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114th Congress  }                                       {  Rept. 114-537
                        HOUSE OF REPRESENTATIVES
 2d Session     }                                       {     Part 2

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



 
        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2017

                                _______
                                

  May 12, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                          SUPPLEMENTAL REPORT

                        [To accompany H.R.4909]

      [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. 
4909), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on May 4, 
2016 (H. Rept. 114-537, pt. 1).

                  Congressional Budget Office Estimate

    In compliance with clause 3(c)(3) of rule XIII 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:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 11, 2016.
Hon. Mac Thornberry,
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. 4909, the National 
Defense Authorization Act for Fiscal Year 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is David Newman.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 4909--National Defense Authorization Act for Fiscal Year 2017

    Summary: H.R. 4909 would authorize appropriations totaling 
an estimated $603.3 billion for the military functions of the 
Department of Defense (DoD), for certain activities of the 
Department of Energy (DOE), and for other purposes. In 
addition, H.R. 4909 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 $587 billion over 
the 2017-2021 period.
    Of the amount that would be authorized for 2017 $567.0 
billion would be for base budget costs for defense programs, 
$0.4 billion would be for nondefense programs, and $35.7 
billion would be to cover a portion (seven months) of costs 
directly related to war-related activities. Funds for the 
direct cost of war-related activities for the remaining five 
months of 2017--roughly $20 billion--could be provided in 
supplemental appropriations; the bill, however, would not 
authorize additional funds for that purpose.\1\
---------------------------------------------------------------------------
    \1\For 2017, DoD requested funding for overseas contingency 
operations totaling $58.8 billion, most of which would be for war-
related costs.
---------------------------------------------------------------------------
    If appropriated, $544.0 billion of the authorized amounts 
would count against the 2017 defense cap set in the Budget 
Control Act (BCA), as amended and $0.4 billion would count 
against the nondefense cap. An additional $58.8 billion would 
be authorized for overseas contingency operations (OCO) and if 
appropriated would not count against the caps. Of the amount 
designated for OCO, $23.1 billion would be used in support of 
base budget requirements while the remaining $35.7 billion 
would be for war-related activities.
    The bill also contains provisions that would affect the 
costs of defense programs funded through discretionary 
appropriations in 2018 and future years. Those provisions would 
affect force structure, DoD compensation and benefits, and 
various procurement programs. CBO has analyzed the costs of a 
select number of those provisions and estimates that they 
would, on a net basis, increase the cost of those programs 
relative to current law by about $24 billion over the 2018-2021 
period. The net costs of those provisions in the future are not 
included in the total amount of outlays mentioned above because 
funding for those activities would be covered by specific 
authorizations in future years.
    In addition, CBO estimates that enacting the bill would 
lower direct spending by about $206 million over the 2017-2026 
period. H.R. 4909 would increase revenues by an insignificant 
amount. Because enacting the bill would affect direct spending 
and revenues, pay-as-you-go procedures apply.
    CBO estimates that enacting H.R. 4909 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    H.R. 4909 contains intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that the aggregate costs of the intergovernmental 
mandates would not exceed the threshold established in UMRA 
($77 million in 2016, adjusted annually for inflation). CBO 
estimates that the costs to the private sector of complying 
with the mandates in the bill would probably fall below the 
annual threshold established in UMRA for private-sector 
mandates ($154 million in 2016, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary effects of H.R. 4909 are shown in Table 1. Almost all 
of the $603.3 billion authorized by the bill would be for 
activities within budget function 050 (national defense). Some 
authorizations, however, fall within other budget functions, 
including, in 2017: $208 million for the Maritime 
Administration in function 400 (transportation); $122 million 
for function 700 (veterans benefits and services); $64 million 
for the Armed Forces Retirement Home in function 600 (income 
security); $22 million for the Small Business Administration in 
function 370 (commerce and housing credit) and $15 million for 
the Naval Petroleum Reserves in function 270 (energy).
    The budgetary effects of provisions that would affect 
direct spending fall in function 050 (defense); function 500 
(education, training, employment, and social services); 
function 550 (health); and function 600 (income security).

      TABLE 1.--BUDGETARY EFFECTS OF H.R. 4909, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2017
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2017       2018       2019       2020       2021    2017-2021
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION
 
Authorization Levels For Appropriations         .........  .........  .........  .........  .........  .........
 Subject To The BCA Caps:
    Defense (Base Budget):                      .........  .........  .........  .........  .........  .........
        Specified Authorizations For Base       .........  .........  .........  .........  .........  .........
         Budget Costs For The Departments Of
         Defense And Energy:
            Authorization Level...............    543,234          0          0          0          0    543,234
            Estimated Outlays.................    335,887    119,350     44,058     20,248      9,030    528,573
        Estimated Authorization for Additional
         Base Budget Accrual Paymentsa:
            Estimated Authorization Level.....        536          0          0          0          0        536
            Estimated Outlays.................        536          0          0          0          0        536
        Estimated Authorization for
         Acquisition of a Maritime Training
         Vesselb:
            Estimated Authorization Level.....        215          0          0          0          0        215
            Estimated Outlays.................         32         65         75         32         11        215
        Estimated Authorization for the
         Selective Servicec:
            Estimated Authorization Level.....          6          6          7          7          7         33
            Estimated Outlays.................          6          6          7          7          7         33
    Nondefense
        Specified Authorizations for MARAD,
         the VA, the AFRH, the NPR and the
         SBAd:
            Authorization Level...............        432         22         22         22          0        497
            Estimated Outlays.................        337         77         40         22         10        486
        Estimated Authorizations for Various
         Departments and Agenciese:
            Estimated Authorization Level.....         11         13          0          0          0         24
            Estimated Outlays.................          6         16          1          1          0         24
            Subtotal:
                Estimated Authorization Level.    544,434         41         29         29          7    544,539
                Estimated Outlays.............    336,804    119,514     44,181     20,310      9,058    529,867
Authorization Levels for Appropriations Not
 Subject to the BCA Caps (specified):
    Authorization for Overseas Contingency
     Operations for Base Budget Costf:
        Authorization Level...................     23,052          0          0          0          0     23,052
        Estimated Outlays.....................      9,688      5,828      3,750      1,899        846     22,012
    Authorization for Overseas Contingency
     Operations for War-Related Activities:
        Authorization Level...................     35,741          0          0          0          0     35,741
        Estimated Outlays.....................     19,989      9,115      3,659      1,561        526     34,850
      Subtotal:
            Authorization Level...............     58,794          0          0          0          0     58,794
            Estimated Outlays.................     29,677     14,943      7,409      3,460      1,372     56,862
            Total:
                Estimated Authorization Level.    603,227         41         29         29          7    603,332
                Estimated Outlays.............    366,481    134,457     51,590     23,770     10,430    586,728
 
                                           CHANGES IN DIRECT SPENDINGg
 
Estimated Budget Authority....................       -487        225        -19        -23        -27       -332
Estimated Outlays.............................       -125         86         16         15         -6        -15
----------------------------------------------------------------------------------------------------------------
Notes: Except as discussed in footnotes a, b, c, and e below, the authorization levels in this table reflect
  amounts that would be specifically authorized by the bill (as reflected in Table 2). Some provisions in the
  bill also would affect the costs of defense programs in 2018 and future years; estimates for a select number
  of those provisions are shown in Table 3, but are not included above because specified authorizations in
  future NDAAs would cover funding for those activities.
AFRH = Armed Forces Retirement Home; BCA = Budget Control Act; MARAD = Maritime Administration; NDAA = National
  Defense Authorization Act; NPR = Naval Petroleum Reserves; SBA = Small Business Administration; VA =
  Department of Veterans Affairs.
Numbers may not add up to totals because of rounding.
aThis 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.
bSection 3506 of the bill would authorize MARAD to acquire a new multipurpose vessel. CBO estimates that design
  and construction of the ship would cost $300 million. H.R. 4909 would specifically authorize $85 million to
  cover costs in 2017; the $215 million shown above reflects the remaining cost of that acquisition.
cSection 528 would require women to register for a military draft, which would increase costs to the Selective
  Service System (a defense-related activity). Section 528 also would affect nondefense discretionary costs of
  the Pell Grant program, (which are included under the heading ``Estimated Authorizations for Various
  Departments and Agencies''), as well as associated direct spending costs (included under the heading of
  ``Changes in Direct Spending'').
dThis reflects specified 2017 authorizations for MARAD ($208 million), the VA ($122 million), the Armed Forces
  Retirement Home ($64 million), and the Naval Petroleum Reserves ($15 million), plus authorizations of $87
  million over the 2017-2020 period for the SBA's Women's Business Center Program.
eThis reflects estimated costs for: SBA's SCORE Program (section 1851, $22 million); the extension of certain
  benefits to federal civilian workers who perform official duties in a combat zone and are employed by
  departments and agencies other than DoD (section 1103, $9 million), and the effects on programs in the
  Department of Education due to female registration in the Selective Service (section 528, savings of $7
  million).
fAlthough this authorization would be for base budget costs, it would not, if appropriated, be subject to the
  cap set by the BCA for 2017 because the funding would be designated for Overseas Contingency Operations.
gIn addition to the changes in direct spending shown here (a decrease of $15 million over the 2017-2021 period),
  H.R. 4909 would have effects beyond 2021. CBO estimates that over the 2017-2026 period, H.R. 4909 would
  decrease revenues by $206 million (see Table 4).

