Order Code RL31805
CRS Report for Congress
Received through the CRS Web
Authorization and Appropriations
for FY2004: Defense
Updated July 17, 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

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

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Authorization and Appropriations
for FY2004: Defense
Summary
Congress is now considering the FY2004 budget for the Department of Defense
(DOD). On July 14, 2003, the Senate began its consideration of its version of the
FY2004 DOD Appropriations bill with a total of $369.2 billion. The Senate
substituted the text of S. 1382 into H.R. 2658 and began debate. Debate continued
July 15 and 16 focusing on the cost of Iraq and Afghanistan and the effect on the
deficit, the effects of long deployments on reserves, and the quality of intelligence
about Iraq and weapons of mass destruction. Debate is continuing July 17, 2003.
The Senate Appropriations Committee completed its markup and unanimously
reported its bill on July 9 (S.Rept. 108-87). On July 8, 2003, the House passed its
version with the same total funding level by a vote of 399 to 19 after marking up and
reporting the bill by voice vote on June 26, the previous week (H.R. 2658, H.Rept.
108-187)
The House and Senate Appropriations Committee markups are consistent with
DOD’s budget allocation, which was set at $3.1 billion below the request and $4.5
billion above the FY2003 appropriations. To meet the allocation for DOD set by the
appropriators, both houses had to cut the Administration’s request by $3.1 billion.
The programmatic impact of the cut is cushioned, however, because appropriators
achieved $2 billion on the House side and $3 billion on the Senate side of the cut by
rescinding funds in the FY2003 supplemental that were intended to cover later-
occurring costs in Iraq. The Administration supports passage of either bill but
objects to the rescission of FY2003 supplemental funds.
The Administration requested $399.7 billion for national defense including not
only DOD appropriations but defense-related programs funded in other bills. In their
respective versions of the FY2004 DOD Authorization Act passed on May 22, 2003,
both houses authorized $400.5 billion for national defense covering funding for DOD
and defense-related activities in other agencies. That amount is consistent with the
FY2004 Budget Resolution but $800 million more than the request. Conferees have
been appointed by the Senate but not by the House.
Conferees are likely to wrestle with several major issues in the authorization
conference including 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, R&D restrictions on new and modified nuclear weapons, expansions of Buy
American Act restrictions, and proposed exemptions to environmental provisions.
The Senate version of the FY2004 DOD Authorization Act includes two
provisions with significant cost implications that the Secretary of Defense has said
would be likely to trigger a presidential veto: 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.

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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

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Status of Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
FY2004 DOD Appropriations Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Military Construction Appropriations Bills . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FY2004 Defense Authorization Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Major Changes in House and Senate Appropriations Committee Markup . . 9
Likely Major DOD Authorization Conference Issues . . . . . . . . . . . . . . . . . 11
Amendments to the FY2004 Authorization Acts . . . . . . . . . . . . . . . . . . . . . 13
Overview and Budget Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Annual Growth for DOD Slows In Later Years in FY2004 Budget
Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Trends in DOD Spending Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
DOD Receives $93.1 Billion in Supplemental Appropriations Since
September 11 Attacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Major Themes in the Administration’s FY2004 Request . . . . . . . . . . . . . . . . . . 26
Key Issues in Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Issues for Congress in DOD’s Legislative Package . . . . . . . . . . . . . . . . . . . 27
Affordability and Mix of DOD’s FY2004 Investment Programs . . . . . . . . 36
Personnel Pay and Benefits Issues and Readiness Issues . . . . . . . . . . . . . . . 66
Basing Structure, Role of the Reserves, and Force Mix Issues . . . . . . . . . . 71
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
List of Tables
Table 1A. Status of FY2004 Defense Appropriations: H.R. 2658 and S. 1382 . . 8
Table 1B. Status of FY2004 Defense Authorization: H.R. 1588 and S. 1050 . . . 9
Table 2. FY2004 DOD Appropriations: Congressional Action . . . . . . . . . . . . . . 11
Table 3. National Defense Budget Function and DOD Budget,
FY1999-FY2008, Administration Projections . . . . . . . . . . . . . . . . . . . . . . . 18
Table 4. Status of FY2004 Budget Resolution (H.Con.Res. 95,
S.Con.Res. 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 5. FY2004 Budget Resolution: DOD Request and Congressional
Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Table 6. Administration Request: National Defense Budget Function by
Title, FY2001-FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 7. Flexibility in DOD’s Supplemental Funding Since September 11
Attacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Table 8A. House and Senate Action on Major Army Acquisition
Programs — Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

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Table 8B. House and Senate Action on Major Army Acquisition
Programs — Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Table 9A. House and Senate Action on Major Navy Acquisition
Programs — Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Table 9B. House and Senate Action on Major Navy Acquisition
Programs — Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Table 10A. House and Senate Action on Major Aircraft
Programs — Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Table 10B. House and Senate Action on Major Aircraft
Programs — Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Table 11. House and Senate Action on Missile Defense Funding . . . . . . . . . . . 58
Table 12. Estimates of the Cost of Concurrent Receipt and TRICARE
for Reservists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

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Authorization and Appropriations for
FY2004: Defense
Most Recent Developments
On July 17, 2203, the fourth day of debate in the Senate on its version of H.R.
2658, the FY2004 DOD appropriations bill continues. Before beginning debate on
July 24, the Senate substituted its bill as reported, S. 1382, into H.R. 2658, the House
bill. Like the House version, the Senate bill totals $269.2 billion. The Senate
debated amendments requiring information about the cost of the Iraq and
Afghanistan, the identity of enemy combatant detainees, intelligence information,
Iraq reconstruction plans, amendments on TRICARE for non-active duty reservists,
and earmarks in the bill. The Senate leadership hopes to complete the bill on July 17.
The House passed its bill on July 9 by a vote of 399 to 19.
The House and Senate Appropriations Committee markups are consistent with
DOD’s budget allocation, which was set at $3.1 billion below the request and $4.5
billion above the FY2003 appropriations (H.Rept. 108-187 and S.Rept. 108-87). To
meet the allocation for DOD set by the appropriators, both houses had to cut the
Administration’s request by $3.1 billion. The programmatic impact of the cut is
cushioned, however, because appropriators achieved $2 billion on the House side and
$3 billion on the Senate side of the cut by rescinding funds in the FY2003
supplemental that were intended to cover later-occurring costs in Iraq.
According to scoring rules, rescissions are counted as a credit in the year when
they are passed even though prior year monies — in this case, FY2003 — are cut.
This allowed the appropriators to meet their FY2004 target without reducing funding
for FY2004 programs by the amount of the rescission. The Administration objected
to the House rescission of funds for the war and occupation of Iraq.
Appropriators in both houses are anticipating that an additional supplemental
to cover the cost of U.S. operations in Iraq in FY2004 could offset the rescission of
FY2003 supplemental monies or other cuts made in FY2004. The Administration
opposes the rescission of FY2003 supplemental funds contending that this will
reduce its flexibility to meet “emerging urgent security and reconstruction
requirements.” A FY2004 supplemental is widely anticipated.
The conference on the FY2004 DOD authorization, H.R. 1588, is expected to
begin sometime soon once the House appoints its conferees. Although House
authorizers had hoped for quick action by July 21, 2003, the House has not yet
appointed its conferees and action appears to be stalled. The authorizers will face
several contentious issues including responding to the Administration’s request for
a new National Security Personnel System for DOD’s civilian employees, restrictions

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CRS-2
on R&D for new and modified nuclear weapons, proposed exemptions to
environmental statutes for DOD, and Buy American Act provisions. Both bills
authorize $400.5 billion for national defense. Although this amount is consistent
with the FY2004 Congressional Budget Resolution (H.Con.Res. 95), it is $800
million more than the amount requested by the President and $3 billion higher than
the amount provided by the appropriators.
Conference negotiations may also be difficult because of potential
Administration veto threats if any of the following four provisions are included:
restrictions on base closures or Buy American provisions that are in the House
version, or concurrent receipt and TRICARE for non-activated reservists that are in
the Senate version.1
Status of Legislation
FY2004 DOD Appropriations Bills
Senate Floor Action. On July 14, the Senate began debate on its version of
the FY2004 DOD Appropriations bill. Its first action was to substitute the text of S.
1382 into the House bill, H.R. 2658. Debate continued July 15 and July 16 with the
leadership hoping to complete action by July 17, 2003.
Debate in the Senate focused on the availability of information on current and
future costs of Iraq and Afghanistan and the effect on the deficit, the quality and
availability of intelligence information related to Iraq, and the effects of the war on
reservists. Several amendments were considered on these topics.
On July 16, 2003, the Senate took the following actions on amendments related
to the cost of U.S. military operations and occupation in Iraq and Afghanistan.
! By a vote of 53 to 41, tabled the Dorgan amendment (S.Admt. 1246)
that would have required the President to submit a budget
amendment for the cost of U.S. military operations in Iraq and
Afghanistan;
! By a vote of 50 to 45, tabled the Boxer amendment (S.Admt. 1271)
requiring monthly reports on the cost, number of U.S. military
personnel, foreign contributions of personnel and defense goods,
number of casualties and contracts in Iraq;
! By a vote of 52 to 43, tabled the Kennedy amendment (S.Admt.
1273) requiring a report within 30 days from the President on U.S.
strategy for reconstruction, security, humanitarian assistance,
1 Letter from Secretary of Defense Rumsfeld to Chair Duncan Hunter dated July 8, 2003.

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CRS-3
reconstruction, and a schedule for the U.S. to seek U.N. approval of
a multinational force and NATO participation in Iraq.2
On July 15, and July 16, 2003, the Senate also considered the following
amendments about the effects of deployments on reservists.
! By a vote of 93 to 2, adopted the Daschle amendment (S.Admt.
1269) that stated the Senate’s support for providing TRICARE
medical benefits to non active-duty reservists as provided in the
Senate version of the FY2004 DOD Authorization Act, H.R. 1588;3
! By a vote of 64 to 31, rejected the Byrd amendment (S.Admt. 1244)
that would have limited overseas deployments for reservists to 180
days within a one-year period compared to the current statutory limit
on reserve mobilizations of 24 consecutive months at any one time;
! Tabled the Stevens amendment (S.Admt. 1255) that would have
established a commission to examine the effects of overseas
deployments on reservists.4
On July 16, 2003, the Senate considered amendments related to enemy
combatant detainees and intelligence related to Iraq and took the following action.
! By a vote of 52 to 48, tabled the Bingaman amendment (S.Admt.
1268) requiring a report on individual detained as enemy combatants
by the U.S. government;
! By a vote of 51 to 45, tabled the Corzine amendment (S.Admt.
1275) setting up a national commission to review intelligence
information to review the development and use of intelligence
information on Iraq.
By a vote of 79 to 16 on July 16, the Senate also tabled a McCain amendment
(S.Admt. 1270) to delete funding for specific projects in the FY2004 DOD
appropriations bill, and by voice vote on July 15, agreed to the Stevens amendment
(S.Admt. 1244) to provide full funding for 12 additional weapons of mass destruction
civil support teams.
Senate Markup. On July 9, the Senate Appropriations Committee marked up
and reported its version of the FY2004 DOD appropriations bill, S. 1382, with a total
of $369.2 billion, the same amount as is included in H.R. 2658, the House bill (no
2 See Congressional Record, July 16, 2003.
3
Neither the Senate nor the House version of H.R. 2658, FY2004 DOD Appropriations
bills, dos not provide the funding because the authorization bill has not been finalized.
4 Congressional Record, July 15, p. S9371 - S9391. The statutory limit of 24 consecutive
months applies to the activation authority known as partial mobilization which is currently
in effect.

