Appropriations for FY2001: Military Construction

Order Code RL30510

CRS Report for Congress

Received through the CRS Web

Appropriations for FY2001:

Military Construction

Updated November 7, 2000

(name redacted)

Analyst 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 considers

each year. It is designed to supplement the information provided by the House and Senate

Appropriations Subcommittees on Military Construction Appropriations. 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.

This report is updated as soon as possible after major legislative developments, especially

following legislative action in the committees and on the floor of the House and Senate.

NOTE: A Web version of this document with

active links is available to congressional staff at

[http://www.loc.gov/crs/products/apppage.html]

Appropriations for FY2001: Military Construction

Summary

The military construction (MilCon) appropriations bill finances (1) military

construction projects in the United States and overseas; (2) military family housing

operations and construction; (3) U.S. contributions to the NATO Security Investment

Program; and (4) most base realignment and closure costs.

This report reviews the appropriations and authorization process for military

construction. The congressional debate perennially centers on the adequacy of the

President’s budget for military construction needs and the necessity for congressional

add-ons, especially for Guard and Reserve projects. In recent years, Congress has

frequently complained that the Pentagon has not adequately funded military

construction.

The Administration’s FY2001 budget request for military construction is $8.0

billion, which is 5.5% below the level provided in FY2000. This continues a

downward trend from the peak FY1996 level of $11.2 billion, the FY1997 level of

$9.8 billion, the FY1998 level of $9.3 billion, the FY1999 level of $9.0 billion and the

FY2000 level of $8.4 billion.

On May 16, 2000, the House passed the Military Construction Appropriations

Act FY2001 (H.R. 4425), by a 386-22 roll call vote. The House followed the House

Appropriations Committee’s lead and passed the $8.634 billion bill with only one

amendment.

On May 18, 2000, the Senate passed S. 2521, their version of the FY2001

Military Construction Appropriations bill, on a 95-4 vote. Because emergency

supplemental appropriations for FY2000 was added onto this bill, the conference

debate has focused on domestic and defense issues outside of military construction.

For background and comprehensive information on the FY2000 supplemental

funding, see CRS Report RL30457, Supplemental Appropriations for FY2000: Plan

Colombia, Kosovo, Foreign Debt Relief, Home Energy Assistance and Other

Initiatives, by (name redacted), et al.

The Military Construction Appropriations conference report, recommending

$8.834 billion, was approved by the House on June 29, 2000, and the Senate on June

30, 2000. It became P.L. 106-246 on July 13, 2000.

In authorization action, on May 18, 2000, the House approved its defense

authorization bill (H.R. 4205, H.Rept. 106-616). The Senate substituted their version

of the defense authorization bill – S. 2549, S.Rept. 106-292 – in H.R. 4205 and

passed that bill on July 13, 2000. The conference report (H.Rept. 106-945) was

passed by the House on October 11, 2000 and by the Senate on October 12, 2000.

The conference authorized $8.8 billion, $787 million more than the President’s

request. The FY2001 defense authorization bill became P.L. 106-398 on October 30,

2000.

Key Policy Staff

CRS

Division

Tel.

Area of Expertise

Name

Base Closure

David Lockwood

FDT

7-....

Defense Acquisition

Valerie Grasso

FDT

7-....

Defense Budget, Mil. Con.

Mary Tyszkiewicz

FDT

7-....

Defense Budget

(name redacted)

FDT

7-....

Defense Reform

Gary Pagliano

FDT

7-....

Guard and Reserve Issues

(name redacted)

FDT

7-....

Division abbreviations: FDT = Foreign Affairs, Defense, and Trade.

Contents

Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Background: Content of Military Construction Appropriations and

Defense Authorization Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Conference Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

House Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Senate Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Senate Appropriations Emergency Supplemental Action for FY2000 . 4

Authorization Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Key Policy Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Ongoing Congressional Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Long-term Planning for Military Construction . . . . . . . . . . . . . . . . . . 5

Reauthorization of the Military Housing Privatization Initiative . . . . . 6

Privatization Initiative for Utility Infrastructure . . . . . . . . . . . . . . . . . 8

History and Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

The Funding Pattern for Military Construction Budgets . . . . . . . . . . . 9

The Debate Over Added Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Major Funding Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Military Construction Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

For Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

CRS Issue Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

CRS Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Selected World Wide Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

List of Tables

Table 1. Status of Military Construction Appropriations, FY2001 . . . . . . . . . . . 3

Table 2. Military Construction Appropriations, FY1996-2000 . . . . . . . . . . . . . 12

Table 3. Military Construction Appropriations by Account:

FY1999-2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Table 4. Military Construction Appropriations by Account - Congressional

Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table 5. Congressional Additions to Annual DOD Budget Requests for

National Guard and Reserve Military Construction, FY1985-2000 . . . . . . 15

Appropriations for FY2001:

Military Construction

Most Recent Developments

The Military Construction Appropriations conference report, recommending

$8.834 billion, was approved by the House on June 29, 2000, and the Senate on June

30, 2000. It became P.L. 106-246 on July 13, 2000.

