader Artillery System. One of the most contentious issues in the
defense budget this year is the fate of the Crusader self-propelled artillery system.

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CRS-22
Advocates of defense transformation have long been critical of the program, arguing
that the 40-ton system is not readily deployable. Supporters of the system respond
that the weight has been reduced substantially, and that the system is needed to allow
artillery to keep up with rapidly moving armored forces on the battlefield. On the eve
of the House Armed Services Committee markup of the defense authorization bill,
Deputy Secretary of Defense Wolfowitz informed committee members that DOD was
ordering the Army to prepare an analysis of alternatives to the Crusader within 30
days, a step toward canceling the $11 billion program. DOD officials later confirmed
that Secretary Rumsfeld intends to terminate the project.
The program has considerable support in Congress, however, and in the
authorization markup the House Armed Services Committee provided the full $475.6
million for Crusader R&D that was in the Administration’s February budget request.
The Committee also included language in its report on the bill, though not in the
statutory language of the measure, that prohibits a cut in funding until after a more
extensive, formal analysis of alternatives is completed, which likely would not be
until April 2003. This prompted the White House to threaten a presidential veto any
bill if it includes any statutory provisions limiting the Administration’s ability to
cancel the program. The Rules Committee did not permit any floor amendments to
reduce Crusader funding. On May 29, the Administration formally submitted an
amendment to its defense budget request asking Congress to allocate the Crusader
funding to other Army R&D programs, including the Future Combat System, the
Excalibur precision artillery projectile, the Army tactical unmanned aerial vehicle,
and a new precision guided mortar munition.
When it marked up its version of the authorization bill on May 9, the Senate
Armed Services Committee deferred action pending a committee hearing on the
Crusader on May 16. The reported bill includes $475.6 million for Crusader. But
when reporting the bill, committee Chairman Carl Levin said that the committee
might offer an amendment to reduce funding when the bill is on the floor. Later,
Senator Levin said that DOD’s civilian leadership had not given the Army adequate
time to review the alternatives to the Crusader that civilian officials supported.
On June 13, the Senate Armed Services Committee held a closed session to
consider action on the Crusader. The committee approved an amendment that would
fence Crusader funding for 30 days after the bill is signed into law and require the
Army to complete a study of alternatives during that time. Subsequently the measure
would permit the Secretary of Defense to submit a request to the congressional
defense committees to reprogram the money into other Army indirect fire weapons
development. Senator Levin proposed the committee amendment on the floor on
June 19. Senator Warner then offered a second degree amendment to permit the
Secretary of Defense to allocate funds to other development programs without
seeking congressional permission through a reprogramming request. The Warner
amendment was agreed to by unanimous consent, and the Levin amendment, as
amended by Warner, was subsequently approved by a vote of 96 to 3.
The House Appropriations Committee agreed to terminate the Crusader program
and to fund the alternatives that the Administration proposed in its May 29 budget
amendment. But the committee also said that development of an alternative indirect
fire system must be coupled with development of an appropriate platform to carry a

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CRS-23
new cannon. The committee therefore added $173 million to develop a platform and
new munitions and specifically earmarked funds for that purpose in a general
provision. The general provision also requires a system to be delivered by 2008.
UH-60, CH-47, and TH-67 Helicopters. The bills acted on to date take
different action on several Army helicopter programs. The House authorization bill
adds $115 million for 8 additional UH-60 Blackhawk utility helicopters and one
simulator and specifies what versions to buy, the Senate authorization adds $96.7
million for 9 aircraft in accordance with Army priorities, and the House
appropriations bill adds funds for 4 helicopters and a simulator. Funding for the CH-
47 cargo helicopter appears to be potentially more contentious. The House
authorization adds $13.5 million to the on-going modification program for
crashworthy seats. The Senate authorization as reported had $4 million for
crashworthy seats, but this was reduced in floor action as offsets for other programs.
The House appropriations bill adds $45 million to the modification plan to increase
the production rate and instructs the Army to plan to upgrade all CH-47s to the most
modern “F” version over the next several years. The House authorization and
appropriations bills add funds for 6 TH-67 training helicopters – the Senate
authorization provides no funds.
Comanche Helicopter. Though the fate of the Comanche helicopter
program is not immediately at issue, it has also been a target of criticism from
transformation advocates. Last year, the program cost increased, and the
development plan was restructured and projected procurement delayed. DOD is
reportedly considering cancellation of the Comanche as one of a number of steps to
reduce the procurement “bow wave” at the end of the decade. In its report on the
defense appropriations bill, the House Appropriations Committee warned that its
support for the Comanche program is in jeopardy because of delays and cost growth,
and the committee urged the Army to begin exploring low-cost alternatives.
Other Army Weapons Programs. There are a number of significant
differences between the various bills on several other Army programs. The House
appropriations bill eliminates funds for the Wide Area Munitions program and
instructs DOD to terminate it. The House authorization and appropriations bills add
$60 million for Bradley fighting vehicle upgrades for the National Guard, the Senate
authorization adds no money. The House authorization also adds $45 million to
upgrade tank recovery vehicles for the National Guard. The House bills both add
money for up-armored HMMWVs. The House bills both cut money for ATACMs
Block II missiles, but the House authorization adds back money to upgrade some
Block I missiles. The House authorization adds $61 million for SINGCARS radios
and the House appropriations adds $17 million. The Senate authorization, however,
cuts $22.1 million that was requested for the program in the DERF. Both House bills
shift funds for PAC-3 anti-aircraft missile procurement from the Army to the Missile
Defense Agency, but the Senate authorization does not.

