House Report 112-78, Part 2 - 112th Congress (2011-2012)
May 23, 2011, As Reported by the Armed Services Committee

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House Report 112-78 - NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2012




[House Report 112-78]
[From the U.S. Government Printing Office]


112th Congress                                             Rept. 112-78
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

======================================================================



 
        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2012

                                _______
                                

  May 23, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 1540]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 
1540), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on May 17, 
2011 (H. Rept. 112-78, pt. 1).
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 20, 2011.
Hon. Howard P. ``Buck'' McKeon,
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. 1540, the National 
Defense Authorization Act for Fiscal Year 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kent 
Christensen.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 1540--National Defense Authorization Act for Fiscal Year 2012

    Summary: H.R. 1540 would authorize appropriations totaling 
$690 billion for fiscal year 2012 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 $119 billion for the cost of overseas contingency 
operations, primarily in Iraq and Afghanistan. In addition, 
H.R. 1540 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 $679 billion over the 2012-2016 
period.
    The bill also contains provisions that would increase and 
decrease costs of discretionary defense programs in 2013 and 
future years. Those implicit authorizations would affect force 
structure, DoD compensation and benefits, DoD's use of 
multiyear procurement authority, and other programs and 
activities. CBO has estimated the costs of a select number of 
those authorizations and estimate they would raise costs by 
about $24 billion over the 2013-2016 period, assuming 
appropriation of the necessary amounts. Those amounts are not 
included in the totals in the previous paragraph because 
funding for these activities would be covered by specific 
authorizations in future years.
    H.R. 1540 contains provisions that would increase and 
decrease components of direct spending. CBO estimates that, on 
net, those changes would decrease direct spending by $1 million 
over the 2012-2016 period and by $3 million over the 2012-2021 
period. Enacting the bill would not affect revenues. Because 
enacting the legislation would affect direct spending, pay-as-
you-go procedures apply.
    H.R. 1540 contains an intergovernmental mandate as defined 
in the Unfunded Mandates Reform Act (UMRA). CBO estimates that 
the aggregate costs of the intergovernmental mandates would 
fall well below the threshold established in UMRA ($71 million 
in 2011, adjusted annually for inflation). The bill contains no 
new private-sector mandates as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1540 is summarized in Table 1. Almost 
all of the $690 billion that would be authorized by the bill is 
for activities within budget function 050 (national defense). 
Some authorizations, however, fall within other budget 
functions, including: $129 million for the Maritime 
Administration (function 400 transportation); $68 million for 
the Armed Forces Retirement Home (function 600 income 
security); and $15 million for the Naval Petroleum Reserves 
(function 270--energy).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
1540 will be enacted near the start of fiscal year 2012.

Spending subject to appropriation

    The bill would specifically authorize appropriations for 
2012 totaling $690 billion, or $15 billion less than the $705 
billion appropriated for 2011. Of that amount, $571 billion 
would be for authorizations of regular appropriations--for 
``base budget'' costs not directly related to overseas 
contingency operations--as follows: $553 billion for DoD and 
$18 billion for DOE and other programs (see Table 2).
    Compared to the 2011 level of appropriations enacted for 
DoD's base budget, the $553 billion that would be authorized 
for 2012 represents an increase of $24 billion (5 percent). The 
categories of DoD funding that would receive increases are 
procurement at $12 billion (11 percent), operation and 
maintenance at $9 billion (5 percent), military personnel at $4 
billion (3 percent), and research and development at $1 billion 
(1 percent). Authorizations for military construction and 
family housing would be $2 billion (11 percent) less than the 
current-year appropriations for those activities.
    For DOE and other programs, the $18 billion that would be 
authorized for 2012 represents a $2 billion (9 percent) 
increase over the level appropriated for 2011.

      TABLE 1.--BUDGETARY IMPACT OF H.R. 1540, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2012
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                                                                          2012-
                                                        2012      2013      2014      2015      2016      2016
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Authorization of Regular Appropriations for 2012,
 Primarily for the Departments of Defense and
 Energy:
    Authorization Level.............................   571,328         0         0         0         0   571,328
    Estimated Outlays...............................   362,274   129,681    45,993    17,066     6,790   561,804
Authorization of Appropriations for Overseas
 Contingency Operations:
    Authorization Level.............................   118,940         0         0         0         0   118,940
    Estimated Outlays...............................    60,684    40,808    11,571     3,459       990   117,512
    Total:
        Authorization Level.........................   690,268         0         0         0         0   690,268
        Estimated Outlays...........................   422,958   170,489    57,564    20,525     7,780   679,316

