Order Code RL31805
CRS Report for Congress
Received through the CRS Web
Authorization and Appropriations
for FY2004: Defense
Updated September 26, 2003
Amy Belasco
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Stephen Daggett
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

---

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

---

Authorization and Appropriations
for FY2004: Defense
Summary
Congress is now considering the FY2004 budget for the Department of Defense
(DOD). The conference version of the FY2004 DOD Appropriations Act (H.R.
2658/H.Rept. 108-283) was passed by the House by a vote of 407 to 15 on September
24, 2003, and by the Senate on the following day by 95 to 0. The bill provides a total
of $368.7 billion for the defense programs it covers. The Senate substituted the text
of the committee-reported version of the bill, S. 1382, into the House version, H.R.
2658 and passed its version on July 17, 2003. The House passed its version of the
bill on July 8 by a vote of 399 to 19. Both the House and Senate versions of the bill
provided $369.2 billion for defense programs.
There are some reports that the House could take up the conference version of
H.R. 1588, the FY2004 defense authorization next week. It is not clear, however,
whether the two houses have reconciled several contentious issues, which have
stalled completion of the conference for some time. A conference report has not been
filed so no details are available. Both the House and Senate versions of the bill
provide $400.5 billion for national defense programs; the authorization covers not
only defense programs funded in the defense appropriations bills but also programs
funded in the military construction, energy and water, and some other appropriations
measures. The House and Senate authorization measure provides $800 more than the
$399.7 billion the Administration requested for national defense in February.
The amount provided in the conference version of the FY2004 DOD
appropriations bills is $3.6 billion below the Administration request and $4 billion
above the FY2003 appropriations. The programmatic impact of the cut is cushioned,
however, because conferees rescinded $3.5 billion from funds earlier provided in the
$62.6 billion in the FY2003 supplemental appropriations bill that Congress approved
in April. That reduction in the defense request frees up funds for non-defense
appropriations bills while staying within overall caps on discretionary spending.
The authorization conference began in July, and there are reports that the
conference version could emerge next week. Issues in the conference include how
to address the Administration’s request to give the Secretary of Defense wide-ranging
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, expansion of Buy America Act restrictions, and proposed
exemptions to certain environmental regulations.
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: (1) 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 (2) concurrent receipt of retirement and disability benefits for military
retirees that could cost the government $4.4 billion in FY2004 and $56.5 billion over
the next ten years.

---

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
Jeff Chamberlin
7-5413
jchamberlin@crs.loc.gov
Gary Pagliano
7-1750
gpagliano@crs.loc.gov
Defense Industry
Daniel Else
7-4996
delse@crs.loc.gov
Michael Davey
7-7074
mdavey@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
Richard Best
7-7607
rbest@crs.loc.gov
Intelligence
Al Cumming
7-7739
acumming@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
Steven Hildreth
7-7635
shildreth@crs.loc.gov
Missile Defense
Andrew Feickert
7-7673
afeickert@crs.loc.gov
Naval Forces
Ronald O’Rourke
7-7610
rorourke@crs.loc.gov
Nuclear Weapons
Jonathan Medalia
7-7632
jmedalia@crs.loc.gov
Peace Operations
Nina Serafino
7-7667
nserafino@crs.loc.gov
Radio Frequency,
Lennard Kruger
7-7070
lkruger@crs.loc.gov
Military
Readiness
Amy Belasco
7-7627
abelasco@crs.loc.gov
Space, Military
Marcia Smith
7-7076
msmith@crs.loc.gov
David Ackerman
7-7965
dackerman@crs.loc.gov
War Powers
Louis Fisher
7-8676
lfisher@crs.loc.gov
Richard Grimmett
7-7675
rgrimmett@crs.loc.gov

---

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Status of Legislation and Summary of Major Action . . . . . . . . . . . . . . . . . . . . . . 2
FY2004 DOD Appropriations Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Military Construction Appropriations Bills . . . . . . . . . . . . . . . . . . . . . . . . . 10
FY2004 Defense Authorization Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Amendments to the FY2004 Authorization Acts . . . . . . . . . . . . . . . . . . . . . 13
Overview and Budget Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Annual Growth for DOD Slows In Later Years in FY2004 Budget
Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Trends in DOD Spending Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
DOD Receives $103.1 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 . . . . . . . . . . . . . . . 63
Basing Structure, Role of the Reserves, and Force Mix Issues . . . . . . . . . . 68
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
List of Tables
Table 1A. Status of FY2004 Defense Appropriations: H.R. 2658 and S. 1382 . . 3
Table 2. FY2004 DOD Appropriations: Congressional Action . . . . . . . . . . . . . . 10
Table 1B. Status of FY2004 Defense Authorization: H.R. 1588 and S. 1050 . . 12
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: National Defense 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
Table 8B. House and Senate Action on Major Army Acquisition Programs:
Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

---

Table 9A. House and Senate Action on Major Navy Acquisition Programs:
Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table 9B. House and Senate Action on Major Navy Acquisition Programs:
Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Table 10A. House and Senate Action on Major Aircraft Programs:
Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Table 10B. House and Senate Action on Major Aircraft Programs:
Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table 11: House and Senate Action on Missile Defense Funding . . . . . . . . . . . . 55
Table 12. Estimates of the Cost of Concurrent Receipt and TRICARE
for Reservists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

---

Authorization and Appropriations for
FY2004: Defense
Most Recent Developments
The conference version of H.R. 2658, the FY2004 DOD appropriations bill,
was passed by the House on September 23, 2003, and by the Senate on the following
day quickly and with little debate. The vote was 407 to 15 in the House and 95 to 0
in the Senate. With the DOD appropriations bill completed, Congress can turn its
attention to the FY2004 supplemental, which may be marked up as early as next
week in the Senate. The FY2004 DOD appropriations bill provides a total of $368.7
billion for the defense programs it covers, $500 million less than the $369.2 billion
that was included in both the House or Senate versions.
There are also reports that the conference version of the FY2004 DOD
Authorization bill, H.R. 1588, could emerge and reach the House floor next week.
Several contentious issues would need to be resolved, and no conference report has
been issued, so details are not available. Senate Armed Services Committee Warner
has asked the Administration to clarify its position on controversial Buy American
provisions proposed by the House that have held up the conference.1 It is also not
clear whether a compromise version of concurrent receipt has been developed that
would be acceptable to the Administration, which earlier threatened a veto. Nor is
it clear whether proposed new health care benefits for non-active duty reservists, also
subject to a veto threat and included by the conferees, are acceptable to the
Administration.2
The total in the conference version of the DOD appropriations bill is slightly
below the amounts that each appropriations committee provided for defense in their
respective allocations of funds under Section 302(b) of the Congressional Budget
Act. The allocations to the defense subcommittees are $3.1 billion below the request,
which frees up the same amount for other appropriations bills while staying within
the cap on discretionary spending established by the FY2004 budget resolution
(H.J.Res. 95).
The conference version cushioned the programmatic impact of the cuts,
however, by making an offsetting rescission of $3.6 billion from the $62.6 billion in
FY2003 supplemental appropriations that Congress approved in April. Under budget
scoring rules, rescissions are counted as a credit in the year when they are enacted,
even though prior year monies — in this case, FY2003 — are cut. This allowed the
1 Congress Daily, “Defense: Surprised Warner Seeks A Clarification,” September 26, 2003.
2 Congressional Record, September 24, 2003, p. H. 8887 and p. H.8923.