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CRS-24
Table 9. Congressional Action on Major Army Acquisition Programs
(amounts in millions of dollars)
House
Senate
House
Request
Authorization
Authorization
Appropriation
Procurement R&D Procurement R&D Procurement R&D Procurement R&D
#
$
$
#
$
$
#
$
$
#
$
$
RAH-66 Comanche
–
– 914.9
–
– 914.9
–
– 914.9
–
– 914.9
UH-60 Blackhawk
12 180.2
–
20 295.5
–
21 276.5
–
16 269.4
–
TH-67 Creek Training
–
–
–
6
9.6
–
–
–
–
9.6
–
Helos.
CH-47 Upgrades
– 403.2
–
– 416.7
–
– 407.2
–
– 458.2
–
AH-64 Mods
–
93.6
–
– 132.6
–
–
93.6
–
–
96.9
–
AH-64D Apache
– 895.5
–
– 895.5
–
– 895.5
–
– 895.5
–
Longbow
Bradley Base Sustainment
– 397.1
–
– 457.1
–
– 397.1
–
– 457.1
–
M-1 Abrams
– 691.4
–
– 691.4
–
– 691.4
–
– 679.2
–
Mods/Upgrades
Interim Armored Vehicle
332 811.8
–
332 811.8
–
332 811.8
–
332 772.0
39.8
Crusader
–
– 475.6
–
– 475.6
–
–
–
– – –
Future Combat System
–
– 313.1
–
– 313.1
–
– 418.1
–
– 427.6
Hellfire Missiles
1,797 184.4
–
– 224.4
– 1,797 184.4
– 1,797 184.4
–
SINGCARs radios
–
52.2
–
– 121.3
–
–
30.1
–
–
72.2
–
Wide Area Munition
–
12.5
–
–
12.5
–
–
6.5
–
–
–
–
ATACMS Upgrade
–
58.8
–
–
70.4
–
–
58.8
–
–
32.4
–
HMMWV
– 196.8
–
– 227.9
–
– 196.8
–
– 204.8
–
FMTV (medium trucks)
– 681.4
–
– 681.4
–
– 681.4
–
– 681.4
–
FMHV (heavy trucks)
– 242.8
–
– 251.8
–
– 251.8
–
– 252.8
–
Source: H.Rept. 107-436; S.Rept. 107-151; H.Rept. 107-532.
Navy Shipbuilding
The pace of Navy shipbuilding has been a major focus of attention in Congress
this year. The FY2003 budget request includes funds for five new ships, far short of
the 8.5 ships per year needed, in principle, to sustain a fleet of 300 ships, which has
long been the Navy’s goal.
Congressional Action. The House Armed Services Committee added $810
million to procure one additional ship, a DD-51 destroyer, in FY2003, provided the
Justice Department reaches a settlement with General Dynamics Corporation in the
long-standing A-12 termination lawsuit. The tentative settlement would provide
$385 million in advance procurement for Virginia-class submarine acquisition. It has
since been reported that the Justice Department has rejected the General Dynamics

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CRS-25
settlement proposal, though negotiations are continuing. If the settlement is not
agreed to, the $810 million would be distributed among several shipbuilding
programs, including $415 million for Virginia class submarine advance procurement,
$210 million for cruiser conversion advance procurement, and $185 million for a
nuclear submarine refueling overhaul. The committee also added funds to accelerate
procurement of the next aircraft carrier, the CVN(X). The Navy plan to procure the
ship had slipped by one year, with half the funding to be requested in FY2007 and
the remainder in FY2008. The committee added $229 million in advance
procurement to accelerate production and instructed the Navy wants to move the start
date back to FY2006.
The Senate Armed Services Committee also added a significant amount for
Navy shipbuilding, including $690 million that Senator Levin said was transferred
from missile defense R&D. The committee additions include $415 million in
advance procurement for Virginia-class attack submarines, $200 million for an
additional submarine refueling overhaul, $150 million in advance procurement for
LPD-17 amphibious ships, and $125 million in advance procurement for DDG-51
destroyers. Like the House Armed Services Committee, the Senate Armed Services
Committee provided funds to accelerate CVN(X) procurement.
The House Appropriations Committee took a substantially different approach
to aircraft carrier procurement. Rather than provide money to accelerate CVN(X)
procurement, the committee added $250 million for the CVN-77 carrier, which is
now being built, and instructed the Navy to incorporate a more advanced radar and
other electronic systems into the ship as a transition to the CVN(X). The committee
did not add money for other major shipbuilding programs, and it eliminated $253
million requested for the LHD-8 amphibious assault ship – this ship was started in
FY2001 and is being incrementally funded through FY2006.
Table 10. Congressional Action on Major Navy Shipbuilding Programs
(amounts in millions of dollars)
House
Senate
House
Request
Authorization
Authorization
Appropriation
Procurement R&D Procurement R&D Procurement R&D Procurement R&D
#
$
$
#
$
$
#
$
$
#
$
$
Virginia Class Submarine
1 1,512.7 238.3
1 1,512.7 238.3
1 1,512.7 238.3
1 1,490.7 238.3
Virginia Class Sub. Adv.
–
706.3
–
–
706.3
–
– 1,121.3
–
–
706.3
–
Proc.
Submarine Refueling
1
271.3
–
1
271.3
–
2
471.3
–
–
231.3
–
Overhaul
Missile Submarine
2
825.3
–
2
825.3
–
2
825.3
–
2
825.3
–
Conversion
CVN-77 Aircraft Carrier
–
–
91.7
–
–
91.7
–
–
91.7
–
250.0
91.7
CVN(X) Aircraft Carrier
–
243.7 268.0
–
472.7 268.0
–
472.7 268.0
–
243.7 243.0
Adv. Proc.
DDG-51 Destroyer
2 2,295.5 300.7
2 2,295.5 310.7
2 2,295.5 300.7
– 2,273.0 320.7

