S. 2549 - National Defense Authorization Act
for Fiscal Year 2001
(Warner (R) VA and Levin (D) MI)

The Administration supports prompt congressional action on the national defense authorization bill for FY 2001 and appreciates the Armed Services Committee's support for many of the President's national defense priorities. S. 2549, however, raises serious budget, policy, and constitutional concerns as outlined below in the SAP and in the attachment.

The Administration notes that both the House and Senate have recently debated and voted on legislation dealing with the U.S. deployment in Kosovo. The Administration opposes any legislation that would create uncertainty about U.S. intentions in Kosovo or would take the decision making authority on the deployment of United States forces out of the hands of the President.

Funding Levels

Consistent with the Budget Resolution, S. 2549 would provide $4.5 billion more for 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 the FY 2000 levels would reduce resources for non-defense programs that are critical to our Nation's future.

Vieques

Title XIII of S. 2549 supports important elements of the President's Directives on Vieques, which embody an agreement with the Governor of Puerto Rico, supported by the Secretary of Defense, the Chief of Naval Operations, the Commandant of the Marine Corps, the Secretary of the Navy, the Governor and legislature of Puerto Rico, and the Mayor of Vieques. As a result of that agreement, the Navy and Marine Corps have resumed training at the Navy's Vieques, Puerto Rico range.

This title also, however, includes provisions that would contradict the agreement and would jeopardize the opportunity for future training. These problematic provisions would preclude transfer to local ownership of certain Navy land on Vieques and create terms different than those agreed to by Puerto Rico and the Navy. Further, Title XIII also includes an authorization for the relocation of unrelated operations at the Army's Fort Buchanan, Puerto Rico if it is determined by referendum that Navy and Marine Corps training not continue at Vieques although it has not been determined that a relocation would be advisable.

The Administration appreciates the Committee's efforts to date on these provisions but will need to continue working with the Congress to ensure that this legislation includes provisions for the disposal of unneeded land consistent with the agreement, and critical to building support for continued training on Vieques.

Health Care for Medicare-Eligible Military Beneficiaries

The Committee proposes a pharmacy benefit that includes access to mail-order and network pharmacy programs and authorizes the Secretary of Defense to implement cost-sharing structures as necessary. As the President stated on April 16th, the Administration supports the House extension of prescription drug coverage to military retirees over the age of 65, and urges the Senate to show similar support, and urges Congress to act on providing coverage to all Medicare beneficiaries.

The Committee-reported bill would extend current demonstration projects through Fiscal Year 2005. In addition, the Committee would expand the TRICARE Senior Prime (Medicare Subvention) demonstration to additional sites and calls upon the Departments of Defense and Health and Human Services to renegotiate their reimbursement agreement. The Administration supports allowing demonstrations to continue for one to two years and evaluating their utility in advance of decisions on expanding or extending them. However, the Administration is concerned about long-term or permanent extensions or expansions and changes in the reimbursement structure without an evaluation.

Joint Strike Fighter (JSF)

The Administration opposes the deletion of the $596 million request to initiate engineering and manufacturing development (EMD) for the JSF, and the authorization of an additional $424 million to extend the demonstration and validation phase. This results in a net reduction of $172 million to the program. Although DOD notes the Committee's concern that the JSF will enter the EMD phase before it is ready, the Department commits to conduct a thorough evaluation and testing of the program before starting the EMD phase. This proposal would limit the Department's managerial flexibility and unnecessarily delay production, potentially threatening the force levels of the Air Force and Marines. We urge the Senate to authorize funding for the JSF as requested by the President.

National Nuclear Security Administration (NNSA)

The Administration strongly opposes certain NNSA-related provisions. Section 3131(b) would restrict the ability of the President and Secretary of Energy to remove the Under Secretary from office for policy differences and would raise significant concerns under the Constitution's separation of powers. Section 3133 would remove, in perpetuity, the authority of the Secretary of Energy to make internal organizational adjustments. Section 3134 would prevent the Secretary of Energy and the Administrator of the NNSA from making the most effective use of the skilled personnel available to them. This section would not make dual DOE/NNSA assignments unlawful, but it would punish those Federal employees lawfully assigned by their superiors to carry out their dual responsibilities by cutting off their salaries.

Environmental Provisions

The Administration strongly opposes section 342, which would require DOD to obtain specific authorization to comply with environmental fines and penalties assessed against the Department. The Administration is opposed to any limitation on the ability of DOD to pay fines or penalties it is liable for under law. This provision could erode public confidence in the commitment of DOD to comply with environmental laws. The Administration also believes that all Federal agencies should be held fully accountable for environmental violations and should be held to the same standards as the private sector.

