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111th Congress                                            Rept. 111-166
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2




 June 23, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


           Mr. Skelton, from the Committee on Armed Services,
                        submitted the following

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 2647]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 
2647), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on June 18, 
2009 (H. Rept. 111-166, pt. 1).
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 22, 2009.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2647, the National 
Defense Authorization Act for Fiscal Year 2010.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kent 
                                              Douglas W. Elmendorf.

H.R. 2647--National Defense Authorization Act for Fiscal Year 2010

    Summary: H.R. 2647 would authorize appropriations totaling 
$681 billion for fiscal year 2010 for the military functions of 
the Department of Defense (DoD), for certain activities of the 
Department of Energy (DOE), and for other purposes. That total 
includes $130 billion for the cost of overseas contingency 
operations, primarily in Iraq and Afghanistan. In addition, 
H.R. 2647 would prescribe personnel strengths for each active-
duty and selected reserve component of the U.S. armed forces. 
CBO estimates that appropriation of the authorized amounts 
would result in outlays of $671 billion over the 2010-2014 
    The bill also contains provisions that would both increase 
and decrease costs of discretionary defense programs in future 
years. Most of those provisions would affect force structure, 
compensation, and benefits. In total, such provisions would 
raise costs by an average of about $16 billion annually from 
2011 to 2014, assuming appropriation of the necessary amounts.
    The bill contains one provision that would have a 
significant effect on direct spending. Section 422 would repeal 
section 1002 of Public Law 110-417, the Duncan Hunter National 
Defense Authorization Act for Fiscal Year 2009, which shifted 1 
percent of military retirement payments scheduled to occur in 
September of 2013 to October 2013. CBO estimates that repeal of 
section 1002 would shift $43 million in outlays from fiscal 
year 2014 to fiscal year 2013. That change would have no net 
effect on budget authority or outlays over the 2010-2014 period 
or the 2010-2019 period.
    Enactment of the bill would not affect revenues.
    H.R. 2647 contains both intergovernmental and private-
sector mandates as defined in the Unfunded Mandates Reform Act 
(UMRA). CBO estimates that the costs of the intergovernmental 
mandates would not exceed the threshold established in UMRA 
($69 million in 2009, adjusted annually for inflation). CBO 
cannot determine whether the costs to the private sector would 
exceed the annual threshold ($139 million in 2009, adjusted 
annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2647 is summarized in Table 1. Almost 
all of the $681 billion that would be authorized by the bill is 
for activities within budget function 050 (national defense). 
Other costs--some occurring beyond 2010--fall within other 
budget functions, including: authorizations of $168 million for 
the Maritime Administration (function 400--transportation); 
$134 million for the Armed Forces Retirement Home (function 
600--income security); $24 million for the Naval Petroleum 
Reserves (function 270--energy); and $4.5 million annually 
through 2015 for the Sikes Act (function 300--natural resources 
and environment, and function 050--national defense).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
2647 will be enacted near the start of fiscal year 2010 and 
that the authorized amounts will be appropriated.


    The bill would specifically authorize appropriations 
totaling $681 billion in 2010 (see Table 2). Of that amount, 
$551.0 billion is for authorizations of regular (non-emergency) 
appropriations--$534.1 billion for DoD, $16.5 billion for 
atomic energy activities within DOE, and $0.3 billion for other 
    Compared to regular appropriations currently enacted for 
2009, the 2010 level authorized for DoD would be an increase of 
$20.7 billion (4.0 percent), while the level authorized for DOE 
would be an increase of $0.6 billion (3.8 percent). The four 
largest categories of DoD spending would receive increases as 
follows: military personnel--$10.8 billion (8.6 percent); 
operation and maintenance--$6.5 billion (3.6 percent); 
procurement--$5.1 billion (5.0 percent), and research and 
development--$0.1 billion (0.1 percent).

                                                          By fiscal year, in millions of dollars 2010--
                                                   2010       2011       2012       2013       2014    2010-2014
                                        SPENDING SUBJECT TO APPROPRIATION

Authorization of Regular Appropriations for
 2010, primarily for the Departments of
 Defense and Energy:
    Authorization Level.......................    550,962          5          5          5          5    550,980
    Estimated Outlays.........................    354,129    125,298     42,897     14,444      5,737    542,505
Authorization of Appropriations for 2010 for
 Overseas Contingency Operations:
    Authorization Level.......................    130,000          0          0          0          0    130,000
    Estimated Outlays.........................     66,601     42,418     14,243      3,986      1,283    128,531
    Authorization Level.......................    680,962          5          5          5          5    680,980
    Estimated Outlays.........................    420,730    167,716     57,140     18,430      7,020    671,036

                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority....................          0          0          0          0          0          0
Estimated Outlays.............................          0          0          0         43        -43         0
Notes: The authorization levels in this table reflect amounts specifically authorized by the bill. The bill also
  implicitly authorizes some activities in 2011 and future years; those authorizations are not included above
  (but are shown in Table 3) because funding for those activities would be covered by specific authorizations in
  future years.
Numbers may not add to totals because of rounding.

