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115th Congress }                                          { Rept. 115-200
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { Part 2

======================================================================
 
        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2018

                                _______
                                

 July 11, 2017.--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. 2810]

      [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. 
2810), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on July 6, 
2017 (H. Rept. 115-200, 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, July 10, 2017.
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. 2810, the National 
Defense Authorization Act for Fiscal Year 2018.
    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. 2810--National Defense Authorization Act for Fiscal Year 2018

    Summary: H.R. 2810 would authorize appropriations totaling 
an estimated $689 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, the bill 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 $669 billion over the 2018-
2022 period.
    If the total amount authorized for 2018 was appropriated, 
$613.8 billion would count against that year's defense cap set 
in the Budget Control Act (BCA), as amended; $0.6 billion would 
count against the nondefense cap for 2018; and $74.6 billion 
designated for overseas contingency operations would not be 
constrained by caps.
    The bill also contains provisions that would affect the 
costs of defense programs funded through discretionary 
appropriations in 2019 and future years. Those provisions 
mainly would affect force structure, compensation and benefits, 
the military health system, 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 $80 billion over the 2019-2022 period. The net costs of 
those provisions in 2019 and beyond 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.
    Several provisions of H.R. 2810 would have insignificant 
effects on direct spending and revenues over the 2018-2027 
period, primarily as a result of changes to military health 
care benefits, allowing DoD to dispose of property and use the 
proceeds from those transactions, and adding a specified 
offense under the military justice system. CBO estimates that 
in total the direct spending and revenue effects of enacting 
the bill would not be significant over the 2018-2027 period. 
Because enacting the bill would affect direct spending and 
revenues, pay-as-you-go procedures apply.
    CBO estimates that enacting H.R. 2810 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 2810 contains intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that the aggregate cost of the mandates would 
fall below the annual thresholds established in UMRA for 
intergovernmental and private-sector mandates ($78 million and 
$156 million respectively in 2017, adjusted annually for 
inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary effects of H.R. 2810 are shown in Table 1. Almost all 
of the $689 billion authorized by the bill would be for 
activities within budget function 050 (national defense).
    Some authorizations, however, fall within other budget 
functions, including, $278 million for the Maritime 
Administration in function 400 (transportation); $127 million 
for the Small Business Administration in function 370 (commerce 
and housing credit); $124 million for the Department of the 
Interior in function 800 (general government); $116 million for 
a medical facility demonstration fund in function 700 (veterans 
benefits and services); $64 million for the Armed Forces 
Retirement Home in function 600 (income security); and $5 
million for the Naval Petroleum Reserves in function 270 
(energy).
    Basis of estimate: For this estimate, CBO assumes that H.R. 
2810 will be enacted near the start of fiscal year 2018 and 
that the authorized and that estimated amounts will be 
appropriated near the beginning of each fiscal year.

Spending Subject to Appropriation

    For 2018, the bill would authorize an estimated $688.9 
billion, primarily for defense programs. Nearly all of that 
amount ($688.6 billion) would be specifically authorized by the 
bill (see Table 2). The remaining $0.3 billion largely reflects 
CBO's estimate of the amount not specifically authorized by the 
bill that would be necessary to fund certain accrual payments 
required under current law.