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CRS-4
report number). Floor debate could begin as soon as Friday, July 11.5 (See Table 1A
for congressional action by appropriators. See Table 2A and section below for
congressional action by authorizers.)
To meet its 302 (b) allocation from the Appropriations Committee, the Senate
bill proposes to rescind $3.2 billion from the Iraq Freedom Fund, a flexible fund set
up in the FY2003 Emergency Supplemental for Iraq to provide for costs occurring
later in the year (P.L. 108-11).6 The Senate bill cuts $3.2 billion from unobligated
funds in the Iraq Freedom Fund, $1 billion more than the $2 billion rescission in the
House bill. The Administration opposed the House rescission and is therefore likely
to oppose the Senate rescission for reducing its flexibility (see below).7 (See Table
2 for funding effects of appropriators’ markup.)
Major Changes to Investment Programs. The Senate increased funding
for procurement programs above the request by $1.2 billion. Major changes to the
request include:
! approval of a five-ship multiyear contract for the Virginia class
submarines, two below the DOD request;
! a $70 million add for seven addition Blackhawk helicopters;
! a $35 million add for long-lead items for the Stryker brigades and
$100 million more for fielding and equipment for the Stryker
Brigade signaling its support;
! an additional $236.3 million for the LHD-8;
! a $450 million addition for refueling of two Los Angeles class
submarines;
! full funding of the Littoral Combat System, a new, smaller ship
designed for coastal operations despite concerns about the fast-track
acquisition approach;
! retained a buy of 22 F-22 Raptor aircraft as requested but reduced a
funding by $161 million for anticipated savings;
! the Senate supported DOD’s plans to phase out funding for Bradley
Fighting vehicles and M1 tank upgrades, setting up an issue with the
House which provided additional funding and rejected DOD’s plans
to phase out these “legacy” programs;
! a $700 million addition for equipment for National Guard and
Reserve units.8
5 Niels C. Sorrells and Joseph J. Schatz, “Appropriations: Defense Spending Bill Easily
Passes House, Remains on Fast Track in Senate,” CQ Today, July 8, 2003.
6
See CRS Report RL31829, Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security.
7 See Section 8119 in S. 1382 for rescission. See OMB, “Statement of Administration Policy
on H.R. 2658,” July 8, 2003 for Administration position on House rescission; see
[http://www.whitehouse.gov/omb/legislative/sap/108-1/hr2658sap-h.pdf.]
8 Senate Appropriations Committee handout at markup, July 9, 2003, and Niels C. Sorrells
and Joseph J. Schatz, “Appropriations: Defense Spending Bill Easily Passes House,
(continued...)

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CRS-5
For additional discussion of congressional changes to investment programs, see
section entitled, “Affordability and Mix of DOD’s FY2004 Investment Programs”
and Table 8, Table 9, and Table 10.
Changes to R&D Programs. The Senate appropriators increased funding
for R&D programs by over $1.7 billion, $1 billion less than the House’s addition.
The Senate bill includes:
! an additional $200 million for more interceptors for the Ground
Based Mid-Course Missile Defense System;
! an addition of $150 million for breast cancer research and $85
million for prostate cancer research; and
! numerous changes to other programs.
Funding Prohibition And Restrictions On Total Information
Awareness (Terrorist Information Awareness) R&D Program. S. 1382
prohibits funding for R&D for the Total Information Awareness program (renamed
the Terrorism Information Awareness system in DOD’s FY2004 submission), a
controversial R&D program designed to collect and analyze a wide assortment of
information to detect potential terrorists. The Senate bill also includes restrictions on
implementation or deployment of Total Information Awareness programs similar to
those included in the House version of the FY2004 DOD Appropriations Act, H.R.
2658. Similar restrictions on deployment were originally included in the
Consolidated Appropriations Resolution of FY2003 (P.L. 108-7).9
The
Administration objected to the Senate cutoff of funding.10
Military Personnel Changes. The Senate bill makes minor changes to the
DOD request for funding of military personnel pay and benefits, supporting the 4.1%
average military pay raise and ongoing improvements in housing and other benefits
for military personnel (see section below on Administration request). S. 1382 does,
however, make other changes to the DOD request (see below).
Senate Bill Refuses to Consolidate Accounts of Active Duty and
Reserve Personnel. S. 1382 does not consolidate accounts that fund pay and
benefits for National Guard and Reserve with those for active-duty military personnel
as requested by DOD, endorsing the action of Senate authorizers and the House
authorizers and appropriators. The Senate Appropriations Committee rejected the
DOD’s contention that additional flexibility was needed to manage those accounts.
8 (...continued)
Remains on Fast Track in Senate,” CQ Today, July 8, 2003.
9 See Section 8120 in S. 1382 and Section 8124 in H.R. 2658; for previous language, see
Section 111 of P.L. 108-7. For a discussion of the original controversy about this program,
see CRS Report RL31786, Total Information Awareness Programs: Funding, Composition,
and Oversight Issues by Amy Belasco.
10
OMB, “Statement of Administration Policy on S. 1382, Department of Defense
Appropriations Bill, FY2004,” July 14, 2003; [http://www.whitehouse.gov/omb/
legislative/sap/108-1/s1382sap-s.pdf].

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CRS-6
Instead, the Senate appropriators consolidated budget activities within the reserve
accounts to give additional flexibility to Guard and Reserve commanders without
reducing congressional oversight.
No Funding of Concurrent Receipt. The Senate bill did not provide
funding for the full concurrent receipt that was authorized in the Senate version of
the FY2004 DOD Authorization Act (H.R. 1588) because of uncertainty about
whether the proposed new benefit to provide both retirement and disability benefits
to military retirees would be included in the final version of the act. If the benefit —
or some form of it — is provided, DOD would be required to fund it by transferring
monies from existing programs or requesting additional funds. Last year, the
Administration threatened to veto the DOD authorization if concurrent receipt was
included and the Secretary of Defense has reiterated that position in a recent letter to
conferees.11
Reductions to O&M. S. 1382 reduces O&M funding by $1.4 billion
compared to the $3.6 billion decrease in the House bill (see Table 2). Like the
House, most of the Senate decreases reflect fact-of-life changes, such as the $1.0
billion cut for South West Asia operations in Iraq that are no longer needed, or for
financing cuts that reflect prices for support services that are likely to be lower than
anticipated. The Senate did not, however, adopt cuts for efficiencies in base
operations support, use of consultants, services contracts, and other administrative
activities that were taken by the House appropriators.
House Floor Action. The House passed H.R. 2658, its version, by a vote of
399 to 19 on July 8. Several amendments were offered by members and then
withdrawn after the Chair and ranking member of the House Appropriations
Committee offered to work with the members to meet their concerns. By a vote of
358 to 57, the House rejected an amendment proposed by Congressman Hostettler
that would have prohibited spending any funding related to the 2005 round of base
closures.12 Earlier, the House passed by voice vote the Lewis amendment to reduce
Navy Operation and Maintenance Funding by $96 million and transfer $31 million
to various other programs.13
The Administration supported H.R. 2658 but objected to the decision by House
appropriators to rescind $2 billion in funds in the FY2003 Supplemental (P.L. 108-
11) in the Iraq Freedom Fund, contending that it would reduce “flexibility to address
emerging urgent security and reconstruction requirements.”14
House Markup. On June 26, 2003, the House Appropriations Committee
completed its markup of the FY2004 DOD appropriations bill and reported the bill
by voice vote (see Table 1A). The bill provides $369.2 billion for DOD, a total that
11 Letter from Secretary of Defense Rumsfeld to Chair Duncan Hunter dated July 8, 2003.
12 Congressional Record, July 8, 2003, p. H.6302 - p. H6303 and p. H.6318.
13 Congressional Record, July 8, 2003, p. H. 6300 - p. H6302.
14
OMB, “Statement of Administration Policy on H.R. 2658,” July 8, 2003; see
[http://www.whitehouse.gov/omb/legislative/sap/108-1/hr2658sap-h.pdf.]

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CRS-7
is consistent with the 302 (b) allocation of funds to DOD made by the House and
Senate Appropriations Committees but $3 billion below the amount assumed by the
budget committees in the FY2004 budget resolution.15 The House Appropriations
Committee filed its report on July 2, 2003 (H.Rept. 108-187).
The total funding provided reflects a $3.1 billion reduction to the
Administration’s request and $4.5 billion over the FY2003 enacted level (including
the $10 billion provided in P.L. 108-7, the FY2003 Consolidated Appropriations
Resolution, but excluding the $62.6 billion provided in P.L. 108-11, the FY2003
Emergency Wartime Supplemental).
There is some controversy at this time about whether the $3 billion reduction
will be restored in a later supplemental. The FY2004 DOD request did not include
funding for operations in either Afghanistan or Iraq. After markup, Defense
Subcommittee Chair Lewis told reporters that he had expected an additional
supplemental from the Administration a few weeks ago to cover operations in Iraq.16
DOD Comptroller Zakheim, however, has stated that the $62.6 billion FY2003
supplemental is sufficient for 2003. More recently, Under Secretary Wolfowitz
suggested that a supplemental for DOD may be needed but that estimating costs at
this time was difficult, particularly for Iraq.17 That comment, however, appears to
refer to uncovered costs in FY2004 costs for Iraq and Afghanistan, a supplemental
that could be proposed in the next fiscal year.18
Of the $3.2 billion decrease, $2 billion reflects a rescission of unobligated funds
in the Iraq Freedom Fund, a flexible account set up in the FY2003 Emergency
Supplemental (P.L. 108-11) to fund later occurring costs in Iraq. Although the
rescission is counted against the total budget authority needed for FY2004
appropriations (reflecting when the change is made), the effect is to reduce FY2003
funding. This cushions the programmatic effect of the cut in FY2004. Earlier
jockeying about the amount to be allocated to DOD by the Appropriations
Committees included proposals to rescind funding in the FY2003 supplemental (see
“DOD’s Appropriations Allocation”).
To reach the lower level, the House markup also cut funding by $1 billion to
reflect the end of U.S. efforts to maintain the no-fly zone in Iraq and by about $3.3
billion for various financing and efficiency measures in operation and maintenance
and military personnel. At the same time, the House appropriators added $2.8
billion for various RDT&E programs and almost $1 billion for procurement
15 The Appropriations Committees are not required to adopt the amounts assumed in the
budget resolution. See H.Rept. 108-171 and S.Rept. 108-77.
16 Inside Defense, “Lewis: DOD Likely to Need 2004 Supplemental for Iraq Costs,” Jun2
26, 2003.
17 Inside Defense, “Wolfowitz: ‘Very Possible’ DOD Will Need Supplemental Spending
Bill,” June 18, 2003.
18 Congressional Quarterly Weekly, “Defense Panel Struggles With Shortfall in Funding For
Overseas Campaigns,” by Niels C. Sorrels, June 21, 2003.