    Basis of estimate: For this estimate, CBO assumes that H.R. 
4909 will be enacted near the start of fiscal year 2017 and 
that the authorized and estimated amounts will be appropriated 
near the beginning of each fiscal year.

Spending subject to appropriation

    In total, the bill would authorize an estimated $603.3 
billion, nearly all of which ($602.5 billion) would be 
specifically authorized by the bill. The remaining $0.8 billion 
largely reflects CBO's estimate of amounts not specifically 
authorized by the bill that would be necessary to fund certain 
accrual payments required under current law and that would be 
needed to fully fund construction of a Maritime Training 
Vessel.
    For base budget costs--defense costs not directly related 
to war-related operations--the bill would specifically 
authorize two sets of appropriations for 2017 (see Table 2):
         $543.2 billion that would, if appropriated, be 
        counted against the BCA caps; and
         $23.1 billion that would not count against the 
        caps because that amount would be specifically 
        categorized by the bill as funding for overseas 
        contingency operations (despite being authorized for 
        base budget costs).
    Base budget funding would rise for nearly all major 
categories of defense spending with operation and maintenance 
receiving the largest increase ($15.2 billion, or 8 percent), 
followed by procurement ($3.6 billion, or 3 percent), research 
and development ($3.3 billion, or 5 percent), and military 
personnel ($2.1 billion, or 2 percent). Funding for other 
categories combined would increase by $1.6 billion (or 6 
percent).
    The remaining authorizations, totaling $35.7 billion, are 
for war-related costs that also would be considered as OCO and 
if appropriated, would not count against the cap. That amount 
is a decrease of $22.9 billion (or 39 percent) from the 
appropriated level for 2016, primarily because the bill's 
authorization would cover only seven months of day-to-day 
operating costs in 2017. Most of the decline is for operation 
and maintenance, which would receive authorizations of $25.9 
billion, a decline of $21 billion (or 45 percent) from 2016.
    Although H.R. 4909 would not authorize supplemental 
appropriations for 2017, such funding for the remaining five 
months could be needed if spending for war-related operations 
continues at the current rate. Based on DoD's request for 2017 
appropriations for those purposes, CBO estimates that such 
supplemental funding could total roughly $20 billion.
    H.R. 4909 also contains provisions that would affect the 
cost of various discretionary programs in future years. Most of 
those provisions would affect end strength (the size of the 
military forces at the end of a fiscal year), military 
compensation and benefits, and acquisition of weapons systems. 
The estimated effects of some of those provisions are shown in 
Table 3 and discussed below. The following sections discuss how 
those provisions would affect the cost of operating those 
programs in future years; all such spending would be subject to 
appropriation action.
    Force Structure. The bill would affect the force structure 
of the various military services by setting end-strength levels 
for 2017 and modifying the minimum end-strength levels 
authorized in permanent law.
    Under title IV, the authorized end strengths in 2017 for 
active-duty personnel and personnel in the selected reserves 
would total 1,310,615 and 833,200 respectively. Of those 
selected reservists, 76,351 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would increase by 1,700 and selected-reserve end strength would 
increase by 15,200 when compared with levels authorized under 
current law for 2017. The specified end-strength levels for 
each component of the armed forces are detailed below.

                        TABLE 2.--SPECIFIED AUTHORIZATIONS OF APPROPRIATIONS IN H.R. 4909
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2017       2018       2019       2020       2021    2017-2021
----------------------------------------------------------------------------------------------------------------
Specified Authorization Levels for
 Appropriations Subject to the BCA Caps:
    Defense (base budget):
        Military Personnela:
            Authorization Level...............    134,850          0          0          0          0    134,850
            Estimated Outlays.................    129,231      3,795        180         39          0    133,245
        Operation and Maintenance:
            Authorization Level...............    203,448          0          0          0          0    203,448
            Estimated Outlays.................    135,344     48,857     10,738      3,267      1,150    199,356
        Procurement:
            Authorization Level...............    103,613          0          0          0          0    103,613
            Estimated Outlays.................     21,035     32,698     24,277     13,199      5,915     97,124
        Research and Development:
            Authorization Level...............     71,630          0          0          0          0     71,630
            Estimated Outlays.................     35,210     26,080      5,216      2,297      1,321     70,124
        Military Construction and Family
         Housing:
            Authorization Level...............      7,952          0          0          0          0      7,952
            Estimated Outlays.................        742      2,105      2,374      1,321        570      7,112
        Revolving Funds:
            Authorization Level...............      2,230          0          0          0          0      2,230
            Estimated Outlays.................      1,202        432        198        170         98      2,100
        General Transfer Authority:
            Authorization Level...............          0          0          0          0          0          0
            Estimated Outlays.................        250       -100        -75        -50        -25          0
        Subtotal, Department of Defense:
            Authorization Level...............    523,722          0          0          0          0    523,722
            Estimated Outlays.................    323,014    113,867     42,908     20,243      9,029    509,061
        Atomic Energy Defense Activities:
            Authorization Levelb..............     19,512          0          0          0          0     19,512
            Estimated Outlays.................     12,873      5,483      1,150          5          1     19,512
        Subtotal, Defense:
            Authorization Level...............    543,234          0          0          0          0    543,234
            Estimated Outlays.................    335,887    119,350     44,058     20,248      9,030    528,573
    Nondefense:
        Department of Veterans Affairs and
         Other Departments and Agencies:
            Authorization Levelc..............        432         22         22         22          0        497
            Estimated Outlays.................        337         77         40         22         10        486
            Subtotal (subject to caps)
                Authorization Level...........    543,666         22         22         22          0    543,731
                Estimated Outlays.............    336,224    119,427     44,098     20,270      9,040    529,059
Specified Authorization Levels for
 Appropriations Not Subject to the BCA Caps:
    Base Budget Activities Designated as
     Overseas Contingency Operations:
        Military Personnela:
            Authorization Level...............      2,623          0          0          0          0      2,623
            Estimated Outlays.................      2,512         73          3          0          0      2,589
        Operation and Maintenance:
            Authorization Level...............      9,211          0          0          0          0      9,211
            Estimated Outlays.................      5,828      2,245        649        209         70      9,001
        Procurement:
            Authorization Level...............     10,728          0          0          0          0     10,728
            Estimated Outlays.................      1,147      3,318      3,048      1,667        766      9,946
        Research and Development:
            Authorization Level...............        452          0          0          0          0        452
            Estimated Outlays.................        200        184         37         15          7        443
        Military Construction:
            Authorization Level...............         38          0          0          0          0         38
            Estimated Outlays.................          1          8         13          8          3         33
            Subtotal: Base Budget Designated
             OCO
                Authorization Level...........     23,052          0          0          0          0     23,052
                Estimated Outlays.............      9,688      5,828      3,750      1,899        846     22,012
    War-Related Activities Designated as
     Overseas Contingency Operations:
        Military Personnel:
            Authorization Level...............      2,200          0          0          0          0      2,200
            Estimated Outlays.................      2,098         70          2          0          0      2,170
        Operation and Maintenance:
            Authorization Level...............     25,944          0          0          0          0     25,944
            Estimated Outlays.................     14,833      6,751      2,321      1,031        336     25,272
        Procurement:
            Authorization Level...............      7,043          0          0          0          0      7,043
            Estimated Outlays.................      2,734      2,147      1,288        519        186      6,874
        Research and Development:
            Authorization Level...............        336          0          0          0          0        336
            Estimated Outlays.................        147        133         29         12          7        328
        Military Construction:
            Authorization Level...............        134          0          0          0          0        134
            Estimated Outlays.................          4         42         46         21          8        121
        Working Capital Funds:
            Authorization Level...............         85          0          0          0          0         85
            Estimated Outlays.................         60         17          7          1          0         85
        Special Transfer Authority:
            Authorization Level...............          0          0          0          0          0          0
            Estimated Outlays.................        113        -45        -34        -23        -11          0
            Subtotal (war related)
                Authorization Level...........     35,741          0          0          0          0     35,741
                Estimated Outlays.............     19,989      9,115      3,659      1,561        526     34,850
                Total Specified Authorizations
                    Authorization Level           602,459         22         22         22          0    602,524
                    Estimated Outlays             365,901    134,370     51,507     23,730     10,412    585,920
----------------------------------------------------------------------------------------------------------------
Notes: This table reflects 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
  affect costs in 2018 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 some
  of those provisions.
Numbers may not add up to totals because of rounding; BCA = Budget Control Act; OCO = Overseas Contingency
  Operations; SBA = Small Business Administration.
aThe authorizations of appropriations for military personnel in sections 421 and 1505 include $6,417 million for
  accrual payments to the Medicare-Eligible Retiree Health Care Fund. CBO estimates, however, that amount
  understates--by $536 million--the amount required for those payments; thus $536 million has been added to the
  estimated cost of the bill, as reflected in Table 1.
bThis authorization is primarily for atomic energy defense activities of the Department of Energy.
cThis reflects 2017 authorizations for the Maritime Administration ($208 million), the Department of Veterans
  Affairs ($122 million), the Armed Forces Retirement Home ($64 million), and the Naval Petroleum Reserves ($15
  million), plus authorizations of $87 million over the 2017-2020 period for the SBA's Women's Business Center
  Program. The authorized amount for the Maritime Administration does not include the $300 million specified in
  the bill for payments to shipping companies under the maritime security program because that amount is already
  authorized under current law for 2017.

