Authorization and Appropriations for FY2003: Defense

Congressional research reportDec 6, 2002

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Authorization and Appropriations

for FY2003: Defense

Updated December 6, 2002

name redacted and name redacted

Foreign Affairs and National Defense Division

Congressional Research Service ˜ The Library of Congress

Appropriations are one part of a complex federal budget process that includes budget

resolutions, appropriations (regular, supplemental, and continuing) bills, rescissions,

and budget reconciliation bills. The process begins with the President’s budget

request and is bounded by the rules of the House and Senate, the Congressional

Budget and Impoundment Control Act of 1974 (as amended), the Budget

Enforcement Act of 1990, and current program authorizations.

This report is a guide to one of the 13 regular appropriations bills that Congress

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

and Senate Appropriations Subcommittees on Energy and Water. It summarizes the

current legislative status of the bill, its scope, major issues, funding levels, and

related legislative activity. The report lists the key CRS staff relevant to the issues

covered and related CRS products.

NOTE: A Web version of this document with active links is

available to congressional staff at:

[http://www.crs.gov/products/appropriations/apppage.shtml].

Authorization and Appropriations for FY2003: Defense

Summary

Congress has completed action on the FY2003 defense authorization (H.R.

4546) and defense appropriations (H.R. 5010) bills. The President signed the

FY2003 defense appropriations act into law on October 23 (P.L. 107-248), and he

signed the FY2003 defense authorization act into law on December 2 (P.L. 107-314).

In addition, Congress has approved, and the President has signed, the military

construction appropriations bill (H.R. 5011, P.L. 107-249). The House and Senate

Appropriations Committees did not, however, take up bills to provide $10 billion that

the Administration requested as a contingency fund for costs of counter-terrorism

operations in FY2003.

The conference agreement on the defense appropriations bill establishes final

funding levels for key defense programs, and it resolves a number of matters that

were at issue during the year. As the Administration requested, the bill eliminates

funds for development of the Crusader artillery system and instead provides

increased funding for other Army indirect fire programs. Conferees added funds to

develop an alternative tube artillery system to be deployed by 2008. Earlier, the

conference report on the FY2002 supplemental appropriations bill (H.R. 4775, P.L.

107-206) directed the Army to enter into a follow-on contract to use Crusader

technology in developing such a system.

Conferees on the defense authorization bill reached agreement on several

contentious issues, though some may recur next year. The key issue, which held up

the conference agreement until after the mid-term elections, was whether to permit

concurrent receipt of military retired pay and veteran’s disability benefits. The

Senate authorization bill included a provision to allow immediate, full concurrent

receipt, while the House bill phased in a program to allow concurrent receipt for

those with 60% or greater disabilities. The White House threatened to veto a bill that

included either provision. The conference agreement provides a new benefit, paid

by the Defense Department, to military retirees who have a disability determined to

be caused by a combat or combat-related injury.

The conference agreement on the defense authorization also resolved a number

of other issues. The agreement includes amended versions of Senate provisions

tightening oversight of missile defense programs; it drops a House provision

concerning application of the Endangered Species Act to defense facilities, but

includes a provision concerning the Migratory Bird Treaty Act; it prohibits FY2003

funds from being used to develop nuclear armed interceptors for missile defense; it

provides funds for developing a nuclear-earth penetrator warhead, but only after the

Defense Department submits a report on the project that includes a review of nonnuclear alternatives; and it drops a Senate provision permitting service members to

have access to abortions at military facilities overseas.

Key Policy Staff

Area of Expertise

Acquisition

Aviation Forces

Arms Control

Arms Sales

Base Closure

Defense Budget

Defense Industry

Defense R&D

Ground Forces

Health Care; Military

Intelligence

Military Construction

Military Personnel

Military Personnel;

Reserves

Missile Defense

Naval Forces

Nuclear Weapons

Peace Operations

Radio Frequency,

Military

Readiness

Space, Military

War Powers

Name

Valerie Grasso

(name redacted)

Amy Woolf

Richard Grimmett

David Lockwood

(name redacted)

Gary Pagliano

John Moteff

Edward Bruner

Steven Bowman

Richard Best

Daniel Else

David Burrelli

Robert Goldich

Telephone

E-Mail

7-....

[redacted]@crs.loc.gov

7-....

[redacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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ted]@crs.loc.[re

[redac

dacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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ted]@crs.loc.[re

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dacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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[redacted]@crs.loc.gov

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ted]@crs.loc.[re

[redac

dacted]@crs.loc.gov

(name redacted)

7-....

[redacted]@crs.loc.gov

Steven Hildreth

Ronald O’Rourke

Jonathan Medalia

Nina Serafino

7-....

[redacted]@crs.loc.gov

Lennard Kruger

7-....

[redacted]@crs.loc.gov

(name redacted)

Marcia Smith

David Ackerman

(name redacted)

Richard Grimmett

7-....

[redac

ted]@c

[redacted]@crs.loc.gov

rs.loc.[re

dacted]@crs.loc.[re

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Contents

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

Status of Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FY2003 Defense Authorization Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FY2003 Defense Appropriations Bill . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FY2003 Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . 2

FY2002 Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . 2

The FY2003 Defense Budget Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

National Defense Funding in the FY2003 Budget Resolution . . . . . . . . . . . . 3

Treatment of Full Civilian Accrual Accounting . . . . . . . . . . . . . . . . . . . . . . 5

Treatment of $10 Billion Contingency Fund for Global

Counter-Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Key Issues in Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Counter-Terrorism Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Personnel Pay and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Army Modernization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Navy Shipbuilding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Aircraft Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Missile Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Strategic Nuclear Weapons Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Environmental Restrictions on DOD Training . . . . . . . . . . . . . . . . . . . . . . 31

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Cap on Military Personnel in Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Base Realignment and Closure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Abortions in Military Hospitals Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Congressional Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Limitation on Transfer Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Congressional Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

FY2002 Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Appendix A: What the Defense Authorization and Appropriations Bills Cover

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Appendix B: Overview of the Administration Request . . . . . . . . . . . . . . . . . . . 38

The Impact of Accrual Accounting for Military and Civilian

Personnel Retirement Benefits on the Defense Budget . . . . . . . . . . . . 39

“Must Pay” Bills in the Defense Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

The Impact of Growing Personnel and Operating Costs . . . . . . . . . . . . . . . 42

Reversing the “Procurement Holiday” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

The Procurement “Bow Wave” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Defense Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Appendix C: Summary Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

List of Tables

Table 1a. Status of FY2003 Defense Appropriations . . . . . . . . . . . . . . . . . . . . . . 2

Table 1b. Status of FY2003 Defense Authorization . . . . . . . . . . . . . . . . . . . . . . . 3

Table 2. Congressional Budget Resolution, Recommended Amounts

for National Defense, FY2003-FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Table 3: Preliminary CBO Estimate of Costs of Combat Related

Disability Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Table 4. Congressional Budget Office Estimate of the Costs of the House

Armed Services Committee Increase in Active Duty End-Strength . . . . . . 12

Table 5: Crusader Budget Amendment/Non-Line of Sight Cannon

Funding: Appropriations Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Table 6: Appropriations Action on Major Army Acquisition Programs . . . . . . . 18

Table 7: Appropriations Action on Major Navy Shipbuilding Programs . . . . . . 21

Table 8: Appropriations Action on Major Aircraft Programs . . . . . . . . . . . . . . . 24

Table 9: Congressional Action on Missile Defense Funding by Program

Element and Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Table B1. National Defense Budget Function and Department of

Defense Budget, FY2000-FY2007, Administration Projections . . . . . . . . . 39

Table B2. Effects of Accrual Accounting on the Defense Budget . . . . . . . . . . . 41

Table B3. Changes in Requested National Defense Funding by

Appropriations Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Table B4. Trends in Military Personnel Funding, FY1990-FY2007 . . . . . . . . . 44

Table B5. National Defense Budget Function by Appropriations Title,

FY2000-FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Table C1. Congressional Action on Defense Authorization by Title . . . . . . . . . 49

Table C2. Congressional Action on Defense Appropriations by Title . . . . . . . . 50

Table C3: Summary of Congressional Action on Defense and Military

Construction Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Authorization and Appropriations for

FY2003: Defense

Most Recent Developments

On November 12, the House, and on November 13, the Senate, approved a

conference agreement on the FY2003 defense authorization bill (H.R. 4546), and the

President signed the bill into law on December 2 (P.L. 107-314). Earlier, on

October 10, the House, and on October 16, the Senate, approved a conference

agreement on the FY2003 defense appropriations bill (H.R. 5010), and the President

signed it into law on October 23 (P.L. 107-248). The conference agreement on the

defense appropriations bill provides $355.1 billion for programs it covers. This is

$11.7 billion below the Administration’s request. The bill does not include $10

billion that the Administration requested as a contingency fund for costs of counterterrorism operations in FY2003.

Status of Legislation

FY2003 Defense Authorization Bills. On May 1, the House Armed

Services Committee marked up its version of the FY2003 defense authorization bill,

H.R. 4546. The committee also considered, but did not report, a companion measure,

H.R. 4547, to provide funds for the war on terrorism. The House passed H.R. 4546

early on the morning of May 10. On May 9, the Senate Armed Services Committee

completed marking up its version of the FY2003 defense authorization, S. 2514, and

a report was issued on May 15. On June 13, the committee approved an amendment

to be offered on the floor regarding the Crusader artillery system. On June 18, the

full Senate began considering the bill, and the Senate passed the bill on June 27. On

July 18, the House Armed Services Committee reported H.R. 4547, entitled the Cost

of War Against Terrorism Authorization Act (COWATAA), and the full House

approved the bill under suspension of the rules on July 24. On November 12, a

conference report on the bill was filed. The conference agreement was approved in

the House under suspension of the rules on November 12. The Senate approved the

conference report on November 13 by voice vote. The President signed by bill on

December 2.

FY2003 Defense Appropriations Bill. On June 19, the House Defense

Appropriations Subcommittee marked up its version of the FY2003 defense

appropriations bill, and on June 24, the full committee marked up the bill (H.R.

5010) and ordered it to be reported. The House passed the bill on June 27. On July

18, the Senate Appropriations Committee reported its version of the bill (also H.R.

5010). The Senate passed the bill on August 1. On October 9, conferees announced

agreement on a compromise version of the bill. The House approved the conference

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report on October 10 and the Senate on October 16. The President signed the bill

into law on October 23.

FY2003 Congressional Budget Resolution. On March 20, the House

passed its version of the annual congressional budget resolution, H.Con.Res. 353, and

the Senate reported its version, S.Con.Res. 100, on March 22. Both versions

recommended funding levels for defense in FY2003 very close to what the

Administration requested. The full Senate never considered the resolution on the

floor, however, and it the two chambers were not able to agree on a common budget.

On May 22, as part of the rule governing debate on supplemental appropriations, the

House approved a measure deeming the budget resolution, as approved in the House,

to have been passed for purposes of guiding later action on funding legislation.

FY2002 Supplemental Appropriations. On March 21, the Administration

submitted a request for $27.1 billion in supplemental FY2002 appropriations for

activities in response to last year’s terrorist attacks, of which $14 billion was for

defense programs. On May 24, the House approved its version of the bill, H.R. 4775,

providing $28.8 billion using Office of Management and Budget (OMB) scoring of

a key provision (as assumed by the appropriations committee) and $30.1 billion using

Congressional Budget Office (CBO) scoring. The Senate approved its version of the

bill on June 7, providing $31.4 billion. On July 18, conferees announced agreement

on a compromise bill that provides $28.9 billion, including $14.5 billion for defense.

The House approved the conference report on July 23 and the Senate on July 24, and

the President signed the bill on August 2 (P.L. 107-206). Of the total in the bill, $5.1

billion was provided in contingent emergency appropriations, and on August 13, the

White House announced that the President would not designate those amounts as

emergency funding. Without those amounts, the total available for defense in the bill

is $13.983 billion offset by $613 million in rescissions.

Table 1a. Status of FY2003 Defense Appropriations

Subcommittee

Markup

House

6/19/02

Conference

House House Senate Senate Conf. Report Approval

Report Passage Report Passage Report

Senate

House Senate

–

6/24/02

7/18/02

6/27/02

H.Rept.

S.Rept.

413-18

107-532

107-213

8/1/02

95-3

Public

Law

10/9/02

10/23/02

10/10/02 10/16/02

H.Rept.

P.L. 107409-14

93-1

107-732

248

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Table 1b. Status of FY2003 Defense Authorization

Full Committee

Markup

House

Report

House Senate

5/1/02

5/9/02

House Senate Senate Conf.

Passage Report Passage Report

Conference Report

Approval

Public Law

House

5/3/02

H.Rept.

107-436

Senate

5/15/02

11/12/02 11/12/02 11/13/02

5/10/02

6/27/02

12/2/02

S.Rept.

H.Rept. Voice

Voice

359-58

97-2

P.L. 107-314

107-151

107-772

Vote

The FY2003 Defense Budget Debate

On February 4, 2002, the Administration submitted its formal FY2003 budget

request to Congress. The Administration proposed $396.8 billion for the national

defense budget function, about $46 billion above the estimated FY2002 level (for an

overview of the request, see Appendix B). Of the total requested, $3.4 billion was

for full accrual accounting of civilian personnel retirement benefits, which Congress

ultimately did not approve. Without the accrual accounting change, the request was

$393.4 billion. Of this amount, $366.7 billion was requested for programs covered

by the defense appropriations bill, $9.7 billion by the military construction

appropriations bill, $16.5 billion for Department of Energy defense-related activities

funded in the energy and water appropriations bill, and the remainder in other

appropriations bills.

With a global war against terrorism underway, Congress was not inclined to

make substantial changes in the Administration’s request for a defense increase.

Early in the year, however, there was some skirmishing, particularly between the

defense committees and the budget committees, over two issues:

first, how to treat the Administration’s request for $10 billion in

FY2003 in an unallocated contingency fund for the war against

terrorism and,

second, how to treat the Administration’s request for full accrual

accounting of civilian retirement benefits, which, across the whole

government, would increase discretionary spending by about $9

billion and reduce mandatory spending by an equal amount (see

Appendix B for a discussion of accrual accounting).

National Defense Funding in the FY2003 Budget Resolution

For their part, the congressional defense committees would have preferred to be

able to allocate the entire amount the Administration requested for national defense

as they saw fit. The House Budget Committee, however, set aside the $10 billion

requested for war costs in a reserve fund available only for that purpose. The House

also set aside funds for civilian accrual accounting in a reserve fund, while the Senate

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Budget Committee rejected the shift to full accrual accounting altogether. Table 2

shows amounts recommended for national defense in the House and Senate versions

of the budget resolution, compared to the Administration request.

The House approved its version of the FY2003 budget resolution, H.Con.Res.

353, on March 20 by a vote of 221-209. In all, the measure recommended $393.8

billion for the national defense budget function in FY2003, but $10 billion of that

amount was in the reserve fund available only for costs of the global war against

terrorism. An additional $3.4 billion, not shown in the national defense total, was

available for defense in the reserve fund to cover costs of accrual accounting, if

Congress approved it.

The Senate Budget Committee version of the resolution, S.Con.Res. 100, was

reported on March 22 but was never brought up on the Senate floor. The committee

recommended $393.4 billion for national defense in FY2003 and explicitly rejected

a shift to full accrual accounting for civilian employees. The committee also

recommended lower levels of defense spending after FY2004 than either the House

or the Administration, though the committee set aside future funds in a reserve to be

available either for defense or deficit reduction. Recommended national defense

funding levels in the budget resolution are not binding on the appropriations

committees, however, which are free to allocate funds for discretionary programs as

they decide.