---

CRS-8
programs (see Table 2 below). Many of the actions of the House appropriators
endorsed previous action by the House Armed Services Committee in its markup.
Table 1A. Status of FY2004 Defense Appropriations:
H.R. 2658 and S. 1382
Conference
Subcommittee
Report
Markup
House
House
Senate Senate
Conf.
Public
Report Passage Report Passage Report
Approval
Law
House Senate
House Senate
7/9/03
7/2/03
7/8/03
7/10/03.
—
—
—
—
—
6/18/03
H.Rept. (399-19) S.Rept.
108-187a
108-87
a. Full committee markup took place on June 26, 2003; the report was filed on July 2, 2003.
Military Construction Appropriations Bills
The House passed H.R. 2559, its version of the FY2004 military construction
appropriations on May 22, 2003, providing $9.2 billion for military construction and
family housing as requested by the Administration. The Senate Appropriations
Committee reported S. 1357, its version, on June 26, 2003. On July 11, 2003, the
Senate passed the bill by 91 to 0.19
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 (see Table
1b).20 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
19 See CRS Report RL31810, Appropriations for FY2004: Military Construction, by Daniel
H. Else.
20 Congressional Record, May 23, 2003, p. S7115 and Congressional Record, June 4, p.
S7280-S7295.

---

CRS-9
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).21
Table 1B. Status of FY2004 Defense Authorization:
H.R. 1588 and 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.
Major Changes in House and Senate Appropriations
Committee Markup
Table 2 below shows the changes to the Administration’s request in the House
Appropriations Committee markup of June 26, 2003. In order to reduce total DOD
spending by $3 billion as well as add funds for selected procurement and R&D
programs, the House appropriators rescinded $2 billion from the FY2003
supplemental and reduced DOD’s request in Operation and Maintenance (O&M) by
$3.6 billion to reflect a variety of new circumstances, price changes, and
efficiencies.22
21 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.
22 This section was prepared based on the draft report and bill of the House Appropriations
Committee. The bill number is H.R. 2658, and the report is H.Rept. 108-187.

---

CRS-10
The largest savings was from a rescission of $2 billion from the FY2003
supplemental allocated to the Iraq Freedom Fund based on uncertainty in the timing
of expenses for the Iraq war. This change may also reflect recent comments by DOD
Comptroller Dov Zakheim that some expenses for Iraq have been less than
anticipated.
The House appropriators also reduced O&M by $1 billion to reflect the fact that
the Air Force no longer needs funds to maintain “no fly” zones over Iraq, endorsing
earlier action by the House authorizers. In a series of general provisions, the
appropriators adopted various financing and efficiency cuts proposed by the
authorizers, such as cuts to transportation (Section 8119) and other support costs
(Section 8101) because of the higher volume of transportation services and parts as
a result of the deployments and war in Iraq. With higher volume, overhead costs are
spread over a larger base, reducing average prices for peacetime as well as wartime
supplies and services.23 In addition, the House Appropriators made cuts to
information technology programs (Section 8099) and consultants contracts (Sec.
8094) in anticipation of efficiencies and better management practices by DOD.
Additional savings of $675 million are garnered by the decision of House
appropriators and authorizers not to accept a DOD proposal to set up a new Refined
Petroleum Products transfer account to cover the cost of unanticipated changes in
fuel prices (see section entitled, “Scoring Differences between Congress and the
Administration” below). The House appropriators also reduced Military Personnel
funding to reflect a variety of pricing changes.
Funds freed up by these cuts were then applied to increases in selected areas of
Operation and Maintenance. The House appropriators also endorsed the action of the
House authorizers by increasing procurement funding for Bradley upgrades and
Abrams tanks, Blackhawk helicopters, and Tomahawk tactical missiles. Other
procurement programs were cut, such as the multiyear for a Virginia class submarine
and F-22 Raptor and the C-17A. (See section entitled, “Affordability and Mix of
DOD’s FY2004 Investment Programs” for more detailed discussion.) The House
appropriators made a variety of changes to R&D programs, including increases for
a next generation bomber, medical research, and force protection devices. The
markup funds most of DOD’s request for missile defense.
23 These parts and services are purchased through DOD’s working capital funds. Prices to
the O&M customers that were set in January 2004 in the FY2004 budget did not anticipate
the Iraqi war. When costs are less than anticipated, the working capital funds operate at a
profit and build up cash beyond the amount needed to finance their operations. The standard
practice is to reduce prices to the customers the following year.

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CRS-11
Table 2. FY2004 DOD Appropriations: Congressional Action
(in billions of dollars)
House
Senate House
FY2003 FY2004
House
Markup
Senate
Markup
Title
vs.
Enacted Request Markup
vs.
Markup
vs.
Senate
Request
Request
Military Personnel
93.0
98.9
98.3
-0.7
98.9
0
.7
Operation and
112.9
117.0
113.3
-3.7
115.6
-1.4
2.2
Maintenancea
Procurement
70.5
72.7
73.6
.9
73.8
-1.1
.2
RDT&E
57.9
61.8
64.6
2.8
63.6
-1.7
-1.1
Revolving &
2.6
3.5
2.8
-0.7
1.7
-1.8
-1.1
Management
Funds
Other DOD
17.4
17.8
18.1
0.3
18.3
-.5
-.2
Programs
Related Agencies
0.5
0.4
0.4
0.0
.4
-0
-0
General
[-4.0]
[0.1]
[-4.1]
[-4.0]
[-3.4]
[-.7]
[-.7]
Provisionsa
Iraq Freedom
0
0
-2.0
-2.0
-3.2
-.1
0
Fund
Rescissionb
Scorekeeping
0.0
0.1
0.0
0.0
0
-3.2
-1.1
Adjustment
TOTALc
354.7
372.2
369.2
-3.0
369.1
— 3.1
-.1
Sources: CRS adjusted title totals for the effect of general provisions using amounts included in the
language of the general provisions. FY2004, see H.R. 2658 and S. 1382. For FY2003, see P.L. 107-
248.
[ ] Square brackets indicate total amount of funding for general provisions that is allocated by title
in Table 2.
a. Of the $4.0 billion decrease for general provisions in the House version of the FY2004 DOD
appropriations act, H.R. 2658 allocates $2.0 billion to O&M appropriations and $2 billion is a
rescission to the $15.7 billion provided in the Iraq Freedom Fund for later costs of the war and
occupation in the FY2003 supplemental. According to scoring rules, that decrease counts as a
reduction to FY2004 appropriations. Of the $3.4 billion in reductions from general provisions
in S. 1382, $3.2 billion is from a rescission to the Iraq Freedom Fund. About $1.8 billion of
the deceases in FY2003 that were made in general provisions affected O&M appropriations.
b. The Iraq Freedom Fund is a flexible account set up to cover later costs of the war, which could not
be allocated to specific appropriation accounts.
c. Difference is rounding: total funding is $369.193 billion in the House bill and $3.143 billion in the
Senate bill.
Likely Major DOD Authorization Conference Issues
Several issues that are likely to be difficult to resolve during the FY2004
authorization conference include:
! restrictions on R&D for new and modified nuclear weapons;
! the proposed new National Security Personnel System;

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CRS-12
! exemptions to environmental statutes for DOD; and
! broadening the application of Buy American Act restrictions.
Low Yield Nuclear Weapons.
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 up
to engineering development 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 (see additional discussion in section, “Modify
Restrictions on R7D for Low-Yield Nuclear Weapons”). A parallel debate may take
place in the Energy and Water appropriations bill where House appropriators
signaled their concern by reducing funding for the Robust Nuclear Earth Penetrator
from $15 million to $5 million and eliminated funding for Advanced Concepts
Initiative, which could fund concept studies on low yield nuclear weapons. Since
Senate appropriators did not reduce funding in markup, this is likely to be a
conference issue in the energy and water appropriations bill.24
New Personnel System for DOD Civilians. The House version of the
DOD Authorization includes much of what the Administration proposed for a
separate, new National Security Personnel System (NSPS) for DOD’s 746,000 DOD
civilians. An attempt to add civil service protections to the House bill on the floor
was 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. The bill includes additional protections for
civil servants as well as some of the Administration’s proposal (see section, “A New
Civilian Personnel System for DOD?” below).
Environmental Exemptions for DOD.
Although the Administration
proposed a wide range of exemptions to various environmental laws for DOD, only
two are addressed in the House or Senate bills: exemptions to the Endangered
Species Act and the Marine Mammal Protection Act. The House version is closer
to the Administration’s request. The House version also would allow the Secretary
of Defense to exempt DOD’s readiness activities from compliance with Marine
Mammal Protection Act requirements and redefines what constitutes harassment.
The Senate bill does not include changes to that Act.
Buy American Act Restrictions. The Administration proposed a series of
changes to current Buy American Act restrictions to give DOD additional flexibility
to purchase from foreign sources. The House version of the bill would place
additional limits on the circumstances in which DOD can purchase from foreign
sources whereas the Senate version would allow DOD some additional flexibility.
Reconciling Total Funding with the Appropriators.
Since both
authorizing committees provided $3 billion more than the levels adopted by both the
House and Senate appropriators in their 302 (b) allocations, the conferees may want
to make their own recommendations for reductions to reconcile their marks. This
24 National Journal, “Energy and Water Spending Bill Clears Senate Subcommittee,” July
16, 2003.

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CRS-13
could include, for example, adopting the $2 billion rescission to the FY2003
supplemental included by the House appropriators.
Amendments to the FY2004 Authorization Acts
The two sections below describe the major amendments made to H.R. 1588, the
House and Senate versions of the FY2004 DOD Authorization Act.
Major Floor Amendments Considered by the House.
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 Floor Amendments Considered by the Senate. After its return
from the Memorial Day Recess on June 2, 2003, the Senate considered several
additional amendments to S. 1050, which were ruled earlier as not relevant by the
Senate Parliamentarian.25 The Dorgan/Lott amendment to cancel the 2005 round of
base closures was defeated by a vote of 42 to 53.26 The Secretary of Defense and
other senior advisors would recommend a veto of the FY2004 DOD Authorization
25 Congressional Record, May 20, 2003, p. S6645 and p. S6648.
26 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.

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CRS-14
Act if Congress included a cancellation of the 2005 round according to a statement
of Administration policy.27
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.28 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.29
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.30
The FY2004 congressional budget resolution does not include 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. 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
27 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.
28 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.
29 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).
30 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
Belasco.

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CRS-15
combat or combat-related disabilities.31 That special compensation benefit will be
available to those retirees who are eligible as of June 1, 2003.
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 (S.Amdt. 847, Kennedy/Brownback). Currently, citizenship
is available to such relatives of active-duty military personnel who die in wartime.32
During earlier floor debate on May 19, 21, and 22, the Senate added several
amendments to S. 1050 (the Senate-reported version) with significant cost or policy
implications. (Additional discussion of major issues is included in individual sections
below.)
! 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);33
! 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).
Senate amendments that were defeated include:
31 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.
32 See Section 661 to Sec. 665, H.R. 1588, engrossed as passed by the Senate, June 4, 2003.
33 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.