    Active-Duty End Strengths. Compared with end strengths 
authorized under current law for 2017, section 401 would 
authorize increases in active-duty personnel for three of the 
four services: 5,000 more for the Army, 1,000 more for the 
Marine Corps, and 285 more for the Air Force. The end strength 
authorized for the Navy would decline by 4,585. CBO estimates 
that the net growth in active-duty personnel of 1,700 service 
members would increase costs to DoD by $1.2 billion over the 
2017-2021 period. The pattern in the yearly costs in Table 3 
reflects the phase-in of those personnel changes and the fact 
that some costs, including retention bonuses, would be paid 
mostly in the earlier years.
    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 increases in end strength: 8,000 more for the Army 
National Guard, 7,000 more for the Army Reserve, 600 more for 
the Navy Reserve, and 200 more for the Air National Guard. End 
strength would decrease for the remaining two components: 400 
fewer for the Marine Corps Reserve and 200 fewer for the Air 
Force Reserve. As part of those changes, the number of full-
time reservists who serve on active duty in support of the 
reserves would decline by 654 compared with current authorized 
end-strength levels for 2017. CBO estimates that, on net, 
implementing those provisions would increase costs for salaries 
and expenses for selected reservists by almost $2.0 billion 
over the 2017-2021 period.
    Reserve Technicians End Strengths. Sections 413 and 414 
would authorize the end-strength levels for military 
technicians. Section 413 sets the minimum end-strength for 
dual-status military technicians, who are federal civilian 
personnel that are required to maintain membership in a 
selected-reserve component as a condition of their employment. 
(The cost to DoD of the reserve pay for dual-status technicians 
is included in the section above.) Section 414 sets the maximum 
end-strength levels for nondual status technicians. The 
combined effect of those sections would be a net reduction in 
reserve technicians of 346. CBO estimates that the combined 
effect of implementing those two sections would decrease costs 
for civilian salaries and expenses by $154 million over the 
2017-2021 period.
    Compensation and Benefits. H.R. 4909 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 $137.5 
billion for the costs of military pay and allowances in 2017. 
For related costs resulting from overseas contingency 
operations (primarily in Afghanistan), the bill would authorize 
appropriations of an additional $2.2 billion for 2017.
    Expiring Bonuses and Allowances. Sections 611 through 615 
would extend for another year DoD's authority to enter into 
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, 2016. Some 
bonuses are paid in lump sum, while others are paid in annual 
or monthly installments over a period of obligated service. 
Based on DoD's budget submission for fiscal year 2017, CBO 
estimates that extending that authority for one year would cost 
$2.0 billion over the 2017-2021 period.
    Temporary Duty Per Diem Allowance. Section 603 would 
prohibit DoD from reducing per diem rates based on the duration 
of temporary duty assignments for service members and DoD 
civilian employees. The per diem allowance compensates 
travelers for the daily cost of lodging, meals, and incidental 
expenses. This section would repeal the policy that the 
Secretary of Defense implemented on November 1, 2014, to pay a 
lower per diem rate for long-term temporary-duty assignments in 
one location. Under that policy, the per diem allowance for 
trips lasting between 31 and 180 days equals 75 percent of the 
locality rate; for trips lasting more than 181 days the per 
diem rate equals 55 percent of the locality rate. This section 
also would reverse similar policies established by the 
Services, which are specific to travel for contingency 
operations. According to DoD, those two policies have reduced 
annual payments for per diem compensation by about $60 million 
and $20 million, respectively. On the basis of that 
information, CBO estimates that implementing section 603 would 
increase costs to DoD by $400 million over the 2017-2021 
period.

                         TABLE 3.--ESTIMATED COSTS FOR SELECTED PROVISIONS IN H.R. 4909
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                  2017a       2018       2019       2020       2021    2017-2021
----------------------------------------------------------------------------------------------------------------
                                                 FORCE STRUCTURE
 
Active-Duty End Strengths.....................         80        327        274        268        274      1,223
Selected-Reserve End Strengths................        219        430        435        442        454      1,980
Reserve Technicians End Strengths.............        -16        -33        -34        -35        -36       -154
 
                                            COMPENSATION AND BENEFITS
 
Expiring Bonuses and Allowances...............        826        480        292        247        147      1,992
Temporary Duty Per Diem Allowance.............         80         80         80         80         80        400
Civilian Benefits in a Combat Zone Department           0         45          0          0          0         45
 of Defenseb..................................
Continuation Payments.........................          0      1,245        580        285        140      2,250
TRICARE Reform................................         50         -5        -15        -35       -110       -115
 
                                                OTHER PROVISIONS
 
Nuclear Refueling and Overhauls of the U.S.S.         249        450        600      1,741      2,560      5,600
 Nimitz Class Carriers........................
Construction of LHA-8 Ship....................      1,623      1,679          0          0          0      3,302
Construction of Lead LX(R) Ship...............        856        644          0          0          0      1,500
Construction of Ship to Shore Connector Craft.        293        333        501        626        654      2,407
Construction of Maritime Training Vessel......        300          0          0          0          0        300
Multiyear Procurement:
    AH-64E Apache Helicopters.................        881        885        981        945        834      4,526
    H-60M Black Hawk Helicopters..............        755        985      1,141        868      1,094      4,843
Athletic Shoes................................         21          7          7          7          8         50
----------------------------------------------------------------------------------------------------------------
Notes: Amounts shown in this table for 2018-2021 are not included in amounts that would be specifically
  authorized by the bill (and therefore are not reflected in Tables 1 and 2). Rather, those amounts would be
  covered by specific authorizations for defense programs in future years.
Numbers may not add up to totals because of rounding.
aWith one exception, the amounts shown in this table for 2017 are included in the amounts that would be
  specifically authorized to be appropriated by the bill (as reflected in Table 2 and summarized in Table 1).
  The exception is for the Maritime Training Vessel, where $85 million (of the estimated $300 million) would be
  specifically authorized to be appropriated by the bill. As a result, only $85 million is included in Table 2,
  with the remaining $215 million added to Table 1.
bThis provision also would increase costs in 2017 for departments and agencies other than DoD by an estimated $9
  million. Those costs are included in Table 1 under ``Estimated Authorizations for Various Departments and
  Agencies.''

