74–183 

112TH CONGRESS REPT. 112–479 " ! HOUSE OF REPRESENTATIVES 2d Session Part 2 

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL 

YEAR 2013 

MAY 15, 2012.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. MCKEON, from the Committee on Armed Services, 

submitted the following 

SUPPLEMENTAL REPORT 

together with 

ADDITIONAL VIEWS 

[To accompany H.R. 4310] 

This supplemental report shows the cost estimate of the Congressional Budget Office with respect to the bill (H.R. 4310), as reported, which was not included in part 1 of the report submitted 

by the Committee on Armed Services on May 11, 2012 (H. Rept. 

112–479, pt. 1). 

This supplemental report also includes the correct version of Mr. 

Hank Johnson’s Additional Views. The views attributed to Mr. 

Johnson in part 1 of the report submitted by the Committee on 

Armed Services on May 11, 2012 (H. Rept. 112–479, pt. 1), were 

not the correct views submitted by Mr. Johnson. 

Finally, this supplemental report includes a revised version of 

Roll Call Vote No. 18 that correctly lists Ms. Sanchez’s vote as 

‘‘Aye’’. This correction does not change the outcome of the roll call 

vote total for Roll Call Vote No. 18 in part 1 of the report submitted by the Committee on Armed Services on May 11, 2012. 


tjames on DSK6SPTVN1PROD with REPORTS
2 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, May 15, 2012. 

Hon. HOWARD P. ‘‘BUCK’’ MCKEON, 

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. 4310, the National Defense Authorization Act for Fiscal Year 2013. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Kent Christensen. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 4310—National Defense Authorization Act for Fiscal Year 

2013 

Summary: H.R. 4310 would authorize appropriations totaling 

$637 billion for fiscal year 2013 for the military functions of the 

Department of Defense (DoD), for certain activities of the Department of Energy (DOE), and for other purposes. That total includes 

an estimated $89 billion for the cost of overseas contingency operations, primarily in Afghanistan. In addition, H.R. 4310 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 $626 billion over the 2013–2017 period. 

The bill also contains provisions that would increase or decrease 

costs of discretionary defense programs in 2014 and future years. 

Those implicit authorizations would affect force structure, DoD 

compensation and benefits, DoD’s use of multiyear procurement authority, and other programs and activities. CBO has analyzed the 

costs of a select number of those authorizations and estimates they 

would raise net costs by about $57μbillion over the 2014–2017 period, assuming appropriation of the necessary amounts for those 

years. Those amounts are not included in the totals in the previous 

paragraph because funding for those activities would be covered by 

specific authorizations in future years. 

H.R. 4310 contains provisions that would increase or decrease 

components of direct spending. CBO estimates that, on net, those 

changes would decrease direct spending by $554 million over the 

2013–2017 period and by $44 million over the 2013–2022 period. 

Enacting the bill would not affect revenues. Because enacting the 

legislation would affect direct spending, pay-as-you-go procedures 

apply. 

The bill would impose intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

on mortgage lending institutions and would preempt state laws 

governing child custody in some cases. CBO estimates that the 

costs to public entities of complying with the mandates would be 

small and well below the annual threshold established in UMRA 

for intergovernmental mandates ($73 million in 2012, adjusted annually for inflation). CBO estimates that the costs to private entities of complying with the mandate would probably fall below the 


tjames on DSK6SPTVN1PROD with REPORTS
3 

annual threshold established in UMRA for private-sector mandates 

($146 million in 2012, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 4310 is summarized in Table 1. Almost all of 

the $637 billion that would be authorized by the bill is for activities 

within budget function 050 (national defense). Some authorizations, 

however, fall within other budget functions, including: $210 million 

primarily for the Department of Veterans Affairs (function 700— 

veterans benefits and services); $110 million for the Maritime Administration (function 400—transportation); $68 million for the 

Armed Forces Retirement Home (function 600—income security); 

$15 million for the Naval Petroleum Reserves (function 270—energy); and an estimated $315 million over the 2013–2017 period, 

primarily for programs affecting procurement with small businesses (function 800—general government). 

The provisions that would affect direct spending are for activities 

within budget functions 050, 600, and 550 (health). 

TABLE 1—BUDGETARY IMPACT OF H.R. 4310, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR 

FISCAL YEAR 2013 

By fiscal year, in millions of dollars— 

2013 2014 2015 2016 2017 2013–2017 

SPENDING SUBJECT TO APPROPRIATION 

Specified Authorization of Regular Appropriations for 2013, Primarily for the Departments 

of Defense and Energy: 

Authorization Level ...................................... 547,196 30 30 30 30 547,316 

Estimated Outlays ....................................... 349,297 119,925 42,611 17,395 7,528 536,755 

Estimated Authorization of Regular Appropriations for 2013 for Accrual Payments:a

Estimated Authorization Level ..................... 672 0 0 0 0 672 

Estimated Outlays ....................................... 672 0 0 0 0 672 

Specified Authorization of Appropriations for 

Overseas Contingency Operations (OCO): 

Authorization Level ...................................... 88,633 0 0 0 0 88,633 

Estimated Outlays ....................................... 48,053 27,502 8,574 2,624 772 87,524 

Estimated Authorization of Appropriations for 

the Pakistan Counterinsurgency Fund (OCO) b

Estimated Authorization Level ..................... 800 0 0 0 0 800 

Estimated Outlays ....................................... 120 240 240 120 80 800 

Other Authorizations of Appropriations c

Estimated Authorization Level ..................... 41 56 61 76 81 315 

Estimated Outlays ....................................... 31 51 61 76 81 300 

Total: 

Estimated Authorization Level ............ 637,343 86 91 106 111 637,737 

Estimated Outlays .............................. 398,173 147,718 51,485 20,215 8,460 626,051 

CHANGES IN DIRECT SPENDING d

Estimated Budget Authority ................................. ¥73 ¥152 ¥125 ¥124 ¥82 ¥556 

Estimated Outlays ................................................ ¥33 ¥152 ¥137 ¥137 ¥95 ¥554 

Notes: Except as noted below, the authorization levels in this table reflect amounts that would be specifically authorized by the bill. The 

bill also implicitly authorizes some activities in 2014 and future years; those authorizations are not included above (but estimates for a select 

number of them are shown in Table 3) because funding for those activities would be covered by specific authorizations in future years. 

Numbers may not sum to totals because of rounding. a This authorization reflects CBO’s estimate of the added cost of certain accrual payments required under current law but not fully reflected 

in the amounts specifically authorized by the bill. b This authorization reflects the estimated cost of section 1217, which would extend—for one year through 2013—the authority for DoD to 

provide equipment, supplies, and funding for training the security forces of Pakistan. c These are estimated authorizations in title XVI, which would affect procurement with small businesses, and section 1111, which would establish within the Executive Office of the President a Committee on National Security Personnel. d In addition to the changes in direct spending shown above, H.R. 4310 would have effects beyond 2017. CBO estimates that over the 

2013–2022 period, H.R. 4310 would decrease direct spending by $44 million (see Table 4). 


tjames on DSK6SPTVN1PROD with REPORTS
4 

1 In addition, the bill would authorize $30 million annually through 2017 for the National 

Guard to operate counterdrug training schools. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

4310 will be enacted near the start of fiscal year 2013 and that the 

authorized and estimated amounts will be appropriated. 

