[House Report 115-200]
[From the U.S. Government Publishing Office]
115th Congress } { Rept. 115-200
HOUSE OF REPRESENTATIVES
1st Session } { Part 2
======================================================================
NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2018
_______
July 11, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Thornberry, from the Committee on Armed Services, submitted the
following
SUPPLEMENTAL REPORT
[To accompany H.R. 2810]
[Including cost estimate of the Congressional Budget Office]
This supplemental report shows the cost estimate of the
Congressional Budget Office with respect to the bill (H.R.
2810), as reported, which was not included in part 1 of the
report submitted by the Committee on Armed Services on July 6,
2017 (H. Rept. 115-200, pt. 1).
Congressional Budget Office Estimate
In compliance with clause 3(c)(3) of rule XIII of the House
of Representatives, the cost estimate prepared by the
Congressional Budget Office and submitted pursuant to section
402 of the Congressional Budget Act of 1974 is as follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 10, 2017.
Hon. Mac Thornberry,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2810, the National
Defense Authorization Act for Fiscal Year 2018.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is David Newman.
Sincerely,
Keith Hall.
Enclosure.
H.R. 2810--National Defense Authorization Act for Fiscal Year 2018
Summary: H.R. 2810 would authorize appropriations totaling
an estimated $689 billion for the military functions of the
Department of Defense (DoD), for certain activities of the
Department of Energy (DOE), and for other purposes. In
addition, the bill 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 would result in outlays of $669 billion over the 2018-
2022 period.
If the total amount authorized for 2018 was appropriated,
$613.8 billion would count against that year's defense cap set
in the Budget Control Act (BCA), as amended; $0.6 billion would
count against the nondefense cap for 2018; and $74.6 billion
designated for overseas contingency operations would not be
constrained by caps.
The bill also contains provisions that would affect the
costs of defense programs funded through discretionary
appropriations in 2019 and future years. Those provisions
mainly would affect force structure, compensation and benefits,
the military health system, and various procurement programs.
CBO has analyzed the costs of a select number of those
provisions and estimates that they would, on a net basis,
increase the cost of those programs relative to current law by
about $80 billion over the 2019-2022 period. The net costs of
those provisions in 2019 and beyond are not included in the
total amount of outlays mentioned above because funding for
those activities would be covered by specific authorizations in
future years.
Several provisions of H.R. 2810 would have insignificant
effects on direct spending and revenues over the 2018-2027
period, primarily as a result of changes to military health
care benefits, allowing DoD to dispose of property and use the
proceeds from those transactions, and adding a specified
offense under the military justice system. CBO estimates that
in total the direct spending and revenue effects of enacting
the bill would not be significant over the 2018-2027 period.
Because enacting the bill would affect direct spending and
revenues, pay-as-you-go procedures apply.
CBO estimates that enacting H.R. 2810 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2028.
H.R. 2810 contains intergovernmental and private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
CBO estimates that the aggregate cost of the mandates would
fall below the annual thresholds established in UMRA for
intergovernmental and private-sector mandates ($78 million and
$156 million respectively in 2017, adjusted annually for
inflation).
Estimated cost to the Federal Government: The estimated
budgetary effects of H.R. 2810 are shown in Table 1. Almost all
of the $689 billion authorized by the bill would be for
activities within budget function 050 (national defense).
Some authorizations, however, fall within other budget
functions, including, $278 million for the Maritime
Administration in function 400 (transportation); $127 million
for the Small Business Administration in function 370 (commerce
and housing credit); $124 million for the Department of the
Interior in function 800 (general government); $116 million for
a medical facility demonstration fund in function 700 (veterans
benefits and services); $64 million for the Armed Forces
Retirement Home in function 600 (income security); and $5
million for the Naval Petroleum Reserves in function 270
(energy).
Basis of estimate: For this estimate, CBO assumes that H.R.
2810 will be enacted near the start of fiscal year 2018 and
that the authorized and that estimated amounts will be
appropriated near the beginning of each fiscal year.
Spending Subject to Appropriation
For 2018, the bill would authorize an estimated $688.9
billion, primarily for defense programs. Nearly all of that
amount ($688.6 billion) would be specifically authorized by the
bill (see Table 2). The remaining $0.3 billion largely reflects
CBO's estimate of the amount not specifically authorized by the
bill that would be necessary to fund certain accrual payments
required under current law.