    Civilian Benefits in a Combat Zone. Section 1103 would 
extend for one year the authority to grant certain benefits to 
federal civilian employees who perform official duties in a 
combat zone. Those benefits, which expire under current law on 
September 30, 2017, 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 2,400 civilian employees of DoD and 500 employees of 
other federal agencies will work in a designated combat zone in 
2018 and would receive an average benefit that would cost about 
$18,600 a year under this provision. Thus, CBO estimates that 
in 2018, implementing section 1103 would increase the cost to 
DoD of providing benefits to civilian employees by $45 million 
and to other federal agencies by $9 million. (The $9 million 
for other federal agencies is included in the amount shown in 
Table 1 for nondefense estimated authorizations under the 
heading Estimated Authorizations for Various Departments and 
Agencies.)
    Continuation Payments. Section 622 would change several 
features of the continuation payments that are authorized as 
part of the new retirement system--scheduled to go into effect 
during fiscal year 2018--that was established in the National 
Defense Authorization Act for Fiscal Year 2016. Continuation 
payments are lump-sum amounts that are offered to service 
members in exchange for an agreement to remain in the service 
for a specific number of additional years. Most notably, 
section 622 would permit DoD to make continuation payments up 
to four years earlier than under current law.
    Based on information from DoD, CBO expects that the 
department would use this authority to make continuation 
payments two years earlier than under current law, on average--
thereby accelerating into the 2017-2021 period payments that 
will otherwise be made after 2021 under current law. The salary 
on which the average continuation payment is calculated would 
be based on two fewer years of service, and would include two 
fewer military pay increases, reducing the average continuation 
payment by around 10 percent.
    In addition, section 622 would raise the minimum amount of 
continuation pay for reservists from 0.5 to 2.5 months' of 
salary, which would increase the continuation pay offered to 
most enlisted members of the reserves by 400 percent, CBO 
estimates. Under current law, CBO expects that DoD will pay the 
minimum amount to almost all reservists.
    In total, CBO estimates that implementing the changes in 
section 622 would cost $2.2 billion over the 2017-2021 period. 
Of that amount, about $1.2 billion would be for payments to 
active duty members and $1 billion would be for payments for 
reservists.
    TRICARE Reform. Section 701 would make a number of changes 
to TRICARE, the health benefits program for members and 
retirees of the uniformed services and their families. In 
total, CBO estimates that implementing the various changes in 
section 701 would reduce discretionary costs by about $115 
million over the 2017-2021 period.
    TRICARE benefits are provided in the form of several 
different plans, of which the most popular are TRICARE Prime--
an HMO option--and TRICARE Standard/Extra--a fee-for-service 
option where beneficiaries can manage their own care, but pay 
less out of pocket if they use providers that are in the 
TRICARE network.\2\ There are also separate benefit plans for 
members and former members of the selected reserves and for 
retirees, survivors, and their family members who are eligible 
for Medicare; section 701 would not directly modify those 
programs and they are not considered in this estimate.
---------------------------------------------------------------------------
    \2\Beneficiaries in the fee-for-service option can use both network 
and non-network providers. When beneficiaries use a network provider in 
the fee-for-service option they are using the TRICARE Extra benefit; 
when they use a non-network provider they are using TRICARE Standard.
---------------------------------------------------------------------------
    Under current law, active duty members are not charged for 
medical care. Their dependents also face no charges if they 
enroll in Prime, but they do have to pay deductibles and 
coinsurance to use Standard/Extra. Retirees, survivors, and 
their family members are charged enrollment fees and copayments 
to enroll in and use Prime, and they must pay deductibles and 
coinsurance to use Standard/Extra. Section 701 would change how 
TRICARE benefits are provided to some of those groups. In 
addition, the families of service members who begin active duty 
after the end of 2017 would face a different payment structure. 
Two groups would see no changes under this provision: active 
duty service members regardless of when they join the service, 
and the families of service members who joined the service 
prior to the beginning of calendar year 2018. Some of the more 
notable changes are summarized below:
           The TRICARE Standard/Extra option would be 
        renamed TRICARE Preferred. All beneficiaries who 
        currently use Standard/Extra would be required to 
        enroll in either TRICARE Preferred or Prime to maintain 
        their health benefits.
           There would be new TRICARE Prime and TRICARE 
        Preferred enrollment fees for the family members of 
        those active duty members who first join the uniformed 
        services on or after January 1, 2018. Those members and 
        their families also would face higher fees and cost 
        shares if they eventually become eligible for a 
        military retirement annuity and choose to continue to 
        use TRICARE.
           Current retirees, survivors, and their 
        families would face an enrollment fee for those who 
        wish to use TRICARE Preferred. There is no enrollment 
        fee for TRICARE Standard/Extra, the current version of 
        TRICARE Preferred. Otherwise, enrollment fees and cost 
        shares would generally be unchanged for this group.
    Because many of the new fees and higher cost shares would 
only apply to those who join the uniformed services during or 
after calendar year 2018, it would take several decades to 
fully realize the savings from those changes. Most of the 
savings in the first five years would come from the new annual 
enrollment fees for the families of members who first join the 
uniformed services after the start of 2018. In that year, the 
fees for enrollment in TRICARE Prime, which covers about 85 
percent of active duty families, would be $180 for service 
members with only one dependent and $360 for service members 
with multiple dependents. Those new enrollment fees would 
increase over time at the rate of the cost-of-living adjustment 
for military retired pay. In 2018, CBO estimates the new 
enrollment fees would apply to about 20,000 households. That 
figure would increase to about 175,000 households in 2021, as 
more members join the services under the new rules. Those 
figures reflect the fact that while most new service members 
are single, within just a few years of joining a substantial 
number have started families.
    Beginning in 2021, there also would be a new annual fee for 
retiree households who enroll in the new TRICARE Preferred 
option. The new fee would be $100 for those retirees and 
survivors who enroll only themselves and $200 for those who 
also enroll their families. The new fees would increase over 
time at the rate of the cost-of-living adjustment for military 
retired pay. CBO estimates the new enrollment fees would apply 
to about 450,000 households. (There are also currently about 
600,000 retiree households enrolled in TRICARE Prime. Those 
households already pay annual enrollment fees and would be 
unaffected by this proposal.)
    Because DoD is allowed to collect and spend the enrollment 
fees without further appropriation, CBO estimates that the 
higher fees would reduce the amount needed for annual 
appropriations to the Defense Health Program by about $165 
million over the 2018-2021 period. There would be costs in 2017 
for administrative tasks related to the changes, including 
rulemaking, changes to claim processing systems, and the need 
to notify and educate beneficiaries. CBO estimates those tasks 
would cost about $50 million in 2017, which is based on DoD 
estimates of similar proposals to reform TRICARE.
    Section 701 also would affect mandatory spending. Details 
of those effects are discussed below, under the heading 
``Direct Spending.''
    After-Hours Health Care. Sections 704 and 705 would 
increase the availability of after-hours care at military 
treatment facilities, including extended hours for primary care 
providers and urgent care clinics. Also, those enrolled in 
TRICARE Prime would no longer be required to seek authorization 
before using an urgent care clinic. Keeping military treatment 
facilities open longer and allowing TRICARE Prime beneficiaries 
unrestricted access to urgent care facilities would increase 
costs to DoD. However, those costs would be offset by savings 
from less use of more costly after-hours options, including 
emergency rooms. From the available information, CBO cannot 
determine whether the combination of those effects would result 
in a net cost or a net savings to DoD. The Department is about 
to start a pilot program that will hopefully allow more insight 
into how people's behavior patterns change when granted 
improved access to after-hours care, although it may be several 
years before any conclusions can be drawn.

