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104th Congress Rept. 104-138
HOUSE OF REPRESENTATIVES
1st Session Part 2
INTELLIGENCE AUTHORIZATION ACT FOR FISCAL YEAR 1996
July 19, 1995.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. Clinger, from the Committee on Government Reform and Oversight,
submitted the following
R E P O R T
[To accompany H.R. 1655]
[Including cost estimate of the Congressional Budget Office]
The Committee on Government Reform and Oversight, to whom
was referred the bill (H.R. 1655) to authorize appropriations
for fiscal year 1996 for intelligence and intelligence-related
activities of the United States Government, the Community
Management Account, and the Central Intelligence Agency
Retirement and Disability System, and for other purposes,
having considered the same, report favorably thereon with an
amendment and recommend that the bill as amended do pass.
I. Background and need for the legislation..........................2
II. Legislative hearings and committee actions.......................4
III. Committee hearings and written testimony.........................4
IV. Explanation of the bill..........................................4
V. Compliance with rule XI..........................................4
VI. Budget analysis and projections..................................4
VII. Cost estimate of the Congressional Budget Office.................5
Inflationary impact statement....................................7
IX. Changes in existing law..........................................7
X. Committee recommendation.........................................8
XI. Congressional Accountability Act; Public Law 104-1; section 8
The amendment to the bill, as reported by the Committee on
Government Reform and Oversight, is as follows:
Strike out section 505.
short summary of legislation
The legislation amending H.R. 1655, the Intelligence
Authorization Act For Fiscal Year 1996, strikes Section 505 of
Title V of the Act.
i. background and need for the legislation
A. Legislative history
H.R. 1655, the Intelligence Authorization Act for Fiscal
Year 1996, was ordered to be reported by the House Permanent
Select Committee on Intelligence on June 14, 1995. Section 505
in Title V of H.R. 1655 was sequentially referred to the
Government Reform and Oversight Committee and then to the
Subcommittee on Civil Service.
On July 12, 1995, the Subcommittee on the Civil Service
amended section 505 by striking the provision from the bill. No
other amendments were offered and the bill was amended and
ordered reported to the full Committee. On July 18, 1995, the
committee favorably reported H.R. 1655, as amended by the Civil
Service Subcommittee, to the full House.
Section 505 of Title V of H.R. 1655 would waive the
provision of the Civil Service Retirement System that imposes a
2% per year reduction in accrued benefits for early retirement
before age 55 specifically for National Security Agency (NSA)
employees. The waiver would be in effect for 90 days during
fiscal year 1996 and could apply to as many as 3,700 NSA
employees--ages 42 to 54--now eligible for early retirement.
The Office of Personnel Management (OPM) has estimated that
approximately 26% of the 3,700 employees could be induced to
retire with the waiver of the 2% reduction of the accrued
benefit. NSA has already used the $25,000 voluntary separation
incentive payment (buyout) three times. In addition, as a
component of the Department of Defense, NSA will continue to
have buyout authority through fiscal year 1999. No provision of
the bill approved by the House Select Committee on Intelligence
would bar employees from collecting both buyouts and unreduced
pensions. Report language recommends that this should happen
``only if required to achieve the desired workforce reduction
and with prior consultation with both the House and Senate
Intelligence Committees.'' The bill contains no other
restrictions on overlapping incentive payments.
C. Need for legislation
The Committee believes that, the provision (section 505) to
waive the 2% reduction penalty would, among other problems, set
a costly and adverse precedent by placing in motion similar
requests for such waiver authority by other agencies.
The NSA has indicated that they need the early retirement
option to reduce the size of their workforce and their payroll
by encouraging the retirement of higher-paid employees with
obsolete skills. The NSA penalty waiver proposal is thus
focused directly at the largest subgroup of retirement eligible
employees--those eligible for early retirement--approximately
19% of their civilian population. However, this group has not
taken advantage of the $25,000 separation incentive. The age
distribution at NSA has two peaks, one centered at age 31 and
the other at age 50. The older group constitutes a population
that could largely move into retirement in the next ten years.
