Noteworthy

Floor Situation: With unanimous support, the Senate Armed Services Committee reported out its version of the fiscal year 2018 defense authorization bill, S. 1519, on June 29. Majority Leader McConnell has made the motion to proceed to this bill.

Executive Summary: The current Budget Control Act cap for all national defense discretionary spending (budget function 050) for fiscal year 2018 is $549 billion. As a general rule, the Department of Defense usually comprises 95.5 percent of all budget authority in this category.

The administration’s fiscal year 2018 defense budget request within the jurisdiction of the Senate Armed Services Committee was $659.8 billion in discretionary spending, composed of:

1. $574.7 billion for the Department of Defense base budget,

2. $20.5 billion for Department of Energy national security programs and the Defense Nuclear Facilities Safety Board, and

3. $64.6 billion for overseas contingency operations.            

The fiscal year 2018 defense authorization bill as reported out of the Senate Armed Services Committee authorizes $692.1 billion in spending, $32.3 billion more than the request:

1. $610.9 billion for the Department of Defense base budget,

2. $21 billion for DOE and DNFSB national security programs, and

3. $60.2 billion for OCO.

The House approved its version of the bill, H.R. 2810, on May 18, 2016, by a vote of 344-81. According to the House Armed Services Committee, it provides $688.3 billion in budget authority, composed of $613.8 billion for the base budget for the Department of Defense and Department of Energy national security programs, and $74.6 billion for OCO. Of this OCO amount, the committee said $10 billion “is authorized in support of base budget requirements.”

Overview

The bill authorizes the following amounts in the base budget:

1. $140.3 billion in procurement funding, which is $26.3 billion more than the president’s request;

2. $86 billion in funding for research, development, testing, and evaluation, which is $3.3 billion more than the president’s request;

3. $194.9 billion for operation and maintenance, which is $6.2 billion more than the request;

4. $141.5 billion for military personnel, which is $139 million less than the requested level;

5. $21 billion for atomic energy defense, which is $562 million more than the request; and

6. $8.6 billion for military construction, which is $449 million more than the request. 

It authorizes $60.2 billion for OCO, which is $4.4 billion less than the president’s request, primarily accounted for by moving European Deterrence Initiative spending from OCO to base.

Also of note:

1. Section 601 authorizes an across-the-board pay raise of 2.1 percent.

2. Section 706 provides for co-pay increases in certain Tricare pharmacy benefits.

3. Section 1021 extends the ban on transferring Guantanamo detainees to the United States.

4. Section 1217 increases the allocation of Afghan Special Immigrant Visas.

5. Section 2702 denies the request for authority to conduct a BRAC round.

6. In the report, the committee expressed its support for the “unconditional repeal” of the BCA.

Notable Bill Provisions

Division A – Department of Defense Authorizations

Title I – Procurement

The committee approved $140.3 billion, which is $26.3 billion more than the president’s budget request.

Section 101 – Authorization of appropriation

Makes authorizations for fiscal year 2018 in accordance with the table outlined in section 4101.

Unfunded requirements list

At multiple points in the accompanying committee report, the committee expressed its position that since the enactment of the Budget Control Act “budget requests have been guided by artificial constraints rather than the realities of the global strategic environment.” It went on to note that these budget constraints, when combined with a “sustained high operational tempo, have led to a significant degradation in our military readiness in the near term, and the threat that we will fall behind our adversaries in the long-term.” The committee then said, “the budget should be based on requirements, rather than arbitrary budget caps.” In order to “address the degraded state of our military and to stop the erosion of U.S. military advantage,” the committee recommended the following increases in procurement for the services, as compared to the president’s request, identified in their unfunded requirements lists:

1. $6.4 billion for the Army,

2. $6 billion for the Navy, to include 10 F/A-18 Super Hornets, four F-35Bs, and six F-35Cs,

3. $4.6 billion for the Air Force, to include 14 F-35As and 2 KC-46s, and

4. $347.5 million in defense-wide procurement, to include 24 additional THAAD interceptors.

Title II – Research, Development, Test and Evaluation

For RDT&E, the committee approved $86 billion, which is $3.3 billion more than the president’s request.

