Congressional Record, Volume 148 Issue 81 (Tuesday, June 18, 2002)

[Congressional Record Volume 148, Number 81 (Tuesday, June 18, 2002)]
[Senate]
[Pages S5674-S5687]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2003

Mr. DASCHLE. Mr. President, I now ask unanimous consent the Senate
proceed to Calendar No. 370, S. 2514, the Department of Defense
authorization bill; that there be debate only on the bill during
today's session; further, that the Senate resume consideration of the
bill at 11 o'clock on Wednesday, June 19.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report the bill by title.
The assistant legislative clerk read as follows:

A bill (S. 2514) to authorize appropriations for fiscal
year 2003 for military activities of the Department of
Defense, for military construction, for defense activities of
the Department of Energy, to prescribe personnel strengths
for such fiscal year for the Armed Forces, and for other
purposes.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. Mr. President, in behalf of the Armed Services Committee,
I am pleased to bring the National Defense Authorization Act for Fiscal
Year 2003 to the floor.
This bill would fully fund the fiscal year 2003 budget request of the
administration of $393.3 billion for the national security activities
for the Department of Defense and the Department of Energy.
In the first 41 days of congressional session this year, the Armed
Services Committee held 41 hearings to examine the administration's
budget request and related issues. Last month, after meeting in markup
for 3 days, the committee approved S. 2514, the National Defense
Authorization Act for Fiscal Year 2003.

[[Page S5675]]

I thank all the members of committee for their hard work on this
bill.
There were two close votes on two funding issues that caused a few of
our members to vote against the bill at the end, which, of course, we
regret. But except for those two issues, I think we probably would have
had a unanimous vote on our committee.
As we take up this bill, America's Armed Forces are engaged around
the world as never before. In the months since September 11, we have
dispatched troops not only to Afghanistan but also to Pakistan, the
Philippines, the countries of central Asia and the Persian Gulf. We
called up the National Guard to assist in contingency operations and to
assist in safeguarding our borders and protecting our airports.
All of this has been done without relieving our soldiers, sailors,
airmen, and marines of ongoing deployments in Korea, the Balkans,
Colombia, and elsewhere.
This year, as much as ever before, we owe it to our men and women in
uniform to act on this bill with dispatch. The events following
September 11 have once again shown that the U.S. military is the most
capable fighting force in the world. The success of our forces in
Afghanistan has been remarkable. Osama bin Laden--if he is alive--is on
the run and in hiding. Many of his al-Qaida terrorists have been
captured or killed. The Taliban regime that harbored them is no more,
and a new government is in place. Nations around the world have been
put on notice: America is determined to protect itself from more
attacks and to bring terrorists to justice.
From Europe to the Persian Gulf to the Korean Peninsula, the presence
of U.S. military forces and their contributions to regional peace and
security continue to reassure our allies and deter potential
adversaries. Over the last decade, U.S. forces have excelled in every
mission assigned to them, including not only Operation Enduring
Freedom, but also the 1999 NATO air campaign over Kosovo and ongoing
enforcement of the no-fly zones over Iraq; humanitarian operations from
Central America to Africa; and peacekeeping operations from the Balkans
to East Timor.
The excellence behind that success was not built in months. The
success of our forces in Afghanistan is a tribute to the men and women
of the Armed Forces and the investments in national defense that
Congress and the Department of Defense have made over many years.
Future success on the battlefield will likewise depend upon the success
of Congress and the Department in preparing, training, and equipping
our military for tomorrow's missions.
The National Defense Authorization Act for Fiscal Year 2003 builds on
the considerable strengths of our military forces and their record of
success. The Armed Services Committee identified five priorities to
guide us in preparing this bill. These were to:
No. 1, continue the improvements in the compensation and quality of
life of the men and women in the Armed Forces, retirees and their
families;
No. 2, sustain the readiness of the military services to conduct the
full range of their assigned mission, including current and future
operations against international terrorism;
No. 3, improve the efficiency of Defense Department programs and
operations and apply the savings toward high-priority programs;
No. 4, improve the ability of the Armed Forces to meet nontraditional
threats, including terrorism and weapons of mass destruction; and
No. 5, promote the transformation of the Armed Forces to meet the
threats of the 21st century.
First, compensation and quality of life:
The bill reflects the committee's highest priority--ensuring that our
men and women in uniform, retirees and their families receive the
compensation and quality of life they deserve. Toward that end, we
added more than $1.2 billion to the budget request for pay and quality
of life initiatives. Specifically, the bill includes a 4.1 percent
across-the-board pay raise for all military personnel, with an
additional targeted pay raise for the mid-career force; adds $640
million above the budget request to improve and replace facilities on
military installations; and authorizes a new assignment incentive pay
of up to $1,500 per month to reward military members who agree to serve
in difficult-to-fill assignments.
The bill would also begin to address a longstanding inequity in the
compensation of military retirees by authorizing the concurrent receipt
of retired pay and veterans' disability compensation for military
retirees with disabilities rated at 60% or more. During our markup, the
committee approved a separate amendment that would authorize concurrent
receipt of retired pay and veterans' disability compensation for all
disabled military retirees for non-disability retirement. Senator
Warner and I plan to offer this amendment on behalf of the committee at
the earliest possible point in the debate of this bill.
With regard to readiness, we propose to set aside $10 billion, as
requested by the administration, to fund ongoing operations in the war
against international terrorism during fiscal year 2003. The President
requested that this money be reserved for the continuance of the war
against international terrorism, and we believe that there is no more
important purpose to which this funding could be dedicated.
However, the Department is not yet in a position to state how long
the war on terrorism will continue, or in what form, or to specify the
specific programs for which the requested funds would be used. For this
reason, the provision recommended by the committee would authorize for
appropriation the $10 billion requested by the President upon receipt
of a budget request which: No. 1, designates the requested amount as
being essential to the continued war on terrorism; and No. 2, specifies
how the administration proposes to use the requested funds, consistent
with the Authorization for the Use of Military Force, P.L. 107-40.
In addition, the bill would add funding to address shortfalls in a
number of key readiness accounts and help lessen the burden on some of
the Department's high demand, low density assets.
These funding increases include $126 million to protect and enhance
military training ranges; $232 million for aircraft, ship, and Navy gun
depot maintenance; $176 million for improvements to Air Force and Army
facilities; $51 million for ammunition to meet new training
requirements and supplement war reserve stocks; $55 million to address
the Army's aviation training backlog; $110 million for the purchase of
an additional EC-130J Commando Solo aircraft; and $114 million for
modifications to help improve the readiness of the EA-6B electronic
warfare aircraft fleet.
Relative to combating terrorism, the bill before us would take a
significant step towards addressing nontraditional threats by providing
in excess of $10 billion for combating terrorism initiatives, as
requested by the Department, including more than $2 billion for force
protection improvements to DOD installations around the world.
In addition, the bill would provide increases of $200 million to
enhance the security of our nuclear materials and nuclear weapons in
the Department of Energy, $43 million in funding for the U.S. Special
Operations Commands, and $30 million for defense against chemical and
biological weapons and other efforts to combat weapons of mass
destruction.
We have also included two important legislative initiatives that
would require the Department of Defense to take a more comprehensive
approach to installation preparedness for weapons of mass destruction
attacks and authorize the Secretary of Defense to expand cooperative
threat reduction activities beyond the countries of the former Soviet
Union.
Relative to transformation, the bill would provide significant funds
to promote the transformation of the Armed Forces to meet the threats
of the 21st century. In particular, the bill would add more than $1.1
billion to the Navy's shipbuilding accounts to refuel a nuclear
submarine and pay for advance procurement of an aircraft carrier, a
Virginia-class submarine, a DDG-51 class destroyer, and an LPD-17 class
amphibious transport dock.
Our bill would add $105 million for funding for research and
development on the Army's Future Combat System and more than $100
million for science and technology needed to help the Army achieve its
Objective Force.
It would fully fund the $5.2 billion requested by the Department for
the F-

[[Page S5676]]

22, the $3.5 billion requested for continued research and development
on the Joint Strike Fighter, and more than $600 million requested for
Air Force unmanned aerial vehicles.
It would add more than $300 million to the Department's science and
technology budget, bringing the Department closer to the Secretary's
goal of devoting 3 percent of all defense funds to the programs that
promise to bring us the revolutionary technologies that will be needed
to prevail in future conflicts.
Relative to the Crusader Artillery System, in the middle of our
committee markup of this bill the Secretary of Defense announced that
he intended to terminate the Crusader Artillery System. This is a
system which the Department of Defense had strongly supported until
just a few days earlier. Because the committee had no opportunity to
review the reasons for this sudden reversal, we did not address this
issue in our markup. Instead, we scheduled a hearing with the Secretary
of Defense and the Army Chief of Staff to consider the merits of the
program.
At that hearing, the Secretary of Defense favored termination. The
Army Chief of Staff testified that the system was very important and
very necessary and, as a matter of fact, an important part of
transformation. The Chief of Staff is a very strong supporter of
transformation.