    The $130 billion that would be authorized for overseas 
contingency operations--primarily for military operations in 
Iraq and Afghanistan--represents a decrease of about $14 
billion (roughly 10 percent) compared to the amount currently 
appropriated for 2009 for those operations. The decreases are 
primarily in accounts for military personnel and procurement.
    The bill also contains provisions that would both increase 
or decrease the cost of defense discretionary programs in 
future years. Most of those provisions would affect end 
strength, military compensation, health benefits, and multiyear 
procurement authorities.
    The estimated costs of those provisions are shown in Table 
3 and discussed below. The following discussion does not 
address the timing of outlays from those estimated 
    Force Structure. The bill would affect force structure by 
setting end-strength levels for the various military services.
    Title IV would authorize active and reserve end-strength 
levels for 2010 and would set the minimum end-strength 
authorization in permanent law.
    Under title IV, the authorized end strengths in 2010 for 
active-duty personnel and personnel in the selected reserves 
would total about 1,410,000 and 855,000, respectively. Of those 
selected reservists, about 78,900 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would increase by about 40,200 and selected-reserve end 
strength would increase by about 6,400 when compared with 
levels authorized in 2009.
    Also, this title would allow DoD to temporarily increase 
end strength for active-duty personnel in the Army by 30,000 in 
fiscal years 2011 and 2012 above the level authorized in this 
bill for 2010.
    Active-Duty End Strength. Section 401 would authorize 
15,000 additional active-duty personnel for the Army, 8,100 
additional active-duty personnel for the Marine Corps, about 
2,500 additional active-duty personnel for the Navy, and about 
14,700 additional active-duty personnel for the Air Force--
which CBO estimates would increase costs to DoD by $31 billion 
over the 2010-2014 period. Those costs include the pay and 
benefits of the additional personnel, as well as costs for 
operation and maintenance. Costs for procurement and 
construction are included for the cost of additional personnel 
in both the Army and Marine Corps to support adding and 
reorganizing units as part of the Grow the Force initiative.
    Army Temporary 30,000 Increase. Section 403 would allow the 
Secretary of Defense to temporarily increase the Army's active-
duty end strength by 30,000 in 2011 and 2012 compared with the 
level authorized in section 401 for 2010. CBO estimates that 
the temporary increase in end strength for the Army would raise 
costs for salaries and other expenses by roughly $2 billion in 
2011, $4 billion in 2012, and $2 billion in 2013.
    Reserve Component End Strengths. Sections 411 and 412 would 
authorize the end strengths for the reserve components, 
including those who serve on active duty in support of the 
reserves. Under this bill, the selected reserve would 
experience a net increase in end strength of about 6,400, with 
the Navy Reserve and Air National Guard losing personnel while 
the Army National Guard and Air Force Reserve would see an 
increase. On net, the number of full-time reservists who serve 
on active duty in support of the reserves would increase by 
about 170. CBO estimates that the net result of implementing 
those provisions would be an increase in costs for salaries and 
other expenses for selected reservists of $571 million in 2010 
and about $2 billion over the 2010-2014 period, compared with 
the authorized end-strength levels for 2009.
    Reserve Technicians End Strengths. In addition, section 413 
would authorize the minimum end-strength levels for dual-status 
military technicians, who are federal civilian personnel 
required to maintain membership in a selected reserve component 
as a condition of their employment. Under this bill, the 
required number of technicians would increase on net by 275 
relative to the levels currently authorized. CBO estimates the 
costs in civilian salaries and expenses that would result from 
additional military technicians would total about $120 million 
over the 2010-2014 period, compared with the minimum end-
strength levels for technicians in 2009.
    Coast Guard Reserve End Strengths. The bill also would 
authorize an end-strength level of 10,000 servicemembers in 
2010 for the Coast Guard Reserve. Because this authorization is 
the same as that under current law, CBO does not estimate any 
additional costs for this provision.
    Compensation and Benefits. H.R. 2647 contains several 
provisions that would affect military compensation and benefits 
for uniformed personnel. The bill would specifically authorize 
regular appropriations of $135.7 billion for the costs of 
military pay and allowances in 2010. For related costs due to 
overseas contingency operations (primarily in Iraq and 
Afghanistan), the bill would authorize an additional $13.6 
billion for 2010.
    Pay Raises. Section 601 would raise basic pay for all 
individuals in the uniformed services by 3.4 percent, effective 
January 1, 2010. CBO estimates the total cost of a 3.4 percent 
military pay raise would be about $2.4 billion in 2010. 
Compared with current law (under which CBO estimates the 
across-the-board increase that will go into effect on January 1 
will be 2.9 percent), this section would increase the pay raise 
in 2010 by an additional 0.5 percent. CBO estimates the 
incremental cost of this larger raise would be about $350 
million in 2010 and $2.3 billion over the 2010-2014 period.

