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‘‘(C) will be carried out by an institution of
higher education.’’; and
(B) by adding at the end the following new
paragraph:
‘‘(3) At least 25 percent of the funds available for
the program each fiscal year shall be used for awarding
grants and entering into contracts, cooperative agree-
ments, and other transactions on a cost-share basis under
which the ratio of recipient costs to Government costs is
two to one.’’.
(b) CLERICAL AMENDMENT.—The item relating to
section 2525 in the table of sections at the beginning of
chapter 148 of title 10, United States Code, is amended
to read as follows:
‘‘2525. Manufacturing technology program.’’.
SEC. 259. FIVE-YEAR PLAN FOR CONSOLIDATION OF DE-
FENSE LABORATORIES AND TEST AND EVAL-
UATION CENTERS.
(a) FIVE-YEAR PLAN.—The Secretary of Defense
shall develop a five-year plan to consolidate and restruc-
ture the laboratories and test and evaluation centers of
the Department of Defense.
(b) OBJECTIVE.—The plan shall set forth the specific
actions needed to consolidate the laboratories and test and
evaluation centers into as few laboratories and centers as
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is practical and possible, in the judgment of the Secretary,
by October 1, 2005.
(c) MATTERS TO BE CONSIDERED.—In developing
the plan, the Secretary shall consider the following:
(1) Consolidation of common support functions,
including the following:
(A) Aircraft (fixed wing and rotary).
(B) Weapons.
(C) Space systems.
(D) Command, control, communications,
computers, and intelligence.
(2) The extent to which any military construc-
tion is planned at the laboratories and centers.
(3) The encroachment on the laboratories and
centers by residential and industrial expansion.
(4) The cost of operations and maintenance at
the laboratories and centers.
(5) The cost of environmental remediation at
the laboratories and centers.
(d) REPORT.—Not later than May 1, 1996, the Sec-
retary of Defense shall submit to the congressional defense
committees a report on the plan.
(e) LIMITATION.—Of the amounts appropriated or
otherwise made available pursuant to an authorization in
section 201 for the central test and evaluation investment
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development program, not more than 40 percent may be
obligated before the report required by subsection (d) is
submitted to Congress.
SEC. 260. AERONAUTICAL RESEARCH AND TEST CAPABILI-
TIES ASSESSMENT.
(a) POLICY.—(1) It is in the Nation’s long-term na-
tional security interests to maintain preeminence in the
area of aeronautical research and test capabilities.
(2) Continued advances in aeronautical science and
engineering are critical to sustaining the strategic and tac-
tical air superiority of the United States and coalition
forces, as well as United States economic security and
international aerospace leadership.
(3) Encouragement of active Department of Defense
partnership with other Government agencies, academic in-
stitutions, and private industry to develop, maintain, and
enhance aeronautical research and test capabilities is in
the national security and economic interest of the Depart-
ment and the United States.
(b) REVIEW.—(1) In pursuit of the aeronautical re-
search and test capabilities policy set forth in subsection
(a), the Secretary of Defense shall conduct a comprehen-
sive review of the aeronautical research and test facilities
and capabilities of the United States in order to assess
the current condition of such facilities and capabilities.
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(2) The review shall identify options for providing af-
fordable, operable, reliable, and responsive long-term aero-
nautical research and test capabilities for military and ci-
vilian purposes and for the organization and conduct of
such capabilities within the Department or through shared
operations with other Government agencies, academic in-
stitutions, and private industry. The review also shall set
forth in detail the projected costs of such options, includ-
ing costs of acquisition and technical and financial ar-
rangements (including the use of Government facilities for
reimbursable private use).
(c) REPORT.—Not later than March 1, 1996, the
Secretary of Defense shall submit to the congressional de-
fense committees a report setting forth in detail the find-
ings of the review required by subsection (b). The report
shall include recommendations on the most efficient and
economic means of developing, maintaining, and contin-
ually modernizing aeronautical research and test capabili-
ties to meet current, planned, and prospective military and
civilian needs.
SEC. 261. LIMITATION ON T–38 AVIONICS UPGRADE PRO-
GRAM.
