Appropriations for FY2002: Military Construction
Released: 2002-04-23T00:00:00

Most Recent Developments

The House Appropriations Committee marked up the Military Construction Appropriations billfor FY2002 ( H.R. 2904 ) on September 20, 2001, with House passage the next day ona 401-0 vote (vote no. 344). The Senate Appropriations Committee marked up its version of the bill( S. 1460 ) on September 25 and passed it the next day on a unanimous vote of 97-0 (voteno. 288). Although both bills appropriated $10.5 billion, falling within adjusted 302(b) budgetallocations, they differed in how the funding was allocated. Conferees met on October 16, 2001, andissued the conference report ( H.Rept. 107-246 ) on H.R. 2904 . The House approved thereport on October 17 with a vote of 409-1 (vote no. 394). The Senate approved the report on October18 with a vote of 96-1 (vote no. 305), clearing the measure for the President. The President signedthe bill on November 5, 2001, enacting it as P.L. 107-64 (115 Stat. 474).

Background: Content of Military Construction Appropriations and Defense Authorization Bills

The Department of Defense (DOD) manages the world's largest dedicated infrastructure,covering more than 40,000 square miles of land and a physical plant worth more than $500 billion. The military construction appropriations bill provides a large part of the funding to enhance andmaintain this infrastructure. The bill funds construction projects and real property maintenance ofthe active Army, Navy and Marine Corps, Air Force, and their reserve components; additionaldefense-wide construction; U.S. contributions to the NATO Security Investment Program (formerlyknown as the NATO Infrastructure Program); and military family housing operations andconstruction. (1) The bill also provides funding for theBase Realignment and Closure (BRAC)account, which finances most base realignment and closure costs, including construction of newfacilities for transferred personnel and functions and environmental cleanup at closing sites.

The military construction appropriations bill is one of several annual pieces of legislation that provide funding for national defense. Other major appropriation legislation includes the defenseappropriations bill, which provides funds for all non-construction military activities of theDepartment of Defense and constitutes more than 90% of national security-related spending, and theenergy and water development appropriations bill, which provides funding for atomic energy defenseactivities of the Department of Energy and for civil projects carried out by the U.S. Army Corps ofEngineers. Two other appropriations bills, VA-HUD-Independent Agencies andCommerce-Justice-State, also include small amounts for national defense. (2)

The annual defense authorization bill authorizes all of the activities in the defense appropriation measures described above. Therefore, major debates over defense policy and funding issues,including military construction, can be also found in the authorization bill. Since issues in thedefense authorization and appropriations bills intertwine, this report includes salient parts of theauthorization bill in its discussion of the military construction appropriation process.

The separate military construction appropriations bill dates to the late 1950s and early 1960s when Congress funded a large defense infrastructure build-up precipitated by the heightened securitythreat posed by the Soviet Union. Defense construction spending soared as facilities were hardenedagainst potential nuclear attack, missile silos were constructed, and other infrastructure was built.The appropriations committees established military construction subcommittees to deal with thisnew level of activity, and the separate military construction bill was created. The first stand-alonemilitary construction bill was written for FY1959 (P.L. 85-852). Previously, militaryconstruction funding was provided through annual defense appropriations or supplementalappropriations bills.

Military construction appropriations are the major, but not the sole, source of funds for facility investments by the military services and defense agencies. The defense appropriations bill providessome funds for real property maintenance in operation and maintenance and minor constructionaccounts. In addition, funds for construction and maintenance of Morale, Welfare, andRecreation-related facilities are partially provided through proceeds of commissaries, recreation userfees, and other non-appropriated income.

Most funds appropriated by Congress each year must be obligated in that fiscal year. Military construction appropriations, though, are an exception. Because of the long-term nature ofconstruction projects, these funds can generally be obligated for up to five fiscal years, reflecting thelong-term nature of capital building programs.

Consideration of the military construction budget starts when the President's budget is delivered to Congress each year, usually in early February. This year is unusual, though, because the Presidentdid not submit his amended DOD FY2002 budget request until June 27, 2001.

Status

Table 1 shows the key legislative steps necessary for the enactment of the FY2002 militaryconstruction appropriations. It will be updated as the appropriation process moves forward.