                                 TABLE 2.--SPECIFIED AUTHORIZATIONS IN H.R. 2647
                                                          By fiscal year, in millions of dollars 2010--
                                                   2010       2011       2012       2013       2014    2010-2014
Authorization of Regular Appropriations--
 Department of Defense:
    Military Personnel\a\
         Authorization Level..................    135,723          0          0          0          0    135,723
        Estimated Outlays.....................    129,480      5,700         68         14          0    135,262
    Operation and Maintenance:
        Authorization Level...................    185,571          0          0          0          0    185,571
        Estimated Outlays.....................    134,159     38,599      8,480      2,089        844    184,171
        Authorization Level...................    106,759          0          0          0          0    106,759
        Estimated Outlays.....................     28,084     38,970     22,735      8,763      3,498    102,050
    Research and Development:
        Authorization Level...................     79,654          0          0          0          0     79,654
        Estimated Outlays.....................     43,499     28,670      4,903      1,172        362     78,606
    Military Construction and Family Housing:
        Authorization Level...................     23,261          0          0          0          0     23,261
        Estimated Outlays.....................      4,375      8,660      5,818      2,465      1,035     22,352
    Revolving Funds:
        Authorization Level...................      3,158          0          0          0          0      3,158
        Estimated Outlays.....................      2,415        467        147         86         43      3,158
    General Transfer Authority:
        Authorization Level...................          0          0          0          0          0          0
        Estimated Outlays.....................        700       -150       -300       -150        -50         50
        Subtotal Department of Defense:
            Authorization Level...............    534,126          0          0          0          0    534,126
            Estimated Outlays.................    342,712    120,916     41,851     14,439      5,732    525,650
    Atomic Energy Defense Activities:
        Authorization Level\b\................     16,507          0          0          0          0     16,507
        Estimated Outlays.....................     11,151      4,327      1,029          0          0     16,507
    Other Programs:
        Authorization Level\c\................        329          5          5          5          5        347
        Estimated Outlays.....................        266         55         17          5          5        347
        Subtotal, Authorization of Regular
            Authorization Level...............    550,962          5          5          5          5    550,980
            Estimated Outlays.................    354,129    125,298     42,897     14,444      5,737    542,505
Authorization of Appropriations for Overseas
 Contingency Operations:
    Military Personnel:
        Authorization Level...................     13,586          0          0          0          0     13,586
        Estimated Outlays.....................     12,892        650          7          2          0     13,551
    Operation and Maintenance:
        Authorization Level...................     89,785          0          0          0          0     89,785
        Estimated Outlays.....................     48,839     29,964      7,571      1,953        668     88,995
        Authorization Level...................     24,416          0          0          0          0     24,416
        Estimated Outlays.....................      4,225     10,932      6,194      1,903        573     23,827
    Research and Development:
        Authorization Level...................        410          0          0          0          0        410
        Estimated Outlays.....................        211        156         28          6          2        403
    Military Construction:
        Authorization Level...................      1,405          0          0          0          0      1,405
        Estimated Outlays.....................        145        567        436        145         61      1,354
    Working Capital Funds:
        Authorization Level...................        397          0          0          0          0        397
        Estimated Outlays.....................        149        189         47          9          3        397
    Special Transfer Authority:
        Authorization Level...................          0          0          0          0          0          0
        Estimated Outlays.....................        140        -40        -40        -32        -24          4
        Subtotal, Iraq and Afghanistan:
            Authorization Level...............    130,000          0          0          0          0    130,000
            Estimated Outlays.................     66,601     42,418     14,243      3,986      1,283    128,531
    Total Specified Authorizations:
        Authorization Level...................    680,962          5          5          5          5    680,980
        Estimated Outlays.....................    420,730    167,716     57,140     18,430      7,020   671,036
Notes: This table summarizes the authorizations of appropriations explicitly stated in the bill--in specified
  amounts. Various provisions of the bill also would authorize activities and provide authorities that would
  result in additional costs in 2011 and in future years. Because the bill would not specifically authorize
  appropriations to cover those costs (other than for the Sikes Act, as discussed below), they are not reflected
  in this table. Rather, Table 3 contains the estimated costs of a select number of those provisions.
Numbers may not add to totals because of rounding.
a. For purposes of this estimate, CBO assumes that the authorization of appropriation in section 421 for
  military personnel includes $10.7 billion for accrual payments for the TRICARE For Life program.
b. This authorization is primarily for atomic energy activities within the Department of Energy.
c. These authorizations are for the Maritime Administration ($168 million), the Armed Forces Retirement Home
  ($134 million), the Naval Petroleum Reserves ($23.6 million), and the Sikes Act ($4.5 million annually). The
  authorized level for the Maritime Administration does not include the amounts specified in the bill for
  maritime loan guarantees or payments to shipping companies under the maritime security program because those
  programs are authorized for 2010 by existing statute.

    Expiring Bonuses and Allowances. Sections 611 through 616 
and 662 would extend DoD's authority to enter agreements to pay 
certain bonuses and allowances to military personnel. Those 
bonuses and allowances are scheduled to expire on December 31, 
2009. The bonuses covered under sections 611 through 616 would 
be extended for an additional year, and the recruitment 
incentives covered under section 662 would continue for three 
more years. Some bonuses are paid in lump sum, while others are 
paid in annual or monthly installments over the period of 
obligated service. Based on DoD's budget submission for fiscal 
year 2010, CBO estimates that extending those authorities would 
cost $1.7 billion in 2010 and $2.8 billion over the 2010-2014 
    Transportation Allowances. Sections 631 and 634 would 
improve transportation benefits for certain servicemembers when 
they make a permanent change of station. Under section 631 
military members accompanied by dependents of driving age could 
ship an additional privately owned vehicle at government 
expense to or from nonforeign duty stations outside the 
continental United States. Military bases in Guam, Alaska, and 
Hawaii would be the primary duty stations affected by this 
provision. Section 634 would increase the amount of baggage and 
household goods servicemembers in grades E-5 through E-9 are 
allowed to move by up to 500 pounds. Based on information from 
DoD, CBO estimates that providing both those expanded benefits 
would cost $50 million in 2010 and $347 million over the 2010-
2014 period.
    Post-Deployment/Mobilization Respite Absence (PDMRA) Pay. 
The PDMRA program was enacted on January 19, 2007, as part of 
the National Defense Authorization Act for Fiscal Year 2007 
(Public Law 109-364) and was fully implemented by October 1, 
2007. Section 663 would authorize the Secretary of Defense to 
pay current and former servicemembers up to $200 for each day 
of leave earned under the PDMRA program that was not credited 
because the program was not yet fully implemented.
    The PDMRA program provides additional administrative leave 
when a member of the armed forces deploys more frequently than 
the rate specified by DoD rotation policy. Based on information 
from DoD, CBO estimates that under section 663 DoD would pay 
about 8,100 former and 14,000 current servicemembers $200 per 
day for an average of 13 PDMRA days. Implementing this section 
would cost $57 million in 2010. Because this authority would 
expire after one year, there would be no costs beyond 2010.
    Proration of Imminent Danger Pay. Section 618 would allow 
the Secretary of Defense to prorate certain types of special 
and incentive pay. Based on information from DoD, CBO expects 
that DoD would use the authority to prorate imminent danger pay 
starting in 2011. Under current law, DoD pays $225 per month to 
servicemembers who spend any part of a month in areas 
designated by DoD as qualifying for imminent danger pay. The 
authority in this section would allow DoD to pay servicemembers 
a prorated amount for that part of a month that members are in 
the designated area. CBO estimates that about 10,300 members of 
the armed forces would earn a partial month of imminent danger 
pay (i.e., about 4,700 would earn half a month and 5,600 would 
earn one quarter of a month, on average). Thus, CBO estimates 
that implementing this section would save $21 million in 2011 
and $28 million annually over the 2012-2014 period.

