Defense: FY2015 Authorization and Appropriations
Released: 2015-01-28T00:00:00

Introduction

Fiscal year 2015 (FY2015) is the fourth consecutive year for which discretionary appropriations for the Department of Defense (DOD) are subject to a legally binding cap on national defense-related spending, initially codified by P.L. 112-25, the Budget Control Act of 2011 (or BCA) and subsequently modified, most recently by P.L. 113-67, the Bipartisan Budget Act (BBA) of 2013. President Obama's FY2015 DOD budget request complied with the applicable cap as did the versions of the FY2015 National Defense Authorization Act (NDAA) that were passed by the House ( H.R. 4435 ), reported by the Senate Armed Services Committee ( S. 2410 ), and enacted into law ( H.R. 3979 ).

Similarly, the versions of the FY2015 Defense Appropriations Act passed by the House and reported by the Senate Appropriations Committee ( H.R. 4870 ) and the version enacted as part of the Consolidated and Further Continuing Appropriations Act of 2015 ( H.R. 83 , Division C) all were consistent with the defense spending cap then in force (i.e., BBA's cap for FY2015).

By contrast, congressional action on the FY2014 DOD budget had been prolonged by the fact that the Administration's DOD budget request for that year exceeded the spending cap then in force, as did the FY2014 defense funding bills reported by the Armed Services and Appropriations Committees of both the House and Senate.

For DOD's FY2015 "base budget"—that is, the annual budget exclusive of war-related costs—the Administration requested $495.6 billion in discretionary budget authority. Combined with the amounts requested for national defense-related activities carried out by other agencies, including the FBI and the Department of Energy, the Administration requested a total of $522.6 billion for national defense related spending—a total that complies with the FY2015 cap on national defense discretionary budget authority set by the BBA.

Although the President's FY2015 budget request for DOD complied with the FY2015 cap, he also requested an additional $27.7 billion in defense-related spending (including $26.4 billion for DOD) as part of package called the Opportunity, Growth, and Security Initiative (OGSI). If those additional funds were appropriated, the current FY2015 defense cap would be exceeded. In that case, unless current law was amended, appropriations would be reduced to the level of the cap by a process of across-the-board reductions called "sequestration." Moreover, for each year from FY2016 through FY2019, the Administration's projected DOD budget requests would exceed the statutory defense spending cap for that year by an average of nearly $31 billion annually (see Table 7 ).

FY2015 Defense Budget Overview

Excluding war-related costs, President Obama's FY2015 budget request for national defense-related activities (comprising Budget Function 050) amounts to $522.6 billion in discretionary budget authority. This so-called "base budget" (i.e., non-war cost) amount is consistent with the defense spending cap established by P.L. 113-67 , the Bipartisan Budget Act (BBA) of 2013, which raised the BCA spending caps for FY2014 and FY2015 (see Table 3 ).

Within the overall FY2015 national defense budget request for discretionary spending, the base budget for DOD military activities is $495.6 billion. ( Table 4 )

Consistent with national defense budgets in recent years, the DOD request thus amounts to roughly 95% of the discretionary national defense-related base budget for FY2015.

In addition to funding for DOD, the FY2015 discretionary base budget request for function 050 also includes $18.0 billion for defense-related nuclear energy activities conducted by the Department of Energy, the largest share of which is $8.3 billion for activities related to nuclear weapons. Other major components of the defense-related nuclear energy budget include $4.9 billion for environmental cleanup at defense nuclear sites, $1.6 billion for nuclear non-proliferation work, and $1.4 billion for work on nuclear reactors that power Navy ships.

The remaining $8.0 billion of the FY2015 base budget request for function 050 is for defense-related activities conducted by other agencies. Of this amount, the largest single component—$4.9 billion—would go to the FBI for counterintelligence operations.

FY2015 OCO Budget Request Highlights

The Administration amended its FY2015 budget request for Overseas Contingency Operations (OCO) three times, expanding that category's scope to include funding for DOD activities other than operations relating to combat and post-combat activities in Afghanistan and Iraq.

The Initial Placeholder

At the time the FY2015 budget request was submitted to Congress in March 2014, the Administration said it had not yet settled on an OCO budget for the upcoming year because of ongoing negotiations with the Afghan government that would affect the number of U.S. troops remaining in that country during FY2015. Accordingly, the budget request included, as a "placeholder" for the OCO request, $79.4 billion—essentially the amount appropriated for OCO in FY2014. When the House Appropriations Committee marked up its version of H.R. 4870 , the FY2015 defense appropriations bill, it incorporated this amount with few modifications.

June 2014 OCO Request

On June 27, 2014, DOD released an amended OCO budget request that included $53.8 million for activities in (and in the region around) Afghanistan and Iraq. (See Table 5 .)

The budget amendment also included funds for two newly proposed DOD programs:

$4.0 billion for a new Counterterrorism Partnerships Fund (CTPF), intended to support the counterterrorism efforts of partner states (with $1.0 billion of this amount directed to support states bordering on Syria and to train and equip "properly vetted elements of the Syrian armed opposition"). $925 million for a new European Reassurance Initiative (ERI), which is intended to reassure NATO allies and bolster the defenses of NATO and non-NATO partners "that feel most threatened by Russia's actions against Ukraine." To partly offset these costs, the budget amendment also included a rescission of $117.0 million appropriated in FY2014 to modernize Army helicopters that now are slated for retirement.

This version of the OCO budget request, which amounted for $58.6 billion for DOD, was the one the Senate Appropriations Committee had acted on when it reported to the Senate its version of H.R. 4870 on July 17, 2014.

Ebola-related Funding Addition

On November 5, 2014, after the House had passed the FY2015 DOD appropriations bill and the Senate Appropriations Committee had reported its version of the measure to the Senate, the President requested $6.18 billion in emergency appropriations to deal with the outbreak of Ebola in Africa and to beef up domestic public health systems to deal with such threats. That package included $112 million for the Defense Advanced Research Projects Agency (DARPA) to speed development of medical technologies that would be useful in developing vaccines and other defenses against Ebola and other infectious diseases. The Office of Management and Budget categorized this request as an addition to DOD's FY2015 OCO budget.

Increase to Counter Islamic State (IS)

On November 10, 2014, the President requested an additional $5.0 billion in DOD budget authority for OCO in FY2015 to cover the cost of Operation Inherent Resolve, the operations conducted by U.S. forces against the Islamic State. The Islamic State is a transnational Sunni Islamist insurgent and terrorist group that has expanded its control over areas of parts of Iraq and Syria since 2013.

The major components of that request include

$1.62 billion to create an Iraq Train and Equip Fund through which the Iraqi military and Kurdish and tribal security forces would be provided equipment, supplies, training, services, and stipends to support their role in the fight against the Islamic State; $2.46 billion to cover the military personnel and Operation and Maintenance (O&M) costs of U.S. forces engaged in Operation Inherent Resolve, aimed at eliminating the Islamic State; and $972.5 million for procurement and development of equipment, including $141.3 million to replenish missiles and other munitions expended in the operation and $673.6 million for classified purposes.

In sum, the November 2014 adjustments brought the Administration's FY2015 OCO request to $63.7 billion, which was the amount considered by congressional negotiators drafting the final version of the FY2015 appropriations legislation.

The revised OCO request assumes that, between FY2014 and FY2015, the average number of U.S. troops in Afghanistan would drop by more than two-thirds while OCO funding would decline by slightly more than one-third. (See Figure 1 and Figure 2 .)

Source: DOD Comptroller, United States Department of Defense Fiscal Year 2015 Budget Amendment: Overview, Overseas Contingency Operations, June 2014, Figure 6, p. 6.

According to DOD, OCO funding is slated to decline more slowly than the number of troops on the ground for several reasons. These include

the continued "forward presence" of substantial U.S. forces in the Middle East, outside of Afghanistan, to support the OCO mission; the cost of base closure, unexploded ordnance disposal, and return of equipment to the United States; and the costs of replacing munitions expended in the operation and of replacing or repairing equipment destroyed, worn out, or damaged in OCO.

That contention is consistent with DOD's functional breakdown of the FY2015 OCO request (see Table 6 ). On the one hand, the $11.0 billion requested for the operation of U.S. forces in Afghanistan would decline by 60%, compared with the corresponding amount in the FY2014 budget. On the other hand, the request for funding in two categories that account for more half the spending related to Afghanistan would decline by less than 10% compared with the amounts appropriated in FY2014, namely:

the $18.1 billion requested for activities outside Afghanistan to support operations in that country would amount to 91% of the corresponding expenditure in FY2014; and the $9.2 billion requested for replacement or refurbishing of equipment and munitions would amount to a nearly 5% increase over the FY2014 amount.

Historical Context

The President's FY2015 request of $495.6 billion in discretionary budget authority for DOD's base budget is lower than the corresponding FY2014 appropriation by less than $400 million. If Congress were to approve funding at that level, FY2015 would be the third consecutive year in which DOD's base budget hovered at between $495 billion and $496 billion after having dropped between FY2012 and FY2013 by $35 billion, in nominal terms (that is, without taking account of inflation). The 7% reduction in DOD's base budget in FY2013 was part of the government-wide spending reduction program initiated by the 2011 BCA. (See Figure 3 .)

Based on DOD's method of adjusting for the cost of inflation, the FY2015 base budget request is 1.8% below the FY2014 appropriation in real terms. It is about 19% lower, adjusting for inflation, than DOD's budget in 1985, which marked the peak year (in real terms) of the Reagan-era Cold War buildup. But it is slightly more than 1% higher in real terms than the average (mean) DOD budget since the end of the Vietnam War (1975-2015) and 23% higher than the FY2000 budget, the last one enacted before the attacks of September 11, 2001.