                                           CHANGES IN DIRECT SPENDINGa

Estimated Budget Authority..........................         *        24       -25         *        -1         *
Estimated Outlays...................................         *        20       -24         2        -1       -1
----------------------------------------------------------------------------------------------------------------
\a\In addition to the changes in direct spending shown above, H.R. 1540 would have effects beyond 2016. CBO
  estimates that over the 2012-2021 period, H.R. 1540 would decrease direct spending by $3 million (see Table
  4).
Notes: The authorization levels in this table reflect amounts specifically authorized by the bill. The bill also
  implicitly authorizes some activities in 2013 and future years; those authorizations are not included above
  (but estimates for a select number of them are shown in Table 3) because funding for those activities would be
  covered by specific authorizations in future years.
Numbers may not sum up to totals because of rounding; * = between -$500,000 and $500,000.

    The $119 billion that would be authorized for 2012 overseas 
contingency operations--primarily for military operations in 
Iraq and Afghanistan--represents a decrease of about $40 
billion (25 percent) compared to the $159 billion appropriated 
for 2011. That authorized level would be consistent with the 
Administration's budget request, which assumes a drawdown of 
all U.S. troops in Iraq by December 31, 2011, and a reduction 
of force levels in Afghanistan. Authorizations for all 
categories of contingency funding would be decreased--operation 
and maintenance by $20 billion (18 percent), procurement by $13 
billion (46 percent), military personnel by $5 billion (31 
percent), and the remaining categories by a total of $2 
billion.

                                 TABLE 2.--SPECIFIED AUTHORIZATIONS IN H.R. 1540
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                                                                          2012-
                                                        2012      2013      2014      2015      2016      2016
----------------------------------------------------------------------------------------------------------------
Authorization of Regular Appropriations:
    Department of Defense:
        Military Personnel:a
            Authorization Level.....................   142,164         0         0         0         0   142,164
            Estimated Outlays.......................   134,767     6,950       171        37         0   141,925
        Operation and Maintenance:
            Authorization Level.....................   204,878         0         0         0         0   204,878
            Estimated Outlays.......................   147,097    43,808     8,366     2,148       738   202,157
        Procurement:
            Authorization Level.....................   112,940         0         0         0         0   112,940
            Estimated Outlays.......................    25,600    40,725    26,462    11,088     4,354   108,229
        Research and Development:
            Authorization Level.....................    75,580         0         0         0         0    75,580
            Estimated Outlays.......................    38,124    27,486     5,637     2,117       982    74,346
        Military Construction and Family Housing:
            Authorization Level.....................    14,766         0         0         0         0    14,766
            Estimated Outlays.......................     2,010     5,261     4,362     1,744       733    14,111
        Revolving Funds:
            Authorization Level.....................     2,703         0         0         0         0     2,703
            Estimated Outlays.......................     2,136       401        89        51        23     2,700
        General Transfer Authority:
            Authorization Level.....................         0         0         0         0         0         0
            Estimated Outlays.......................       560      -120      -240      -120       -40        40
            Subtotal, Department of Defense:
                Authorization Level.................   553,032         0         0         0         0   553,032
                Estimated Outlays...................   350,294   124,511    44,847    17,066     6,790   543,508
        Atomic Energy Defense Activities:
            Authorization Levelb....................    18,085         0         0         0         0    18,085
            Estimated Outlays.......................    11,813     5,137     1,135         0         0    18,085
            Other Programs:
                Authorization Levelc................       211         0         0         0         0       211
                Estimated Outlays...................       167        33        11         0         0       211
                Subtotal, Authorization of Regular
                 Appropriations:
                  Authorization Level...............   571,328         0         0         0         0   571,328
                  Estimated Outlays.................   362,274   129,681    45,993    17,076     6,790   561,804
Authorization of Appropriations for Overseas
 Contingency Operations:
    Military Personnel:
        Authorization Levela........................    11,229         0         0         0         0    11,229
        Estimated Outlays...........................    10,506       681         6         2         0    11,195
    Operation and Maintenance:
        Authorization Level.........................    91,861         0         0         0         0    91,861
        Estimated Outlays...........................    46,020    33,811     7,987     2,361       595    90,774
    Procurement:
        Authorization Level.........................    15,019         0         0         0         0    15,019
        Estimated Outlays...........................     3,656     6,060     3,512     1,087       396    14,711
    Research and Development:
        Authorization Level.........................       397         0         0         0         0       397
        Estimated Outlays...........................       199       147        31         9         4       390
    Working Capital Funds:
        Authorization Level.........................       435         0         0         0         0       435
        Estimated Outlays...........................       163       141        95        32         3       434
    Special Transfer Authority:
        Authorization Level.........................         0         0         0         0         0         0
        Estimated Outlays...........................       140       -32       -60       -32        -8         8
        Subtotal, Overseas Contingency Operations:
            Authorization Level.....................   118,940         0         0         0         0   118,940
            Estimated Outlays.......................    60,684    40,808    11,571     3,459       990   117,512
Total Specified Authorizations:
    Authorization Level.............................   690,268         0         0         0         0   690,268
    Estimated Outlays...............................   422,958   170,489    57,564    20,525     7,780  679,316
----------------------------------------------------------------------------------------------------------------
\a\The authorizations of appropriations in sections 421 and 1505 for military personnel include $10,733 million
  and $117 million, respectively, for accrual payments to the Medicare-Eligible Retiree Health Care Fund.
\b\This authorization is primarily for atomic energy activities within the Department of Energy.
\c\This authorization is for the Maritime Administration ($128.7 million), the Armed Forces Retirement Home
  ($67.7 million), and the Naval Petroleum Reserves ($14.9 million). 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 2012 by
  existing statues.
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 2013 and in future years. Because the bill would not specifically authorize
  appropriations to cover those costs, they are not reflected in this table. Rather, Table 3 contains the
  estimated costs of a select number of those provisions.
Numbers may not sum to totals because of rounding.