Table 1. Status of Military Construction Appropriations, FY2002

Appropriations Action

House Appropriations Action. The House passed the FY2002 Military Construction Appropriations Act( H.R. 2904 , H.Rept. 107-207 , CR H5868-5875) without amendment onSeptember 21, 2001, by a 401-0 vote. As passed by the House, the $10.500 billionbill increased the military construction budget by $1.035 billion, or 11%, above theFY2001 enactment. It decreased the current "facility replacement rate" of 192 yearsto 101 years and kept the Department of Defense on track to bring barracks andfamily housing up to acceptable habitability standards by 2008 and 2010,respectively. (3) This bill exceeded the president'srequest by $528.7 million, allocating$5.6 billion to military construction, $163 million to the NATO Security InvestmentProgram, $4.1 billion to family housing, and $552 million to Base Realignment andClosure (BRAC). It also required an upward adjustment of 302(b) budget allocationfrom $10.2 billion to $10.5 billion.

Senate Appropriations Action. The Senate passed the FY2002 Military Construction Appropriations Act( S. 1460 , S.Rept. 107-68 , CR S9828-9833) with amendment in thenature of a substitute of the House bill on September 26, 2001, by a 97-0 vote. Aspassed by the Senate, the $10.500 billion bill exceeded the president's request by$528.7 million, allocating $5.5 billion to military construction, $163 million to theNATO Security Investment Program, $4.1 billion to family housing, and $682million to Base Realignment and Closure (BRAC). The bill was within the 302(b)allocation (see Table 4 for side-by-side comparisons by appropriation account of thebudget request, House and Senate bills).

Conference Action. Senate conferees were appointed on September 26. House conferees were appointed onOctober 2. The conferees met on October 16 and issued the conference report( H.Rept. 107-246 ). Their report was forwarded to the House floor on October 17,where it was approved with a vote of 409-1. The report was sent to the Senate floor,where it was approved with a vote of 96-1, clearing the bill for the President.

Key Policy Issues

Elective Quality of LifeConstruction. Budget actions affect service member perceptions ofthe quality of military life through its impact on matters such as pay and benefits,health care, deployment schedules, and the like. In recent years, quality of life,including the use of military construction funds, has been a focus of the defensedebate.

Recent committee attention has focused on improvements to housing, workplaces, and installation infrastructure (such as water, sewer, and electricitysystems), through both new construction and improved operations and maintenanceof existing facilities. Subcommittee hearings have discussed at length the applicationof military construction funds to housing and workplace improvements at basesoverseas and within the continental United States. Efforts to leverage appropriatedfunds through the partial privatization of military housing and installation utilityservices have also been subjected to protracted dialogue in committee hearings. Foran in-depth discussion of the privatization of housing see CRS Report RL31039(pdf) , Military Housing Privatization Initiative: Background and Issues , by [author name scrubbed].

Requested Congressional Additions to the Military Construction Budget. In recent years, some analysts have criticizedthe military construction appropriations process for being prone to the insertion ofunwanted and unnecessary undertakings. Others, though, have supported theaddition of construction projects not requested by the Department of Defense asbeing necessary for military viability. An historical comparison shows that thedivergence between DOD budget requests and congressional appropriationenactments originated relatively recently and has mainly affected the less than 20 %of military construction funding dedicated to the National Guard and Reserves (see Table 5 at the end of this report).

Military construction funding since the mid 1980s can be broken into three distinct periods: prior to fiscal year 1989; fiscal years 1989 - 1994; and fiscal year1995 to the present. Before FY1989, the relationship between funding requested bythe Administration and budget authority enacted by Congress appeared stable.Congress typically appropriated approximately 80 % of DOD requests for militaryconstruction funds. Beginning with FY1989, Regular (i.e., active duty) componentfunding continued in the established pattern, but Reserve component requests (whichinclude the federal reserves and the Army and Air National Guard) took a sudden andsharp downturn (see Figures 1 and 2 ). Congress responded by adding morethan35% to that year's budget Reserve component submission. This gap between reserveconstruction requests and appropriations has remained and widened. Finally, withFY1995, the pattern of funding for the Regular forces inverted. Although presidentialrequests reversed their downward direction and began to rise, Congress began toappropriate more than was requested and has continued to do so to the present.