Mandatory Spending Caps

Since 2011, the mandatory spending caps enacted as part of the BCA have been a significant factor in restraining the rate at which DOD spending has increased (as measured in current dollars). The BCA required annual reductions in projected discretionary spending for FY2012-FY2021 totaling $2.1 trillion, with the cuts falling equally on defense and non-defense programs.

Compared with the Administration's 10-year projection of discretionary DOD funding published in March 2011, the amount provided for FY2012 was reduced by terms of the BCA and the amount provided for FY2013 was reduced by sequestration, but only after the spending caps for that year were raised by terms of P.L. 112-240, the American Taxpayer Relief Act (ATRA) of 2012. The DOD budget request for FY2014 exceeded that modified cap and final action on FY2014 appropriations came only after Congress enacted P.L. 113-67, the Bipartisan Budget Act of 2014, which further raised the spending caps for FY2014 and 2015. (See Figure 4 .)

Based on projections by the Office of Management and Budget (OMB), the adjusted caps would increase at or slightly below the rate of inflation, thus keeping future DOD budgets flat in real terms.

Thus, one aspect of the interaction between DOD's long-term budget projections and the spending reduction effort embodied in BCA is that, after their initial year in effect (2012, when the FY2013 budget was at issue), Congress has twice modified the spending caps so as to reduce (but not eliminate) their impact on the then-pending budget request. (See Table 7 .)

On the other hand, since early 2011—months before the BCA was enacted—DOD's long-range spending plans have been pared back each year as part of the spending reduction effort of which the BCA-created spending caps are the most prominent manifestation. As a result, the Administration's FY2015 DOD request of $496 billion in discretionary budget authority is lower by more than 18% than the $616 billion request for FY2015 that was projected in March 2010. (See Figure 5 .)

Even if Congress were to amend the current defense spending cap for FY2015 and provide the additional $26.4 billion requested for DOD as part of the OGSI package, discretionary DOD base budget authority for FY2015 would be 15% lower than was projected in 2010.

Internal Cost Pressures

Although DOD's FY2015 base budget request is 23% higher, in real terms, than the budget was in 2000 (the last full year before the terror attacks of 9/11), the department may face increasingly tough budget choices if there is no change in the current statutory caps restricting future defense budgets to increases that would match, or fall just short of, the rate of inflation.

The basic reason for this is that within major segments of the DOD budget—excluding war costs—the annual cost-per-active-duty-troop (in inflation-adjusted terms) has been steadily increasing for many years:

Military personnel funding per capita (excluding most of the cost of medical care) has increased by nearly 27% since 2000. Major contributing factors included annual pay raises that frequently exceeded the average rate of pay hikes in the private sector, increased housing allowances intended to eliminate out-of-pocket costs for personnel not living in government-provided housing, and various policy changes that have increased pay and medical benefits for military retirees. Operation and Maintenance (O&M) funding, which covers deployments, training, operation of bases, repair and maintenance of equipment and facilities and most of DOD's civilian payroll and health care costs, has been growing for more than three decades, relative to the size of the force, at an average annual rate of 2.7% above the cost of inflation. Spending on acquisition (procurement plus R&D) per troop has increased in real terms as developments in technology make each new generation of weaponry more expensive (as well as more capable) than the generation it replaces. Moreover, combat in Iraq and Afghanistan has fostered new requirements for procurement associated with force protection, communications and transportation.

If DOD discretionary spending (adjusted for inflation) remains essentially flat through the early 2020s as current law (i.e., the BBA spending caps) requires, and if the real per capita costs of personnel, O&M, and procurement continue to increase, some combination of reductions in the size and/or readiness of the force and reductions in the scope of planned modernization may have to occur.

FY2015 Base Budget Highlights

According to Administration officials, the $495.6 billion request for discretionary budget authority in DOD's base budget was intended support the national strategy outlined in DOD's 2014 Quadrennial Defense Review (QDR) published concurrently with the funding request. In general terms, the request was presented as an effort to accommodate both changing security requirements and more constrained budgets by reducing the size of the force—particularly the Army and Marine Corps—while modernizing the force and keeping it trained for a broader range of missions.

Following are some major themes of the Administration's FY2015 base budget request.

Implementing the 2014 Quadrennial Defense Review (QDR)

A QDR, mandated by law to be conducted during the first year of every four-year presidential term, is required to "delineate a national defense strategy"; to determine the force structure, modernization plans, and infrastructure required to implement that strategy; and to craft a budget plan that would fund it. The review is required by law to take a 20-year outlook, and to be fiscally unconstrained by the President's budget request.

Some critics faulted the 2014 QDR for focusing on near-term security issues and accepting the limitations imposed by the Administration's budget:

[T]he 2014 QDR focused largely on the planned force structure associated with the five-year Future Years Defense Program [covering 2015-2019], and it contained a strategy that assumes increased risk to the force, without specifying the resources required to execute the strategy at a low-to-moderate level of risk.

The Administration, on the other hand, characterized the 2014 QDR as "strategy-driven and resource-informed."

The DOD priorities outlined in the 2014 QDR were based on the Defense Strategic Guidance (DSG) issued by the Administration in January 2012. That earlier document was written as a blueprint for reshaping by 2020 a U.S. defense establishment that had been focused for more than a decade on very specific types of operations in Iraq and Afghanistan. Among the shifts proposed by DSG that were echoed in the 2014 QDR are the following:

DOD will "rebalance" its global posture to emphasize operations in the Asia-Pacific region and the Middle East. DOD will maintain a large enough force to win a major conventional war in one region while, concurrently, being able to inflict enough damage on a potential aggressor in a second region to deter that country from launching a second attack. DOD will not maintain an active-duty force large enough to conduct large-scale stability operations on a prolonged basis, such those conducted in Iraq and Afghanistan over the past decade. DOD will place more emphasis on being able to project military power in regions to which potential adversaries will try to deny them access with precision-guided missiles and other advanced weapons. In a departure from the practice in recent years of having forces concentrate on training for the types of missions being carried out in Iraq and Afghanistan, forces will train for operating across the spectrum of conflict, from major conventional wars to peacekeeping and stability operations. DOD will invest in capabilities other than traditional combat forces, including Special Operations Forces, Intelligence, Surveillance, and Reconnaissance (ISR) capabilities, and cyberspace defenses. DOD will try to improve its ability to help other countries bolster their own security forces to partner more effectively with U.S. forces in missions of mutual interest .

Manpower Issues

Size of the Force

The Administration's FY2015 budget request projected continuation of the reduction in the number of active-component personnel begun in FY2013, with the Army and Marine Corps slated to absorb most of the reduction. Originally, the plan was that, by FY2017, the Army would drop to 490,000 active-duty soldiers, while the size of the Marine Corps would drop to 182,100. In effect, the two services thus would give up the 92,000 personnel that had been added to their strength in 2007, ending up slightly larger than they had been in 2001, the last budget year before the terrorist attacks of 9/11.

With the FY2014 budget request, the planned drawdown was accelerated, with the two services slated to reach their new, lower ceilings by FY2015. However, the FY2015 budget request projected that, even if the BCA spending caps were removed, by FY2019 the Army will be further reduced, stabilizing at between 440,000 and 450,000 active-duty personnel. If the BCA caps remain in force, the projection is for an Army of 420,000 and a Marine Corps of 175,000. (See Table 8 .)

In FY2001, the last budget year before the post-9/11 buildup of U.S. force, the combined end-strength of the active component Army and Marine Corps was about 653,000—roughly two-thirds of its FY1987 post-Vietnam, Cold War peak. Compared with their manpower in FY2001, the two services had grown by about 18% in FY2010, their peak year of their post-9/11 end-strength. Compared with that same baseline, the current plan would reduce their size by 5% if the spending caps were lifted and by 9% if the caps remained in force. (See Figure 6 .)

The Administration's FY2015 request also assumed a reduction of 12,900 personnel in the reserve components. More than half that cut would be taken from the Army Reserve and Army National Guard which—taken together—account for two-thirds of Selected Reserve personnel. As is the case with the Army's active component, that service's two reserve components would continue to shrink under the Administration's budget plan. Compared with their FY2014 end-strength, the combined end-strength of the Army Reserve and Army National Guard would be reduced by 5% by FY2019 if DOD is granted relief from the current budget caps and by 10% if the caps remain in force. (See Table 9 .)

Compensation

By DOD's accounting, more than one-third of the department's annual budget funds pay and benefits for military personnel. Adding the cost of pay and benefits for DOD's nearly 800,000 civilian employees—most of whose compensation is funded in the Operation and Maintenance accounts—brings the total cost of compensation to nearly one-half the annual DOD budget. (See Table 10 .)