In authorization action, on May 18, 2000, the House approved its defense

authorization bill (H.R. 4205, H.Rept. 106-616). The Senate substituted their

version of the defense authorization bill – S. 2549, S.Rept. 106-292 – in H.R. 4205

and passed that bill on July 13, 2000. The conference report (H.Rept. 106-945) was

passed by the House on October 11, 2000 and by the Senate on October 12, 2000.

The conference authorized $8.8 billion, $787 million more than the President’s

request. The FY2001 defense authorization bill became P.L. 106-398 on October 30,

2000.

Background: Content of Military Construction

Appropriations and Defense Authorization Bills

The Department of Defense (DOD) manages the world’s largest dedicated

infrastructure, covering over 40,000 square miles of land and a physical plant worth

over $500 billion. The military construction appropriations bill provides a large part

of the funding to maintain this infrastructure. The bill funds construction projects and

real property maintenance of the active Army, Navy & Marine Corps, Air Force, and

their reserve components; defense-wide construction; U.S. contributions to the

NATO Security Investment Program (formerly called the NATO Infrastructure

Program); and military family housing operations and construction. The bill also

provides funding for the Base Realignment and Closure (BRAC) account, which

finances most base realignment and closure costs, including construction of new

facilities for transferred personnel and functions, and environmental cleanup at closing

sites.

The military construction appropriations bill is only one of several annual pieces

of legislation that provide funding for national defense. Other major legislation

includes (1) the defense appropriations bill, that provides funds for all military

activities of the Department of Defense, except for military construction; (2) the

national defense authorization bill, that authorizes appropriations for national

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defense,1 and (3) the energy and water development appropriations bill, that provides

funding for atomic energy defense activities of the Department of Energy. Two other

appropriations bills, VA-HUD-Independent Agencies and Commerce-Justice-State,

also include small amounts for national defense. In addition, the energy and water

development appropriations bill provides funds for civil projects carried out by the

U.S. Army Corps of Engineers.

The annual defense authorization bill authorizes all the activities in the defense

appropriation measures described above. Therefore, major debates over defense

policy and funding issues, including military construction can be also found in the

authorization bill. Since issues in the defense authorization and appropriations bills

intertwine, this report highlights salient parts of the authorization bill, along with the

military construction appropriation process.

The separate military construction appropriations bill dates to the late 1950s

when a large defense build-up occurred in response to intercontinental ballistic missile

threats and the Soviet launch of Sputnik. Defense construction spending soared, as

facilities were hardened, missile silos were constructed, and other infrastructure was

built. The appropriations committees established the military construction

subcommittees to deal with this new level of activity. Consequently, the separate

military construction bill was created. The first stand-alone military construction bill

was in FY1959, P.L. 85-852. Previously, military construction funding was provided

through annual defense appropriations or supplemental appropriations bills.

Military construction appropriations are the major, but not the sole, source of

funds for facility investments by the military services and defense agencies. The

defense appropriations bill provides some funds for real property maintenance in

operation and maintenance accounts. In addition, funds for construction and

maintenance of Morale, Welfare, and Recreation-related facilities are partially

provided through proceeds of commissaries, recreation user fees, and other income.

Most funds appropriated by Congress each year must be obligated in that fiscal

year. Military construction appropriations are an exception, since these funds are

generally made available for obligation for five fiscal years.

Consideration of the military construction budget starts when the President’s

budget is delivered to Congress early each year. For FY2001, the President requested

$8.0 billion in funding for the military construction program.

1

See Appropriations for FY2001: Defense, by (name r edacted), CRS Report RL30505, for

details on the defense authorization and appropriation process.

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Status

Table 1 shows the key legislative steps necessary for the enactment of the

FY2001 military construction appropriations.

Table 1. Status of Military Construction Appropriations, FY2001

Committee

Markup

House

Senate

5/9/00

5/8/00

House

Report

H.Rept.

106-614

House

Passage

5/16/00

Senate

Report

S.Rept.

106-290

Senate

Passage

5/18/00

Conference

Report

H.Rept.

106-710

Conference Report

Approval

House

Senate

6/29/00

6/30/00

Public

Law

P.L.

106-246

Appropriations Action

Conference Appropriations Action. The Military Construction Appropriations

conference report, recommending $8.834 billion, was approved by the House on June

29, 2000, and the Senate on June 30, 2000. It became P.L. 106-246 on July 13,

2000. The conference report debate centered on domestic and defense items in the

FY2000 supplemental emergency appropriations. (For more details, see Senate

Appropriations Emergency Appropriations Action for FY2000 section, below.)

House Appropriations Action. On May 16, 2000, the House passed the

FY2001 Military Construction Appropriations Act (H.R. 4425), by a 386-22 roll call

vote. The House followed the House Appropriations Committee’s lead and passed

the bill with only one amendment. The Traficant amendment prohibits any money in

the bill from going to individuals or companies convicted of violating the “Buy

American” laws.

The House Appropriations Committee decided, as written in its report (H.Rept.

106-614) to:

! reprimand the Pentagon about serious shortfalls in the military construction

request and the severe backlog in readiness, revitalization, and quality of life

projects,

! deny the Pentagon’s advance appropriations requests,

! direct the DOD Comptroller to monitor the impact of no contingency funding

for construction and hopes this action will improve the Services’ cost

estimating, and

! expect the Pentagon to include facility modernization programs in its

Quadrennial Defense Review.