Environmental Remediation on Closed Military Bases. The continuing costs associated with the four completedBRAC rounds, funded through the military construction appropriation, are nowreduced to covering environmental and other caretaker efforts. Funding requestedand appropriated for BRAC fell sharply from a high of $3,898 million for FY1996to a low of $664 million for FY2000 as closure and realignment wound down. (4) Thecost of environmental remediation contributed to a $1,024 million FY2001 BRACappropriation, of which $865 million was dedicated to base environmental cleanup.

Members of the Senate Appropriations and Armed Services Committees, in hearings held a few days after the submission of the President's amended FY2002budget request, noted that Department of Defense had requested only $532 millionin BRAC funds at a time when the Navy and Air Force had announced a combinedshortfall of between $140 million and $150 million in immediate BRAC cleanupneeds. (5) DOD witnesses responded by indicating thatthe request would be sufficientfor upcoming requirements, explaining that the shortfall estimates had been based ona set of assumptions that were no longer thought to be accurate.

The upturn in expenditures had come about through recent legal requirements and agreements between the services and local communities. DOD expected theinsufficiency to be satisfied through transfers of unused funds from other accountsand by adjustments in the end-use of some property that would significantly reducethe cost of needed remediation. The passed bill added more than $100 million inBRAC funds to the request, primarily for remediation of the environmental impactof the 1995 round of base realignments and closures.

The Efficient Facilities Initiative (EFI). The Efficient Facilities Initiative (EFI) was announced by theDepartment of Defense on August 2, and the Department's General Counselsubmitted proposed legislation to Congress on August 3. The EFI includes threemajor actions: the potential realignment and closure of U.S. military installationsoverseas; the potential realignment and closure of installations within the UnitedStates; and the permanent authorization of the Brooks Air Force Base DevelopmentDemonstration Project, expanded to include all military services.

In support of the first action, the Secretary of Defense has instructed the Chairman of the Joint Chiefs of Staff to undertake a thorough assessment of alloverseas military installations based on the results of the upcoming QuadrennialDefense Review (QDR). His recommendations on the retention, realignment orclosing of bases are due to the Secretary six months after the completion of the QDR.

In support of the second action, the Secretary will likewise use the results of the QDR to generate a list of recommended actions regarding the future of militaryinstallations within the United States and its territories. The proposed legislationsuggests the establishment of a review commission and a process for endorsing theSecretary's recommendations for submission to the President and Congress. Both ofthese differ somewhat from the BRAC process of the 1990s. (6)

For an understanding of the third action, one must look to recent activity at Brooks Air Force Base, Texas. The Brooks Air Force Base DevelopmentDemonstration Project (also known as the "Base Efficiency Project," or the "BrooksCity-Base Project") is a partnership between the Secretary of the Air Force and theCity of San Antonio, Texas, and represents an alternative to traditional base closingsor realignments. Congress has authorized the Secretary to "convert any military orcivil service appropriated or non-appropriated fund activity at Brooks Air Force Base,Texas, into a contracted activity or an exchange of services compensated for by thelease, sale, conveyance, or transfer of real or private property." (7) This has empoweredthe Secretary to convey, in exchange for appropriate compensation, the whole ofFederal real property at Brooks to the city and to lease back for military use thoseparts which directly support the base's military mission. (8) The cost of maintainingand operating the facility's physical plant, including fire and police protection,upkeep, and the like, is effectively transferred along with ownership from theDepartment of Defense to the local community. Funds generated from the lease orsale of property, reimbursements, and so on, is placed in a special Project Fund,which the Secretary of the Air Force may employ for operations, leaseback,maintenance and repair of Department facilities, and other uses at Brooks. (9)

EFI proponents have maintained that conducting a single definitive round of base closures and realignments could relieve communities of uncertainty about theirfuture. Proponents further contend that a review commission with restricted abilityto change the Secretary of Defense's recommendations might reduce the potential forpolitics to influence its outcome; and that joining the military departments with localand state governments and private enterprise could significantly reduce the need formilitary construction and defense appropriations. Critics, though, have suggestedthat the selection of the commission's members and the method used for creating thelist of recommendations may actually repoliticize the BRAC process, and haveasserted that benefits to the defense budget accrued to date from the Brooks projectare hypothetical.