(a) REQUIREMENT.—The Secretary of Defense shall
ensure that, in evaluating proposals submitted in response
to a solicitation issued for a contract for the T–38 Avi-
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onics Upgrade Program, the proposal of an entity may not
be considered unless—
(1) in the case of an entity that conducts sub-
stantially all of its business in a foreign country, the
foreign country provides equal access to similar con-
tract solicitations in that country to United States
entities; and
(2) in the case of an entity that conducts busi-
ness in the United States but that is owned or con-
trolled by a foreign government or by an entity in-
corporated in a foreign country, the foreign govern-
ment or foreign country of incorporation provides
equal access to similar contract solicitations in that
country to United States entities.
(b) DEFINITION.—In this section, the term ‘‘United
States entity’’ means an entity that is owned or controlled
by persons a majority of whom are United States citizens.
SEC. 262. CROSS REFERENCE TO CONGRESSIONAL DE-
FENSE 
POLICY 
CONCERNING 
NATIONAL
TECHNOLOGY AND INDUSTRIAL BASE, REIN-
VESTMENT, AND CONVERSION IN OPERATION
OF DEFENSE RESEARCH AND DEVELOPMENT
PROGRAMS.
(a) 
SECTION
2358 
PROJECTS.—Section
2358(a)(2)(B) of title 10, United States Code, is amended
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by inserting before the period the following: ‘‘and advance
the defense policies and objectives specified in section
2501 of this title’’.
(b) SECTION 2371 PROJECTS.—Section 2371(a) of
such title is amended by inserting before the period in the
first sentence the following: ‘‘for the purpose of advancing
the defense policies and objectives specified in section
2501 of this title’’.
SEC. 263. DEMILITARIZATION OF CONVENTIONAL MUNI-
TIONS, ROCKETS, AND EXPLOSIVES.
Of the amount appropriated pursuant to the author-
ization in section 201 for the joint Department of De-
fense-Department of Energy munitions technology devel-
opment program (PE 63225D), $15,000,000 shall be
available for cooperative development and demonstration
of processes that comply with applicable environmental
laws for the demilitarization and disposal of unserviceable,
obsolete, or nontreaty compliant munitions, rocket motors,
and explosives. In carrying out such development and
demonstration, the Secretary of Defense and the Secretary
of Energy should consider a number of potential tech-
nologies, including super-critical water oxidation, molten
metal pyrolisis, plasma arc, catalytic fluidized-bed oxida-
tion, molten salt oxidation, incineration, critical fluid ex-
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TITLE III—OPERATION AND
MAINTENANCE
Subtitle A—Authorization of
Appropriations
SEC. 301. OPERATION AND MAINTENANCE FUNDING.
Funds are hereby authorized to be appropriated for
fiscal year 1996 for the use of the Armed Forces and other
activities and agencies of the Department of Defense for
expenses, not otherwise provided for, for operation and
maintenance in amounts as follows:
(1) For the Army, $19,339,936,000.
(2) For the Navy, $21,677,510,000.
(3) For the Marine Corps, $2,603,622,000.
(4) For the Air Force, $18,984,162,000.
(5) 
For 
Defense-wide 
activities,
$10,680,371,000.
(6) For the Army Reserve, $1,139,591,000.
(7) For the Naval Reserve, $838,042,000.
(8) 
For 
the 
Marine 
Corps 
Reserve,
$91,783,000.
(9) For the Air Force Reserve, $1,507,447,000.
(10) 
For 
the 
Army 
National 
Guard,
$2,394,108,000.
(11) 
For 
the 
Air 
National 
Guard,
$2,734,221,000.
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(12) For the Defense Inspector General,
$177,226,000.
(13) For the United States Court of Appeals
for the Armed Forces, $6,521,000.
(14) For Environmental Restoration, Defense,
$1,422,200,000.
(15) For Drug Interdiction and Counter-drug
Activities, Defense-wide, $680,432,000.
(16) 
For 
Medical 
Programs, 
Defense,
$9,876,525,000.
(17) For Summer Olympics, $15,000,000.
(18) For Cooperative Threat Reduction pro-
grams, $200,000,000.
(19) For Overseas Humanitarian, Disaster, and
Civic Aid programs, $50,000,000.
SEC. 302. WORKING CAPITAL FUNDS.
Funds are hereby authorized to be appropriated for
fiscal year 1996 for the use of the Armed Forces and other
activities and agencies of the Department of Defense for
providing capital for working capital and revolving funds
in amounts as follows:
(1) For the Defense Business Operations Fund,
$878,700,000.
(2) For the National Defense Sealift Fund,
$1,574,220,000.
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SEC. 303. ARMED FORCES RETIREMENT HOME.