TABLE 1. BUDGETARY EFFECTS OF H.R. 2810, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2018a
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By fiscal year, in millions of dollars--
-----------------------------------------------------------------
2018 2019 2020 2021 2022 2018-2022
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INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Levels for Appropriations
Subject to the BCA Caps:
Defense:
Specified Authorizations for the
Departments of Defense and Energy:
Authorization Levelb.............. 613,457 0 0 0 0 613,457
Estimated Outlays................. 364,876 142,742 53,242 24,885 10,342 596,087
Estimated Authorization for Additional
Accrual Paymentsc:
Estimated Authorization Level..... 296 0 0 0 0 296
Estimated Outlays................. 296 0 0 0 0 296
Nondefense:
Specified Authorizations for Various
Departments and Agenciesb,d:
Authorization Level............... 609 22 22 22 0 674
Estimated Outlays................. 456 99 59 44 5 663
Estimated Authorizations for Various
Departments and Agenciese:
Estimated Authorization Level..... 13 24 4 4 4 50
Estimated Outlays................. 10 22 7 4 4 47
Subtotal
Estimated Authorization Level. 614,375 46 26 26 4 614,477
Estimated Outlays............. 365,638 142,863 53,308 24,934 10,351 597,093
Specified Authorizations for Defense
Appropriations not Subject to the BCA Caps
Authorization Levelb,f.................... 74,560 0 0 0 0 74,560
Estimated Outlays......................... 39,695 19,090 7,661 3,542 1,686 71,674
Total
Estimated Authorization Level......... 688,934 46 26 26 4 689,037
Estimated Outlays..................... 405,333 161,953 60,969 28,476 12,037 668,767
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Notes: Except as discussed in footnotes c and e below, the authorization levels in this table reflect amounts
that would be specifically authorized by the bill (as reflected in Table 2). Some provisions in the bill also
would affect the costs of defense programs in 2019 and future years; estimates for a select number of those
provisions are shown in Table 3, but are not included above because specified authorizations in future NDAAs
would reflect funding for those activities.
Numbers may not add to totals because of rounding; BCA = Budget Control Act; MERHCF = Medicare-Eligible
Retirement Health Care Fund; NDAA = National Defense Authorization Act; SBA = Small Business Administration.
aIn addition to increasing spending subject to appropriation, the bill would have an insignificant effect on
direct spending and revenues over the 2018-2028 period.
bAmounts that would be specifically authorized by the bill.
cCBO's estimate of the added cost of certain accrual payments to the MERHCF required under current law but not
fully reflected in the amounts specifically authorized by sections 421 and 1505 of the bill.
dAuthorizations for the Maritime Administration ($278 million), the Compact for Free Association with Palau
($124 million), the Department of Veterans Affairs ($116 million), the SBA Women's Business Center Program
($87 million over the 2018-2021 period), the Armed Forces Retirement Home ($64 million) and the Naval
Petroleum Reserves ($5 million).
eAuthorizations reflect the cost of extending certain benefits, in section 1108, to federal civilian workers who
perform official duties in a combat zone and are employed by departments and agencies other than the
Department of Defense ($10 million in 2019). Also included are costs to the SBA from sections 1701, 1703, and
1721 ($40 million over the 2018-2022 period). Other provisions in title XVII would result in costs to the SBA;
however, due to time constraints CBO was not able to complete an estimate for those provisions.
fAuthorizations of appropriations that would be designated for Overseas Contingency Operations. Under the bill,
$64,566 million would be authorized for contingency costs related to military operations and related
activities in Afghanistan, Iraq and elsewhere, while another $9,994 million would be authorized for costs of
`base requirements' not directly related to those missions.
TABLE 2. SPECIFIED AUTHORIZATIONS OF APPROPRIATIONS IN H.R. 2810
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By fiscal year, in millions of dollars--
-----------------------------------------------------------------
2018 2019 2020 2021 2022 2018-2022
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Specified Authorization Levels for
Appropriations Subject to the BCA Caps:
Defense:
Military Personnela:
Authorization Level............... 141,870 0 0 0 0 141,870
Estimated Outlays................. 131,886 8,078 182 38 0 140,184
Operation and Maintenance:
Authorization Level............... 226,229 0 0 0 0 226,229
Estimated Outlays................. 150,490 54,146 11,769 3,336 1,295 221,036
Procurement:
Authorization Level............... 128,823 0 0 0 0 128,823
Estimated Outlays................. 24,963 40,440 31,138 16,791 7,256 120,588
Research and Development:
Authorization Level............... 84,038 0 0 0 0 84,038
Estimated Outlays................. 41,202 31,757 6,222 2,968 909 83,058
Military Construction and Family
Housing:
Authorization Level............... 9,585 0 0 0 0 9,585
Estimated Outlays................. 816 2,164 2,714 1,759 886 8,339
Revolving Funds:
Authorization Level............... 2,108 0 0 0 0 2,108
Estimated Outlays................. 1,726 314 43 15 8 2,106
General Transfer Authority:
Authorization Level............... 0 0 0 0 0 0
Estimated Outlays................. 125 -50 -38 -25 -12 0
Subtotal, Department of Defense:
Authorization Level........... 592,654 0 0 0 0 592,654
Estimated Outlays............. 351,208 136,849 52,030 24,882 10,342 575,311
Atomic Energy Defense Activities:
Authorization Levelb.................. 20,803 0 0 0 0 20,803
Estimated Outlays..................... 13,668 5,893 1,212 3 0 20,776
Subtotal, Defense:
Authorization Level............... 613,457 0 0 0 0 613,457
Estimated Outlays................. 364,876 142,742 53,242 24,885 10,342 596,087
Nondefense
Department of Veterans Affairs and
Other Departments and Agencies:
Authorization Levelc.............. 609 22 22 22 0 674
Estimated Outlays................. 456 99 59 44 5 663
Subtotal (subject to caps):
Authorization Level........... 614,066 22 22 22 0 614,131
Estimated Outlays............. 365,332 142,841 53,301 24,929 10,347 596,750
Specified Authorization Levels for Defense
Appropriations not Subject to the BCA Capsd:
Military Personnela:
Authorization Levele.............. 5,124 0 0 0 0 5,124
Estimated Outlays................. 4,746 306 7 1 0 5,060
Operation and Maintenance:
Authorization Levele.............. 48,653 0 0 0 0 48,653
Estimated Outlays................. 30,130 12,574 3,342 941 381 47,368
Procurement:
Authorization Levele.............. 17,963 0 0 0 0 17,963
Estimated Outlays................. 3,730 5,180 3,936 2,442 1,239 16,527
Research and Development:
Authorization Levele.............. 2,085 0 0 0 0 2,085
Estimated Outlays................. 946 843 174 71 23 2,057
Military Construction:
Authorization Level............... 637 0 0 0 0 637
Estimated Outlays................. 11 192 213 99 49 564
Working Capital Funds:
Authorization Level............... 99 0 0 0 0 99
Estimated Outlays................. 69 20 8 1 0 98
Special Transfer Authority:
Authorization Level............... 0 0 0 0 0 0
Estimated Outlays................. 63 -25 -19 -13 -6 0
Subtotal (not subject to caps):
Authorization Level........... 74,560 0 0 0 0 74,560
Estimated Outlays............. 39,695 19,090 7,661 3,542 1,686 71,674
Total Specified
Authorizations:
Authorization Level......... 688,626 22 22 22 0 688,691
Estimated Outlays........... 405,027 161,931 60,962 28,471 12,033 668,424
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Notes: This table reflects the authorizations of appropriations explicitly stated in the bill in specified
amounts. Various provisions of the bill also would authorize activities and provide authorities that would
affect costs in 2019 and in future years. Because the bill would not specifically authorize appropriations to
cover those costs, they are not reflected in this table. Rather, Table 3 contains the estimated costs of some
of those provisions.
Numbers may not add up to totals because of rounding; BCA = Budget Control Act; SBA = Small Business
Administration.
aThe authorizations of appropriations for military personnel in sections 421 and 1505 include $7,849 million for
accrual payments to the Medicare-Eligible Retiree Health Care Fund. CBO estimates, however, that amount
understates--by $296 million--the amount required for those payments; thus $296 million has been added to the
estimated cost of the bill, as reflected in Table 1.
bPrimarily for atomic energy defense activities of the Department of Energy.
cAuthorizations for the Maritime Administration ($278 million), the Compact for Free Association with Palau
($124 million), the Department of Veterans Affairs ($116 million), the Armed Forces Retirement Home ($64
million), and the Naval Petroleum Reserves ($5 million), plus authorizations of $87 million over the 2018-2021
period for the SBA Women's Business Center Program. The authorized amount for the Maritime Administration does
not include the $300 million specified in the bill for payments to shipping companies under the Maritime
Security Program because that amount is already authorized under current law for 2018.
dUnder H.R. 2810, funding provided for 2018 pursuant to the authorizations in title XV would not be subject to
the BCA cap on defense appropriations for that year. Most authorizations in title XV are for costs related to
overseas contingency operations (OCO)--primarily the costs of military operations and related activities in
Afghanistan, Iraq, and elsewhere in the world; under the bill, however, some authorizations in that title
would cover costs not directly related to OCO (see footnote e).
eAuthorized levels in title XV would not be subject to the 2018 BCA cap on defense appropriations because they
would be designated for overseas contingency operations (OCO). However, of the $74,560 million designated for
OCO, the following amounts would be used--according to the bill--for ``base requirements'', that is,
requirements not directly related to the costs contingency operations in Afghanistan, Iraq, and elsewhere in
the world: military personnel ($1,062 million); operation and maintenance ($2,107 million); procurement
($6,047 million); and research and development ($779 million).
Under H.R. 2810, $613.4 billion specifically authorized for
defense programs would, if appropriated, be subject to the 2018
BCA cap for defense. Another $74.6 billion specifically
authorized for DoD--largely for costs related to overseas
contingency operations--would not be subject to that cap. For
nondefense programs, the bill would specifically authorize $0.6
billion for several departments and agencies.