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CRS-26
House
Senate
House
Request
Authorization
Authorization
Appropriation
Procurement R&D Procurement R&D Procurement R&D Procurement R&D
#
$
$
#
$
$
#
$
$
#
$
$
DDG-51 Destroyer Adv.
–
74.0
–
–
74.0
–
–
199.0
–
–
74.0
–
Proc.
LPD-17 Amphibious
1
596.5
10.1
1
596.5
10.1
1
596.5
10.1
1
596.5
10.1
Transport
LPD-17 Adv. Proc.
–
8.0
–
–
8.0
–
–
158.0
–
–
8.0
–
LHD-8 Amphibious
–
253.0
–
–
253.0
–
–
243.0
–
–
– –
Assault Ship
Prior Year Shipbuilding
–
644.9
–
–
644.9
–
–
644.9
–
–
644.9
–
Costs
Shipbuilding Initiative*
–
–
–
–
810.0
–
–
–
–
–
–
–
DD (X) Destroyer
–
– 960.5
–
– 962.5
–
– 973.5
–
– 885.5
Sources: H.Rept. 107-436; S.Rept. 107-151; H.Rept. 107-532.
*Note: Shipbuilding Initiative money in the House bill is for one additional DD-51 destroyer ($810 million) or for
Virginia class submarine advance procurement ($415 million), cruiser conversion advance procurement ($210 million)
and a nuclear submarine refueling overhaul ($185 million).
Aircraft Programs
Funding for several major aircraft programs is included in the FY2003
Administration request, including Marine Corps V-22 tilt rotor aircraft development
and procurement; Air Force F-22 fighter development and procurement; Air Force
and Navy F-35 Joint Strike Fighter development; Navy F/A-18E/F multirole fighter
procurement; and C-17 cargo aircraft procurement. The Navy has reportedly been
considering reducing future planned F-35 procurement, but this has not affected
congressional support for the program to date. It could, however, drive up unit
procurement costs, which may affect support for the program in the future.
Congressional Action. Both the House and Senate Armed Services
Committees approved requested funding for most major aircraft programs, including
the F-22, F-35, V-22, and C-17. The House Armed Services Committee added funds
for a few lower profile programs, including trainer aircraft, Navy helicopters, and F-
15 communications upgrades. The Senate Armed Services Committee added funds
to procure an additional 4 F/A-18EF fighters for the Navy and Marine Corps. Both
committees added funds for EA-6B electronic warfare aircraft upgrades.
C-17 Funding Profile. One rather technical, but potentially significant issue
this year is whether the funding approach that the Air Force has proposed for future
C-17 procurement sets a precedent that would erode DOD policies designed to
promote long-term fiscal discipline. In the past, DOD typically requested enough
money to procure a specific number of fully equipped end-items – funding requested
for 12 C-17 aircraft, for example, would be sufficient to buy 12 deployable aircraft.
This year, however, the Air Force is requesting only enough money to finance

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CRS-27
progress payments on a new five-year contract for multi-year procurement of the
aircraft. The effect is to reduce amounts requested early in the multi-year contract
and increase costs in the later years. This is technically at odds with longstanding
DOD policy, which calls for full funding of the cost of end-items being requested in
any given year, and it is the first time a significant breach of the full funding policy
has occurred in an area apart from Navy shipbuilding. (For an extensive discussion,
see Ronald O’Rourke and Stephen Daggett, Defense Procurement: Full Funding
Policy – Background, Issues, and Options for Congress, CRS Report RL31404.) The
House Armed Services Committee approved the requested C-17 procurement profile,
but warned DOD against using this funding approach in the future. The House
Appropriations Committee also rejected the Air Force approach and required the Air
Force to use C-17 funding in FY2004 to procure complete aircraft. The committee
also instructed the Defense Department to restructure future funding plans for the C-
17 to use full funding.
Tanker Aircraft Leasing. Last year, the conference report on the defense
appropriations bill included a provision allowing the Air Force to pursue negotiations
with aircraft manufacturers to lease tanker aircraft for a ten year period. The
provision was structured so that the aircraft would be returned to the manufacturer
after the lease expired. As a result, the lease is considered an “operating lease” rather
than a “lease-purchase” agreement, so that only the annual cost of actual payments
on the lease would be scored in the Air Force budget on a year-to-year basis –
otherwise, the full cost of the contract would have to be scored in the years when the
money would be obligated. Boeing has offered to lease 100 767 aircraft for this
purpose, though the Air Force has also considered offers from some other
manufacturers, including the European Airbus consortium.
Senator McCain and some others have objected to the leasing provision, arguing
that it will cost the government more in the long run than simply procuring additional
tanker aircraft. Recently both the Office of Management and Budget and the
Congressional Budget Office have prepared analyses which project considerably
higher costs for leasing than for regular procurement. (The text of the CBO letter is
available electronically at [ftp://ftp.cbo.gov/34xx/doc3413/tankers.pdf]. The Senate
Armed Services Committee approved an amendment proposed by Senator McCain
that would require Congress to authorize and appropriate funds for any tanker lease
agreement. Most recently, the Air Force has reported that it is very close to reaching
an agreement with Boeing on the tanker leases.