Other provisions

    Nuclear Refueling and Overhauls of U.S.S. Nimitz Class 
Carriers. Section 121 would authorize the Navy to conduct 
nuclear refueling and overhauls on the remaining Nimitz class 
carriers. The bill also would allow the Navy to use incremental 
funding for those overhauls, which would allow them to fund 
those activities over two or more years. The Navy deploys 10 
Nimitz class carriers; those carriers are designated CVN-68 
through CVN-77. The lead ship of the class was commissioned in 
1975 and the last ship was commissioned in 2009. The carriers 
have a service life of about 50 years and are capable of 
operating for nearly 25 years without refueling the nuclear 
reactor cores.
    The first four Nimitz class carriers have already undergone 
nuclear refueling and are back in the fleet. The Congress 
authorized nuclear refueling of the CVN-72 and the CVN-73 in 
the 2012 and 2016 defense authorization bills, respectively. On 
the basis of information provided by the Navy, CBO expects that 
the nuclear refueling and overhauls of the CVN-74 and CVN-75 
carriers would begin during the 2017-2021 period. (Refueling 
and overhauls for the CVN-76 and CVN-77 would begin after 
2021.) Based on that information and accounting for projected 
inflation in the costs of ship construction, CBO estimates that 
implementing section 121 would cost $5.6 billion over the 2017-
2021 period; an additional $5.2 billion would be needed to 
complete the nuclear refueling of the CVN-75 beyond 2021.
    Construction of LHA-8 Ship. Section 123 would allow the 
Navy to enter into a contract, beginning in fiscal year 2017, 
to construct the third Freedom class amphibious assault ship 
(designated LHA-8). The bill also would allow the Navy to use 
incremental funding for construction of the LHA-8. Currently, 
the lead ship of the class, the LHA-6, is in service and 
construction of the second ship (LHA-7) is nearing completion 
and scheduled for delivery in 2019. On the basis of information 
provided by the Navy, CBO estimates that the LHA-8 ship would 
cost about $3.8 billion. The Congress already appropriated 
about $500 million for items that need a long-lead time. Thus, 
CBO estimates that implementing section 123 would cost an 
additional $3.3 billion over the 2017-2018 period.
    Construction of Lead LX(R) Ship. Section 124 would allow 
the Navy to enter into a contract, beginning in fiscal year 
2017, to construct a class of dock landing ships (designated 
LX(R)) that would replace the existing LSD class of dock 
landing ships. The bill also would allow the Navy to use 
incremental funding for that ship. Currently, the Navy plans to 
buy the first ship in 2020. Congress provided $250 million in 
the 2016 defense appropriations bill to accelerate the start of 
construction. The Navy has indicated that the start date for 
construction of the LX(R) cannot be accelerated to 2017, but an 
LPD-17 derivative ship could be built on that schedule; CBO 
expects that the Navy would do that. On the basis of 
information provided by the Navy, and accounting for projected 
inflation in the costs of ship construction, CBO estimates that 
the cost to build an LPD-17 derivative ship would total about 
$1.75 billion. After accounting for appropriations already 
provided for that purpose, CBO estimates that implementing 
section 124 would cost an additional $1.5 billion over the 
2017-2018 period.
    Construction of Ship to Shore Connector Craft. Section 125 
would allow the Navy to enter into a contract, beginning in 
fiscal year 2017, to construct up to 45 Ship to Shore Connector 
craft in addition to the seven craft previously authorized. 
Although the Navy planned to buy only 42 craft over the 2017-
2021 period, CBO expects the Navy would increase that to 45 
craft because the bill would authorize additional funds in 2017 
for that purpose. Based on information from the Navy and 
accounting for projected inflation in the costs of ship 
construction, CBO estimates that implementing section 125 would 
cost $2.4 billion over the 2017-2021 period.
    Construction of Maritime Training Vessel. Section 3506 
would authorize the Maritime Administration (MARAD) to acquire 
a new multipurpose vessel that would be used primarily to train 
midshipmen at state maritime academies. The Navy would oversee 
the contract using funds appropriated to the National Defense 
Sealift Fund. Based on information from MARAD and from the 
Navy, CBO estimates that design and construction of the ship 
would cost $300 million over the 2017-2021 period. The bill 
specifically would authorize appropriations for $85 million of 
that cost (that amount is included in the $543 billion 
specifically authorized for the base budget in Table 1). The 
remaining $215 million is included in the estimated 
authorizations for Defense in Table 1.
    Multiyear Procurement Contracts. The bill would authorize 
the Army to enter multiyear procurement contracts for two 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.
           Section 111 would authorize the Army to use 
        that authority to enter a multiyear contract beginning 
        in fiscal year 2017 to purchase new and remanufactured 
        AH-64E Apache helicopters. The AH-64E is heavy attack 
        helicopter capable of firing missiles and other 
        munitions. On the basis of information from the Army, 
        CBO estimates that under such a contract, the service 
        would buy 275 of those helicopters over the 2017-2021 
        period at a cost of $4.5 billion. (The service 
        estimates that a single multiyear contract would cost 
        $426 million less than five annual contracts.)
           Section 112 would authorize the Army to 
        pursue a multiyear contract beginning in fiscal year 
        2017 to acquire H-60M helicopters. The H-60M is a 
        medium-lift helicopter that is used to transport 
        military personnel and supplies. On the basis of 
        information from the Army, CBO estimates that the 
        service would buy 268 helicopters over the 2017-2021 
        period at a cost of $4.8 billion. (The Army estimates 
        that a single multiyear contract would cost $455 
        million less than five annual contracts.)
    Athletic Shoes. Section 808 would require DoD to issue 
American-made athletic shoes to enlisted personnel arriving for 
initial training. The military services do not currently 
provide such shoes to recruits; new enlistees furnish their own 
running shoes and some of the military services offer a cash 
allowance to defray the expense at a cost of $17 million 
annually. Under section 808, the military would have to stock 
such footwear for issue to recruits.
    DoD brings in approximately 200,000 recruits for initial 
training each year. In the first year the department would need 
to buy a pair for each recruit, back-up inventory to prevent 
shortages, and some additional quantities to ensure it had 
enough shoes in the proper size and model to outfit each 
recruit. On the basis of information from the department, CBO 
expects that DoD would acquire 500,000 pairs of shoes in 2017. 
Thereafter, the department would need to buy about 250,000 
pairs annually to outfit new recruits, to replace shortages in 
particular sizes and models, and to replace inventory that has 
been damaged, degraded, or lost.
    CBO further estimates that the department would spend $95 a 
pair to satisfy the domestic-sourcing requirement. Thus, after 
accounting for the savings from discontinuing the cash 
allowance, requiring DoD to issue American-made shoes at boot 
camp would cost $50 million over the 2017-2021 period.
    Female Registration for Selective Service. Under current 
law, male citizens and certain other men who are residing in 
the United States and who are between the ages of 18 and 26, 
must register with the Selective Service System (SSS). Section 
528 would require women who meet the age and other registration 
requirements to register for the SSS, and thus be eligible for 
a military draft also. Men who fail to register lose 
eligibility for some federal benefits, including student 
financial aid. Under section 528, those limits on eligibility 
for certain federal benefits also would apply to women in the 
same manner as for men.
    Because individuals who have not met their obligation to 
register with the selective service are prohibited from 
receiving federal student aid, CBO projects that enacting the 
bill would reduce eligibility for Pell grants. Based on 
information from the SSS, CBO expects that the requirements for 
registration would be phased in by age group over multiple 
years and that no students would lose eligibility before July 
1, 2018, the start of the academic year. CBO also expects that 
compliance with this new requirement would increase over time. 
However, the number of aid applicants over the age of 25 who 
were required to register but failed to do so would increase 
over time as well. (Those applicants would be unable to 
register after turning 26 and thus could be permanently 
prohibited from accessing federal student aid). Thus, based on 
information about male aid applicants registering with the SSS, 
the number of women applying for federal student aid, and 
accounting for both the phase-in of the requirement to register 
and of knowledge and acceptance of that responsibility, CBO 
projects that the number of students who would no longer 
receive Pell grants under this provision would grow over time, 
from fewer than 3,000 in award year 2018-2019 to more than 
11,000 by 2026-2027.
    Federal funding for Pell grants is provided through both 
annual discretionary appropriations and direct spending 
authority. CBO estimates that enacting H.R. 4909 would reduce 
discretionary spending for Pell grants by $7 million over the 
2018-2021 period. Because the Pell grant program is only 
authorized through fiscal year 2018, that estimate includes 
only the effect on discretionary spending for that year. 
Section 528 also would affect eligibility for the mandatory 
portion of the Pell grant program and student loans, both of 
which are treated as direct spending in the budget. More 
details about the effect of this provision on direct spending 
are provided below under the heading, Direct Spending and 
Revenues. (The $7 million reduction in discretionary spending 
for the Department of Education is included in the amounts 
shown in Table 1 for nondefense estimated authorizations under 
the heading nondefense estimated authorizations.)
    Those reduced discretionary costs would be offset by higher 
costs for the SSS. To meet the new requirement of registering 
women, the SSS would need to hire additional personnel, 
increase office space and equipment, and publicize additional 
materials to make women aware of the new requirement. Based on 
information from the SSS, CBO estimates that although the 
agency could process some initial electronic registrations 
received by females starting in 2017, the bulk of new female 
registrations would begin in 2018 and would ramp up over the 
following four years. The agency would begin to hire and train 
new personnel, and inform women of the new requirement to 
register in 2017. Costs would be higher in the earlier years if 
the SSS shortened the phase-in period. CBO estimates that 
implementing section 528 would increase discretionary costs to 
the SSS by $33 million over the 2017-2021 period. (Those 
discretionary costs are shown in Table 1 under defense 
estimated authorizations.)

Direct spending and revenues

    Several provisions in H.R. 4909 would affect direct 
spending. CBO estimates that enacting the bill would decrease 
outlays by $206 million over the 2017-2026 period (see Table 
4). H.R. 4909 also would affect revenues by insignificant 
amounts over the 10-year period.

                                               TABLE 4.--ESTIMATED EFFECTS OF H.R. 4909 ON DIRECT SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                 -----------------------------------------------------------------------------------------------------------------------
                                                                                                                                        2017      2017
                                    2017      2018      2019      2020      2021      2022      2023      2024      2025      2026      2021      2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
Acquisition Workforce Fund
    Budget Authority............      -475         0         0         0         0         0         0         0         0         0      -475      -475
    Estimated Outlays...........      -113      -120        14        36        20         5         0         0         0         0      -163      -158
Special Survivor Indemnity
 Allowance
    Estimated Budget Authority..         0       240         0         0         0         0         0         0         0         0       240       240
    Estimated Outlays...........         0       220        20         0         0         0         0         0         0         0       240       240
National Defense Stockpile
    Estimated Budget Authority..       -14       -14       -14       -14       -14       -14       -14       -14       -14       -14       -70      -140
    Estimated Outlays...........       -14       -14       -14       -14       -14       -14       -14       -14       -14       -14       -70      -140
Combat-Related Special
 Compensation
    Estimated Budget Authority..         0        -1        -3        -6        -8       -11       -14       -17       -20       -23       -18      -103
    Estimated Outlays...........         0        -1        -3        -5        -8       -12       -14       -16       -20       -23       -17      -102
Female Registration for
 Selective Service
    Estimated Budget Authority..         0        -2        -3        -4        -5        -7        -7        -9        -9       -10       -15       -56
    Estimated Outlays...........         0        -1        -2        -3        -4        -5        -7        -8        -9        -9       -11       -50
Survivor Benefits
    Estimated Budget Authority..         1         1         1         1         1         1         1         2         2         2         5        13
    Estimated Outlays...........         1         1         1         1         1         1         1         2         2         2         5        13
TRICARE Reform
    Estimated Budget Authority..         0         *         *         *        -2        -2        -2        -2        -2        -2        -2       -12
    Estimated Outlays...........         0         *         *         *        -2        -2        -2        -2        -2        -2        -2       -12
Medals of Honor
    Estimated Budget Authority..         1         1         *         *         1         *         *         *         *         *         3         3
    Estimated Outlays...........         1         1         *         *         1         *         *         *         *         *         3         3
    Total Changes in Direct
     Spending
        Estimated Budget              -487       225       -19       -23       -27       -33       -36       -40       -43       -47      -332      -530
         Authority..............
        Estimated Outlays.......      -125        86        16        15        -6       -27       -36       -38       -43       -46       -15      -206
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Several other provisions of H.R. 4909 would affect direct spending by an insignificant amount. Provisions to modify the military justice system
  would increase revenues by an insignificant amount.
Details may not sum to totals because of rounding; * = between -$500,000 and $500,000.