      TABLE 1. BUDGETARY EFFECTS OF H.R. 2810, THE NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2018a
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2018       2019       2020       2021       2022    2018-2022
----------------------------------------------------------------------------------------------------------------
                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Levels for Appropriations
 Subject to the BCA Caps:
    Defense:
        Specified Authorizations for the
         Departments of Defense and Energy:
            Authorization Levelb..............    613,457          0          0          0          0    613,457
            Estimated Outlays.................    364,876    142,742     53,242     24,885     10,342    596,087
        Estimated Authorization for Additional
         Accrual Paymentsc:
            Estimated Authorization Level.....        296          0          0          0          0        296
            Estimated Outlays.................        296          0          0          0          0        296
    Nondefense:
        Specified Authorizations for Various
         Departments and Agenciesb,d:
            Authorization Level...............        609         22         22         22          0        674
            Estimated Outlays.................        456         99         59         44          5        663
        Estimated Authorizations for Various
         Departments and Agenciese:
            Estimated Authorization Level.....         13         24          4          4          4         50
            Estimated Outlays.................         10         22          7          4          4         47
            Subtotal
                Estimated Authorization Level.    614,375         46         26         26          4    614,477
                Estimated Outlays.............    365,638    142,863     53,308     24,934     10,351    597,093
Specified Authorizations for Defense
 Appropriations not Subject to the BCA Caps
    Authorization Levelb,f....................     74,560          0          0          0          0     74,560
    Estimated Outlays.........................     39,695     19,090      7,661      3,542      1,686     71,674
    Total
        Estimated Authorization Level.........    688,934         46         26         26          4    689,037
        Estimated Outlays.....................    405,333    161,953     60,969     28,476     12,037    668,767
----------------------------------------------------------------------------------------------------------------
Notes: Except as discussed in footnotes 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 2019 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 reflect funding for those activities.
Numbers may not add to totals because of rounding; BCA = Budget Control Act; MERHCF = Medicare-Eligible
  Retirement Health Care Fund; NDAA = National Defense Authorization Act; SBA = Small Business Administration.
aIn addition to increasing spending subject to appropriation, the bill would have an insignificant effect on
  direct spending and revenues over the 2018-2028 period.
bAmounts that would be specifically authorized by the bill.
cCBO's estimate of the added cost of certain accrual payments to the MERHCF required under current law but not
  fully reflected in the amounts specifically authorized by sections 421 and 1505 of the bill.
dAuthorizations for the Maritime Administration ($278 million), the Compact for Free Association with Palau
  ($124 million), the Department of Veterans Affairs ($116 million), the SBA Women's Business Center Program
  ($87 million over the 2018-2021 period), the Armed Forces Retirement Home ($64 million) and the Naval
  Petroleum Reserves ($5 million).
eAuthorizations reflect the cost of extending certain benefits, in section 1108, to federal civilian workers who
  perform official duties in a combat zone and are employed by departments and agencies other than the
  Department of Defense ($10 million in 2019). Also included are costs to the SBA from sections 1701, 1703, and
  1721 ($40 million over the 2018-2022 period). Other provisions in title XVII would result in costs to the SBA;
  however, due to time constraints CBO was not able to complete an estimate for those provisions.
fAuthorizations of appropriations that would be designated for Overseas Contingency Operations. Under the bill,
  $64,566 million would be authorized for contingency costs related to military operations and related
  activities in Afghanistan, Iraq and elsewhere, while another $9,994 million would be authorized for costs of
  `base requirements' not directly related to those missions.


