H. R. 3230—127
Subtitle C—Travel and Transportation
Allowances
SEC. 621. ALLOWANCE IN CONNECTION WITH SHIPPING MOTOR
VEHICLE AT GOVERNMENT EXPENSE.
(a) ALLOWANCE AUTHORIZED.—Section 406(b)(1)(B) of title 37,
United States Code, is amended by adding at the end the following:
‘‘If clause (i)(I) applies to the transportation by the member of
a motor vehicle from the old duty station, the monetary allowance
under this subparagraph shall also cover return travel to the old
duty station by the member or other person transporting the vehicle.
In the case of transportation described in clause (ii), the monetary
allowance shall also cover travel from the new duty station to
the port of debarkation to pick up the vehicle.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on January 1, 1997.
SEC. 622. DISLOCATION ALLOWANCE AT A RATE EQUAL TO TWO AND
ONE-HALF MONTHS BASIC ALLOWANCE FOR QUARTERS.
(a) ALLOWANCE AUTHORIZED.—Section 407(a) of title 37, United
States Code, is amended in the matter preceding paragraph (1)
by striking out ‘‘two months’’ and inserting in lieu thereof ‘‘two
and one-half months’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on January 1, 1997.
SEC. 623. ALLOWANCE FOR TRAVEL PERFORMED IN CONNECTION
WITH LEAVE BETWEEN CONSECUTIVE OVERSEAS TOURS.
(a) AUTHORITY FOR ADDITIONAL DEFERRAL OF TRAVEL.—Section
411b(a)(2) of title 37, United States Code, is amended by adding
at the end the following: ‘‘If the member is unable to undertake
the travel before the end of such one-year period as a result of
duty in connection with a contingency operation, the member may
defer the travel for one additional year beginning on the date
the duty of the member in connection with the contingency operation
ends.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect as of November 1, 1995.
SEC. 624. FUNDING FOR TRANSPORTATION OF HOUSEHOLD EFFECTS
OF PUBLIC HEALTH SERVICE OFFICERS.
Section 406(j) of title 37, United States Code, is amended—
(1) in the first sentence of paragraph (1)—
(A) by striking out ‘‘Appropriations available’’ and all
that follows through ‘‘to a member’’ and inserting in lieu
thereof ‘‘The Secretary concerned may pay a monetary
allowance to a member of the armed forces or a member
of the Commissioned Corps of the Public Health Service’’;
and
(B) by striking out ‘‘of the military department’’; and
(2) by adding at the end the following new paragraph:
‘‘(3) Appropriations available to the Department of Defense
for providing transportation of household effects of members of
the armed forces under subsection (b) shall be available to pay
the monetary allowance authorized under paragraph (1) to such
members. Appropriations available to the Department of Health
H. R. 3230—128
and Human Services for providing transportation of household
effects of members of the Commissioned Corps of the Public Health
Service under subsection (b) shall be available to pay the monetary
allowance authorized under paragraph (1) to such members.’’.
Subtitle D—Retired Pay, Survivor Benefits,
and Related Matters
SEC. 631. EFFECTIVE DATE FOR MILITARY RETIREE COST-OF-LIVING
ADJUSTMENT FOR FISCAL YEAR 1998.
(a) REPEAL OF ADJUSTMENT OF EFFECTIVE DATE FOR FISCAL
YEAR 1998.—Section 1401a(b)(2)(B) of title 10, United States Code,
is amended—
(1) by striking out ‘‘(B) SPECIAL RULES’’ and all that follows
through ‘‘In the case of’’ in clause (i) and inserting in lieu
thereof ‘‘(B) SPECIAL RULE FOR FISCAL YEAR 1996.—In the case
of’’; and
(2) by striking out clause (ii).
(b) REPEAL
OF CONTINGENT ALTERNATIVE DATE
FOR FISCAL
YEAR 1998.—Section 631 of the National Defense Authorization
Act for Fiscal Year 1996 (Public Law 104–106; 110 Stat. 364)
is amended by striking out subsection (b).
SEC. 632. CLARIFICATION OF INITIAL COMPUTATION OF RETIREE
COLAS AFTER RETIREMENT.
(a) IN GENERAL.—Section 1401a of title 10, United States Code,
is amended by striking out subsections (c) and (d) and inserting
in lieu thereof the following new subsections:
‘‘(c) FIRST COLA ADJUSTMENT FOR MEMBERS WITH RETIRED
PAY COMPUTED USING FINAL BASIC PAY.—
‘‘(1) FIRST
ADJUSTMENT
WITH
INTERVENING
INCREASE
IN
BASIC
PAY.—Notwithstanding subsection (b), if a person
described in paragraph (3) becomes entitled to retired pay
based on rates of monthly basic pay that became effective
after the last day of the calendar quarter of the base index,
the retired pay of the member or former member shall be
increased on the effective date of the next adjustment of retired
pay under subsection (b) only by the percent (adjusted to the
nearest one-tenth of 1 percent) by which—
‘‘(A) the price index for the base quarter of that year,
exceeds
‘‘(B) the price index for the calendar quarter imme-
diately before the calendar quarter in which the rates
of monthly basic pay on which the retired pay is based
became effective.
‘‘(2) FIRST ADJUSTMENT WITH NO INTERVENING INCREASE
IN BASIC PAY.—If a person described in paragraph (3) becomes
entitled to retired pay on or after the effective date of an
adjustment in retired pay under subsection (b) but before the
effective date of the next increase in the rates of monthly
basic pay, the retired pay of the member or former member
shall be increased, effective on the date the member becomes
entitled to that pay, by the percent (adjusted to the nearest
one-tenth of 1 percent) by which—
‘‘(A) the base index, exceeds
H. R. 3230—129
‘‘(B) the price index for the calendar quarter imme-
diately before the calendar quarter in which the rates
of monthly basic pay on which the retired pay is based
became effective.
‘‘(3) MEMBERS
COVERED.—Paragraphs (1) and (2) apply
to a member or former member of an armed force who first
became a member of a uniformed service before August 1,
1986, and whose retired pay base is determined under section
1406 of this title.
‘‘(d) FIRST COLA ADJUSTMENT FOR MEMBERS WITH RETIRED
PAY COMPUTED USING HIGH-THREE.—Notwithstanding subsection
(b), the retired pay of a member or former member of an armed
force who first became a member of a uniformed service before
August 1, 1986, and whose retired pay base is determined under
section 1407 of this title shall be increased on the effective date
of the first adjustment of retired pay under subsection (b) after
the member or former member becomes entitled to retired pay
by the percent (adjusted to the nearest one-tenth of 1 percent)
equal to the difference between the percent by which—
‘‘(1) the price index for the base quarter of that year,
exceeds
‘‘(2) the price index for the calendar quarter immediately
before the calendar quarter during which the member became
entitled to retired pay.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply only to adjustments of retired and retainer pay effective
after the date of the enactment of this Act.
SEC. 633. SUSPENSION OF PAYMENT OF RETIRED PAY OF MEMBERS
WHO ARE ABSENT FROM THE UNITED STATES TO AVOID
PROSECUTION.
(a) DEVELOPMENT
OF
PROCEDURES
FOR
SUSPENSION.—The
Secretary of Defense shall develop uniform procedures under which
the Secretary of a military department may suspend the payment
of the retired pay of a member or former member of the Armed
Forces during periods in which the member willfully remains out-
side the United States to avoid criminal prosecution or civil liability.
The procedures shall address the types of criminal offenses and
civil proceedings for which the procedures may be used, including
the offenses specified in section 8312 of title 5, United States
Code, and the manner by which a member, upon the return of
the member to the United States, may obtain retired pay withheld
during the member’s absence.
(b) REPORT TO CONGRESS.—The Secretary of Defense shall sub-
mit to Congress a report describing the procedures developed under
subsection (a). The report shall include recommendations regarding
changes to existing provisions of law (including section 8313 of
title 5, United States Code) that the Secretary determines are
necessary to fully implement the procedures.
(c) RETIRED PAY DEFINED.—For purposes of this section, the
term ‘‘retired pay’’ means retired pay, retirement pay, retainer
pay, or equivalent pay, payable under a statute to a member or
former member of a uniformed service.
(d) EFFECTIVE DATE.—The uniform procedures required by sub-
section (a) shall be developed not later than 30 days after the
date of the enactment of this Act.
H. R. 3230—130
SEC. 634. NONSUBSTANTIVE RESTATEMENT OF SURVIVOR BENEFIT
PLAN STATUTE.
Subchapter II of chapter 73 of title 10, United States Code,
is amended to read as follows:
‘‘SUBCHAPTER II—SURVIVOR BENEFIT PLAN
‘‘Sec.
‘‘1447. Definitions.
‘‘1448. Application of Plan.
‘‘1449. Mental incompetency of member.
‘‘1450. Payment of annuity: beneficiaries.
‘‘1451. Amount of annuity.
‘‘1452. Reduction in retired pay.
‘‘1453. Recovery of amounts erroneously paid.
‘‘1454. Correction of administrative errors.
‘‘1455. Regulations.
‘‘§ 1447. Definitions
‘‘In this subchapter:
‘‘(1) PLAN.—The term ‘Plan’ means the Survivor Benefit
Plan established by this subchapter.
‘‘(2) STANDARD
ANNUITY.—The term ‘standard annuity’
means an annuity provided by virtue of eligibility under section
1448(a)(1)(A) of this title.
‘‘(3) RESERVE-COMPONENT
ANNUITY.—The term ‘reserve-
component annuity’ means an annuity provided by virtue of
eligibility under section 1448(a)(1)(B) of this title.
‘‘(4) RETIRED PAY.—The term ‘retired pay’ includes retainer
pay paid under section 6330 of this title.
‘‘(5) RESERVE-COMPONENT RETIRED PAY.—The term ‘reserve-
component retired pay’ means retired pay under chapter 1223
of this title (or under chapter 67 of this title as in effect
before the effective date of the Reserve Officer Personnel
Management Act).
‘‘(6) BASE AMOUNT.—The term ‘base amount’ means the
following:
‘‘(A) FULL AMOUNT UNDER STANDARD ANNUITY.—In the
case of a person who dies after becoming entitled to retired
pay, such term means the amount of monthly retired pay
(determined without regard to any reduction under section
1409(b)(2) of this title) to which the person—
‘‘(i) was entitled when he became eligible for that
pay; or
‘‘(ii) later became entitled by being advanced on
the retired list, performing active duty, or being trans-
ferred from the temporary disability retired list to the
permanent disability retired list.
‘‘(B) 
FULL
AMOUNT
UNDER
RESERVE-COMPONENT
ANNUITY.—In the case of a person who would have become
eligible for reserve-component retired pay but for the fact
that he died before becoming 60 years of age, such term
means the amount of monthly retired pay for which the
person would have been eligible—
‘‘(i) if he had been 60 years of age on the date
of his death, for purposes of an annuity to become
effective on the day after his death in accordance with
a designation made under section 1448(e) of this title;
or
H. R. 3230—131
‘‘(ii) upon becoming 60 years of age (if he had
lived to that age), for purposes of an annuity to become
effective on the 60th anniversary of his birth in accord-
ance with a designation made under section 1448(e)
of this title.
‘‘(C) REDUCED AMOUNT.—Such term means any amount
less than the amount otherwise applicable under subpara-
graph (A) or (B) with respect to an annuity provided under
the Plan but which is not less than $300 and which is
designated by the person (with the concurrence of the per-
son’s spouse, if required under section 1448(a)(3) of this
title) providing the annuity on or before—
‘‘(i) the first day for which he becomes eligible
for retired pay, in the case of a person providing a
standard annuity, or
‘‘(ii) the end of the 90-day period beginning on
the date on which he receives the notification required
by section 12731(d) of this title that he has completed
the years of service required for eligibility for reserve-
component retired pay, in the case of a person provid-
ing a reserve-component annuity.
‘‘(7) WIDOW.—The term ‘widow’ means the surviving wife
of a person who, if not married to the person at the time
he became eligible for retired pay—
‘‘(A) was married to him for at least one year imme-
diately before his death; or
‘‘(B) is the mother of issue by that marriage.
‘‘(8) WIDOWER.—The term ‘widower’ means the surviving
husband of a person who, if not married to the person at
the time she became eligible for retired pay—
‘‘(A) was married to her for at least one year imme-
diately before her death; or
‘‘(B) is the father of issue by that marriage.
‘‘(9) SURVIVING SPOUSE.—The term ‘surviving spouse’ means
a widow or widower.
‘‘(10) FORMER SPOUSE.—The term ‘former spouse’ means
the surviving former husband or wife of a person who is eligible
to participate in the Plan.
‘‘(11) DEPENDENT CHILD.—
‘‘(A) IN GENERAL.—The term ‘dependent child’ means
a person who—
‘‘(i) is unmarried;
‘‘(ii) is (I) under 18 years of age, (II) at least
18, but under 22, years of age and pursuing a full-
time course of study or training in a high school, trade
school, technical or vocational institute, junior college,
college, university, or comparable recognized edu-
cational institution, or (III) incapable of self support
because of a mental or physical incapacity existing
before the person’s eighteenth birthday or incurred
on or after that birthday, but before the person’s
twenty-second birthday, while pursuing such a full-
time course of study or training; and
‘‘(iii) is the child of a person to whom the Plan
applies, including (I) an adopted child, and (II) a step-
child, foster child, or recognized natural child who lived
with that person in a regular parent-child relationship.
H. R. 3230—132
‘‘(B) SPECIAL RULES FOR COLLEGE STUDENTS.—For the
purpose of subparagraph (A), a child whose twenty-second
birthday occurs before July 1 or after August 31 of a
calendar year, and while regularly pursuing such a course
of study or training, is considered to have become 22 years
of age on the first day of July after that birthday. A
child who is a student is considered not to have ceased
to be a student during an interim between school years
if the interim is not more than 150 days and if the child
shows to the satisfaction of the Secretary of Defense that
the child has a bona fide intention of continuing to pursue
a course of study or training in the same or a different
school during the school semester (or other period into
which the school year is divided) immediately after the
interim.
‘‘(C) FOSTER CHILDREN.—A foster child, to qualify under
this paragraph as the dependent child of a person to whom
the Plan applies, must, at the time of the death of that
person, also reside with, and receive over one-half of his
support from, that person, and not be cared for under
a social agency contract. The temporary absence of a foster
child from the residence of that person, while a student
as described in this paragraph, shall not be considered
to affect the residence of such a foster child.
‘‘(12) COURT.—The term ‘court’ has the meaning given that
term by section 1408(a)(1) of this title.
‘‘(13) COURT ORDER.—
‘‘(A) IN
GENERAL.—The term ‘court order’ means a
court’s final decree of divorce, dissolution, or annulment
or a court ordered, ratified, or approved property settlement
incident to such a decree (including a final decree modifying
the terms of a previously issued decree of divorce, dissolu-
tion, annulment, or legal separation, or of a court ordered,
ratified, or approved property settlement agreement
incident to such previously issued decree).
‘‘(B) FINAL
DECREE.—The term ‘final decree’ means
a decree from which no appeal may be taken or from
which no appeal has been taken within the time allowed
for the taking of such appeals under the laws applicable
to such appeals, or a decree from which timely appeal
has been taken and such appeal has been finally decided
under the laws applicable to such appeals.
‘‘(C) REGULAR ON ITS FACE.—The term ‘regular on its
face’, when used in connection with a court order, means
a court order that meets the conditions prescribed in section
1408(b)(2) of this title.
‘‘§ 1448. Application of plan
‘‘(a) GENERAL RULES FOR PARTICIPATION IN THE PLAN.—
‘‘(1) NAME OF PLAN; ELIGIBLE PARTICIPANTS.—The program
established by this subchapter shall be known as the Survivor
Benefit Plan. The following persons are eligible to participate
in the Plan:
‘‘(A) Persons entitled to retired pay.
‘‘(B) Persons who would be eligible for reserve-compo-
nent retired pay but for the fact that they are under
60 years of age.
H. R. 3230—133
‘‘(2) PARTICIPANTS IN THE PLAN.—The Plan applies to the
following persons, who shall be participants in the Plan:
‘‘(A) STANDARD ANNUITY PARTICIPANTS.—A person who
is eligible to participate in the Plan under paragraph (1)(A)
and who is married or has a dependent child when he
becomes entitled to retired pay, unless he elects (with
his spouse’s concurrence, if required under paragraph (3))
not to participate in the Plan before the first day for
which he is eligible for that pay.
‘‘(B) RESERVE-COMPONENT ANNUITY PARTICIPANTS.—A
person who (i) is eligible to participate in the Plan under
paragraph (1)(B), (ii) is married or has a dependent child
when he is notified under section 12731(d) of this title
that he has completed the years of service required for
eligibility for reserve-component retired pay, and (iii) elects
to participate in the Plan (and makes a designation under
subsection (e)) before the end of the 90-day period beginning
on the date he receives such notification.
A person described in clauses (i) and (ii) of subparagraph (B)
who does not elect to participate in the Plan before the end
of the 90-day period referred to in that clause remains eligible,
upon reaching 60 years of age and otherwise becoming entitled
to retired pay, to participate in the Plan in accordance with
eligibility under paragraph (1)(A).
‘‘(3) ELECTIONS.—
‘‘(A) SPOUSAL
CONSENT
FOR
CERTAIN
ELECTIONS
RESPECTING STANDARD ANNUITY.—A married person who
is eligible to provide a standard annuity may not without
the concurrence of the person’s spouse elect—
‘‘(i) not to participate in the Plan;
‘‘(ii) to provide an annuity for the person’s spouse
at less than the maximum level; or
‘‘(iii) to provide an annuity for a dependent child
but not for the person’s spouse.
‘‘(B) SPOUSAL
CONSENT
FOR
CERTAIN
ELECTIONS
RESPECTING
RESERVE-COMPONENT
ANNUITY.—A married
person who elects to provide a reserve-component annuity
may not without the concurrence of the person’s spouse
elect—
‘‘(i) to provide an annuity for the person’s spouse
at less than the maximum level; or
‘‘(ii) to provide an annuity for a dependent child
but not for the person’s spouse.
‘‘(C) EXCEPTION WHEN SPOUSE UNAVAILABLE.—A person
may make an election described in subparagraph (A) or
(B) without the concurrence of the person’s spouse if the
person establishes to the satisfaction of the Secretary con-
cerned—
‘‘(i) that the spouse’s whereabouts cannot be deter-
mined; or
‘‘(ii) that, due to exceptional circumstances, requir-
ing the person to seek the spouse’s consent would
otherwise be inappropriate.
‘‘(D) CONSTRUCTION
WITH
FORMER
SPOUSE
ELECTION
PROVISIONS.—This paragraph does not affect any right or
obligation to elect to provide an annuity for a former spouse
H. R. 3230—134
(or for a former spouse and dependent child) under sub-
section (b)(2).
‘‘(E) NOTICE
TO
SPOUSE
OF
ELECTION
TO
PROVIDE
FORMER
SPOUSE
ANNUITY.—If a married person who is
eligible to provide a standard annuity elects to provide
an annuity for a former spouse (or for a former spouse
and dependent child) under subsection (b)(2), that person’s
spouse shall be notified of that election.
‘‘(4) IRREVOCABILITY OF ELECTIONS.—
‘‘(A) STANDARD ANNUITY.—An election under paragraph
(2)(A) not to participate in the Plan is irrevocable if not
revoked before the date on which the person first becomes
entitled to retired pay.
‘‘(B) RESERVE-COMPONENT ANNUITY.—An election under
paragraph (2)(B) to participate in the Plan is irrevocable
if not revoked before the end of the 90-day period referred
to in that paragraph.
‘‘(5) PARTICIPATION
BY
PERSON
MARRYING
AFTER
RE-
TIREMENT, ETC.—
‘‘(A) ELECTION TO PARTICIPATE IN PLAN.—A person who
is not married and has no dependent child upon becoming
eligible to participate in the Plan but who later marries
or acquires a dependent child may elect to participate
in the Plan.
‘‘(B) MANNER AND TIME OF ELECTION.—Such an election
must be written, signed by the person making the election,
and received by the Secretary concerned within one year
after the date on which that person marries or acquires
that dependent child.
‘‘(C) LIMITATION ON REVOCATION OF ELECTION.—Such
an election may not be revoked except in accordance with
subsection (b)(3).
‘‘(D) EFFECTIVE DATE OF ELECTION.—The election is
effective as of the first day of the first calendar month
following the month in which the election is received by
the Secretary concerned.
‘‘(E) DESIGNATION IF RCSBP ELECTION.—In the case of
a person providing a reserve-component annuity, such an
election shall include a designation under subsection (e).
‘‘(6) ELECTION
OUT
OF
PLAN
BY
PERSON
WITH
SPOUSE
COVERAGE WHO REMARRIES.—
‘‘(A) GENERAL RULE.—A person—
‘‘(i) who is a participant in the Plan and is provid-
ing coverage under the Plan for a spouse (or a spouse
and child);
‘‘(ii) who does not have an eligible spouse bene-
ficiary under the Plan; and
‘‘(iii) who remarries,
may elect not to provide coverage under the Plan for the
person’s spouse.
‘‘(B) EFFECT OF ELECTION ON RETIRED PAY.—If such
an election is made, reductions in the retired pay of that
person under section 1452 of this title shall not be made.
‘‘(C) TERMS AND CONDITIONS OF ELECTION.—An election
under this paragraph—
‘‘(i) is irrevocable;
H. R. 3230—135
‘‘(ii) shall be made within one year after the per-
son’s remarriage; and
‘‘(iii) shall be made in such form and manner as
may be prescribed in regulations under section 1455
of this title.
‘‘(D) NOTICE TO SPOUSE.—If a person makes an election
under this paragraph—
‘‘(i) not to participate in the Plan;
‘‘(ii) to provide an annuity for the person’s spouse
at less than the maximum level; or
‘‘(iii) to provide an annuity for a dependent child
but not for the person’s spouse,
the person’s spouse shall be notified of that election.
‘‘(E) CONSTRUCTION
WITH
FORMER
SPOUSE
ELECTION
PROVISIONS.—This paragraph does not affect any right or
obligation to elect to provide an annuity to a former spouse
under subsection (b).
‘‘(b) INSURABLE INTEREST AND FORMER SPOUSE COVERAGE.—
‘‘(1) COVERAGE FOR PERSON WITH INSURABLE INTEREST.—
‘‘(A) GENERAL
RULE.—A person who is not married
and does not have a dependent child upon becoming eligible
to participate in the Plan may elect to provide an annuity
under the Plan to a natural person with an insurable
interest in that person. In the case of a person providing
a reserve-component annuity, such an election shall include
a designation under subsection (e).
‘‘(B) TERMINATION OF COVERAGE.—An election under
subparagraph (A) for a beneficiary who is not the former
spouse of the person providing the annuity may be termi-
nated. Any such termination shall be made by a participant
by the submission to the Secretary concerned of a request
to discontinue participation in the Plan, and such participa-
tion in the Plan shall be discontinued effective on the
first day of the first month following the month in which
the request is received by the Secretary concerned. Effective
on such date, the Secretary concerned shall discontinue
the reduction being made in such person’s retired pay
on account of participation in the Plan or, in the case
of a person who has been required to make deposits in
the Treasury on account of participation in the Plan, such
person may discontinue making such deposits effective on
such date.
‘‘(C) FORM
FOR
DISCONTINUATION.—A request under
subparagraph (B) to discontinue participation in the Plan
shall be in such form and shall contain such information
as may be required under regulations prescribed by the
Secretary of Defense.
‘‘(D) WITHDRAWAL OF REQUEST FOR DISCONTINUATION.—
The Secretary concerned shall furnish promptly to each
person who submits a request under subparagraph (B)
to discontinue participation in the Plan a written statement
of the advantages and disadvantages of participating in
the Plan and the possible disadvantages of discontinuing
participation. A person may withdraw the request to dis-
continue participation if withdrawn within 30 days after
having been submitted to the Secretary concerned.
