Contents

• Most Recent Legislative Action
• Status of Legislation
• FY2013 Defense Budget Overview
• Base Budget Highlights
• New Strategic Guidance
• Force Structure, Readiness
• Military Personnel Issues
• Pay Raise
• TRICARE Pharmacy Fees
• Modernization
• Overseas Contingency Operations Highlights
• Bill-by-Bill Analysis
• FY2013 National Defense Authorization Act
• NDAA: The Broad Outlines
• Military Personnel Issues (Authorization)
• Proposed Reductions in Personnel and Force Structure
• Ground Combat Equipment (Authorization)
• Naval Systems (Authorization)
• Aircraft and Long-Range Strike Systems (Authorization)
• Ballistic Missile Defense (Authorization)
• Ground-based Midcourse Defense (GMD) Enhancement
• MEADS (Medium Extended Air Defense System) Authorization
• Commercial Satellite Export Rules
• Provisions Relating to Wartime Detainees
• Smith-Mundt Act
• House Floor Amendments
• Senate Floor Amendments
• FY2013 DOD Appropriations Bill
• DOD Appropriations Overview
• Proposed Administration Savings and Congressional Response
• Congressional Initiatives
• Funding Offsets
• Military Personnel and Force Structure (Appropriations)
• Reduction in Personnel Transfers
• Depot Maintenance 'Carryover'
• TRICARE Fee Increases and Cost Savings
• Ground Combat Systems Appropriations
• Naval Systems Appropriations
• Aircraft Appropriations
• Missile Defense Appropriations
• OCO Funding: Afghanistan and Related Activities
• House Floor Amendments
• Senate Floor Amendments

Summary

President Obama requested $613.9 billion in discretionary budget authority for the Department of Defense in Fiscal Year 2013, which is $31.8 billion less than had been appropriated for the agency in FY2012. The end of U.S. combat in Iraq and the declining tempo of operations in Afghanistan accounted for the bulk of the overall reduction: The budget request for Overseas Contingency Operations (OCO)—DOD activities in those two countries—was $88.5 billion, which is $26.6 billion less than was provided for those operations in FY2012.

However, the Administration's $525.4 billion request for DOD's so-called "base budget"—funds for all DOD activities other than OCO—was $5.2 billion less than was provided for FY2012 and $45.3 billion less than the FY2013 base budget the Administration had projected a year earlier, in February of 2011. The proposed reduction in the base budget—and planned reductions of more than $50 billion per year through FY2021, compared with the FY2011 projection—reflected the Administration's effort to reduce federal spending as required by the Budget Control Act (BCA) of 2011, enacted on August 2, 2011 (P.L. 112-25). All told, the Obama Administration's February 2012 projection would reduce DOD budgets by $486.9 billion over a 10-year period (FY2012-FY2021), compared with its February 2011 plan. (See "

FY2013 Defense Budget Overview.")

According to the Administration, the FY2013 DOD budget request was consistent with the initial spending caps set by the BCA. However, both H.R. 4310, the version of the FY2013 National Defense Authorization Act (NDAA) passed by the House on May 18, 2012, and H.R. 5856, the companion DOD appropriations bill for FY2013, reported by the House Appropriations Committee on May 25, 2012, exceeded the Administration request for those bills —by $3.7 billion in the case of the authorization bill and by $3.1 billion in the case of the appropriation bill.

On the other hand, S. 3254, the version of the NDAA reported June 4, 2012, by the Senate Armed Services Committee, and the version of the DOD appropriations bill (H.R. 5856) reported by the Senate Appropriations Committee on August 2, 2012, kept FY2013 DOD funding within the initial BCA caps.

Neither the House nor the Senate considered either an NDAA or a DOD appropriations bill for FY2013 that conformed to the lowered BCA caps on defense spending.

The compromise version of the authorization bill (H.R. 4310), enacted on January 2, 2013 as P.L. 112-239, would authorize $544.9 billion for DOD's base budget—roughly splitting the difference between the House and Senate bills—and would authorize $88.5 billion for war costs.

In general terms, the House-passed and Senate committee-reported versions of the first DOD appropriations bill for FY2013 (H.R. 5856) paralleled the House and Senate versions of the FY2013 NDAA, respectively. However, the Senate did not act on that bill. For nearly the first six months of FY2013, DOD and other federal agencies had been funded by a continuing resolution (H.J.Res. 117; P.L. 112-175). On March 21, 2013, Congress sent to the White House H.R. 933, the Consolidated and Continuing Appropriations Act, which the President signed into law (P.L. 113-6) on March 26, 2013. Division C of that legislation is the Department of Defense Appropriations bill for FY2013 (See "DOD Appropriations Overview"). Although the amount provided by that section of the bill was $287.4 million more than the Administration's request for programs covered by that division of H.R. 933, the overall level of DOD funding provided by H.R. 933 (including funds provided for military construction in Division E) exceeded the request by $323.8 million.

Since the total DOD funding level for FY2013 of $607.7 billion exceeds the BCA spending cap, that law requires that DOD funds be reduced (or "sequestered) by $35.0 billion before the end of the fiscal year. As of May 15, 2013, the Administration has not allocated the required reduction among specific DOD programs. All FY2013 appropriations amounts cited in this report reflect the amounts appropriated by H.R. 933 prior to sequestration.

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Defense: FY2013 Authorization and Appropriations

Most Recent Legislative Action

On March 21, 2013, Congress sent to the White House H.R. 933, the Consolidated and Continuing Appropriations Act, which the President signed into law (P.L. 113-6) on March 26, 2013. Division C of that legislation was a fully detailed DOD appropriations act for FY2013 that provided $597.1 billion for programs funded by that bill.

Including funds provided for military construction in Division E of H.R. 933, the bill provided a total of $607.7 billion in discretionary budget authority for DOD. This is $323.8 million less than the Administration's request, but exceeds the funding cap set by the BCA and thus triggers a sequestration of up to $35.0 billion. The Administration had not allocated that reduction among specific DOD appropriations accounts as of May 15, 2013.

Status of Legislation

FY2013 Defense Budget Overview

The Obama Administration's FY2013 budget request, submitted to Congress on February 13, 2012, included $646.97 billion for the so-called "national defense" function of the federal budget (budget function 050). This included funding for global operations of the Department of Defense (DOD), defense-related nuclear programs conducted by the Department of Energy (DOE), and other defense-related activities.

For discretionary DOD budget authority, the request included $613.93 billion, of which $525.45 billion is for "base" defense budget costs—that is, day-to-day operations other than war costs—and the remaining $88.48 billion was for "Overseas Contingency Operations" (OCO)—that is, military operations in Afghanistan and elsewhere. The function 050 total also included discretionary budget authority of $17.98 billion for DOE defense-related programs (dealing with nuclear weapons and warship powerplants), $4.75 billion for FBI national security programs, and $2.42 billion for a number of smaller accounts, including selective service and civil defense (Table 3).

The Administration's proposed DOD budget called for the third consecutive annual decrease in total DOD funding (including OCO) since FY2010. Most of that decline reflected the decrease in OCO spending for operations in Iraq and Afghanistan. However, while the decline in war costs accounted for most of this reduction, the President's FY2013 request also would have reduced the base budget (in current dollars) for the first time since 1996. The base budget request was $5.2 billion less than was appropriated for the base budget in FY2012 and $45.3 billion less than the FY2013 request the Administration had projected in February 2011 (Figure 1).

Figure 1. DOD Discretionary Budget Authority, FY2007-FY2013 (amounts in billions of dollars)

Source: DOD Comptroller, FY2013 Budget Request Overview, Figures 1-2 and 6-2, http://comptroller.defense.gov/defbudget/fy2013/FY2013_Budget_Request_Overview_Book.pdf.

That reduction from the previously planned FY2013 request—and additional planned reductions of more than $50 billion per year compared to DOD's February 2011 budget projections through FY2021—reflected the Administration's plan to reduce federal spending as required by the Budget Control Act (BCA) of 2011, enacted on August 2, 2011 (P.L. 112-25). Compared with the long-range spending plan published by DOD in February 2011, the February 2012 plan reduced DOD base budgets by $259.4 billion from FY2012 through FY2017 (Figure 2). For the 10-year period covered by the BCA (FY2012-FY2021), the Administration's revised spending plan reduced DOD budgets by a total of $486.9 billion.

Figure 2. Obama Administration DOD Budget Projections: February 2011 and February 2012 (amounts in billions of dollars)

Source: DOD Comptroller, Budget Briefing, FY2012 Budget Request (slide 4), available at http://comptroller.defense.gov/defbudget/fy2013/FY2013_Budget_Request.pdf. Note: The graph's truncated vertical axis highlights differences between the two plans, but might appear to exaggerate their magnitude. Under the 2012 plan, the FY2017 budget would be 9.57% lower than had been planned in 2011.

Further reductions in DOD base budgets over the next 10 years may be in store as a result of the BCA. In addition to the $900 billion worth of deficit reduction in FY2012-FY2021 (counting both defense and non-defense spending) that results from the BCA, the act also requires additional deficit reduction measures totaling $1.2 trillion through FY2021 (which would result in a total deficit reduction through FY2021 of $2.1 trillion).