I think we all--as we perhaps will be debating the Crusader System--
should recognize the contribution of the Army Chief of Staff to the
transformation of the Army. He is not one who has resisted
transformation. He has been a very strong supporter of transformation,
and he views the Crusader Artillery System--or viewed this at the time
he testified--as an important part of that transformation.
On June 13, the committee met to discuss the Crusader Artillery
System. At that time, the committee voted 13 to 6 to recommend an
amendment that would do two things. First, it would take the $475
million out of the Crusader program and put the money into a separate
funding line for future combat systems research and development. This
is the Army's armored systems modernization line. Second, we would
require the Army Chief of Staff, in our amendment, to conduct an
analysis--or finish his analysis--of alternatives for the Army's
artillery needs and to submit his findings to the Secretary of Defense
no later than 1 month after the date of enactment of this act.
This approach would enable the Secretary of Defense to terminate the
Crusader program following the receipt of the Army's analysis which was
truncated. The Army, in late April, was told that it could complete its
analysis by the end of this fiscal year. And then, in early May, it was
told that it could have until the end of May to complete this analysis.
I emphasize the importance of this analysis. The Army's analysis is
intended to answer seven questions. I am not going to go through them
all, but I am simply going to say these are important questions. These
are important questions for the future well-being of the men and women
in the Army. They are critical questions. They have to do with risk.
What are the risks in proceeding? What are the risks in canceling?
These are questions which the Army was in the middle of analyzing
when suddenly, a few days into May, despite the earlier decision to
allow the completion of this analysis by the end of May, the Secretary
of Defense simply said: We are going to terminate.
Seven questions were to be answered. And I emphasize, these are
questions which can be life-and-death questions for the men and women
in the future armies of this country. They were going to analyze these
questions in six combat scenarios. They were going to look at four
different alternatives. We believe the answers to those questions in
that analysis should be completed. The amendment, which I will offer on
behalf of the committee, as I promised to the committee I would offer
early in this debate, was adopted, as I said, by a 13-to-6 vote.
We hope the Senate will approve this amendment. We think it is the
correct balance. Not only should we have that information before we or
the Defense Department--either one of us--finally decide on
termination, that analysis is important as to how best to spend that
money. Where should we jump to? Even if we, this Nation, decide to jump
from Crusader, even if we take whatever risks are involved--and there
are risks involved in that--the decision also involves, Where do we
then allocate those funds? How do we allocate those funds? And that
analysis is critically important to that issue as well. We hope our
amendment will address both those issues in a rational, thoughtful way.
Congress has a responsibility also to ensure that the resources our
taxpayers provide for national defense are spent wisely. The
administration has not complied with statutory requirements to provide
Congress with a national security strategy and an annual report
outlining detailed plans for the size, structure, shape, or
transformation of the military. In the absence of that planning, again,
required by law, the Department of Defense is going to have difficulty
establishing a clear vision for the future for our Armed Forces.
But a year ago, the Secretary of Defense testified before us saying:
``We have an obligation to taxpayers to spend their money wisely.'' He
said that he had ``never seen an organization, in the private or public
sector,'' to use his words, ``that could not, by better management,
operate at least five percent more efficiently if given the freedom to
do so. Five percent of the DOD budget,'' he pointed out, ``is over $15
billion!''
He testified that that $15 billion of savings from management
efficiencies could be used to: increase ship procurement from six to
nine ships a year; to procure several hundred additional aircraft
annually rather than 189. He could meet the target of a 67-year
facility replacement rate, and those savings could increase defense-
related science and technology funding from 2.7 percent to 3 percent
for the Department of Defense budget.
To this date, it has been disappointing that the Department has
identified less than $150 million of the $15 billion annual savings
projected by the Secretary. Despite the largest proposed increase in
defense spending in 20 years, the budget request would fund just 5
ships and 166 aircraft, way below the goals; replace facilities at a
122-year rate instead of the 67-year rate, which is desirable. It would
leave the rate of defense-related science and technology unchanged at
just 2.7 percent of the Department of Defense budget instead of the 3-
percent target which is desirable.
In short, despite the proposed $48 billion increase in defense
spending, management efficiencies are needed now more than ever to
ensure the taxpayers' money is well spent.
Our bill includes a number of provisions to help address this
problem, including a major initiative, based on recommendations of the
Defense Science Board and the DOD Director of Operational Test and
Evaluation, to address budget shortfalls and organizational
shortcomings in the Department's test and evaluation infrastructure
that have led to inadequate testing of major weapons systems.
It would provide for a continuation of last year's initiative by the
committee to improve the way in which the Department manages its $50
billion of services contracts with resulting savings of $850 million.
We include a provision that would address the Department's inability to
produce reliable financial information and achieve $400 million of
savings by deferring spending on new financial systems that would be
inconsistent with a comprehensive financial management enterprise
architecture currently being developed by the Department. We include a
provision requiring the Department to establish new internal controls
to address recurring problems with the abuse of purchase cards and
travel cards by military and civilian personnel.

In the area of missile defense, the bill would reallocate $812
million for missile defense expenditures that appear to be unjustified
or duplicative to higher priority areas. The bill would transfer $690
million from missile defense activities to fund advanced procurement of
a second Virginia-class submarine as soon as fiscal year 2005; advanced
procurement for a second LPD-17 amphibious transport dock in fiscal
year 2004; and advanced procurement for a third DDG-51 Arleigh Burke-
class destroyer in fiscal year 2004.

[[Page S5677]]

Every defense budget requires choices, as every other budget of every
other Department. Even with more than $390 billion to spend for
national security activities, the administration was not able to fund
every important national security priority. Each of the military
services came to us with a long list of unfunded priorities, items not
included in their budget, which they believe to be important to the
national defense.
There was unanimous agreement among the members of the Armed Services
Committee that the President's budget did not provide adequate
resources to maintain the Navy's surface fleet or attack submarines.
The committee received extensive testimony from DOD witnesses and
numerous DOD and Navy reports indicating that the Navy should be
building 8 to 10 ships per year to recapitalize its current fleet. A
number of Navy witnesses, including the chief of naval operations, have
indicated they believe that the Navy should be building a fleet with as
many as 375 ships in order to meet the requirements the Navy faces
today.
Two years ago, the Navy's shipbuilding plan called for 23 ships
between 2003 and 2005. This year's plan calls for only 17 ships during
that period.
The Department's proposed budget for missile defense was not even
reviewed by the Joint Chiefs of Staff. Earlier this year, each of the
four service chiefs testified before the Armed Services Committee that
they had not been asked for their views on the funding for missile
defense programs relative to other priorities in the budget--all those
unmet requirements that they told us about. They were not asked to
weigh the importance of the missile defense budget against those other
needed items.
The committee, and the subcommittee chaired by Senator Jack Reed,
conducted an exhaustive examination of the proposed missile defense
budget, holding two strategic subcommittee hearings alone on missile
defense, reviewing 400 pages of missile defense budget documentation,
and participating in more than 25 hours of staff briefings by the
Department of Defense. Based on this lengthy review, the committee
recommended funding the vast majority of the Department's missile
defense requests, an amount that is sufficient to aggressively fund all
of the specific systems that the Department has said it wants to
develop.
However, at the same time the committee identified $810 million of
the missile defense request, which is 11 percent of the total request,
that could not adequately be justified by the Department despite a
detailed review of available documentation and repeated requests at
hearings and in briefings.

For example, the budget request included $1.1 billion in the
ballistic missile defense program element. That is an increase of $250
million over the current funding level. The major purpose of this
program element is to develop an integrated architecture of BMD
systems. While this is an important goal, most of the systems that will
comprise the BMD architecture are years away from being deployed,
making the development and definition of a detailed BMD architecture
impossible at this point.
After receiving more than $800 million for this program element in
fiscal year 2002, the Missile Defense Agency has yet to provide to
Congress any indication what the overall ballistic missile defense
architecture might be. In fact, the committee learned that of the $800
million appropriated for that program element in fiscal year 2002, only
$50 million had been spent by the end of March, halfway through the
fiscal year.
Because of this slow execution, the Missile Defense Agency informed
us that $400 million of these fiscal year 2002 funds will be available
for expenditure in 2003. So half of the money that we appropriated in
2002 for that program element is not going to be spent. It is going to
be available next year. Under those circumstances, it is hard to see
why the Department would need a $250 million increase in that program
element in fiscal year 2003.
In short, we made a choice to make careful, well-justified reductions
in missile defense programs to fund increases to the Department's
shipbuilding accounts, and other critically important accounts, which
are strongly supported by most members of the uniformed Navy and by
members of the committee. The choice was the right one.
One of the things we used the money for, one of the important areas
that we used that funding for, was greater security of our Department
of Energy nuclear facilities. The greatest threat we face is a
terrorist threat. Those facilities are not adequately protected. We
found some additional money--about $100 million--in those reductions in
the missile defense accounts which we believed could not be justified,
not just to build more ships, which are necessary, but also to give
greater security to our Department of Energy nuclear facilities which
are so critically important to be defended.
Secretary Rumsfeld has written us that the Department opposes these
changes and he would recommend that the President veto the bill if this
change in missile defense funding remains in the bill. But again, this
veto threat not only is addressed at the funding cuts in the bill but,
in effect, is addressed at the items that we added in the bill which
are so important to the national security of this country.
We believe our bill would provide the Missile Defense Agency as much
money as can reasonably be executed for the missile defense program in
this year and would ensure that this money is expended in a sound
manner.
Mr. President, finally, I wish to say a few words on two items that
are not included in this bill. First, the budget request of the
administration included $15 million in the Department of Energy to
begin studying the feasibility of the new robust nuclear earth
penetrator. We had doubts about the need for this new nuclear weapon,
particularly at a time when we are trying to convince other countries
to forgo the development of nuclear weapons, and we adopted an
amendment deleting funding for the robust nuclear penetrator and
instead we directed the Department of Defense, in consultation with the
Secretary of Energy, to submit a report to Congress on the requirements
for this new nuclear weapon--how it would be deployed, what categories
of targets it would be used against, and whether conventional weapons
could effectively address such targets.
Second, less than a month before we began our markup, the Department
of Defense sent us a legislative proposal to exempt certain military
installations and activities from the Endangered Species Act, the
Migratory Bird Treaty Act, the Marine Mammal Protection Act, the Clean
Air Act, the Solid Waste Disposal Act, and the Comprehensive
Environmental Response and Compensation Liability Act, or CERCLA.
We did not consider those proposals because all those statutes fall
outside the jurisdiction of the Armed Services Committee. We did
include two environmentally sound provisions in the Department's
proposal that were in our committee's jurisdiction. These provisions
authorize the Department of Defense to enter into agreements with non-
Federal entities to manage lands adjacent to military installations and
to create buffer zones between training areas and the surrounding
population.
America's Armed Forces are ready to help keep the peace, to deter
traditional and nontraditional threats to our security and our vital
interests around the world, and to win any conflict decisively. Our
bill builds on the considerable strength of our military forces and
their record of success by preserving a high quality of life for U.S.
forces and their families, sustaining readiness, transforming the Armed
Forces to meet the threats and challenges of tomorrow.
I hope our colleagues will join us in supporting this important
legislation.
Mr. President, the Congressional Budget Office is required to prepare
a cost estimate for spending legislation reported by committees. The
cost estimate for the bill reported by the committee, S. 2514, was not
finished at the time the report on this bill was filed. The CBO cost
estimate is now available. I ask unanimous consent that the
Congressional Budget Office cost estimate for the Defense authorization
bill reported by the Committee on Armed Services be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[[Page S5678]]

U.S. Congress,

Congressional Budget Office,

Washington, DC, May 21, 2002.
Hon. Carl Levin,
Chairman, Committee on Armed Services, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2514, the National
Defense Authorization Act for Fiscal Year 2003.
The CBO staff contact is Kent Christensen. If you wish
further details on this estimate, we will be pleased to
provide them.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 2514--National Defense Authorization Act for Fiscal Year
2003
Summary: S. 2514 would authorize appropriations totaling
$392 billion for fiscal year 2003 and an estimated $14
billion in additional funding for 2002 for the military
functions of the Department of Defense (DoD) and the
Department of Energy (DOE). It also would prescribe personnel
strengths for each active-duty and selected reserve component
of the U.S. armed forces. CBO estimates that appropriation of
the authorized amounts for 2002 and 2003 would result in
additional outlays of $402 billion over the 2002-2007 period.
The bill also contains provisions that would raise the
costs of discretionary defense programs over the 2004-2007
period. CBO estimates that those provisions would require
appropriations of $6.8 billion over those four years.
The bill contains provisions that would increase direct
spending by an estimated $5.6 billion over the 2003-2007
period and $17.6 billion over the 2003-2012 period, primarily
from the phase-in of concurrent payment of retirement
annuities with veterans' disability compensation to retirees
from the military and the other uniformed services who have
service-connected disabilities rated at 60 percent or
greater. Because it would affect direct spending, the bill
would be subject to pay-as-you-go procedures.
S. 2514 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act
(UMRA) and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 2514 is shown in Table 1. Most of the
costs of this legislation fall within budget function 050
(national defense).