Table 2. Congressional Budget Resolution, Recommended

Amounts for National Defense, FY2003-FY2007

(billions of dollars)

Fiscal Year:

2002

2003

2004

2005

2006

2007

Budget Authority

347.514

393.831

401.640

422.740

444.243

466.458

Outlays

344.777

375.261

390.579

409.696

425.090

439.181

House-Passed

Senate Budget Committee

Budget Authority

–

393.353

401.073

411.744

422.785

434.118

Outlays

–

380.145

394.354

405.833

411.587

415.278

Difference (House Minus Senate)

Budget Authority

–

+0.478

+0.567

+10.996

+21.458

+32.340

Outlays

–

-4.884

-3.775

+3.863

+13.503

+23.903

Budget Authority

–

396.801

405.642

426.571

447.702

469.750

Outlays

–

379.012

393.802

413.527

428.549

442.473

Administration Request

CBO Estimate of Administration Request, Excluding Civilian Accrual

Budget Authority

–

393.445

402.013

422.790

443.764

465.636

Outlays

–

375.656

390.173

409.746

424.611

438.359

Sources: H.Con.Res. 353; S.Con.Res. 100.

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Treatment of Full Civilian Accrual Accounting

The $9 billion requested for full civilian accrual accounting was at the center of

debate over the total amount available for appropriations bills. The House-passed

budget resolution provided $759 billion in total discretionary funding to the

appropriations committee, which is equal to the Administration request without the

$9 billion government-wide cost of shifting civilian accrual payments from the

mandatory to the discretionary side of the budget. The Senate reported version of the

budget resolution, however, provided $768 billion in discretionary funds, though it

did not assume that Congress would approve the shift of accrual funding. As a result,

without the $9 billion for accrual accounting, the House ended up marking up

appropriations bills with $9 billion less than the Senate. Eventually, this contributed

to a deadlock, and none of the appropriations bills, except for defense and military

construction, have been enacted.

Treatment of $10 Billion Contingency Fund for Global

Counter-Terrorism

How to treat the $10 billion that the Administration requested as an unallocated

contingency for war costs was a matter of ongoing discussion. On May 22, the

House approved H.Res. 428, the rule governing debate on the FY2002 supplemental

appropriations bill (H.R. 4775), which includes a provision “deeming” the budget

resolution, as passed by the House, to be in effect for purposes of subsequent House

action on appropriations and other funding bills. Appropriators wanted the

“deeming” language amended to allow the appropriations committee to remove the

reserve fund designation for the contingency funding, thus letting the committee use

the $10 billion as it decided. In the face of objections from some conservatives,

however, the House leadership did not agree, and the deeming language refers to the

measure as passed by the House on March 20.

The debate over treatment of the $10 billion contingency fund for war costs

played out further in congressional action on the defense authorization bill. The

House Armed Services Committee approved the $10 billion in a separate bill, H.R.

4547, the Cost of War Against Terrorism Authorization Act, and used part of the

money in that bill to finance programs that otherwise would have been included in

the regular authorization bill – see below for a full discussion. In the end, however,

the conference agreement on the defense authorization bill approved the $10 billion

as requested as an unallocated contingency fund for costs of the war against

terrorism. That amount was not appropriated, however. The appropriations

committees did not act on the $10 billion contingency request at all, though funding

for counter-terrorism activities may be addressed next year in a supplemental

appropriations measure.

Appropriations Action

The House version of the defense appropriations bill, H.R. 5010, approved on

June 27, provided $354.7 billion for defense activities it covers (excluding military

construction programs, Department of Energy defense-related activities, and defenserelated activities of some other agencies). This was $12.1 billion below the amount

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requested, of which $10 billion was the counter-terrorism contingency amount. The

additional $2.1 billion reduction in defense was then available for other

appropriations bills, including the military construction bill, which was $541 million

above the request, and the energy and water bill, which includes defense-related

programs. The Senate version of H.R. 5010, approved on August 1, provided $355.4

billion, $11.4 billion below the request. The conference agreement on the defense

appropriations bill provides $255.1 billion, $11.6 billion below the request. (See

Table C2 in the Appendices for details).

Key Issues in Congress

Along with negotiations about the overall level of defense spending, there was

considerable debate in Congress about priorities within the budget and about a

number of specific programs. The most contentious issue was whether to permit

concurrent receipt of military retired pay and veterans disability benefits. The House

authorization bill included a provision to phase in partial concurrent receipt. The

Senate bill included a measure approved on the floor to provide immediate, full

concurrent receipt. The White House Statement of Administration Policy on the

Senate bill threatened to veto any bill that includes either partial or full concurrent

receipt. The conference agreement on the defense authorization bill provides a

benefit payment only to military retirees with a disability determined to be caused by

a combat or combat-related injury.

Another major issue emerged at the beginning of May, on the eve of the House

Armed Services Committee markup of the defense authorization bill, when the

committee received word that the Office of the Secretary of Defense (OSD) had

decided to terminate the Army Crusader self-propelled artillery program. The

committee did not agree to end the program, however, and it included full funding

for the Crusader in the bill that passed the full House. Subsequently, however, as

work on defense funding bills proceeded, Congress agreed to terminate the program,

though it added money for a new artillery system that the Administration had not

requested.

A major issue in the Senate debate over the authorization bill was the level of

funding for missile defense. The Senate Armed Services Committee reduced

requested missile defense R&D funds by more than $800 million, freeing up funds

for, among other things, increased shipbuilding. Eight Republicans on the

Committee voted against reporting the bill, several citing the missile defense cut as

the reason. In floor action, however, the Senate voted to allocate $814.3 million in

anticipated inflation savings either to missile defense or to counter-terrorism.

Other major issues over the course of the year included provisions concerning

environmental limitations on military training, missile defense funding and

management, and nuclear weapons development and testing.

The following discussion provides an overview of major elements of the

Administration’s request and of congressional action to date, with particularly

controversial items highlighted.

CRS-7

Counter-Terrorism Funding

The Administration requested a total of $19.4 billion in the FY2003 defense

budget for costs of the global campaign against terrorism. Of the total, $10 billion

was requested as an unallocated reserve for future, as yet unplanned military

operations, and the remaining $9.4 billion was requested for specified activities. All

of the money, and an additional $700 million to support programs identified in the

Administration’s Nuclear Posture Review, was requested to be appropriated to the

Defense Emergency Response Fund (DERF), a transfer account from which money

would then be allocated to operating accounts of the services. This would allow the

Defense Department considerable flexibility in using the money, since funds can be

shifted to different activities without going through normal reprogramming

procedures.

The counter-terrorism amounts requested for FY2003 are to carry on activities

that were financed in FY2001 and FY2002 mainly through emergency supplemental

appropriations. Last autumn, Congress appropriated $40 billion for responding to the

terrorist attacks of September 11, of which $17.1 billion was devoted to defense

programs. On March 21, 2002, the Administration sent Congress a request for an

additional $27.1 billion in FY2002 supplemental appropriations for responding to the

terrorist attacks, of which $14.0 billion was for defense. On July 23, the House, and

on July 24, the Senate, approved a conference agreement on a bill providing $28.8

billion in supplemental appropriations for FY2002, of which$14.5 billion is for

defense. Of the total in the bill, $5.1 billion was appropriated as contingent

emergency funding, which requires the President to designate the funds as an

emergency before it is made available. The White House has announced that it does

not intend to designate the funds as an emergency, however. Of the $5.1 billion that

will not, therefore, be available, $983 million is for defense. (For a full discussion,

see CRS Report RL31406, Supplemental Appropriations for FY2002: Combating

Terrorism and Other Issues, by (name redacted) and (name redacted).)

Congressional Action. None of the congressional defense committees

agreed to provide the $9.4 billion requested for specific counter-terrorism programs

in the DERF. Instead, all the committees allocated funding to regular operating and

acquisition accounts in the authorization and appropriations bills. All the committees

also reduced funding for combat air patrols and for some other programs requested

in the DERF.

In the end, Congress did not provide the $10 billion requested as an unallocated

contingency fund, though it may provide part or all of the amount requested next year

in a supplemental appropriations measure. The House Armed Services Committee

considered the $10 billion in a separate bill, H.R. 4547. In preliminary markup of the

bill on May 1, the committee allocated $3.6 billion to specific programs – later, that

amount was reduced to $3.1 billion. All but about $200 million of that amount is for

programs the Administration requested as part of the $9.4 billion in specifically

allocated counter-terrorism money. In effect, the committee freed up about $3 billion

of funds for other programs in the regular authorization bill by using some of the $10

billion in the unallocated contingency fund for counter-terrorism projects that

otherwise would have been financed in the regular authorization.

CRS-8

The Senate Armed Services Committee authorized the full $10 billion in a

general provision (Section 1003) of its version of the authorization bill. The

provision authorized the full $10 billion for continuation of the war on terrorism,

subject to a specific request for the funds and to subsequent appropriations.

On July 3, after considerable prodding from Congress, the Administration

submitted a formal budget amendment revising its request for the $10 billion. The

Administration did not provide significantly more detail on the allocation of the

funds, however. Instead, the revised request would authorize the Secretary of

Defense to transfer the $10 billion to various DOD appropriations accounts 15 days

after notifying Congress of the transfer. The letter accompanying the request

estimated that up to $2.55 billion would be for military personnel accounts, up to

$5.57 billion for operation and maintenance accounts (including the Defense Health

Program and Overseas Humanitarian, Disaster, and Civic Aid), military construction

or working capital funds; and up to $1.88 billion for appropriations for procurement

or research development. (The full text of the request is available electronically at:

[http://w3.access.gpo.gov/usbudget/fy2003/pdf/15dod_amend.pdf].)

On July 18, the House Armed Services Committee marked up and reported a

revised version of H.R. 4547. It provided $3.1 billion allocated to specific programs,

with another $6.9 billion in very broad categories. The House took up the bill under

suspension of the rules late in the evening of July 23, and the bill was passed on July

24. Taken together, the regular defense authorization bill, H.R. 4546, and the Cost

of War Against Terrorism Authorization, H.R. 4547, as passed by the House,

authorized $392.8 billion for national defense.

In the end, however, Congress did not approve the House Armed Services

Committee’s effort to use part of the contingency fund for war costs to finance an

increase in other defense programs. The conference report on the defense

authorization bill provides $10 billion as an unallocated reserve for war costs, as

requested, and as in the Senate version of the bill.

More importantly, the disposition of the $10 billion requested for counterterrorism ultimately depended on what happened in appropriations bills. The

conference report on the defense appropriations bill does not provide any of the

money, and the appropriations committees did not take up separate legislation to

provide additional funding for the war on terrorism.

Personnel Pay and Benefits

The Administration request included a 4.1% pay raise for military personnel;

additional selective pay increases for mid-grade personnel that could increase their

pay raise to 6.5%; the extension of special pays and bonuses to bolster retention of

personnel with critical skills; and continued incremental increases in the basic

allowance for housing intended to eliminate out-of-pocket off-base housing costs by

FY2005.

Congressional Action. Pay raises and benefits for uniformed military

personnel and authorized military end-strength are under the jurisdiction of the

Armed Services Committees and are addressed in the annual defense authorization

CRS-9

bill. The defense appropriations bill formally provides funding for military

personnel, but it does not authorize the pay raise or benefits, though it sometimes

makes changes in some personnel-related activities.

Both the House and the Senate Armed Services Committees approved the

Administration’s proposed pay and benefits increases, and the authorization

conference report provides the full 4.1% pay raise and other targeted pay increases

as requested. A number of significant personnel related issues emerged, however.

The major issue concerned concurrent receipt of retirement and disability benefits.

Other issues included House cuts in funding for health benefits accrual and a House

and Senate increase in authorized active duty military end-strength.

Concurrent Receipt of Retirement and Disability Benefits. Under

current law, military retirees – who leave after 20 years or more of service – are

eligible for payments from the Veterans Administration (VA) for service-connected

disabilities, but their military retirement pensions are reduced by the amount of

disability benefits received. Individuals who qualify often accept the disability

benefits, however, because VA disability payments are not taxed, while pensions are.

Veterans organizations have long argued that individuals should be able to

receive both full retirement pensions and VA disability benefits without any offset.

Last year, Congress approved a measure to phase in partial concurrent receipt (as in

the House plan this year), but it was contingent on the Administration taking steps

to fund the measure, and the Administration did not do so. This year, concurrent

receipt was a critical issue both in the House and in the Senate.

The House-passed authorization bill approved a plan to phase in a measure that

would allow military retirees with a disability of 60% or greater to receive both

disability benefits and retirement pensions. Allowing phased in, partial concurrent

receipt, as in the House bill, would cost an estimated $516 million in FY2003, $5.8

billion over the five years from FY2003 through FY2007, and $17 billion over ten

years through FY2012. These amounts would be scored not as discretionary funding

in the defense bills, but as mandatory spending coming either from mainly from the

military retirement trust fund.

The measure would also require an increase in contributions to the military

retirement fund to cover the accrual cost of the increased benefits payable in the

future to current military personnel. The House measure provides that the accrual

payments will be made from the general Treasury, however, rather than from

discretionary funds in the defense budget. Including both increased payments to

retirees and payments from the general fund into the military retirement fund, the

Congressional Budget Office estimates that the total budget cost of the House plan

would be $1.1 billion in FY2003, $8.8 billion over the five years, FY2003-FY2007,

and $22.6 billion over the next ten years through FY2012.1

Congressional Budget Office, “Cost Estimate, H.R. 4546, Bob Stump National defense

Authorization Act for Fiscal year 2003,” p. 13 and p. l 5.

CRS-10

The Senate Armed Services Committee included a similar, phased in, partial

measure in its reported bill, but the committee also voted to offer an amendment on

the floor that would immediately allow full concurrent receipt of disability and retired

pay regardless of the level of disability. Senators Levin and Warner brought up that

amendment on the floor on June 19, and it was approved by a voice vote. The Senatepassed measure did not insulate the Defense Department from the accrual costs of the

increased benefits as the House measure did. CBO estimated that the Senate version

of concurrent receipt would cost $4.3 billion in FY2003, $25.8 billion over the next

five years, and $61.0 billion over the next ten years. Of those amounts, the Defense

Department would have to provide $1.1 billion in FY2003, $2.5 billion over the next

five years and $6.4 billion over the next ten years in its budget to cover accrual

payments for its current military personnel. (For a full discussion of the budget

issues, see CRS Report RS21327, Concurrent Receipt of Military Retirement and VA

Disability Benefits: Budgetary Issues, by (name redacted).)

For its part, the Administration opposed permitting concurrent receipt. In its

“Statement of Administration Policy” on the Senate authorization bill (available at

[http://www.whitehouse.gov/omb/legislative/sap/107-2/S2514-s.html]), the White

House threatened to veto the defense authorization if it provided for either partial or

full concurrent receipt. The Defense Department also threatened a veto in the

package of appeals of provisions in the House and Senate authorization bills that it

sent to the Armed Services Committees on July 24 and in a letter that Secretary of

Defense Rumsfeld sent to Senator Levin and Senator Warner on September 24.

The dispute over concurrent receipt held up a conference agreement on the

defense authorization bill until after the November elections. On November 12,

during the 107th Congress’s lame duck session, authorizers announced a compromise

on the issue that provides a new benefit for retirees who are determined to have a

disability caused by a combat or combat-related injury. Payments would be made to

all retirees with a disability of 10% or greater resulting from an injury or wound for

which the retiree was awarded a Purple Heart. Payments would also be made to

retirees with a disability of 60% or more resulting from combat-related activities,

which include injuries received as a direct result of armed conflict, while engaged in

hazardous service, while performing duty under conditions simulating war, or

through an instrumentality of war. As explained by the bill managers on the House

floor on November 12 (see Congressional Record, pp. H8536-8537), injuries caused

by instrumentalities of war include an injury cause by a mine, accidents during

combat, or sickness caused by fumes, gas, or military ordnance. The amount of the

payment to each individual will be equal to the amount that would be paid as a VA

disability benefit.

