House Report 113-102, Part 2 - 113th Congress (2013-2014)
June 11, 2013, As Reported by the Armed Services Committee

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House Report 113-102 - NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2014




[House Report 113-102]
[From the U.S. Government Printing Office]


113th Congress                                            Rept. 113-102
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

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



 
        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2014

                                _______
                                

 June 11, 2013.--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. 1960]

      [Including cost estimate of the Congressional Budget Office]

    This supplemental report shows the cost estimate of the 
Congressional Budget Office with respect to the bill (H.R. 
1960), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on June 7, 
2013 (H. Rept. 113-102, pt. 1).

                  Congressional Budget Office Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the cost estimate prepared by 
the Congressional Budget Office and submitted pursuant to 
section 402 of the Congressional Budget Act of 1974 is as 
follows:

                                                     June 11, 2013.
Hon. Howard P. ``Buck'' McKeon,
Chairman, Committee on Armed Services,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1960, the National 
Defense Authorization Act for Fiscal Year 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is David Newman.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

H.R. 1960--National Defense Authorization Act for Fiscal Year 2014

    Summary: H.R. 1960 would authorize appropriations totaling 
$632 billion for fiscal year 2014 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 $86 billion for the cost of overseas contingency 
operations, primarily in Afghanistan. In addition, H.R. 1960 
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 $618 billion over the 2014-2018 period.
    The bill also contains provisions that would increase or 
decrease the costs of defense programs funded through 
discretionary appropriations in 2015 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 analyzed 
the costs of a select number of those authorizations and 
estimates they would, on a net basis, lower the amount of 
appropriations needed to implement defense programs relative to 
current law by about $9 billion over the 2015-2018 period. 
Those savings are not included in the total amounts of outlays 
in the previous paragraph because funding for those activities 
would be covered by specific authorizations in future years.
    In addition, H.R. 1960 contains provisions that would 
affect direct spending. CBO estimates that, on net, those 
provisions would decrease direct spending by $18 million over 
the 2014-2018 period and by $2 million over the 2014-2023 
period. Enacting the bill would have an insignificant effect on 
revenues. Because enacting the legislation would affect direct 
spending, pay-as-you-go procedures apply.
    The bill would impose intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
on mortgage lending institutions and state governments. CBO 
estimates that the costs to public entities of complying with 
the mandates would be small and well below the annual threshold 
established in UMRA for intergovernmental mandates ($75 million 
in 2013, adjusted annually for inflation). CBO estimates that 
the costs to private entities of complying with the mandate 
would probably fall below the annual threshold established in 
UMRA for private-sector mandates ($150 million in 2013, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1960 is summarized in Table 1. Almost 
all of the $632 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: $219 million for cemetery expenses and 
for activities within the Department of Veterans Affairs 
(function 700--veterans benefits and services); $173 million 
for the Maritime Administration (function 400--transportation); 
$68 million for the Armed Forces Retirement Home (function 
600--income security); $20 million for the Naval Petroleum 
Reserves (function 270--energy); and an estimated $20 million--
over the 2015-2018 period--primarily for programs within the 
Department of the Interior (function 300--natural resources and 
environment).
    The provisions that would affect direct spending are 
primarily for activities within budget functions 050, 400, 600, 
700, 550 (health), and 650 (Social Security).

       TABLE 1--BUDGETARY IMPACT OF H.R. 1960, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2014
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                                                                         2014-
                                                   2014       2015       2016       2017       2018       2018
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION
Specified Authorization of Regular
 Appropriations for 2014, Primarily for the
 Departments of Defense and Energy
    Authorization Level.......................    545,349          0          0          0          0    545,349
    Estimated Outlays.........................    346,613    116,014     43,302     19,336      8,122    533,387
Estimated Authorization of Regular
 Appropriations for 2014 for Accrual Paymentsa
    Estimated Authorization Level.............        580          0          0          0          0        580
    Estimated Outlays.........................        580          0          0          0          0        580
Specified Authorization of Appropriations for
 Overseas Contingency Operations
    Authorization Level.......................     85,766          0          0          0          0     85,766
    Estimated Outlays.........................     43,345     27,417      9,531      3,179        813     84,284
Other Authorizations of Appropriationsb
    Estimated Authorization Level.............          0         11          3          3          3         20
    Estimated Outlays.........................          0          9          4          3          3         19
                                               -----------------------------------------------------------------
    Total
        Estimated Authorization Level.........    631,695         11          3          3          3    631,715
        Estimated Outlays.....................    390,538    143,440     52,837     22,518      8,938    618,270

                                           CHANGES IN DIRECT SPENDINGc
Estimated Budget Authority....................        -28        -37          4          1          5        -55
Estimated Outlays.............................        -26        -27         14         11         10       -18
----------------------------------------------------------------------------------------------------------------
Notes: Except as noted below, the authorization levels in this table reflect amounts that would be specifically
  authorized by the bill. The bill also would implicitly authorize some defense activities in 2015 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 to totals because of rounding.
a. This authorization reflects CBO's estimate of the added cost of certain accrual payments required under
  current law but not fully reflected in the amounts specifically authorized by the bill.
b. For 2015, this authorization level has two components: an estimated $8 million for extending certain benefits
  to federal civilian workers who perform official duty in a combat zone and are employed by departments and
  agencies other than DoD; and an estimated $3 million for Department of Interior activities related to the
  Sikes Act. For 2016 to 2018, the authorization levels reflect estimates for implementing the Sikes Act.
  (Current law contains authorizations for those activities in 2014; thus, no authorizations for that year are
  reflected here.)
c. In addition to the changes in direct spending shown above, H.R. 1960 would have effects beyond 2018. CBO
  estimates that over the 2014-2023 period, H.R. 1960 would decrease direct spending by $2 million (see Table
  4).