                        TABLE 2. SPECIFIED AUTHORIZATIONS OF APPROPRIATIONS IN H.R. 2810
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2018       2019       2020       2021       2022    2018-2022
----------------------------------------------------------------------------------------------------------------
Specified Authorization Levels for
 Appropriations Subject to the BCA Caps:
    Defense:
        Military Personnela:
            Authorization Level...............    141,870          0          0          0          0    141,870
            Estimated Outlays.................    131,886      8,078        182         38          0    140,184
        Operation and Maintenance:
            Authorization Level...............    226,229          0          0          0          0    226,229
            Estimated Outlays.................    150,490     54,146     11,769      3,336      1,295    221,036
        Procurement:
            Authorization Level...............    128,823          0          0          0          0    128,823
            Estimated Outlays.................     24,963     40,440     31,138     16,791      7,256    120,588
        Research and Development:
            Authorization Level...............     84,038          0          0          0          0     84,038
            Estimated Outlays.................     41,202     31,757      6,222      2,968        909     83,058
        Military Construction and Family
         Housing:
            Authorization Level...............      9,585          0          0          0          0      9,585
            Estimated Outlays.................        816      2,164      2,714      1,759        886      8,339
        Revolving Funds:
            Authorization Level...............      2,108          0          0          0          0      2,108
            Estimated Outlays.................      1,726        314         43         15          8      2,106
        General Transfer Authority:
            Authorization Level...............          0          0          0          0          0          0
            Estimated Outlays.................        125        -50        -38        -25        -12          0
            Subtotal, Department of Defense:
                Authorization Level...........    592,654          0          0          0          0    592,654
                Estimated Outlays.............    351,208    136,849     52,030     24,882     10,342    575,311
    Atomic Energy Defense Activities:
        Authorization Levelb..................     20,803          0          0          0          0     20,803
        Estimated Outlays.....................     13,668      5,893      1,212          3          0     20,776
        Subtotal, Defense:
            Authorization Level...............    613,457          0          0          0          0    613,457
            Estimated Outlays.................    364,876    142,742     53,242     24,885     10,342    596,087
    Nondefense
        Department of Veterans Affairs and
         Other Departments and Agencies:
            Authorization Levelc..............        609         22         22         22          0        674
            Estimated Outlays.................        456         99         59         44          5        663
            Subtotal (subject to caps):
                Authorization Level...........    614,066         22         22         22          0    614,131
                Estimated Outlays.............    365,332    142,841     53,301     24,929     10,347    596,750
Specified Authorization Levels for Defense
 Appropriations not Subject to the BCA Capsd:
        Military Personnela:
            Authorization Levele..............      5,124          0          0          0          0      5,124
            Estimated Outlays.................      4,746        306          7          1          0      5,060
        Operation and Maintenance:
            Authorization Levele..............     48,653          0          0          0          0     48,653
            Estimated Outlays.................     30,130     12,574      3,342        941        381     47,368
        Procurement:
            Authorization Levele..............     17,963          0          0          0          0     17,963
            Estimated Outlays.................      3,730      5,180      3,936      2,442      1,239     16,527
        Research and Development:
            Authorization Levele..............      2,085          0          0          0          0      2,085
            Estimated Outlays.................        946        843        174         71         23      2,057
        Military Construction:
            Authorization Level...............        637          0          0          0          0        637
            Estimated Outlays.................         11        192        213         99         49        564
        Working Capital Funds:
            Authorization Level...............         99          0          0          0          0         99
            Estimated Outlays.................         69         20          8          1          0         98
        Special Transfer Authority:
            Authorization Level...............          0          0          0          0          0          0
            Estimated Outlays.................         63        -25        -19        -13         -6          0
            Subtotal (not subject to caps):
                Authorization Level...........     74,560          0          0          0          0     74,560
                Estimated Outlays.............     39,695     19,090      7,661      3,542      1,686     71,674
                Total Specified
                 Authorizations:
                  Authorization Level.........    688,626         22         22         22          0    688,691
                  Estimated Outlays...........    405,027    161,931     60,962     28,471     12,033    668,424
----------------------------------------------------------------------------------------------------------------
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 2019 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; SBA = Small Business
  Administration.
aThe authorizations of appropriations for military personnel in sections 421 and 1505 include $7,849 million for
  accrual payments to the Medicare-Eligible Retiree Health Care Fund. CBO estimates, however, that amount
  understates--by $296 million--the amount required for those payments; thus $296 million has been added to the
  estimated cost of the bill, as reflected in Table 1.
bPrimarily for atomic energy defense activities of the Department of Energy.
cAuthorizations for the Maritime Administration ($278 million), the Compact for Free Association with Palau
  ($124 million), the Department of Veterans Affairs ($116 million), the Armed Forces Retirement Home ($64
  million), and the Naval Petroleum Reserves ($5 million), plus authorizations of $87 million over the 2018-2021
  period for the SBA 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 2018.
dUnder H.R. 2810, funding provided for 2018 pursuant to the authorizations in title XV would not be subject to
  the BCA cap on defense appropriations for that year. Most authorizations in title XV are for costs related to
  overseas contingency operations (OCO)--primarily the costs of military operations and related activities in
  Afghanistan, Iraq, and elsewhere in the world; under the bill, however, some authorizations in that title
  would cover costs not directly related to OCO (see footnote e).
eAuthorized levels in title XV would not be subject to the 2018 BCA cap on defense appropriations because they
  would be designated for overseas contingency operations (OCO). However, of the $74,560 million designated for
  OCO, the following amounts would be used--according to the bill--for ``base requirements'', that is,
  requirements not directly related to the costs contingency operations in Afghanistan, Iraq, and elsewhere in
  the world: military personnel ($1,062 million); operation and maintenance ($2,107 million); procurement
  ($6,047 million); and research and development ($779 million).