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CRS-28
Table 11. Congressional Action on Major Aircraft Programs
(amounts in millions of dollars)
House
Request
House Authorization Senate Authorization
Appropriation
Procurement R&D Procurement R&D Procurement R&D Procurement R&D
#
$
$
#
$
$
#
$
$
#
$
$
Navy Aircraft
V-22 Osprey
11 1,106.0
420.1
11 1,106.0
420.1
11 1,096.8
420.1
11 1,086.0
420.1
F-35 Joint Strike
–
– 1,727.5
–
– 1,727.5
–
– 1,727.5
– –
1,727.5
Fighter
F/A-18E/F
44 3,159.5
204.5
44 3,159.5
204.5
48 3,399.5
219.5
44 3,162.5
214.5
JPATS Trainer
–
–
–
10
60.0
–
6
46.0
–
–
15.0
–
E-2C Hawkeye
5
295.5
19.0
5
295.5
19.0
5
295.5
19.0
5
295.5
19.0
T-45
8
221.4
–
8
231.4
–
8
221.4
–
8
221.4
–
MH-60S
15
372.2
23.2
19
460.2
23.2
15
372.2
23.2
15
367.2
23.2
MH-60R
–
116.2
89.0
–
116.2
89.0
–
121.2
89.0
– 116.2
96.0
EA-6B Prowler mods
–
223.5
74.7
–
327.5
87.7
–
337.5
74.7
– 229.5
75.6
P-3 mods
–
102.7
–
–
144.7
–
–
116.7
–
–
143.6
–
KC-130J Aircraft
4
334.0
–
3
249.0
–
4
334.0
–
4
334.0
–
(DERF)*
Air Force Aircraft
F-22
23 4,621.1
627.3
23 4,621.1
627.3
23 4,621.1
627.3
23 4,621.1
808.5
E-8C Joint STARS
1
279.3
55.5
1
279.3
68.2
1
279.3
55.5
1
279.3
67.5
F-16C/D mods.
–
265.0
81.3
–
325.0
81.3
–
348.0
81.3
–
270.0
85.3
F-15 mods.
–
232.5
81.7
–
291.5
81.7
–
232.5
81.7
–
259.9
81.7
JPATS Trainer
35
211.8
–
35
211.8
–
35
211.8
–
35
211.8
–
C-17 Globemaster
12 3,698.5
157.2
12 3,698.5
157.2
12 3,650.1
157.2
12 3,708.0
157.2
F-35 Joint Strike
–
– 1,743.7
–
– 1,743.7
–
– 1,743.7
– –
1,743.7
Fighter
B1-B Bomber
–
98.0
160.7
–
98.0
160.7
–
98.0
160.7
–
98.0
78.7
B-2 Stealth Bomber*
–
72.1
275.3
–
104.1
292.3
–
97.3
258.3
– 104.1
315.3
Sources: H.Rept. 107-436; S.Rept. 107-151; H.Rept. 107-532.
Notes: Funding for 4 KC-130Js was requested in the Defense Emergency Response Fund (DERF). The House funded
3 aircraft in H.R. 4546 and transferred $83.5 million for one aircraft to H.R. 4547. B-2 request includes $50 million
for R&D requested in the DERF. The Senate transferred $25.2 million from B-2 R&D to procurement.

---

CRS-29
Missile Defense
The Administration requested $7.8 billion for missile defense programs in
FY2003. The request includes
! $3.2 billion for mid-course defenses, including funds for the
National Missile Defense program to develop ground-based systems
to protect the entire United States, and the Navy Theater Wide
program, which is a theater defense system to be based on navy
ships;
! $1.1 billion for battle management and related support programs;
! $935 million for the ground-based Theater High Altitude Area
Defense (THAAD) system;
! $858 million for Patriot PAC-3 development and procurement;
! $797 million for boost phase defense systems, including the
Airborne Laser (ABL) and the Space-Based Laser (SBL); and
! $373 million for space-based sensors, including the Space-Based
Infrared System-Low (SBIRS-Low);
! an additional $815 million in the Air Force budget for the Space-
Based Infrared System-High (SBIRS-High).
Recently, the SBIRS-High program has had very large cost increases, and the
program was under review because the cost growth violated Nunn-McCurdy cost cap
provisions. DOD decided to continue the program, however, though its status
remains a matter of concern. There continues to be extensive debate in Congress
about the status of the National Missile Defense program, which the Administration
has tried to accelerate, and about space-based systems like the SBL.
Congressional Action. The House Armed Services Committee generally
supported the Administration’s request. The committee reduced funding for the ABL
(now funded under the title “Air-Based Boost” defense) by $77.5 million, since a
second test aircraft, that was included in the request, may not yet be needed. The
committee distributed the savings to a number of other missile defense programs.
The House Armed Services Committee also refused to fund Patriot PAC-3 or
Medium Extended Air Defense System (MEADS) development in the Army budget,
as requested, but instead shifted the money back to the Missile Defense Agency.
During the House Armed Services Committee markup, Representative Spratt
offered an amendment to reduce funding for the SBL and for space-based kinetic
interceptor development and to transfer the savings to the PAC-3 and Arrow theater
missile defense programs. The amendment was defeated in the committee. On the
floor, the House approved an alternative offered by Representative Hunter to add
funds for PAC-3 and Arrow to be financed from funds available to the Missile
Defense Agency, but without specifying the offsetting source of funds.
In committee markup, Representative Spratt also offered an amendment to
prohibit deployment of nuclear tipped interceptor missiles for missile defense, which
was rejected. On the floor, Representative Spratt offered a motion to recommit the
bill to committee with instructions to prohibit nuclear interceptor development, and
that motion was defeated.

---

CRS-30
The Senate Armed Services Committee reduced overall missile defense funding
by more than $800 million (see Table 13 for a detailed tabulation of funding),
prompting several Republicans on the committee to vote against reporting the bill.
Most of the reductions were in systems engineering and other support activities,
which the committee argued are not adequately justified in support material provided
by DOD. This became a major issue on the Senate floor. The Senate Armed Services
Committee also reduced ABL funding by $135 million and SBIRS-High funding by
$100 million.
In addition, the committee approved several provisions designed to require
stricter oversight of missile defense programs and adherence to more traditional
acquisition procedures in the development programs. One provision would require
the independent Director of Operational Test and Evaluation to conduct an annual
assessment of missile defense programs. Another provision requires the Secretary
of Defense to provide annual schedule and cost estimates for major elements of the
program to Congress.
On June 12, Secretary Rumsfeld send at letter to Senator Levin opposing the
Senate Armed Services Committee reduction in missile defense funding and
objecting to the committee’s provisions regarding acquisition procedures. The
committee’s measures, said Rumsfeld, “would impose a number of burdensome
statutory restrictions that would undermine our ability to manage the program
effectively.” The Secretary said he would recommend a veto if a final authorization
bill includes either the Senate cuts in missile defense funding or the Senate
provisions regarding management of the program. OMB’s June 19 “Statement of
Administration Policy” repeats the veto threat.
On June 26, the Senate approved an amendment offered by Senator Warner,
with a second degree amendment by Senator Levin, that would likely restore some
or all of the missile defense funding that the committee cut. The amendment would
permit the President to allocate up to $815 million of anticipated inflation savings
either to missile defense or to counter-terrorism programs. The Levin amendment
stipulates that priority should be given to counter-terrorism. The Senate did not
consider any measures to revise committee provisions on program management.
Also on June 26, the Senate approved an amendment proposed by Senators
Feinstein and Stevens to prohibit development or deployment of nuclear armed
interceptors for missile defense. This measure is similar to the Spratt amendment
that the House turned down.
The House Appropriations Committee made a number of changes in requested
missile defense funding. The committee denied funding for Navy sea based terminal
defense, a replacement for the terminated Navy Area Defense program, saying that
DOD had not presented a plan for using the research funds. The committee also
denied funding for the Russian-American Observation Satellites Program (RAMOS)
because the Russian government has not yet responded to a U.S. proposal to
implement the program. The committee said it would revisit the issue in conference
if the two governments sign an agreement. The committee also cut funding for sea-
based and space-based boost phase defenses, saying that requested large increases in
funding were not justified in view of requirements for near term programs like the