    Basis of estimate: For this estimate, CBO assumes that H.R. 
1960 will be enacted near the start of fiscal year 2014 and 
that the authorized and estimated amounts will be appropriated.

Spending Subject to Appropriation

    The bill would authorize appropriations for 2014 totaling 
$632 billion, of which $546 billion would be authorizations of 
regular appropriations for ``base budget'' costs (not directly 
related to overseas contingency operations). Of the funding 
that would be authorized for base budget costs, nearly all 
($545 billion) would be specifically authorized as follows: 
$527 billion for DoD and $18 billion for atomic energy defense 
activities within DOE and for various other programs (see Table 
2).
    The funding that would be authorized for DoD's base budget 
represents an increase of $32 billion (7 percent) relative to 
appropriations enacted for 2013 and adjusted to reflect the 
effects of the March 2013 sequestration. Authorized funding 
would increase for all major categories of spending: operation 
and maintenance would increase by $15 billion (8 percent), 
procurement by $10 billion (11 percent), research and 
development by $5 billion (7 percent), military personnel by $2 
billion (2 percent), and military construction and family 
housing by $1 billion (11 percent). For those comparisons, the 
amount authorized for DoD's base budget also reflects CBO's 
estimate of the additional amount needed--$580 million--to 
fully fund certain accrual payments required under current law 
but not fully reflected in the amounts specifically authorized 
by the bill.
    For DOE and other programs, the $18 billion that would be 
authorized for 2014 represents a $2 billion (10 percent) 
increase over the level appropriated for 2013, adjusted to 
reflect the March sequestration.
    The $86 billion that would be authorized for 2014 overseas 
contingency operations represents a $3 billion (4 percent) 
increase relative to the post-sequestration amounts for 2013. 
Authorized levels would increase by $10 billion (17 percent) 
for operation and maintenance, but would decrease by $4 billion 
(31 percent) and $2 billion (22 percent) for military personnel 
and procurement, respectively. Changes in other accounts would 
be less than $0.1 billion.

                                 TABLE 2--SPECIFIED AUTHORIZATIONS IN H.R. 1960
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2014       2015       2016       2017       2018    2014-2018
----------------------------------------------------------------------------------------------------------------
Authorization of Regular Appropriations
    Department of Defense
        Military Personnela
            Authorization Level...............    136,896          0          0          0          0    136,896
            Estimated Outlays.................    127,490      8,126        587         38          0    136,241
        Operation and Maintenance
            Authorization Level...............    208,558          0          0          0          0    208,558
            Estimated Outlays.................    149,151     43,309      9,453      2,402        823    205,138
        Procurement
            Authorization Level...............    100,723          0          0          0          0    100,723
            Estimated Outlays.................     21,261     31,245     23,853     13,405      5,350     95,114
        Research and Development
            Authorization Level...............     68,079          0          0          0          0     68,079
            Estimated Outlays.................     33,444     24,604      5,075      2,234      1,318     66,675
        Military Construction and Family
         Housing
            Authorization Level...............     10,640          0          0          0          0     10,640
            Estimated Outlays.................      1,249      3,387      3,241      1,258        636      9,771
        Revolving Funds
            Authorization Level...............      2,277          0          0          0          0      2,277
            Estimated Outlays.................      1,853        334         48         27         10      2,272
        General Transfer Authority
            Authorization Level...............          0          0          0          0          0          0
            Estimated Outlays.................        175        -70        -53        -35        -17          0
            Subtotal, Department of Defense
                Authorization Level...........    527,173          0          0          0          0    527,173
                Estimated Outlays.............    334,623    110,935     42,204     19,329      8,120    515,211
        Atomic Energy Defense Activities
            Authorization Levelb..............     17,696          0          0          0          0     17,696
            Estimated Outlays.................     11,600      5,008      1,082          4          2     17,696
        Other Programs
            Authorization Levelc..............        480          0          0          0          0        480
            Estimated Outlays.................        390         71         16          3          0        480
            Subtotal, Authorization of Regular
             Appropriations
                Authorization Level...........    545,349          0          0          0          0    545,349
                Estimated Outlays.............    346,613    116,014     43,302     19,336      8,122    533,387
Authorization of Appropriations for Overseas
 Contingency Operations
    Military Personnel
        Authorization Levela..................      9,853          0          0          0          0      9,853
        Estimated Outlays.....................      9,222        602          5          1          0      9,830
    Operation and Maintenance
        Authorization Level...................     68,362          0          0          0          0     68,362
        Estimated Outlays.....................     32,151     24,116      7,919      2,641        635     67,462
    Procurement
        Authorization Level...................      7,169          0          0          0          0      7,169
        Estimated Outlays.....................      1,743      2,598      1,561        530        183      6,615
    Research and Development
        Authorization Level...................        117          0          0          0          0        117
        Estimated Outlays.....................         55         45         10          3          1        114
    Working Capital Funds
        Authorization Level...................        265          0          0          0          0        265
        Estimated Outlays.....................         99         86         58         19          1        263
        Special Transfer Authority
            Authorization Level...............          0          0          0          0          0          0
            Estimated Outlays.................         75        -30        -23        -15         -8          0
            Subtotal, Overseas Contingency
             Operations
                Authorization Level...........     85,766          0          0          0          0     85,766
                Estimated Outlays.............     43,345     27,417      9,531      3,179        813     84,284
                                               -----------------------------------------------------------------
Total Specified Authorizations
    Authorization Level.......................    631,115          0          0          0          0    631,115
    Estimated Outlays.........................    389,958    143,431     52,833     22,515      8,935   617,671
----------------------------------------------------------------------------------------------------------------
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 2015 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.
a. The authorizations of appropriations for military personnel (in sections 421 and 1505) include $6,677 million
  and $164 million, respectively, for accrual payments to the Medicare-Eligible Retiree Health Care Fund. CBO
  estimates, however, that section 421 understates--by $580 million--the amount required for those payments,
  thus that amount has been added to the estimated cost of the bill as reflected in Table 1.
b. This authorization is primarily for atomic energy activities within the Department of Energy.
c. This authorization is for veterans benefits and services ($219 million), the Maritime Administration ($173
  million), the Armed Forces Retirement Home ($68 million), and the Naval Petroleum Reserves ($20 million). The
  authorized level reflected in this estimate for the Maritime Administration does not include the amount
  specified in the bill for payments to shipping companies under the maritime security program because that
  program is authorized under current law for 2014.