Exactly how many retirees will qualify for the new benefit is not known;

preliminary estimates are in the range of 30,000. The Defense Department is

responsible for administering the program, and it will have to establish criteria for

determining eligibility. Table 3 shows a preliminary Congressional Budget Office

(CBO) estimate of the costs.

CRS-11

Table 3: Preliminary CBO Estimate of Costs of Combat Related

Disability Benefits

(by fiscal year in millions of dollars)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

108

265

512

624

665

697

730

762

696

830

Source: Congressional Budget Office.

As the provision is written, these amounts will be paid directly by the Defense

Department out of its current budget rather than from the military retirement fund.

These amounts, therefore, will be subject to annual appropriations. The FY2003

defense appropriations bill, which was passed before the authorization bill, did not

provide funding. To cover the costs, the Defense Department may reprogram money

or request supplemental appropriations.

Reduction in Funding for Estimated Cost of Retiree Health Care

Benefits. When it submitted its budget request, the Administration estimated that

the Defense Department would have to pay $8.1 billion in FY2003 into the retiree

health care reserve fund for accrual costs of 65-and-over health care benefits (see the

discussion of accrual accounting in Appendix B, below). Later officials said that

DOD actuaries were expected to reduce the estimated cost when they convened later

in the year. The House Armed Services Committee reduced military personnel

funding by $810 million, 10% of the estimated cost of health benefits accrual.

Representative Spratt, the second ranking Democrat on the committee, criticized this

measure, saying that the $810 million is at the upper limit of the amount DOD said

might be saved. If defense actuaries did not revise their cost estimate as much, there

could be a shortfall of several hundred million dollars in military personnel accounts.

The House Appropriations Committee reduced funding for health benefits

accrual by $405 million, the lower end of DOD estimates of likely savings. The

Senate Appropriations Committee reduced accrual contributions by $372.6 million

to reflect changes in retiree health benefits that were approved in the FY2002 defense

authorization act (P.L. 107-107). The committee also said it would revisit the

amount of accrual contributions after defense actuaries met. The Administration

package of appeals on the House and Senate authorization bills opposed the House

authorization measure. The conference agreement on the defense appropriations bill

reduces funding for health benefits accrual by $405 million.

Increase in Personnel End-Strength. The House Armed Services

Committee approved an increase of 12,552 in active duty end-strength, including

increases in full time guard and reserve personnel. The House-passed authorization

bill provided $528 million in FY2003 to cover associated costs in the military

personnel accounts. Each of the military services has requested an increase of

personnel end-strength recently, with Army seeking the largest increment of as many

as 40,000 additional soldiers over the next few years. Secretary Rumsfeld has

resisted increases, however, arguing repeatedly that added personnel would be very

expensive over the long term and that measures should instead be taken to reduce

demands on the force.

CRS-12

It was not clear whether the House Armed Services Committee intended the

end-strength increase to be a temporary measure related to the war against terrorism

or a permanent addition to the force. Once fully phased in, an increase of 12,552 in

end-strength would cost more than $1 billion a year in the personnel accounts (see

Table 4), with additional costs required in operation and maintenance accounts to

fully train, sustain, and equip the added troops.

Table 4. Congressional Budget Office Estimate of the Costs of

the House Armed Services Committee Increase in Active Duty

End-Strength

(budget authority in millions of dollars)

2003

House – H.R. 4546

528

2004

1,089

2005

1,122

2006

1,155

2007

1,191

Source: Congressional Budget Office.

The Senate Armed Services Committee did not include an increase in endstrength in the authorization bill it reported. But on the floor on June 27, the Senate

approved an amendment offered by Senators Cleland and McCain to increase

authorized active duty end-strength by 12,000. Senator Cleland called for an increase

of 40,000 service members over the next five years. The Defense Department’s

package of appeals on the authorization opposed any increase in end-strength.

The House Appropriations Committee did not approve an increase in endstrength, arguing that requirements are uncertain. The committee report said that any

increase that might be needed in FY2003 should be addressed in a supplemental

appropriations request. The Senate Appropriations Committee also did not approve

an increase in end-strength. The appropriations conference report does not include

funds for an overall increase in end-strength.

The conference agreement on the defense authorization bill does not include an

increase in end-strength. In report language, conferees said that an increase is needed

but that the appropriations bill did not provide enough money. The conference

agreement also allows the Secretary of Defense to increase end-strength by up to 3%

above the authorized level – standing law had allowed a 2% increase – and it gives

the military service secretaries independent authority to increase end-strength by up

to 2%. The agreement also establishes a floor on end-strength equal to the requested

levels, and it repeals a measure that allowed the Secretary of Defense flexibility to

reduce end-strength below authorized levels.

Army Modernization

The Army’s modernization plan involves three overlapping initiatives: one, to

upgrade and recapitalize the existing “legacy” force of heavy armored forces; a

second to build new, more easily deployable “interim brigade combat teams”; and a

third to develop the “objective force” of the future.

CRS-13

Key elements of legacy force modernization include upgrading existing weapons

with digitized communications links and new surveillance and reconnaissance

capabilities. The most controversial elements of the plan have been the Comanche

helicopter, which has experienced repeated development delays and cost increases,

and the Crusader artillery system.

The central element of the interim force is a new light armored vehicle, recently

named the “Stryker.” Congress has supported the interim force concept, although

there has been some debate about the characteristics of the armored vehicle. In the

past, the issue was whether it should be a tracked vehicle instead of the wheeled

system the Army has selected. More recently, the issue has been whether the new

vehicle will be transportable on C-130 airlift aircraft.

The key element of the objective force is the “Future Combat System,” which

is an integrated suite of capabilities, including new armored systems and also

improved communications, intelligence, and surveillance capabilities. The Army’s

FY2003 budget request includes funds to accelerate FCS development.

Congressional Action. Congress has generally supported the Army’s

modernization plan, including plans for the interim combat brigade teams and

development of the Future Combat System. But several issues have been

contentious, including funding for the Crusader artillery system, and for some Army

helicopter programs.

Crusader Artillery System. One of the most contentious issues in the

defense budget this year was the fate of the Crusader self-propelled artillery system.

Advocates of defense transformation have long been critical of the program, arguing

that the 40-ton system is not readily deployable. Supporters of the system responded

that the weight has been reduced substantially and that the system was needed to

allow artillery to keep up with rapidly moving armored forces on the battlefield. On

the eve of the House Armed Services Committee markup of the defense authorization

bill, Deputy Secretary of Defense Wolfowitz informed committee members that

DOD was ordering the Army to prepare an analysis of alternatives to the Crusader

within 30 days, a step toward canceling the $11 billion program. DOD officials later

confirmed that Secretary Rumsfeld intended to terminate the project.

The Crusader had considerable support in Congress, however. In the

authorization markup the House Armed Services Committee provided the full $475.6

million for Crusader R&D that was in the Administration’s February budget request.

The Committee also included language in its report on the bill, though not in the

statutory language of the measure, that prohibits a cut in funding until after a more

extensive, formal analysis of alternatives was completed, which likely would not be

until April 2003. This prompted the White House to threaten a presidential veto of

any bill if it included any statutory provisions limiting the Administration’s ability

to cancel the program. The Rules Committee did not permit any floor amendments

to reduce Crusader funding.

When it marked up its version of the authorization bill on May 9, the Senate

Armed Services Committee deferred action pending a committee hearing on the

Crusader. The reported bill included $475.6 million for Crusader. But when

CRS-14

reporting the bill, committee Chairman Carl Levin said that the committee might

offer an amendment to reduce funding when the bill is on the floor. Later, Senator

Levin said that DOD’s civilian leadership had not given the Army adequate time to

review the alternatives to the Crusader that civilian officials supported.

On May 29, the Administration formally submitted an amendment to its defense

budget request asking Congress to allocate the Crusader funding to other Army R&D

programs, including the Future Combat System, the Excalibur precision artillery

projectile, the Army tactical unmanned aerial vehicle, and a new precision guided

mortar munition (see Table 5).

Table 5: Crusader Budget Amendment/Non-Line of Sight Cannon Funding:

Appropriations Action

(budget authority in thousands of dollars)

0603854A - Artillery Systems - Dem/Val

Crusader Demonstration/Validation

Objective Force -- Indirect Fires

Technology Integration -- Cannon, Platform, Munitions

Reduction

0604854A - Artillery Systems - EMD

Crusader Engineering Development and Operational

Test

Paladin Upgrades

0604645A - Armored Systems Modernization

Netfires System Technology

Netfires C4ISR

Objective Force -- Indirect Fires

Crusader Follow-On Indirect Fires

Technology Integration -- Cannon, Platform, Munitions

Precision Guided Mortar Munition in PE 603802A

XM982 (Excalibur) Projectile in PE 604814A

Guided MLRS Unitary and HIMARS in PE 603778A

Advanced Field Artillery Tactical Data System in PE

203726A

Abrams Engine Program in PE 203735A

Tactical Unmanned Aerial Vehicles Transfer in PE

305204A

Micro Electro-Mechanical Systems (MEMS) in PE

602303A

Total

Original Amended

Request Request

–

246,465

–

229,144

–

House

Senate

Approp. Approp.

–

195,500

–

173,000

–

-5,200

–

Conf.

Approp.

–

195,500

173,000

–

7,500

–

57,000

57,509

195,500

–

10,800

48,300

55,000

4,000

7,500

–

57,000

57,509

–

10,800

48,300

55,000

4,000

–

475,609

173,000

–

5,625

–

42,750

43,000

–

8,100

36,225

41,250

4,000

–

28,600

11,400

28,600

11,400

–

28,600

–

15,000

–

12,750

475,609

663,609

643,409

590,800

Source: FY2003 Defense Appropriations Conference Report, H.Rept. 107-731, p. 257.

On June 13, the Senate Armed Services Committee held a closed session to

consider action on the Crusader. The committee approved an amendment that would

fence Crusader funding for 30 days after the bill is signed into law and require the

Army to complete a study of alternatives during that time. Subsequently the measure

would permit the Secretary of Defense to submit a request to the congressional

defense committees to reprogram the money into other Army indirect fire weapons

development. Senator Levin proposed the committee amendment on the floor on

CRS-15

June 19. Senator Warner then offered a second degree amendment to permit the

Secretary of Defense to allocate funds to other development programs without

seeking congressional permission through a reprogramming request. The Warner

amendment was agreed to by unanimous consent, and the Levin amendment, as

amended by Warner, was subsequently approved by a vote of 96 to 3.

Subsequent to House and Senate action on the defense authorization bill,

however, the issue was resolved in a fashion acceptable to the Administration. In its

version of the defense appropriations bill, the House Appropriations Committee

agreed to terminate the Crusader program and to fund the alternatives that the

Administration proposed in its May 29 budget amendment. But the committee also

said that development of an alternative indirect fire system must be coupled with

development of an appropriate platform to carry a new cannon. The committee

therefore added $173 million to develop a platform and new munitions and

specifically earmarked funds for that purpose in a general provision. The general

provision also required a system to be delivered by 2008. Like the House, the Senate

Appropriations Committee added $173 million for a non-line of sight cannon to be

deployed by 2008.

The conference agreement on H.R. 4775, providing supplemental appropriations

for FY2002, includes legislative language directing the Army to enter into a

follow-on contract immediately to develop and field a next generation non-line of

sight cannon artillery system by 2008. Subsequently, on July 31, August 1, and

August 2, all four of the congressional defense committees sent letters to the Defense

Department approving a DOD request to reprogram FY2002 funds from the Crusader

to the Army’s Future Combat System development program.

Like the House and Senate appropriations bills, the conference agreement on the

defense appropriations provides most of what the Administration proposed in its

Crusader budget amendment and adds $173 million for a non-line of sight cannon to

be deployed by 2008.

UH-60, CH-47, and TH-67 Helicopters. The defense committees took

different actions on several Army helicopter programs. The House authorization bill

added $115 million for 8 additional UH-60 Blackhawk utility helicopters and one

simulator and specified what versions to buy. The House appropriations bill added

funds for 4 helicopters and a simulator. The Senate authorization and appropriations

bills added $96.7 million for 9 aircraft allowing the Army to allocate the funds. The

conference report on the defense appropriations bill provides $269.9 million for 19

Blackhawks, an increase of $116.6 million for seven additional aircraft, and, as in the

House authorization, specifies which models to procure and which components will

receive them.

Funding for the CH-47 cargo helicopter was more contentious. The House

authorization added $13.5 million to the on-going modification program for

crashworthy seats. The Senate authorization as reported had $4 million for

crashworthy seats, but this was reduced in floor action as offsets for other programs.

The Senate appropriations bill added just $1 million for crashworthy seats. The

House appropriations bill, however, added $45 million to the modification plan to

increase the production rate and instructed the Army to plan to upgrade all CH-47s

CRS-16

to the most modern “F” version over the next several years. The appropriations

conference adds $39.1 million to support an increased production rate and directs the

Army to ensure that all requirements for upgraded aircraft are fulfilled by 2016.

The House authorization and appropriations bills and the Senate appropriations

bill added funds for 6 TH-67 training helicopters. The Senate authorization provided

no funds. The appropriations conference agreement provides $9.6 million for six

aircraft.

Comanche Helicopter. The Comanche helicopter program has also been a

target of criticism from some transformation advocates. Last year, the program cost

increased, the development plan was restructured, and projected procurement was

delayed. DOD reportedly considered canceling the Comanche as one of a number

of steps to reduce the procurement “bow wave” at the end of the decade. The House

Armed Services Committee included a measure in its version of the defense

authorization bill to establish a cap of $6 billion on total engineering and

manufacturing development (EMD) costs for the Comanche – a level that now

appears to be below the amount the Army is projecting for development of just the

first versions of the aircraft. The House bill also required an annual review of the

EMD program by the Defense Department’s Inspector General. In its report on the

defense appropriations bill, the House Appropriations Committee warned that its

support for the Comanche program is in jeopardy because of delays and cost growth,

and the committee urged the Army to begin exploring low-cost alternatives.

For its part, the Defense Department has also been scrutinizing the program, and

in October the DOD’s decision-making body, the Defense Acquisition Board,

decided to cut planned procurement of the Comanche by about half. The conference

report on the authorization bill eliminates the House cap on EMD costs and the

requirement for an Inspector General review but requires quarterly reports to

Congress on the status of the program.

Other Army Weapons Programs. There were a number of significant

differences between the various bills on several other Army programs. The House

and Senate appropriations bills eliminated funds for the Wide Area Munitions

program and instructed DOD to terminate it. The House authorization and

appropriations bills added $60 million for Bradley fighting vehicle upgrades for the

National Guard, while the Senate authorization and appropriations bills added no

money. The House authorization also added $45 million to upgrade tank recovery

vehicles for the National Guard. The House bills and the Senate appropriations bill

added money for up-armored HMMWVs. The House bills both cut money for

ATACMs Block II missiles, but the House authorization added back money to

upgrade some Block I missiles. The Senate appropriations bill eliminated funds for

Block II missiles. The House authorization added $61 million for SINGCARS radios

and the House appropriations added $17 million. The Senate authorization, however,

cut $22.1 million that was requested for the program in the DERF. The Senate

appropriations bill provided the amount requested, including the$22.1 million

requested in the DERF. Both the House and the Senate appropriations bills

eliminated R&D funds for the Brilliant Anti-Armor Submunition (BAT) Product

Improvement Program, though neither version of the authorization bill reduced

CRS-17

funding. Both House bills shifted funds for PAC-3 anti-aircraft missile procurement

from the Army to the Missile Defense Agency, but the Senate bills did not.

The defense appropriations conference report terminates the Wide Area

Munitions program, adds $48 million for Bradley upgrades, eliminates funds for the

ATACMS Block II, but adds money to upgrade Block I missiles, adds $11.9 million

for SINGCARS radios, provides funds for up-armored HMMWVs, and terminates

the BAT Product Improvement Program. The conference agreement also follows the

House and shifts Patriot PAC-3 procurement from the Army to the Missile Defense

Agency.