Spending subject to appropriation 

The bill would authorize appropriations for 2013 totaling $637 billion, of which $548 billion would be authorizations of regular appropriations for ‘‘base budget’’ costs (not directly related to overseas 

contingency operations). Of the funding that would be authorized 

for base budget costs, nearly all ($547 billion) would be specifically 

authorized as follows: $529 billion for DoD and $19 billion for 

atomic energy defense activities within DOE and various other programs (see Table 2).1

The $529 billion that would be authorized for DoD’s base budget represents a decrease of $1 billion (0.2 percent) relative to appropriations enacted for 2012. Authorized funding would decline for 

most major categories of spending: military personnel would fall by 

$5 billion (4 percent); procurement by $4 billion (4 percent), military construction and family housing by $2 billion (16 percent), and 

research and development by $1 billion (1 percent). Those decreases, however, would be largely offset by a $12 billion (6 percent) increase in authorizations for operation and maintenance. 

The amount authorized for DoD’s base budget also reflects CBO’s 

estimate of the additional amount needed—$672 million—to fully 

fund certain accrual payments required under current law but not 

fully reflected in the amounts specifically authorized by the bill. For DOE and other programs, the $19 billion that would be au- thorized for 2013 represents a $1 billion (7 percent) increase over 

the level appropriated for 2012. 

Of the funds that would be authorized for 2013 overseas contingency operations—primarily for military operations in Afghanistan—$89 billion would be specifically authorized by the bill. In addition, CBO estimates that another $0.8 billion would be authorized for costs related to the security forces of Pakistan. Those combined amounts represent a decrease of $26 billion (22 percent) compared to the $115 billion appropriated for 2012. Authorized funding 

for operation and maintenance would decrease by $24 billion (27 

percent), while funding envisioned for procurement would decline 

by $6 billion (36 percent). Increased authorizations for military personnel of $3 billion (25 percent) and for other categories of spending would partially offset those declines. 


tjames on DSK6SPTVN1PROD with REPORTS
5 

TABLE 2—SPECIFIED AUTHORIZATIONS IN H.R. 4310 

By fiscal year, in millions of dollars 

2013 2014 2015 2016 2017 2013–2017 

Authorization of Regular Appropriations: 

Department of Defense: 

Military Personnel: a

Authorization Level .................... 135,727 0 0 0 0 135,727 

Estimated Outlays ..................... 128,270 6,725 170 37 0 135,202 

Operation and Maintenance: 

Authorization Level b .................. 209,005 30 30 30 30 209,125 

Estimated Outlays ..................... 148,914 45,017 9,062 2,229 748 205,969 

Procurement: 

Authorization Level .................... 100,424 0 0 0 0 100,424 

Estimated Outlays ..................... 21,442 33,777 23,691 11,763 4,873 95,546 

Research and Development: 

Authorization Level .................... 70,387 0 0 0 0 70,387 

Estimated Outlays ..................... 34,783 25,485 5,264 2,126 1,348 69,006 

Military Construction and Family 

Housing: 

Authorization Level .................... 10,985 0 0 0 0 10,985 

Estimated Outlays ..................... 1,602 3,628 3,328 1,242 569 10,369 

Revolving Funds: 

Authorization Level .................... 2,124 0 0 0 0 2,124 

Estimated Outlays ..................... 1,747 311 35 19 7 2,119 

General Transfer Authority: 

Authorization Level .................... 0 0 0 0 0 0 

Estimated Outlays ..................... 175 ¥70 ¥53 ¥35 ¥17 0 

Subtotal, Department of Defense: 

Authorization Level ........... 528,652 30 30 30 30 528,772 

Estimated Outlays ............ 336,933 114,873 41,497 17,381 7,528 518,211 

Atomic Energy Defense Activities: 

Authorization Level c .................. 18,143 0 0 0 0 18,143 

Estimated Outlays ..................... 12,076 4,976 1,090 0 0 18,142 

Other Programs: 

Authorization Level d .................. 402 0 0 0 0 402 

Estimated Outlays ..................... 288 76 24 14 0 402 

Subtotal, Authorization of Regular Appropriations: 

Authorization Level ........... 547,196 30 30 30 30 547,316 

Estimated Outlays ............ 349,297 119,925 42,611 17,395 7,528 536,755 

Authorization of Appropriations for Overseas 

Contingency Operations: 

Military Personnel: 

Authorization Level)a ........................... 14,060 0 0 0 0 14,060 

Estimated Outlays .............................. 13,169 846 7 0 0 14,022 

Operation and Maintenance: 

Authorization Level ............................. 62,451 0 0 0 0 62,451 

Estimated Outlays .............................. 31,736 21,933 5,885 1,701 384 61,639 

Procurement: 

Authorization Level ............................. 10,308 0 0 0 0 10,308 

Estimated Outlays .............................. 2,365 4,090 2,428 832 359 10,074 

Research and Development: 

Authorization Level ............................. 1,161 0 0 0 0 1,161 

Estimated Outlays .............................. 517 469 100 33 24 1,143 

Military Construction: 

Authorization Level ............................. 151 0 0 0 0 151 

Estimated Outlays .............................. 2 30 66 36 9 143 

Working Capital Funds: 

Authorization Level ............................. 503 0 0 0 0 503 

Estimated Outlays .............................. 189 164 110 37 3 503 

Special Transfer Authority: 

Authorization Level ............................. 0 0 0 0 0 0 

Estimated Outlays .............................. 75 ¥30 ¥23 ¥15 ¥8 0 

Subtotal, Overseas Contingency Operations: 

Authorization Level .................... 88,633 0 0 0 0 88,633 


tjames on DSK6SPTVN1PROD with REPORTS
6 

TABLE 2—SPECIFIED AUTHORIZATIONS IN H.R. 4310—Continued 

By fiscal year, in millions of dollars 

2013 2014 2015 2016 2017 2013–2017 

Estimated Outlays ..................... 48,053 27,502 8,574 2,624 772 87,524 

Total Specified Authorizations: 

Authorization Level ...................................... 635,830 30 30 30 30 635,950 

Estimated Outlays ....................................... 397,350 147,427 51,184 20,019 8,299 624,279 

Notes: This table summarizes 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 result in additional costs in 2014 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 a select number of those provisions. 

Numbers may not sum to totals because of rounding. a The authorizations of appropriations for military personnel (in sections 421 and 1505) implicitly include $7,354 million and $271 million, 

respectively, for accrual payments to the Medicare-Eligible Retiree Health Care Fund. CBO estimates, however, that section 421 understates— by $672 million—the amount required for those payments, thus that amount has been added to the estimated cost of the bill. b The authorizations of $30 million annually through 2017 reflect specified authorizations made by section 1011, which would extend the 

authority of the National Guard to operate counterdrug schools. c This authorization is primarily for atomic energy activities within the Department of Energy. 

d This authorization is for veterans benefits and services ($210 million), the Maritime Administration ($110 million), the Armed Forces Re- tirement Home ($68 million), and the Naval Petroleum Reserves ($15 million). The authorized level reflected in this estimate for the Maritime Administration does not include the amount specified in the bill for payments to shipping companies under the maritime security program because that program is authorized for 2013 by existing statute. 

H.R. 4310 also contains provisions that would increase or decrease the cost of various discretionary programs in future years. 

Most of those provisions would affect end strength, military compensation and benefits, and acquisition programs using multiyear 

procurement authorities. The estimated costs of a select number of 

those provisions are shown in Table 3 and discussed below. The following discussion does not address the timing of outlays from those 

estimated authorizations. All such spending would be subject to appropriation of the estimated amounts. 