The total amount that would be specifically authorized for
defense programs is an increase of $62.3 billion (or 10
percent) compared to amounts appropriated for 2017. Procurement
would receive the largest increase ($23.2 billion, or 19
percent), followed by operation and maintenance ($15.2 billion,
or 6 percent), research and development ($13.1 billion, or 18
percent), military personnel ($7.5 billion, or 5 percent), and
military construction and family housing ($2.1 billion, or 25
percent). Authorized funding for all other categories combined
would increase by $1.2 billion (or 5 percent).
H.R. 2810 also contains provisions that would affect the
cost of various discretionary programs in future years. Most of
those provisions would affect end strength (the size of the
military forces at the end of a fiscal year), military
compensation and benefits, the military health system, and
authorities related to the acquisition of weapons systems. The
estimated effects of some of those provisions are shown in
Table 3 and discussed below. The following sections discuss how
those provisions would affect the need for discretionary
appropriations in future years.
Force Structure. The bill would affect the force structure
of the various military services by setting end-strength levels
for 2018 and modifying the minimum end-strength levels
authorized in permanent law.
Under title IV, the authorized end strengths in 2018 for
active-duty personnel and personnel in the selected reserves
would total 1,324,000 and 829,900, respectively. Of those
selected reservists, 78,626 would serve on active duty in
support of the reserves. In total, active-duty end strength
would increase by 18,100 and selected-reserve end strength
would increase by 9,700 when compared with levels authorized
under current law for 2018. The specified end-strength levels
for each component of the armed forces are detailed below with
CBO's estimates of the effects of those changes on DoD's
personnel and operation and maintenance costs.
Active-Duty End Strengths. Compared with end strengths
authorized under current law for 2018, section 401 would
authorize increases in active-duty personnel for three of the
four services: 10,000 more for the Army, 4,100 more for the Air
Force, and 4,000 more for the Navy. The end strength authorized
for the Marine Corps would remain unchanged at 185,000. CBO
estimates that the net growth in active-duty personnel of
18,100 service members would cost $12.3 billion over the 2018-
2022 period, assuming appropriations are increased by that
amount.
TABLE 3. ESTIMATED COSTS FOR SELECTED PROVISIONS IN H.R. 2810
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By fiscal year, in millions of dollars--
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2018 2019 2020 2021 2022 2018-2022
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FORCE STRUCTURE
Active-Duty End Strengths..................... 1,466 2,616 2,663 2,736 2,810 12,291
Selected-Reserve End Strengths................ 311 635 652 672 692 2,962
Reserve Technicians End Strengths............. -13 -26 -26 -27 -28 -120
COMPENSATION AND BENEFITS
Expiring Bonuses and Allowances............... 1,510 842 346 265 104 3,067
Higher Basic Allowance for Housing............ 155 55 0 0 0 210
Separate Moves for Military Families.......... 10 20 21 22 22 95
Temporary Duty Per Diem Allowance............. 80 80 80 80 80 400
Civilian Voluntary Separation Incentive Pay... 0 125 125 125 0 375
Civilian Benefits in a Combat Zonea........... 0 45 0 0 0 45
MILITARY HEALTH SYSTEM
Overseas Hospitals............................ 10 25 25 25 25 110
Transitional Health Benefits.................. 8 8 9 9 10 44
Physical Exams................................ 3 4 4 4 4 19
OTHER PROVISIONS
Multiyear Procurement Contracts:
Virginia Class Submarines................. 2,864 7,180 8,870 7,430 7,880 34,224
Arleigh Burke Destroyers.................. 5,538 6,190 6,020 5,830 5,660 29,238
V-22 Osprey Aircraft...................... 473 631 653 796 929 3,482
Nuclear Refueling and Overhaul of the U.S.S. 76 460 630 2,040 2,430 5,636
Nimitz Class Carriers........................
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Notes: Amounts shown in this table for 2018 are included in the amounts that would be specifically authorized to
be appropriated by the bill (as reflected in Table 2 and summarized in Table 1). Amounts shown in this table
for 2019-2022 would not be specifically authorized by the bill (and therefore are not reflected in Tables 1
and 2); rather, those amounts would be covered by specified authorizations in future National Defense
Authorization Acts.
Numbers may not add to totals because of rounding.
aThis provision also would increase costs in 2019 for departments and agencies other than the Department of
Defense by an estimated $10 million. Those costs are included in Table 1 under ``Estimated Authorizations for
Various Departments and Agencies.''
Selected-Reserve End Strengths. Sections 411 and 412 would
authorize the end strengths for reserve components, including
those who serve on active duty in support of the reserves.
Under this bill, five of the six reserve components would
experience increases in end strength: 4,000 more for the Army
Guard, 3,000 more for the Army Reserve, 1,000 more for the Navy
Reserve, 900 more for the Air Guard, and 800 more for the Air
Force Reserve. End strength for the Marine Corps Reserve would
stay the same. As part of those changes, the number of full-
time reservists who serve on active duty in support of the
reserves would grow by 2,275. CBO estimates that, on net,
implementing those provisions would increase costs for selected
reservists by $3.0 billion over the 2018-2022 period.
