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116th Congress    }                                 {    Rept. 116-442
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                 {           Part 2


                            FISCAL YEAR 2021


 July 16, 2020.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


    Mr. Smith of Washington, from the Committee on Armed Services, 
                        submitted the following

                          SUPPLEMENTAL REPORT

                        [To accompany H.R. 6395]

      [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. 
6395), as reported, which was not included in part 1 of the 
report submitted by the Committee on Armed Services on July 9, 
2020 (H. Rept. 116-442, 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 16, 2020.
Hon. Adam Smith,
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. 6395, the William 
M. (Mac) Thornberry National Defense Authorization Act for 
Fiscal Year 2021.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matt Schmit.
                                         Phillip L. Swagel,


    Estimated budgetary effects of the bill would primarily 
stem from
           Authorizing appropriations in 2021 totaling 
        $732.4 billion for the military functions of the 
        Department of Defense and for the Department of 
        Energy's atomic energy defense activities
           Authorizing appropriations totaling $1.3 
        billion over the 2021-2025 period for nondefense 
        activities, mainly for the Maritime Administration
           Offering paid leave for certain employees in 
        federally funded jobs following the birth, adoption, or 
        foster placement of a child
           The bill would impose intergovernmental and 
        private-sector mandates by increasing the authorized 
        end strength for active duty personnel and requiring 
        defense-related industries to share intelligence about 
        cybersecurity incidents
    Areas of significant uncertainty include
           Predicting the amount of new family leave 
        federal employees would substitute for other leave 

Bill summary

    H.R. 6395 would authorize appropriations totaling $733.7 
billion over the 2021-2025 period. Almost all of that amount, 
$732.4 billion, would be specifically authorized for 2021 for 
the military functions of the Department of Defense (DoD) and 
for the atomic energy defense activities of the Department of 
Energy. CBO estimates that appropriation of all authorized 
amounts would result in outlays of $710.5 billion over the 
2021-2025 period.
    In addition, CBO estimates that enacting H.R. 6395 would 
have an insignificant effect on direct spending and revenues 
over the 2021-2030 period.

Estimated Federal cost

    The estimated budgetary effects of H.R. 6395 are shown in 
Table 1. Of the $733.7 billion that would be authorized over 
the 2021-2025 period, nearly all--$732.4 billion--would be for 
activities within budget function 050 (national defense).
    The other $1.3 billion would fall within budget functions 
400 (transportation), 700 (veterans benefits and services); 600 
(income security); and 270 (energy).

Basis of estimate

    For this estimate, CBO assumes that H.R. 6395 will be 
enacted near the start of fiscal year 2021 and that the 
authorized amounts will be appropriated each fiscal year. 
Outlays were estimated using historical spendout rates.

Spending subject to appropriation

    H.R. 6395 would specifically authorize appropriations 
totaling $733.7 billion for the 2021-2025 period.
    For defense programs, $732.4 billion would be authorized 
for 2021, of which $663.4 billion would, if appropriated, count 
against that year's defense cap set in the Budget Control Act 
of 2011, as amended. The remaining $69.0 billion would be 
authorized for appropriations designated for overseas 
contingency operations (primarily for activities in and around 
Afghanistan, Iraq, and Syria) and not counted against the cap.
    The bill would authorize the following amounts for 2021:
           $289.3 billion for operation and maintenance 
        (including revolving funds);
           $162.4 billion for military personnel;
           $139.1 billion for procurement;
           $106.8 billion for research and development;
           $26.7 billion for atomic energy activities; 
           $8.2 billion for military construction and 
        family housing.
    In total, the amount that would be authorized for defense 
programs in 2021 is $14.8 billion (or 2 percent) less than the 
$747.2 billion appropriated for 2020. The amount appropriated 
for 2020 includes $18.6 billion in emergency funding--$10.6 
billion provided in response to the novel coronavirus pandemic 
and $8.0 billion provided in response to natural disasters.
    Excluding that emergency funding, H.R. 6395 would authorize 
$3.8 billion more than was appropriated for 2020, an increase 
of less than 1 percent. Authorizations for three categories of 
spending would increase--military personnel by $7.6 billion (5 
percent), atomic energy activities by $2.6 billion (11 
percent), and research and development by $2.5 billion (2 
percent). Conversely, authorized funding for three categories 
would decrease--procurement by $4.3 billion (3 percent), 
military construction and family housing by $3.8 billion (32 
percent), and operation and maintenance by $0.8 billion (less 
than 1 percent).
    For nondefense programs, the bill would authorize $1.3 
billion over the 2021-2025 period, which includes the following 
           $1,082 million for the Maritime 
           $137 million for a medical facility 
        demonstration fund that is jointly managed by the 
        Department of Veterans Affairs and DoD;
           $70 million for the Armed Forces Retirement 
        Home; and
           $13 million for the Naval Petroleum 