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CRS-16
! 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.
The Senate version of the FY2004 DOD Authorization Act also includes several
amendments with significant cost or policy implications. 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, and full concurrent receipt of both military retirement and
disability payments, which is estimated to cost the government $4.1 billion in
FY2004 and $56.5 billion over the next ten years.
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
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).
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.34 This does not
include in FY2003 level, however, $62.6 billion in supplemental appropriations that
DOD recently received for the Iraq war and other costs.35
34 DOD has received $93.1 billion in supplemental funding to combat terrorism since the
September 11 attacks; see below.
35 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.

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CRS-17
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 3 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.36
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.
36 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 3 for a breakout of these categories).

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CRS-18
Table 3. National Defense Budget Function and DOD 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%
Outlaysb
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.

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CRS-19
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 4). 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 4. 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
(no
56-44
H.Rept. 216-211 51-50
108-37
report)
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.37 The FY2004 budget resolution projects a 40% increase in entitlement
programs by 2008 and an 80% increase by 2013.38
37 Center for Strategic and Budgetary Assessment, Analysis of the 2004 Defense Budget
Request by Steven M. Kosiak, p. 5-p.7
38 CRS calculations based on table in H.Rept. 108-71, Conference Report on Concurrent
Resolution on the Budget For Fiscal Year 2004, p. 68.

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CRS-20
Table 5. 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.

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CRS-21
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.39
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.40 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.41 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 4 and Table 5). 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.
39 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.
40 See H.Rept. 108-71, p. 73.
41 See H.Rept. 108-71, p. 109 and Congressional Record, March 20, 2003, p. S4209 for
S.Amdt. 341.

---

CRS-22
According to DOD, the rationale for setting up this new account with an “indefinite
appropriation” is to allow DOD to cover the difference between the amount budgeted
for fuel costs and actual market prices.42 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.43 Instead, both houses transfer that $675 million to
other programs. The House appropriators also rejected DOD’s proposal for this new
fund and cut the $675 million for that account.
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.44 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.45 A similar process is under
consideration for some domestic programs.46 According to a recent press reports, the
42 OMB, Fiscal Year 2004 Appendix to the Budget of the United States, p. 298.
43 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.
44 The 302(b) allocation process was established by the Congressional Budget Act of 1974.
45 Congress Daily, “House Juggling Allocations for Approps Subcommittees,” May 9, 2003;
Congress Daily, “Appropriations Impasse Continues Over Spending Allocations, May 21,
2003.
46 Congress Daily, “Appropriations: Hill Leaders, White House to Meet Today on FY04
Approps,” June 10, 2003.

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CRS-23
committees are considering consulting with the White House before adopting
allocations for individual subcommittees, an unusual procedure.47
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 6 and makes comparisons difficult,
particularly for operation and maintenance spending that received the bulk of
supplemental funding (see below).
Table 6. 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.
47 Alexander Bolton and Jonathan E. Kaplan, “Congress Veils Appropriations Spending
Totals,” The Hill, May 28, 2003.

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CRS-24
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-
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 7). 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

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CRS-25
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.
Table 7. Flexibility in DOD’s Supplemental Funding Since
September 11 Attacks
(Dollars in Billions)
Emergency Terrorism
Funding Level
FY2002
FY2003
Response Supplemental
& Amount of
Supplemental
Supplemental
(P.L. 107-38 and
Flexibility
(P.L. 107-206)
(P.L. 108-11)
P.L. 107-117)
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. Enacted
81.7%
100.0%
100.0%
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.

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CRS-26
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,”48 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 1049 (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.50 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
48 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.
49 Statement of Deputy Secretary of Defense Paul Wolfowitz before the House Committee
on Government Reform, May 6, 2003, p. 4.
50 Secretary of Defense Rumsfeld testifying before the Senate Armed Services Committee,
FY2004 Budget, February 13, 2003; transcript available from Reuters.

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CRS-27
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. 1588, the FY2004

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CRS-28
defense authorization bill as reported by the House Armed Services Committee on
May 14.51 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.52
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.53
51 The HASC did not include sections on NASA and the SEC but did include some
government wide provisions.
52 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 the DOD website at
[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.
53 House Government Reform Committee, Hearing on Civil Service and National Security
Personnel, May 6, 2003; transcript available from Reuters.

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CRS-29
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
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.54
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.55
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.56 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.57
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,
54 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]
55 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.
56 Statement by Deputy Secretary Paul Wolfowitz before the House Committee on
Government Reform, May 6, 2003.
57 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-30
but not necessarily reach agreement with OPM thirty days in advance of negotiations.
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-31
! 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 FY2008.58
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.59
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.60
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
58 See S. 1166. Prepared with the help of Barbara Schwemle, CRS.
59 Testimony of Under Secretary of Defense David Chu before the House Armed Services
Committee, May 2, 2003, transcript; available from Reuters.
60 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-32
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.61
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”.62
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
61 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].
62 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-33
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%.)63
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.64
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.65
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. The House Appropriations Committee also deleted this funding in
its markup.
63 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].
64 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].
65 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-34
DOD Again Requests Environmental Exemptions. As it did last year,
DOD again requested 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, 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.
DOD has argued that environmental provisions significantly affect military
training, and hence readiness. Critics have questioned DOD about the extent of the
impact on readiness activities and DOD’s limited use of waiver authorities already
included in current law. A recent GAO report found that environmental restrictions
are only one of several factors, including urban growth and pollution, that affect
DOD’s ability to carry out training activities and that DOD continues to be unable to
measure its impact.66 The debate centers on whether and to what extent DOD should
be exempt from current environmental statutes.67
Congressional Action: House And Senate Proposed Changes to
Current Law. This year, both houses include modifications of the Administration’s
proposal for exemptions for DOD to the Endangered Species Act, and the House also
proposed exemptions from the Marine Mammal Protection Act that are close to the
Administration’s proposals.
Endangered Species Act. The House version modifies the Administration’s
proposal, which would have prohibited the Secretary of the Interior from designating
any DOD lands as critical habitat for endangered species if DOD developed an
Integrated Resources Management Plan under the Sikes Act.68 Instead, the House
allows DOD to develop and administer an “Integrated Resources Management Plan”
to protect certain DOD lands but gives the Secretary of the Interior final say as to
whether the plan “addresses protective issues” and hence would allow DOD land to
be exempted from designation as critical habitat.69 The Senate language is similar and
would exempt DOD lands from designation as critical habitat only if the Secretary
of the Interior determines in writing that DOD’s integrated management plan would
66 GAO-03-621T, Military Training: DOD Approach to Managing Encroachment on
Training Ranges Still Evolving, April 2, 2003.
67 Hearings were held by the Senate Subcommittee on Fisheries, Wildlife and Water,
Committee on the Environment, May 6, 2003 and by the House Committee on Resources,
May 6, 2003; see also CRS RL31415, The Endangered Species Act (ESA), Migratory Bird
Treaty Act (MBTA), and Department of Defense (DOD) Readiness Activities: Current Law
and Legislative Proposals by Pamela Baldwin, and Issue Brief 10072, Endangered Species:
Difficult Choices by M. Lynne Corn, Eugene H. Buck and Pamela Baldwin.
68 General Counsel, DOD, William J. Haynes III, Letter to Speaker of the House Hastert,
April 10, 2003, proposing legislation, see Title 10, U.S. Code, new Chapter 101A, Section
2017 in draft legislation; see [http://defenselink.mil/dodgc/lrs/legispro.html].
69 See Section 317 in Congressional Record, May 21, 2003, p. H4428.

---

CRS-35
“effectively conserve the threatened species and endangered species.”70 In addition,
the Senate proposal to amend Title 10 rather than the Endangered Species Act, as
proposed by the House, is considered more acceptable to environmental interests.
Currently, such plans are not accepted as substitutes for designating lands as
critical habitat to protect endangered species. An integrated management plan is
intended to provide for both the protection of fish and wildlife and the military
mission of the base whereas the goal of critical habitat designations is solely to
protect endangered species.71 According to the Senate Armed Services Committee,
portions of about 150 DOD bases could be designated as critical habitat.72
Marine Mammal Protection Act. The House version adopts much of the
Administration’s proposed changes to the Marine Mammal Protection Act. In the
House version, the Secretary of Defense would be granted broad authority to
“exempt any action or category of actions” from compliance with any provisions of
the Marine Mammal Protection Act for two years if the Secretary determines “it is
necessary for national defense.”73 At his discretion, the Secretary of Defense could
renew such exemptions for additional two-year periods.
In addition, the House version adopts the Administration’s proposal that
narrower definitions of harassment of marine mammals be applied to military
readiness activities than for other agencies. To demonstrate “harassment,” the House
language requires that disruptions to the normal activities of marine mammals reach
a point where “behavioral patterns are abandoned or significantly altered” rather than
demonstrating a “potential to injure or disturb” marine mammals, the current
standard.74
Amendments to delete both measures were rejected in the House
committee markup.
The Senate version of H.R. 1588 does not include any changes to the Marine
Mammal Protection Act.
Other Proposed Changes to Environmental Statutes. The House and
Senate bills also include other changes to current environmental laws, such as
allowing DOD to participate in the wetland mitigation banking program, and the
70 See proposed new Chapter 101A-Readiness and Range Preservation in Title 10, Section
2020 in H.R. 1588 as passed by the Senate. The House bill amends the Endangered Species
Act and the Senate amends Title 10.
71 See CRS Report RL31415, The Endangered Species Act (ESA), The Migratory Bird
Treaty Act (MBTA), and Department of Defense (DOD) Readiness Activities: Current Law
and Legislative Proposals by Pamela Baldwin, p. 12 - p. 18.
72 S.Rept. 108-46, p. 286.
73 General Counsel, DOD, William J. Haynes III, “Letter to Speaker of the House Hastert,”
April 10, 2003, Title 10, Chapter 101A, Section 2019, Subsection b, p. 92 - p.98; see
[http://defenselink.mil/dodgc/lrs/legispro.html.]
74 See Section 318 in Congressional Record, May 21, 2003, p. H4428.

---

CRS-36
House also proposes to limit requirements to give notice of incidental [unintended]
takings to the Federal Register.75
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
the Navy’s personnel end-strength, and early retirement of 115 Air Force fighter
aircraft and 115 mobility/tanker aircraft, as well as efficiencies.76
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
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.
75 See Subtitle B, Sections 311 to Sec. 320 in H.R. 1588 as passed by the House and Subtitle
C, Sections 321 to Sec. 31 as passed by the Senate.
76 Briefing by DOD Comptroller Dov Zakheim, “FY2004 Defense Budget,” February 6,
2003.