Force Structure. The bill would affect the force structure of the 

various military services by setting end-strength levels for 2013 

and modifying the minimum end-strength levels authorized in permanent law. 

Under title IV, the authorized end strengths in 2013 for activeduty personnel and personnel in the selected reserves would total 

1,402,483 and 843,733, respectively. Of those selected reservists, 

78,552 would serve on active duty in support of the reserves. In 

total, active-duty end strength would decrease by 20,117 and selected-reserve end strength would decrease by 3,367 when compared with levels authorized under current law for 2013. 

Active-Duty End Strengths. Compared with end-strength levels 

for 2013 authorized under current law, section 401 would authorize 

reductions in active-duty personnel across all four services: 9,900 

fewer for the Army; 3,000 fewer for the Navy; 4,800 fewer for the 

Marine Corps; and 2,417 fewer for the Air Force. CBO estimates 

that the total reduction in active-duty personnel of 20,117 

servicemembers would decrease costs to DoD by $12.2 billion over 

the 2013–2017 period, assuming appropriations are reduced by the 

same amount. Those decreases reflect reductions in pay and benefits from fewer personnel, as well as reductions in costs for operation and maintenance. 

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, 

the Navy Reserve and the Air National Guard would experience decreases in end strength of 3,700 and 695, respectively, while the 

Air Force Reserve would increase by 1,028. The other reserve components would see no change to the levels already authorized for 


tjames on DSK6SPTVN1PROD with REPORTS
7 

2013. The net number of full-time reservists who serve on active 

duty in support of the reserves would grow by 138 compared with 

authorized end-strength levels for 2013. CBO estimates that the 

net result of implementing those provisions would be a decrease in 

costs for salaries and expenses for selected reservists of $458 million over the 2013–2017 period, assuming appropriations are reduced by the same amount. 

Reserve Technicians End Strengths. Sections 413 would authorize 

the minimum end-strength levels 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. The bill would reduce the required number of technicians by 68 relative to the levels currently authorized. CBO estimates that such a reduction would decrease costs for civilian salaries and expenses by $27 million over the 2013–2017 period. 

TABLE 3—ESTIMATED AUTHORIZATIONS OF APPROPRIATIONS FOR SELECTED PROVISIONS IN H.R. 

4310 

By fiscal year, in millions of dollars— 

2013 2014 2015 2016 2017 2013–2017 

FORCE STRUCTURE 

Active-Duty End Strengths ................................... ¥1,592 ¥2,357 ¥2,661 ¥2,767 ¥2,848 ¥12,225 

Selected-Reserve End Strengths .......................... ¥56 ¥83 ¥101 ¥108 ¥110 ¥458 

Reserve Technicians End Strengths ..................... ¥3 ¥6 ¥6 ¥6 ¥6 ¥27 

Members within IDES ........................................... 2,298 2,345 2,527 2,426 2,489 12,085 

COMPENSATION AND BENEFITS (DOD) 

Expiring Bonuses and Allowances ....................... 1,117 658 374 373 184 2,706 

Basic Allowance for Housing ............................... 9 9 7 7 7 39 

TRICARE Pharmacy Copays 

Defense Health Program ............................. ¥34 ¥29 ¥16 * 26 ¥53 

MERHCF Accrual Payments ......................... 0 172 181 189 200 743 

OTHER PROVISIONS 

Multiyear Procurement Contracts 

Virginia-class Submarines .......................... 875 4,607 6,282 5,727 4,312 21,803 

Arleigh Burke Destroyers ............................. 4,069 2,200 3,730 4,616 5,318 19,933 

V–22 Tiltrotor Aircraft ................................. 1,779 1,828 1,619 1,546 1,504 8,276 

CH–47 Helicopters ....................................... 717 622 647 857 465 3,308 

F/A–18 E/F Fighter Aircraft ......................... 0 1,162 0 0 0 1,162 

Incrementally Funded Procurement Contracts: 

USS Abraham Lincoln Refueling and Overhaul ......................................................... 1,613 1,748 0 0 0 3,361 

Space-Based Infrared System Satellites ..... 368 379 368 350 391 1,856 

East Coast Missile Defense Site .......................... 100 1,800 1,600 50 50 3,600 

Chemistry and Metallurgy Research Building ..... 100 400 400 400 500 1,800 

Pakistan Counterinsurgency Fund ........................ 800 0 0 0 0 800 

Small Business Procurement: 

Department of Defense ............................... 20 35 40 50 70 215 

Other Departments and Agencies ............... 40 55 60 75 80 310 

Troops to Teachers ............................................... 15 15 15 15 15 75 

Interagency Personnel Rotations .......................... 1 1 1 1 1 5 

Notes: 

Amounts shown in this table for 2013 (with the exception of amounts for the Pakistan Counterinsurgency Fund, provisions relating to small 

business procurement outside DoD, and Interagency Personnel Rotations) reflect costs of defense programs and are included in amounts specifically authorized to be appropriated by the bill (as reflected in Table 2 and summarized in Table 1). Associated amounts for 2014 through 

2017 are not included in amounts specifically authorized in the bill but would be covered by specific authorizations in future years; those 

amounts therefore are not reflected in Tables 1 and 2. 

The estimated costs for the Pakistan Counterinsurgency Fund, small business procurement outside DoD, and Interagency Personnel Rotations 

are not specifically authorized by the bill (and thus are not reflected in Table 2). Those costs, however, are reflected in Table 1 because they 

are in addition to costs that would be covered by specified authorizations in this bill (and presumably in future National Defense Authorization Acts). 

IDES = Integrated Disability Evaluation System; MERHCF = Medicare-Eligible Retiree Health Care Fund. 

* = less than $500,000. 

Figures shown here may not add up to numbers in the text because of rounding. 


tjames on DSK6SPTVN1PROD with REPORTS
8 

Coast Guard Reserve End Strengths. The bill also would authorize an end-strength level of 9,000 servicemembers in 2013 for the 

Coast Guard Reserve, 1,000 fewer than authorized under current 

law. Because this authorization level remains above the actual 

number of Coast Guard Reservists, which has stayed below 8,000 

since 2007, CBO does not estimate any change in costs would result from this provision. 

Members within the Integrated Disability Evaluation System. 

Section 404 would exclude servicemembers in the Integrated Disability Evaluation System (IDES) at the end of each fiscal year 

from counting toward the active-duty end strength for fiscal years 

2013 through 2018. Servicemembers are in IDES while DoD evaluates their injuries or illnesses to determine whether they will return to duty or be discharged. Based on information from DoD, 

CBO estimates that on average about 20,700 active-duty 

servicemembers will be within IDES on the final day of the year 

over the 2013–2017 period. By omitting them from counting toward 

end strength, CBO estimates that this provision would effectively 

raise the authorized end strength by that same average amount, 

roughly 20,700. CBO estimates that the resulting increase in active-duty personnel would cost $12.1 billion over the 2013–2017 period (see top panel of Table 3). 

Compensation and Benefits. H.R. 4310 contains several provisions that would affect compensation and benefits for uniformed 

personnel. The bill would specifically authorize regular appropriations of $136 billion for the costs of military pay and allowances in 

2013. For related costs resulting from overseas contingency operations (primarily in Afghanistan), the bill would authorize the appropriation of an additional $14 billion for 2013. 