Stryker-Equipped Interim Combat Brigades. The Army now plans to

outfit six brigades (a combat division has three brigades plus support and command

units) with the new “Stryker” light armored combat vehicle. These brigades are

designed to be more rapidly deployable than heavy armored units but more capable

and survivable than light infantry or airborne units. These units are intended to be

an interim approach to transformation of the Army while development of the Future

Combat System proceeds. Recently, there have been reports that the Defense

Department is considering a measure that would reduce the number of Interim

Combat Brigades to three. This is one of many options DOD is considering in

preparing the FY2004-FY2009 defense plan. Congress has not debated any specific

proposal to reduce the number of new brigades, and the Administration has not yet

decided on the proposal. But the appropriations conference report adds $59.5 million

for Stryker brigade deployment and includes a general provision, Section 8121, that

requires the Army to budget for six brigades.

CRS-18

Table 6: Appropriations Action on Major Army Acquisition Programs

(amounts in millions of dollars)

House

Appropriations

Request

Senate

Appropriations

Conference

Appropriations

Change to

Request

Procurement R&D Procurement R&D Procurement R&D Procurement R&D Procurement R&D

–

UH-60 Blackhawk

180.2

99.1

269.4

TH-67 Creek Training Helos.

–

CH-47 Upgrades

–

403.2

–

AH-64 Mods

–

93.6

AH-64D Apache Longbow

–

Bradley Base Sustainment

M-1 Abrams Mods/Upgrades

– 914.9

–

– 914.9

99.1

276.5 123.1

9.6

–

9.6

–

458.2

–

96.9

–

895.5

46.2

–

895.5

–

397.1

–

691.4

54.6

–

332

–

RAH-66 Comanche

Stryker Interim Armored

Vehicle

– 914.9

–

– 914.9

–

19 296.8 115.1

+7 +116.6 +16.0

–

9.6

–

+9.6

–

406.2

–

450.3

–

+47.1

–

159.6

–

136.9

–

+43.3

–

46.2

–

895.5

46.2

–

895.5 46.2

–

457.1

–

395.3

–

444.9

–

+47.9

–

679.2

54.6

–

690.4

58.1

–

678.2 57.1

–

-13.2

+2.5

811.8 124.4 332

772.0 124.4 332

788.0 148.2 332 788.0 148.2

–

-23.8 +23.8

SINGCARs Radios

–

52.2

–

72.2

–

52.2

–

64.1

–

+11.9

–

Wide Area Munition

–

12.5

–

-12.5

–

ATACMS Upgrade

–

58.7

–

32.3

–

9.1

–

29.1

–

-29.7

–

144

17.9

14.5 144

17.9

14.5

–

14.5

–

14.5

–

-17.9

–

38.1

–

38.1

–

45.0

–

LOSAT Missile

BAT Product Improvement

–

– 190.3

HMMWV

–

196.8

–

204.8

–

261.8

–

240.8

–

+44.0

–

FMTV (medium trucks)

–

681.4

–

681.4

–

656.4

–

681.4

–

FHTV (heavy trucks)

–

242.8

4.0

–

252.8

4.0

–

242.1

20.0

–

241.6 15.2

–

Source: H.Rept. 107-532; S.Rept. 107-213; H.Rept. 107-732.

Navy Shipbuilding

The pace of Navy shipbuilding was a major focus of attention in Congress this

year. The FY2003 budget request included funds for five new ships, far short of the

8.5 ships per year needed, in principle, to sustain a fleet of 300 ships, which has long

been the Navy’s goal.

Congressional Action. The House Armed Services Committee provided

funds to procure an additional DD-51 destroyer on condition that the Justice

Department reach as settlement with General Dynamics Corporation in the

long-standing A-12 termination lawsuit. The tentative settlement would have

provided $385 million in advance procurement for Virginia-class submarine

acquisition. By the time the authorization and appropriations conference agreements

were being negotiated, however, that settlement had failed.

– -145.3

-1.2 +11.2

CRS-19

In the absence of a settlement, the House authorization added $810 million to

be distributed among several shipbuilding programs, including $415 million for

Virginia class submarine advance procurement, $210 million for cruiser conversion

advance procurement, and $185 million for a nuclear submarine refueling overhaul.

The committee also added funds to accelerate procurement of the next aircraft carrier,

the CVN(X). The Navy plan to procure the ship had slipped by one year, with half

the funding to be requested in FY2007 and the remainder in FY2008. The committee

added $229 million in advance procurement to accelerate production and instructed

the Navy wants to move the start date back to FY2006.

The Senate Armed Services Committee also added a significant amount for

Navy shipbuilding, including $690 million that Senator Levin said was transferred

from missile defense R&D. The committee additions included $415 million in

advance procurement for Virginia-class attack submarines, $200 million for refueling

rather than retiring an SSN-688 Los Angeles-class attack submarine, $150 million

in advance procurement for LPD-17 amphibious ships, and $125 million in advance

procurement for DDG-51 destroyers. Like the House Armed Services Committee,

the Senate Armed Services Committee provided $229 million to accelerate CVN(X)

procurement.

The House Appropriations Committee took a substantially different approach

to shipbuilding in general and to aircraft carrier procurement in particular. Rather

than provide money to accelerate CVN(X) procurement, the committee added $250

million for the CVN-77 carrier, which is now being built, and instructed the Navy to

incorporate a more advanced radar and other electronic systems into the ship as a

transition to the CVN(X). The committee did not add money for other major

shipbuilding programs, and it eliminated $253 million requested for the LHD-8

amphibious assault ship – this ship was started in FY2001 and is being incrementally

funded through FY2006.

The Senate Appropriations Committee added a substantial amount for

shipbuilding, but it allocated funding quite differently from the other committees.

The committee added $530.9 million to cover cost overruns on LPD-17 amphibious

ships, DDG-51 destroyers, and Virginia-class submarines approved in prior years,

while it reduced funding requested for advance procurement for the same programs.

The committee also criticized the Navy for overusing advance procurement, saying

that it should only be employed for long lead components of ships and that it should

not comprise as large a share of the total cost of ships as it has in recent years. The

committee also added $306 million to pay for the cost of an agreed transfer of work

on LPD-17s and DDG-51s between the two major shipbuilders. Like the authorizing

committees, the committee provided $229 million to accelerate CVN(X) procurement

and about $200 million for an SSN-688 attack submarine refueling overhaul.

The appropriations conference report adds $90 million, rather than the $250

million in the House bill, to incorporate advanced electronics on CVN-77. The

conference report provides $160 million, rather than the $229 million in the Senate

bill, to restore the CVN(X) procurement schedule. As in the Senate bill, the

conference report provides $530.9 million in added money for prior year cost growth.

The agreement provides $243 million for LHD-8, rejecting the House reduction. As

CRS-20

in the Senate bill, the agreement provides $165 million for an additional SSN-688

refueling overhaul.

After congressional action on the authorization and appropriations bills was well

underway, a new issue arose when the Navy announced that it planned to accelerate

development of a new, smaller vessel called the Littoral Combat Ship (LCS). The

LCS program was one element of the Navy’s plan to develop a series of new ships

under the DDX program that was announced in 2001 after the DD-21 destroyer

program was canceled. During the summer of 2002, the Navy said it wanted to

pursue the LCS more rapidly, and it informally asked Congress for additional money

to begin studying alternatives. The Senate report on the authorization bill included

$4 million for the program. The program had not undergone the review process that

has normally been part of the acquisition process, however, which includes, among

other things, a formal assessment of requirements for a new system, projections of

the program schedule and costs, and an analysis of alternatives. The defense

authorization conference report provides $4 million for the program, but it includes

a long discussion of the need for a thorough review of program requirements and

alternatives, and it requires DOD and the Navy to report to Congress on the

assessments that had previously been required under DOD acquisition regulations.

CRS-21

Table 7: Appropriations Action on Major Navy Shipbuilding Programs

(amounts in millions of dollars)

House

Appropriations

Request

Procurement

R&D

Virginia Class Submarine

1 1,512.7

238.3

Virginia Class Sub. Adv.

Proc.

–

706.3

Submarine Refueling

Overhaul

Submarine Refueling Adv.

Proc.

Procurement

Senate

Appropriations

R&D

1,490.7

250.3

–

706.3

271.3

–

88.3

–

Missile Submarine

Conversion

825.3

CVN Refueling Overhaul

Adv. Proc.

–

CVN-77 Aircraft Carrier

Procurement

Conference

Appropriations

R&D

Procurement

1,512.7

238.3

1 1,499.2 246.2

–

-13.5

+7.9

–

645.2

–

645.2

–

-61.1

–

231.3

–

435.8

–

435.8

–

+164.5

–

88.3

–

64.0

–

-24.3

–

825.3

–

825.3

–

825.3

–

296.8

–

296.8

–

195.8

–

221.8

–

-75.0

–

91.7

–

250.0

91.7

–

91.7

90.0

91.7

–

+90.0

–

CVN(X) Aircraft Carrier

Adv. Proc.

–

243.7

268.0

–

243.7

243.0

–

472.7

268.0

403.7 268.0

–

+160.0

–

DDG-51 Destroyer

2 2,295.5

300.7

–

2,273.0

323.7

2,321.5

311.7

2 2,321.5 348.1

–

+26.0

+47.4

DDG-51 Destroyer Adv.

Proc.

–

74.0

–

74.0

–

-74.0

–

LPD-17 Amphibious

Transport

596.5

10.1

596.5

10.1

596.5

10.1

596.5

10.1

–

LPD-17 Adv. Proc.

–

8.0

–

8.0

–

-8.0

–

LHD-8 Amphibious

Assault Ship

–

253.0

–

243.0

–

243.0

–

-10.0

–

Prior Year Shipbuilding

Costs

–

644.9

–

644.9

–

1,175.8

–

973.7

–

+328.8

–

DDG-51/LPD-17 Work

Swap

–

306.2

–

306.2

–

+306.2

–

DD (X) Destroyer

–

960.5

–

895.5

–

– 1,006.5

–

993.2

–

+32.7

T-AKE Auxiliary Cargo

Ship

388.8

–

388.8

–

388.8

–

R&D

Procurement

–

R&D

388.8

Change to

Request

Sources: H.Rept. 107-532; S.Rept. 107-213; H.Rept. 107-732.

Aircraft Programs

Funding for several major aircraft programs was included in the FY2003

Administration request, including Marine Corps V-22 tilt rotor aircraft development

and procurement; Air Force F-22 fighter development and procurement; Air Force

and Navy F-35 Joint Strike Fighter development; Navy F/A-18E/F multirole fighter

procurement; and C-17 cargo aircraft procurement. The Navy has reportedly been

considering reducing future planned F-35 procurement, but this has not affected

congressional support for the program to date.

CRS-22

Congressional Action. Both the House and Senate Armed Services

Committees approved requested funding for most major aircraft programs, including

the F-22, F-35, V-22, and C-17. The House Armed Services Committee added funds

for a few lower profile programs, including trainer aircraft, Navy helicopters, and

F-15 communications upgrades. The Senate Armed Services Committee added funds

to procure an additional 4 F/A-18EF fighters for the Navy and Marine Corps. Both

committees added funds for EA-6B electronic warfare aircraft upgrades. The House

Appropriations Committee added funding for F-22 R&D, but otherwise made few

changes in the request for major aircraft programs. The Senate Appropriations

Committee added funds for 4 additional F/A-18E/F fighters. The committee also

added money to fully fund procurement of C-17 aircraft.

The appropriations conference report adds $120 million for 2 additional F/A18E/F aircraft, half as many as in the Senate bill. The committee also added money

to fully fund C-17 procurement.

C-17 Funding Profile. One rather technical, but potentially significant issue

this year was whether the funding approach that the Air Force proposed for future

C-17 procurement sets a precedent that would erode DOD policies designed to

promote long-term fiscal discipline. In the past, DOD typically requested enough

money to procure a specific number of fully equipped end-items – funding requested

for 15 C-17 aircraft, for example, would be sufficient to buy 15 deployable aircraft.

This year, however, the Air Force requested only enough money to finance progress

payments on a new 5-year contract for multi-year procurement of the aircraft. The

effect is to reduce amounts requested early in the multi-year contract and increase

costs in the later years.

This is technically at odds with longstanding DOD policy which calls for full

funding of the cost of end-items being requested in any given year, and it is the first

time a significant breach of the full funding policy has occurred in an area apart from

Navy shipbuilding. (For an extensive discussion, see CRS Report RL31404, Defense

Procurement: Full Funding Policy – Background, Issues, and Options for Congress,

by Ronald O’Rourke and (name redacted).)

The House Armed Services Committee approved the requested C-17

procurement profile, but warned DOD against using this funding approach in the

future. The House Appropriations Committee rejected the Air Force approach and

required the Air Force to use C-17 funding in FY2004 to procure complete aircraft.

The committee also instructed the Defense Department to restructure future funding

plans for the C-17 to use full funding. The Senate Appropriations Committee

specifically rejected the Air Force’s incremental funding approach and instead added

$585.9 million to finance the full cost of procuring 15 aircraft. The appropriations

conference agreement mandates full funding of the C-17 – as in the Senate bill, it

adds $585.9 million for full funding in FY2003, and it retains House language

instructing the Air Force to request full funding in the future.

Tanker Aircraft Leasing. Last year, the conference report on the defense

appropriations bill included a provision allowing the Air Force to pursue negotiations

with the Boeing Corporation to lease tanker aircraft for a ten-year period. The

provision was structured so that the aircraft would be returned to the manufacturer

CRS-23

after the lease expired. As a result, the lease is considered an “operating lease” rather

than a “lease-purchase” agreement, so that only the annual cost of actual payments

on the lease would be scored in the Air Force budget on a year-to-year basis –

otherwise, the full cost of the contract would have to be scored in the years when the

money would be obligated. Boeing has offered to lease 100 767 aircraft as tankers.

Senator McCain and some others have objected to the leasing provision, arguing

that it will cost the government more in the long run than simply procuring additional

tanker aircraft. Both the Office of Management and Budget and the Congressional

Budget Office have prepared analyses which project considerably higher costs for

leasing than for regular procurement. (The text of the CBO letter is available

electronically at [ftp://ftp.cbo.gov/34xx/doc3413/tankers.pdf].) Mitch Daniels, the

Director of OMB, has criticized the plan, insisting that it will be cheaper either to buy

new tankers or to re-engine older aircraft. In its markup of the defense authorization

bill, the Senate Armed Services Committee approved an amendment proposed by

Senator McCain that would require Congress to authorize and appropriate funds for

any tanker lease agreement. In floor action on the defense appropriations bill,

however, Senator McCain offered but then withdrew a similar amendment. Recently,

the Air Force has reported that it is very close to reaching an agreement with Boeing

on the tanker leases.

The appropriations conference agreement provides $3 million for the tanker

lease program (in Operation and Maintenance, Air Force). The agreement also

includes a general provision, Section 8117, that provides that payment for tanker

leases may be made one year in advance and that permits funds either for

procurement of aircraft or for operation and maintenance to be used for the leases.

On October 16, Senator McCain made a floor statement that was strongly critical of

the leasing provisions in the conference report (Congressional Record, pp. S1051910520).

The authorization conference report includes a provision (Section 133) revising

Senator McCain’s amendment. The revised provision prohibits the leasing

agreement unless funds have been specifically authorized and appropriated for the

program, or unless a reprogramming notification has been submitted to the

congressional defense committees. In report language, the conference agreement

says that it expects the Secretary of Defense to seek congressional approval for a new

tanker lease.