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CRS-37
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. Table 8A shows action on major Army programs
in the House and Senate defense authorization bills, and Table 8B shows House
action in the committee-reported version of the defense appropriations bill. A few
issues stand out.
! Legacy force modernization:
The House authorization adds
$258.8 million for Bradley Fighting Vehicle upgrades and $424
million for M1 tank upgrades (offset by cuts of $140 million in other
M1 projects).
These are among the programs that the
Administration wants to terminate as part of the $82 billion in 6-year
savings that officials announced when the budget was released. The
House appropriations bill adds the same amount for Bradley
upgrades and $155 million for M1 upgrades.
The House
appropriators also urged DOD to budget for enough M1 upgrades in
the future to complete equipping the 3rd Armored Cavalry Regiment
with modernized tanks. In effect, the House has rejected DOD plans
to cut back on Army “legacy force” upgrades, though the House
appropriators also indicated that they may be satisfied once
sufficient upgraded Bradleys and M1s are procured to equip 2 and
1/3 divisions of what the Army calls its “counterattack” force of
heavy armored units.
! Stryker interim combat brigades: The House appropriations also
adds $35 million for long lead items for Stryker armored vehicle
procurement to equip the 5th and 6th Stryker brigades. DOD has, in
the past at least, considered halting the interim combat brigade
program after four brigades are deployed. House appropriators sent
a strong message that they expect DOD to fill out the planned six-
brigade force. The Senate Appropriations Committee also added
$35 million for long lead items for Stryker procurement, though its
report language did not specify that it was for the 5th and 6th brigades.
In addition, Senate appropriators added $100 million in other Army
procurement — for communications and other equipment — to
accelerate Stryker brigade deployment, a strong vote of support for
the Army program.
! All of the committees add money for additional UH-60 utility
helicopters, largely for the National Guard, though there are some
differences in how the additional money is allocated. This is a
perennial congressional addition to proposed budgets.

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CRS-38
! All of the committees support continued Comanche helicopter
development despite cost growth and substantial cuts in the planned
program.

---

CRS-39
Table 8A. House and Senate Action on Major Army Acquisition Programs — Authorization
(amounts in millions of dollars)
House
Senate
Request
Action
Action
Procuremen
R&
Procuremen
Comments
R&D
Procurement
R&D
t
D
t
#
$
$
#
$
$
#
$
$
RAH-66 Comanche
—
—
1,079
—
—
1,079.
—
—
1,079
—
.3
3
.3
UH-60 Blackhawk
10
167.0
70.2
19
279.8
70.2
17
237.0
74.1
House adds $112.8 million for 9 aircraft for Army
National Guard. Senate adds $70.7 million for 7 aircraft
in accordance with Army priorities and for air inlet
upgrades ($0.8 million) and $3.9 million for R&D for C2
integration..
UH-60 Blackhawk
—
138.5
—
—
38.5
100.0
—
38.5
100.0
Both House and Senate transfer $100 million from proc.
mods.
to R&D for UH-60M upgrade.
CH-47 Upgrades
—
516.0
—
—
522.0
—
—
531.0
—
House adds $6 million for crashworthy seats. Senate adds
$15 million for MH-47G mods.
AH-64 Mods
—
58.9
—
—
74.4
—
—
58.9
—
House adds $15.5 million for bladefold kits.
AH-64D Apache
—
776.7
—
—
776.7
—
—
776.7
—
—
Longbow
Bradley Base
—
113.3
—
—
372.1
—
—
113.3
—
House adds $258.8 million for Bradley M3A2 Operation
Sustainment
Desert Storm ``D+’‘ upgrades.
M1 Abrams
—
361.6
—
—
645.6
—
—
361.6
—
House adds $424 million for M1A2 to M1A2 SEP
Mods/Upgrades
upgrades, cuts $108 million from new engine program
due to delays and $32 million from other upgrades — net
add $284 million.
Stryker Interim
301
955.0
46.0
301
955.0
46.0
301
955.0
46.0
—

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CRS-40
House
Senate
Request
Action
Action
Procuremen
R&
Procuremen
Comments
R&D
Procurement
R&D
t
D
t
#
$
$
#
$
$
#
$
$
Armored 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 million for laser Hellfire II missiles —
request was just for Longbow Hellfires.
Javelin (Anti-Tank
901
140.7
—
901
140.7
—
901
180.7
—
Senate adds $40 million for command launch units for
Missile)
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;
Senate cuts all funds.
Logistic/Theater
—
—
65.7
1
33.0
65.7
—
—
73.2
House adds $33 million in proc. for Logistic Support
Support Vessel
Vessel (Army now has 8); Senate adds $7.5 million in
R&D for composite hull design Theater Support Vessel to
replace LSVs.
Sources: H.Rept. 108-106; S.Rept. 108-46.
Note: Figures reflect committee-reported versions of the bills and not changes made in subsequent floor action.

---

CRS-41
Table 8B. House and Senate Action on Major Army Acquisition Programs — Appropriations
(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
—
279.8
79.2
17
215.7
70.2
House adds $112.8 million. in proc. as in
House authorization. Senate adds $70.7
million for 7 aircraft, cuts $20.0 million for
MYP savings and $2.0 million from
management costs.
UH-60 Blackhawk
—
138.5
—
—
38.5
73.0
—
44.4
92.0
House cuts $100 million. from proc. and
mods.
adds $73 million. to R&D for UH-60M
upgrade program. Senate cuts $100 million
from proc. and adds $92 million to R&D for
UH-60M. Senate adds $6.0 million for
specified units.
CH-47 Upgrades
—
516.0
—
—
516.0
—
—
474.9
—
House rescinds $39.1 million. of FY2003
funds. Senate cuts $41.1 million from
unexpended balances and support costs.
AH-64 Mods
—
58.9
—
—
64.9
—
—
64.1
—
House adds $15.5 million. for bladefold kits.
Senate adds $5.2 million for other upgrades.
AH-64D Apache
—
776.7
—
—
781.0
—
—
766.7
—
House adds $4.3 million. for radar upgrades
Longbow
earmarked for 2 South Carolina National
Guard AH-64Ds. Senate cuts $10.0 million
from support costs.
Bradley Base
—
113.3
—
—
372.1
—
—
175.2
—
House adds $258.8 million. for Bradley

---

CRS-42
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
Sustainment
M3A2 Operation Desert Storm ``D+’‘
upgrades. Senate adds $61.9 million for
ODS upgrades for National Guard.
M1 Abrams
—
361.6
—
—
376.6
—
—
291.6
—
House adds $155 million. for M1A2 to
Mods/Upgrades
M1A2 SEP upgrades (vs $424 million. in
House authorization), cuts $108 million.
from new engine program due to delays and
$32 million. from other upgrades — net add
$15 million. Senate cuts $75 million from
new engine program, adds $3 million for
X1100-3B engine and $2 million for
diagnostics.
Stryker Interim
301
955.0
61.4
—
990.0
61.4
301
955.0
61.4
House adds $35 million. for long lead items
Armored Vehicle
for 5th and 6th brigades. Senate adds $35
million for long lead items.

---

CRS-43
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
HIMARS (Rocket
24
124.2
87.4
—
124.2
87.4
24
124.2
87.4
Note: C-130 air transportable version of
Launcher)
MLRS.
Hellfire Missiles
—
33.1
—
—
33.1
—
—
25.1
—
No add in House, which follows House
authorization. Senate cuts $8 million from
“CAP kits.”
Javelin (Anti-Tank
901
140.7
—
—
140.7
—
901
140.7
—
—
Missile)
Future Combat System
—
—
1,701.3
—
—
1,701.3
—
—
1,701.3
House directs more detailed breakdown of
projects in justification material.
ATACMS Penetrator
—
—
55.1
—
—
2.0
—
—
55.1
House and Senate cut all funds for
ATACMS penetrator. House adds $2
million and Senate adds $4 million for Viper
Strike Munition.
Logistic/Theater
—
—
65.7
—
—
65.7
—
—
73.2
House does not follow House authorization
Support Vessel
add. Senate adds $7.5 million for Theater
Support Vessel development, following
Senate authorization.
Sources: H.Rept. 108-187; S.Rept. 108-87.
Note: Figures reflect committee-reported versions of the bills and not changes made in subsequent floor action. Note: Future Combat System funding includes PE 0604645A - Armored
Systems Modernization (ASM)-Eng. Dev. only.

---

CRS-44
Navy Programs. 77 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 9A shows
action on major Navy programs in the House and Senate defense authorization bills,
and Table 9B shows House action in the committee-reported version of the defense
appropriations bill. In action on key issues:
! Carrier replacement program: All of the congressional defense
committees supported funding for the Administration’s revised
carrier development program.
A major budget decision in the
FY2004-FY2009 defense plan was to accelerate the transition to the
77 This section was written by Ronald O’Rourke.

---

CRS-45
next generation of carriers by incorporating more advanced
technology into the next carrier to be fully funded in FY2007 or
FY2008. In all, the new carrier is projected to cost almost $12
billion for development and production, of which about $5 billion is
for R&D.
! Cruiser conversion program: The Navy requested $194.4 million to
begin a program to update CG-47 Aegis cruisers to incorporate new
command, control, and communications equipment and other
advances. The Senate Appropriations Committee eliminated funds
because the Navy proposed updating one of the newest cruisers —
the committee said the ship already is outfitted with much of the
updated equipment.
The committee expressed support for the
program, but told the Navy to propose a revised schedule.
! Virginia-Class Attack Submarines: The House Appropriations
Committee denied funds requested to sign a multi-year procurement
(MYP) contract for new submarines, saying (1) that the schedule for
delivery of the first submarine remains too uncertain and (2) that the
requirement to buy two submarines each year in FY2007 and
FY2008 may be unaffordable given the $2.6 billion price of each
boat. The Senate Appropriations Committee approved multi-year
procurement of Virginia-Class submarines, but only for 5 boats over
the FY2004-FY2009 planning period rather than the 7 boats that the
Navy had requested.
! Attack Submarine Refueling Overhaul: The Navy did not request
funding for any overhauls in FY2004. The Senate Armed Services
Committee added $248 million to refuel one Los Angeles-class
attack submarine; The Senate Appropriations Committee added
$450 million for two refueling overhauls. Neither House defense
committee added any funds.
! Littoral Combat Ship: All of the defense committees have expressed
concern about the status of the Littoral Combat Ship (LCS)
development program, though none has eliminated funding. The
Senate Armed Services Committee issued the most critical report
language, though it also added $35 million for more experimentation
to determine the utility of the concept. The committee said (1) a
Navy report on the program that Congress required last year did not
adequately review alternatives or establish priorities among Navy
combat requirements, (2) that Navy cost estimates did not include
firm figures on the various modules that would be installed in the
common sea frame, and (3) that costs of the program could compete
with higher priority Navy shipbuilding in a constrained budget
environment in the future. The House Armed Services Committee
added $35 million for module design, while the House
Appropriations Committee added $25 million for module design but
cut $15 million from the overall program.
The Senate
Appropriations Committee added no funds for module design, but

---

CRS-46
directed that $76 million be used for module design. The committee
also insisted that the Navy complete all regularly required
operational requirements reviews before purchasing LCS or DD(X)
ships with R&D funds.
! LPD-17 Class Amphibious Ship: The House Appropriations
Committee added $175 million for advance procurement for the next
ship of the class, the LPD-23, and told the Navy to provide full
funding for the ship in FY2005, as had been planned, rather than in
FY2006, as the Navy projected this year. The Senate Appropriations
Committee added $75 million for the LPD-23.

