Order Code RL31805
CRS Report for Congress
Received through the CRS Web
Authorization and Appropriations
for FY2004: Defense
Updated June 10, 2003
Amy Belasco
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Stephen Daggett
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

---

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].

---

Authorization and Appropriations
for FY2004: Defense
Summary
Congress is now considering the FY2004 budget for the Department of Defense
(DOD). The Administration requested $399.7 billion for national defense. In their
respective versions of the FY2004 DOD Authorization Act passed on May 22, 2003,
both houses authorized $400.5 billion for national defense, an amount consistent with
the FY2004 Budget Resolution but $800 million more than the request. Neither
chamber has yet begun formal action on annual defense appropriations bills though
press reports suggest that markup may occur by the end of June.
On May 22, 2003, the House passed H.R. 1588, the FY2004 DOD
Authorization Act by a vote of 361 to 68. On June 4 after considering three
additional amendments to S. 1050, its version, the Senate passed the bill by voice
vote. On that day the Senate adopted by voice vote amendments providing full
concurrent receipt of both VA disability benefits and military retirement for military
retirees (S.Admt. 848, Reid), a provision that could trigger a presidential veto, as well
as an amendment providing citizenship rights to immediate relatives of activated
reservists who die in combat (S.Admt. 847, Kennedy/Brownback). By a vote of 42
to 53, the Senate rejected an amendment to cancel the 2005 round of base closures,
an amendment that could have triggered a presidential veto of the entire bill. The
Senate then substituted S. 1050 into the House bill, H.R. 1588, and appointed its
conferees. The House has not yet appointed its conferees.
Debate on the FY2004 DOD Authorization Act began May 19 in the Senate and
May 21st in the House. The Senate completed marking up its bill on May 8 and
reported its bill on May 13 (S.Rept. 108-46). The House completed its markup on
May 14 and reported its bill on May 16th (H.Rept. 108-106).
Potential major issues in conference on the authorization bill may be how to
address the Administration’s request to give the Secretary of Defense wide-ranging
new authority to set up a new National Security Personnel System (NSPS) for the
750,000 civilians working in the Department of Defense. The House-reported version
of the bill approves much of what the Administration requested, while the
Senate-reported version does not include any proposed changes. On June 4, 2003, the
Senate’s Governmental Affairs Committee held a hearing on S. 1166, a bill that
includes some but not all of the Administration’s proposal for a new personnel
system for DOD.
The Senate version of the FY2004 DOD Authorization Act includes two
provisions with significant cost implications: new health benefits for non-active duty
reservists that could cost $470 million in FY2004 and $7.3 billion over the next five
years and concurrent receipts for military retirees that could cost the government $4.4
billion in FY2004 and $56.5 billion over the next ten years. Other programs would
need to be cut to cover some of the cost. These provisions are not in the House bill.
Other potential conference issues include provisions that would restrict R&D on low
yield nuclear weapons and the nuclear earth penetrator weapon, provisions exempting
DOD from certain environmental statutes.

---

Key Policy Staff
Area of Expertise
Name
Telephone
E-Mail
Acquisition
Valerie Grasso
7-7617
vgrasso@crs.loc.gov
Aviation Forces
Christopher Bolkcom
7-2577
cbolkcom@crs.loc.gov
Arms Control
Amy Woolf
7-2379
awoolf@crs.loc.gov
Arms Sales
Richard Grimmett
7-7675
rgrimmett@crs.loc.gov
Base Closure
David Lockwood
7-7621
dlockwood@crs.loc.gov
Stephen Daggett
7-7642
sdaggett@crs.loc.gov
Defense Budget
Amy Belasco
7-7627
abelasco@crs.loc.gov
Defense Industry
Gary Pagliano
7-1750
gpagliano@crs.loc.gov
Defense R&D
John Moteff
7-1435
jmoteff@crs.loc.gov
Edward Bruner
7-2775
ebruner@crs.loc.gov
Ground Forces
Steven Bowman
7-7613
sbowman@crs.loc.gov
Health Care; Military
Richard Best
7-7607
rbest@crs.loc.gov
Intelligence
Richard Best
7-7607
rbest@crs.loc.gov
Military Construction
Daniel Else
7-4996
delse@crs.loc.gov
David Burrelli
7-8033
dburrelli@crs.loc.gov
Military Personnel
Robert Goldich
7-7633
rgoldich@crs.loc.gov
Military Personnel;
Lawrence Kapp
7-7609
lkapp@crs.loc.gov
Reserves
Missile Defense
Steven Hildreth
7-7635
shildreth@crs.loc.gov
Naval Forces
Ronald O’Rourke
7-7610
rorourke@crs.loc.gov
Nuclear Weapons
Jonathan Medalia
7-7632
jmedalia@crs.loc.gov
Peace Operations
Nina Serafino
7-7667
nserafino@crs.loc.gov
Radio Frequency,
Lennard Kruger
7-7070
lkruger@crs.loc.gov
Military
Readiness
Amy Belasco
7-7627
abelasco@crs.loc.gov
Space, Military
Marcia Smith
7-7076
msmith@crs.loc.gov
David Ackerman
7-7965
dackerman@crs.loc.gov
War Powers
Louis Fisher
7-8676
lfisher@crs.loc.gov
Richard Grimmett
7-7675
rgrimmett@crs.loc.gov

---

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Status of Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2004 Defense Authorization Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Overview and Budget Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Annual Growth for DOD Slows In Later Years in FY2004
Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trends in DOD Spending Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
DOD Receives $93.1 Billion in Supplemental Appropriations
Since September 11 Attacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Major Themes in the Administration’s FY2004 Request . . . . . . . . . . . . . . . . . . 16
Key Issues in Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Issues for Congress in DOD’s Legislative Package . . . . . . . . . . . . . . . . . . . 17
Affordability and Mix of DOD’s FY2004 Investment Programs . . . . . . . . 24
Personnel Pay and Benefits Issues and Readiness Issues . . . . . . . . . . . . . . . 35
Basing Structure, Role of the Reserves, and Force Mix Issues . . . . . . . . . . 39
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
List of Tables
Table 1a. Status of FY2004 Defense Authorization (H.R. 1588/S. 1050) . . . . . . 6
Table 1b. Status of FY2004 Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . 6
Table 2. National Defense Budget Function and Department of Defense
Budget, FY1999-FY2008, Administration Projections . . . . . . . . . . . . . . . . . 8
Table 3. Status of FY2004 Budget Resolution
(H.Con.Res. 95, S.Con.Res. 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 4. FY2004 Budget Resolution: DOD Request and
Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 5. Administration Request: National Defense Budget Function
by Title, FY2001-FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 6. Flexibility in DOD’s Supplemental Funding Since
September 11 Attacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 7: House and Senate Armed Services Markup of Major
Army Acquisition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Table 8: House and Senate Armed Services Markup of Major
Navy Acquisition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Table 8: House and Senate Armed Services Markup of Major
Air Force Acquisition Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Table 9. Estimates of the Cost of Concurrent Receipt and
TRICARE for Reservists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

---

Authorization and Appropriations for
FY2004: Defense
Most Recent Developments
After adopting two amendments to S. 1050, its version of the FY2004 DOD
Authorization Act, the Senate passed the bill by voice vote on June 4, 2003. The first
amendment, the Reid amendment, would provide concurrent receipt of military
retirement and VA disability benefits for military retirees (S.Admt. 848), and the
second would provide expedited naturalization for activated reservists and for their
families should the reservist die in wartime. By a vote of 53 to 42, the Senate
defeated an amendment that would have canceled the 2005 round of base closures.
The Senate then substituted its version into the House bill, H.R. 1588, and appointed
conferees.
Before recessing for Memorial Day on May 23, 2003, the House passed H.R.
1588, its version of the FY2004 DOD Authorization Act by 361 to 68. The House
has not yet appointed conferees. The Administration generally supports the House
bill but threatened to veto any version of the FY2004 DOD Authorization Act that
delayed or cancelled the 2005 round of base closures. Last year, the Administration
threatened to veto the DOD authorization act if concurrent receipt was included.
During floor debate, several amendments with significant cost or policy
implications were adopted. On the Senate side, the Graham/Daschle amendment
would expand access to TRICARE health care benefits to non-active duty reservists
and could cost an average of $1.5 billion annually and about $7.4 billion over five
years. This provision is not in the House bill.
Both the House and Senate adopted provisions that would lift or modify the
current ten-year ban on R&D of low-yield nuclear weapons. The House version
modifies the ban and would permit research while the Senate version requires
specific authorization for DOE to proceed to engineering development of low yield
nuclear weapons or a nuclear earth penetrating weapon. An attempt to add civil
service protections to the House bill, which includes much of the Administration’s
request to set up a new National Security Personnel System, was also defeated. The
Senate bill does not include these provisions although the Senate Governmental
Affairs Committee held hearings on June 4 on S. 1166, a bill to set up a National
Security Personnel System.
Both bills authorize $400.5 billion for national defense, an amount consistent
in the FY2004 Congressional Budget Resolution (H.Con.Res. 95) but $800 million
more than the amount requested by the President.

---

CRS-2
Status of Legislation
FY2004 Defense Authorization Bills
On May 22, the House and the Senate passed their respective versions of the
FY2004 DOD Authorization bills after several days of floor debate. The House
version, H.R. 1588, passed by 361 to 68. Although the Senate passed its version, S.
1050, by 98 to 1 on the same date, the Senate adopted a unanimous consent
agreement the next day providing for consideration of several specific amendments.
On June 4 after the Memorial Day recess, the Senate adopted amendments on
concurrent receipt and expedited immigration for selected reservists and their
families during wartime and rejected an amendment to cancel the 2005 round of base
closures before passing the bill by voice vote and appointing its conferees.1 Debate
in the House took place on May 20 and May 21, and in the Senate on May 19, 20, 21,
22, and June 4, 2003.
On May 13, the Senate Armed Services Committee (SASC) reported S. 1050,
after completing markup on May 9 (S.Rept. 108-46). The bill does not include the
DOD proposal to design its own civilian personnel system. The House Armed
Services Committee (HASC) reported its bill on May 16 after completing markup on
May 14 (H.Rept. 108-106). On May 21, the House adopted a rule (H.Res. 245) that
limited general debate to two hours and amendments to those specified in the rule.
The Senate rule required that all amendments be considered relevant by the
Parliamentarian. The House bill includes much of DOD’s legislative proposal for a
new civilian personnel system as initially marked up by the House Government
Reform Committee (H.R. 1836).2
Additional Amendments Considered by the Senate. After its return
from the Memorial Day Recess on June 2, 2003, the Senate considered several
amendments to S. 1050, which were ruled earlier as not relevant by the Senate
Parliamentarian.3 The Dorgan/Lott amendment to cancel the 2005 round of base
closures was defeated by a vote of 42 to 53.4 The Secretary of Defense and other
senior advisors would recommend a veto of the FY2004 DOD Authorization Act if
1 Congressional Record, May 23, 2003, p. S7115 and Congressional Record, June 4, p.
S7280-S7295.
2 For a comparison of all the Administration’s proposed legislative provisions compared to
current law, see CRS Report RL31916, Defense Department Transformation Proposal:
Original DOD Proposal Compared to Existing Law, by Robert L. Goldich, Gary J. Pagliano,
Barbara L. Schwemle, and Thomas J. Nicola. Other bills that would reform the current civil
service system are S. 129 (introduced by Senator Voinovich) and H.R. 1601 (introduced by
Representative JoAnn Davis). For a review of these measures, see CRS Report RL31516,
Civil Service Reform Proposals: A Side-by-Side Comparison of S. 129 and H.R. 1601 (108th
Congress) with Current Law, by Barbara L. Schwemle and L. Elaine Halchin.
3 Congressional Record, May 20, 2003, p. S6645 and p. S6648.
4 Congressional Record, May 23, p. S7115, and Congressional Record, June 4, p. S7286-
S7295. Senator Warner had reserved the right to offer two amendments on base closures
but did not do so after the Dorgan amendment was defeated.