In FY2013, the BCA requires an across the board cut in budget authority (or "sequester") that would be levied against almost all discretionary spending. For the National Defense budget function (of which the DOD budget comprises more than 95%), some $59 billion—about 10%—would be cut from the Administration's budget request, with equal percentages cut from each program, project and activity. In subsequent years, the BCA sets lowered spending caps to achieve the required savings. Each year, to the extent that Congress appropriates more than the caps allow, the Administration would sequester funds through across-the-board cuts to ensure that the required savings are achieved. If the sequestration process and the lowered spending caps remain law, the Administration's February 2012 projection for defense budgets over the next 10 years would be cut by an additional $515 billion—about 9%.

Base Budget Highlights

The Obama Administration presented its FY2013 DOD budget plan both as an effort to address the long-term spending limits set by the BCA and as an opportunity to refocus U.S. defense planning as DOD winds down large-scale deployments of U.S. troops in Iraq and Afghanistan. The Administration preceded the announcement of its FY2013 budget request with the publication on January 5, 2012, of new "strategic guidance," which, it said, took account of both the new budgetary and strategic environments.¹

New Strategic Guidance

The January 2012 strategic guidance postulates that active-duty ground forces no longer will be sized to conduct large-scale, prolonged stability operations such as those in Iraq and Afghanistan, which required an Army and Marine Corps capable of maintaining a constantly rotating overseas deployment of upwards of 100,000 troops.

Under this approach, U.S. forces will be shaped and sized to conduct a campaign to defeat a major aggression—a combined arms campaign involving air, sea, and land forces and including a large-scale ground operation—and, simultaneously, another campaign intended to block an attack in some other area by a second adversary.²

The January 2012 strategic guidance also calls for DOD to put a higher priority on deploying U.S. forces to the Pacific and around Asia while scaling back deployments in Europe. For example, the Administration planned to withdraw and disband two of the four Army brigade combat teams currently stationed in Germany while maintaining a rotating force of up to 2,500 Marines in northern Australia. It also planned to station littoral combat ships in Singapore and smaller patrol craft in Bahrain. Because of the distances from land bases to which U.S. forces have access, operations in the Asia-Pacific region would rely heavily on air and naval forces. Accordingly, many observers expect a shift of DOD resources toward naval and air forces at the expense of ground formations.

Some question the Administration's claim of a "pivot" toward Asia, citing its plan to retire some older, long-range cargo planes and to cut a total of $13.1 billion from projected shipbuilding budgets for FY2013-FY2017. But the Administration cites its decisions to retain in service 11 aircraft carriers and to add other ships to its shipbuilding plan as proof of its refocused commitment on the Pacific region, where long operational distances are the rule.

Force Structure, Readiness

Pursuant to the Administration's January 2012 strategic guidance, DOD plans to eliminate or retire several major combat units and weapons systems by FY2017. Among these are

• At least 8 of the Army's 45 active-duty brigade combat teams;
• Six of the Marine Corps's 41 battalion landing teams;
• Seven cruisers from among the Navy's current fleet of 101 surface warships;
• Two of the Navy's 30 amphibious landing ships;
• Six of the 61 fighter and ground-attack squadrons in the Air Force, Air Force Reserve, and Air National Guard;
• 27 early-model C-5A cargo planes out of a total fleet of 302 long-range, wide-body C-5 and C-17 cargo jets;
• The entire fleet of C-27 mid-sized cargo planes, currently operated by the Air Force but desired by the Army to deliver supplies to troops in forward positions; and
• The entire fleet of "Block 30" Global Hawk surveillance drones, which DOD officials said had proven to be more expensive than the U-2 aircraft they had been slated to replace.

On the other hand, the Administration says its plan would maintain the remaining force at a high level of readiness. Compared with the February 2011 plan, the Operation and Maintenance request for FY2013 was reduced by 3%, one-fifth as large as the 15% reduction imposed on the Procurement accounts (Table 4).

Military Personnel Issues

The Administration plans to reduce the size of the active-duty force—slated to be 1.42 million at the end of FY2012—by 21,600 personnel in FY2013 and by a total of 102,400 by the end of FY2017. Consistent with the new policy of avoiding prolonged, large-scale peacekeeping operations, most of that multi-year reduction—92,000 out of the 102,400—would come from the Army and Marine Corps. In effect, this plan would remove from the force the 92,000 personnel that were added to the Army and Marine Corps beginning in 2007 to sustain deployments to Iraq and Afghanistan. However, in 2017—when the proposed reductions would be complete—each of those two services still would be larger than it had been before the terrorist attacks of September 11, 2001 (Table 5).

Pay Raise

The FY2013 budget request included a 1.7% increase in service members' "basic pay," an amount based on the Labor Department's Employment Cost Index (ECI), which is a survey-based estimate of the rate at which private-sector pay has increased. After providing an equal increase in basic pay for FY2014, the Administration plan would provide basic pay raises less than the anticipated ECI increase in the following three years: 0.5% below ECI for FY2015, 1.0% below for FY2016, and 1.5% below for FY2017.

The Administration maintained that budgetary limits require some reduction in the rate of increase of military compensation in order to avoid excessive cuts in either the size of the force or the pace of modernization. However, it promised that no service member would be subjected to either a pay freeze or a pay cut. Moreover, proposed reductions in the size of the annual military pay raise would not begin until FY2015, thus allowing service members and their families to plan for the change. Over the five-year period (FY2013-FY2017), the Administration projected that savings from its planned schedule of military compensation would total $16.5 billion.

According to DOD officials, although military compensation accounts for about one-third of DOD's budget, the savings that would result from the proposed changes in compensation would account for less than 10% of the total that the Administration's budget would slice from the February 2011 DOD budget projection for FY2012-FY2021 (Table 4).

TRICARE Pharmacy Fees

The Administration also proposed a variety of fee increases for the 9.65 million beneficiaries of TRICARE, DOD's medical insurance program for active-duty, reserve-component, and retired service members and their dependents and survivors. According to DOD, the overall cost of the Military Health Program, which totaled $19 billion in FY2001, had more than doubled to $48.7 billion in FY2013. The FY2013 request assumes $1.8 billion in savings as a result of the Administration's proposed fee increases, which are controversial and which Congress would have to approve in law.

Many of the proposed fees and fee increases would apply only to working-age retirees and would be "tiered" according to the retiree's current income. The package also includes pharmacy co-pays intended to provide an incentive for TRICARE beneficiaries to use generic drugs and mail-order pharmacy service. Future changes in some of the propose fees and in the "catastrophic cap" per family would be indexed to the National Health Expenditures (NHE) index, a measure of escalation in medical costs calculated by the federal agency that manages Medicare.

Modernization

Compared with the FY2013 budget that DOD projected in February of 2011, the actual FY2013 request for procurement and R&D accounts was 12.5% lower. Proportionally, that reduction is more than twice as large as the reduction in the combined accounts for military personnel and operation and maintenance (down 4.7%).

Measured in constant dollars, DOD's combined procurement and R&D budget in FY2010 was 60% higher than it had been in FY2001. Accordingly, some argue that DOD can afford to rein in its spending on acquisition while it lives off the capital stocks built up and modernized during the decade of budget increases that followed the terrorist attacks of 2001.³

But others contend that much of the procurement spending during that decade was for (1) items peculiarly relevant to the wars in Iraq and Afghanistan; (2) items needed to replace equipment destroyed in combat or worn out by the high tempo of operations in a region that is particularly stressful on machinery and electronics; or (3) modifications to existing planes, tanks, and ships. While modifications can improve the effectiveness of existing platforms, they cannot nullify in the long run the impact of age and design obsolescence.⁴

The Administration emphasizes that it is prioritizing among weapons programs in deciding where to make cuts in previously planned spending and that it is sustaining funding for high-priority programs, such as the development of a new, long-range bomber for which its plan budgets $292 million in FY2013 and more than $5 billion over the FY2014-FY2017 period.

Compared with DOD's February 2011 plan for procurement and R&D funding, the program announced in February 2013 would save $24 billion in FY2013 and a total of $94 billion over FY2013-FY2017. Procurement of some items would be terminated outright, before the originally planned total number was acquired (e.g., the Army's new 5-ton trucks—designated FMTV—terminated for a total savings of $2.2 billion over five years, and a new Air Force weather satellite, terminated for a total savings of $2.3 billion).

But DOD plans to achieve most of the savings in procurement from "restructuring" programs, that is, from slowing the timetable for moving from development into production or slowing the rate of production. The department justifies some of its proposed reductions on grounds of fact-of-life delays in specific programs. In other cases, it contends that it is an "acceptable risk" to forego (or delay) acquisition of a particular capability.