H. R. 3230—136
‘‘(E) 
CONSEQUENCES
OF
DISCONTINUATION.—Once
participation is discontinued, benefits may not be paid in
conjunction with the earlier participation in the Plan and
premiums paid may not be refunded. Participation in the
Plan may not later be resumed except through a qualified
election under paragraph (5) of subsection (a).
‘‘(2) FORMER SPOUSE COVERAGE UPON BECOMING A PARTICI-
PANT IN THE PLAN.—
‘‘(A) GENERAL
RULE.—A person who has a former
spouse upon becoming eligible to participate in the Plan
may elect to provide an annuity to that former spouse.
‘‘(B) EFFECT OF FORMER SPOUSE ELECTION ON SPOUSE
OR
DEPENDENT
CHILD.—In the case of a person with a
spouse or a dependent child, such an election prevents
payment of an annuity to that spouse or child (other than
a child who is a beneficiary under an election under para-
graph (4)), including payment under subsection (d).
‘‘(C) 
DESIGNATION
IF
MORE
THAN
ONE
FORMER
SPOUSE.—If there is more than one former spouse, the
person shall designate which former spouse is to be pro-
vided the annuity.
‘‘(D) DESIGNATION IF RCSBP ELECTION.—In the case of
a person providing a reserve-component annuity, such an
election shall include a designation under subsection (e).
‘‘(3) FORMER
SPOUSE
COVERAGE
BY
PERSONS
ALREADY
PARTICIPATING IN PLAN.—
‘‘(A) ELECTION OF COVERAGE.—
‘‘(i) AUTHORITY FOR ELECTION.—A person—
‘‘(I) who is a participant in the Plan and is
providing coverage for a spouse or a spouse and
child (even though there is no beneficiary currently
eligible for such coverage), and
‘‘(II) who has a former spouse who was not
that person’s former spouse when that person
became eligible to participate in the Plan,
may (subject to subparagraph (B)) elect to provide an
annuity to that former spouse.
‘‘(ii) TERMINATION OF PREVIOUS COVERAGE.—Any
such election terminates any previous coverage under
the Plan.
‘‘(iii) MANNER AND TIME OF ELECTION.—Any such
election must be written, signed by the person making
the election, and received by the Secretary concerned
within one year after the date of the decree of divorce,
dissolution, or annulment.
‘‘(B) LIMITATION
ON
ELECTION.—A person may not
make an election under subparagraph (A) to provide an
annuity to a former spouse who that person married after
becoming eligible for retired pay unless—
‘‘(i) the person was married to that former spouse
for at least one year, or
‘‘(ii) that former spouse is the parent of issue by
that marriage.
‘‘(C) IRREVOCABILITY, EFFECTIVE DATE, ETC.—An elec-
tion under this paragraph may not be revoked except in
accordance with section 1450(f) of this title. Such an elec-
tion is effective as of the first day of the first calendar
H. R. 3230—137
month following the month in which it is received by the
Secretary concerned. This paragraph does not provide the
authority to change a designation previously made under
subsection (e).
‘‘(D) NOTICE TO SPOUSE.—If a person who is married
makes an election to provide an annuity to a former spouse
under this paragraph, that person’s spouse shall be notified
of the election.
‘‘(4) FORMER SPOUSE AND CHILD COVERAGE.—A person who
elects to provide an annuity for a former spouse under para-
graph (2) or (3) may, at the time of the election, elect to
provide coverage under that annuity for both the former spouse
and a dependent child, if the child resulted from the person’s
marriage to that former spouse.
‘‘(5) DISCLOSURE OF WHETHER ELECTION OF FORMER SPOUSE
COVERAGE IS REQUIRED.—A person who elects to provide an
annuity to a former spouse under paragraph (2) or (3) shall,
at the time of making the election, provide the Secretary con-
cerned with a written statement (in a form to be prescribed
by that Secretary and signed by such person and the former
spouse) setting forth—
‘‘(A) whether the election is being made pursuant to
the requirements of a court order; or
‘‘(B) whether the election is being made pursuant to
a written agreement previously entered into voluntarily
by such person as a part of, or incident to, a proceeding
of divorce, dissolution, or annulment and (if so) whether
such voluntary written agreement has been incorporated
in, or ratified or approved by, a court order.
‘‘(c) PERSONS ON TEMPORARY DISABILITY RETIRED LIST.—The
application of the Plan to a person whose name is on the temporary
disability retired list terminates when his name is removed from
that list and he is no longer entitled to disability retired pay.
‘‘(d) COVERAGE
FOR
SURVIVORS
OF
RETIREMENT-ELIGIBLE
MEMBERS WHO DIE ON ACTIVE DUTY.—
‘‘(1) SURVIVING SPOUSE ANNUITY.—The Secretary concerned
shall pay an annuity under this subchapter to the surviving
spouse of a member who dies on active duty after—
‘‘(A) becoming eligible to receive retired pay;
‘‘(B) qualifying for retired pay except that he has not
applied for or been granted that pay; or
‘‘(C) completing 20 years of active service but
before he is eligible to retire as a commissioned officer
because he has not completed 10 years of active commis-
sioned service.
‘‘(2) DEPENDENT CHILD ANNUITY.—The Secretary concerned
shall pay an annuity under this subchapter to the dependent
child of a member described in paragraph (1) if there is no
surviving spouse or if the member’s surviving spouse subse-
quently dies.
‘‘(3) MANDATORY FORMER SPOUSE ANNUITY.—If a member
described in paragraph (1) is required under a court order
or spousal agreement to provide an annuity to a former spouse
upon becoming eligible to be a participant in the Plan or has
made an election under subsection (b) to provide an annuity
to a former spouse, the Secretary—
H. R. 3230—138
‘‘(A) may not pay an annuity under paragraph (1)
or (2); but
‘‘(B) shall pay an annuity to that former spouse as
if the member had been a participant in the Plan and
had made an election under subsection (b) to provide an
annuity to the former spouse, or in accordance with that
election, as the case may be, if the Secretary receives
a written request from the former spouse concerned that
the election be deemed to have been made in the same
manner as provided in section 1450(f)(3) of this title.
‘‘(4) PRIORITY.—An annuity that may be provided under
this subsection shall be provided in preference to an annuity
that may be provided under any other provision of this sub-
chapter on account of service of the same member.
‘‘(5) COMPUTATION.—The amount of an annuity under this
subsection is computed under section 1451(c) of this title.
‘‘(e) DESIGNATION
FOR COMMENCEMENT
OF RESERVE-COMPO-
NENT ANNUITY.—In any case in which a person electing to partici-
pate in the Plan is required to make a designation under this
subsection, the person making such election shall designate
whether, in the event he dies before becoming 60 years of age,
the annuity provided shall become effective on—
‘‘(1) the day after the date of his death; or
‘‘(2) the 60th anniversary of his birth.
‘‘(f) COVERAGE
OF
SURVIVORS
OF
PERSONS
DYING
WHEN
ELIGIBLE TO ELECT RESERVE-COMPONENT ANNUITY.—
‘‘(1) SURVIVING SPOUSE ANNUITY.—The Secretary concerned
shall pay an annuity under this subchapter to the surviving
spouse of a person who is eligible to provide a reserve-compo-
nent annuity and who dies—
‘‘(A) before being notified under section 12731(d) of
this title that he has completed the years of service required
for eligibility for reserve-component retired pay; or
‘‘(B) during the 90-day period beginning on the date
he receives notification under section 12731(d) of this title
that he has completed the years of service required for
eligibility for reserve-component retired pay if he had not
made an election under subsection (a)(2)(B) to participate
in the Plan.
‘‘(2) DEPENDENT CHILD ANNUITY.—The Secretary concerned
shall pay an annuity under this subchapter to the dependent
child of a person described in paragraph (1) if there is no
surviving spouse or if the person’s surviving spouse subse-
quently dies.
‘‘(3) MANDATORY
FORMER
SPOUSE
ANNUITY.—If a person
described in paragraph (1) is required under a court order
or spousal agreement to provide an annuity to a former spouse
upon becoming eligible to be a participant in the Plan or has
made an election under subsection (b) to provide an annuity
to a former spouse, the Secretary—
‘‘(A) may not pay an annuity under paragraph (1)
or (2); but
‘‘(B) shall pay an annuity to that former spouse as
if the person had been a participant in the Plan and had
made an election under subsection (b) to provide an annuity
to the former spouse, or in accordance with that election,
as the case may be, if the Secretary receives a written
H. R. 3230—139
request from the former spouse concerned that the election
be deemed to have been made in the same manner as
provided in section 1450(f)(3) of this title.
‘‘(4) COMPUTATION.—The amount of an annuity under this
subsection is computed under section 1451(c) of this title.
‘‘(g) ELECTION TO INCREASE COVERAGE UPON REMARRIAGE.—
‘‘(1) ELECTION.—A person—
‘‘(A) who is a participant in the Plan and is providing
coverage under subsection (a) for a spouse or a spouse
and child, but at less than the maximum level; and
‘‘(B) who remarries,
may elect, within one year of such remarriage, to increase
the level of coverage provided under the Plan to a level not
in excess of the current retired pay of that person.
‘‘(2) PAYMENT REQUIRED.—Such an election shall be contin-
gent on the person paying to the United States the amount
determined under paragraph (3) plus interest on such amount
at a rate determined under regulations prescribed by the Sec-
retary of Defense.
‘‘(3) AMOUNT TO BE PAID.—The amount referred to in para-
graph (2) is the amount equal to the difference between—
‘‘(A) the amount that would have been withheld from
such person’s retired pay under section 1452 of this title
if the higher level of coverage had been in effect from
the time the person became a participant in the Plan;
and
‘‘(B) the amount of such person’s retired pay actually
withheld.
‘‘(4) MANNER
OF
MAKING
ELECTION.—An election under
paragraph (1) shall be made in such manner as the Secretary
shall prescribe and shall become effective upon receipt of the
payment required by paragraph (2).
‘‘(5) DISPOSITION OF PAYMENTS.—A payment received under
this subsection by the Secretary of Defense shall be deposited
into the Department of Defense Military Retirement Fund.
Any other payment received under this subsection shall be
deposited in the Treasury as miscellaneous receipts.
‘‘§ 1449. Mental incompetency of member
‘‘(a) ELECTION
BY
SECRETARY
CONCERNED
ON
BEHALF
OF
MENTALLY INCOMPETENT MEMBER.—If a person to whom section
1448 of this title applies is determined to be mentally incompetent
by medical officers of the armed force concerned or of the Depart-
ment of Veterans Affairs, or by a court of competent jurisdiction,
an election described in subsection (a)(2) or (b) of section 1448
of this title may be made on behalf of that person by the Secretary
concerned.
‘‘(b) REVOCATION OF ELECTION BY MEMBER.—
‘‘(1) AUTHORITY
UPON
SUBSEQUENT
DETERMINATION
OF
MENTAL
COMPETENCE.—If a person for whom the Secretary
has made an election under subsection (a) is later determined
to be mentally competent by an authority named in that sub-
section, that person may, within 180 days after that determina-
tion, revoke that election.
‘‘(2) 
DEDUCTIONS
FROM
RETIRED
PAY
NOT
TO
BE
REFUNDED.—Any deduction made from retired pay by reason
of such an election may not be refunded.
H. R. 3230—140
‘‘§ 1450. Payment of annuity: beneficiaries
‘‘(a) IN GENERAL.—Effective as of the first day after the death
of a person to whom section 1448 of this title applies (or on such
other day as that person may provide under subsection (j)), a
monthly annuity under section 1451 of this title shall be paid
to the person’s beneficiaries under the Plan, as follows:
‘‘(1) SURVIVING SPOUSE OR FORMER SPOUSE.—The eligible
surviving spouse or the eligible former spouse.
‘‘(2) SURVIVING CHILDREN.—The surviving dependent chil-
dren in equal shares, if the eligible surviving spouse or the
eligible former spouse is dead, dies, or otherwise becomes ineli-
gible under this section.
‘‘(3) DEPENDENT
CHILDREN.—The dependent children in
equal shares if the person to whom section 1448 of this title
applies (with the concurrence of the person’s spouse, if required
under section 1448(a)(3) of this title) elected to provide an
annuity for dependent children but not for the spouse or former
spouse.
‘‘(4) NATURAL
PERSON
DESIGNATED
UNDER
‘INSURABLE
INTEREST’ COVERAGE.—The natural person designated under
section 1448(b)(1) of this title, unless the election to provide
an annuity to the natural person has been changed as provided
in subsection (f).
‘‘(b) TERMINATION OF ANNUITY FOR DEATH, REMARRIAGE BEFORE
AGE 55, ETC.—
‘‘(1) GENERAL RULE.—An annuity payable to the beneficiary
terminates effective as of the first day of the month in which
eligibility is lost.
‘‘(2) TERMINATION
OF
SPOUSE
ANNUITY
UPON
DEATH
OR
REMARRIAGE BEFORE AGE 55.—An annuity for a surviving spouse
or former spouse shall be paid to the surviving spouse or
former spouse while the surviving spouse or former spouse
is living or, if the surviving spouse or former spouse remarries
before reaching age 55, until the surviving spouse or former
spouse remarries.
‘‘(3) EFFECT
OF
TERMINATION
OF
SUBSEQUENT
MARRIAGE
BEFORE
AGE
55.—If the surviving spouse or former spouse
remarries before reaching age 55 and that marriage is termi-
nated by death, annulment, or divorce, payment of the annuity
shall be resumed effective as of the first day of the month
in which the marriage is so terminated. However, if the surviv-
ing spouse or former spouse is also entitled to an annuity
under the Plan based upon the marriage so terminated, the
surviving spouse or former spouse may not receive both annu-
ities but must elect which to receive.
‘‘(c) OFFSET
FOR AMOUNT
OF DEPENDENCY
AND INDEMNITY
COMPENSATION.—
‘‘(1) REQUIRED
OFFSET.—If, upon the death of a person
to whom section 1448 of this title applies, the surviving spouse
or former spouse of that person is also entitled to dependency
and indemnity compensation under section 1311(a) of title 38,
the surviving spouse or former spouse may be paid an annuity
under this section, but only in the amount that the annuity
otherwise payable under this section would exceed that com-
pensation.
‘‘(2) EFFECTIVE DATE OF OFFSET.—A reduction in an annuity
under this section required by paragraph (1) shall be effective
H. R. 3230—141
on the date of the commencement of the period of payment
of such dependency and indemnity compensation under title
38.
‘‘(d) LIMITATION ON PAYMENT OF ANNUITIES WHEN COVERAGE
UNDER CIVIL SERVICE RETIREMENT ELECTED.—If, upon the death
of a person to whom section 1448 of this title applies, that person
had in effect a waiver of that person’s retired pay for the purposes
of subchapter III of chapter 83 of title 5, an annuity under this
section shall not be payable unless, in accordance with section
8339(j) of title 5, that person notified the Office of Personnel Man-
agement that he did not desire any spouse surviving him to receive
an annuity under section 8341(b) of that title.
‘‘(e) REFUND OF AMOUNTS DEDUCTED FROM RETIRED PAY WHEN
DIC OFFSET IS APPLICABLE.—
‘‘(1) FULL REFUND WHEN DIC GREATER THAN SBP ANNUITY.—
If an annuity under this section is not payable because of
subsection (c), any amount deducted from the retired pay of
the deceased under section 1452 of this title shall be refunded
to the surviving spouse or former spouse.
‘‘(2) PARTIAL REFUND WHEN SBP ANNUITY REDUCED BY DIC.—
If, because of subsection (c), the annuity payable is less than
the amount established under section 1451 of this title, the
annuity payable shall be recalculated under that section. The
amount of the reduction in the retired pay required to provide
that recalculated annuity shall be computed under section 1452
of this title, and the difference between the amount deducted
before the computation of that recalculated annuity and the
amount that would have been deducted on the basis of that
recalculated annuity shall be refunded to the surviving spouse
or former spouse.
‘‘(f) CHANGE IN ELECTION OF INSURABLE INTEREST OR FORMER
SPOUSE BENEFICIARY.—
‘‘(1) AUTHORIZED CHANGES.—
‘‘(A) ELECTION IN FAVOR OF SPOUSE OR CHILD.—A per-
son who elects to provide an annuity to a person designated
by him under section 1448(b) of this title may, subject
to paragraph (2), change that election and provide an annu-
ity to his spouse or dependent child.
‘‘(B) NOTICE.—The Secretary concerned shall notify the
former spouse or other natural person previously des-
ignated under section 1448(b) of this title of any change
of election under subparagraph (A).
‘‘(C) PROCEDURES, EFFECTIVE
DATE, ETC.—Any such
change of election is subject to the same rules with respect
to execution, revocation, and effectiveness as are set forth
in section 1448(a)(5) of this title (without regard to the
eligibility of the person making the change of election to
make such an election under that section).
‘‘(2) LIMITATION ON CHANGE IN BENEFICIARY WHEN FORMER
SPOUSE COVERAGE IN EFFECT.—A person who, incident to a
proceeding of divorce, dissolution, or annulment, is required
by a court order to elect under section 1448(b) of this title
to provide an annuity to a former spouse (or to both a former
spouse and child), or who enters into a written agreement
(whether voluntary or required by a court order) to make such
an election, and who makes an election pursuant to such order
or agreement, may not change that election under paragraph
H. R. 3230—143
of appropriate jurisdiction in accordance with appli-
cable State law; or
‘‘(ii) the person is required by a court order to
make such an election.
‘‘(C) TIME LIMIT FOR REQUEST BY FORMER SPOUSE.—
An election may not be deemed to have been made under
subparagraph (A) in the case of any person unless the
Secretary concerned receives a request from the former
spouse of the person within one year of the date of the
court order or filing involved.
‘‘(D) EFFECTIVE DATE OF DEEMED ELECTION.—An elec-
tion deemed to have been made under subparagraph (A)
shall become effective on the first day of the first month
which begins after the date of the court order or filing
involved.
‘‘(4) FORMER SPOUSE COVERAGE MAY BE REQUIRED BY COURT
ORDER.—A court order may require a person to elect (or to
enter into an agreement to elect) under section 1448(b) of
this title to provide an annuity to a former spouse (or to
both a former spouse and child).
‘‘(g) LIMITATION ON CHANGING OR REVOKING ELECTIONS.—
‘‘(1) IN GENERAL.—An election under this section may not
be changed or revoked.
‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply to—
‘‘(A) a revocation of an election under section 1449(b)
of this title; or
‘‘(B) a change in an election under subsection (f).
‘‘(h) TREATMENT OF ANNUITIES UNDER OTHER LAWS.—Except
as provided in section 1451 of this title, an annuity under this
section is in addition to any other payment to which a person
is entitled under any other provision of law. Such annuity shall
be considered as income under laws administered by the Secretary
of Veterans Affairs.
‘‘(i) ANNUITIES EXEMPT FROM CERTAIN LEGAL PROCESS.—Except
as provided in subsection (l)(3)(B), an annuity under this section
is not assignable or subject to execution, levy, attachment, garnish-
ment, or other legal process.
‘‘(j) EFFECTIVE DATE OF RESERVE-COMPONENT ANNUITIES.—
‘‘(1) PERSONS
MAKING
SECTION
1448(e) DESIGNATION.—An
annuity elected by a person providing a reserve-component
annuity shall be effective in accordance with the designation
made by such person under section 1448(e) of this title.
‘‘(2) PERSONS
DYING
BEFORE
MAKING
SECTION
1448(e)
DESIGNATION.—An annuity payable under section 1448(f) of
this title shall be effective on the day after the date of the
death of the person upon whose service the right to the annuity
is based.
‘‘(k) ADJUSTMENT OF SPOUSE OR FORMER SPOUSE ANNUITY UPON
LOSS OF DEPENDENCY AND INDEMNITY COMPENSATION.—
‘‘(1) READJUSTMENT IF BENEFICIARY 55 YEARS OF AGE OR
MORE.—If a surviving spouse or former spouse whose annuity
has been adjusted under subsection (c) subsequently loses
entitlement to dependency and indemnity compensation under
section 1311(a) of title 38 because of the remarriage of the
surviving spouse, or former spouse, and if at the time of such
remarriage the surviving spouse or former spouse is 55 years
of age or more, the amount of the annuity of the surviving
H. R. 3230—144
spouse or former spouse shall be readjusted, effective on the
effective date of such loss of dependency and indemnity com-
pensation, to the amount of the annuity which would be in
effect with respect to the surviving spouse or former spouse
if the adjustment under subsection (c) had never been made.
‘‘(2) REPAYMENT OF AMOUNTS PREVIOUSLY REFUNDED.—
‘‘(A) GENERAL
RULE.—A surviving spouse or former
spouse whose annuity is readjusted under paragraph (1)
shall repay any amount refunded under subsection (e) by
reason of the adjustment under subsection (c).
‘‘(B) INTEREST REQUIRED IF REPAYMENT NOT A LUMP
SUM.—If the repayment is not made in a lump sum, the
surviving spouse or former spouse shall pay interest on
the amount to be repaid. Such interest shall commence
on the date on which the first such payment is due and
shall be applied over the period during which any part
of the repayment remains to be paid.
‘‘(C) MANNER OF REPAYMENT; RATE OF INTEREST.—The
manner in which such repayment shall be made, and the
rate of any such interest, shall be prescribed in regulations
under section 1455 of this title.
‘‘(D) DEPOSIT OF AMOUNTS REPAID.—An amount repaid
under this paragraph (including any such interest) received
by the Secretary of Defense shall be deposited into the
Department of Defense Military Retirement Fund. Any
other amount repaid under this paragraph shall be depos-
ited into the Treasury as miscellaneous receipts.
‘‘(l) PARTICIPANTS IN THE PLAN WHO ARE MISSING.—
‘‘(1) 
AUTHORITY
TO
PRESUME
DEATH
OF
MISSING
PARTICIPANT.—
‘‘(A) IN GENERAL.—Upon application of the beneficiary
of a participant in the Plan who is missing, the Secretary
concerned may determine for purposes of this subchapter
that the participant is presumed dead.
‘‘(B) PARTICIPANT WHO IS MISSING.—A participant in
the Plan is considered to be missing for purposes of this
subsection if—
‘‘(i) the retired pay of the participant has been
suspended on the basis that the participant is missing;
or
‘‘(ii) in the case of a participant in the Plan who
would be eligible for reserve-component retired pay
but for the fact that he is under 60 years of age,
his retired pay, if he were entitled to retired pay,
would be suspended on the basis that he is missing.
‘‘(C) REQUIREMENTS APPLICABLE TO PRESUMPTION OF
DEATH.—Any such determination shall be made in accord-
ance with regulations prescribed under section 1455 of
this title. The Secretary concerned may not make a deter-
mination for purposes of this subchapter that a participant
who is missing is presumed dead unless the Secretary
finds that—
‘‘(i) the participant has been missing for at least
30 days; and
‘‘(ii) the circumstances under which the participant
is missing would lead a reasonably prudent person
to conclude that the participant is dead.
H. R. 3230—145
‘‘(2) COMMENCEMENT OF ANNUITY.—Upon a determination
under paragraph (1) with respect to a participant in the Plan,
an annuity otherwise payable under this subchapter shall be
paid as if the participant died on the date as of which the
retired pay of the participant was suspended.
‘‘(3) EFFECT OF PERSON NOT BEING DEAD.—
‘‘(A) TERMINATION OF ANNUITY.—If, after a determina-
tion under paragraph (1), the Secretary concerned deter-
mines that the participant is alive—
‘‘(i) any annuity being paid under this subchapter
by reason of this subsection shall be terminated; and
‘‘(ii) the total amount of any annuity payments
made by reason of this subsection shall constitute a
debt to the United States.
‘‘(B) COLLECTION
FROM
PARTICIPANT
OF
ANNUITY
AMOUNTS ERRONEOUSLY PAID.—A debt under subparagraph
(A)(ii) may be collected or offset—
‘‘(i) from any retired pay otherwise payable to the
participant;
‘‘(ii) if the participant is entitled to compensation
under chapter 11 of title 38, from that compen-
sation; or
‘‘(iii) if the participant is entitled to any other
payment from the United States, from that payment.