Pay Raises. Section 601 would raise basic pay for all individuals 

in the uniformed services by 1.7 percent, effective January 1, 2013. 

CBO estimates that the total cost of a 1.7 percent military pay 

raise would be $1.3 billion in 2013. Because that pay raise is the 

same as authorized under current law, CBO does not estimate any 

additional costs for this provision. 

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, 2012. Some bonuses are paid in a lump 

sum, while others are paid in annual or monthly installments over 

the period of obligated service. Based on DoD’s budget submission 

for fiscal year 2013, CBO estimates that extending that authority 

for one year would cost $2.7 billion over the 2013–2017 period. 

Basic Allowance for Housing. Sections 602 and 603 would authorize DoD to increase the number and dollar amount of monthly payments of the basic allowance for housing (BAH), which helps 

servicemembers cover the cost of housing. Section 602 would allow 

certain dual military couples to earn a housing allowance while assigned to sea duty. Section 603 would protect certain members of 

the National Guard from a reduction in BAH when they transition 

between active duty and full-time National Guard duty. CBO estimates that implementing those provisions would have a net cost of 

$39 million over the 2013–2017 period. 


tjames on DSK6SPTVN1PROD with REPORTS
9 

TRICARE Pharmacy Copayments. Section 718 would set higher 

copayments for those who use the TRICARE pharmacy system beginning in 2013 and would limit the future growth of those copayments to increases in the annual cost-of-living adjustment (COLA) 

for military retired pay. Pharmaceutical costs for active-duty dependents and military retirees who are not Medicare-eligible are 

paid from discretionary funds and are discussed in this part of the 

estimate. Pharmaceutical costs for Medicare-eligible TRICARE 

beneficiaries are paid from the DoD Medicare-Eligible Retiree 

Health Care Fund (MERHCF), a mandatory account, and are discussed in the ‘‘Direct Spending’’ section of the estimate. 

DoD has the authority to increase the pharmacy copayments 

under current law, and CBO estimates that there is at least some 

probability they will do so. By increasing copayments in 2013, CBO 

estimates that section 718 would initially decrease TRICARE 

spending. However, section 718 would also limit the future growth 

in the copayments to the annual COLA for military retired pay. 

Currently, CBO projects the COLA will increase by about 2 percent 

each year, which is less than the approximately 5 percent annual 

increase in pharmacy copayments CBO estimates would occur 

under current law. This restriction on DoD’s ability to increase copayments in future years would lead to increased costs in later 

years. We estimate that section 718 would decrease net costs relative to current law by about $50 million over the 2013–2017 period, although over time it would increase costs. 

In addition, CBO estimates section 718 would require DoD to in- crease accrual contributions to the MERHCF by about $740 million 

over that same period. For additional details about how CBO estimated the effects of section 718, see the related discussion in the 

‘‘Direct Spending’’ section of this estimate. That discussion also includes background on the estimated impact on the discretionary accrual payments to the MERHCF. 

Other Provisions. Various other provisions would increase the 

cost of discretionary programs over the 2013–2017 period, CBO estimates. 

Multiyear Procurement Contracts. H.R. 4310 would authorize the 

military departments to enter multiyear procurement contracts for 

five major acquisition programs. Multiyear procurement is a special 

contracting method authorized in current law (title 10, United 

States Code, section 2306b), which 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 

every year are not appropriated at the time the contracts are 

awarded. Additional legislative authorization is required for 

multiyear contracts costing more than $500 million. 

Multiyear procurement contracts are used to acquire multiple assets—such as ships, planes, and other weapons—under one agreement. As part of such a contract, the government commits to purchase all items specified at the time the contract is signed, including those to be produced and paid for in subsequent years. Budget 

authority is provided in advance only for the cost of the items that 

will be ordered in the upcoming budget year. Because multiyear 

procurement allows a contractor to plan for more efficient production, such a contract can reduce the cost of an acquisition compared 

with the cost of buying the items through a series of annual conVerDate Mar 15 2010 07:01 May 16, 2012 Jkt 074183 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\HR479P2.XXX HR479P2

tjames on DSK6SPTVN1PROD with REPORTS
10 

tracts. If such contracts are cancelled before completion, an agency 

usually has useable assets, albeit fewer than were envisioned 

under the contract. 

Multiyear contracts frequently include provisions that require 

DoD to pay for unrecovered fixed costs in the event that the contract is canceled before completion. In practice, DoD does not budget for, obtain, or obligate funds sufficient to pay for those contractual commitments at the time they are incurred. Thus, should the 

contracts be cancelled at the end of the first year, DoD could owe 

the contractors for unrecovered fixed costs; however, the department has not requested budget authority for that amount. The 

amount of cancellation liability would decline in subsequent years, 

as increasing portions of the fixed costs were covered by annual 

contract payments, falling to zero in the final year of the contract. 

CBO believes that the full cost of such liabilities should be recorded in the budget at the time they are incurred. The failure to 

request funding for cancellation liabilities may distort the resource 

allocation process by understating the cost of decisions made today 

and possibly requiring a future Congress to pay for those decisions. 

Section 126 would authorize the Navy to enter a follow-on 

multiyear contract for up to 10 Virginia-class submarines beginning in fiscal year 2014. The Navy will order the last of two submarines in 2013 under an ongoing multiyear contract that was 

awarded in 2009. Based on information from DoD, CBO estimates 

that the Navy would use this authority to purchase an additional 

nine submarines over the 2014–2018 period and that those nine 

ships would require appropriations of $21.8 billion over the 2013– 

2017 period. (An additional $3.8 billion would be needed to complete the purchase in 2018.) The Navy estimates that purchasing 

those vessels under five annual contracts would cost $4.5 billion 

more than a single multiyear procurement contract. 

Section 125 would authorize the Navy to enter a multiyear contract for up to 10 Arleigh Burke-class destroyers beginning in fiscal 

year 2013. Based on information from DoD, CBO estimates that 

under that provision the Navy would purchase nine destroyers over 

the 2013–2017 period and that those nine ships would require appropriations of $19.9 billion over that period. The Navy estimates 

that five annual contracts would cost $1.5 billion more than a single multiyear procurement contract for those vessels. 

Section 124 would authorize the Navy to enter a multiyear contract beginning in fiscal year 2013 to purchase V–22 aircraft for the 

Marine Corps, the Air Force, and the U.S. Special Operations Command. In 2012, the Navy will order the last of five lots of the tiltrotor aircraft under a multiyear contract that began in 2008. Under 

the subsequent multiyear contract that would be authorized by this 

section, CBO estimates that the Navy would buy 91 aircraft for the 

Marines and seven aircraft for the Air Force and Special Operations Command over the 2013–2017 period at a cost of $8.3 billion. Appropriations were provided in 2012 for cost-reduction initiatives, so no cancellation costs are anticipated for the contract. The 

Navy estimates that a single multiyear contract would cost $852 

million less than five annual contracts. 

Section 111 would authorize the Army to enter a multiyear procurement contract for CH–47 helicopter airframes beginning in fiscal year 2013. Using that authority, CBO estimates that the Army 


tjames on DSK6SPTVN1PROD with REPORTS
11 

would purchase 161 such aircraft over the 2013–2017 period at a 

cost of $3.3 billion. The Army estimates that procuring the helicopters through a series of annual contracts would require additional appropriations of $373 million. 

Section 123 would authorize the Navy to purchase additional 

F/A–18 E/F fighter aircraft under an ongoing multiyear contract. 