Section 201 – Authorization of appropriation

Makes authorizations for fiscal year 2018 in accordance with the table outlined in section 4201.

Unfunded requirements list

Similar to the additional funds provided for procurement, $2.1 billion in additional funding is authorized for RDT&E, as compared to the request, in part to accelerate cyber, directed energy, and space capabilities.

Title III – Operation and Maintenance

The committee approved $194.9 billion for operation and maintenance, which is $6.2 billion more than the request.

Section 301 – Authorization of appropriation

Makes authorizations for fiscal year 2018 in accordance with the table outlined in section 4301.

Unfunded requirements list

Similar to the additional funds provided for procurement, $4.8 billion in additional funding is authorized for O&M, as compared to the request, to include more funding for home station training and depot maintenance.

Climate change

In report language the committee directed the secretary of defense to submit “a comprehensive threat assessment and implementation master plan ... on the risks and vulnerabilities to DOD missions and infrastructure associated with climate-related events.”

Title IV – Military Personnel

The committee approved $141.5 billion for military personnel, which is $139 million less than the requested level.

Section 421 – Authorization of appropriation

Makes authorizations for fiscal year 2018 in accordance with the table outlined in section 4401.

Unfunded requirements list

Similar to the additional funds provided for procurement, $627.8 million in additional funding is authorized for the military personnel accounts, as compared to the request, to include an increase in the Army end strength (personnel level) of 6,000 and in the Marine Corps of 1,000.

Title V – Military Personnel Policy

Section 517 – Service chief of staff authority for military specialty codes

Vests solely with each service chief of staff responsibility for establishing, approving, and modifying the criteria, standards, and qualifications for military specialty codes within each service, while reaffirming that the secretary of defense maintains the authority concerning gender-based criteria for military specialties. This provision was added during committee mark-up by a vote of 15-12.

Section 543 – Professional athlete service commitment in the Reserves

Amends the law to allow a service academy student who, upon graduation, obtains employment as a professional athlete to fulfill his service requirements as a commissioned officer in the Reserve component. Earlier this year, the department rescinded a 2016 policy allowing for this.

Title VI – Compensation and Benefits

This title authorizes various bonuses and special pay authorities aimed at encouraging enlistment, reenlistment, and continued service by active duty and reserve military personnel.

Section 601 – Across-the-board pay raise

Authorizes an across-the-board pay raise of 2.1 percent.

Section 604 – Modification of presidential authority to adjust basic pay

37 U.S.C. § 1009 provides the pay raise formula for the uniformed services. Subsection (e) authorizes the president to propose an alternative pay adjustment to this formula in cases of “national emergency or serious economic conditions affecting the general welfare.” Section 604 of the underlying bill repeals that latter condition.

Section 651 – Berry Amendment/Buy American for furnished footwear

With last year’s defense authorization bill, the department is now required to furnish footwear directly to service members “instead of providing a cash allowance to the members for the purchase of such footwear,” and then required to comply with requirements of the Berry Amendment in the procurement of such footwear. Section 651 provides that this does not apply if the secretary determines that complying with these requirements “would result in a sole source contract for procurement of athletic footwear ... because there would be only a sole certified of supply for such footwear.”

Title VII – Health Care 

Section 706 – Tricare pharmacy co-pays

Provides for co-pay increases in certain Tricare pharmacy benefits. CBO has estimated this provision would save $182 million in direct spending and $68 million in discretionary spending in fiscal year 2018. It further estimates $3.36 billion in savings in direct spending and $5.65 billion in discretionary savings in the 10-year budget window. In report language, the committee pointed out that “beneficiaries would continue to receive pharmaceuticals at no cost in military medical treatment facilities. There also would be no changes to cost-sharing amounts for survivors of members who died on Active Duty or for disabled retirees and their family members.” In order to encourage the use of pharmaceutical agents that provide the greatest value to the department and beneficiaries, this section authorizes the secretary to exclude from the pharmacy benefits program any pharmaceutical agent that provides “little or no value to covered beneficiaries and the Department.”