    H.R. 1540 also contains provisions that would increase and 
decrease the cost of various defense discretionary programs in 
future years. Most of those provisions would affect end 
strength, military compensation and benefits, and acquisition 
programs using multiyear procurement authorities. The estimated 
costs of some select number of those provisions are shown in 
Table 3 and discussed below. The following discussion does not 
address the timing of outlays from those estimated 
authorizations. All such spending would be subject to 
appropriation of the estimated amounts.
    Force Structure. The bill would affect the force structure 
of the various military services by setting end-strength levels 
for 2012 and modifying the minimum end-strength levels 
authorized in permanent law.
    Under title IV, the authorized end strengths in 2012 for 
active-duty personnel and personnel in the selected reserves 
would total 1,422,600 and 847,100, respectively. Of those 
selected reservists, about 78,500 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would decrease by 9,800 and selected-reserve end strength would 
increase by 900 when compared with levels authorized under 
current law for 2012.
    Active-Duty End Strength. Section 401 would authorize 7,400 
fewer active-duty personnel for the Army, 3,000 fewer active-
duty personnel for the Navy, 600 additional active-duty 
personnel for the Air Force, and the same number of active-duty 
personnel for the Marine Corps, compared with end-strength 
levels for 2012 authorized under current law. CBO estimates 
that the net reduction in active-duty personnel of 9,800 
servicemembers would decrease costs to DoD by $5.8 billion over 
the 2012-2016 period, assuming appropriations are reduced by 
the same amount. Those decreases reflect reductions in pay and 
benefits from fewer personnel, as well as reductions in costs 
for operation and maintenance.

            TABLE 3.--ESTIMATED AUTHORIZATIONS OF APPROPRIATIONS FOR SELECTED PROVISIONS IN H.R. 1540
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                    ------------------------------------------------------------
                                                       2012      2013      2014      2015      2016    2012-2016
----------------------------------------------------------------------------------------------------------------
                                                 FORCE STRUCTURE

Active-Duty End Strengths..........................      -541    -1,152    -1,306    -1,401    -1,446     -5,846
Selected-Reserve End Strengths.....................        -4        -9       -12       -15       -15        -55
Reserve Technicians End Strengths..................         7        15        15        16        16         69
Increase Strengths in Certain Grades...............         6        12        19        19        20         76

                                         COMPENSATION AND BENEFITS (DOD)

Expiring Bonuses and Allowances....................     1,569       747       308       309       146      3,079
TRICARE Prime Enrollment Fee.......................         0        14        36        57        79        186

                                                OTHER PROVISIONS

Arleigh Burke Multiyear Procurement................     2,230     3,687     3,588     3,487     2,910     15,902
H-60 Helicopter Multiyear Procurement..............     3,081     2,786     2,921     2,733     2,711     14,232
Incremental Funding for AEHF Satellites............       475       636       623       568       534      2,836
Sexual Assault Response Personnel..................        26        49        75        78        81        309
Sexual Assault Prevention Training.................        20        17        15        15        15         82
Reimburse Red Cross................................        25        25        26        26        27        129
Access to Behavioral Health Services for Reserves..         6        26        27        29        30        118
Wounded Warrior Careers Program....................        10        12        12        13        13        60
----------------------------------------------------------------------------------------------------------------
Notes: Amounts shown in this table for 2012 are included in amounts specifically authorized to be appropriated
  by the bill, and therefore are reflected in Tables 1 and 2. Amounts shown in this table for 2013 through 2016
  are not included in amounts specifically authorized in the bill but would be covered by specific
  authorizations in future years; those amounts therefore are not reflected in Tables 1 and 2.
Figures shown here may not add up to numbers in the text because of rounding; AEHF = Advanced Extremely High
  Frequency.