The Administration also strongly opposes section 344, which would expand indemnification against environmental costs to recipients of property disposed of pursuant to Base Realignment and Closure (BRAC) rounds. The Department already has a legal responsibility to clean-up, or pay for clean-up, of DOD property, whether currently or formerly owned. The Administration is concerned that this provision would imply that the current legal requirements are insufficient, could create significant legal problems for the Federal Government, and would create large unfunded liabilities in the outyears.

Combating Terrorism

The Administration objects to Section 902 because it would unnecessarily constrain the Secretary of Defense in his oversight and execution of the Department's policies, plans, budget, and operations which are dedicated to combating terrorism. In addition, it would limit the Secretary's ability to leverage the Department's warfighting skills and other capabilities by inappropriately realigning Departmental functions.

Restrictions on Student Aid

The Administration opposes subsection 553(c). That subsection would repeal an FY 2000 Defense Appropriations Act provision which permits otherwise eligible, financially needy students to continue to receive Federal assistance, rather than limit their access to postsecondary education because an institution denies access to military recruiters or Reserve Officer Training Corps activities. Other Federal funding to such institutions is prohibited.

"Fly America" Restrictions

The Administration strongly opposes subsection 376 which would require DOD to use only carriers that participate in the Civil Reserve Air Fleet (CRAF) program for the transportation abroad of DOD passengers and property. This provision would foreclose use of allied-flag carriers even in the very limited circumstances now provided for in U.S. law, when such carriers might better meet Defense deployment requirements. The provision also would unnecessarily tie the Administration's hands in international negotiations to open foreign aviation markets. Because DOD is free to exclude non-CRAF carriers through its procurement process, subsection 376 is unnecessary to maintain the CRAF program in its current form.

Pay-as-You-Go Scoring

S. 2549 would affect receipts and direct spending; therefore, it is subject to the pay-as-you-go requirements of the Omnibus Budget Reconciliation Act of 1990. OMB's pay-as-you-go scoring of S. 2549 is under development.

The Administration will continue its review of the bill and may identify other issues. The Administration looks forward to working with congressional leaders to forge a strong National Defense Authorization Act for FY 2001.

Attachment

The Administration strongly supports section 1042, "Information Security Scholarship Program", as a complement to the Administration's Federal Cyber Service (FCS) "Scholarship for Service" program. The FCS program has been discussed in the National Plan for Information Systems Protection, and included in the President's FY 2001 Budget submission for the National Science Foundation and Office of Personnel Management. The Administration looks forward to working with the Congress to perfect the proposal.

Cooperative Threat Reduction (CTR)

The Administration strongly supports the Committee's decision to fully fund the Administration's CTR request, and its conditional repeal of the prohibition on construction of the chemical weapons destruction facility at Shchuch'ye, Russia, and its support for the program to eliminate Russian production of weapons-grade plutonium. The CTR program provides the United States with the most cost-effective manner to deal with the threats posed by nerve agent weapons and Russian production of weapons-grade plutonium. Continued funding of these programs at the requested levels is critical to our national security.

Institute for Professional Military Education and Training

The Administration commends the Committee for including section 1204 to establish a new Institute to provide professional education and training to eligible military, law enforcement and civilian personnel from the Western Hemisphere. This new institute will serve vital U.S. interests in Latin America and the Caribbean by helping to secure the benefits of democratization as well as promote joint efforts to better address regional challenges.

Utilities Privatization

The Administration strongly prefers the Senate Committee bill's amendment to section 2688 of title 10 United State Code over the House version because of the retention of the competitive procedures in the conveyance of utility systems. This Senate provision retains Federal sovereign immunity, and does not eliminate competition by giving a franchised local utility a monopoly in the acquisition of DOD systems. Competition provides fairer prices, innovation, and improved technology thereby giving the Armed Services optimum value, and cost effective and reliable service consistent with national defense readiness requirements.

Unrequested Funding Increases

The Committee's bill would add funds for procurement, research, development, testing and evaluation (RDT&E), and military construction projects. The bill increases funds authorized for procurement by $3 billion and reprioritizes funding for programs within the request. The President's FY 2001 request meets the $60 billion procurement target established in the Quadrennial Defense Review and represents a balanced approach to modernization. The bill authorizes additional funding for several unrequested items including $165 million for two variants of the C-130J aircraft, $117 million for C-40A Naval Reserve transport planes, $73 million for UC-35 medium lift aircraft, $196 million for additional Army UH-60 Blackhawk helicopters, $63 million for additional Navy CH-60 helicopters, and $460 million in advance procurement funding for construction of the LHD-8 amphibious ship.