                                                            By fiscal year, in millions of dollars--
                                                   2010       2011       2012       2013       2014    2010-2014
                                                 FORCE STRUCTURE

Active-Duty End Strengths.....................      8,145      7,351      5,513      5,269      5,148     31,426
Army Temporary 30,000 Increase................          0      2,133      4,206      2,053          0      8,392
Reserve Component End Strengths...............        571        545        198        201        206      1,721
Reserve Technicians End Strengths.............         13         26         27         27         27        120

                                         COMPENSATION AND BENEFITS (DOD)

Pay Raises....................................        351        481        493        503        511      2,339
Expiring Bonuses and Allowances...............      1,741        604        139        222        143      2,849
Transportation Allowances.....................         50         71         74         75         77        347
PDMRA Pay.....................................         57          0          0          0          0         57
Proration of Imminent Danger Pay..............          0        -21        -28        -28        -28       -105
National Guard Youth Challenge Program........         20         21         21         21         22        105
Other Military Compensation Provisions........         22         23         33         33         34        145

                                             DEFENSE HEALTH PROGRAM

TRICARE Prior to Activation...................         92         83         63         53         56        347
Chiropractic Care.............................          5         11         12         12         13         53
TRICARE for Grey-Area Retirees................         10          5          0          0          0         15
Dental Care for Survivors.....................          2          2          2          2          2         10

                                                OTHER PROVISIONS

Multiyear Procurement (F/A-18 E/F and EA-18G        2,725      2,907      2,034          0          0      7,666
Multiyear Procurement (DDG-51 Destroyers).....      2,020      4,180      2,160      4,470      2,320     15,150
Wage Rates for Construction on Guam...........      2,100      2,700      2,600      2,500        300     10,200
Renewable Aviation Fuel.......................          0          0         20         80        150        250
Hybrid and Electric Vehicles..................         30         27         24         20         16        117
School of Nursing.............................         72         15          5          6          6        104
Decontamination of Culebra....................          0         25          0          0          0         25
Notes: For every item in this table, the 2010 levels are assumed to be included in amounts specifically
  authorized to be appropriated by the bill (and reflected in Tables 1 and 2). Amounts shown in this table for
  2011 through 2014 are not included in Tables 1 or 2 because authorizations for those amounts would be covered
  by specific authorizations in future years.
Figures shown here may not add to numbers in the text because of rounding; PDMRA = Post-Deployment/Mobilization
  Respite Absence.