    Under H.R. 2810, $613.4 billion specifically authorized for 
defense programs would, if appropriated, be subject to the 2018 
BCA cap for defense. Another $74.6 billion specifically 
authorized for DoD--largely for costs related to overseas 
contingency operations--would not be subject to that cap. For 
nondefense programs, the bill would specifically authorize $0.6 
billion for several departments and agencies.
    The total amount that would be specifically authorized for 
defense programs is an increase of $62.3 billion (or 10 
percent) compared to amounts appropriated for 2017. Procurement 
would receive the largest increase ($23.2 billion, or 19 
percent), followed by operation and maintenance ($15.2 billion, 
or 6 percent), research and development ($13.1 billion, or 18 
percent), military personnel ($7.5 billion, or 5 percent), and 
military construction and family housing ($2.1 billion, or 25 
percent). Authorized funding for all other categories combined 
would increase by $1.2 billion (or 5 percent).
    H.R. 2810 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, the military health system, and 
authorities related to the 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 need for discretionary 
appropriations in future years.
    Force Structure. The bill would affect the force structure 
of the various military services by setting end-strength levels 
for 2018 and modifying the minimum end-strength levels 
authorized in permanent law.
    Under title IV, the authorized end strengths in 2018 for 
active-duty personnel and personnel in the selected reserves 
would total 1,324,000 and 829,900, respectively. Of those 
selected reservists, 78,626 would serve on active duty in 
support of the reserves. In total, active-duty end strength 
would increase by 18,100 and selected-reserve end strength 
would increase by 9,700 when compared with levels authorized 
under current law for 2018. The specified end-strength levels 
for each component of the armed forces are detailed below with 
CBO's estimates of the effects of those changes on DoD's 
personnel and operation and maintenance costs.
    Active-Duty End Strengths. Compared with end strengths 
authorized under current law for 2018, section 401 would 
authorize increases in active-duty personnel for three of the 
four services: 10,000 more for the Army, 4,100 more for the Air 
Force, and 4,000 more for the Navy. The end strength authorized 
for the Marine Corps would remain unchanged at 185,000. CBO 
estimates that the net growth in active-duty personnel of 
18,100 service members would cost $12.3 billion over the 2018-
2022 period, assuming appropriations are increased by that 
amount.

                          TABLE 3. ESTIMATED COSTS FOR SELECTED PROVISIONS IN H.R. 2810
----------------------------------------------------------------------------------------------------------------
                                                            By fiscal year, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   2018       2019       2020       2021       2022    2018-2022
----------------------------------------------------------------------------------------------------------------
                                                 FORCE STRUCTURE
 
Active-Duty End Strengths.....................      1,466      2,616      2,663      2,736      2,810     12,291
Selected-Reserve End Strengths................        311        635        652        672        692      2,962
Reserve Technicians End Strengths.............        -13        -26        -26        -27        -28       -120
 
                                            COMPENSATION AND BENEFITS
 
Expiring Bonuses and Allowances...............      1,510        842        346        265        104      3,067
Higher Basic Allowance for Housing............        155         55          0          0          0        210
Separate Moves for Military Families..........         10         20         21         22         22         95
Temporary Duty Per Diem Allowance.............         80         80         80         80         80        400
Civilian Voluntary Separation Incentive Pay...          0        125        125        125          0        375
Civilian Benefits in a Combat Zonea...........          0         45          0          0          0         45
 
                                             MILITARY HEALTH SYSTEM
 
Overseas Hospitals............................         10         25         25         25         25        110
Transitional Health Benefits..................          8          8          9          9         10         44
Physical Exams................................          3          4          4          4          4         19
 
                                                OTHER PROVISIONS
 
Multiyear Procurement Contracts:
    Virginia Class Submarines.................      2,864      7,180      8,870      7,430      7,880     34,224
    Arleigh Burke Destroyers..................      5,538      6,190      6,020      5,830      5,660     29,238
    V-22 Osprey Aircraft......................        473        631        653        796        929      3,482
Nuclear Refueling and Overhaul of the U.S.S.           76        460        630      2,040      2,430      5,636
 Nimitz Class Carriers........................
----------------------------------------------------------------------------------------------------------------
Notes: Amounts shown in this table for 2018 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). Amounts shown in this table
  for 2019-2022 would not be specifically authorized by the bill (and therefore are not reflected in Tables 1
  and 2); rather, those amounts would be covered by specified authorizations in future National Defense
  Authorization Acts.
Numbers may not add to totals because of rounding.
aThis provision also would increase costs in 2019 for departments and agencies other than the Department of
  Defense by an estimated $10 million. Those costs are included in Table 1 under ``Estimated Authorizations for
  Various Departments and Agencies.''