NSA states ``Their skills, while still applicable, will--
without substantial retraining--become less valuable over
time.'' This group is the target for increased attrition.
Given this experience, there is no guarantee that Section
505 would achieve the desired results. Unfortunately the
provision takes a blunt approach to one age group with no
guarantee that these incentives will effectively address the
alleged skills mismatch. This ``skills mismatch'' could be
claimed by numerous other agencies affected by restructuring
measures, and this would have disastrous budget consequences.
During the Subcommittee's May 17, 1995 hearing on Federal
buyouts, both public sector expert and private consultant
witnesses recommended that approval of any additional incentive
program should be linked closely to approval of an
organizational restructuring plan. The Committee found,
however, that there is no such plan at the National Security
The Permanent Select Committee on Intelligence report on
H.R. 1655 reflects an extensive effort to review the human,
technical, and financial resource requirements of several
intelligence programs, but contains no strategic organizational
plan. In the report NSA representatives indicated the skill
categories that they would like to shift, but provided no
organizational restructuring, no outline of a training or
retraining program, nor an alternative mechanism to achieve the
restructuring suited to future operations.
There is also concern that the provision would have
disastrous budget consequences. In testimony submitted for
planned hearings before the Select Committee on Intelligence,
O.M. projected, ``If a waiver of the two percent per year
reduction for early retirement was applied on a government-wide
basis, even if only 27 percent of those eligible elected to
take it, retirement outlays would increase by more than $6
billion over a five-year period. These pay-as-you-go costs
would have to be offset by savings in other direct spending
programs or by new revenues under the terms of the Budget
Enforcement Act.'' The Select Committee planned hearings on
these provisions, but they never occurred.
There is also concern about the adverse precedent the
provision would create if granted to NSA. Testimony at the
Subcommittee's March 17 hearing on buyouts forecast that such a
precedent would result in an immediate reduction in current
retirement rates as employees would anticipate the potential
for additional incentives. Additionally, such incentives
inevitably would divert resources from current operations,
minimizing any investment that agencies might be able to make
into the technologies and training essential for the
NSA desires to avoid a program of involuntary separations
(Reductions-in-Force), but it has not yet exercised all
management options currently available. The Administration does
not support NSA's position. Although this legislation is
targeted to one agency for a limited period, the Office of
Personnel Management expressed concern about the consequences
of such a program for other agencies.
In short, this measure would establish adverse precedent,
provide undesirable incentives to current employees, and
inhibit progress toward organizational restructuring, all while
imposing substantial financial burdens on both the retirement
system and the costs of future government operations.
II. LEGISLATIVE HEARINGS AND COMMITTEE ACTIONS
H.R. 1655 was introduced on May 17, 1995 by the Honorable
Larry Combest (R-TX), Chairman of the House Permanent Select
Committee on Intelligence. The bill was referred to the
Committee on Government Reform and Oversight on June 23, 1995
to consider for a period until July 19, 1995, sections of the
bill within its jurisdiction. The Subcommittee on the Civil
Service held a mark up on section 505 of the bill on July 12,
1995. One amendment was offered and adopted by the
subcommittee, and the measure as amended was ordered favorably
reported to the full Committee by a voice vote. On July 18,
1995, the Committee on Government Reform and Oversight met to
consider H.R. 1655, as amended by the Civil Service
Subcommittee, and favorably reported the bill to the full House
by voice vote and without further amendment.
III. COMMITTEE HEARINGS AND WRITTEN TESTIMONY
The Subcommittee on the Civil Service held no formal
hearings on H.R. 1655. However, the Subcommittee has held, and
will continue to hold, general oversight hearings on Federal
workforce restructuring and retirement practices, such as
buyouts, currently in use by Federal agencies.
IV. EXPLANATION OF THE LEGISLATION AMENDING THE BILL
The amendment simply strikes section 505 of H.R. 1655,
thereby leaving in place existing law which provides for a 2%
per year reduction in benefits for retirement before age 55 for
National Security Agency employees.