    Selected-Reserve End Strength. Sections 411 and 412 would 
authorize the end strengths for reserve components, including 
those who serve on active duty in support of the reserves. 
Under this bill, the Navy Reserve and the Air Force Reserve 
would experience increases in end strength of 700 and 200, 
respectively, while the other reserve components would maintain 
the levels already authorized for 2012. On net, the number of 
full-time reservists who serve on active duty in support of the 
reserves would decline by almost 400 compared with authorized 
end-strength levels for 2012. CBO estimates that the net result 
of implementing those provisions would be a decrease in costs 
for salaries and expenses for selected reservists of $55 
million over the 2012-2016 period, assuming appropriations are 
reduced by the same amount.
    Reserve Technicians End Strengths. 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. On net, the bill would 
increase the required number of technicians by about 170 
relative to the levels currently authorized. CBO estimates the 
costs for civilian salaries and expenses that would result from 
those additional military technicians would total $69 million 
over the 2012-2016 period.
    Coast Guard Reserve End Strengths. The bill also would 
authorize an end-strength level of 10,000 servicemembers in 
2012 for the Coast Guard Reserve. Because this authorization is 
the same as under current law, CBO does not estimate any 
increase or decrease in costs for this provision.
    Increase Strengths in Certain Grades. Section 501 would 
increase the authorized strengths for active-duty officers in 
the Marine Corps who are in the grades of major, lieutenant 
colonel, and colonel. By increasing the ceiling on the number 
of officers in those grades, this provision would allow DoD to 
redistribute officers among certain grades, and thus increase 
the average grade of officers in the Marine Corps. Based on 
information from DoD, CBO estimates that, under section 501, 
about 250 additional officers would be assigned to those grades 
in 2012 and that the number would grow to about 750 a year 
starting in 2014. Because those officers would receive higher 
pay and benefits (about $25,000 a year on average) than they 
otherwise would have, CBO estimates that implementing section 
501 would cost $76 million over the 2012-2016 period.
    Compensation and Benefits. H.R. 1540 contains several 
provisions that would affect compensation and benefits for 
uniformed personnel. The bill would specifically authorize 
regular appropriations of $142.2 billion for the costs of 
military pay and allowances in 2012. For related costs 
resulting from overseas contingency operations (primarily in 
Iraq and Afghanistan), the bill would authorize the 
appropriation of an additional $11.2 billion for 2012.
    Pay Raises. Section 601 would raise basic pay for all 
individuals in the uniformed services by 1.6 percent, effective 
January 1, 2012. CBO estimates that the total cost of a 1.6 
percent military pay raise would be $1.2 billion in 2012. 
Because this 1.6 percent pay raise is the same as authorized 
under current law, CBO does not estimate any additional costs 
for this provision.
    Expiring Bonuses and Allowances. Sections 611 through 616 
would extend for another year DoD's authority to enter 
agreements to pay certain bonuses and allowances to military 
personnel. The authority to enter into such agreements is 
currently scheduled to expire on December 31, 2011. 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 2012, CBO 
estimates that extending that authority for one year would cost 
$3.1 billion over the 2012-2016 period.
    TRICARE Prime Enrollment Fee. Section 701 would limit 
future increases in TRICARE Prime enrollment fees for military 
retirees and their dependents to the annual cost-of-living 
adjustment (COLA) for military retirement annuities.\1\ The 
change would take effect beginning in 2013. DoD currently plans 
to index future increases in those enrollment fees to the per 
capita growth rate in national health expenditures as published 
by the Centers for Medicare and Medicaid Services; that growth 
rate is currently projected to be about 5 percent to 6 percent 
per year over the next decade. In contrast, CBO estimates that 
annual increases in the military retirement COLA (which are 
based on the consumer price index for urban wage earners and 
clerical workers) will average about 2 percent over that same 
period. Therefore, indexing the enrollment fees to the military 
retirement COLA would require DoD to subsidize a larger portion 
of health spending for military retirees than they would under 
current law.
---------------------------------------------------------------------------
    \1\The military's health care program, TRICARE, comprises nine 
health plans that cover uniformed servicemembers, retirees, and their 
dependents in the United States and abroad. One of the most commonly 
used plans is TRICARE Prime--a managed care option.
---------------------------------------------------------------------------
    Currently, about 700,000 military retiree households are 
enrolled in TRICARE Prime, covering about 1.6 million 
beneficiaries. CBO expects that the TRICARE Prime enrollment 
fees in 2012 will be $260 for those who enroll as individuals 
and $520 for those who enroll their families. CBO estimates 
that limiting future growth in the enrollment fees to the 
military retirement COLA would cost $186 million over the 2013-
2016 period. In addition, this change would increase mandatory 
health spending for certain retirees of the Coast Guard and 
other uniformed services. (Our estimate of those costs is 
discussed in the ``Direct Spending'' section of the estimate.)
    Other Provisions. Various other provisions would affect the 
cost of discretionary programs over the 2012-2016 period, CBO 
estimates.
    Multiyear Procurement. This bill would authorize multiyear 
procurement contracts for Arleigh Burke-class destroyers for 
the Navy, and H-60 helicopters for the Army and the Navy.
    Multiyear procurement is a special contracting method 
authorized in current law (title 10, United States Code, 
section 2306b), which 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. Additional legislative authorization is required for 
multiyear contracts costing more than $500 million.
    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.
    Section 122 would authorize the Navy to enter a multiyear 
contract for Arleigh Burke-class destroyers beginning in fiscal 
year 2012. Based on information from the Navy, CBO estimates 
that the Navy would use that multiyear contract authority to 
purchase eight ships over the 2012-2016 period at a cost of 
$15.9 billion.
    Section 113 would authorize the Army and the Navy to enter 
a multiyear procurement contract for H-60 helicopters over the 
2012-2016 period. Section 123 would further authorize the Navy 
to enter a separate multiyear contract for specialized 