    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, five of the six reserve components would 
experience increases in end strength: 4,000 more for the Army 
Guard, 3,000 more for the Army Reserve, 1,000 more for the Navy 
Reserve, 900 more for the Air Guard, and 800 more for the Air 
Force Reserve. End strength for the Marine Corps Reserve would 
stay the same. As part of those changes, the number of full-
time reservists who serve on active duty in support of the 
reserves would grow by 2,275. CBO estimates that, on net, 
implementing those provisions would increase costs for selected 
reservists by $3.0 billion over the 2018-2022 period.
    Reserve Technicians End Strengths. Section 413 sets the 
end-strength for dual-status military technicians, who are 
federal civilian personnel required to maintain membership in a 
selected-reserve component as a condition of their employment. 
On net, section 413 would reduce the number of dual status 
technicians by 254. CBO estimates a decrease in costs for 
civilian salaries and expenses from fewer dual status positions 
of $120 million over the 2018-2022 period. (Changing the number 
of dual status technicians would not change the number of part-
time reservists established in section 411, discussed above. 
Thus, the only budget effects would be the reduction in 
civilian compensation.)
    Compensation and Benefits. H.R. 2810 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 $141.9 
billion for the costs of military pay and allowances in 2018. 
For related costs resulting from overseas contingency 
operations (primarily in Afghanistan), the bill would authorize 
the appropriation of an additional $5.1 billion for 2018.
    Expiring Bonuses and Allowances. Sections 611 through 615 
would extend for another year DoD's authority to enter 
agreements to pay certain bonuses and allowances to military 
personnel. The authority to enter into such agreements is 
currently scheduled to expire on December 31, 2017. Some 
bonuses are paid in a 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 2018, CBO 
estimates that extending that authority for one year would cost 
$3.1 billion over the 2018-2022 period.
    Higher Basic Allowance for Housing. Section 602 would delay 
by one year a planned reduction in the housing allowance paid 
to service members residing in housing constructed under the 
Military Housing Privatization Initiative (MHPI). Basic 
allowance for housing (BAH) is based on the average cost of 
specific types of housing in the areas around members' assigned 
duty stations within the Unites States. Under current law, DoD 
is authorized to reduce the portion of housing costs covered by 
BAH by up to 4 percent in 2018--a 1 percent increase from the 3 
percent reduction authorized for 2017. That reduction will 
affect all service members receiving BAH: those who live in 
MHPI housing (usually on base) and those who live in housing in 
the private market (usually off base). Under section 602, the 
additional 1 percent reduction in BAH that would affect new 
rates in January 2018 would not occur. The authority to further 
reduce BAH would resume in 2019 and affect rates in January of 
that year. CBO estimates that the one year delay in the 
reduction of BAH, if applied only to service members living in 
MPHI housing, would cost roughly $50 million in 2018 and $20 
million in the first three months of 2019.
    However, DoD reports that calculating and processing two 
sets of BAH rates--one for those residing in MHPI housing 
without the 1 percent additional reduction in BAH and one for 
those living in private-sector homes with the 1 percent 
additional reduction--would be difficult to implement, 
especially by January 2018. Also, DoD is not in favor of paying 
different BAH amounts dependent upon whether service members 
live on or off base. Based on DoD's concerns, CBO expects that 
DoD would likely apply the delayed reduction in BAH under this 
section to all recipients of BAH, not just those living in MHPI 
housing. Thus, CBO estimates that delaying the reduction in BAH 
until 2019 would cost $155 million in 2018 and $55 million in 
2019.
    Separate Moves for Military Families. Section 603 would 
authorize higher housing allowances for certain service members 
during a relocation period that would cover the six months 
preceding and following the date that a member is ordered to 
report to a new duty station. During that period, members whose 
families move before or after the member's reporting date would 
receive BAH for whichever military housing area would be 
higher--the BAH rate for the prior duty location or the rate 
for the new duty location--for the period that the family would 
live separately, up to six months. Members would be eligible 
for this benefit if the separate moves assisted the family in 
matters related to schooling, employment, or health care. Based 
on an analysis of information from DoD, CBO estimates that 
about 13,000 families a year would receive an incremental BAH 
payment of roughly $500 a month for three months. On that 
basis, CBO estimates that providing the higher BAH to those 
service members would cost $95 million over the 2018-2022 
period.
    Temporary Duty Per Diem Allowance. Section 604 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. The section would repeal the per diem 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 the policy, the per diem allowance for 
travel lasting between 31 and 180 days is 75 percent of the 
locality rate; for trips lasting more than 180 days the rate is 
55 percent. The section also would reverse similar per diem 
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. Based on 
that information, CBO estimates that implementing section 604 
would cost $400 million over the 2018-2022 period.
    Civilian Voluntary Separation Incentive Pay. Section 1102 