The $8.634 billion bill passed by voice vote. This bill is 4% over last year’s bill

and some $600 million more than the President’s FY2001 request. The bill provides

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$3.9 for military construction, $3.5 million for family housing and $1.2 billion for

Base Realignment and Closure costs.2

Senate Appropriations Action. On May 18, 2000, the Senate passed S. 2521,

by a vote of 96-4. Because emergency supplemental appropriations for FY2000 was

added to this bill, the debate on S. 2521 has centered on domestic and defense riders

attached on the bill. (See below.)

On May 9, 2000, the Senate Appropriations Committee reported out its version

(S. 2521), of the FY2001 military construction appropriations bill.

The Senate Appropriations Committee decided, as written in its report (S.Rept.

106-290) to:

! chastise the Pentagon for its inadequately-funded proposal,

! require the Pentagon to add 5% contingency funding in its FY2002 request, in

order to promote flexibility in completing projects (the Pentagon proposed

zero in FY2001), and

! continue to require the Pentagon to report repair projects in Operations and

Maintenance account funding to Congress.

The $8.634 billion bill passed by voice vote. This bill is $292 million over last year’s

bill and some $600 million more than the President’s FY2001 request. The bill

provides $3.81 for military construction, $3.5 million for family housing and $1.2

billion for Base Realignment and Closure costs.3

Senate Appropriations Emergency Supplemental Action for FY2000.

FY2000 supplemental funding was attached to this Senate bill, S. 2521. Defense

items include: peacekeeping costs in Kosovo and East Timor, counter-terrorism,

growth in fuel and health-care costs for DOD dependents and retirees, and counternarcotics costs in Columbia. (For a complete list of supplemental items attached to

S. 2521, see Appendix 1.) The debate on S. 2521 is centering on supplemental riders

on gun control and Kosovo. The most controversial provision that would have put

a deadline to have U.S. troops withdraw from Kosovo, by July 1, 2001, was voted

down by the Senate.

For background and comprehensive information on the supplemental, see CRS

Report RL30457, Supplemental Appropriations for FY2000: Plan Colombia,

Kosovo, Foreign Debt Relief, Home Energy Assistance and Other Initiatives, by

(nameredacted),et al. For background on the Kosovo operations, see CRS Issue Brief

IB98041, Kosovo and U.S. Policy, by Steve Woehrel, and CRS Issue Brief IB10027,

Kosovo: U.S. and Allied Military Operations, by (name redacted).

2

For a press release on the House Appropriations Subcommittee mark-up, see:

[http://www.house.gov/appropriations/pr01mcsu.html]

3

For a press release about the Senate Appropriations Committee mark-up, see:

[http://www.senate.gov/~appropriations/releases/fy01full.htm]

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Authorization Action

On May 18, 2000, the House passed the defense authorization bill (H.R. 4205,

H.Rept. 106-616) Following the lead of the Military Construction Subcommittee,

the House recommended $8.4 billion dollars for military construction, $400 million

more than the President’s request.

The Senate substituted their version of the defense authorization bill – S. 2549,

S.Rept. 106-292 – in H.R. 4205 and passed that bill by 97-3 on July 13, 2000. The

Senate recommended $8.46 billion for military construction, $430 million more than

the President’s request.

The conference report (H.Rept. 106-945) was passed by the House on October

11, 2000 and by the Senate on October 12, 2000. The FY2001 defense authorization

bill became P.L. 106-398 on October 30, 2000.

The conference authorized $8.8 billion, $787 million more than the President’s

request. The conferees added over $200 million of the service chiefs’ unfunded

requirements and emphasized additions to improved living and working conditions for

military personnel and their families.

The conference also agreed to extend the alternative authority for acquisition and

improvement of military housing in Section 2806 – better known as Military Housing

Privatization Initiative. It is extended from February 10, 2001, to December 31,

2004. (For more information on this initiative, see the Key Policy Issues section

below.)

Key Policy Issues

Ongoing Congressional Concerns

Long-term Planning for Military Construction. Throughout the 1990s,

Congress and Administration have debated whether military construction funding and

long-term planning are adequate. Members of Congress have complained that poor

planning and insufficient funding on the Pentagon’s part have made it difficult for

Congress to insure that military construction plans meet pressing priorities.

The Department of Defense uses a formal process called the Planning,

Programming and Budgeting System (PPBS) to create its budget for Congress.4 The

PPBS process is also used to prepare DOD’s internal, long-term financial plan. The

long-term plan extends over a six-year period and is known as the Future Years

Defense Plan (FYDP). During the 1990s, Congress has criticized the Pentagon’s

long-term planning for military construction.

4

For a discussion of the formulation of the defense budget proposal by the DOD, see CRS

Report RL30002, A Defense Budget Primer, by (nam er edacted)

and (name redacted).

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In hearings on the FY2001 military construction request, legislators expressed

continuing concern over military construction planning and the sufficiency of funding.

Rep. Joel Hefley, Chair of the Military Installations and Facilities Subcommittee of the

House Armed Services Committee (HASC) argued at a hearing on March 2, 2000,

that the FY2001 budget request – like the previous FY1997-00 requests – continues

the poor planning and downward trend for military construction budgets. For the

FY1997-2001 military construction requests, the Administration requested fewer

funds than it had programmed in its budget assumptions in the previous years’ FYDP.