---

CRS-3
Congress included a cancellation of the 2005 round, according to a statement of
Administration policy.5
Another amendment that could trigger a veto threat by the Administration was
passed on June 4: Senator Reid’s amendment on concurrent receipt that would
provide both VA disability and retirement benefits to about 700,000 military retirees
with 20 or more years of service.6 Faced with a veto threat by the Administration last
year to similar congressional proposals, Congress adopted a targeted special
compensation that would provide benefits to about 40,000 retirees whose disabilities
reflect either combat or combat-related disabilities.7 That special compensation
benefit will be available to those retirees who are eligible as of June 1, 2003.
Recently, CBO estimated that providing full concurrent receipt would cost the
government a total of about $4.1 billion in FY2004, including $1.1 billion that would
be financed through DOD appropriations and about $3 billion that would be financed
by the Treasury.8 CBO estimates that about 700,000 would be eligible for a blanket
version of concurrent receipt. Over 600,000 of those who would be eligible for
benefits would be non-disability retirees, who receive VA disability ratings after
leaving military service. Over ten years, CBO estimates that full concurrent receipt
would cost the government about $56.5 billion, including about $41 billion in direct
spending and $15.4 billion in accrual payments to cover the future cost of today’s
military workforce.9 The FY2004 congressional budget resolution does not include
5 OMB, Statement of Administration Policy on H.R. 1588 - National Defense Authorization
Act for Fiscal Year 2004, May 22, 2003, p. 1; available on the White House website at
[http://whitehouse.gov/omb/legislative/sap/108-1/hr1588sap-h.pdf]. Completion of the
FY2002 DOD Authorization Act was stymied by the Administration’s threatened veto
because of congressional unwillingness to authorize another round of base closures.
6 Except for those eligible for the new combat or combat-related special compensation,
military retirees who opt to receive VA disability benefits must take an offset to their
military retirement of the same amount. See Congressional Record, May 19, 2003, p.
S6637, for Reid amendment. Senate Amendment 697 is the same as S. 392, the Retired Pay
Restoration Act of 2003, introduced by Senator Reid and others on February 13, 2003.
7 See CBO testimony by Sarah T. Jennings before the Subcommittee on Personnel, Senate
Armed Services Committee, March 27, 2003; CRS Report RL31305, Authorization and
Appropriations for FY2003: Defense by Stephen Daggett and Amy Belasco; and CRS
Report RS21327, Concurrent Receipt of Military Retirement and VA Disability Benefits:
Budgetary Issues, by Amy Belasco.
8 See CBO, Cost Estimate on S. 1050, National Defense Authorization Act for Fiscal Year
2004, June 2, 2003; see [http://www.cbo.gov]. Payments for current beneficiaries would be
paid by the Treasury (direct or mandatory spending), whereas accrual costs to cover the
future cost of the benefits for DOD’s current military personnel would be paid for by DOD.
The cost reflects the offsets against retirement benefits currently taken by about 695,000
military retirees who would be eligible and about 7,000 from the other uniformed services
(Public Health Service, National Oceanic and Atmospheric Administration).
9 See CBO testimony by Sarah T. Jennings before the Subcommittee on Personnel, Senate
Armed Services Committee, March 27, 2003, and CRS Report RS21327, Concurrent
Receipt of Military Retirement and VA Disability Benefits: Budgetary Issues, by Amy
(continued...)

---

CRS-4
an allowance for concurrent receipt. If enacted, other programs would have to be
decreased to finance the DOD portion and spending for current beneficiaries would
increase the deficit by $3 billion in FY2004.
An amendment offered by Senators Kennedy and Brownback to extend
citizenship to the spouse, children, and parents of selected reservists who are non-
citizens or permanent resident aliens and who die while in active-duty status was
adopted by voice vote. Currently, citizenship is available to such relatives of active-
duty military personnel who die in wartime.10
Major Amendments Considered During Senate Floor Action. Several
amendments were added during floor debate in each house with significant cost or
policy implications. (Additional discussion of major issues is included in individual
sections below.)
On the Senate side, the following major amendments to S. 1050 were adopted:
! Graham/Daschle amendment that would provide access to
TRICARE health care benefits to non-active duty reservists with an
estimated annual cost of $1.5 billion (by a vote of 85-10);
! Warner amendment that would require specific authorization by
Congress for DOD to begin engineering development of a low-yield
nuclear weapon (by a vote of 59 to 38);
! Nelson (Ben) amendment that would require specific authorization
for DOD to begin engineering development of a Robust Nuclear
Earth Penetrator weapon (voice vote);11
! Lautenberg/Jeffords amendment that would require a determination
by the Secretary of Interior for DOD to substitute an integrated
resources management plan to protect endangered species (by vote
of 51 to 48);
! Modified Bingaman amendment that would prohibit funding for
ballistic missile defense interceptors to be used in space (by voice
vote);
! Reid amendment to transfer $20 million from special operations
forces to modifications of 23 B-1 bombers slated for retirement (by
voice vote); and
! Warner/Boxer/Lautenberg amendment to express the sense of the
Senate that by August 31, 2003, DOD should have a competitive
contract in place for the reconstruction of Iraq’s oil industries (by a
vote of 99 to 0).
9 (...continued)
Belasco.
10 See Section 661 to Sec. 665, H.R. 1588, engrossed as passed by the Senate, June 4, 2003.
11 See CRS Report RS20834, Nuclear Earth Penetrator Weapons, by Jonathan Medalia, and
CRS Report RS21133, The Nuclear Posture Review: Overview and Emerging Issues, by
Amy F. Woolf.

---

CRS-5
Senate amendments that were defeated include:
! Feinstein/Kennedy amendment to re-institute the ban on R&D on
low-yield nuclear weapons;
! Dorgan amendment prohibiting funds for the Robust Nuclear Earth
Penetrator (tabled by a vote of 56 to 41); and
! Murray amendment that would have permitted overseas DOD
facilities to be used for abortions if no DOD funds were used.
Major Amendments Considered During House Floor Action. Several
amendments with significant policy or cost implications were adopted during House
debate of the FY2004 DOD Authorization Act:
! Goode amendment to authorize the Secretary of Defense to assign
military personnel to assist the U.S. Customs Service in carrying out
border patrol if the Secretary of Homeland Security certifies that the
assistance is necessary to meet national security threats from
terrorists, drug traffickers, or illegal aliens (vote of 250-179);
! Upton amendment to authorize imminent danger pay for military
personnel assigned duty as first responders (included in Hunter en
bloc, agreed to by voice vote); and
! Hunter amendment to add $100 million to enhance the capability of
the fourth Stryker brigade (included in Hunter en bloc, agreed to by
voice vote).
Several House amendments to H.R. 1588 were rejected:
! Tauscher amendment to transfer $15 million from the Robust
Nuclear Earth Penetrator to a R&D on a conventional bunker-
busting bomb (by a vote of 199-226);
! Loretta Sanchez amendment to permit military personnel to receive
abortions in DOD medical facilities overseas (by a vote of 201-227);
and
! Cooper amendment to recommit the bill with instructions to add
various civil service protections to the proposed National Security
Personnel System and to delete language that would allow the
Secretary of Defense to bargain with employees without being
subject to dispute resolution procedures (by a vote of 204 to 224).
Major Changes During Markup. The Senate markup of S. 1050 did not
include DOD’s request for broad new authority to design its own civilian personnel
system. The House markup of H.R. 1588 includes some but not all of DOD’s
request, generally tailoring the new authorities to be consistent to those granted to the
Department of Homeland Security allowing the agency to set its own pay scales and
devise a new appeals procedures for employees but retaining some of the civil service
protections in the current system (see CRS Report RL31924, Civil Service Reform
— H.R. 1836, Homeland Security Act, and Current Law by Barbara L. Schwemle
and Thomas J. Nicola and section below on “New Civil Service System for DOD?”).
Neither the House Armed Services Committee (HASC) nor the Senate Armed
Services Committee (SASC) endorses DOD’s request for broad authority to manage

---

CRS-6
senior level military officers, proposing expansions of current provisions instead.
Also controversial may be the HASC proposal to grant DOD exemptions to certain
environmental laws, which Congress has rejected in previous years (see section on
Environmental Provisions, below).
Table 1a. Status of FY2004 Defense Authorization
(H.R. 1588/S. 1050)
Conference
Subcommittee
Report
Markup
House
House
Senate
Senate
Conf.
Public
Report Passage Report
Passage Report
Approval
Law
House Senate
House Senate
5/16/03
5/13/03
6/4/03
5/22/03
5/14/03 5/9/03 H.Rept.
S.Rept.
voice
—
—
—
—
361-68
108-106
108-46
votea
a The Senate initially passed S. 1050 by 98 to 1 on May 22, 2003, but then adopted a unanimous
consent agreement on May 23, 2003, to continue debate on selected amendments after the
recess; see Congressional Record, p. S7115. Those amendments were considered on June 4, and
the bill was then passed by voice vote.
Table 1b. Status of FY2004 Defense Appropriations
Conference
Subcommittee
Report
Markup
House
House
Senate
Senate
Conf.
Public
Report
Passage Report Passage Report
Approval
Law
House Senate
House Senate
—
—
—
—
—
—
—
—
—
—
Overview and Budget Trends
On February 3, 2003, the Administration submitted its FY2004 budget request
to Congress. The Administration proposed $399.7 billion for the national defense
budget function, about $7 billion above the estimated FY2003 level. (Note: This
includes in the FY2003 total $10 billion that Congress appropriated for DOD in the
FY2003 Consolidated Appropriations Act — most OMB and DOD tables prepared
for the February budget release do not include these additional funds.12 This does
12 DOD has received $93.1 billion in supplemental funding to combat terrorism since the
September 11 attacks; see below.

---

CRS-7
not include in FY2003 level, however, $62.6 billion in supplemental appropriations
that DOD recently received for the Iraq war and other costs.13
The FY2004 increase is in addition to substantial increases in FY2002 and
FY2003. The new request is more than $100 billion above the 1999 level for defense
spending, which reflects an increase over five years of 20% in inflation-adjusted
constant FY2004 dollars. The FY2004 defense request is almost 25% higher in real
terms than the budget in FY1996 when DOD’s draw down in spending and military
personnel in response to the end of the Cold War was completed. The number of
military personnel has remained level since 1996 and is not projected to increase.
The Administration is proposing continued increases of about $20 billion
annually in the defense budget for the next five years, which would increase national
defense budget authority to $480 billion by FY2008. Table 2 shows ten-year
FY1999-FY2008 trend in defense spending under the Administration’s plan for both
the national defense budget function and the Department of Defense budget.14
Of the $399.7 billion requested for national defense in FY2004, $370.6 billion
is for programs covered by the defense appropriations bill, $9.0 billion by the military
construction appropriations bill, $17.3 billion for Department of Energy defense-
related activities funded in the energy and water appropriations bill, and the
remaining $2.8 billion in other appropriations bills.
13 OMB, Fiscal Year 2004 Historical Tables, Table 5.1 (February 2003) and H.Rept. 108-10,
Conference Report on FY2003 Consolidated Appropriations Resolution, p. 1498.
14 The National Defense budget function (050 in OMB budget documents) is made up
primarily of the Department of Defense (051), plus about $18 billion in other defense-
related activities, primarily weapons-related activities in the Department of Energy (see
Table 2 for a breakout of these categories).

---

CRS-8
Table 2. National Defense Budget Function and Department of Defense Budget, FY1999-FY2008, Administration
Projections
(current and constant FY2004 dollars in billions)
Actual
Actual
Actual
Actual
Enacted
Req.
Proj.
Proj.
Proj.
Proj.
Fiscal Year:
1999
2000
2001
2002
2003a
2004
2005
2006
2007
2008
National Defense Budget Function
Budget Authority
Current year dollars
292.3
304.1
335.5
362.1
392.7
399.7
420.0
440.0
460.3
480.7
Constant FY2004 dollars
331.1
335.8
360.1
378.5
401.8
399.7
410.4
420.0
429.0
437.5
Real growth/decline
5.1%
1.4%
7.2%
5.1%
6.2%
-0.5%
2.7%
2.3%
2.1%
2.0%
Outlays/b/
Current year dollars
274.9
294.5
305.5
348.6
376.3
390.4
410.1
423.2
436.4
460.5
Constant FY2004 dollars
312.2
325.3
327.4
363.4
385.1
390.4
400.9
394.6
397.3
409.3
Real growth/decline
12.1%
4.2%
0.6%
11.0%
6.0%
1.4%
2.7%
-1.6%
0.7%
3.0%
Department of Defense
Budget Authority
Current year dollars
278.6
290.5
319.5
345.0
374.0
379.6
399.6
419.6
440.3
461.6
Constant FY2004 dollars
315.5
320.8
343.0
360.6
382.7
379.6
390.5
400.5
410.4
420.1
Real growth/decline
5.1%
1.7%
6.9%
5.1%
6.1%
-0.8%
2.9%
2.6%
2.5%
2.4%
Outlays/b/
Current year dollars
261.4
281.2
291.0
332.0
358.2
370.7
389.6
402.7
416.3
441.1
Constant FY2004 dollars
296.9
310.7
311.9
346.1
366.5
370.7
380.8
375.5
379.0
392.1
Real growth/decline
11.7%
4.7%
0.4%
11.0%
5.9%
1.1%
2.7%
-1.4%
0.9%
3.5%
Source: Office of Management and Budget, F2004 Historical Tables, and FY2003 Consolidated Appropriations Resolution (P.L. 108-11).
a Includes $10 billion in budget authority appropriated to DOD in the FY2003 Consolidated Appropriations Resolution (see P.L. 108-11) but not the outlay effects of that addition
because OMB has not re-estimated outlays. Does not include $62.6 billion in FY2003 supplemental appropriations for defense provided in H.R. 1559, P.L. 108-11.