    National Guard Youth Challenge Program. Section 593 would 
authorize DoD to pay a larger share of the cost to operate the 
National Guard Youth Challenge Program, raising the maximum 
from 60 percent to 75 percent of the costs. CBO estimates that 
this change would cost $20 million in 2010 and $105 million 
over the 2010-2014 period.
    Other Military Compensation Provisions. CBO estimates that 
other provisions in titles V and VI would increase DoD military 
compensation costs by $145 million over the 2010-2014 period. 
Those other provisions would:
     Extend stabilization pay to officers who are 
reassigned to lower grades. Stabilization pay allows 
servicemembers to retain their existing level of pay when they 
change military fields and are reassigned to a lower-paying 
     Provide a monthly allowance for members with 
catastrophic injuries or illnesses that are combat related, to 
defray the cost of either a medical or personal attendant.
     Limit the collection of overpayments of pay and 
allowances paid in error to servicemembers.
     Extend for two years the expiring authority for a 
member of the armed forces to accumulate and carry over an 
additional 15 days of leave earned above the otherwise maximum 
statutory limit of 60.
     Increase the number of students who may 
participate in the Health Professionals Scholarship Program and 
reserve up to 300 scholarships for students in degree programs 
for mental health care.
     Grant permanent authority for the Secretary of 
Defense to allow children of members of foreign militaries to 
attend, tuition free, the schools in Mons, Belgium operated by 
the Defense Dependents' Education System.
    Defense Health Program. Title VII contains several 
provisions that would affect the health care benefits provided 
by DoD.
    TRICARE Prior to Activation. Section 706 would allow 
reserve component members and their dependents to receive the 
same TRICARE benefits as active-duty members for up to 180 days 
prior to being called-up for active service. Currently, such 
coverage is limited to 90 days. (Once a reserve member starts 
his active service, he receives the same pay and benefits as 
regular active-duty members.) Based on current reserve 
activation statistics, CBO estimates that in the first full 
year about 100,000 reserve component members could benefit from 
the extra 90 days of TRICARE coverage. An analysis of reserve 
component survey data indicates that many of those reserve 
members have access to other health insurance. Based on this 
information, CBO estimates that only about two-thirds of them 
would actively use the benefit.
    Based on cost data from current TRICARE programs, CBO 
estimates the cost to provide an additional 90 days of TRICARE 
benefits would be, on average, about $2,000 for each 
participating reserve component member. After accounting for 
the time needed to issue new regulations, CBO estimates this 
expanded authority would cost about $92 million in 2010. Annual 
costs would decrease over time because CBO assumes the number 
of activated reserve members will eventually decline. In total, 
CBO estimates section 706 would cost $347 million over the 
2010-2014 period.
    Chiropractic Care. Section 702 would require DoD to provide 
chiropractic services to all current active-duty members. 
Currently, chiropractic care is only available to active-duty 
members at 60 military treatment facilities (MTFs). Based on an 
analysis of current military base population reports, CBO 
estimates that about 900,000, or roughly two-thirds, of the 1.4 
million active-duty members are currently able to receive 
chiropractic services.
    To estimate the cost of providing care to the rest of the 
active-duty population, CBO used information from the final 
report of DoD's chiropractic health care demonstration program, 
which took place between 1995 and 1999 (Birch and Davis 
Associates, Inc., 2000). Based on that information, with 
adjustments for both inflation and expected savings from 
reduced usage of other forms of health care, CBO estimates that 
extending chiropractic care to the remainder of the active-duty 
population would result in 160,000 additional visits to 
chiropractors each year, at a net cost of about $55 per visit, 
or about $9 million per year.
    Section 702 also would authorize a demonstration program to 
provide chiropractic care to deployed forces. CBO estimates 
such a program would cost about $12 million over a five-year 
period, based on cost data from previous DoD chiropractic 
demonstration programs. In total, CBO estimates that section 
702 would cost $53 million over the 2010-2014 period.
    TRICARE for Grey-Area Retirees. Section 704 would establish 
a new TRICARE program for reserve component members who have 
completed 20 years of service but have not yet reached the age 
of 60 (so called ``grey-area'' retirees). The program would 
offer benefits and cost sharing similar to that offered as part 
of the TRICARE Standard health plan. However, to participate in 
the program beneficiaries would be required to pay premiums 
equal to the cost of the services provided. Because the 
collection of those premiums is supposed to offset the added 
costs to DoD, CBO estimates the net cost to the government of 
this new program should be insignificant over the long-run. DoD 
would incur some start-up costs related to outreach and changes 
to personnel databases. CBO estimates those costs would total 
about $15 million over the 2010-2011 period, based on start-up 
costs from the TRICARE Reserve Select Program.
    Dental Care for Survivors. Section 703 would extend TRICARE 
dental benefits to the survivors of members who die on active 
duty until they reach the age of 21, or, if they are still 
enrolled in college, age 23. Currently, dental benefits for 
survivors cease three years after the death of the sponsor. 
Based on DoD casualty statistics, demographic information, and 
budget data, CBO estimates this section would allow about 7,000 
additional survivors to receive dental benefits through the 
TRICARE program each year, at an annual cost of about $300 per 
person. In total, CBO estimates this extended benefit would 
cost $2 million per year.
    Multiyear Procurement. Multiyear procurement is a special 
contracting method authorized in title 10, United States Code, 
section 2306b, that permits the government to enter into 
contracts covering acquisitions for more than one year but not 
more than five years, even though the total funds required for 
every year are not appropriated at the time the contracts are 
awarded. As part of such a contract, the government commits to 
purchase all items specified at the time the contract is 
signed, including those to be produced and paid for in 
subsequent years. Because multiyear procurement allows a 
contractor to plan for more efficient production, such a 
contract can reduce the cost of an acquisition compared with 
the cost of buying the items through a series of annual 
procurement contracts.
    Such contracts frequently include provisions that require 
DoD to pay for unrecovered fixed costs in the event that the 
contract is canceled before completion. DoD does not budget 
for, obtain, or obligate funds sufficient to pay for those 
contractual commitments at the time they are incurred. 
Authorizing DoD to initiate a multiyear procurement program 
with such unfunded cancellation liabilities provides contract 
authority--a form of budget authority--because it allows the 
department to incur that liability in advance of 
appropriations. CBO believes that the full cost of such 
liabilities should be recorded in the budget at the time they 
are incurred. The failure to request funding for cancellation 
liabilities may distort the resource allocation process by 
understating the cost of decisions made for the budget year and 
may require a future Congress to pay for decisions made today.
    Section 124 would authorize the Department of the Navy to 