Real Property Costs, the Broader Picture. With military construction comes maintenance. Plantmaintenance, adequately funded and conscientiously carried out, preventsdeterioration and reduces the need for replacement. As a facility ages, though, ittends to demand greater effort and expense to maintain it in usable condition.Inadequate maintenance accelerates facility deterioration, requiring early demolitionand replacement. Construction and maintenance, therefore, are closely related, andthe effort expended on one will have a direct effect on the other.

Much of the funding for"real property maintenance" (RPM) is contained within the Operations and Maintenance function of the Defense budget, which falls withinthe jurisdiction of the Defense Subcommittees of the Appropriations Committees. (10) Figure 3 gives a graphic representation of the relative sizes of the MilitaryConstruction and RPM appropriations for FY2001.

RPM funding includes not only repairs and maintenance for existing structures, but also "minor construction" (projects whose costs do not exceed $500,000). TheFY2001 Defense budget request included $5,325.6 million for real propertymaintenance and repair and $251.1 million for minor construction. Even that totaldoes not capture the full cost incurred in maintaining DOD real property. To gain amore complete picture, one should add items not easily broken out from the generalbudget submission, such as the pay and benefits of military personnel assigned toRPM activities (installation maintenance, for example), projects financed throughDOD Working Capital Funds, and construction supported through DOD Research,Development, Test and Evaluation (RDT&E) appropriations. (11) Therefore, the finalcost to the Department of Defense of building, maintaining, and operating itsholdings in real property is extremely difficult to capture in its entirety.

Conflicting Priorities and Construction Funding. Overall Administration proposals for military constructionfunding have fallen in nearly every year since the mid-1980s. Nevertheless, until themid-1990s, Congress consistently granted significantly less budget authority to theDepartment of Defense than had been requested by the Administration (see Figure4 ).

This pattern of partial funding reversed with the FY1995 budget. The Administration's FY1994 Military Construction budget request was $4,007 million,while Congress authorized $3,787.9 million. (12) The FY1995 request fell to $2,240.2million, to which Congress added $431.9 million. (13) Every year since then, Congresshas added significant amounts to the Administration requests, countering whatMembers have termed "inadequate" funding for military construction.

Three related explanations have been given for recent congressional actions. First, some Members of the military construction subcommittees have argued thatmilitary construction has been chronically underfunded. This viewpoint wasreiterated in hearings on the FY2001 and 2002 budgets and the reports from theHouse Appropriations Committee and the defense authorizing committees on billsfor FY1998-2000.

Second, Congress often has different priorities than the Administration, as reflected in frequent congressional cuts to overseas construction requests andcontributions to the NATO Security Investment Program and its predecessor, theNATO Infrastructure Program (see Figure 5 ). (14)

Third, although Congress has found the President's overall requests for militaryconstruction insufficient, Members have deemed DOD treatment of the Army andAir National Guard and the federal reserves particularly so. (15) Until the late 1980s,the amount of military construction funds appropriated by Congress for the Guardand Reserve rose steadily, closely matching the amounts requested by DOD. ForFY1989, though, the Administration requested $472.9 million in militaryconstruction for the Guard and Reserve, a decrease of $106.4 million from theprevious year. Congress responded by appropriating $605.1 million. Senator Bondcommented during floor debate on FY1996 military construction appropriations thatMembers believed that the Pentagon artificially lowered the amount of budgetauthority requested, counting on Congress to add money to Guard and Reserveprograms. Since FY1989, Congress has consistently appropriated more than theAdministration request, and the gap between request and enactment has grownconsiderably. (See Figure 1 and Table 5 .)