TABLE 1.--BUDGETARY IMPACT OF S. 2514, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2003
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for
Defense Programs:
Budget Authority \1\.......... 346,319 0 0 0 0 0
Estimated Outlays............. 346,900 116,372 38,931 13,267 5,535 2,723
Proposed Changes:
Authorization of Supplemental
Appropriations for 2002:
Estimated Authorization 14,048 0 0 0 0 0
Level \2\................
Estimated Outlays \2\..... 5,345 5,782 1,941 660 174 79
Authorization of
Appropriations for 2003:
Estimated Authorization 0 391,543 0 0 0 0
Level....................
Estimated Outlays......... 0 259,711 88,543 28,227 8,201 2,856
Spending Under S. 2514 for Defense
Programs:
Estimated Authorization Level. 360,367 391,543 0 0 0 0
Estimated Outlays............. 352,245 381,865 129,415 42,154 13,910 5,658

CHANGES IN DIRECT SPENDING

Estimated Budget Authority........ 0 359 674 1,081 1,533 1,936
Estimated Outlays................. 0 359 674 1,081 1,533 1,936
----------------------------------------------------------------------------------------------------------------
\1\ The 2002 level is the amount appropriated for programs authorized by S. 2514.
\2\ The estimates shown for the 2002 supplemental are amounts contained in the Administration's supplemental
request for defense programs. The outlay estimate for 2003 includes $5,684 million of spending from funds
requested as emergency appropriations. Excluding emergency spending would lower total outlays in 2003 to
$376,181 million.
Note.--This table excludes estimated authorizations of appropriations for years after 2003. (Those additional
authorizations are shown in Table 3.)

Basis of estimate
Spending subject to appropriation
The bill would specifically authorize appropriations
totaling $391.5 billion in 2003 (see Table 2) and additional
amounts as may be necessary for supplemental appropriations
for defense in 2002, which CBO estimates would total $14
billion based on the Administration's request. Most of those
costs would fall within budget function 050 (national
defense). S. 2514 also would specifically authorize
appropriations of $70 million for the Armed Forces Retirement
Home (function 600--income security).
The estimate assumes that the estimated authorization
amount for 2002 is appropriated by the end of June 2002, and
that the amounts authorized for 2003 will be appropriated
before the start of fiscal year 2003. Outlays are estimated
based on historical spending patterns.
The bill also contains provisions that would affect various
costs, mostly for personnel, that would be covered by the
fiscal year 2003 authorization and by authorizations in
future years. Table 3 contains estimates of those amounts. In
addition to the costs covered by the authorizations in the
bill for 2003, these provisions would raise estimated costs
by $6.8 billion over the 2004-2007 period. The following
sections describe the provisions identified in Table 3 and
provide information about CBO's cost estimates for those
provisions.

TABLE 2.--SPECIFIC AUTHORIZATIONS IN S. 2514
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
Category ----------------------------------------------------------------
2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
Military Personnel:
Authorization Level \1\.................... 94,297 0 0 0 0
Estimated Outlays.......................... 89,205 4,432 283 94 0
Operation and Maintenance:
Authorization Level........................ 139,938 0 0 0 0
Estimated Outlays.......................... 103,010 28,058 6,279 1,395 478
Procurement:
Authorization Level........................ 72,818 0 0 0 0
Estimated Outlays.......................... 20,599 27,458 15,289 5,193 1,808
Research, Development, Test, and Evaluation:
Authorization Level........................ 55,686 0 0 0 0
Estimated Outlays.......................... 31,375 20,110 3,240 587 153
Military Construction and Family Housing:
Authorization Level........................ 10,129 0 0 0 0
Estimated Outlays.......................... 2,686 3,805 2,259 805 327
Atomic Energy Defense Activities:
Authorization Level........................ 15,895 0 0 0 0
Estimated Outlays.......................... 10,667 4,245 853 74 55
Other Accounts:
Authorization Level........................ 2,688 0 0 0 0
Estimated Outlays.......................... 1,736 501 174 128 60
General Transfer Authority:
Authorization Level........................ 0 0 0 0 0
Estimated Outlays.......................... 350 -75 -150 -75 -25
Total:
Authorization Level \2\.................... 391,451 0 0 0 0
Estimated Outlays.......................... 259,628 88,534 28,227 8,201 2,856
----------------------------------------------------------------------------------------------------------------
\1\ This authorization is for discretionary appropriations and does not include $55 million for mandatory
payments from appropriations for military personnel.
\2\ These amounts comprise nearly all of the proposed changes for authorizations of appropriations for 2003
shown in Table 1; they do not include the estimated authorization of $92 million for the Coast Guard Reserve,
which is shown in Table 3.

[[Page S5679]]

TABLE 3.--ESTIMATED AUTHORIZATIONS OF APPROPRIATIONS FOR SELECTED PROVISIONS IN S. 2514
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
Category ----------------------------------------------------------------
2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
MULTIYEAR PROCUREMENT

C-130J Aircraft................................ 15 -63 -121 -142 -162

FORCE STRUCTURE

DoD Military Endstrengths...................... 87 180 186 192 198
Coast Guard Reserve Endstrengths............... 92 0 0 0 0

COMPENSATION AND BENEFITS (DoD)

Military Pay Raises............................ 276 381 398 415 430
Expiring Bonuses and Allowances................ 706 796 417 234 152
Assignment Incentive Pay....................... 1 14 32 0 0
Education and Training......................... 3 5 9 13 11
Concurrent Receipt............................. 0 588 610 631 650
National Call to Service Program............... 0 10 19 28 29

DEFENSE HEALTH PROGRAM

TRICARE Prime Remote........................... 4 4 4 5 5
Transitional Health Care....................... 7 5 3 2 1

OTHER PROVISIONS

Voluntary Separation and Early Retirement 0 121 212 211 0
Incentives (DoD and DOE)......................
Federal Employees Health Benefits Program...... 0 2 3 3 3
School Impact Aid.............................. (^a) (^a) (^a) 14 15
Arctic and Western Pacific Environmental 7 8 6 5 3
Cooperation Program...........................
Revitalizing DoD Laboratories.................. (^a) (^a) (^a) (^a) 0
Contracting for Environmental Remediation...... -2 -4 -5 -7 -9

TOTAL ESTIMATED AUTHORIZATIONS

Estimated Authorization Level.................. 1,196 2,047 1,773 1,605 1,326
----------------------------------------------------------------------------------------------------------------
^a Less than $500,000.

Note.--For every item in this table except the authorization for the Coast Guard Reserve, the 2003 levels are
included in the amounts specifically authorized to be appropriated in the bill. Those amounts are shown in
Table 2. Amounts shown in this table for 2004 through 2007 are not included in Table 1.

Multiyear Procurement. In most cases, purchases of weapon
systems are authorized annually, and as a result, DoD
negotiates a separate contract for each annual purchase. In a
small number of cases, the law permits multiyear procurement;
that is, it allows DoD to enter into a contract to buy
specified annual quantities of a system for up to five years.
In those cases, DoD can negotiate lower prices because its
commitment to purchase the weapons gives the contractor an
incentive to find more economical ways to manufacture the
weapon, including cost-saving investments. Annual funding is
provided for these multiyear contracts, but potential
termination costs are covered by an initial appropriation.
Section 131 would authorize the Secretary of the Air Force
to enter into a multiyear contract to purchase C-130J
aircraft beginning in 2003 after the Secretary certifies that
the C-130J has been cleared for worldwide, over-water
capability. Based on information provided by the Air Force,
CBO assumes that DoD will procure 64 aircraft over the 2003-
2008 period--40 CC-130J aircraft for the Air Force and 24 KC-
130J aircraft for the Marine Corps. CBO also assumes that the
CC-130J and KC-130J aircraft would be purchased under one
contract administered by the Air Force and covering six years
of production beginning in 2003. CBO estimates that savings
from buying these aircraft under a multiyear contract would
total $473 million, or about $95 million a year, over the
2003-2007 period. CBO also estimates that additional savings
of $182 million would accrue in 2008. Funding requirements to
purchase these aircraft would total just under $3.4 billion
over the 2003-2007 period (instead of the almost $3.9 billion
that would be needed under annual contracts).
Multiyear procurement of C-130Js would raise costs in 2003
because the KC-130J did not receive advance procurement in
2002 in anticipation of multiyear procurement starting in
2003, and because the Air Force would need to provide advance
procurement for the aircraft that it would purchase in 2004.
Military Endstrength. The bill would authorize active and
reserve endstrength levels for 2003. The authorized
endstrengths for active-duty personnel and personnel in the
selected reserve would total about 1,390,000 and 865,000,
respectively. Of those selected reservists, about 68,500
would serve on active duty in support of the reserves. The
bill would specifically authorize appropriations of about $94
billion for the costs of military pay and allowances in 2003.
The authorized endstrength represents a net increase of 2,200
servicemembers that would boost costs for salaries and other
expenses by $87 million in the first year and about $190
million annually in subsequent years, compared to the
authorized strengths for 2002.
The bill also would authorize an endstrength of 9,000 in
2003 for the Coast Guard Reserve. This authorization would
cost about $92 million and would fall under budget function
400 (transportation).
Section 402 would allow the Secretary of Defense to
increase endstrength by 2 percent above the level authorized
by the Congress. The provision would also allow an increase
in endstrength equal to the number of personnel within the
reserve components that are on active duty in support of a
contingency operation. While there is the potential for
increased costs, CBO believes that DoD would still have to
manage their resources given the finite amount of money
appropriated each year for military personnel. As such, CBO
estimates that this provision would not significantly
increase costs.
Compensation and Benefits. S. 2514 contains several
provisions that would affect military compensation and
benefits for uniformed personnel.
Military Pay Raises. Section 601 would raise basic pay by
4.1 percent across-the-board and authorize additional
targeted pay raises, ranging from 0.9 percent to 4.4 percent,
for individuals with specific ranks and years of service at a
total cost of about $2.3 billion in 2003. Because the pay
raises would be above those projected under current law, CBO
estimates that the incremental costs associated with the
larger pay raise would be about $276 million in 2003 and
total $1.9 billion over the 2003-2007 period.
Expiring Bonuses and Allowances. Several sections would
extend DoD's authority to pay certain bonuses and allowances
to current personnel. Under current law, most of these
authorities are scheduled to expire in December 2002, or
three months into fiscal year 2003. The bill would extend
these authorities through December 2003. Based on data
provided by DoD, CBO estimates that the costs of these
extensions would be as follows:
Payment of reenlistment bonuses for active-duty personnel
would cost $327 million in 2003 and $191 million in 2004;
enlistment bonuses for active-duty personnel would cost $133
million in 2003 and $361 million in 2004;
Various bonuses for the Selected and Ready Reserve would
cost $99 million in 2003 and $114 million in 2004;
Special payments for aviators and nuclear-qualified
personnel would cost $67 million in 2003 and $72 million in
2004;
Retention bonuses for officers and enlisted members with
critical skills would cost $29 million in 2003 and $19
million in 2004;
Accession bonuses for new officers with critical skills
would cost $14 million in 2003 and $5 million in 2004; and
Authorities to make special payments and give bonuses to
certain health care professionals would cost $37 million in
2003 and $34 million in 2004.
Most of these changes would result in additional, smaller
costs in subsequent years because payments are made in
installments.
Assignment Incentive Pay. Section 617 would authorize a new
incentive pay to servicemembers who volunteer for difficult-
to-fill jobs or less-than-desirable locations. The authority
would expire three years after the enactment date of this
bill. Based on information from DoD, CBO expects that only
the Navy would use this authority. Based on information
provided by the Navy, CBO assumes that the special incentive
pay would average $300 a month and that 11,250 servicemembers
would receive this special pay by 2005. Given expected
personnel turnover, CBO estimates that this provision would
cost $1 million in 2003 and $46 million over the 2003-2005
period.
Education and Training. Section 521 would allow the
military services to increase the number of students at each
of the service academies from the current ceiling of 4,000 to
4,400 students. Based on information from DoD, CBO expects
that only the Navy would significantly increase its service-
academy strength and that it would bring on about 100 extra
academy students a year, so that the student body would
increase, after several years, to about 4,400 students. Based
on information provided by DoD, CBO assumes the other service
academies would each increase their enrollments by an
insignificant number of students a year.
According to DoD, the additional cost to bring on 400 extra
students at the Naval