This mismatch between plans and funding was cited in the congressional criticism of

the Pentagon’s military construction planning. Since the FYDP and the requested

amount decreases each year for military construction, Mr. Hefley states that he is

finding it difficult to take Pentagon future plans for military construction seriously.

That sentiment was echoed by the Senate Appropriations Military Construction

Subcommittee chair – Sen. Conrad Burns – who expressed dismay at the kind of longterm planning seen in the FY2001 military construction proposal.

At the March 2nd HASC hearing, Randall Yim, Deputy Under Secretary of

Defense (Installations), outlined a new DOD approach to installation management,

in response to the subcommittee’s concerns about planning. Yim established an

Installation Policy Board, consisting of the senior service facilities leaders, senior

service engineers and representatives from financing and program communities. This

Board, chaired by Yim, meets monthly to peer review and audit installation

requirements, to develop common standards between services and to provide a forum

for DOD-wide installations issues.

Yim outlined three analytical tools that the Installation Policy Board is

developing for more efficient planning. The first is a facilities strategic plan, so DOD

knows what type of facilities are needed in the future. The second is the facilities

sustainment model, which uses auditable data to model and identify the funds needed

to keep facilities in good working order. The final tool is an installation readiness

reporting system, so that installation readiness can be considered as part of

operational readiness decisions.

Reauthorization of the Military Housing Privatization Initiative. DOD is

requesting that Congress amend Section 2885, Title 10, U.S.C. to extend the Military

Housing Privatization Initiative (MHPI) pilot program for an additional five years.

The MHPI is set to expire in February 2001. The DOD believes the authorities that

the MHPI provides will contribute significantly to its plan to solve its housing

situation by 2010, when combined with traditional government-funded construction.

The defense authorization conference report for FY 2001 (H.Rept. 106-945)

approved an extension of these authorities in Section 2806 for an additional 3-year

period – from February 2001 to December 2004.

Background on Problems in Military Family Housing. In testimony to the

House Armed Services Committee on March 16, 2000, the official in charge of DOD

installations – Randall Yim – described the continuing problem of military family

housing. He stated that approximately two-thirds of DOD’s nearly 300,000 family

housing units need extensive renovation or replacement. Yim also testified that fixing

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this problem using only traditional military construction methods would take 30 years

and cost as much as $16 billion.

In his testimony, Yim emphasized that privatization of military family housing

is just one part of a three part program to fix the DOD housing problem by 2010.

Two other important components are increasing housing allowances to eliminate outof-pocket costs for servicemembers and a strong military construction program.

Increasing the housing allowance will reduce demand for on-base housing and a

traditional government-funded construction program will continue to help fix on-base

housing.

Definition of MHPI Authorities. Recognizing the severity of the family housing

problem, Congress passed the Military Housing Privatization Initiative in the FY1996

Defense Authorization Act (P.L. 104-106). This gave the Pentagon new authorities

to obtain private sector financing and expertise for military housing. The authorities

are:

! guarantees, both loan and rental;

! conveyance or lease of existing property and facilities;

! differential lease payments;

! investments, both limited partnerships and stock/bond ownership; and

! direct loans.

The legislation enabled the new authorities to be used individually, or in combination.5

History on Use of MHPI Authorities. Yim gave the history of DOD’s

implementation of the MHPI. In the early days of using these authorities (19961998), the Department of Defense’s Housing Revitalization Support Office (HRSO)

coordinated the application of the new authorities and oversaw all aspects of the

process from initial site visits to final solicitation. During this phase – said Yim –

significant strides were made in developing program criteria, financial models, legal

documents and budget scoring guidelines. Only two on-base projects reached the

solicitation stage, however, largely due to a problems in DOD’s centralized

management structure.

In October 1998, the Pentagon changed tactics and devolved the execution of

housing privatization projects to the Services.6 To date, there have been four projects

awarded and/or completed, twelve projects solicited and fourteen planned, using the

MHPI process.7

5

For more detailed information on the authorities; see the DOD’s Privatization of Military

Housing website, [http://www.acq.osd.mil/installation/hrso/]

6

Each Service has its own program name for housing privatization: Army - Residential

Communities Initiative (formerly known as the Capital Venture Initiative (CVI)); Navy Public-Private Venture (PPV); and Air Force - Housing Privatization Program.

7

For details on awarded, solicited, and planned privatization projects see:

[http://www.acq.osd.mil/installation/hrso/0100qreport.htm]

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Evaluation of MHPI. Progress of the privatization initiative has been slow.

Representative Gene Taylor, Ranking Member of the Military Installations and

Facilities Subcommittee of the HASC stated at the March 16, 2000 hearing that

Congress has been disappointed with the pace of privatization implementation. Taylor

hoped that DOD will be able to find the right mix of public and private funding and

that the housing privatization concept will live up to its promise of providing high

quality housing for our troops and their families.

