254
(e) CLERICAL AMENDMENTS.—(1) The heading of 
section 323 of such title is amended to read as follows: 
‘‘§ 323 Special pay: retention incentives for members 
qualified in a critical military skill or 
who satisfy other eligibility criteria’’. 
(2) The table of sections at the beginning of chapter 
5 of such title is amended—
(A) by striking the items relating to sections 
302g, 308d, and 308e; and 
(B) by striking the item relating to section 323 
and inserting the following new item:
‘‘323. Special pay: retention incentives for members qualified in a critical mili-
tary skill or who satisfy other eligibility criteria.’’.
(f) EFFECTIVE DATE.—(1) Except as provided by 
paragraph (2), the amendments made by this section shall 
take effect October 1, 2004, and the amendments made 
by subsections (a), (b), and (c) shall apply to agreements, 
reenlistments, and the voluntary extension of enlistments 
referred to in section 323(a) of title 37, United States 
Code, entered into on or after that date. 
(2) The amendments made by subsections (d)(1) and 
(e)(2)(A) shall take effect December 31, 2004. 
(g) LIMITATION
ON FISCAL YEAR 2005 OBLIGA-
TIONS.—During fiscal year 2005, obligations incurred 
under section 323 of title 37, United States Code, to pro-
vide retention bonuses to members of the uniformed serv-
255
ices using the expanded authority provided by the amend-
ments made by subsections (a), (b), and (c) may not ex-
ceed $10,000,000. The bonus authority available under 
such section shall not be considered to be an expanded 
authority to the extent that the authority was available 
under a provision of law specified in subsection (d), before 
the repeal of the provision by such subsection. 
SEC. 618. ELIGIBILITY OF NEW RESERVE COMPONENT OF-
FICERS FOR ACCESSION OR AFFILIATION 
BONUS FOR OFFICERS IN CRITICAL SKILLS. 
(a) ELIGIBILITY.—Subsection (a) of section 324 of 
title 37, United States Code, is amended to read as fol-
lows: 
‘‘(a) BONUS AUTHORIZED.—(1) The Secretary con-
cerned may pay a bonus under this section—
‘‘(A) to a person who executes a written agree-
ment to accept a commission or an appointment as 
an officer of armed forces and serve on active duty 
in a designated critical officer skill or serve in a re-
serve component of an armed force in a designated 
critical officer skill; or 
‘‘(B) to an officer of an armed force, including 
a warrant officer, but excluding an officer who has 
previously served in the Selected Reserve or an offi-
cer who is entitled to retired pay, who executes a
256
written agreement to serve in a reserve component 
of an armed force in a designated critical officer 
skill after being discharged or released from active 
duty under honorable conditions, once the officer af-
filiates with a unit or position in the reserve compo-
nent. 
‘‘(2) The written agreement under paragraph (1) be-
tween the Secretary concerned and a person or officer 
shall specify the period during which the person or officer 
will be required to serve in a designated critical officer 
skill to maintain entitlement to the bonus payment.’’. 
(b) AMOUNT OF BONUS.—Subsection (c) of such sec-
tion is amended to read as follows: 
‘‘(c) AMOUNT OF BONUS.—The Secretary concerned 
shall determine the amount of a bonus to be paid under 
subsection (a), except that a person may not receive a total 
of more than $60,000 in payments under this section’’. 
(c) CONFORMING AMENDMENTS.—Such section is 
further amended—
(1) in subsection (d), by striking ‘‘accession’’ 
both places it appears; 
(2) in subsection (e)—
(A) in the subsection heading, by striking 
‘‘ACCESSION’’; and
257
(B) by striking ‘‘an accession bonus’’ and 
inserting ‘‘a bonus’’; and 
(3) in subsection (f), by striking ‘‘active duty’’ 
and ‘‘accession’’ each place it appears. 
(d) CLERICAL AMENDMENTS.—(1) The heading of 
section 324 of such title is amended to read as follows: 
‘‘§ 324. Special pay: accession or affiliation bonus for 
officers in designated critical skills’’. 
(2) The table of sections at the beginning of chapter 
5 of such title is amended by striking the item relating 
to section 324 and inserting the following new item:
‘‘324. Special pay: accession or affiliation bonus for officers in designated crit-
ical skills.’’.
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect October 1, 2004, and apply 
to agreements referred to in section 324(a) of title 37, 
United States Code entered into on or after that date. 
(f) LIMITATION
ON FISCAL YEAR 2005 OBLIGA-
TIONS.—During fiscal year 2005, obligations incurred 
under section 324 of title 37, United States Code, as 
amended by subsections (a) and (b), to provide accession 
and affilliation bonuses to members of the Armed Forces 
not previously eligible for such a bonus under such section 
may not exceed $5,000,000.
258
SEC. 619. ELIGIBILITY OF RESERVE COMPONENT MEMBERS 
FOR INCENTIVE BONUS FOR CONVERSION TO 
MILITARY 
OCCUPATIONAL 
SPECIALTY 
TO 
EASE PERSONNEL SHORTAGE. 
(a) ELIGIBILITY.—Section 326 of title 37, United 
States Code, is amended—
(1) in subsection (a), by inserting ‘‘of a regular 
or reserve component’’ after ‘‘an eligible member’’; 
(2) in subsection (b)—
(A) by striking ‘‘if—’’ and all that follows 
through ‘‘at the time’’ and inserting ‘‘if, at the 
time’’; and 
(B) by redesignating subparagraphs (A) 
and (B) as paragraphs (1) and (2), respectively; 
and 
(3) in subsection (c)(2), by inserting ‘‘regular 
or reserve component of the’’ after ‘‘chief personnel 
officer of the’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall take effect October 1, 2004, and apply 
to agreements referred to in section 326(a) of title 37, 
United States Code, entered into on or after that date. 
(c) LIMITATION
ON FISCAL YEAR 2005 OBLIGA-
TIONS.—During fiscal year 2005, obligations incurred 
under section 326 of title 37, United States Code, as 
amended by subsection (a), to provide incentive bonuses
259
to members of a reserve component of the Armed Forces 
may not exceed $3,000,000. 
SEC. 620. AVAILABILITY OF HAZARDOUS DUTY INCENTIVE 
PAY FOR MILITARY FIREFIGHTERS. 
(a) ADDITIONAL TYPE
OF DUTY ENTITLED
TO 
PAY.—Subsection (a) of section 301 of title 37, United 
States Code, is amended—
(1) by striking ‘‘or’’ at the end of paragraph 
(12); 
(2) by redesignating paragraph (13) as para-
graph (14); and 
(3) by inserting after paragraph (12) the fol-
lowing new paragraph: 
‘‘(13) involving regular participating as a fire-
fighting crew member, as determined by the Sec-
retary concerned; or’’.’’. 
(b) MONTHLY AMOUNT OF PAY.—Subsection (c) of 
such section is amended—
(1) in paragraph (1), by striking ‘‘(12)’’ and in-
serting ‘‘(13)’’; and 
(2) in paragraph (2)(A), by striking ‘‘(13)’’ and 
inserting ‘‘(14)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
subsection (a) and (b) shall take effect October 1, 2004.