    H.R. 1960 also contains provisions that would affect the 
cost of various discretionary programs in future years. Most of 
those provisions would change end strength, military 
compensation and benefits, and acquisition programs using 
multiyear procurement authorities. The estimated effects of a 
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 appropriations action consistent 
with the bill.
    Force Structure. The bill would affect the force structure 
of the various military services by setting end-strength levels 
for 2014 and modifying the minimum end-strength levels 
authorized in permanent law.
    Under title IV, the authorized end strengths in 2014 for 
active-duty personnel and personnel in the selected reserves 
would total 1,361,400 and 842,700, respectively. Of those 
selected reservists, 78,386 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would decrease by 40,160 and selected-reserve end strength 
would decrease by 8,180 when compared with levels authorized 
under current law for 2014. The specified end-strength levels 
for each component of the armed forces are detailed below.
    Active-Duty End Strengths. Compared with end-strength 
levels authorized under current law for 2014, section 401 would 
authorize reductions in active-duty personnel across three of 
the four services: 32,100 fewer for the Army; 7,100 fewer for 
the Marine Corps; and 1,860 fewer for the Air Force. In 
contrast, the Navy would increase strength by 900. CBO 
estimates that the total net reduction in active-duty personnel 
of 40,160 servicemembers would decrease costs to DoD by $24.9 
billion over the 2014-2018 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.
    Selected-Reserve End Strengths. 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, four of the six reserve components would 
experience decreases in end strength: 4,000 fewer for the Army 
National Guard, 3,400 fewer for the Navy Reserve, 300 fewer for 
the Air National Guard, and 480 fewer for the Air Force 
Reserve. The other reserve components would see no change to 
the levels already authorized for 2014. Those numbers include a 
small net increase (21 reservists) in the number of full-time 
reservists who serve on active duty in support of the reserves 
compared with the authorized end-strength levels for 2014. CBO 
estimates that the net result of implementing those provisions 
would be a decrease in costs for salaries and expenses for 
selected reservists of $1.1 billion over the 2014-2018 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. The bill would lower the 
minimum number of technicians required by 276 relative to the 
levels currently authorized. CBO estimates that such a 
reduction would decrease costs for civilian salaries and 
expenses by $131 million over the 2014-2018 period.

            TABLE 3--ESTIMATED AUTHORIZATIONS OF APPROPRIATIONS FOR SELECTED PROVISIONS IN  H.R. 1960
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                  2014a       2015       2016       2017       2018    2014-2018
----------------------------------------------------------------------------------------------------------------
                                                 FORCE STRUCTURE

Active-Duty End Strengths.....................     -3,037     -4,808     -5,468     -5,712     -5,900    -24,925
Selected-Reserve End Strengths................        -91       -203       -252       -281       -289     -1,116
Reserve Technicians End Strengths.............        -13        -28        -29        -30        -31       -131
Active Status for Inactive National Guard               8         26         44         64         63        205
 Members......................................

                                            COMPENSATION AND BENEFITS

Expiring Bonuses and Allowances...............        935        582        336        293        150      2,296
TRICARE Prime Service Areas...................        164        154        146        139        132        735
Civilian Benefits in a Combat Zone, Department          0         72          0          0          0         72
 of Defenseb..................................

                                                OTHER PROVISIONS

Multiyear Procurement Contracts
    C-130J Aircraft Variants..................      1,594      1,044      1,815        800        537      5,789
    E-2D Aircraft.............................        965        935        981      1,003        699      4,582
    Ground-based Interceptors.................        367        364        375        384        393      1,883
East Coast Missile Defense Site...............        700        700        700        100        100      2,300
Increased Cost Cap for CVN-78 Aircraft Carrier        132        777          0          0          0        909
Repair of Vessels in Foreign Shipyards........         36         36         37         38         39        186
Incrementally Funded Construction Projects....        373        195          0          0          0        568
Mental Health Assessments.....................         25         45         45         45         50        210
Sikes Act, Department of Defenseb.............          0          2          2          2          2         6
----------------------------------------------------------------------------------------------------------------
Notes: Amounts shown in this table for 2015 through 2018 are not included in amounts that would be specifically
  authorized by the bill and would be covered by specific authorizations for defense programs in future years
  (and therefore are not reflected in Tables 1 and 2).
Figures shown here may not add up to numbers in the text because of rounding.
a. Amounts shown in this table for 2014 are included in amounts specifically authorized to be appropriated by
  the bill (as reflected in Table 2 and summarized in Table 1).
b. This provision also would increase costs for agencies other than DoD. Those costs are included in Table 1
  under ``Other Authorizations of Appropriations.''