---

CRS-31
PAC-3 system. The committee added $30 million for additional PAC-3 testing and
required a report on planned testing of the Theater High Altitude Area Defense
(THAAD) system.
Table 12. Congressional Action on Missile Defense Funding by
Program Element and Project
(millions of dollars)
Change
Change
Change
FY2003
House
to
Senate
to
House
to
Program Element/Project
Request
Auth.
Request
Auth.
Request Approp. Request
Missile Defense Agency R&D
0603175C BMD Technology
6010 Advanced Technology
118.9
118.9
–
142.6
+23.7
124.9
+6.0
Development
6090 Program Operations
2.9
2.9
–
2.9
–
2.9
–
0603880C BMD System
BM/C2
112.8
112.8
–
112.8
–
112.8
–
1020 Communications
12.0
12.0
–
12.0
–
12.0
–
1030 Targets & Countermeasures
128.2
128.2
–
128.2
–
128.2
–
1050 Systems Engineering & Integration
371.1
371.1
–
231.1
-140.0
371.1
–
1060 Test & Evaluation
382.0
382.0
–
412.0
+30.0
382.0
–
1070 Producibility & Manufacturing
21.9
21.9
–
21.9
–
21.9
–
Technology
1090 Program Operations
37.9
37.9
–
37.9
–
37.9
–
Wide bandwidth technology program
–
10.0
+10.0
–
–
5.0
+5.0
Battlespace environment and signatures
–
10.0
+10.0
–
–
– –
toolkit
High Energy Laser Transmitters for
–
–
–
–
–
5.0
+5.0
LADAR
General Reduction, Lack of Justification
–
–
–
-222.0
-222.0
–
–
0603881C Terminal Defense Segment
2015 Medium Extended Air Defense
–
117.7
+117.7
–
–
117.7
+117.7
System (MEADS)
2016 Israeli Arrow Program
65.7
156.7
+91.0
105.7
+40.0
129.7
+64.0
2022 Sea-Based Terminal
90.0
90.0
–
90.0
–
–
-90.0
2090 Program Operations
14.2
14.2
–
0.2
-14.0
14.2
–
0603882C Midcourse Defense Segment
3011 Block 2004 Test Bed
533.9
533.9
–
533.9
–
533.9
–
3012 Ground-Based Midcourse Defense
2,075.0
2,075.0
–
2,075.0
–
2,075.0
–
(GMD)
3020 Sea-Based Midcourse Defense
426.6
426.6
–
426.6
–
426.6
–
(SMD)

---

CRS-32
Change
Change
Change
FY2003
House
to
Senate
to
House
to
Program Element/Project
Request
Auth.
Request
Auth.
Request Approp. Request
3050 Segment Common Systems
95.0
95.0
–
–
-95.0
95.0
–
Engineering and Integration
3090 Program Operations
64.5
64.5
–
0.5
-64.0
64.5
–
Aegis LEAP interceptor flight
–
27.0
+27.0
–
–
– –
demonstration
Long-range X-band and S-band
–
25.0
+25.0
–
–
– –
discrimination radar development
High Power Discriminator Radar
–
–
–
40.0
+40.0
– –
Development
Small Kill Vehicle Technology
–
–
–
10.0
+10.0
– –
Development
Concept Development, Studies, and
–
–
–
-52.0
-52.0
– –
Risk Reduction
0603883C Boost Defense Segment
4020 Sea-Based Boost
89.6
89.6
–
34.6
-55.0
69.6
-20.0
4030 Air-Based Boost
598.0
520.5
-77.5
463.0
-135.0
538.0
-60.0
4040 Space-Based Boost
54.4
54.4
–
24.4
-30.0
44.4
-10.0
4043 Space-Based Laser
34.8
34.8
–
24.8
-10.0
34.8
–
4090 Program Operations
20.1
20.1
–
0.1
-20.0
20.1
–
0603884C Sensors
5041 Space-based Infrared System
293.9
293.9
–
238.9
-55.0
293.9
–
(SBIRS) Low
5049 Russian-American Observation
69.1
69.1
–
79.1
+10.0
– -69.1
Satellite Program (RAMOS)
5050 System Engineering and
–
–
–
–
–
–
–
Integration
5060 Test and Evaluation
–
–
–
–
–
–
–
5090 Program Operations
10.4
10.4
–
0.4
-10.0
10.4
–
Airborne Infrared Surveillance (AIRS)
–
–
–
22.0
+22.0
– –
System
Dem/Val Test and Evaluation Transfer
–
–
–
-37.0
-37.0
– –
0604861C THAAD System
2011 Theater High Altitude Area
932.2
932.2
–
892.2
-40.0
932.2
–
Defense (THAAD)
2090 Program Operations
–
–
–
–
–
–
–
0604865C Patriot PAC3 - EMD
–
150.8
+150.8
–
–
180.8
+180.8
0604867C Navy Area - EMD
–
–
–
–
–
–
–
0901585C Pentagon Reservation
7.5
7.5
–
7.5
–
7.5
–
Maintenance Fund
0901598C Management Headquarters
27.9
27.9
–
27.9
–
27.9
–
General Reduction
–
-135.0
-135.0
–
–
–
–