The FY2015 budget request proposed several changes in compensation policy which, the Administration maintains, would not reduce the compensation of any servicemember but would slow the rate at which compensation costs were rising year to year:

Basic pay, which typically accounts for about two-thirds of the cash compensation of an active-duty servicemember, would be increased by 1% in FY2015 and FY2016. This is a lower rate than the expected increase in the Labor Department's Employment Cost Index (ECI), which tracks changes in private sector pay. Generals and admirals would receive no increase in basic pay in FY2015. Servicemembers' Basic Allowance for Housing (BAH)—a cash payment based on members' rank, number of dependents, and housing costs in the area where they are stationed—has been intended to cover 100% of housing rental expenses for personnel who are not provided with government-supplied housing. Under the Administration's plan, the allowance would increase more slowly than rental costs until the allowance covers 95% of rent and utility costs, requiring servicemembers to cover the remaining 5%. The subsidy for commissaries—a worldwide chain of 284 supermarkets in which servicemembers, retirees, and their dependents buy items at cost-plus-5%—would be reduced by a total of $1 billion over three years (FY2015-FY2017). As it had done in its budget requests for FY2013 and FY2014, the Administration included in its FY2015 DOD budget proposals to create some new fees and copayment requirements and to increase some existing fees for beneficiaries of TRICARE, DOD's medical insurance program.

Defense Health Program

The FY2015 budget request included a total of $47.4 billion for DOD's health care system, which serves more than 9,600,000 active and retired servicemembers, their dependents, and their survivors. Of that total, the Defense Health Program (DHP) was slated to receive $32.0 billion, 97% of which is Operation and Maintenance funding that operates DOD's 56 hospitals and 608 medical and dental clinics in addition to funding private sector medical care purchased by the TRICARE system under contract. The DHP budget includes compensation for the health care system's 67,000 civilian employees.

The other major components of DOD's health care budget are

$8.6 billion (included in the services' Military Personnel accounts) to fund pay and benefits for the 85,000 uniformed medical personnel, many of who support the noncombat health care mission directly or indirectly; and $6.2 billion in payments to the Medicare-Eligible Retiree Health Care Fund, created in 2003 to provide for the future cost of post-retirement health care of personnel currently on active duty (and their dependents) under the so-called TRICARE-for-Life program.

Like several previous DOD budget requests since 2005, the FY2015 request incorporated proposals intended to slow the rate of growth of DOD's health care costs. The health care system (including military personnel costs), which accounted for 6.0% of DOD's base budget in FY2001, accounted for 9.4% of the FY2015 base budget request.

Compared to what the FY2015 DOD health care budget would have been in the absence of the Administrations proposed TRICARE changes, the Administration request incorporated:

an addition of $88 million to cover the administrative cost of consolidating into a single TRICARE coverage plan the current menu of three TRICARE options; a reduction of $180 million to reflect the higher copayment fees for pharmaceuticals that TRICARE beneficiaries would pay under one of the Administration's legislative proposals, which is intended to encourage the use of generic medications and mail-order refills; and a reduction of $92 million in anticipation of savings that result from the consolidation and reorganization of some DOD health care facilities on the basis of a DOD study currently underway.

The Administration also proposed an enrollment fee for military retirees joining the TRICARE-for-Life program. Currently, there is no such fee.

Force Structure

The Administration's FY2015 budget request and its projected requests through FY2019 assumed that reductions would be made in several components of the force in addition to some reorganizations. Moreover, the Administration said that deeper reductions would be necessary if the defense spending caps currently in force were not raised, officials said.

Army Force Reductions

In the Army's active component, the number of brigade combat teams (BCTs)—ground combat units of 4,000 to 5,000 soldiers—would drop from 36 to 32. The remaining BCTs each would be enlarged with the addition of a third combat battalion.

The Army also would reduce from 13 to 11 the number of combat aviation brigades—each of which fields upwards of 100 combat and transport helicopters as well as pilotless drones. To save an estimated $1.1 billion in annual operating costs, the service would dispose of nearly 800 of its almost 4,600 helicopters. In the process, the service hoped to economize on its aviation training and maintenance overhead by eliminating entire fleets of several older types of aircraft. More controversially, the plan would transfer to active-component Army units all 192 of the Apache attack helicopters currently assigned to National Guard units, while transferring to Guard units 111 Blackhawk troop-carrying helicopters currently assigned to the active Army.

Navy Force Reductions

The FY2015 budget request for the Navy would have paid to remove spent nuclear fuel from the two reactors that power the 25-year-old aircraft carrier U.S.S. George Washington , for which the Navy long had planned a mid-life refueling and modernization to equip the ship for another 25 years of service. But Administration officials said that, if the defense spending caps currently in force were not removed, the Navy would retire the ship instead, reducing the carrier force to 10 ships.

To save money, the Navy's budget also would remove from service—but not scrap—half its fleet of 22 Aegis cruisers and 3 of its amphibious landing ships. The vessels would be modernized over several years and put back in service one-by-one to replace similar ships that had remained in service and had worn out.

Air Force Reductions

Contending that the Air Force could not sustain its current force under the reduced budgets now in prospect, Administration officials planned to retire entire fleets of certain types of aircraft so they could shut down the associated training and maintenance pipelines. They planned to retire the U-2 long-range reconnaissance plane which, they said, could be replaced by long-range drones. They also planned to retire the A-10 ground attack plane, contending that many other types of aircraft could perform its missions using precision-guided bombs and missiles.

If the future defense spending caps remained in force, they said, the Service would propose in future budgets retiring its force of KC-10 mid-air refueling tankers and one version of the Global Hawk long-range reconnaissance drone.

Modernization

According to the Administration, its FY2015 DOD budget request and plan for future DOD budgets would modernize the smaller force in prospect with an emphasis on systems that could prevail over a "near-peer competitor"—that is, another traditionally organized military force equipped with high-tech weaponry and communications. Compared with previously announced modernization plans, however, the request reflected tighter defense budgets both in reductions in the number of some items acquired and, in some cases, a shift to less technologically ambitious development efforts.

Strategic Nuclear Forces

The budget request would sustain the existing "triad" of strategic nuclear weapons launchers: manned bombers, land-based ICBMs, and ballistic missile launching submarines. It included $913 million in FY2015 and an additional $8.9 billion over the course of the following four years to develop a new long-range bomber to replace B-52s that have been in service since the early 1960s. The request also included $1.22 billion to continue developing a new missile-launching sub (and its associated nuclear power plant) to replace the ten Ohio -class ships currently in service, which are slated to begin retiring in 2025.

Ground Combat Systems

Both the Army and the Marine Corps sidetracked efforts to push the technology envelope in developing a new generation of armored combat vehicles, putting emphasis, instead, on less complex programs. The Army's highest-priced R&D program, the Ground Combat Vehicle (GCV) program (intended as a successor to the Bradley armored troop carrier) was cancelled weeks before the FY2015 DOD budget was made public. According to DOD, this single move will reduce by a total of $3.7 billion the budgets requested in FY2015-FY2019.

The budget request included $92.4 million to continue development of an Advanced Multi-Purpose Vehicle (AMPV) intended to replace some 3,000 Vietnam War-era M-113 troop carriers currently used as mobile command posts and battlefield ambulances and supply carriers.

In 2012, the Marine Corps had abandoned its Expeditionary Fighting Vehicle (EFV) program, an effort to develop an amphibious armored vehicle that would move from ship to shore at 50 mph and then function as a troop carrier. Other efforts to develop less technologically ambitious combat vehicles for the Marines have been slow to gain momentum in recent years. With the existing fleet of AAV-7 amphibious troop carriers reaching 40 years of service, the Marine Corps FY2015 budget request includes $105.5 million to develop an Amphibious Combat Vehicle (ACV)—a conventional armored troop carrier that would replace some of the older AAV-7s. Unlike the vehicle it would replace, the ACV might travel on wheels rather than on tracks, and would be carried close to shore in a landing craft.

Ships

Reflecting the Administration's priority on forces that could hold their own in high-tech, conventional warfare, the FY2015 budget request continued the policy of funding annually two Virginia -class nuclear-powered submarines (requesting $5.88 billion for the program) and two Arleigh Burke -class destroyers equipped with the Aegis anti-missile/anti-aircraft system (for which the budget includes $2.81 billion).

The emphasis on systems that can fight in intense conventional combat was the Administration's stated rationale for funding in FY2015 three Littoral Combat Ships [LCSs], rather than the four ships that had been planned. Although the Navy had planned to buy a total of 52 of the ships (two versions of which are being built), Defense Secretary Hagel directed the Navy to buy no additional LCS ships (beyond those requested for FY2015) and to come up with a design for a more robust and combat-capable ship. In the event, DOD announced on December 11, 2014 that the Navy would continue purchasing both LCS versions with additional firepower and other improvements.

Aircraft

The Administration's request would continue funding several major aircraft programs that have been among DOD's top priorities, though the amounts requested for FY2015 were less than had been projected in DOD's FY2014 budget documents.

For the three versions of the F-35 Joint Strike fighter used by the Navy, Marine Corps and Air Force, the budget requested $5.82 billion for 34 planes. This amounted to a reduction of eight planes ($1.15 billion) from the FY2015 request that was projected in DOD's FY2014 budget request.

The request included a total of $2.31 billion to continue development and begin production of the KC-46A mid-air refueling tanker, a modification of the Boeing 767 jetliner intended to replace KC-135 tankers that date from the 1960s.

No funds were requested by the Navy to continue production of either the F/A-18E/F carrier-based strike fighter or the EF-18G Growler, a variant of the fighter equipped to jam enemy radars. Some critics of the F-35 view continued production of the F/A-18E/F as a possible alternative to the Navy's version of the F-35.