The General Accounting Office (GAO) highlighted some concerns with the

privatization initiative when it reviewed DOD’s military housing situation in July

1998.8 Initial evaluation of life-cycle costs of privatized housing versus traditional

military housing showed a potential savings of only about 10% or less. The proposed

long-term time horizons for some privatization projects of 50 years or more raised

concerns that the housing might not be needed that far into future. Also, the GAO

argued that Pentagon planning for military housing remains poor. GAO stated that

housing requirements are not integrated with particular facilities and community

needs, that the plans underutilize the use of local housing and that there is poor

communication between offices responsible for housing allowances and military

housing construction. GAO recommended that comprehensive, better integrated

plans could help maximize the privatization initiative while minimizing total housing

costs.

A March 2000 GAO follow-up study on the privatization initiative9 reported that

since no projects under the initiative have been fully implemented, there is little basis

to evaluate whether the initiative will ultimately achieve its goals of eliminating

inadequate housing more economically and faster than could be achieved through

traditional military construction financing. Also, the GAO points out that the DOD

does not have an evaluation plan to assess the initiative.

The GAO recommended that the DOD create a privatization evaluation plan to

be used consistently by all the Services. The plan should include performance

measures, such as evaluation of each authority, comparison of actual to estimated

costs of projects, assessment of developer performance, collection of data on the use

and satisfaction of housing by service members. DOD agreed with GAO’s

recommendations and has begun to create an evaluation plan.

Privatization Initiative for Utility Infrastructure. Yim testified on March

16th that DOD is pursuing utility privatization through the authority of Section 2871

of Title 10 for cost savings and recapitalization of aging infrastructure. The DOD

would like to privatize 1,700 utility systems by 2003, in order have public and private

sector experts run and upgrade these systems according to best business practices.

8

U.S. General Accounting Office, Military Housing: Privatization Off to a Slow Start and

Continued Management Attention Needed, GAO Report Number NSIAD-98-178, July 1998.

9

U.S. General Accounting Office, Military Housing: Continued Concerns in Implementing

the Privatization Initiative, GAO Report Number NSIAD-00-71, March 2000. This report

is also available on the GAO web site: [http://www.gao.gov].

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This authority requires that the long-term economic benefit of utility privatization

exceeds the long-term economic and utility services costs. To date, 12 systems at 7

installations have been privatized, representing a savings of more than $10 million,

according to DOD.

Through this authority, DOD divests ownership of the utility system (i.e. wires

and pipes) where it is economically feasible. In certain locations and markets, energy

management may be included in a proposal in order to offer the best value to the

government.

To give incentives to DOD installations to privatize utilities, the DOD is asking

Congress to amend this utility privatization authority. With the proposed change, the

Services would be able to keep savings generated by utility privatization in their

installations, instead of the savings going to the general treasury.

History and Context

The Funding Pattern for Military Construction Budgets. In recent years,

Congress has added significant amounts to annual Administration military

construction budget requests. This has been a recurring pattern in the 1990s. The

President proposes what Congress calls an inadequate military construction budget,

especially for Guard and Reserve needs. Congress then adds funding for military

construction, with some attention to Guard and Reserve projects. For example,

Congress added $479 million in FY1996, $850 million in FY1997, $800 million in

FY1998, and $875 million in FY1999 to the military construction accounts.

Congressional additions to the military construction budget have been common

and controversial throughout the 1990s. Three themes explain the pattern of

recurring congressional additions. First, some members of the military construction

subcommittees have believed that military construction has been chronically

underfunded. This theme was echoed in hearings on the FY2001 budget and the

reports from the House Appropriations Committee and the defense authorizing

committees on bills for FY1998-2000. Second, often Congress has different priorities

than the Administration, as reflected in frequent congressional cuts to overseas

construction requests and contributions to the NATO Security Investment Program.

Third, other Members of Congress, as Senator Bond commented during the floor

debate on FY1996 military construction appropriations, believe that the Pentagon

counts on Congress to add money to Guard and Reserve programs. In recent years,

Congress has added large amounts for National Guard and Reserve construction

projects, including a peak amount of $451.1 million in FY2000. (See Table 5.)

Low military construction budgets has led to growing maintenance backlogs,

inadequate budgets for installation maintenance, and conflict between congressional

& Pentagon military construction priorities. Military construction proponents,

including facility advocates in the military services, argue that military facilities have

been systematically underfunded for many years. For example, GAO reported its

results of a review of the management of real property assets by the DOD and the

services, at a March 1, 2000 hearing to the House Armed Services Subcommittee on

Readiness. The review focused on properties that the services maintain and repair

using operation and maintenance accounts. The GAO pointed out that Congress has

CRS-10

been concerned about the DOD’s real property maintenance since the 1950s.

Recently, the backlog for deferred maintenance has grown from $8.9 billion in 1992

to $14.6 billion in 1998.

Also, DOD facility managers have not met their goal to allocate 3% of the plant

replacement value of DOD facilities for annual construction and maintenance (called

real property maintenance at the Pentagon). Although this 3% goal is below the

average for public facilities nationwide, actual DOD funding has typically run at 1 to

2% of plant replacement value. For example, the Navy testified on March 1, 2000 to

the House Armed Services Subcommittee for Readiness that the Navy budgeted

1.8% for real property maintenance. As a result, facility proponents welcome any

congressional additions.