---

CRS-9
Annual Growth for DOD Slows In Later Years in FY2004
Budget Resolution
Passed by both houses on April 11 just before the April recess, the FY2004
budget resolution (H.Con.Res. 95, H.Rept. 108-71) endorses the Administration’s
proposed growth of $20 billion annually for defense over the next five years (see
Table 3). Over the following five years, however, defense would grow by about $10
billion annually; the Administration does not project beyond FY2008. The chief
issue in this year’s budget resolution was the amount to be provided for tax cuts.
Table 3. Status of FY2004 Budget Resolution
(H.Con.Res. 95, S.Con.Res. 23)
Conference
Subcommittee
Report
Markup
House House
Senate
Senate
Conf.
Public
Report Passage Report Passage Report
Approval
Law
House Senate
House Senate
NAa
NA
4/10/03 3/21/03 3/26/03
3/26/03
4/11/03 4/11/03 4/11/03 NAb
H.Rept. 215-212 S.Rept.
56-44
H.Rept. 216-211 51-50
108-37
No rept.
108-71
Note : Senate substituted S.Con.Res. 23 into H.Con.Res. 95 after passage.
a Budget resolutions are only marked up in full committee.
b Budget resolutions guide the action of the authorizing and appropriating committees but are not
signed into law by the President.
Although there has been considerable congressional support for increases for
defense, some observers have questioned whether increases can be sustained with
reduced federal revenues because of tax cuts, high federal budget deficits, and the
dramatic increases in costs associated with the retirement of the baby boom
generation.15 The FY2004 budget resolution projects a 40% increase in entitlement
programs by 2008 and an 80% increase by 2013.16
15 Center for Strategic and Budgetary Assessment, Analysis of the 2004 Defense Budget
Request by Steven M. Kosiak, p. 5-p.7
16 CRS calculations based on table in H.Rept. 108-71, Conference Report on Concurrent
Resolution on the Budget For Fiscal Year 2004, p. 68.

---

CRS-10
Table 4. FY2004 Budget Resolution: DOD Request and Congressional Action
(billions of dollars)
FY2004-
FY2009-
FY2004-
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2008
FY2013
FY2013
Est.a
Proj.
Proj.
Proj.
Proj.
Proj.
Proj.
Proj.
Proj.b
Budget Authority
Administration Request
392.7
399.7
420.0
440.0
460.3
480.7
2,200.8
NA
NA
FY2004 Budget Res.
392.5
400.5
420.1
440.2
460.4
480.9
2,202.0
2556.1
4758.2
Annual Change In Dollars
Administration Request
30.6
7.0
20.3
20.0
20.3
20.4
88.1
NA
NA
FY2004 Budget Res.
NA
8.1
19.5
20.1
20.3
20.5
88.4
48.5
136.9
Annual Change In Percent
Administration Request
8.5%
1.8%
5.1%
4.8%
4.6%
4.4%
NA
NA
NA
FY2004 Budget Res.
NA
2.1%
4.9%
4.8%
4.6%
4.4%
NA
NA
NA
Defense Share Of Discretionary BA
Administration Request
48.8%
47.6%
48.2%
48.6%
48.9%
49.7%
NA
NA
NA
FY2004 Budget Res.
51.5%
50.9%
51.7%
52.2%
52.6%
53.2%
NA
NA
NA
Outlays
Admin. Requesta
376.3
390.4
410.1
423.2
436.4
460.5
2,120.7
NA
NA
FY2004 Budget Res.
386.2
400.9
414.2
426.0
438.7
462.9
2,142.7
2,515.6
4,658.3
Estimates Of The Surplus/Deficit
Administration Request
-304.0
-307.0
-208.0
-201.0
-178.0
-190.0
NA
NA
NA
FY2004 Budget Res.
-282.5
-287.3
-218.1
-169.4
-128.1
-113.9
NA
118.8
-798.1
Source: CRS calculations based on OMB, FY2004 Historical Tables, and DOD, Office of the Secretary of Defense, Comptroller, Briefing, FY2004 Defense Budget (February 6, 2003);
Conference Report on FY2004 Budget Resolution, H.Rept. 108-71, and House report on H. Con. Res. 95, H.Rept. 108-71, p. 6.
a Administration request does not reflect outlays from the $10 billion enacted in the FY2003 Consolidated Appropriations Resolution.
b OMB does not project budget authority or outlays beyond five years.

---

CRS-11
House and Senate Differences about Defense Spending. The final
version of the FY2004 budget resolution projects a five-year total for defense
spending of $2.2 trillion, a level comparable to the Administration and matching
levels passed in both houses. In later years, the House provided larger funding for
defense than the Senate and the conference compromised at $4.758 trillion, at about
the midpoint between the two houses.17
The conference version of the budget resolution also deleted two provisions
proposed by the Senate:
! a measure to set aside $100 billion over the next ten years in a
reserve fund to pay for costs associated with the war in Iraq; and
! a measure to include $182 million in FY2004 and $12.8 billion in
FY2004-FY2013 to cover the cost of phasing in concurrent receipt
benefits for military retirees with disability levels of 60% or higher.
The Senate bill had included a defense reserve fund that decreased by $100
billion the funds set aside for a tax cut in order to provide $10 billion annually to
cover continued costs of military action or reconstruction in Iraq.18 Funding for Iraq
in FY2003 was provided in the FY2003 supplemental, but there is no funding for
occupation costs in the FY2004 budget, which was submitted before the initiation of
hostilities. Nor is there funding in the FY2004 budget to cover the costs of the
continued U.S. presence in Afghanistan.
The Senate version of the resolution also would have allowed all military
retirees whose disabilities are 60% or higher to receive both their military retirement
and VA disability payments, a proposal considered but rejected in the final version
of the FY2003 DOD Authorization Act. Instead, Congress provided special
compensation for military retirees whose disabilities are a result of combat or
combat-related activities in the FY2003 Authorization Act.19 The conference version
of the resolution deleted both provisions. Without an allocation in the budget
resolution, it appears unlikely that benefits for military retirees with disabilities will
be expanded.
Scoring Differences Between Congress and the Administration.
CBO scored the cost of DOD’s request as $400.5 billion, $800 million higher than
the Administration’s estimate (see Table 2 and Table 4) . The difference between
the two estimates reflects primarily CBO’s assessment that a DOD legislative
proposal to set up a new account, the Refined Petroleum Products transfer account,
would cost about $675 million compared to zero expenditures assumed by DOD.
According to DOD, the rationale for setting up this new account with an “indefinite
17 As passed by the House, H.Con.Res. 95 recommended $4.8 trillion for defense and the
Senate recommended $4.6 trillion with a midpoint of $4.7 trillion; CRS calculation based
on House Budget Committee, Majority staffs, Budget Conference for Fiscal Year 2004:
Side-By-Side Comparison of House and Senate Resolutions, April 2, 2003, p. 11.
18 See H.Rept. 108-71, p. 73.
19 See H.Rept. 108-71, p. 109 and Congressional Record, March 20, 2003, p. S4209 for
S.Amdt. 341.

---

CRS-12
appropriation” is to allow DOD to cover the difference between the amount budgeted
for fuel costs and actual market prices.20 Since DOD assumes that its estimate is
correct, the Administration provided no funds for the account. CBO, however,
believes that fuel prices in FY2004 are likely to be about $5 higher per barrel than
DOD assumes — $27 a barrel compared to $22 barrel — and scores the likely cost
of the new account at $675 million based on the level of DOD’s annual fuel
purchases.
Although the FY2004 congressional budget resolution adopted CBO’s higher
scoring, it appears that Congress is unlikely to agree to set up the new account.
Neither the House nor the Senate version of the FY2004 DOD Authorization Act
includes funds for the account.21 Instead, both houses transfer that $675 million to
other programs.
DOD’s Appropriations Allocation. A sign of potential pressure on DOD’s
budget top line is the difficulty in reaching decisions about the distribution of funds
to the various appropriations subcommittees to guide their markup, a process known
as setting 302(b) allocations markup.22 The annual congressional budget resolution
sets the total amount of discretionary spending available to the appropriations
committees and recommends spending allocations for each budget function. The
appropriations committees, however, have discretion to set allocations for each
subcommittee.
According to press reports, the total for discretionary spending adopted by
Congress in the FY2004 resolution is $7 billion to $10 billion below the amount
needed to fund domestic programs. To provide these funds, the House and Senate
Appropriations Committees are considering rescinding and transferring unobligated
DOD funds from the FY2003 supplemental and reducing DOD’s allocation in the
FY2004 budget resolution by about $3 billion.23 A similar process is under
consideration for some domestic programs.24 According to a recent press reports, the
committees are considering consulting with the White House before adopting
allocations for individual subcommittees, an unusual procedure.25
20 OMB, Fiscal Year 2004 Appendix to the Budget of the United States, p. 298.
21 The Senate report, S.Rept. 108-46, includes the CBO scoring for the account in its
estimate of the request for working capital funds and then deletes that funding, see p. 10
and p. 298. The House report, H.Rept. 108-106, does not adjust the scoring of working
capital funds and therefore does not include any funding for the new account; see p. 7 and
p. 306.
22 The 302(b) allocation process was established by the Congressional Budget Act of 1974.
23 Congress Daily, “House Juggling Allocations for Approps Subcommittees,” May 9, 2003;
Congress Daily, “Appropriations Impasse Continues Over Spending Allocations, May 21,
2003.
24 Congress Daily, “Appropriations: Hill Leaders, White House to Meet Today on FY04
Approps,” June 10, 2003.
25 Alexander Bolton and Jonathan E. Kaplan, “Congress Veils Appropriations Spending
Totals,” The Hill, May 28, 2003.

---

CRS-13
Trends in DOD Spending Plans
Understanding the trends in DOD’s FY2004 budget is difficult because of the
effect of the large amount of supplemental funding received since September 11,
2001, in the Emergency Terrorism Response Supplemental of 2001 and the FY2002
Supplemental. That funding is shown in Table 5 and makes comparisons difficult,
particularly for operation and maintenance spending which received the bulk of
supplemental funding (see below).
Table 5. Administration Request: National Defense Budget
Function by Title, FY2001-FY2008
(in billions of dollars)
Fiscal Year
Actual Actual
Est.
Req.
Proj.
Proj.
Proj.
Proj.
2001
2002
2003a
2004
2005
2006
2007
2008
Military Personnel
76.9
87.0
95.1
99.0
103.1
107.4
111.0
114.6
Operation &
Maintenance
115.8
133.2
134.8
133.5
139.3
145.2
150.3
157.6
Procurement
62.6
62.7
73.8
74.4
78.6
85.8
96.1
105.3
RDT&E
41.6
48.7
57.5
61.8
67.1
64.3
64.6
67.0
Military
Construction
5.4
6.6
6.3
5.0
6.1
10.4
13.2
12.2
Family Housing
3.7
4.0
4.2
4.0
4.8
5.1
4.8
3.8
Other
13.5
2.7
2.2
2.0
0.6
1.4
0.3
1.2
Subtotal, DOD
319.5
345.0
374.0
379.6
399.6
419.6
440.3
461.6
Atomic Energy
Defense Activities
14.4
15.3
16.6
17.3
17.7
17.7
17.1
16.2
Defense-Related
Activities
1.6
1.8
2.1
2.8
2.8
2.8
2.9
2.9
Total, National
Defense
335.5
362.1
392.7
399.7
420.0
440.0
460.3
480.7
Source: OMB, FY2004 Historical Tables and Analytical Perspectives (February 2003), and H.Rept.
108-10, Conference report on FY2003 Consolidated Appropriations Resolution for final enacted
levels, and House Appropriations Committee.
OMB figures include DOD’s supplemental
appropriations of $17.3 billion in the FY2001 Emergency Terrorism Response Supplemental and
$14.0 billion in the FY2002 Supplemental.
Note: Does not include $62.6 billion received by DOD in FY2003 Supplemental.
Figures for FY2003 also include an additional $10 billion provided for DOD in
the FY2003 Consolidated Appropriations Resolution to cover intelligence and costs
associated with the U.S. presence in Afghanistan and the global war on terrorism.
The $62.6 billion provided to DOD in the FY2003 Supplemental, however, is not
included. DOD’s procurement funding shows little increase in FY2004. Much of the
increase in RDT&E reflects an increase from $7.6 billion to $9.1 billion in DOD’s
Missile Defense Program reflecting DOD’s plan to begin deployment of 10 land-