‘‘(C) COLLECTION FROM BENEFICIARY.—If the partici-
pant dies before the full recovery of the amount of annuity
payments described in subparagraph (A)(ii) has been made
by the United States, the remaining amount of such annu-
ity payments may be collected from the participant’s bene-
ficiary under the Plan if that beneficiary was the recipient
of the annuity payments made by reason of this subsection.
‘‘§ 1451. Amount of annuity
‘‘(a) COMPUTATION OF ANNUITY FOR A SPOUSE, FORMER SPOUSE,
OR CHILD.—
‘‘(1) STANDARD ANNUITY.—In the case of a standard annuity
provided to a beneficiary under section 1450(a) of this title
(other than under section 1450(a)(4)), the monthly annuity pay-
able to the beneficiary shall be determined as follows:
‘‘(A) BENEFICIARY UNDER 62 YEARS OF AGE.—If the bene-
ficiary is under 62 years of age or is a dependent child
when becoming entitled to the annuity, the monthly annu-
ity shall be the amount equal to 55 percent of the base
amount.
‘‘(B) BENEFICIARY 62 YEARS OF AGE OR OLDER.—
‘‘(i) GENERAL RULE.—If the beneficiary (other than
a dependent child) is 62 years of age or older when
becoming entitled to the annuity, the monthly annuity
shall be the amount equal to 35 percent of the base
amount.
‘‘(ii) RULE
IF
BENEFICIARY
ELIGIBLE
FOR
SOCIAL
SECURITY OFFSET COMPUTATION.—If the beneficiary is
eligible to have the annuity computed under subsection
(e) and if, at the time the beneficiary becomes entitled
to the annuity, computation of the annuity under that
subsection is more favorable to the beneficiary than
computation under clause (i), the annuity shall be
H. R. 3230—146
computed under that subsection rather than under
clause (i).
‘‘(2) RESERVE-COMPONENT
ANNUITY—In the case of a
reserve-component annuity provided to a beneficiary under sec-
tion 1450(a) of this title (other than under section 1450(a)(4)),
the monthly annuity payable to the beneficiary shall be deter-
mined as follows:
‘‘(A) BENEFICIARY UNDER 62 YEARS OF AGE.—If the bene-
ficiary is under 62 years of age or is a dependent child
when becoming entitled to the annuity, the monthly annu-
ity shall be the amount equal to a percentage of the base
amount that—
‘‘(i) is less than 55 percent; and
‘‘(ii) is determined under subsection (f).
‘‘(B) BENEFICIARY 62 YEARS OF AGE OR OLDER.—
‘‘(i) GENERAL RULE.—If the beneficiary (other than
a dependent child) is 62 years of age or older when
becoming entitled to the annuity, the monthly annuity
shall be the amount equal to a percentage of the base
amount that—
‘‘(I) is less than 35 percent; and
‘‘(II) is determined under subsection (f).
‘‘(ii) RULE
IF
BENEFICIARY
ELIGIBLE
FOR
SOCIAL
SECURITY OFFSET COMPUTATION.—If the beneficiary is
eligible to have the annuity computed under subsection
(e) and if, at the time the beneficiary becomes entitled
to the annuity, computation of the annuity under that
subsection is more favorable to the beneficiary than
computation under clause (i), the annuity shall be
computed under that subsection rather than under
clause (i).
‘‘(b) INSURABLE INTEREST BENEFICIARY.—
‘‘(1) STANDARD ANNUITY.—In the case of a standard annuity
provided to a beneficiary under section 1450(a)(4) of this title,
the monthly annuity payable to the beneficiary shall be the
amount equal to 55 percent of the retired pay of the person
who elected to provide the annuity after the reduction in that
pay in accordance with section 1452(c) of this title.
‘‘(2) RESERVE-COMPONENT
ANNUITY.—In the case of a
reserve-component annuity provided to a beneficiary under sec-
tion 1450(a)(4) of this title, the monthly annuity payable to
the beneficiary shall be the amount equal to a percentage
of the retired pay of the person who elected to provide the
annuity after the reduction in such pay in accordance with
section 1452(c) of this title that—
‘‘(A) is less than 55 percent; and
‘‘(B) is determined under subsection (f).
‘‘(3) COMPUTATION OF RESERVE-COMPONENT ANNUITY WHEN
PARTICIPANT DIES BEFORE AGE 60.—For the purposes of para-
graph (2), a person—
‘‘(A) who provides an annuity that is determined in
accordance with that paragraph;
‘‘(B) who dies before becoming 60 years of age; and
‘‘(C) who at the time of death is otherwise entitled
to retired pay,
shall be considered to have been entitled to retired pay at
the time of death. The retired pay of such person for the
H. R. 3230—147
purposes of such paragraph shall be computed on the basis
of the rates of basic pay in effect on the date on which the
annuity provided by such person is to become effective in
accordance with the designation of such person under section
1448(e) of this title.
‘‘(c) ANNUITIES
FOR SURVIVORS
OF CERTAIN PERSONS DYING
DURING A PERIOD OF SPECIAL ELIGIBILITY FOR SBP.—
‘‘(1) IN GENERAL.—In the case of an annuity provided under
section 1448(d) or 1448(f) of this title, the amount of the annuity
shall be determined as follows:
‘‘(A) BENEFICIARY UNDER 62 YEARS OF AGE.—If the per-
son receiving the annuity is under 62 years of age or
is a dependent child when the member or former member
dies, the monthly annuity shall be the amount equal to
55 percent of the retired pay to which the member or
former member would have been entitled if the member
or former member had been entitled to that pay based
upon his years of active service when he died.
‘‘(B) BENEFICIARY 62 YEARS OF AGE OR OLDER.—
‘‘(i) GENERAL RULE.—If the person receiving the
annuity (other than a dependent child) is 62 years
of age or older when the member or former member
dies, the monthly annuity shall be the amount equal
to 35 percent of the retired pay to which the member
or former member would have been entitled if the
member or former member had been entitled to that
pay based upon his years of active service when he
died.
‘‘(ii) RULE
IF
BENEFICIARY
ELIGIBLE
FOR
SOCIAL
SECURITY OFFSET COMPUTATION.—If the beneficiary is
eligible to have the annuity computed under subsection
(e) and if, at the time the beneficiary becomes entitled
to the annuity, computation of the annuity under that
subsection is more favorable to the beneficiary than
computation under clause (i), the annuity shall be com-
puted under that subsection rather than under clause
(i).
‘‘(2) DIC OFFSET.—An annuity computed under paragraph
(1) that is paid to a surviving spouse shall be reduced by
the amount of dependency and indemnity compensation to
which the surviving spouse is entitled under section 1311(a)
of title 38. Any such reduction shall be effective on the date
of the commencement of the period of payment of such com-
pensation under title 38.
‘‘(3) SERVICEMEMBERS NOT YET GRANTED RETIRED PAY.—
In the case of an annuity provided by reason of the service
of a member described in section 1448(d)(1)(B) or 1448(d)(1)(C)
of this title who first became a member of a uniformed service
before September 8, 1980, the retired pay to which the member
would have been entitled when he died shall be determined
for purposes of paragraph (1) based upon the rate of basic
pay in effect at the time of death for the grade in which
the member was serving at the time of death, unless (as deter-
mined by the Secretary concerned) the member would have
been entitled to be retired in a higher grade.
‘‘(4) RATE OF PAY TO BE USED IN COMPUTING ANNUITY.—
In the case of an annuity paid under section 1448(f) of this
H. R. 3230—149
this title, the annuity shall be the amount equal to 55
percent of the retired pay of the person providing the
annuity (as that pay is determined under subsection (c)).
‘‘(3) SOCIAL SECURITY OFFSET.—An annuity computed under
this subsection shall be reduced by the lesser of the following:
‘‘(A) SOCIAL SECURITY COMPUTATION.—The amount of
the survivor benefit, if any, to which the surviving spouse
(or the former spouse, in the case of a former spouse
beneficiary who became a former spouse under a divorce
that became final after November 29, 1989) would be
entitled under title II of the Social Security Act (42 U.S.C.
401 et seq.) based solely upon service by the person con-
cerned as described in section 210(l)(1) of such Act (42
U.S.C. 410(l)(1)) and calculated assuming that the person
concerned lives to age 65.
‘‘(B) MAXIMUM AMOUNT OF REDUCTION.—40 percent of
the amount of the monthly annuity as determined under
paragraph (2).
‘‘(4) 
SPECIAL
RULES
FOR
SOCIAL
SECURITY
OFFSET
COMPUTATION.—
‘‘(A) TREATMENT OF DEDUCTIONS MADE ON ACCOUNT
OF WORK.—For the purpose of paragraph (3), a surviving
spouse (or a former spouse, in the case of a person who
becomes a former spouse under a divorce that becomes
final after November 29, 1989) shall not be considered
as entitled to a benefit under title II of the Social Security
Act (42 U.S.C. 401 et seq.) to the extent that such benefit
has been offset by deductions under section 203 of such
Act (42 U.S.C. 403) on account of work.
‘‘(B) TREATMENT
OF
CERTAIN
PERIODS
FOR
WHICH
SOCIAL SECURITY REFUNDS ARE MADE.—In the computation
of any reduction made under paragraph (3), there shall
be excluded any period of service described in section
210(l)(1) of the Social Security Act (42 U.S.C. 410(l)(1))—
‘‘(i) which was performed after December 1, 1980;
and
‘‘(ii) which involved periods of service of less than
30 continuous days for which the person concerned
is entitled to receive a refund under section 6413(c)
of the Internal Revenue Code of 1986 of the social
security tax which the person had paid.
‘‘(f) DETERMINATION OF PERCENTAGES APPLICABLE TO COMPUTA-
TION OF RESERVE-COMPONENT ANNUITIES.—The percentage to be
applied in determining the amount of an annuity computed under
subsection (a)(2), (b)(2), or (e)(2)(B) shall be determined under regu-
lations prescribed by the Secretary of Defense. Such regulations
shall be prescribed taking into consideration the following:
‘‘(1) The age of the person electing to provide the annuity
at the time of such election.
‘‘(2) The difference in age between such person and the
beneficiary of the annuity.
‘‘(3) Whether such person provided for the annuity to
become effective (in the event he died before becoming 60
years of age) on the day after his death or on the 60th anniver-
sary of his birth.
‘‘(4) Appropriate group annuity tables.
‘‘(5) Such other factors as the Secretary considers relevant.
H. R. 3230—150
‘‘(g) ADJUSTMENTS TO ANNUITIES.—
‘‘(1) PERIODIC ADJUSTMENTS FOR COST-OF-LIVING.—
‘‘(A) INCREASES
IN
ANNUITIES
WHEN
RETIRED
PAY
INCREASED.—Whenever retired pay is increased under sec-
tion 1401a of this title (or any other provision of law),
each annuity that is payable under the Plan shall be in-
creased at the same time.
‘‘(B) PERCENTAGE OF INCREASE.—The increase shall,
in the case of any annuity, be by the same percent
as the percent by which the retired pay of the person
providing the annuity would have been increased at such
time if the person were alive (and otherwise entitled to
such pay).
‘‘(C) CERTAIN REDUCTIONS TO BE DISREGARDED.—The
amount of the increase shall be based on the monthly
annuity payable before any reduction under section 1450(c)
of this title or under subsection (c)(2).
‘‘(2) ROUNDING DOWN.—The monthly amount of an annuity
payable under this subchapter, if not a multiple of $1, shall
be rounded to the next lower multiple of $1.
‘‘(h) ADJUSTMENTS TO BASE AMOUNT.—
‘‘(1) PERIODIC ADJUSTMENTS FOR COST-OF-LIVING.—
‘‘(A) INCREASES IN BASE AMOUNT WHEN RETIRED PAY
INCREASED.—Whenever retired pay is increased under sec-
tion 1401a of this title (or any other provision of law),
the base amount applicable to each participant in the Plan
shall be increased at the same time.
‘‘(B) PERCENTAGE OF INCREASE.—The increase shall be
by the same percent as the percent by which the retired
pay of the participant is so increased.
‘‘(2) RECOMPUTATION
AT
AGE
62.—When the retired pay
of a person who first became a member of a uniformed service
on or after August 1, 1986, and who is a participant in the
Plan is recomputed under section 1410 of this title upon the
person’s becoming 62 years of age, the base amount applicable
to that person shall be recomputed (effective on the effective
date of the recomputation of such retired pay under section
1410 of this title) so as to be the amount equal to the amount
of the base amount that would be in effect on that date if
increases in such base amount under paragraph (1) had been
computed as provided in paragraph (2) of section 1401a(b)
of this title (rather than under paragraph (3) of that section).
‘‘(3) DISREGARDING
OF
RETIRED
PAY
REDUCTIONS
FOR
RETIREMENT
BEFORE
YEARS
OF
SERVICE.—Computation of
a member’s retired pay for purposes of this section shall be
made without regard to any reduction under section 1409(b)(2)
of this title.
‘‘(i) 
RECOMPUTATION
OF
ANNUITY
FOR
CERTAIN
BENE-
FICIARIES.—In the case of an annuity under the Plan which is
computed on the basis of the retired pay of a person who would
have been entitled to have that retired pay recomputed under
section 1410 of this title upon attaining 62 years of age, but who
dies before attaining that age, the annuity shall be recomputed,
effective on the first day of the first month beginning after the
date on which the member or former member would have attained
62 years of age, so as to be the amount equal to the amount
of the annuity that would be in effect on that date if increases
H. R. 3230—151
under subsection (h)(1) in the base amount applicable to that
annuity to the time of the death of the member or former member,
and increases in such annuity under subsection (g)(1), had been
computed as provided in paragraph (2) of section 1401a(b) of this
title (rather than under paragraph (3) of that section).
‘‘§ 1452. Reduction in retired pay
‘‘(a) SPOUSE AND FORMER SPOUSE ANNUITIES.—
‘‘(1) REQUIRED REDUCTION IN RETIRED PAY.—Except as pro-
vided in subsection (b), the retired pay of a participant in
the Plan who is providing spouse coverage (as described in
paragraph (5)) shall be reduced as follows:
‘‘(A) STANDARD
ANNUITY.—If the annuity coverage
being providing is a standard annuity, the reduction shall
be as follows:
‘‘(i) DISABILITY
AND
NONREGULAR
SERVICE
RE-
TIREES.—In the case of a person who is entitled to
retired pay under chapter 61 or chapter 1223 of this
title, the reduction shall be in whichever of the alter-
native reduction amounts is more favorable to that
person.
‘‘(ii) MEMBERS
AS
OF
ENACTMENT
OF
FLAT-RATE
REDUCTION.—In the case of a person who first became
a member of a uniformed service before March 1, 1990,
the reduction shall be in whichever of the alternative
reduction amounts is more favorable to that person.
‘‘(iii) NEW ENTRANTS AFTER ENACTMENT OF FLAT-
RATE REDUCTION.—In the case of a person who first
becomes a member of a uniformed service on or after
March 1, 1990, and who is entitled to retired pay
under a provision of law other than chapter 61 or
chapter 1223 of this title, the reduction shall be in
an amount equal to 61⁄2 percent of the base amount.
‘‘(iv) ALTERNATIVE REDUCTION AMOUNTS.—For pur-
poses of clauses (i) and (ii), the alternative reduction
amounts are the following:
‘‘(I) FLAT-RATE REDUCTION.—An amount equal
to 61⁄2 percent of the base amount.
‘‘(II) AMOUNT
UNDER
PRE-FLAT-RATE
REDUC-
TION.—An amount equal to 21⁄2 percent of the first
$337 (as adjusted after November 1, 1989, under
paragraph (4)) of the base amount plus 10 percent
of the remainder of the base amount.
‘‘(B) RESERVE-COMPONENT
ANNUITY.—If the annuity
coverage being provided is a reserve-component annuity,
the reduction shall be in whichever of the following
amounts is more favorable to that person:
‘‘(i) FLAT-RATE REDUCTION.—An amount equal to
61⁄2 percent of the base amount plus an amount deter-
mined in accordance with regulations prescribed by
the Secretary of Defense as a premium for the addi-
tional coverage provided through reserve-component
annuity coverage under the Plan.
‘‘(ii) AMOUNT UNDER PRE-FLAT-RATE REDUCTION.—
An amount equal to 21⁄2 percent of the first $337
(as adjusted after November 1, 1989, under paragraph
(4)) of the base amount plus 10 percent of the remain-
H. R. 3230—152
der of the base amount plus an amount determined
in accordance with regulations prescribed by the Sec-
retary of Defense as a premium for the additional
coverage provided through reserve-component annuity
coverage under the Plan.
‘‘(2) ADDITIONAL REDUCTION FOR CHILD COVERAGE.—If there
is a dependent child as well as a spouse or former spouse,
the amount prescribed under paragraph (1) shall be increased
by an amount prescribed under regulations of the Secretary
of Defense.
‘‘(3) NO REDUCTION WHEN NO BENEFICIARY.—The reduction
in retired pay prescribed by paragraph (1) shall not be
applicable during any month in which there is no eligible
spouse or former spouse beneficiary.
‘‘(4) PERIODIC ADJUSTMENTS.—
‘‘(A) ADJUSTMENTS FOR INCREASES IN RATES OF BASIC
PAY.—Whenever there is an increase in the rates of basic
pay of members of the uniformed services effective on or
after October 1, 1985, the amounts under paragraph (1)
with respect to which the percentage factor of 21⁄2 is applied
shall be increased by the overall percentage of such increase
in the rates of basic pay. The increase under the preceding
sentence shall apply only with respect to persons whose
retired pay is computed based on the rates of basic pay
in effect on or after the date of such increase in rates
of basic pay.
‘‘(B) ADJUSTMENTS FOR RETIRED PAY COLAS.—In addi-
tion to the increase under subparagraph (A), the amounts
under paragraph (1) with respect to which the percentage
factor of 21⁄2 is applied shall be further increased at the
same time and by the same percentage as an increase
in retired pay under section 1401a of this title effective
on or after October 1, 1985. Such increase under the preced-
ing sentence shall apply only with respect to a person
who initially participates in the Plan on a date which
is after both the effective date of such increase under
section 1401a and the effective date of the rates of basic
pay upon which that person’s retired pay is computed.
‘‘(5) SPOUSE COVERAGE DESCRIBED.—For the purposes of
paragraph (1), a participant in the Plan who is providing spouse
coverage is a participant who—
‘‘(A) has (i) a spouse or former spouse, or (ii) a spouse
or former spouse and a dependent child; and
‘‘(B) has not elected to provide an annuity to a person
designated by him under section 1448(b)(1) of this title
or, having made such an election, has changed his election
in favor of his spouse under section 1450(f) of this title.
‘‘(b) CHILD-ONLY ANNUITIES.—
‘‘(1) REQUIRED REDUCTION IN RETIRED PAY.—The retired
pay of a participant in the Plan who is providing child-only
coverage (as described in paragraph (4)) shall be reduced by
an amount prescribed under regulations by the Secretary of
Defense.
‘‘(2) NO REDUCTION WHEN NO CHILD.—There shall be no
reduction in retired pay under paragraph (1) for any month
during which the participant has no eligible dependent child.
H. R. 3230—153
‘‘(3) SPECIAL RULE FOR CERTAIN RCSBP PARTICIPANTS.—In
the case of a participant in the Plan who is participating
in the Plan under an election under section 1448(a)(2)(B) of
this title and who provided child-only coverage during a period
before the participant becomes entitled to receive retired pay,
the retired pay of the participant shall be reduced by an amount
prescribed under regulations by the Secretary of Defense to
reflect the coverage provided under the Plan during the period
before the participant became entitled to receive retired pay.
A reduction under this paragraph is in addition to any reduction
under paragraph (1) and is made without regard to whether
there is an eligible dependent child during a month for which
the reduction is made.
‘‘(4) CHILD-ONLY COVERAGE DEFINED.—For the purposes of
this subsection, a participant in the Plan who is providing
child-only coverage is a participant who has a dependent child
and who—
‘‘(A) does not have an eligible spouse or former
spouse; or
‘‘(B) has a spouse or former spouse but has elected
to provide an annuity for dependent children only.
‘‘(c) REDUCTION FOR INSURABLE INTEREST COVERAGE.—
‘‘(1) REQUIRED REDUCTION IN RETIRED PAY.—The retired
pay of a person who has elected to provide an annuity to
a person designated by him under section 1450(a)(4) of this
title shall be reduced as follows:
‘‘(A) STANDARD
ANNUITY.—In the case of a person
providing a standard annuity, the reduction shall be by
10 percent plus 5 percent for each full five years the individ-
ual designated is younger than that person.
‘‘(B) RESERVE
COMPONENT
ANNUITY.—In the case of
a person providing a reserve-component annuity, the reduc-
tion shall be by an amount prescribed under regulations
of the Secretary of Defense.
‘‘(2) LIMITATION ON TOTAL REDUCTION.—The total reduction
under paragraph (1) may not exceed 40 percent.
‘‘(3) DURATION OF REDUCTION.—The reduction in retired
pay prescribed by this subsection shall continue during the
lifetime of the person designated under section 1450(a)(4) of
this title or until the person receiving retired pay changes
his election under section 1450(f) of this title.
‘‘(4) RULE FOR COMPUTATION.—Computation of a member’s
retired pay for purposes of this subsection shall be made with-
out regard to any reduction under section 1409(b)(2) of this
title.
‘‘(d) DEPOSITS TO COVER PERIODS WHEN RETIRED PAY NOT
PAID.—
‘‘(1) REQUIRED DEPOSITS.—If a person who has elected to
participate in the Plan has been awarded retired pay and
is not entitled to that pay for any period, that person must
deposit in the Treasury the amount that would otherwise have
been deducted from his pay for that period.
‘‘(2) DEPOSITS NOT REQUIRED WHEN PARTICIPANT ON ACTIVE
DUTY.—Paragraph (1) does not apply to a person with respect
to any period when that person is on active duty under a
call or order to active duty for a period of more than 30
days.
H. R. 3230—154
‘‘(e) DEPOSITS NOT REQUIRED FOR CERTAIN PARTICIPANTS IN
CSRS.—When a person who has elected to participate in the Plan
waives that person’s retired pay for the purposes of subchapter
III of chapter 83 of title 5, that person shall not be required
to make the deposit otherwise required by subsection (d) as long
as that waiver is in effect unless, in accordance with section 8339(i)
of title 5, that person has notified the Office of Personnel Manage-
ment that he does not desire a spouse surviving him to receive
an annuity under section 8331(b) of title 5.
‘‘(f) REFUNDS OF DEDUCTIONS NOT ALLOWED.—
‘‘(1) GENERAL RULE.—A person is not entitled to refund
of any amount deducted from retired pay under this section.
‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply—
‘‘(A) in the case of a refund authorized by section
1450(e) of this title; or
‘‘(B) in case of a deduction made through administra-
tive error.
‘‘(g) DISCONTINUATION
OF
PARTICIPATION
BY
PARTICIPANTS
WHOSE SURVIVING SPOUSES WILL BE ENTITLED TO DIC.—
‘‘(1) DISCONTINUATION.—
‘‘(A) CONDITIONS.—Notwithstanding any other provi-
sion of this subchapter but subject to paragraphs (2) and
(3), a person who has elected to participate in the Plan
and who is suffering from a service-connected disability
rated by the Secretary of Veterans Affairs as totally dis-
abling and has suffered from such disability while so rated
for a continuous period of 10 or more years (or, if so
rated for a lesser period, has suffered from such disability
while so rated for a continuous period of not less than
5 years from the date of such person’s last discharge or
release from active duty) may discontinue participation
in the Plan by submitting to the Secretary concerned a
request to discontinue participation in the Plan.
‘‘(B) EFFECTIVE DATE.—Participation in the Plan of a
person who submits a request under subparagraph (A)
shall be discontinued effective on the first day of the first
month following the month in which the request under
subparagraph (A) is received by the Secretary concerned.