Overseas Contingency Operations Highlights

The Administration's $88.5 billion request for FY2013 war costs (OCO) amounts to $26.6 billion less than Congress appropriated for war costs in FY2012. This reduction reflects:

• the cessation of U.S. combat operations in Iraq by the end of the first quarter of FY2012; and
• the reduction of the number of U.S. troops in Afghanistan, by the end of FY2012, to 68,000 personnel, thus ending the "surge" into that country of 33,000 additional U.S. troops announced by President Obama on December 1, 2009.

The OCO budget request assumed that 68,000 U.S. troops will remain in Afghanistan through the end of FY2013, although President Obama has said that, after the number had been drawn down to 68,000 by the summer of 2012, it would continue to decline "at a steady pace." ⁵

On September 20, 2012, then-Defense Secretary Leon Panetta announced that the President's goal of reducing the number of U.S. troops in Afghanistan to 68,000 had been met.⁶

Bill-by-Bill Analysis

FY2013 National Defense Authorization Act

The compromise final version of the FY2013 NDAA, signed by the President on Jan. 2, 2013 (P.L. 112-239), authorized $648.7 billion for DOD and defense-related nuclear activities of DOE, which amounts to $1.7 billion more than the administration requested.

For DOD's base budget, the final bill would authorize $527.5 billion, practically splitting the difference between the $528.6 billion that would have been authorized by the House-passed version of the bill, and the $525.8 billion that would have been authorized by the Senate-passed version. The final bill made a slight reduction to the amount requested for war costs and larger—though still relatively small—reduction to the amount requested for Energy Department nuclear programs (Table 6).

NDAA: The Broad Outlines

Compared with annual defense authorization bills enacted in the previous decade, both H.R. 4310 as passed by the House and S. 3254 as passed by the Senate would make relatively few additions to the authorization levels proposed by the Administration for specific programs. This reflects the stringent bars against "earmarks" currently observed in both the House and the Senate.

Proposed Administration Savings

The House-passed version of H.R. 4310 would have added to the request more than $4 billion to cover the cost of overturning some of the Administration's more high-profile efforts to reduce DOD spending. The Senate-passed bill would have taken similar action to reverse two of the initiatives—disbanding several squadrons of airplanes in the Air Force, Air Force Reserve, and Air National Guard; and deferring production of an attack submarine. However, the Senate bill supported, wholly or in part, several of the Administration's other proposed DOD spending cuts. As enacted, the enacted FY2013 NDAA steered a middle course between the House and Senate versions. (See Table 7.)

Other Increased Weapons Spending

The House-passed version of the FY2013 NDAA would have authorized $2.1 billion more than was requested for several programs for which Congress typically adds to the annual budget request. The Senate-passed version would have added about one-fifth as much. (See Table 8.)

Funding Offsets

As is customary in annual NDAAs, both the House-passed H.R. 4310 and the Senate committee's S. 3254 would offset some or all of their proposed additions to the budget request with some relatively large proposed reductions within certain programs. Moreover—as usual—the House and Senate Armed Services Committees that drafted the two bills said that some of their proposed reductions would have no adverse impact on DOD. For example, each bill would reduce the total amount authorized by upwards of $1.5 billion on the grounds that funds appropriated in prior years but not spent could be used in lieu of the same amount of new budget authority to cover part of the FY2013 budget. (See Table 9.)

Military Personnel Issues (Authorization)⁷

Like the version of H.R. 4310 passed by the House and S. 3254 as passed by the Senate, the enacted version of H.R. 4310 authorizes a 1.7% military pay raise, as requested.

Proposed Reductions in Personnel and Force Structure

In their respective reports on the FY2013 NDAA, the Armed Services Committees of the House and Senate each expressed concern that the Administration's plan to reduce the Army and Marine Corps by a total of 92,000 by the end of FY2017 may cut too deep. However, both bills approved the Administration's proposed reductions in the number of active-duty personnel for the Army, Navy, and Marine Corps in FY2013 and the final version of the bill did the same. (Table 10).

Air Force Cuts

The House and Senate versions of the bill each contained provisions that would block the Administration's proposal to disband several Air Force units and retire more than 300 aircraft. In testimony before the Senate Defense Appropriations Subcommittee on March 14, 2012, Air Force Secretary Michael Donley said he would defer the proposed changes. In a June 22, 2012, letter to then-Senate Defense Subcommittee Chairman Daniel K. Inouye, Defense Secretary Panetta went further, saying he would defer any changes to the force structure of the Air Force—including some that had been authorized and funded in prior budgets—until Congress completes work on the FY2013 budget.

The House-passed bill authorized 7,030 personnel more than requested for the Air Force and its associated reserve components in order to staff units that had been slated for disbanding. H.R. 4310 would add to the request $699.2 million to continue operating those units, plus $400.4 million to continue purchasing C-27 cargo planes and RQ-4 Block 30 Global Hawk reconnaissance drones. The Administration had proposed mothballing the C-27s and Block 30 Global Hawks already in hand and terminating plans to buy more of each.⁸

The Senate-passed bill authorized 8,246 more personnel than had been requested for the Air Force and associated reserve components. S. 3254 also includes provisions that would add to the budget request a total of $1.40 billion to maintain the status quo pending recommendations by a National Commission on the Structure of the Air Force that the bill would establish (Sections 1701-1709). However, the Senate bill did not challenge the Administration's proposal to dispose of the C-27s and Global Hawk Block 30s. In fact, it rescinded $544 million appropriated for Global Hawk in prior years, using those funds instead to cover some of the cost of the FY2013 budget.

The conference report on H.R. 4310 adds to the budget request a total of $636 million and 5,040 personnel (active duty and reserve components) to retain the current force structure and to continue operating C-27s and Global Hawk Block 30s. However, the enacted version of the bill would not flatly prohibit changes to the current force structure. It also mandated creation of a commission to make recommendations about USAF force structure over the long-term (Sections 361-367).

Ship Retirements

The House-passed version of H.R. 4310 would have barred the Navy from laying up six of the seven Aegis cruisers and either of the two amphibious landing ships slated for earlier-than-planned retirement as a cost-saving measure in the budget request. It would allow the Navy to retire, as requested, the one cruiser, the USS Port Royal, although that ship—commissioned in 1994—is the newest of the Aegis cruisers and one of the few that has been modified to shoot down ballistic missiles. The ship sustained structural damage when it ran aground off Honolulu in 2009.

The House bill also would have authorized an additional $638 million to continue operating and upgrading the three cruisers slated for retirement in FY2013. However, the bill would approve a reduction in Navy end-strength from 325,700 to 322,700, as requested. The Armed Services Committee said the Navy could man the three ships even after absorbing that reduction.

The Senate version of the bill included a provision expressing the sense of Congress that the "operational capability" of all the ships slated for early retirement should be retained. However, the Senate bill added no funds to the request.

The conference report on H.R. 4310 included a provision (Section 354) barring the use of funds to retire (or prepare for retirement) any of the cruisers or amphibious ships. It also added to the requested authorization $629 million for the operation and upgrade of all four of the cruisers, including the Port Royal and directed the Navy to prepare a detailed report on the how the damaged ship could be brought up to par.

Army and Marine Corps Drawdown⁹

The Armed Services Committees of both the House and Senate, in their reports on their respective versions of the defense authorization act, expressed concern over the Administration's plan to cut a total of 92,000 active-duty personnel from the Army and Marine Corps by the end of FY2017. Although both the House and Senate versions of the bill authorized the portion of that long-term reduction that the Administration proposed for FY2013 (approving cuts of 9,900 from the Army and 4,800 from the Marine Corps), the two committees expressed concern about the pace of the reductions while U.S. ground forces still are deployed in combat operations in Afghanistan. The Senate committee warned that the reduction could undermine morale by reducing "dwell-time"—that is, the period during which soldiers and Marines are stationed at their home bases between overseas deployments.¹⁰

The House bill included a provision (Section 403) that would have limited the number of personnel that could be cut in any one year from 2014 through 2017 to 15,000 from the Army and 5,000 from the Marine Corps. In its Statement of Administration Policy (SAP) on the bill, the Office of Management and Budget (OMB) said this provision would slow its planned drawdown in ground forces, thus increasing military personnel and health care costs by more than $500 million in 2014 and by a total of $1.9 billion through 2019.¹¹

S. 3254 included no such provision, but in its report to accompany the bill, the Senate Armed Services Committee directed DOD to include with each of its annual budget requests for FY2014-FY2017 two items relevant to this issue:¹²

• A prediction of the ratio of "dwell time" to deployment time for active and reserve component personnel that would result from the personnel reductions proposed in that budget; and
• An assessment of whether the proposed reductions could be reversed within one year, if unforeseen contingencies led to the deployment of more forces than the budget request had assumed.
• The conference report on H.R. 4310 reiterated the Armed Services Committees' concern about the wisdom of cutting the size of the Army and Marine Corps while troops remain engaged in Afghanistan. The final version of the bill also included a provision (Section 403) mirroring the House provision that allows a the active-duty manpower of the Army and Marine Corps to be reduced by no more than 15,000 and 5,000 respectively in each fiscal year from 2014 through 2017.

