H.R. 4576 - DEPARTMENT OF DEFENSE APPROPRIATIONS
BILL, FY 2001
(Sponsors: Young (R), Florida; Lewis (R), California)

This Statement of Administration Policy provides the Administration's views on the Department of Defense Appropriations Bill, FY 2001, as reported by the House Committee. As the House develops its version of the bill, your consideration of the Administration's views would be appreciated.

The Committee bill provides about $4 billion more for Department of Defense programs in FY 2001 than requested by the President. The President's fiscal and spending priorities provide a balanced approach that maintains fiscal discipline, eliminates the national debt, and extends the solvency of Social Security and Medicare. Providing additional funds for defense in excess of the significant increases sought by the President over FY 2000 levels would reduce resources for non-defense programs that are also critical to our Nation's future.

Health Care for Medicare-Eligible Military Retirees

The Committee has provided $94 million for the new Medicare-eligible retiree pharmacy benefit proposed by the House Armed Services Committee. As the President stated last month, he believes strongly that military retirees -- as well as all other retirees -- must have access to voluntary, affordable prescription drug coverage. However, the Administration is concerned that this funding level will not cover the cost of the program, which we estimate to be close to $200 million in FY 2001. We urge the Congress to fully fund this proposal, especially in the context of funds already provided in this bill.

The Administration has similar concerns with the lack of funding provided for the proposed extension and expansion of the TRICARE Senior Prime (Medicare subvention) demonstration program. We estimate the costs of expanding this program nationwide to be $350 million per year to the Department of Defense alone. We believe strongly that health care coverage for our military retiree population is critically important. However, the Defense Health Program already faces significant challenges in managing expanding benefits in the face of fiscal constraints, which would only be compounded by the need to fund these new programs.

Expansion of the Medicare subvention demonstration, as provided in the House-passed DoD Authorization bill, would also have significant costs to Medicare, which would diminish the solvency of the Trust Funds and require an offset. CBO has estimated that costs to Medicare would be $285 million over the next five years and $945 million over the next ten years. The Administration believes costs may be even higher, depending on how the provision is implemented. Additionally, the Administration is concerned about expanding the demonstration without evaluating it first. A lower cost, more prudent policy would be to extend the existing demonstration for only one or two years to complete the evaluation before making decisions about expansion.

Joint Strike Fighter

The Administration opposes the $300 million reduction to the request to initiate the engineering and manufacturing development (EMD) for the Joint Strike Fighter (JSF) and the addition of $150 million to extend the demonstration and validation phase of the project. The Committee is apparently concerned that the JSF will enter EMD before it is ready, and the bill would mandate a delay in the start of EMD. The bill also includes an objectionable legislated restriction on the use of funds to develop a new ejection seat for the JSF. The Department of Defense intends to conduct a thorough evaluation and testing of the program before starting the EMD phase. The Committee's actions would limit the Department's managerial flexibility and would be potentially disruptive to the program. We urge the House to delete the restrictive language and to fund the JSF as requested by the President.

Army Transformation

The President's FY 2001 request reflects a careful balance between the Service's current and future warfighting needs. The request includes sufficient funds for the Army to initiate its transformation effort in a prudent manner and continue it at a sustainable rate. Furthermore, the Administration is concerned that section 8115 of the bill would limit the President's flexibility in developing an FY 2002 request, as well as a long-range plan, that continues to balance competing priorities. We urge the House to delete this provision.

Cooperative Threat Reduction

The Committee has eliminated funding for the construction of a chemical weapons destruction facility at Schuch'ye, Russia. The nerve agent at this site is in small, modern munitions that are easily transported and mated to delivery systems that exist throughout the world. They are highly desirable weapons for both terrorists and states of concern and represent a serious proliferation risk. It is vital to U.S. security to assist Russia in eliminating these munitions. In view of the threat posed by these weapons, and the progress we have made both with Russia and with the international community in meeting infrastructure requirements at the site, the Administration strongly urges the House to reinstate funding for this critical program.

Unrequested Funding for Procurement and R&D

Much of the additional funding in the Committee bill is for unrequested procurement and R&D programs, funding that comes at the expense of more urgent needs. The President's FY 2001 request meets the $60 billion procurement target established in the Quadrennial Defense Review (QDR) and represents a balanced approach to modernization. The bill would add funding for several unrequested items such as $119 million for 11 Army Blackhawk helicopters, $15 million for two UC-35 medium lift aircraft, and $76 million for one additional KC-130J tanker aircraft.

At the same time, the Committee fails to fully fund the development of new technologies of importance to DoD, including a $65 million reduction to two key information technology programs, Extensible Information Systems and Computing Systems and Communications Technology. The Committee also makes a $20 million reduction to Biological Warfare Defense R&D while adding a larger amount for unrequested biological warfare defense projects in the same program.