Readiness

DOD characterized the FY2015 budget request as a blueprint for the revitalization of conventional warfighting capabilities that had atrophied during a decade of counterinsurgency operations in Iraq and Afghanistan. DOD budget documents cited three factors as contributing to a shortfall in current readiness:

Mandatory deficit reduction measures enforced by sequestration in FY2013 and by spending caps in FY2012, FY2104, and FY2015, which have constrained budgets for training, equipment maintenance, and facilities upkeep. Maintenance of relatively large forces in Iraq and Afghanistan that required units to deploy frequently for operations in a demanding environment without adequate time between deployments for rest and rehabilitation of personnel and equipment. A constant need to devote available training time and equipment to preparing troops to fight a very specific, limited type of war at the expense of preparing for conventional combat against a technologically advanced adversary.

For FY2015, DOD's base budget request for operations and maintenance (O&M) accounts—which fund training, equipment maintenance, facilities upkeep and other activities contributing to readiness—amounted to $198.7 billion. This is 3.1% more than was appropriated for base budget O&M funding in FY2014. However, in the FY2014 Consolidated Appropriations Act ( P.L. 113-76 ), Congress shifted to the part of the bill funding war costs $9.15 billion for O&M activities that DOD had presented as part of the base budget. If those funds are counted as part of the FY2014 base budget O&M appropriation, the FY2015 O&M request would represent a reduction of 1.6%.

Efficiencies

In addition to proposed reductions in the size of the force and the pace of modernization, the FY2015 request—like the three budgets that preceded it—included a number of organizational and management initiatives that are intended to further reduce DOD operating costs:

The FY2012 request projected savings totaling $150 billion over the course of FY2012-FY2016. The FY2013 request projected savings of an additional $60 billion in FY2013-FY2017. The FY2014 request projected savings of an additional $35 billion in FY2014-FY2018.

The FY2015 budget assumed operational efficiencies that would reduce DOD costs in FY2015-FY2019 by an estimated $73.3 billion, including the following projected savings:

a 20% reduction in headquarters budgets expected to save an estimated $5.3 billion. various proposed efficiencies in the Defense Health Program (aside from the proposed changes in the TRICARE medical insurance system) projected to save $17.3 billion. cuts to training, travel and other support costs expected to save $21.0 billion; and various efficiencies in contracting expected to save $29.9 billion.

The FY2015 budget request and five-year projection also assumed reductions in manpower and in military facilities construction funds totaling $12.2 billion. In addition, the budget request assumed a so-called "BRAC"-round of base-closures that would cost $1.9 billion through FY2019 but would yield annual savings thereafter.

FY2015 National Defense Authorization Act (NDAA): H.R. 4435, S. 2410, H.R. 3979

The versions of the National Defense Authorization Act (NDAA) for FY2015 that were passed by the House on May 25, 2014 ( H.R. 4435 ) and reported on June 2, 2014, by the Senate Armed Services Committee ( S. 2410 ) each would have authorized total DOD base budget appropriations that would have exceeded the Administration's base budget request by less than $500 million. The base budget authorized by H.R. 3979 —the version of the NDAA that was cleared for the President on December 8, 2014—fell between the House and Senate versions of the bill, authorizing $495.9 billion, which is $347 million more than the Administration requested. (See Table 11 .)

Authorized funding levels for Overseas Contingency Operations (OCO) in the House-passed, Senate committee reported, and final versions of the FY2015 NDAA are not comparable. The Administration's original FY2015 budget request included $79.4 billion for OCO, but that amount—which was identical with DOD's enacted FY2014 OCO appropriation—was specifically described as a placeholder that would be replaced with an updated request once decisions were made about the number of U.S. troops slated to remain in Afghanistan through FY2015.

Before the Administration submitted its revised OCO request, the House passed H.R. 4435 , which would have authorized the placeholder OCO amount, and the Senate Armed Services Committee reported S. 2410 , which would have provided a blanket authorization for OCO appropriations without specifying the amount.

House and Senate negotiators drafting H.R. 3979 took account of total FY2015 OCO funding requests totaling $63.7 billion, which the Administration submitted in three parts:

On June 26, 2014, it requested $53.7 billion for operations associated with Afghanistan and Iraq plus $4.0 billion for a Counterterrorism Partnerships Fund and $925 million for a European Reassurance Initiative to signal U.S. support for countries unsettled by Russia's occupation of Ukrainian territory. On November 5, 2014, it requested $112 million for the Defense Advanced Research Projects Agency (DARPA) to develop vaccines and other technologies relevant to the effort to combat the Ebola virus. And on November 10, 2014, it requested $5.0 billion for operations against the Islamic State.

NDAA Highlights

The House and Senate versions of the bill each barred—during FY2015—several of the cost-reduction initiatives that had been incorporated into the Administration's budget request. Both bills included provisions that would bar Administration proposals for a new round of military base closures, the retirement of various Air Force planes (including A-10 ground attack aircraft), and changes in the military commissary system.

However, the final version of the bill approved limited steps that could lead to eventual implementation of many of the Administration's proposals to reduce the rate of growth of military compensation and to retire some types of weapons. On several of these issues, including the proposed transfer of Apache helicopters from the National Guard to the Army, the housing allowance for military personnel, and pharmacy co-payments for TRICARE beneficiaries, the Joint Explanatory Statement on H.R. 3979 agreed to by House and Senate negotiators specifically cited the possibility that Congress might, at some future date, agree to these or similar cost-reduction proposals. (See Table 12 .)

As both the House and Senate versions of the NDAA would have done, H.R. 3979 authorizes billions of dollars more than the budget requests for various purposes (with those gross increases offset, in some measure, by proposed cuts to the request). Taken as a whole, the Senate bill's add-ons were less ambitious than those that would have been authorized by the House bill: for two big-ticket Navy items—refueling an aircraft carrier and buying an amphibious landing ship—the House bill would have authorized additional funds while the Senate bill would have allowed the Navy to use for those purposes funds that had been appropriated in earlier budgets.

For several programs, the increased authorizations provided by the final version of the bill were closer to the higher, House-passed, amounts. For example, H.R. 3979 would add to the amount requested nearly $1.7 billion for the carrier refueling and the additional amphibious landing ship. However, more than $1.0 billion of the final bill's additional authorization would apply to the OCO budget, which is exempt from the statutory cap on defense spending. (See Table 13 .)

To compensate for the added cost of rejecting at least some Administration-proposed savings and making some sizeable additions to the budget request, H.R. 3979—as the House and Senate versions of the NDAA would have done—would authorize less than the budget requested for many programs, with some of the reductions amounting to hundreds of millions of dollars. While some of the proposed reductions were aimed at slowing down certain acquisition programs, others were justified on grounds that they reflected fact-of-life developments (such as changes in foreign currency exchange rates) and would have no adverse impact on DOD's FY2015 activities. (See Table 14 .)

Military Personnel Issues (Authorization)

End-Strength Reductions (Authorization)

As the House and Senate versions of the FY2014 NDAA would have done, H.R. 3979 authorizes the Administration-proposed reductions in the size of the active and reserve components of the services. This will reduce active component end-strength by 52,800 to a total of 1,361,400 personnel ( Table 8 ) while reducing reserve component end-strength by 12,900 to a total of 820,800 personnel ( Table 9 ).

In its report on H.R. 4435 , the House Armed Services Committee expressed concern that, considering ongoing overseas commitments of U.S. forces, the additional reductions that will be necessary if the budget caps are not lifted, "may have serious implications on the capacity and capability of the All-Volunteer Force and the ability for the services to meet the National Defense Strategy."

The House committee also directed the Government Accountability Office (GAO) to investigate why 25% of Army Reserve and 30% of Army National Guard personnel are not available for mobilization at any given time, mostly for medical reasons.

Compensation and Benefits Changes (Authorization)

The House-passed version of the FY2015 NDAA would block each of the Administration's proposals to slow the rate of growth in military pay and benefits, while the version reported by the Senate Armed Services Committee would authorize some of those initiatives.

In its report on H.R. 4435 , the House Armed Services Committee warned of the cumulative effect on relatively junior enlisted personnel of the proposed changes in pay and benefits, recommending that any changes be deferred until Congress receives the recommendations of the legislatively mandated Military Compensation and Retirement Modernization Commission (MCRMC). This group, established by a provision of the NDAA for FY2013, is due to report its findings and recommendations by February 1, 2015.

The Senate Armed Services Committee, in its report on S. 2410 , said it "reluctantly" supported proposed restraints on the increase for FY2015 in servicemembers' basic pay and housing allowances, as well as a proposed increase in certain pharmacy co-payment requirements under TRICARE. However, the Senate committee, too, called for deferring other proposed changes in TRICARE and the commissary system pending receipt of the MCRMC recommendations. It also urged the commission to conduct a survey of servicemembers.

The enacted version of the bill—H.R. 3979—steered a middle course between the House and Senate bills on these issues. But in the Joint Explanatory Statement accompanying the bill, House and Senate negotiators noted that they were deferring judgment on some of the proposed cost reductions, not rejecting them out of hand, and warning that the overall budget situation would be a factor in the Armed Services Committees' future decisions:

We note that if sequestration-level budgets remain in effect for fiscal year 2016 and beyond, DOD will need to make painful cuts and achieve substantial savings across its entire budget in order to avoid an unacceptable reduction in readiness of the Armed Forces of the United States. The [Joint Chiefs of Staff] have urged us to take all action necessary, including compensation adjustments, to avoid such readiness impacts.

Military Basic Pay Authorization

Section 601 of the final bill freezes the basic pay of generals and admirals during FY2015, as the Administration had proposed. The House and Senate bill's each contained similar provisions.