[[Page S5680]]

Academy would be about $29,000 per student each year. These
additional students would not be used to increase overall
officer endstrength, but rather to offset a desired draw down
in the number of officers commissioned through the Officer
Candidate School (OCS) program, according to the Navy. Thus,
the actual cost of the increase for the academy students
would be offset somewhat by the cost of the OCS graduates
they would replace. Because the OCS program lasts less than
one year, the offsetting costs would not begin to affect net
outlays until 2007, when the first of the additional academy
students would graduate and be commissioned. CBO estimates
the cost of implementing this provision would be $1 million
in 2003 and $31 million over the 2003-2007 period, assuming
appropriation of the necessary amounts.
Section 652 would extend the period during which eligible
reservists may use their education benefits from 10 years to
14 years. In 2001, over 82,000 reservists trained under this
program and received an average annual benefit of $1,653.
These benefits are paid by the Secretary of Veterans Affairs
from the DoD Education Benefits Fund. Each month, DoD pays
into the fund the net present value of the education benefit
granted to each person who enlisted in the previous month.
Based on information from DoD about current contributions to
the fund and expected accessions, CBO estimates implementing
section 652 would increase payments into the fund by about $2
million each year. (CBO estimates that there also would be
direct spending of about $24 million over the 2003-2012
period for increased outlays from the fund. CBO's estimate of
those costs is discussed below under the heading of ``Direct
Spending.'')
Concurrent Receipt. Section 641 would phase in over five
years total or partial concurrent payment of retirement
annuities together with veterans' disability compensation to
retirees from the uniformed services who have service-
connected disabilities rated at 60 percent or greater. The
uniformed services include all branches of the U.S. military,
the Coast Guard, and uniformed members of the Public Health
Service (PHS) and the National Oceanic and Atmospheric
Administration (NOAA).
Under current law, disabled veterans who are retired from
the uniformed services cannot receive both full retirement
annuities and disability compensation from the Department of
Veterans Affairs (VA). Because of this prohibition on
concurrent receipt, such veterans forgo a portion of their
retirement annuity equal to the nontaxable veterans' benefit.
This section would phase in concurrent receipt of both
benefits so that, beginning in 2007, individuals who have
significant service-connected disabilities and have a
retirement annuity based on years of service, would receive
both benefits in full without the reduction called for under
current law. Individuals whose retirement pay is based on
their degree of disability would continue to forgo retirement
pay equal to the VA compensation payment, but only to the
extent that their disability had entitled them to a larger
retirement annuity than they would have received based on
years of service.
The military retirement system is financed in part by an
annual payment from appropriated funds to the military
retirement trust fund, based on an estimate of the system's
accruing liabilities. If this provision is enacted, the
yearly contribution to the military retirement trust fund (an
outlay in budget function 050) would increase to reflect the
added liability from the expected increase in annuities to
future retirees. Using information from DoD, CBO estimates
that implementing this provision would increase such payments
by $588 million in 2004 and $2.5 billion over the 2004-2007
period. Because the phase-in of concurrent receipt benefits
would not take effect until January 1, 2003, the accrual
payment for fiscal year 2003 would not be affected. CBO
estimates that there also would be direct spending of about
$17.3 billion over the 2003-2012 period for increased outlays
from the fund. CBO's estimate of those costs is discussed
below under the heading of ``Direct Spending.''
National Call to Service. Section 541 would give the
Secretary of Defense authority to establish an enlistment
program in which a participant, in exchange for a specified
incentive, would enlist in the armed forces for a period of
15 months plus training time followed by service in the
reserves, the Peace Corps, Americorps, or another national
service program. The specified incentives would consist of
either a cash bonus of $5,000, payment of student loans not
to exceed $18,000, or education benefits similar to those
provided for in the Montgomery GI Bill (MGIB) education
program.
Based on information from DoD, CBO estimates that DoD would
seek to recruit about 1 percent of annual enlisted accessions
(an average of about 2,000 enlistees a year) under the
National Call to Service program. CBO assumes that all (or
nearly all) participants would choose the $5,000 cash bonus
option since DoD has indicated that the amount it would
probably offer for the repayment of student loans would be
less than or equal to $5,000. Moreover, while the education
benefits offered under this program would be worth more than
$5,000, CBO believes that few enlistees would choose these
benefits because a participant who selected the cash bonus
would also have the potential to be eligible for active-duty
or reserve MGIB benefits. Thus, CBO estimates that the cost
for providing the cash bonus to participants who enlist under
the National Call to Service program would be about $10
million a year once the program was implemented. Based on
information provided by DoD, CBO assumes that it would take
about one year for DoD to implement this program.
CBO also estimates that there would be an additional cost
associated with administering this program. Since
servicemembers who would enlist under the National Call to
Service program would leave the military one year sooner than
the average enlisted member who leaves after his or her
initial obligation is fulfilled, DoD would need to induct
more people into the military to maintain endstrength. CBO
estimates that DoD would need to induct 1,000 additional
enlistees a year to make up for the accelerated loss in
personnel. With an average training period of about six
months, DoD would need to add these enlistees about half a
year earlier. Thus, the first bonuses would not be paid out
until 2004 and the first replacements would not have to be
inducted until 2005.
Based on information from DoD, CBO estimates that the
average cost for each additional enlistee would be about
$16,250 in fiscal year 2003, which includes the cost of
providing new uniforms, travel expenses, and six months of
salary and benefits during training. After adjusting for
inflation and assuming that new participants are brought into
the program evenly throughout the first year, CBO estimates
that the cost of these additional accessions would be $9
million in 2005 and an average of $20 million per year
thereafter.
Therefore, CBO estimates that the total costs for the
National Call to Service program would be $10 million in
2004, $19 million in 2005, and about $85 million over the
2004-2007 period.
Defense Health Program. Title VII contains several
provisions that would affect DoD health care and benefits.
Tricare is the name of DoD's health care program; Tricare
Prime and Tricare Prime Remote are managed care programs, and
Tricare Standard is a fee-for-service program.
Tricare Prime Remote. Section 703 would affect dependents
of servicemembers on active duty who live in a remote area,
which is defined as roughly a one-hour-or-more driving
distance from a military treatment facility. Under certain
conditions, this section would allow dependents of personnel
on active duty who live in a remote area to participate in
Tricare Prime Remote if the servicemember is transferred to a
different duty station and is not allowed to bring his or her
family. Under current law, dependents of personnel on active
duty living in remote areas must reside with the active-duty
member to participate in Tricare Prime Remote. If the active-
duty servicemember is transferred to a duty station where he
or she cannot bring family members, the family can no longer
participate in the Tricare Prime Remote program.
Based on information provided by DoD, CBO estimates that
about 27,000 dependents of personnel on active duty would be
affected by this provision. According to DoD, about 40
percent of those dependents who would be eligible for Tricare
Prime Remote under this section already participate in
Tricare Standard. Based on data provided by the department,
CBO estimates that the additional incremental cost of
providing Tricare Prime Remote to those individuals would be
$113 per person. In addition, CBO estimates that the new
benefit would attract about 1,350 dependents to Tricare Prime
Remote who had not previously used any Tricare program at an
estimated annual cost of $1,900 per person. Thus, CBO
estimates that the cost of providing Tricare Prime Remote to
more individuals would be $4 million in 2003 and $22 million
over the 2003-2007 period, assuming appropriation of the
estimated amounts.
Transitional Health Care. Under section 707, family members
of reservists who were called to active duty for more than 30
days would be eligible for health care coverage under Tricare
for 60 days after the reservist is released from active duty.
Under current law, only the reservist is eligible for health
care coverage under Tricare for the 60 days after he or she
is released from active duty. While there are currently more
than 80,000 reservists on active duty, CBO assumes for this
estimate that the number of reserves will fall to about
65,000 in 2003 and 10,000 by 2006. If the number of
reservists remains at current levels over the 2003-2007
period, the estimated costs would be correspondingly higher.
Based on data from DoD and the General Accounting Office,
CBO estimates that about 50 percent of the reservists have
families and that about 40 percent of those families would
use the transitional health care. CBO further estimates that
providing an additional 60 days of health care coverage to
those families would cost, on average, about $600 per family.
After accounting for inflation and the assumed decline in the
level of reservists called to active duty, CBO estimates that
this provision would cost $7 million in 2003, and $18 million
over the 2003-2007 period, assuming appropriation of the
estimated amounts.
Voluntary Separation and Early Retirement Incentives. S.
2514 contains several provisions that would allow DoD and the
Department of Energy to offer voluntary retirement incentives
to their civilian employees. Taken together, CBO estimates
implementing these provisions would cost $121 million in 2004
and $544 million over the 2004-2006 period.

[[Page S5681]]