260
Subtitle C—Travel and 
Transportation Allowances 
SEC. 631. EXPANSION OF TRAVEL AND TRANSPORTATION 
ALLOWANCES TO ASSIST SURVIVORS OF A 
DECEASED MEMBER TO ATTEND BURIAL 
CEREMONY OF THE MEMBER. 
(a) AUTHORIZED TRAVEL LOCATIONS.—Subsection 
(b) of section 411f of title 37, United States Code, is 
amended to read as follows: 
‘‘(b) AUTHORIZED LOCATIONS FOR TRAVEL; DURA-
TION AND RATES.—(1) The allowances under subsection 
(a) may be provided for travel and transportation by eligi-
ble relatives of the deceased member to the place selected 
pursuant to section 1482(a)(8) of title 10 for disposition 
of the remains of the deceased member. 
‘‘(2) The allowances may not exceed the rates for two 
days and the time necessary for the travel.’’. 
(b) ELIGIBLE RELATIVES.—Subsection (c)(1)(C) of 
such section is amended by striking ‘‘If no person de-
scribed in subparagraph (A) or (B) is provided travel and 
transportation allowances under subsection (a)(1), the’’ 
and inserting ‘‘The’’. 
(c) LIMITATION
ON FISCAL YEAR 2005 OBLIGA-
TIONS.—During fiscal year 2005, obligations incurred 
under section 411f of title 37, United States Code, as
261
amended by subsections (a) and (b), to provide travel and 
transportation allowances, not previously available under 
such section, to survivors of deceased members of the uni-
formed services, and to provide such allowances to persons 
not previously eligible for such allowances, may not exceed 
$2,000,000. 
SEC. 632. TRANSPORTATION OF FAMILY MEMBERS INCI-
DENT TO THE SERIOUS ILLNESS OR INJURY 
OF MEMBERS OF THE UNIFORMED SERVICES. 
(a) REMOVAL OF LIMITATION ON NUMBER OF FAM-
ILY MEMBERS.—Subsection (a)(1) of section 411h of title 
37, United States Code, is amended by striking ‘‘not more 
than two family members’’ and inserting ‘‘a family mem-
ber’’. 
(b) FAMILY
MEMBERS
DESCRIBED.—Subsection 
(b)(1) of such section is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C); 
(2) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(E) other persons approved by the Secretary 
concerned.’’.
262
(c) AVAILABILITY OF PER DIEM.—Such section is 
further amended—
(1) in subsection (a)(1), by inserting ‘‘travel 
and’’ before ‘‘transportation’’; and 
(2) in subsection (c)—
(A) by inserting ‘‘(1)’’ after ‘‘(c)’’ ; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) In addition to the transportation authorized by 
subsection (a), the Secretary concerned may provide a per 
diem allowance or reimbursement for the actual and nec-
essary expenses of the travel, or a combination thereof, 
but not to exceed the rates established under section 
404(d) of this title.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on October 1, 2004, and apply 
to transportation described in section 411h of title 37, 
United States Code, provided on or after that date. 
(e) LIMITATION
ON FISCAL YEAR 2005 OBLIGA-
TIONS.—During fiscal year 2005, obligations incurred 
under section 411h of title 37, United States Code, as 
amended by subsections (a) and (b), to provide travel and 
transportation allowances, not previously available under 
such section, to family members of seriously ill or injured 
members of the uniformed services, and to provide such
263
allowances to persons not previously eligible for such al-
lowances, may not exceed $3,000,000. 
SEC. 633. REIMBURSEMENT OF MEMBERS FOR CERTAIN 
LODGING COSTS INCURRED IN CONNECTION 
WITH STUDENT DEPENDENT TRAVEL. 
Section 430(b) of title 37, United States Code, is 
amended—
(1) by redesignating paragraphs (2) and (3) as 
paragraphs (3) and (4), respectively; and 
(2) by inserting after paragraph (1) the fol-
lowing new paragraph (2): 
‘‘(2) The transportation allowance paid to a member 
under paragraph (1) may include reimbursement, at a rate 
prescribed by the Secretaries concerned, for lodging costs 
incurred during the annual trip for which the allowance 
is paid when, for reasons beyond the control of the depend-
ent child of the member, the child is required to procure 
accommodations while en route between the child’s school 
and the member’s duty station.’’. 
Subtitle D—Retired Pay and 
Survivor Benefits
SEC. 641. COMPUTATION OF BENEFITS UNDER SURVIVOR 
BENEFIT PLAN FOR SURVIVING SPOUSES 
OVER AGE 62. 
(a) PHASED INCREASE IN BASIC ANNUITY.—
264
(1) STANDARD ANNUITY.—
(A) INCREASE TO 55 PERCENT.—Clause (i) 
of subsection (a)(1)(B) of section 1451 of title 
10, United States Code, is amended by striking 
‘‘35 percent of the base amount.’’ and inserting 
‘‘the product of the base amount and the per-
cent applicable to the month, as follows: 
‘‘(I) For a month before October 
2005, the applicable percent is 35 percent. 
‘‘(II) For months after September 
2005 and before April 2006, the applicable 
percent is 40 percent. 
‘‘(III) For months after March 2006 
and before April 2007, the applicable per-
cent is 45 percent. 
‘‘(IV) For months after March 2007 
and before April 2008, the applicable per-
cent is 50 percent. 
‘‘(V) For months after March 2008, 
the applicable percent is 55 percent.’’. 
(B) COORDINATION WITH SAVINGS PROVI-
SION UNDER PRIOR LAW.—Clause (ii) of such 
subsection is amended by striking ‘‘, at the time 
the beneficiary becomes entitled to the annu-
ity,’’.
265
(2) 
RESERVE-COMPONENT
ANNUITY.—Sub-
section (a)(2)(B)(i)(I) of such section is amended by 
striking ‘‘35 percent’’ and inserting ‘‘the percent 
specified under subsection (a)(1)(B)(i) as being ap-
plicable for the month’’. 
(3) SURVIVORS OF ELIGIBLE PERSONS DYING 
ON ACTIVE DUTY, ETC.—
(A) INCREASE TO 55 PERCENT.—Clause (i) 
of subsection (c)(1)(B) of such section is 
amended—
(i) by striking ‘‘35 percent’’ and in-
serting ‘‘the applicable percent’’; and 
(ii) by adding at the end the fol-
lowing: ‘‘The percent applicable for a 
month under the preceding sentence is the 
percent 
specified 
under 
subsection 
(a)(1)(B)(i) as being applicable for that 
month.’’. 
(B) COORDINATION WITH SAVINGS PROVI-
SION UNDER PRIOR LAW.—Clause (ii) of such 
subsection is amended by striking ‘‘, at the time 
the beneficiary becomes entitled to the annu-
ity,’’.
266
(4) CLERICAL AMENDMENT.—The heading for 
subsection (d)(2)(A) of such section is amended to 
read as follows: ‘‘COMPUTATION OF ANNUITY.—’’. 