For personnel of all other ranks, Section 601 of the Senate Committee's bill would have authorized a 1% raise in basic pay, beginning January 1, 2015, as called for by the budget request. In its report on H.R. 4435 , the House Armed Services Committee endorsed the 1.8% increase in basic pay that would occur on that date under existing law which ties the annual increase in military basic pay to the Labor Department's Employment Cost Index (ECI), a measure of private sector compensation. The House-passed bill included no provision relating to the annual increase in basic pay (except for its Section 602, freezing basic pay for generals and admirals). However, House bill would have increased the amount authorized for military personnel spending by $534.9 million—the difference between the cost of the 1% raise included in the budget request and the 1.8% raise favored by the House committee.

The enacted bill contains no provision relating to basic pay (except for generals and admirals). However, the accompanying Joint Explanatory Statement acknowledges that the President had "exercised his authority under Section 1009 (e) of Title 37, United States Code" to implement a 1% raise rather than the 1.8% raise that the ECI formula would require.

Military Retired Pay COLA

H.R. 3979 includes a provision (Section 623) that essentially mirrored Section 621 of the Senate bill, delaying until January 1, 2016, the effective date of a reduction in the annual cost-of-living adjustment (COLA) for military retired pay. The provision's roots lay in the Bipartisan Budget Act (BBA) of 2013 ( P.L. 113-67 ) enacted late in December 2013.

In addition to raising mandatory budget caps in FY2014 and FY2015, that law reduced the cost of living adjustments (COLAs) provided to military retirees under the age of 62 from a percentage equal to the increase in the Consumer Price Index (CPI) to a percentage that was 1% lower than the CPI change. Subsequent legislation ( P.L. 113-76 and P.L. 113-82 ) exempted from that provision all currently serving military personnel who joined prior to January 1, 2014.

Section 623 of the enacted bill extends that exemption to cover all who joined the service prior to January 1, 2016. In its report on S. 2410 , the Senate Armed Services Committee said this would defer any change in the retirees' COLA until Congress had time to review the report of the legislatively mandated compensation review commission (MCRMC), which is due to report early in 2015.

Housing Allowance (BAH) Authorization

Section 603 of the Senate bill ( S. 2410 ) would have authorized, as requested, a change in the method for computing servicemembers' Basic Allowance for Housing (BAH) in order to allow DOD to reduce the rate of growth in BAH payments in fiscal years 2015-2017 until they cover 95% of housing and utility costs in a particular region rather than 100% of costs, as currently is the policy.

The House bill included no provision relating to the proposed change in the housing allowance. However, in its report, the committee asked DOD to share with the Military Compensation Commission any analysis it had carried out concerning the likely effects on the force of the proposed change in the housing allowance.

Section 604 of the final bill allows DOD to implement that portion of the planned reduction in growth that was planned for FY2015—the first year of the three-year phase-in period—pending the Military Compensation Commission report. "By adopting changes to BAH beginning in the first year of the proposal, the agreement preserves the option for Congress to achieve the full savings requested by DOD," the Joint Explanatory Statement says.

Commissary Subsidy Authorization

Like the House and Senate versions of the FY2015 NDAA, the final version of the bill rejected the Administration proposal to reduce by $200 million the annual operating subsidy to the military commissary system. The subsidy amounted to $1.37 billion in FY2014 and the Administration requested $1.11 billion in FY2015.

H.R. 3979 authorizes restoration of the $200 million difference to the commissary budget, as the Senate bill would have done. In its report on S. 2410 , the Senate committee directed the Secretary of Defense to present to the military compensation commission an analysis of the impact of the commissary proposal on the purchasing power of the families of younger enlisted personnel and an assessment of other business models for the commissary system. The House bill would have added $100 million to the commissary budget request.

Section 634 of the final bill—which parallels Section 632 of the House bill—requires the Secretary of Defense to sponsor a review of the commissary system by an independent organization "experienced in grocery retail analysis." The review is to include an assessment of "the impact that eliminating or reducing the commissary subsidy would have on eligible beneficiaries."

TRICARE Authorization

The House bill rejected the Administration's proposed increases in TRICARE fees and pharmacy copays, including the proposed enrollment fee for retirees joining TRICARE-for-Life. The bill included a provision (Section 736) barring the closure or realignment of any DOD medical facility pending a report to Congress by the Government Accountability Office (GAO) on a currently ongoing DOD study that is expected to recommend such changes.

The Senate bill would have authorized the Administration's proposal to increase pharmacy copayments under TRICARE in ways designed to encourage the use of generic medications and mail-order refills (Section 702).

Section 702 of the final version of the bill authorizes a $3 increase in the current pharmacy copayment and requires that all prescriptions for maintenance medications—those used on a regular basis for chronic conditions such as high cholesterol—be filled either through a pharmacy at a military medical facility or through TRICARE's mail-order system.

Sexual Assault Prevention and Response

The House and Senate bills each included provisions building on elements of the FY2014 NDAA ( P.L. 113-66 ) that changed DOD policy and military law regarding cases of sexual assault within the Armed Forces.

Following are selected aspects of the sexual assault issue that are addressed in one or another version of the FY2015 NDAA:

Ground Combat Systems (Authorization)

Congressional action on authorization of funding for selected ground force equipment is summarized in Table A-4 . Following are some highlights.

Army and National Guard Helicopters

The House bill would have prohibited during FY2015 the transfer to active Army units of Apache attack helicopters currently assigned to National Guard units many of which, in turn, would be equipped with relatively modern Black Hawk troop-carrying helicopters drawn from Army units (Section 1050). It also would have directed the GAO to review the analysis that was the basis of the Army's decision to transfer the Apaches. In its report on the bill, however, the committee allowed for the possibility that such a transfer eventually might occur, stating: "The committee expects that those units that transfer AH-64 Apache attack helicopters to the active Army would receive priority for modernized Black Hawks."

The House bill also would have added to the budget $96.4 million to buy six new Black Hawks for the National Guard plus $45.4 million to modernize early-model Black Hawks currently equipping National Guard units.

The Senate bill would have allowed DOD to transfer to the active Army as many as 48 of the National Guard's 192 Apaches (Section 1703). In addition, it would have added to the budget $145 million for eight additional Black Hawks for the National Guard.

S. 2410 also would have mandated creation of an independent commission to make recommendations on the organization of the Army and on the allocation of missions among the active Army, the Army Reserve and the Army National Guard (Title XVII). The bill also would have required the Secretary of the Air Force to report each year from 2016 to 2019 on that service's implementation of recommendations made early in 2014 by a legislatively mandated panel set up to review the structure of the Air Force, including the allocation of missions between active and reserve components (Section 1061).

In the final version of the FY2015 NDAA, Section 1703 bars the transfer of any Apache helicopters from the National Guard during FY2015 but allows the transfer of up to 48 of the aircraft during the first six months of FY2016. Also, Sections 1701-1712 of the bill creates a commission to study the allocation of missions between the active-duty Army and its reserve components, paralleling the Senate bill's initiative.

Armored Vehicle and Tactical Vehicle Industrial Base

Like the House and Senate versions of the bill, H.R. 3979 authorizes larger amounts than were requested for tanks and other armored combat vehicles for the stated purpose of sustaining the specialized network of suppliers and assembly plants that produce such equipment. The House and Senate Armed Services Committees, in the reports on their respective versions of the FY2015 NDAA, each warned that the Army's budget request for tanks and other armored combat vehicles was inadequate to sustain that industrial base. The House committee explicitly discounted DOD's contention that sales to foreign governments would keep the armored industrial base intact until late in this decade, when DOD projects a surge in procurement of such vehicles.

The final version of the bill also mirrors the House bill in authorizing additional funds for Army trucks. In its report on H.R. 4435 , the House Armed Services Committee justified these increases as a way to even out annual funding for the trucks, avoiding the inefficiencies that would result fluctuations in annual funding under DOD projected spending plans. ( Table 16 .)

Naval Systems (Authorization)

Congressional action on authorization of funding for selected naval equipment is summarized in Table A-6 . Following are some highlights.

Refueling a Nuclear-powered Carrier

Like the House and Senate versions of the NDAA, H.R. 3979 includes provisions intended to require the Navy to refuel and modernize the aircraft carrier U.S.S. George Washington . The project—expected to cost $4.7 billion over nearly four years—would equip the ship, commissioned in 1992, for an additional 23 years of service.

Incremental funding for preliminary work was included in DOD budgets beginning in FY2012, with extensive work on the ship slated to begin in FY2016. But when presenting the FY2015 budget request, DOD officials said that, because of budget constraints, they were deferring until 2016 a decision whether to refuel and modernize the carrier or retire it. Officials said that the FY2016 budget request would fund one course or the other depending on whether Congress had indicated a willingness to provide more funding for DOD in future years than the budget caps currently in force would allow.

On July 10, 2014, the Navy's chief shipbuilding manager, Assistant Secretary Sean Stackley, told a House Armed Services Subcommittee that, in the light of congressional support for retaining the ship, the Navy was planning to fund the refueling and overhaul of the carrier in future budgets.

The House bill would have required the Navy to proceed with the originally planned mid-life refueling and modernization of U.S.S. George Washington , authorizing an additional $785 million for the project. The House bill also would have embargoed use of 50% of the funds appropriated for the Office of the Secretary of Defense in FY2015 until contracts were signed for the refueling (Section 1024).

The Senate bill would have authorized the Navy to begin work on the carrier using in FY2015 up to $650 million in funds that had been appropriated in prior budgets but had not been spent (Section 1021). It also would have barred the Navy from using those funds to perform any work on the carrier that was not a part of the refueling and modernization work (Section 1021). This would be consistent with DOD's announced plan to perform during FY2015 only work that would be needed whether the ship was to be refueled or retired.