would extend DoD's authority to increase the amount of lump-sum 
payments that DoD can offer to civilian employees to entice 
them to separate voluntarily; that amount would increase from 
the previous ceiling of $25,000 to $40,000 for an additional 
three years. The authority to pay up to $40,000 is currently 
scheduled to expire on September 30, 2018. On the basis of 
information from DoD, CBO estimates that about 5,900 DoD 
civilian employees would receive voluntary separation incentive 
payments (VSIP) of $40,000 on average starting in 2019. CBO 
estimates that under current law 75 percent of those civilian 
employees will take VSIP at the lower capped amount of $25,000. 
Thus, the incremental cost to DoD for those 4,400 employees 
would be $15,000. CBO expects that the remaining 1,500 
employees would not take VSIP at the lower rate and thus DoD 
would face the full cost of $40,000 for those employees. On 
that basis, CBO estimates that temporarily raising the cap on 
VSIP to $40,000 would cost $375 million over the 2018-2022 
period.
    Civilian Benefits in a Combat Zone. Section 1108 would 
extend for one year the authority to grant certain benefits to 
federal civilian employees who perform official duty in a 
combat zone. Those benefits, which expire under current law on 
September 30, 2018, include death gratuities, paid leave and 
travel for one trip home, and up to three leave periods per 
year for rest and recuperation. On the basis of 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 
2019 and, under this provision, would receive an average 
benefit that would cost about $18,900 a year. Thus, CBO 
estimates that in 2019, section 1108 would increase the costs 
of civilian employees of DoD by $45 million and of other 
federal employees by $10 million.
    Military Health System. Title VII would make several 
changes to health benefits for members of the armed forces. In 
total, those changes would increase costs for health care by 
about $170 million over the 2018-2022 period, CBO estimates.
    Overseas Hospitals. Section 712 would prevent all military 
hospitals that are overseas from reducing the types of 
inpatient services that they currently provide. The immediate 
effect of this provision would be to prevent the planned 
reorganization and downsizing of several military hospitals in 
Italy, which is scheduled to be completed as early as 2019. 
Based on an analysis of information from DoD, CBO estimates the 
planned reorganization will save DoD about $25 million per 
year. Therefore, implementing section 712 would cost $110 
million over the 2018-2022 period.
    Transitional Health Benefits. Section 503 would expand 
health care benefits for reserve members who are involuntarily 
activated to perform support work. Those members would be 
allowed to receive full TRICARE benefits in the six months 
before and after being activated. Based on an analysis of 
information from DoD, CBO estimates that about 2,000 reserve 
members are activated each year using the authority referenced 
by the bill. The annual cost for a household that uses the 
TRICARE health benefit is currently about $12,000 per year. 
However, many reserve members have access to other health 
insurance and would not use the full benefit, so the 
incremental cost to the government for the additional 
households covered by section 503 would be about $4,000. In 
total, CBO estimates that implementing section 503 would cost 
about $44 million over the 2018-2022 period.
    Physical Exams. Section 701 would allow certain members 
separating from a reserve component to receive a voluntary 
physical exam. To be eligible for the physical, the member must 
have served at least 30 days on active duty in support of a 
contingency operation in the two years prior to separation. 
Based on an analysis of data from DoD, CBO estimates that about 
6,400 separating reserve members would be eligible for the 
physical authorized by this section. Take-up rates for 
voluntary medical exams vary, but given that the members would 
receive orders for the physical and could get paid for their 
time, CBO estimates that about 50 percent of the eligible 
population would volunteer for a separation physical. CBO 
further estimates that the cost of each exam would be about 
$1,000, which includes the cost of the medical procedures that 
would most likely be part of the exam, as well as the cost of a 
day's worth of pay and benefits for those who volunteer to have 
the physical. In total, implementing section 701 would cost 
about $19 million over the 2018-2022 period, CBO estimates.
    Hyperbaric Oxygen Therapy. Section 703 would authorize DoD 
to provide hyperbaric oxygen therapy (HBOT) to service members 
with post-traumatic stress disorder (PTSD) or traumatic brain 
injuries (TBI). If DoD chose to offer this treatment, the costs 
could be significant. Based on an analysis of information from 
DoD, CBO estimates the annual cost to staff and operate HBOT 
equipment would be about $1 million per facility. If multiplied 
by each of the approximately 50 military treatment facilities 
that could house such equipment, the costs could be as high as 
$50 million per year. However, based on information from DoD 
and a review of recent studies, CBO expects that DoD would not 
choose to offer this treatment for PTSD and TBI.\1\
---------------------------------------------------------------------------
    \1\For a summary of some of the studies that looked at HBOT for the 
treatment of PTSD and TBI see Government Accountability Office, Defense 
Health Care: Research on Hyperbaric Oxygen Therapy to Treat Traumatic 
Brain Injury and Post-Traumatic Stress Disorder, GAO-16-154 (December 
2015), http://www.gao.gov/assets/680/674334.pdf.
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Other Provisions