V. COMPLIANCE WITH RULE XI
Pursuant to rule XI, clause 2(l)(3) of the Rules of the
House of Representatives, under the authority of rule X, clause
2(b)(1) and clause 3(f), the results and findings from
committee oversight activities are incorporated in the bill and
VI. BUDGET ANALYSIS AND PROJECTIONS
H.R. 1655 as amended provides for no new authorization,
budget authority or tax expenditures. Consequently, the
provisions of section 308(a) of the Congressional Budget Act
are not applicable.
VII. COST ESTIMATE OF THE CONGRESSIONAL BUDGET OFFICE
Congressional Budget Office,
Washington, DC, July 18, 1995.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1655, the
Intelligence Authorization Act for Fiscal Year 1996, as ordered
reported by the House Committee on Government Reform and
Oversight on July 18, 1995.
The bill would affect direct spending and thus would be
subject to pay-as-you-go procedures under section 252 of the
Balanced Budget and Emergency Deficit Control Act.
If you wish further details on this estimate, we will be
pleased to provide them.
June E. O'Neill, Director.
Congressional Budget Office cost estimate
1. Bill number: H.R. 1655.
2. Bill title: Intelligence Authorization Act for Fiscal
3. Bill status: As ordered reported by the House Committee
on Government Reform and Oversight on July 18, 1995.
4. Bill purpose: H.R. 1655 would authorize appropriations
for fiscal year 1996 for intelligence activities of the United
States government, the Community Management Staff of the
Director of Central Intelligence, and the Central Intelligence
Agency Retirement and Disability System (CIARDS).
5. Estimated cost to the Federal Government of titles I
(except sections 101-103), II, III (except section 301), IV, V,
1995 1996 1997 1998 1999 2000
authority.... 0 0 0 2 3 1
outlays...... 0 0 0 2 3 1
SPENDING SUBJECT TO APPROPRIATIONS ACTION
authority \1\ 291 0 0 0 0 0
outlays...... 291 38 22 9 0 0
level \2\.... 0 295 (\3\) 4 5 (\3\)
outlays...... 0 264 23 11 7 (\3\)
SPENDING SUBJECT TO APPROPRIATIONS ACTION
\1\ \2\..... 291 295 (\3\) 4 5 (\3\)
outlays...... 291 302 45 20 7 (\3\)
\1\ The 1995 figure is the amount already appropriated.
\2\ Because parts of this bill are highly classified, CBO is unable to
provide a full accounting of the bill's costs over the 1996-2000
period and a comparison with the 1995 level.
\3\ Less than $500,000.
CBO was unable to obtain the necessary information to
estimate the costs for Title I (except section 104) and section
301 of Title III of this bill because they are classified at a
level above clearances now held by CBO employees. The estimated
costs in the above table, therefore, reflect only the costs of
section 104 and Titles II, III (except section 301), IV, V, and
6. Basis of estimate: For purposes of this estimate, CBO
assumed that H.R. 1655 will be enacted by October 1, 1995, and
that the full amounts authorized will be appropriated for
fiscal year 1996. Outlays are estimated according to historical
spending patterns for intelligence programs.
CIA Separation Incentives.--Section 401 would allow the
Central Intelligence Agency (CIA) to offer separation incentive
payments to employees from the end of fiscal year 1997 to the
end of fiscal year 1999. Additional retirement costs would
occur in the near term because employees who retire under this
program would receive their annuities earlier than they would
otherwise. The cost of these annuities would constitute direct
spending. CBO estimates no costs to occur in 1996 and 1997 as a
result of section 401. However, direct spending costs are
estimated to be $2 million in 1998, $3 million in 1999, and $1
million in 2000.