Finally, congressional military construction subcommittees – authorization as

well as appropriations subcommittees – have frequently taken issue with

Administration military construction priorities. In the early 1990s, for example, the

committees frequently reduced amounts requested for construction overseas – on the

grounds that troop levels abroad should be reduced and that allied burden-sharing

contributions should increase – and reallocated the funds to domestic projects. In

addition, congressional committees have added unrequested funds for quality of life

improvements, such as day care centers and barracks renovation. Congress has

argued that the military services have tended to neglect these areas in favor of

warfighting investments.

The Debate Over Added Projects. Since Congress has added significant

amounts to military construction budgets over the last 10 years, congressional debate

has centered on how to prioritize worthy additional projects.

In 1994, the Senate debate on the military construction appropriations bill

focused on the amount of congressional additions to the request despite constraints

on overall defense spending. Senator McCain, in particular, objected to the provision

of substantial amounts for projects that the Administration had not requested. He

argued that such projects largely represented “pork barrel” spending, and came at the

expense of higher priority defense programs. In Senate floor consideration of the

military construction bill that year, the managers accepted a McCain amendment that

called for criteria to be applied to additional projects. His amendment included a

provision that any added project should be on the military lists of critical yet

unbudgeted projects. The McCain amendment was not incorporated into the final

conference version of the bill, however, and the conference agreement provided over

$900 million for unrequested construction projects.

The National Defense Authorization Act for FY1995 (P.L. 103-337), however,

incorporated Senator McCain’s criteria as a “Sense of the Senate” provision,10

providing that the unrequested projects should be:

10

A “Sense of the Senate” provision is a provision that requires approval by the Senate, but

is not formally part of the bill and therefore does not have the force of law. This type of

provision expresses the sense of the Senate on policy issues. There can also be similar Sense

of the House and Sense of the Congress provisions.

CRS-11

1. essential to the DOD’s national security mission,

2. not inconsistent with the Base Realignment and Closure Act,

3. in the services’ Future Years Defense Plan (see above),

4. executable in the year they are authorized and appropriated, and

5. offset by reductions in other defense accounts, through advice from the

Secretary of Defense.

Since the 104th Congress, the House military construction authorizing and

appropriations committees have also used similar criteria, in collaboration with the

Pentagon, to add projects to the military construction budget. Each potential project

needs to pass the following criteria, similar to the McCain criteria: Is the project

essential to the DOD mission, consistent with BRAC plans, in the Future Years

Defense Plan and “executable” in the coming fiscal year? If the project can meet

those criteria, the military construction authorizing and appropriations committees

may add the project.

Debate over congressionally-added projects continues. In debate on the

FY2000 military construction appropriations conference report, Senator McCain

continued to discuss projects added by Congress. He noted that Congress added

nearly $975 million of extra projects. Senator McCain presented his list of

questionable projects in the Congressional Record, in a letter to the President and on

his web page [http://www.senate.gov/~mccain/mil00cf.htm].

Major Funding Trends

The Administration has proposed $8.0 billion for the FY2001 military

construction request. The conference report approved $8.8 billion. This total

continues a downward trend from the FY1996 level of $11.2 billion, the FY1997 level

of $9.8 billion, the FY1998 level of $9.3 billion, the FY1999 level of $9.0 billion.

The FY2001 enacted amount of $8.8 billion is more than the FY2000 enacted amount

of $8.4 billion.

Table 2 shows overall military construction program funding since FY1996.

Table 3 breaks down the FY2001 request by appropriations account and compares

it to FY1999 and FY2000 levels. Table 4 shows congressional action on military

construction appropriations by account. Table 5 shows congressional military

construction add-ons for Guard and Reserve projects from FY1985-2000.

Legislation

Military Construction Appropriations

P.L. 106-246, H.R. 4425 (Hobson)

Making appropriations for military construction, family housing, and base

realignment and closure for the Department of Defense for the fiscal year ending

September 30, 2001, and for other purposes. The House Committee on

Appropriations reported an original measure, H.Rept. 106-614, May 11, 2000.

CRS-12

Passed House, 386 - 22 (Roll No. 184) (text: CR H3074-3076), May 16, 2000.

Conference report (H.Rept. 106-710) filed June 29, 2000. Mr. Young (FL) brought

up conference report by previously agreed to special order, June 29, 2000.

Conference report passed House, 306 - 110 (Roll no. 362), June 29, 2000; passed

Senate, by voice vote, June 30, 2000. Signed into law July 13, 2000.

S. 2521 (Burns)

An original bill making appropriations for military construction, family housing,

and base realignment and closure for the Department of Defense for the fiscal year

ending September 30, 2001, and for other purposes. Committee on Appropriations

ordered to be reported an original measure, May 9, 2000. By Senator Burns from

Committee on Appropriations filed written report, H.Rept. 106-290, May 11, 2000.

Measure laid before Senate, May 11, 2000. Considered by Senate, May 15-18, 2000.

Senate incorporated this measure in H.R. 4425 as an amendment, May 18, 2000.

Senate passed companion measure H.R. 4425 in lieu of this measure (96 - 4) on May

18, 2000.