---

CRS-33
Change
Change
Change
FY2003
House
to
Senate
to
House
to
Program Element/Project
Request
Auth.
Request
Auth.
Request Approp. Request
Total, R&D Missile Defense Agency
6,690.7
6,909.7
+219.0
5,887.4
-803.3
6,820.2
+129.4
(MDA)
0604865A - Patriot PAC-3 - EMD
150.8
–
-150.8
150.8
–
–
-150.8
0603869A - Meads Concepts - Dem/Val
117.7
–
-117.7
69.7
-48.0
–
-117.7
0203801A - Patriot PAC-3 Product
43.7
43.7
–
43.7
–
43.7
–
Improvement
Total, R&D Army
312.2
43.7
-268.5
264.2
-48.0
43.7
-268.5
Total, R&D Missile Defense Agency
7,002.9
6,953.4
-49.5
6,151.6
-851.3
6,863.9
-139.1
and Army
Procurement
Patriot Mod
151.3
151.3
–
151.3
–
151.3
–
Patriot Mod Initial Spares
40.7
40.7
–
40.7
–
40.7
–
Patriot PAC-3
471.7
536.7
+65.0
471.7
–
536.7
+65.0
Total, Procurement
663.7
728.7
+65.0
663.7
–
728.7
+65.0
Military Construction
PE 0603880C, BMD System MILCON
–
–
–
–
–
–
PE 0603881C, Terminal Defense
23.4
23.4
–
23.4
–
NA
–
MILCON
PE 0603882C, Midcourse Defense
–
–
–
–
–
NA
–
MILCON
Total, Military Construction
23.4
23.4
–
23.4
–
NA
–
Total, R&D, Procurement, MilCon
7,690.0
7,705.5
+15.5
6,838.7
-851.3
7,592.6
-97.5
Related Program
0604441F Space Based Infrared System
814.9
814.9
–
814.9
–
744.9
-70.0
(SBIRS) High
Sources: Department of Defense, FY2003 RDT&E Program Descriptive Summaries; H.Rept. 107-436; S.Rept. 107-151,
H.Rept. 107-532.

---

CRS-34
Strategic Nuclear Weapons Policy
In January, the Administration completed a congressionally mandated Nuclear
Posture Review and submitted a classified report on the review, with an unclassified
summary, to Congress. Parts of the classified report were later leaked to the press,
prompting considerable public debate about several issues, including the potential
use of nuclear weapons against non-nuclear states that use or threaten to use non-
nuclear weapons of mass destruction, plans to shorten the time needed to resume
nuclear testing, and potential development of new nuclear weapons for missions such
as destruction of deeply buried and hardened targets. The review also reaffirmed
Administration plans to reduce offensive nuclear warhead numbers. Later, on May
13, the White House announced an agreement with Russia on a treaty to reduce
strategic offensive force levels to between 1,700 and 2,200 warheads.
Congressional Action. In the House Armed Services Committee markup,
Representative Tauscher offered an amendment to limit strategic nuclear force levels
to 1,700. The proposal was rejected in committee. On the floor, the House approved
a Tauscher amendment to require a report on options for achieving a level of 1,700
to 2,200 warheads. Representative Spratt offered an amendment, also rejected in
committee, to require one-year advance notification of a decision to resume nuclear
testing. The Rules Committee did not permit a floor vote on the amendment. The full
House also rejected an amendment offered by Representative Markey to prohibit
development of a nuclear earth penetrator weapon.
The Senate Armed Services Committee version of the authorization eliminates
$15.5 million requested in the Department of Energy weapons budget for
development of a “Robust Nuclear Earth Penetrator” weapon and requires a detailed
report on the proposed program. On July 26, the Senate approved an amendment to
the bill, offered by Senators Feinstein and Stevens, to prohibit development or
deployment of nuclear armed interceptors for missile defense.
The Senate bill also includes a provision that would require the Secretary of
Energy to request funds before beginning research and development or production
of any new or modified nuclear weapon. The provision also requires a specific
authorization for a new or modified nuclear weapon program before funds could be
obligated or expended.
Environmental Restrictions on DOD Training
The Defense Department has voiced increasing concern in recent years about
the effect on training of environmental regulations. Shortly before the House Armed
Services Committee markup of the defense authorization bill, the Administration
proposed legislation to exempt DOD training activities from the requirements of
several environmental statutes ranging from the Endangered Species Act to the Clean
Air Act.
Congressional Action. The House-passed version of the authorization bill
addresses exemptions or waivers for DOD of application of the Endangered Species
Act, the Migratory Bird Treaty Act, and the Wilderness Act to areas used for military

---

CRS-35
training exercises. On the Endangered Species Act, Section 312 of the House bill
would allow DOD to substitute its own Integrated Natural Resource Management
Plan to protect endangered species rather than having installations designated as a
critical habitat. DOD would, however, still be prohibited from taking any actions
that would harm endangered or threatened species. In designating new critical
habitats, the bill would also require that the effect on national security, as well as the
economic impact, must be considered.
Section 311 of the House bill provides that in the case of military training
activities, DOD would not be subject to the part of the Migratory Bird Treaty Act
that designates certain types of activities as unlawful. According to the committee
report, this provision was intended to permit DOD to carry out military exercises
even if they might unintentionally harm migratory birds. The language adopted
would exempt DOD more broadly from any activity deemed to be unlawful under the
Act.
The House bill also permits DOD to conduct training activities and have
emergency access to the Utah Test and Training Range, despite the fact that a portion
of that range has been designated as a wilderness area with certain restrictions on
noise and disturbances. The House bill also includes provisions that would designate
several areas owned by the Bureau of Land Management that are adjacent to the Utah
Test and Training Range as wilderness areas although DOD’s training activities in
these areas would also not be covered by Wilderness Act restrictions. (For a
discussion of these and other provisions, see CRS Report RL31456, Defense Cleanup
and Environmental Programs: Authorization and Appropriations for FY2003, by
David Michael Bearden, and CRS Report RL31415, The Endangered Species Act,
Migratory Bird Treaty Act, and Department of Defense Readiness Activities: Current
Law and Legislative Proposals, by Pamela Baldwin.)