---

CRS-2
appropriators to meet their FY2004 targets without reducing requested funding for
FY2004 programs by the full amount of the reductions in the subcommittee totals.
Both houses had anticipated that an FY2004 supplemental, now under consideration
in both houses, could offset cuts if necessary.
Earlier the House approved its version of the FY2004 defense authorization bill,
H.R. 1588, on May 22, and the Senate approved its version of the bill, S. 1050, on
June 4. Both the House and Senate versions of the bill provide $400.5 billion for
national defense programs, about $800 million above the request of $399.7 billion
that the Administration submitted in February. The authorization covers not only
defense programs funded in the defense appropriations bill but also programs funded
in the military construction, energy and water, and some other appropriations
measures.
Although the formal conference on the authorization began on July 22,
conferees face several potentially contentious issues including differences over the
Administration’s request for a new National Security Personnel System for DOD’s
civilian employees, restrictions on R&D for new and modified nuclear weapons,
proposed exemptions to environmental statutes for DOD, and Buy America Act
provisions.
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 America provisions that are in the House version,
or concurrent receipt and TRICARE for non-activated reservists that are in the Senate
version.3
Status of Legislation and Summary of Major Action
FY2004 DOD Appropriations Bills
Action on the FY2004 DOD appropriations act was completed before the end
of the fiscal year on September 30.
Conference on H.R. 2658. Conferees resolved their issues and the bill was
passed on September 23 by the House and September 24 by the Senate after the two-
day hiatus in business caused by Hurricane Isabel. Differences in funding levels were
resolved. Further details on the appropriation conference will be provided in a later
update.
The conferees adopted restrictions on the Terrorism Information Awareness
System (TIA), which transferred unspecified components of the program from the
Defense Advanced Research Projects Agency (DARPA) to classified venues where
research could continue but would be subject to safeguards in the National Foreign
Intelligence Program that restrict the sharing of information on U.S. citizens. Less
3 Letter from Secretary of Defense Rumsfeld to House Armed Services Committee
Chairman Duncan Hunter dated July 8, 2003.

---

CRS-3
controversial components of the program, such as machine translation of languages,
were retained in DARPA. The components that were transferred and the amount of
funding remaining cannot be determined because details are in a classified annex.4
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. 7/17/03 9/24/03 9/24/03 9/25/03
—
6/18/03
H.Rept. (399-19) S.Rept.
(95-0) H.Rept. (405-15) (95-0)
108-187a
108-87
108-283
a. Full committee markup was completed on June 26, 2003; the report was filed on July 2, 2003.
b. Full committee markup was completed on July 9, 2003; the report was filed on July 10, 2003.
Senate Floor Action. On July 17, the Senate approved its version of the
FY2004 defense appropriations bill following four days of debate. Before beginning
floor debate on July 14, the Senate took up the House-passed bill, H.R. 2658, and
substituted the text of S. 1382, the committee-reported version of the bill, into the
text. Action proceeded on H.R. 2658 as amended.
Debate in the Senate focused on the availability of information on current and
future costs of Iraq and Afghanistan and the effect of ongoing operations on the
federal budget deficit, the quality and availability of intelligence information related
to Iraq, and the effects of extended callups for the war on reservists. Several
amendments were considered on these topics.
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.Amdt. 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.Amdt. 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;
4 Statement by Senator Inouye in Congressional Record, September 25, 2003, p. S11939.
For statutory and conference, see Section 8131 in conference version of H.R. 2658 and p.
H8771, respectively, in Congressional Record, September 24, 2004.

---

CRS-4
! By a vote of 52 to 43, tabled the Kennedy amendment (S.Amdt.
1273) requiring a report by the President within 30 days on U.S.
strategy for reconstruction, security, and humanitarian assistance in
Iraq and a schedule for the U.S. to seek U.N. approval of a
multinational force and NATO participation in Iraq;
! Approved, without objection, an amendment by Senators Wyden and
Byrd (S.Amdt. 1312) to require a report on the reconstruction of Iraq
and an amendment by Senators Schumer and Bingaman (S.Amdt.
1315) to require a report on the establishment of police and military
forces in Iraq.
The Senate considered the following amendments about the effects of
deployments on reservists.
! By a vote of 93 to 2, adopted the Daschle amendment (S.Amdt.
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;5
! By a vote of 64 to 31, rejected the Byrd amendment (S.Amdt. 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.Amdt. 1255) that would have
established a commission to examine the effects of overseas
deployments on reservists.6
The Senate also considered amendments related to enemy combatant detainees
and intelligence related to Iraq and took the following actions, listed below.
! By a vote of 52 to 48, tabled the Bingaman amendment (S.Amdt.
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.Amdt.
1275) setting up a national commission to review intelligence
information to review the development and use of intelligence
information on Iraq;
5
Neither the Senate nor the House version of the FY2004 defense appropriations bills
provides the funding because the authorization bill has not been finalized.
6 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.

---

CRS-5
! By a vote of 62-34, tabled a Durbin amendment (S.Amdt. 1277) to
limit funds for intelligence community management pending a
report on Iraq related intelligence.
On some other issues, by a vote of 79 to 16, the Senate tabled a McCain
amendment (S.Amdt. 1270) to delete funding for specific projects in the FY2004
DOD appropriations bill; by voice vote, the Senate agreed to a Stevens amendment
(S.Amdt. 1244) to provide full funding for 12 additional weapons of mass destruction
civil support teams in the National Guard; by a vote of 71 to 24, the Senate tabled a
Byrd amendment (S.Amdt. 1283) to rescind $1.1 billion for procurement and R&D
and appropriate the same amount to combat AIDS/HIV, tuberculosis, and malaria.
Senate Markup. On July 9, the Senate Appropriations Committee marked up
and ordered reported its version of the FY2004 DOD appropriations bill, (S. 1382,
S.Rept. 108-87) providing a total of $369.2 billion, the same amount as is included
in H.R. 2658, the House-passed bill. Floor debate began on July 14. (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).7 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).8 (See Table 2
for funding effects of appropriations markups.)
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;
7
See CRS Report RL31829, Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security.
8 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.]

---

CRS-6
! 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
funding by $161 million for anticipated savings;
! 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.9
For a more extended discussion of congressional changes to investment programs,
see below, the section entitled, “Affordability and Mix of DOD’s FY2004 Investment
Programs,” including Table 8A, 8B, 9A, 9B, 10A, 10B, and 11.
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. As passed
by the Senate, H.R. 2658 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 develop a
system 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 (TIA) programs similar to those included in the
House version of the FY2004 DOD Appropriations Act, H.R. 2658. The
Administration objected to the Senate cutoff of funding.10
Similar restrictions on deployment were originally included in the Consolidated
Appropriations Resolution of FY2003 (P.L. 108-7).11 On May 20, 2003, the Defense
9 Senate Appropriations Committee handout at markup, July 9, 2003, and 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.
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].
11 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,
(continued...)

---

CRS-7
Advanced Research Projects Agency (DARPA) avoided a cutoff in funding for TIA
by submitting the report required by P.L. 108-7. On August 29, 2003, retired
Admiral Poindexter, the head of the program, is slated to resign, partly in response
to recent controversy about a TIA program, FutureMAP, which was designed to set
up a “market” to collect predictions about potential terrorist or terrorist-related
events.12 The program was cancelled in response to public and congressional
concerns.
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). The Senate
version of the bill 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.
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 appropriations bill did not
provide funding for the full concurrent receipt that was authorized in the Senate
version of the FY2004 defense authorization bill 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 measure. If the
benefit — or some form of it — is provided, payments to current retirees would be
made mainly from the military retirement trust fund and not directly from the
Defense Department. DOD would be required to pay into the trust fund to cover the
actuarily determined cost of future benefits for current personnel, however, and this
amount would have to be covered either 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
11 (...continued)
see CRS Report RL31786, Total Information Awareness Programs: Funding, Composition,
and Oversight Issues by Amy Belasco.
12 Washington Post, “Poindexter Resigns But Defends Programs,” August 13, 2003; Defense
Advanced Research Projects Agency, Report to Congress Regarding The Terrorism
Information Awareness Program, In Response to Consolidated Appropriations Resolution
2003, P.L. 108-7, Division M, Section 111 (b);
see the DARPA website at
[http://www.darpa.mil/body/tia/tia_report_page.htm].