---

CRS-14
based interceptors as well as continue the ramp-up in R&D. By 2008, however,
DOD plans to ramp up funding for procurement by about 40% and RDT&E by over
15% compared to FY2003.
DOD Receives $93.1 Billion in Supplemental Appropriations
Since September 11 Attacks
Since the September 11 attacks, DOD has received $93.1 billion in
supplemental appropriations for the war in Afghanistan, the war in Iraq, enhanced
security at DOD installations, and the global war on terrorism (see Table 6). The
most recent supplemental for the Iraq war provides funding for the U.S. presence in
Afghanistan and continued operations in Iraq through FY2003. The Administration
did not include any funding for these costs in the FY2004 budget, however, which
suggests that the Administration will propose either a supplemental or a budget
amendment for FY2004.
In its post-September 11 requests for supplemental funding, DOD has requested
substantial flexibility in its use of funds, citing the uncertainty of estimating the cost
of war and the global war on terrorism. The Administration has reiterated that theme
in its FY2004 request as well, calling for transformation of not only weapon systems
to meet new threats but also transformation of DOD’s business practices and
personnel management systems (see discussion of Major Administration Themes
below).
Although Congress has generally provided the amounts requested by DOD in
its supplemental requests, it has been reluctant to provide the amount of flexibility
requested by DOD. In fact, with each supplemental request, Congress has been less
willing to accept the flexibility proposed by DOD.
Of the $40 billion appropriated in the Emergency Terrorism Response
Supplemental (ETR) passed on September 14, 2001 to combat terrorism, DOD
received $17.3 billion, almost entirely within the Defense Emergency Response
Fund, a flexible account. Of that total, DOD had discretion to allocate funds as long
as Congress was informed. For the remainder, Congress set levels within ten broad
categories for DOD spending. Congress also permitted DOD to move funding into
various appropriation accounts at its discretion in the FY2002 supplemental for the
bulk of the funding requested.
In the most recent supplemental, for FY2003, DOD requested that Congress
provide 95% of the funding in the Defense Emergency Response Fund (DERF) so
that DOD could transfer funds to various accounts as needs arise. Instead Congress
set up an new fund, the Iraq Freedom Fund, and allocated 25% of the funds requested
to that fund but required five-day advance notifications.

---

CRS-15
Table 6. Flexibility in DOD’s Supplemental Funding Since
September 11 Attacks
Emergency Terrorism
Funding Level
FY2002
FY2003
Response Supplemental
& Amount of
Supplemental
Supplemental
(P.L. 107-38 and P.L. 107-
Flexibility
(P.L. 107-206)
(P.L. 18-11)
117)
In Billions of Dollars
Flexible Funda
Request
21.163
11.300
59.863
Enacted
15.000
11.300
15.679
Regular Appropriations
Request
0.000
2.722
2.724
Enacted
2.300
2.722
46.908
Total Funding
Request
21.163
14.022
62.587
Enacted
17.300
14.022
62.587
As Percent of Total Funding
Flexible Fund
Request
100.0%
80.6%
95.6%
Enacted
86.7%
80.6%
25.1%
Regular Appropriations
Request
0.0%
19.4%
4.4%
Enacted
13.3%
19.4%
74.9%
Total Funding Received
Request vs.
81.7%
100.0%
100.0%
Enacted
Source: CRS calculations from CRS Report RL31829, CRS Report RL31005, CRS Report RL31406,
and appropriations conference reports and GAO Report, Defense Budget: Tracking of Emergency
Response Funds for the War on Terrorism, April 2003.
a In the ETR, DOD funds were appropriated into the Defense Emergency Response Fund (DERF)
except for a small amount of military construction funds, procurement funding, and Pentagon
Renovation Revolving Funds. In the FY2002 Supplemental, DOD funds were appropriated to
the DERF, which was made into a transfer account. In the FY2003 supplemental, funds were
appropriated into a new Iraq Freedom Fund, set up as a transfer account, or into regular
appropriations accounts.

---

CRS-16
Major Themes in the Administration’s
FY2004 Request
The overarching theme in the Administration’s FY2004 request is a call for
flexibility to transform not only U.S. military doctrine and technology, but also
military and civilian personnel systems and defense acquisition practices. According
to Secretary of Defense Rumsfeld, not only do “our armed forces need to be flexible,
light and agile,” but also “the same is true of the men and women who support them,”
in meeting the “frequent, sudden changes in our security environment,”26 including
the global war on terrorism.
To meet this goal, the Administration delivered a broad ranging legislative
proposal, entitled the “Defense Transformation for the 21st Century Act,” to Congress
on April 10, 2003 shortly before Congress’s two-week April recess. Among other
things, the legislative proposal would give the Secretary of Defense authority to re-
design the civil service system governing the 700,000 civilian employees in the
Department of Defense, provide additional flexibility in managing senior military
officers, modify certain acquisition requirements, and exempt DOD from certain
environmental statutes.
Some members of Congress expressed concern that DOD had delivered such an
ambitious proposal at a time when Congress was about to recess and shortly before
markup of the DOD authorization act was planned. Although DOD witnesses
discussed their plans to submit the proposal earlier in the year and met with
congressional staff over the past couple of months, the specific proposals were not
available before April 1027 (as noted above, CRS compares all of the proposed new
measures with current law in CRS Report RL31916, Defense Department
Transformation Proposal: Side by Side with Current Law, by Robert L. Goldich,
Gary J. Pagliano, Barbara L. Schwemle, and Thomas J. Nicola).
The Administration characterizes these proposals as the logical followup to
earlier efforts to transform weapons modernization and operational practices.
According to DOD, the FY2004 budget is the first budget to reflect fully President
Bush’s commitment to “challenge the status quo” and balance the need to meet
current challenges from the global war on terrorism and near-term threats with the
need to transform DOD in the longer term.28 DOD contends that transformation is
now fully underway with new emphasis placed on unmanned vehicles, precision
guided munitions, special operations forces, command, control, and communications
and missile defense (see discussion on modernization below), as well as the
26 Secretary of Defense Rumsfeld testifying before the Senate Armed Services Committee,
Defense Authorization Request for Fiscal Year 2004 and the Future Years Defense
Program, February 13, 2003, transcript; available from Reuters.
27 Statement of Deputy Secretary of Defense Paul Wolfowitz before the House Committee
on Government Reform, May 6, 2003, p. 4.
28 Secretary of Defense Rumsfeld testifying before the Senate Armed Services Committee,
FY2004 Budget, February 13, 2003; transcript available from Reuters.

---

CRS-17
establishment of a new command, NORTHCOM to focus on homeland security and
changes in training practices to emphasize joint operations.
DOD also argues that its proposals for military pay raises and other benefits and
its funding of operational training will ensure that recruitment and retention remain
high and that readiness goals continue to be met. Over the longer term, DOD plans
to review its current basing strategies in Europe and review the role of reserve forces
but these areas are currently under study and not incorporated in the FY2004 budget.
Key Issues in Congress
The major issues likely to be the focus of this year’s congressional debate are:
! DOD’s request for broad ranging authority to manage its civilian
workforce and senior military personnel as well as exemptions for
DOD to certain environmental laws;
! Whether DOD’s investment priorities are transformational,
affordable, and consistent with “lessons learned” from the war in
Iraq;
! Possibly revisiting the FY2005 base closure round due to be initiated
next year; and
! Longer-term Administration proposals that could affect global troop
deployments, the mix of active and reserve forces, and the mix of
civilian, contractor, and uniformed personnel.
Issues for Congress in DOD’s Legislative Package
Sent to Congress on April 10, 2003, DOD’s legislative proposal, the “Defense
Transformation for the 21st Century Act,” includes far-ranging provisions that would
allow the Secretary of Defense to set up a new personnel system for its 700,000
civilians, give the Secretary new flexibility to retain, move, and retire senior military
personnel, exempt DOD from certain environmental provisions, and change certain
acquisition rules.
The budget implications of DOD’s proposal are not obvious because DOD has
provided only the broadest outlines of its plans to reform its civilian personnel
system. Until that system is defined, it is not possible to know whether DOD’s
proposal would raise or lower its costs for civilian personnel. DOD did not present
its acquisition proposals as cost-saving measures. According to DOD, the main
rationale for its proposal is the need to provide additional flexibility to DOD in
carrying out its missions.
Status of Bills Addressing DOD Proposal. H.R. 1836 is the markup by
the House Government Reform Committee of DOD’s proposed new civilian
personnel system. Much of that bill was then incorporated in H.R. 1050, the FY2004
defense authorization bill as reported by the House Armed Services Committee on

---

CRS-18
May 14.29 The HASC approves changes to DOD civilian personnel management
proposal that were included in the Government Reform Committee markup, but does
not approve the major Administration proposals to change laws governing senior
uniformed officers and addresses only some of the Administration’s environmental
proposals. On the Senate side, the Armed Services Committee does not include any
of the major Administration personnel proposals in S. 1050, its version of FY2004
authorization bill.
A New Civilian Personnel System for DOD?
Perhaps the most
controversial provisions in DOD’s 205-page legislative proposal would permit the
Secretary of Defense to design and implement a new personnel system for the
700,000 civilians working for the Department of Defense. DOD’s proposal calls for
the Secretary of Defense to develop a system that is “flexible,” and “contemporary”
to meet DOD’s needs. Requesting discretion even broader than the temporary
authority given to the new Department of Homeland Security, DOD proposed that
the Secretary of Defense be permitted to develop its own rules for:
! defining positions,
! setting pay scales,
! designing hiring and firing systems,
! bargaining with employees,
! expanding early retirement options,
! hiring consultants and employees overseas,
! rewarding senior level employees.30
DOD’s proposal has been opposed by government employee unions and has
raised concerns among some Members of Congress, while it has been supported by
other organizations and some other legislators. Some are concerned about the
breadth of the authority requested by DOD, the decision to apply changes selectively
to almost half of the total civilian workforce, potential effects on government
workers, and the lack of specificity in DOD’s proposals. Others observers commend
DOD for addressing longstanding concerns about laws and regulations governing the
federal civilian work force and for proposing to develop a new system.31
Like the new Department of Homeland Security, DOD is seeking the authority
to design its own National Security Personnel System jointly with the Office of
29 The HASC did not include sections on NASA and the SEC but did include some
government wide provisions.
30 This section was prepared with the help of CRS analysts, Barbara Schwemle, Thomas
Nicola, Sharon Gressle, and Jon Shimabukuro. General Counsel, DOD, William J. Haynes
III,
letter
to
Speaker
of
the
House
Hastert,
April
10,
2003;
see
[http://www.defenselink.mil/dodgc/lrs/legispro.html]; See also CRS Report RL31916,
Defense Department Transformation Proposal: Original DOD Proposal Compared to
Existing Law by Gary J. Pagliano, Robert L. Goldich, Barbara L. Schwemle, and Thomas
J. Nicola; see also CRS Report RL31924, Civil Service Reform: H.R. 1836, Homeland
Security Act and Current Law, by Barbara Schwemle and Thomas Nicola.
31 House Government Reform Committee, Hearing on Civil Service and National Security
Personnel, May 6, 2003; transcript available from Reuters.