Reserve Technicians End Strengths. Section 413 sets the
end-strength for dual-status military technicians, who are
federal civilian personnel required to maintain membership in a
selected-reserve component as a condition of their employment.
On net, section 413 would reduce the number of dual status
technicians by 254. CBO estimates a decrease in costs for
civilian salaries and expenses from fewer dual status positions
of $120 million over the 2018-2022 period. (Changing the number
of dual status technicians would not change the number of part-
time reservists established in section 411, discussed above.
Thus, the only budget effects would be the reduction in
civilian compensation.)
Compensation and Benefits. H.R. 2810 contains several
provisions that would affect compensation and benefits for
uniformed personnel and civilian employees of DoD. The bill
would specifically authorize regular appropriations of $141.9
billion for the costs of military pay and allowances in 2018.
For related costs resulting from overseas contingency
operations (primarily in Afghanistan), the bill would authorize
the appropriation of an additional $5.1 billion for 2018.
Expiring Bonuses and Allowances. Sections 611 through 615
would extend for another year DoD's authority to enter
agreements to pay certain bonuses and allowances to military
personnel. The authority to enter into such agreements is
currently scheduled to expire on December 31, 2017. Some
bonuses are paid in a lump sum, while others are paid in annual
or monthly installments over a period of obligated service.
Based on DoD's budget submission for fiscal year 2018, CBO
estimates that extending that authority for one year would cost
$3.1 billion over the 2018-2022 period.
Higher Basic Allowance for Housing. Section 602 would delay
by one year a planned reduction in the housing allowance paid
to service members residing in housing constructed under the
Military Housing Privatization Initiative (MHPI). Basic
allowance for housing (BAH) is based on the average cost of
specific types of housing in the areas around members' assigned
duty stations within the Unites States. Under current law, DoD
is authorized to reduce the portion of housing costs covered by
BAH by up to 4 percent in 2018--a 1 percent increase from the 3
percent reduction authorized for 2017. That reduction will
affect all service members receiving BAH: those who live in
MHPI housing (usually on base) and those who live in housing in
the private market (usually off base). Under section 602, the
additional 1 percent reduction in BAH that would affect new
rates in January 2018 would not occur. The authority to further
reduce BAH would resume in 2019 and affect rates in January of
that year. CBO estimates that the one year delay in the
reduction of BAH, if applied only to service members living in
MPHI housing, would cost roughly $50 million in 2018 and $20
million in the first three months of 2019.
However, DoD reports that calculating and processing two
sets of BAH rates--one for those residing in MHPI housing
without the 1 percent additional reduction in BAH and one for
those living in private-sector homes with the 1 percent
additional reduction--would be difficult to implement,
especially by January 2018. Also, DoD is not in favor of paying
different BAH amounts dependent upon whether service members
live on or off base. Based on DoD's concerns, CBO expects that
DoD would likely apply the delayed reduction in BAH under this
section to all recipients of BAH, not just those living in MHPI
housing. Thus, CBO estimates that delaying the reduction in BAH
until 2019 would cost $155 million in 2018 and $55 million in
2019.
Separate Moves for Military Families. Section 603 would
authorize higher housing allowances for certain service members
during a relocation period that would cover the six months
preceding and following the date that a member is ordered to
report to a new duty station. During that period, members whose
families move before or after the member's reporting date would
receive BAH for whichever military housing area would be
higher--the BAH rate for the prior duty location or the rate
for the new duty location--for the period that the family would
live separately, up to six months. Members would be eligible
for this benefit if the separate moves assisted the family in
matters related to schooling, employment, or health care. Based
on an analysis of information from DoD, CBO estimates that
about 13,000 families a year would receive an incremental BAH
payment of roughly $500 a month for three months. On that
basis, CBO estimates that providing the higher BAH to those
service members would cost $95 million over the 2018-2022
period.
Temporary Duty Per Diem Allowance. Section 604 would
prohibit DoD from reducing per diem rates based on the duration
of temporary duty assignments for service members and DoD
civilian employees. The per diem allowance compensates
travelers for the daily cost of lodging, meals, and incidental
expenses. The section would repeal the per diem policy that the
Secretary of Defense implemented on November 1, 2014, to pay a
lower per diem rate for long-term temporary duty assignments in
one location. Under the policy, the per diem allowance for
travel lasting between 31 and 180 days is 75 percent of the
locality rate; for trips lasting more than 180 days the rate is
55 percent. The section also would reverse similar per diem
policies established by the Services, which are specific to
travel for contingency operations. According to DoD, those two
policies have reduced annual payments for per diem compensation
by about $60 million and $20 million, respectively. Based on
that information, CBO estimates that implementing section 604
would cost $400 million over the 2018-2022 period.