Major Funding Trends

Requested military construction funds declined steadily from a high of $7.2billion for FY1985 to a low of $1.6 billion for FY2000. Enacted funding similarlydeclined, though at a slower rate, from a level of $5.5 billion to a low of $2.7 billionfor FY1995. Since then, though, enactments have risen steadily, reflecting thedivergence from presidential requests, reaching $5.4 billion for FY2001, well abovethe Administration request of $4.6 billion. The amended Administration request forFY2002 of $5.4 billion was increased by Congress to $5.9 billion. (16)

Table 2 shows overall military construction program funding since FY1998. Table 3 breaks down the FY2002 request by appropriations account and comparesit to FY2000 and FY2001 levels. Table 4 shows congressional action on militaryconstruction appropriations by account. Table 5 compares Administration militaryconstruction requests and enactments for Guard and Reserve projects fromFY1985-2002.

Legislation

Emergency Supplemental Appropriations

P.L. 107-38 , H.R. 2888 . Making emergency supplemental appropriations for fiscal year 2001 for additional disaster assistance, foranti-terrorism initiatives, and for assistance in the recovery from the tragedy thatoccurred on September 11, 2001, and for other purposes. Mr. Young introduced anoriginal bill on September 14, 2001, which was referred to the Committees onAppropriations and Budget and reported to the floor on the same day. Passed House422-0 (Roll No. 341, text: CR H5619-5631). The bill was received in the Senate andpassed without amendment by Unanimous Consent (text: CR S9430). Presented tothe President on September 14, 2001, and signed into law on September 18, 2001.The Act provides $40 billion in an emergency response fund.

Military Construction Appropriations

P.L. 107-64 . Making appropriations for military construction, family housing, and base realignment and closure for the Department of Defense for the fiscal yearending September 30, 2002, and for other purposes. The Senate appointed confereeson September 26, 2001 (CR S9833). On October 2, 2001, the House appointedconferees and instructed the managers on the part of the House to insist on the Houseposition regarding all items included in the House-passed bill for overseas militaryconstruction CR H6099, H6101-6102). The motion to instruct passed 417-1 (RollNo. 362). The conference committee filed its report ( H.Rept. 107-246 ) on October16, 2001. The House agreed to the conference report on October 17, 2001 (CRH7110-7111) 409-1 (Roll no. 394). The Senate considered the conference report (CRS10807-10810) on October 18, 2001, and agreed 96-1 (Record Vote No. 305). Thebill was presented to the President on October 25, 2001, and signed into law onNovember 5, 2001.

H.R. 2904 (Hobson). Making appropriations for military construction, family housing, and base realignment and closure for the Departmentof Defense for the fiscal year ending September 30, 2002, and for other purposes.The House Committee on Appropriations reported an original measure , H.Rept.107-207 , on September 21, 2001. Passed House 401-0 (Roll No. 344, text: CRH5868-5875) on September 21, 2001.

S. 1460 (Fenstein). Making appropriations for military construction, family housing, and base realignment and closure for the Departmentof Defense for the fiscal year ending September 30, 2002, and for other purposes.The Senate Committee on Appropriations reported an original measure, S.Rept.107-68 , on September 25, 2001. Passed Senate 97-0 (Record Vote No. 288, text: CRS9828-9833) on September 26, 2001. The text of S. 1460 was insertedin H.R. 2904 as an amendment in the form of a substitution andsubmitted to the conference committee.

Defense Authorization

P.L. 107-107 , S. 1438 . An original bill to authorize appropriations for fiscal year 2002 for military activities of the Department ofDefense, for military construction, and for defense activities of the Department ofEnergy, to prescribe personnel strengths for such fiscal year for the Armed Forces,and for other purposes. Introduced in the Senate on September 19, 2001, and was laidbefore the Senate on September 21, 2001 (CR S9565-9580). A cloture motion waspresented on September 26, 2001 (CR 9937), cloture was invoked 100-0 (CRS10027-10055, Record Vote No. 289), and the bill passed with amendments 99-0(Record Vote No. 290) on October 2, 2001.

The message on Senate action was forwarded to the House on October 4, 2001. It was received there on the same day and held at the desk until October 17, 2001,when the text of H.R. 2586 was inserted after the enabling clause. TheHouse insisted on its amendment and requested a conference by voice vote (CRH7096). The House appointed conferees and instructed them to agree to theprovisions contained in Section 652 of the Senate bill, relating to Survivor BenefitPlan eligibility of survivors of retirement-ineligible members of the uniformedservices who die on active duty (CR 7096-7097). The House passed a motion toclose portions of the conference 420-0 (CR H7098, Roll No. 391) and sent a messageon its action to the Senate. The Senate disagreed to the House amendment, agreed tothe request for a conference, and appointed conferees on October 17, 2001.