The House Armed Services Committee did not address other environmental
measures that DOD included in its legislative proposal. In the House Armed
Services Committee markup, Representative James Maloney offered an amendment
to remove the environmental waiver provisions, but the proposal was rejected. The
Rules Committee did not permit a similar amendment proposed by Representatives
Rahall, Dingell and Maloney to be offered on the floor.
The Senate Armed Services Committee did not address these environmental
issues in its version of the authorization bill. Instead, it referred the Administration’s
proposals to the Environment and Public Works Committee, which recently held a
hearing on those proposals. The Senate bill authorizes $20 million to allow the
Secretary of Defense to acquire lands adjacent to military installations to serve as a
buffer zone and provide additional natural habitat areas for endangered species in
areas where animals have moved to military installations as a result of development.
Cap on Military Personnel in Colombia
Under current law, there is a cap of 400 on the number of U.S. military
personnel who can operate in Colombia. The cap specifically excludes personnel
serving diplomatic functions or performing emergency missions. The House
authorization bill includes a provision that would establish a cap of 500 on the

---

CRS-36
number of U.S. military personnel in Colombia who are supported or maintained by
Department of Defense funds. The measure also provides the Secretary of Defense
may waive the cap for national security reasons and must inform Congress within 15
days of a waiver.
Base Realignment and Closure
Last year, Congress approved a measure that will permit a new round of military
base closures in 2005, following procedures that were used in earlier rounds in 1991,
1993, and 1995. In the House Armed Services Committee markup of the
authorization bill, Representative Taylor offered an amendment to repeal last year’s
base closure provisions. The committee defeated the amendment by a vote of 38-19.
The Rules Committee did not allow the amendment to be offered on the floor, which
was a matter of considerable contention when the bill was debated.
Abortions in Military Hospitals Overseas
Abortions are readily available in the United States, but are often not available
to U.S. personnel deployed abroad. Congress has perennially debated measures to
allow abortions for U.S. military personnel at military hospitals overseas.
Congressional Action. In the House Armed Services Committee markup,
the committed rejected an amendment by Representative Sanchez to allow abortions
at U.S. military hospitals abroad; the full House rejected the proposal in a floor vote.
On June20 the Senate debated and on June 21 approved by a vote of 52-40 an
amendment to the authorization bill by Senators Murray and Collins that would
remove the prohibition on privately funded abortions at overseas military facilities.
Legislation
Congressional Budget Resolution
H.Con.Res. 253 (Nussle)
A concurrent resolution establishing the congressional budget for the United
States Government for fiscal year 2003 and setting forth appropriate budgetary levels
for each of fiscal years 2004 through 2007. Reported by the House Budget
Committee (H.Rept. 107-376), March 15, 2002. Passed by the House, 221-209,
March 20, 2002.
S.Con. Res. 100 (Conrad)
An original concurrent resolution setting forth the congressional budget for the
United States Government for fiscal year 2003 and setting forth the appropriate
budgetary levels for each of the fiscal years 2004 through 2012. Reported by the
Senate Budget Committee, March 22, 2002. Written report filed (S.Rept. 107-141),
April 11. 2002.

---

CRS-37
Defense Authorization
H.R. 4546 (Stump)
A bill to authorize appropriations for fiscal year 2003 for military activities of
the Department of Defense, and for military construction, to prescribe military
personnel strengths for fiscal year 2003, and for other purposes. Marked up and
ordered to be reported by the House Armed Services Committee, May 1, 2002.
Report filed (H.Rept. 107-436), May 3, 2002. Considered by the House and
approved, with amendments (359-58), May 10, 2002. Laid before the Senate, Senate
struck all after the enacting clause and substituted the language of S. 2514, and
passed by the Senate by unanimous consent, June 27, 2002.
H.R. 4547 (Stump)
A bill to authorize appropriations for the costs of the war against terrorism.
Considered by the House Armed Services Committee, May 1, 2002.
S. 2514 (Levin)
An original bill to authorize appropriations for fiscal year 2003 for military
activities of the Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe personnel strengths for such
fiscal year for the Armed Forces, and for other purposes. Marked up and ordered to
be reported by the Senate Armed Services Committee, May 9, 2002. Report filed
(S.Rept. 107-151), May 15, 2002. Considered by the Senate, June 18, 19, 20, 21, 24,
25, 26, 27. Approved by the Senate as amended (97-2), June 27, 2002.
Defense Appropriations
H.R. 5010 (Lewis)
Making appropriations for the Department of Defense for the fiscal year ending
September 30, 2003, and for other purposes. Marked up and reported by the House
Appropriations Committee (H.Rept. 107-532), June 25, 2002. Considered by the
House and approved as amended (413-18), June 27, 2002.
H.R. 5011 (Hobson)
Making appropriations for military construction, family housing, and base
realignment and closure for the Department of Defense for the fiscal year ending
September 30, 2003, and for other purposes. Marked up and reported by the House
Appropriations Committee (H.Rept. 107-533), June 25, 2002. Considered by the
House and approved, as amended (426-1), June 27, 2002.
S. 2709 (Feinstein)
An original bill making appropriations for military construction, family housing,
and base realignment and closure for the Department of Defense for the fiscal year
ending September 30, 2003, and for other purposes. Marked up and ordered to be
reported by the Senate Appropriations Committee, June 27, 2002. Report filed
(S.Rept. 107-202), July 3, 2002.