TRICARE

Neither the House-passed H.R. 4310 nor the Senate-passed S. 3254 would have authorized most of the Administration's proposed new fees and fee increases for TRICARE beneficiaries and for retirees who benefit from the so-called TRICARE-for-Life program. Specifically, neither chamber's version of the FY2013 NDAA would have authorized proposals to

• raise TRICARE-for-Life premiums for military retirees using a three-tier model linking the size of each beneficiary's increase to the amount of his or her military retired pay;
• link increases in TRICARE's so-called "catastrophic cap"—the maximum amount a family would have to pay in a single year—to increases in the federal government's National Health Expenditure index; and
• increase the annual enrollment fees for the TRICARE Prime plan and introduce enrollment fees for the other TRICARE plans, including TRICARE-for-Life.

The House bill (Section 718) would have allowed increases in the TRICARE pharmacy co-payments for brand-name and non-formulary drugs, but at a lower rate than current law would allow. This section of the bill further provided that, beginning in 2014, pharmacy co-payments would be indexed to the annual retiree cost-of-living adjustment. It also directed the Secretary of Defense to conduct a pilot program that would use the national mail-order pharmacy program to refill prescription maintenance medications for each TRICARE-for-Life beneficiary (Section 717). All told, the House-passed bill would have added $1.21 billion to the amount requested in the budget to compensate for savings the Administration had anticipated would result from the proposed TRICARE changes the House bill would not make.

S. 3254 would have allowed the proposed increase in TRICARE pharmacy co-payments at the rate allowed by current law. It also would have authorized $452 million more than was requested for DOD's health care program to compensate for savings projected to have resulted from TRICARE changes the bill would not authorize.

The conference report on H.R. 4310, as enacted, Section 712 would set new cost-sharing rates under the TRICARE pharmacy benefits program for fiscal year 2013 in statute, and would in fiscal years 2014 through 2022 limit any annual increases in pharmacy copayments to increases in retiree cost of living adjustments. Beyond fiscal year 2022, the Secretary of Defense would be authorized to increase copayments as the Secretary considers appropriate.¹³

Abortion

As enacted, the conference report included (Section 704) a provision of the Senate-passed bill authorizing the use of DOD funds to provide abortions in the case of pregnancies resulting from rape or incest.

Same-Sex Marriage

The House bill included a provision (Section 537) that would prohibit the use of DOD facilities for any marriage or "marriage-like" ceremony unless the ceremony involves the union of one man and one woman. The bill also included a provision (Section 536) that would prohibit any military chaplain from being required to perform any duty or religious ceremony contrary to the chaplain's conscience or religious beliefs. The provision also would have barred any adverse personnel action against a chaplain on the basis of his refusal to comply with any order prohibited by the section.

The enacted version of H,R, 4310 dropped the prohibition on same-sex marriages in DOD facilities, but included in Section 533 a modified version of the House provision allowing chaplains to refuse to officiate at such ceremonies on grounds of conscience or religious belief.

Women in Combat Roles¹⁴

In a February 2012 report mandated by Section 535 of the Ike Skelton National Defense Authorization Act for FY2011,¹⁵ DOD announced its intention to relax several policies that restricted women from assignment to ground combat units and their associated support units. One of those announced changes was the development of "gender-neutral physical standards for occupational specialties closed [to women] due to physical requirements." The enacted version of H.R. 4310 included a provision (Section 524), incorporated from the House-passed version of the bill, requiring DOD to report to Congress on the feasibility of developing such "gender-neutral" standards.

The House Armed Services Committee noted, in its report on the bill, that counterinsurgency operations in Iraq and Afghanistan "place female service members in direct combat action with the enemy." Noting that some women who had been deployed in that theater were critical of the body armor currently issued to U.S. troops (which was designed for male body morphology), the committee directed the Secretary of the Army to assess the need for body armor tailored to female body types.¹⁶

The Senate Armed Services Committee, in its report on S. 3254, called the policy changes announced in DOD's February 2012 report "a small step in the right direction," but urged DOD to further relax current restrictions on the assignment of female service personnel, saying: "By limiting their use of the talents of female service members, the Department [of Defense] and the services are handicapping efforts to field the highest quality force possible." The Senate committee directed the Secretary of Defense to report by February 1, 2013, on its implementation of the policy changes announced in the February report and to "make recommendations for regulatory and statutory change that the Secretary considers appropriate to increase service opportunities for women in the armed forces." ¹⁷

Ground Combat Equipment (Authorization)¹⁸

Congressional action on authorization of funding for selected ground force equipment is summarized in Table A-3. Following are highlights:

M-1 Tanks, Bradley Troop Carriers, Hercules Tank Recovery Vehicles

As part of DOD's strategic reorientation,¹⁹ the Army plans to dissolve at least 8 of its 47 active-duty brigade combat teams (BCTs),²⁰ including at least 2 of its 15 so-called "heavy" BCTs—units equipped with dozens of M-1 Abrams tanks and Bradley armored troop carriers. The Army has not decided the final number of active BCTs it wants to retain; how many of that number will be heavy BCTs; or the number of tanks, Bradleys, and other armored combat vehicles in each heavy unit.

In its report on H.R. 4310, the House committee expressed concern that budget pressures might induce the Army to eliminate too many heavy BCTs (which cost more to equip and operate than other units). The panel also objected to DOD's plan to shut down, from 2013 through 2016, the production lines that upgrade M-1 tanks (in Lima, OH) and Bradleys (in York, PA).²¹ Under the Administration's plan, the two lines would reopen in 2017 to further modify tanks and Bradleys.

The House committee maintained that it was not clear either (1) that the planned temporary shut-downs would save very much, or (2) that the network of suppliers needed to support planned future upgrades could be reconstituted after a three-year break. The panel also contended that there was a need for additional upgraded combat vehicles and that pending Army decisions might further increase the requirement. Accordingly, the House bill increased above the budget request the amounts authorized for three of the Army's heavy combat vehicles, authorizing

• $255.4 million (an increase of $181.0 million) to convert older M-1As to the M-1A2 SEP configuration, with improvements to night-vision equipment and other components;
• $288.2 million (an increase of $140.0 million) to upgrade Bradleys; and
• $169.9 million to buy 51 Hercules tank recovery vehicles, designed to tow damaged tanks to safety (an increase of $62.0 million and 20 vehicles).

The House committee also urged the Army to accelerate a program to equip its 1980s-vintage Paladin mobile howitzers with a new chassis and a drive train adapted from the Bradley troop carrier.

S. 3254 would have mirrored the House bill's authorization of $255.4 million to convert older tanks to the M-1A2 SEP configuration and also would have authorize the amount requested to upgrade Bradleys but also would have authorized a total of $230.9 million for Hercules tank recovery vehicles.²²

The enacted version of H.R. 4310 added a total of $338.0 million to the requested authorization, providing additional funding for Abrams upgrades and Bradley upgrades and for tank recovery vehicles.

New Generation of Tactical Vehicles

The enacted version of the FY2013 NDAA, like the House and Senate versions, all approved the amounts requested to develop a new generation of Army vehicles:

• $639.9 million for the Ground Combat Vehicle, intended to replace the Bradley;
• $74.1 million for the Armored Multi-Purpose Vehicle (AMPV), intended to replace the Vietnam War-vintage M-113 troop carrier now used in various roles, including battlefield ambulance and supply hauler; and
• $116.8 million for the Joint Light Tactical Vehicle (JLTV), intended to succeed the jeep-like "Humvee" (HMMWV).

Naval Systems (Authorization)²³

Congressional action on authorization of funding for selected naval systems is summarized in Table A-5. Following are highlights.

Attack Submarines²⁴

As requested, the enacted version of H.R. 4310—like the House and Senate versions of the NDAA—authorized $3.22 billion for two Virginia-class attack submarines. But all three versions of the NDAA also authorized $1.65 billion—about $778 million more than requested—for long lead-time components to be used for an additional submarine to be procured in FY2014. (The House bill would have added $778.0 million while the Senate bill and the enacted version of H.R. 4310 added $777.679 million.) The increase would allow the Navy to budget for two submarines in FY2014—as had been assumed in DOD's February 2011 budget projection—rather than one, as is assumed in the budget projection published in February 2012.

Like the House and Senate bills, the final version of H.R, 4310 includes a provision (Section 122) that would permit the use of a multi-year contract for procuring up to 10 Virginia-class attack submarines in FY2014-FY2018, and the use of incremental funding²⁵ in such a contract. The Navy had requested authority for a multi-year contract to buy nine submarines during that period. The service did not request authority to use incremental funding in the contract, but testified that it wanted to find a way, if possible, to buy a second Virginia-class boat in FY2014 (which would be the 10^th boat in the multi-year contract), and that doing so would likely require the use of incremental funding.

DDG-51 Aegis Destroyers²⁶

Like the House and Senate versions of the NDAA, the enacted version of H.R. 4310 contains a provision (Section 123) authorizing the Navy to sign a multi-year contract to buy 10 Aegis destroyers in FY2013-FY2017. The Navy had requested authority for a multi-year contract to procure nine of the ships in that period, but indicated in testimony that it hoped that bids submitted for that contract might come in low enough to finance the procurement of a 10^th ship.