---

CRS-19
Personnel Management. Compared to DHS’s authority, however, DOD’s proposal
includes broader discretion because the Secretary of Defense could unilaterally
institute rules and procedures that DOD certifies are “essential for national security,”
would receive the authority permanently rather than temporarily, and could bargain
with employees at the national rather than the local level.32
DOD’s proposal, however, does not include specific provisions outlining how
it would design or implement its new system. For further information, DOD witness,
Under Secretary of Defense for Personnel and Readiness, David Chu, referred
Congress to DOD’s “Best Practices” plan for its demonstration projects that was
published in the Federal Register on April 2, 2003. Under its proposal, DOD would
continue to follow some of the current merit system principles and would be subject
to anti-discrimination statutes, but would be exempt from certain statutes governing
competitive hiring as well as laws defining procedures to discipline or remove
personnel.33
DOD is proposing to develop a new system for all its civilian personnel that
builds on its experience over the past twenty years with practices like pay banding
which gives managers greater flexibility to hire at different pay levels and to reward
performance, and has been used by DOD to attract and reward scientific and
technical personnel working at DOD’s research facilities.34 Some observers are
concerned about the expansion of “pay for performance,” systems because of the
difficulties in measuring employee performance. According to GAO’s work, most
of these systems, including those used by DOD, do not do a meaningful evaluation.35
Although DOD has had the authority to expand its personnel demonstration projects
to 120,000 civilians, over 15% of its workforce, DOD has only used its authority for
30,000 personnel.
To gain additional flexibility to remove, suspend, or discipline employees,
DOD seeks the authority to re-write the appeals process, though they do not specify
the changes they would seek. Employees could no longer appeal decisions to the
current Merit System Protection Board. To give greater ability to manage its
workforce, DOD is also requesting authority to offer buyouts. To simplify bargaining
with employees, DOD is also requesting the authority to bargain at the national rather
than the local level as is the current practice and would also be required to consult,
but not necessarily reach agreement with OPM thirty days in advance of negotiations.
32 General Counsel, DOD, William J. Haynes III, Letter to Speaker of the House Hastert,
April 10, 2003, Section 5 U.S.C. 9902 (a); see
[http://www.defenselink.mil/dodgc/lrs/legispro.html]
33 For example, DOD would no longer be required to follow the “rule of three, that requires
an agency to re-advertize if they don’t select a candidate from the top three. DOD would
also not need to follow current procedures governing adverse actions against employees.
34 Statement by Deputy Secretary Paul Wolfowitz before the House Committee on
Government Reform, May 6, 2003.
35 Statement by David M. Walker, Comptroller General of the United States, “Defense
Transformation: DOD’s Proposed Civilian Personnel System and Governmentwide Human
Capital Reform,” before the House Armed Services Committee, May 1, 2003, p. 3.

---

CRS-20
The new Department of Homeland Security did not receive national bargaining
authority.
DOD is also seeking the flexibility to hire personnel outside of the U.S. “as
determined by the Secretary to be necessary and appropriate,” and to negotiate
personal services contracts for national security missions without any restrictions
about the type of persons selected, an authority currently available to the CIA. Other
provisions would allow DOD greater flexibility to set pay levels for senior executive
service (SES) positions.
Congressional Action: Senate and House Markup.
S. 1050, the
Senate-reported version of the FY2004 DOD Authorization bill, does not include
DOD’s request for authority to set up a new civilian personnel management system,
ensuring that this will be a conference issue.
H.R. 1588 as reported, the House
version of the bill, modifies DOD’s proposal to make the authorities closer to those
provided to the Department of Homeland Security (DHS) rather than permitting
DOD the broader discretion that it requested. DOD would, however, be given a
special waiver authority that would allow the Secretary of Defense, with the approval
of the President, issue new rules without the agreement of the Office of Personnel
Management if they are necessary for national security (Section 9990(a)). Like DHS,
DOD would have flexibility to set pay scales and to change the appeals process but
would be subject to anti-discrimination statutes.
The House-reported version changes DOD’s proposal in the following ways:
! requires DOD to establish an independent appeals board to hear
employee grievances;
! limits DOD’s authority to waive current civil service rules on hiring
procedures (e.g. DOD must continue to rate applications);
! sets criteria for DOD’s performance management system including
that it follow merit principles, establish a link between the
performance and the agency’s strategic plan, involve employees, and
provide safeguards to employees.
DOD would also be allowed to bargain at the national level, an authority not
provided to DHS, and one likely to be controversial.
On June 4, 2003, the Senate Governmental Affairs Committee held a hearing
on S. 1166, a bipartisan bill to set up a National Security Personnel System. Since
several members of that committee also serve on the Senate Armed Services
Committees, the provisions in this bill may be taken into consideration during
conference on the FY2004 DOD Authorization Act. The major differences between
S. 1166 and the House-passed version in H.R. 1588 are:
! S. 1166 does not include the national security waiver that would
allow the Secretary of Defense to set personnel rules without OPM
agreement;
! specifies requirements for a pay-for-performance evaluation system;
! would not waive Title V, Chapter 71 on labor management relations;

---

CRS-21
! phases in coverage by the new system from 120,000 civilian
employees in FY2004 to more than 240,000 employees in FY2005
if the Secretary of Defense determines that DOD has a performance
management system and a pay formula that meet the criteria in the
act; and
! DOD provides the same total level of funding as would be needed
under the current system between FY2004 and FY2008.36
DOD’s Proposed Changes in Managing Senior Military and
Reservists. As part of its “transformational” package, DOD is also requesting a
series of provisions that would give the President and the Secretary of Defense
additional flexibility to select and retain DOD’s senior military leadership. Examples
include allowing the President to re-appoint Service Chiefs and the Chair and Vice-
Chair of the Joint Chiefs of Staff for as many two-year terms as desired, to repeal
mandatory terms for certain general and flag officers, and to re-assign many senior
officers in Senate-confirmed positions without returning to Congress. To retain
senior officers, DOD also wants to raise the normal maximum retirement age from
62 to 68 and modify retirement rules so that senior officers can retire after less than
three years (known as a time-in-grade rule) but still receive retirement based on their
highest rank.
According to DOD witnesses, these proposed changes would allow DOD to
move senior military leaders to where they are needed, to retain those whose skills
are important, and to retire those who may no longer be performing as needed. Critics
voice concern that these changes could reduce incentives for younger officers who
could see their opportunities limited by older officers who stay longer.37
Other proposals in this package would add flexibility to use reservists by
allowing DOD to activate reservists for an additional 90 days of training and by
expanding the reasons that the President can call up reservists to include domestic
disasters, accidents or catastrophes. DOD would also be allowed to provide medical
and dental screening of reservists preparing for mobilization.38
Congressional Action: Senate and House Markup. The Senate Armed
Services Committee (SASC) was unwilling to grant DOD broad ranging authority to
move, set retirement terms, and raise age limits for senior level military officers, but
did make permanent an existing authority that allows the Secretary of Defense to
permit officers above the grade of major to retire and still receive benefits based on
their current pay grade after two rather than three years in grade. In response to
DOD’s request for broad authority to use reserves in domestic crises, the SASC only
agrees to expand existing authority to use reserves in terrorist-related incidents. The
36 See S. 1166. Prepared with the help of Barbara Schwemle, CRS.
37 Testimony of Under Secretary of Defense David Chu before the House Armed Services
Committee, May 2, 2003, transcript; available from Reuters.
38 General Counsel, DOD, William J. Haynes III, letter to Speaker of the House Hastert,
April 10, 2003, Title 10, Sections 135, 136, and 137; see
[http://defenselink.mil/dodgc/lrs/legispro.html].

---

CRS-22
SASC does agree to provide medical and dental screening for reservists likely to
deploy.
Like the SASC, the HASC did not grant the Secretary of Defense broad
discretion to manage senior level military officers. The HASC bill would make
permanent a current authority to allow two rather than three years in grade for Lt.
Colonels and Colonels, and Commanders and Captains (O-5s and O-6s), and would
also permit DOD to reduce the requirement of three years in grade to one-year for
senior military officers (general and flag officers) as long as the Secretary certified
that their performance was satisfactory, a requirement that applies to about half of
DOD’s senior officer corps (O-8s to O-10s). The HASC also does not approve
DOD’s request to add up to 90 days to reserve training requirements but does agree
to provide medical and dental screening of reservists likely to deploy.
Proposed Acquisition Changes. In its legislative package, DOD includes
a variety of provisions designed to increase its flexibility to contract for major
defense weapons systems and information technology programs, receive waivers
from Buy American and domestic content requirements, and buy standardized
items.39
Two potentially controversial proposals would allow DOD to contract out for
firefighting and security guards at bases and would allow DOD to count work
performed by contractors at federally owned facilities as part of the 50% minimum
for in-house performance of depot work. Congress has consistently opposed allowing
DOD to hire private security guards and loosening the definition of work that could
be counted as “in-house”.40
Congressional Action: Senate and House Markup. The SASC was
willing to lift the prohibition on contracting out for one year only for firefighters who
were deployed. Concerning DOD’s request to expand the definition of depot work
that would be counted as in-house, the SASC recommends that only depot work
performed by a public-private partnership in a center of excellence would be
excluded from the tally.
The HASC did not include either of DOD’s requests to contract out firefighters
or security guards or expand the depot work that could be counted as “in-house.”
Other Organizational And Financial Proposals To Increase
Flexibility. Other potentially controversial proposals would give the Secretary of
Defense broad discretion to reorganize the department, transfer personnel, and be
exempt from current personnel caps. To increase financial flexibility, DOD is
requesting that the limit on transfers between appropriation accounts be raised from
39 General Counsel, DOD, William J. Haynes III, letter to Speaker of the House Hastert,
April 10, 2003, Title 10, Sections 201-206; see
[http://defenselink.mil/dodgc/lrs/legispro.html].
40 General Counsel, DOD, William J. Haynes III, letter to Speaker of the House Hastert,
April 10, 2003, Title 10, Sections 211 and 214; see
[http://defenselink.mil/dodgc/lrs/legispro.html],

---

CRS-23
the current level of $2.5 billion to 2.5% of total DOD spending or about $9 billion.
(DoD made this same request in the FY2003 supplemental, and received a higher
transfer limit but not the 2.5%.)41
Equally controversial may be DOD’s proposal to change the standard governing
awards of contracts to government entities versus private companies based on the A-
76 competitive sourcing rules. DOD proposes to use a “best value” rather than the
current lowest cost standard. A proposal that has been endorsed by both OPM and
DOD that is not likely to be controversial would transfer the DOD civilian personnel
currently performing security investigations to OPM.
DOD also proposes to
eliminate 184 reports to Congress that are currently required, ranging from reports
on specialized topics to more general reports on readiness levels and operation and
maintenance funding.42
Congressional Action: Senate and House Markup. The SASC did not
agree to give the Secretary of Defense authority to reorganize the department, transfer
personnel, or be exempt from ceilings on headquarters. The SASC did agree to
increase DOD’s transfer authority to $3 billion, $500 million higher than the limit in
the regular DOD bill but below the $9 billion level requested by DOD.
The HASC also did not give the Secretary of Defense authority to reorganize
DOD and set the annual transfer limit at the current $2.5 billion level.
Authority To Spend $200 million To Support Foreign Militaries. In
its request, DOD asks Congress to give it permanent authority to allocate up to $200
million to support “coalition forces,” or foreign military forces. Although this
request is similar to the request enacted in the FY2003 supplemental for $1.4 billion
for coalition forces who help the U.S. to combat terrorism, DOD’s request for
permanent authority could be controversial because it includes no provision for
congressional oversight. In the FY2003 supplemental, Congress requires DOD to
report by July 1, 2003 on its plan to allocate funding for coalition forces.43
Congressional Action: Senate and House Markup. Neither the SASC
nor the HASC approves DOD’s request for authority to spend up to $200 million for
coalition forces.
41 General Counsel, DOD, William J. Haynes III, letter to Speaker of the House Hastert,
April 10, 2003, Title 10, Sections 401-405,411;
[http://defenselink.mil/dodgc/lrs/legispro.html].
42 General Counsel, DOD, William J. Haynes III, letter to Speaker of the House Hastert,
April 10, 2003, Title 10, Sections 404, 405, and 421; see
[http://defenselink.mil/dodgc/lrs/legispro.html].
43 General Counsel, DOD, William J. Haynes III, letter to Speaker of the House Hastert,
April 10, 2003, Title 10, Section 441; see [http://defenselink.mil/dodgc/lrs/legispro.html],
and CRS Report RL31829, Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security, by Amy Belasco and Larry
Nowels.