Civilian Voluntary Separation Incentive Pay. Section 1102
would extend DoD's authority to increase the amount of lump-sum
payments that DoD can offer to civilian employees to entice
them to separate voluntarily; that amount would increase from
the previous ceiling of $25,000 to $40,000 for an additional
three years. The authority to pay up to $40,000 is currently
scheduled to expire on September 30, 2018. On the basis of
information from DoD, CBO estimates that about 5,900 DoD
civilian employees would receive voluntary separation incentive
payments (VSIP) of $40,000 on average starting in 2019. CBO
estimates that under current law 75 percent of those civilian
employees will take VSIP at the lower capped amount of $25,000.
Thus, the incremental cost to DoD for those 4,400 employees
would be $15,000. CBO expects that the remaining 1,500
employees would not take VSIP at the lower rate and thus DoD
would face the full cost of $40,000 for those employees. On
that basis, CBO estimates that temporarily raising the cap on
VSIP to $40,000 would cost $375 million over the 2018-2022
period.
Civilian Benefits in a Combat Zone. Section 1108 would
extend for one year the authority to grant certain benefits to
federal civilian employees who perform official duty in a
combat zone. Those benefits, which expire under current law on
September 30, 2018, include death gratuities, paid leave and
travel for one trip home, and up to three leave periods per
year for rest and recuperation. On the basis of information
from DoD and the Office of Personnel Management, CBO estimates
that about 2,400 civilian employees of DoD and 500 employees of
other federal agencies will work in a designated combat zone in
2019 and, under this provision, would receive an average
benefit that would cost about $18,900 a year. Thus, CBO
estimates that in 2019, section 1108 would increase the costs
of civilian employees of DoD by $45 million and of other
federal employees by $10 million.
Military Health System. Title VII would make several
changes to health benefits for members of the armed forces. In
total, those changes would increase costs for health care by
about $170 million over the 2018-2022 period, CBO estimates.
Overseas Hospitals. Section 712 would prevent all military
hospitals that are overseas from reducing the types of
inpatient services that they currently provide. The immediate
effect of this provision would be to prevent the planned
reorganization and downsizing of several military hospitals in
Italy, which is scheduled to be completed as early as 2019.
Based on an analysis of information from DoD, CBO estimates the
planned reorganization will save DoD about $25 million per
year. Therefore, implementing section 712 would cost $110
million over the 2018-2022 period.
Transitional Health Benefits. Section 503 would expand
health care benefits for reserve members who are involuntarily
activated to perform support work. Those members would be
allowed to receive full TRICARE benefits in the six months
before and after being activated. Based on an analysis of
information from DoD, CBO estimates that about 2,000 reserve
members are activated each year using the authority referenced
by the bill. The annual cost for a household that uses the
TRICARE health benefit is currently about $12,000 per year.
However, many reserve members have access to other health
insurance and would not use the full benefit, so the
incremental cost to the government for the additional
households covered by section 503 would be about $4,000. In
total, CBO estimates that implementing section 503 would cost
about $44 million over the 2018-2022 period.
Physical Exams. Section 701 would allow certain members
separating from a reserve component to receive a voluntary
physical exam. To be eligible for the physical, the member must
have served at least 30 days on active duty in support of a
contingency operation in the two years prior to separation.
Based on an analysis of data from DoD, CBO estimates that about
6,400 separating reserve members would be eligible for the
physical authorized by this section. Take-up rates for
voluntary medical exams vary, but given that the members would
receive orders for the physical and could get paid for their
time, CBO estimates that about 50 percent of the eligible
population would volunteer for a separation physical. CBO
further estimates that the cost of each exam would be about
$1,000, which includes the cost of the medical procedures that
would most likely be part of the exam, as well as the cost of a
day's worth of pay and benefits for those who volunteer to have
the physical. In total, implementing section 701 would cost
about $19 million over the 2018-2022 period, CBO estimates.
Hyperbaric Oxygen Therapy. Section 703 would authorize DoD
to provide hyperbaric oxygen therapy (HBOT) to service members
with post-traumatic stress disorder (PTSD) or traumatic brain
injuries (TBI). If DoD chose to offer this treatment, the costs
could be significant. Based on an analysis of information from
DoD, CBO estimates the annual cost to staff and operate HBOT
equipment would be about $1 million per facility. If multiplied
by each of the approximately 50 military treatment facilities
that could house such equipment, the costs could be as high as
$50 million per year. However, based on information from DoD
and a review of recent studies, CBO expects that DoD would not
choose to offer this treatment for PTSD and TBI.\1\
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\1\For a summary of some of the studies that looked at HBOT for the
treatment of PTSD and TBI see Government Accountability Office, Defense
Health Care: Research on Hyperbaric Oxygen Therapy to Treat Traumatic
Brain Injury and Post-Traumatic Stress Disorder, GAO-16-154 (December
2015), http://www.gao.gov/assets/680/674334.pdf.