---

CRS-47
Table 9A. House and Senate Action on Major Navy Acquisition Programs — Authorization
(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
339.2
—
Carrier Refueling Overhauls
—
367.8
—
367.8
—
—
367.8
—
—
Cruiser Conversion Program
1
194.4
—
1
194.4
—
1
194.4
—
—
Missile Submarine
2
1,167.3
—
2 1,167.3
—
2 1,167.3
—
—
Conversion
Submarine Refueling
—
164.4
—
164.4
—
1
412.4
—
Senate adds $248 million for one overhaul in
Overhauls
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 million in R&D for S-band radar
and $10 million for open Aegis architecture; Sen.
adds $21 million in proc. for ship modernization.
LPD-17 Amphibious
1
1,192.0
8.0
1 1,192.0
8.0
1 1,192.0
8.0
—
Transport
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.
—
—
1,042.0
—
—
1,038.0 House adds $4 million for knowledge projection
0
for maintenance.
Littoral Combat Ship
—
—
158.1
—
—
—
—
—
188.1 Senate adds $35 million for experimentation to
determine the value of the concept.
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.
Note: Figures reflect committee-reported versions of the bills and not changes made in subsequent floor action.

---

CRS-48
Table 9B. House and Senate Action on Major Navy Acquisition Programs — Appropriations
(amounts in millions of dollars)
House
Senate
Request
Action
Action
Procuremen
Procuremen
Procuremen
Comments
R&D
R&D
R&D
t
t
t
#
$
$
#
$
$
#
$
$
Carrier Replacement
—
1,186.6
339.2
—
1,186.6
339.2
—
1,186.6
339.2
—
Program
Carrier Refueling
—
367.8
—
—
367.8
—
—
232.8
—
Senate cuts $135 million as premature request.
Overhauls
Cruiser Conversion
1
194.4
—
1
194.4
—
—
—
—
Senate eliminates funding.
Program
Missile Submarine
2
1,167.3
—
2
1,167.3
—
2
1,167.3
—
—
Conversion
Submarine Refueling
—
164.4
—
—
164.4
—
2
470.4
—
Senate adds $450.0 million for 2 attack submarine
Overhauls
overhauls, cuts $144.0 million from advance
procurement.
DDG-51 Destroyer
3
3,198.3
205.7
3
3,198.3
205.7
3
3,218.3
205.7
House does not follow House authorization add.
Senate adds $20.0 million for a pricing adjustment.
LPD-17 Amphibious
1
1,192.0
8.0
1
1,367.0
8.0
1
1,192.0
8.0
House adds $175 million to restore FY2005 date for
Transport
full funding. Senate adds $75 million in advance
procurement.
LHD-8 Amphibious
—
355.0
—
—
355.0
—
—
591.3
—
Senate adds $236.3 million for FY2005 incremental
Assault Ship
funding for LHD-8.
Prior Year Shipbuilding
—
635.5
—
—
899.5
—
—
635.5
—
House adds $264 million to accelerate FY2005
Costs
payments.
DD(X)Destroyer
—
—
1,038.0
—
—
928.0
—
—
1,038.
House cuts $110 million of which $100 million is

---

CRS-49
House
Senate
Request
Action
Action
Procuremen
Procuremen
Procuremen
Comments
R&D
R&D
R&D
t
t
t
#
$
$
#
$
$
#
$
$
0
for ship design for lack of definitive requirements
and slow release of prior year funds.
LittoralCombatShip
—
—
158.1
—
—
168.1
—
—
158.1
House adds $25 million for module design and cuts
$15 million due to lack of final design. Senate adds
no funds, but directs $76.0 million be used for
module design.
T-AKE Auxiliary Cargo
2
722.3
—
2
722.3
—
—
—
—
Senate eliminates funds due to program delays.
Ship
Note: In National Defense Sealift Fund, not in Navy
Procurement.
Source: H.Rept. 108-187, S.Rept. 108-87.
Note: Figures reflect reported bills only, not subsequent floor action.

---

CRS-50
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 desire to expand
it. The Air Force sees the F/A-22 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 approved only 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, plus
aircraft in repair and transit, 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 Congress to lift.
Another issue that remains contentious is whether to permit the Air Force to
lease commercially produced aircraft for use as tankers. 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
in part 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. After much internal debate within the
Administration, on May 23, the Defense Department announced that it had approved
an agreement under which the Air Force will lease 100 767s through 2017. Delivery
will begin in 2006 and will be completed by 2011, and the cost through 2017 will
total about $13 billion. At the end of the lease, the Air Force will have the option of
purchasing the aircraft for about $4 billion.
Congressional Action. Table 10A shows action on selected major Air
Force, Navy, and Marine Corps aircraft programs in the House and Senate versions
of the defense authorization bill. Table 10B shows changes made in the House
Appropriations Committee markup of the defense appropriations bill. In action on
key issues:

---

CRS-51
! F-22 Fighter:
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 dramatic a way. The Senate bill
reduces procurement from the 22 aircraft requested to 20 in order to
allow the Air Force to adjust planned production and delivery dates.
None of the other defense committees, however, made cuts in the
number of aircraft.
! Boeing 767 Tanker Leases: The Defense Department has not yet
announced how it will propose that Congress approve funding for
767 tanker leases. The FY2003 defense appropriations act permits
the Air Force to pay for leases either with existing operation and
maintenance funds or by reprogramming funds from other accounts.
Under existing rules established by Congress, reprogramming of
more than $10 million into or out of O&M accounts, or a
reprogramming action that starts a new program, would require prior
approval by the congressional defense committees. The FY2003
defense authorization act, which was signed into law after the
appropriations bill, is more restrictive. It requires either specific
future authorization and appropriation of funds or a “new start”
reprogramming action. In the past, the leasing proposal has been
especially contentious in the Senate, where Senator McCain, in
particular, has strongly opposed the plan. The issue may come up
either in the House-Senate conference on the defense authorization
bill or in House and Senate action on the defense appropriations bill.
! Next Generation Bomber Development: The House authorizers and
appropriators both added $100 million in a new R&D line item to
begin development of a new bomber.
The Senate defense
committees did not provide funds.

---

CRS-52
Table 10A. House and Senate Action on Major Aircraft Programs — Authorization
(amounts in millions of dollars)
House
Senate
Request
Authorization
Authorization
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
Air Force Programs
F-22
22 4,225.4
936.5
22
4,064.4
936.5
20 4,008.4
936.5 House cuts $161 million Senate cuts 2 aircraft and
$217 million
F-16C/D Mods./Post
—
314.5
87.5
—
328.7
107.5
—
372.7
87.5 House adds $14.2 million in proc. and $20 million in
Production
R&D for upgrades. Senate adds $48 million in proc.
for engines and $10 million for upgrades.
F-15 Mods./Post
—
204.9
112.1
—
244.9
128.6
—
241.4
128.6 House adds $40 million in proc. and $16.5 million in
Production
R&D for upgrades. Senate adds $36.5 million in proc.
and $16.5 million in R&D for upgrades.
JPATS Trainer
52
280.6
—
52
280.6
—
52
280.6
—
—
C-17 Globemaster
11 3,502.1
184.1
12
3,680.4
—
11 3,498.4
— House adds $182 million for 1 aircraft. House and
Senate cut $10 million in proc., add $6.3 million for
mods.
C-130/C130J Airlift
5
660.0
164.2
5
666.1
164.2
5
672.9
164.2 House adds $6.1 million for radar upgrades. Senate
Aircraft/Mods.
adds $6.1 for radar and $6.8 million for satellite comm.
Next Generation Bomber
—
—
—
—
—
100.0
—
—
— House adds $100 million for new R&D program.
F-35 Joint Strike Fighter
—
— 2,194.1
—
—
2,194.1
—
—
2,194.1 —
B1-B Bomber Mods.
—
100.1
88.7
—
120.4
88.7
—
100.1
88.7 House adds $20.3 million for mods.
B-2 Stealth Bomber Mods.
—
114.9
176.8
—
166.7
185.6
—
139.6
152.1 House and Senate transfer $24.7 million from R&D to
proc. House adds $27.1 million in proc. for upgrades,
and $33.5 million in R&D.
Navy/Marine Corps Programs
F/A-18
42 3,031.1
179.0
42
3,056.1
179.0
42 3,031.1
179.0 House adds $25 million for armament equip.
V-22*
9
875.2
543.3
9
875.2
543.3
9
875.2
543.3 —

---

CRS-53
House
Senate
Request
Authorization
Authorization
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
F-35 Joint Strike Fighter
—
— 2,171.7
—
—
2,171.7
—
2,227.7 Senate adds $56 million for interchangeable engine
devel.
UH-1/AH-1Z Helicopter
9
320.1
90.6
9
320.1
90.6
9
320.1
90.6 —
MH-60S Helicopter
13
431.5
59.1
13
431.5
59.1
13
431.5
59.1 —
MH-60R Helicopter
6
398.5
77.1
6
398.5
77.1
6
402.0
77.1 Senate adds $3.5 million in proc. for low freq. sonar.
E-2C Early Warning Aircft.
2
271.6
361.4
2
271.6
361.4
2
271.6
361.4 —
UC-35 Support Aircraft
2
15.6
—
2
15.6
—
4
31.2
— Senate adds $15.6 million for 2 additional aircraft.
T-45TS Trainer
15
339.2
—
15
339.2
—
15
339.2
—
—
JPATS Trainer
—
2.4
—
—
17.1
—
5
37.4
— House adds $14.7 million for aircraft and ground
systems. Senate adds $35.0 million for 5 aircraft.
KC-130J Airlift Aircraft
—
79.2
—
—
79.2
—
—
79.2
—
—
EA-6 Series Mods.
—
207.1
36.6
—
339.5
36.6
—
207.1
36.6 House adds $132.4 million for specified upgrades.
AV-8 Series Mods.
—
20.9
10.5
—
20.9
17.5
—
70.9
10.5 Senate adds $50.0 million for specified upgrades.
House and Senate add $7.0 million in R&D for engine
devel.
F-18 Series Mods.
—
335.9
—
—
335.9
—
—
335.9
—
—
P-3 Series Mods.
—
95.0
7.3
—
104.0
24.8
—
134.4
19.6 House adds $9.0 million in proc. for comm. upgrades,
Senate adds $39.4 million for Anti-Surface Warfare
Improvement Program (AIP). House adds $17.5
million and Senate adds $12.3 million in R&D for AIP.
T-45 Series Mods.
—
22.3
3.0
—
41.4
3.0
—
22.3
3.0 House adds $19.1 million for conversions to Model C.
Sources: H.Rept. 108-106; S.Rept. 108-46.
Note: Figures reflect committee-reported versions of the bills and not changes made in subsequent floor action.