As requested, all three versions of the NDAA would authorize $3.05 billion for two destroyers in FY2013. The House bill would have authorized $581.3 million—$115 million more than requested—for long lead-time components to be used for the additional (10^th) ship. However the Senate bill and the enacted version of H.R. 4310 authorized $466.3 million, as requested, for long lead-time destroyer components.

Ballistic Missile Submarines²⁷

In February 2011, DOD projected a FY2013 budget request totaling $1.20 billion to continue developing a new class of 12 missile-launching submarines, designated SSBN(X). These ships are intended to replace the 14 Ohio-class subs built in the 1980s and 1990s, which are slated to begin retiring in 2027. The first of the new subs was slated to begin construction in FY2019.

The Administration's FY2013 budget request, unveiled in February 2012, would provide less than half of the amount earlier projected for FY2013—$564.9 million—and would defer construction of the first of the new ships until FY2021.

In its report on H.R. 4310, the House committee objected that, under the new schedule, the number of missile subs in service would drop to 10 or 11 ships for a dozen years (2029-2041). It added to the bill a provision (Section 121) requiring the Navy to maintain a force of at least 12 ballistic missile submarines. The House passed bill would have added $374.4 million to the authorization requested to design the planned new sub, thus increasing that authorization to the level that had been projected in 2011. The House bill would authorize the amount requested to develop the new missile sub's nuclear powerplant.

Like the Senate bill, the enacted version of H.R. 4310 authorized the amounts requested for SSBN(X).

Aircraft and Long-Range Strike Systems (Authorization)²⁸

Congressional action on authorization of funding for selected aircraft and long-range strike programs is summarized in Table A-9. Following are some highlights.

Long-Range Bombers, Strike Weapons

As requested, the House-passed, Senate-passed and enacted versions of the NDAA authorized $291.7 million to continue developing a new, long-range bomber the Air Force wants to begin procuring in the 2020s. The House rejected by a vote of 112-308 an amendment to its bill that would have delayed the program by 10 years and eliminated the authorization for FY2013 funds (see H.Amdt. 1109 in Table 12).

The enacted version of H.R. 4310 incorporated a provision of the House-passed bill (Section 211) requiring that the new bomber be equipped to carry nuclear weapons. According to the conference report on the bill, the Senate accepted the House provision, "with the understanding that the provision is consistent with the current Air Force plans."

The enacted bill, like the House-passed and Senate-passed versions, also authorizes, as requested, $110.4 million for development of a "conventional, prompt global strike" system designed to place a precision-guided, non-nuclear warhead on a target anywhere in the world within minutes.

Like the House-passed version, the enacted version of H.R. 4310 authorized, as requested, a total of $628.3 million to develop and install various modifications in B-52, B-1, and B-2 bombers currently in service. The Senate-passed bill, S. 3254, also would have authorized the requested bomber modification funds except for $15.0 million cut from the $327.4 million B-2 request on grounds of unspecified "efficiencies."

Carrier-Based UAVs

The enacted version of H.R. 4310, like the House-passed and Senate-passed NDAAs, authorized a total of $264.7 million for two programs aimed at developing a long-range, stealthy drone aircraft to fly reconnaissance and attack missions from carriers. As requested, the Senate bill and the enacted version authorized $142.3 million for the Unmanned Combat Air Vehicle (UCAV) project, which is intended to test the feasibility of the project, and $142.5 million for the Unmanned Carrier-launched Airborne Surveillance and Strike (UCLASS) project, which is intended to produce an operational weapon. The House-passed version of H.R. 4310 would have cut $75 million from the amount requested for UCLASS and added the same amount to the request for UCAV, requiring the Navy (in Section 212) to slow the former, more operationally oriented program while it conducts additional research in the UCAS program.

Ballistic Missile Defense (Authorization)²⁹

Congressional action on authorization of funding for selected missile defense programs is summarized in Table A-1. Following are some highlights.

The enacted version of H.R. 4310 authorized $8.13 billion for programs managed by the Missile Defense Agency (MDA), which is $394.1 million more than the Administration requested. The bulk of the increase reflects authorization of additional funding for several Israeli defense systems and for the Ground-based Midcourse Defense (GMD), currently deployed in Alaska and California which is intended to protect U.S. territory against a small number of missiles launched from North Korea.

The House-passed version of H.R. 4310 would have added to the $7.74 billion MDA request an authorization for an additional $1.31 billion. More than half that increase ($680 million) would be authorized (Section 227) to be spent over several years to support Israel's purchase and operation of "Iron Dome" system, designed to intercept short-range rockets and artillery shells. Another major component of the House bill's increase was a proposed addition of more than 50% ($460 million) to the $903.2 million requested for GMD, of which $103.0 million was to be spent adding to the current missile defense sites in Alaska and California a third site, located on the East Coast.

The Senate-passed version of the NDAA would have added $410 million to the MDA request, including no additional funds for GMD and $210.0 million for Iron Dome in FY2013.

The final bill added to the request authorizations of $211.0 million for Iron Dome, $168.0 million for other Israeli missile defense programs, and $75.0 million for GMD.

Ground-based Midcourse Defense (GMD) Enhancement

The House-passed version of the NDAA would have required DOD to begin developing a plan and a supporting environmental impact statement for putting into service by the end of 2015 an anti-missile interceptor site on the East Coast. The plan was supposed to evaluate the effectiveness from the proposed new site of various interceptor missiles including the three-stage weapon currently deployed at the existing GMD sites in Alaska and California, a two-stage version of the GMD missile, and several versions of the Navy's SM-3 Standard missile.

The enacted version of H.R. 4310 includes a provision that is generally similar, but drops the 2015 deadline. Section 224 of the bill requires that DOD evaluate, and prepare an environmental impact statement on three potential locations for a third GMD site, at least two of which are on the East Coast. The provision also requires DOD to submit with its FY2014 budget request a contingency plan for deploying GMD at one of the three sites evaluated.

The final version of the bill dropped a House provision that would have required GMD to be tested against a target ICBM during 2013. Currently, such a test is scheduled for late 2015. However, the enacted bill included a provision (Section 231) requiring DOD to report to Congress on the feasibility and cost-effectiveness of (1) testing the defense against an ICBM sooner than currently planned and (2) conducting GMD flight tests at the rate of at least three every two years.

MEADS (Medium Extended Air Defense System) Authorization

Neither the House-passed, Senate-passed nor final versions of the bill authorized any of the $400.9 million requested to continue development of the Medium Extended Air Defense System (MEADS), a program jointly funded by the United States, Germany, and Italy to develop a mobile air and missile defense system for combat units in the field. The system would incorporate the Patriot PAC-3 missile. Plans to procure MEADS as an operational system have been shelved, but the three partner countries plan to continue the development program in hopes of harvesting technologies that could be incorporated into other systems. Under the tri-national agreement governing the program, the United States could incur significant costs if the program were terminated.

In addition, Section 221 of the enacted version of H.R. 4310 included a provision, which had been included in both the House and Senate versions of the bill, barring DOD from obligating or expending funds for MEADS.³⁰

Commercial Satellite Export Rules

The enacted version of H.R. 4310 contains a provision that would give the President more flexibility than current law in deciding how to regulate the export of communications satellites pursuant to the Arms Export Control Act.³¹ Section 1261 of the FY2013 NDAA repeals a provision of the FY1999 NDAA that had put "satellites and related items" on the U.S. Munitions List (administered by the State Department) and thus prohibited their export to countries toward which the United States maintains an arms embargo. By repealing that provision of the earlier bill, H.R. 4310 gives the President discretion to designate satellites and related items, as "dual use" items—i.e., equipment that could be used either for civilian or military purposes—which are listed on the Commerce Control List and subject to less restrictive export controls administered by the Commerce Department. The new law would retain the prohibition on satellite sales to or launches by China, North Korea, and countries designated as state sponsors of terrorism (Cuba, Iran, Sudan, Syria). Under the new law, a license application to export satellites and related items to a country in which the United States maintains a comprehensive arms embargo will face a presumption of denial, although not an outright prohibition.³²

Provisions Relating to Wartime Detainees

The House-passed and Senate-passed versions of the FY2013 NDAA each contained provisions relating to persons captured in the course of hostilities against Al Qaeda and associated forces, including those detained at the U.S. Naval Station at Guantanamo Bay, Cuba. Several of the provisions in the House bill aimed to extend the effect or clarify the scope of detainee provisions contained in the FY2012 NDAA while other provisions would have established new restrictions on the transfer or release of detainees held by the United States in Afghanistan. The Senate bill included provisions extending certain expiring restrictions on the handling of detainees that had been enacted as part of the FY2012 bill.

Following are summaries of selected detainee-related provisions of H.R. 4310, as enacted>

Military Trials for Foreign Terrorist Suspects

The enacted version of the bill did not include a provision, adopted during House consideration of H.R. 4310, that would have required that a foreign national who (1) "engages or has engaged in conduct constituting an offense relating to a terrorist attack" on a U.S. target, and who (2) is subject to trial for the offense before a military commission, must be charged before a military commission rather than in federal court.