CRS-24

Table 8: Appropriations Action on Major Aircraft Programs

(amounts in millions of dollars)

Request

House

Appropriations

House Authorization Senate Authorization

Senate

Appropriations

Procurement R&D

Procurement R&D Procurement R&D Procurement R&D

V-22 Osprey

11 1,106.0

420.1

11 1,086.0

F-35 Joint Strike Fighter

–

F/A-18E/F

44 3,159.5

JPATS Trainer

–

15.0

–

42.5

–

E-2C Hawkeye

295.5

19.0

295.5

19.0

281.0

19.0

T-45

221.4

–

221.4

–

221.4

–

MH-60S

372.2

23.2

367.2

23.2 15

MH-60R

–

116.2

89.0

–

116.2

96.0

EA-6B Prowler Mods

–

223.5

74.7

–

229.5

KC-130J Aircraft (DERF)*

334.0

–

F-22

23 4,621.1

E-8C Joint STARS

F-16C/D Mods.

Procurement

R&D

Navy Aircraft

420.1

–

-28.4

–

1,747.3

–

+19.8

210.5 46 3,252.2

215.7

+92.7

+11.2

26.0

–

+26.0

–

291.5

19.0

–

-4.0

–

221.4

–

362.2

23.2 15

357.2

23.2

–

-15.0

–

121.2

89.0 –

119.7

94.9

–

+3.5

+6.0

75.6

–

267.5

84.7 –

263.1

81.3

–

+39.6

+6.6

334.0

–

315.2

–

315.2

–

-18.8

–

808.5

23 4,621.1

808.5

–

4,592.6

808.5 23 4,592.6

808.5

–

-28.5

–

279.3

55.5

279.3

67.5

279.3

55.5

279.3

61.5

–

+6.0

–

265.0

81.3

–

269.0

85.3

–

268.1

81.3 –

281.0

83.4

–

+16.0

+2.1

F-15 Mods.

–

232.5

81.7

–

259.9

81.7

–

300.0

81.7 –

283.7

81.7

–

+51.2

–

JPATS Trainer

211.8

–

211.8

–

211.8

– 35

211.8

–

C-17 Globemaster

12 3,698.5

157.2

157.2 15 4,236.5

157.2

+3 +538.0

–

F-35 Joint Strike Fighter

–

B1-B Bomber Mods.

–

98.0

160.7

–

98.0

78.7

–

109.0

B-2 Stealth Bomber Mods.*

–

72.1

275.3

–

104.1

265.3

–

72.1

– 1,727.5

204.5

–

420.1 11 1,096.8

– 1,727.5

44 3,162.5

–

420.1 11 1,077.6

– 1,752.5 –

214.5 48 3,295.4

Air Force Aircraft

– 1,743.7

12 3,708.0

–

157.2 15 4,236.5

– 1,743.7

–

– 1,733.7 –

–

1,733.7

–

-10.0

120.7 –

106.0

160.7

–

+8.0

–

267.0 –

104.1

265.3

–

+32.0

-10.0

Sources: H.Rept. 107-532; S.Rept. 107-213; H.Rept. 107-732.

Notes: Funding for 4 KC-130Js was requested in the Defense Emergency Response Fund (DERF). B-2 request includes $50 million for R&D

requested in the DERF.

Missile Defense

The Administration requested $7.8 billion for missile defense programs in

FY2003. The request included

$3.2 billion for mid-course defenses, including funds for the

National Missile Defense program to develop ground-based systems

to protect the entire United States, and the Navy Theater Wide

program, which is a theater defense system to be based on navy

ships;

! $1.1 billion for battle management and related support programs;

CRS-25

$935 million for the ground-based Theater High Altitude Area

Defense (THAAD) system;

! $858 million for Patriot PAC-3 development and procurement;

! $797 million for boost phase defense systems, including the

Airborne Laser (ABL) and the Space-Based Laser (SBL); and

! $373 million for space-based sensors, including the Space-Based

Infrared System-Low (SBIRS-Low);

! an additional $815 million in the Air Force budget for the SpaceBased Infrared System-High (SBIRS-High).

The SBIRS-High program has experienced very large cost increases, and early in the

year, the program was under review because the cost growth violated Nunn-McCurdy

cost cap provisions. DOD decided to continue the program, however, though its

status remains a matter of concern. There continues to be extensive debate in

Congress about the status of the National Missile Defense program, which the

Administration has tried to accelerate, and about space-based systems like the SBL.

Congressional Action. The House Armed Services Committee generally

supported the Administration’s request. The committee reduced funding for the ABL

(now funded under the title “Air-Based Boost” defense) by $77.5 million, on the

premise that a second test aircraft, that was included in the request, may not yet be

needed. That judgment was disputed in House floor action on the defense

appropriations bill (discussed below). The committee distributed the savings to a

number of other missile defense programs. The House Armed Services Committee

also refused to fund Patriot PAC-3 or Medium Extended Air Defense System

(MEADS) development in the Army budget, as requested, but instead shifted the

money back to the Missile Defense Agency.

During the House Armed Services Committee markup, Representative Spratt

offered an amendment to reduce funding for the SBL and for space-based kinetic

interceptor development and to transfer the savings to the PAC-3 and Arrow theater

missile defense programs. The amendment was defeated in the committee. On the

floor, the House approved an alternative offered by Representative Hunter to add

funds for PAC-3 and Arrow to be financed from funds available to the Missile

Defense Agency, but without specifying the offsetting source of funds.

In committee markup, Representative Spratt also offered an amendment to

prohibit deployment of nuclear tipped interceptor missiles for missile defense, which

was rejected. On the floor, the Rules Committee did not make in order an

amendment on the issue, but Representative Spratt offered a motion to recommit the

bill to committee with instructions to prohibit nuclear interceptor development, and

that motion was defeated.

The Senate Armed Services Committee reduced overall missile defense funding

by $814.3 million (see Table 9 for a detailed tabulation of funding), prompting

several Republicans on the committee to vote against reporting the bill. Most of the

reductions were in systems engineering and other support activities, which the

committee argued are not adequately justified in support material provided by DOD.

This became a major issue on the Senate floor. The Senate Armed Services

CRS-26

Committee also reduced ABL funding by $135 million and SBIRS-High funding by

$100 million.

In addition, the committee approved several provisions designed to require

stricter oversight of missile defense programs and adherence to more traditional

acquisition procedures in the development programs. One provision would require

the independent Director of Operational Test and Evaluation to conduct an annual

assessment of specific missile defense programs. Another provision requires the

Secretary of Defense to provide annual schedule and cost estimates for major

elements of the program to Congress.

On June 12, Secretary Rumsfeld send at letter to Senator Levin opposing the

Senate Armed Services Committee reduction in missile defense funding and

objecting to the committee’s provisions regarding acquisition procedures. The

committee’s measures, said Rumsfeld, “would impose a number of burdensome

statutory restrictions that would undermine our ability to manage the program

effectively.” The Secretary said he would recommend a veto if a final authorization

bill includes either the Senate cuts in missile defense funding or the Senate

provisions regarding management of the program. OMB’s June 19 “Statement of

Administration Policy” repeated the veto threat.

On June 26, the Senate approved an amendment offered by Senator Warner,

with a second degree amendment by Senator Levin, to restore some or all of the

missile defense funding that the committee cut. The amendment would permit the

President to allocate up to $814.3 million of anticipated inflation savings either to

missile defense or to counter-terrorism programs. The Levin amendment stipulates

that priority should be given to counter-terrorism. The Senate did not consider any

measures to revise committee provisions on program management.

Also on June 26, the Senate approved an amendment proposed by Senators

Feinstein and Stevens to prohibit development or deployment of nuclear armed

interceptors for missile defense. This measure is similar to the Spratt amendment

that the House turned down.

The House Appropriations Committee made a number of changes in requested

missile defense funding. The committee denied funding for Navy sea-based terminal

defense, a replacement for the terminated Navy Area Defense program, saying that

DOD had not presented a plan for using the research funds. The committee also

denied funding for the Russian-American Observation Satellite Program (RAMOS)

because the Russian government has not yet responded to a U.S. proposal to

implement the program. The committee said it would revisit the issue in conference

if the two governments sign an agreement. The committee also cut funding for seabased and space-based boost phase defenses, saying that requested large increases in

funding were not justified in view of requirements for near term programs like the

PAC-3 system. The committee added $30 million for additional PAC-3 testing and

required a report on planned testing of the Theater High Altitude Area Defense

(THAAD) system.

CRS-27

In floor action, the House approved an amendment by Representative Spratt to

reduce funding for the space-based kinetic interceptor program by $30 million and

shift the funds to the Airborne Laser program.

The Senate Appropriations Committee largely followed the Senate authorization

bill. In a general provision, it provided an additional $814.3 million for missile

defense or for counter-terrorism programs, offset by anticipated inflation savings.

The provision also itemized the programs to and amounts for which funds are to be

restored, should the President choose to allocate these funds to missile defense.

The appropriations conference report provides most of what the Administration

requested for missile defense. In all, it reduced funding by $43 million. It added $45

million for Patriot PAC-3 procurement (offset by a $25 million reduction in support

funding) and $70 million for the U.S.-Israeli Arrow program. It reduced funding for

RAMOS but did not eliminate it as in the House bill.

The authorization conference report includes revised provisions governing

management of missile defense programs. It requires that DOD submit annual

reports to Congress on performance goals and development baselines for each

development block of each missile defense system as part of annual budget

justification material; it requires year-by-year funding profiles for each block of each

system that could be fielded; and it requires the Defense Department’s Joint

Requirements Oversight Council (JROC), which is chaired by the Deputy Chairman

of the Joint Chiefs, to provide to Congress a one-time review of cost, schedule, and

performance criteria. The agreement also requires that DOD provide a life-cycle cost

estimate for the Theater High Altitude Area Defense (THAAD) program – the Senate

had prohibited obligation of more than 50% of the money authorized for THAAD

until the report is submitted, while the conference agreement permits 85% to be

obligated. The conference report also requires the director of the Missile Defense

Agency to provide reports to Congress on each flight test of the Ground-Based MidCourse National Missile Defense System. The authorization conference agreement

drops provisions in the Senate bill requiring annual JROC reviews of missile defense

programs and operational assessments of some programs by the Director of

Operational Test and Evaluation.

The authorization conference report also prohibits the use of FY2003 funds for

development of a nuclear-armed interceptor for missile defense – the Senate version

of the bill had flatly prohibited development.

CRS-28

Table 9: Congressional Action on Missile Defense Funding by

Program Element and Project

(millions of dollars)

Program Element/Project

Missile Defense Agency R&D

0603175C BMD Technology

6010 Advanced Technology Development

6090 Program Operations

MEADS Concepts -- Dem/Val

Transfer from Army R&D

0603880C BMD System

BM/C2

1020 Communications

1030 Targets & Countermeasures

1050 Systems Engineering & Integration

1060 Test & Evaluation

1070 Producibility & Manufacturing

Technology

1090 Program Operations

Wide bandwidth technology program

Battlespace environment and signatures

toolkit

High Energy Laser Transmitters for LADAR

General Reduction, Lack of Justification

0603881C Terminal Defense Segment

2015 Medium Extended Air Defense System

(MEADS)

2016 Israeli Arrow Program

2022 Sea-Based Terminal

2090 Program Operations

0603882C Midcourse Defense Segment

3011 Block 2004 Test Bed

3012 Ground-Based Midcourse Defense

(GMD)

3020 Sea-Based Midcourse Defense (SMD)

Transfer S-Band Radar Research to Navy

Adds for PMRF, SHOTS, ESPRIT, Range

Data Monitor

3050 Segment Common Systems

Engineering and Integration

3090 Program Operations

Transfer Physical Security to National Guard

Aegis LEAP interceptor flight demonstration

Long-range X-band and S-band

discrimination radar development

High Power Discriminator Radar

Development

Small Kill Vehicle Technology Development

Concept Development, Studies, and Risk

Reduction

FY2003

Request

House

Auth.

Senate

Auth.

House

Approp.

Senate

Approp.

Conference

Approp.

Change

Request

118.9

2.9

118.9

2.9

142.6

2.9

124.9

2.9

142.6

2.9

152.1

2.9

+33.2

–

69.7

117.7

+117.7

112.8

12.0

128.2

371.1

382.0

21.9

112.8

12.0

128.2

371.1

382.0

21.9

112.8

12.0

128.2

231.1

412.0

21.9

112.8

12.0

128.2

371.1

382.0

21.9

112.8

12.0

128.2

29.1

392.0

21.9

112.8

12.0

128.2

371.1

382.0

21.9

–

37.9

–

37.9

10.0

37.9

–

37.9

5.0

–

37.9

–

37.9

3.0

–

+3.0

–

-222.0

5.0

–

4.3

–

+4.3

–

117.7

–

117.7

–

65.7

90.0

14.2

221.7

90.0

14.2

105.7

90.0

0.2

129.7

–

14.2

145.7

50.0

0.2

135.7

–

4.2

+70.0

-90.0

-10.0

533.9

2,075.0

533.9

2,075.0

533.9

2,075.0

533.9

2,075.0

533.9

2,075.0

533.9

2,075.0

–

426.6

–

426.6

–

426.6

–

426.6

–

386.6

–

416.6

-22.0

29.1

-10.0

-22.0

+29.1

95.0

–

95.0

–

95.0

–

64.5

–

64.5

–

27.0

25.0

0.5

–

64.5

–

40.5

–

64.5

-6.7

–

-6.7

–

40.0

–

10.0

-52.0

–

-2.0

–

CRS-29

Program Element/Project

0603883C Boost Defense Segment

4020 Sea-Based Boost

4030 Air-Based Boost

4040 Space-Based Boost

4043 Space-Based Laser

Kinetic Energy Boost

4090 Program Operations

0603884C Sensors

5041 Space-based Infrared System (SBIRS)

Low

5049 Russian-American Observation Satellite

Program (RAMOS)

5090 Program Operations

Airborne Infrared Surveillance (AIRS)

System

0604861C THAAD System

2011 Theater High Altitude Area Defense

(THAAD)

0604865C Patriot PAC3 - EMD

0901585C Pentagon Reservation

Maintenance Fund

0901598C Management Headquarters

General Reduction

Total, R&D Missile Defense Agency (MDA)

Army R&D

0604865A - Patriot PAC-3 - EMD

0603869A - Meads Concepts - Dem/Val

0203801A - Patriot PAC-3 Product

Improvement

Total, R&D Army

Senate Warner/Levin Amendment*

Total, R&D Missile Defense Agency and

Army

Procurement

Patriot Mod

Patriot Mod Initial Spares

Patriot PAC-3

Total, Procurement

Total, R&D & Procurement

Related Program

0604441F Space Based Infrared System

(SBIRS) High

FY2003

Request

House

Auth.

Senate

Auth.

House

Approp.

Senate

Approp.

Conference

Approp.

Change

Request

89.6

598.0

54.4

34.8

–

20.1

89.6

520.5

54.4

34.8

–

20.1

34.6

463.0

24.4

24.8

–

0.1

69.6

568.0

14.4

34.8

–

20.1

34.6

463.0

24.4

24.8

–

0.1

89.6

598.0

54.4

24.8

-50.0

20.1

–

-10.0

-50.0

–

293.9

238.9

293.9

250.9

293.9

–

69.1

79.1

–

79.1

50.1

-19.0

10.4

–

10.4

–

0.4

22.0

10.4

–

0.4

10.0

10.4

5.0

–

+5.0

932.2

892.2

932.2

892.2

912.2

-20.0

–

7.5

220.8

7.5

–

7.5

180.8

7.5

150.8

7.5

180.8

7.5

+180.8

–

27.9

–

6,690.7

27.9

-135.0

7,044.7

27.9

–

5,924.4

27.9

–

6,820.2

27.9

–

6,145.0

27.9

–

6,896.2

–

+205.5

150.8

117.7

43.7

–

43.7

150.8

69.7

43.7

–

43.7

–

43.7

–

43.7

-150.8

-117.7

–

312.3

–

7,003.0

43.7

–

7,088.4

264.3

814.3

7,003.0

43.7

–

6,863.9

43.7

814.3

7,003.0

43.7

–

6,939.9

-268.6

–

-63.1

151.3

40.7

471.7

663.7

7,666.7

151.3

40.7

536.7

728.7

7,817.1

151.3

40.7

471.7

663.7

7,666.7

151.3

40.7

536.7

728.7

7,592.6

151.3

40.7

471.7

663.7

7,666.7

151.3

40.7

491.7

663.7

7,603.6

–

+20.0

–

-43.1

814.9

714.9

784.9

-30.0

Sources: Department of Defense, FY2003 RDT&E Program Descriptive Summaries; H.Rept. 107-436; S.Rept. 107-151; H.Rept.