(b) CORRESPONDING PHASED ELIMINATION OF SUP-
PLEMENTAL ANNUITY.—
(1) PHASED
REDUCTION
OF
SUPPLEMENTAL 
ANNUITY.—Section 1457(b) of title 10, United 
States Code, is amended—
(A) by striking ‘‘5, 10, 15, or 20 percent’’ 
and inserting ‘‘the applicable percent’’; and 
(B) by inserting after the first sentence 
the following: ‘‘The percent used for the com-
putation shall be an even multiple of 5 percent 
and, whatever the percent specified in the elec-
tion, may not exceed 20 percent for months be-
fore October 2005, 15 percent for months after 
September 2005 and before April 2006, 10 per-
cent for months after March 2006 and before 
April 2007, and 5 percent for months after 
March 2007 and before April 2008.’’. 
(2) REPEAL
UPON
IMPLEMENTATION
OF
PERCENT
SBP
ANNUITY.—Effective on April 1, 
2008, chapter 73 of such title is amended—
(A) by striking subchapter III; and
267
(B) by striking the item relating to sub-
chapter III in the table of subchapters at the 
beginning of that chapter. 
(c) RECOMPUTATION OF ANNUITIES.—
(1) PERIODIC
RECOMPUTATION
REQUIRED.—
Effective on the first day of each month specified in 
paragraph (2)—
(A) each annuity under section 1450 of 
title 10, United States Code, that commenced 
before that month, is computed under a provi-
sion of section 1451 of that title amended by 
subsection (a), and is payable for that month 
shall be recomputed so as to be equal to the 
amount that would be in effect if the percent 
applicable for that month under that provision, 
as so amended, had been used for the initial 
computation of the annuity; and 
(B) each supplemental survivor annuity 
under section 1457 of such title that com-
menced before that month and is payable for 
that month shall be recomputed so as to be 
equal to the amount that would be in effect if 
the percent applicable for that month under 
that section, as amended by this section, had
268
been used for the initial computation of the 
supplemental survivor annuity. 
(2) TIME FOR RECOMPUTATION.—The require-
ment under paragraph (1) for recomputation of cer-
tain annuities applies with respect to the following 
months: 
(A) October 2005. 
(B) April 2006. 
(C) April 2007. 
(D) April 2008. 
(d) RECOMPUTATION OF RETIRED PAY REDUCTIONS 
FOR SUPPLEMENTAL SURVIVOR ANNUITIES.—The Sec-
retary of Defense shall take such actions as are neces-
sitated by the amendments made by subsection (b) and 
the requirements of subsection (c)(1)(B) to ensure that 
the reductions in retired pay under section 1460 of title 
10, United States Code, are adjusted to achieve the objec-
tives set forth in subsection (b) of that section. 
SEC. 642. OPEN ENROLLMENT PERIOD FOR SURVIVOR BEN-
EFIT PLAN COMMENCING OCTOBER 1, 2005. 
(a) PERSONS NOT CURRENTLY PARTICIPATING IN 
SURVIVOR BENEFIT PLAN.—
(1) ELECTION OF SBP COVERAGE.—An eligible 
retired or former member may elect to participate in 
the Survivor Benefit Plan under subchapter II of
269
chapter 73 of title 10, United States Code, during 
the open enrollment period specified in subsection 
(f). 
(2) ELECTION
OF
SUPPLEMENTAL
ANNUITY 
COVERAGE.—An eligible retired or former member 
who elects under paragraph (1) to participate in the 
Survivor Benefit Plan at the maximum level may 
also elect during the open enrollment period to par-
ticipate in the Supplemental Survivor Benefit Plan 
established under subchapter III of chapter 73 of 
title 10, United States Code. 
(3) ELIGIBLE RETIRED OR FORMER MEMBER.—
For purposes of paragraphs (1) and (2), an eligible 
retired or former member is a member or former 
member of the uniformed services who on the day 
before the first day of the open enrollment period is 
not a participant in the Survivor Benefit Plan and—
(A) is entitled to retired pay; or 
(B) would be entitled to retired pay under 
chapter 1223 of title 10, United States Code, 
but for the fact that such member or former 
member is under 60 years of age. 
(4) STATUS UNDER SBP OF PERSONS MAKING 
ELECTIONS.—
270
(A) STANDARD ANNUITY.—A person mak-
ing an election under paragraph (1) by reason 
of eligibility under paragraph (3)(A) shall be 
treated for all purposes as providing a standard 
annuity under the Survivor Benefit Plan. 
(B) RESERVE-COMPONENT
ANNUITY.—A 
person making an election under paragraph (1) 
by reason of eligibility under paragraph (3)(B) 
shall be treated for all purposes as providing a 
reserve-component annuity under the Survivor 
Benefit Plan. 
(b) ELECTION
TO INCREASE COVERAGE UNDER 
SBP.—A person who on the day before the first day of 
the open enrollment period is a participant in the Survivor 
Benefit Plan but is not participating at the maximum base 
amount or is providing coverage under the Plan for a de-
pendent child and not for the person’s spouse or former 
spouse may, during the open enrollment period, elect to—
(1) participate in the Plan at a higher base 
amount (not in excess of the participant’s retired 
pay); or 
(2) provide annuity coverage under the Plan for 
the person’s spouse or former spouse at a base 
amount not less than the base amount provided for 
the dependent child.
271
(c) ELECTION FOR CURRENT SBP PARTICIPANTS TO 
PARTICIPATE IN SUPPLEMENTAL SBP.—
(1) ELECTION.—A person who is eligible to 
make an election under this paragraph may elect 
during the open enrollment period to participate in 
the Supplemental Survivor Benefit Plan established 
under subchapter III of chapter 73 of title 10, 
United States Code. 
(2) PERSONS ELIGIBLE.—Except as provided in 
paragraph (3), a person is eligible to make an elec-
tion under paragraph (1) if on the day before the 
first day of the open enrollment period the person is 
a participant in the Survivor Benefit Plan at the 
maximum level, or during the open enrollment pe-
riod the person increases the level of such participa-
tion to the maximum level under subsection (b) of 
this section, and under that Plan is providing annu-
ity coverage for the person’s spouse or a former 
spouse. 
(3) LIMITATION ON ELIGIBILITY FOR CERTAIN 
SBP
PARTICIPANTS
NOT
AFFECTED
BY
TWO-TIER 
ANNUITY COMPUTATION.—A person is not eligible to 
make an election under paragraph (1) if (as deter-
mined by the Secretary concerned) the annuity of a 
spouse or former spouse beneficiary of that person
272
under the Survivor Benefit Plan will be computed 
under section 1451(e) of title 10, United States 
Code. However, such a person may during the open 
enrollment period waive the right to have that annu-
ity computed under such section. Any such election 
is irrevocable. A person making such a waiver may 
make an election under paragraph (1) as in the case 
of any other participant in the Survivor Benefit 
Plan. 
(d) MANNER OF MAKING ELECTIONS.—An election 
under this section must be made in writing, signed by the 
person making the election, and received by the Secretary 
concerned before the end of the open enrollment period. 
