House Report 112-479 - NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2013[House Report 112-479]
[From the U.S. Government Printing Office]


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.

                                     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 $57 billion 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 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 Appropriationsc
    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 SPENDINGd
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).

    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\
---------------------------------------------------------------------------
    \1\In addition, the bill would authorize $30 million annually 
through 2017 for the National Guard to operate counterdrug training 
schools.
---------------------------------------------------------------------------
    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 
authorized 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.

                                 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
            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 Retirement 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 
active-duty 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 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        1,613      1,748          0          0          0      3,361
     and Overhaul..................
    Space-Based Infrared System            368        379        368        350        391      1,856
     Satellites....................
East Coast Missile Defense Site....        100      1,800      1,600         50         50      3,600
Chemistry and Metallurgy Research          100        400        400        400        500      1,800
 Building..........................
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.

    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.
    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 
increase 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 
contracts. 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 tilt-rotor 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 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 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.
    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\
---------------------------------------------------------------------------
    \2\For purposes of this estimate, CBO has reflected the $800 
million as an authorization of funding for overseas contingency 
operations.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \3\Funding 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.
---------------------------------------------------------------------------
    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 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 mail-order. The copayments for generic 
drugs would remain unchanged and drugs dispensed at military 
treatment facilities would continue to be offered at no charge.

                                                                    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.

    Pharmaceutical costs for Medicare-eligible TRICARE 
beneficiaries are paid from the DoD Medicare-Eligible Retiree 
Health Care Fund, a mandatory account. (Pharmaceutical costs 
for active-duty 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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \5\The 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.
---------------------------------------------------------------------------
    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 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 mail-order 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 allowed 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.
     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.

                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
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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.

            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.
                            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.

                      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.               X         ........  ..........
                                                                 Ruppersberger.
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        ..........                    ........  ........  ..........
----------------------------------------------------------------------------------------------------------------

                                  
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