Effective on such date, the Secretary concerned shall dis-
continue the reduction being made in such person’s retired
pay on account of participation in the Plan or, in the
case of a person who has been required to make deposits
in the Treasury on account of participation in the Plan,
such person may discontinue making such deposits effective
on such date.
‘‘(C) FORM FOR REQUEST FOR DISCONTINUATION.—Any
request under this paragraph to discontinue participation
in the Plan shall be in such form and shall contain such
information as the Secretary concerned may require by
regulation.
‘‘(2) CONSENT
OF
BENEFICIARIES
REQUIRED.—A person
described in paragraph (1) may not discontinue participation
in the Plan under such paragraph without the written consent
of the beneficiary or beneficiaries of such person under the
Plan.
‘‘(3) INFORMATION ON PLAN TO BE PROVIDED BY SECRETARY
CONCERNED.—
H. R. 3230—155
‘‘(A) INFORMATION
TO
BE
PROVIDED
PROMPTLY
TO
PARTICIPANT.—The Secretary concerned shall furnish
promptly to each person who files a request under para-
graph (1) to discontinue participation in the Plan a written
statement of the advantages of participating in the Plan
and the possible disadvantages of discontinuing participa-
tion.
‘‘(B) RIGHT TO WITHDRAW DISCONTINUATION REQUEST.—
A person may withdraw a request made under paragraph
(1) if it is withdrawn within 30 days after having been
submitted to the Secretary concerned.
‘‘(4) REFUND
OF
DEDUCTIONS
FROM
RETIRED
PAY.—Upon
the death of a person described in paragraph (1) who discon-
tinued participation in the Plan in accordance with this sub-
section, any amount deducted from the retired pay of that
person under this section shall be refunded to the person’s
surviving spouse.
‘‘(5) RESUMPTION OF PARTICIPATION IN PLAN.—
‘‘(A) CONDITIONS FOR RESUMPTION.—A person described
in paragraph (1) who discontinued participation in the
Plan may elect to participate again in the Plan if—
‘‘(i) after having discontinued participation in the
Plan the Secretary of Veterans Affairs reduces that
person’s service-connected disability rating to a rating
of less than total; and
‘‘(ii) that person applies to the Secretary concerned,
within such period of time after the reduction in such
person’s service-connected disability rating has been
made as the Secretary concerned may prescribe, to
again participate in the Plan and includes in such
application such information as the Secretary con-
cerned may require.
‘‘(B) EFFECTIVE DATE OF RESUMED COVERAGE.—Such
person’s participation in the Plan under this paragraph
is effective beginning on the first day of the month after
the month in which the Secretary concerned receives the
application for resumption of participation in the Plan.
‘‘(C) RESUMPTION OF CONTRIBUTIONS.—When a person
elects to participate in the Plan under this paragraph,
the Secretary concerned shall begin making reductions in
that person’s retired pay, or require such person to make
deposits in the Treasury under subsection (d), as appro-
priate, effective on the effective date of such participation
under subparagraph (B).
‘‘(h) INCREASES
IN REDUCTION WITH INCREASES
IN RETIRED
PAY.—
‘‘(1) GENERAL RULE.—Whenever retired pay is increased
under section 1401a of this title (or any other provision of
law), the amount of the reduction to be made under subsection
(a) or (b) in the retired pay of any person shall be increased
at the same time and by the same percentage as such retired
pay is so increased.
‘‘(i) RECOMPUTATION OF REDUCTION UPON RECOMPUTATION OF
RETIRED PAY.—When the retired pay of a person who first became
a member of a uniformed service on or after August 1, 1986,
and who is a participant in the Plan is recomputed under section
1410 of this title upon the person’s becoming 62 years of age,
H. R. 3230—156
the amount of the reduction in such retired pay under this section
shall be recomputed (effective on the effective date of the recomputa-
tion of such retired pay under section 1410 of this title) so as
to be the amount equal to the amount of such reduction that
would be in effect on that date if increases in such retired pay
under section 1401a(b) of this title, and increases in reductions
in such retired pay under subsection (h), had been computed as
provided in paragraph (2) of section 1401a(b) of this title (rather
than under paragraph (3) of that section).
‘‘§ 1453. Recovery of amounts erroneously paid
‘‘(a) RECOVERY.—In addition to any other method of recovery
provided by law, the Secretary concerned may authorize the recov-
ery of any amount erroneously paid to a person under this sub-
chapter by deduction from later payments to that person.
‘‘(b) AUTHORITY TO WAIVE RECOVERY.—Recovery of an amount
erroneously paid to a person under this subchapter is not required
if, in the judgment of the Secretary concerned and the Comptroller
General—
‘‘(1) there has been no fault by the person to whom the
amount was erroneously paid; and
‘‘(2) recovery of such amount would be contrary to the
purposes of this subchapter or against equity and good con-
science.
‘‘§ 1454. Correction of administrative errors
‘‘(a) AUTHORITY.—The Secretary concerned may, under regula-
tions prescribed under section 1455 of this title, correct or revoke
any election under this subchapter when the Secretary considers
it necessary to correct an administrative error.
‘‘(b) FINALITY.—Except when procured by fraud, a correction
or revocation under this section is final and conclusive on all officers
of the United States.
‘‘§ 1455. Regulations
‘‘(a) IN GENERAL.—The President shall prescribe regulations
to carry out this subchapter. Those regulations shall, so far as
practicable, be uniform for the uniformed services.
‘‘(b) NOTICE OF ELECTIONS.—Regulations prescribed under this
section shall provide that before the date on which a member
becomes entitled to retired pay—
‘‘(1) if the member is married, the member and the mem-
ber’s spouse shall be informed of the elections available under
section 1448(a) of this title and the effects of such elections;
and
‘‘(2) if the notification referred to in section 1448(a)(3)(E)
of this title is required, any former spouse of the member
shall be informed of the elections available and the effects
of such elections.
‘‘(c) PROCEDURE FOR DEPOSITING CERTAIN RECEIPTS.—Regula-
tions prescribed under this section shall establish procedures for
depositing the amounts referred to in sections 1448(g), 1450(k)(2),
and 1452(d) of this title.
‘‘(d) PAYMENTS TO GUARDIANS AND FIDUCIARIES.—
‘‘(1) IN GENERAL.—Regulations prescribed under this sec-
tion shall provide procedures for the payment of an annuity
under this subchapter in the case of—
H. R. 3230—157
‘‘(A) a person for whom a guardian or other fiduciary
has been appointed; and
‘‘(B) a minor, mentally incompetent, or otherwise
legally disabled person for whom a guardian or other fidu-
ciary has not been appointed.
‘‘(2) AUTHORIZED
PROCEDURES.—The regulations under
paragraph (1) may include provisions for the following:
‘‘(A) In the case of an annuitant referred to in para-
graph (1)(A), payment of the annuity to the appointed
guardian or other fiduciary.
‘‘(B) In the case of an annuitant referred to in para-
graph (1)(B), payment of the annuity to any person who,
in the judgment of the Secretary concerned, is responsible
for the care of the annuitant.
‘‘(C) Subject to subparagraphs (D) and (E), a require-
ment for the payee of an annuity to spend or invest the
amounts paid on behalf of the annuitant solely for benefit
of the annuitant.
‘‘(D) Authority for the Secretary concerned to permit
the payee to withhold from the annuity payment such
amount, not in excess of 4 percent of the annuity, as
the Secretary concerned considers a reasonable fee for the
fiduciary services of the payee when a court appointment
order provides for payment of such a fee to the payee
for such services or the Secretary concerned determines
that payment of a fee to such payee is necessary in order
to obtain the fiduciary services of the payee.
‘‘(E) Authority for the Secretary concerned to require
the payee to provide a surety bond in an amount sufficient
to protect the interests of the annuitant and to pay for
such bond out of the annuity.
‘‘(F) A requirement for the payee of an annuity to
maintain and, upon request, to provide to the Secretary
concerned an accounting of expenditures and investments
of amounts paid to the payee.
‘‘(G) In the case of an annuitant referred to in para-
graph (1)(B)—
‘‘(i) procedures for determining incompetency and
for selecting a payee to represent the annuitant for
the purposes of this section, including provisions for
notifying the annuitant of the actions being taken to
make such a determination and to select a representa-
tive payee, an opportunity for the annuitant to review
the evidence being considered, and an opportunity for
the annuitant to submit additional evidence before the
determination is made; and
‘‘(ii) standards for determining incompetency,
including standards for determining the sufficiency of
medical evidence and other evidence.
‘‘(H) Provisions for any other matter that the President
considers appropriate in connection with the payment of
an annuity in the case of a person referred to in paragraph
(1).
‘‘(3) LEGAL
EFFECT
OF
PAYMENT
TO
GUARDIAN
OR
FIDU-
CIARY.—An annuity paid to a person on behalf of an annuitant
in accordance with the regulations prescribed pursuant to para-
graph (1) discharges the obligation of the United States for
H. R. 3230—158
payment to the annuitant of the amount of the annuity so
paid.’’.
SEC. 635. INCREASES IN SURVIVOR BENEFIT PLAN CONTRIBUTIONS
TO BE EFFECTIVE CONCURRENTLY WITH PAYMENT OF
RETIRED PAY COST-OF-LIVING INCREASES.
(a) SURVIVOR BENEFIT PLAN.—Section 1452(h) of title 10,
United States Code, as amended by section 634, is amended by
adding at the end the following new paragraph:
‘‘(2) COORDINATION WHEN PAYMENT OF INCREASE IN RETIRED
PAY IS DELAYED BY LAW.—
‘‘(A) IN
GENERAL.—Notwithstanding paragraph (1),
when the initial payment of an increase in retired pay
under section 1401a of this title (or any other provision
of law) to a person is for a month that begins later than
the effective date of that increase by reason of the applica-
tion of subsection (b)(2)(B) of such section (or section 631(b)
of Public Law 104–106 (110 Stat. 364)), then the amount
of the reduction in the person’s retired pay shall be effective
on the date of that initial payment of the increase in
retired pay rather than the effective date of the increase
in retired pay.
‘‘(B) DELAY NOT TO AFFECT COMPUTATION OF ANNU-
ITY.—Subparagraph (A) may not be construed as delaying,
for purposes of determining the amount of a monthly annu-
ity under section 1451 of this title, the effective date of
an increase in a base amount under subsection (h) of such
section from the effective date of an increase in retired
pay under section 1401a of this title to the date on which
the initial payment of that increase in retired pay is made
in accordance with subsection (b)(2)(B) of such section.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply with respect to retired pay payable for months beginning
on or after the date of the enactment of this Act.
SEC. 636. AMENDMENTS TO THE UNIFORMED SERVICES FORMER
SPOUSES’ PROTECTION ACT.
(a) MANNER OF SERVICE OF PROCESS.—Subsection (b)(1)(A) of
section 1408 of title 10, United States Code, is amended by striking
out ‘‘certified or registered mail, return receipt requested’’ and
inserting in lieu thereof ‘‘facsimile or electronic transmission or
by mail’’.
(b) SUBSEQUENT COURT ORDER FROM ANOTHER STATE.—Sub-
section (d) of such section is amended by adding at the end the
following new paragraph:
‘‘(6)(A) The Secretary concerned may not accept service of a
court order that is an out-of State modification, or comply with
the provisions of such a court order, unless the court issuing that
order has jurisdiction in the manner specified in subsection (c)(4)
over both the member and the spouse or former spouse involved.
‘‘(B) A court order shall be considered to be an out-of-State
modification for purposes of this paragraph if the order—
‘‘(i) modifies a previous court order under this section upon
which payments under this subsection are based; and
‘‘(ii) is issued by a court of a State other than the State
of the court that issued the previous court order.’’.
H. R. 3230—160
SEC. 638. ADMINISTRATION OF BENEFITS FOR SO-CALLED MINIMUM
INCOME WIDOWS.
(a) ADJUSTED ANNUAL INCOME LIMITATION APPLIABLE TO ELIGI-
BILITY FOR INCOME SUPPLEMENT.—(1) Section 4 of Public Law 92–
425 (10 U.S.C. 1448 note) is amended—
(A) in subsection (a)(3), by striking out ‘‘$2,340’’ and insert-
ing in lieu thereof ‘‘the maximum annual rate of pension in
effect under section 1541(b) of title 38, United States Code’’;
and
(B) in the first sentence of subsection (b), by striking out
‘‘$2,340 a year’’ and inserting in lieu thereof ‘‘the maximum
annual rate of pension in effect under section 1541(b) of title
38, United States Code’’.
(2) Subsection (c) of such section is repealed.
(b) PAYMENTS TO BE MADE
BY SECRETARY
OF VETERANS
AFFAIRS.—Such section is further amended by adding at the end
the following new subsection:
‘‘(e)(1) Payment of annuities under this section shall be made
by the Secretary of Veterans Affairs. If appropriate for administra-
tive convenience (or otherwise determined appropriate by the Sec-
retary of Veterans Affairs), that Secretary may combine a payment
to any person for any month under this section with any other
payment for that month under laws administered by the Secretary
so as to provide that person with a single payment for that month.
‘‘(2) The Secretary concerned shall annually transfer to the
Secretary of Veterans Affairs such amounts as may be necessary
for payments by the Secretary of Veterans Affairs under this section
and for costs of the Secretary of Veterans Affairs in administering
this section. Such transfers shall be made from amounts that would
otherwise be used for payment of annuities by the Secretary con-
cerned under this section. The authority to make such a transfer
is in addition to any other authority of the Secretary concerned
to transfer funds for a purpose other than the purpose for which
the funds were originally made available. In the case of a transfer
by the Secretary of a military department, the provisions of section
2215 of title 10, United States Code, do not apply.
‘‘(3) The Secretary concerned shall promptly notify the Secretary
of Veterans Affairs of any change in beneficiaries under this sec-
tion.’’.
(c) CLARIFICATION OF CONTINUING ELIGIBLITY FOR DEPARTMENT
OF VETERANS AFFAIRS PENSION.—Such section, as amended by sub-
section (a)(2), is further amended by inserting after subsection
(b) the following new subsection (c):
‘‘(c) The amount of an annuity payable under this section,
although counted as income in determining the amount of any
pension described in subsection (a)(2) of this section, shall not
be considered to affect the eligiblity of the recipient of such annuity
for such pension, even though, as a result of including the amount
of the annuity as income, no amount of such pension is due.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
take effect on July 1, 1997, and apply with respect to payments
of benefits for any month after June 1997.
H. R. 3230—161
Subtitle E—Other Matters
SEC. 651. DISCRETIONARY ALLOTMENT OF PAY, INCLUDING RETIRED
OR RETAINER PAY.
(a) ALLOTMENTS AUTHORIZED.—Section 701 of title 37, United
States Code, is amended by striking out subsection (d) and inserting
in lieu thereof the following new subsections:
‘‘(d) Under regulations prescribed by the Secretary of Defense,
a member of the Army, Navy, Air Force, or Marine Corps and
a contract surgeon of the Army, Navy, or Air Force may make
allotments from the pay of the member or surgeon for the purpose
of supporting relatives or for any other purpose that the Secretary
considers proper. Such allotments may include a maximum of six
allotments considered to be discretionary under such regulations.
For a member or former member entitled to retired or retainer
pay, a maximum of six discretionary allotments authorized during
active military service may be continued into retired status, and
new discretionary allotments may be authorized so long as the
total number of discretionary allotments does not exceed six.
‘‘(e) If an allotment made under subsection (d) is paid to the
allottee before the disbursing officer receives a notice of discontinu-
ance from the officer required by regulation to furnish the notice,
the amount of the allotment shall be credited to the disbursing
officer. If an allotment is erroneously paid because the officer
required by regulation to so report failed to report the death of
the allotter or any other fact that makes the allotment not payable,
the amount of the payment not recovered from the allottee shall,
if practicable, be collected by the Secretary concerned from the
officer who failed to make the report.’’.
(b) ISSUANCE OF REGULATIONS.—The Secretaries of the military
departments shall prescribe regulations under subsection (d) of
section 701 of title 37, United States Code, as added by subsection
(a), not later than October 1, 1997.
SEC. 652. REIMBURSEMENT FOR ADOPTION EXPENSES INCURRED IN
ADOPTIONS THROUGH PRIVATE PLACEMENTS.
(a) DEPARTMENT
OF DEFENSE.—Section 1052(g) of title 10,
United States Code, is amended—
(1) in paragraph (1), by striking out ‘‘State or local govern-
ment’’ and all that follows through the period at the end of
the first sentence and inserting in lieu thereof ‘‘qualified adop-
tion agency.’’; and
(2) by adding at the end the following new paragraph:
‘‘(3) The term ‘qualified adoption agency’ means any of
the following:
‘‘(A) A State or local government agency which has
responsibility under State or local law for child placement
through adoption.
‘‘(B) A nonprofit, voluntary adoption agency which is
authorized by State or local law to place children for adop-
tion.
‘‘(C) Any other source authorized by a State to provide
adoption placement if the adoption is supervised by a court
under State or local law.’’.
(b) COAST GUARD.—Section 514(g) of title 14, United States
Code, is amended—
H. R. 3230—162
(1) in paragraph (1), by striking out ‘‘State or local govern-
ment’’ and all that follows through the period at the end of
the first sentence and inserting in lieu thereof ‘‘qualified adop-
tion agency.’’; and
(2) by adding at the end the following new paragraph:
‘‘(3) The term ‘qualified adoption agency’ means any of
the following:
‘‘(A) A State or local government agency which has
responsibility under State or local law for child placement
through adoption.
‘‘(B) A nonprofit, voluntary adoption agency which is
authorized by State or local law to place children for adop-
tion.
‘‘(C) Any other source authorized by a State to provide
adoption placement if the adoption is supervised by a court
under State or local law.’’.
SEC. 653. WAIVER OF RECOUPMENT OF AMOUNTS WITHHELD FOR TAX
PURPOSES FROM CERTAIN SEPARATION PAY.
(a) IN GENERAL.—Section 1174(h)(2) of title 10, United States
Code, is amended by inserting before the period at the end of
the first sentence the following: ‘‘, less the amount of Federal
income tax withheld from such pay (such withholding being at
the flat withholding rate for Federal income tax withholding, as
in effect pursuant to regulations prescribed under chapter 24 of
the Internal Revenue Code of 1986)’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on October 1, 1996, and shall apply to payments
of separation pay, severance pay, or readjustment pay that are
made after September 30, 1996.
SEC. 654. TECHNICAL CORRECTION CLARIFYING LIMITATION ON FUR-
NISHING CLOTHING OR ALLOWANCES FOR ENLISTED
NATIONAL GUARD TECHNICIANS.
Section 418(c) of title 37, United States Code, is amended
by striking out ‘‘for which a uniform allowance is paid under section
415 or 416 of this title’’ and inserting in lieu thereof ‘‘for which
clothing is furnished or a uniform allowance is paid under this
section’’.
SEC. 655. TECHNICAL CORRECTION TO PRIOR AUTHORITY FOR PAY-
MENT OF BACKPAY TO CERTAIN PERSONS.
Section 634 of the National Defense Authorization Act for Fiscal
Year 1996 (Public Law 104–106; 110 Stat. 366) is amended—
(1) in subsection (b)(1), by striking out ‘‘Island of Bataan’’
and inserting in lieu thereof ‘‘peninsula of Bataan or island
of Corregidor’’; and
(2) in subsection (c), by inserting after the first sentence
the following: ‘‘For the purposes of this subsection, the Secretary
of War shall be deemed to have determined that conditions
in the Philippines during the specified period justified payment
under applicable regulations of quarters and subsistence allow-
ances at the maximum special rate for duty where emergency
conditions existed.’’.
H. R. 3230—163
SEC. 656. COMPENSATION FOR PERSONS AWARDED PRISONER OF
WAR MEDAL WHO DID NOT PREVIOUSLY RECEIVE COM-
PENSATION AS A PRISONER OF WAR.
(a) AUTHORITY TO MAKE PAYMENTS.—The Secretary of the mili-
tary department concerned shall make payments in the manner
provided in section 6 of the War Claims Act of 1948 (50 U.S.C.
App. 2005) to (or on behalf of) any person described in subsection
(b) who submits an application for such payment in accordance
with subsection (d).
(b) ELIGIBLE PERSONS.—This section applies with respect to
a member or former member of the Armed Forces who—
(1) has received the prisoner of war medal under section
1128 of title 10, United States Code; and
(2) has not previously received a payment under section
6 of the War Claims Act of 1948 (50 U.S.C. App. 2005) with
respect to the period of internment for which the person
received the prisoner of war medal.
(c) AMOUNT OF PAYMENT.—The amount of the payment to any
person under this section shall be determined based upon the
provisions of section 6 of the War Claims Act of 1948 that are
applicable with respect to the period of time during which the
internment occurred for which the person received the prisoner
of war medal.
(d) ONE-YEAR PERIOD FOR SUBMISSION OF APPLICATIONS.—A
payment may be made by reason of this section only in the case
of a person who submits an application to the Secretary concerned
for such payment during the one-year period beginning on the
date of the enactment of this Act. Any such application shall be
submitted in such form and manner as the Secretary may require.
SEC. 657. PAYMENTS 
TO 
CERTAIN 
PERSONS 
CAPTURED 
AND
INTERNED BY NORTH VIETNAM.
(a) PAYMENT AUTHORIZED
TO ELIGIBLE PERSONS.—(1) Using
amounts made available under subsection (g), the Secretary of
Defense shall make a payment under this section to a person
who demonstrates to the satisfaction of the Secretary of Defense
that the person was captured and incarcerated by the Democratic
Republic of Vietnam as a result of the participation by the person
in operations conducted under OPLAN 34A or its predecessor.
(2) Using amounts made available under subsection (g), the
Secretary of Defense shall also make a payment under this section
to a person who demonstrates to the satisfaction of the Secretary
of Defense that the person—
(A) served as a Vietnamese operative pursuant to
OPLAN 35;
(B) was captured and incarcerated by North Vietnamese
forces as a result of the participation by the person in operations
in Laos or along the Lao-Vietnamese border pursuant to
OPLAN 35;
(C) remained in captivity after 1973 (or died in
captivity); and
(D) has not previously received payment from the United
States for the period spent in captivity.
(3) A payment may not be made under this section to, or
with respect to, a person who the Secretary of Defense determines,
based on the available evidence, served in the Peoples Army of
Vietnam or provided active assistance to the Government of the
H. R. 3230—164
Democratic Republic of Vietnam during the period from 1958
through 1975.
(b) EFFECT OF DEATH OF ELIGIBLE PERSON.—In the case of
a decedent who would have been eligible for a payment under
this section if alive, the documentation required under subsection
(a) may be provided by survivors of the decedent, and the payment
under this section shall be made to survivors of the decedent
in the following order:
(1) To the surviving spouse.
(2) If there is no surviving spouse, to the surviving children
(including natural children and adopted children) of the
decedent, in equal shares.
(c) AMOUNT PAYABLE.—The amount payable to, or with respect
to, a person under this section is $40,000. If a person can dem-
onstrate to the Secretary of Defense that confinement or incarcer-
ation exceeded 20 years, the Secretary may pay an additional $2,000
for each full year in excess of 20 (and a proportionate amount
for a partial year), but the total amount paid to, or with respect
to, a person under this section may not exceed $50,000.
(d) TIME LIMITATIONS.—(1) To be eligible for a payment under
this section, a claimant must file a claim for such payment with
the Secretary of Defense within 18 months of the effective date
of the regulations implementing this section.
(2) Not later than 18 months after receiving a claim for payment
under this section, the Secretary shall determine the eligibility
of the claimant for payment of the claim. Subject to subsection
(f), if the Secretary determines that the claimant is eligible for
the payment, the Secretary shall promptly pay the claim.
(e) REGULATIONS.—(1) The Secretary of Defense shall prescribe
regulations to carry out this section. Such regulations shall include
procedures by which persons may submit claims for payment under
this section. Such regulations shall be prescribed not later than
six months after the date of the enactment of this Act.