    Coast Guard Reserve End Strength. The bill also would 
authorize an end-strength level of 9,000 servicemembers in 2014 
for the Coast Guard Reserve. Because this authorization is the 
same as that under current law, CBO does not estimate any 
change in costs for this provision.
    Active Status for Inactive National Guard Members. Section 
513 would provide temporary authority to create a new active 
status for certain members of the inactive National Guard 
(ING). Members transferred to that status would continue to 
receive their current level of pay and benefits; however, they 
would no longer count towards the end strength level for 
Selected Reserve Personnel. The bill would limit the number of 
guardsmen in the new active status to 4,000 at any time.
    Based on information from DoD, CBO expects that the Army 
National Guard (ARNG) would use this authority to transfer to 
the new status soldiers who are not eligible to be deployed 
because they are being evaluated under the Integrated 
Disability Evaluation System (IDES). As of April of this year, 
there were a little over 4,000 ARNG members in IDES being 
evaluated for their injuries or illnesses to determine whether 
they will return to duty or be discharged.
    Based on information from DoD, CBO estimates that the ARNG 
would implement this authority starting in April of 2014, and 
that the number of members on the active status list of the ING 
would grow from about 1,000 members in 2014 to 4,000 by the end 
of 2017. That number would then decline to zero by December 31, 
2018, when the authority would expire. By omitting those 
members of the ARNG from counting toward Selected Reserve end 
strength set in section 411 of this bill, and thus making room 
under the limit to hire additional part-time ARNG members, CBO 
estimates that this provision would effectively raise the 
authorized end strength by that same amount. CBO estimates that 
the resulting increase in ARNG personnel would cost $205 
million over the 2014-2018 period.
    Compensation and Benefits. H.R. 1960 contains several 
provisions that would affect compensation and benefits for 
uniformed personnel and civilian employees of DoD. The bill 
would specifically authorize regular appropriations of $137 
billion for the costs of military pay and allowances in 2014. 
For related costs resulting from overseas contingency 
operations (primarily in Afghanistan), the bill would authorize 
the appropriation of an additional $10 billion for 2014.
    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, 2013. Some 
bonuses are paid in a 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 2014, CBO 
estimates that extending that authority for one year would cost 
$2.3 billion over the 2014-2018 period.
    TRICARE Prime Service Areas. At the beginning of fiscal 
year 2014, several TRICARE Prime Service areas are scheduled to 
be eliminated. About 170,000 Prime beneficiaries will need to 
convert to TRICARE Standard, obtain a waiver to use TRICARE 
Prime providers in a nearby service area, or use some other 
form of health coverage (such as employer sponsored 
insurance).\1\ Section 711 would require DoD to continue to 
make the TRICARE Prime benefit available to beneficiaries 
currently residing in those affected areas. DoD would be 
allowed to phase-out Prime in those areas as those 
beneficiaries either move, opt out of Prime, or reach the age 
of eligibility for TRICARE-for-Life.
---------------------------------------------------------------------------
    \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. Two of the most commonly 
used plans are TRICARE Prime--a managed care option, and TRICARE 
Standard--a fee-for-service option. Medicare-eligible TRICARE 
beneficiaries use the TRICARE-for-Life benefit, which acts as Medicare 
wrap-around coverage.
---------------------------------------------------------------------------
    Because it has low out-of-pocket costs, TRICARE Prime is 
typically more expensive to DoD than other health options, 
including TRICARE Standard; thus, any attempt to maintain or 
expand enrollment in TRICARE Prime would result in added costs 
to the government. Based on an analysis of the proximity of the 
affected Prime service areas to areas unaffected by the new 
policy, CBO estimates that about a third of the affected 
beneficiaries will seek the waivers available under current law 
and travel the added distance to remain in Prime. Therefore, 
the net cost to the government of health benefits for those 
people will remain approximately the same. For the other two-
thirds of that population, CBO estimates that the requirement 
to maintain the Prime benefit would result in added costs for 
the government.
    The average annual cost for a Prime beneficiary is about 
$5,400. CBO estimates that eliminating Prime would decrease 
that cost by over 25 percent. That estimate takes into account 
the lower costs for Standard, as well as the possibility that 
those beneficiaries would begin using another source of 
funding--such as employer-sponsored insurance--for part or all 
of their health care costs. Initially, CBO estimates that 
enacting section 711 would cost DoD more than $150 million 
annually, although costs would decrease over time as the 
affected beneficiaries drop out of Prime for various reasons. 
In total, CBO estimates that implementing section 711 would 
increase the need for appropriations by $735 million over the 
2014-2018 period.
    In addition, CBO estimates section 711 would increase 
mandatory spending for retiree health benefits of the Other 
Uniformed Services. A discussion of those costs can be found in 
the ``Direct Spending'' section of this estimate.
    Civilian Benefits in a Combat Zone. Section 1102 would 
extend for one year the authority to grant certain benefits to 
federal civilian employees who perform official duty in a 
combat zone. Those benefits, which expire under current law on 
September 30, 2014, include death gratuities, paid leave and 
travel for one trip home, and up to three leave periods per 
year for rest and recuperation. Based on information from DoD 
and the Office of Personnel Management, CBO estimates that 
about 5,000 civilian employees of DoD and 600 employees of 
other federal agencies will work in a designated combat zone in 
2015 and, under this provision, would receive an average 
benefit that would cost about $14,500 a year. Thus, CBO 
estimates that in 2015, section 1102 would increase the costs 
of civilian employees of DoD by about $72 million and of other 
federal employees by $8 million.
    Other Provisions. Various other provisions of H.R. 1960 
would increase the cost of discretionary programs over the 
2014-2018 period, CBO estimates.
    Multiyear Procurement Contracts. The bill would authorize 
the military departments to enter multiyear procurement 
contracts for four major acquisition programs. Multiyear 
procurement is a special contracting method authorized in 
current law (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 all years are 
not appropriated at the time the contracts are awarded. 
Additional legislative authorization is required for multiyear 
contracts costing more than $500 million.
    Multiyear procurement contracts are used to acquire 
multiple assets--such as ships, planes, and other weapons--
under one agreement. 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. Budget authority is provided in advance 
only for the cost of the items that will be ordered in the 
upcoming budget year. 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 
contracts. If such contracts are cancelled before completion, 
an agency usually has useable assets, albeit fewer than were 
envisioned under the contract.
    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, but the department does not request budget 
authority for that amount. The amount of cancellation liability 
declines in subsequent years, as increasing portions of the 
fixed costs are 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.
    