---

CRS-8
of Defense reiterated that position this year in a July 8 letter to authorization
conferees.13
According to recent press accounts, House Republican leaders are proposing a
compromise that would allow concurrent receipt in return for restricting in some
fashion benefits to current and future retirees. The nature of the compromise is
unclear, and no legislative language has emerged making it clear whether the
proposal could pay for itself.14
Reductions to O&M. The Senate version of the appropriations bill 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 Southwest Asia operations in and around
Iraq that are no longer needed, or for prices of 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 its version of the defense
appropriations bill by a vote of 399 to 19 on July 8. Several amendments were
offered by members and then withdrawn after the chairman 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 to implement the 2005
base closure round.15 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.16
The Administration supported H.R. 2658 but objected to the decision by House
appropriators to rescind $2 billion in funds from the Iraq Freedom Fund in the
FY2003 Supplemental (P.L. 108-11), contending that it would reduce “flexibility to
address emerging urgent security and reconstruction requirements.”17
House Markup. On June 26, 2003, the House Appropriations Committee
completed its markup of the FY2004 defense appropriations bill and reported the bill
by voice vote (see Table 1A). The bill provides $369.2 billion for DOD, a total that
is consistent with the 302 (b) allocation of funds to the defense subcommittee by the
House and Senate Appropriations Committees but $3 billion below the amount
13 Letter from Secretary of Defense Rumsfeld to House Armed Services Committee
Chairman Duncan Hunter, July 8, 2003.
14 Newport News Daily Press, “Concurrent Receipt Deal Tied To Disability Pay ‘Reform’,”
September 12, 2003.
15 Congressional Record, July 8, 2003, p. H.6302 - p. H6303 and p. H.6318.
16 Congressional Record, July 8, 2003, p. H. 6300 - p. H6302.
17
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.]

---

CRS-9
assumed by the budget committees in the FY2004 budget resolution.18 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 is $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 Chairman Jerry Lewis told reporters that he expected an additional
supplemental request from the Administration within a few weeks to cover ongoing
operations in Iraq.19 DOD Comptroller Dov Zakheim, however, has said that the
$62.6 billion FY2003 supplemental funding is sufficient for FY2003. More recently,
Under Secretary of Defense Paul Wolfowitz suggested that a supplemental for DOD
may be needed but that estimating costs at this time is difficult, particularly for Iraq.20
That comment, however, appears to refer to costs in FY2004 for Iraq and
Afghanistan that presumably will be addressed in a supplemental appropriations
request that would be proposed in the next fiscal year that begins on October 1.21
Of the $3.1 billion decrease, $2 billion is from 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.
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 accounts. At the same time, the House appropriators added
$2.8 billion for various RDT&E programs and almost $1 billion for procurement
programs (see Table 2). Many of the actions of the House appropriators endorsed
previous action by the House Armed Services Committee in its markup.
18 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.
19 Inside Defense, “Lewis: DOD Likely to Need 2004 Supplemental for Iraq Costs,” Jun2
26, 2003.
20 Inside Defense, “Wolfowitz: ‘Very Possible’ DOD Will Need Supplemental Spending
Bill,” June 18, 2003.
21 Congressional Quarterly Weekly, “Defense Panel Struggles With Shortfall in Funding For
Overseas Campaigns,” by Niels C. Sorrels, June 21, 2003.

---

CRS-10
Table 2. FY2004 DOD Appropriations: Congressional Action
(in billions of dollars)
Senate
Senate
FY2003
FY2004
House
vs.
vs.
Title
Enacted Request
House
vs. Request
Senate
Request
House
Military Personnel
93.0
98.9
98.3
-0.7
98.9
0.0
+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
+0.9
73.8
-1.1
+0.2
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
+0.5
+0.2
Programs
Related Agencies
0.5
0.4
0.4
0.0
0.4
-0.0
-0
General Provisionsa
[-4.0]
[0.1]
[-4.1]
[-4.0]
[-3.4]
[-3.3]
[+0.7]
Iraq Freedom Fund
0
0
-2.0
-2.0
-3.2
-3.2
-1.2
Rescissionb
Scorekeeping
0.0
0.1
0.0
-0.1
0.0
-0.1
0.0
Adjustment
Consolidated
10.0
—
—
—
—
—
—
Appropriations
TOTALc
364.7
372.2
369.2
-3.0
369.1
- 3.1
-0.1
Sources: H.Rept. 108-187; S.Rept. 108-87.
Notes: CRS adjusted title totals for both FY2003 and FY2004 to allocate funding in general
provisions. [ ] Square brackets indicate the total amount of funding for general provisions that is
allocated by title in the table and is not added into the total. For FY2004, see H.R. 2658 and S. 1382.
For FY2003, see P.L. 107-248.
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.
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 0.22
22 See CRS Report RL31810, Appropriations for FY2004: Military Construction, by Daniel
(continued...)

---

CRS-11
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 approval 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).23 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 as reported did not
include the DOD proposal to redesign its civilian personnel system. The House
Armed Services Committee (HASC) reported its bill on May 16 after completing
markup on May 14 (H.Rept. 108-106). On May 21, the House adopted a rule (H.Res.
245) that limited general debate to two hours and amendments to those specified in
the rule. The Senate rule required that all amendments be considered relevant by the
Parliamentarian. The House bill includes much of DOD’s legislative proposal for a
new civilian personnel system as initially marked up by the House Government
Reform Committee (H.R. 1836).24
22 (...continued)
H. Else.
23 Congressional Record, May 23, 2003, p. S7115 and Congressional Record, June 4, p.
S7280-S7295.
24 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.

---

CRS-12
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 DOD Authorization Conference Issues.
Key issues in the FY2004 authorization conference include:
! restrictions on R&D for new and modified nuclear weapons;
! the proposed new National Security Personnel System;
! exemptions to environmental statutes for DOD; and
! broadening the application of Buy America Act restrictions.
Low Yield Nuclear Weapons.
Both the House and Senate adopted
provisions that would lift or modify a ban on R&D of low-yield nuclear weapons that
was enacted in 1989. The House version of the authorization bill modifies the ban
to permit research up to engineering development. So the House measure preserves
a ban on engineering development and production in standing law. The Senate
version repeals the 1989 ban on R&D but requires specific congressional
authorization for DOE to proceed to engineering development of low yield nuclear
weapons or a nuclear earth penetrating weapon (see additional discussion below in
the section entitled “Modify Restrictions on R&D for Low-Yield Nuclear
Weapons”). A parallel debate may take place in the conference on the Energy and
Water appropriations bill. House appropriators reduced funding for the Robust
Nuclear Earth Penetrator from $15 million to $5 million and eliminated funding for
the Advanced Concepts Initiative, which would fund concept studies on low yield
nuclear weapons. Senate appropriators did not reduce funding in their markup, so
this appears likely to be a conference issue.25
New Personnel System for DOD Civilians. The House version of the
authorization includes much of the legislative language the Administration proposed
allowing DOD to establish a new National Security Personnel System (NSPS) for the
department’s 746,000 civilian employees. An attempt to add civil service protections
25 National Journal, “Energy and Water Spending Bill Clears Senate Subcommittee,” July
16, 2003.