(2) The Secretary of Defense may establish guidelines regarding
what constitutes adequate documentation for determining whether
a person satisfies the requirements specified in subsection (a)
regarding eligibility for a payment under this section. Such guide-
lines shall be established in consultation with the heads of other
agencies of the Government involved with OPLAN 34A or its prede-
cessor or OPLAN 35.
(f) LIMITATION ON DISBURSEMENT.—(1) The actual disbursement
of a payment under this section may be made only to the person
who is eligible for the payment under subsection (a) or (b) and
only—
(A) upon the appearance of that person, in person, at
any designated disbursement office in the United States or
its territories; or
(B) at such other location or in such other manner as
that person may request in writing.
(2) In the case of a claim approved for payment but not dis-
bursed as a result of operation of paragraph (1), the Secretary
of Defense shall hold the funds in trust for the person in an
interest bearing account until such time as the person makes an
election under such paragraph.
(g) FUNDING.—To the extent provided in advance for this section
in appropriations Acts, of amounts authorized to be appropriated
H. R. 3230—165
under section 301(24) for this purpose, $20,000,000 shall be avail-
able until expended for payments under this section.
(h) PAYMENT IN FULL SATISFACTION OF CLAIMS AGAINST THE
UNITED STATES.—The acceptance of payment by, or with respect
to, a person under this section shall be in full satisfaction of all
claims by or on behalf of that individual against the United States
arising from operations under OPLAN 34A or its predecessor or
OPLAN 35.
(i) ATTORNEY FEES.—Notwithstanding any contract, the rep-
resentative of a person may not receive, for services rendered in
connection with the claim of, or with respect to, a person under
this section, more than 10 percent of a payment made under this
section on that claim.
(j) NO RIGHT TO JUDICIAL REVIEW.—All determinations by the
Secretary of Defense pursuant to this section are final and conclu-
sive, notwithstanding any other provision of law. Claimants under
this section have no right to judicial review, and such review
is specifically precluded.
(k) REPORTS TO CONGRESS.—(1) Not later than 24 months after
the date of the enactment of this Act, the Secretary of Defense
shall submit to Congress a report on the payment of claims under
this section.
(2) After the submission of the report under paragraph (1),
the Secretary shall periodically submit to Congress a report on
the status of payment of claims under this section.
TITLE VII—HEALTH CARE PROVISIONS
Subtitle A—Health Care Services
Sec. 701. Preventive health care screening for colon and prostate cancer.
Sec. 702. Implementation of requirement for Selected Reserve dental insurance
plan.
Sec. 703. Dental insurance plan for military retirees and unremarried surviving
spouses and certain other dependents of military retirees.
Sec. 704. Plan for health care coverage for children with medical conditions caused
by parental exposure to chemical munitions while serving as members
of the Armed Forces.
Subtitle B—TRICARE Program
Sec. 711. CHAMPUS payment limits for TRICARE prime enrollees.
Sec. 712. Improved information exchange between military treatment facilities and
TRICARE program contractors.
Sec. 713. Plans for medicare subvention demonstration programs.
Subtitle C—Uniformed Services Treatment Facilities
Sec. 721. Definitions.
Sec. 722. Inclusion of designated providers in uniformed services health care
delivery system.
Sec. 723. Provision of uniform benefit by designated providers.
Sec. 724. Enrollment of covered beneficiaries.
Sec. 725. Application of CHAMPUS payment rules.
Sec. 726. Payments for services.
Sec. 727. Repeal of superseded authorities.
Subtitle D—Other Changes to Existing Laws Regarding Health Care
Management
Sec. 731. Authority to waive CHAMPUS exclusion regarding nonmedically
necessary treatment in connection with certain clinical trials.
Sec. 732. Exception to maximum allowable payments to individual health-care
providers under CHAMPUS.
Sec. 733. Codification of annual authority to credit CHAMPUS refunds to current
year appropriation.
H. R. 3230—166
Sec. 734. Exceptions to requirements regarding obtaining nonavailability-of-health-
care statements.
Sec. 735. Enhancement of third-party collection and secondary payer authorities
under CHAMPUS.
Subtitle E—Other Matters
Sec. 741. Alternatives to active duty service obligation under Armed Forces Health
Professions Scholarship and Financial Assistance program and Uni-
formed Services University of the Health Sciences.
Sec. 742. External peer review for defense health program extramural medical
research involving human subjects.
Sec. 743. Independent research regarding Gulf War syndrome.
Sec. 744. Comptroller General review of health care activities of Department of
Defense relating to Gulf War illnesses.
Sec. 745. Report regarding specialized treatment facility program.
Sec. 746. Study of means of ensuring uniformity in provision of medical and dental
care for members of reserve components.
Sec. 747. Sense 
of 
Congress 
regarding 
tax 
treatment 
of 
Armed 
Forces
Health Professions Scholarship and Financial Assistance program.
Subtitle A—Health Care Services
SEC. 701. PREVENTIVE HEALTH CARE SCREENING FOR COLON AND
PROSTATE CANCER.
(a) MEMBERS
AND FORMER MEMBERS.—(1) Section 1074d of
title 10, United States Code, is amended—
(A) in subsection (a)—
(i) by inserting ‘‘(1)’’ before ‘‘Female’’; and
(ii) by adding at the end the following new paragraph:
‘‘(2) Male members and former members of the uniformed serv-
ices entitled to medical care under section 1074 or 1074a of this
title shall also be entitled to preventive health care screening for
colon or prostate cancer at such intervals and using such screening
methods as the administering Secretaries consider appropriate.’’;
and
(B) in subsection (b), by adding at the end the following
new paragraph:
‘‘(8) Colon cancer screening, at the intervals and using
the screening methods prescribed under subsection (a)(2).’’.
(2)(A) The heading of such section is amended to read as
follows:
‘‘§ 1074d. Certain 
primary 
and 
preventive 
health 
care
services
(B) The item relating to such section in the table of sections
at the beginning of chapter 55 of such title is amended to read
as follows:
‘‘1074d. Certain primary and preventive health care services.’’.
(b) DEPENDENTS.—(1) Section 1077(a) of such title is amended
by adding at the end the following new paragraph:
‘‘(14) Preventive health care screening for colon or prostate
cancer, at the intervals and using the screening methods pre-
scribed under section 1074d(a)(2) of this title.’’.
(2) Section 1079(a)(2) of such title is amended—
(A) in the matter preceding subparagraph (A), by inserting
‘‘the schedule and method of colon and prostate cancer
screenings,’’ after ‘‘pap smears and mammograms,’’; and
(B) in subparagraph (B), by inserting ‘‘or colon and prostate
cancer screenings’’ after ‘‘pap smears and mammograms’’.
H. R. 3230—167
SEC. 702. IMPLEMENTATION 
OF 
REQUIREMENT 
FOR 
SELECTED
RESERVE DENTAL INSURANCE PLAN.
(a) IMPLEMENTATION BY CONTRACT.—Subsection (a) of section
1076b of title 10, United States Code, is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(a) AUTHORITY TO ESTABLISH
PLAN.—’’;
(2) by designating the third sentence as paragraph
(3); and
(3) by inserting after paragraph (1), as designated by para-
graph (1) of this subsection, the following new paragraph:
‘‘(2) The Secretary shall provide benefits under the plan through
one or more contracts awarded after full and open competition.’’.
(b) COLLECTION OF PREMIUMS OF MEMBERS NOT RECEIVING
BASIC PAY.—Subsection (b)(3) of such section is amended by adding
at the end the following: ‘‘In the case of a member who does
not receive basic pay, the Secretary of Defense shall establish
procedures for the collection of the member’s share of the premium
for coverage.’’.
(c) SCHEDULE
FOR IMPLEMENTATION.—Section 705(b) of the
National Defense Authorization Act for Fiscal Year 1996 (Public
Law 104–106; 110 Stat. 373; 10 U.S.C. 1076b note) is amended—
(1) in the first sentence, by striking out ‘‘October 1, 1996’’
and inserting in lieu thereof ‘‘October 1, 1997’’; and
(2) by striking out ‘‘fiscal year 1996’’ both places it appears
and inserting in lieu thereof ‘‘fiscal years 1996 and 1997’’.
SEC. 703. DENTAL INSURANCE PLAN FOR MILITARY RETIREES AND
UNREMARRIED SURVIVING SPOUSES AND CERTAIN OTHER
DEPENDENTS OF MILITARY RETIREES.
(a) ESTABLISHMENT OF DENTAL PLAN.—(1) Chapter 55 of title
10, United States Code, is amended by inserting after section 1076b
the following new section:
‘‘§ 1076c. Dental insurance plan: certain retirees and their
surviving spouses and other dependents
‘‘(a) REQUIREMENT FOR PLAN.—The Secretary of Defense shall
establish a dental insurance plan for military retirees, certain
unremarried surviving spouses, and dependents in accordance with
this section.
‘‘(b) PERSONS ELIGIBLE FOR PLAN.—The following persons are
eligible to enroll in the dental insurance plan established under
subsection (a):
‘‘(1) Members of the Armed Forces who are entitled to
retired pay.
‘‘(2) Members of the Retired Reserve who would be entitled
to retired pay under chapter 1223 of this title but for being
under 60 years of age.
‘‘(3) Eligible dependents of a member described in para-
graph (1) or (2) who are covered by the enrollment of the
member in the plan.
‘‘(4) The unremarried surviving spouse and eligible child
dependents of a deceased member—
‘‘(A) who dies while in a status described in paragraph
(1) or (2); or
‘‘(B) who is described in section 1448(d)(1) of this title.
H. R. 3230—168
‘‘(c) PREMIUMS.—(1) A member enrolled in the dental insurance
plan established under subsection (a) shall pay the premiums
charged for the insurance coverage.
‘‘(2) The amount of the premiums payable by a member entitled
to retired pay shall be deducted and withheld from the retired
pay and shall be disbursed to pay the premiums. The regulations
prescribed under subsection (h) shall specify the procedures for
payment of the premiums by other enrolled members and by
enrolled surviving spouses.
‘‘(d) BENEFITS AVAILABLE UNDER THE PLAN.—The dental insur-
ance plan established under subsection (a) shall provide benefits
for basic dental care and treatment, including diagnostic services,
preventative 
services, 
basic 
restorative 
services 
(including
endodontics), surgical services, and emergency services.
‘‘(e) COVERAGE.—(1) The Secretary shall prescribe a minimum
required period for enrollment by a member or surviving spouse
in the dental insurance plan established under subsection (a).
‘‘(2) The dental insurance plan shall provide for voluntary
enrollment of participants and shall authorize a member or eligible
unremarried surviving spouse to enroll for self only or for self
and eligible dependents.
‘‘(f) TERMINATION OF ENROLLMENT.—The Secretary shall termi-
nate the enrollment of any enrollee, and any eligible dependents
of the enrollee covered by the enrollment, in the dental insurance
plan established under subsection (a) upon the occurrence of the
following:
‘‘(1) In the case of an enrollment under subsection (b)(1),
termination of the member’s entitlement to retired pay.
‘‘(2) In the case of an enrollment under subsection (b)(2),
termination of the member’s status as a member of the Retired
Reserve.
‘‘(3) In the case of an enrollment under subsection (b)(4),
remarriage of the surviving spouse.
‘‘(g) CONTINUATION OF DEPENDENTS’ ENROLLMENT UPON DEATH
OF ENROLLEE.—Coverage of a dependent in the dental insurance
plan established under subsection (a) under an enrollment of a
member or a surviving spouse who dies during the period of enroll-
ment shall continue until the end of that period and may be renewed
by (or for) the dependent, so long as the premium paid is sufficient
to cover continuation of the dependent’s enrollment. The Secretary
may terminate coverage of the dependent when the premiums paid
are no longer sufficient to cover continuation of the enrollment.
The Secretary shall prescribe in regulations under subsection (h)
the parties responsible for paying the remaining premiums due
on the enrollment and the manner for collection of the premiums.
‘‘(h) REGULATIONS.—The dental insurance plan established
under subsection (a) shall be administered under regulations pre-
scribed by the Secretary of Defense, in consultation with the Sec-
retary of Transportation.
‘‘(i) DEFINITIONS.—In this section:
‘‘(1) The term ‘eligible dependent’ means a dependent
described in subparagraph (A), (D), or (I) of section 1072(2)
of this title.
‘‘(2) The term ‘eligible child dependent’ means a dependent
described in subparagraph (D) or (I) of section 1072(2) of this
title.
‘‘(3) The term ‘retired pay’ includes retainer pay.’’.
H. R. 3230—169
(2) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1076b
the following new item:
‘‘1076c. Dental insurance plan: certain retirees and their surviving spouses and
other dependents.’’.
(b) IMPLEMENTATION.—Beginning not later than October 1,
1997, the Secretary of Defense shall—
(1) offer members of the Armed Forces and other persons
described in subsection (b) of section 1076c of title 10, United
States Code (as added by subsection (a)(1) of this section),
the opportunity to enroll in the dental insurance plan required
under that section; and
(2) begin to provide benefits under the plan.
SEC. 704. PLAN FOR HEALTH CARE COVERAGE FOR CHILDREN WITH
MEDICAL CONDITIONS CAUSED BY PARENTAL EXPOSURE
TO CHEMICAL MUNITIONS WHILE SERVING AS MEMBERS
OF THE ARMED FORCES.
(a) PLAN REQUIRED.—The Secretary of Defense, in coordination
with the Secretary of Veterans Affairs, shall develop a plan for
ensuring the provision of medical care to any natural child of
a member of the Armed Forces (including former members and
members discharged or otherwise separated from active duty) who
has a congenital defect or catastrophic illness, proven to a reason-
able degree of scientific certainty on the basis of scientific research
to have resulted from exposure of the member to a chemical warfare
agent or other hazardous material to which the member was
exposed during active military service.
(b) SUBMISSION TO CONGRESS.—Not later than 180 days after
the date of the enactment of this Act, the Secretary of Defense
shall submit the plan developed under subsection (a) to Congress.
(c) DEFINITIONS OF CONGENITAL DEFECT AND CATASTROPHIC
ILLNESS.—The Secretary of Defense shall prescribe in regulations
a definition of the terms ‘‘congenital defect’’ and ‘‘catastrophic ill-
ness’’ for the purposes of this section.
Subtitle B—TRICARE Program
SEC. 711. CHAMPUS 
PAYMENT 
LIMITS 
FOR 
TRICARE 
PRIME
ENROLLEES.
Section 1079(h)(4) of title 10, United States Code, is amended
in the second sentence by striking out ‘‘emergency’’.
SEC. 712. IMPROVED INFORMATION EXCHANGE BETWEEN MILITARY
TREATMENT 
FACILITIES 
AND 
TRICARE 
PROGRAM
CONTRACTORS.
(a) UNIFORM INTERFACES.—The Secretary of Defense shall
ensure that the automated medical information system being devel-
oped by the Department of Defense (known as the Composite Health
Care System) provides for uniform interfaces between information
systems of military treatment facilities and private contractors
under managed care programs of the TRICARE program. The uni-
form interface shall provide for a full electronic two-way exchange
of health care information between the military treatment facilities
and contractor information systems, including enrollment informa-
tion, information regarding eligibility determinations, provider net-
H. R. 3230—170
work information, appointment information, and information
regarding the existence of third-party payers.
(b) AMENDMENT OF EXISTING CONTRACTS.—To assure a single
consistent source of information throughout the health care delivery
system of the uniformed services, the Secretary of Defense shall
amend each TRICARE program contract, with the consent of the
TRICARE program contractor and notwithstanding any require-
ment for competition, to require the contractor—
(1) to use software furnished under the Composite Health
Care System to record military treatment facility provider
appointments; and
(2) to record TRICARE program enrollment through direct
use of the Composite Health Care System software or through
the uniform two-way interface between the contractor and mili-
tary treatment facilities systems, where applicable.
(c) DEFINITION OF TRICARE PROGRAM.—For purposes of this
section, the term ‘‘TRICARE program’’ means the managed health
care program that is established by the Secretary of Defense under
the authority of chapter 55 of title 10, United States Code, prin-
cipally section 1097 of such title, and includes the competitive
selection of contractors to financially underwrite the delivery of
health care services under the Civilian Health and Medical Program
of the Uniformed Services.
SEC. 713. PLANS 
FOR 
MEDICARE 
SUBVENTION 
DEMONSTRATION
PROGRAMS.
(a) PROGRAM FOR ENROLLMENT IN TRICARE MANAGED CARE
OPTION.—Not later than September 6, 1996, the Secretary of
Defense and the Secretary of Health and Human Services shall
jointly submit to Congress and the President a report containing
a specific plan (including the recommendations of the Secretaries
required under subsection (b)) regarding the establishment of a
demonstration program under which—
(1) covered beneficiaries under chapter 55 of title 10, United
States Code, who are also entitled to benefits under part A
of the medicare program are permitted to enroll in the managed
care option of the TRICARE program; and
(2) the Secretary of Health and Human Services reimburses
the Secretary of Defense from the Medicare program on a
capitated basis for the costs of providing health care services
to military retirees who enroll.
(b) SPECIFIC ELEMENTS OF REPORT.—The report shall include
the following:
(1) The number of covered beneficiaries described in sub-
section (a) who are projected to participate in the demonstration
program and the minimum number of such participants nec-
essary to conduct the demonstration program effectively.
(2) A plan for notifying such covered beneficiaries of their
eligibility for enrollment in the demonstration program and
for any other matters connected with enrollment.
(3) A recommendation for the duration of the demonstration
program.
(4) A recommendation for the geographic regions in which
the demonstration program should be conducted.
(5) The appropriate level of capitated reimbursement, and
a schedule for such reimbursement, from the Medicare program
H. R. 3230—171
to the Department of Defense for health care services provided
enrollees in the demonstration program.
(6) An estimate of the amounts that, in the absence of
the demonstration program, would be required to be allocated
by the Department of Defense for the provision of health care
services to covered beneficiaries described in subsection (a)
who reside in the regions in which the demonstration program
is proposed to be conducted.
(7) An assessment of revisions to the allocation estimated
under paragraph (6) that would result from the conduct of
the demonstration program in such regions.
(8) An estimate of the cost to the Department of Defense
and to the Medicare program of providing health care services
to covered beneficiaries described in subsection (a) who enroll
in the demonstration program.
(9) An assessment of the likelihood of cost shifting among
the Department of Defense and the Medicare program under
the demonstration program.
(10) A proposal for mechanisms for reconciling and
reimbursing any improper payments among the Department
of Defense and the Medicare program under the demonstration
program.
(11) A methodology for evaluating the demonstration pro-
gram, including cost analyses.
(12) As assessment of the extent to which the TRICARE
program is prepared to meet requirements of the Medicare
program for purposes of the demonstration program and the
provisions of law or regulation that would have to be waived
in order to facilitate the carrying out of the demonstration
program.
(13) An assessment of the impact of the demonstration
program on military readiness.
(14) Contingency plans for the provision of health care
services under the demonstration program in the event of the
mobilization of health care personnel.
(15) A recommendation of the reports that the Department
of Defense and the Department of Health and Human Services
should submit to Congress describing the conduct of the dem-
onstration program.
(c) PROGRAM FOR ENROLLMENT IN TRICARE FEE-FOR-SERVICE
OPTION.—Not later than January 3, 1997, the Secretary of Defense
and the Secretary of Health and Human Services shall jointly
submit to Congress and the President a report on the feasibility
and advisability of expanding the demonstration program referred
to in subsection (a) so as to provide the Department of Defense
with reimbursement from the Medicare program on a fee-for-service
basis for health care services provided covered beneficiaries
described in subsection (a) who enroll in the demonstration program.
The report shall include a proposal for the expansion of the program
if the expansion is determined to be advisable.
Subtitle C—Uniformed Services Treatment
Facilities
SEC. 721. DEFINITIONS.
In this subtitle:
H. R. 3230—172
(1) The term ‘‘administering Secretaries’’ means the Sec-
retary of Defense, the Secretary of Transportation, and the
Secretary of Health and Human Services.
(2) The term ‘‘agreement’’ means the agreement required
under section 722(b) between the Secretary of Defense and
a designated provider.
(3) The term ‘‘capitation payment’’ means an actuarially
sound payment for a defined set of health care services that
is established on a per enrollee per month basis.
(4) The term ‘‘covered beneficiary’’ means a beneficiary
under chapter 55 of title 10, United States Code, other than
a beneficiary under section 1074(a) of such title.
(5) The term ‘‘designated provider’’ means a public or non-
profit private entity that was a transferee of a Public Health
Service hospital or other station under section 987 of the Omni-
bus Budget Reconciliation Act of 1981 (Public Law 97–35; 42
U.S.C. 248b) and that, before the date of the enactment of
this Act, was deemed to be a facility of the uniformed services
for the purposes of chapter 55 of title 10, United States Code.
The term includes any legal successor in interest of the trans-
feree.
(6) The term ‘‘enrollee’’ means a covered beneficiary who
enrolls with a designated provider.
(7) The term ‘‘health care services’’ means the health care
services provided under the health plan known as the
‘‘TRICARE PRIME’’ option under the TRICARE program.
(8) The term ‘‘Secretary’’ means the Secretary of Defense.
(9) The term ‘‘TRICARE program’’ means the managed
health care program that is established by the Secretary of
Defense under the authority of chapter 55 of title 10, United
States Code, principally section 1097 of such title, and includes
the competitive selection of contractors to financially underwrite
the delivery of health care services under the Civilian Health
and Medical Program of the Uniformed Services.
SEC. 722. INCLUSION OF DESIGNATED PROVIDERS IN UNIFORMED
SERVICES HEALTH CARE DELIVERY SYSTEM.
(a) INCLUSION IN SYSTEM.—The health care delivery system
of the uniformed services shall include the designated providers.
(b) 
AGREEMENTS
TO
PROVIDE
MANAGED
HEALTH
CARE
SERVICES.—(1) After consultation with the other administering Sec-
retaries, the Secretary of Defense shall negotiate and enter into
an agreement with each designated provider under which the des-
ignated provider will provide health care services in or through
managed care plans to covered beneficiaries who enroll with the
designated provider.
(2) The agreement shall be entered into on a sole source basis.
The Federal Acquisition Regulation, except for those requirements
regarding competition, issued pursuant to section 25(c) of the Office
of Federal Procurement Policy Act (41 U.S.C. 421(c)) shall apply
to the agreements as acquisitions of commercial items.
(3) The implementation of an agreement is subject to availabil-
ity of funds for such purpose.
(c) EFFECTIVE DATE OF AGREEMENTS.—(1) Unless an earlier
effective date is agreed upon by the Secretary and the designated
provider, the agreement shall take effect upon the later of the
following:
H. R. 3230—173
(A) The date on which a managed care support contract
under the TRICARE program is implemented in the service
area of the designated provider.
(B) October 1, 1997.
(2) Notwithstanding paragraph (1), the designated provider
whose service area includes Seattle, Washington, shall implement
its agreement as soon as the agreement permits.
(d) TEMPORARY CONTINUATION
OF
EXISTING
PARTICIPATION
AGREEMENTS.—The Secretary shall extend the participation agree-
ment of a designated provider in effect immediately before the
date of the enactment of this Act under section 718(c) of the
National Defense Authorization Act for Fiscal Year 1991 (Public
Law 101–510; 42 U.S.C. 248c) until the agreement required by
this section takes effect under subsection (c).
(e) SERVICE AREA.—The Secretary may not reduce the size
of the service area of a designated provider below the size of
the service area in effect as of September 30, 1996.
(f) COMPLIANCE
WITH
ADMINISTRATIVE
REQUIREMENTS.—(1)
Unless otherwise agreed upon by the Secretary and a designated
provider, the designated provider shall comply with necessary and
appropriate administrative requirements established by the Sec-
retary for other providers of health care services and requirements
established by the Secretary of Health and Human Services for
risk-sharing contractors under section 1876 of the Social Security
Act (42 U.S.C. 1395mm). The Secretary and the designated provider
shall determine and apply only such administrative requirements
as are minimally necessary and appropriate. A designated provider
shall not be required to comply with a law or regulation of a
State government requiring licensure as a health insurer or health
maintenance organization.