 Section 131 would authorize the Air Force to enter 
a multiyear contract beginning in fiscal year 2014 to purchase 
several variants of the C-130J aircraft for the Air Force and 
the Marine Corps. The C-130 is a medium-sized transport 
aircraft that performs a broad variety of airlift and support 
missions. CBO estimates that under such a contract, the Air 
Force would buy 72 aircraft for its active and reserve 
component squadrons and seven aircraft for the Marines over the 
2014-2018 period at a cost of $5.8 billion. The services 
estimate that a single multiyear contract would cost about $600 
million less than five annual contracts.
    
 Section 121 would authorize the Navy to pursue a 
multiyear contract beginning in fiscal year 2014 to purchase E-
2D Advanced Hawkeye aircraft. The E-2D is an airborne command, 
control and surveillance aircraft. CBO estimates that the Navy 
would buy 32 aircraft over the 2014-2018 period at a cost of 
$4.6 billion. The service estimates that a single multiyear 
contract would cost about $520 million less than five annual 
contracts.
    
 Section 141 would authorize the Missile Defense 
Agency (MDA) to enter into one or more multiyear contracts for 
the procurement of ground-based interceptors. In addition, the 
provision would allow MDA to enter into contracts for advance 
procurement associated with those interceptors. The bill would 
authorize $107 million in advance procurement authority in 2014 
to purchase long-lead items associated with the interceptors. 
CBO estimates that the MDA would use the multiyear contract 
authority to purchase 14 additional interceptors for the Fort 
Greely site and 20 interceptors for the East Coast Missile 
site. CBO estimates that those 34 interceptors would require 
additional appropriations of nearly $1.9 billion over the 2014-
2018 period. An additional $500 million would be required 
beyond 2018 to complete the purchase of the 34 interceptors. 
CBO estimates that purchasing those interceptors under multiple 
annual contracts would cost about $300 million more than a 
multiyear procurement contract.
    
 Section 142 would authorize the Department of 
Defense to enter one or more multiyear contracts over the 2014-
2018 period for a variety of medium and heavy tactical 
vehicles. The services have no plans for such a multiyear 
contract, but requested $240 million to purchase 1,057 such 
vehicles in 2014. CBO has no basis on which to estimate the 
cost of a multiyear contract for those and additional vehicles 
in subsequent years.
    East Coast Missile Defense Site. Section 232 would require 
that the Secretary of Defense ensure that a missile defense 
site on the East Coast of the United States is constructed and 
operational by 2018. Based on information from the Missile 
Defense Agency, CBO estimates that preparing and operating the 
site would require appropriations of $2.3 billion over the 
2014-2018 period. That $2.3 billion amount includes the costs 
for buying ground equipment ($1.2 billion), building the 
facilities and constructing the silos (nearly $900 million), 
and operations ($200 million).
    CBO estimates that DoD would purchase 20 ground-based 
interceptors to deploy to the new East Coast site. The costs of 
those interceptors are included above under the discussion of 
the multiyear contract authority provided under section 141.
    Increased Cost Cap for the CVN-78 Aircraft Carrier. Section 
122 of the bill would increase, to $12.9 billion, the cost cap 
for acquiring the CVN-78 aircraft carrier, the lead ship of the 
Ford class of nuclear aircraft carriers. That amount is 
currently capped at nearly $11.8 billion. Public Law 109-364 
established a cost cap of $10.5 billion that was later revised 
to $11.8 billion in 2010 under the authority of the Secretary 
of the Navy to make adjustments to the cap for costs incurred 
primarily because of inflation through fiscal year 2010. Under 
that same authority, the cap can be further increased to $12 
billion to reflect inflation since 2010. The Congress has 
appropriated more than $11.5 billion for the CVN-78 through 
2013. CBO expects that DoD will use its current-law authority 
to increase the cost cap to $12 billion; thus, we estimate that 
raising that cap to $12.9 billion would increase the need for 
appropriations for constructing the CVN-78 by $0.9 billion over 
the 2014-2015 period.
    Repair of Vessels in Foreign Shipyards. Section 1023 would 
require all vessels that are part of the Military Sealift 
Command (MSC) to be treated as though they are assigned to home 
ports in the United States or Guam. MSC vessels are often 
stationed overseas for two or more consecutive years. During 
such deployments, the Navy considers those ships to be 
forwarded deployed (that is, to not have a home port), allowing 
maintenance and repair work on those ships to be performed in 
foreign shipyards. Because they do not have to transit back to 
the United States during their deployments, those ships have 
lower fuel costs and are able to spend more time on station. In 
contrast, ships that are homeported in the United States are 
required to have all maintenance and repair work performed 
domestically, except in emergencies.
    Implementing this provision would require all MSC vessels 
that are stationed overseas to transit back to the United 
States or Guam for routine repairs. The Navy reports that about 
35 ships would be affected by this provision. Based on 
information from the Navy, trips back to the United States for 
repairs would increase fuel costs by $35 million to $40 million 
annually, and reduce the time each vessel can spend on station. 
The Navy estimates that the cost for repairs and maintenance 
performed domestically would, on average, be higher that the 
costs charged overseas. However, CBO does not currently have 
the information needed to estimate that increased cost.
    Incrementally Funded Construction Projects. Division B 
would authorize DoD to begin two construction projects while 
authorizing appropriations for a portion of the cost in 
advance. The bill would authorize $373 million for those 
projects in 2014; an additional $195 million in authorizations 
and appropriations would be required in subsequent years to 
complete those projects. Additionally, the bill would authorize 
the appropriation of $1,261 million for subsequent increments 
of 10 projects that were authorized in prior years.
    Mental Health Assessments. Two sections would increase the 
number of mental health assessments administered to military 
personnel. CBO estimates that the combined cost of those 
additional assessments would be $210 million over the 2014-2018 
period.
    Section 701 would require DoD to administer a mental health 
assessment to deployed personnel once every six months. Based 
on current deployment levels, CBO estimates DoD would need to 
deploy an additional 20 mental health professionals to conduct 
those assessments. Based on information from DoD, CBO estimates 
the cost to deploy each of those additional personnel would be 
about $150,000 per year. In addition, there would be a cost to 
DoD to replace those personnel in the continental U.S. (CONUS), 
so that current mental health caseload demands can be met. CBO 
estimates DoD would need to pay for an additional 25,000 hours 
per year of mental health services in CONUS to compensate for 
the loss of the deployed mental health professionals, at a cost 
of over $100 per hour. In total, CBO estimates section 701 
would cost about $5 million per year, or about $25 million over 
the 2014-2018 period.
    Section 702 would require DoD to administer a person-to-
person mental health assessment to all active duty members on a 
periodic basis. Based on discussions with DoD, CBO believes the 
department would administer the assessments during a service 
member's annual health assessment. While certain aspects of 
mental health are already addressed during the periodic health 
assessment, it is not clear whether the current approach is 
sufficient to meet the requirements of section 702. For this 
estimate, CBO assumes health professionals would need to add an 
additional 15 minutes per assessment to fully meet the 
requirements. The total number of personnel requiring mental 
health assessments each year would be about 1.3 million 
(excluding deployed personnel and those already receiving pre- 
and post- deployment mental health assessments). At an 
additional cost of about $25 per assessment (the billing rates 
for health professionals are about $100 per hour), CBO 
estimates section 702 would cost $185 million over the 2014-
2018 period.
    Sikes Act. Section 313 would extend by five years--from 
2015 to 2019--authorizations of up to $4.5 million annually for 
activities related to the Sikes Act, which promotes cooperation 
between the Department of Interior (DOI) and DoD in planning 
and developing fish and wildlife resources on military land. 
Under current law, the authorizations for those activities will 
expire in 2014. CBO estimates that through 2018, authorizations 
in H.R. 1960 for the DOI and DoD would total $12 million and $6 
million, respectively.