---

CRS-13
to the House bill was defeated on the floor. The Senate bill does not include these
provisions. The Senate Governmental Affairs Committee held hearings on June 4
on S. 1166, a bill to establish a National Security Personnel System. The Senate
committee bill includes some of what the Administration proposed, but includes
additional protections for civil servants (see the section below entitled, “A New
Civilian Personnel System for DOD?”).
Environmental Exemptions for DOD. The Administration proposed a
wide range of exemptions to various environmental laws for DOD, but 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
under that Act. The Senate bill does not include changes to that Act.
Buy America Act Restrictions. The Administration proposed a series of
changes to current Buy America 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.
Amendments to the FY2004 Authorization Acts
The two sections below describe major floor amendments to 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 on 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 amendment 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 amendment
and 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);

---

CRS-14
! L. 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 earlier ruled earlier as not relevant by
the Senate Parliamentarian.26 The Dorgan/Lott amendment to cancel the 2005 round
of base closures was defeated by a vote of 42 to 53.27
The Statement of
Administration Policy on the bill threatened a veto if Congress included cancellation
of the 2005 round.28
Another amendment that the Administration warned could trigger a veto,
however, 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.29 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.30
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
26 Congressional Record, May 20, 2003, p. S6645 and p. S6648.
27 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.
28 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].
29 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.
30 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).

---

CRS-15
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.31
The FY2004 congressional budget resolution does not include an allowance for
concurrent receipt. If enacted, other programs within DOD would have to be
decreased to finance the costs of contributing to the military retirement fund, and
spending for current beneficiaries would increase the deficit by $3 billion in FY2004.
Last year, faced with an Administration threat to veto the authorization bill if it
included a similar provision, Congress adopted a measure providing special
compensation benefits to about 40,000 retirees whose disabilities reflect either
combat or combat-related disabilities.32 That special compensation benefit is
available to those eligible retirees as of June 1, 2003.
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);
! B. Nelson 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);
31 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.
32 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.
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.

---

CRS-16
! 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:
! Feinstein/Kennedy amendment to re-institute the ban on R&D on
low-yield nuclear weapons;
! Dorgan amendment prohibiting funds for the Robust Nuclear Earth
Penetrator (tabled by a vote of 56 to 41); and
! Murray amendment that would have permitted overseas DOD
facilities to be used for abortions if no DOD funds were used.
Major Changes During Markup. The Senate markup of S. 1050 did not
include provisions that DOD requested to provide broad new authority to redesign
its civilian personnel system. The House markup of H.R. 1588 includes some but not
all that DOD requested, generally tailoring the new authorities to be consistent with
those granted to the Department of Homeland Security. The measures adopted allow
the agency to set its own pay scales and devise a new appeals procedures for
employees but retain 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 the section
below entitled “New Civil Service System for DOD?”). Neither the House Armed
Services Committee nor the Senate Armed Services Committee agreed to DOD’s
request for broad authority to manage senior level military officers.
Also controversial may be the House approval of proposals to grant DOD
exemptions to certain environmental laws, which Congress has rejected in previous
years (see section on Environmental Provisions, below).

---

CRS-17
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 the FY2003 level, however, $62.6 billion in supplemental defense
appropriations that Congress approved in April for the Iraq war and other costs.35
The FY2004 increase is in addition to substantial increases in FY2002 and
FY2003. The new request is more than $100 billion above the FY1999 level for
defense spending, and it represents 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 drawdown in spending
and military personnel after the end of the Cold War was completed.
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 the ten-year
FY1999-FY2008 trend in defense spending under the Administration’s plan both for
the national defense budget function and for 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.
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.
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).

---

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.

---

CRS-19
Annual Growth for DOD Slows In Later Years in FY2004
Budget Resolution
The conference agreement on the FY2004 congressional budget resolution
(H.Con.Res. 95, H.Rept. 108-71), which was passed by both houses on April 11, just
before the April recess, 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 in
defense, some observers have questioned whether increases can be sustained in the
future because of 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 spending on entitlement programs by FY2008 and
an 80% increase by FY2013.38
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.

---

CRS-20
Table 5. FY2004 Budget Resolution: National Defense Request and Congressional Action
(billions of dollars)
FY2004-
FY2009-
FY2004-
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2008
FY2013
FY2013
Est.a
Proj.
Proj.
Proj.
Proj.
Proj.
Proj.
Proj.
Proj.b
Budget Authority
Administration Request
392.7
399.7
420.0
440.0
460.3
480.7
2,200.8
NA
NA
FY2004 Budget Res.
392.5
400.5
420.1
440.2
460.4
480.9
2,202.0
2556.1
4758.2
Annual Change In Dollars
Administration Request
30.6
7.0
20.3
20.0
20.3
20.4
88.1
NA
NA
FY2004 Budget Res.
NA
8.1
19.5
20.1
20.3
20.5
88.4
48.5
136.9
Annual Change In Percent
Administration Request
8.5%
1.8%
5.1%
4.8%
4.6%
4.4%
NA
NA
NA
FY2004 Budget Res.
NA
2.1%
4.9%
4.8%
4.6%
4.4%
NA
NA
NA
Defense Share Of Discretionary BA
Administration Request
48.8%
47.6%
48.2%
48.6%
48.9%
49.7%
NA
NA
NA
FY2004 Budget Res.
51.5%
50.9%
51.7%
52.2%
52.6%
53.2%
NA
NA
NA
Outlays
Admin. Requesta
376.3
390.4
410.1
423.2
436.4
460.5
2,120.7
NA
NA
FY2004 Budget Res.
386.2
400.9
414.2
426.0
438.7
462.9
2,142.7
2,515.6
4,658.3
Estimates Of The Surplus/Deficit
Administration Request
-304.0
-307.0
-208.0
-201.0
-178.0
-190.0
NA
NA
NA
FY2004 Budget Res.
-282.5
-287.3
-218.1
-169.4
-128.1
-113.9
NA
118.8
-798.1
Source: CRS calculations based on OMB, FY2004 Historical Tables, and DOD, Office of the Secretary of Defense, Comptroller, Briefing, FY2004 Defense Budget (February 6, 2003);
Conference Report on FY2004 Budget Resolution, H.Rept. 108-71, and House report on H. Con. Res. 95, H.Rept. 108-71, p. 6.
a. Administration request does not reflect outlays from the $10 billion enacted in the FY2003 Consolidated Appropriations Resolution.
b. OMB does not project budget authority or outlays beyond five years.

---

CRS-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 projection and
matching levels approved in both houses. In later years, however, the House
projected higher funding for defense than the Senate, and the conference
compromised at $4.758 trillion through FY2013, 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 military retired pay and
Veterans Administration disability benefits, a proposal considered but rejected in the
final version of the FY2003 DOD Authorization Act. Instead, last year, 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 less likely 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,
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
would cost about $675 million compared to zero expenditures assumed by DOD.
According to DOD, the rationale for setting up this new account with an “indefinite
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 in
the CBO estimate for that account to other programs. The House and Senate
appropriators also rejected DOD’s proposal for this new fund and eliminated the
$675 million for the account.
DOD’s Appropriations Allocation. A sign of potential pressure on DOD’s
budget top line in the future is the outcome of decisions about the distribution of
funds to the various appropriations subcommittees to guide their markup, a process
known as setting 302(b) allocations.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.
The conference agreement on the budget resolution allocates $784.7 billion in
discretionary budget authority to the appropriations committees. For several weeks
after the budget resolution was agreed to, committee leaders debated how to allocate
funds among the subcommittees and, especially, how to absorb what they identified
as a $5 to $7 billion gap in spending requirements and amounts available. Departing
from traditional practices where House and Senate Committees work separately on
subcommittee allocations, committee leaders negotiated across both houses with their
leadership and with the White House to establish a common framework within which
to base their initial allocations.
On June 11, House and Senate Appropriations Committee Chairmen announced
an agreed package that would free up sufficient resources to address the funding gap
and remain within the overall FY2004 discretionary budget cap of $784.7 billion. As
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.
For a brief discussion, see CRS Report 98-815, Budget Resolution Enforcement.