(2) A designated provider may not contract out more than
five percent of its primary care enrollment without the approval
of the Secretary, except in the case of primary care contracts
between a designated provider and a primary care contractor in
force on the date of the enactment of this Act.
SEC. 723. PROVISION 
OF 
UNIFORM 
BENEFIT 
BY 
DESIGNATED
PROVIDERS.
(a) UNIFORM BENEFIT REQUIRED.—A designated provider shall
offer to enrollees the health benefit option prescribed and imple-
mented by the Secretary under section 731 of the National Defense
Authorization Act for Fiscal Year 1994 (Public Law 103–160; 10
U.S.C. 1073 note), including accompanying cost-sharing require-
ments.
(b) TIME FOR IMPLEMENTATION OF BENEFIT.—A designated pro-
vider shall offer the health benefit option described in subsection
(a) to enrollees upon the later of the following:
(1) The date on which health care services within the
health care delivery system of the uniformed services are ren-
dered through the TRICARE program in the region in which
the designated provider operates.
(2) October 1, 1997.
(c) ADJUSTMENTS.—The Secretary may establish a later date
under subsection (b)(2) or prescribe reduced cost-sharing require-
ments for enrollees.
H. R. 3230—174
SEC. 724. ENROLLMENT OF COVERED BENEFICIARIES.
(a) FISCAL YEAR 1997 LIMITATION.—(1) During fiscal year 1997,
the number of covered beneficiaries who are enrolled in managed
care plans offered by designated providers may not exceed the
number of such enrollees as of October 1, 1995.
(2) The Secretary may waive the limitation under paragraph
(1) if the Secretary determines that additional enrollment authority
for a designated provider is required to accommodate covered bene-
ficiaries who are dependents of members of the uniformed services
entitled to health care under section 1074(a) of title 10, United
States Code.
(b) PERMANENT LIMITATION.—For each fiscal year beginning
after September 30, 1997, the number of enrollees in managed
care plans offered by designated providers may not exceed 110
percent of the number of such enrollees as of the first day of
the immediately preceding fiscal year. The Secretary may waive
this limitation as provided in subsection (a)(2).
(c) RETENTION OF CURRENT ENROLLEES.—An enrollee in the
managed care plan of a designated provider as of September 30,
1997, or such earlier date as the designated provider and the
Secretary may agree upon, shall continue receiving services from
the designated provider pursuant to the agreement entered into
under section 722 unless the enrollee disenrolls from the designated
provider. Except as provided in subsection (e), the administering
Secretaries may not disenroll such an enrollee unless the
disenrollment is agreed to by the Secretary and the designated
provider.
(d) ADDITIONAL ENROLLMENT AUTHORITY.—Other covered bene-
ficiaries may also receive health care services from a designated
provider, except that the designated provider may market such
services to, and enroll, only those covered beneficiaries who—
(1) do not have other primary health insurance coverage
(other than Medicare coverage) covering basic primary care
and inpatient and outpatient services; or
(2) are enrolled in the direct care system under the
TRICARE program, regardless of whether the covered bene-
ficiaries were users of the health care delivery system of the
uniformed services in prior years.
(e) SPECIAL RULE
FOR MEDICARE-ELIGIBLE BENEFICIARIES.—
If a covered beneficiary who desires to enroll in the managed
care program of a designated provider is also entitled to hospital
insurance benefits under part A of title XVIII of the Social Security
Act (42 U.S.C. 1395c et seq.), the covered beneficiary shall elect
whether to receive health care services as an enrollee or under
part A of title XVIII of the Social Security Act. The Secretary
may disenroll an enrollee who subsequently violates the election
made under this subsection and receives benefits under part A
of title XVIII of the Social Security Act.
(f) 
INFORMATION
REGARDING
ELIGIBLE
COVERED
BENE-
FICIARIES.—The Secretary shall provide, in a timely manner, a
designated provider with an accurate list of covered beneficiaries
within the marketing area of the designated provider to whom
the designated provider may offer enrollment.
SEC. 725. APPLICATION OF CHAMPUS PAYMENT RULES.
(a) APPLICATION OF PAYMENT RULES.—Subject to subsection
(b), the Secretary shall require a private facility or health care
H. R. 3230—175
provider that is a health care provider under the Civilian Health
and Medical Program of the Uniformed Services to apply the pay-
ment rules described in section 1074(c) of title 10, United States
Code, in imposing charges for health care that the private facility
or provider provides to enrollees of a designated provider.
(b) AUTHORIZED ADJUSTMENTS.—The payment rules imposed
under subsection (a) shall be subject to such modifications as the
Secretary considers appropriate. The Secretary may authorize a
lower rate than the maximum rate that would otherwise apply
under subsection (a) if the lower rate is agreed to by the designated
provider and the private facility or health care provider.
(c) REGULATIONS.—The Secretary shall prescribe regulations
to implement this section after consultation with the other admin-
istering Secretaries.
(d) CONFORMING AMENDMENT.—Section 1074 of title 10, United
States Code, is amended by striking out subsection (d).
SEC. 726. PAYMENTS FOR SERVICES.
(a) FORM OF PAYMENT.—Unless otherwise agreed to by the
Secretary and a designated provider, the form of payment for health
care services provided by a designated provider shall be on a full
risk capitation payment basis. The capitation payments shall be
negotiated and agreed upon by the Secretary and the designated
provider. In addition to such other factors as the parties may
agree to apply, the capitation payments shall be based on the
utilization experience of enrollees and competitive market rates
for equivalent health care services for a comparable population
to such enrollees in the area in which the designated provider
is located.
(b) LIMITATION
ON TOTAL PAYMENTS.—Total capitation pay-
ments for health care services to a designated provider shall not
exceed an amount equal to the cost that would have been incurred
by the Government if the enrollees had received such health care
services through a military treatment facility, the TRICARE pro-
gram, or the Medicare program, as the case may be.
(c) ESTABLISHMENT OF PAYMENT RATES ON ANNUAL BASIS.—
The Secretary and a designated provider shall establish capitation
payments on an annual basis, subject to periodic review for actuarial
soundness and to adjustment for any adverse or favorable selection
reasonably anticipated to result from the design of the program
under this subtitle.
(d) ALTERNATIVE BASIS
FOR CALCULATING PAYMENTS.—After
September 30, 1999, the Secretary and a designated provider may
mutually agree upon a new basis for calculating capitation pay-
ments.
SEC. 727. REPEAL OF SUPERSEDED AUTHORITIES.
(a) REPEALS.—The following provisions of law are repealed:
(1) Section 911 of the Military Construction Authorization
Act, 1982 (42 U.S.C. 248c).
(2) Section 1252 of the Department of Defense Authoriza-
tion Act, 1984 (42 U.S.C. 248d).
(3) Section 718(c) of the National Defense Authorization
Act for Fiscal Year 1991 (Public Law 101–510; 42 U.S.C. 248c
note).
(4) Section 726 of the National Defense Authorization Act
for Fiscal Year 1996 (Public Law 104–106; 42 U.S.C. 248c
note).
H. R. 3230—176
(b) EFFECTIVE DATE.—The amendments made by paragraphs
(1), (2), and (3) of subsection (a) shall take effect on October 1,
1997.
Subtitle D—Other Changes to Existing
Laws Regarding Health Care Management
SEC. 731. AUTHORITY TO WAIVE CHAMPUS EXCLUSION REGARDING
NONMEDICALLY NECESSARY TREATMENT IN CONNECTION
WITH CERTAIN CLINICAL TRIALS.
(a) WAIVER AUTHORITY.—Paragraph (13) of section 1079(a) of
title 10, United States Code, is amended—
(1) by striking out ‘‘any service’’ and inserting in lieu
thereof ‘‘Any service’’;
(2) by striking out the semicolon at the end and inserting
in lieu thereof a period; and
(3) by adding at the end the following: ‘‘Pursuant to an
agreement with the Secretary of Health and Human Services
and under such regulations as the Secretary of Defense may
prescribe, the Secretary of Defense may waive the operation
of this paragraph in connection with clinical trials sponsored
or approved by the National Institutes of Health if the Secretary
of Defense determines that such a waiver will promote access
by covered beneficiaries to promising new treatments and
contribute to the development of such treatments.’’.
(b) CLERICAL AMENDMENTS.—Such section is further amended—
(1) in the matter preceding paragraph (1), by striking out
‘‘except that—’’ and inserting in lieu thereof ‘‘except as follows:’’;
(2) by capitalizing the first letter of the first word of each
of paragraphs (1) through (17);
(3) by striking out the semicolon at the end of each of
paragraphs (1) through (12) and paragraphs (14) and (15) and
inserting in lieu thereof a period; and
(4) in paragraph (16), by striking out ‘‘; and’’ and inserting
in lieu thereof a period.
SEC. 732. EXCEPTION 
TO 
MAXIMUM 
ALLOWABLE 
PAYMENTS 
TO
INDIVIDUAL HEALTH-CARE PROVIDERS UNDER CHAMPUS.
Section 1079(h) of title 10, United States Code, is amended—
(1) by redesignating paragraph (5) as paragraph (6); and
(2) by inserting after paragraph (4) the following new para-
graph:
‘‘(5) In addition to the authority provided under paragraph
(4), the Secretary may authorize the commander of a facility of
the uniformed services, the lead agent (if other than the com-
mander), and the health care contractor to modify the payment
limitations under paragraph (1) for certain health care providers
when necessary to ensure both the availability of certain services
for covered beneficiaries and lower costs than would otherwise
be incurred to provide the services.’’.
SEC. 733. CODIFICATION 
OF 
ANNUAL 
AUTHORITY 
TO 
CREDIT
CHAMPUS REFUNDS TO CURRENT YEAR APPROPRIATION.
(a) CREDITS TO CHAMPUS ACCOUNTS.—(1) Chapter 55 of title
10, United States Code, is amended by inserting after section 1079
the following new section:
H. R. 3230—177
‘‘§ 1079a. CHAMPUS: 
treatment 
of 
refunds 
and 
other
amounts collected
‘‘All refunds and other amounts collected in the administration
of the Civilian Health and Medical Program of the Uniformed
Services shall be credited to the appropriation available for that
program for the fiscal year in which the refund or amount is
collected.’’.
(2) The table of sections at the beginning of such chapter
is amended by inserting after the item relating to section 1079
the following new item:
‘‘1079a. CHAMPUS: treatment of refunds and other amounts collected.’’.
(b) CONFORMING REPEAL.—Section 8094 of the Department of
Defense Appropriations Act, 1996 (Public Law 104–61; 109 Stat.
671), is repealed.
SEC. 734. EXCEPTIONS TO REQUIREMENTS REGARDING OBTAINING
NONAVAILABILITY-OF-HEALTH-CARE STATEMENTS.
(a) REFERENCE
TO INPATIENT MEDICAL CARE.—(1) Section
1080(a) of title 10, United States Code, is amended by inserting
‘‘inpatient’’ before ‘‘medical care’’ in the first sentence.
(2) Section 1086(e) of such title is amended in the first sentence
by striking out ‘‘benefits’’ and inserting in lieu thereof ‘‘inpatient
medical care’’.
(b) WAIVERS AND EXCEPTIONS TO REQUIREMENTS.—(1) Section
1080 of such title is amended by adding at the end the following
new subsection:
‘‘(c) WAIVERS AND EXCEPTIONS TO REQUIREMENTS.—(1) A cov-
ered beneficiary enrolled in a managed care plan offered pursuant
to any contract or agreement under this chapter for the provision
of health care services shall not be required to obtain a nonavailabil-
ity-of-health-care statement as a condition for the receipt of health
care.
‘‘(2) The Secretary of Defense may waive the requirement to
obtain 
nonavailability-of-health-care 
statements 
following 
an
evaluation of the effectiveness of such statements in optimizing
the use of facilities of the uniformed services.’’.
(2) Section 1086(e) of such title is amended in the last sentence
by striking out ‘‘section 1080(b)’’ and inserting in lieu thereof ‘‘sub-
sections (b) and (c) of section 1080’’.
(c) CONFORMING AMENDMENTS.—Section 1080(b) of such title
is amended—
(1) by striking out ‘‘NONAVAILABILITY
OF HEALTH CARE
STATEMENTS’’ and inserting in lieu thereof ‘‘NONAVAILABILITY-
OF-HEALTH-CARE STATEMENTS’’; and
(2) by striking out ‘‘nonavailability of health care state-
ment’’ and inserting in lieu thereof ‘‘nonavailability-of-health-
care statement’’.
SEC. 735. ENHANCEMENT 
OF 
THIRD-PARTY 
COLLECTION 
AND
SECONDARY PAYER AUTHORITIES UNDER CHAMPUS.
(a) RETENTION AND USE BY TREATMENT FACILITIES OF AMOUNTS
COLLECTED.—Subsection (g)(1) of section 1095 of title 10, United
States Code, is amended by inserting ‘‘or through’’ after ‘‘provided
at’’.
(b) EXPANSION OF DEFINITION OF THIRD-PARTY PAYER.—Sub-
section (h) of such section is amended—
H. R. 3230—178
(1) in the first sentence of paragraph (1), by inserting
‘‘and a workers’ compensation program or plan’’ before the
period; and
(2) in paragraph (2)—
(A) by striking out ‘‘organization and’’ and inserting
in lieu thereof a ‘‘organization,’’; and
(B) by inserting before the period at the end the follow-
ing: ‘‘, and a personal injury protection plan or medical
payments benefit plan for personal injuries resulting from
the operation of a motor vehicle’’.
(c) APPLICABILITY OF SECONDARY PAYER REQUIREMENT.—Sec-
tion 1079(j)(1) of such title is amended by inserting after ‘‘or health
plan’’ the following: ‘‘, including any plan offered by a third-party
payer (as defined in section 1095(h)(1) of this title),’’.
Subtitle E—Other Matters
SEC. 741. ALTERNATIVES TO ACTIVE DUTY SERVICE OBLIGATION
UNDER ARMED FORCES HEALTH PROFESSIONS SCHOLAR-
SHIP 
AND 
FINANCIAL 
ASSISTANCE 
PROGRAM 
AND
UNIFORMED SERVICES UNIVERSITY OF THE HEALTH
SCIENCES.
(a) ARMED FORCES HEALTH PROFESSIONS SCHOLARSHIP
AND
FINANCIAL ASSISTANCE PROGRAM.—Subsection (e) of section 2123
of title 10, United States Code, is amended to read as follows:
‘‘(e)(1) A member of the program who is relieved of the member’s
active duty obligation under this subchapter before the completion
of that active duty obligation may be given, with or without the
consent of the member, any of the following alternative obligations,
as determined by the Secretary of the military department con-
cerned:
‘‘(A) A service obligation in another armed force for a
period of time not less than the member’s remaining active
duty service obligation.
‘‘(B) A service obligation in a component of the Selected
Reserve for a period not less than twice as long as the member’s
remaining active duty service obligation.
‘‘(C) Repayment to the Secretary of Defense of a percentage
of the total cost incurred by the Secretary under this subchapter
on behalf of the member equal to the percentage of the mem-
ber’s total active duty service obligation being relieved, plus
interest.
‘‘(2) In addition to the alternative obligations specified in para-
graph (1), if the member is relieved of an active duty obligation
by reason of the separation of the member because of a physical
disability, the Secretary of the military department concerned may
give the member a service obligation as a civilian employee
employed as a health care professional in a facility of the uniformed
services for a period of time equal to the member’s remaining
active duty service obligation.
‘‘(3) The Secretary of Defense shall prescribe regulations
describing the manner in which an alternative obligation may be
given under this subsection.’’.
(b) 
UNIFORMED
SERVICES
UNIVERSITY
OF
THE
HEALTH
SCIENCES.—Section 2114 of title 10, United States Code is amended
by adding at the end the following new subsection:
H. R. 3230—179
‘‘(h) A graduate of the University who is relieved of the grad-
uate’s active-duty service obligation under subsection (b) before
the completion of that active-duty service obligation may be given,
with or without the consent of the graduate, an alternative obliga-
tion in the same manner as provided in subparagraphs (A) and
(B) of paragraph (1) of section 2123(e)(1) of this title or paragraph
(2) of such section for members of the Armed Forces Health Profes-
sions Scholarship and Financial Assistance program.’’.
(c) APPLICATION OF AMENDMENTS.—The amendments made by
this section shall apply with respect to individuals who first become
members of the Armed Forces Health Professions Scholarship and
Financial Assistance program or students of the Uniformed Services
University of the Health Sciences on or after October 1, 1996.
(d) TRANSITION PROVISION.—(1) In the case of any member
of the Armed Forces Health Professions Scholarship and Financial
Assistance program who, as of October 1, 1996, is serving an active
duty obligation under the program or is incurring an active duty
obligation as a participant in the program, and who is subsequently
relieved of the active duty obligation before the completion of the
obligation, the alternative obligations authorized by the amendment
made by subsection (a) may be used by the Secretary of the military
department concerned with the agreement of the member.
(2) In the case of any person who, as of October 1, 1996,
is serving an active-duty service obligation as a graduate of the
Uniformed Services University of the Health Sciences or is incurring
an active-duty service obligation as a student of the University,
and who is subsequently relieved of the active-duty service obliga-
tion before the completion of the obligation, the alternative obliga-
tions authorized by the amendment made by subsection (b) may
be implemented by the Secretary of Defense with the agreement
of the person.
(e) REPORT ON UTILIZATION OF GRADUATES OF UNIVERSITY.—
Not later than 120 days after the date of the enactment of this
Act, the Secretary of Defense shall submit to Congress a report
on the utilization by the Department of Defense of graduates of
the Uniformed Services University of the Health Sciences. The
report shall include a discussion of means of ensuring that grad-
uates of the University have received training in medical specialties
for which the Department has particular need.
SEC. 742. EXTERNAL PEER REVIEW FOR DEFENSE HEALTH PROGRAM
EXTRAMURAL MEDICAL RESEARCH INVOLVING HUMAN
SUBJECTS.
(a) ESTABLISHMENT
OF EXTERNAL PEER REVIEW PROCESS.—
The Secretary of Defense shall establish a peer review process
that will use persons who are not officers or employees of the
Government to review the research protocols of medical research
projects.
(b) PEER REVIEW REQUIREMENTS.—Funds of the Department
of Defense may not be obligated or expended for any medical
research project unless the research protocol for the project has
been approved by the external peer review process established
under subsection (a).
(c) MEDICAL RESEARCH PROJECT DEFINED.—For purposes of
this section, the term ‘‘medical research project’’ means a research
project that—
(1) involves the participation of human subjects;
H. R. 3230—180
(2) is conducted solely by a non-Federal entity; and
(3) is funded through the Defense Health Program account.
(d) EFFECTIVE DATE.—The peer review requirements of sub-
section (b) shall take effect on October 1, 1996, and, except as
provided in subsection (e), shall apply to all medical research
projects proposed funded on or after that date, including medical
research projects funded pursuant to any requirement of law en-
acted before, on, or after that date.
(e) EXCEPTIONS.—Only the following medical research projects
shall be exempt from the peer review requirements of sub-
section (b):
(1) A medical research project that the Secretary deter-
mines has been substantially completed by October 1, 1996.
(2) A medical research project funded pursuant to any
provision of law enacted on or after that date if the provision
of law specifically refers to this section and specifically states
that the peer review requirements do not apply.
SEC. 743. INDEPENDENT 
RESEARCH 
REGARDING 
GULF 
WAR
SYNDROME.
(a) DEFINITIONS.—For purposes of this section:
(1) The term ‘‘Gulf War service’’ means service on active
duty as a member of the Armed Forces in the Southwest
Asia theater of operations during the Persian Gulf War.
(2) The term ‘‘Gulf War syndrome’’ means the complex
of illnesses and symptoms commonly known as Gulf War syn-
drome.
(3) The term ‘‘Persian Gulf War’’ has the meaning given
that term in section 101(33) of title 38, United States Code.
(b) RESEARCH.—The Secretary of Defense shall provide, by con-
tract, grant, or other transaction, for scientific research to be carried
out by entities independent of the Federal Government on possible
causal relationships between Gulf War syndrome and—
(1) the possible exposures of members of the Armed Forces
to chemical warfare agents or other hazardous materials during
Gulf War service; and
(2) the use by the Department of Defense during the Per-
sian Gulf War of combinations of various inoculations and
investigational new drugs.
(c) PROCEDURES FOR AWARDING GRANTS.—The Secretary shall
prescribe the procedures to be used to make research awards under
subsection (b). The procedures shall—
(1) include a comprehensive, independent peer-review
process for the evaluation of proposals for scientific research
that are submitted to the Department of Defense; and
(2) provide for the final selection of proposals for award
to be based on the scientific merit and program relevance
of the proposed research.
(d) AVAILABILITY OF FUNDS.—Of the amount authorized to be
appropriated under section 301(21) for defense medical programs,
$10,000,000 is available for research under subsection (b).
SEC. 744. COMPTROLLER GENERAL REVIEW OF HEALTH CARE ACTIVI-
TIES OF DEPARTMENT OF DEFENSE RELATING TO GULF
WAR ILLNESSES.
(a) MEDICAL RESEARCH AND CLINICAL CARE PROGRAMS.—The
Comptroller General shall analyze the effectiveness of the medical
research programs and clinical care programs of the Department
H. R. 3230—181
of Defense that relate to illnesses that might have been contracted
by members of the Armed Forces as a result of service in the
Southwest Asia theater of operations during the Persian Gulf War.
(b) POLICIES REGARDING INVESTIGATIONAL NEW DRUGS.—The
Comptroller General shall analyze the scope and effectiveness of
the policies of the Department of Defense with respect to—
(1) the use of investigational new drugs during the Persian
Gulf War to treat members of the Armed Forces who served
in the Southwest Asia theater of operations; and
(2) the current use of investigational new drugs to treat
illnesses referred to in subsection (a).
(c) ADMINISTRATION OF MEDICAL RECORDS.—The Comptroller
General shall analyze the administration of medical records by
the military departments in order to assess the extent to which
such records accurately reflect the pre-deployment medical assess-
ments, immunization records, informed consent releases, complaints
during routine sick call, emergency room visits, visits with unit
medics during deployment, and other relevant medical information
relating to the members and former members referred to in
subsection (a) with respect to the illnesses referred to in that
subsection.
(d) REPORTS.—Not later than March 1, 1997, the Comptroller
General shall submit to Congress a separate report on each of
the analyses required under subsections (a), (b), and (c).
SEC. 745. REPORT REGARDING SPECIALIZED TREATMENT FACILITY
PROGRAM.
Not later than April 1, 1997, the Secretary of Defense shall
submit to Congress a report evaluating the impact on the military
health care system of limiting the service area of a facility des-
ignated as part of the specialized treatment facility program under
section 1105 of title 10, United States Code, to not more than
100 miles from the facility.
SEC. 746. TUDY OF MEANS OF ENSURING UNIFORMITY IN PROVISION
OF MEDICAL AND DENTAL CARE FOR MEMBERS OF
RESERVE COMPONENTS.
(a) STUDY.—(1) In consultation with the Secretary of Transpor-
tation, the Secretary of Defense shall conduct a study of means
of improving the provision of medical and dental care to members
of the reserve components referred to in paragraph (2) in order
to ensure uniformity and consistency in the provision of such care
to such members.
(2) The members of the reserve components referred to in
paragraph (1) are the following:
(A) Members on active duty, including active duty for train-
ing and annual training duty.
(B) Members on full-time National Guard duty.
(C) Members on inactive-duty training, regardless of
whether such members are in a pay or nonpay status.
(b) REPORT.—Not later than 180 days after the date of the
enactment of this Act, the Secretary of Defense shall submit to
Congress a report on the study conducted under subsection (a).