Section 1102 would provide DoD with the authority to offer
voluntary retirement incentives of up to $25,000 to its
civilian employees who voluntarily retire or resign through
September 30, 2006. Current buyout authority for DoD is
scheduled to expire on September 30, 2003. Based on
discussions with DoD staff, CBO assumes that about 16,500 DoD
employees would participate in the buyout program in 2004
through 2006. CBO estimates that the buyout payments would
cost $88 million in 2004 and $414 million over the 2004-2006
period, assuming appropriation of the estimated amounts. DoD
also would be required to make a payment to the Civil Service
Retirement and Disability Fund (CSRDF) for every employee who
takes a buyout. The payments would equal 15 percent of the
final basic pay of each employee and come out of the agency's
appropriated funds. Assuming an average final salary for the
affected workers of $45,000, CBO estimates these payments
would cost DoD $24 million in 2004 and $118 million over the
2004-2006 period. (CBO estimates that enacting this section
also would increase direct spending for federal retirement
and retiree health care benefits by a total of $188 million
over the 2004-2012 period. CBO's estimate of those outlays is
discussed below under the heading of ``Direct Spending.'')
Section 3163 would provide DOE with authority to offer
voluntary retirement incentives of up to $25,000 to employees
who voluntarily retire or resign in calendar year 2004.
Current buyout authority for DOE is scheduled to expire on
December 31, 2003. Based on information from DOE, CBO assumes
that about 350 DOE employees would participate in the buyout
program in calender year 2004. CBO estimates that the cost of
the buyout payments would total $6 million in 2004 and $2
million in 2005. DOE would also be required to make a payment
to the CSRDF for every employee who takes a buyout. The
payments would equal 15 percent of the final pay of each
employee and come out of the agency's appropriated funds.
Assuming an average final salary for the affected workers of
$75,000, CBO estimates these payments would cost DOE $3
million in 2004 and $1 million in 2005. (CBO estimates that
enacting this section also would increase direct spending for
federal retirement and health care benefits by a total of $8
million over the 2004-2012 period. CBO's estimate of those
outlays is discussed below under the heading of ``Direct
Spending.'')
Federal Employees Health Benefits (FEHB) Program. Section
1103 would extend a provision of law into fiscal year 2007
that allows DoD and certain Department of Energy employees
whose employment is terminated because of a reduction-in-
force action to continue to participate in the FEHB health
insurance program and only pay the regular employee's share
of the insurance premium. The respective departments would be
responsible for paying the normal employer's share of the
premium. Under current law, this provision expires in fiscal
year 2004. Based on information from DoD and the Office of
Personnel Management, CBO estimates that this provision would
affect about 500 people a year at an average annual cost of
$5,500 per person over the 2003-2007 period. CBO estimates
that extending this provision into fiscal year 2007 would
cost $2 million in 2004, and $11 million over the 2004-2007
period, assuming appropriation of the estimated amounts.
School Impact Aid. Section 1064 would allow school
districts with a large percentage of children from military
families to continue to receive heavy impact aid when
military families are temporarily relocated. Heavy impact aid
is federal funding earmarked for school districts with large
military populations. Many military families in those school
districts live on federal installations and do not contribute
to the local property tax base that is used to help finance
school operations. Heavy impact aid helps to offset this loss
of local tax revenue. Under current law, schools can only
receive heavy impact aid if they meet strict criteria for
numbers of federal students located in their districts, local
tax rates, and per pupil expenditures. Because of population
relocations associated with certain military housing
initiatives, some school districts will temporarily be unable
to meet these criteria and will lose their heavy impact aid
for several years.
Based on data from the Department of Education and the
Military Impacted Schools Association, CBO estimates that
about four school districts would initially be affected by
housing privatization and that these school districts receive
about $18 million in heavy impact aid annually. Because
applications for heavy impact aid are based on school
district statistics from three years prior, CBO estimates
that the cost of implementing this section would not occur
until 2006. After adjusting for the changes in student
population within the affected districts, CBO estimates that
restoration of this aid would cost about $14 million per
year. Since the requirements of the School Impact Aid program
are not always fully funded, CBO expects that the Department
of Education would likely fund this increase through
reductions in aid to other school districts. CBO expects this
cost would reoccur annually only for the duration of the
housing privatization effort within the affected school
districts, which CBO estimates to be about three years.
Section 1064 also would allow coterminous school districts
(school districts whose boundaries are the same as a military
base) to change the way in which they include students living
off the base in their heavy impact aid calculations. CBO
estimates that implementing this provision would change the
calculation of heavy impact aid for 200 students in two
school districts and that the impact aid for these students
would increase by about $2,300 per student. CBO estimates
allowing coterminous school districts to change the method
for calculating heavy impact aid would cost slightly less
than $500,000 each year beginning in 2003.
Arctic and Western Pacific Environmental Cooperation
Program. Section 1214 would authorize the Department of
Defense, with the concurrence of the Secretary of State, to
assist in mitigating the impact of military operations on the
environment of the arctic and western Pacific regions,
particularly nuclear or radiological impacts. Based on
information from DoD, CBO estimates that implementing this
provision would cost $29 million over the 2003-2007 period,
assuming appropriation of the estimated amounts.
Revitalizing DoD Laboratories. Section 241 would allow DoD
to establish a new three-year pilot program beginning in
March 2003 at various DoD laboratories to pursue improved
efficiencies for performing research and development work at
these laboratories. The section also would extend through
2006 authorizations for similar pilot projects that will
expire in 2003. Finally, section 241 would permit
laboratories participating in this new pilot program to enter
into public-private partnerships and other business
arrangements with private firms to achieve improved
efficiencies. The authority to enter into such partnerships
would expire in 2006. Under section 241, one of the public-
private partnerships could be established as a limited
liability corporation where the federal and nonfederal
partners could contribute capital, services, or facilities to
the corporation.
Under the new pilot program, DoD would be authorized to
waive certain restrictions not required by law that hinder
the objective of achieving improved efficiencies. The
department also would be authorized to use innovative methods
of personnel management and technology development. According
to information provided by DoD, the laboratories
participating in the existing pilot program were granted
similar authorities. DoD reported that these laboratories did
not substantially change their business practices because, in
their view, they already had the authority to waive non-
statutory regulations. Thus, CBO assumes that any
laboratories selected for the new program would not change
their business practices substantially. CBO estimates that
spending under these new and extended authorities would not
be significant--probably less than $500,000 annually over the
2003-2006 period. (CBO estimates that the provision allowing
a limited liability corporation also would increase direct
spending by a total of $15 million over the 2004-2006 period.
CBO's estimate of those outlays is discussed below under the
heading of ``Direct Spending.'')
Multiyear Procurement of Environmental Remediation
Services. Section 827 would give DoD the authority to enter
into multiyear contracts for environmental remediation
services. Under current law, the total cost of any multiyear
remediation service contract must be fully funded at the
beginning of the contract. DoD has found this difficult to do
for contracts that are expensive and last several years.
Instead, DoD often awards these contracts for environmental
remediation to cover work for one year and then extends the
contract on a year-to-year basis as funds become available.
DoD states that contracting in this manner is generally more
expensive because contractors charge higher prices when they
don't know whether the contract will continue beyond the
current year. Thus, allowing DoD to sign multiyear contracts
for environmental remediation would most likely produce some
savings. DoD could not provide CBO with the necessary data to
produce a precise estimate of the annual savings. However,
given the high cost of these contracts, CBO believes these
savings could be significant. CBO estimates that DoD
currently spends about $1.7 billion each year on
environmental cleanup related activities. If 10 percent of
future contracts were negotiated as multiyear contracts and
those contracts produced savings of about 5 percent on
average, multiyear contracting for environmental remediation
efforts would save about $10 million annually after a five-
year phase-in period.
Disposition of Surplus Plutonium. In January 2002, the
Secretary of Energy announced that the federal government
plans to convert roughly 34 metric tons of surplus weapons
grade plutonium currently located at various DOE facilities
into mixed-oxide (MOX) fuel that would be suitable for use in
U.S. commercial nuclear reactors. The federal government
would ship the surplus plutonium to a MOX fuel fabrication
facility at its Savannah River Site in Aiken, South Carolina.
DOE plans to start construction of the facility in 2004 and
expects that construction would be complete by 2007. The
facility would be able to convert about 3.5 metric tons of
plutonium a year and would complete the conversion in about
12 years.
Section 3182 would require that the Secretary of Energy pay
up to $100 million a year to the state of South Carolina
beginning in 2011, if the planned conversion schedule was not
met. The federal government could avoid these penalties,
however, if it removes at least one metric ton of plutonium a
year from South Carolina over the 2011-2016 period and
removes all remaining plutonium after 2016.

[[Page S5682]]

Based on delays in developing the construction plans for
the proposed MOX facility, and delays in similar programs
such as the Nuclear Waste Repository Site at Yucca Mountain,
Nevada, and the Waste Isolation Pilot Program at Carlsbad,
New Mexico, CBO believes that there is some chance that
construction of the MOX facility could be delayed for several
years beyond the 2007 planned completion date and that
construction would not be completed by 2011. If DOE does not
remove the required surplus plutonium from the state of South
Carolina, DOE would need to pay up to $100 million a year to
the state starting in 2011.
Direct Spending
The bill contains provisions that would increase direct
spending, primarily from the phase-in of concurrent payment
of retirement annuities with veterans' disability
compensation to retirees from the military and the other
uniformed services who have service-connected disabilities
rated at 60 percent or greater. The bill also contains a few
provisions with smaller direct spending costs. In total, CBO
estimates that enacting S. 2514 would result in an increase
in direct spending totaling $5.6 billion over the 2003-2007
period (see Table 4).

TABLE 4.--ESTIMATED DIRECT SPENDING FROM CONCURRENT RECEIPT AND OTHER PROVISIONS IN S. 2514
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------
2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING

Section 641--Concurrent Receipt:
Estimated Budget Authority................. 356 628 995 1,439 1,905
Estimated Outlays.......................... 356 628 995 1,439 1,905
Section 651--Education Benefits for the
Selected Reserves:
Estimated Budget Authority................. 2 2 2 2 2
Estimated Outlays.......................... 2 2 2 2 2
Section 702--Mental Health Benefits:
Estimated Budget Authority................. 1 1 1 1 1
Estimated Outlays.......................... 1 1 1 1 1
Section 1102--Voluntary Separation and Early
Retirement Incentives (DoD):
Estimated Budget Authority................. 0 31 73 87 28
Estimated Outlays.......................... 0 31 73 87 28
Section 3163--Voluntary Separation and Early
Retirement Incentives (DOE):
Estimated Budget Authority................. 0 3 4 1 (^a)
Estimated Outlays.......................... 0 3 4 1 (^a)
Section 241--Revitalizing DoD Laboratories:
Estimated Budget Authority................. 0 6 6 3 0
Estimated Outlays.......................... 0 6 6 3 0
Section 2824--Land Conveyance of Navy Property,
Westover Reserve Air Base:
Estimated Budget Authority................. 0 3 0 0 0
Estimated Outlays.......................... 0 3 0 0 0

TOTAL CHANGES IN DIRECT SPENDING

Estimated Budget Authority..................... 359 674 1,081 1,533 1,936
Estimated Outlays.............................. 359 674 1,081 1,533 1,936
----------------------------------------------------------------------------------------------------------------
^a Less than $500,000.

Concurrent Receipt. Section 641 would phase in over five
years total or partial concurrent payment of retirement
annuities together with veterans' disability compensation to
retirees from the uniformed services who have service-
connected disabilities rated at 60 percent or greater. Under
section 641, the phase-in of concurrent receipt would not
take effect until January 1, 2003.
Under current law, disabled veterans who are retired from
the uniformed services cannot receive both full retirement
annuities and disability compensation from VA. Because of
this prohibition on concurrent receipt, such veterans forgo a
portion of their retirement annuity equal to the nontaxable
veterans' benefit. This section would permit, beginning in
2007, individuals who have significant service-connected
disabilities and have a retirement annuity based on years of
service, to receive both benefits in full without the
reduction called for under current law. Individuals whose
retirement pay is based on their degree of disability would
continue to forgo retirement pay equal to the VA compensation
payment, but only to the extent that their disability had
entitled them to a larger retirement annuity than they would
have received based on years of service.
This section also would repeal, as of January 1, 2003, a
program that partially compensates certain severely disabled
retirees for this reduction in their retirement annuities.
This program currently pays a fixed benefit of $50 to $300 a
month, depending on degree of disability. Taken together, CBO
estimates that implementing section 641 would increase direct
spending for retirement annuities and veterans' disability
compensation by a net amount of about $356 million in 2003,
$5.3 billion over the 2003-2007 period, and $17.3 billion
over the 2003-2012 period (see Table 5).
Retirement Annuities. Since the proposed legislation would
treat retirees differently based on their type of
retirement--nondisability or disability, the potential costs
of the legislation depend on the number of beneficiaries,
their type of retirement, their disability levels, and their
benefit amounts.
Nondisability Retirees. A nondisability retirement is
granted based on length of service--usually 20 or more years.
Section 641 would allow those longevity retirees whose degree
of disability has been rated as 60 percent or greater to
receive full retirement annuities and veterans' disability
benefits with no offset in 2007, and to receive an increasing
portion of their retirement annuities over the 2003-2006
period. Data from the uniformed services indicate that in
2001 the prohibition on paying both benefits concurrently
caused about $1.3 billion to be withheld from the annuity
payments of about 74,000 eligible DoD retirees with
nondisability retirements, and about 900 eligible Coast
Guard, PHS, and NOAA retirees. Using current rates of net
growth in the population of new beneficiaries, CBO estimates
this caseload would rise to about 78,000 nondisability
retirees in 2003, and 96,000 nondisability retirees by 2012.
CBO assumes that future benefit payments will increase
consistent with current rates of growth in average disability
levels and also increase from cost-of-living adjustments.
After phasing the benefits in over five years as specified in
the provision, CBO estimates that enacting the legislation
would increase direct spending on retirement annuities for
nondisability retirees of the uniformed services by $342
million in 2003, $4.7 billion over the 2003-2007 period, and
$15.2 billion over the 2003-2012 period.