107-532; S.Rept. 107-213; H.Rept. 107-732.

*Note: Warner/Levin amendment to the Senate authorization bill provides up to $814.3 million for missile defense and counterterrorism programs.

CRS-30

Strategic Nuclear Weapons Policy

In January, the Administration completed a congressionally mandated Nuclear

Posture Review and submitted a classified report on the review, with an unclassified

summary, to Congress. Parts of the classified report were later leaked to the press,

prompting considerable public debate about several issues, including the potential

use of nuclear weapons against non-nuclear states that use or threaten to use nonnuclear weapons of mass destruction, plans to shorten the time needed to resume

nuclear testing, and potential development of new nuclear weapons for missions such

as destruction of deeply buried and hardened targets. The review also reaffirmed

Administration plans to reduce offensive nuclear warhead numbers. Later, on May

13, the White House announced an agreement with Russia on a treaty to reduce

strategic offensive force levels to between 1,700 and 2,200 warheads.

Congressional Action. In the House Armed Services Committee markup,

Representative Tauscher offered an amendment to limit strategic nuclear force levels

to 1,700. The proposal was rejected in committee. On the floor, the House approved

a Tauscher amendment to require a report on options for achieving a level of 1,700

to 2,200 warheads. Representative Spratt offered an amendment, also rejected in

committee, to require one-year advance notification of a decision to resume nuclear

testing. The Rules Committee did not permit a floor vote on the amendment. The

full House also rejected an amendment offered by Representative Markey to prohibit

development of a nuclear earth penetrator weapon.

The Senate Armed Services Committee version of the authorization eliminates

$15.5 million requested in the Department of Energy weapons budget for

development of a “Robust Nuclear Earth Penetrator” warhead and requires a detailed

report on the proposed program. On July 26, the Senate approved an amendment to

the bill, offered by Senators Feinstein and Stevens, to prohibit development or

deployment of nuclear armed interceptors for missile defense (see the discussion of

missile defense programs, above).

The Senate bill also includes a provision that would require the Secretary of

Energy to request funds before beginning research and development or production

of any new or modified nuclear weapon. The provision also requires a specific

authorization for a new or modified nuclear weapon program before funds could be

obligated or expended.

The authorization conference report provides funds for the Robust Nuclear Earth

Penetrator warhead but prohibits obligation of the money until 30 days after Congress

receives the report required by the Senate version of the bill. The conference

agreement also includes a revised version of the Senate requirement that the

Department of Energy specifically request funds to develop any new nuclear

weapons. The conference report also requires a report on options for resuming

nuclear testing.

CRS-31

Environmental Restrictions on DOD Training

The Defense Department has voiced increasing concern in recent years about

the effect on training of environmental regulations. Shortly before the House Armed

Services Committee markup of the defense authorization bill, the Administration

proposed legislation to exempt DOD training activities from the requirements of

several environmental statutes ranging from the Endangered Species Act to the Clean

Air Act.

Congressional Action. The House-passed version of the authorization bill

includes provisions exempting DOD from or waiving application of the Endangered

Species Act, the Migratory Bird Treaty Act, and the Wilderness Act to areas used for

military training exercises. On the Endangered Species Act, Section 312 of the

House bill would allow DOD to substitute its own Integrated Natural Resource

Management Plan to protect endangered species rather than having installations

designated as a critical habitat. DOD would, however, still be prohibited from taking

any actions that would harm endangered or threatened species. In designating new

critical habitats, the bill would also require that the effect on national security, as well

as the economic impact, must be considered.

Section 311 of the House bill provides that in the case of military training

activities, DOD would not be subject to the part of the Migratory Bird Treaty Act

that designates certain types of activities as unlawful. According to the committee

report, this provision was intended to permit DOD to carry out military exercises

even if they might unintentionally harm migratory birds. The language adopted

would exempt DOD more broadly from any activity deemed to be unlawful under the

Act.

The House bill also permits DOD to conduct training activities and have

emergency access to the Utah Test and Training Range, despite the fact that a portion

of that range has been designated as a wilderness area with certain restrictions on

noise and disturbances. The House bill also includes provisions that would designate

several areas owned by the Bureau of Land Management that are adjacent to the Utah

Test and Training Range as wilderness areas although DOD’s training activities in

these areas would also not be covered by Wilderness Act restrictions. (For a

discussion of these and other provisions, see CRS Report RL31456, Defense Cleanup

and Environmental Programs: Authorization and Appropriations for FY2003, by

David Michael Bearden, and CRS Report RL31415, The Endangered Species Act,

Migratory Bird Treaty Act, and Department of Defense Readiness Activities: Current

Law and Legislative Proposals, by (name redacted).)

The House Armed Services Committee did not address other environmental

measures that DOD included in its legislative proposal. In the House Armed

Services Committee markup, Representative James Maloney offered an amendment

to remove the environmental waiver provisions, but the proposal was rejected. The

Rules Committee did not permit a similar amendment proposed by Representatives

Rahall, Dingell and Maloney to be offered on the floor.

The Senate Armed Services Committee did not address these environmental

issues in its version of the authorization bill. Instead, it referred the Administration’s

CRS-32

proposals to the Environment and Public Works Committee, which recently held a

hearing on those proposals. The Senate bill authorizes $20 million to allow the

Secretary of Defense to acquire lands adjacent to military installations to serve as a

buffer zone and provide additional natural habitat areas for endangered species in

areas where animals have moved to military installations as a result of development.

The authorization conference report includes a revised version of the House

provision regarding the Migratory Bird Treaty Act. The House provision would have

altered the Act to exempt military training from certain provisions. The conference

revision temporarily exempts training activities and requires the Secretary of the

Interior to prescribe regulations to exempt DOD.

The conference report does not include the House provision regarding the

Endangered Species Act, but it includes without change the House provisions

regarding the Utah Test and Training Range.

Cap on Military Personnel in Colombia

Under current law, there is a cap of 400 on the number of U.S. military

personnel who can operate in Colombia. The cap specifically excludes personnel

serving diplomatic functions or performing emergency missions. The House

authorization bill included a provision that would establish a cap of 500 on the

number of U.S. military personnel in Colombia who are supported or maintained by

Department of Defense funds. The measure also would permit the Secretary of

Defense to waive the cap for national security reasons and provided he informs

Congress within 15 days of a waiver. The authorization conference report does not

include the House provision.

Base Realignment and Closure

Last year, Congress approved a measure that will permit a new round of military

base closures in 2005, following procedures that were used in earlier rounds in 1991,

1993, and 1995. In the House Armed Services Committee markup of the

authorization bill, Representative Taylor offered an amendment to repeal last year’s

base closure provisions. The committee defeated the amendment by a vote of 38-19.

The Rules Committee did not allow the amendment to be offered on the floor, which

was a matter of considerable contention when the bill was debated.

Abortions in Military Hospitals Overseas

Abortions are readily available in the United States, but are often not available

to U.S. personnel deployed abroad. Congress has perennially debated measures to

allow abortions for U.S. military personnel at military hospitals overseas.

Congressional Action. In the House Armed Services Committee markup,

the committed rejected an amendment by Representative Sanchez to allow abortions

at U.S. military hospitals abroad; the full House rejected the proposal in a floor vote.

On June20 the Senate debated and on June 21 approved by a vote of 52-40 an

amendment to the authorization bill by Senators Murray and Collins that would

CRS-33

remove the prohibition on privately funded abortions at overseas military facilities.

The authorization conference report drops the Senate provision.

Limitation on Transfer Authority

Like other House FY2003 appropriations bills, the House-passed measure

includes a provision, Section 8122, that prohibits the transfer of funds to any other

agency unless approved in an appropriations act. One effect would be to prevent the

transfer of defense funds to the new Department of Homeland Security without the

approval of the appropriations committees. That provision is not included in the

appropriations conference agreement.

Legislation

Congressional Budget Resolution

H.Con.Res. 253 (Nussle)

A concurrent resolution establishing the congressional budget for the United

States government for fiscal year 2003 and setting forth appropriate budgetary levels

for each of fiscal years 2004 through 2007. Reported by the House Budget

Committee (H.Rept. 107-376), March 15, 2002. Passed by the House, 221-209,

March 20, 2002.

S.Con. Res. 100 (Conrad)

An original concurrent resolution setting forth the congressional budget for the

United States government for fiscal year 2003 and setting forth the appropriate

budgetary levels for each of the fiscal years 2004 through 2012. Reported by the

Senate Budget Committee, March 22, 2002. Written report filed (S.Rept. 107-141),

April 11, 2002.

Defense Authorization

H.R. 4546 (Stump)

A bill to authorize appropriations for fiscal year 2003 for military activities of

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

personnel strengths for fiscal year 2003, and for other purposes. Marked up and

ordered to be reported by the House Armed Services Committee, May 1, 2002.

Report filed (H.Rept. 107-436), May 3, 2002. Considered by the House and

approved, with amendments (359-58), May 10, 2002. Laid before the Senate, Senate

struck all after the enacting clause and substituted the language of S. 2514, and

passed by the Senate by unanimous consent, June 27, 2002. Conference report filed

(H.Rept. 107-772), November 12. Conference report agreed to in the House on

suspension of the rules by voice vote, November 12. Conference report agreed to in

the Senate by voice vote, November 13.

H.R. 4547 (Stump)

A bill to authorize appropriations for the costs of the war against terrorism.

Considered by the House Armed Services Committee, May 1, 2002. Marked up and

CRS-34

ordered reported by the House Armed Services Committee July 18, 2002. Report

filed (H.Rept. 107-603), July 23, 2002. Considered under suspension of the rules,

yeas and nays ordered, and further consideration postponed, July 23-24, 2002.

Approved by the House (413-3), July 24, 2002.

S. 2514 (Levin)

An original bill to authorize appropriations for fiscal year 2003 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. Marked up and ordered to

be reported by the Senate Armed Services Committee, May 9, 2002. Report filed

(S.Rept. 107-151), May 15, 2002. Considered by the Senate, June 18, 19, 20, 21, 24,

25, 26, 27. Approved by the Senate as amended (97-2), June 27, 2002.

Defense Appropriations

P.L. 107-248, H.R. 5010

Making appropriations for the Department of Defense for the fiscal year ending

September 30, 2003, and for other purposes. Marked up and reported by the House

Appropriations Committee (H.Rept. 107-532), June 25, 2002. Considered by the

House and approved as amended (413-18), June 27, 2002. Marked up and reported

as amended by the Senate Appropriations Committee (S.Rept. 107-213), July 18,

2002. Considered by the Senate July 31 and August 1, 2002. Approved by the

Senate, as amended (95-3), August 1, 2002. Conference report filed (H.Rept. 107732), October 9, 2002. Conference report agreed to in the House (409-14), October

10, 2002. Conference report agreed to in the Senate (93-1), October 16, 2002.

Signed into law October 23, 2002.

P.L. 107-249, H.R. 5011

Making appropriations for military construction, family housing, and base

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

September 30, 2003, and for other purposes. Marked up and reported by the House

Appropriations Committee (H.Rept. 107-533), June 25, 2002. Considered by the

House and approved, as amended (426-1), June 27, 2002. Senate struck all after the

enacting clause and substituted the text of S. 2709, as reported, July 17, 2002.

Approved by the Senate, with an amendment (96-3), July 18, 2002. Conference

report filed (H.Rept. 107-731), October 9, 2002. Conference report agreed to in the

House (419-0), October 10, 2002. Conference report agreed to in the Senate by

unanimous consent, October 11, 2002. Signed into law October 23, 2002.

S. 2709 (Feinstein)

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, 2003, and for other purposes. Marked up and ordered to be

reported by the Senate Appropriations Committee, June 27, 2002. Report filed

(S.Rept. 107-202), July 3, 2002.

CRS-35

FY2002 Supplemental Appropriations

P.L. 107-206, H.R. 4775

Making supplemental appropriations for the fiscal year ending September 30,

2002, and for other purposes. Reported by the House Appropriations Committee

(H.Rept. 107-180), May 20, 2002. Considered by the House, May 22-23, 2002.

Approved by the House (280-138), May 24, 2002. Measure laid before the Senate

and Senate struck all after the enacting clause and substituted the language of S. 2551

to be used as original text, June 3, 2002. Cloture motions presented in the Senate,

June 4, 2002. Cloture motion invoked (87-10), June 6, 2002. Approved by the

Senate (71-22), June 7, 2002. Conference agreement reported (H.Rept. 107-593),

July 19, 2002. Conference report agreed to by the House (397-32), July 23, 2002.

Conference report agreed to by the Senate (92-7), July 24, 2002. Signed into law

August 2, 2002.

S. 2551 (Byrd)

An original bill making supplemental appropriations for further recovery from

and response to terrorist attacks on the United States for the fiscal year ending

September 30, 2002, and for other purposes. Marked up and ordered to be reported

by the Senate Appropriations Committee, May 22, 2002. Written report filed

(S.Rept. 107-156), May 29, 2002.

For Additional Reading

CRS Report RL31310. Appropriations for FY2003: Military Construction, by (name

redacted).

CRS Report RS21327. Concurrent Receipt of Military Retirement and VA Disability

Benefits: Budgetary Issues, by (name redacted).

CRS Report RS21218. Crusader XM2001 Self-Propelled Howitzer: Background and

Issues for Congress, by (name redacted) and Steven R. Bowman.

CRS Report RL31456. Defense Cleanup and Environmental Programs:

Authorization and Appropriations for FY2003, by David Michael Bearden.

CRS Issue Brief IB10062. Defense Research: DOD’s Research, Development, Test

and Evaluation Program, by John Dimitri Moteff.

CRS Report RL31415. The Endangered Species Act, Migratory Bird Treaty Act, and

Department of Defense Readiness Activities: Current Law and Legislative

Proposals, by (name redacted).

CRS Issue Brief IB93103. Military Medical Care Services: Questions and Answers,

by Richard A. Best, Jr.

CRS Issue Brief IB10089. Military Pay and Benefits: Key Questions and Answers,

by (name redacted).

CRS-36

CRS Report 95-469. Military Retirement and Veterans' Compensation: Concurrent

Receipt Issues, by Robert Goldich and Carolyn Merck.

CRS Issue Brief IB85159. Military Retirement: Major Legislative Issues, by (name

redacted).

CRS Report RL31111. Missile Defense: The Current Debate, coordinated by (name

redacted) and (name redacted).

CRS Report RS20535. Navy Ship Procurement Rate and the Planned Size of the

Navy: Background and Issues for Congress, by Ronald O’Rourke.

CRS Report RS20643. Navy CVNX Aircraft Carrier Program: Background and

Issues for Congress, by Ronald O’Rourke.

CRS Report RS21059. Navy DD(X) Future Surface Combatant Program:

Background and Issues for Congress, by Ronald O’Rourke.

CRS Issue Brief IB94040. Peacekeeping: Issues of U.S. Military Involvement, by

Nina Maria Serafino.

CRS Report RL31297. Recruiting and Retention in the Active Component Military,

by (name redacted).

CRS Issue Brief IB92115. Tactical Aircraft Modernization: Issues for Congress, by

(name redacted).

CRS Report RL31187. Terrorism Funding: Congressional Debate on Emergency

Supplemental Allocations, by (name redacted) and Larry Q. Nowels.

CRS Report RS21133. The Nuclear Posture Review: Overview and Emerging Issues,

by (name redacted).