---

CRS-24
DOD Again Requests Environmental Exemptions. As it did last year,
DOD again requests that military readiness-related activities be exempted from
provisions of a number of federal environmental laws, including the Clean Air Act,
the Endangered Species Act, the Marine Mammal Protection Act, and the Solid
Waste Disposal Act and “Superfund.” Last year, Congress was receptive to only one
of DOD’s environmental proposals, providing DOD with a targeted exemption from
the Migratory Bird Treaty Act. Critics have questioned DOD about the extent of the
impact on readiness activities and its limited use of waiver authorities included in
current law.
This year, environmental provisions again appear likely to be contentious on the
House and Senate floor.
The House-reported version of the bill includes the
Administration’s proposed readiness exemptions from provisions of the Endangered
Species Act and the Marine Mammal Protection Act, while the Senate-reported bill
includes exemptions from the Endangered Species Act. Amendments to delete both
measures were rejected in the House committee markup.
Congressional Action: Senate and House Armed Services
Committee Markup. The SASC agrees only to allow DOD bases to be exempt
from critical habitat requirements under the Endangered Species Act only if it has
submitted an integrated natural resource management plan that addresses the
protections required under the Act.
The HASC agrees to modified versions of DOD’s requests for exemptions from
provisions of the Endangered Species and the Marine Mammal Protection Act.
Affordability and Mix of DOD’s FY2004 Investment Programs
A perennial issue in defense policy has been whether the Defense Department
will be able to afford all of the major weapons modernization programs that have
been on the drawing boards, particularly toward the end of the decade, when a
number of new programs are planned to be in full scale production. The issue has
been complicated by the Defense Department’s growing commitment to defense
transformation, which implies an effort to accelerate selected programs and perhaps
add some entirely new ones. During the 2000 presidential election campaign, then-
Governor Bush promised to “skip a generation” of weapons programs in order to free
up funds for more transformational priorities.
Last year, and again this year, the Defense Department has tried to calculate the
amount that is being devoted to modernization programs that it regards as particularly
transformational. According to DOD Comptroller Dov Zakheim, these programs add
up to $24.3 billion in the FY2004 budget and $239 billion over the period of the six-
year FY2004-FY2009 future years defense plan (FYDP). Under Secretary Zakheim
said that DOD made room for these programs in part by cutting about $82 billion
from projected service budgets over the course of the FYDP. The cuts include
termination of a number of Army programs to upgrade current weapons, early
retirement of 26 Navy ships and 259 aircraft and an attendant reduction of 10,000 in

---

CRS-25
the Navy’s personnel end-strength, and early retirement of 115 Air Force fighter
aircraft and 115 mobility/tanker aircraft, as well as efficiencies.44
In the FY2004 budget, the Defense Department requested $74.4 billion for
weapons procurement and $61.8 billion for research, development, test, and
evaluation (RDT&E). Major aspects of the Administration request, and some key
potentially controversial issues include the following.
Army Transformation. In recent years, the Army has been pursuing three
major initiatives simultaneously:
(1) upgrades to the current “legacy” force,
including improvements in M1 tanks and Bradley Fighting Vehicles; (2)
development and deployment of an “interim” force made up of six brigades equipped
with Stryker wheeled armored vehicles and designed to be more rapidly deployable
than heavy armored forces; and (3) pursuit of an “Objective Force” include the
“Future Combat System,” a family of new armored vehicles and other systems
designed to fundamentally change the way the Army will fight in the future. In
addition, the Army has been continuing to develop the Comanche helicopter, though
late last year, the Defense Department decided to cut planned total Comanche
procurement by about half.
In the FY2004 budget request, the Defense Department cut back a number of
planned upgrades of Army legacy systems, including high-profile M1 and Bradley
upgrades. In the wake of the Army’s success in the Iraq war, there was extensive
discussion in Congress about the wisdom of these planned cuts. The House Armed
Services Committee-reported version of the authorization adds $727 million to the
request to continue M1 and Bradley upgrades along with some related Army upgrade
programs.
Congressional Action: Senate and House Markup. Table 7 shows
changes made during markup by the House and Senate Armed Services Committee.
44 Briefing by DOD Comptroller Dov Zakheim, “FY2004 Defense Budget,” February 6,
2003.

---

CRS-26
Table 7: House and Senate Armed Services Markup of Major Army Acquisition Programs
(amounts in millions of dollars)
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
RAH-66 Comanche
—
— 1,079.3
—
—
1,079.3
—
—
1,079.3 —
UH-60 Blackhawk
10
167.0
70.2
19
279.8
70.2
17
237.0
74.1 House adds $112.8 mn. for 9 aircraft for Army National Guard.
Senate adds $70.7 mn. for 7 aircraft in accordance with Army
priorities and for air inlet upgrades ($0.8 mn.) and $3.9 mn. for
R&D for C2 integration..
UH-60 Blackhawk mods.
—
138.5
—
—
38.5
100.0
—
38.5
100.0 Both House and Senate transfer $100 mn. from proc. to R&D
for UH-60M upgrade.
CH-47 Upgrades
—
516.0
—
—
522.0
—
—
531.0
— House adds $6 mn. for crashworthy seats. Senate adds $15 mn.
for MH-47G mods.
AH-64 Mods
—
58.9
—
—
74.4
—
—
58.9
— House adds $15.5 mn. for bladefold kits.
AH-64D Apache Longbow
—
776.7
—
—
776.7
—
—
776.7
—
—
Bradley Base Sustainment
—
113.3
—
—
372.1
—
—
113.3
— House adds $258.8 mn. for Bradley M3A2 Operation Desert
Storm ``D+’‘ upgrades.
M1 Abrams
—
361.6
—
—
645.6
—
—
361.6
— House adds $424 mn. for M1A2 to M1A2 SEP upgrades, cuts
Mods/Upgrades
$108 mn. from new engine program due to delays and $32 mn.
from other upgrades — net add $284 mn.
Stryker Interim Armored
301
955.0
46.0
301
955.0
46.0
301
955.0
46.0 —
Vehicle
HIMARS (Rocket
24
124.2
87.4
24
124.2
87.4
24
124.2
— Note: C-130 air transportable version of MLRS.
Launcher)
Hellfire Missiles
—
33.1
—
—
33.1
—
—
76.1
— Senate adds $43 mn. for laser Hellfire II missiles — request
was just for Longbow Hellfires.
Javelin (Anti-Tank Missile)
901
140.7
—
901
140.7
—
901
180.7
— Senate adds $40 mn. for command launch units for Army
National Guard.
ATACMS Penetrator
—
—
55.1
—
—
55.1
—
—
— House urges no obligation of funds until DOD explores more
cost effective options to attack hardened sites.

---

CRS-27
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
Logistic/Theater Support
—
—
3.8
1
33.0
3.8
—
—
11.3 House adds $33 mn. in proc. for Logistic Support Vessel
Vessel
(Army now has 8); Senate adds $7.5 mn. in R&D for composite
hull design Theater Support Vessel to replace LSVs.
Sources: H.Rept. 108-106; S.Rept. 108-46.

---

CRS-28
Navy Programs. 45 Key Navy ship-acquisition programs for FY2004 include
the Virginia (SSN-774) class submarine program, the Littoral Combat Ship (LCS)
program, the Arleigh Burke (DDG-51) class Aegis destroyer, the DD(X)
next-generation destroyer program, the San Antonio (LPD-17) class amphibius ship
program, the Lewis and Clark (TAKE-1) auxiliary ship program, the Trident
cruise-missile submarine (SSGN) conversion program, and the Aegis cruiser (CG-47
class) conversion program. The FY2004 budget also includes, among other things,
continued advanced procurement funding for CVN-21, an aircraft carrier to be
procured in FY2007.
One issue in congressional hearings on the FY2004 Navy program concerns the
planned size and structure of the Navy. The 2001 Quadrennial Defense Review
(QDR) revalidated the plan for a 310-ship Navy established by the 1997 QDR, but
also stated that force-structure goals in the 2001 QDR, including the 310-ship goal,
were subject to change pending the maturation of DOD’s transformation efforts. In
February 2003, in submitting its proposed FY2004 defense budget, DOD officials
stated that they had launched studies on future requirements for undersea warfare and
future options for forcibly entering overseas military theaters. These studies have the
potential for changing, among other things, the planned number of attack submarines
and the planned size and structure of the amphibious fleet. Since attack submarines
and amphibious ships are two of the four major building blocks of the Navy (the
others being aircraft carriers and surface combatants), DoD, by launching these two
studies, appears to have taken steps to back away from the 310-ship plan. At the
same time, the Secretary of Defense has explicitly declined to endorse a plan for a
375-ship fleet that has been put forward in recent months by Navy leaders.
As a result of these events, there is now uncertainty concerning the planned size
and structure of the Navy: DoD may no longer support the 310-ship plan, but neither
has it endorsed the 375-ship plan or any other replacement plan. This uncertainty
over the planned size and structure of the Navy affects surface combatants as well as
submarines and amphibious ships, because the biggest single difference between the
310-ship and 375-ship plans is in the area of surface combatants. The 310-ship plan
includes 116 surface combatants, all of which are cruisers, destroyers, and frigates,
while the 375-ship plan includes 160 surface combatants, including not only cruisers,
destroyers, and frigates, but as many as 60 smaller Littoral Combat Ships as well.
Congressional Action: Senate and House Markup. Table 8 shows
changes to the Administration’s request made by the House and Senate Armed
Services Committees during markup.
45 This section was written by Ronald O’Rourke.

---

CRS-29
Table 8: House and Senate Armed Services Markup of Major Navy Acquisition Programs
(amounts in millions of dollars)
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
Carrier Replacement Program
— 1,186.6
339.2
1,186.6
339.2
—
1,186.6
—
—
Carrier Refueling Overhauls
—
367.8
—
367.8
—
—
367.8
—
—
Missile Submarine Conversion
2 1,167.3
—
2 1,167.3
—
2
1,167.3
—
—
Submarine Refueling Overhauls
—
164.4
—
164.4
—
—
412.4
— Senate adds $248 mn. for overhauls in FY2004
DDG-51 Destroyer
3 3,198.3
205.7
3 3,198.3
250.7
1
3,219.3
205.7 House adds $35 mn. in R&D for S-band radar and $10
mn. for open Aegis architecture. Senate adds $21 mn. in
proc. for ship modernization.
LPD-17 Amphibious Transport
1 1,192.0
8.0
1 1,192.0
8.0
1
1,192.0
8.0 —
LHD-8 Amphibious Assault
—
355.0
—
—
355.0
—
—
355.0
—
—
Ship
Prior Year Shipbuilding Costs
—
635.5
—
—
635.5
—
—
635.5
—
—
DD (X) Destroyer
—
— 1,038.0
—
— 1,042.0
—
— 1,038.0 House adds $4 mn. for knowledge projection for
maintenance.
T-AKE Auxiliary Cargo Ship
2
722.3
—
2
722.3
—
2
722.3
— Note: In National Defense Sealift Fund, not in Navy
Procurement.
Sources: H.Rept. 108-106; S.Rept. 108-46.

---

CRS-30
Aircraft Programs. One of the most expensive elements of the Defense
Department’s long-term modernization plan is procurement of a number of new
advanced aircraft, including the Air Force F/A-22 fighter, the Navy/Marine Corps
F/A-18E/F aircraft; and the multi-service F-35 Joint Strike Fighter. In addition, the
Air Force is continuing to procure C-17 airlift aircraft, and the Marine Corps is
continuing to develop the V-22 tilt rotor aircraft, while DOD is continuing to review
whether to go ahead with a proposal to allow the Air Force to lease Boeing 767s as
tanker aircraft.
The F/A-22 has been a particular focus of attention recently because of
continued cost growth in the program and because of the Air Force’s continued desire
to expand the program. For its part, the Air Force sees the program as its highest
priority and, in the long run, would like to increase the total number of aircraft to be
procured, particularly to build a version of the aircraft configured especially for a
deep strike ground attack role to replace F-15E aircraft as they retire in the future.
The Air Force even changed the formal designation of the aircraft from the F-22 to
the F/A-22 to emphasize its ground attack capabilities.
The Department of Defense, however, has continued to approve only enough
aircraft for about three wings of aircraft for the air superiority mission, and a key
budget decision in the FY2004-FY2009 FYDP was that the Air Force may plan to
buy only as many aircraft as it can with the total funds projected last year to be
available for the program. With continued cost growth, this number has shrunk from
the 330 aircraft the Air Force has wanted to outfit three wings (each with 72
deployable aircraft, plus attrition reserves, aircraft in repair, etc.), to 295 and most
recently to 276. For its part, Congress has imposed a cap on the total development
cost of the program, which the Air Force wants to Congress to lift.
A few years ago, the House Appropriations Committee proposed terminating F-
22 development, though funding was eventually provided. This year, the F-22 has
been an issue in the Senate, though not in nearly so drastic a way. The Senate
committee-reported bill reduces procurement from the 22 aircraft requested to 20 in
order to allow the Air Force to adjust planned production and delivery dates.
The issue of tanker leasing continues to be unresolved. In the FY2002 defense
appropriations conference report, Congress approved a proposal to allow the Air
Force to begin negotiations with Boeing to lease as many as 100 767 aircraft to be
converted to operate as air-to-air refueling tankers. This measure was controversial
because Federal budget rules generally discourage leases on the premise that direct
purchase will be cheaper for the government in the long run, though it may require
more up-front money in agency budgets. Through all the controversy, the Air Force
and Boeing continued to try to hammer out the details of a lease agreement. The
resulting agreement, apparently with several options, has now been under review in
the Office of the Secretary of Defense for the past few months, but Secretary
Rumsfeld has declined to speculate when he will make a final decision and
recommendation to Congress on the issue.
Congressional Action: Senate and House Markup. Table 8 shows
changes to the Administration’s request made by the House and Senate Armed
Services Committees during markup.