Direct Spending and Revenues

    Several provisions in H.R. 1960 would affect direct 
spending. CBO estimates that those provisions would decrease 
net direct spending by $2 million over the 2014-2023 period 
(see Table 4).
    Retired Pay Inversion. In 1975, a law was enacted that 
required DoD to recalculate the annuities of military retirees 
to take into account any additional cost-of-living adjustments 
(COLA) that would have occurred had members retired at earlier 
dates, if they were eligible to do so; this provision is 
referred to as the Tower Amendment. In instances where an 
earlier retirement would have resulted in a larger annuity, DoD 
was directed to recalculate using that earlier date.\2\
---------------------------------------------------------------------------
    \2\For military personnel who entered service prior to 1981, 
retirement pay is based on their final annual pay at the time they 
retired. In certain instances, it would have been more advantageous, 
from a financial perspective, if the member had retired at an earlier 
date. For example, assume the member retired in the month of October 
after exactly 20 years of service. If the member's initial annuity was 
$1,000 per month and his first COLA was 3 percent, his retired pay the 
following January would have been $1,030. However, if the member waited 
until that January to initially retire and in the intervening three 
months received a pay raise of 1.5 percent, the member's initial 
retired pay in January (including the impact of the additional three 
months of service) would have only been $1,028. The member would have 
been better off retiring the previous October.
---------------------------------------------------------------------------
    Subsequently, a new method of computing retired pay was 
enacted into law. The new method (known as ``High-36 Average'') 
applies to all personnel who entered the service after 1980. 
DoD believed that the Tower Amendment did not apply to that new 
provision of law. However, a recent audit concluded that the 
Tower Amendment does apply to those who retire using the High-
36 Average method of computation and that a number of those 
retirees stand to benefit from its application. DoD believes 
they are now required to make retroactive retirement payments 
back to the year 2000 (the year in which retirees started 
receiving annuities under the High-36 plan), and that they will 
also have to recalculate payments to future retirees to 
determine if those payments should be increased. Section 622 
would prevent most of those higher payments from taking place, 
by specifying that the Tower Amendment applies to High-36 
retirees only in very limited circumstances.
    Based on an analysis of DoD retirement statistics and COLAs 
published by the Defense Finance and Accounting Service (DFAS), 
CBO estimates that about 370,000 former members have retired 
using the High-36 Average method of computation since 2000, and 
that, under current law, about 15 percent of those will benefit 
from application of the Tower Amendment. Of those who will 
benefit, CBO estimates the average retroactive payment should 
be about $1,000 per person, or almost $60 million in total. 
Section 622 would prevent those retroactive payments from being 
made.