There is hereby authorized to be appropriated for fis-
cal year 1996 from the Armed Forces Retirement Home
Trust Fund the sum of $59,120,000 for the operation of
the Armed Forces Retirement Home, including the United
States Soldiers’ and Airmen’s Home and the Naval Home.
SEC. 304. OFFICE OF ECONOMIC ADJUSTMENT.
Of the amount authorized in section 301(5) for De-
fense-wide activities, $60,578,000 is for the Office of Eco-
nomic Adjustment of the Department of Defense.
Subtitle B—Defense Business
Operations Fund
SEC. 311. CODIFICATION OF DEFENSE BUSINESS OPER-
ATIONS FUND.
(a) MANAGEMENT OF WORKING-CAPITAL FUNDS.—
(1) Chapter 131 of title 10, United States Code, is amend-
ed by inserting after section 2215 the following new sec-
tion:
‘‘§ 2216. Defense Business Operations Fund
‘‘(a) MANAGEMENT OF WORKING-CAPITAL FUNDS
AND CERTAIN ACTIVITIES.—The Secretary of Defense
may manage the performance of the working-capital funds
and industrial, commercial, and support type activities de-
scribed in subsection (b) through the fund known as the
Defense Business Operations Fund, which is established
on the books of the Treasury. Except for the funds and
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activities specified in subsection (b), no other functions,
activities, funds, or accounts of the Department of De-
fense may be managed through the Fund.
‘‘(b) FUNDS AND ACTIVITIES INCLUDED.—The funds
and activities referred to in subsection (a) are the follow-
ing:
‘‘(1) Working-capital funds established under
section 2208 of this title and in existence on Decem-
ber 5, 1991.
‘‘(2) Those activities that, on December 5,
1991, were funded through the use of a working-
capital fund established under that section.
‘‘(3) The Defense Finance and Accounting
Service.
‘‘(4) The Defense Industrial Plant Equipment
Center.
‘‘(5) The Defense Commissary Agency.
‘‘(6) The Defense Technical Information Serv-
ice.
‘‘(7) The Defense Reutilization and Marketing
Service.
‘‘(c) SEPARATE ACCOUNTING, REPORTING, AND AU-
DITING OF FUNDS AND ACTIVITIES.—(1) The Secretary
of Defense shall provide in accordance with this subsection
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for separate accounting, reporting, and auditing of funds
and activities managed through the Fund.
‘‘(2) The Secretary shall maintain the separate iden-
tity of each fund and activity managed through the Fund
that (before the establishment of the Fund) was managed
as a separate fund or activity.
‘‘(3) The Secretary shall maintain separate records
for each function for which payment is made through the
Fund and which (before the establishment of the Fund)
was paid directly through appropriations, including the
separate identity of the appropriation account used to pay
for the performance of the function.
‘‘(d) CHARGES FOR GOODS AND SERVICES PROVIDED
THROUGH THE FUND.—(1) Charges for goods and serv-
ices provided through the Fund shall include the following
amounts:
‘‘(A) Amounts necessary to recover the full
costs of—
‘‘(i) the development, implementation, op-
eration, and maintenance of systems supporting
the wholesale supply and maintenance activities
of the Department of Defense; and
‘‘(ii) the use of members of the armed
forces in the provision of the goods and serv-
ices, computed by calculating, to the maximum
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‘‘(2) The Secretary of Defense may award contracts
for capital assets of the Fund in advance of the availability
of funds in the subaccount.
‘‘(f) 
PROCEDURES
FOR
ACCUMULATION
OF
FUNDS.—The Secretary of Defense shall establish billing
procedures to ensure that the balance in the Fund does
not exceed the amount necessary to provide for the work-
ing capital requirements of the Fund, as determined by
the Secretary.
‘‘(g) PURCHASE FROM OTHER SOURCES.—The Sec-
retary of Defense or the Secretary of a military depart-
ment may purchase goods and services that are available
for purchase from the Fund from a source other than the
Fund if the Secretary determines that such source offers
a more competitive rate for the goods and services than
the Fund offers.
‘‘(h) ANNUAL REPORTS AND BUDGET.—The Sec-
retary of Defense shall annually submit to Congress, at
the same time that the President submits the budget
under section 1105 of title 31, the following:
‘‘(1) A detailed report that contains a state-
ment of all receipts and disbursements of the Fund
(including such a statement for each subaccount of
the Fund) for the year for which the report is sub-
mitted.