electronics and equipment for its two versions of that 
aircraft. Planned purchases under those contracts would total 
356 aircraft for the Army and 202 aircraft and associated 
equipment for the Navy, at a cost of $14.2 billion.
    Multiyear contracts frequently include provisions that 
require DoD to pay for unrecovered fixed costs in the event 
that the contract is canceled before completion. In practice, 
DoD does not budget for, obtain, or obligate funds sufficient 
to pay for those contractual commitments at the time they are 
incurred. Thus, should the contracts be cancelled at the end of 
the first year, DoD could owe the contractors for unrecovered 
fixed costs; however, the department has not requested budget 
authority for that amount. The amount of cancellation liability 
would decline in subsequent years, as increasing portions of 
the fixed costs were covered by annual contract payments, 
falling to zero in the final year of the contract.
    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 today and possibly requiring a future 
Congress to pay for those decisions.
    Incremental Funding for AEHF Satellites. H.R. 1540 would 
authorize incremental funding for Advanced Extremely High 
Frequency (AEHF) satellites for the Air Force. Incremental 
funding allows the services to request budget authority for 
expensive programs, such as ships and complex satellites, over 
several years. Under current policy the services must request 
all the funding needed to build weapon systems in the year 
those systems are authorized. Although the use of incremental 
funding allows theservices to allocate resources to more 
programs in a given year, it can mask the full cost of expensive 
programs.
    Section 132 would authorize the Secretary of the Air Force 
to enter into a fixed-price contract using incremental funding 
to buy two AEHF satellites. That authority would allow the 
Secretary to request budget authority for those satellites on 
an annual basis over a five-year period. Any contract entered 
into by the Air Force would have to provide that any obligation 
by the U.S. government to make payments under the terms of the 
contract is subject to the availability of appropriations for 
that purpose. CBO estimates that buying two AEHF satellites 
would require discretionary appropriations of $2.8 billion over 
the 2012-2016 period.
    Sexual Assault Response Personnel. Section 582 would 
require DoD to employ at least one full-time Sexual Assault 
Response Coordinator (SARC) and one full-time Sexual Assault 
Victim Advocate for each brigade or brigade-equivalent of the 
armed forces. The bill also would require that such personnel 
must either be members of the armed forces or DoD civilian 
employees. The services currently use different combinations of 
military personnel, civilians, and contractors, employed both 
full- and part-time, to fill such positions.
    Assuming an average brigade size of 4,000 personnel and 
assuming that the provision would only apply to the active 
components of DoD, CBO estimates that implementing this 
provision would require approximately 650 additional civilian 
personnel. About 550 of those new personnel would be trained 
SARCs or victim advocates, while about 100 would be support 
personnel. Assuming that the additional personnel would be 
hired over the 2012-2013 period and the provision is fully 
implemented by the beginning of 2014, CBO estimates that the 
provision would require appropriations of $309 million over the 
2012-2016 period. Of that amount, approximately $10 million 
would be used to train and certify the additional personnel, 
while the remainder would cover salaries and benefits.
    Sexual Assault Prevention Training. Section 587 would 
require that the secretaries of the military departments 
develop curricula to provide training on preventing and 
responding to sexual assault to members of the armed forces. 
Based on DoD's experience with previous curricula, CBO 
estimates that developing new training materials would cost 
approximately $10 million over the 2012-2013 period. In 
addition, the section would require that the existing education 
system for military professionals have an increased emphasis on 
training to prevent sexual assault. CBO expects that DoD would 
use training modules similar to the ``Bystander Intervention'' 
modules currently used by the Navy and the Air Force to provide 
the additional training. Development and military-wide 
presentation of those training modules would cost roughly $72 
million over the 2012-2016 period. Therefore, CBO estimates 
that implementing this provision would require appropriations 
of $82 million over the 2012-2016 period.
    Reimburse Red Cross. Section 661 would authorize DoD to 
reimburse the American National Red Cross for humanitarian 
support and other services provided to servicemembers and their 
families. Based on information from DoD, CBO estimates that 
reimbursing the Red Cross for those services would cost $129 
million over the 2012-2016 period.
    Access to Behavioral Health Services for Reserves. Section 
703 would require DoD to provide reserve members with access to 
behavioral health professionals during training exercises and 
other unit assemblies. CBO based its estimate of this 
provision's costs on pilot programs providing such care to the 
California and Montana National Guards. For those programs, 
guard units contracted with behavioral health professionals to 
be available during drill weekends. Based on information from 
DoD, CBO estimates that the Montana and California programs 
combined cost about $1 million per year and covered about 
25,000 reserve members. After scaling those costs upward to 
cover the roughly 700,000 drilling members of the selected 
reserve and adjusting for inflation, CBO estimates this 
provision would require appropriations of almost $30 million 
per year when fully implemented. Costs would be lower in the 
first year because of the time needed to establish regulations 
and set up the required programs. In total, CBO estimates that 
implementing section 703 would cost $118 million over the 2012-
2016 period.
    Wounded Warrior Careers Program. Section 594 would direct 
the Secretary of Defense to implement a program to provide 
career-development services to both current and former members 
of the military who were wounded in the line of duty. The 
program would provide a range of services including testing and 
assistance in developing career plans, preparing resumes, and 
improving skills. Those services would be provided at as many 
as 20 locations in geographic areas with the largest 
concentrations of wounded former and current servicemembers.
    Based on information from DoD's Office of Wounded Warrior 
Care and Transition Policy and the National Organization on 
Disability, CBO estimates that implementing this provision 
would cost $60 million over the 2012-2016 period, assuming that 
the program opens and maintains 20 locations in the United 
States for most of that period.