The department, which was scheduled to purchase the final lot of 

those aircraft in fiscal year 2013, has now requested authority to 

order an additional 13 aircraft in 2014. Section 123 would authorize the Navy to extend its multiyear procurement contract for another year to purchase those additional aircraft at a cost of $1.2 billion, CBO estimates. The Navy estimates that extending the existing contract would require $59 million less in appropriations than 

buying the aircraft under a stand-alone annual contract. 

Incrementally Funded Procurement Contracts. H.R. 4310 would 

provide incremental funding authority for two acquisition contracts. Incremental funding of contracts is similar to multiyear contracts in that it allows agencies to incur obligations for which budget authority will be provided over more than one year. 

Government-wide accounting policies and DoD financial regulations generally require that appropriations for the full cost of acquisition contracts be enacted in advance. Incrementally funded 

contracts deviate from that policy because only a portion of the 

total budget authority needed to complete an acquisition is available at the time the contract is signed. Authority for such contracts 

typically stipulates that payments due in successive years of the 

contract are subject to the availability of appropriations provided 

in subsequent appropriations acts. If incrementally funded contracts are cancelled before completion, an agency is usually left 

without a complete and usable asset. 

Incremental funding does not change the budgetary impact of an 

acquisition program; it merely delays recognition of the full cost of 

the acquisition program by providing budget authority in allotments that more closely match estimated annual outlays. In general, outlays under such a contract will proceed according to the 

pace of production and the performance of the contractor, regardless of whether appropriations are provided up front or over time. 

Section 127 would authorize the Navy to conduct a nuclear refueling and overhaul of the U.S.S. Abraham Lincoln (CVN–72) over 

the 2013–2014 period. CBO estimates that the refueling and overhaul would require appropriations of $1.6 billion in 2013 and $1.7 

billion in 2014. Over the 2010–2012 period, the Congress appropriated $1.1 billion for advance procurement of materials and components. 

Section 147 would authorize the Secretary of the Air Force to 

enter into a fixed-price contract using incremental funding to buy 

two Space-Based Infrared System satellites. Budget authority for 

those satellites would be provided annually over a six-year period. 

The Congress appropriated almost $500 million for advance procurement for those satellites over the 2011–2012 period. CBO estimates that buying those satellites would require an additional $2.9 

billion in budget authority: $1.9 billion over the 2013–2017 period, 

and $1 billion in 2018 to complete the acquisition. 

East Coast Missile Defense Site. Section 223 would require that 

the Secretary of Defense ensure that a missile defense site on the 


tjames on DSK6SPTVN1PROD with REPORTS
12 

East Coast of the United States is constructed and operational by 

2016. The bill also would require DoD to evaluate the use of 

ground-based interceptors (GBIs) versus Standard Missile–3 interceptors (SM–3s) for the new site. Based on the operational requirements to defend against intercontinental ballistic missile threats, 

for the purposes of this estimate, CBO assumed that the Missile 

Defense Agency (MDA) would deploy GBIs at the site. 

MDA currently deploys a total of 30 operational GBIs in silos at 

Fort Greely, Alaska, and Vandenberg Air Force Base in California. 

Production of GBIs continues today as the MDA increases the inventory of spares and test interceptors. However, the GBIs are currently undergoing review to identify the cause of recent test failures, and the eventual cost to overcome those problems is not yet 

known. CBO estimates that under section 223, DoD would deploy 

20 GBIs on the East Coast of the United States requiring appropriations of $3.6 billion over the 2013–2017 period, including the 

cost of buying 20 GBIs ($1.3 billion); buying ground equipment 

($1.2 billion); developing the site, building the facilities, and constructing the silos ($1 billion); and operations ($100 million). Costs 

would be higher if the ongoing review of the GBIs increases the 

cost of the interceptors. 

Although CBO assumes that MDA will deploy GBIs for the East 

Coast installation because they can defend against intercontinental 

ballistic missiles, MDA could choose to deploy SM–3 interceptors 

instead. In that case, CBO estimates that MDA would purchase 24 

SM–3 Block IB interceptors, which would require appropriations of 

$1.2 billion over the 2013–2017 period. However, the Block IB 

interceptors have little or no capability against intercontinental 

ballistic missiles, and would thus need to be replaced by upgraded 

versions (and probably upgraded launchers) as those become available. Upgrading the SM–3s to the more capable versions would require additional appropriations after 2017. 

Both GBIs and SM–3s are currently being produced. If it is not 

possible to step up the rates of production for those programs, 

meeting the deadline specified in section 223 could require diverting equipment that is intended for use at other locations or for 

other purposes. In that case, the appropriations required to purchase the interceptors would be required at a later date to backfill 

the currently planned inventory. 

Chemistry and Metallurgy Research Building. The bill would require the Administration to develop and construct the Chemistry 

and Metallurgy Research Building Replacement Project in Los Alamos, New Mexico. That facility would be used to conduct plutonium 

research and to produce and maintain plutonium components for 

nuclear weapons. 

The Department of Energy began developing the project in 2004. 

In the 2013 budget request, development was deferred for at least 

five years to offset cost increases in other facilities and infrastructure projects. Section 2804 would require that the facility’s design 

and construction be placed under the jurisdiction of the Department of Defense and would authorize it as a military construction 

project for up to $3.5 billion. Section 2805 would eliminate the 

planned five-year deferral and require DOE and DoD to resume 

planning and design efforts, begin construction, and have the facility operational by 2024. 


tjames on DSK6SPTVN1PROD with REPORTS
13 

2For purposes of this estimate, CBO has reflected the $800 million as an authorization of 

funding for overseas contingency operations. 3Funding for the Troops to Teachers program for fiscal years 2011 and 2012 was appropriated 

for the Department of Defense rather than the Department of Education. 

Section 4701 would authorize appropriations of $100 million for the project in 2013. Additional appropriations of $1.7 billion would 

be required over the 2014–2017 period to complete the facility, 

CBO estimates. 

Extension of Pakistan Counterinsurgency Fund. Section 1217 

would extend for one year, through fiscal year 2013, DoD’s authority to provide assistance—including equipment, supplies, and funding for training—to the security forces of Pakistan through the 

Pakistan Counterinsurgency Fund (PCF). Since 2009, DoD and the 

Department of State have received approximately $3 billion to provide support to the Pakistani security forces through PCF and the 

Pakistan Counterinsurgency Capability Fund (PCCF). For fiscal 

year 2013, the Administration requested appropriations of $800 

million for the PCCF to support Pakistani security forces. Based on 

that funding request, CBO estimates that implementing this provision would require appropriations of $800 million in fiscal year 

2013.2

Small Business Procurement. Title XVI would make many 

changes to the laws that encourage federal agencies to contract for 

goods and services with small business. The bill would amend the 

definition of ‘‘bundled contracts’’ (the practice of combining two or 

more contracts into a single agreement) for the procurement of 

goods and services and require agencies to better justify the need 

for larger contracts rather than smaller ones that could be available to small business. 

The federal government currently has a goal of acquiring 23 percent of most goods and services from small business. The legislation would expand the goal to 25 percent and increase the number 

of goods and services that small businesses could provide. Finally, 

the bill would change contracting practices by the Small Business 

Administration (SBA) and agencies government-wide to help small 

business compete for federal contracts by expanding programs that 

allow them to partner with larger companies. Based on information 

from SBA, the General Services Administration, and agencies with 

large procurement budgets, CBO estimates that implementing title 

XVI would increase the need for appropriations by $525 million 

over the 2013–2017 period. 