Any such election shall be made subject to the same condi-
tions, and with the same opportunities for designation of 
beneficiaries and specification of base amount, that apply 
under the Survivor Benefit Plan or the Supplemental Sur-
vivor Benefit Plan, as the case may be. A person making 
an election under subsection (a) to provide a reserve-com-
ponent annuity shall make a designation described in sec-
tion 1448(e) of title 10, United States Code. 
(e) EFFECTIVE DATE FOR ELECTIONS.—Any such 
election shall be effective as of the first day of the first 
calendar month following the month in which the election 
is received by the Secretary concerned.
273
(f) OPEN ENROLLMENT PERIOD DEFINED.—The 
open enrollment period is the two-year period beginning 
on October 1, 2005. 
(g) EFFECT OF DEATH OF PERSON MAKING ELEC-
TION WITHIN TWO YEARS OF MAKING ELECTION.—If a 
person making an election under this section dies before 
the end of the two-year period beginning on the effective 
date of the election, the election is void and the amount 
of any reduction in retired pay of the person that is attrib-
utable to the election shall be paid in a lump sum to the 
person who would have been the deceased person’s bene-
ficiary under the voided election if the deceased person 
had died after the end of such two-year period. 
(h) APPLICABILITY
OF CERTAIN PROVISIONS
OF 
LAW.—The provisions of sections 1449, 1453, and 1454 
of title 10, United States Code, are applicable to a person 
making an election, and to an election, under this section 
in the same manner as if the election were made under 
the Survivor Benefit Plan or the Supplemental Survivor 
Benefit Plan, as the case may be. 
(i) ADDITIONAL PREMIUM.—The Secretary of De-
fense may require that the premium for a person making 
an election under subsection (a)(1) or (b) include, in addi-
tion to the amount required under section 1452(a) of title 
10, United States Code, an amount determined under reg-
274
ulations prescribed by the Secretary of Defense for the 
purposes of this subsection. Any such amount shall be 
stated as a percentage of the base amount of the person 
making the election and shall reflect the number of years 
that have elapsed since the person retired, but may not 
exceed 4.5 percent of that person’s base amount. 
(j) REPORT CONCERNING OPEN SEASON.—Not later 
than July 1, 2005, the Secretary of Defense shall submit 
to the Committee on Armed Services of the Senate and 
the Committee on Armed Services of the House of Rep-
resentatives a report on the open season authorized by this 
section for the Survivor Benefit Plan. The report shall in-
clude the following: 
(1) A description of the Secretary’s plans for 
implementation of the open season. 
(2) The Secretary’s estimates of the costs asso-
ciated with the open season, including any antici-
pated effect of the open season on the actuarial sta-
tus of the Department of Defense Military Retire-
ment Fund. 
(3) Any recommendation by the Secretary for 
further legislative action.
275
SEC. 643. SOURCE OF FUNDS FOR SURVIVOR BENEFIT 
PLAN ANNUITIES FOR DEPARTMENT OF DE-
FENSE BENEFICIARIES OVER AGE 62. 
(a) IN GENERAL.—Chapter 74 of title 10, United 
States Code, is amended as follows: 
(1) Section 1465(b) of such title is amended by 
adding at the end the following new paragraph: 
‘‘(4) At the same time that the Secretary of Defense 
makes the determination required by paragraph (1) for 
any fiscal year, the Secretary shall determine the amount 
of the Treasury contribution to be made to the Fund for 
the next fiscal year under section 1466(b)(2)(E) of this 
title. That amount shall be determined in the same man-
ner as the determination under paragraph (1) of the total 
amount of Department of Defense contributions to be 
made to the Fund during that fiscal year under section 
1466(a) of this title, except that for purposes of this para-
graph the Secretary, in making the calculations required 
by subparagraphs (A) and (B) of that paragraph, shall 
use the single level percentages determined under sub-
section (c)(5), rather than those determined under sub-
section (c)(1).’’. 
(4) Section 1465(c) of such title is amended—
(A) in paragraph (1)—
(i) in subparagraph (A), by inserting 
before the semicolon at the end the fol-
276
lowing: 
‘‘and 
as 
if 
benefits 
under 
subchpater II of chapter 73 of this title for 
beneficiaries 62 years of age and older 
were computed for any fiscal year on the 
basis of the percentage of 35 percent, rath-
er than any percentage otherwise applica-
ble for that computation for that fiscal 
year’’; and 
(ii) in subparagraph (B), by inserting 
before the period at the end the following: 
‘‘and as if benefits under subchapter II of 
chapter 73 of this title for beneficiaries 62 
years of age and older were computed for 
any fiscal year on the basis of the percent-
age of 35 percent, rather than any percent-
age otherwise applicable for that computa-
tion for that fiscal year’’; 
(B) by redesignating paragraph (5) as 
paragraph (6); and 
(C) by inserting after paragraph (4) the 
following new paragraph (5): 
‘‘(5) Whenever the Secretary carries out an actuarial 
valuation under paragraph (1), the Secretary shall include 
as part of such valuation the following:
277
‘‘(A) A determination of a single level percent-
age determined in the same manner as applies under 
subparagraph (A) of paragraph (1), but determined 
as if benefits under subchapter II of chapter 73 of 
this title for beneficiaries 62 years of age and older 
were computed for any fiscal year on the basis of the 
percentage of 35 percent, rather than any percent-
age otherwise applicable for that computation for 
that fiscal year. 
‘‘(B) A determination of a single level percent-
age determined in the same manner as applies under 
subparagraph (B) of paragraph (1), but determined 
as if benefits under subchapter II of chapter 73 of 
this title for beneficiaries 62 years of age and older 
were computed for any fiscal year on the basis of the 
percentage of 35 percent, rather than any percent-
age otherwise applicable for that computation for 
that fiscal year. 
Such single level percentages shall be used for the pur-
poses of subsection (b)(4).’’. 
(5) Section 1466(b) of such title is amended—
(A) 
in 
paragraph 
(1), 
by 
inserting 
‘‘1465(b)(4),’’ after ‘‘1465(b)(3),’’; and 
(B) by adding at the end of paragraph (2) 
the following new subparagraph:
278
‘‘(E) The amount for that year determined by 
the Secretary of Defense under section 1465(b)(4) 
of this title for the cost to the Fund arising from in-
creased amounts payable from the Fund by reason 
of benefits under subchapter II of chapter 73 of this 
title for beneficiaries 62 years of age and older being 
computed for any fiscal year on the basis of the per-
centage greater than 35 percent.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect as of October 1, 2004. If 
this Act is enacted after that date, the Secretary of De-
fense shall provide for such administrative adjustments as 
necessary to provide for payments made for any period 
during fiscal year 2005 before the date of the enactment 
of this Act to be treated as having been made in accord-
ance with such amendments and for the provisions of 
those amendments to be implemented as if enacted as of 
September 30, 2004.
279
Subtitle E—Commissary and Non-
appropriated Fund Instrumen-
tality Benefits
SEC. 651. CONSOLIDATION AND REORGANIZATION OF LEG-
ISLATIVE PROVISIONS REGARDING DEFENSE 
COMMISSARY SYSTEM AND EXCHANGES AND 
OTHER 
MORALE, 
WELFARE, 
AND 
RECRE-
ATION ACTIVITIES. 