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Other Provisions
Multiyear Procurement Contracts. The bill would authorize
the Navy to enter multiyear procurement contracts for four
major programs. Multiyear procurement is a special contracting
method authorized in current law that permits the government to
enter into contracts covering acquisitions for more than one
year but not more than five years, even though the total funds
required for all years are not appropriated at the time the
contracts are awarded.
Section 124 would authorize the Navy to enter a
multiyear contract to purchase up to 13 Virginia-class
submarines beginning in 2019 and to make advance purchases of
equipment for those vessels beginning in 2018. On the basis of
information from the Navy, CBO estimates that under that
authority the Navy would purchase 10 submarines over the 2019-
2022 period and that those submarines would cost about $34
billion over the 2018-2022 period. (The remaining three
submarines would be purchased in 2023 at a cost of roughly $9
billion.) Currently, the Navy is constructing Virginia-class
submarines under a multiyear contract, but that authority will
expire in 2018. (The Navy estimates that buying the submarines
under a multiyear contract lowers costs by about $300 million
for each submarine when compared to five annual contracts.)
Section 125 would authorize the Navy to enter a
multiyear contract to purchase up to 15 Arleigh Burke-class
destroyers beginning in 2018. On the basis of information from
the Navy, CBO estimates that under that authority the Navy
would purchase 15 destroyers over the 2018-2022 period and that
those ships would cost about $29 billion. Currently, the Navy
is buying those destroyers at a rate of two ships a year under
a multiyear contract, but that authority will expire at the end
of 2017. (The Navy estimates that buying the destroyers under a
multiyear contract lowers costs by about $200 million a ship
when compared to single year purchases.)
Section 128 would authorize the Navy to enter a
multiyear contract beginning in fiscal year 2018 to purchase V-
22 Osprey aircraft. The V-22 is a tiltrotor aircraft that can
take off and land vertically and is capable of carrying
personnel and equipment. On the basis of information from the
Navy, CBO estimates that under such a contract the service
would buy 65 of those aircraft over the 2018-2024 period. The
contract would cost $3.5 billion over the 2018-2022 period and
a total of $5.7 billion through 2024. (The service estimates
that a single multiyear contract would cost about $600 million
less than five annual contracts.)
Section 123 would authorize the Navy to enter a
multiyear contract for up to six polar icebreaking vessels on
behalf of the Coast Guard. The Congress appropriated $150
million in 2017 for the design of the first new icebreaker. The
Coast Guard plans to award a contract for that effort in 2019
and expects construction of the vessel to begin after 2020 once
the detailed designs are substantially complete. The Coast
Guard's preliminary estimate for the cost of a new icebreaker
is about $1 billion. Construction of the first vessel would
take approximately three years. Because multiyear procurement
contracts are typically not awarded until several production
lots have been completed, CBO does not expect that the Coast
Guard will use the multiyear-contract authority in section 123
until after 2022.
Nuclear Refueling and Overhaul of the U.S.S. Nimitz Class
Carriers. Section 121 would authorize the Navy to conduct
nuclear refueling and overhauls of the remaining Nimitz class
carriers. The bill also would allow the Navy to fund the
refueling and overhauls over several years (incremental
funding). The Navy deploys 10 Nimitz class carriers (CVN-68
through CVN-77). The lead ship of the class was commissioned in
1975 and the last ship was commissioned in 2009. The carriers
have a service life of about 50 years and are capable of
operating for nearly 25 years without refueling the nuclear
reactor cores. The first four carriers have already undergone a
nuclear refueling and are back in the fleet. The Congress
authorized the Navy to conduct a nuclear refueling for the CVN-
72 in the 2012 defense bill and for the CVN-73 in the 2016
defense bill. Based on an analysis of information provided by
the Navy, CBO expects that funding would be needed in the 2018-
2022 period for refueling and overhauling the CVN-74 and CVN-
75. Funding for the CVN-76 and CVN-77 would be needed after
2022. CBO estimates that implementing section 121 would cost
$5.6 billion over the 2018-2022 period. In addition, roughly $5
billion would be needed in years after 2022 to complete the
nuclear refueling of the CVN-75.
Direct Spending and Revenues
Several provisions in H.R. 2810 would have effects on
direct spending or revenues, but those effects would be
insignificant, generally because very few people would be
affected or because the proposal would allow the spending of
new receipts so that the net effect would be small.
Section 523 would create a new specified offense
under the military justice system that would provide a more
effective and efficient means for DoD to prosecute individuals
who wrongfully broadcast or distribute intimate visual images;
any penalties collected under this provision would be
classified as revenues.
Section 721 would extend the authority for DoD to
carry out a pilot program whereby retail pharmacies could buy
prescription drugs at DoD's lowest cost for those drugs through
2019. DoD has not used the current authority to implement such
a pilot program and, based on information from DoD, CBO expects
that there is a very low probability that DoD would use the
extended authority.