Direct spending and revenues

    Enacting H.R. 6395 would have insignificant effects on net 
direct spending and revenues over the 2021-2030 period, CBO 
    Section 1101 would provide 12 weeks of paid leave following 
the birth, adoption, or foster placement of a child to 
employees of the District of Columbia's courts and its Public 
Defender Service, the Federal Aviation Administration, the 
Transportation Security Administration, and the Department of 
Veterans Affairs. That leave also would be available to judges 
at courts established under Article I of the Constitution, and 
to employees of the Executive Office of the President and at 
the residences of the President and Vice President.\1\ Those 
changes would increase costs by allowing employees to use paid 
rather than unpaid leave, or by allowing employees who 
currently would use paid annual and sick leave instead to defer 
that leave for later use. Employees who as a result accrue more 
unused sick leave would receive higher federal pensions if they 
retire. However, because relatively few employees who would use 
that leave will be eligible to retire before 2031, CBO 
estimates that the additional payments would increase direct 
spending by less than $500,000 over the 2021-2030 period.\2\
    \1\The Transportation Security Administration, and the Department 
of Veterans Affairs intend to use the discretion that is available to 
those agencies under current law to provide paid parental leave to 
employees beginning in fiscal year 2021, regardless of whether H.R. 
6395 is enacted. CBO expects that providing those benefits will 
increase costs, but because the departments' plans for providing such 
leave are the same as those that would be required by the bill, CBO 
estimates that implementing section 1101 would not affect the budget 
for those departments.
    \2\CBO estimates that implementing section 1101 would increase 
personnel costs by $170 million over the 2021-2025 period; that 
spending would be subject to appropriation of the estimated amounts.
    Several provisions would affect retirement benefits for 
military personnel, but none of those provisions would 
significantly affect direct spending. Some members of the 
reserve components will be unable to complete their annual 
requirement for military training because of the pandemic 
emergency. Under section 514, the time those service members 
were scheduled to train would be credited towards their reserve 
retirement benefits. Relatively few reservists would earn 
additional retirement pay over the 2021-2030 period because of 
that provision, CBO estimates. Section 521 would expand DoD's 
ability to recall military retirees to active duty during 
wartime or national emergency. Retirees recalled to duty 
initially forego their retired pay; at the completion of their 
recall, their retirement pay is increased based on that 
additional duty. However, CBO expects that provision would 
primarily affect how the department recalls retirees to active 
duty but not how many retirees it would recall. Section 523 
would require DoD to provide retirement credit, in some cases, 
for time spent in education under the Seaman to Admiral-21 
program. Few service members would earn additional retirement 
pay over the 2021-2030 period because of that provision, CBO 
    Several other provisions in H.R. 6395 would affect net 
direct spending and revenues by an insignificant amount each 
year and in total over the 2021-2030 period, generally because 
very few people would be affected, or because the proposals 
would allow the Department of Defense to collect and spend new 
receipts so that the net effect would be small. Sections 229 
and 531 would increase the amount of fines and penalties 
collected by the government. Those fines and penalties, which 
are classified as revenues, would total less than $500,000 over 
the next 10 years, CBO estimates. Section 548 would increase 
such fines and penalties for some service members and decrease 
them for others; we estimate that the net effect of those 
changes would be insignificant.


    Some uncertainty is associated with the long-term costs of 
section 1101. The costs of federal pensions depend on the 
amount of paid parental leave that employees would substitute 
for sick leave. The costs also depend on the future size and 
demographic makeup of the federal workforce.

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 the net effects 
of H.R. 6395 on direct spending and revenues would be 
insignificant over the 2021-2030 period.