(a) 
PROVISIONS
RELATED
TO
COMMISSARY 
STORES.—Chapter 147 of title 10, United States Code, 
is amended—
(1) by striking the table of sections at the be-
ginning of the chapter and sections 2481, 2483, 
2485, and 2487; 
(2) by redesignating sections 2482, 2484, and 
2486 as sections 2485, 2483 and 2484, respectively; 
(3) by inserting after the chapter heading the 
following:
‘‘Subchapter 
Sec. 
‘‘I. Defense Commissary System ..............................................................
2481
‘‘II. Relationship, Continuation, and Common Policies of Defense Com-
missary and Exchange Systems ....................................
2487
‘‘III. Morale, Welfare, and Recreation Programs and Nonappropriated 
Fund Instrumentalities .................................................
2491
‘‘SUBCHAPTER I—DEFENSE COMMISSARY 
SYSTEM
‘‘Sec. 
‘‘2481. Existence and purpose of defense commissary system. 
‘‘2482. Commissary stores: criteria for establishment or closure; store size.
280
‘‘2483. Commissary stores: use of appropriated funds to cover operating ex-
penses. 
‘‘2484. Commissary stores: merchandise that may be sold; uniform surcharges 
and pricing. 
‘‘2485. Commissary stores: operation.
‘‘§ 2481. Existence and purpose of defense com-
missary system 
‘‘(a) EXISTENCE OF SYSTEM.—The Secretary of the 
Defense shall operate, using funds appropriated to the De-
partment of Defense, a world-wide system of commissary 
stores that sell, at reduced prices, food and other merchan-
dise consistent with societal norms for product selection 
in commercial large-scale grocery stores in the United 
States to members of the uniformed services on active 
duty, members of the uniformed services entitled to retired 
pay, dependents of such members, and patrons authorized 
to use the system under chapter 54 of this title. 
‘‘(b) PURPOSE OF SYSTEM.—The purpose of the de-
fense commissary system is to enhance the quality of life 
of members of the uniformed services, retired members, 
dependents of such members, and other authorized pa-
trons and to provide such members with an additional 
nonmonetary compensation in recognition of their service 
to the United States. 
‘‘(c) REDUCES PRICES DEFINED.—In this section, 
the term ‘reduced prices’ means prices for food and other 
merchandise determined using the price setting process 
specified in section 2484 of this title.
281
‘‘§ 2482. Commissary stores: criteria for establishment 
or closure; store size 
‘‘(a) PRIMARY CONSIDERATION
FOR ESTABLISH-
MENT.—The needs of members of the uniformed services 
on active duty and their dependents shall be the primary 
consideration whenever the Secretary of Defense—
‘‘(1) assesses the need to establish a com-
missary store; and 
‘‘(2) selects the actual location for the store. 
‘‘(b) STORE SIZE.—In determining the size of a com-
missary store, the Secretary of Defense shall take into 
consideration the number of all authorized patrons of the 
defense commissary system who are likely to use the store. 
‘‘(c) CLOSURE CONSIDERATIONS.—(1) Whenever as-
sessing whether to close a commissary store, the effect of 
the closure on the quality of life of members of the uni-
formed services and their dependents using the store and 
on the welfare and security of the military community in 
which the commissary is located shall be the primary con-
sideration. In all cases, the quality of life for military pa-
trons shall take priority over any consideration of eco-
nomic criteria relative to store financial performance. 
‘‘(2) The Secretary of Defense shall give the quality 
of life for members of a reserve component the same pri-
ority as the quality of life for active duty members when-
ever assessing whether to close a commissary store, includ-
283
‘‘(a) IN GENERAL.—As provided in section 2481(a) 
of this title, commissary stores are intended to be similar 
to commercial grocery stores and may sell merchandise 
similar to that sold in commercial grocery stores. The Sec-
retary of Defense shall ensure that the design and format 
of commissary stores are consistent with modern grocery 
store stockage and format.
‘‘(b) REQUIRED COMMISSARY MERCHANDISE CAT-
EGORIES.—Merchandise sold in, at, or by commissary 
stores shall include items in the following categories: 
‘‘(1) Meat, poultry, and seafood. 
‘‘(2) Nonalcoholic beverages. 
‘‘(3) Produce. 
‘‘(4) Grocery food, whether stored chilled, fro-
zen, or at room temperature. 
‘‘(5) Dairy products. 
‘‘(6) Bakery and delicatessen items. 
‘‘(7) Nonfood grocery items. 
‘‘(8) Health and beauty aids. 
‘‘(9) Magazines and periodicals. 
‘‘(10) Telephone cards, greeting cards, and film 
and one-time use cameras. 
‘‘(c) 
INCLUSION
OF
GENERAL
MERCHANDISE 
ITEMS.—(1) Among the various defense retail systems—
284
‘‘(A) commissary stores shall be the primary 
Department of Defense-operated store for the sale of 
items described in paragraphs (1) through (7) of 
subsection (b); and 
‘‘(B) exchange stores shall continue to maintain 
the exclusive right to operate convenience stores, 
shopettes, and troop stores, including such stores es-
tablished to support contingency operations. 
‘‘(2) Merchandise sold in commissary stores may in-
clude such general merchandise items as the Secretary of 
Defense may prescribe, except that the Secretary may not 
exclude seasonal items, tobacco products, pet supplies, 
batteries, potted plants and floral bouquets, women’s ho-
siery, and school supplies, to the extent such products 
have been available in commissary stores before June 1, 
2004, unless the Secretary determines that space or other 
considerations preclude the sale of all or some of the speci-
fied items. The Secretary shall provide notice to Congress 
of any reduction in the availability of such items at least 
30 days before the reduction takes effect. 
‘‘(3) A military exchange may be considered as the 
vendor for the purchase of tobacco products, greeting 
cards, and film and one-time use cameras and shall serve 
as the vendor for telephone cards. Subsections (e) and (f) 
shall not apply to the pricing of such an item when a mili-
285
tary exchange serves as the vendor of the item. Com-
missary store and exchange prices shall be comparable for 
such an item. 
‘‘(4) During the two-year period ending March 31, 
2007, the Secretary shall maintain sales data for com-
missary stores and exchange stores regarding the items 
identified in subsection (b)(10). Not later than August 1, 
2007, the Secretary shall submit to Congress a report con-
taining such sales data. 
‘‘(d) EXCLUDED GOODS OR SERVICES.—Commissary 
stores shall not offer film development services. 