    Multiyear Procurement Contracts. The bill would authorize 
the Navy to enter multiyear procurement contracts for four 
major programs. Multiyear procurement is a special contracting 
method authorized in current law 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 124 would authorize the Navy to enter a 
multiyear contract to purchase up to 13 Virginia-class 
submarines beginning in 2019 and to make advance purchases of 
equipment for those vessels beginning in 2018. On the basis of 
information from the Navy, CBO estimates that under that 
authority the Navy would purchase 10 submarines over the 2019-
2022 period and that those submarines would cost about $34 
billion over the 2018-2022 period. (The remaining three 
submarines would be purchased in 2023 at a cost of roughly $9 
billion.) Currently, the Navy is constructing Virginia-class 
submarines under a multiyear contract, but that authority will 
expire in 2018. (The Navy estimates that buying the submarines 
under a multiyear contract lowers costs by about $300 million 
for each submarine when compared to five annual contracts.)
     Section 125 would authorize the Navy to enter a 
multiyear contract to purchase up to 15 Arleigh Burke-class 
destroyers beginning in 2018. On the basis of information from 
the Navy, CBO estimates that under that authority the Navy 
would purchase 15 destroyers over the 2018-2022 period and that 
those ships would cost about $29 billion. Currently, the Navy 
is buying those destroyers at a rate of two ships a year under 
a multiyear contract, but that authority will expire at the end 
of 2017. (The Navy estimates that buying the destroyers under a 
multiyear contract lowers costs by about $200 million a ship 
when compared to single year purchases.)
     Section 128 would authorize the Navy to enter a 
multiyear contract beginning in fiscal year 2018 to purchase V-
22 Osprey aircraft. The V-22 is a tiltrotor aircraft that can 
take off and land vertically and is capable of carrying 
personnel and equipment. On the basis of information from the 
Navy, CBO estimates that under such a contract the service 
would buy 65 of those aircraft over the 2018-2024 period. The 
contract would cost $3.5 billion over the 2018-2022 period and 
a total of $5.7 billion through 2024. (The service estimates 
that a single multiyear contract would cost about $600 million 
less than five annual contracts.)
     Section 123 would authorize the Navy to enter a 
multiyear contract for up to six polar icebreaking vessels on 
behalf of the Coast Guard. The Congress appropriated $150 
million in 2017 for the design of the first new icebreaker. The 
Coast Guard plans to award a contract for that effort in 2019 
and expects construction of the vessel to begin after 2020 once 
the detailed designs are substantially complete. The Coast 
Guard's preliminary estimate for the cost of a new icebreaker 
is about $1 billion. Construction of the first vessel would 
take approximately three years. Because multiyear procurement 
contracts are typically not awarded until several production 
lots have been completed, CBO does not expect that the Coast 
Guard will use the multiyear-contract authority in section 123 
until after 2022.
    Nuclear Refueling and Overhaul of the U.S.S. Nimitz Class 
Carriers. Section 121 would authorize the Navy to conduct 
nuclear refueling and overhauls of the remaining Nimitz class 
carriers. The bill also would allow the Navy to fund the 
refueling and overhauls over several years (incremental 
funding). The Navy deploys 10 Nimitz class carriers (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 carriers have already undergone a 
nuclear refueling and are back in the fleet. The Congress 
authorized the Navy to conduct a nuclear refueling for the CVN-
72 in the 2012 defense bill and for the CVN-73 in the 2016 
defense bill. Based on an analysis of information provided by 
the Navy, CBO expects that funding would be needed in the 2018-
2022 period for refueling and overhauling the CVN-74 and CVN-
75. Funding for the CVN-76 and CVN-77 would be needed after 
2022. CBO estimates that implementing section 121 would cost 
$5.6 billion over the 2018-2022 period. In addition, roughly $5 
billion would be needed in years after 2022 to complete the 
nuclear refueling of the CVN-75.