The bill would authorize $1.5 billion over the request for Research, Development, Test and Evaluation programs, including increases of $92 million for the Airborne Laser Program and $49 million for advanced spacecraft technologies. Of the increases proposed by the Committee, many are of low military value as judged by the military services. In addition, Section 218 would authorize $20 million for the Kinetic Energy Anti-Satellite Technology Program. The Administration continues to believe that there are more effective means to address threats to space systems, including improving intelligence on these threats and protection of our space systems.

The bill would authorize an increase of $430 million to the military construction funding levels requested in the President's budget. This increase would authorize funds for over 80 projects that were not requested. Over 20 of these projects are not included in the Future Years Defense Program.

Army Transformation

The Administration appreciates the Committee's support for Army transformation programs, but we object to the restoration of funds for programs, such as the Grizzly obstacle clearing vehicle and the Wolverine bridging vehicle, that were canceled to fund transformation. Re-starting these programs will create a funding liability in future years which will slow the pace of transformation.

Russian-American Observation Satellites (RAMOS)

S. 2549 would reduce the Administration's request of $35.8 million for the RAMOS program by $20 million, and would direct the Secretary of Defense to restore the RAMOS program to the approach presented to Congress in the Fiscal Year 2000 Budget request. Since that time, however, the RAMOS program has been adapted to better meet defense needs. In addition, RAMOS remains a critical element of U.S.-Russian threat reduction efforts. The Administration, therefore, urges the Senate to fully fund the request.

Procurement Reform

The Administration urges the incorporation of its proposals to further improve the acquisition process and its ability to support the Defense mission. In particular, we urge the bill be modified to further expand "other transactions" authority as proposed by the Administration. This is necessary to facilitate access to the latest technological advances in the commercial marketplace. The Administration strongly recommends that the extension of pilot program authority in section 806 be amended to specifically include an extension of the Joint Direct Attack Munitions (JDAM) pilot program. Without such an extension unit costs will rise, negating many of the cost savings that have already been achieved in the JDAM program. In addition, we urge the inclusion of the Administration's proposals to enable the government to take greater advantage of electronic commerce and to streamline certain test authorities.

Approval Authority for Cash Awards in Excess of $10,000

The Administration strongly opposes section 1109, which would authorize the Secretary of Defense to grant cash awards in excess of $10,000. The piecemeal granting of single-agency authorities impedes the rational and careful development of Government wide provisions as well as creating inequities among Federal employees. The Administration urges the Congress to address Federal Personnel issues in a consistent and equitable manner.

Life Insurance for Emergency Essential Employees

Section 1111 would permit emergency essential employees, as designated by the Secretary of Defense, to elect or change enrollment in the Federal Employees' Group Life Insurance (FEGLI) Program within 60 days of their designation. Enactment of this provision would create a benefit disparity between DOD and non-DOD employees. This proposal is also contrary to the well-established policy of avoiding adverse selection by allowing only limited opportunities for employees to acquire FEGLI coverage after initial eligibility.

Uniformed Services Accession and Retention Costs

The Administration opposes sections 616 and 618 because they will unnecessarily increase accession and retention costs for certain health professionals by authorizing amounts that exceed requirements. We urge deletion of these provisions.

Non-reimbursable Details Outside the Federal Government

The Administration urges that the amendment to section 3341 of title 5 United States Code proposed in section 3155, allowing the non-reimbursable details of surplus or displaced Federal employees to the private sector, be deleted. It raises a number of serious concerns, including conflict of interest issues.

Acquisition Workforce

The Administration appreciates the need to have a workforce capable of effectively performing in the changing Federal marketplace and supports the development of a report on the sufficiency of the workforce and a plan to ensure proper size, composition, and qualifications as required by Section 812. Defense, OPM, and the Federal Acquisition Institute have each undertaken various projects projected to be completed within the next year to define necessary workforce competencies. Any educational requirements should reflect the results of these efforts. The Administration therefore recommends that Section 811 be deleted from the bill and reconsidered after these efforts are completed.

Monitoring performance of DOD functions

The Administration opposes section 366, which requires monitoring the performance of functions subjected to a workforce review, and defines workforce reviews to include A-76, strategic sourcing, BRAC and all other reorganizations, reengineerings, and privatizations. This approach may apply to A-76 and strategic sourcing. However, the provision would require DoD to develop new reporting systems for BRAC, privatization and other reengineering efforts that would be difficult to develop and burdensome to implement, and would hinder DoD's ability to effectively manage. We urge elimination of the language for BRAC and other reengineerings, reorganizations or privatizations.