enter into a multiyear procurement contract for F/A-18 E/F 
fighter/attack aircraft and EA-18G electronic attack aircraft. 
The department has not requested multiyear procurement 
authority, and its acquisition plans for those aircraft are 
unclear after 2010. The President's budget includes a request 
for funding for nine F/A-18 E/Fs and 22 EA-18Gs for 2010, but 
does not provide information on procurement plans in subsequent 
years. In the 2009 budget, DoD planned to purchase a total of 
89 of those two aircraft models over the 2010-2012 period. If 
the department enters a multiyear procurement contract to 
purchase 31 aircraft in 2010 and another 58 aircraft over the 
2011-2012 period, costs would total $7.7 billion, CBO 
estimates. Because the Navy procured F/A-18 E/F aircraft under 
two previous multiyear contracts, CBO estimates that new 
cancellation liabilities for a third such contract would likely 
be small.
    Section 125 would authorize the Department of the Navy to 
enter into a multiyear procurement contract for DDG-51 Arleigh 
Burke-class destroyers. In place of continuing procurement of 
DDG 1000 class ships, the Department has requested funds for 
restarting DDG-51 production in 2010 (The Navy last purchased a 
DDG-51 ship in 2005). Based on information from the Defense 
Department, CBO estimates that the Navy would purchase a total 
of seven DDG-51 ships over the 2010-2014 period. CBO estimates 
that if the department used the authority in this section, it 
would enter a contract to acquire those seven ships at a total 
cost of about $15.2 billion.
    Wage Rates for Construction on Guam. DoD is realigning U.S. 
forces from Okinawa and the Japanese mainland to Guam, a 
process that will increase the number of active duty personnel 
on the island to about 19,000 from a current level of 6,400 and 
the number of military family members to about 19,000 from 
7,700. That growth in population will require the construction 
of over $10 billion worth of new facilities, family housing 
units, and utilities infrastructure, according to DoD. Section 
2833 would require construction firms that get contracts for 
those projects to pay their workers wages consistent with the 
labor rates in Hawaii. According to data from the Joint Guam 
Program Office, wage rates in Hawaii are about 250 percent 
higher than wage rates on Guam. Because labor costs account for 
about 40 percent of project costs, increasing wage rates as 
required by section 2833 would double the cost of completing 
the construction projects necessary for the realignment of 
    The costs of realigning forces to Guam are being shared by 
the U.S. and Japanese governments; DoD will contribute $4.2 
billion, the Japanese will contribute $2.8 billion, and arrange 
for third parties to finance $3.2 billion worth of family 
housing construction and utility system improvements. Although 
the cost of all projects would increase, CBO does not expect 
that the Japanese government would increase its share; thus, 
the U.S. government would need to provide the additional funds 
necessary to complete construction. The growth in labor costs 
that would result from enacting section 2833 would increase the 
need for discretionary appropriations by about $10 billion over 
the 2010-2014 period, CBO estimates.
    Renewable Aviation Fuel. Under section 334, DoD would 
establish a goal to procure from renewable sources, at least 25 
percent of the aviation fuel it consumes in the continental 
United States. (Renewable fuels are produced from plant or 
animal matter, or from gas emitted from landfills, sewage, or 
decaying organic matter.) On the basis of its current 
consumption of aviation fuel, the department would need to 
procure 12 million barrels of renewable fuel each year to 
achieve that goal. It would take several years to select a 
source for such fuel and to conduct the testing necessary to 
confirm that such fuel would be suitable for use in military 
aircraft. Thus, CBO assumes that the department would begin 
purchasing small amounts of renewable aviation fuel in 2012, 
increasing the amount purchased each year by about a million 
barrels, until it meets the goal of an estimated 12 million 
barrels purchased annually by 2025.
    Although federal subsidies reduce their price, renewable 
fuels are more expensive than conventional petroleum products. 
Biodiesel prices averaged 55 cents more per gallon than 
conventional diesel over the 2006-2008 period. However, that 
difference includes the federal biodiesel tax credit and other 
subsidies that effectively reduce the price of biodiesel by 
$1.00 per gallon. Because the federal government cannot benefit 
from the value of federal tax subsidies, the additional cost 
for biodiesel for government use over that period would have 
averaged $1.55 more per gallon than regular diesel--a 50 
percent premium. CBO assumes that DoD would pay a similar 
premium for renewable aviation fuel compared to the cost of 
conventional jet fuel.
    CBO estimates that DoD would procure a total of 4.5 million 
barrels of aviation fuel from renewable sources over the 2012-
2014 period, at an average of $55 more per barrel, increasing 
expenditures on fuel by $250 million. If DoD achieves the goal 
of procuring 25 percent of domestically consumed jet fuel from 
renewable source by 2025, it would expend about $900 million 
more per year for fuel than if it relied solely on conventional 
jet fuel, CBO estimates.
    Hybrid and Electric Vehicles. Under section 2842, DoD would 
increase its procurement or lease of electric or hybrid 
vehicles to the extent that such vehicles meet the department's 
needs and are reasonably comparable in cost to vehicles with 
internal combustion engines over the life of the vehicles. CBO 
assumes that 25 percent of the vehicles the department acquires 
in 2010 and after would be electric or hybrid vehicles.
    According to information from GSA, the federal government 
replaces its vehicle fleet on a 10-year cycle. The Department 
of Defense owns and leases a total of about 190,000 vehicles, 
and replaces roughly 19,000 of those vehicles each year. Hybrid 
vehicles cost about $7,000 more than a conventional vehicle of 
similar size. If 25 percent of the vehicles replaced each year 
were hybrid or electric, acquisition costs would increase by 
about $33 million annually compared to the cost of procuring a 
fleet of all conventional vehicles. The department would begin 
to realize some savings in fuel costs as hybrid vehicles were 
fielded, but initially those savings would be minimal because 
of the small number of hybrids and electric vehicles in the 
fleet. Over the 2010-2014 period, vehicle acquisition and 
operation costs would increase by $117 million.
    School of Nursing. Section 933 would establish a bachelor's 
degree program in nursing at the Uniformed Services University 
(USU). The school would be required to have 25 or more nurses 
in its first graduating class, 50 or more nurses in the second 
graduating class, and 100 or more in each subsequent class. DoD 
reports that USU does not have the facilities necessary to 
house the nursing program. CBO estimates that construction of a 
nursing facility would cost $84 million. In addition, CBO 
estimates the cost to run the program over the 2010-2014 period 
would total $20 million for faculty salaries, administrative 
costs, and other expenses. In total, section 933 would cost $72 
million in 2010 and $104 million over the 2010-2014 period.
    Decontamination of Culebra. Section 2815 would repeal a 
provision in the Military Construction Authorization Act, 1974, 
that prohibits the use of the former naval bombardment range on 
Culebra, Puerto Rico, for any purpose that would require 
decontamination and removal of expended ordnance. Lifting that 
prohibition would allow the Army Corps of Engineers to clean up 
the area at a cost of $25 million over the 2010-2014 period, 
assuming appropriation of the necessary amounts.