Title VIII – Acquisition Policy and Management 

In report language, the committee expressed disappointment at the “Department’s slow rate of implementation and apparent unwillingness to embrace” the substantial reforms made to the acquisition process in previous years’ bills. It noted how the acquisition process is critical to military technological superiority. To this end, the committee noted its intent to provide the department great flexibility “to develop its own processes, organizational structures, and initiatives to improve its acquisition view and culture,” while performing oversight “over the Department’s efforts to reform and improve its acquisition culture and practices, and hold senior leaders responsible and accountable for those efforts and their success.”

Section 821 – Bid protest loser pays costs

Requires contractors with revenues in excess of $100 million who file a contract bid protest, “all elements of which are denied” in a GAO opinion, to pay for the department’s costs incurred for processing that protest. Contractors may protest the loss of a contract at either the Court of Federal Claims or at GAO.

Section 830 – Contractor workplace safety

Requires departmental contracting officers to “consider” OSHA violations or equivalent violations of state law “by the offeror and by any covered subcontractors.” The purpose of this is to determine “whether the offeror is a responsible source with a satisfactory record of performance that meets mission and ethical standards.”

Title IX – Department Organization and Management

Section 908 – Five-year relief from active duty for under secretary positions

Current law provides that a person may not serve as the under secretary of defense for research and engineering; acquisition and sustainment; and policy “within seven years after relief from active duty.” The other under secretaries have no such limitation. Section 908 amends that to five years, and extends the condition to all under secretary positions within the Office of the Secretary of Defense.

Section 910 – Assistant secretaries of defense

Amends the law to provide for 13 assistant secretaries of defense instead of 14. The current state of the law also requires that among the assistant secretaries, there be assistant secretaries for manpower and reserve affairs; homeland defense; special operations and low intensity conflict; legislative affairs; and nuclear, chemical, and biological defense programs. Section 910 amends this to require only the SO/LIC and NCB assistant secretaries, affording the secretary of defense flexibility with the remaining 11 positions.

Section 911 – Deputy assistant secretaries of defense

Provides a total limit of 46 for this position within the department. Later, in report language, the committee encouraged the secretary of defense to designate a DASD with primary responsibilities for the Arctic region.

Section 931 – Senior Executive Service positions

Section 1109 of the 2017 defense authorization act limits the total number of SES positions to 1,260. This section amends that limit to 1,140.

Section 938 – Security clearances

Directs the secretary of defense to transfer by October 1, 2020, responsibility for the conduct of background investigations under his purview from the National Background Investigations Bureau to the Defense Security Service. In report language, the committee said the background investigation process is “broken,” with “a very large and rapidly growing backlog.” In support of this conclusion, the report said “DOD is already paying $1.0 billion annually for background investigations; the backlog exceeds 650,000 cases and is growing at a rate of 10,000-20,000 per month.” It supported the transfer of responsibility by saying in report language that “the committee lacks confidence that the current owner of the background investigation mission has the will, culture, or capability to effect vital reforms in current processes and practices.”

Title X – General provisions

Section 1001 – Transfer authority

Structures the general transfer authority provided to the department, limiting that authority to $4 billion, requiring that transfers may only be made to items with a higher priority than the items from which money is transferred, and specifying that transfer authority cannot be used to support an item denied authorization by Congress. This section then provides that transfers between military personnel authorizations do not count toward the $4 billion limit.

Sections 1003 and 1004 – Audit readiness

Directs the secretary of defense and service secretaries to certify by the end of the fiscal year whether the full financial statements of the department and the respective military departments are audit ready. If an audit opinion is not obtained for the Department of Defense in fiscal year 2018, it provides for a reduction in pay for each secretary of a military department.

Section 1016 – 355-ship Navy

Makes it U.S. policy to have available not fewer than 355 battle force ships. The accompanying committee report cited an April 2017 CBO report saying this could take 18 years to achieve.

Section 1031 – Prohibiting Guantanamo detainee transfers to the United States

Extends for one year the prohibition on the use of funds to transfer to the United States Khalid Sheikh Mohammed or any other Guantanamo detainee.

Section 1032 – Facilities in the United States for Guantanamo detainees

Extends for one year the prohibition on the use of funds to construct or modify facilities in the United States for the purpose of housing Guantanamo detainees.