---

CRS-23
approved by all parties, including the President, the appropriations committees
reduced defense spending by $3.1 billion and moved $2.2 billion in FY2004 advance
appropriations to FY2003.
Trends in DOD Spending Plans
Assessing long-term trends in the defense 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, which is included in figures in Table 6, 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
2003*
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: Office of Management and Budget, Budget of the U.S. Government, FY2004: Historical
Tables and Budget of the U.S. Government, FY2004: 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 appropriations.

---

CRS-24
Figures for FY2003 also include an additional $10 billion provided for DOD in
the FY2003 Consolidated Appropriations Resolution for classified intelligence
programs and for 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 to continue the ramp-up
in R&D. By FY2008, however, DOD plans to increase funding for procurement by
about 40% and RDT&E by over 15% compared to FY2003.
DOD Receives $103.1 Billion in Supplemental Appropriations
Since September 11 Attacks
Since the September 11 attacks, DOD has received $103.3 billion in
supplemental or regular 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 its FY2004
budget, however, which suggests that the Administration will propose either a
supplemental or a budget amendment for FY2004. In addition to funding in
supplementals, DOD received $10 billion in the FY2003 Consolidated
Appropriations
Resolution to fund the
occupation of Afghanistan and
classified/intelligence programs.
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. Congress rejected DOD’s request
that about 95% of the funding be provided in a flexible account, choosing instead to
allocate 45% of the funds in flexible accounts (see below).
Of the $40 billion appropriated in the Emergency Terrorism Response
supplemental (ETR) passed on September 14, 2001, 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

---

CRS-25
appropriation accounts at its discretion in the FY2002 supplemental for the bulk of
the funding requested.
In the most recent supplemental, for FY2003, DOD requested that Congress
provide 95% of the funding in the Defense Emergency Response Fund (DERF) so
that DOD could transfer funds to various accounts as needs arise. Instead Congress
set up an new fund, the Iraq Freedom Fund, and allocated 25% of the funds requested
to that fund but required five-day advance notifications.
Table 7. Flexibility in DOD’s Supplemental Funding Since
September 11 Attacks
(Dollars in Billions)
Emergency
Terrorism
Total
Funding Level
FY2002
FY2003
Response
ETR-
& Amount of
Supplemental
Supplemental
Supplemental
FY2003
Flexibility
(P.L. 107-206)
(P.L. 108-11)
(P.L. 107-38 and
Supp.
P.L. 107-117)
Flexible Funda
Request
21.16
11.30
59.86
92.33
Enacted
15.00
11.30
15.68
41.98
Regular Appropriations
Request
0.00
2.72
2.72
5.45
Enacted
2.30
2.08
46.91
51.29
Total Funding
Request
21.16
14.02
62.59
97.77
Enacted
17.30
13.38
62.59
93.27
As Percent of Total Funding
Flexible Fund
Request
100.0%
80.6%
95.6%
94.4%
Enacted
86.7%
84.4%
25.1%
45.0%
Regular Appropriations
Request
0.0%
19.4%
4.4%
5.5%
Enacted
13.3%
15.6%
74.9%
55.0%
Total Funding Received
Request vs. Enacted
81.7%
95.4%
100.0%
95.4%
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

---

CRS-26
appropriated into a new Iraq Freedom Fund, set up as a transfer account, or into regular
appropriations accounts.
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,”45 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
redesign 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 defense authorization bill was planned. Although DOD witnesses
discussed their plans to submit the proposal earlier in the year and met with
congressional staff in the preceding couple of months, the specific proposals were not
available before April 1046 (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 its 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.47 DOD contends that transformation is now fully
45 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.
46 Statement of Deputy Secretary of Defense Paul Wolfowitz before the House Committee
on Government Reform, May 6, 2003, p. 4.
47 Secretary of Defense Rumsfeld testifying before the Senate Armed Services Committee,
(continued...)

---

CRS-27
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
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
Some major issues in 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
47 (...continued)
FY2004 Budget, February 13, 2003; transcript available from Reuters.

---

CRS-28
rationale for its proposal is the need to provide additional flexibility to DOD in
carrying out its missions.
Status of Bills Addressing DOD Proposal.
In the House, the DOD
civilian personnel proposals were addressed initially by the Government Reform
Committee in H.R. 1836, which the committee marked up and ordered to be reported
on May 7 (H.Rept. 108-116, filed on May 19).
Much of that bill was then
incorporated into H.R. 1588, the FY2004 defense authorization bill, as reported by
the House Armed Services Committee on May 14.48 The committee version of the
defense authorization bill approved changes in DOD civilian personnel management
proposal that were included in the Government Reform Committee markup but did
not approve the main Administration proposals to change laws governing senior
uniformed officers.
The committee bill also addressed only some of the
Administration’s environmental proposals. On the Senate side, the Armed Services
Committee did not include any of the major Administration personnel proposals in
S. 1050, its version of the FY2004 authorization bill. Instead, those provisions were
addressed by the Governmental Affairs Committee. On June 2, Senator Collins, the
chair of the committee, submitted a bill, S. 1166, to establish a DOD national security
personnel system. The committee held hearings on the measure but did not mark it
up or report a 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.49
48 The Armed Services Committee did not include sections of H.R. 1836 on NASA and the
SEC but did include some government-wide provisions.
49 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.

---

CRS-29
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.50
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.51
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.52
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. It has been used by DOD to attract and reward scientific and technical
personnel working at DOD’s research facilities.53 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.54
50 House Government Reform Committee, Hearing on Civil Service and National Security
Personnel, May 6, 2003; transcript available from Reuters.
51 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]
52 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.
53 Statement by Deputy Secretary Paul Wolfowitz before the House Committee on
Government Reform, May 6, 2003.
54 Statement by David M. Walker, Comptroller General of the United States, “Defense
(continued...)

---

CRS-30
Although DOD has had the authority to expand its personnel demonstration projects
to 120,000 civilians, over 15% of its workforce, DOD has only used its authority for
30,000 personnel.
To gain additional flexibility to remove, suspend, or discipline employees,
DOD seeks the authority to re-write the appeals process, though they do not specify
the changes they would seek. Employees could no longer appeal decisions to the
current Merit System Protection Board. To give greater ability to manage its
workforce, DOD is also requesting authority to offer buyouts. To simplify bargaining
with employees, DOD is also requesting the authority to bargain at the national rather
than the local level as is the current practice and would also be required to consult,
but not necessarily reach agreement with OPM thirty days in advance of negotiations.
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, to 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.
54 (...continued)
Transformation: DOD’s Proposed Civilian Personnel System and Government-wide Human
Capital Reform,” before the House Armed Services Committee, May 1, 2003, p. 3.

---

CRS-31
DOD would also be allowed to bargain at the national level, an authority not
provided to DHS, and one that may 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 the
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;
! 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
! provides DOD with the same total level of funding as would be
needed under the current system between FY2004 and FY2008.55
DOD’s Proposed Changes in Managing Senior Military and
Reservists. As part of its “transformational” package, DOD also requested 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 to
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.56
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
55 See S. 1166. Prepared with the help of Barbara Schwemle, CRS.
56 Testimony of Under Secretary of Defense David Chu before the House Armed Services
Committee, May 2, 2003, transcript; available from Reuters.