    Acquisition Workforce Fund. Section 1002 would require DoD 
to transfer $475 million in available unobligated balances from 
the Department of Defense Acquisition Workforce Development 
Fund (fund) to the General Fund of the Treasury. Because those 
balances would no longer be available to DoD, outlays would 
decline by $428 million, CBO estimates. However, the department 
is authorized to transfer to the fund unobligated balances from 
appropriations for procurement, research and development, and 
operation and maintenance during the three-year period after 
those appropriations expire. CBO expects that DoD would largely 
offset the proposed transfer of unobligated balances out of the 
fund by transferring such expired balances into the fund, and 
would thereby make those amounts newly available for 
obligation.
    DoD is required by law to deposit at least $400 million 
into the fund each year, and can increase that amount to a 
maximum of $500 million. The department currently plans to 
transfer the minimum amount each year. CBO expects that if the 
balances are reduced, the department would instead transfer the 
maximum amount allowed, an increase of $100 million per year. 
Over the 2017-2019 period, CBO expects that DoD would make such 
transfers from funds that already have been appropriated and 
that would not otherwise outlay under current law. Thus, the 
transfers would increase outlays from those existing 
appropriations by $270 million.
    On net, the transfers into and out of the fund would 
decrease direct spending by $158 million over the 2017-2026 
period.
    Special Survivor Indemnity Allowance. Surviving spouses who 
receive both an annuity as a beneficiary of the Survivor 
Benefit Plan (SBP) as well as Dependency and Indemnity 
Compensation (DIC) from the Department of Veterans Affairs have 
their SBP payments reduced by the amount of DIC. The Special 
Survivor Indemnity Allowance (SSIA) is a payment made to such 
surviving spouses to offset, at least in part, that reduction. 
SSIA is limited to the lesser of $310 or the amount of the SBP 
reduction. The authority for SSIA is set to expire at the end 
of fiscal year 2017. Section 623 would extend it through fiscal 
year 2018.
    Based on the Statistical Report of the Military Retirement 
System, CBO expects that nearly 65,000 surviving spouses would 
receive the SSIA in fiscal year 2018. CBO estimates that 
section 623 would increase direct spending for SSIA by $240 
million over the 2017-2026 period.
    National Defense Stockpile. Two provisions, sections 1411 
and 1412, would modify the authorities under which the National 
Defense Stockpile disposes of and acquires materials. Together, 
enacting those provisions would decrease direct spending by a 
net of $140 million over the 2017-2026 period.
    Section 1411 would provide new authority to sell most of 
the remaining materials in the National Defense Stockpile that 
have been determined to be excess to requirements and no longer 
needed for the stockpile. Those materials were among those that 
had been previously authorized for disposal. The National 
Defense Stockpile reports that all revenue goals required by 
current law will be met in 2016. Without this new authority, 
those materials will remain unsold.
    The materials authorized for sale under this proposal 
include tungsten ores, chromium ferroalloys, chromium metal, 
and platinum. Under this provision, sales of those materials 
would continue until all amounts have been sold. On the basis 
of current market prices for those commodities, recent market 
trends, and the rate at which the National Defense Stockpile 
has historically disposed of such materials, CBO expects that 
this authority would increase sales from the stockpile by $205 
million over the 2017-2026 period. Under this provision, those 
amounts would be deposited (as an offsetting receipt) in the 
National Defense Stockpile Transaction Fund (a mandatory 
account known as the T-Fund, that funds the operations of the 
stockpile).
    Another provision in Section 1411 would modify the 
purchasing authority for the National Defense Stockpile by 
allowing the stockpile manager to spend up to $55 million from 
the T-Fund to purchase several materials over the 2017-2021 
period. All of those materials have been identified as 
necessary to meet military and industrial needs. Based on 
information from DoD, CBO estimates that the T-Fund has 
sufficient balances to cover the costs of those purchases. CBO 
estimates that enacting both the new disposal and purchasing 
authority provisions of section 1411 would, on net, decrease 
direct spending by a total of $150 million over the 2017-2026 
period.
    Section 1412 would amend the Strategic and Critical 
Materials Stock Piling Act to provide greater flexibility to 
manage the stockpile by changing section 4 and section 15 of 
the Act. Under section 4, DoD has the authority to recover 
critical materials from other agencies only when the material 
is in short supply. The Department of Energy is exempt from 
this restriction and routinely allows DoD to recover critical 
materials from their inventory of excess equipment. The 
proposed change to section 4 would provide the same authority 
for the stockpile manager to review, acquire, and manage 
disposal of excess strategic and critical materials for other 
federal agencies as currently exists for materials managed by 
the Department of Energy.
    Under section 15 of the Act, DoD is authorized to certify 
domestically produced materials for purchase at domestic 
facilities in times of national emergencies when existing 
sources are in short supply. Typically, when materials are in 
short supply, defense contractors can buy materials needed to 
build equipment for DoD from the stockpile. By certifying 
domestic facilities, defense contractors could purchase those 
materials directly from the supplier. Based on information from 
DoD, CBO expects that the certifying process would require 
testing of materials at DoD facilities and inspections of the 
defense contractor sites and that those costs would be paid 
from the T-Fund. CBO estimates that the costs for those 
activities would increase direct spending by $1 million in 2017 
and total $10 million over the 2017-2026 period.
    Combat-Related Special Compensation. Military retirees who 
also receive disability compensation from the Department of 
Veterans Affairs for a disability that is rated at less than 50 
percent have their military pension reduced by the amount of 
that compensation. Combat-Related Special Compensation (CRSC) 
restores the military pension for the portion of the disability 
that DoD determines is combat related--but only up to the 
amount of the pension the retiree would have earned based on 
the number of years of service. The National Defense 
Authorization Act for Fiscal Year 2016 established a new 
retirement system that begins in 2018. The new system reduces 
by 20 percent the multiplier for calculating retirement pay 
based on years of service. Section 619 would amend the formula 
that caps CRSC pay to include the effect of that upcoming 
reduction in the retirement multiplier for those service 
members who qualify for a disability retirement under the new 
system.
    Based on information from the Office of the Chief Actuary 
at the Department of Defense, CBO expects that each year about 
1,500 to 2,000 new retirees would have their CRSC reduced under 
section 619. The amount by which monthly benefits would be 
reduced ranges from less than $100 for new retirees with few 
years of service to nearly $500 for new retirees with almost 20 
years of service. (CBO does not expect retirees with 20 years 
of service or more to be affected by this provision.) On that 
basis, CBO estimates that section 619 would reduce direct 
spending for CRSC payments by $102 million over the 2017-2026 
period.
    Female Registration for Selective Service. As discussed 
above under the heading of Spending Subject to Appropriation, 
section 528 would require some women to register for the 
Selective Service System (SSS), and thus be eligible for a 
military draft. Men who fail to register lose eligibility for 
some federal benefits, primarily Pell grants and student loans. 
Under section 528, the registration requirements and 
corresponding limits on eligibility for certain federal 
benefits that currently apply to men also would apply to women.
    CBO projects that the number of students who would no 
longer receive Pell grants and student loans under this 
provision would grow from 3,000 in award year 2018-2019 to more 
than 11,000 by 2026-2027 for each program. The bulk of the Pell 
grant program is classified as discretionary spending (funded 
through annual appropriations), but a significant portion is 
mandatory spending. Mandatory funding for both student loans 
and the mandatory portion of Pell grants is permanent. Over the 
2018-2026 period, CBO estimates that enacting H.R. 4909 would 
reduce direct spending for Pell grants by about $45 million and 
for student loans by about $5 million.
    Additionally, the eligibility of a female lawful permanent 
resident (LPR) to naturalize--that is, to become a U.S. 
citizen--could be delayed for up to five years if the 
Department of Homeland Security found she refused or knowingly 
and willfully failed to register for the draft. (Like citizens, 
LPRs are required to register for the draft.) Naturalization 
affects individuals' eligibility for certain federal benefits 
(such as Supplemental Security Income) and their ability to 
sponsor certain relatives to immigrate to the United States--
both of which could affect direct spending. However, the 
Department of Homeland Security could not provide data about 
why the Department denies LPRs' naturalization applications--
notably about how frequently it denies male LPRs' applications 
because of knowing and willful failure to register for the 
draft. Without such information, CBO cannot estimate the effect 
that section 528 would have on naturalization and any 
consequent decreases in direct spending for federal benefits.
    Survivor Benefits. When service members die in the line of 
duty, their survivors' payment through the Survivor Benefit 
Plan is usually 55 percent of a base amount that reflects the 
retired pay that the member would have been eligible to 
receive, regardless of whether the member had enough years of 
service to retire. For those service members who die while on 
active duty, that base amount is calculated as if the member 
retired with a total disability: 75 percent of their salary. 
For reservists who die during inactive-duty training (the 
weekend duty performed by members of the reserves and National 
Guard), the base amount reflects their years of service, which 
causes the SBP payment to be less than if the member died on 
active duty. Section 624 would eliminate that difference.
    Based on data from DoD regarding deaths during inactive-
duty training and payments to affected survivors, CBO expects 
that nearly 50 current SBP annuitants and 10 new SBP annuitants 
each year would receive higher monthly annuities under section 
624. The average increase in monthly annuities would be more 
than $900 in fiscal year 2017, growing to nearly $1,100 in 
fiscal year 2026. On that basis, CBO estimates that section 624 
would increase direct spending for SBP annuities by $13 million 
over the 2017-2026 period.