Direct spending

    Several provisions in H.R. 1540 would affect direct 
spending. CBO estimates that, on net, those provisions would 
decrease direct spending outlays by $3 million over the 2012-
2021 period (see Table 4).
    Special Survivor Allowance. Recipients of Survivor Benefit 
Plan (SBP) payments who have their annuities reduced by the 
amount of Dependency and Indemnity Compensation they receive 
from the Department of Veterans Affairs are entitled to a 
monthly payment from DoD. The amount of that monthly allowance 
is $70 in 2011, and will increase each year until it reaches 
$310 per month in 2017, at which point the allowance is 
scheduled to terminate. Section 651 would increase the 
allowance to $163 per month beginning in 2013 and then increase 
it further until it reaches $314 in 2017. This section would 
authorize payment of the allowance over the 2018-2021 period, 
although the monthly payments in those years would be less than 
the amounts payable in 2017. Based on data from DoD's Office of 
the Actuary, CBO estimates that more than 55,000 survivors 
would receive the enhanced allowance under this section, which 
would increase direct spending for military retirement benefits 
by $149 million over the 2013-2021 period.

                                               TABLE 4.--ESTIMATED IMPACT OF H.R. 1540 ON DIRECT SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                      2012   2013    2014    2015    2016    2017    2018    2019    2020    2021   2012-2016  2012-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
Special Survivor Allowance:
    Estimated Budget Authority.....................      0      49      34      10       5       3       6      11      14      20        98        152
    Estimated Outlays..............................      0      45      35      12       5       3       6      10      14      19        97        149
Stockpile Sales:
    Estimated Budget Authority.....................      0     -25     -60     -10      -5       0       0       0       0       0      -100       -100
    Estimated Outlays..............................      0     -25     -60     -10      -5       0       0       0       0       0      -100       -100
Uniformed Services Family Health Plan:
    Estimated Budget Authority.....................      0       *       *      -1      -3      -5      -9     -14     -19     -25        -4        -76
    Estimated Outlays..............................      0       *       *      -1      -3      -5      -9     -14     -19     -25        -4        -76
TRICARE Prime Enrollment Fee:
    Estimated Budget Authority.....................      0       *       1       1       2       2       3       3       4       5         4         21
    Estimated Outlays..............................      0       *       1       1       2       2       3       3       4       5         4         21
Retirement of Military Technicians
    Estimated Budget Authority.....................      *       *       *       *       *       *       *       *       *       *         1          2
    Estimated Outlays..............................      *       *       *       *       *       *       *       *       *       *         1          2
Waive Repayment of VSIP:
    Estimated Budget Authority.....................      *       *       *       *       *       *       *       *       *       *         1          1
    Estimated Outlays..............................      *       *       *       *       *       *       *       *       *       *         1          1
Total Changes in Direct Spending:
    Estimated Budget Authority.....................      *      24     -25       *      -1       *       *       *      -1       *         *          *
    Estimated Outlays..............................      *      20     -24       2      -1       *       *      -1      -1      -1        -1        -3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Numbers may not add up to totals because of rounding.
VSIP = Voluntary Separation Incentive Payments; * = between -$500,000 and $500,000.