Section 1033 – Prohibiting transfer of Guantanamo detainees to certain countries

Extends for one year the prohibition on the use of funds to transfer any Guantanamo detainee to Libya, Somalia, Syria, or Yemen.

Section 1061 – Global force posture assessment

Directs the secretary to complete an assessment of the global force posture of the armed forces within 180 days of the production of the 2018 National Defense Strategy.

Section 1066 – Vetting of foreign investment with potential national security impacts

Directs the secretary of defense, in consultation with the secretaries of state and treasury, to develop a plan for agencies other than the Department of Defense to improve the effectiveness of interagency vetting to identify and prevent foreign investments that could potentially impair both U.S. national security and the department’s ability to defend the nation.

Section 1070 – Report on civilian casualties

Directs the secretary of defense to submit a report annually on civilian casualties caused by U.S. military operations.

Budget Control Act

The committee expressed its “support” for the “unconditional repeal” of the BCA in the accompanying committee report.

Title XII – Matters Relating to Other Nations

Section 1213 – Coalition support funds

Extends the authority to use funds to reimburse certain countries for support provided to U.S. military operations in Afghanistan, Iraq, and Syria. It then authorizes $900 million for this purpose. Of this amount, the amount of reimbursement authorized to be provided to Pakistan is limited to $700 million. It then further provides that of this amount, $350 million cannot be used unless the secretary makes certain certifications regarding Pakistan’s commitment to disrupting terrorist safe havens, funding, and recruitment.

Sections 1216 and 1217 – Afghan Special Immigrant Visas

Makes certain findings on the service of Afghan nationals in support of U.S. military operations there, and that the current limit on visas authorized under this program is expected to be met by the end of this fiscal year. It then expresses the sense of Congress that an additional 4,000 visas should be made available under this program “to prevent harm” to U.S. operations in Afghanistan. The fiscal year 2017 omnibus bill increased the limit of visas under this program to 11,000. Section 1217 of this bill increases that number to 15,000. With the clarification of eligibility criteria for this visa in the 2017 defense authorization act, those eligible for this visa are both Afghans who served as interpreters/translators and those who performed “sensitive and trusted activities.”

Section 1244 – Ukraine Security Assistance Initiative

Extends authority for this program to the end of 2019, and then authorizes the use of up to $500 million. Of this amount, $250 million is not available for use until certifications are made regarding Ukraine defense institutional reforms. The president requested $150 million for this program.

Sections 1248 and 1249 – European Deterrence Initiative

Expresses the sense of Congress that the United States, together with NATO partners and European allies, in order to enhance the European Deterrence Initiative and strengthen deterrence against Russian aggression, should demonstrate its ability to meet its NATO Article V commitments through appropriate military exercises, with an emphasis on participation of U.S. forces based in the continental United States, thereby testing strategic and operational logistics and transportation capabilities. It goes on to express the sense of Congress that the initiative will bolster efforts to deter further Russian aggression, investments supporting the security and stability of Europe are in U.S. long-term vital national security interests, and funds for such efforts should be authorized and appropriated in the DOD base budget. In the OCO section, it will be pointed out that $4.8 billion in funding for the European Deterrence Initiative was moved from OCO to the base budget.

Section 1261 – Asia-Pacific Stability Initiative

Authorizes the secretary to carry this out, with activities to, among other things, increase the U.S. military presence in the region and enhance its capabilities. Funding for this may only come from the transfer of funds in the military personnel or O&M accounts, and such transfer authority is “in addition to” any other transfer authority available to the department.

Section 1265 – Freedom of Navigation Operations

Begins by making findings about the freedom of the seas and navigation, especially in the South and East China Seas, and how consistent freedom of navigation operations and overflights plays a critical role in safeguarding freedom of the seas. Declares it to be U.S. policy “to fly, sail, and operate throughout the oceans, seas, and airspace of the world wherever international law allows.” To this end, the secretary is directed to “plan and execute a robust series of routine and regular naval presence missions” and FONOPs throughout the world.

Section 1266 – South China Sea

Expresses the sense of Congress that it is a vitally important waterway and China is undermining security and challenging international rules and norms by its actions there. It goes on to say that a Tribunal has determined China violated sovereign rights of the Philippines in its exclusive economic zone. It then quotes the Arbitral Tribunal Award statement that “there is no legal basis for China to claim historic rights to resources within the sea areas falling within the nine-dash line.”