Troops to Teachers. Section 541 would permanently reauthorize 

the Troops to Teachers program and transfer its administration 

from the Department of Education to the Department of Defense.3

The bill would limit annual obligations for the program to $15 million. CBO estimates reauthorizing the Troops to Teachers program 

would have discretionary costs of about $75 million over the 2013– 

2017 period. 

Interagency Personnel Rotations. Section 1111 would establish a 

Committee on National Security Personnel within the Executive 

Office of the President to improve the integration of national security personnel across the federal government, and would identify 

areas for cooperation between federal agencies responsible for national security. The bill would authorize the committee to receive 

annual appropriations over the 2013 to 2017 period equal to the 


tjames on DSK6SPTVN1PROD with REPORTS
14 

amounts expended on salaries and expenses for DoD’s National Security Professional Development and Integration Office during 

2012. Based on information from that office regarding the size of 

its workforce and its expenses, CBO estimates that the cost of implementing this provision would approach $1 million annually over 

the 2013–2017 period. 

Direct spending 

Several provisions in H.R. 4310 would affect direct spending. 

CBO estimates that those provisions would decrease net direct 

spending by $44 million over the 2013–2022 period (see Table 4). 

TRICARE Pharmacy Copayments. Section 718 would set 

higher copayments for those who use the TRICARE pharmacy system beginning in 2013 and would limit the future growth of those 

copayments to increases in the annual cost-of-living adjustment 

(COLA) for military retired pay. Under this provision, the copayments for brand name formulary drugs would increase from $12 in 

2012 to $17 in 2013 for up to a 30-day supply at retail pharmacies 

and from $9 in 2012 to $13 in 2013 for up to a 90-day supply purchased through the TRICARE national mail-order pharmacy. In addition, this section would increase the copayments for non-formulary drugs, currently set at $25, to $44 for those purchased at 

retail points of service and to $43 for those purchased by mailorder. The copayments for generic drugs would remain unchanged 

and drugs dispensed at military treatment facilities would continue 

to be offered at no charge. 


tjames on DSK6SPTVN1PROD with REPORTS
15 

TABLE 4—ESTIMATED IMPACT OF H.R. 4310 ON DIRECT SPENDING 

By fiscal year, in millions of dollars— 

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013–2017 2013–2022 

TRICARE Pharmacy Copayments: 

Estimated Budget Authority .......................................... ¥30 ¥17 6 31 90 124 162 204 256 303 80 1,129 

Estimated Outlays ......................................................... ¥25 ¥19 3 26 80 119 156 197 248 296 65 1,081 

Mail-Order Pharmacy Pilot Program: 

Estimated Budget Authority .......................................... ¥18 ¥144 ¥146 ¥162 ¥178 ¥153 ¥118 ¥90 ¥68 ¥52 ¥648 ¥1,129 

Estimated Outlays ......................................................... ¥9 ¥141 ¥146 ¥161 ¥177 ¥155 ¥121 ¥92 ¥70 ¥53 ¥634 ¥1,125 

Pentagon Maintenance Revolving Fund: 

Estimated Budget Authority .......................................... ¥26 0 0 0 0 0 0 0 0 0 ¥26 ¥26 

Estimated Outlays ......................................................... 0 ¥1 ¥9 ¥9 ¥4 ¥2 ¥1 0 0 0 ¥23 ¥26 

Minimum Service for Retirement as an Officer: 

Estimated Budget Authority .......................................... 0 2 5 5 5 5 3 ¥1 ¥2 ¥2 17 20 

Estimated Outlays ......................................................... 0 2 5 5 5 5 3 ¥1 ¥2 ¥2 17 20 

Time-In-Grade Waivers: 

Estimated Budget Authority .......................................... 1 8 12 4 3 3 ¥1 ¥3 ¥3 ¥3 28 21 

Estimated Outlays ......................................................... 1 8 12 4 3 3 ¥1 ¥3 ¥3 ¥3 28 21 

Retirement of Navy Chief Warrant Officers: 

Estimated Budget Authority .......................................... * ¥1 ¥2 ¥2 ¥2 ¥2 ¥2 ¥2 ¥1 ¥1 ¥7 ¥15 

Estimated Outlays ......................................................... * ¥1 ¥2 ¥2 ¥2 ¥2 ¥2 ¥2 ¥1 ¥1 ¥7 ¥15 

Total Changes in Direct Spending: 

Estimated Budget Authority ................................. ¥73 ¥152 ¥125 ¥124 ¥82 ¥23 ¥44 108 182 245 ¥556 * 

Estimated Outlays ......................................................... ¥33 ¥152 ¥137 ¥137 ¥95 ¥32 34 99 172 237 ¥554 ¥44 

Notes: Numbers may not sum to totals because of rounding. * = between 0 and -$500,000. 


tjames on DSK6SPTVN1PROD with REPORTS
16 

4 CBO projects that linking future increases in the pharmacy copayments to the COLA for 

military retired pay would result in increases of less than a dollar each year. We believe that 

DoD would prefer to increase copayments in whole dollar amounts. Because section 718 is unclear as to whether DoD can consider the cumulative increase in the COLA over several years 

when setting the copayments, CBO believes section 718 could effectively freeze those amounts 

at the 2013 levels, and we have reflected this view in our cost estimate. 5The actual amount of the accrual payments are set by the DoD Office of the Actuary, and 

the actual need to increase the accrual payments because of section 718 would ultimately depend on their own assumptions about future changes in the copayments under current law, 

which may be substantially different than the copayments used by CBO in establishing its baseline. 

Pharmaceutical costs for Medicare-eligible TRICARE beneficiaries are paid from the DoD Medicare-Eligible Retiree Health 

Care Fund, a mandatory account. (Pharmaceutical costs for activeduty dependents and military retirees who are not Medicare-eligible are paid from discretionary funds. CBO’s evaluation of the 

pharmacy costs for that latter group of beneficiaries is discussed in 

the ‘‘Spending Subject to Appropriation’’ section of the estimate.) 

Initially, the direct savings produced by the higher copayments under section 718 would be about $25 million a year. However, 

that provision would also limit the rate of future growth in the copayments to the annual COLA for military retired pay. Currently, 

CBO projects the COLA will increase by about 2 percent each year, 

which is less than the approximately 5 percent annual increase in 

pharmacy copayments CBO estimates would occur under current 

law. This restriction on DoD’s ability to increase copayments in future years would quickly lead to copayments lower than those CBO 

estimates would otherwise occur, and would thus increase spending 

from the MERHCF.4 On net, CBO estimates section 718 would increase spending from the MERHCF by about $1.1 billion over the 

2013–2022 period. 

Part of the funding for the MERHCF is derived from annual accrual payments made to that fund by the Treasury on DoD’s behalf. 

Those accrual payments represent the future costs to the MERHCF 

of members currently serving in the military and are made at the 

beginning of each fiscal year. Relative to what CBO estimates 

would occur under current law, we estimate those accrual payments would have to be increased by about $740 million over the 

2014–2017 period (see Table 3). Those payments are recorded as 

intragovernmental transactions and have no net impact on the federal budget deficit. However, they do count against DoD’s top-line 

discretionary budget request, and so future discretionary allocations may need to be adjusted accordingly.5 We expect section 718 

would not be enacted in time to affect the accrual payments for 

2013. 