                            DIRECT SPENDING

    While several provisions in H.R. 2647 would affect direct 
spending, CBO estimates that, on net, that effect would be 
insignificant over the 2010-2014 period and the 2010-2019 
    Shift of Military Retirement Payments. Section 422 would 
repeal section 1002 of the Duncan Hunter National Defense 
Authorization Act for Fiscal Year 2009 (Public Law 110-417), 
which shifted 1 percent of military retirement payments from 
September 2013 to October 2013. Based on the amounts of current 
outlays for military retirement annuities, and taking into 
account expected inflation and changes in the number of 
retirees, CBO estimates that repeal of section 1002 would shift 
$43 million in outlays from fiscal year 2014 to fiscal year 
    Stockpile Sales. Section 1412 would extend by two years the 
period to sell cobalt from the National Defense Stockpile as 
previously authorized in the National Defense Authorization Act 
for Fiscal Year 1998 (Public Law 105-85 and most recently 
revised by Public Law 110-417). That authority is set to expire 
on September 30, 2009, and CBO expects that all remaining 
cobalt will be sold by that date. Thus, CBO estimates that no 
additional receipts would be achieved by extending the sales 
through fiscal year 2011.
    Other Provisions. The following provisions would have an 
insignificant effect on direct spending, primarily because they 
would affect few individuals or because they authorize both the 
collection and spending of funds so that the net budgetary 
impact would be quite small.
     Section 503 would forbid any time spent by a 
member in the Seaman to Admiral program from counting towards 
the 20 years of service needed to earn a military retirement.
     Section 532 would increase the number of private-
sector civilians who may attend the National Defense 
University. The university has the authority to collect and 
spend any tuition it receives.
     Section 641 would allow reserve retirees to have 
their annuities recalculated for any additional time served in 
an active status after the age of 60.
     Section 642 would allow certain active-duty 
members who are eligible for retirement and who join the 
selected reserves to have their retirement annuities 
recalculated at age 60.
     Section 704 would allow the Secretary of Defense 
to collect and spend premiums as part of a new health benefit 
for certain former members who are eligible for a reserve 
     Section 904 would allow certain private-sector 
employees to attend the Defense Cyber Investigations Training 
Academy. Under this section, the Secretary of Defense would 
charge those students tuition and then retain and spend those 
     Section 912 would make permanent a pilot program 
that allows DoD to provide satellite tracking services to non-
U.S. government entities. Under this program DoD is allowed to 
charge fees to cover the costs of providing such services and 
to spend such fees.
     Section 1303 would allow DoD to accept 
contributions from the private sector and foreign governments 
for use on activities associated with the Cooperative Threat 
Reduction program. Spending of amounts contributed would be 
subject to appropriations. The authority to accept 
contributions would expire on December 31, 2012. Any amounts 
not spent by December 31, 2015 would be returned to the donor.
     Section 2817 would authorize the Secretary of the 
Air Force to accept contributions from public and private 
entities to demolish facilities on the former Almaden Air Force 
Station in California and to restore that property to a natural 
state. Spending of contributions would be subject to 
appropriation. CBO estimates that the collections from such 
authority would not be significant.
     Section 3502 would increase outlays by authorizing 
the Maritime Administration to make lump-sum payments for 
unused leave to certain former employees of the U.S. Merchant 
Marine Academy.
    Intergovernmental and private-sector impact H.R. 2647 
contains both intergovernmental and private-sector mandates as 
defined in UMRA. CBO estimates that the costs of the 
intergovernmental mandates would not exceed the threshold 
established in UMRA ($69 million in 2009, adjusted annually for 
inflation). CBO cannot determine whether the costs to the 
private sector would exceed the annual threshold ($139 million 
in 2009, adjusted annually for inflation).

