May 20, 1998

H.R. 3616 - National Defense Authorization Act
for Fiscal Year 1999

(Spence (R) SC and Skelton (D) MO)

The Administration supports prompt congressional consideration of its national defense authorization legislative proposal for FY 1999. As reported by the Committee on National Security, however, H.R. 3616 raises serious budget and policy concerns which must be addressed satisfactorily. The Administration also has particular concerns, addressed below, about a number of amendments which have been ruled in order for floor consideration.

Reduction of Department of Energy (DOE) Funds

The Administration strongly objects to the net reduction of $401 million from DOE's defense activities, particularly the $358 million cut from weapons activities and the earmarking of $60 million from the Stockpile Stewardship account for DOD's Ballistic Missile Defense Organization. A significant portion of the Stockpile Stewardship reduction results from $341 million taken from prior year balances which are not available. This will force real reductions in critical programs needed to ensure the safety, security, and reliability of America's nuclear deterrent.

In addition, the Administration opposes the $230 million reduction in the Environmental Management Privatization account that cuts funds which are needed to demonstrate to the financial investment community the Administration's commitment to the privatization approach, and which are required to complete key nuclear waste disposal facilities. The bill would also delay the decision to select a primary source for tritium until the results of tests at the Watts Bar nuclear station are determined. This would delay the selection decision by over one year, increase the costs of the program, and prevent the Department from meeting its 2005 deadline for achieving a tritium production capability. The Administration also opposes the premature sun-setting of the Worker and Community Transition Program, which has facilitated the orderly reduction of 43,000 contractor employees at DOE sites since 1992.

Program Funding

H.R. 3616 would reduce funding for basic and applied research by over $1 billion in FY 1999. This research provides the fundamental knowledge and technical know-how required to develop future defense systems. The failure to provide adequate funding for this research will ultimately result in the inability to upgrade systems at an adequate pace. The Administration strongly urges the House to authorize the Administration's full $4.1 billion request for these programs.

Conversely, the bill adds a net total of $250 million for procurement and $450 million for construction programs. Some of these increases are for programs that, due to higher priority military requirements, are not in the Future Years Defense Program (FYDP). This includes, for example, $398 million for seven additional C-130J airlift aircraft, and $300 million for other unrequested items for the National Guard and Reserve. These increases for lower priority weapons modernization and military construction programs would be at the expense of higher priority defense programs.

The Administration appreciates the bill's emphasis on preserving military readiness through strong funding for maintenance and spare parts. Force readiness could be threatened, however, by the bill's reductions to other O&M programs. The President's request is very tightly constructed within the discretionary caps agreed to in the bipartisan budget agreement. Any adjustments must be carefully evaluated to ensure that sufficient funding is available for DoD operations and support programs. The Administration will work with the Congress to reexamine any adjustments to the O&M programs prior to final congressional action on the bill.

In particular, the Administration opposes the bill's $500 million funding reduction for defense contractual services, which are an integral part of DOD functions and are essential to critical military objectives. This reduction would have a direct adverse impact on operational readiness and modernization. The prohibitions and limitations on: (1) accounting procedures for contractual services and (2) the performance of core logistics capabilities are also objectionable. In addition, the bill's requirement for a comprehensive annual review of Defense service contracts would be costly and divert personnel from higher priority areas.

Base Realignment and Closure

The Administration is disappointed that the bill does not adopt the Defense proposal to authorize two additional rounds of base closure and realignment in 2001 and 2005. Defense's base infrastructure is far too large for its military forces and must be reduced if the Department is to obtain adequate appropriations for readiness and modernization requirements during the next decade.

Gender Integrated Training

The Administration strongly opposes any legislatively mandated changes for initial entry training within the military services.

The Federal Advisory Committee on Gender Integrated Training and Related Issues made several recommendations on training that have been reviewed by the Secretary of Defense and each of the services. In addition to the Committee's recommendations, the Secretary directed the services to take additional action in the areas of training leadership, training rigor, and recruit billeting. The services have each taken a number of steps in support of the Committee's recommendations and Secretary's additional direction. The implementation of future initiatives will also be monitored. All actions are geared toward providing new recruits with the best training possible in a safe and secure environment. In order to achieve this goal, each service must be allowed to tailor its basic training as needed to prepare recruits for their specific service's missions. Legislation at this time would be counter productive to meeting this goal.

Weapons of Mass Destruction

H.R. 3616 does not include authorities requested to allow a more rapid response to threats to U.S. forces, and permit Defense to support interagency efforts to combat terrorism. The bill also defers action on authorizing the National Guard and Reserves to assist other Federal, state, and local authorities in responding to domestic terrorist incidents involving weapons of mass destruction. These authorities are critical to improving the Nation's ability to deter and combat terrorism. The Administration strongly urges prompt congressional enactment of these important authorities.

Bosnia Expenditure Cap

The Administration opposes section 1201 which would impose an expenditure limitation on funds for U.S. participation in Bosnia peacekeeping operations. It is imperative that the Administration retain the flexibility necessary to meet exigent circumstances.