    TRICARE Reform. Section 701 would make several changes to 
the TRICARE health benefit, including a new annual fee for 
retirees and their families who enroll in the TRICARE Preferred 
option, as discussed above under the heading, ``Spending 
Subject to Appropriation.'' Health benefits for retirees of the 
other uniformed services (the Coast Guard, the National Oceanic 
and Atmospheric Administration, and the Public Health Service) 
and their family members are paid from mandatory 
appropriations, so any change to their benefits would affect 
direct spending. CBO estimates about 10,000 retirees of the 
other uniformed services would be affected by the new 
enrollment fee (which would start in 2021) of $100 for retirees 
who enroll only themselves and $200 for those who also enroll 
their families. There would be some small changes to mandatory 
spending prior to 2021 because of changes related to cost 
sharing for certain disabled retirees. In total, CBO estimates 
section 701 would reduce mandatory spending by $12 million over 
the 2018-2026 period.
    Medals of Honor. Four sections in the bill would involve 
awarding the Medal of Honor. In total, CBO estimates that those 
four provisions would increase direct spending by $3 million 
over the 2017-2026 period.
    Sections 583 and 584 would authorize awarding the Medal of 
Honor to Gary M. Rose and Charles S. Kettles for acts of valor 
during the Vietnam War. Both recipients would receive a 
mandatory, monthly stipend starting upon the date of enactment 
of this bill. The initial payment would include a lump sum 
amount for payments retroactive to the date of the act of 
valor. CBO estimates that awarding those two Medals of Honor 
would increase direct spending by $1 million in 2017 and by an 
insignificant amount in the following years.
    Section 582 would authorize the award of the Medal of Honor 
for any current or prior service members who are identified as 
warranting the Medal of Honor pursuant to the review of valor 
directed by the Secretary of Defense on January 7, 2016, for 
military service during Operation Enduring Freedom, Operation 
Iraqi Freedom, Operation New Dawn, Operation Freedom's 
Sentinel, and Operation Inherent Resolve. Based on information 
from DoD, CBO estimates that the review of valor would result 
in additional awards of the Medal of Honor--some of which would 
be non-posthumous--starting in 2018. Living Medal of Honor 
recipients are entitled to a lifetime stipend. CBO estimates 
that payments of monthly stipends for those awards, including 
the retroactive lump sums, would increase direct spending by $1 
million in 2018 and by an insignificant amount in the following 
years.
    Section 581 would require the Secretary of Defense to 
conduct a review of the service records of certain veterans who 
previously earned specified awards for service during the 
Korean or Vietnam Wars to determine if that service warrants an 
award of the Medal of Honor. Eligible veterans would be those 
of Asian American, Native American, or Pacific Island descent. 
In addition, veterans of the Korean or Vietnam Wars who did not 
receive a medal could apply within one year from the date of 
enactment of this bill for a similar review. If the Secretary 
determines that any of those veterans should receive the Medal 
of Honor, this section would authorize that award.
    On the basis of information from DoD, CBO estimates that 
under section 581, DoD would recommend award of the Medal of 
Honor to additional war veterans in 2021, that some of those 
awards would be non-posthumous, and that payments of the 
associated stipend to those veterans would increase direct 
spending by $1 million in 2021 and by an insignificant amount 
in the following years.
    Military Justice Reform. Division E would make a number of 
changes to the Uniform Code of Military Justice (UCMJ) 
affecting activities across the entire military justice system. 
Those changes would include: modifying the composition of 
courts-martial; amending pre-trial, trial, and post-trial 
procedures; codifying a number of offenses currently charged 
under Article 134 of the UCMJ (General Article); and 
introducing new specific offenses. Based on information from 
the Department of Defense, changes to certain punitive articles 
would provide a more effective and efficient means for DoD to 
prosecute certain crimes. Because most of the new and newly 
codified offenses are currently chargeable under existing 
articles of the UCMJ, CBO estimates that the increase in the 
number of prosecutions attributable to those provisions would 
be small and that any resulting fines and forfeitures would 
total less than $500,000 over the 2017-2026 period. Fines and 
forfeitures adjudged against enlisted service members, warrant 
officers, and limited duty officers are classified as revenues 
and deposited in the Armed Forces Retirement Home Trust Fund. 
Spending of those amounts would be subject to future 
appropriation.
    Operating Authority of the Defense Commissary Agency 
(DeCA). Section 631 would amend chapter 147 of title 10, United 
States Code to allow DeCA to set prices for merchandise sold in 
commissaries based on market conditions and customer demand. 
Under current law, DeCA is required to set prices at levels 
necessary to recoup the actual cost of the merchandise plus any 
costs to replace inventory that has been damaged, degraded, or 
lost.
    Based on information from DoD, CBO expects that DeCA will 
implement this provision by offering private label goods (i.e. 
retailer exclusive items) under a variable pricing program. 
Section 631 would allow DeCA to add a markup to those private 
label goods and use the proceeds to offset its operating costs. 
Proceeds from the markup in prices would decrease direct 
spending by less than $500,000 over the 2017-2026 period, CBO 
estimates.
    Other Provisions. Other provisions in the bill would have 
insignificant effects on direct spending or revenues, generally 
because very few people would be affected or because the 
proposal would allow the spending of new receipts so that the 
net effect would be small.
           Section 321 would temporarily allow the Army 
        to enter 25-year agreements at certain government-
        owned, contractor-operated industrial plants. The Army 
        has permanent authority for such contracts at 
        ammunition plants and depots. The authority to enter 
        such agreements at industrial plants would expire in 
        2021. Similar long-term agreements have resulted in 
        mandatory obligations to make payments in subsequent 
        years, but CBO does not expect the Army would use this 
        temporary authority in that manner.
           Section 502 would modify rules related to 
        the selective early retirement or discharge of military 
        personnel. In certain circumstances, those changes 
        might affect by a small amount the number of former 
        service members drawing retired pay in a given year.
           Section 545 would impose the same standard-
        of-proof threshold on military whistleblower cases as 
        is currently used for federal civilians who claim to 
        have been subjected to unlawful reprisals for 
        whistleblower activities. CBO estimates that enacting 
        that section would result in an increased number of 
        substantiated claims and allow those victims of 
        reprisals to receive retroactive payments, benefits, or 
        awards that were improperly denied.
           Sections 704 and 705 would change the access 
        to after-hours care for certain TRICARE beneficiaries. 
        This could change the usage patterns of retirees of the 
        other uniformed services and their family members, 
        whose health benefits are paid for with mandatory 
        appropriations.
           Section 721 would allow DoD to sell hearing 
        aids to dependents of former members of the uniformed 
        services at the government's cost of providing that 
        service. Because DoD would not be authorized to retain 
        and spend those receipts, CBO expects it would not 
        implement this provision.
           Section 722 would authorize DoD to accept 
        and spend reimbursements from state governments for 
        providing TRICARE health benefits to certain full-time 
        reservists during state disaster response duty.
           Section 731 would change the manner in which 
        the Coast Guard reimburses DoD for medical care 
        received by coast guard personnel in Military Treatment 
        Facilities. This could affect the timing of certain 
        payments from the Coast Guard to DoD, which could cause 
        small variations federal outlays.
           Section 745 would authorize DoD to carry out 
        a pilot program whereby DoD's lowest cost for 
        prescription drugs would be extended to retail 
        pharmacies. Based on information from DoD, CBO expects 
        there is a very low probability that DoD would exercise 
        that authority.
           Section 837 would allow the Secretary of the 
        Navy to close out old contracts upon receipt of about 
        $500,000 from the contractor that would be deposited 
        into the Treasury. In the absence of this authority, 
        these matters would likely remain unresolved over the 
        2017-2026 period.
           The Federal Aviation Administration's 
        authority to offer nonpremium insurance to air carriers 
        that participate in the Civil Reserve Air Fleet (CRAF) 
        expires on December 31, 2018. Section 1043 would extend 
        that authority for one year. Providing insurance 
        without charging an actuarially sound premium would be 
        a mandatory obligation. Based on historical data on the 
        cost of covered losses that have occurred, however, CBO 
        estimates that a one-year extension would have no 
        significant effect on the budget.
           Section 1221 would extend DoD's authority to 
        accept and use contributions from foreign governments 
        to provide assistance to certain Syrian opposition 
        groups.
           Section 2804 would extend the period during 
        which DoD could accept and spend contributions from 
        Kuwait for certain military construction projects. 
        Those contributions are classified as mandatory 
        offsetting receipts.
           Sections 2831, 2832, and 2833 would 
        authorize the exchange or conveyance of several parcels 
        of federal property. DoD could be reimbursed for 
        administrative costs and could also receive cash 
        compensation for the value of the property. Those 
        receipts would be available for expenditure.
           Section 2851 would allow DoD to accept and 
        spend cash donations to establish and operate a 
        cryptology museum at Fort Meade, Maryland. Those 
        contributions are classified as offsetting receipts.
           Section 3508 would modify the Maritime 
        Administration's authority to dispose of certain 
        vessels, which could affect offsetting receipts from 
        sales of such vessels to firms that dismantle and 
        recycle them. Current law authorizes MARAD to spend all 
        such receipts, without further appropriation, for 
        certain maritime-related activities.
    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 Table 5.