Based on projections from the CIA, CBO estimates that 550
employees would be offered an incentive payment in 1998 and 700
in 1999. The CIA expects that one quarter of those offered an
incentive payment would take the incentive and retire. The
estimate assumes that about 60 percent of the retirees would
have retired anyway, without the incentive. The estimate
assumes that the remaining 40 percent who accept the incentive
would retire one or two years earlier than they would have
Thrift Savings Plan (TSP) forfeiture.--Section 304 would
allow forfeiture of the U.S. government contribution to the TSP
under the Federal Employees Retirement System, along with
interest, if an employee is convicted of national security
offenses. According to the CIA, savings from this provision
would not exceed $35,000 annually.
Spousal Pension Benefits.--Section 305 would allow
restoration of spousal pension benefits to those spouses who
cooperate in criminal investigations and prosecutions for
national security offenses. According to the CIA, costs from
this provision would not exceed $35,000 annually.
Authorizations of appropriations
Section 104 would authorize appropriations of $80.7 million
for 1996 for the Intelligence Community Management Account of
the Director of Central Intelligence (DCI). Similarly, section
201 specifies an authorization of appropriations for a
contribution to the Central Intelligence Agency Retirement and
Disability Fund of $213.9 million.
In addition to the added retirement costs, section 401
(discussed above under direct spending) would increase
discretionary spending for incentive costs. The cash incentives
would cost $4 million in 1998 and $5 million in 1999. CBO
assumes that the savings in salary and benefits from these
reductions would be incurred under current law as part of the
anticipated reduction in the CIA workforce. Thus, these savings
would not be a result of this bill and would not offset the
cost of incentive payments in this estimate.
Section 502 would extend comparable benefits and allowances
to civilian and military personnel assigned to defense
intelligence functions overseas. According to the Defense
Intelligence Agency, this provision would increase personnel
costs by approximately $200,000 annually.
7. Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act of 1985 sets up pay-as-you-go
procedures for legislation affecting direct spending or
receipts through 1998. CBO estimates that H.R. 1655 as ordered
reported by the House Committee on Government Reform and
Oversight would have the following pay-as-you-go impact:
1995 1996 1997 1998
Change in outlays................... 0 0 0 2
Change in receipts.................. (\1\) (\1\) (\1\) (\1\)
\1\ Not applicable.
8. Estimated cost to State and local governments: None.
9. Estimate comparison: None.
10. Previous CBO estimate: CBO prepared an estimate for
H.R. 1655 as ordered reported by the House Permanent Select
Committee on Intelligence on May 18, 1995. That version
included a provision (section 505) that would allow employees
at the National Security Agency (NSA) enrolled in the Civil
Service Retirement System (CSRS) who retire before reaching age
55 to receive unreduced annuities. This provision would reduce
direct spending in 1966 by $2 million and increase direct
spending by a total of $111 million over the 1997-2000 period.
NSA would also be required to make an agency contribution to
the CSRS trust fund of $15 million in 1996 to cover the long-
run actuarial cost to the retirement system of this incentive
program. The version of the bill ordered reported by the House
Committee on Government Reform and Oversight does not include
this provision dealing with NSA retirees, and the two estimates
differ for that reason.
11. Estimate prepared by: Wayne Boyington and Elizabeth
12. Estimated approved by: Robert A. Sunshine, for Paul N.
Van de Water, Assistant Director for Budget Analysis.
viii. inflationary impact statement
In accordance with rule XI, clause 2(l)(4) of the Rules of
the House of Representatives, this legislation is assessed to
have no inflationary effect on prices and costs in the
operation of the national economy.
ix. changes in existing law
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown in part 1 of the report, filed
by the Permanent Select Committee on Intelligence.
x. committee recommendation
On July 18, 1995, a quorum being present, the Committee
ordered the bill favorably reported.
Committee on Government Reform and Oversight--104th Congress Rollcall
Date: July 18, 1995.
Final Passage of H.R. 1655, as amended.
Offered by: Hon. John L. Mica (R-FL).
Voice Vote: yea.
xi. congressional accountability act; public law 104-1; section
H.R. 1655 as amended by the committee is inapplicable to
the legislative branch because it does not relate to any terms
or conditions of employment or access to public services or