---

CRS-32
disasters, accidents, or catastrophes. DOD would also be allowed to provide medical
and dental screening of reservists preparing for mobilization.57
Congressional Action: Senate and House Markup. The Senate Armed
Services Committee 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 committee agreed
only to expand existing authority to use reserves in terrorist-related incidents. The
committee did agree to provide medical and dental screening for reservists likely to
deploy.
Like the Senate committee, the House Armed Services Committee did not grant
the Secretary of Defense broad discretion to manage senior level military officers.
The House 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
did not approve DOD’s request to add up to 90 days to reserve training requirements
but did agree to provide medical and dental screening of reservists likely to deploy.
Proposed Acquisition Changes. In its legislative package, DOD included
several provisions designed to increase its flexibility to contract for major defense
weapons systems and information technology programs, receive waivers from Buy
America and domestic content requirements, and buy standardized items.58
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”.59
Congressional Action: Senate and House Markup. The Senate Armed
Services Committee was willing to lift the prohibition on contracting out for one year
57 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].
58 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].
59 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
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 committee
recommended that depot work performed by a public-private partnership in a center
of excellence would be excluded from the tally.
The House Armed Services Committee did not include either of DOD’s requests
to contract out firefighters or security guards or to expand the depot work that could
be counted as “in-house.”
Other Organizational And Financial Proposals To Increase
Flexibility. Other DOD 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 requested that the
limit on transfers between appropriation accounts be raised from 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%.)60
DOD also proposed changing the standard governing awards of contracts to
government entities versus private companies based on the A-76 competitive
sourcing rules. DOD proposed using a “best value” assessment rather than the
current lowest cost standard. A less controversial proposal, which has been endorsed
by both OPM and DOD, would transfer the DOD civilian personnel currently
performing security investigations to OPM. DOD also proposed eliminating 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.61
Congressional Action: Senate and House Markup. The Senate Armed
Services Committee did not agree to give the Secretary of Defense authority to
reorganize the department, transfer personnel, or be exempt from ceilings on
headquarters staff. The committee 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.
The House Armed Services Committee also did not give the Secretary of
Defense authority to reorganize DOD, and it 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 asked Congress to give it permanent authority to allocate up to $200
million to support “coalition forces,” or foreign military forces. Although this
60 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].
61 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].

---

CRS-34
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 included no provision for congressional oversight. In the
FY2003 supplemental, Congress required DOD to report by July 1, 2003 on its plan
to allocate funding for coalition forces.62
Congressional Action.
None of the approved versions of either the
authorization or appropriations bill approved DOD’s request for authority to spend
up to $200 million for coalition forces.
DOD Again Requests Environmental Exemptions. As it did last year,
DOD requested that military readiness-related activities be exempted from certain
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 the “Superfund” law. 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 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.63 The debate centers on whether and to what extent DOD should be exempt
from current environmental statutes.64
Congressional Action: House And Senate Proposed Changes to
Current Law.
This year, both House and Senate versions of the defense
authorization bill included modifications of the Administration’s proposal for
exemptions for DOD to the Endangered Species Act, and the House also included
exemptions from the Marine Mammal Protection Act that are close to the
Administration’s proposals.
62 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.
63 GAO-03-621T, Military Training: DOD Approach to Managing Encroachment on
Training Ranges Still Evolving, April 2, 2003.
64 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.

---

CRS-35
Endangered Species Act. The Administration’s proposal would prohibit the
Secretary of the Interior from designating DOD lands as critical habitat for
endangered species if DOD developed an Integrated Resources Management Plan
under the Sikes Act.65 The House provision modifies the Administration proposal:
it allows DOD to develop and administer an “Integrated Resources Management
Plan” to protect certain DOD lands, but it gives the Secretary of the Interior final say
as to whether the plan “addresses protective issues” as a condition for exempting
lands from the Endangered Species Act.66 The Senate language is similar. It 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
“effectively conserve the threatened species and endangered species.”67 In addition,
the Senate proposal would amend Title 10 of the U.S. Code, which governs the
Department of Defense, rather than the Endangered Species Act itself. This is
considered more acceptable to environmental interests.
Under current law, integrated management plans are not accepted as substitutes
for designating lands as critical habitat to protect endangered species. An integrated
management plan is intended, rather, to provide both for the protection of fish and
wildlife and for the military mission of the base. The goal of critical habitat
designations is solely to protect endangered species.68 According to the Senate
Armed Services Committee, portions of about 150 DOD bases could be designated
as critical habitat.69
Marine Mammal Protection Act. The House version adopts two 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.”70 At his discretion, the Secretary of Defense could
renew such exemptions for additional two-year periods.
In addition, the House version adopts an Administration proposal that would
apply a narrower definitions of harassment of marine mammals to military readiness
65 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].
66 See Section 317 in Congressional Record, May 21, 2003, p. H4428.
67 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.
68 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.
69 S.Rept. 108-46, p. 286.
70 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.]

---

CRS-36
activities than to activities of other agencies. The standard under current law is that
activities are prohibited if they would have a “potential to injure or disturb” marine
mammals.71 The House language, in contrast, defines activities as “harassment”
only if disruptions to the normal activities of marine mammals reach a point at which
“behavioral patterns are abandoned or significantly altered.” 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.
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.72
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
71 See Section 318 in Congressional Record, May 21, 2003, p. H4428.
72 Briefing by DOD Comptroller Dov Zakheim, “FY2004 Defense Budget,” February 6,
2003.

---

CRS-37
“Future Combat System,” a family of new armored vehicles and other systems
designed to fundamentally change the way the Army will fight in the future. In
addition, the Army has been continuing to develop the Comanche helicopter, though
late last year, the Defense Department decided to cut planned total Comanche
procurement by about half.
In the FY2004 budget request, the Defense Department cut back a number of
planned upgrades of Army legacy systems, including high-profile M1 and Bradley
upgrades. In the wake of the Army’s success in the Iraq war, there was extensive
discussion in Congress about the wisdom of these planned cuts. The House Armed
Services Committee-reported version of the authorization adds $727 million to the
request to continue M1 and Bradley upgrades along with some related Army upgrade
programs.
Congressional Action. Table 8A shows action on major Army programs
in the House and Senate defense authorization bills, and Table 8B shows action in
the House and Senate versions 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 rejected DOD plans to
cut back on Army “legacy force” upgrades, though 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
added $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.

---

CRS-38
! Helicopters: All of the committees add money for UH-60 utility
helicopters, largely for the National Guard, though there are some
differences in how the money is allocated. This is a perennial
congressional addition to proposed budgets. All of the committees
also 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
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
RAH-66 Comanche
—
— 1,079.3
—
—
1,079.3
—
—
1,079.3 —
UH-60 Blackhawk
10
167.0
70.2
19
279.8
70.2
17
237.0
74.1 House adds $112.8 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 mods.
—
138.5
—
—
38.5
100.0
—
38.5
100.0 Both House and Senate transfer $100 million from proc. 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 Longbow
—
776.7
—
—
776.7
—
—
776.7
—
—
Bradley Base Sustainment
—
113.3
—
—
372.1
—
—
113.3
— House adds $258.8 million for Bradley M3A2 Operation Desert
Storm ``D+’‘ upgrades.
M1 Abrams Mods/Upgrades
—
361.6
—
—
645.6
—
—
361.6
— House adds $424 million for M1A2 to M1A2 SEP upgrades, cuts
$108 million from new engine program due to delays and $32
million from other upgrades — net add $284 million.
Stryker Interim Armored
301
955.0
46.0
301
955.0
46.0
301
955.0
46.0 —
Vehicle
HIMARS (Rocket Launcher)
24
124.2
87.4
24
124.2
87.4
24
124.2
— Note: C-130 air transportable version of MLRS.
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 Missile)
901
140.7
—
901
140.7
—
901
180.7
— Senate adds $40 million for command launch units for Army
National Guard.
ATACMS Penetrator
—
—
55.1
—
—
55.1
—
—
— House urges no obligation of funds until DOD explores more cost
effective options to attack hardened sites; Senate cuts all funds.