                    TABLE 5.--PAY-AS-YOU-GO EFFECTS FOR H.R. 4909 AS REPORTED BY THE HOUSE COMMITTEE ON ARMED SERVICES ON MAY 4, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 By fiscal year, in millions of dollars
                                               ---------------------------------------------------------------------------------------------------------
                                                 2016    2017    2018   2019   2020   2021   2022    2023    2024    2025    2026   2016-2021  2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact................      0     -125     86     16     15     -6     -27     -36     -38     -43     -46       -15       -206
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source:Congressional Budget Office.

    Intergovernmental and private-sector impact: H.R. 4909 
contains intergovernmental and private-sector mandates as 
defined in UMRA. CBO estimates the costs of the 
intergovernmental mandates would not exceed the threshold 
established in UMRA ($77 million in 2016, adjusted annually for 
inflation). CBO estimates that the costs to the private sector 
of complying with the mandates in the bill would probably fall 
below the annual threshold established in UMRA for private-
sector mandates ($154 million in 2016, adjusted annually for 
inflation).

Mandates that apply to both public and private entities

    Increasing the End Strength of Active Duty Forces. Section 
401 would increase the costs of complying with existing 
intergovernmental and private-sector mandates by increasing the 
number of service members on active-duty by 1,900 relative to 
currently authorized levels. Those additional service members 
would be eligible for existing protections under the Service 
members Civil Relief Act (SCRA).
    SCRA allows service members to maintain a single state of 
residence for purposes of paying state and local personal 
income taxes and to request deferrals for certain state and 
local fees. CBO estimates that the additional cost of those 
mandates on state and local governments would be small.
    SCRA also requires creditors to charge no more than 6 
percent interest rate on service members' loan obligations when 
the acquisition of such obligations predates active-duty 
service, and allows courts to temporarily stay certain civil 
proceedings, such as evictions, foreclosures, and 
repossessions. The act also precludes the use of a service 
member's personal assets to satisfy the member's trade or 
business liability while he or she is in military service.
    The number of active-duty service members covered by SCRA 
would increase by less than 1 percent, CBO estimates. Service 
members' utilization of the various provisions of the SCRA 
depends on a number of uncertain factors, including how often 
and how long they are deployed. While some of the SCRA 
protections might affect many service members, the cost per 
person could be relatively small. On the other hand, other SCRA 
protections--such as precluding the use of a service member's 
personal assets to satisfy certain liabilities--could have 
large per-person costs in some instances. Because the increase 
in the number of active-duty service members covered by SCRA 
would be so small, on balance CBO expects that the increased 
costs for private-sector entities also would probably be small 
relative to the annual threshold for the private sector.
    Notice of Construction Affecting National Security. Section 
343 would impose a mandate on public and private entities 
seeking to build or modify structures, such as towers or 
landfills, near airports by requiring those entities to notify 
the FAA if construction would affect national security 
interests. Under current law, entities are required to provide 
such notices to protect public safety and preserve navigable 
airspace. Based on information about the current number of 
notices and the low cost of submitting the necessary form, CBO 
estimates that the costs of the mandate would be small.

Mandates and other effects on public entities only

    Preemptions of State and Local Laws. The bill contains two 
preemptions of state and local authority. Because preemptions 
limit the authority of state and local governments, they are 
considered intergovernmental mandates under UMRA. However, CBO 
estimates that the preemptions would impose no duty that would 
result in additional spending or a loss of revenues by state, 
local, or tribal governments:
           Section 1642 would preempt state or local 
        laws requiring disclosure of information to the public 
        in cases where the Department of Defense has shared 
        information concerning critical infrastructure with 
        state or local governments and designated the 
        information as sensitive; and
           Section 3609 would preempt state and local 
        laws relating to ballast water and other discharges of 
        vessels by establishing a national uniform standard and 
        set of best management practices.
    Other Effects on Public Entities. The bill would allow the 
Department of Defense to continue providing financial 
assistance to local educational agencies that benefit 
dependents of armed forces personnel and DOD civilian 
employees. It also would authorize senior military colleges to 
enter into partnerships with local educational agencies to 
develop cyber skills among local students. Any costs those 
agencies might incur would result from participation in a 
voluntary federal program.
    The bill would benefit state, local, and tribal 
governments, as well as other public entities, in Alaska, 
California, Texas, Utah, and Washington by authorizing several 
land conveyances and exchanges between the federal government 
and those entities. Any costs to those entities resulting from 
such transactions would be incurred voluntarily.
    Finally, Section 528 would expand the requirement to 
register for the Selective Service to include all female U.S. 
citizens between the ages of 18-26. Many states have enacted 
laws that support compliance with the federal registration 
requirement; for example, some states currently require male 
citizens to prove that they are registered for the Selective 
Service in order to be eligible for a driver's license. To the 
extent that states choose to support the expansion of the 
Selective Service to women by updating their own laws and 
regulations, they would incur additional administrative costs; 
however, those costs would be incurred voluntarily and would 
not stem from a mandate under UMRA.

Mandates that apply to private entities only

    Selective Service Registration. Section 528 would require 
women between the ages of 18 and 26 to register with Selective 
Service. Enrollment, either online or by U.S. mail, is a quick 
process. Therefore, CBO estimates that the cost to the several 
million women that would be required to register annually would 
be small.
    Eliminating a Right of Action Related to Activities on 
Federal Land. Section 3014 would impose a private-sector 
mandate by eliminating an individual's existing right to seek 
compensation from the federal government for damages occurring 
in the course of any authorized nondefense-related activity 
conducted on BLM land. Under current law private entities may 
seek compensation from the United States in a federal court for 
damages committed by persons acting on behalf of the United 
States. The cost of the mandate would be the forgone value of 
awards and settlements in such claims. Information from the 
Department of the Interior indicates that few, if any, of those 
types of claims related to activities on BLM land are brought 
against the United States. Because such claims would probably 
continue to be uncommon, CBO estimates that the cost of the 
mandate would be small.
    Certification of Water Treatment Technology. Title XXXVI 
would prohibit manufacturers and importers of certain water 
treatment technology from selling such technology unless it has 
been certified by the U.S. Coast Guard or a foreign entity and 
deemed to meet equivalent levels of performance and safety. The 
cost of the mandate would be the cost of obtaining 
certification and any net loss of income from forgone sales. 
Under current law, manufacturers of water treatment technology 
already need to obtain Coast Guard certification. If the 
certification process under this bill is very similar to the 
certification process conducted under current law, the 
incremental cost of complying with the mandate would be small, 
but they could be higher. On balance, CBO expects the cost of 
the private-sector mandate would probably not be substantial 
relative to the annual threshold.
    Increase in long-term direct spending and deficts: CBO 
estimates that enacting H.R. 4909 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2027.
    Estimate prepared by: Federal Costs: Defense 
Authorizations--Kent Christensen; Military and Civilian 
Personnel--Dawn Regan; Military Construction--David Newman; 
Military Health Care--Matthew Schmit; Military Retirement and 
Immigration--David Rafferty; Operation and Maintenance--William 
Ma; Procurement--Raymond J. Hall and David Newman; Selective 
Service--Justin Humphrey and Leah Koestner.
    Impact on State, Local, and Tribal Governments: Jon Sperl.
    Impact on the Private Sector: Elizabeth Bass and Paige 
Piper/Bach.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.