The final version of the NDAA authorizes an additional $795.1 million to begin overhauling the ship and incorporates as Section 1023 the Senate provision barring use of the funds for any purpose not required by the refueling and modernization plan.

Temporary Lay-up of Aegis Cruisers and Amphibious Ships

The FY2015 budget request incorporated a plan for the Navy to:

keep in service 11 Aegis cruisers and 9 LSD-type amphibious landing transports; tie up 11 other cruisers and 3 LSDs; modernize the out-of-service ships while they are laid up, over the span of several years; and return the modernized ships to service as one-for-one replacements as their sister ships (those that remained in service) retire, beginning in the late 2020s. H.R. 3979 —like the House and Senate versions of the FY2015 NDAA—includes restrictive provisions intended to ensure that the laid-up ships would be modernized and would not be prematurely scrapped.

In the final version of the bill, Section 1026 requires that modernization work on two of the cruisers begin in 2015, that none of the ships be retired, and that all of them be maintained in a condition that would permit their return to active service. It also requires submission to Congress, with the annual DOD budget request, of a detailed report on the status of each of the ships. The Joint Explanatory Statement accompanying H.R. 3979 expresses the expectation that the ships be retained in the fleet for their full, planned service lifetimes (not counting any years that the ship was out of service because it was undergoing modernization).

Missile-launching Submarines

The final version of the FY2015 NDAA—like the House and Senate versions—authorizes the $1.22 billion requested to develop a new class of ballistic missile-launching submarines to replace the current fleet of Ohio -class subs, which are slated to begin retiring in 2027. That total includes $849.3 million for design work related to the new ship and $370.0 million to continue development of the new sub's nuclear power plant.

H.R. 3979 —like its House and Senate precursors—also creates (Section 1022) a new budget account to fund construction of the new class of missile subs: the National Sea-Based Deterrent Fund. Navy officials have said that, if the cost of the new subs—estimated at $6 billion apiece in FY2013 dollars—has to be absorbed within projected shipbuilding budgets, many other ships will be squeezed out. The bill authorizes the Secretary of the Navy to transfer into the new account up to $3.5 billion in unobligated balances from the Navy's appropriations for FY2014-FY2016.

Air Force Programs (Authorization)

Congressional action on authorization of funding for selected types of fixed-wing aircraft is summarized in Table A-10 . Following are some highlights.

A-10 Ground-Attack Aircraft

The House and Senate versions of the FY2015 NDAA each contained provisions that would have blocked outright the Air Force's plan to retire its fleet of A-10 ground-attack planes. Each of those bills also would have authorized additional funds to continue operating the A-10 fleet.

Section 133 of H.R. 3979 prohibits retirement of any A-10s, but it also allows the Air Force to remove up to 36 of the aircraft from day-to-day operations if the Secretary of Defense certifies to Congress that doing so is necessary to free up funding needed to sustain the readiness of the Air Force fighter fleet. The final bill also added to the Air Force authorization request $331.2 million for continued A-10 operations in FY2015.

Intelligence, Reconnaissance, and Surveillance (ISR) Aircraft

In the reports on their respective versions of the FY2015 NDAA, the House and Senate Armed Services Committees each expressed concerns about Air Force plans to retire several of the service's surveillance and reconnaissance planes, in some cases, before a planned replacement would be ready for service. Following is a summary of action related to those issues in the House and Senate versions of the NDAA and in H.R. 3979 , the final version enacted into law. (See Table 17 .)

Missile Defense Programs

The FY2015 budget request included $7.46 billion for the Missile Defense Agency (MDA), about three-quarters of which would go to R&D efforts to develop sensors to detect ballistic missiles in flight and weapons to destroy them. The House bill would increase the MDA authorization by a net total of $363 million—about 4.9%. The Senate bill would add a net total of $190 million to the request. H.R. 3979 would add a net total of $377.6 million, authorizing a total of $7.85 billion for MDA. In each case, the bulk of the proposed increase would go to several Israeli-developed defense systems.

Congressional action on authorization of funding for selected missile defense programs is summarized in Table A-2 . Following are some highlights.

Ground-based Midcourse Defense (GMD)

The budget request included $1.00 billion for the Ground-Based Midcourse Defense (GMD), which includes Ground-Based Interceptor (GBI) missiles currently deployed in Alaska and California to protect U.S. territory against a small number of intercontinental ballistic missiles (ICBMs) launched from North Korea or Iran. The final version. H.R. 3979 —like the House-passed version of the NDAA—increases the authorization by $40.0 million to improve the reliability and maintainability of the system.

The final bill does not authorize planning and design for a third GBI deployment site, to be located on the East Coast. The House bill would have authorized $20 million for this purpose. In its report on H.R. 4435 , the House Armed Services Committee directed MDA to provide it with regular updates on the cost and planning estimates associated with a third site and an assessment of which of several potential East Coast sites would provide the best protection against missiles launched from Iran.

Israeli Defense Systems

The budget request included a total of $272.8 million for various Israeli-designed systems: $96.8 million to continue development of three systems designed to intercept short-range and medium-range ballistic missiles and $176.0 million to continue acquiring for Israel's use a fourth system called "Iron Dome," designed to intercept short-range rockets and artillery shells.

The House bill would have raised the total authorized for the Israeli systems to $520.8 million: $352.0 million for Iron Dome and $168.8 million for the other three. The Senate bill would have authorized $447.8 million: $351.0 million for Iron Dome and $220.6 million for the other three.

H.R. 3979 authorizes $571.6 million—slightly more than double the budget request—for the Israeli missile defense systems: $351.0 million for procurement of Iron Dome (in the OCO budget) plus $220.6 million for the other three systems.

Provisions Regarding Guantanamo Bay Detainees

The final version of the FY2015 NDAA—like the House bill—extends through December 31, 2015 restrictions in current law that prohibit the transfer to the United States of detainees held at the U.S. Naval Station at Guantanamo Bay, Cuba (Section 1033).

By contrast, the Senate bill (Section 1031) would have allowed a detainee to be brought to U.S. territory for continued detention and/or trial if:

the Secretary of Defense submits to Congress a plan to close the Guantanamo Bay detention facility; Congress does not pass (under fast-track procedures) a joint resolution of disapproval; the Secretary of Defense determines that the transfer served U.S. security interests and that steps had been or would be taken to reduce any public safety risks that would result; and Congress received at least 30 days prior notice of the proposed transfer.

H.R. 3979 does not include a provision comparable to Section 1033 of the Senate bill which would have allowed the temporary transfer of detainees to U.S. territory to deal with medical emergencies.

Detainee Facilities at Guantanamo Bay

No funds for constructing additional detainee facilities at Guantanamo Bay were requested in the FY2015 budget and none are authorized by H.R. 3979 . The House version of the FY2015 NDAA would have added $69.0 million for construction at Guantanamo Bay of a "high value detainee complex." Section 2808 of the final bill—repeating Section 2806 of the Senate bill—prohibits funding the construction of any additional facility at Guantanamo Bay "unless it has enduring military value independent of a high value detention mission." H.R. 3979 does not include a provision comparable to Section 1034 of the House bill that would have barred the use of funds for recreational facilities for Guantanamo Bay detainees.

Transfer of Detainees to Other Countries

The final version of the bill does not include language paralleling provisions of the Senate bill that would:

Prohibit the transfer of detainees to Yemen (Senate bill Section 1034); or Require a report to Congress on impediments to the transfer of detainees to other countries using the greater discretion given to the executive branch by Section 1035 of the FY2014 NDAA (Section 1032).

Provisions Relating to DOD Peacekeeping and Counterterrorism47

Global Train and Equip

Section 1205 of the final version of the FY2015 NDAA codifies a modified version of DOD's premier "building partner capacity" (BPC) authority, first established by Section 1206 of the FY2006 NDAA ( P.L. 109-163 ) and regularly extended by subsequent NDAAs. Known for its first decade by its original section number, "Section 1206," as codified to Title 10 (Armed Services), U.S. Code, Section 2282, authorizes the Secretary of Defense, with the concurrence of the Secretary of State, to provide equipment, supplies, training, defense services, and small-scale military construction to foreign security forces:

to enable foreign national military forces, national maritime or border security forces, and other national-level security forces with counterterrorism responsibilities to perform counterterrorism operations; and to enable foreign military forces to participate in or to support military, stability, and peace support operations which benefit U.S. national security interests.

This assistance is subject to all conditions found elsewhere in law on country eligibility and the types of assistance that may be provided.

Human Rights Conditions

Section 1204 of H.R. 3979 codifies a modified version of the recurring "Leahy Law" human rights condition on DOD assistance to foreign security forces included in annual DOD defense appropriations measures since 1989. As codified to Title 10 U.S.C. Section 2249e, the DOD Leahy Law prohibits providing training, equipment, and "other assistance" to members of a foreign security force unit where there is credible information that the unit has committed a gross violation of human rights. Exceptions are made for disaster, humanitarian and emergency assistance, and for cases where a foreign government "has taken all necessary corrective steps" to address a unit's gross violations of human rights. (The term "all necessary corrective steps" is not defined.) The prohibition could be waived in case of "extraordinary circumstances."

In a related human rights innovation, Section 1206 of the enacted bill authorizes the Secretary of Defense, with the concurrence of the Secretary of State, to conduct human rights and rule of law training of security forces and associated foreign government security ministries through FY2020. This provision permits human rights and rule of law training, under certain conditions, to foreign security units that would otherwise be prohibited from receiving such training by the DOD Leahy Law (see above) or other law.