CRS Report RL31384. V-22 Osprey Tilt-Rotor Aircraft, by (name redacted).

CRS-37

Appendix A: What the Defense Authorization and

Appropriations Bills Cover

Congress provides funding for national defense programs in several annual

appropriations measures, the largest of which is the defense appropriations bill.

Congress also acts every year on a national defense authorization bill, which

authorizes programs funded in all of the regular appropriations measures. The

authorization bill addresses defense programs in almost precisely the same level of

detail as the defense-related appropriations, and congressional debate about major

defense policy and funding issues usually occurs mainly in action on the

authorization. Because the defense authorization and appropriations bills are so

closely related, this report tracks congressional action on both measures.

The annual defense appropriations bill provides funds for military activities of

the Department of Defense (DOD), including pay and benefits of military personnel,

operation and maintenance of weapons and facilities, weapons procurement, and

research and development, as well as for other purposes.

Most of the funding in the bill is for programs administered by the Department

of Defense, though the bill also provides (1) relatively small, unclassified amounts

for the Central Intelligence Agency retirement fund and intelligence community

management, (2) classified amounts for national foreign intelligence activities

administered by the CIA and by other agencies as well as by DOD, and (3) very small

amounts for some other agencies. Five other appropriations bills also provide funds

for national defense activities of DOD and other agencies including:

the military construction appropriations bill, which finances

construction of military facilities and construction and operation of

military family housing, all administered by DOD;

the energy and water development appropriations bill, which

funds atomic energy defense activities administered by the

Department of Energy;

the VA-HUD-independent agencies appropriations bill, which

finances civil defense activities administered by the Federal

Emergency Management Agency, activities of the Selective Service

System, and DOD support for National Science Foundation

Antarctic research;

the Commerce-Justice-State appropriations bill, which funds

national security-related activities of the FBI, the Department of

Justice, and some other agencies; and

the transportation appropriations bill, which funds some

defense-related activities of the Coast Guard.

CRS-38

Appendix B: Overview of the Administration

Request

On February 4, 2002, the Administration submitted its formal FY2003 budget

request to Congress. The Administration proposed $396.8 billion for the national

defense budget function, about $46 billion above the estimated FY2002 level (not

including supplemental FY2002 appropriations of $14 billion proposed on March

21).2 The increase between FY2002 and FY2003 is the largest since at least the first

years of the Reagan Administration. And with supplemental counter-terrorism

funding for FY2001 and FY2002 included, the total increase in defense in the last

year is the largest, in inflation-adjusted dollars, since the Vietnam War. The

Administration projects continued growth in defense through FY2007, though at a

much more modest pace – Table B1 shows the long term trend in defense spending

under the Administration’s plan.

The large increase requested for defense has not been enough, however, to allay

the concerns of defense advocates in Congress. In their view, the budget is not

adequate to accommodate needed increases in weapons procurement. In the House,

several Members threatened to vote against the proposed budget resolution because

it set aside $10 billion for defense in a reserve fund available only for costs of the

global counter-terrorism campaign. The Administration requested the $10 billion as

an unallocated contingency fund for costs of counter-terrorism operations in FY2003,

but several members of the Armed Services Committees both in the House and in the

Senate have said they would prefer using that money to increase spending on major

weapons programs, especially shipbuilding.

Early statements by the President and DOD briefing material on the budget request say the

FY2003 increase over FY2002 is $48 billion. This is the increase for Department of

Defense discretionary budget authority if civilian accrual accounting costs are not included

in the FY2002 base.

CRS-39

Table B1. National Defense Budget Function and Department of

Defense Budget, FY2000-FY2007, Administration Projections

(current and constant FY2003 dollars in billions)

Fiscal Year:

Actual Actual Estimate Request Proj.

2000

2001

2002

2003 2004

Proj.

2005

Proj.

2006

Proj.

2007

National Defense Budget Function

Budget Authority

Current year dollars

304.1

329.0

350.7

396.8

405.6

426.6

447.7

469.8

Constant FY2002 dollars

329.9

346.5

358.5

396.8

396.1

406.5

416.2

426.1

Real growth/decline

+1.4%

+5.0%

+3.5% +10.7%

-0.2%

+2.6%

+2.4%

Current year dollars

294.5

308.5

348.0

379.0

393.8

413.5

428.5

442.5

Constant FY2003 dollars

319.5

324.9

355.2

379.0

384.5

394.2

398.4

401.1

Real growth/decline

+4.3%

+1.7%

+9.3%

+6.7% +1.5%

+2.5%

+1.1%

+0.7%

Current year dollars

290.5

313.0

333.0

378.6

387.4

408.3

429.2

450.9

Constant FY2003 dollars

315.1

329.6

340.4

378.6

378.3

389.0

398.9

409.0

Real growth/decline

+1.7%

+4.6%

+3.3% +11.2%

-0.1%

+2.8%

+2.5%

Current year dollars

281.2

294.0

330.6

361.0

375.6

395.2

410.2

423.9

Constant FY2003 dollars

305.1

309.6

337.4

361.0

366.7

376.7

381.3

384.2

Real growth/decline

+4.8%

+1.5%

+9.0%

+7.0% +1.6%

+2.7%

+1.2%

+0.8%

Outlays

Department of Defense

Budget Authority

Outlays

Sources: U.S. Office of Management and Budget, Historical Tables: Budget of the United States

Government, Fiscal Year 2003 , February 2002. Constant dollar figures are CRS calculations using

deflators from DOD Comptroller.

Notes: This and other tables in this report use OMB data that reflect enacted and proposed changes in

accounting for retirement benefits. Figures reflect (1) enacted accrual accounting for health care benefits

for over-65 military retirees beginning in FY2003; (2) proposed accrual accounting for health care

benefits for under-65 military retirees beginning in FY2004; and (3) proposed accrual accounting for all

civilian retirement pension and health benefits beginning in FY2003. OMB has also adjusted FY2001 and

FY2002 to be consistent with FY2003 and later treatment of civilian retirement benefits. Data in these

tables also reflect OMB scoring of funds provided in the Emergency Terrorism Response (ETR)

supplemental appropriations act approved in September 2001. OMB figures do not show the allocation

of $9.8 billion of funding provided for defense in the ETR supplemental.

The Impact of Accrual Accounting for Military and Civilian

Personnel Retirement Benefits on the Defense Budget

One important complicating element in the FY2003 defense budget is a series

of changes in accounting for military and civilian personnel retirement benefits.

Most federal retirement benefits, including benefits for uniformed military service

CRS-40

members and DOD civilian personnel, have long been funded on the basis of

“accrual accounting,” in which the cost of future benefits for current employees is

charged to the employing agency as the benefits are accrued. Under accrual

accounting procedures, federal agencies pay the actuarily determined cost of future

benefits into a fund. Payments to retirees are then charged to the fund, not to the

agency. In the FY2003 and FY2004 defense budgets, three substantial adjustments

involving accrual accounting have a large effect on budget totals. These are:

Accrual accounting for over-65 health care benefits for

uniformed personnel: The FY2001 Defense Authorization Act,

P.L. 106-398, included a provision, known as “Tricare-for-Life,”

that guarantees DOD-provided health care to 65-and-over military

retirees and their dependents. Beginning in FY2003, these benefits

are being funded on an accrual basis. This results in (1) an increase

of $8.1 billion in FY2003 in the military personnel accounts to

reflect the accrual cost of future benefits for current uniformed

personnel and (2) a reduction of $5.6 billion in operation and

maintenance accounts to reflect a payment from the health care trust

fund to DOD for providing care to over-65 retirees.

Accrual accounting for all civilian personnel retirement pension

and health benefits: While most federal civilian retirement benefits

have been funded on an accrual basis, a small part has not been. The

Administration has proposed funding all retirement benefits on an

accrual basis. In FY2003, the proposed change results in an increase

of $3.4 billion (both in budget authority and in outlays) in the

Department of Defense budget. OMB has adjusted FY2001 and

FY2002 figures – though not figures for earlier years – to be

comparable to the new, proposed treatment of civilian retirement and

health benefits. Thus, OMB figures include $3.0 billion in FY2001

and $3.2 billion in FY2002 Department of Defense budget totals

(both in budget authority and in outlays) for increased civilian

retirement accrual even though this accounting procedure was not in

place in those years.

Accrual accounting for under-65 health care benefits for

uniformed personnel: Beginning in FY2004, the Administration

is also proposing to finance health care benefits for under-65

military retirees on an accrual basis, in which, again, DOD would

pay into a fund the cost of future benefits for current employees and

would receive reimbursement from the fund for costs of under-65

retiree health care that it provides. Both the contributions to the

fund and reimbursements from the fund are reflected in budget

projections from FY2004 on.

Table B2 shows the year-by-year impact of these changes in accrual accounting on

the defense budget through FY2007.

CRS-41

Table B2. Effects of Accrual Accounting on the Defense Budget

(millions of dollars)

2003

2004

2005

2006

2007

Payments for Accrual of Benefits for 65-and-Over

Health

8,102

8,618

9,151

9,720

10,338

Payments for Accrual of Civilian Benefits

3,356

3,629

3,781

3,938

4,114

–

6,484

6,889

7,319

7,778

11,458

18,731

19,821

20,977

22,230

Receipts for 65-and-Over Health Care

5,634

5,986

6,361

6,758

7,180

Receipts for Under-65 Health Care

–

5,579

5,928

6,299

6,692

Total Receipts from Funds

5,634

11,565

12,289

13,057

13,872

Net Effect on DOD Budget

+5,824

+7,166

+7,532

+7,920

+8,358

DOD Payments to Accrual Funds

Payments for Accrual of Benefits for Under-65

Health

Total Payments to Funds

Receipts by DOD for Provision of Services

Source: Office of Management and Budget.

“Must Pay” Bills in the Defense Budget

The cost of changes in accrual accounting is only one of a number of so-called

“fact of life” or “must pay” bills in the FY2003 defense budget. Much of the

FY2002-2003 budget increase is taken up by accounting changes, inflation, pay

raises, changes in weapons cost estimates, and costs of the global counter-terrorism

campaign rather than by increases in weapons investment. DOD Comptroller Dov

Zakheim has told congressional committees that such “must pay” bills leave less than

$10 billion for new initiatives.

According to the Defense Department, increased costs include:

$6.7 billion for inflation;

$2.7 billion for pay raises;

$8.1 billion for accrual payments for 65-and-over health care

benefits for current uniformed personnel when they retire (discussed

above);

! $3.3 billion for increased accrual payments to retirement accounts

for current civilian DOD personnel (also discussed above – the

OMB estimate is $3.4 billion for FY2003);

! $7.4 billion for what DOD calls “realistic costing,” half for revised

estimates of weapons costs (including the F-22 fighter and already

contracted Navy ships) and half for closer to full funding of

projected operating costs; and

CRS-42

$19.4 billion for counter-terrorism, including $10 billion in an

unallocated contingency fund for continuing the war and $9.4 billion

for specific costs associated with ongoing operations.

In all, this adds up to $47.5 billion in new costs, but the total is offset by $9.3 billion

in savings from procurement programs that were in the FY2002 budget but are not

in the FY2003 plan. So an increase of almost $50 billion in the defense budget, by

this account, still leaves relatively little available for new programs.

Although the point is generally well taken, some items are missing from the

arithmetic. For one thing, DOD is receiving $5.6 billion in payments from the retiree

health care trust fund in FY2003 to cover costs of providing services to 65-and-over

retirees – money it did not receive in FY2002. Also, some counter-terrorism costs

were included in the FY2002 budget, so the increased cost in FY2003 is $16 billion

rather than $19 billion. Moreover, OMB budget figures (though not some of the

figures DOD used in its early briefings on the budget), show $3.2 billion in costs of

civilian accrual accounting in the FY2002 budget for purposes of comparison with

the FY2003 request, so the added cost in FY2003 is only $0.2 billion. And, finally,

a substantial part of the $9.4 billion for specifically allocated war-related funding will

go to procure material, such as Unmanned Aerial Vehicles (UAVs), intelligence

infrastructure, and communications equipment, that will be in the force for some

time – DOD officials have said that at least $3 billion of the amount for

counter-terrorism is for weapons procurement. So, in all, the money available for

new initiatives in FY2003, compared to FY2002, is more like $20-25 billion – not

the whole of the defense budget increase, but still not insubstantial.

The Impact of Growing Personnel and Operating Costs

The impact of “fact of life” cost increases on the FY2003 budget is relatively

large because of some special factors, but it is by no means unique. Table B3

compares the FY2003 defense request with FY2002 estimated funding by

appropriations title – a fairly common way of looking at the budget – with comments

on major reasons for some of the changes. What stands out is how much of the large

increase between FY2002 and FY2003 is going to military personnel and to operation

and maintenance (O&M) rather than to procurement or to research and development

(though, as noted, some procurement is being financed from war-related funds

requested in the operation and maintenance title).

CRS-43

Table B3. Changes in Requested National Defense Funding by

Appropriations Title

(budget authority in billions of dollars)

Fiscal Year:

Estimate Request

2002

2003

Change

Notes/Comments

Military Personnel

82.0

94.3

+12.3 +$8.1 health benefits accrual

Operation & Maintenance

129.8

150.4

+20.7 +$15.9 war costs;

-$5.6 health care receipts

Procurement

61.1

68.7

+7.6 +$3.7 for increased cost estimates

RDT&E

48.6

53.9

+5.3 –

Military Construction

6.6

4.8

-1.8 Limited pending 2005 base closures

Family Housing

4.1

4.2

+0.2 –

Other

0.9

2.3

+1.4 –

333.0

378.6

+45.6 –

Atomic Energy Defense Activities

16.0

16.5

+0.4 –

Other Defense-Related Activities

1.7

+0.0 –

350.7

396.8

+46.1 –

Subtotal, DOD

Total, National Defense

Source: Office of Management and Budget; CRS calculations.

Notes: OMB figures include $3.4 billion for civilian retirement benefits accrual in FY2003 and $3.2 billion in

FY2002. FY2002 estimate does not include $14.0 billion in supplemental appropriations requested for

counter-terrorism operations on March 21, 2002.

Military personnel accounts have grown especially rapidly in recent years

because of pay and benefits increases that Congress approved beginning with the

FY2001 defense authorization act (P.L. 106-398), passed in October, 2000. That bill

included:

a 3.7% across-the-board pay raise;

“pay table reform” that provided additional substantial pay raises to

mid-career personnel to bolster retention;

! the first increment of a Clinton Administration proposal to reduce

out-of-pocket off-base housing costs by increasing basic allowance

for housing benefits;

! “Tricare for Life,” guaranteeing DOD-provided health care to

over-65 military retirees; and

! a requirement that future military pay raises be equal to the

“employment cost index,” a broad measure of personnel costs in the

economy as a whole, plus 0.5%.

Last year, the FY2002 defense authorization bill included some additional changes

in the pay table to further boost income for selected mid-career personnel, and the bill

also increased special pays and bonuses.

CRS-44

Increased pay and benefits appear to have improved military recruitment and

retention, though recent gains may, in part, also be due to a less robust economy. The

increases have also driven up personnel costs dramatically. Table B4 illustrates the

point. Under the Administration’s plan, total military personnel funding will grow

from less than $70 billion as recently as FY1998 (in current year dollars – i.e., not

adjusting for inflation) to $94 billion in FY2003 and to $117 billion by FY2007.

After adjusting for inflation (using the Consumer Price Index), personnel costs will

grow from about $48,000 per active duty troop to more than $65,000 in FY2003

prices over the same period.