---

CRS-31
Table 8: House and Senate Armed Services Markup of Major Air Force Acquisition Programs
(amounts in millions of dollars)
House
Senate
Request
Authorization
Authorization
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
F-22
22 4,225
936.5
22
4,064.4
936.5
20 4,008.4
936.5 House cuts $161 mn. Senate cuts 2 aircraft and $217
.4
mn.
E-8C Joint STARS mods.
—
36.0
58.4
—
63.0
58.4
—
36.0
58.4 House adds $27 mn. in proc. for reengining.
F-16C/D Mods./Post
— 314.5
87.5
—
328.7
107.5
—
372.7
87.5 House adds $14.2 mn. in proc. and $20 mn. in R&D
Production
for upgrades. Senate adds $48 mn. in proc. for
engines and $10 mn. for upgrades.
F-15 Mods./Post
— 204.9
112.1
—
244.9
128.6
—
241.4
128.6 House adds $40 mn. in proc. and $16.5 mn. in R&D
Production
for upgrades. Senate adds $36.5 mn. in proc. and
$16.5 mn. in R&D for upgrades.
JPATS Trainer
52 280.6
—
52
280.6
—
52
280.6
—
—
C-17 Globemaster
11 3,502
184.1
12
3,680.4
—
11 3,498.4
— House added $182 mn. for 1 aircraft. House and
.1
Senate transferred -$10 mn. for Multi-Year
Procurement and +$6.3 mn. for mods. at AF request.
C-130/C130J Airlift
5 641.7
13.6
5
647.8
13.6
5
654.6
13.6 House adds $6.1 mn. for radar upgrades for Air Guard.
Aircraft
Senate adds $6.1 for radar. upgrades and $6.8 mn. for
satellite comm.
F-35 Joint Strike Fighter
—
— 2,194.1
—
—
2,194.1
—
—
2,194.1 —
B1-B Bomber Mods.
— 100.1
—
—
120.4
—
—
100.1
— House adds $20.3 mn. for mods.
B-2 Stealth Bomber Mods.
— 114.9
176.8
—
166.7
176.8
—
136.6
176.8 House adds $24.7 mn. AF transfer request and $27.1
mn. for upgrades. Senate adds $24.7 mn. AF transfer
request.
Sources: H.Rept. 108-106; S.Rept. 108-46.

---

CRS-32
Missile Defense.
The Administration requested a total of $9.1 billion in
FY2004 for missile defense programs, including development programs that it
requests be funded through the Missile Defense Agency and procurement of the
Patriot PAC-3 missile that it requests in the Army budget. The Administration’s
major new initiative has been to pursue accelerated fielding of a limited National
Missile Defense capability to include, among other things, up to 20 ground-based
interceptor missiles based in Alaska and California.
Last year, with the Senate under Democratic control, a major issue was the
acquisition process that the Administration has proposed for missile defense
programs. The FY2003 defense authorization included measures requiring more
detailed reports on costs and on planned missile defense tests to Congress.
The
authorization also prohibited development of a nuclear-tipped interceptor for missile
defense.
And Congress reduced funding for some space-based programs and
increased funding for some ground-based theater missile defense systems.
Nuclear Weapons Programs. Last year, a major debate in Congress
concerned an Administration proposal to study development of a new “Robust
Nuclear Earth Penetrator” warhead and to set limits on R&D on any new or modified
nuclear weapons.46
The debate continued this year in response to the
Administration’s request that Congress lift the ban on conduct of R&D into low-yield
nuclear weapons that has been in effect since 1993 known as the Spratt-Furze
provision, Section 3136. That section states:
It shall be the policy of the United States not to conduct research and
development which could lead to production by the United States of a new low-
yield nuclear weapons, including a precision low-yield warhead.47
As part of its new Nuclear Posture Review issued in 2002, some Administration
officials suggested that the United States should investigate the use of modified
nuclear weapons to destroy deeply-buried and hardened targets in rogue nations such
as North Korea.48 In its legislative request this year, DOD argues that lifting the ban
is necessary to train the next generation of nuclear weapons scientists and engineers
and explore “the full range of technical options” to respond to “new or emerging
threats,” including using low-yield nuclear weapons against buried and hardened
bunkers that could contain chemical and biological agents.49 To carry this out, DOD
46 H.Rept. 107-772, Conference Report on National Defense Authorization Act for Fiscal
Year, 2003, p. 786-p.788. Sec. 3143 of the FY2003 DOD Authorization Act required that
DOE specifically request funds for R&D for research, development or that could lead to
production of any new nuclear weapon. Section 3146 provided $15 million for the Robust
Nuclear Earth Penetrator program 30 days after the Secretary of Defense submitted a report
that specified military requirements, described targets and assessed conventional
alternatives.
47 Section 3136, P.L. 103-160.
48 CRS Report RS21133, The Nuclear Posture Review: Overview and Emerging Issues by
Amy F. Woolf, p. 5.
49 General Counsel, DOD, William J. Haynes III, Letter to Speaker of the House Hastert,
(continued...)

---

CRS-33
requested $6 million to conduct “advanced concepts” research into low-yield nuclear
weapons and $15 million to continue R&D to do research on a Robust Nuclear Earth
Penetrator that could modify either the B61 or the B83 nuclear weapon, large nuclear
weapons in the current inventory to a lower-yield version.
Congressional Action: Modify Restrictions on R&D for Low-Yield
Nuclear Weapons. Although both houses agreed to modify the current restrictions
on conducting R&D on low-yield nuclear weapons (less than five kilotons), each
house adopted a different approach with different policy implications, making this
likely to be a significant conference issue. In the House version, U.S. policy would
be modified to ban “development and production” of low-yield nuclear weapons but
DOE would be allowed to conduct “concept definition, feasibility studies and
detailed engineering design.”50
As passed, the Senate version lifts the ban but states that the Department of
Energy would not be authorized to conduct testing, acquisition or deployment, and
requires that DOE may not begin engineering development or any later phase unless
“specifically authorized” by Congress.51 The Senate also adopted by voice vote an
amendment that would require specific authorization for DOE to pursue engineering
development of a Robust Nuclear Earth Penetrator weapon.52
Although the language in both houses appears to permit DOE to conduct basic
research and feasibility studies, the language in the House continues the general
policy prohibition on low-yield nuclear weapons but modifies the point at which it
applies, whereas the Senate changes U.S. policy and requires specific congressional
action to proceed to engineering development or beyond. There may be some
ambiguity about exactly where the line is drawn in terms of when DOE would need
to return to Congress either to lift the ban (House) or receive specific authorization
(Senate).
The language in the Senate version requiring that DOE could not begin
engineering development of a low-yield nuclear weapon unless specifically
authorized by Congress was added on the floor in an amendment offered by Senator
Warner and passed by 59 to 38 (S.Admt. 752).53 Prior to that, the Senate debated but
did not adopt an amendment offered by Senator Reed (S.Admt. 751) that would have
modified the ban on R&D of low yield nuclear weapons by applying it to
development engineering, an approach closer to the House version.54
49 (...continued)
March 3, 2003, Subtitle C, Sec. 221; see [http://defenselink.mil/dodgc/lrs/legispro.html].
50 Section 3111 in H.R.1588 as engrossed and passed by the House, and HRept. 108-106,
p. 434.
51 Section 3131 in S. 1050 as reported, and S.Rept. 108-46, p. 447-p. 448.
52 Congressional Record, May 21, 2003, p. S6805.
53 Congressional Record, May 20, 2003, p. S6692.
54 Congressional Record, May 20, 2003, p. S6690.

---

CRS-34
On the floor, an unsuccessful attempt occurred in the Senate to restore the ban
and reverse the action taken in markup.
After a wide-ranging debate on the
amendment offered by Senators Feinstein and Kennedy to restore the ban, the
amendment was tabled by a vote of 51 to 43 (S.Admt. 715). Both supporters and
opponents of the ban focused on the Administration’s interest in exploring the
possibility of using low yield nuclear weapons as a way to attack deeply buried,
hardened bunkers that could contain chemical or biological weapons, a new mission
for nuclear weapons beyond their original purpose of deterrence. Although military
leaders support lifting the ban, they have not identified a specific requirement for a
low-yield nuclear weapon.55
To those who oppose the ban, research to explore the use of a low-yield nuclear
weapon or a nuclear earth penetrator weapon against hardened, underground bunkers
should be explored as a method that could be effective and could generate less
collateral damage. On the other hand, supporters of continuing the ban argued that
even a 5-kiloton nuclear weapon would generate large losses of life and much
collateral damage.
Supporters of the ban also argue that exploring this new mission for nuclear
weapons could lead to requirements to test new nuclear weapons and undercut the
U.S. commitment to the underground nuclear testing moratorium as well as U.S.
policy to prevent the spread of nuclear weapons to other nations. Those who want to
lift the ban argue that U.S. actions to re-institute research on new nuclear weapons
would not affect U.S. efforts to discourage nations from pursuing nuclear weapons.
Whether a nuclear weapon is necessary for this mission is also controversial.
Some observers believe that only a nuclear version could destroy hardened, deeply-
buried bunkers, and others argue that the U.S. could develop precise conventional
bunker-busting weapons or other approaches that could be equally or more effective
than nuclear weapons in disabling a hardened bunker or containing chemical or
biological weapons.56 Some scientists and engineers have questioned whether a low
yield nuclear weapon could be effective against a deeply-buried underground facility,
particularly if its precise location is not known.57 Other conventional alternatives
could include developing non-nuclear bunker-busting weapons with more precise
targeting capability, using several penetrating missiles simultaneously to increase
destructive capability, disabling facilities with electromagnetic pulse weapons, or
monitoring any movement of material by maintaining surveillance on exits of
underground bunkers.58
55 Congressional Record, May 20, p. S6663-S6690, passim.
56 Congressional Record, May 20, 2003, p. S6663 to p. S6690, passim.
57 Geoffrey Forden, “USA Looks at Nuclear Role in Bunker Busting,” Jane’s Intelligence
Review, March 12, 2002, p. 1, 3, 4-5; see [http://www.janes.com/press/pc020312_1.shtml];
see also, Sidney Drell, James Goodby, Raymond Jeanlos, and Robert Peurifoy, “A Strategic
Choice: New Bunker Busters Versus Nonproliferation, Arms Control Today, March 2003.
58 Michael A. Levi, “The Case Against New Nuclear Weapons,” Issues in Science and
Technology, Spring 2003.

---

CRS-35
Opponents of the ban also argue that this new research is necessary to train a
new generation of nuclear scientists, a point cited by the Administration in its
request. Supporters argue that nuclear scientists can be trained in other ways.
On the House side, Congresswoman Tauscher’s proposed amendment to transfer
$21 million from research into nuclear versions of low yield weapons to R&D on
conventional bunker-busting weapons was defeated by a vote of 199 to 226 (H.Admt.
4).59
Personnel Pay and Benefits Issues and Readiness Issues
As it did last year, DOD has proposed a mixture of across-the-board and
targeted pay raises along with continuation of a plan initiated in the Clinton
Administration to reduce out-of-pocket housing costs for military personnel living
in private housing. The Administration is proposing pay raises for uniformed
personnel ranging from 2% to as high as 6.5% for targeted grades and skills with an
overall average 4.1%. The FY2004 budget also includes funds to reduce out-of-
pocket off-base housing costs from a maximum of 7.5% of pay to 3.5%, with costs
reduced to zero in FY2005.
Permitting concurrent receipt of military retirement and disability payments was
not included in the FY2004 budget resolution passed by both houses. In the 107th
Congress, concurrent receipt was a critical personnel issue that was strongly opposed
by the Administration and stymied passage of the defense authorization bill. DOD
is currently implementing a compromise proposal passed by Congress last year,
which provides special compensation benefits to a targeted group of military retirees
whose disabilities are a product of combat or combat-related activities.
Overall funding for operation and maintenance is continuing to grow at more
than 2.5% per year above inflation under Administration projections — about the
historical rate of growth per active duty troop. Although concerns about military
readiness appear to have abated, some have questioned how long DOD can sustain
the deployment of substantial numbers of troops in Iraq, Afghanistan, and elsewhere
without jeopardizing morale and readiness goals.
Congressional Action on Pay and Benefits for Active-Duty and
Reservists.
As in the past, Congress opted for a larger pay raise than the
Administration has proposed. The Senate committee-reported bill approves a 3.7%
minimum across-the-board pay raise for all uniformed service personnel, though it
approves targeted pay raises ranging from 5.25 to 6.25%. The overall average pay
raise in the Senate bill is 4.15%. The House version includes pay raises ranging from
2% to 6.5% with an average of 4.1%.
Senate Adds Concurrent Receipt for Military Retirees On The Floor.
On June 4, 2003, the Senate adopted by voice vote the Reid amendment that would
provide full concurrent receipt for all military retirees with twenty or more years of
59 Congressional Record, May 20, 2003, p. S6690, and Congressional Record, May 22,
2003, p. H4572.