Detainee Held at Guantanamo

Many provisions in the 2012 NDAA affecting detainees at Guantanamo were scheduled to expire at the end of the fiscal year (though similar restrictions concerning the transfer of Guantanamo detainees are found in appropriations enactments in effect beyond that date). The enacted version of H.R. 4310 effectively extended several of these provisions through FY2013, including:

• a blanket funding bar on the transfer of Guantanamo detainees into the country (Section 1027);
• a prohibition on using funds to construct or modify facilities to house these detainees in the United States (Section 1022); and
• restrictions on the transfer of Guantanamo detainees to foreign countries (Section 1028).

A provision from the House bill (Section 1035) that was not retained would have barred any Guantanamo detainee who is "repatriated" to the former U.S. territories of Palau, Micronesia, or the Marshall Islands from traveling to the United States.

Detainees Held Elsewhere Abroad

The enacted version of H.R. 4310 establishes would new certification and congressional notification requirements relating to the transfer or release of non-U.S. or non-Afghan nationals held at the detention facility in Parwan, Afghanistan (Section 1025). It requires a report to be filed within 120 days describing the "estimated recidivism rates and the factors that appear to contribute to the recidivism of individuals formerly detained at the Detention Facility at Parwan, Afghanistan, who were transferred or released, including the estimated total number of individuals who have been recaptured on one or more occasion" (Section 1026).

The enacted version of the bill also requires the Secretary of Defense to submit a report regarding the use of naval vessels to detain persons pursuant to the Congressionally passed Authorization of the Use of Military Force (AUMF), and to notify Congress whenever such detention occurs (Section 1024). In 2011, a Somali national reportedly was detained on a U.S. vessel for two months and interrogated by military and intelligence personnel before being brought into the United States to face criminal trial.³³

Detention of Persons in the United States:

Although the President has stated that the Administration would not indefinitely detain Americans in the United States pursuant to the detention authorization in the FY2012 NDAA, that provision has been controversial.

A provision of the Senate-passed FY2013 NDAA—which was not retained in the enacted version of the bill—would have stipulated that authorizations to use force are not to be construed to permit detention of U.S. citizens or lawful permanent residents in the United States unless Congress passes a law expressly authorizing such detention. An amendment to remove military detention as an optional "disposition under the law of war" for persons in the United States was proposed during the House debate on H.R. 4310 but was not adopted.

Instead, the enacted version of H.R. 4310 includes (Section 1029) a modified version of a provision in the House-passed bill providing that nothing in the AUMF or in the 2012 NDAA is to be construed as denying "the availability of the writ of habeas corpus" or denying "any Constitutional rights in a court ordained or established by or under Article III of the Constitution" with respect to persons who are inside the United States who would be "entitled to the availability of such writ or to such rights in the absence of such laws."

The original provision from the House-passed bill, as amended on the floor,172 would have covered only persons who are lawfully present in the United States when detained pursuant to the AUMF. Under the floor amendment, the provision would also have required the President to notify Congress within 48 hours of the detention of such a person, and established a requirement that such persons be permitted to file for habeas corpus "not later than 30 days after the person is placed in military custody."

The bill does not contain substantive clarification of which U.S. persons are lawfully subject to detention under the AUMF. Sections from the House bill setting forth congressional findings with respect to detention authority under the AUMF and 2012 NDAA and with respect to habeas corpus were omitted from the final version. Consequently, ambiguity with respect to who can be lawfully detained in the United States appears to have been preserved, but the enacted version of the bill provides reassurance that access to a court to petition for habeas corpus will remain available to those who are detained in the United States pursuant to the AUMF.

Smith-Mundt Act³⁴

Section 1078 of the enacted version of the authorization bill incorporates a modified version of a provision in the House-passed bill (Section 1097) amending and restating Section 501 of the United States Information and Educational Exchange Act of 1948 ("Smith-Mundt Act"; P.L. 80-402, 22 U.S.C. §1461) as well as Section 208 of the Foreign Relations Authorization Act, Fiscal Years 1986 and 1987 (P.L. 99-93; 22 U.S.C. §1461-1a). Prior to enactment of H.R. 4310, those two provisions of law authorized the Secretary of State to conduct public diplomacy programs that provide information about the United States, its people, and its culture to foreign publics, but prohibited the dissemination of that information within the United States until 12 years after the initial dissemination or preparation for dissemination of such information. Before 12 years have elapsed, Members of Congress, media organizations, and research students and scholars were allowed to examine such information, however media organizations and researchers were permitted to do so only at the Department of State. In addition, the two provisions prohibited the use of funds authorized and appropriated for State Department public diplomacy programs to influence public opinion in the United States.

The amendments incorporated in Section 1028 of the enacted bill removed the prohibition on domestic dissemination of public diplomacy information produced by the Department of State and the Broadcasting Board of Governors (BBG) intended for foreign audiences, while maintaining the prohibition on using public diplomacy funds to influence U.S. public opinion.³⁵ Proponents of these changes argued that the ban on domestic dissemination of public diplomacy information was impractical given the global reach of modern communications, especially the Internet, and that it unnecessarily prevented valid U.S. government communications with foreign publics due to U.S. officials' fear of violating the ban. They asserted as well that lifting the ban would promote the transparency in the United States of U.S. public diplomacy and international broadcasting activities conducted abroad. Critics of lifting the ban stated that it might open the door to more aggressive U.S. government activities to persuade U.S. citizens to support government policies, and might also divert the focus of State Department and the BBG communications from foreign publics, thus reducing their effectiveness.³⁶

House Floor Amendments

Following are selected amendments on which the House took action during consideration of H.R. 4310.

Senate Floor Amendments

Following are selected amendments on which the House took action during consideration of S. 3254.

FY2013 DOD Appropriations Bill

DOD Appropriations Overview

The FY2013 DOD appropriations bill reported by the House Appropriations Committee May 25, 2012 (H.R. 5856), would provide a total of $599.89 billion for DOD activities other than military construction,³⁷ $3.09 billion more than the President requested. Amendments to the bill, adopted by the House on July 18-19, 2012, reduced the appropriation to $597.71 billion.

In exceeding the President's budget request—and in many of its details—the House-passed version of the DOD appropriations bill parallels H.R. 4310, the House-passed version of the companion FY2013 National Defense Authorization Act (NDAA). By the same token, the House-passed appropriation is consistent with the defense funding cap set by H.Con.Res. 112, the FY2013 budget resolution adopted by the House on March 29, 2012. Thus, it exceeds defense spending cap set by the Budget Control Act of August 2011. On those grounds, the Administration warned that the President's senior advisors would recommend that he veto the house-passed bill in its current form.³⁸

The version of H.R. 5856 reported by the Senate Appropriations Committee on August 2, 2012, would provide $596.64 billion—$155.0 million less than the Administration's request and $1.06 billion less than the House-passed version (Table 14).

Proposed Administration Savings and Congressional Response

The House-passed and Senate committee-reported versions of H.R. 5856 would each add billions of dollars to the Administration's budget request—$5.5 billion in the case of the House bill—reversing some of the Administration's DOD budget reduction initiatives, summarized in Table 15.

In each version of the bill, that gross increase, along with other congressional initiatives summarized in Table 16, is partly offset by funding reductions summarized in Table 17.

Congressional Initiatives

As reported by the House Appropriations Committee, H.R. 5856 also would add to the budget request upwards of $6.0 billion for certain programs for which Congress typically increases funding above the proposed level.

Funding Offsets

As is customary in annual DOD appropriations bills, the House-passed and Senate committee-reported versions of H.R. 5856 would offset some of its proposed additions to the budget request with a small number of relatively large funding reductions (in addition to dozens of smaller cuts justified in terms of specific problems with specific programs).

Following are additional highlights of H.R. 5856 as passed by the House and reported by the Senate Appropriations Committee.

Military Personnel and Force Structure (Appropriations)³⁹

H.R. 933 as enacted funds the 1.7% increase in "basic pay" for military personnel proposed by the Administration, as the versions of H.R. 5856 passed by the House and reported by the Senate Appropriations Committee would have done. That rate is based on the Labor Department's Employment Cost Index (ECI), which is a survey-based estimate of the rate at which private-sector pay has increased.

Army, Marine Corps End-Strength Reductions

The enacted bill, as well as the versions that had been passed by the House and reported by the Senate Appropriations Committee each accepted the Administration's proposal to reduce the active-duty end-strength of the Army (reduced by 9,900) and Marine Corps (reduced by 4,800) during FY2013. In its report on the FY2013 defense bill, the House Appropriations Committee expressed concern that the Administration's plan to reduce those two services by an additional 77,300 spaces by the end of FY2017 was based on budgetary pressures rather than military requirements.⁴⁰

Navy Ship Retirements

The enacted bill, like the version reported by the Senate committee, added to the budget request $2.38 billion to continue manning, operating and modernizing as previously had been scheduled in FY2013 and FY2014 all seven of the Aegis cruisers and both of the amphibious landing ships the Administration had planned to retire during that time. The funds are in a newly created "Ship Modernization, Operations and Sustainment Fund" that would remain available through FY2014 (Section 8105 of H.R. 933).