Direct Spending and Revenues

    Several provisions in H.R. 2810 would have effects on 
direct spending or revenues, but those effects would be 
insignificant, 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 523 would create a new specified offense 
under the military justice system that would provide a more 
effective and efficient means for DoD to prosecute individuals 
who wrongfully broadcast or distribute intimate visual images; 
any penalties collected under this provision would be 
classified as revenues.
     Section 721 would extend the authority for DoD to 
carry out a pilot program whereby retail pharmacies could buy 
prescription drugs at DoD's lowest cost for those drugs through 
2019. DoD has not used the current authority to implement such 
a pilot program and, based on information from DoD, CBO expects 
that there is a very low probability that DoD would use the 
extended authority.
     Section 722 would require DoD to carry out a pilot 
program to provide counseling and assistance to TRICARE 
beneficiaries with complex medical conditions. The pilot 
program could affect the cost of health benefits for retirees 
of the Coast Guard, Public Health Service, and the National 
Oceanic and Atmospheric Administration, and their dependents; 
those benefits are paid from mandatory appropriations.
     Section 1062 would delay by nine months (from 
January 2020 to October 2020) the time when H-2B nonimmigrant 
(or temporary) workers hired in Guam or the Northern Marianas 
begin to count against the nationwide cap on H-2B workers. 
Thus, the provision would result in more aliens receiving H-2B 
status and working in one of the 50 states or Washington, D.C., 
where they can receive emergency Medicaid benefits and health-
insurance subsidies under the Affordable Care Act, if they 
otherwise qualify.
     Section 1222 would extend DoD's authority to 
accept and spend contributions from foreign governments to 
assist the military and security forces of, or associated with, 
the government of Iraq to counter threats posed by the Islamic 
State of Iraq and the Levant.
     Section 1276 would extend DoD's authority to 
accept and spend contributions from Australia, Canada, New 
Zealand, and the United Kingdom to operate a joint security 
cooperation program with those countries.
     Section 2824 would authorize the Army to sell 
certain real property near U.S. Army Natick Soldier Systems 
Center and use the proceeds to build new housing at that 
installation.
     Section 2862 would authorize the Chief Operating 
Officer of the Armed Forces Retirement Home to lease out 
underused property at the home. Such property can currently be 
leased out by the Secretary of Defense. Those leases would 
increase offsetting receipts to the Armed Forces Retirement 
Home Trust Fund, which are recorded as reductions in direct 
spending. Additionally, some leases include in-kind 
consideration such as the construction of new facilities that 
could result in mandatory obligations to make payments in 
subsequent years. Those obligations are treated as an increase 
in direct spending. CBO expects enacting section 2862 would 
accelerate the process for new leases but would not increase 
the total number of leases that would be approved over the 
2018-2027 period.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. CBO estimates that in total enacting the bill would 
have an insignificant effect on net direct spending and 
revenues over the 2018-2027 period.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting H.R. 2810 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    Intergovernmental and private-sector impact: H.R. 2810 
contains intergovernmental and private-sector mandates as 
defined in UMRA. CBO estimates that the aggregate cost of the 
mandates on public and private entities would fall below the 
annual thresholds established in UMRA for intergovernmental and 
private-sector mandates ($78 million and $156 million 
respectively in 2017, adjusted annually for inflation).

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 
about 20,000 relative to currently authorized levels. Those 
additional service members would be eligible for existing 
protections under the Servicemembers Civil Relief Act (SCRA). 
Protections under SCRA require public and private entities to 
grant active-duty personnel various allowances for business and 
tax transactions and court procedures.
    For example, SCRA allows service members to maintain a 
single state of residence for 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 it 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.
    Under the bill, the number of active-duty service members 
covered by SCRA would increase by less than 2 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. 
However, the increase in the number of active-duty service 
members covered by SCRA would be small, so CBO estimates that 
the incremental cost of compliance for private entities also 
would be small relative to the annual threshold for the private 
sector.

Exclusion

    CBO has determined that section 573 of H.R. 2810 is 
excluded from review for mandates under UMRA. That section 
would allow service members to vote in federal, state, and 
local elections in the state where they are stationed for 
military orders instead of in their state of permanent 
residence. UMRA excludes from the application of that act any 
legislative provisions that enforce the constitutional rights 
of individuals. Because section 573 would protect the rights of 
individuals to vote, CBO has not reviewed it for 
intergovernmental or private-sector mandates.
    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; Small 
Business Administration--Stephen Rabent.
    Impact on state, local, and tribal governments: Zach Byrum.
    Impact on the private sector: Paige Piper/Bach, Heidi 
Golding, and Adebayo Adedeji.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                                  [all]