Section 722 would require DoD to carry out a pilot
program to provide counseling and assistance to TRICARE
beneficiaries with complex medical conditions. The pilot
program could affect the cost of health benefits for retirees
of the Coast Guard, Public Health Service, and the National
Oceanic and Atmospheric Administration, and their dependents;
those benefits are paid from mandatory appropriations.
Section 1062 would delay by nine months (from
January 2020 to October 2020) the time when H-2B nonimmigrant
(or temporary) workers hired in Guam or the Northern Marianas
begin to count against the nationwide cap on H-2B workers.
Thus, the provision would result in more aliens receiving H-2B
status and working in one of the 50 states or Washington, D.C.,
where they can receive emergency Medicaid benefits and health-
insurance subsidies under the Affordable Care Act, if they
otherwise qualify.
Section 1222 would extend DoD's authority to
accept and spend contributions from foreign governments to
assist the military and security forces of, or associated with,
the government of Iraq to counter threats posed by the Islamic
State of Iraq and the Levant.
Section 1276 would extend DoD's authority to
accept and spend contributions from Australia, Canada, New
Zealand, and the United Kingdom to operate a joint security
cooperation program with those countries.
Section 2824 would authorize the Army to sell
certain real property near U.S. Army Natick Soldier Systems
Center and use the proceeds to build new housing at that
installation.
Section 2862 would authorize the Chief Operating
Officer of the Armed Forces Retirement Home to lease out
underused property at the home. Such property can currently be
leased out by the Secretary of Defense. Those leases would
increase offsetting receipts to the Armed Forces Retirement
Home Trust Fund, which are recorded as reductions in direct
spending. Additionally, some leases include in-kind
consideration such as the construction of new facilities that
could result in mandatory obligations to make payments in
subsequent years. Those obligations are treated as an increase
in direct spending. CBO expects enacting section 2862 would
accelerate the process for new leases but would not increase
the total number of leases that would be approved over the
2018-2027 period.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. CBO estimates that in total enacting the bill would
have an insignificant effect on net direct spending and
revenues over the 2018-2027 period.
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 2810 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2028.
Intergovernmental and private-sector impact: H.R. 2810
contains intergovernmental and private-sector mandates as
defined in UMRA. CBO estimates that the aggregate cost of the
mandates on public and private entities would fall below the
annual thresholds established in UMRA for intergovernmental and
private-sector mandates ($78 million and $156 million
respectively in 2017, adjusted annually for inflation).
Increasing the End Strength of Active-Duty Forces
Section 401 would increase the costs of complying with
existing intergovernmental and private-sector mandates by
increasing the number of service members on active-duty by
about 20,000 relative to currently authorized levels. Those
additional service members would be eligible for existing
protections under the Servicemembers Civil Relief Act (SCRA).
Protections under SCRA require public and private entities to
grant active-duty personnel various allowances for business and
tax transactions and court procedures.
For example, SCRA allows service members to maintain a
single state of residence for paying state and local personal
income taxes and to request deferrals for certain state and
local fees. CBO estimates that the additional cost of those
mandates on state and local governments would be small.
SCRA also requires creditors to charge no more than 6
percent interest rate on service members' loan obligations when
the acquisition of such obligations predates active-duty
service, and it allows courts to temporarily stay certain civil
proceedings, such as evictions, foreclosures, and
repossessions. The act also precludes the use of a service
member's personal assets to satisfy the member's trade or
business liability while he or she is in military service.
Under the bill, the number of active-duty service members
covered by SCRA would increase by less than 2 percent, CBO
estimates. Service members' utilization of the various
provisions of the SCRA depends on a number of uncertain
factors, including how often and how long they are deployed.
However, the increase in the number of active-duty service
members covered by SCRA would be small, so CBO estimates that
the incremental cost of compliance for private entities also
would be small relative to the annual threshold for the private
sector.
Exclusion
CBO has determined that section 573 of H.R. 2810 is
excluded from review for mandates under UMRA. That section
would allow service members to vote in federal, state, and
local elections in the state where they are stationed for
military orders instead of in their state of permanent
residence. UMRA excludes from the application of that act any
legislative provisions that enforce the constitutional rights
of individuals. Because section 573 would protect the rights of
individuals to vote, CBO has not reviewed it for
intergovernmental or private-sector mandates.
Estimate prepared by: Federal costs: Defense
Authorizations--Kent Christensen; Military and Civilian
Personnel--Dawn Regan; Military Construction--David Newman;
Military Health Care--Matthew Schmit; Military Retirement and
Immigration--David Rafferty; Operation and Maintenance--William
Ma; Procurement--Raymond J. Hall and David Newman; Small
Business Administration--Stephen Rabent.
Impact on state, local, and tribal governments: Zach Byrum.
Impact on the private sector: Paige Piper/Bach, Heidi
Golding, and Adebayo Adedeji.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
[all]