                         PROTECTIONS UNDER SCRA

    Sections 401, 403, and 412 would increase the costs of 
complying with existing intergovernmental and private-sector 
mandates by increasing the number of service members and 
reservists on active duty. Specifically, the number of active-
duty service members would increase by more than 40,000 in 
fiscal year 2010, with an additional increase of 30,000 for the 
army in fiscal years 2011 and 2012 combined.
    Those additional service members would be eligible for 
existing protections under the Servicemembers Civil Relief Act 
(SCRA). SCRA includes the right to maintain a single state of 
residence for purposes of state and local personal income taxes 
and the right to request a deferral in the payment of certain 
state and local taxes and fees.
    SCRA also requires creditors to reduce the interest rate on 
servicemembers' loan obligations to 6 percent when the 
acquisition of such obligations predate active-duty service, 
allows courts to temporarily stay certain civil proceedings, 
such as evictions, foreclosures, and repossessions, and 
precludes the use of a servicemember's personal assets to 
satisfy the member's trade or business liability while he or 
she is in military service. Also, section 582 would include 
additional service contracts, such as those for multichannel 
video programming and Internet access, in the SCRA provision 
that allows servicemembers who receive deployment or permanent 
change-of-station orders to cancel or suspend contracts without 
incurring early-termination fees.
    Extending these existing and proposed protections would 
impose mandates and could result in lost revenues to government 
and private-sector entities. CBO estimates that the net impact 
of the residency provisions on the collection of state and 
local government income taxes would be small, with some 
additional costs associated with delayed collections. Because 
public utilities and other public entities that would be 
affected by the bill's limitation on fees rarely impose such 
fees, the costs of those provisions also would be small.
    CBO does not have sufficient information to estimate 
precisely the increased costs on the private sector of 
complying with the provisions in SCRA. Servicemembers' 
utilization of the various provisions of the SCRA depends on a 
number of uncertain factors, including how often and how long 
they are deployed. While some of the SCRA protections might 
affect a greater number of servicemembers, the cost per person 
could be relatively small. On the other hand, other SCRA 
protections could have relatively high per-person costs even 
though they affect a small number of servicemembers. Because 
the proposed increase in authorized active-duty and reserve end 
strength is relatively larger than the increases in recent 
years, CBO cannot determine whether the costs to the private 
sector would exceed the annual threshold.


    Section 585 would amend provisions of the Family and 
Medical Leave Act (FMLA) to extend employment benefits of that 
act to certain service members and veterans. Because 
governmental and private-sector employers are required to 
comply with FMLA, the provision would impose both 
intergovernmental and private-sector mandates. CBO estimates 
that the costs of those mandates would fall below the annual 
thresholds established in UMRA.

                        PREEMPTION OF STATE LAW

    Section 584 would expand existing protections for 
servicemembers related to child custody proceedings by 
prohibiting courts from changing custody orders while a 
servicemember is deployed and from considering a 
servicemember's deployment in determining the best interests of 
the child. CBO estimates the cost of complying with this 
mandate would be small.


    The bill contains several provisions that would benefit 
state and local governments. Some of those provisions would 
authorize aid for certain local schools that serve dependents 
of defense personnel. Any costs to those governments would be 
incurred voluntarily as a condition of receiving federal 
    Estimate prepared by: Federal Costs: Defense Outlays--Kent 
Christensen; Military Construction and Multiyear Procurement--
David Newman; Military and Civilian Personnel--Dawn Regan; 
Military Retirement and Health Care--Matthew Schmit; Operation 
and Maintenance--Jason Wheelock; Nursing Education--Camille 
Woodland; Ship Acquisition and Stockpile Sales--Raymond J. 
Hall; Impact on State, Local, and Tribal Governments: Burke 
Doherty; Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.


    This exchange of letters was inadvertently omitted in Part 
I of House Report 111-166. The committee appreciates the 
cooperation and effort which the Committee on Small Business 
dedicated to ensuring that the National Defense Authorization 
Act for Fiscal Year 2010 moved expeditiously through the 
legislative process.

                          House of Representatives,
                               Committee on Small Business,
                                     Washington, DC, June 18, 2009.
Hon. Ike Skelton,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I am writing you concerning the bill, 
H.R. 2647, the National Defense Authorization Act for Fiscal 
Year 2010. There are certain provisions, including Sections 801 
and 814, in the legislation that fall within the Rule X 
jurisdiction of the House Small Business Committee.
    I am willing to waive this committee's right to sequential 
referral on the bill. I do so with the understanding that by 
waiving consideration of the bill the Small Business Committee 
does not waive any future jurisdictional claim over the subject 
matters contained in the bill which fall within its Rule X 
jurisdiction. I request that you urge the Speaker to name 
members of this committee to any conference committee which is 
named to consider such provisions.
    Please place this letter into the committee report on H.R. 
2647 and into the Congressional Record during consideration of 
the measure on the House floor. Thank you for the cooperative 
spirit in which you have worked regarding this matter and 
others between our respective committees.
                                        Nydia M. Velazquez,

                          House of Representatives,
                               Committee on Armed Services,
                                     Washington, DC, June 22, 2009.
Hon. Nydia M. Velazquez,
Chairwoman, Committee on Small Business,
House of Representatives, Washington, DC.
    Dear Madam Chairwoman: Thank you for your letter regarding 
H.R. 2647, the National Defense Authorization Act for Fiscal 
Year 2010. I agree that the Committee on Small Business has 
valid jurisdictional claims to certain provisions in this 
important legislation, and I am most appreciative of your 
decision not to schedule a mark-up of this bill in the interest 
of expediting consideration. I agree that by agreeing to waive 
consideration of certain provisions of the bill, the Committee 
on Small Business is not waiving its jurisdiction over these 
    This exchange of letters will be included in the committee 
report on the bill.
            Very truly yours,
                                               Ike Skelton,


    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the committee is required to include a list 
of congressional earmarks, limited tax benefits, or limited 
tariff benefits, as defined in clause 9 of rule XXI of the 
Rules of the House of Representatives, which are in the bill or 
the report.
    The following supplemental list contains a line omitted 
from the list contained in part 1 of the committee report (H. 
Rept. 111-166) accompanying the National Defense Authorization 
Act for Fiscal Year 2010 due to inadvertent clerical oversight. 
This is not a new program and it was included in part 1 of the 
committee report. That disclosure failed to include all members 
who requested the program and the omission is corrected in the 
following table.
    Additionally, the original report attributed the Wave 
Energy PowerBuoy Generating System program to Representative 
Kurt Schrader (OR). This item was not requested by 
Representative Schrader and was inadvertently attributed to him 
in part 1 of the committee report.