                                                                    TABLE 4--ESTIMATED IMPACT OF H.R. 1960 ON DIRECT SPENDING
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           By fiscal year, in millions of dollars--
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                              2014-      2014-
                                                                 2014       2015       2016       2017       2018       2019       2020       2021       2022       2023       2018       2023
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Retired Pay Inversion
    Estimated Budget Authority..............................        -38        -49        -12        -13        -14        -15        -16        -17        -18        -20       -126       -212
    Estimated Outlays.......................................        -38        -49        -12        -13        -14        -15        -16        -17        -18        -20       -126       -212

Special Immigrant Visas for Iraqi and Afghan Allies
    Estimated Budget Authority..............................          2          5         10         10         15         15         15         15         15         15         42        117
    Estimated Outlays.......................................          2          5         10         10         15         15         15         15         15         15         42        117

TRICARE Prime Service Areas
    Estimated Budget Authority..............................          4          4          4          3          3          3          3          3          3          3         18         33
    Estimated Outlays.......................................          4          4          4          3          3          3          3          3          3          3         18         33

Servicemember Qualification for Mortgage Refinancing
    Estimated Budget Authority..............................          4          3          2          1          1          1          1          2          2          2         11         19
    Estimated Outlays.......................................          4          3          2          1          1          1          1          2          2          2         11         19

National Defense Stockpile
    Estimated Budget Authority..............................          0          0          0          0          0          0          0          0          0          0          0          0
    Estimated Outlays.......................................          2         10         10         10          5          4          0          0          0          0         37         41
                                                             -----------------------------------------------------------------------------------------------------------------------------------
    Total Changes in Direct Spending
        Estimated Budget Authority..........................        -28        -37          4          1          5          4          3          3          2          0        -55        -43
        Estimated Outlays...................................        -26        -27         14         11         10          8          3          3          2          0        -18        -2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: H.R. 1960 also would affect revenues. However, CBO estimates that effect would be insignificant.

    In addition, CBO estimates section 622 would reduce future 
payments by more than $10 million annually over the next 10 
years. That amount includes both the added payments to current 
retirees (which would average about $200 a year each), as well 
as increased payments for those who will retire during that 
period and stand to benefit from application of the Tower 
Amendment. In total, CBO estimates that enacting section 622 
would reduce spending from the Military Retirement Fund by $212 
million over the 2014-2023 period.
    Special Immigrant Visas for Iraqi and Afghan Allies. 
Section 1216 would amend the Afghan Allies Protection Act of 
2009 (8 U.S.C. 1101 note) to extend by four years (through the 
end of fiscal year 2018) the period during which special 
immigrant visas can be provided to certain Afghans. Eligible 
immigrants under that provision are Afghans who were employed 
by the United States Government at some point since 2001 and 
are experiencing an ongoing serious threat as a consequence.
    The provision also would make available to those 
individuals 435 additional visas in each year from 2014 to 
2018; their spouses and children would not count against that 
number. Because those special immigrants (including their 
spouses and children) are eligible for public benefits to the 
same extent as refugees, they could receive subsidies through 
health insurance exchanges, Medicaid benefits, nutrition 
benefits, and Supplemental Security Income, if otherwise 
eligible, upon arrival in the United States. CBO estimates that 
direct spending for those benefits would increase by $117 
million over the 2014-2023 period.
    TRICARE Prime Service Areas. At the beginning of fiscal 
year 2014, several TRICARE Prime Service areas are scheduled to 
be eliminated. Section 711 would require DoD to continue to 
make the TRICARE Prime benefit available to beneficiaries 
currently residing in those areas. Most of the 170,000 affected 
beneficiaries are retirees of the Army, Navy, Air Force, and 
Marine Corps, and their dependents. Health benefits for those 
personnel are paid by the Defense Health Program, which is 
subject to annual appropriations. However, about 2.5 percent of 
the population are retirees and dependents of retirees of the 
Coast Guard, National Oceanic and Atmospheric Administration, 
and the Uniformed Corps of the Public Health Service. Health 
benefits for those beneficiaries are paid from mandatory 
appropriations. Based on information from DoD, CBO estimates 
section 711 would increase direct spending for those 
beneficiaries by $33 million over the 2014-2023 period.
    For a more complete overview of section 711, as well as 
additional details about CBO's estimating methodology, see the 
related discussion in the ``Spending Subject to Appropriation'' 
section of this estimate.
    Servicemember Qualification for Mortgage Refinancing. 
Section 553 would make it easier for certain servicemembers to 
refinance mortgages on homes that they do not occupy. Under 
current law, borrowers must occupy a home to be eligible for a 
guarantee from the Department of Veterans Affairs (VA) on cash-
out refinancing loans. Further, private-sector lenders 
generally charge higher interest rates for loans on homes that 
are not occupied by the borrower, which discourages some of 
those borrowers from refinancing. Section 533 would require 
servicemembers to be treated as if they occupied the home when 
they refinance, if they left the home because of change-of-
station or deployment orders. As a result, some additional 
borrowers would qualify for cash-out refinancing loans that are 
guaranteed by VA. Others would choose to refinance loans that 
they would otherwise not have because they would receive lower 
interest rates; some of those loans also would be guaranteed by 
VA.
    VA guarantees lenders a payment of up to 25 percent of the 
outstanding loan balance (subject to some limitations on the 
original loan amount) in the event that the veteran defaults. 
Such guarantees enable veterans to get better loan terms such 
as lower interest rates or smaller down payments. The subsidy 
costs of VA loan guarantees are paid from mandatory 
appropriations.\3\ Guaranteeing additional loans would increase 
subsidy outlays. Based on the annual number of loan guarantees 
that VA currently provides for servicemembers, CBO expects that 
over the next 10 years, VA would guarantee an additional 10,000 
loans under this provision. Those guarantees would increase 
direct spending by $19 million over the 2014-2023 period, CBO 
estimates.
---------------------------------------------------------------------------
    \3\Under the Federal Credit Reform Act of 1990, the subsidy cost of 
a loan guarantee is the net present value of estimated payments by the 
government to cover defaults and delinquencies, interest subsidies, and 
other expenses, offset by any payments to the government, including 
origination fees, other fees, penalties, and recoveries on defaulted 
loans. Such subsidy costs are calculated by discounting those expected 
cash flows using the rate on Treasury securities of comparable 
maturity. The resulting estimated subsidy costs are recorded in the 
budget when the loans are disbursed.
---------------------------------------------------------------------------
    National Defense Stockpile. Section 1411 would modify the 
purchasing authority for the National Defense Stockpile by 
authorizing the recovery of strategic and critical materials 
embedded in excess components owned by the U.S. military or 
other federal agencies before those components are sold for 
scrap.
    Section 1412 would allow the Stockpile Manager to spend up 
to $41 million from the National Defense Stockpile Transaction 
Fund to purchase six new materials over the 2014-2019 period. 
All of those materials have been identified as necessary to 
meet military needs. Based on information from DoD, CBO 
estimates that enacting sections 1411 and 1412 would increase 
direct spending by $41 million over the 2014-2019 period.
    Other Provisions. Other provisions in the bill would have 
insignificant effects on direct spending or revenues, generally 
because few people would be affected, or because the net 
budgetary impact would be small.
    