Other Security Assistance-related Provisions

The final version of the FY2015 NDAA also contains two other provisions regarding DOD BPC and other security assistance:

Section 1201 extends the joint DOD-State Department Global Security Contingency Fund (GSCF, Section 1207 of the FY2012 NDAA, P.L. 112-81 , as amended) through FY2017. The GSCF may be used for BPC counterterrorism programs similar to those conducted under Section 1206, Global Train and Equip as well as justice sector, rule of law, and stabilization support. Section 1201 adds a new provision permitting up to $750,000 to be used per project for small-scale construction; and

Section 1211 of the bill requires the Secretary of Defense, in consultation with the Secretary of State, to report by February 1 of 2016, 2018, and 2020 on 18 specified DOD programs, describing assistance provided, stating the cost, and describing metrics, if any used to assess and evaluate those programs.

Counterterrorism Partnerships Fund

Section 1510 of H.R. 3979 authorizes up to $1.3 billion in FY2015 DOD appropriations to establish the new Counterterrorism Partnerships Fund (CTPF) requested by the Administration in June 2014. (The Administration requested $4 billion in DOD funding.) Section 1534 authorizes the use of CTPF funds for two purposes: (1) to provide support and assistance to foreign security forces or other groups or individuals to conduct, support, or facilitate counterterrorism and crisis response activities under existing DOD authorities, and (2) to improve U.S. military capacity to provide enabling support to counterterrorism and crisis response activities undertaken by foreign security forces or other groups or individuals.

Congress established a number of limitations on this authority. Section 1534 limits CTPF-funded activities to the areas of responsibility of the U.S. Central Command (excluding assistance or other support for the government of Iraq) and the U.S. Africa Command. Activities elsewhere may be funded only if the Secretary of Defense determines it necessary to counter an increased national security risk and no other monies are available.

CTPF funds can only be used when transferred to any existing DOD operation and maintenance account to conduct programs under any existing DOD authority and subject to the requirements and limitations of that authority. Although Section 1534 does not specify potential recipient accounts, Section 9016 of the FY2015 omnibus appropriations act ( P.L. 113-235 ) provides that up to $500 million CTPF monies may be used through FY2015 to assist vetted Syrian forces, groups, and individuals authorized to receive assistance under Section 1209 of the FY2015 NDAA. Among possible authorities under which CTPF monies may be spent are the "Section 1206" Build Partner Capacity authority (as codified at 10 U.S.C. 2282), the Global Security Contingency Fund, and the Regional Defense Counterterrorism Fellowship Program (10 U.S.C. 2249c). P.L. 112-235 designates CTPF monies as Overseas Contingency Operations/Global War on Terrorism funds.

House Floor Action on H.R. 4435

The House passed H.R. 4435 , the Howard P. "Buck" McKeon National Defense Authorization Act for FY2015, on May 25, 2014 by a vote of 325-98. Following is a summary of House action on selected amendments considered during floor debate on the bill:

FY2015 DOD Appropriations Bill(H.R. 4870; H.R. 83, Division C)

The Consolidated and Further Continuing Appropriations Act for FY2015 ( H.R. 83 , codified as P.L. 113-235 ) incorporates as Division C the FY2015 Defense Appropriations Act which appropriates $483.7 billion for DOD's FY2015 base budget. Compared with the Administration's $484.3 billion request for base budget programs funded in that bill, this amounts to a reduction of $548 million—slightly more than 1/1000th of 1%. (See Table 19 .)

Within those similar gross totals, however, the budget request and the enacted bill have some significant differences. The bill—like the companion FY2015 NDAA—either rejects outright or defers a decision on several cost reduction initiatives proposed by the Administration. At the same time, it appropriates billions of dollars for weapons programs and "readiness" improvements that were not included in the budget request.

Those added costs, in turn, are offset—in part—by reductions which, according to the bill's authors, reflect fact-of-life developments and will have no adverse impact on DOD programs. The cost of the congressional additions (in the base budget) is further offset by the fact that some other costs are shifted into the part of the bill that funds war costs (or Overseas Contingency Operations—OCO), and thus are exempt from the statutory cap on discretionary spending. (See " DOD Appropriations Overview " , below.)

DOD Appropriations Overview

As is the case with the companion NDAA, the versions of H.R. 4870 passed by the House and reported by the Senate Appropriations Committee, as well as the enacted version of the bill (( H.R. 83 , Division C) rejects or deferrs several of the cost-reduction initiatives contained in the Administration's budget request. They all bar proposals for another round of military base closures, the retirement of various types of Air Force planes, the retirement of an aircraft carrier, and changes in the military commissary system.

On the other hand (as with the authorization measure), the enacted version of the appropriations bill—like the Senate version—allows some of the Administration's other controversial proposals which the House bill would block: reductions in the rate of increase of military basic pay and of housing allowances. (See Table 20 .)

Like both the House and Senate versions of H.R. 4870, the enacted version of H.R. 83, Division C would appropriate billions of dollars more than the budget requests for various purposes, with those gross increases offset by proposed cuts to the request. (See Table 21 .)

To compensate for the added cost of rejecting some Administration-proposed savings and making some sizeable additions to the budget request, the House and Senate versions of H.R. 4870 and the enacted version of H.R. 83, Division C incorporate several reductions, some of which amount to hundreds of millions of dollars. While some of the proposed reductions are taken from the amounts requested for specific acquisition programs, others are justified on grounds that they reflected fact-of-life developments (such as changes in foreign currency exchange rates) and would have no adverse impact on DOD's FY2015 activities. In addition, some funds that were requested in the base budget are provided, in the final bill, as part of the OCO budget, which is exempt from the statutory cap on discretionary defense appropriations. (See Table 22 .)

FY2015 Base Budget Appropriations Highlights

Following are selected highlights of base budget issues in H.R. 83, Division C, the enacted version of the FY2015 Defense Appropriations Bill.

Military Personnel Issues (Appropriations)

To restrain the rate of increase in military compensation costs, the Administration proposed:

a 1% raise in military basic pay for all but the most senior personnel, rather than the 1.8% raise (based on a Labor Department survey of wage increases in the private sector) which would take effect under existing law unless some other rate of increase were mandated; a gradual reduction in the rate at which housing allowances increase; and the phasing-out over three years of the subsidy for military commissaries.

The House-passed bill rejected all three proposals, adding to the amount requested $533.3 million to pay for the larger pay increase, $244.7 million to restore the amount cut from the housing allowance, and $100.0 million for the commissary subsidy. The Senate bill concurred with the proposals for basic pay and housing while adding $200.0 million to sustain the commissary subsidy and requiring from DOD additional information about commissary usage and the details of implementing the proposed change.

The final bill accepts the 1% raise in basic pay but adds to the request $88.0 million to partially restore the reduction in the housing allowance and $190 million for the commissary subsidy.

Retired Pay Accrual Payment

The Senate version of H.R. 4870 would have added $507.0 million to $18.9 billion requested for the FY2015 accrual payment to the military retired pay fund, a payment that is calculated by Pentagon actuaries to cover the anticipated future retired pay of currently active personnel. The additional funds were to compensate for the fact that legislation enacted in February ( P.L. 113-82 ) nullified a provision of the 2013 Balanced Budget Act ( P.L. 113-67 ) that reduced by one percentage point future annual cost of living increases in military retired pay. The retired pay accrual payment in the budget request assumed the lower future retired pay increases that would have resulted if the BBA provision had remained in force. The enacted version of the appropriations bill adds $215.3 million to cover the retired pay accrual shortfall. Joint Explanatory Statement accompanying the final version of the appropriations bill cites revised personnel budget estimates as the basis for adding that amount.

Sexual Assault Prevention and Response

In their reports on H.R. 4870 , the House and Senate Appropriations Committees each expressed concern over the reported incidence of sexual assault in the military services. Each committee noted with approval the fact that the FY2014 Omnibus Appropriations Act ( P.L. 113-76 ) added $25.0 million to the $25.1 million requested for DOD's Sexual Assault Prevention and Response Office (SAPRO). The additional funds were intended to expand the Special Victims Counsel program, which provides legal representatives to provide advice and representation to sexual assault victims.

In order to further expand the Special Victims Counsel program, the final version of the bill—like the Senate version of H.R. 4870 —adds $25.0 million to the $25.1 million requested for SAPRO in the FY2015 budget (Section 8053).

Proposed Force Structure Changes (Appropriations)

Army/National Guard Helicopters

Like the House version of H.R. 4870 , the final defense appropriations bill includes a provision (Section 8133) that would prohibit the proposed shift of Apache attack helicopters from National Guard units to active-duty Army units. But the ban was effective only until enactment of the FY2015 NDAA, which occurred within days of the enactment of the appropriations bill. While the FY2015 NDAA bars transfer of any National Guard Apaches in FY2015, it allows the transfer of up to 48 of the aircraft in FY2016.

The Senate version of H.R. 4870 included no ban on transferring the Apaches to active component Army units. However, the Senate bill would have added to the section of the bill providing OCO funding $144.0 million for additional Apaches to equip National Guard units. The final bill retains the $144.0 million for six Apaches in the OCO portion of the bill, but does not stipulate that the aircraft were intended to equip National Guard units.