Increase in long-term deficits

    CBO estimates that enacting H.R. 6395 would not increase 
on-budget deficits by more than $5 billion in any of the four 
consecutive 10-year periods beginning in 2031.


    H.R. 6395 contains intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that the aggregate cost of complying with the 
mandates would not exceed the annual thresholds established in 
UMRA ($84 million and $168 million, respectively, in 2020, 
adjusted annually for inflation).
    CBO has not reviewed two sections of the bill for 
intergovernmental or private-sector mandates. Section 4 of UMRA 
excludes from the application of that act any legislative 
provision that would establish or enforce statutory rights 
prohibiting discrimination. CBO has determined that subtitle B 
of title XI falls within that exclusion because it would 
enforce protections for federal employees against 
discrimination on the basis of race, color, religion, sex, 
national origin, age, or handicapped condition. Section 4 of 
UMRA also excludes any provision that enforces Constitutional 
rights. CBO has determined that section 1751 falls within that 
exclusion because it would enforce the right of citizens to 

Mandate that applies to public and private entities

    Section 401 would increase the costs of complying with 
existing intergovernmental and private-sector mandates by 
increasing the number of active-duty service members by about 
12,000 relative to currently authorized levels. Those 
additional service members would be eligible for protections 
under the Servicemembers Civil Relief Act (SCRA). Those 
protections require public and private entities to grant 
active-duty military 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. SCRA also requires creditors to charge no more than 
6 percent interest on a service member's loan obligations if 
the loan was originated before the service member began active 
duty, and it allows courts to temporarily stay certain civil 
proceedings, such as evictions, foreclosures, and 
repossessions. SCRA also prohibits lenders from using a service 
member's personal assets to satisfy a trade or business 
liability during a period of military service.
    Under the bill, the number of active-duty service members 
covered by SCRA would increase by about 1 percent, CBO 
estimates. Service members' use of the various provisions of 
SCRA depends on such factors as the frequency and duration of 
deployment. The increase in the number of active-duty service 
members covered by SCRA would be small, and CBO estimates that 
the incremental cost of compliance for public or private 
entities also would be small.

Mandate that applies to private entities

    Section 1632 would require the Secretary of Defense to 
establish a program that, among other activities, would be used 
by the government and companies that develop military weapon 
systems to communicate cybersecurity threats. Under current 
law, companies that contract with DoD must report certain 
cybersecurity incidents. The bill would require all companies 
involved in developing such weapon systems to report 
cybersecurity incidents--thus imposing a mandate on domestic 
companies without active DoD contracts. The cost of the mandate 
would depend on the complexity of the reporting requirements 
and on the number of incidents. However, because the provision 
would affect only certain companies in the defense industry 
without a department contract, CBO estimates that the cost of 
compliance would be small.

Previous CBO estimate

    On July 1, 2020, CBO transmitted a cost estimate for S. 
4049, the National Defense Authorization Act for Fiscal Year 
2021, as reported by the Senate Committee on Armed Services on 
June 23, 2020. For fiscal year 2021, H.R. 6395 would authorize 
the appropriation of $733.5 billion--$2.1 billion more than the 
$731.4 billion that would be authorized by S. 4049. In 
addition, S. 4049 would increase direct spending by an 
estimated $488 million over the 2021-2030 period (primarily for 
provisions that would allow DoD to waive health care 
regulations during the pandemic emergency and provide hazardous 
duty pay for service members responding to that pandemic); H.R. 
6395 does not contain those provisions and would have 
insignificant effects on direct spending and revenues over 
those ten years.

Estimate prepared by

    Federal Costs: Kent Christensen, Sunita D'Monte, Ann 
Futrell, Raymond Hall, Paul B.A. Holland, Aaron Krupkin, 
William Ma, Aldo Prosperi, David Rafferty, Dan Ready, Dawn 
Regan, Matt Schmit, and Logan Smith.
    Mandates: Brandon Lever and Fiona Forrester.
    Production: Brittany Phillips.

Estimate reviewed by

    David Newman, Chief, Defense, International Affairs, and 
Veterans' Affairs Cost Estimates Unit; Kathleen FitzGerald, 
Chief, Public and Private Mandates Unit; Leo Lex, Deputy 
Director of Budget Analysis; Theresa Gullo, Director of Budget