TABLE 5.--ESTIMATED CHANGES IN RETIREE BENEFITS UNDER S. 2514
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
Description of benefits program ----------------------------------------------------------------
2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
Retirement Annuities:
Nondisability.............................. 342 582 861 1,223 1,654
Disability................................. 56 92 127 172 223
Veterans Compensation Payments................. 0 13 67 104 89
Survivor Benefit Plan Payments................. 7 7 8 9 9
Special Compensation for Severely Disabled..... -49 -66 -68 -69 -70
----------------------------------------------------------------
Total Changes in Retiree Benefits........ 356 628 995 1,439 1,905
----------------------------------------------------------------------------------------------------------------

Disability Retirees. Servicemembers who are found to be
unable to perform their duties because of service-related
disabilities may be granted a disability retirement. Section
641 would allow eligible disability retirees to receive
retirement annuities based on their years of service and
veterans' disability benefits with no offset in 2007, and
partial concurrent receipt of these payments in 2003 through
2006. Disability retirees would be eligible to obtain
concurrent receipt of their retirement annuity and veterans'
disability compensation if they served 20 or more years in
the uniformed services and had a disability rating of 60
percent or greater.
Data from the uniformed services indicate that in 2001, the
prohibition on paying both benefits concurrently caused about
$200 million to be withheld from annuity payments of about
11,400 eligible DoD retirees with disability retirements, and
about 500 eligible Coast Guard, PHS, and NOAA retirees. An
analysis of retiree records by DoD indicates

[[Page S5683]]

that, under the criteria set forth in this section, these
retirees would be eligible to receive about 95 percent of
their retirement annuity concurrently with their VA
disability benefit. Assuming continuation of current trends
in population and benefit growth, and phasing the benefit in
over five years as specified in this section, CBO estimates
that, of the disability retirees who would be receiving VA
disability benefits in fiscal year 2003, about 12,100 would
be entitled to an additional $56 million in retirement
annuities. CBO estimates their retirement annuities would
increase by $670 million over the 2003-2007 period and $1.9
billion over the 2003-2012 period.
Other Effects of Concurrent Receipt. Enacting section 641
also would affect Veterans' Disability Compensation, receipts
to the Treasury for Survivor Benefit Payments, Special
Compensation to Severely Disabled Retirees, and the level of
contributions to the Military Retirement Trust Fund.
Veterans' Disability Compensation. Data from DoD indicates
that an additional 15,100 disability retirees of the
uniformed services--14,500 from DoD and about 600 from the
other uniformed services--do not currently receive VA
disability benefits that they are entitled to receive. Since
many disability retirees are not taxed on their annuities,
there is no incentive under current law for these retirees to
apply for the tax-free VA benefits, as they will be offset,
dollar-for-dollar, against their retirement annuities.
Section 641 would provide a significant incentive for the
more disabled of these individuals to apply for VA disability
benefits. CBO estimates that about 7,000 disability retirees
might be eligible for concurrent receipt under section 641,
but, because many of these retirees are both disabled and
quite elderly, CBO expects that only about half of that
number would become aware of this improved benefit and
successfully complete the application process. Based on their
DoD-assessed degree of disability, CBO estimates that outlays
for VA disability benefits would increase by $13 million in
2004, about $270 million over the 2003-2007 period, and $760
million over the 2003-2012 period. Because of the time needed
for individuals to prepare and submit their applications and
the current backlog in processing applications, CBO estimates
that enacting this legislation would not increase outlays for
veterans' disability compensation in 2003.
Survivor Benefit Plan Offsetting Receipts. Many retirees
have a Survivor Benefit Plan (SBP) premium payment deducted
from their retirement annuity. The SBP was established in
Public Law 92-425 to create an opportunity for military
retirees to provide annuities for their survivors. Those
retirees who are not receiving a paycheck from DoD because
their retirement annuity is totally offset by their VA
disability benefit may still participate in the SBP by paying
the monthly premium to the U.S. Treasury. These payments are
recorded as offsetting receipts (a credit against direct
spending) to DoD. According to DoD, approximately 34,000
military retirees paid $23 million in SBP premiums to the
Treasury in 2001. DoD also indicates that about $7 million of
that amount was paid by about 8,000 retirees who would begin
to receive annuity checks under section 641. CBO's estimate
of the increase in retirement outlays presented above assumes
that the SBP premiums of retirees who benefit from the
legislation would be deducted from the retirees' annuities,
and their payments to the Treasury would cease. Assuming
continuation of current trends in population and benefit
growth, CBO estimates these offsetting receipts would
decrease by about $7 million in 2003, $40 million over the
2003-2007 period, and $90 million over the 2003-2012 period.
Repeal of Special Compensation for Severely Disabled
Retirees. Section 641 also would repeal a special
compensation program that currently pays a fixed benefit of
$50 to $300 a month to certain uniformed service retirees who
were determined to be 60 percent to 100 percent disabled
within four years of their retirement. These special payments
would stop on January 1, 2003, under section 641. Based on
information from DoD and assuming the population growth
trends continue, CBO estimates that about 36,000 DoD retirees
and about 600 retirees of the other uniformed services will
receive an average monthly benefit of $150 in 2002. Under
current law, this benefit is scheduled to increase over the
next two years to $172 a month. CBO estimates that the
savings from repealing this program would be $49 million in
2003, about $320 million over the 2003-2007 period, and $690
million over the 2003-2012 period.
Increased Accrual Payment Financing. The military
retirement system is financed in part by an annual payment
from appropriated funds (an outlay in budget function 050) to
the Military Retirement Fund, based on an estimate of the
system's accruing liabilities. If this provision is enacted,
the yearly contribution to the fund would increase to reflect
the added liability from the expected increase in annuities
to future retirees. These discretionary costs were discussed
earlier in the ``Spending Subject to Appropriation'' section.
Education Benefits for the Selected Reserve. Section 651
would extend the period during which eligible reservists may
use their education benefits from 10 years to 14 years. VA
reported that, in 2001, over 82,000 reservists trained under
this program and received an average annual benefit of
$1,653. This average benefit includes both the basic benefit
and a supplemental benefit that DoD can offer to enhance
accessions or re-enlistment in critical skill specialties.
This benefit increases each year by a cost-of-living
adjustment and by the level of supplemental benefits being
offered. Based on current usage rates, CBO estimates that
enacting this extension would result in an extra 1,500
trainees a year. Based on information from DoD and VA, CBO
estimates that enacting this legislation would increase
education outlays by $2 million in 2003, $10 million over
the 2003-2007 period and by $24 million over the 2003-2012
period. Since DoD makes monthly payments into the DoD
Education Benefits Fund in the amount of the net present
value of the benefits granted during the previous month,
this increase in usage of the education benefit would
necessitate an increase in payments to the fund. (The
discretionary costs associated with these payments are
discussed earlier in the ``Spending Subject to
Appropriation'' section under the heading of ``Education
and Training.'')
Mental Health Benefits. Section 702 would remove a
statutory requirement that inpatient mental health care be
preauthorized for retirees and dependents who are eligible
for Medicare. Under current law, Tricare for Life (TFL),
another medical program run by DoD, pays all Medicare
copayments and deductibles for those benefits that are
covered by both programs. Beginning in 2003, TFL spending for
Medicare-eligible retirees and dependents will be considered
direct spending. Under current law, Medicare does not require
a preauthorization for inpatient mental health care but
Tricare does. Removing this requirement would make the mental
health benefits identical and reduce confusion among
beneficiaries and health care providers.
Although most individuals would seek preauthorization
before receiving inpatient mental health care, CBO expects
that, under current law, some individuals would fail to
obtain the necessary preauthorization from Tricare and would
have to pay the copayments and deductibles on their own.
Because DoD does not have any available data on the frequency
or costs of inpatient mental health care for Medicare-
eligible retirees and dependents, CBO extrapolated this data
from the general Medicare population. Under section 702, CBO
estimates that in 2003 TFL would cover the copayments and
deductibles for about 600 additional people at an average
cost of about $1,700 per person. Thus, CBO estimates section
702 would raise direct spending by $1 million in 2003, $5
million over the 2003-2007 period, and $15 million over the
2003-2012 period.
Voluntary Separation and Early Retirement Incentives. S.
2514 contains several provisions that would allow the DoD and
DOE to offer voluntary separation incentives to their
civilian employees. Taken together, CBO estimates enacting
these provisions would increase direct spending for federal
retirement and retiree health care benefits by $34 million in
2004 and $196 million over the 2004-2012 period.
Section 1102 would provide DoD with authority to offer its
civilian employees voluntary retirement incentive payments of
up to $25,000 for employees who voluntarily retire or resign
in fiscal years 2004 thorough 2006. Current buyout authority
for DoD is set to expire on September 30, 2003. CBO estimates
that enacting section 1102 would increase direct spending for
federal retirement and retiree health care benefits by $31
million in 2004 and $188 million over the 2004-2012 period.
Section 3163 would provide DOE with authority to offer
payments of up to $25,000 to employees who voluntarily retire
or resign in calendar year 2004. Current buyout authority for
DOE is scheduled to expire on December 31, 2003. CBO
estimates enacting section 3163 would increase direct
spending for federal retirement and retiree health care
benefits by about $3 million in 2004 and about $8 million
during the 2004-2012 period.
DoD Retirement Spending. CBO assumes that about 16,500 DoD
employees would participate in the buyout program over the
three-year period and that many workers who take a buyout
would begin collecting federal retirement benefits several
years earlier than they would under current law. Inducing
some workers to retire earlier would result in additional
benefits being paid from the Civil Service Retirement and
Disability Fund. In later years, annual federal retirement
outlays would be lower than under current law because the
employees who retire early receive smaller annuity payments
than if they had retired later. CBO estimates that enacting
section 1102 would increase direct spending for federal
retirement benefits by $24 million in 2004 and $136 million
over the 2004-2012 period. (The discretionary costs over the
2004-2006 period associated with the buyout payments were
discussed earlier in the ``Spending Subject to
Appropriation'' section under the heading of ``Voluntary
Separation and Early Retirement Incentives.'')
DoD Retiree Health Care Spending. Enacting section 1102
also would increase direct spending on federal benefits for
retiree health care because many employees who accept the
buyouts would continue to be eligible for coverage under the
Federal Employee Health Benefits (FEHB) program. The
government's share of the premium for these retirees--unlike
current employees--is mandatory spending. Because many of
those accepting the buyouts would convert from being an
employee to being a retiree earlier than under current law,
mandatory spending for FEHB premiums would increase. CBO
estimates