Defense Authorization

H.R.4205 (Spence)

To authorize appropriations for fiscal year 2001 for military activities of the

Department of Defense and for military construction, to prescribe military personnel

strengths for fiscal year 2001, and for other purposes. Reported (amended) by the

Committee on Armed Services (H.Rept. 106-616), May 12, 2000. Considered by the

House, May 17-18, 2000. Passed House (353-63), May 18, 2000. Conference report

H.Rept. 106-945 passed the House (382 - 31) on October 11, 2000. The Senate

agreed to conference report (90 - 3) on October 12, 2000. Became P.L. 106-398 on

October 30, 2000.

S. 2549 (Warner)

To authorize appropriations for fiscal year 2001 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. Committee on Armed Services ordered to be

reported an original measure, May 9, 2000. Report filed (S.Rept. 106-292), May 11,

2000. Considered by the Senate, June 6-8, June 14, and June 19-20, 2000. Senate

struck all after the Enacting Clause for H.R. 4205 and substituted the language of S.

2549 as amended and this passed the Senate in lieu of S. 2549 with an amendment by

Yea-Nay Vote, 97 - 3, on July 13, 2000.

Table 2. Military Construction Appropriations, FY1996-2000

(budget authority in millions of dollars)

Military

Construction

Family Housing

Total

Actual Actual Actual

FY1996 FY1997 FY1998

Actual Estimate Request

FY1999 FY2000 FY2001

Enacted

FY2001

6,893

5,718

5,466

5,405

4,793

4,549

5,411

4,260

11,153

4,131

9,849

3,828

9,294

3,592

8,997

3,597

8,390

3,485

8,034

3,422

8,833

Source: Actual FY1996-99 data, Estimate FY2000 and Request 2001 from Department of Defense (DOD),

Financial Summary Tables, Feb. 2000 & previous years’ reports. Enacted FY2001 data from H.Rept. 106-710.

CRS-13

Table 3. Military Construction Appropriations by Account:

FY1999-2001

(in thousands of dollars)

Account

FY1999

Actual

FY2000

Est.

FY2001

Request

Milcon, Army

991,726

1,036,645

897,938

MilCon, Navy

608,453

896,869

753,422

MilCon, Air Force

642,009

783,963

530,969

MilCon, Defense-wide

551,114

629,145

784,753

MilCon, Army National Guard

151,303

236,228

59,130

MilCon, Air National Guard

185,701

262,360

50,179

MilCon, Army Reserve

102,119

110,764

81,713

MilCon, Navy Reserve

31,621

28,310

16,103

MilCon, Air Force Reserve

34,371

64,071

14,851

1,617,302

663,834

1,170,305

NATO Security Investment Program

245,000

80,581

190,000

Foreign Curr. Fluct., Constr., Def.

63,186

–

–

MILCON transfer fund (from FY1999

emergency supplemental for Kosovo costs)

181,290

–

–

Total: Military Construction

5,405,195

4,792,770

4,549,363

Family Housing Const., Army

163,290

80,283

162,106

Family Housing Operation & Debt, Army

1,088,897

1,080,695

978,275

Family Housing Const., Navy & Marine

Corps

294,590

339,307

362,822

Family Housing Operation & Debt, Navy and

Marine Corps

920,892

886,860

882,638

Family Housing Const. AF

297,665

347,649

223,483

Family Housing Operation & Debt, AF

784,737

814,160

826,271

345

50

–

Family Housing Operation & Debt, Def-wide

36,914

41,226

44,886

Homeowners Assist. Fund, Def.

7,200

5,000

4,064

DOD Family Housing Improvement Fund

2,000

1,990

–

DOD Unacccompd. Housing Improvement

Fund

(5,000)

–

–

Total: Family Housing

3,591,530

3,597,220

3,484,545

GRAND TOTAL

8,996,725

8,389,990

8,033,908

BRAC Acct., Total

Family Housing Const., Def-wide

Source: FY1999-FY2001 Request from DOD, Financial Summary Tables, February 2000.

CRS-14

Table 4. Military Construction Appropriations by Account Congressional Action

(in thousands of dollars)

Account

FY2001

Request

House

Bill

Senate

Bill

Conf.

Report

Milcon, Army

897,938

869,950

823,503

909,245

MilCon, Navy

753,422

891,380

828,278

928,273

MilCon, Air Force

530,969

703,903

777,793

870,208

MilCon, Defense-wide

784,753

800,314

801,098

814,647

MilCon, Army National

Guard

59,130

137,603

233,675

281,717

MilCon, Air National

Guard

50,179

110,585

183,029

203,829

MilCon, Army Reserve

81,713

115,854

99,888

108,738

MilCon, Navy Reserve

16,103

50,604

38,532

62,073

MilCon, Air Force Reserve

14,851

43,748

25,533

36,591

1,174,369

1,174,369

1,174,369

1,024,369

190,000

177,500

175,000

172,000

Total: Military

Construction

4,553,427

5,075,810

5,160,698

5,411,690

Family Housing, Army

1,140,381

1,152,249

1,179,470

1,187,749

Family Housing, Navy and

Marine Corps

1,245,460

1,298,792

1,274,332

1,299,722

Family Housing, Air Force

1,049,754

1,062,263

1,048,121

1,072,861

Family Housing, Defensewide

44,886

44,886

44,886

44,886

Senate General Provision

(Sec. 125: rescinds

unobligated balances)

0

0

(73,507)

--

General Provision

(Sec. 125)

0

0

0

(100,000)

General Provision

(Sec. 132)

0

0

0

(83,000)

Total: Family Housing

3,480,481

3,558,190

3,473,302

3,422,218

GRAND TOTAL

8,033,908

8,634,000

8,634,000

8,833,908

BRAC Acct., Part IV

NATO Security Investment

Program

Source: H.Rept. 106-614, S.Rept. 106-290, H.Rept. 106-710.