‘‘(e) UNIFORM SALES PRICE SURCHARGE.—The Sec-
retary of Defense shall apply a uniform surcharge equal 
to not more than five percent on the sales prices estab-
lished under subsection (f) for each item of merchandise 
sold in, at, or by commissary stores.’’; 
(D) in subsection (f), as so redesignated, 
by striking ‘‘(consistent with this section and 
section 2685 of this title)’’ in paragraph (1); 
(E) in subsection (h), as so redesignated, 
by striking ‘‘Subsections (c) and (d)’’ and in-
serting ‘‘Subsections (e) and (f)’’; and 
(F) by adding at the end the following new 
subsection:
286
‘‘(i) USE OF SURCHARGE FOR CONSTRUCTION, RE-
PAIR, IMPROVEMENT, AND MAINTENANCE.—(1)(A) The 
Secretary of Defense may use the proceeds from the sur-
charges imposed under subsection (e) only—
‘‘(i) to acquire (including acquisition by lease), 
construct, convert, expand, improve, repair, main-
tain, and equip the physical infrastructure of com-
missary stores and central product processing facili-
ties of the defense commissary system; and 
‘‘(ii) to cover environmental evaluation and con-
struction costs related to activities described in 
clause (i), including costs for surveys, administra-
tion, overhead, planning, and design. 
‘‘(B) In subparagraph (A), the term ‘physical infra-
structure’ includes real property, utilities, and equipment 
(installed and free standing and including computer equip-
ment), necessary to provide a complete and usable com-
missary store or central product processing facility. 
‘‘(2)(A) The Secretary of Defense may authorize a 
nonappropriated fund instrumentality of the United 
States to enter into a contract for construction of a shop-
ping mall or similar facility for a commissary store and 
one or more nonappropriated fund instrumentality activi-
ties. The Secretary may use the proceeds of surcharges 
under subsection (e) to reimburse the nonappropriated
287
fund instrumentality for the portion of the cost of the con-
tract that is attributable to construction of the com-
missary store or to pay the contractor directly for that 
portion of such cost. 
‘‘(B) In subparagraph (A), the term ‘construction’, 
with respect to a facility, includes acquisition, conversion, 
expansion, installation, or other improvement of the facil-
ity. 
‘‘(3) The Secretary of Defense, with the approval of 
the Director of the Office of Management and Budget, 
may obligate anticipated proceeds from the surcharges 
under subsection (e) for any use specified in paragraph 
(1) or (2), without regard to fiscal year limitations, if the 
Secretary determines that such obligation is necessary to 
carry out any use of such adjustments or surcharges speci-
fied in such paragraph. 
‘‘(4) Revenues received by the Secretary of Defense 
from the following sources or activities of commissary 
store facilities shall be available for the purposes set forth 
in paragraphs (1), (2), and (3): 
‘‘(A) Sale of recyclable materials. 
‘‘(B) Sale of excess and surplus property. 
‘‘(C) License fees. 
‘‘(D) Royalties.
288
‘‘(E) Fees paid by sources of products in order 
to obtain favorable display of the products for resale, 
known as business related management fees.’’; 
(6) by inserting section 2485, as redesignated 
by paragraph (2), after section 2484, as amended by 
paragraph (5); and 
(7) in section 2485, as redesignated by para-
graph (2)—
(A) in subsection (a)(2), by adding at the 
end the following new sentence: ‘‘Until Decem-
ber 31, 2009, the Defense Commissary Agency 
is not required to conduct any cost-comparison 
study under the policies and procedures of Of-
fice of Management and Budget Circular A–76 
relating to the possible contracting out of com-
missary store functions.’’; 
(B) in subsection (b)(2), by striking ‘‘sec-
tion 2484’’ and inserting ‘‘section 2483’’; 
(C) in subsection (c)(2), by adding at the 
end the following new sentences: ‘‘The chair-
man of the governing board shall be a commis-
sioned officer or member of the senior executive 
service who has demonstrated experience or 
knowledge relevant to the management of the 
defense commissary system. In selecting other
289
members of the governing board, the Secretary 
shall give priority to persons with experience re-
lated to logistics, military personnel, military 
entitlements or other experiences of value of 
management of commissaries.’’; and 
(D) by adding at the end the following new 
subsections: 
‘‘(d) ASSIGNMENT OF ACTIVE DUTY MEMBERS.—(1) 
Except as provided in paragraph (2), members of the 
armed forces on active duty may not be assigned to the 
operation of a commissary store. 
‘‘(2)(A) The Secretary of Defense may assign an offi-
cer on the active-duty list to serve as the Director of the 
Defense Commissary Agency. 
‘‘(B) Not more than 18 members (in addition to the 
officer referred to in subparagraph (A)) of the armed 
forces on active duty may be assigned to the Defense Com-
missary Agency. Members who may be assigned under this 
subparagraph to regional headquarters of the agency shall 
be limited to enlisted members assigned to duty as advis-
ers in the regional headquarters responsible for overseas 
commissaries and to veterinary specialists. 
‘‘(e) REIMBURSEMENT FOR USE OF COMMISSARY FA-
CILITIES
BY MILITARY DEPARTMENTS.—(1) The Sec-
retary of a military department shall pay the Defense
290
Commissary Agency the amount determined under para-
graph (2) for any use of a commissary facility by the mili-
tary department for a purpose other than commissary 
sales or operations in support of commissary sales. 
‘‘(2) The amount payable under paragraph (1) for 
use of a commissary facility by a military department shall 
be equal to the share of depreciation of the facility that 
is attributable to that use, as determined under regula-
tions prescribed by the Secretary of Defense. 
‘‘(3) The Director of the Defense Commissary Agency 
shall credit amounts paid under paragraph (1) for use of 
a facility to an appropriate account to which proceeds of 
a surcharge applied under section 2484(e) of this title are 
credited. 
‘‘(4) This subsection applies with respect to a com-
missary facility that is acquired, constructed, converted, 
expanded, installed, or otherwise improved (in whole or in 
part) with the proceeds of a surcharge applied under sec-
tion 2484(e) of this title. 
‘‘(f) DONATION OF UNUSABLE FOOD.—(1) The Sec-
retary of Defense may donate food described in paragraph 
(2) to any of the following entities: 
‘‘(A) A charitable nonprofit food bank that is 
designated by the Secretary of Defense or the Sec-
292
‘‘(C) in the case of commissary store food, is 
unmarketable and unsaleable. 
‘‘(3) In the case of commissary store food, a donation 
under this subsection shall take place at the site of the 
commissary store that is donating the food. 
‘‘(4) This subsection does not authorize any service 
(including transportation) to be provided in connection 
with a donation under this subsection. 
‘‘(g) COLLECTION OF DISHONORED CHECKS.—(1) 
The Secretary of Defense may impose a charge for the 
collection of a check accepted at a commissary store that 
is not honored by the financial institution on which the 
check is drawn. The imposition and amounts of charges 
shall be consistent with practices of commercial grocery 
stores regarding dishonored checks. 
‘‘(2)(A) The following persons are liable to the United 
States for the amount of a check referred to in paragraph 
(1) that is returned unpaid to the United States, together 
with any charge imposed under that paragraph: 
‘‘(i) The person who presented the check. 
‘‘(ii) Any person whose status and relationship 
to the person who presented the check provide the 
basis for that person’s eligibility to make purchases 
at a commissary store.
293
‘‘(B) Any amount for which a person is liable under 
subparagraph (A) may be collected by deducting and with-
holding such amount from any amounts payable to that 
person by the United States. 