Mail-Order Pharmacy Pilot Program. Section 717 would establish a pilot program to require Medicare-eligible beneficiaries of 

the TRICARE pharmacy program to obtain refills of certain maintenance medications from TRICARE’s national mail-order pharmacy. This requirement would remain in place through calendar 

year 2017, although beneficiaries could opt out of the program after 

they have used the mail-order pharmacy for at least one year. (All 

spending by TRICARE for pharmacy costs attributable to Medicare-eligible beneficiaries comes from the MERHCF.) 

Based on information from DoD, CBO believes that most maintenance medications would be included in this pilot program. Providing those medications through retail pharmacies to TRICARE 


tjames on DSK6SPTVN1PROD with REPORTS
17 

beneficiaries who are Medicare-eligible costs DoD about $1 billion 

a year, on net. Data from DoD indicates that those same medications would cost the department about 19 percent less if purchased 

through the mail-order pharmacy, which means the savings from 

this pilot program could be as much as $200 million per year. 

However, not all of those savings would be realized. First, some 

beneficiaries would choose to opt out of the pilot program after participating for a year. Information from DoD indicates that historically, about 10 percent of beneficiaries who use the mail-order 

pharmacy stop using it after a reasonable trial period. In addition, 

the pilot program would allow those with newly issued prescriptions to obtain the first 30-day supply at a retail point of service. 

Studies show that many people who start maintenance medications 

do not continue to use them past their initial period of usage. 

Based on those same studies, CBO estimates about 15 percent of 

all prescriptions would be those used less than 30 days, and not require transition to mail-order under this pilot program. Taking 

both of those effects into account, CBO estimates savings under 

section 717 of about $150 million a year for the years when the 

program would be fully operational, 2014 to 2017. 

Savings would be less in 2013 because of the time needed to set 

up the program and the costs to transition millions of existing prescriptions to mail-order. There would also be some savings after 

2018 because some beneficiaries who would be moved to the mailorder pharmacy would continue to use it after the pilot program 

ends. In total, CBO estimates section 717 would reduce direct 

spending by about $1.1 billion over the 2013–2022 period. 

Pentagon Reservation Maintenance Revolving Fund 

(PRMRF). Section 1421 would transfer $26 million of unobligated 

balances from the PRMRF to the Treasury, to be deposited as miscellaneous receipts. This transfer would lower spending estimated 

to occur under current law because DoD would be unable to obligate and expend those amounts without a subsequent appropriation. 

The PRMRF finances the maintenance, repair, and renovation of 

the Pentagon and certain other facilities in the national capital 

area using appropriations originally provided to various operation 

and maintenance accounts (and later transferred into the fund). 

Based on DoD’s projection of balances through the end of 2013, 

CBO expects that under current law the $26 million in balances 

would not be obligated or spent in that year. As a result, CBO estimates that section 1421 would have no effect on outlays in 2013, 

but would lower spending by $26 million over the 2014–2022 period. 

Force Shaping Authorities. Several sections of H.R. 4310 

would enhance DoD’s ability to reshape the officer corps—by making retirement more attractive or allowing longer careers—to better 

suit its current needs. CBO expects that three of those provisions 

would increase spending from the Military Retirement Fund in the 

near term, because those sections would encourage members to retire earlier than they otherwise would have under current law. 

However, by retiring earlier, those members would be accepting a 

smaller annuity, which would result in savings to the retirement 

fund over the long run. Similarly, one provision would allow members to remain in the service longer than they are currently alVerDate Mar 15 2010 07:01 May 16, 2012 Jkt 074183 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\HR479P2.XXX HR479P2

tjames on DSK6SPTVN1PROD with REPORTS
18 

lowed under current law. In this instance, the delayed retirements 

would result in savings in the near term, but eventually lead to 

higher costs. 

Minimum Service for Retirement as an Officer. Officers who 

began their military careers as enlisted servicemembers must complete at least 10 years of commissioned service to retire as officers. 

Those with less than 10 years of commissioned service are generally retired at the highest enlisted grade they achieved. DoD currently has temporary authority (through 2013) to allow such members to retire as officers with a minimum of eight years of commissioned service. Section 504 would extend this authority through 

2018. Based on data from DoD, CBO estimates that under this authority about 100 officers per year over the 2014–2018 period 

would retire earlier than they otherwise would have, which would 

increase costs, on net, by about $20 million over the 2014–2022 period. 

Time-in-Grade Waivers. Currently, for officers to retire at the 

highest grade they achieved, they must serve at least three years 

in that grade. The service secretaries can waive this restriction and 

lower the requirement to two years in that grade, but such waivers 

may be granted to 2 percent of the officer population at most. Sections 505 and 506 would allow the services to grant waivers for up 

to 4 percent of the population of those in the grades of O–5 and 

O–6, and up to 5 percent of the population of those in the grades 

of O–7 and O–8. In addition, the Marine Corps would be authorized 

to grant time-in-grade waivers to an additional 5 percent of O–7s 

and O–8s (for a total of 10 percent). 

Based on data from the services, CBO estimates that with this 

expanded authority about 1,300 additional officers would be granted time-in-grade waivers over the 2013–2018 period. However, because many of the officers could have been forced or encouraged to 

retire using existing authorities, such as early retirement boards or 

fewer promotions, CBO estimates the net increase in retirements 

would only be about half that amount, resulting in a net increase 

in spending of $21 million over the 2013–2022 period. 

Retirement of Navy Chief Warrant Officers. Section 502 would 

allow Navy Chief Warrant Officers to remain in the service for 33 

years. Currently, those officers are required to retire after completing 30 years of service. Based on data from DoD, CBO expects 

that each year about 10 Warrant Officers would choose to remain 

in the service for additional years. On net, CBO estimates section 

502 would reduce spending by the Military Retirement Fund by 

$15 million over the 2013–2022 period. 

Other Provisions. Other provisions in the bill would have insignificant effects on direct spending, generally because few people 

would be affected. 

• Section 333 would extend (through 2018) and expand a pilot 

program that would allow the military services to use working capital funds (WCFs) as a source of financing for the upgrading of 

components in DoD weapons systems. Such programs could affect 

the spending of existing balances in the WCFs, but CBO expects 

such changes to be small. 

• Section 521 would extend eligibility for disability retirement 

benefits to those servicemembers participating in the career intermission pilot program. 


tjames on DSK6SPTVN1PROD with REPORTS
19 

• Section 552 would award the Purple Heart to servicemembers 

who were killed or wounded in the attacks at a recruiting station 

in Little Rock, Arkansas, on June 1, 2009, and at Fort Hood, Texas, 

on November 5, 2009. Receipt of the Purple Heart is directly tied 

to eligibility for Combat-Related Special Compensation (CRSC), 

which is a mandatory benefit. CBO estimates that some of those 

servicemembers who would receive the Purple Heart under this 

provision, would as a result earn CRSC. • Section 651 would allow certain federal employees to stop paying premiums for military survivor benefits. • Section 663 would extend certain benefits to members of the 

Coast Guard Reserve who are activated for domestic emergencies, 

including the possibility of early retirement and education assistance. • Section 715 would clarify the applicability of the Federal Tort 

Claims Act to certain contractors of the defense health system. 