Chemical Weapons Convention

The Administration urges the House to include the requested authorization of appropriations for the DOD to reimburse the Organization for the Prohibition of Chemical Weapons for costs incurred in inspecting DOD sites and facilities. These funds are necessary to fulfill the requirements of the recently ratified Chemical Weapons Convention.

Management Issues

A number of provisions in H.R. 3616 would undermine the Administration's efforts to improve governmental operations. For example, the bill would terminate a DOD "household goods moving services" pilot program that was designed to adopt corporate business practices and foster competition. The bill would replace this DOD pilot with an approach that was proposed by the industry that perpetuates the current inefficient system.

The Administration objects to section 337 which would require DOD to perform depot-level maintenance and repair of the C-17 at Government-owned, Government-operated facilities. This section also states that the C-17 Flexible Sustainment contract does not meet the requirements of law. Although the language is specific to the C-17 support contract, it has far reaching implications for many DOD weapon systems. The bill sets a precedent for bypassing the DOD risk assessment and core determination process, and directing that weapon systems be supported in public depots without regard to cost or readiness. The resulting investments would have a significant adverse affect on DOD's long term plans for funding.

Section 336 of the bill would require complicated and cumbersome tests for determining what qualifies as a commercial item under 10 U.S.C. §2464, and would require application of those tests to determine whether or not a V-22 engine component or system is a "commercial item" that, by definition, should be procured with simplified, streamlined procurement procedures. Whether intended or not, the provision would duplicate a capability that already exists commercially.

Section 331 of the bill would expand current requirements that the Secretary report to Congress before outsourcing any commercial or industrial type function currently accomplished in-house. This would be counterproductive to efficient and effective government, and should be deleted. These additional requirements would only slow the process, discourage contractors from taking over activities that DOD no longer needs to perform in-house, and waste money that should be used to modernize DOD weapons systems.

Military Pay Raise

H.R. 3616 contains a minimum of a 3.6 percent increase in basic pay for military members, an increase that is 0.5 percent higher than the amount requested. At this time, the Adminstration is reviewing the implications of a higher pay raise, and will work with Congress to provide a fair pay raise that does not force unacceptable reductions in other high priority Defense programs.

Cooperative Threat Reduction (CTR)

The Administration generally supports the bill's authorizations for the Cooperative Threat Reduction Program and urges full funding of the FY 1999 request for CTR. The Administration opposes, however, language that would restrict the use of CTR funds for chemical weapons destruction facility construction. The restriction would preclude any construction until FY 2000, thereby imposing a minimum delay of one year in the current project schedule.

The Administration, as it continues to review H.R. 3616, may identify other issues, and will work with the Congress to develop a more acceptable bill.

Unacceptable Amendments

In addition, the Administration strongly opposes a number of seriously problematic amendments that may be offered, including:

  • any amendment that would further restrict or prohibit licensing of commercial satellite launches by China. Transfer to China or Chinese entities of technology, data, or defense services relevant to ballistic missiles or warhead delivery is controlled under the Arms Export Control Act. Existing procedures, including the bilateral Satellite Technology Safeguards Agreement (negotiated under the Bush Administration and signed in February 1993) explicitly prohibit transfer of ballistic missile technology to China.

  • any amendment to require licenses for nuclear exports and retransfers to non-OECD countries to be reported to Congress 30 days before issuance. Such a requirement is unnecessary as applications for licenses to export controlled nuclear technology and items are already reported to the public immediately upon filing with the Nuclear Regulatory Commission. The licensing process provides for a unique degree of transparency, including public intervention. To require such a notification before licenses are issed to non-OECD countries would impose significant delays to many commercial contracts, reducing U.S. commercial competitiveness, and reducing U.S. influence with countries of great importance to our nuclear non-proliferation efforts.

  • the amendment which would cap expenditures for NATO enlargement at $2 billion or 10 percent of the total cost. At the Madrid summit Allied heads of State and government agreed that the costs of NATO enlargement would be reasonable and they would be met in accordance with current Alliance procedures. After careful study, NATO agreed that the costs of enlargement to the Alliance common budgets for the first 10 years would be $1.5 billion. Using the current shares of NATO common budget that would mean the costs to the U.S. during that period would be approximately $400 million. However, a reduction to 10 percent of enlargement costs as called for in the amendment is neither reasonable nor consistent with the Madrid communique agreed by all Allied heads of state and government.

  • prohibit the use of commercial light water reactors for the production of tritium; eliminating the least costly, most technically mature option under consideration by DOE. Tritium production in commercial reactors is not inconsistent with U.S. nonproliferation policy. There have been several instances of cooperation between U.S. military and civilian nuclear programs, including dual use of uranium enrichment facilities and commercial sale of electricity originating from a weapons material production reactor.

The inclusion of such amendments in the bill presented to the President would be unacceptable.