[[Page S5684]]

these additional FEHB benefits would increase direct spending
by $7 million in 2004 and $52 million over the 2004-2012
period.
DOE Retirement Spending. CBO assumes that about 350 DOE
employees would participate in the buyout program in calender
year 2004 and that many workers who take a buyout would begin
collecting federal retirement benefits several years earlier
than they would under current law. Inducing some workers to
retire earlier would result in additional retirement benefits
being paid from the CSRDF. In later years, annual federal
retirement outlays would be lower than under current law
because the employees who retire early receive smaller
annuity payments than if they had retired later. Under
section 3163, CBO estimates spending for federal retirement
benefits would increase by $3 million in 2004 and by $8
million over the 2004-2012 period.
DOE Retiree Health Care Spending. Section 3163 would also
increase spending on federal retiree health benefits because
many employees who would accept the buyouts continue to
eligible for coverage under the FEHB program. CBO estimates
that these additional FEHB benefits would increase direct
spending by less than $500,000 a year over the 2004-2006
period.
Revitalizing DoD Laboratories. Section 241 would allow DoD
to establish a new three-year pilot program beginning in
March 2003 at various DoD laboratories to pursue improved
efficiencies for performing research and development work at
these laboratories. The section also would extend through
2006 authorizations for similar pilot projects that will
expire in 2003. Finally, section 241 would permit
laboratories participating in this new pilot program to enter
into public-private partnerships and other business
arrangements with private firms to achieve improved
efficiencies. The authority to enter into such partnerships
would expire in 2006. Under section 241, one of the public-
private partnerships could be established as a limited
liability corporation where the federal and nonfederal
partners could contribute capital, services, or facilities to
the corporation.
CBO has little information about how this limited liability
corporation would be structured, but one of the purposes of
this corporation would be to finance improvements to DoD's
research, test, and evaluation functions. CBO considers such
hybrid entities as governmental. Hence, their activities
should be recorded in the federal budget. CBO treats the
assets that are expected to be contributed by the private
party as borrowed by the federal government. Borrowing
authority is treated as budget authority in the year and in
the amounts that CBO estimates the private party would
contribute to the limited liability corporation. This
budgetary treatment is consistent with the recommendations of
the President's 1967 Commission on Budget Concepts, which
suggests that entities jointly capitalized with private and
public assets be included in the federal budget until they
are completely privately owned.
CBO assumes that DoD would need about one year to develop
the policies and regulations for the new corporation that
would be authorized under section 241. Based on information
provided by DoD, CBO estimates that the additional expenses
of the limited liability corporation could total between $4
million and $7 million a year. Assuming costs fall midway
within that range, CBO estimates that federal borrowing would
be about $6 million starting in 2004 and total about $15
million over the 2004-2006 period.
The budget also would record any cash proceeds collected by
the corporation from the public. Any payments from federal
agencies would be an intragovernmental transfer and would
have no net budgetary impact. In contrast, any proceeds
accruing to the corporation from nonfederal entities would
be recorded as offsetting collections and would reduce the
net cost of the partnership over time. For this estimate,
CBO assumes that the government would use most of the
services of this corporation. As a result, CBO estimates
that proceeds from nonfederal sources would not be
significant.
Land Conveyance and Other Property Transactions. Title
XXVIII would authorize a variety of property transactions
involving both large and small parcels of land.
Section 2824 would allow the Secretary of the Navy to
convey 30.38 acres and 133 housing units located at Westover
Reserve Air Base to the city of Chicopee, Massachusetts,
without receiving payment for this property. Under current
law, the Navy will soon declare this property excess and
transfer it to the General Services Administration (GSA) for
disposal. Under normal procedures, GSA sells property not
needed by other federal agencies or by nonfederal entities in
need of property for public-use purposes such as parks or
educational facilities. Information from GSA indicates that
the housing and land will likely be sold under current law
after the entire parcel is screened for other uses in 2003.
As a result, CBO estimates that this conveyance would result
in forgone receipts totaling about $3 million in 2004.
Section 2828 would authorize the Secretary of the Interior
to convey to the city of West Wendover, Nevada, and Tooele
County, Utah, without consideration, two parcels of federal
land located in those states and identified in the bill.
According to the Bureau of Land Management, those lands,
which are withdrawn for military purposes, currently generate
no offsetting receipts and are not expected to in the
foreseeable future. Hence, CBO estimates that conveying the
lands would not affect offsetting receipts. According to the
U.S. Air Force, portions of the lands that could be conveyed
have been used as a bombing range by the Air Force. Under the
Comprehensive Environmental Response, Compensation, and
Liability Act, the Air Force would have to remediate any
expended and unexploded ordnance prior to conveying those
lands. Based on information from the Air Force, we estimate
that initial remediation activities would cost at least $2
million, assuming appropriation of the necessary amounts.
Although we do not have sufficient information to estimate
the cost of subsequent remediation activities that may be
necessary, CBO expects that such costs could be significant.
Any spending for additional remediation would be subject to
appropriation.
CBO estimates that other provisions in title XXVIII would
not result in significant costs to the federal government
because they would either authorize DoD to convey land for
fair market value, to exchange one piece of property for
another or would authorize DoD to convey land that under
current law is unlikely to be declared excess and sold or is
likely to be given away.
Other Provisions. The following provisions would have an
insignificant budgetary impact on direct spending:
Section 111 would extend through 2004 the authority for a
pilot program that allows industrial facilities within the
Army to sell manufactured goods to the private sector even if
the goods are manufactured in the domestic market. Section
111 also would direct that a portion of the sales proceeds in
excess of $20 million a year be made available for ammunition
demilitarization. CBO estimates, however, that there would
likely be less than $5 million in annual sales under this
pilot program over the 2003-2004 period, based on data
provided by the Army, and that since the industrial
facilities are allowed to spend any sales proceeds, the net
effect on direct spending would be insignificant.
Section 642 would increase the retirement annuity of
enlisted servicemembers who are retired from a reserve
component of the Armed Forces and have been credited by their
service secretary with extraordinary heroism in the line of
duty. Under section 642, these retirees would be entitled to
a 10 percent increase in their retirement annuity. CBO
estimates that enacting section 642 would increase direct
spending by less than $500,000 a year.
Section 1063 would extend through 2006 DoD's authority to
sell aircraft and aircraft parts for use in responding to oil
spills. Based on information from DoD, CBO does not
anticipate any transactions would occur under this authority.
Section 3151 would require that the program to eliminate
weapons-grade plutonium production in Russia be transferred
from the Department of Defense to the Department of Energy.
Funds appropriated for the program for 2000 through 2002
would be transferred to DOE and would be made available for
obligation until expended. Under current law, those funds
have a three-year period of availability, thus this provision
could result in a reappropriation because it would extend the
availability of some funds that would otherwise lapse. CBO
estimates that about $120 million has been appropriated for
this program over the 2000-2002 period and that nearly all of
those funds will be obligated and spent under current law. As
a result, CBO estimates that reappropriations under section
3151 would not be significant--probably less than $500,000
annually from 2003 through 2005.
Section 3162 would allow the Department of Energy to
penalize contractors operating at DOE facilities for
occupational safety violations. These penalties would most
likely be levied by reducing the fees owed to the contractor.
Based on information about penalties levied over the last few
years for nuclear safety violations, CBO estimates that the
reduction in contract fees due to occupational safety
violations would be less than $500,000 annually.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go
procedures for legislation affecting direct spending or
receipts. The net changes in direct spending that are subject
to pay-as-you-go procedures are shown in Table 6. For the
purposes of enforcing pay-as-you-go procedures, only the
effects through fiscal year 2006 are counted.

TABLE 6.--ESTIMATED IMPACT OF S. 2514 ON DIRECT SPENDING AND RECEIPTS
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays.............................................. 0 359 674 1,081 1,533 1,936 2,132 2,261 2,391 2,529 2,676
Changes in receipts Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page S5685]]

Intergovernmental and private-sector impact: S. 2514
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Previous CBO estimate: On May 3, 2002, CBO transmitted a
cost estimate for H.R. 4546, the Bob Stump National Defense
Authorization Act for Fiscal Year 2003, as ordered reported
by the House Committee on Armed Services on May 1, 2002. The
House bill would authorize approximately $382 billion in
defense funding for fiscal year 2003 ($10 billion less than
S. 2514 would authorize for 2003) and an estimated $14
billion in additional defense funding for 2002 (as also
contained in S. 2514).
Both H.R. 4546 and S. 2514 would increase direct spending
over the 2003-2007 period, but the Senate bill contains about
$200 million less spending. Both bills contain provisions
that would phase in over five years total or partial payment
of retirement annuities together with veterans' disability
compensation to retirees from the uniformed services who have
service-connected disabilities rated at 60 percent or greater
but the provisions specify different rates and schedules for
phasing in the increased payments. Differences in the other
estimated costs reflect differences in the legislation.
Estimate Prepared by: Federal Costs: Defense Outlays: Kent
Christensen; Defense Laboratories and Department of Energy:
Raymond Hall; Military Construction: David Newman; Military
and Civilian Personnel: Michelle Patterson and Dawn Regan;
Military Retirement and Education Benefits: Sarah Jennings;
Health Programs: Sam Papenfuss; Multiyear Procurement: David
Newman; Operation and Maintenance: Matt Schmit; Voluntary
Separation and Early Retirement Incentives: Geoffrey
Gerhardt; Impact on State, Local, and Tribal Governments:
Elyse Goldman; Impact on the Private Sector: R. William
Thomas.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