The House bill would have added to the request only the funds needed to modernize and continue operating during FY2013 three of the four Aegis cruisers that would have been retired during that year under the administration's plan. The House bill would have allowed the retirement of a fourth cruiser—USS Port Royal, which was severely damaged in 2009 when it grounded on a coral reef off Honolulu. The House bill would have added $124.6 million for operation and maintenance of the three other cruisers and $426.7 million to upgrade their equipment (including the purchase of five MH-60R helicopters).

Air Force Cuts Rejected

The final version of the appropriations bill added to the Administration's request nearly $900 million dollars to sustain several flying squadrons that the budget would have disbanded and to continue acquiring and operating two types of aircraft that would have been disposed of under the budget request.

Like the House and Senate Armed Services Committees, the House and Senate Appropriations Committees both rejected a proposal to disband seven Air Force squadron and mothball or dispose of nearly 300 F-16s and A-10s operated by those units. In its report H.R. 5856, the House Appropriations Committee said the planned cutbacks would fall disproportionately on the Air Force Reserve and Air National Guard. Together, those two reserve components would absorb 85% of the planned reduction in airplanes and 60% of the planned manpower cuts, the committee said.

As enacted, H.R. 933 includes a provision (Sec. 8115) that prohibits both the proposed dissolution the squadrons and disposal of their aircraft. It also adds to the amount requested $557.2 million to continue operating those squadrons and to fund the nearly 7,000 Air Force, Air Force Reserve and Air National Guard personnel assigned to them.

In its report to accompany H.R. 5856, the House Appropriations Committee had directed the Air Force to submit by October 1, 2012, a cost-benefit analysis of the proposed retirements and reorganizations that was to be reviewed by the Government Accountability Office (GAO). Conferees on H.R. 933 explicitly dropped the requirement, but said they expected that any future proposals to change the Air Force's force structure would be "transparently and comprehensively justified."

The final defense bill also adds to the request $341.3 million to for the previously planned procurements of "Block 30" Global Hawk long-range surveillance drones and small cargo planes designated C-27s and to continue operating Block 30s and C-27s that already had been acquired. It also includes a provision (Sec. 8118) requiring the Air Force to spend funds appropriated in earlier budgets for Block 30s and C-27s.

Reduction in Personnel Transfers

The enacted version of FY2013 DOD appropriations bill (H.R. 933) cut the $2.94 billion requested by the four services for routine personnel transfers by 5% ($146.8 million).⁴¹ This amounted to half the reduction that would have been made by the version of the bill reported by the Senate Appropriations Committee (H.R. 5856), which would have cut transfer costs by 10% ($293.6 million).

In its report on the defense bill, the Senate committee said DOD rotates an average of one-third of military personnel from one duty station to another in any year and that the average time between such reassignments is about two years. The Joint Explanatory Statement accompanying H.R. 933 directed the Under Secretary of Defense for Personnel and Readiness to report to Congress (within 180 days of enactment) on potential budget savings that could be realized by longer tours of duty at any one station as well as potential improvements in service members' job performance and in the quality of life for service members and their families.

Depot Maintenance 'Carryover'

The enacted version of the FY2013 defense appropriations bill—like the versions passed by the House and reported by the Senate Appropriations Committee - cut the Administration's budget request in an effort to reduce what the committees described in their reports as an excessive backlog of scheduled maintenance work by the services' depots, which perform major overhauls of aircraft, ground vehicles, engines, electronic equipment and other major items. Essentially, the Appropriations Committees took the position that they would reduce the amount of additional funds appropriated for overhauls in FY2013 while the depots would keep working at their regular tempo performing work that had been paid for in prior budgets, thus drawing down the backlogs.

The issue, which the GAO has been scrutinizing for years, is referred to as "excess carryover" and is described by a July 2008 GAO report on Army depots:

The five Army depots operate under the working capital fund concept, where customers are to be charged for the anticipated full cost of goods and services. To the extent that the depots do not complete work at [sic–apparently means "by"] year-end, the funded work will be carried into the next fiscal year. Carryover is the reported dollar value of work that has been ordered and funded (obligated) by customers but not completed by working capital fund activities at the end of the fiscal year. The congressional defense committees recognize that some carryover is needed to ensure a smooth flow of work during the transition from one fiscal year to the next. However, past congressional defense committee reports raised concerns that the level of carryover may be more than is needed. Excessive amounts of carryover financed with customer appropriations are subject to reductions by the Department of Defense (DOD) and the congressional defense committees during the budget review process.⁴²

The House-passed version of H.R. 5856 would have cut a total of $2.46 billion from the amounts requested for Army Operation and Maintenance (O&M) and for the Army's Other Procurement accounts, explaining the action in a summary table as, "Excess Working Capital Fund Carryover." Citing the same rationale, the Senate committee-reported version of the bill would have cut a total of $331.7 million from the amounts requested for the O&M accounts of the four armed services. H.R. 933 as enacted cuts $332.3 million from the O&M requests.

TRICARE Fee Increases and Cost Savings⁴³

Proposed TRICARE Fee Increases

The Administration's $16.15 billion request for DOD's TRICARE medical insurance program assumed certain increases in various fees paid by participants. While some of those proposed increases were allowed by current law, most of them would have required legislative changes, most of which were rejected by the House and Senate Armed Services Committees in drafting the enacted version of the FY2013 National Defense Authorization Act.

As reported by the House Appropriations Committee, H.R. 5856 incorporated the TRICARE cost savings that would result from the Administration's proposed fee hikes. In its report on the bill, the House Committee said it would "continue to evaluate the proposed changes," pending enactment of the companion defense authorization bill.

H.R. 933 as enacted—like the Senate Appropriations Committee-reported version of H.R. 5856—added to the budget request $273.0 million to cover higher than budgeted costs expected to result from Congress's rejection of some of the proposed TRICARE fee increases.

TRICARE Savings Assumed

Following the lead of the Senate Appropriations Committee, the enacted version of H.R. 933 cuts $807.4 million from the FY2013 TRICARE request, a reduction of 5% which—conferees said—should have no adverse impact on the program. Citing the Government Accountability Office (GAO) as its source, the Senate Committeee said in its report on H.R. 5856 that the TRICARE program had "underexecuted" its budget (i.e., had spent less than was appropriated) by $771.6 million in FY2010 and by $1.36 billion in FY2011, and that it was on track to spend $1.04 billion less than had been appropriated for FY2012.

Similarly, the House-passed version of H.R. 5856 would have cut $400.0 million from the TRICARE request on the assumption that this pattern of "historic underexecution" would continue in FY2013.

Ground Combat Systems Appropriations⁴⁴

Congressional action on appropriation of funds for selected ground combat systems is summarized in Table A-4. Following are some highlights.

Abrams Tank and Bradley Upgrades; Hercules tank recovery vehicles

H.R. 933 as enacted incorporates $383.0 million worth of House-passed additions to the amounts requested for three armored vehicle programs, as follows:

The budget requested $74.4 million for to support the fielding of M-1 tanks that had been upgraded to the so-called "M-1A2SEP" version, which incorporates improvements to the power train, communications gear, and night-vision equipment.⁴⁵ The final appropriations bill would add $181.0 million to upgrade additional tanks.

H.R. 933 would nearly double—to $288.2 million, from $148.2 million requested—funding to upgrade Bradley armored troop carriers with improved night vision equipment, digital communications gear, and power train modifications.

The bill would add $62.0 million to the $107.9 million requested for M-88A2 Hercules tank recovery vehicles—tracked vehicles designed to tow to safety a disabled 70-ton Abrams tank.

Ground Combat Vehicle⁴⁶

The enacted version of the appropriations bill—like the House-passed and Senate committee-reported versions of H.R. 5856—would provide $639.9 million, as requested, to continue development of the Army's Ground Combat Vehicle (GCV), which is intended to replace the Bradley armored troop carrier.

In its report on H.R. 5856, the Senate Appropriations Committee had questioned the emphasis the Army was placing on the GCV, considered in the context of its overall spending plans for modernization of its armored combat vehicle fleet. Under current Army plans, the Senate committee said, the GCV would account for about 10% of the Army's entire fleet of combat vehicles. In the FY2013 budget request, it accounts for more than 70% of the total amount requested for modernization of the ground combat fleet. Over the five-year period FY2013-FY2017, GCV would absorb more than 80% of the service's projected spending on combat vehicle modernization. The committee directed the Army to provide to Congress the results of a business case analysis—currently underway—of its combat vehicle fleet modernization plans.⁴⁷

Naval Systems Appropriations⁴⁸

In their respective reports on H.R. 5856, the Appropriations Committees of both the House and Senate decried the Administration's plan to reduce the number of warships projected for funding in FY2013-FY2017 compared with the Navy's previous five-year plan. Both committees warned that the projected reduction in shipbuilding would increase costs and weaken the nation's shipbuilding industrial base. The House committee also contended that the Administration's plan was inconsistent with its increased emphasis on U.S. military power in the Pacific region, where naval forces would play a particularly significant role.⁴⁹

Congressional action on appropriation of funds for selected naval systems is summarized in Table A-6. Following are highlights.