---

CRS-54
Table 10B. House and Senate Action on Major Aircraft Programs — Appropriations
(amounts in millions of dollars)
House
Senate
Request
Authorization
Authorization
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
Air Force Programs
F-22
22 4,225.4
936.5
22
4,225.4
936.5
22 4,069.4
936.5 House cuts $161 million from proc., following House
authorization. Senate cuts $161 million for
efficiencies, adds $5 million for producibility.
F-35 Joint Strike Fighter
—
— 2,194.1
—
—
2,128.1
—
—
2,166.1 House cuts $66 million in overall system design.
Senate cuts $28.0 million for inflation adjustment.
F-16C/D Mods./Post
—
314.5
87.5
—
294.8
87.5
—
338.5
97.5 House cuts $25.5 million in proc. for helmet display,
Production
adds $5.8 million for other upgrades. Senate adds
$20.0 million for engine and $4.0 million for other
upgrades in proc. and adds $10 million for radar
upgrades in R&D.
F-15 Mods./Post
—
204.9
112.1
—
204.9
101.1
—
204.9
112.1 House cuts $26.9 million. in proc. for display
Production
processor, adds $29.5 million. for other upgrades, cuts
$11 million. from R&D. Senate adds $21.5 million in
proc. for upgrades, cuts $17.0 million for program
delays and adds $16.5 million for radar upgrade in
R&D.
JPATS Trainer
52
280.6
—
52
280.6
—
52
280.6
—
—
C-17 Globemaster
11 3,502.1
184.1
11
3,502.1
184.1
11 3,552.1
184.1 House cuts $5 million in proc. for slow execution, cuts
$10 million for proc. and adds $6.3 million for mods.,
cuts $50 million from interim contractor support.
Senate adds $50 million in proc. for interim contractor
support.

---

CRS-55
House
Senate
Request
Authorization
Authorization
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
C-130/C130J Airlift
5
660.0
13.6
5
656.8
13.6
5
682.9
19.7 House cuts $3.2 million. in proc. from upgrades.
Aircraft/Mods.
Senate adds $6.1 million in R&D for C-130 radar
upgrades for National Guard. Senate adds $6.8
million for SATCOM upgrades, $3.1 million for radar
upgrades for Nevada National Guard, and $13 million
for infrared countermeasures for Alaska National
Guard.
Next Generation Bomber
—
—
—
—
—
100.0
—
—
— House adds $100 million, following House
authorization.
B1-B Bomber Mods.
—
100.1
88.7
105.4
88.7
—
100.1
88.7 House adds $20.3 million for mods. as in House
authorization, cuts $15 million for Wind Corrected
Munitions Dispenser (WCMD) kits. Senate cuts $15
million for WCMD kits.
B-2 Stealth Bomber Mods.
—
114.9
176.8
—
166.7
185.6
—
134.6
152.1 House and Senate transfer $24.7 million from R&D to
in proc. House adds $27.1 million in proc. for
upgrades, and $33.5 million. in R&D, as in House
auth. Senate cuts $5.0 million in proc. for interim
contractor support.
Navy/Marine Corps Programs
F/A-18
42 3,031.1
179.0
42
3,031.1
179.0
42 3,031.1
179.0 House does not follow House authorization add of $25
million. Senate adds $29.0 million for aircraft
equipment.
V-22*
9
875.2
543.3
9
875.2
543.3
9
875.2
543.3 Senate transfers $43.0 million from R&D Navy to
R&D for Special Operations Command.
F-35 Joint Strike Fighter
—
— 2,171.7
—
—
2,105.7
—
—
2,216.5 House cuts $66 million. in overall system design.
Senate cuts $28.0 million for inflation, adds $72.8
million for interchangeable engine design.
UH-1/AH-1Z Helicopter
9
320.1
90.6
9
320.1
90.6
9
320.1
92.6 House adds $5.0 million in proc. for AH-1W night
targeting upgrade. Senate adds $10.0 million in proc.
for UH-1 upgrades and $2.0 million in R&D for
diagnostics.

---

CRS-56
House
Senate
Request
Authorization
Authorization
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
MH-60S Helicopter
13
431.5
59.1
13
431.5
59.1
13
411.5
59.1 Senate cuts $20.0 million in support costs.
MH-60R Helicopter
6
398.5
77.1
6
398.5
77.1
6
388.5
77.1 Senate cuts $10.0 million in support costs.
E-2C Early Warning
2
271.6
361.4
2
271.6
356.4
2
271.6
361.4 House cuts $5.0 million in R&D from management
Aircraft
costs. Senate adds $5. 0 million in R&D for Network
Centric Warfare test bed.
UC-35 Support Aircraft
2
15.6
—
2
15.6
—
4
31.2
— Senate adds $15.6 million for 2 aircraft, as in auth.
T-45TS Trainer
15
339.2
—
15
339.2
—
15
339.2
—
—
JPATS Trainer
—
2.4
—
—
24.1
—
—
20.4
— House adds $21.7 million. for aircraft and ground
equipment. Senate adds $18 million for aircraft.
KC-130J Airlift Aircraft
—
79.2
—
—
79.2
—
—
79.2
—
—
EA-6 Series Mods.
—
207.1
36.6
—
284.1
45.6
—
207.1
49.1 House adds $77.0 million. in proc. for specified
upgrades and $9 million. for R&D. Senate adds $12.5
million in R&D for upgrades.
AV-8 Series Mods.
—
20.9
10.5
—
57.9
8.0
—
57.9
10.5 House and Senate add $37 million in proc. for
targeting pods. House cuts $2.5 million in R&D to
reduce concurrency.
F-18 Series Mods.
—
335.9
—
—
341.9
—
—
370.9
— House adds $6.0 million. for specified upgrades.
Senate adds $35 million for ongoing upgrade program.
P-3 Series Mods.
—
95.0
7.3
—
95.0
11.3
—
128.0
19.6 House adds $30.0 million. in proc. for upgrades, of
which $6 million. is for Anti-Surface Warfare
Improvement Program (AIP). House adds $4 million.
in R&D for AIP. Senate adds $26.0 million in proc.
for AIP and $7.0 million for other upgrades, and adds
$12.3 million in R&D for phased capability upgrade.
T-45 Series Mods.
—
22.3
3.0
—
22.3
3.0
—
22.3
3.0 House does not follow House authorization add.
Source: H.Rept. 108-187.
Notes: Figures reflect committee markup of the House bill only. V-22 total includes Air Force and Special Operations Command CV-22 R&D funding.

---

CRS-57
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.
Table 11 shows congressional action on funding for missile defense programs.
Congress did not make major changes in the requested program. A few issues stand
out, however.
! The Administration requested funding for Patriot PAC-3 and
Medium Extended-Range Air Defense System (MEADS) R&D in
the Army budget rather than in the Missile Defense Agency (MDA)
budget.
The House and Senate authorization and the Senate
appropriations bills, however, all transfer funding to the MDA.
! The House authorization and appropriations bills made a number of
cuts in missile defense R&D programs and added about equal
amounts to Patriot PAC-3 missile procurement. The Administration
requested funds for 108 missiles. The House authorization adds
$126 million for 30 additional missiles, and the House
appropriations bill adds $90 million.

---

CRS-58
Table 11. House and Senate Action on Missile Defense Funding
(budget authority in thousands of dollars)
House
Senate
House
Senate
Comments
Program Element # and Title/Project Title
Request
Auth.
Auth.
Approp.
Approp.
0603175C Ballistic Missile Defense Technology
Advanced Technology Development
189,056
189,056
189,056
189,056
189,056
—
Laser Technology
47,130
47,130
47,130
47,130
47,130
—
Kinetic Energy Anti-Satellite
—
—
—
7,500
7,500
House and Senate approp. add $7.5 million
Extended Footprint Program
—
—
—
1,400
—
House approp. adds $1.4 million
Advanced Metallized Gelled Propellants
—
—
—
—
3,800
Senate approp. add.
Massively Parallel Optical Interconnects for Microsatellites
—
—
—
—
4,500
Senate approp. add.
Chemical Vapor Deposition of Organic Materials
—
—
—
—
3,000
Senate approp. add.
COLD
—
—
—
—
3,000
Senate approp. add.
Improved Materials for Optical Memories
—
—
—
—
4,200
Senate approp. add.
Silcon Carbide Wide Band Gap Research
—
—
—
—
5,500
Senate approp. add.
Wide Bandgap Optoelectronics
—
—
—
—
8,000
Senate approp. add.
Multiple Target Tracking Optical Sensor Array Technology
—
—
—
—
1,000
Senate approp. add.
[MOST]
AEOS MWIR Adaptive Optic
—
—
—
—
2,000
Senate approp. add.
Advanced RF Technology Development
—
—
—
—
4,000
Senate approp. add.
SiC Mirrors
—
—
—
—
2,000
Senate approp. add.
Porous Silicon
—
—
—
—
3,000
Senate approp. add.
Program Operations
4,634
4,634
4,634
4,634
4,634
—
Program Reduction
—
-55,800
—
-55,800
—
House auth. and approp. cut $55.8 million from overall PE.
Program Element Total
240,820
185,020
240,820
193,920
292,320
—
0603879C Advanced Concepts, Evaluations And Systems /a/
Program Element Total
151,696
151,696
151,696
151,696
151,696
—

---

CRS-59
House
Senate
House
Senate
Comments
Program Element # and Title/Project Title
Request
Auth.
Auth.
Approp.
Approp.
0603881C Ballistic Missile Defense Terminal Defense Segment
Theater High Altitude Area Defense (THAAD)
730,571
767,571
730,571
730,571
730,571
—
Israeli Arrow Program
64,803
64,803
74,803
64,803
154,803
Senate approp. adds $90 million.
Medium Extended Air Defense (MEADS) /b/
—
276,259
—
—
—
House auth. transfers MEADS from Army. House approp. does not
follow auth.
Program Operations
15,066
15,066
15,066
15,066
15,066
—
Program Element Total
810,440
1,123,699
820,440
810,440
900,440
—
0603882C Ballistic Missile Defense Midcourse Defense Segment
Ground-Based Midcourse Defense (GMD) Test Bed
2,810,799
2,810,799
2,910,799
2,810,799
3,010,799
Senate auth. adds $100.0 million. Senate approp. adds $200 million
for additional interceptors.
AEGIS Ballistic Missile Defense
672,165
679,165
660,465
672,165
672,165
House auth. adds $7.0 million Senate auth. cuts $11.7 million from
program management.
Sea-Based X-Band Radar
—
22,900
—
22,900
—
House auth. and approp. add $22.9 million
Common RF Scene Generation Capability (non-add)
—
[4,800]
—
—
—
House auth. earmarks $4.8 million
Japanese Cooperative Program
54,000
54,000
54,000
54,000
54,000
—
Range Command and Control Display Upgrade
—
—
—
—
3,000
Senate approp. add.
Range Data Monitor/Analysis Tool
—
—
—
—
3,000
Senate approp. add.
SHOTS
—
—
—
—
5,000
Senate approp. add.
PMRF Upgrades
—
—
—
—
20,000
Senate approp. add.
Kauai Test Facility
—
—
—
—
[4,000]
Senate approp. earmark of appropriated funds.
Program Operations
76,302
76,302
76,302
69,302
76,302
House approp. cuts $7.0 million
Program Element Total
3,613,266
3,643,166
3,701,566
3,629,166
3,844,266
—
0603883C Ballistic Missile Defense Boost Defense Segment
Airborne Laser (ABL)
610,035
610,035
610,035
610,035
610,035
—
Program Operations
16,229
16,229
16,229
14,229
16,229
House approp. cuts $2.0 million
Program Element Total
626,264
626,264
626,264
624,264
626,264
—