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CRS-38
FY2002 Supplemental Appropriations
H.R. 4775 (C.W. Bill Young)
Making supplemental appropriations for the fiscal year ending September 30,
2002, and for other purposes. Reported by the House Appropriations Committee
(H.Rept. 107-180), May 20, 2002. Considered by the House, May 22-23, 2002.
Approved by the House (280-138), May 24, 2002. Measure laid before the Senate
and Senate struck all after the enacting clause and substituted the language of S. 2551
to be used as original text, June 3, 2002. Cloture motions presented in the Senate,
June 4, 2002. Cloture motion invoked (87-10), June 6, 2002. Approved by the
Senate (71-22), June 7, 2002.
S. 2551 (Byrd)
An original bill making supplemental appropriations for further recovery from
and response to terrorist attacks on the United States for the fiscal year ending
September 30, 2002, and for other purposes. Marked up and ordered to be reported
by the Senate Appropriations Committee, without written report, May 22, 2002.
Written report filed (S.Rept. 107-156), May 29, 2002.

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CRS-39
For Additional Reading
CRS Report RL31310: Appropriations for FY2003: Military Construction, by Daniel
H. Else.
CRS Report RS21218, Crusader XM2001 Self-Propelled Howitzer: Background and
Issues for Congress, by Edward F. Bruner and Steven R. Bowman.
CRS Report RL31456, Defense Cleanup and Environmental Programs:
Authorization and Appropriations for FY2003, by David Michael Bearden.
CRS Issue Brief IB10062, Defense Research: DOD’s Research, Development, Test
and Evaluation Program, by John Dimitri Moteff.
CRS Report RL31415, The Endangered Species Act, Migratory Bird Treaty Act, and
Department of Defense Readiness Activities: Current Law and Legislative
Proposals, by Pamela Baldwin.
CRS Issue Brief IB93103, Military Medical Care Services: Questions and Answers,
by Richard A. Best, Jr.
CRS Issue Brief IB10089, Military Pay and Benefits: Key Questions and Answers,
by Robert L. Goldich.
CRS Issue Brief IB85159, Military Retirement: Major Legislative Issues, by Robert
L. Goldich.
CRS Report RL31111, Missile Defense: the Current Debate, coordinated by Steven
A. Hildreth and Amy F. Woolf.
CRS Report RS20535, Navy Ship Procurement Rate and the Planned Size of the
Navy: Background and Issues for Congress, by Ronald O’Rourke.
CRS Report RS20643, Navy CVNX Aircraft Carrier Program: Background and
Issues for Congress, by Ronald O’Rourke.
CRS Report RS21059, Navy DD(X) Future Surface Combatant Program:
Background and Issues for Congress, by Ronald O’Rourke.
CRS Issue Brief IB94040, Peacekeeping: Issues of U.S. Military Involvement, by
Nina Maria Serafino.
CRS Report RL31297, Recruiting and Retention in the Active Component Military,
by Lawrence Kapp.
CRS Issue Brief IB92115, Tactical Aircraft Modernization: Issues for Congress, by
Christopher Bolkcom.

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CRS-40
CRS Report RL31187, Terrorism Funding: Congressional Debate on Emergency
Supplemental Allocations, by Amy Belasco and Larry Q. Nowels.
CRS Report RS21133, The Nuclear Posture Review: Overview and Emerging Issues,
by Amy F. Woolf.
CRS Report RL31384, V-22 Osprey Tilt-Rotor Aircraft, by Christopher Bolkcom.

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CRS-41
Appendix
Table A1. Congressional Action on Defense Authorization by Title
(budget authority in billions of dollars)
Request
With
House
Senate
DERF
DERF
Author-
Change
Author-
Change
Request Allocated Allocated
ization to Request
ization to Request
Military Personnel
94.3
0.0
94.3
93.7
-0.6
94.4
+0.0
Operation and Maintenance
130.4
3.9
134.3
130.7
-3.7
130.2
-4.1
Defense Emergency Response Fund
20.1
10.0
10.0
0.0
-10.0
0.0
-10.0
Procurement
68.7
2.9
71.6
73.2
+1.6
72.2
+0.6
RDT&E
53.9
2.3
56.1
56.4
+0.3
56.4
+0.3
Military Construction
4.8
0.6
5.3
5.7
+0.4
6.0
+0.6
Family Housing
4.2
0.0
4.2
4.3
+0.0
4.2
-0.0
Revolving Funds/Other
1.9
0.3
2.3
0.9
-1.3
1.6
-0.6
General Provisions
0.0
0.0
0.0
+0.0
10.0
+10.0
Total DOD
378.2
20.1
378.2
364.9
-13.3
375.0
-3.3
Atomic Energy Defense Activities
16.4
16.4
16.3
-0.0
16.7
+0.3
Other Defense-Related Activities
1.7
1.7
1.6
-0.1
1.6
-0.1
Total National Defense
396.3
396.3
382.8
-13.5
393.2
-3.1
Sources: H.Rept. 107-436; S.Rept. 107-151.
Note: DERF allocation as shown by the Senate Armed Services Committee in S.Rept. 107-151.
Table A2. Congressional Action on Defense Appropriation by Title
(budget authority in billions of dollars)
Request
House
DERF With DERF
Appro-
Change
Request
Allocated
Allocated
priation
to Request
Military Personnel
94.2
0.0
94.3
93.4
-0.9
Operation and Maintenance
111.6
3.9
115.5
114.8
-0.8
Defense Emergency Response Fund
20.1
10.0
10.0
0.0
-10.0
Procurement
67.2
2.9
70.1
70.3
+0.2
RDT&E
53.7
2.3
56.0
57.8
+1.8
Revolving & Mgmnt Funds
2.4
0.3
2.8
2.8
+0.0
Other DOD Programs
17.1
0.0
17.1
17.1
+0.0
Related Agencies
0.4
0.4
0.4
+0.0
General Provisions
0.0
0.0
-1.8
-1.9
Total DOD
366.8
19.5
366.8
354.7
-12.1
Sources: H.Rept. 107-532.
Note: DERF allocation as shown by the Senate Armed Services Committee in S.Rept. 107-151.

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