---

CRS-40
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
Logistic/Theater Support
—
—
65.7
1
33.0
65.7
—
—
73.2 House adds $33 million in proc. for Logistic Support Vessel (Army
Vessel
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.
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 mods.
—
138.5
—
—
38.5
73.0
—
44.4
92.0 House cuts $100 million from proc. and 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 Longbow
—
776.7
—
—
781.0
—
—
766.7
— House adds $4.3 million for radar upgrades earmarked for 2

---

CRS-41
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
South Carolina National Guard AH-64Ds. Senate cuts $10.0
million from support costs.
Bradley Base Sustainment
—
113.3
—
—
372.1
—
—
175.2
— House adds $258.8 million for Bradley 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 M1A2 SEP upgrades (vs
Mods/Upgrades
$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 Armored
301
955.0
61.4
—
990.0
61.4
301
955.0
61.4 House adds $35 million for long lead items for 5th and 6th
Vehicle
brigades. Senate adds $35 million for long lead items.
HIMARS (Rocket
24
124.2
87.4
—
124.2
87.4
24
124.2
87.4 Note: C-130 air transportable version of MLRS.
Launcher)
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 Missile)
901
140.7
—
—
140.7
—
901
140.7
—
—
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 Support
—
—
65.7
—
—
65.7
—
—
73.2 House does not follow House authorization add. Senate adds
Vessel
$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-42
Navy Programs. 73 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: A major budget decision in the
FY2004-FY2009 defense plan was to accelerate the transition to the
next generation of carriers by incorporating more advanced
technology into the next carrier to be fully funded in FY2007 or
73 This section was written by Ronald O’Rourke.

---

CRS-43
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. All of the congressional defense committees supported
the Administration’s revised carrier development program.
! 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.
Subsequently, on August 14, the Navy
announced an agreement with contractors on a multi-year
procurement deal for 7 boats, but with an option to reduce
procurement to 5 or 6 boats with some increase in costs per ship.
! Attack Submarine Refueling Overhaul: The Senate Armed Services
Committee added $248 million to refuel one Los Angeles-class
attack submarine; the Navy did not request funding for any
overhauls.
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 expressed some
concern about the status of the Littoral Combat Ship (LCS)
development program, though none 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 $10 million from the overall program.
The Senate
Appropriations Committee added funds for module design.
! 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-44
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
—
—
Virginia Class Submarine
1 2,528.1
112.4
1 2,528.1
112.4
1
2,528.1
138.6 House adds $10.0 million in R&D for multi-mission
module. Senate adds $26.2 million in R&D for that and
other specified equipment.
Cruiser Conversion Program
1
194.4
—
1
194.4
—
1
194.4
—
—
Missile Submarine Conversion
2 1,167.3
—
2 1,167.3
—
2
1,167.3
—
—
Submarine Refueling Overhauls
—
164.4
—
164.4
—
1
412.4
— Senate adds $248 million for one overhaul in FY2004
DDG-51 Destroyer
3 3,198.3
205.7
3 3,198.3
250.7
1
3,219.3
205.7 House adds $35 million in R&D for S-band radar and $10
million for open Aegis architecture. Senate adds $21
million in proc. for ship modernization.
LPD-17 Amphibious Transport
1 1,192.0
8.0
1 1,192.0
8.0
1
1,192.0
8.0 —
LHD-8 Amphibious Assault
—
355.0
—
—
355.0
—
—
355.0
—
—
Ship
Prior Year Shipbuilding Costs
—
635.5
—
—
635.5
—
—
635.5
—
—
DD (X) Destroyer
—
— 1,038.0
—
— 1,042.0
—
— 1,038.0 House adds $4 million for knowledge projection 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-45
Table 9B. House and Senate Action on Major Navy Acquisition Programs: Appropriations
(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
—
—
232.8
— Senate cuts $135 million as premature request.
Virginia Class Submarine
1 2,528.1
112.4
1 2,123.2
158.9
1
2,339.1
141.6 House cuts $390.0 million in proc. for Multi-Year
Procurement (MYP), adds back $115.0 million for MYP
savings, cuts $129.9 million for advance proc. for FY2008
boats, and adds $46.5 million in R&D for specific
equipment and for overall program. Senate cuts $130.0
million in proc. for MYP, approving MYP for 5 rather
than 7 boats, cuts $59.0 million in advance proc. due to
inadequate Navy justification of request, and adds $29.2
million in R&D for specified equipment.
Cruiser Conversion Program
1
194.4
—
1
194.4
—
—
—
— Senate eliminates funding.
Missile Submarine Conversion
2 1,167.3
—
2 1,167.3
—
2
1,167.3
—
—
Submarine Refueling Overhauls
—
164.4
—
—
164.4
—
2
470.4
— Senate adds $450.0 million for 2 attack submarine
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 Transport
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 full
funding. Senate adds $75 million in advance
procurement.
LHD-8 Amphibious Assault
—
355.0
—
—
355.0
—
—
591.3
— Senate adds $236.3 million for FY2005 incremental
Ship
funding for LHD-8.
Prior Year Shipbuilding Costs
—
635.5
—
—
899.5
—
—
635.5
— House adds $264 million to accelerate FY2005 payments.
DD (X) Destroyer
—
— 1,038.0
—
—
928.0
—
— 1,038.0 House cuts $110 million of which $100 million is for ship
design for lack of definitive requirements and slow release
of prior year funds.
Littoral Combat Ship
—
—
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,

---

CRS-46
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
but directs $76.0 million be used for module design.
T-AKE Auxiliary Cargo Ship
2
722.3
—
2
722.3
—
—
—
— Senate eliminates funds due to program delays. 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-47
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 Congress is continuing to
review whether to approve 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 act, Congress approved a proposal to allow the Air Force to begin
negotiations with Boeing to lease 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 in constant FY2002 dollars. Purchasing the aircraft would
cost an additional $4 billion.
Congressional Action. Table 10A shows action on selected major weapons
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-48
! 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: On May 23, the Defense Department
announced approval of a proposal to lease 100 Boeing 767 aircraft
equipped as tankers to replace existing KC-135 tankers in the Air
Force, as approved by Congress in Section 8159 of the FY2002
defense appropriations act (P.L. 107-117). On July 14, the Air Force
submitted a report to Congress on the lease as required by Section
8159 and subsequently requested approval of the four congressional
defense committees (Armed Services and Appropriations in each
chamber) to reprogram funds to cover initial costs of the lease.
Three of the four committees approved the lease reprogramming, but
the Senate Armed Services Committee has not, pending hearings on
the proposal.74
! 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.
74 For a detailed CRS review of the proposed leasing agreement, see Christopher Bolkcom,
Coordinator, The Air Force KC-767 Tanker Lease Proposal: Key Issues For Congress, CRS
Report RL32056, September 2, 2003. The Congressional Budget Office and the General
Accounting Office have also released studies of the issue.