---

CRS-60
House
Senate
House
Senate
Comments
Program Element # and Title/Project Title
Request
Auth.
Auth.
Approp.
Approp.
0603884C Ballistic Missile Defense Sensors
Space Tracking and Surveillance System (STSS)
300,195
300,195
284,695
300,195
284,695
Senate auth. cuts $15.5 from program management. Senate approp.
cuts $15.5 million by consolidating projects.
Russian-American Observation Satellite Program (RAMOS)
29,623
29,623
29,623
29,623
29,623
—
Ballistic Missile Defense Radars
101,000
101,000
101,000
101,000
101,000
—
Airborne Infrared System (AIRS)
—
—
10,000
—
15,000
Senate auth. adds $10.0 million. Senate approp. adds $15.0 million.
X-Band Radar
—
—
5,000
—
—
Senate auth. adds $5.0 million
E-2 Infrared Search and Track (IRST)
—
—
3,750
—
—
Senate auth. adds. $3.75 million
Program Operations
7,424
7,424
7,424
7,424
7,424
—
Program Element Total
438,242
438,242
441,492
438,242
437,742
—
0603886C Ballistic Missile Defense System Interceptor
Ballistic Missile Defense Interceptors
295,542
295,542
225,542
295,542
85,542
Senate auth. cuts $70.0 million. Senate approp. cuts $210.0 million.
Program Operations
5,510
5,510
5,510
5,510
5,510
—
Program Reduction
—
-150,000
—
-150,000
—
House auth. and approp. cut $150 million from PE.
Program Element Total
301,052
151,052
231,052
151,052
91,052
—
0603888C Ballistic Missile Defense Test & Targets
Test & Evaluation
355,857
355,857
355,857
355,857
355,857
—
Targets & Countermeasures
249,089
249,089
249,089
249,089
249,089
—
Proton-Neutron Pulse Research at Indiana University
—
—
—
2,100
—
House approp. adds $2.1 million
Program Operations
6,576
6,576
6,576
6,576
6,576
—
Program Element Total
611,522
611,522
611,522
613,622
611,522
—
0603889C Ballistic Missile Defense Products
Command and Control, Battle Management and
168,455
168,455
168,455
168,455
168,455
—
Communications (C2BMC)
Hercules
56,452
56,452
56,452
56,452
56,452
—
Joint Warfighter Support Block 2004
24,139
24,139
24,139
24,139
24,139
—

---

CRS-61
House
Senate
House
Senate
Comments
Program Element # and Title/Project Title
Request
Auth.
Auth.
Approp.
Approp.
Joint National Integration Center (JNIC)
79,122
79,122
79,122
79,122
79,122
—
Program Operations
15,476
15,476
15,476
15,476
15,476
—
Program Reduction
—
-31,100
—
-31,100
-40,000
House auth. and approp. cut $31.1 million from PE. Senate approp.
cuts $40.0 million from engineering support.
Program Element Total
343,644
312,544
343,644
312,544
303,644
—
0603890C Ballistic Missile Defense Systems Core
System Engineering & Integration
208,048
208,048
208,048
208,048
208,048
—
Command and Control, Battle Management and
15,556
15,556
15,556
15,556
15,556
—
Communications Core
Intelligence
19,362
19,362
19,362
19,362
19,362
—
Joint Warfighter Support
245
245
245
245
245
—
Producibility & Manufacturing Technology
30,769
30,769
30,769
30,769
30,769
—
Countermeasures/Counter-Countermeasures (CM/CCM)
48,000
48,000
48,000
48,000
48,000
—
Hercules Core
24,079
24,079
24,079
24,079
24,079
—
Modeling and Simulation
98,173
98,173
98,173
98,173
98,173
—
BMD Information Management Systems
31,364
31,364
31,364
31,364
31,364
—
Program Reduction
—
-45,000
—
-45,000
-60,000
House auth. and approp. cut $45.0 million from PE. Senate approp.
cuts $60.0 million from engineering and other support.
Wide Bandwidth Technology
—
[9,500]
—
5,000
—
House auth. earmarks $9.5 million House approp. adds $5.0 million
Ballistic Missile Launch Canister & Manufacturing
—
[5,000]
—
—
—
House auth. earmarks $5.0 million
Improvements (non-add)
Corporate Lethality Testing
—
—
-5,000
—
—
Senate auth. cuts $5.0 million
Advanced Research Center
—
—
2,000
0
10,534
Senate auth. adds $2.0 million. Senate approp. adds $10.5 million.
Electro-Optic Components for Missile Defense
—
—
—
5,000
—
House approp. adds $5.0 million
Pump Arrays for High Energy Lasers
—
—
—
2,500
—
House approp. adds $2.5 million
Carbon Foam Program
—
—
—
—
2,500
Senate approp. add.

---

CRS-62
House
Senate
House
Senate
Comments
Program Element # and Title/Project Title
Request
Auth.
Auth.
Approp.
Approp.
Program Operations
8,400
8,400
8,400
8,400
8,400
—
Program Element Total
483,996
438,996
480,996
451,496
437,030
—
0604865C Patriot PAC-3 Theater Missile Defense Acquisition
Transfer from Army MEADS
—
—
241,325
—
—
Senate auth. transfers $241.3 million from Army.
Transfer from Army PAC-3 TMD Acquisition
—
—
174,475
—
—
Senate auth. transfers $174.5 million from Army.
Program Element Total
—
—
415,800
—
395,800
Senate approp. transfers PAC-3 and MEADS from Army and directs
consolidating the programs.
0901585C Pentagon Reservation
Program Element Total
14,481
14,481
14,481
14,481
14,481
—
0901598C Management Headquarters - MDA
Program Element Total
93,441
93,441
93,441
93,441
93,441
—
Total RDT&E Missile Defense Agency
7,728,864
7,790,123
8,173,214
7,484,364
8,199,698
—
Other Agency Missile Defense R&D Programs
Army
0604865A Patriot PAC-3 Theater Missile
174,475
253,475
—
174,475
—
Senate auth. and approp. transfer all funding to MDA.
Defense Acquisition
0203801A Missile/Air Defense Product Improvement
44,468
54,468
48,468
44,468
46,968
Senate auth. adds $4.0 million for PAC-3 antenna mast group.
Program
Senate approp. adds $1.0 million for mast group and $1.5 million for
radome.
0603869A Medium Extended Air Defense System
276,259
—
—
276,259
—
House and Senate auth. and Senate approp. transfer all funding to
(MEADS) Concepts /b/
MDA. Senate auth. cuts $39.9 million.
Joint Staff
0605126J Joint Theater Air and Missile Defense
87,250
87,250
87,250
87,250
87,250
—
Organization
Total RDT&E Other Agencies
582,452
395,193
135,718
582,452
134,218
—

---

CRS-63
House
Senate
House
Senate
Comments
Program Element # and Title/Project Title
Request
Auth.
Auth.
Approp.
Approp.
Missile Defense Procurement
Army
Patriot PAC-3 (Patriot System Summary)
561,555
687,555
561,555
651,555
561,555
House Auth. adds $126.0 million for 30 missiles (request for 108).
House approp. adds $90.0 million.
Patriot Modifications
212,575
212,575
223,575
182,075
212,575
Senate auth. adds $11.0 million for PAC-3 improvements. House
approp. cuts $30.5 million for Patriot-MEADS consolidation
savings.
Total Missile Defense Procurement
774,130
900,130
785,130
833,630
774,130
—
Total RDT&E and Procurement /b/
9,085,446
9,085,446
9,094,062
8,900,446
9,108,046
—
Sources: H.Rept. 108-106; S.Rept. 108-46; H.Rept. 108-187.
Notes:
/a/ Project level detail classified.
/b/ Does not include Military Construction funding of $2.6 million.

---

CRS-64
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.78
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.79
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.80 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.81 To carry this out, DOD
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.”82
78 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.
79 Section 3136, P.L. 103-160.
80 CRS Report RS21133, The Nuclear Posture Review: Overview and Emerging Issues by
Amy F. Woolf, p. 5.
81 General Counsel, DOD, William J. Haynes III, Letter to Speaker of the House Hastert,
March 3, 2003, Subtitle C, Sec. 221; see [http://defenselink.mil/dodgc/lrs/legispro.html].
82 Section 3111 in H.R. 1588 as engrossed and passed by the House, and H.Rept. 108-106,
p. 434.

---

CRS-65
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.83 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.84
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.Amdt. 752).85 Prior to that, the Senate debated but
did not adopt an amendment offered by Senator Reed (S.Amdt. 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.86
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.Amdt. 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.87
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.
83 Section 3131 in S. 1050 as reported, and S.Rept. 108-46, p. 447-p. 448.
84 Congressional Record, May 21, 2003, p. S6805.
85 Congressional Record, May 20, 2003, p. S6692.
86 Congressional Record, May 20, 2003, p. S6690.
87 Congressional Record, May 20, p. S6663-S6690, passim.

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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.88 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.89 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.90
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, Representative 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.Amdt.
4).91
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-
88 Congressional Record, May 20, 2003, p. S6663 to p. S6690, passim.
89 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.
90 Michael A. Levi, “The Case Against New Nuclear Weapons,” Issues in Science and
Technology, Spring 2003.
91 Congressional Record, May 20, 2003, p. S6690, and Congressional Record, May 22,
2003, p. H4572.

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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%.
The Senate version of the FY2004 DOD Authorization Act also includes several
amendments with significant cost or policy implications: 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, and full concurrent receipt of both military retirement and
disability payments, which is estimated to cost the government $4.1 billion in
FY2004 and $56.5 billion over the next ten years.
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
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

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of accrual payments for current active-duty personnel and $15.4 billion over the next
ten years (see Table 11 below).92 DOD opposed this provision last year suggesting
that financing the benefit would hurt defense readiness by taking funds from other
higher-priority programs.93
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.94 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
! 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 12 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.95
92 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.
93 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.
94 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.
95 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.

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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.96
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.
96 “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.

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Table 12. 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.

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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.97 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.98
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
97 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].
98 Congressional Record, May 20, page S644ff.

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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.99 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.
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.
99 Testimony of Secretary of Defense Rumsfeld before Senate Armed Services Committee,
FY2004 DOD Authorization Request, February 13, 2003.

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CRS-73
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.
Defense Appropriations
Defense Appropriations.
H.R. 2658 (Lewis)
A bill making appropriations for the Department of Defense for the fiscal year
ending September 30, 2004, and for other purposes. Committee consideration and
markup held on June 26, 2003. Reported July 2, 2003, H.Rept. 108-187. Considered
on the House floor on July 8, 2003 under unanimous consent agreement passed on
June 26, 2003, by 399 to 19, and sent to the Senate.
S. 1382 (Stevens)
A bill making appropriations for the Department of Defense for the fiscal year
ending September 30, 2004, and for other purposes. Committee consideration and
markup held on July 9, 2003. Reported July 10, 2003, S.Rept. 108-87. Senate
substituted text of S. 1382 into H.R. 2658 by unanimous consent on July 14, 2003.
Floor debate continues July 15, 2003.

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