‘‘(3) Amounts collected as charges imposed under 
paragraph (1) shall be credited to the commissary trust 
revolving fund. 
‘‘(4) Appropriated funds may be used to pay any 
costs incurred in the collection of checks and charges re-
ferred to in paragraph (1). An appropriation account 
charged a cost under the preceding sentence shall be reim-
bursed the amount of that cost out of funds in the com-
missary trust revolving fund. 
‘‘(5) In this subsection, the term ‘commissary trust 
revolving fund’ means the trust revolving fund maintained 
by the Department of Defense for surcharge collections 
and proceeds of sales of commissary stores. 
‘‘(h) RELEASE OF CERTAIN COMMERCIALLY VALU-
ABLE INFORMATION TO PUBLIC.—(1) The Secretary of 
Defense may limit the release to the public of any informa-
tion described in paragraph (2) if the Secretary deter-
mines that it is in the best interest of the Department 
of Defense to limit the release of such information. If the 
Secretary determines to limit the release of any such infor-
294
mation, the Secretary may provide for limited release of 
such information in accordance with paragraph (3). 
‘‘(2) Paragraph (1) applies to the following: 
‘‘(A) Information contained in the computerized 
business systems of commissary stores or the De-
fense Commissary Agency that is collected through 
or in connection with the use of electronic scanners 
in commissary stores, including the following infor-
mation: 
‘‘(i) Data relating to sales of goods or serv-
ices. 
‘‘(ii) Demographic information on cus-
tomers. 
‘‘(iii) Any other information pertaining to 
commissary transactions and operations. 
‘‘(B) Business programs, systems, and applica-
tions (including software) relating to commissary op-
erations that were developed with funding derived 
from commissary surcharges. 
‘‘(3)(A) The Secretary of Defense may, using com-
petitive procedures, enter into a contract to sell informa-
tion described in paragraph (2). 
‘‘(B) The Secretary of Defense may release, without 
charge, information on an item sold in commissary stores
295
to the manufacturer or producer of that item or an agent 
of the manufacturer or producer. 
‘‘(C) The Secretary of Defense may, by contract en-
tered into with a business, grant to the business a license 
to use business programs referred to in paragraph (2)(B), 
including software used in or comprising any such pro-
gram. The fee charged for the license shall be based on 
the costs of similar programs developed and marketed by 
businesses in the private sector, determined by means of 
surveys. 
‘‘(D) Each contract entered into under this para-
graph shall specify the amount to be paid for information 
released or a license granted under the contract, as the 
case may be. 
‘‘(4) Information described in paragraph (2) may not 
be released, under paragraph (3) or otherwise, in a form 
that identifies any customer or that provides information 
making it possible to identify any customer. 
‘‘(5) Amounts received by the Secretary under this 
section shall be credited to funds derived from commissary 
surcharges applied under section 2484(e) of this title, 
shall be merged with those funds, and shall be available 
for the same purposes as the funds with which merged.’’.
296
(b) RELATION BETWEEN DEFENSE COMMISSARY 
AND EXCHANGE SYSTEMS.—Chapter 147 of title 10, 
United States Code, is further amended—
(1) by inserting after section 2485, as amended 
by subsection (a)(7), the following: 
‘‘SUBCHAPTER 
II—RELATIONSHIP, 
CONTINU-
ATION, AND COMMON POLICIES OF DE-
FENSE COMMISSARY AND EXCHANGE SYS-
TEMS
‘‘Sec. 
‘‘2487. Existence and purpose of defense commissary system. 
‘‘2488. Combined exchange and commissary stores. 
‘‘2489. Overseas commissary and exchange stores: access and purchase restric-
tions.
‘‘§ 2487. Relationship between defense commissary 
system and exchange stores system 
‘‘(a) SEPARATE SYSTEMS.—(1) Except as provided in 
paragraph (2), the defense commissary system and the ex-
change stores system shall be operated as separate sys-
tems of the Department of Defense. 
‘‘(2) Paragraph (1) does not apply to the following: 
‘‘(A) Combined exchange and commissary 
stores operated under the authority provided by sec-
tion 2489 of this title. 
‘‘(B) NEXMART stores of the Navy Exchange 
Service Command established before October 1, 
2003.
297
‘‘(b) CONSOLIDATION OR OTHER ORGANIZATIONAL 
CHANGES OF DEFENSE RETAIL SYSTEMS.—(1) The oper-
ation and administration of the defense retail systems may 
not be consolidated or otherwise merged unless the con-
solidation or merger is specifically authorized by an Act 
of Congress. 
‘‘(2) In this subsection, the term ‘defense retail sys-
tems’ means the defense commissary system and exchange 
stores system and other revenue-generating facilities oper-
ated by nonappropriated fund instrumentalities of the De-
partment of Defense for the morale, welfare, and recre-
ation of members of the armed forces’’; 
(2) by redesignating sections 2488, 2489, 
2489a as sections 2495, 2495a, and 2495b, respec-
tively; and 
(3) by redesignating sections 2490a and 2492 
as sections 2488 and 2489, respectively, and insert-
ing such sections after section 2487, as added by 
paragraph (1). 
(c) MWR PROGRAMS AND NONAPPROPRIATED FUND 
INSTRUMENTALITIES.—Chapter 147 of title 10, United 
States Code, is further amended—
(1) by inserting after section 2489, as redesig-
nated and moved by subsection (b)(3), the following:
298
‘‘SUBCHAPTER III—MORALE, WELFARE, AND 
RECREATION 
PROGRAMS 
AND 
NON-
APPROPRIATED 
FUND 
INSTRUMENTAL-
ITIES
‘‘Sec. 
‘‘2491. Uniform funding and management of morale, welfare, and recreation 
programs. 
‘‘2491a. Department of Defense golf courses: limitation on use of appropriated 
funds. 
‘‘2491b. Use of appropriated funds for operation of Armed Forces Recreation 
Center, Europe: limitation. 
‘‘2491c. Retention of morale, welfare, and recreation funds by military installa-
tions: limitation. 
‘‘2492. Nonappropriated fund instrumentalities: contracts with other agencies 
and instrumentalities to provide and obtain goods and services. 
‘‘2493. Fisher Houses: administration as nonappropriated fund instrumentality. 
‘‘2494. Nonappropriated fund instrumentalities: furnishing utility services for 
morale, welfare, and recreation purposes. 
‘‘2495. Nonappropriated fund instrumentalities: purchase of alcoholic beverages. 
‘‘2495a. Overseas package stores: treatment of United States wines. 
‘‘2495b. Sale or rental of sexually explicit material prohibited.’’;
(2) by redesignating section 2494 as section 
2491 and inserting such section after the table of 
sections at the beginning of subchapter III, as added 
by paragraph (1); 
(3) by redesignating section 2482a as section 
2492 and inserting such section before section 2493; 
(4) by inserting after section 2493 the following 
new section: 
‘‘§ 2494. Nonappropriated fund instrumentalities: fur-
nishing utility services for morale, wel-
fare, and recreation purposes 
‘‘Appropriations for the Department of Defense may 
be used to provide utility services for—
299
‘‘(1) buildings on military installations author-
ized by regulation to be used for morale, welfare, 
and recreation purposes; and 
‘‘(2) other morale, welfare, and recreation ac-
tivities for members of the armed forces.’’; and 
(5) by inserting sections 2495, 2495a, and 
2495b, as redesignated by subsection (b)(2), after 
section 2494, as added by paragraph (4). 