Nuclear-powered Aircraft Carrier Refueling

The enacted version of the bill—like the Senate version of H.R. 4870 —adds to the request a total of $849.0 million to begin refueling and modernizing the carrier U.S.S. George Washington , as had long been scheduled to occur midway through the ship's planned 50-year operating life. The House version of H.R. 4870 would have added $789.3 million for this purpose.

The Administration's budget request would have deferred a choice between refueling the ship and retiring it. However, on July 10, 2014, a senior Navy official said that, in light of broad congressional support for keeping the ship in service, the Navy would fund its refueling and modernization in the budget for FY2016 and future years.

Aegis Cruisers Lay-up

The enacted appropriations bill would imposes conditions on the Navy's plan to tie-up 11 Aegis cruisers and three amphibious landing transports with the promise that the ships would be gradually updated and then put back into service to replace their sister ships that had remained in active service. Section 8105 of H.R. 83 , Division C requires that no more than six of the ships be out of services at any one time, as did provisions of the House and Senate versions of H.R. 4870 .

Like the House version of the appropriations bill, the final bill requires that modernization of two cruisers begin in FY2015 and adds $540.0 million to a "Ship Modernization, Operations, and Sustainment Fund," created by Congress to modernize these ships and keep them in service. According to the Joint Explanatory statement to accompany H.R. 83 , that fund has a balance of $1.4 billion (not counting the added $540.0 million).

A-10 Attack Plane Retirement

As reported by the House Appropriations Committee, H.R. 4870 would have raised no bar to Air Force plans to begin retiring the service's fleet of A-10 ground attack aircraft. But on June 19, 2014, the House adopted by a vote of 300-114 an amendment to the bill prohibiting the use of funds to retire any A-10s in FY2015.

The version of H.R. 4870 reported by the Senate Appropriations committee included no prohibition on A-10 retirements. However, it would have added to the budget a total of $325.7 million in the military personnel and O&M accounts of the Air Force, Air Force Reserve and Air National Guard to continue operating the full complement of A-10s through FY2015.

The enacted bill includes a prohibition against retiring any A-10s (Section 8141) and adds $337.1 million to continue operating the fleet in FY2015.

Ground Combat Systems (Appropriations)

Congressional action on appropriations for selected ground combat vehicles is summarized in Table A-5 while action on selected communications systems is summarized in Table A-9 .

Armored Combat Vehicles

The enacted version of the bill—like both the House and Senate versions of H.R. 4870 —adds funds to the amounts requested for the purchase of armored combat vehicles and for the upgrade of such vehicles already in the Army's inventory. The congressional defense committees have contended for years that the amounts budgeted for those programs are too small to sustain the network of specialized contractors and suppliers needed to develop and build tanks and other heavy combat vehicles.

H.R. 83 , Division C adds:

$28.5 million (added to the $107.5 million requested) to upgrade Bradley armored troop carriers; $72.0 million (added to the $50.5 million requested) to purchase additional armored "recovery vehicles" designed to tow disabled tanks off the battlefield; and $120.0 million to continue a program to upgrade the communications, night vision equipment, and powerplants of M-1 tanks—a program which Congress has sustained for several years in the absence of Administration funding requests.

Shipbuilding (Appropriations)

Congressional action on appropriations for selected shipbuilding programs is summarized in Table A-7 .

The enacted bill approves the budgets requested for most major shipbuilding programs with relatively minor reductions. For example, of the $1.30 billion requested for the FY2015 increment of funding for an aircraft carrier (expected to cost $11.5 billion by the time it enters service in 2023), the bill provides all but $81.0 million, which it cut on grounds of unjustified "cost growth" in several components of the ship and in anticipation of unspecified "contracting efficiencies".

By the same token, the final bill cuts $58.5 million from the $5.9 billion requested for nuclear-powered attack submarines, a reduction of about 1% that was attributed to "cost growth." Of the amount approved, $3.53 billion would go to fund two of the ships and $2.30 billion would purchase long lead-time components to be used in future construction.

Similarly, for DDG-51-class destroyers equipped with the Aegis anti-missile system, the final bill provides $2.66 billion for two ships, a reduction of $$9.5 million attributed to "cost growth."

The House bill would have eliminated one of the three Littoral Combat Ships (LCSs) requested, cutting $475.7 million from the $1.43 billion requested. But the enacted bill—like the Senate version of H.R. 4870 —provides the amount requested and adds $80 million for long lead-time components to be used in LCSs funded in future budgets.

The enacted bill also adds to the budget funds for two ships designed to carry combat troops and heavy equipment:

$1.0 billion to cover roughly half the cost of an LPD 17-class amphibious landing transport, which would be the twelfth ship of that class; and $200 million for a high-speed catamaran transport (designated a JHSV) which would be the eleventh of that class.

Aircraft Procurement (Appropriations)

Congressional action on appropriations for selected aircraft programs is summarized in Table A-11 . Following are other highlights:

New Long-range Bomber and Tanker

The enacted bill appropriates the amounts requested to continue developing a new long-range bomber ($913.7 million) and to continue procurement of the KC-46A refueling tanker ($2.36 billion). The tanker funds include $776.9 million to continue developing the plane—a modified version of the Boeing 757 jetliner—and $1.58 billion to buy seven aircraft.

F-35 Joint Strike Fighter

The budget request included a total of $7.96 billion for the F-35 Joint Strike Fighter Program:

$3.55 billion to buy 26 "A" model F-35s for the Air Force; $1.20 billion to buy six "C" model aircraft for the Marine Corps adapted for short takeoff/vertical landing (STOVL) operations; $610.7 million to buy two "B" model planes adapted to operate from aircraft carriers; $465.2 million for long lead-time components for use in planes slated for purchase in future budgets; $494.1 million for modifications to F-35s purchased in earlier budgets; and $1.64 billion to continue development of the three models of the aircraft.

The enacted bill provides a total of $8.24 billion for the F-35 program, including additions of $255.0 million to buy two additional Navy aircraft and $224.0 million for two additional planes of the Air Force version. Those additions, which mirror the House version of H.R. 4870 , are partly offset by several relatively minor reductions.

This increases the number of F-35s funded in FY2015 to 40 aircraft.

EA-18G Growler

The budget request did not include funds to continue production of the Navy's EF-18G Growler, a version of the F/A-18E/F fighter that is modified to jam enemy radars. According to the House Appropriations Committee, recent Navy studies conclude that it would be advantageous to increase from five to seven the number of Growlers typically aboard a carrier. In addition, sustaining the Growler production line at the Boeing plant in St. Louis, MO, would facilitate the Navy's purchase of additional F/A-18E/F fighters, if the Navy reduced its purchase of F-35s because of the cost or technical problems.

The enacted bill adds to the budget $1.46 billion to buy 12 additional Growlers and to keep the production line warm. The House version of H.R. 4870 would have added $975.0 million and the Senate version $1.30 billion for the same purpose.

FY2015 OCO Appropriations

The enacted FY2015 Defense Appropriations Bill provides $65.17 billion for OCO funding, $1.54 billion more than the amended OCO request. It includes three congressional additions costing more than $1.0 billion apiece:

$2.9 billion for Operations and Maintenance (O&M) activities that DOD included in its base budget request, but which the bill funds in OCO accounts exempt from the statutory budget caps; $1.0 billion (Section 9018) "for the purposes of improving military readiness," and $1.2 billion for equipment for the National Guard and reserve components.

These additions are partly offset by several relative modest reductions and two relatively large ones:

A reduction of $2.7 billion from the $4.0 billion requested for DOD funding of the Counterterrorism Partnerships Fund (CTPF) intended to build up the counterterrorism capacity of other governments; and A reduction of $533.0 million justified on the basis that the Army's request for OCO military personnel funding was larger than required.

Counterterrorism Partnerships Fund (CTPF)

In addition to appropriating $1.3 billion of the $4.0 billion requested for the CTPF, the bill includes a provision (Section 8059) prohibiting the provision of training, equipment, or other assistance "to any unit of a foreign security service if the Secretary of Defense has credible information that the unit has committed a gross violation of human rights." The prohibition can be waived if the Secretary of Defense, after consultation with the Secretary of State, concludes that a waiver is required because of "extraordinary circumstances."

Syrian Opposition Support

Section 9016 of the enacted bill authorizes DOD to use up to $500.0 million of the Defense-wide O & M funds to train and equip Syrian opposition groups that had been vetted for human right compliance. Both that section of the bill and Section 9013 stipulate that nothing in the bill should be construed to authorize action relating to Syria that would violate the War Powers Resolution.

European Reassurance Initiative

In all, Congress has appropriated for FY2015 a total of $985.0 million—$60.0 million more than the Administration requested—for the European Reassurance Initiative, intended to fund countries that might be threatened by Russian actions regarding the Ukraine. While the Administration requested the funds as a single amount in the FY2015 Defense Appropriations Bill (which is Division C of H.R. 83 ), House and Senate negotiators provided $175.0 million of the amount requested in the FY2015 appropriations bill that funds military construction, the Department of Veterans Affairs and Related Agencies (which is Division I of H.R. 83 ).

Within the defense appropriations bill (that is, Division C of H.R. 83 ), the enacted legislation provides:

$635.0 million parceled out among OCO funds for military personnel and O&M costs; and $175.0 million in a fund to be used only for military assistance to Estonia, Latvia, Lithuania, and Ukraine.

House Floor Action on H.R. 4870

The House passed H.R. 4870 , FY2015 DOD Appropriations Bill, on June 20, 2014, by a vote of 340-73. Following is a summary of House action on selected amendments considered during floor debate on the bill:

Appendix. Selected Program Funding Tables