    Stockpile Sales. Enacting the bill would lead to increased 
receipts from additional sales of material in the National 
Defense Stockpile. Section 1412 would increase by $100 million 
the target contained in the Ike Skelton National Defense 
Authorization Act for Fiscal Year 2000 (Public Law 106-65, as 
most recently amended by Public Law 111-383, the National 
Defense Authorization Act for Fiscal Year 2011); it also would 
extend the sales of chromium from the National Defense 
Stockpile through 2016. Those changes would increase receipts 
by $100 million over the 2013-2016 period. Such receipts are a 
credit against direct spending.
    Uniformed Services Family Health Plan. Section 704 would 
close enrollment in the Uniformed Services Family Health Plan 
(USFHP) to Medicare-eligible beneficiaries of the military 
health system. Those currently enrolled in USFHP would be 
allowed to remain in the program for as long as they wish. 
However, anyone who enrolled after the end of fiscal year 2012 
would be forced to leave USFHP once they reach the age of 65. 
At that point, such individuals would move to the regular 
Medicare/TRICARE-for-Life benefit.\2\ Based on information from 
DoD regarding the process used to determine the payment rates 
for the USFHP programs, CBO believes that USFHP costs the 
government more than it would cost to provide that care through 
the regular Medicare/TRICARE-for-Life programs. Therefore, 
limiting enrollment in USFHP would result in a net savings to 
the federal government, which CBO estimates would total about 
$76 million over the 2013-2021 period.\3\
---------------------------------------------------------------------------
    \2\When a beneficiary of the military health system becomes 
eligible for Medicare, they usually move to the TRICARE-for-Life 
program. Under TRICARE-for-Life, Medicare acts as the first payer and 
TRICARE provides secondary wrap-around coverage for almost all 
remaining out-of-pocket costs. There are no fees to enroll in TRICARE-
for-Life, but beneficiaries are required to enroll in and pay premiums 
for Medicare Part B. The military health system also includes the 
Uniformed Services Family Health Plan, which is an association of six 
nonprofit health maintenance organizations that have agreements with 
DoD to provide health care to beneficiaries in certain areas. 
Beneficiaries who live in one of those areas can forgo participation in 
one of the regular TRICARE plans and instead enroll in USFHP.
    \3\For additional details see Congressional Budget Office, Letter 
to the Honorable Joe Wilson on the Proposal to Place Certain 
Limitations on Enrollment in the Uniformed Services Family Health Plan 
(April 29, 2011), http://www.cbo.gov/ftpdocs/121xx/doc12170/
USFHPletter.pdf. CBO estimated an earlier version of this proposal 
would reduce direct spending by $104 million over the 2012-2021 period. 
That earlier version would apply to those who enroll in USFHP after 
2011, whereas section 704 would apply to those who first enroll after 
2012; as a result, the savings in the initial 10-year window would be 
less.
---------------------------------------------------------------------------
    TRICARE Prime Enrollment Fee. Section 701 would index 
future increases in the TRICARE Prime enrollment fees for 
military retirees and their dependents to the annual cost-of-
living adjustment for military retirement annuities. The change 
would take effect beginning in 2013. Of the roughly 700,000 
military retiree households enrolled in TRICARE Prime, CBO 
estimates that about 2.5 percent are former uniformed members 
of the Coast Guard, the National Oceanic and Atmospheric 
Administration (NOAA), and the Public Health Service (PHS). 
Health spending for those individuals is funded by mandatory 
appropriations. As explained above in the section on ``Spending 
Subject to Appropriation,'' CBO estimates that indexing the 
Prime enrollment fees to the military retirement COLA would 
cause those fees to grow at rates slower than they would have 
under current law. As a result, the Uniformed Services would 
need to provide a larger subsidy for the TRICARE Prime health 
benefit. CBO estimates that indexing the Prime enrollment fees 
to the military retirement COLA would require an increase in 