The report shall include such recommendations (including rec-
ommendations for legislation) as the Secretary considers appro-
priate.
H. R. 3230—182
SEC. 747. SENSE OF CONGRESS REGARDING TAX TREATMENT OF
ARMED FORCES HEALTH PROFESSIONS SCHOLARSHIP
AND FINANCIAL ASSISTANCE PROGRAM.
It is the sense of Congress that the Secretary of Defense should
work with the Secretary of the Treasury to interpret section 117
of the Internal Revenue Code of 1986 so that the limitation on
the amount of a qualified scholarship or qualified tuition reduction
excluded from gross income does not apply to any portion of a
scholarship or financial assistance provided by the Secretary of
Defense to a person enrolled in the Armed Forces Health Professions
Scholarship and Financial Assistance program under subchapter
I of chapter 105 of title 10, United States Code.
TITLE 
VIII—ACQUISITION 
POLICY,
ACQUISITION 
MANAGEMENT, 
AND
RELATED MATTERS
Subtitle A—Acquisition Management
Sec. 801. Procurement technical assistance programs.
Sec. 802. Extension of pilot mentor-protege program.
Sec. 803. Authority to waive certain requirements for defense acquisition pilot pro-
grams.
Sec. 804. Modification of authority to carry out certain prototype projects.
Sec. 805. Increase in threshold amounts for major systems.
Sec. 806. Revisions in information required to be included in selected acquisition
reports.
Sec. 807. Increase in simplified acquisition threshold for humanitarian or peace-
keeping operations.
Sec. 808. Expansion of audit reciprocity among Federal agencies to include post-
award audits.
Sec. 809. Excessive compensation of certain contractor personnel.
Sec. 810. Exception to prohibition on procurement of foreign goods.
Subtitle B—Other Matters
Sec. 821. Prohibition on release of contractor proposals under Freedom of Informa-
tion Act.
Sec. 822. Amendments relating to reports on procurement regulatory activity.
Sec. 823. Amendment of multiyear limitation on contracts for inspection, mainte-
nance, and repair.
Sec. 824. Streamlined notice requirements to contractors and employees regarding
termination or substantial reduction in contracts under major defense
programs.
Sec. 825. Repeal of notice requirements for substantially or seriously affected par-
ties in downsizing efforts.
Sec. 826. Study of effectiveness of defense mergers.
Sec. 827. Annual report relating to Buy American Act.
Sec. 828. Foreign environmental technology.
Sec. 829. Assessment of national defense technology and industrial base and
dependency of base on supplies available only from foreign countries.
Sec. 830. Expansion of report on implementation of automated information systems
to include additional matters regarding information resources manage-
ment.
Sec. 831. Year 2000 software conversion.
Sec. 832. Procurement from firms in industrial base for production of small arms.
Sec. 833. Cable television franchise agreements.
Subtitle A—Acquisition Management
SEC. 801. PROCUREMENT TECHNICAL ASSISTANCE PROGRAMS.
(a) FUNDING.—Of the amount authorized to be appropriated
under section 301(5), $12,000,000 shall be available for carrying
out the provisions of chapter 142 of title 10, United States Code.
H. R. 3230—183
(b) SPECIFIC PROGRAMS.—Of the amounts made available pursu-
ant to subsection (a), $600,000 shall be available for fiscal year
1997 for the purpose of carrying out programs sponsored by eligible
entities referred to in subparagraph (D) of section 2411(1) of title
10, United States Code, that provide procurement technical assist-
ance in distressed areas referred to in subparagraph (B) of section
2411(2) of such title. If there is an insufficient number of satisfac-
tory proposals for cooperative agreements in such distressed areas
to allow effective use of the funds made available in accordance
with this subsection in such areas, the funds shall be allocated
among the Defense Contract Administration Services regions in
accordance with section 2415 of such title.
SEC. 802. EXTENSION OF PILOT MENTOR-PROTEGE PROGRAM.
Section 831(j) of the National Defense Authorization Act for
Fiscal Year 1991 (10 U.S.C. 2302 note) is amended—
(1) in paragraph (1), by striking out ‘‘1995’’ and inserting
in lieu thereof ‘‘1998’’; and
(2) in paragraph (2), by striking out ‘‘1996’’ and inserting
in lieu thereof ‘‘1999’’.
SEC. 803. AUTHORITY 
TO 
WAIVE 
CERTAIN 
REQUIREMENTS 
FOR
DEFENSE ACQUISITION PILOT PROGRAMS.
(a) AUTHORITY.—The Secretary of Defense may waive sections
2399, 2403, 2432, and 2433 of title 10, United States Code, in
accordance with this section for any defense acquisition program
designated by the Secretary of Defense for participation in the
defense acquisition pilot program authorized by section 809 of the
National Defense Authorization Act for Fiscal Year 1991 (Public
Law 101–510; 10 U.S.C. 2430 note).
(b) OPERATIONAL TEST
AND EVALUATION.—The Secretary of
Defense may waive the requirements for operational test and
evaluation for such a defense acquisition program as set forth
in section 2399 of title 10, United States Code, if the Secretary—
(1) determines (without delegation) that such test would
be unreasonably expensive or impractical;
(2) develops a suitable alternate operational test program
for the system concerned;
(3) describes in the test and evaluation master plan, as
approved by the Director of Operational Test and Evaluation,
the method of evaluation that will be used to evaluate whether
the system will be effective and suitable for combat; and
(4) submits to the congressional defense committees a
report containing the determination that was made under para-
graph (1), a justification for that determination, and a copy
of the plan required by paragraph (3).
(c) CONTRACTOR GUARANTEES FOR MAJOR WEAPONS SYSTEMS.—
The Secretary of Defense may waive the requirements of section
2403 of title 10, United States Code, for such a defense acquisition
program if an alternative guarantee is used that ensures high
quality weapons systems.
(d) SELECTED ACQUISITION REPORTS.—The Secretary of Defense
may waive the requirements of sections 2432 and 2433 of title
10, United States Code, for such a defense acquisition program
if the Secretary provides a single annual report to Congress at
the end of each fiscal year that describes the status of the program
in relation to the baseline description for the program established
under section 2435 of such title.
H. R. 3230—184
SEC. 804. MODIFICATION OF AUTHORITY TO CARRY OUT CERTAIN
PROTOTYPE PROJECTS.
(a) AUTHORIZED OFFICIALS.—(1) Subsection (a) of section 845
of the National Defense Authorization Act for Fiscal Year 1994
(Public Law 103–160; 107 Stat. 1721; 10 U.S.C. 2371 note) is
amended by inserting ‘‘, the Secretary of a military department,
or any other official designated by the Secretary of Defense’’ after
‘‘Agency’’.
(2) Subsection (b)(2) of such section is amended to read as
follows:
‘‘(2) To the maximum extent practicable, competitive procedures
shall be used when entering into agreements to carry out projects
under subsection (a).’’.
(b) EXTENSION OF AUTHORITY.—Subsection (c) of such section
is amended by striking out ‘‘terminate’’ and all that follows and
inserting in lieu thereof ‘‘terminate at the end of September 30,
1999.’’.
(c) CONFORMING AND TECHNICAL AMENDMENTS.—Section 845
of such Act is further amended—
(1) in subsection (b)—
(A) in paragraph (1), by striking out ‘‘(c)(2) and (c)(3)
of 
such 
section 
2371, 
as 
redesignated 
by 
section
827(b)(1)(B),’’ and inserting in lieu thereof ‘‘(e)(2) and (e)(3)
of such section 2371’’; and
(B) in paragraph (2), by inserting after ‘‘Director’’ the
following: ‘‘, Secretary, or other official’’; and
(2) in subsection (c), by striking out ‘‘of the Director’’.
SEC. 805. INCREASE IN THRESHOLD AMOUNTS FOR MAJOR SYSTEMS.
(a) INCREASE AND ADJUSTMENT.—Chapter 137 of title 10, United
States Code, is amended—
(1) in section 2302(5), by striking out the third sentence
and inserting in lieu thereof the following: ‘‘A system shall
be considered a major system if (A) the conditions of section
2302d of this title are satisfied, or (B) the system is designated
a ‘major system’ by the head of the agency responsible for
the system.’’; and
(2) by inserting after section 2302c the following:
‘‘§ 2302d. Major system: definitional threshold amounts
‘‘(a) DEPARTMENT OF DEFENSE SYSTEMS.—For purposes of sec-
tion 2302(5) of this title, a system for which the Department of
Defense is responsible shall be considered a major system if—
‘‘(1) the total expenditures for research, development, test,
and evaluation for the system are estimated to be more than
$115,000,000 (based on fiscal year 1990 constant dollars); or
‘‘(2) the eventual total expenditure for procurement of more
than $540,000,000 (based on fiscal year 1990 constant dollars).
‘‘(b) CIVILIAN
AGENCY
SYSTEMS.—For purposes of section
2302(5) of this title, a system for which a civilian agency is respon-
sible shall be considered a major system if total expenditures for
the system are estimated to exceed the greater of—
‘‘(1) $750,000 (based on fiscal year 1980 constant
dollars); or
‘‘(2) the dollar threshold for a ‘major system’ established
by the agency pursuant to Office of Management and Budget
(OMB) Circular A–109, entitled ‘Major Systems Acquisitions’.
H. R. 3230—185
‘‘(c) ADJUSTMENT AUTHORITY.—(1) The Secretary of Defense
may adjust the amounts and the base fiscal year provided in sub-
section (a) on the basis of Department of Defense escalation rates.
‘‘(2) An amount, as adjusted under paragraph (1), that is not
evenly divisible by $5,000,000 shall be rounded to the nearest
multiple of $5,000,000. In the case of an amount that is evenly
divisible by $2,500,000 but not evenly divisible by $5,000,000, the
amount shall be rounded to the next higher multiple of $5,000,000.
‘‘(3) An adjustment under this subsection shall be effective
after the Secretary transmits to the Committee on Armed Services
of the Senate and the Committee on National Security of the
House of Representatives a written notification of the adjustment.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of such chapter is amended by inserting after the item relating
to section 2302c the following:
‘‘2302d. Major system: definitional threshold amounts.’’.
SEC. 806. REVISIONS IN INFORMATION REQUIRED TO BE INCLUDED
IN SELECTED ACQUISITION REPORTS.
Section 2432 of title 10, United States Code, is amended—
(1) in subsection (c)(1)—
(A) by striking out ‘‘and’’ at the end of subpara-
graph (B);
(B) by redesignating subparagraph (C) as subpara-
graph (D); and
(C) by inserting after subparagraph (B) the following
new subparagraph (C):
‘‘(C) the current procurement unit cost for each major
defense acquisition program included in the report and the
history of that cost from the date the program was first included
in a Selected Acquisition Report to the end of the quarter
for which the current report is submitted; and’’; and
(2) in subsection (e), by striking out paragraph (8) and
redesignating paragraph (9) as paragraph (8).
SEC. 807. INCREASE IN SIMPLIFIED ACQUISITION THRESHOLD FOR
HUMANITARIAN OR PEACEKEEPING OPERATIONS.
(a) ARMED SERVICES ACQUISITIONS.—Section 2302(7) of title
10, United States Code, is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(7)’’;
(2) by inserting after ‘‘contingency operation’’ the following:
‘‘or a humanitarian or peacekeeping operation’’; and
(3) by adding at the end the following:
‘‘(B) In subparagraph (A), the term ‘humanitarian or peace-
keeping operation’ means a military operation in support of
the provision of humanitarian or foreign disaster assistance
or in support of a peacekeeping operation under chapter VI
or VII of the Charter of the United Nations. The term does
not include routine training, force rotation, or stationing.’’.
(b) CIVILIAN AGENCY ACQUISITIONS.—Section 309(d) of the
Federal Property and Administrative Services Act of 1949 (41 U.S.C.
259(d)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(d)’’;
(2) by inserting after ‘‘contingency operation’’ the following:
‘‘or a humanitarian or peacekeeping operation’’; and
(3) by adding at the end the following:
‘‘(2) In paragraph (1):
H. R. 3230—186
‘‘(A) The term ‘contingency operation’ has the meaning
given such term in section 101(a) of title 10, United States
Code.
‘‘(B) The term ‘humanitarian or peacekeeping operation’
means a military operation in support of the provision of
humanitarian or foreign disaster assistance or in support of
a peacekeeping operation under chapter VI or VII of the Charter
of the United Nations. The term does not include routine train-
ing, force rotation, or stationing.’’.
SEC. 808. EXPANSION OF AUDIT RECIPROCITY AMONG FEDERAL
AGENCIES TO INCLUDE POST-AWARD AUDITS.
(a) ARMED SERVICES ACQUISITIONS.—Subsection (d) of section
2313 of title 10, United States Code, is amended to read as follows:
‘‘(d) LIMITATION ON AUDITS RELATING TO INDIRECT COSTS.—
The head of an agency may not perform an audit of indirect costs
under a contract, subcontract, or modification before or after enter-
ing into the contract, subcontract, or modification in any case in
which the contracting officer determines that the objectives of the
audit can reasonably be met by accepting the results of an audit
that was conducted by any other department or agency of the
Federal Government within one year preceding the date of the
contracting officer’s determination.’’.
(b) CIVILIAN AGENCY ACQUISITIONS.—Subsection (d) of section
304C of the Federal Property and Administrative Services Act of
1949 (41 U.S.C. 254d) is amended to read as follows:
‘‘(d) LIMITATION ON AUDITS RELATING TO INDIRECT COSTS.—
An executive agency may not perform an audit of indirect costs
under a contract, subcontract, or modification before or after enter-
ing into the contract, subcontract, or modification in any case in
which the contracting officer determines that the objectives of the
audit can reasonably be met by accepting the results of an audit
that was conducted by any other department or agency of the
Federal Government within one year preceding the date of the
contracting officer’s determination.’’.
(c) GUIDELINES
FOR ACCEPTANCE
OF AUDITS
BY STATE
AND
LOCAL GOVERNMENTS RECEIVING FEDERAL ASSISTANCE.—The Direc-
tor of the Office of Management and Budget shall issue guidelines
to ensure that an audit of indirect costs performed by the Federal
Government is accepted by State and local governments that receive
Federal funds under contracts, grants, or other Federal assistance
programs.
SEC. 809. COMPENSATION OF CERTAIN CONTRACTOR PERSONNEL.
(a) ARMED SERVICES PROCUREMENTS.—(1) During fiscal year
1997, the head of an agency shall treat the costs described in
paragraph (2) as not allowable under a covered contract, in the
same manner as costs listed in section 2324(e)(1) of title 10, United
States Code.
(2) The costs covered by paragraph (1) are costs of compensation
paid with respect to services of any one officer to the extent that
the total amount of the compensation paid in a fiscal year exceeds
$250,000.
(b) CIVILIAN AGENCY PROCUREMENTS.—(1) During fiscal year
1997, an executive agency shall treat the costs described in para-
graph (2) as not allowable under a covered contract, in the same
manner as costs listed in section 306(e)(1) of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 256(e)(1)).
H. R. 3230—187
(2) The costs covered by paragraph (1) are costs of compensation
paid with respect to services of any one officer to the extent that
the total amount of the compensation paid in a fiscal year exceeds
$250,000.
(c) DEFINITIONS.—In this section:
(1) The term ‘‘head of an agency’’ has the meaning provided
in section 2302 of title 10, United States Code.
(2) The term ‘‘executive agency’’ has the meaning provided
in section 3 of the Federal Property and Administrative Services
Act of 1949 (40 U.S.C. 472).
(3) The term ‘‘covered contract’’—
(A) with respect to procurements subject to chapter
137 of title 10, United States Code, has the meaning pro-
vided by section 2324(l) of such title; and
(B) with respect to procurements subject to title III
of the Federal Property and Administrative Services Act
of 1949 (41 U.S.C. 251 et seq.), has the meaning provided
by section 306(l) of such Act (41 U.S.C. 256(l)).
(4) The term ‘‘compensation’’ means—
(A) the total amount of wages as defined in section
3401(a) of the Internal Revenue Code of 1986 for the year
concerned; and
(B) the total amount of elective deferrals (within the
meaning of section 402(g)(3) of such Code) for the year
concerned.
(5) The term ‘‘officer’’ means a person who is determined
to be in a senior management position as established by regula-
tion.
(d) REVIEW.—The Administrator for Federal Procurement
Policy, in consultation with the Secretary of Defense, shall conduct
a comprehensive review of the levels of compensation received by
senior executives of corporations performing a significant amount
of business with the Federal Government in order to determine
the appropriate cost allowability policy in this area. Such a review
should include the following:
(1) In consultation with the Secretary of the Treasury,
an examination of the appropriate definition and treatment
of compensation, including deferred compensation.
(2) An examination of the appropriate definition of senior
executive positions and any other positions that should be
covered under the cost allowability policy.
(3) An examination of how to apply the cost allowability
policy to individual contracts and aggregations of contracts
within a corporation.
(4) Any other matter related to the cost allowability of
executive compensation that the Administrator considers appro-
priate.
(e) LEGISLATIVE PROPOSAL.—Not later than March 1, 1997,
the President shall submit to Congress a legislative proposal incor-
porating the conclusions reached by the review conducted under
subsection (d) and establishing a statutory Government standard
on the cost allowability of executive compensation.
SEC. 810. EXCEPTION 
TO 
PROHIBITION 
ON 
PROCUREMENT 
OF
FOREIGN GOODS.
Section 2534(d)(3) of title 10, United States Code, is amended
by inserting ‘‘or would impede the reciprocal procurement of defense
H. R. 3230—188
items under a memorandum of understanding providing for recip-
rocal procurement of defense items that is entered into under section
2531 of this title,’’ after ‘‘a foreign country,’’.
Subtitle B—Other Matters
SEC. 821. PROHIBITION ON RELEASE OF CONTRACTOR PROPOSALS
UNDER FREEDOM OF INFORMATION ACT.
(a) ARMED SERVICES ACQUISITIONS.—Section 2305 of title 10,
United States Code, is amended by adding at the end the following
new subsection:
‘‘(g) PROHIBITION ON RELEASE OF CONTRACTOR PROPOSALS.—
(1) Except as provided in paragraph (2), a proposal in the possession
or control of the Department of Defense may not be made available
to any person under section 552 of title 5.
‘‘(2) Paragraph (1) does not apply to any proposal that is set
forth or incorporated by reference in a contract entered into between
the Department and the contractor that submitted the proposal.
‘‘(3) In this subsection, the term ‘proposal’ means any proposal,
including a technical, management, or cost proposal, submitted
by a contractor in response to the requirements of a solicitation
for a competitive proposal.’’.
(b) CIVILIAN
AGENCY
ACQUISITIONS.—Section 303B of the
Federal Property and Administrative Services Act of 1949 (41 U.S.C.
253b) is amended by adding at the end the following new subsection:
‘‘(m) PROHIBITION ON RELEASE OF CONTRACTOR PROPOSALS.—
(1) Except as provided in paragraph (2), a proposal in the possession
or control of an executive agency may not be made available to
any person under section 552 of title 5, United States Code.
‘‘(2) Paragraph (1) does not apply to any proposal that is set
forth or incorporated by reference in a contract entered into between
the agency and the contractor that submitted the proposal.
‘‘(3) In this subsection, the term ‘proposal’ means any proposal,
including a technical, management, or cost proposal, submitted
by a contractor in response to the requirements of a solicitation
for a competitive proposal.’’.
SEC. 822. AMENDMENTS RELATING TO REPORTS ON PROCUREMENT
REGULATORY ACTIVITY.
Subsection (g) of section 25 of the Office of Federal Procurement
Policy Act (41 U.S.C. 421) is amended—
(1) in paragraph (1)—
(A) by striking out ‘‘within 6 months after the date
of enactment of this section and every 6 months thereafter’’
and inserting in lieu thereof ‘‘every 12 months’’; and
(B) by inserting ‘‘and’’ after the semicolon at the end;
(2) in paragraph (2)(H), by striking out ‘‘; and’’ and inserting
in lieu thereof a period; and
(3) by striking out paragraph (3).
SEC. 823. AMENDMENT OF MULTIYEAR LIMITATION ON CONTRACTS
FOR INSPECTION, MAINTENANCE, AND REPAIR.
Paragraph (14) of section 210(a) of the Federal Property and
Administrative Services Act of 1949 (40 U.S.C. 490(a)) is amended
by striking out ‘‘for periods not exceeding three years’’ and inserting
in lieu thereof ‘‘for periods not exceeding five years’’.
H. R. 3230—189
SEC. 824. STREAMLINED NOTICE REQUIREMENTS TO CONTRACTORS
AND EMPLOYEES REGARDING TERMINATION OR SUBSTAN-
TIAL REDUCTION IN CONTRACTS UNDER MAJOR DEFENSE
PROGRAMS.
(a) ELIMINATION
OF UNNECESSARY REQUIREMENTS.—Section
4471 of the Defense Conversion, Reinvestment, and Transition
Assistance Act of 1992 (division D of Public Law 102–484; 10
U.S.C. 2501 note) is amended—
(1) by striking out subsection (a);
(2) by striking out subsection (f), except paragraph (4);
(3) by redesignating subsections (b), (c), (d), (e), and (g)
as subsections (a), (b), (c), (d), and (f), respectively; and
(4) by redesignating such paragraph (4) as subsection (e).
(b) NOTICE TO CONTRACTORS.—Subsection (a) of such section,
as redesignated by subsection (a)(3), is amended by striking out
paragraphs (1) and (2) and inserting in lieu thereof the following:
‘‘(1) shall identify each contract (if any) under major defense
programs of the Department of Defense that will be terminated
or substantially reduced as a result of the funding levels pro-
vided in that Act; and
‘‘(2) shall ensure that notice of the termination of, or
substantial reduction in, the funding of the contract is
provided—
‘‘(A) directly to the prime contractor under the con-
tract; and
‘‘(B) directly to the Secretary of Labor.’’.
(c) NOTICE
TO
SUBCONTRACTORS.—Subsection (b) of such
section, as redesignated by subsection (a)(3), is amended—
(1) by striking out ‘‘As soon as’’ and all that follows through
‘‘prime contractor shall—’’ in the matter preceding paragraph
(1) and inserting in lieu thereof ‘‘Not later than 60 days after
the date on which the prime contractor for a contract under
a major defense program receives notice under subsection (a),
the prime contractor shall—’’;
(2) in paragraph (1)—
(A) by striking out ‘‘for that program under a contract’’
and inserting in lieu thereof ‘‘under that prime contract
for subcontracts’’; and
(B) by striking out ‘‘for the program’’; and
(3) in paragraph (2)(A), by striking out ‘‘for the program
under a contract’’ and inserting in lieu thereof ‘‘for sub-
contracts’’.
(d) NOTICE TO EMPLOYEES AND STATE DISLOCATED WORKER
UNIT.—Subsection (c) of such section, as redesignated by subsection
(a)(3), is amended by striking out ‘‘under subsection (a)(1)’’ and
all that follows through ‘‘a defense program,’’ in the matter preced-
ing paragraph (1) and inserting in lieu thereof ‘‘under subsection
(a),’’.
(e) CROSS REFERENCES AND CONFORMING AMENDMENTS.—(1)
Subsection (d) of such section, as redesignated by subsection (a)(3),
is amended—
(A) by striking out ‘‘a major defense program provided
under subsection (d)(1)’’ and inserting in lieu thereof ‘‘a defense
contract provided under subsection (c)(1)’’; and
(B) by striking out ‘‘the program’’ and inserting in lieu
thereof ‘‘the contract’’.
H. R. 3230—190
(2) Subsection (e) of such section, as redesignated by subsection
(a)(4), is amended—
(A) by striking out ‘‘ELIGIBILITY’’ and inserting in lieu
thereof ‘‘ELIGIBILITY’’; and
(B) by striking out ‘‘under paragraph (3)’’ and inserting
in lieu thereof ‘‘or cancellation of the termination of, or substan-
tial reduction in, contract funding’’.