Table B4. Trends in Military Personnel Funding, FY1990-FY2007

(budget authority)

Fiscal

Year

Total

Military

Personnel

Funding

(CY$ in

billions)*

Funding

for Active

Duty

Military

Personnel

(CY$ in

billions)*

Funding

for Active

Military

Personnel

(FY2003$ in

billions)*

Active

EndStrength

(000s)

Funding

for Active

Military

Personnel

Per Troop

(FY2003 $)

1990

78.6

69.8

98.6

2,069

47,656

1991

78.4

75.0

101.1

2,002

50,485

1992

78.8

71.5

93.7

1,808

51,799

1993

76.0

66.5

84.7

1,705

49,652

1994

71.4

61.8

76.7

1,610

47,651

1995

71.6

62.1

75.0

1,518

49,389

1996

69.8

60.4

71.0

1,472

48,227

1997

70.3

60.9

69.8

1,440

48,453

1998

69.8

60.3

68.2

1,406

48,471

1999

70.6

60.7

67.2

1,386

48,519

2000

73.8

63.4

68.0

1,384

49,124

2001

76.9

65.7

68.3

1,385

49,287

2002

82.0

70.3

71.9

1,387

51,834

2003

94.3

79.9

1,390

57,494

2004

104.0

88.4

86.5

1,390

62,236

2005

108.1

91.7

87.6

1,390

63,048

2006

113.7

96.4

90.0

1,390

64,736

2007

117.4

99.4

90.6

1,390

65,183

Source: CRS calculations based on data from the Office of Management and Budget.

*Notes: “CY$” refers to “current year” dollars – i.e., not adjusted for inflation. FY2003 constant

dollar figures are calculated using CPI-W deflators. DOD military personnel deflators are not

appropriate to use because they count the amount of annual pay raises and benefits increases simply

as inflation.

CRS-45

A similar, though much longer-term upward trend applies to operation and

maintenance (O&M) accounts. A very simple measure of the trend is to calculate

total O&M funding per active duty troop in constant, inflation adjusted prices.

Making some adjustments to reduce inconsistencies from year to year, the result

shows a very constant pattern of growth of about 2.5% per year above inflation from

the mid-1950s on – Figure 1 illustrates the trend.

Figure 1. Trend in DOD Operation & Maintenance Funding per

Active Duty Troop, FY1955-2007

120

100

Trend: +2.5% per year

O&M per Troop

Trend

1955

1965

1975

1985

1995

2005

In the past, Defense Department projections often showed O&M costs per troop

leveling off in the later years of each successive five or six year funding plan. When

costs continued to grow, the Clinton Administration’s response was either to reduce

planned procurement funding in order to shift money into O&M or to increase the

total defense budget to cover at least part of the shortfall. The Bush Administration

appears, at least from this very rough measure, to be more fully funding likely O&M

cost growth, though the projections, as in the past, do appear to level off between

FY2006 and FY2007. DOD Comptroller Dov Zakheim has said that the

Administration is insisting on more realistic estimates both of procurement and of

operating costs.

Continuing, unabated growth in personnel and in O&M costs takes up a

substantial share of projected increases in overall defense spending over the next few

years. Table B5 shows Administration projections of defense funding by

appropriations title through FY2007. Between FY2000, the last full year of the

Clinton Administration, and FY2007, overall national defense funding is projected

to increase by $166 billion. Of the increase, $90 billion is for personnel and O&M

and $63 billion is for procurement and R&D.

CRS-46

Table B5. National Defense Budget Function by Appropriations Title,

FY2000-FY2007

(budget authority, current year dollars in billions)

Fiscal Year:

2000

2001

2002

2003

2004

2005

2006

2007

Military Personnel

73.8

76.9

82.0

94.3

104.0

108.1

113.7

117.4

Operation & Maintenance

108.8

117.7

129.8

150.4

140.9

147.0

152.3

155.2

Procurement

55.0

62.6

61.1

68.7

74.7

79.2

86.9

99.0

RDT&E

38.7

41.7

48.6

53.9

57.0

60.7

58.9

58.0

Military Construction

5.1

5.5

6.6

4.8

5.1

6.3

10.8

13.8

Family Housing

3.5

3.7

4.1

4.2

4.3

5.1

4.9

4.8

Other

5.6

4.9

0.9

2.3

1.4

1.9

1.5

2.7

Subtotal, DOD

290.5

313.0

333.0

378.6

387.4

408.3

429.2

450.9

Atomic Energy Defense Activities

12.4

14.4

16.0

16.5

16.6

16.8

17.1

Defense-Related Activities

1.2

1.6

1.7

Total, National Defense

304.1

329.0

350.7

396.8

405.6

426.6

447.7

469.8

Source: Office of Management and Budget.

Note: OMB figures show $3.0 billion in FY2000 and $3.2 billion in FY2001 for full accrual accounting for civilian

retirement benefits, though it was not in effect in those years and is proposed to begin in FY2003.

Reversing the “Procurement Holiday”

One key issue in congressional debate about the defense budget has been

whether the $70 billion or so requested for procurement in FY2003, or even the $99

billion projected for procurement in FY2007, is enough to reverse what former

Secretary of Defense William Perry called the “procurement holiday” in defense

budgets that followed the end of the Cold War. A decline in new weapons purchases,

said Perry in 1996, was justified in the early 1990s, first, because threats had

declined, second, because many new weapons ordered in the 1980s had just entered

the force, and, finally, because older weapons were retired first as the size of the

force declined, so the average age of equipment was dropping even without new

acquisitions. But the holiday would have to end soon, said Perry, in order to avoid

creating an unaffordable “bow wave” of costs in the future to replace large numbers

of rapidly aging weapons.

At the time, the Joint Chiefs set $60 billion per year for procurement by FY1998

as the goal, a target reached in the Clinton Administration’s final budget for FY2001.

In the years since Perry laid out the argument, however, the debate has shifted. Now

the issue, at least among defense advocates, is no longer whether $60 billion a year

is adequate, but rather, how much more than $60 billion is needed to meet

modernization needs.

Much of the discussion has been shaped by a series of studies of the amounts

needed to sustain a “steady state” procurement rate for major weapons: i.e., how

CRS-47

much is needed to replace the existing stock of weapons with more modern systems

as weapons reach the ends of their planned service lives. A study by the Center for

Strategic and International Studies estimated $160 billion a year, in FY2000 prices,

if strategic nuclear weapons are included in the calculus, and $110 billion a year

without strategic modernization. The Congressional Budget Office made its own

estimate of about $90 billion a year, and the Center for Strategic and Budgetary

Assessments said $80 billion, both also in FY2000 prices. Most recently the

Chairman of the Joint Chiefs, General Richard Myers, said that a Joint Staff study,

not released for public review, concluded that $100-110 billion a year, in FY2001

prices, is needed.3 After adjusting for inflation, the $99 billion projected for

procurement in FY2007 does not quite reach CBO estimates of steady-state

procurement requirements: $99 billion in FY2007 prices equals about $83 billion in

FY2000 prices.

Many members of the congressional defense committees have expressed

concern that the Administration’s budget plan – both in FY2003 and in future years –

does not appear sufficient, despite large increases in the defense total, to finance

planned weapons procurement programs. In the FY2003 request, committee

members have been especially critical of the shipbuilding budget, which calls for

procuring just five new ships. Assuming a 35-year service life for Navy ships, it

would take an average of 8.5 new ships per year to maintain a force of 300 ships in

the fleet. Only in the later years of the FY2003-2007 defense plan does the

shipbuilding rate reach the nominal “steady-state” replacement rate. Some argue that

helicopters, munitions, and other programs are inadequately funded as well.

The Procurement “Bow Wave”

Most recently there have been reports that DOD has been discussing how to

cope with a substantial “bow wave” of procurement costs in FY2007 and beyond.

Analytically, a “bow wave” refers to the normal pattern of funding for weapons

programs. The annual budget for any major acquisition program tends to grow as a

system moves from technology development to full scale engineering development

to production. Then the acquisition cost will decline again as production winds

down. Thus the shape of a bow wave. A very large cumulative bow wave can

develop if many new systems are scheduled to begin full production at about the

same time.

This situation now appears to be facing the Defense Department at the end of

the decade, when a number of new systems will be in production, including the F-22

and F-35 (Joint Strike Fighter) aircraft, the Comanche helicopter, and several new

Daniel Gouré & Jeffrey M. Ranney, Averting the Defense Train Wreck in the New

Millennium, (Washington: Center for Strategic and International Studies, 1999);

Congressional Budget Office, Budgeting for Defense: Maintaining Today’s Forces,

September 2000; Steven M. Kosiak, “Cost of Defense Plan Could Exceed Available

Funding By $26 Billion a Year Over the Long Run,” Center for Strategic and Budgetary

Assessments, April 2, 1998; Steven M. Kosiak, “CSIS “Train Wreck” Analysis of Defense

Department’s Plans-Funding Mismatch Is Off Track,” Center for Strategic and Budgetary

Assessments, February 2000; prepared statement of General Richard B. Myers, Chairman

of the Joint Chiefs of Staff, before the House Armed Services Committee, February 6, 2002.

CRS-48

Navy ships. According to numerous press accounts, the Defense Department has

been considering how to cope with the substantial projected shortfalls in procurement

funding. The Navy, reportedly, is proposing to cut back substantially on planned

procurement of F-35 fighters, and Secretary of Defense Rumsfeld is reportedly

considering terminating several weapons programs – perhaps some in addition to the

Crusader self-propelled artillery system – in order to safeguard future funds for more

“transformational” weapons (see below).

Defense Transformation

During the presidential election campaign, then-candidate George Bush strongly

endorsed the notion of a defense transformation to meet the needs of a dramatically

new security environment. Both President Bush and Secretary of Defense Rumsfeld

have reaffirmed their commitment to transformation in major policy speeches in

recent months.4 Defense transformation has been defined in diverse ways, however,

and the Administration has been under some pressure from Congress to articulate its

definition more fully.

Most recently, using categories of transformation laid out in the Quadrennial

Defense Review that was released last September,5 Deputy Secretary of Defense Paul

Wolfowitz gave a rough estimate of the amount of money requested for

transformation-related initiatives in FY2003 and future years. In testimony before

the Senate Armed Services Committee on April 9,6 Wolfowitz said

The six specific transformation goals identified in the QDR are first, to defend

the U.S. homeland and other bases of operation and defeat nuclear, biological

and chemical weapons and their means of delivery. Second, to deny enemy

sanctuary, depriving them of the ability to run or hide, any time, any where.

Third, to project and sustain forces in distant theaters in the face of access denial

threats. Fourth, to conduct effective operations in space. Fifth, to conduct

effective information operations. And sixth, to leverage our information

technology to give our joint forces a common operational picture.

In all, Wolfowitz said, about $21 billion is requested in FY2003 for such

transformational goals, and $136 billion is planned over the next 5 years.

Remarks by the President at the Citadel, December 11, 2001; Remarks by U.S. Secretary

of Defense Donald Rumsfeld, National Defense University, Fort McNair, Washington, D.C.,

Thursday, January 31, 2002.

U.S. Department of Defense, Office of the Secretary, Quadrennial Defense Review Report,

September 30, 2001, 71 p. Available electronically on the Department of Defense web site

at: [http://www.defenselink.mil/pubs/qdr2001.pdf].

Statement of Deputy Secretary of Defense Paul Wolfowitz before the Senate Armed

Services Committee, Hearing on Transforming the Armed Forces to Meet the Challenges

of the 21st Century, April 9, 2002. The prepared statement is available electronically at:

[http://www.senate.gov/~armed_services/statemnt/2002/April/Wolfowitz.pdf].

CRS-49

Appendix C: Summary Tables

Table C1. Congressional Action on Defense Authorization by Title

(budget authority in billions of dollars)

Request

With

DERF

Request Allocated Allocated

Military Personnel

Operation and Maintenance

Defense Emergency Response Fund

Procurement

RDT&E

Military Construction

Family Housing

Revolving Funds/Other

General Provisions

Mandatory Programs

Total DOD

Atomic Energy Defense Activities

Other Defense-Related Activities

Total National Defense

94.3

130.4

20.1

68.7

53.9

4.8

4.2

3.3

0.0

-1.3

378.2

16.4

1.7

396.3

0.0

3.9

10.0

2.9

2.3

0.6

0.0

0.3

0.0

20.1

94.3

134.3

10.0

71.6

56.1

5.3

4.2

3.6

0.0

-1.3

378.2

16.4

1.7

396.3

House

Authorization

Senate

Authorization

94.2

131.0

6.7

75.1

56.7

5.8

4.3

2.4

0.0

-1.4

374.9

16.3

1.6

392.8

94.4

130.2

10.0

72.2

56.4

6.0

4.2

2.6

0.0

-1.3

374.6

16.7

1.6

392.8

Sources: H.Rept. 107-436; S.Rept. 107-151; H.Rept. 107-772.

Note: DERF allocation as shown by the Senate Armed Services Committee in S.Rept. 107-151.

Conf.

Author- Change

ization to Request

93.8

129.8

10.0

73.8

56.7

6.3

4.2

2.6

-1.0

-1.3

374.8

16.5

1.6

392.9

-0.5

-4.6

+0.0

+2.1

+0.6

+0.9

-0.0

-1.0

+0.0

-3.4

+0.1

-0.1

-3.4

CRS-50

Table C2. Congressional Action on Defense Appropriations by Title

(budget authority in billions of dollars)

Military Personnel

Operation and Maintenance

Defense Emergency

Response Fund

Procurement

RDT&E

Revolving & Management

Funds

Other DOD Programs

Related Agencies

General Provisions

Counter-Terrorism/WMD

Defense

Scorekeeping Adjustment

Total

Supplemental Appropriations

P.L. 107-117

P.L. 107-206

Total with Supplementals

FY2002

Enacted

82.1

105.0

–

Request

With

FY2003

DERF

Request Allocated Allocated

94.2

0.0

94.3

112.2

3.9

116.1

19.3

10.0

House

Appropriation

93.4

114.8

0.0

Senate

Appropriation

93.8

114.8

0.0

Conference

Appropriation

93.6

114.8

0.0

Change

Request

(with

DERF)

-0.7

-1.4

-10.0

60.9

48.9

1.7

67.2

53.7

2.4

2.9

2.3

0.3

70.1

56.0

2.8

70.3

57.8

2.8

71.5

56.1

2.7

71.5

58.6

2.7

+1.4

+2.6

-0.0

20.5

0.4

-2.8

0.9

17.1

0.4

0.0

–

0.0

–

17.1

0.4

0.0

–

17.1

0.4

-1.8

–

17.5

0.4

-1.6

–

17.4

0.5

-4.0

–

+0.3

+0.1

-4.0

–

-0.2

317.5

–

366.7

–

19.3

–

366.7

–

354.7

–

355.4

–

355.1

–

-11.6

3.4

13.4

334.2

–

Sources: H.Rept. 107-532, S.Rept. 107-213, H.Rept. 107-732.

Note: DERF request as shown in the appropriations conference report is reduced by $716.849 million that is transferred

to military construction appropriations. DERF allocation is as shown by the Senate Armed Services Committee in

S.Rept. 107-151.

Table C3: Summary of Congressional Action on Defense and Military

Construction Appropriations

(budget authority in millions of dollars)

Change

FY2002 FY2003

House

Senate

Conf. Change

from

Enacted Request Approp. Approp. Approp. to Request FY2002

Defense Appropriations

317,473.7 366,671.6 354,712.9 355,405.9 355,107.4 -11,564.3 +37,633.6

Military Construction Appropriations 10,630.2 9,664.0 10,083.0 10,622.0 10,499.0

+835.0

-131.2

Total

328,103.9 376,335.7 364,795.9 366,027.9 365,606.4 -10,729.3 +37,502.4

Supplemental Appropriations

P.L. 107-117 (Jan. 2002)

3,395.6

P.L. 107-206 (Aug. 2002)

13,343.9

Total with Supplemental Approp. 344,843.5 376,335.7 364,795.9 366,027.9 365,606.4 -10,729.3 +20,762.9

Source: Summary tables of appropriations conference reports in Congressional Record, October 10, 2002, pp. 7807

and 7816.

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