Mr. LEVIN. I yield the floor.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. WARNER. Mr. President, I thank my good friend and colleague, and
I look forward again--as this will be our 24th year--of working
together on the authorization bill.
Mr. President, I simply say to my good friend, the chairman, he
mentioned that the Bush administration has yet to provide a formal
national security strategy. I note that the timetable for submitting
this document is not unusual. The Clinton administration did not submit
its first national security strategy until well into its second year in
office. In my contacts with the administration, they will soon be
submitting that national security strategy.
I thank Chairman Levin for the work he has done on the bill which is
before the Senate. I also want to thank my colleagues on the committee
for their wise counsel and efforts, as well as the tremendous efforts
of our committee staff. In large measure, this Defense Authorization
Act for Fiscal Year 2003 is a good bill and an important step forward
in our war against terrorism. In this time of national emergency it is
essential that we provide our President and our armed forces the vital
resources they need to defend our Nation, and to fight the scourge of
terrorism at home and abroad.
In the end, I joined with seven of my Republican colleagues on the
committee in voting against this bill in committee--primarily due to
the drastic cut of over $800 million in missile defense. Having worked
hard for a year on the many critical issues related to this bill, I
considered my vote against the bill necessary, but regrettable.
Despite the fact that I voted against this bill, I support most of
what is contained in this legislation. It represents the bipartisan
work of all committee members--working together to support our men and
women in uniform, and their families.
The National Defense Authorization Act for Fiscal Year 2003 contains
the largest defense increase in over 20 years--an increase of $45.0
billion over the fiscal year 2002 appropriated level. The good news
story associated with this much needed increase is that it has the
full, bipartisan support of the Senate. While there is disagreement
over how some of the money is allocated in this bill, there is
virtually no dissent about the need for this significant increase in
the top line for defense. This is a remarkable display of unity behind
our President, so important and fitting with our nation at war.
In line with the request of the President, the bill significantly
increases all major defense accounts over the fiscal year 2002
appropriated levels:
It increases spending on military personnel by over 12 percent,
including a 4.1 percent pay raise for our servicemen and women.
It increases funding for operations and maintenance by over 15
percent, providing the necessary resources to fully fund our war
effort.
The bill increases the procurement account by almost 10 percent. This
will enable our military departments to procure the equipment they need
to replace aging and heavily used assets, as well as to buy the things
they need to protect our facilities, infrastructure and people in these
increasingly uncertain and dangerous times.
Additionally, the bill increases spending on research and development
by almost 9 percent, ensuring that investment is being made in the
future to develop the capabilities we need to deter and defeat emerging
threats to our national security.
The bill also sets aside a $10.0 billion reserve fund, as requested
by the President, to pay for ongoing and future military operations in
the global war on terrorism.
The threats to our Nation and the ongoing war on terrorism demand
this increased investment in national security, both now and in the
future.
The bill contains many key provisions which I support to improve the
quality of life of our men and women in uniform, our retirees, and
their families. In addition to the 4.1 percent pay raise for our
uniformed personnel I mentioned earlier, additional funding is included
for facilities and services that will greatly improve the quality of
life for our service personnel and their families, at home and abroad.
The bill includes a legislative provision that calls for the phased
repeal of the prohibition on concurrent receipt of non-disability
retired military pay and veterans disability pay for our military
retirees with disabilities rated at 60 percent or higher. The committee
also approved a managers' amendment, sponsored by Senator Bob Smith,
which will soon be considered by the full Senate, to repeal fully and
immediately, the prohibition on concurrent receipt, a step which will
allow all nondisability retired veterans with VA disability ratings to
collect the full amount they have earned. This action is long overdue.
It is important to note that this bill, with the exception of the
cuts made to missile defense, supports and fully funds virtually all of
the priorities established by the Department and the President for the
development and procurement of major weapons systems, including Joint
Strike Fighter, F-22 and the Army's future combat system. In addition,
I was pleased that we were able to add $229 million to the CVN(X) new
generation aircraft carrier to restore the original development and
fielding schedule for this essential program. The carrier proved its
worth once again in Afghanistan--a war which relied on carrier-based
assets. This bill supports acceleration of this important program.
Despite the very favorable aspects of this bill, however, I cannot
support the bill in its current form. I was joined by seven of my
Republican colleagues in opposing the bill as reported by the
committee.
For the second consecutive year, the Senate Armed Services Committee
divided along party lines primarily over the issue of missile defense.
Sincere, good-faith efforts were made by Republican Members to find
common ground and compromise on this issue, but these efforts were
voted down. The national defense authorization bill for fiscal year
2003 that we have before us, in my view, fundamentally alters the
President's national security priorities and fails to send a clear
message, on the issue of missile defense, to America's allies and
adversaries that the Congress will provide the resources necessary to
protect our homeland, our troops deployed overseas and our allies and
friends from all known threats--including the very real and growing
threat of missile attack. I will work in the days ahead, and into the
conference with the House, to restore the cuts made to these important
programs and to staunchly defend the priorities our President has
established.

The world as we knew it changed forever on September 11. We lost not
only many lives and much property that day, but we also lost our
uniquely American feeling of invulnerability;

[[Page S5686]]

our feeling of safety within our shores, our borders, behind two vast
oceans. But from our darkest hour, our nation has quickly emerged
stronger and more united than ever. Our President has rallied our
country and many nations around the world to fight the evil of
terrorism.
As we begin our floor debate on the national defense authorization
bill for fiscal year 2003, our nation is at war. U.S. soldiers,
sailors, airmen, and marines, together with their coalition partners,
are engaged on the front lines in the global war against terrorism,
with a mission to root out terrorism at its source in the hopes of
preventing future attacks. Our armed forces have responded to the call
of duty in the finest traditions of our nation. It is critical that the
Congress keep faith with our troops by providing the resources and
capabilities our President--our Commander in Chief has requested.
Homeland security is now, without a doubt, our top priority. We have
a solemn obligation to protect our Nation and our citizens from all
known and anticipated threats--whatever their source or means of
delivery. As a candidate and as President, George W. Bush promised our
Nation that homeland security was his most urgent priority.
Our President submitted a responsible, prioritized budget request for
fiscal year 2003 that addressed our most important security needs. The
bill before us reflects the urgent security needs of our Nation by
doubling the funding for combating terrorism at home and abroad. It
invests in new technologies to detect weapons of mass destruction and
to deter their development. The bill provides funding and authorities
for the establishment of new organizations within the Department of
Homeland Defense, including the formation of Northern Command,
NORTHCOM, to provide coordinated land, sea and air defense of the
United States. As we re-look and re-evaluate our security needs, it is
especially important to remember that protection of our nation, our
citizens, our deployed troops and our allies from ballistic missiles is
also an integral part of homeland defense and an overall sense of
security.
The budget request for missile defense was reasonable. It was a
request that represented no increase over last year's funding level,
and a request that was less than two percent of the defense budget. We
must use these resources to move forward now, without artificial
limitations--either fiscal or legislative--to develop and deploy
adequate missile defenses.
The national defense authorization bill for fiscal year 2003, as
reported out of committee, contains a drastic reduction, of over $800
million, from the President's request for missile defense programs,
including over $400 million in reductions to theater missile defense
programs. In addition, the bill contains a number of restrictions and
excessive reporting requirements that will further hamper the rapid
development of missile defenses. Together, these actions have resulted
in a letter from the Secretary of Defense informing the Senate that he
would recommend a veto of this legislation if the reductions and
restrictions on missile defense remain.
Three years ago, by a vote of 97 to 3, this body approved the
National Missile Defense Act of 1999--the Cochran bill. This act
established two clear goals: to deploy an effective ballistic missile
defense for the United States, ``as soon as technologically feasible;''
and, to seek further negotiated reductions in Russian nuclear forces.
Last month, President Bush signed a landmark arms control agreement, in
Moscow, that will ultimately reduce the number of U.S. and Russian
deployed nuclear warheads by two-thirds over the next 10 years. The
second goal of the Cochran bill has been achieved.
This month, the United States formally withdrew from the Anti-
Ballistic Missile Treaty--a 30-year-old treaty--which had hampered the
U.S. missile defense program. With this action, all artificial
restraints have been removed from the ability of the United States to
research, develop and deploy effective missile defense systems. Both
goals of the Cochran bill that the Senate so overwhelmingly supported
are in sight. Congress should not now apply new limitations on the
rapid, cost-effective development of defenses to protect our nation and
deployed troops from missile attack. The funding reductions and program
constraints contained in the bill before us are a significant step
backward in our efforts to improve the security of our nation.
The threat of missile attack against the United States and U.S.
interests is real and growing. According to the January 2002 national
intelligence estimate, NIE, on the missile threat, ``The probability
that a missile with a weapon of mass destruction will be used against
U.S. forces or interests is higher today than during most of the cold
war, and will continue to grow as the capabilities of potential
adversaries mature.'' Dozens of nations already have short- and medium-
range ballistic missiles in the field that threaten U.S. interests,
military forces, and allies; and others are seeking to acquire similar
capabilities, including missiles that could reach the United States. We
must be prepared to protect our nation.
I am also concerned with other key areas in the bill, particularly
the level of funding for shipbuilding. While I understand the tough
choices that our defense leaders must make in establishing priorities
and putting forth budget recommendations, shipbuilding was severely
underfunded in the President's budget request. The bill we are now
considering provides some additional resources for shipbuilding, but I
believe more must be done to reverse the downward trend in
shipbuilding. We all know that we are not currently building enough
ships to maintain an adequate Navy for the future. Ultimately, there
will be a high price to pay if this trend is not reversed.
It is with these concerns in mind that I urge my colleagues to join
me in constructive dialogue to find a way to restore the President's
fundamental national security priorities and to ensure we are making
the right investments in future capabilities. It is imperative that we
send our President, our fellow citizens and the world a message of
resolve from the Congress--a national defense authorization bill that
provides the resources and authorities our Nation's leaders and our
armed forces require to protect our Nation, our citizens abroad, our
vital interests, and our international partners who stand with us
against terrorism.
I thank the distinguished chairman. I am going to a meeting on this
bill tonight as to how we can order the amendments tomorrow on which I
will work with the chairman.
Mr. THURMOND. Mr. President, one of my most important
responsibilities throughout my almost 48 years in the Senate has been
to vote on the annual national defense authorization bill. This bill
not only provides for our Nation's security but, more importantly, it
provides for the Nation's most valuable asset, the men and women who so
proudly wear the uniform and their family members who are an integral
part of our military. Today, I rise, ever mindful of my
responsibilities, to offer my views on the last national defense
authorization bill that I will vote on before I leave the Senate.
Before discussing the bill, I want to congratulate Chairman Levin,
and the ranking member, Senator Warner, for their leadership of the
Senate Armed Services Committee. The challenges they face in pulling
together this annual bill are immense, yet, year after year they
prepare a bill that reflects a bipartisan approach to national
security. There may be differences on individual programs, but their
leadership and the participation of every member of the committee
crafted a bill that enhances the security of the country and improves
the quality of life for our soldiers, sailors, airmen and marines and
their families.
The national defense authorization bill for fiscal year 2003,
supports the President's budget request of $379 million, the largest
increase to the defense budget in twenty years. It provides significant
increases in military pay, readiness funding, and military
construction. The bill includes a provision that would address long-
standing inequities in the compensation of military retirees by
authorizing the concurrent receipt of retired pay and veterans
disability compensation. This is an issue which I have supported for
some time and I am pleased to see it resolved this year.
Like all bills there are provisions that cause me concern. The most
egregious in this bill is the reduction to the

[[Page S5687]]

President's request for missile defense. By reallocating more than $800
million requested for missile defense to other programs, the bill
fundamentally alters the President's priorities and leaves open the
possibility that we will not adequately defend our Nation against a
missile attack. I urge the Senate to reverse this flawed provision.
Mr. President, in closing I remind my colleagues that this bill also
provides vital funding to support our forces currently engaged in the
war against terrorism. This war is unlike any faced by my generation.
It will not be won by large armies, but by dedicated, highly trained
soldiers, sailors, airmen and marines. I am extremely proud of what our
military personnel have accomplished and I have no doubt that their
professionalism and dedication will bring an end to the terrorist
threat. We owe these men and women the best our Nation can provide and
we must show them our support by voting for this bill.
I thank the Chair.
Mr. LEVIN. Madam President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Ms. Cantwell). The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. REID. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

____________________