mandatory appropriations to the Coast Guard, NOAA, and PHS of 
$21 million over the 2013-2021 period.
    In addition, this change would increase spending subject to 
appropriations for military retirees of the Department of 
Defense, which is discussed above in the section on ``Spending 
Subject to Appropriation.''
    Retirement of Military Technicians. Section 513 would allow 
the Secretaries of the Army and the Air Force to decline a 
request by a dual-status technician to remain in the reserves 
beyond the maximum years-of-service limit for officers in their 
grade, usually at age 55. Dual-status military technicians are 
civilian employees of DoD who are required to hold concurrent 
positions in the reserves. Under current law, the Secretaries 
of the Army and Air Force must allow technicians to remain in 
the reserves so that they may continue in their civil service 
positions until they reach age 60. Under this section, some 
technicians would be forced to retire from their civilian 
position earlier than they otherwise would have, increasing 
direct spending for civil service retirement and health care. 
(Because military retirement benefits for reservists do not 
begin until they reach age 60, there would not be a similar 
reduction in spending for military retirements.) CBO estimates 
that this section would result in a net increase in direct 
spending for civil service retirement annuities and health care 
benefits of $2 million over the 2012-2021 period.
    Waive Repayment of Voluntary Separation Incentive Payments. 
Section 1109 would authorize the Secretary of Defense to waive 
the requirement for repayment of voluntary separation incentive 
pay (VSIP) received by certain DoD civilian employees who, 
after separating from DoD under the VSIP program, were later 
rehired as DoD civilian employees. Based on information from 
DoD, CBO estimates that about 40 civilian employees who owe 
$25,000 each on average, would have their debt forgiven under 
this section. Because those repayments would go to the 
Treasury, waiving repayment would reduce offsetting receipts. 
CBO estimates that such reductions would increase direct 
spending by $1 million over the 2012-2021 period.
    Pay-as-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table.

                CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1540 AS REPORTED BY THE HOUSE COMMITTEE ON ARMED SERVICES ON MAY 17, 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                     ---------------------------------------------------------------------------------------------------
                                                       2011   2012   2013   2014    2015   2016   2017   2018   2019   2020   2021  2011-2016  2011-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact......................      0      0     20     -24      2     -1      0      0     -1     -1     -1        -1        -3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers do not sum to totals because of rounding.

    Intergovernmental and private-sector impact: Section 573 
would preempt state laws governing child custody if they are 
inconsistent with or provide less protection to the rights of a 
parent who is a servicemember than those provided under the 
bill. That preemption would be an intergovernmental mandate as 
defined in UMRA. Because the preemption would simply limit the 
application of state laws, CBO estimates that it would not 
impose significant costs on intergovernmental entities.
    The bill contains no new private-sector mandates as defined 
in UMRA.
    Previous CBO estimates: On April 29, 2011, CBO transmitted 
a letter to the Honorable Joe Wilson on the Proposal to Place 
Certain Limitations on Enrollment in the Uniformed Services 
Family Health Plan. CBO estimated that proposal, which is 
similar to section 704 of H.R. 1540, would reduce direct 
spending by $104 million over the 2012-2021 period. The 
difference in the estimated costs between the two proposals 
reflects different effective dates.
    Estimate prepared by: Federal Costs: Defense 
Authorizations--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; 
Procurement of Ships and Satellites; Stockpile Sales--Raymond 
J. Hall; Impact on State, Local, and Tribal Governments: J'nell 
Blanco; Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.