Regionalized Civilian Personnel Support

The Administration opposes section 1112, which would establish a pilot program to assess the feasibility of public-private competition for regionalized civilian personnel services. The timing is not correct for this pilot program. DOD is beginning deployment of its modern Defense Civilian Personnel Data System, which will establish the information systems required to support regionalized civilian personnel services. Once implemented, this system will enable policy-makers to make better judgements about public-private competitions. To require a feasibility study now would divert critical resources and seriously endanger the successful deployment of this system and support to military commanders in the field. DOD has invested almost $400 million on the combined regionalization and systems modernization program, which will save over $220 million yearly when fully implemented.

High-level Radioactive Waste Storage

The Administration recommends that Section 3107 be deleted. The Administration has proposed to rescind $85 million previously appropriated for interim storage activities. As drafted, Section 3107 would authorize a lower level of funding for the Department of Energy 's National Security Programs than the Administration has requested and, instead, authorize an additional $85 million for interim storage activities.

Formerly Utilized Sites Remedial Action Program (FUSRAP)

The Administration opposes section 3152, which would tie certain DOE travel funds to a certification of DOE compliance with section 3131 of the National Defense Authorization Act for FY 2000. Instead, the Administration recommends that Congress repeal section 3131. Both provisions reflect a basic misunderstanding of the way in which the Federal Government funds the FUSRAP. DOE developed FUSRAP to clean up certain sites contaminated as a result of the Nation's early atomic weapons development activities. However, Congress transferred this responsibility to the Army Corps of Engineers in the FY 1998 Energy and Water Development Appropriations Act. The classification of FUSRAP activities as defense spending is sound programmatically and consistent with the classification of similar nuclear waste cleanup efforts elsewhere in the Budget, and reflects prior consultation with the Committees on Appropriations and on the Budget of both Houses of Congress. When the Administration classified these funds as defense spending, it adjusted the discretionary caps so as not to reduce the funds available for defense discretionary spending.

Restriction of NNSA Funds

The Administration opposes sections 3136 (c) and (d), which would limit the NNSA's program direction obligations to 65 percent of the amounts appropriated for FY 2001 until 45 days after a FY 2001 future-years nuclear security program is submitted. DOE is committed to sending a compliant future-years nuclear security program to Congress in concert with the FY 2002 Budget. The proposed limitations would make it more difficult for the DOE to effectively manage and oversee its programs and to acquire resources. This would result in schedule delays affecting delivery of goods and services and would increase costs to taxpayers.

Polygraph Tests

Section 3154 would amend section 3154 of the National Defense Authorization Act for FY 2000 by providing temporary waiver provisions from the requirement for polygraph examinations for certain DOE employees and contractor employees who have access to high-risk programs. This provision does not provide the flexibility necessary for optimum operation of that program. DOE believes polygraph examinations should be given only to those persons with access to DOE's most sensitive and classified information and materials. These positions are best identified by the program managers of these high-risk programs. The Administration recommends that section 3154 be revised to provide the Secretary additional flexibility on more than a temporary basis to designate which positions within these high-risk programs will require a counterintelligence polygraph examination in the interest of national security.

Overseas Humanitarian, Disaster, and Civic Aid

The Committee reported bill reduces the President's request of nearly $65 million by $9.5 million. The Administration objects to this reduction because it would constrain DOD's humanitarian assistance programs, which are critical to the Commanders in Chiefs' (CINCs) 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. All of the programs are coordinated with the Department of State to ensure appropriate execution and compliance with national security and foreign policy interests. The Administration urges full funding of the request.

Veterans Equity Concern

The Administration opposes section 655, which would provide special gratuity payments to certain prisoners of war who were forced to perform slave labor during World War II in Bataan or Corriegidor, and would single out one group of veterans for special benefits when others who might have served in similar circumstances are not afforded such benefits. In addition, we have technical concerns about definitions, the appropriate agency of jurisdiction, and the nature of its effect on direct spending.

Land Transfers

The Administration objects to numerous sections of S. 2549 which direct the conveyance of DOD properties to various entities. The directed conveyances circumvent the Federal Property and Administrative Services Act and the Stewart B. McKinney Homeless Assistance Act. In order to streamline the Federal Government's property disposal process, the Administration urges the Congress instead to enact the "Federal Property Asset Management Reform Act of 2000." This proposal will increase incentives for agencies to identify unneeded properties and streamline the disposal process, while preserving the rights of homeless organizations and balancing Federal, State, and local claims to underused and unneeded property.

Military Housing Privatization Initiative (MHPI)

The Administration urges Congress to extend the MHPI authorities for five years, as requested, vice the three provided for in the Committee-reported bill. A five year extension is necessary to give the private sector confidence in the future MHPI program , encouraging participation in our solicitations and providing the competition needed to achieve the Department's housing goals, which are critical to Service members and their families.