Chemical Weapons Demilitarization

The Committee bill would reduce the request for this priority program by $76.4 million. While the reduction is not allocated to specific programs, it seems intended to eliminate the entire FY 2001 effort to develop technologies to treat and dispose of recovered chemical warfare material. The reduction would force the cancellation of contracts employing workers in eight States and delay the destruction of this material, leading to a potential breach of the Chemical Weapons Convention treaty deadline and increased risk to the public. We strongly urge the House to restore funding for this priority program.

Tobacco Litigation

The Administration believes strongly that the Government should recover the costs it has incurred treating smoking-related illnesses. The Department of Defense spends hundreds of millions of dollars each year to treat tobacco-related illnesses and has provided a modest level of support to the litigation effort relative to the potentially significant recoveries. The Department of Defense funding is making a critical contribution to the Government's tobacco litigation effort. The Administration strongly opposes any attempts by Congress to hamper the Department of Defense's ability to support the tobacco litigation using current statutory authorities. The House report contains such language, which would require prior congressional approval of any reimbursement provided by the Department of Defense to another agency to support the Government's litigation to recover the Federal costs of tobacco-related illnesses.

Overseas Humanitarian, Disaster, and Civic Aid

The Committee has provided funding for this account that is $8 million below the President's request, citing concerns that the Department of Defense was funding requirements more suitably funded by the Department of State. The Administration objects to this reduction because it would constrain DoD's humanitarian assistance and demining programs, which are critical to the Commanders in Chief's (CINC's) regional engagement plans. These programs help the CINCs shape the environment and prepare to respond rapidly and effectively to humanitarian crises. Also, the U.S. military obtains substantial training and access benefits from overseas humanitarian, disaster, and civic aid activities, enhancing readiness across a wide range of operational areas.

Headquarters and Management Staff Reductions

The Committee's reduction of over $244 million for staffing and administrative functions in DoD headquarters, acquisition programs, and overseas staffs would impose unattainable staffing limits on the Department and hinder smooth operations. The Department is in the midst of addressing the policy, programmatic, and resource implications of Army Transformation, Expeditionary Aerospace Forces, and other activities supporting the revolution in military affairs. Once fully realized, these revolutionizing efforts will permit the Department to react more effectively to post-Cold War national security requirements. These efforts and the requirements to keep the Congress informed of DoD's progress demand the professionalism and expertise of its staffs. Budget-driven reductions to the staffs would only impede progress in the revolution in military affairs, disrupt operations, and inhibit responsiveness to congressional reporting requirements.

Critical Infrastructure Protection/Cyber Crime

The Administration urges the House to provide the President's request of $1.46 billion for the national security community for critical infrastructure protection/cyber crime. These funds are a crucial component of the national, interagency effort to protect infrastructure -- particularly information systems -- in both Government and the private sector that is essential to the functioning of our economy, national defense, and the safety of the population. The funds requested for the national security community are necessary in order to protect critical national security infrastructures against attack and to ensure the integrity and security of both DoD and intelligence community information systems.

Weapons of Mass Destruction

The Administration urges the House to provide the President's request of $467 million for the national security community to counter threats posed by terrorism and the use of biological and chemical weapons of mass destruction. Adversaries are expected to rely increasingly on these unconventional strategies to offset U.S. military superiority. The funds requested for the national security community would improve our ability to provide support to the designated lead Federal agencies for domestic preparedness based on the national security community's long experience with defense against weapons of mass destruction and its capability to respond with specially trained and equipped personnel.

Coast Guard Funding

The House Defense Authorization Act authorizes additional funding for DoD to implement a variety of medical, pay and other enhancements. Under Title 37 of the U.S. Code, Coast Guard must match many of the DoD enhancements. If H.R. 4576 funds these enhancements for DoD, like funding enhancements should be provided by Congress to the Coast Guard. Otherwise, the Coast Guard would need to redirect resources that support vital Coast Guard missions.

Restrictions on Contract Awards

The Administration understands that an amendment will be offered that would preclude award of contracts to entities who have provided information that the entity has been convicted of, or has a civil judgment rendered against it, on three or more occasions, for various offenses. The Administration supports efforts to ensure that we do business only with entities that comply with the law. The current debarment/suspension process has worked successfully in protecting the government's interests in the award of contracts. The proposed amendment does not provide the discretion currently afforded by the existing process to make award decisions consistent with what is in the best interests of the government. Therefore, the Administration urges that the amendment not be adopted or, at a minimum, modified to provide discretion to the Department.