---

CRS-49
Table 10A. House and Senate Action on Major Aircraft Programs: Authorization
(amounts in millions of dollars)
House
Senate
Request
Action
Action
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-35 Joint Strike Fighter
—
— 2,194.1
—
—
2,194.1
—
—
2,194.1 —
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.
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-50
House
Senate
Request
Action
Action
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-51
Table 10B. House and Senate Action on Major Aircraft Programs: Appropriations
(amounts in millions of dollars)
House
Senate
Request
Action
Action
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
3,3437.1
184.1
11 3,552.1
184.1 House cuts $5 million in proc. for slow execution, cuts
$10 million from multi-year proc., adds $6.3 million
for mods., cuts $50 million from interim contractor
support. Senate adds $50 million in proc. for interim
contractor support.
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

---

CRS-52
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
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.
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

---

CRS-53
House
Senate
Request
Action
Action
Comments
Procurement
R&D
Procurement
R&D
Procurement
R&D
#
$
$
#
$
$
#
$
$
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-54
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 Senate authorization and appropriations bills, however,
transfer funding for PAC-3 the MDA, and the House authorization
transfers funding for MEADS.
! 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-55
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-56
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-57
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-58
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-59
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-60
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-61
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.75 The debate continued this year in response to an Administration
request that Congress lift a ban on the conduct of R&D into low-yield nuclear
weapons that has been in effect since 1993. Referred to the Spratt-Furse amendment,
the provision was enacted as Section 3136 of the FY1993 defense authorization act
(P.L. 103-160). 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.
As part of its Nuclear Posture Review issued in December 2001, the
Administration announced that the United States would investigate the use of
modified nuclear weapons to destroy deeply-buried and hardened targets in rogue
nations such as North Korea and would pursue concept development studies for new
low-yield nuclear weapons for that and some other missions.76 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.77 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 weapons in the current inventory to
be more able to penetrate hardened sites.
Congressional Action: Modify Restrictions on R&D for Low-Yield
Nuclear Weapons. Both houses agreed to modify current restrictions on R&D on
low-yield nuclear weapons (less than five kilotons), though the chambers adopted
different approaches, 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.”78 The Senate version
75 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.
76 CRS Report RS21133, The Nuclear Posture Review: Overview and Emerging Issues by
Amy F. Woolf, p. 5.
77 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].
78 Section 3111 in H.R. 1588 as engrossed and passed by the House, and H.Rept. 108-106,
(continued...)

---

CRS-62
lifts the ban but states that the Department of Energy may not begin engineering
development or any later phase of development or production of new weapons unless
“specifically authorized” by Congress.79 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.80
The Senate language was added on the floor in an amendment offered by
Senator Warner and passed by 59 to 38 (S.Amdt. 752).81 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.82
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.83
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. Supporters of continuing the ban argued that even a 5-kiloton
nuclear weapon would generate large losses of life and much collateral damage.
Supporters of the ban also argued 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
78 (...continued)
p. 434.
79 Section 3131 in S. 1050 as reported, and S.Rept. 108-46, p. 447-p. 448.
80 Congressional Record, May 21, 2003, p. S6805.
81 Congressional Record, May 20, 2003, p. S6692.
82 Congressional Record, May 20, 2003, p. S6690.
83 Congressional Record, May 20, p. S6663-S6690, passim.

---

CRS-63
biological weapons.84 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.85 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.86
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).87
Personnel Pay and Benefits Issues and Readiness Issues
As it did last year, DOD has proposed a mixture of across-the-board and
targeted pay raises along with continuation of a plan initiated in the Clinton
Administration to reduce out-of-pocket housing costs for military personnel living
in private housing. The Administration is proposing pay raises for uniformed
personnel ranging from 2% to as high as 6.5% for targeted grades and skills with an
overall average 4.1%. The FY2004 budget also includes funds to reduce out-of-
pocket off-base housing costs from a maximum of 7.5% of pay to 3.5%, with costs
reduced to zero in FY2005.
Permitting concurrent receipt of military retirement and disability payments was
not included in the FY2004 budget resolution passed by both houses. In the 107th
Congress, concurrent receipt was a critical personnel issue that was strongly opposed
by the Administration and stymied passage of the defense authorization bill. DOD
is currently implementing a compromise proposal passed by Congress last year,
which provides special compensation benefits to a targeted group of military retirees
whose disabilities are a product of combat or combat-related activities.
84 Congressional Record, May 20, 2003, p. S6663 to p. S6690, passim.
85 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.
86 Michael A. Levi, “The Case Against New Nuclear Weapons,” Issues in Science and
Technology, Spring 2003.
87 Congressional Record, May 20, 2003, p. S6690, and Congressional Record, May 22,
2003, p. H4572.

---

CRS-64
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
of accrual payments for current active-duty personnel and $15.4 billion over the next
ten years (see Table 11 below).88 DOD opposed this provision last year suggesting
88 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.

---

CRS-65
that financing the benefit would hurt defense readiness by taking funds from other
higher-priority programs.89
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.90 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.91
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
89 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.
90 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.
91 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.

---

CRS-66
who had been mobilized once maintain private coverage and 80% of employers
continue to pay their share of the premium.92
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.
92 “Reserve Component Health Care;” see the Department of Defense web page on
TRICARE at [http://www.tricare.osd.mil/reserve]; GAO-02-829. Defense Health Care;
Most Reservists Have Civilian Health Coverage But More Assistance Is Needed When
TRICARE Is Used, September 2002, p. 5-6, p. 10.

---

CRS-67
Table 12. Estimates of the Cost of Concurrent Receipt and TRICARE for Reservists
(in millions of current year 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 reservists
466
1,041
1,695
1,964
2,106
NA
NA
NA
NA
NA
7,272
NA
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 reservists
0
0
0
0
0
0
0
0
0
0
0
0
Total Government
4,854
5,567
6,494
7,101
7,543
13,024
6,048
6,369
6,711
7,095
24,285
NA
spending
a Discretionary spending is appropriated annually.
b Mandatory spending is generally for entitlement programs and financed by Treasury general revenues.

---

CRS-68
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 key issue in Congress this year has been whether to impose 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.93 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.94
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
93 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].
94 Congressional Record, May 20, page S644ff.

---

CRS-69
has resisted these measures. The Navy, in fact, wants to reduce 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.95 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: End-Strength.
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: Defense Personnel for Border Security. An
amendment by Representative Goode passed on the floor would allow the Secretary
of Homeland Security to request military personnel to assist in border patrols 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.
95 Testimony of Secretary of Defense Rumsfeld before Senate Armed Services Committee,
FY2004 DOD Authorization Request, February 13, 2003.

---

CRS-70
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. Considered by the Senate, May 19-22, 2003. Approved by the Senate
(98-1), May 22, 2003. Senate inserted the text of S. 1050, as amended, into H.R.
1588 by unanimous consent, June 4, 2003.
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. Laid before the Senate by unanimous consent, the Senate struck all after the
enacting clause and substituted the text of S. 1050 and passed the bill by voice vote,
June 4, 2003. Senate insisted on its amendments, asked for a conference, and
appointed conferees, June 4, 2003. House agreed to a motion to instruct conferees,
disagreed to the Senate amendments, agreed to a conference, and appointed
conferees, July 16, 2003.
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, agreed to by the House (399-19), and sent to the Senate, July 8,
2003. Laid before the Senate by unanimous consent, July 15, 2003. Considered by
the Senate, July 16-17, 2003, and passed by the Senate (95-0), July 17, 2003. Senate
insisted on its amendments, asked for a conference, and appointed conferees, July 21,
2003.

---

CRS-71
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 (S.Rept. 108-87) July 10, 2003. Senate
brought substituted the text of S. 1382 as reported into H.R. 2658 by unanimous
consent, July 14, 2003.

---