Claims against the government are often settled with payments 

from the Judgment Fund (a permanent indefinite appropriation). • Section 1111 would rescind unobligated balances from DoD’s 

National Security Professional Development Implementation Office, 

and the second could result in a small number of Foreign Services 

Officers retiring one year later than they would have otherwise. • Section 1201 would extend DoD’s authority to accept gifts and 

contributions for the Commanders’ Emergency Response Program 

in Afghanistan. 

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. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. 


tjames on DSK6SPTVN1PROD with REPORTS
20 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 4310 AS REPORTED BY THE HOUSE COMMITTEE ON ARMED SERVICES ON MAY 11, 2012 

By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012– 2017 2012– 2022 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-You-Go Impact ................................................................................................... 0 ¥33 ¥152 ¥137 ¥137 ¥95 ¥32 34 99 172 237 ¥554 ¥44 


tjames on DSK6SPTVN1PROD with REPORTS
21 

Intergovernmental and private-sector impact: 

Mandates that apply to public and private entities 

The bill would impose intergovernmental and private-sector mandates as defined in UMRA on mortgage lending institutions. The 

bill would require mortgage lenders to consider active duty 

servicemembers who have been relocated to be occupying the residence that secures a mortgage for the purpose of inquiries or applications for refinancing. Because of the small number of public lending institutions that would be affected, CBO estimates that the 

costs of complying with the mandate would be small and well below 

the annual threshold established in UMRA for intergovernmental 

mandates ($73 million in 2012, adjusted annually for inflation). 

Based on information about current industry practices, CBO estimates that the costs to private lending institutions of complying 

with the mandate would probably fall below the annual threshold 

established in UMRA for private-sector mandates ($146 million in 

2012, adjusted annually for inflation). 

Mandates that apply to public entities only 

Section 564 would preempt state laws governing child custody if 

those laws are inconsistent with or provide less protection to the 

rights of a parent who is a servicemember than those provided 

under the bill. That preemption would be an intergovernmental 

mandate as defined in UMRA. While the mandate would limit the 

application of state laws, it would impose no duty on states that 

would result in additional spending. 

Estimate prepared by: Federal costs: Defense Authorizations— 

Kent Christensen; Military Construction and Multiyear Procurement—David Newman; Military and Civilian Personnel—Dawn 

Regan; Troops to Teachers—Justin Humphrey; Military Retirement 

and Health Care—Matthew Schmit; Operation and Maintenance— 

Jason Wheelock; Missile Defense and Procurement of Ships and 

Satellites—Raymond J. Hall; Impact on state, local, and tribal governments: J’nell Blanco; Impact on the private sector: Elizabeth 

Bass. 

Estimate approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 


tjames on DSK6SPTVN1PROD with REPORTS
(22) 

ADDITIONAL VIEWS OF REPRESENTATIVE HANK JOHNSON 

I commend Chairman McKeon, Ranking Member Smith, and the 

staff of the House Armed Services Committee for their diligent 

work to produce this committee’s version of the National Defense 

Authorization Act for Fiscal Year 2013. 

The bill as reported included a number of my legislative initiatives, and I thank the majority and minority for working to ensure 

their inclusion wherever possible. 

Nevertheless, I voted against reporting the bill favorably for several reasons. 

The bill authorizes spending billions of dollars in excess of Budget Control Act levels. 

It wastes hundreds of millions of dollars on missile defense and 

nuclear programs deemed unnecessary by military and civilian 

leadership of the Department of Defense. 

And it includes amendments that I believe are designed to institutionalize discrimination against gay and lesbian American citizens and military personnel at the same time the military is adjusting smoothly to the repeal of the discriminatory ‘‘Don’t Ask, 

Don’t Tell’’ policy. 

Wasteful spending on unnecessary and unproven systems particularly the inclusion of funding for a ballistic missile defense site 

on the East Coast of the United States that would cost billions of 

dollars to construct was added to this bill despite widespread bipartisan concern that federal deficits and debt are unsustainable. 

Hours after the committee reported the bill, General Martin E. 

Dempsey, Chairman of the Joint Chiefs of Staff, said, ‘‘The program of record for ballistic missile defense for the homeland, as 

we’ve submitted it, is adequate and sufficient to the task. So I don’t 

see a need beyond what we’ve submitted in the last budget.’’ 

Wasteful spending on defense is particularly troubling while the 

House of Representatives moves simultaneously to cut funding for 

social programs essential to millions of Americans—the poor, seniors, and children—who are finding it difficult to do for themselves 

amid these exceptionally stressful economic conditions. 

For these reasons, with some reluctance and regret, I must express my opposition to this legislation as reported by the Committee. 

HANK JOHNSON. 


tjames on DSK6SPTVN1PROD with REPORTS
23 

COMMITTEE VOTES

This supplemental report includes a revised version of Roll Call 

Vote No. 18 that correctly lists Ms. Sanchez’s vote as ‘‘Aye’’. This 

correction does not change the outcome of the roll call vote total for 

Roll Call Vote No. 18 in part 1 of the report submitted. 


tjames on DSK6SPTVN1PROD with REPORTS
24 

COMMITTEE ON ARMED SERVICES

112th Congress 

ROLL CALL VOTE NO. 18

H.R. 4310

On Agreeing to Amendment No. 84r1 Offered by Mr. Garamendi. 

Description: Strike requirement that DOD ensures East coast 

missile defense base. 

Wednesday: May 9, 2012. 

Member Aye No Present Member Aye No Present 

Mr. McKeon .............. X Mr. Smith ............ X 

Mr. Bartlett .............. X Mr. Reyes ............ X 

Mr. Thornberry ......... X Ms. Sanchez ........ X 

Mr. Jones ................. X Mr. McIntyre ........ X 

Mr. Akin ................... X Mr. Brady ............ X 

Mr. Forbes ............... X Mr. Andrews ........ X 

Mr. Jeff Miller .......... X Mrs. S. Davis ...... X 

Mr. Wilson ............... X Mr. Langevin ....... X 

Mr. LoBiondo ........... X Mr. Larsen ........... X 

Mr. Turner ................ X Mr. Cooper .......... X 

Mr. Kline .................. X Ms. Bordallo ........ X 

Mr. Rogers ............... X Mr. Courtney ....... X 

Mr. Franks ............... X Mr. Loebsack ....... X 

Mr. Shuster .............. X Ms. Tsongas ........ X 

Mr. Conaway ............ X Ms. Pingree .........

Mr. Lamborn ............ X Mr. Kissell ........... X 

Mr. Wittman ............ X Mr. Heinrich ........ X 

Mr. Hunter ............... X Mr. Owens ........... X 

Dr. Fleming .............. X Mr. Garamendi .... X 

Mr. Coffman ............ X Mr. Critz .............. X 

Mr. Rooney ............... X Mr. Ryan ............. X 

Mr. Platts ................ X Mr. Ruppersberger X 

Mr. Rigell ................. X Mr. Johnson ......... X 

Mr. Gibson ............... X Ms. Sutton .......... X 

Mrs. Hartzler ............ X Ms. Hanabusa ..... X 

Dr. Heck ................... X Ms. Hochul .......... X 

Mr. Schilling ............ X Ms. Speier ........... X 

Mr. Runyan .............. X 

Mr. Scott .................. X 

Mr. Griffin ................ X 

Mr. Palazzo .............. X 

Mr. West .................. X 

Mrs. Roby ................ X 

Mr. Brooks ............... X 

Mr. Young ................ X 

Roll Call Vote Total: 28 33 

Æ 


tjames on DSK6SPTVN1PROD with REPORTS