Submarine and Destroyer Production

Like the Armed Services Committees of the House and Senate, the House and Senate Appropriations Committee had objected to the Administration's plan to buy one Virginia-class attack submarine and one Aegis destroyer in FY2014, rather than two ships of each type, as had been planned. H.R. 933 as enacted—like the Senate committee-reported versions of H.R. 5856—adds nearly $1.8 billion to the amount requested for Navy shipbuilding in FY2013 to support multi-year contracts to procure 10 submarines and 10 destroyers in FY2013 through FY2017, with the aim of achieving cost-cutting efficiencies.

Like the Senate committee version of H.R. 5856, H.R. 933 adds to the budget request:

$778 million for long lead-time funding to buy components that would allow the Navy to start work on two submarines rather than one in FY2014; and

$1.0 billion to fund a third destroyer in FY2013, in addition to the two ships requested.

The House-passed version of H.R. 5856 added $723 million for the submarine components as well as $1 billion for a third destroyer.

USS Miami Fire Damage Repair

The final bill—like the Senate committee version of H.R. 5856—added to the amount requested $150 million for the repair of the Virginia-class submarine USS Miami, damaged by fire on May 23, 2012, and undergoing an overhaul at the Portsmouth Naval Shipyard in Kittery, Maine. On August 22, 2012, the Navy announced that it plans to repair the ship, at an estimated cost of $450.0 million, by April 30, 2015, after which the ship would be good for an additional 10 years of service.⁵⁰

The anticipated unit-cost of a new Virginia-class submarine in the FY2013 budget is $2.55 billion.

Amphibious Transport Dock (LPD-17)

The enacted appropriation, like the Senate committee version of the bill, added $263.3 million for long lead-time components that would allow funding in FY2014 of an LPD-17 class amphibious transport dock ship. In its report on the H.R. 5856, the Senate Appropriations Committee noted that the Navy has fewer amphibious landing transports than current DOD plans call for and that the number of such ships is slated to decline further.

Aircraft Appropriations⁵¹

Congressional action on appropriation of funds for selected aircraft and long-range strike programs is summarized in Table A-10. Following are some highlights:

F-35 Joint Strike Fighter

H.R. 933 appropriates $8.29 billion—95% of the amount requested—to continue development and production of the F-35 Joint Strike Fighter. Several reductions totaling $404.0 million reflected what the House and Senate conferees described as funding requests the were premature or that incorporated unjustified price increases. The House-passed and Senate committee-reported versions of H.R. 5856 each would have made generally similar reductions.

The final bill would provide $5.59 billion to buy a total of 29 F-35s of three types: a carrier-based version for the Navy, a short-takeoff version for the Marine Corps, and a conventional, land-based version for the Air Force. It also would provide $2.68 billion to continue development of the plane.

F-22 Oxygen System

The enacted bill would add $21.5 million to the amount requested for modifications to the Air Force's F-22 fighters, with the additional funds intended to install a backup oxygen supply for the pilots in each aircraft. The Air Force has been investigating complaints by some F-22 pilots that they have experienced symptoms similar to those caused by hypoxia (oxygen deprivation).

On August 1, 2012, an Air Force official said that a faulty pressurization program in the F-22's oxygen system was responsible for hypoxia-like symptoms its pilots were suffering. The faulty pressurization programming caused a pressurized vest—designed to protect pilots' lungs in case of rapid decompression—to inflate, restricting the pilots' ability to breathe, Maj. Gen. Charles Lyons USAF, told reporters.⁵²

C-130 Cargo Planes

Instead of the 7 C-130 cargo planes requested in the FY2013 budget (most of which would be equipped for specialized missions such as mid-air refueling and search-and-rescue), the enacted defense bill would provide 14 of the planes plus a down-payment on 18 additional C-130 to be funded in future fiscal years. For procurement of new C-130s (of various types) and modifications to existing planes, the budget requested $1.12 billion and H.R. 933 provides $1.73 billion.

The enacted bill also adds a total of $20.0 million to the Air Force's procurement and R&D accounts to continue the C-130 Avionics Modernization Program (AMP), a project to upgrade the cockpit electronics of older planes. The Administration's budget would have scrapped the program.

Missile Defense Appropriations⁵³

The enacted version of H.R. 933 appropriates $8.30 billion for programs of the Missile Defense Agency, an increase of 6.6% above the $7.79 billion request. The largest single component of the net increase is the House committee's addition of $280.0 million for four Israeli missile defense systems, which includes $211.0 million for the Iron Dome system designed to intercept short-range rockets and artillery shells. Another component of the net increase for MDA in the bill is the addition of $75.0 million to the $903.2 million requested for the Ground-Based Missile Defense (GMD) system currently deployed at sites in Alaska and Hawaii.

Congressional action on appropriation of funds for selected missile defense programs is summarized in Table A-2.

Medium Extended Air Defense System (MEADS)

Following the lead of the Senate Appropriations Committee, the enacted bill appropriates $380.9 million for the Medium Extended Air Defense System (MEADS), a joint U.S.-German-Italian effort to develop a mobile air and missile defense system that incorporates the Patriot PAC-3 missile, which is designed to protect combat units in the field.

Plans to deploy MEADS have been shelved, but the three partner countries are continuing work on the system in hopes of developing components and technologies that could be used in other systems. The Administration maintains that, under the tripartite Memorandum of Understanding governing the program, the United States would incur significant cash penalties if it unilaterally pulled out of the program. The House-passed version of the appropriations bill would have denied the entire $400.9 million requested for MEADS in the FY2013 budget.

The FY2013 National Defense Authorization Act (H.R. 4310; P.L. 112-235) had authorized no funds for MEADS and included a provision (Section 221) prohibiting the use of funds for the program. However, DOD holds that the funds appropriated for MEADS by H.R. 933 can be used for that purpose since, by the usual rule of legislative construction, any particular piece of legislation can be superseded by subsequent legislation.

H.R. 933 allows DOD to use the fund appropriated either to complete the MEADS development program or to pay the fee the U.S. government would incur through termination. In its report on H.R. 5856, the Senate Appropriations Committee said the costs would be about the same in either case.

OCO Funding: Afghanistan and Related Activities

As enacted, H.R. 933 would provide $86.95 billion for Overseas Contingency Operations (OCO) —basically, operations in Afghanistan and Iraq and supporting activities—which is $1.26 billion less than was requested. The House-passed version of H.R. 5856 would have provided $87.11 billion for OCO costs, while the Senate committee-reported version of that bill would have provided $93.03 billion. Following are OCO funding highlights in the FY2013 DOD Appropriations Bill.

Aid to Pakistan

As enacted, H.R. 933 would provide $1.20 billion of the $1.30 billion requested for payments to Pakistan from DOD's Coalition Support Fund. The payments from the fund—for which the Administration requested $1.75 billion in FY2013—are intended to reimburse Pakistan, Jordan and other U.S. coalition partners for expenses they incur from supporting U.S. military operations in Afghanistan and Iraq.

As reported by the House Appropriations Committee, H.R. 5856 would have provided the $1.75 billion requested for CSF. However, Section 9015 of that bill would have barred any payments from the fund to Pakistan unless the Secretaries of Defense and State certify that the government of Pakistan is cooperating with U.S. policy in certain respects, including supporting counterterrorism operations against al Qaeda and certain other groups with bases in Pakistan.

An amendment adopted during House debate on H.R. 5856 cut $650 million from the CSF request, with the intent of cutting Pakistan's payment by 50% to $650 million. (See H.Amdt. 1412, Table 19.)

The final version of the bill restores $550 million of the House cut and retains the House restriction on aid to Pakistan but would allow the Administration to waive that requirement on national security grounds (Section 9014).

Detainee Issues

The enacted version of H.R. 933 contained three provisions, substantially the same as provisions of previous defense appropriations bills and provisions in the House-passed and Senate committee-reported versions of H.R. 5856, that restrict the transfer to any other location of detainees held at the U.S. facility at Guantanamo Bay, Cuba who are neither U.S. citizens nor members of the U.S. Armed Forces. Three provisions of H.R. 933 are

• Section 8109, which would prohibit the transfer to (or release within) U.S. territory of any such detainee;
• Section 8110, which would prohibit the transfer to any other country of any such detainee except to a country where the host government would likely retain the detainee in custody and render him unable to threaten U.S. interests; and
• Section 811, which would prohibit the use of any funds to build, acquire, or modify any facility in U.S. territory to house Guantanamo detainees.

House Floor Amendments

Following are selected amendments on which the House took action during consideration of H.R. 5856.

Senate Floor Amendments

Table 20 summarizes selected amendments on which the Senate took action during consideration of H.R. 933.

Appendix A. Selected Program Funding Tables