CRS-15

Table 5. Congressional Additions to Annual DOD Budget Requests for

National Guard and Reserve Military Construction, FY1985-2000

(current year dollars in thousands)

Fiscal

Year

1985 Req.

1985

Enacted

1986 Req.

1986

Enacted

1987 Req.

1987

Enacted

1988 Req.

1988

Enacted

1989 Req.

1989

Enacted

1990 Req.

1990

Enacted

1991 Req.

1991

Enacted

1992 Req.

1992

Enacted

1993 Req.

1993

Enacted

1994 Req.

1994

Enacted

1995 Req.

1995

Enacted

1996 Req.

1996

Enacted

1997 Req.

1997

Enacted

1998 Req.

1998

Enacted

Army

National

Guard

Air

National

Guard

Army

Reserve

88,900

102,900

98,603

Total

Change

from

Request

Naval

Reserve

Air

Force

Reserve

Total

70,400

60,800

67,800

390,800

–

111,200

69,306

60,800

67,800

407,709

+16,909

102,100

137,200

70,700

51,800

66,800

428,600

–

102,205

121,250

61,346

41,800

63,030

389,631

-38,969

121,100

140,000

86,700

44,500

58,900

451,200

–

140,879

148,925

86,700

44,500

58,900

479,904

+28,704

170,400

160,800

95,100

73,737

79,300

579,337

–

184,405

151,291

95,100

73,737

79,300

583,833

+4,496

138,300

147,500

79,900

48,400

58,800

472,900

–

229,158

158,508

85,958

60,900

70,600

605,124 +132,224

125,000

164,600

76,900

50,900

46,200

463,600

223,490

235,867

96,124

56,600

46,200

658,281 +194,681

66,678

66,500

59,300

50,200

37,700

280,378

313,224

180,560

77,426

80,307

38,600

690,117 +409,739

50,400

131,800

57,500

20,900

20,800

281,400

231,117

217,556

110,389

59,900

9,700

628,672 +347,272

46,700

173,270

31,500

37,772

52,880

342,122

214,989

305,759

42,150

15,400

29,900

608,198 +266,076

50,865

142,353

82,233

20,591

55,727

351,769

302,719

247,491

102,040

25,029

74,486

751,765 +399,996

9,929

122,770

7,910

2,355

28,190

171,154

187,500

248,591

57,193

22,748

56,958

572,990 +401,836

18,480

85,647

42,963

7,920

27,002

182,012

137,110

171,272

72,728

19,055

36,482

436,647 +254,635

7,600

75,394

48,459

10,983

51,655

194,091

78,086

189,855

55,543

37,579

52,805

413,868 +219,777

45,098

60,225

39,112

13,921

14,530

172,886

102,499

190,444

55,453

26,659

15,030

390,085 +217,199

–

–

–

–

–

–

–

–

–

CRS-16

Fiscal

Year

1999 Req.

1999

Enacted

2000 Req.

2000

Enact.

Army

National

Guard

Air

National

Guard

Army

Reserve

47,675

34,761

144,903

Total

Change

from

Request

Naval

Reserve

Air

Force

Reserve

Total

71,287

15,271

10,535

179,529

185,701

102,119

31,621

34,371

498,715 +319,186

57,402

73,300

77,626

14,953

27,320

250,601

236,228

262,360

110,764

28,310

64,071

701,733 +451,132

Source: Department of Defense, Financial Summary Tables, successive years.

–

–

CRS-17

For Additional Information

CRS Issue Briefs

CRS Issue Brief IB96022. Defense Acquisition Reform: Status and Current Issues,

by (name redacted).

CRS Reports

CRS Report RL30002. A Defense Budget Primer, by (name redacted) and

(name redacted).

CRS Report RL30505. Appropriations for FY2001: Defense, by (name redacted).

CRS Report RL30447. Defense Budget for FY2001: Data Summary, by (name r

edacted) and (name redacted).

Selected World Wide Web Sites

U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller),

FY2001 Budget Materials

[http://www.dtic.mil/comptroller/fy2001budget/]

U.S. Department of Defense, Installations Home Page

[http://www.acq.osd.mil/installation]

House Committee on Appropriations

[http://www.house.gov/appropriations]

Senate Committee on Appropriations

[http://www.senate.gov/~appropriations/]

CRS Appropriations Products Guide

[http://www.loc.gov/crs/products/apppage.html#la]

Congressional Budget Office

[http://www.cbo.gov]

General Accounting Office

[http://www.gao.gov]

Office of Management & Budget

[http://www.whitehouse.gov/OMB/]

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