(d) INCLUSION OF OTHER TITLE 10 PROVISIONS.—
Sections 2246, 2247, and 2219 of title 10, United States 
Code, are—
(1) transferred to chapter 147 of such title; 
(2) inserted after section 2491, as redesignated 
and moved by subsection (c)(2); and 
(3) redesignated as sections 2491a, 2491b, and 
2491c, respectively. 
(e) CONFORMING AMENDMENTS.—(1) Section 977 of 
title 10, United States Code, is repealed. 
(2) Section 2868 of such title is amended by striking 
‘‘for—’’ and all that follows through the period at the end 
and inserting ‘‘for buildings constructed at private cost, 
as authorized by law.’’. 
(3) Section 367 of the Strom Thurmond National De-
fense Authorization Act for Fiscal Year 1999 (Public Law
300
105–261; 112 Stat. 1987; 10 U.S.C. 2482 note) is re-
pealed. 
(f) CLERICAL AMENDMENTS.—(1) The table of sec-
tions at the beginning of chapter 49 of title 10, United 
States Code, is amended by striking the item relating to 
section 977. 
(2) The table of sections at the beginning of chapter 
132 of such title is amended by striking the item relating 
to section 2219. 
(3) The table of sections at the beginning of sub-
chapter I of chapter 134 of such title is amended by strik-
ing the items relating to sections 2246 and 2247. 
SEC. 652. CONSISTENT STATE TREATMENT OF DEPART-
MENT 
OF 
DEFENSE 
NONAPPROPRIATED 
FUND HEALTH BENEFITS PROGRAM. 
Section 349 of the National Defense Authorization 
Act for Fiscal Year 1995 (Public Law 103–337; 108 Stat. 
2727) is amended by adding at the end the following new 
subsection: 
‘‘(c) TREATMENT
OF
PROGRAM
AS
FEDERAL 
HEALTH BENEFIT PROGRAM.—(1) No State tax, fee, 
other monetary payment, or State health plan require-
ment, may be imposed, directly or indirectly, on the Non-
appropriated Fund Uniform Health Benefits Program of 
the Department of Defense, or on a carrier or an under-
301
writing or plan administration contractor of the Program, 
to the same extent as such prohibition applies to the 
health insurance program authorized by chapter 89 of title 
5, United States Code, under section 8909(f) of such title. 
‘‘(2) Paragraph (1) shall not be construed to exempt 
the Nonappropriated Fund Uniform Health Benefits Pro-
gram of the Department of Defense, or any carrier or un-
derwriting or plan administration contractor of the Pro-
gram from the imposition, payment, or collection of a tax, 
fee, or other monetary payment on the net income or prof-
it accruing to, or realized by, the Program or by such car-
rier or contractor from business conducted under the Pro-
gram, so long as the tax, fee, or payment is applicable 
to a broad range of business activity. 
‘‘(3) In this section, the term ‘State’ means each of 
the several States, the District of Columbia, the Common-
wealth of Puerto Rico, the United States Virgin Islands, 
Guam, American Samoa, and the Commonwealth of the 
Northern Mariana Islands, and any political subdivision 
or other non-Federal authority thereof.’’.
302
SEC. 653. COOPERATION AND ASSISTANCE FOR QUALIFIED 
SCOUTING 
ORGANIZATIONS 
SERVING 
DE-
PENDENTS OF MEMBERS OF THE ARMED 
FORCES AND CIVILIAN EMPLOYEES OVER-
SEAS. 
(a) AUTHORITY TO COOPERATE AND PROVIDE AS-
SISTANCE.—Subsection (a) of section 2606 of title 10, 
United States Code, is amended—
(1) in subsection (a), by striking ‘‘Subject to 
subsection (b)’’ and inserting ‘‘In the interest of pro-
moting the recognized morale, welfare, and recre-
ation of members of the armed forces’’; and 
(2) in subsection (b), by striking ‘‘and may’’ 
and all that follows through ‘‘armed forces’’. 
(b) TREATMENT OF ORGANIZATIONS AND EMPLOY-
EES.—Such section is further amended—
(1) by striking subsections (e) and (f); 
(2) by redesignating subsections (c) and (d) as 
subsections (e) and (f), respectively; and 
(3) by inserting after subsection (b) the fol-
lowing new subsections: 
‘‘(c) TREATMENT AS NONAPPROPRIATED FUND IN-
STRUMENTALITIES.—(1) Subject to paragraphs (2) and 
(3), to the extent a qualified scouting organization is pro-
viding services for members of the armed forces and their 
dependents, or civilian employees of the Department of
303
Defense and their dependents, at a location outside the 
United States consistent with the regulations prescribed 
under subsection (b), the qualified scouting organization 
shall be a nonappropriated fund instrumentality of the De-
partment of Defense. 
‘‘(2) 
Notwithstanding 
treatment 
as 
a 
non-
appropriated fund instrumentality of the Department of 
Defense, personnel of the qualified scouting organization 
who are performing duties in connection with cooperation 
and assistance provided under subsection (a) may continue 
such policies and procedures related to personnel manage-
ment and such other policies or procedures established by 
the qualified scouting organization as the personnel con-
sider appropriate, subject to the approval of the qualified 
scouting organization. 
‘‘(3) A qualified scouting organization operating out-
side the United States may operate as a private associa-
tion overseas for the purpose of raising funds. Any funds 
so raised may not be commingled with amounts retained 
in a nonappropriated morale, welfare, and recreation ac-
count of the Department of Defense. 
‘‘(d) TREATMENT AS NONAPPROPRIATED FUND IN-
STRUMENTALITY EMPLOYEES.—(1) Personnel of a quali-
fied scouting organization who are performing duties in 
connection with cooperation and assistance provided under
304
subsection (a) for members of the armed forces and their 
dependents, or civilian employees of the Department of 
Defense and their dependents, shall be nonappropriated 
fund instrumentality employees of the United States for 
any period during which the personnel perform such du-
ties. 
‘‘(2) Such personnel of a qualified scouting organiza-
tion shall receive the same benefits, entitlements, and 
logistical support as other nonappropriated fund instru-
mentality employees, except that such personnel—
‘‘(A) shall be allowed to decline to participate in 
retirement programs or other personnel management 
policies or procedures available to other non-
appropriated fund instrumentality employees and 
elect to continue the programs, policies or proce-
dures made available by the qualified scouting orga-
nization; and 
‘‘(B) shall not receive nonappropriated fund in-
strumentality employment credit nor rehire priority. 
‘‘(3) In the regulations prescribed under subsection 
(b), the Secretary of Defense may authorize the use of 
funds appropriated to the Department of Defense to pay 
costs of such personnel of a qualified scouting organiza-
tion, including reimbursement of the personnel or the 
qualified scouting organization, in the case of those retire-