 Section 512 would modify rules related to the 
selective early retirement of reserve personnel. In certain 
circumstances, those changes might affect the number of former 
reserve members drawing retired pay in a given year.
    
 Section 527 would enhance protections for military 
whistleblowers from acts of reprisal and also would require 
that the service records of victims of reprisal action be 
corrected. CBO estimates that correcting those records would 
result in some individuals receiving retroactive payments, 
benefits, or awards that were improperly denied.
    
 Section 528 would allow certain requirements for 
medical examinations to apply to proceedings conducted under 
the Uniform Code of Military Justice. CBO estimates that under 
that provision some servicemembers would receive a higher 
characterization of discharge and, therefore, become eligible 
for certain benefits administered by VA.
    
 Section 585 would award the Purple Heart to 
servicemembers who were killed or wounded in the attacks at a 
recruiting station in Little Rock, Arkansas, on June 1, 2009, 
and at Fort Hood, Texas, on November 5, 2009. Receipt of the 
Purple Heart is directly tied to eligibility for Combat-Related 
Special Compensation (CRSC), which is a mandatory benefit. CBO 
estimates that some of those servicemembers who would receive 
the Purple Heart under this provision would as a result earn 
CRSC. In addition, members of the Armed Forces or civilian 
employees of DoD who were killed or wounded in those attacks 
would be deemed to have been killed or wounded in a combat zone 
or while serving with the Armed Forces in a contingency 
operation. Awarding that status would provide eligibility for 
certain benefits that would increase direct spending and 
decrease revenues.
    
 Section 592 would allow the Army to enter into 
contracts with private entities to provide certain services at 
Arlington National Cemetery, such as transportation. Some of 
those contracts could include third-party financing of capital 
assets that, in CBO's judgment, should be recorded up front in 
the federal budget.
    
 Section 594 would establish a Commission on 
Service to the Nation and allow the Commission to collect and 
spend gifts, bequests, and devises of services or property.
    
 Section 714 would create a pilot program to 
improve the collection of third-party reimbursements at 
military treatment facilities. In certain circumstances, 
expenses associated with third-party collection activities are 
recorded as direct spending.
    
 Section 1061 would allow the Secretary of Defense 
to accept and spend contributions for the operation of the 
Conflict Records Research Center.
    
 Sections 1084 and 3502 would allow the federal 
government to insure without premium, private entities that 
transport U.S. cargo and personnel in the event that the 
private planes and vessels used are damaged in an act of war. 
CBO estimates that the probability of paying claims on such 
insurance would be negligible.
    
 Section 1303 would extend by three years the 
authority that allows DoD to spend contributions received from 
the private sector and foreign governments for use on 
activities associated with the Cooperative Threat Reduction 
program. The current authority to accept and spend those 
contributions will expire on December 31, 2015. Under section 
1303, any amounts not spent by December 31, 2018 would be 
returned to the donor.
    
 Section 2803 would make available for spending by 
DoD an insignificant amount of collections in a moribund 
account for military housing.
    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. 
Enacting H.R. 1960 would have no significant effect on 
revenues.

                CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 1960 AS REPORTED BY THE HOUSE COMMITTEE ON ARMED SERVICES ON JUNE 7, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                By fiscal year, in millions of dollars--
                                              ----------------------------------------------------------------------------------------------------------
                                                2013   2014    2015    2016    2017    2018    2019    2020    2021    2022   2023  2013-2018  2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact...............      0     -26     -27      14      11      10       8       3       3      2      0       -18         -2
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: The bill would 
impose intergovernmental and private-sector mandates as defined 
in UMRA on mortgage lending institutions. The bill would 
require mortgage lenders to consider active-duty servicemembers 
who have been relocated for certain reasons to be considered 
the occupants of the residences that secure mortgages for the 
purpose of refinancing. Because of the small number of loans 
that would be affected, CBO estimates that the costs of 
complying with the mandate would be small and well below the 
annual threshold established in UMRA for intergovernmental 
mandates ($75 million in 2013, adjusted annually for 
inflation). Based on information about current industry 
practices, CBO estimates that the costs to private lending 
institutions of complying with the mandate would probably fall 
below the annual threshold established in UMRA for private-
sector mandates ($150 million in 2013, adjusted annually for 
inflation).
    Section 552 would preempt state laws governing child 
custody if those laws 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. While the mandate 
would limit the application of state laws, it would impose no 
duty on states that would result in additional spending.
    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--Bill Ma, Kent 
Christensen, and Jason Wheelock, Missile Defenses, Ships, and 
Stockpile--Raymond J. Hall; Impact on State, Local, and Tribal 
Governments: J'nell L. Blanco, Impact on the Private Sector: 
Elizabeth Bass.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.