---

CRS-36
service who are eligible for VA disability benefits. Currently, military retirees must
take a dollar-for-dollar offset against their military retirement in order to receive non-
taxed VA disability benefits related to their military service.
The Administration opposes lifting the 111-year old prohibition against
concurrent receipt of benefits that stem from the same period of service because of
both its high cost and the precedent for other federal benefit programs with similar
provisions. This provision is likely to be a major issue during conference and
thereafter if it is included in the final bill.
Estimated by CBO to cost the government $4.4 billion in FY2004 and $56.5
billion over ten years, Congress would have to find offsets of $1.1 billion in
discretionary budget authority in FY2004 within the defense budget to fund the cost
of accrual payments for current active-duty personnel and $15.4 billion over the next
ten years (see Table 9 below).60 DOD opposed this provision last year suggesting
that financing the benefit would hurt defense readiness by taking funds from other
higher-priority programs.61
The bulk of the cost of this new benefit would be payments of about $17.9
billion over the next five years and $41.1 billion over the next ten years to about
700,000 current beneficiaries, which would be financed by general revenues from the
Treasury. Since these funds outlay immediately, this would have immediate effects
on the deficit. According to CBO, over 90% of the $41.1 billion in payments over
the next ten years would go to military retirees whose disabilities stem from service
but developed after they left military service.62 Military retirees with twenty or more
years of service may receive disability ratings from the Veterans Administration at
any time after they leave military service, ratings that can be revised over the course
of their lifetime as they grow older.
Senate Adds New health Care Benefit For Non-active Duty
Reservists.
Another provision added on the Senate floor with major cost
implications is the Graham/Daschle amendment that would provide:
! for non-active duty reservists: access to TRICARE medical benefits
for enlisted personnel who pay annual premiums of $330 for an
individual and $560 for a family, and officers who pay $380 for
individuals and $610 for families; and
60 Like military retirement, DOD would pay for the estimated cost of the benefit to current
active-duty personnel in its annual budget and Treasury general revenues would finance the
cost for current beneficiaries. CBO Testimony to Subcommittee on Personnel, Senate
Armed Services Committee, “The Cost of Providing Retirement Annuities and Veterans’
Disability Compensation to Certain Retirees of the Uniformed Services,” March 27, 2003.
61 See CRS Report RS21327, Concurrent Receipt of Military retirement and VA Disability
Benefits: Budgetary Issues, by Amy Belasco for last year’s debate; and CRS Issue Brief
IB85159, Military Retirement: Major Legislative Issues, by Robert Goldich.
62 CBO Testimony to Subcommittee on Personnel, Senate Armed Services Committee, “The
Cost of Providing Retirement Annuities and Veterans’ Disability Compensation to Certain
Retirees of the Uniformed Services,” March 27, 2003, p. 12.

---

CRS-37
! for activated reservists: payment of their current health care
premiums up to the per capita costs of TRICARE.
If enacted, CBO estimates that this provision would cost $466 million in
FY2004 rising to $2.1 billion by FY2008 as more non-active duty reservists opt for
the coverage because of the attractiveness of the rates (see Table 9 below). The
proposed annual premium of $560 is less than one-third of the national average of
$1,800 for family coverage in 2000. Most of the cost is to pay for access to
TRICARE benefits for non-active duty reservists, 80% of whom already have health
care coverage according to a DOD survey.63
Recent DOD regulations provide that activated reservists and their families are
eligible for TRICARE health care coverage when called up for 30 days or more. For
the first thirty days, employers are required to continue health care coverage, and
employers sometimes continue coverage during longer activations, including paying
the employer premium. According to a 2000 DOD survey, most activated reservists
who had been mobilized once maintain private coverage and 80% of employers
continue to pay their share of the premium.64
If both these provisions are enacted, the government would have to cover
additional cost of $4.8 billion in FY2004 and $24.3 billion in the next five years.
63 GAO-02-829. Defense Health Care; Most Reservists Have Civilian Health Coverage But
More Assistance Is Needed When TRICARE Is Used, September 2002, p. 8.
64 “Reserve Component Health Care;” see the Department of Defense web page on
TRICARE at [http://www.tricare.osd.mil/reserve]; GAO-02-829. Defense Health Care;
Most Reservists Have Civilian Health Coverage But More Assistance Is Needed When
TRICARE Is Used, September 2002, p. 5-6, p. 10.

---

CRS-38
Table 9. Estimates of the Cost of Concurrent Receipt and TRICARE for Reservists
(in millions of dollars)
Type of
2004 - 2004 -
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Spending/Benefit
2008
2013
Discretionary
Spendinga
1,569
2,226
2,969
3,323
3,558
8,819
1,641
1,748
1,864
1,968
6,372
14,151
Concurrent Receipt
1,103
1,185
1,274
1,359
1,452
1,547
1,641
1,748
1,864
1,968
6,372
14,151
TRICARE for
466
1,041
1,695
1,964
2,106
NA
NA
NA
NA
NA
7,272
NA
reservists
Non-active Duty
[393]
[994] [1,678] [1,953] [2,099]
NA
NA
NA
NA
NA
[7,117]
NA
Active-duty
[73]
[47]
[17]
[11]
[7]
NA
NA
NA
NA
NA
[155]
NA
Mandatory
Spendingb
3,285
3,341
3,525
3,778
3,985
4,205
4,407
4,621
4,847
5,127
17,913
41,119
Concurrent Receipt
3,285
3,341
3,525
3,778
3,985
4,205
4,407
4,621
4,847
5,127
17,913
41,119
TRICARE for
0
0
0
0
0
0
0
0
0
0
0
0
reservists
Total Government
4,854
5,567
6,494
7,101
7,543 13,024
6,048
6,369
6,711
7,095
24,285
NA
spending
a Discretionary spending is appropriated annually.
b Mandatory spending is generally for entitlement programs and financed by Treasury general revenues.

---

CRS-39
Basing Structure, Role of the Reserves, and Force Mix Issues
In congressional testimony, Secretary of Defense Rumsfeld raised two
additional issues that may arise in future years: changing DOD’s overseas basing
structure to give DOD a smaller “footprint” with potentially fewer forces located in
western Europe, and reviewing the role of the reserves in light of homeland security
needs and DOD’s heavy reliance on reserves for the Global War on Terrorism and
the Iraq war. DOD is currently studying both issues. Re-locating U.S. overseas bases
to eastern European countries and increasing the number of unaccompanied tours
could potentially save money but DOD has not fleshed out its proposals.
In the FY2004 budget, DOD asks Congress to merge funding for active-duty and
reserve forces in order to increase flexibility in allocating funds. This proposal has
sparked opposition from reserve proponents who see it as a way to reduce the
authority of the heads of the National Guard and Reserves.
A major issue this year may be possible restrictions on the next miliary base
closure round. Two years ago, Congress approved a new round of military base
closures in 2005, following procedures that were used in earlier rounds in 1991,
1993, and 1995.
Congressional Action. The Senate rejected an amendment that was offered
by Senators Dorgan and Lott that would cancel the 2005 round of base closures. The
Administration has signaled that a veto is likely if Congress includes either a delay
or a cancellation of the 2005 round, which the Administration considers essential to
its plans to reduce the size and cost of DOD’s infrastructure and free up funds for
transformational programs.65 During floor debate, Senator Dorgan argued that a new
round should be delayed because of the uncertainties of determining the size and
make-up of DOD’s force structure after the September 11th terrorist attacks and
because of the economic effects on communities of potential base closures.66
The House Armed Services Committee-reported authorization bill includes a
provision that would require the Defense Department to preserve a sufficient basing
structure to support a possible expansion of the force in the future, though the full
committee reversed a subcommittee measure that would have eliminated the 2005
round.
The House and Senate authorizers did not include the Administration’s proposal
to merge personnel accounts of the active-duty and reserve forces.
Number of Active and Reserve Duty Personnel. A frequent issue in
recent years has been whether current active duty end-strength is sufficient. Some
legislators have proposed increases in end-strength, particularly for the Army, to fill
out deployable units and thus ease pressures on the force. The Defense Department
65 OMB, Statement of Administration Policy on H.R. 1588 - National Defense Authorization
Act for Fiscal Year 2004, May 22, 2003, p. 1; available on the White House web site at
[http://whitehouse.gov/omb/legislative/sap/108-1/hr1588sap-h.pdf].
66 Congressional Record, May 20, page S644ff.

---

CRS-40
has resisted these measures. The Navy, in fact, reduces its end-strength by 10,000
over the next five years reflecting a reduction in the number of ships.
In
congressional testimony this year, DOD witnesses have said that a broader review of
the mix of active-duty, reserve, civilian, and contractor personnel has been under way
and some far-reaching proposals could be in the works. Secretary of Defense
Rumsfeld testified that DOD has determined that some 300,000 military personnel
are currently performing non-military duties.67 DOD is looking to rely more heavily
on contractors within the Army in particular, setting ambitious goals for its
competitive sourcing or contracting-out program.
Congressional Action: Senate and House Markup. The House Armed
Services Committee did not agree to a proposed Navy reduction of 1,900 in active
duty end-strength (which was part of the 6-year savings from early retirement of
some ships that the Administration emphasized in its initial budget request). The
committee also added 4,340 positions to authorized end-strength for the other
services for a total increase of 6,240 compared to the Administration request. The
committee also cited substantial shortfalls in end-strength identified by each of the
services and criticized the Administration’s opposition to any increases in the size of
the force in the future. The Senate Armed Services Committee agreed to the
Administration’s end-strength request.
Congressional Action: House and Senate Floor Action.
An
amendment by Representative Goode passed on the floor would allow the Secretary
of Homeland Security to place a request for military personnel to assist in border
patrol to deal with national security threats posed by terrorist, drug trafficking, or
illegal aliens. The Senate did not include a comparable provision. This proposal
could prove controversial because DOD is likely to object to additional missions for
its forces levied by the Department of Homeland Security.
67 Testimony of Secretary of Defense Rumsfeld before Senate Armed Services Committee,
FY2004 DOD Authorization Request, February 13, 2003.

---

CRS-41
Legislation
Congressional Budget Resolution
H.Con.Res. 95 (Nussle)
A concurrent resolution establishing the congressional budget for the United
States Government for fiscal year 2004 and setting forth appropriate budgetary levels
for fiscal years 2003 and 2005 through 2013. Reported by the House Budget
Committee (H.Rept. 108-37), March 17, 2003. Approved by the House (215-212),
March 21, 2003. Senate struck all after the enacting clause and substituted the
language of S.Con.Res. 23, as amended, and agreed to the measure by unanimous
consent in lieu of S.Con.Res. 23. Conference report filed (H.Rept. 108-71), April 10,
2003.
Conference report agreed to in the House (216-211), April 11, 2003.
Conference report agreed to in the Senate (51-50), April 11, 2003.
S.Con.Res. 23 (Nickles)
An original concurrent resolution setting forth the congressional budget for the
United States government for fiscal year 2004 and including the appropriate
budgetary levels for fiscal year 2003 and for fiscal years 2005 through 2013.
Resolution agreed to in the Senate (56-44), March 26, 2003. Senate incorporated this
measure into H.Con.Res. 95 as an amendment and agreed to H.Con.Res. 95 in lieu
of this measure (unanimous consent), March 26, 2003.
Defense Authorization
S. 1050 (Warner)
An original bill to authorize appropriations for fiscal year 2004 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. Ordered to be reported by
the Senate Armed Services Committee, May 8, 2003. Reported by the Senate Armed
Services Committee (S.Rept. 108-46), and placed on the Senate Legislative Calendar,
May 13, 2003. Passed the Senate on June 4, 2003, by voice vote and inserted into
H.R. 1588 as received from the House. Conferees appointed on June 4.
H.R. 1588 (Hunter)
A bill to authorize appropriations for fiscal year 2004 for military activities of
the Department of Defense, to prescribe military personnel strengths for fiscal year
2004, and for other purposes. Committee consideration and markup held and ordered
to be reported, May 14, 2003. Passed the House on May 22, 2003, and sent to the
Senate.

---