(3) Subsection (f) of such section, as redesignated by subsection
(a)(3), is amended in paragraph (2)—
(A) by inserting ‘‘a defense contract under’’ before ‘‘a major
defense program’’; and
(B) by striking out ‘‘contracts under the program’’ and
inserting in lieu thereof ‘‘the funds obligated by the contract’’.
SEC. 825. REPEAL OF NOTICE REQUIREMENTS FOR SUBSTANTIALLY
OR 
SERIOUSLY 
AFFECTED 
PARTIES 
IN 
DOWNSIZING
EFFORTS.
Sections 4101 and 4201 of the National Defense Authorization
Act for Fiscal Year 1991 (Public Law 101–510; 104 Stat. 1850,
1851; 10 U.S.C. 2391 note) are repealed.
SEC. 826. STUDY OF EFFECTIVENESS OF DEFENSE MERGERS.
(a) STUDY.—The Secretary of Defense shall conduct a study
on mergers and acquisitions in the defense sector. The study shall
address the following:
(1) The effectiveness of defense mergers and acquisitions
in eliminating excess capacity within the defense industry.
(2) The degree of change in the dependence by defense
contractors on defense-related Federal contracts within their
overall business after mergers.
(3) The effect on defense industry employment resulting
from defense mergers and acquisitions occurring during the
three years preceding the date of the enactment of this Act.
(4) The effect on competition for defense contracts.
(b) REPORT.—Not later than six months after the date of the
enactment of this Act, the Secretary of Defense shall submit to
Congress a report on the results of the study conducted under
subsection (a).
SEC. 827. ANNUAL REPORT RELATING TO BUY AMERICAN ACT.
The Secretary of Defense shall submit to Congress, not later
than 120 days after the end of each fiscal year, a report on the
amount of purchases by the Department of Defense from foreign
entities in that fiscal year. Such report shall separately indicate
the dollar value of items for which the Buy American Act (41
U.S.C. 10a et seq.) was waived pursuant to any of the following:
(1) Any reciprocal defense procurement memorandum of
understanding described in section 849(c)(2) of Public Law 103–
160 (41 U.S.C. 10b–2 note).
(2) The Trade Agreements Act of 1979 (19 U.S.C. 2501
et seq.)
(3) Any international agreement to which the United States
is a party.
SEC. 828. FOREIGN ENVIRONMENTAL TECHNOLOGY.
Subsection (b) of section 2536 of title 10, United States Code,
is amended to read as follows:
H. R. 3230—191
‘‘(b) WAIVER AUTHORITY.—(1) The Secretary concerned may
waive the application of subsection (a) to a contract award if—
‘‘(A) the Secretary concerned determines that the waiver
is essential to the national security interests of the United
States; or
‘‘(B) in the case of a contract awarded for environmental
restoration, remediation, or waste management at a Depart-
ment of Defense or Department of Energy facility—
‘‘(i) the Secretary concerned determines that the waiver
will advance the environmental restoration, remediation,
or waste management objectives of the department con-
cerned and will not harm the national security interests
of the United States; and
‘‘(ii) the entity to which the contract is awarded is
controlled by a foreign government with which the Sec-
retary concerned is authorized to exchange Restricted Data
under section 144 c. of the Atomic Energy Act of 1954
(42 U.S.C. 2164(c)).
‘‘(2) The Secretary concerned shall notify Congress of any deci-
sion to grant a waiver under paragraph (1)(B) with respect to
a contract. The contract may be awarded only after the end of
the 45-day period beginning on the date the notification is received
by the committees.’’.
SEC. 829. ASSESSMENT OF NATIONAL DEFENSE TECHNOLOGY AND
INDUSTRIAL 
BASE 
AND 
DEPENDENCY 
OF 
BASE 
ON
SUPPLIES AVAILABLE ONLY FROM FOREIGN COUNTRIES.
(a) NATIONAL
SECURITY
OBJECTIVES
FOR
NATIONAL
TECH-
NOLOGY AND INDUSTRIAL BASE.—Section 2501(a) of title 10, United
States Code, is amended by adding at the end the following:
‘‘(5) Providing for the development, manufacture, and sup-
ply of items and technologies critical to the production and
sustainment of advanced military weapon systems within the
national technology and industrial base.’’.
(b) NATIONAL DEFENSE PROGRAM FOR ANALYSIS OF THE TECH-
NOLOGY AND INDUSTRIAL BASE.—Section 2503 of title 10, United
States Code, is amended—
(1) in subsection (a)—
(A) by striking out ‘‘(1) The Secretary of Defense, in
consultation with the National Defense Technology and
Industrial Base Council,’’ in paragraph (1) and inserting
in lieu thereof ‘‘The Secretary of Defense’’; and
(B) by striking out paragraphs (2), (3), and (4); and
(2) in subsection (c)(3)(A)—
(A) by striking out ‘‘the National Defense Technology
and Industrial Base Council in’’ and inserting in lieu
thereof ‘‘the Secretary of Defense for’’; and
(B) by striking out ‘‘and the periodic plans required
by section 2506 of this title’’.
(c) PERIODIC DEFENSE CAPABILITY ASSESSMENTS, INCLUDING
FOREIGN DEPENDENCY.—(1) Section 2505 of title 10, United States
Code, is amended to read as follows:
‘‘§ 2505. National technology and industrial base: periodic
defense capability assessments
‘‘(a) PERIODIC ASSESSMENT.—Each fiscal year, the Secretary
of Defense shall prepare selected assessments of the capability
H. R. 3230—192
of the national technology and industrial base to attain the national
security objectives set forth in section 2501(a) of this title. The
Secretary of Defense shall prepare such assessments in consultation
with the Secretary of Commerce and the Secretary of Energy.
‘‘(b) ASSESSMENT PROCESS.—The Secretary of Defense shall
ensure that technology and industrial capability assessments—
‘‘(1) describe sectors or capabilities, their underlying infra-
structure and processes;
‘‘(2) analyze present and projected financial performance
of industries supporting the sectors or capabilities in the assess-
ment; and
‘‘(3) identify technological and industrial capabilities and
processes for which there is potential for the national industrial
and technology base not to be able to support the achievement
of national security objectives.
‘‘(c) ASSESSMENT
OF EXTENT
OF DEPENDENCY
ON FOREIGN
SOURCE ITEMS.—Each assessment under subsection (a) shall include
a separate discussion and presentation regarding the extent to
which the national technology and industrial base is dependent
on items for which the source of supply, manufacture, or technology
is outside of the United States and Canada and for which there
is no immediately available source in the United States or Canada.
The discussion and presentation regarding foreign dependency
shall—
‘‘(1) identify cases that pose an unacceptable risk of foreign
dependency, as determined by the Secretary; and
‘‘(2) present actions being taken or proposed to be taken
to remedy the risk posed by the cases identified under para-
graph (1), including efforts to develop a domestic source for
the item in question.
‘‘(d) INTEGRATED PROCESS.—The Secretary of Defense shall
ensure that consideration of the technology and industrial base
assessments is integrated into the overall budget, acquisition, and
logistics support decision processes of the Department of Defense.’’.
(2) Section 2502(b) of title 10, United States Code, is amended—
(A) by striking out ‘‘the following responsibilities:’’ and
all that follows through ‘‘effective cooperation’’ and inserting
in lieu thereof ‘‘the responsibility to ensure effective coopera-
tion’’; and
(B) by striking out paragraph (2); and
(3) by redesignating subparagraphs (A), (B), and (C) as para-
graphs (1), (2), and (3), respectively, and adjusting the margin
of such paragraphs two ems to the left.
(d) REPEAL OF REQUIREMENT FOR PERIODIC DEFENSE CAPABIL-
ITY PLAN; DEVELOPMENT OF POLICY GUIDANCE.—Section 2506 of
title 10, United States Code, is amended to read as follows:
‘‘§ 2506. Department of Defense technology and industrial
base policy guidance
‘‘(a) DEPARTMENTAL GUIDANCE.—The Secretary of Defense shall
prescribe departmental guidance for the attainment of each of the
national security objectives set forth in section 2501(a) of this
title. Such guidance shall provide for technological and industrial
capability considerations to be integrated into the budget allocation,
weapons acquisition, and logistics support decision processes.
‘‘(b) REPORT
TO CONGRESS.—The Secretary of Defense shall
report on the implementation of the departmental guidance in the
H. R. 3230—193
annual report to Congress submitted pursuant to section 2504 of
this title.’’.
(e) ANNUAL REPORT TO CONGRESS.—Subchapter II of chapter
148 of title 10, United States Code, is amended by inserting after
section 2503 the following new section:
‘‘§ 2504. Annual report to Congress
‘‘The Secretary of Defense shall transmit to the Committee
on Armed Services of the Senate and the Committee on National
Security of the House of Representatives by March 1 of each year
a report which shall include the following information:
‘‘(1) A description of the departmental guidance prepared
pursuant to section 2506 of this title.
‘‘(2) A description of the methods and analyses being under-
taken by the Department of Defense alone or in cooperation
with other Federal agencies, to identify and address concerns
regarding technological and industrial capabilities of the
national technology and industrial base.
‘‘(3) A description of the assessments prepared pursuant
to section 2505 of this title and other analyses used in develop-
ing the budget submission of the Department of Defense for
the next fiscal year.
‘‘(4) Identification of each program designed to sustain
specific essential technological and industrial capabilities and
processes of the national technology and industrial base.’’.
(f) REPEAL OF REQUIREMENT TO COORDINATE THE ENCOURAGE-
MENT OF TECHNOLOGY TRANSFER WITH THE COUNCIL.—Subsection
2514(c) of title 10, United States Code, is amended by striking
out paragraph (5).
(g) CLERICAL AMENDMENTS.—(1) The table of sections at the
beginning of subchapter II of chapter 148 of title 10, United States
Code, is amended by inserting after the item relating to section
2503 the following new item:
‘‘2504. Annual report to Congress.’’.
(2) Such table of sections is further amended by striking out
the item relating to section 2506 and inserting in lieu thereof
the following new item:
‘‘2506. Department of Defense technology and industrial base policy guidance.’’.
(h) REPEAL
OF SUPERSEDED
AND EXECUTED LAW.—Sections
4218, 4219, and 4220 of the National Defense Authorization Act
for Fiscal Year 1993 (Public Law 102–484; 10 U.S.C. 2505 note
and 2506 note) are repealed.
SEC. 830. EXPANSION OF REPORT ON IMPLEMENTATION OF AUTO-
MATED INFORMATION SYSTEMS TO INCLUDE ADDITIONAL
MATTERS 
REGARDING 
INFORMATION 
RESOURCES
MANAGEMENT.
(a) EXPANDED REPORT.—The Secretary of Defense shall include
in the report submitted in 1997 under section 381(f) of the National
Defense Authorization Act for Fiscal Year 1995 (Public Law 103–
337; 10 U.S.C. 113 note) a discussion of the following matters
relating to information resources management:
(1) The progress made in implementing the Information
Technology Management Reform Act of 1996 (division E of
Public Law 104–106; 110 Stat. 679; 40 U.S.C. 1401 et seq.)
and the amendments made by that Act.
H. R. 3230—194
(2) The progress made in implementing the strategy for
the development or modernization of automated information
systems for the Department of Defense, as required by section
366 of the National Defense Authorization Act for Fiscal Year
1996 (Public Law 104–106; 110 Stat. 275; 10 U.S.C. 113 note).
(3) Plans of the Department of Defense for establishing
an integrated framework for management of information
resources within the department.
(b) SPECIFIC ELEMENTS OF REPORT.—The presentation of mat-
ters under subsection (a) shall specifically include a discussion
of the following:
(1) The status of the implementation of performance
measures.
(2) The specific actions being taken to link the proposed
performance measures to the planning, programming, and
budgeting system of the Department of Defense and to the
life-cycle management processes of the department.
(3) The results of pilot program testing of proposed perform-
ance measures.
(4) The additional training necessary for the implementa-
tion of performance-based information management.
(5) The department-wide actions that are necessary to
comply with the requirements of the following provisions of
law:
(A) The amendments made by the Government
Performance and Results Act of 1993 (Public Law 103–
62; 107 Stat. 285).
(B) The Information Technology Management Reform
Act of 1996 (division E of Public Law 104–106; 110 Stat.
679; 40 U.S.C. 1401 et seq.) and the amendments made
by that Act.
(C) Title V of the Federal Acquisition Streamlining
Act of 1994 (Public Law 103–355; 108 Stat. 3349) and
the amendments made by that title.
(D) The Chief Financial Officers Act of 1990 (Public
Law 101–576; 104 Stat. 2838) and the amendments made
by that Act.
SEC. 831. YEAR 2000 SOFTWARE CONVERSION.
(a) YEAR
2000 SOFTWARE
CONVERSION.—The Secretary of
Defense shall ensure that, as soon as practicable, all information
technology acquired by the Department of Defense pursuant to
contracts entered into after September 30, 1996, has the capabilities
to process date and date-related data in 2000.
(b) ASSESSMENT.—The Secretary, acting through the chief
information officers within the department (as designated pursuant
to section 3506 of title 44, United States Code), shall assess all
information technology within the Department of Defense to deter-
mine the extent to which such technology has the capabilities
to operate effectively.
(c) PLAN.—Not later than January 1, 1997, the Secretary shall
submit to Congress a detailed plan for eliminating any deficiencies
identified pursuant to subsection (b). The plan shall include—
(1) a list of affected major systems;
(2) a description of how the deficiencies could affect the
national security of the United States; and
H. R. 3230—195
(3) an estimate and prioritization of the resources that
are necessary to eliminate the deficiencies.
SEC. 832. PROCUREMENT FROM FIRMS IN INDUSTRIAL BASE FOR
PRODUCTION OF SMALL ARMS.
(a) REQUIREMENT.—Chapter 146 of title 10, United States Code,
is amended by adding at the end the following new section:
‘‘§ 2473. Procurements from the small arms production
industrial base
‘‘(a) 
AUTHORITY
TO
LIMIT
PROCUREMENTS
TO
CERTAIN
SOURCES.—To the extent that the Secretary of Defense determines
necessary to preserve the small arms production industrial base,
the Secretary may require that any procurement of property or
services described in subsection (b) for the Department of Defense
be made only from a firm in the small arms production industrial
base.
‘‘(b) COVERED PROPERTY AND SERVICES.—Subsection (a) applies
to the following:
‘‘(1) Repair parts for small arms.
‘‘(2) Modifications of parts to improve small arms used
by the armed forces.
‘‘(c) SMALL ARMS PRODUCTION INDUSTRIAL BASE.—In this sec-
tion, the term ‘small arms production industrial base’ means the
firms comprising the small arms production industrial base, as
described in the plan entitled ‘Preservation of Critical Elements
of the Small Arms Industrial Base’, dated January 8, 1994, that
was prepared by an independent assessment panel of the Army
Science Board.’’.
(b) CLERICAL AMENDMENT.—The table of sections at the begin-
ning of such chapter is amended by adding at the end the following
new item:
‘‘2473. Procurements from the small arms production industrial base.’’.
SEC. 833. CABLE TELEVISION FRANCHISE AGREEMENTS.
Based on the advisory opinion from the United States Court
of Federal Claims, In the Matter of the Department of Defense
Cable 
Television 
Franchise 
Agreements, 
National 
Defense
Authorization Act for Fiscal Year 1996, Section 823, No. 96–133X
(July 11, 1996)—
(1) cable television franchise agreements for the construc-
tion, installation, or capital improvement of cable systems at
military installations shall be considered contracts for purposes
of the Federal Acquisition Regulation;
(2) cable television operators are entitled to recovery of
their investments at such installations to the extent authorized
in part 49 of the Federal Acquisition Regulation; and
(3) the appropriate official of the Department of Defense
shall promptly issue a written notice of the termination for
the convenience of the Government of the contracts described
in such advisory opinion and commence settlement negotiations
pursuant to the requirements of part 49 of the Federal Acquisi-
tion Regulation.
H. R. 3230—196
TITLE IX—DEPARTMENT OF DEFENSE
ORGANIZATION AND MANAGEMENT
Subtitle A—General Matters
Sec. 901. Repeal of previously enacted reduction in number of statutory positions
in Office of the Secretary of Defense.
Sec. 902. Additional required reduction in defense acquisition workforce.
Sec. 903. Reduction of personnel assigned to Office of the Secretary of Defense.
Sec. 904. Report on military department headquarters staffs.
Sec. 905. Matters to be considered in next assessment of current missions, respon-
sibilities, and force structure of the unified combatant commands.
Sec. 906. Transfer of authority to control transportation systems in time of war.
Sec. 907. Codification of requirements relating to continued operation of the
Uniformed Services University of the Health Sciences.
Sec. 908. Joint Requirements Oversight Council.
Sec. 909. Membership of the Ammunition Storage Board.
Sec. 910. Removal of Secretary of the Army from membership on the Foreign Trade
Zone Board.
Sec. 911. Composition of aircraft accident investigation boards.
Sec. 912. Mission of the White House Communications Agency.
Subtitle B—Force Structure Review
Sec. 921. Short title.
Sec. 922. Findings.
Sec. 923. Quadrennial Defense Review.
Sec. 924. National Defense Panel.
Sec. 925. Postponement of deadlines.
Sec. 926. Definitions.
Subtitle A—General Matters
SEC. 901. REPEAL OF PREVIOUSLY ENACTED REDUCTION IN NUMBER
OF STATUTORY POSITIONS IN OFFICE OF THE SECRETARY
OF DEFENSE.
Section 903 of the National Defense Authorization Act for Fiscal
Year 1996 (Public Law 104–106; 110 Stat. 401) is repealed.
SEC. 902. ADDITIONAL REQUIRED REDUCTION IN DEFENSE ACQUISI-
TION WORKFORCE.
(a) ADDITIONAL REDUCTIONS FOR FISCAL YEAR 1997.—Section
906(d) of the National Defense Authorization Act for Fiscal Year
1996 (Public Law 104–106; 110 Stat. 405) is amended in paragraph
(1) by striking out ‘‘positions during fiscal year 1996’’ and all that
follows and inserting in lieu thereof ‘‘so that—
‘‘(A) the total number of defense acquisition personnel as
of October 1, 1996, is less than the baseline number by at
least 15,000; and
‘‘(B) the total number of defense acquisition personnel as
of October 1, 1997, is less than the baseline number by at
least 30,000.’’.
(b) BASELINE NUMBER.—Such section is further amended by
adding at the end the following new paragraph:
‘‘(3) For purposes of this subsection, the term ‘baseline number’
means the total number of defense acquisition personnel as of
October 1, 1995.’’.
SEC. 903. REDUCTION OF PERSONNEL ASSIGNED TO OFFICE OF THE
SECRETARY OF DEFENSE.
(a) PERMANENT LIMITATION
ON OSD PERSONNEL.—Effective
October 1, 1999, the number of OSD personnel may not exceed
75 percent of the baseline number.
H. R. 3230—197
(b) PHASED REDUCTION.—The number of OSD personnel—
(1) as of October 1, 1997, may not exceed 85 percent of
the baseline number; and
(2) as of October 1, 1998, may not exceed 80 percent of
the baseline number.
(c) BASELINE NUMBER.—For purposes of this section, the term
‘‘baseline number’’ means the number of OSD personnel as of
October 1, 1994.
(d) OSD PERSONNEL DEFINED.—For purposes of this section,
the term ‘‘OSD personnel’’ means military and civilian personnel
of the Department of Defense who are assigned to, or employed
in, functions in the Office of the Secretary of Defense (including
Direct Support Activities of that Office and the Washington Head-
quarters Services of the Department of Defense).
(e) LIMITATION ON REASSIGNMENT OF FUNCTIONS.—In carrying
out reductions in the number of personnel assigned to, or employed
in, the Office of the Secretary of Defense in order to comply with
this section, the Secretary of Defense may not reassign functions
solely in order to evade the requirements contained in this section.
(f) FLEXIBILITY.—If the Secretary of Defense determines, and
certifies to Congress, that the limitation in subsection (b) with
respect to any fiscal year would adversely affect United States
national security, the Secretary may waive the limitation under
that subsection with respect to that fiscal year. If the Secretary
of Defense determines, and certifies to Congress, that the limitation
in subsection (a) during fiscal year 1999 would adversely affect
United States national security, the Secretary may waive the limita-
tion under that subsection with respect to that fiscal year. The
authority under this subsection may be used only once, with respect
to a single fiscal year.
(g) REPEAL
OF PRIOR REQUIREMENT.—Section 901(d) of the
National Defense Authorization Act for Fiscal Year 1996 (Public
Law 104–106; 110 Stat. 401) is repealed.
SEC. 904. REPORT 
ON 
MILITARY 
DEPARTMENT 
HEADQUARTERS
STAFFS.
(a) REVIEW
BY SECRETARY
OF DEFENSE.—The Secretary of
Defense shall conduct a review of the size, mission, organization,
and functions of the military department headquarters staffs. This
review shall include the following:
(1) An assessment on the adequacy of the present organiza-
tion structure to efficiently and effectively support the mission
of the military departments.
(2) An assessment of options to reduce the number of
personnel assigned to the military department headquarters
staffs.
(3) An assessment of the extent of unnecessary duplication
of functions between the Office of the Secretary of Defense
and the military department headquarters staffs.
(4) An assessment of the possible benefits that could be
derived from further functional consolidation between the
civilian secretariat of the military departments and the staffs
of the military service chiefs.
(5) An assessment of the possible benefits that could be
derived from reducing the number of civilian officers in the
military departments who are appointed by and with the advice
and consent of the Senate.
H. R. 3230—359
paragraphs, reduced by $7,000,000, which represents the combina-
tion of project savings resulting from favorable bids, reduced over-
head costs, and cancellations due to force structure changes.’’.
TITLE XXV—NORTH ATLANTIC TREATY
ORGANIZATION 
SECURITY 
INVEST-
MENT PROGRAM
Sec. 2501. Authorized NATO construction and land acquisition projects.
Sec. 2502. Authorization of appropriations, NATO.
SEC. 2501. AUTHORIZED NATO CONSTRUCTION AND LAND ACQUISI-
TION PROJECTS.
The Secretary of Defense may make contributions for the North
Atlantic Treaty Organization Security Investment program as pro-
vided in section 2806 of title 10, United States Code, in an amount
not to exceed the sum of the amount authorized to be appropriated
for this purpose in section 2502 and the amount collected from
the North Atlantic Treaty Organization as a result of construction
previously financed by the United States.
SEC. 2502. AUTHORIZATION OF APPROPRIATIONS, NATO.
Funds are hereby authorized to be appropriated for fiscal years
beginning after September 30, 1996, for contributions by the Sec-
retary of Defense under section 2806 of title 10, United States
Code, for the share of the United States of the cost of projects
for the North Atlantic Treaty Security Investment program as
authorized by section 2501, in the amount of $172,000,000.
TITLE XXVI—GUARD AND RESERVE
FORCES FACILITIES
Sec. 2601. Authorized Guard and Reserve construction and land acquisition
projects.
Sec. 2602. Authorization and funding for construction and improvement of Naval
Reserve Centers.
Sec. 2603. Upgrade Air National Guard facilities, Bangor International Airport,
Maine.
SEC. 2601. AUTHORIZED GUARD AND RESERVE CONSTRUCTION AND
LAND ACQUISITION PROJECTS.
There are authorized to be appropriated for fiscal years begin-
ning after September 30, 1996, for the costs of acquisition, architec-
tural and engineering services, and construction of facilities for
the Guard and Reserve Forces, and for contributions therefor, under
chapter 1803 of title 10, United States Code (including the cost
of acquisition of land for those facilities), the following amounts:
(1) For the Department of the Army—
(A) for the Army National Guard of the United States,
$59,194,000; and
(B) for the Army Reserve, $55,543,000.
(2) For the Department of the Navy, for the Naval and
Marine Corps Reserve, $32,779,000.
(3) For the Department of the Air Force—
(A) for the Air National Guard of the United States,
$188,505,000; and