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‘‘(2) A detailed proposed budget for the oper-
ation of the Fund for the fiscal year for which the
budget is submitted.
‘‘(3) A comparison of the amounts actually ex-
pended for the operation of the Fund for the pre-
vious fiscal year with the amount proposed for the
operation of the Fund for that fiscal year in the
President’s budget.
‘‘(4) A report on the capital asset subaccount of
the Fund that contains the following information:
‘‘(A) The opening balance of the sub-
account as of the beginning of the fiscal year in
which the report is submitted.
‘‘(B) The estimated amounts to be credited
to the subaccount in the fiscal year in which the
report is submitted.
‘‘(C) The estimated amounts of outlays to
be paid out of the subaccount in the fiscal year
in which the report is submitted.
‘‘(D) The estimated balance of the sub-
account at the end of the fiscal year in which
the report is submitted.
‘‘(E) A statement of how much of the esti-
mated balance at the end of the fiscal year in
which the report is submitted will be needed to
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pay outlays in the immediately following fiscal
year that are in excess of the amount to be
credited to the subaccount in the immediately
following fiscal year.
‘‘(i) DEFINITIONS.—In this section:
‘‘(1) The term ‘capital assets’ means the follow-
ing capital assets that have a development or acqui-
sition cost of not less than $15,000:
‘‘(A) Minor construction projects financed
by the Fund pursuant to section 2805(c)(1) of
this title.
‘‘(B) Automatic data processing equip-
ment, software, other equipment, and other
capital improvements.
‘‘(2) The term ‘Fund’ means the Defense Busi-
ness Operations Fund.’’.
(2) The table of sections at the beginning of such
chapter is amended by inserting after the item relating
to section 2215 the following new item:
‘‘2216. Defense Business Operations Fund.’’.
(b) CONFORMING REPEALS.—The following provi-
sions of law are hereby repealed:
(1) Subsections (b), (c), (d), and (e) of section
311 of the National Defense Authorization Act for
Fiscal Year 1995 (Public Law 103–337; 10 U.S.C.
2208 note).
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(2) Subsections (a) and (b) of section 333 of
the National Defense Authorization Act for Fiscal
Year 1994 (Public Law 103–160; 10 U.S.C. 2208
note).
(3) Section 342 of the National Defense Au-
thorization Act for Fiscal Year 1993 (Public Law
102–484; 10 U.S.C. 2208 note).
(4) Section 316 of the National Defense Au-
thorization Act for Fiscal Years 1992 and 1993
(Public Law 102–190; 10 U.S.C. 2208 note).
(5) Section 8121 of the Department of Defense
Appropriations Act, 1992 (Public Law 102–172; 10
U.S.C. 2208 note).
SEC. 312. RETENTION OF CENTRALIZED MANAGEMENT OF
DEFENSE BUSINESS OPERATIONS FUND AND
PROHIBITION ON FURTHER EXPANSION OF
FUND.
(a) CENTRALIZED MANAGEMENT.—Subsection (a) of
section 2216 of title 10, United States Code, as added by
section 311(a), is amended—
(1) by inserting ‘‘(1)’’ before ‘‘The Secretary of
Defense’’; and
(2) by adding at the end the following new
paragraph:
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‘‘(2) Management of the Fund, including manage-
ment of cash balances in the Fund, shall be exercised in
the Office of the Secretary of Defense under the imme-
diate authority of the Under Secretary of Defense (Comp-
troller). The Fund shall be treated as a single account for
purposes of subchapter III of chapter 13 and subchapter
II of chapter 15 of title 31.’’.
(b) EXPANSION OF FUND.—Such subsection is fur-
ther amended by adding at the end of paragraph (1) the
following new sentence: ‘‘The Secretary may not convert
to management through the Fund any function, activity,
fund, or account of the Department of Defense that is not
managed through the Fund as of the date of the enact-
ment of the National Defense Authorization Act for Fiscal
Year 1996.’’.
SEC. 313. CHARGES FOR GOODS AND SERVICES PROVIDED
THROUGH DEFENSE BUSINESS OPERATIONS
FUND AND TERMINATION OF ADVANCE BILL-
ING PRACTICES.
(a) CHARGES INCLUDED.—Paragraph (1)(A)(ii) of
subsection (d) of section 2216 of title 10, United States
Code, as added by section 311(a), is amended by striking
out ‘‘as if employees of the Department of Defense were
used in the provision of the goods and services’’ and in-