Section 1270A – Naval exchanges with Taiwan

Directs the secretary to reestablish regular ports of call by the U.S. Navy at Kaohsiung or any other suitable ports on Taiwan and permit Pacific Command to receive ports of call by the Taiwan navy in Hawaii, Guam, and other appropriate locations. This provision was added during committee markup by a vote of 21-6.

Title XV – Authorization for Supplemental Appropriation for OCO

This title authorizes $60.2 billion to be appropriated in fiscal year 2018 for overseas contingency operations, which is $4.4 billion less than the president’s request. The bulk of this reduction comes from moving to the base budget $4.63 billion of the $4.8 billion OCO request for the European Deterrence Initiative. In report language, the committee explained that “providing credible deterrence against Russian aggression is not a contingent requirement, but an enduring requirement.”

Title XVI – Strategic Programs, Cyber, and Intelligence Matters

Section 1621 – U.S. policy on cyberspace, cybersecurity, and cyberwarfare

Establishes a policy that the United States should employ all instruments of national power, including the use of offensive cyber capabilities, to deter if possible, and respond when necessary, to malicious cyber activities that target U.S. interests with the intent to cause casualties; significantly disrupt the normal functioning of our democratic society or government; threaten the U.S. Armed Forces or the critical infrastructure it relies upon; or achieve an effect—whether individually or in aggregate—comparable to an armed attack.

Section 1630 – Cybersecurity of state election systems exercise

Directs the secretary to incorporate the cybersecurity of state election systems as a component of the Cyber Guard Exercise.

Section 1630B – Kaspersky Lab prohibition

Prohibits the department, as of October 1, 2018, from using any software developed by Kaspersky Lab, and directs the department to sever any network connections between DOD and any other element of the U.S. government using Kaspersky Lab software.

Section 1635 – Response to Russian INF Treaty violation

States it to be U.S. policy to take actions to bring Russia back into compliance with the treaty, to include providing additional funds for activities and systems previously identified to be taken in response to the Russian violation, namely the development of counterforce and countervailing strike capabilities, and active defenses. The section then provides for the additional action of establishing a research and development program for a dual-capable road-mobile ground-launched missile system with a maximum range of 5,500 km. In report language, the committee said the intent is not to violate the treaty, as “research and development, without testing, would not constitute a [treaty] violation.”

Section 1653 – Ground-based missile defense interceptors and infrastructure

In report language, the committee expressed its support for the department’s plan to have 44 ground based interceptors in place by the end of this year. This section directs the secretary to increase the number of GBIs beyond this plan by up to 28, and carry out the necessary infrastructure construction in support of this.

Division B – Military Construction Authorizations

Provides $10.5 billion for military construction, housing programs, and BRAC-related activities, which is essentially the amount of the president’s budget request. This division of the bill authorizes the base closure accounts that fund military construction, environmental cleanup, and other activities required to implement the decisions in previous base closure rounds.

Section 2702 – Deny BRAC authority

The president requested authorization to conduct another BRAC round, which this section specifically declines to provide.

Division C – Department of Energy National Security and Other Authorizations

Title XXXI – Department of Energy National Security Programs

This title authorizes appropriations for atomic energy defense activities of the Department of Energy for fiscal year 2018 in accordance with the table outlined in section 4701 in the amount of $21 billion, which is $562 million more the president’s budget request. Of this amount:

1. $14.5 billion is authorized for the NNSA, of which:

1. $10.5 billion is for weapons activities, which is $273.6 million more than the request;

2. $2 billion is for defense nuclear nonproliferation activities, which is $250.3 million more than the request;

3. $1.5 billion is for naval reactors, which is $38 million more than the request; and

4. $418.6 million is for the office of the administrator, which is equal to the request.

1. $5.5 billion is authorized for defense environmental cleanup activities, which is the amount of the request.

Administration Position

A Statement of Administration Policy has not been issued yet.

Cost

A Congressional Budget Office cost estimate has not been issued yet.

Amendments

The approach to amendments during consideration of this bill is unknown at this time.