Conferences were held on October 31 and November 1, 2001. On December 11, the conferees agreed to file a conference report. The conference report was filed onDecember 12, 2001 ( H.Rept. 107-333 , text at CR H9333-9751). The Houseconsidered the conference report on December 13, 2001 (CR H10073-10080), andit was agreed to 96-2 (Roll No. 496). The Senate agreed to the conference report 96-2on the same day (CR S13113, S13118-13138, Record Vote No. 369).

The bill was presented to the President on December 20, 2001, and was signed on December 28, 2001.

H.R. 2586 (Stump). To authorize appropriations for fiscal year 2002 for military activities of the Department of Defense, to prescribe militarypersonnel strengths for fiscal year 2002, and for other purposes. Reported (amended)by the Committee on Armed Services ( H.Rept. 107-194 ), September 4, 2001.Considered by the House, with the Committee of the Whole House on the State ofthe Union rising leaving H.R. 2586 as unfinished business. The Houseinserted the provisions of H.R. 2586 into S. 1438 onOctober 17, 2001.

Table 2. Military Construction Appropriations, FY1998-2002 (new budget authority in millions of dollars)

Source: Actual FY1996-1999 data, Estimate FY2000 and Request 2001 from Department of Defense (DOD), Financial Summary Tables , February 2000 andprevious years' reports. Enacted FY2001 data from H.Rept. 106-710 . RequestedFY2002 data from DOD FY2002 Amended Budget Request. Passed H.R. 2904 data from H.Rept. 107-246 does not reflect the $60 millionSec. 132 general recission.

Table 3. Military Construction Appropriations by Account: FY2001-2002 (new budget authority in thousandsof dollars)

Source: Data for FY2001-FY2002 from Amended FY2002 Budget Request. Data for H.R. 2904 from H.Rept. 107-246 , as amended by Sec. 130 and 132of the bill.

Table 4. Military Construction FY2002 Appropriations by Account - Congressional Action (inthousands of dollars)

Source: H.Rept. 107-207 , S.Rept. 107-68 , H.Rept. 107-246 .

Table 5. Congressional Additions to AnnualDOD Budget Requests for National Guard and Reserve Military Construction,FY1985-2002 (current year dollars in thousands)

Source: Department of Defense, Financial Summary Tables, successive years.

For Additional Information

CRS Products

CRS Report RL31005 . Appropriations and Authorization for FY2002: Defense , by [author name scrubbed], Mary Tyszkiewicz, and [author name scrubbed].

CRS Issue Brief IB96022. Defense Acquisition Reform: Status and Current Issues , by [author name scrubbed].

CRS Report RL30002(pdf) . A Defense Budget Primer , by [author name scrubbed] and [author name scrubbed].

CRS Report RL30447(pdf) . Defense Budget for FY2001: Data Summary , by [author name scrubbed] and [author name scrubbed].

CRS Report RL30995. Supplemental Appropriations for FY2001: Defense Readiness and Other Programs by [author name scrubbed]

Selected World Wide Web Sites

Legislative Branch Sites

House Committee on Appropriations http://www.house.gov/appropriations

Senate Committee on Appropriations http://www.senate.gov/~appropriations/

CRS Appropriations/Budget Page http://www.loc.gov/crs/products/apppage.shtml

Congressional Budget Office http://www.cbo.gov

General Accounting Office http://www.gao.gov

U.S. Department of Defense Sites

U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller), FY2001 Budget Materials http://www.dtic.mil/comptroller/fy2001budget/

U.S. Department of Defense, Installations Home Page http://www.acq.osd.mil/installation

White House Sites

Executive Office of the President, Office of Management and Budget, FY2002 Budget Materials http://www.whitehouse.gov/omb/budget/index.html

Office of Management & Budget http://www.whitehouse.gov/OMB/