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S 936 -- 06/19/97

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Office of Management and Budget


June 19, 1997

S. 936 - National Defense Authorization Act for Fiscal Year 1998
(Thurmond (R) SC and Levin (D) MI)

The Administration supports prompt congressional consideration of its national defense authorization legislative proposal for FY 1998. As reported by the Committee on Armed Services, however, S. 936 raises serious budget, policy, constitutional, and management concerns.

Of particular concern, S. 936 would: (1) contrary to the Bipartisan Budget Agreement, reallocate funds from the Department of Energy's (DOE) 1998 defense discretionary budget request to Department of Defense (DOD) programs; and (2) unconstitutionally infringe upon the President's authority to protect national security information. The President's senior advisers would recommend that he veto a final conference bill that fails to address these concerns.

In addition, (1) if an amendment is adopted that would revise the 1995 Defense Base Realignment and Closure Commission's recommendations pertaining to Air Force Depot maintenance facilities, or (2) if any amendment is adopted that would mandate a date certain for withdrawal of U.S. forces from Bosnia, the President's senior advisers would recommend that he veto the bill.

Violation of Bipartisan Budget Agreement

S. 936 is inconsistent with the Bipartisan Budget Agreement. While authorizing overall appropriation levels for National Defense consistent with the Agreement, the bill would reduce authorization levels by $2.5 billion from DOE programs intended for vital environmental cleanup activities and ongoing construction projects. At the expense of these high priority activities, the appropriations are reallocated to unrequested procurement programs for the DOD. For example, the bill would reduce DOE's $1.0 billion privatization initiative for nuclear waste cleanup by about 80 percent ($791 million). Failure to invest in privatization contracts for cleanup activities promotes the continued use of more costly, traditional DOE contracting approaches. This would result in a substantial increase to DOE's cleanup costs in future years. In addition, DOE would not be able to support critical environmental projects required under legally enforceable compliance agreements. Also, without the advance funding for ongoing construction projects requested by the Administration, DOE would incur a substantial budget shortfall in critical departmental functions, including stewardship of the safety and reliability of the nuclear weapons stockpile.

Whistleblower Provision Section 1068 would require the President to inform Federal employees that disclosure to Congress of classified information, falling into certain categories, "is not prohibited by law, executive order, or regulation, and is not otherwise contrary to public policy . . . ." This provision is clearly contrary to the Supreme Court's explicit recognition of the President's constitutional authority to protect national security. Congress may not vest lower-ranking personnel in the Executive Branch with a "right" to furnish national security information to a member of Congress without receiving official authorization to do so. By seeking to divest the President of his authority over the disclosure of such information, the Department of Justice advises that section 1068 would unconstitutionally infringe upon the President's constitutional authority. The Administration believes that existing congressional oversight mechanisms, as well as inspector general statutes, have proven effective in bringing instances of illegality, fraud, waste, and abuse to the attention of Executive Branch managers and congressional committees.

Bosnia Withdrawal Amendment

The Administration understands that an amendment may be offered that would mandate a date certain for withdrawal of U.S. forces from Bosnia. Such an amendment could jeopardize the safety of our troops and damage our national security interests. It would seriously undercut the U.S. commitment to help implement the Dayton Peace Accords and successfully complete the NATO-led mission in Bosnia, resulting in a serious loss in U.S. credibility with the Bosnian parties, with our allies, and with other countries participating in the Stabilization Force (SFOR) operation.

The Administration continues to believe that the duration of SFOR's mission should provide sufficient time to establish conditions to maintain security and stability in Bosnia without an outside military presence. However, this effort can only succeed if the parties and the international community remain assured of U.S. leadership and commitment to peace in Bosnia.

Base Closure and Realignment

The Administration is disappointed that the bill does not adopt the Department's proposal to authorize two additional rounds of base closure and realignment in 1999 and 2001. Defense's base infrastructure is far too large for its military forces and must be reduced if the Department is to obtain adequate appropriations for readiness and for modernization requirements for the next decade.

Funding Levels

Threat Reduction Programs. The bill reduces appropriation authorizations for DOD's Cooperative Threat Reduction program by $60 million from the Administration's request. The request of $382.2 million is a bare-bones figure based on a difficult prioritization of a long list of pot ential projects. The proposed reduction would force us to delay several projects in the Former Soviet Union in critical areas such as the destruction of nuclear delivery systems and chemical weapons, improvements to the safety and security of stored nuclear warheads and fissile material, and the cessation of production of weapons-grade plutonium. The Administration urges the Senate to restore appropriation authorizations to the request level for this important and highly effective means of enhancing U.S. security through eliminating former Soviet weapons of mass destruction and preventing weapons proliferation.

The bill also reduces the Department of Energy Materials Protection Control and Accounting Program by $20 million and the International Nuclear Safety program by $50 million. The Administration strongly urges the Senate to restore these two authorizations to the requested level to ensure the success of our efforts to prevent the theft or diversion of weapons-usable fissile materials and reduce the risk of accidents at Soviet-designed nuclear reactors in the Newly Independent States.

Increases for Programs Not In the Future Years Defense Program (FYDP). S. 936 adds $4.2 billion to the Administration's request for procurement and about $1 billion to the request for research and development. Some of these increases, however, are for programs that are not in the FY 1998-2003 FYDP and are of questionable value to the Department's overall plans to modernize military forces. These additions include: $40 million for the Armament Retooling and Manufacturing Support program; $45 million for two CH-47 Cargo helicopters; $75.2 million for an oceanographic survey ship; $118 million for Spaced-Based Laser Technology; $50 million for the Clementine II Program; and $80 million for Kinetic Energy Anti-Satellite technology.

Dual Use Applications Program. The bill authorizes only $125 million of the $225 million requested for the Dual Use Applications Program (DUAP). This program helps to develop and incorporate technologies used and tested by the cost-conscious commercial sector into military systems. By adopting these dual-use technologies, DOD will be able to take advantage of cost savings that flow from the production efficiencies of larger-scale commercial manufacturing lines. Reducing funding for DUAP would result in higher costs for future defens e systems. The Administration strongly opposes reductions from its requested amount for this high priority program.

Incremental Funding of the CVN-77. The bill would authorize incremental funding for the tenth Nimitz-class nuclear aircraft carrier, CVN-77, by adding $345 million in FY 1998 to accelerate advance procurement and construction. Although the Administration is committed to building CVN-77 (the requirement for which was validated by the Quadrennial Defense Review), it opposes incremental funding of procurement programs. The FY 1998-2003 FYDP fully funds CVN-77 construction in FY 2002. This schedule is consistent with force structure requirements and aircraft carrier replacement schedules.

F-22 Fighter Aircraft. By delaying $420 million requested for the Engineering and Management Development program until 1999, S. 936 could jeopardize implementation of the program's recent restructuring. The Senate should restore the funding requested in the President's Budget so that the program changes identified by the Joint Estimate Team as necessary to control costs and maintain F-22 affordability can proceed.

Strategic Sealift Ships. The bill does not authorize the Administration's request for two strategic sealift ships because of concerns regarding justification, cost, and schedule. The requirement for these sealift ships was originally identified in the Mobility Requirements Study (MRS), revalidated in the MRS Bottom Up Review Update, and confirmed in the QDR. Despite some early cost and schedule overruns, the program is now proceeding satisfactorily. The Administration urges the Senate to restore the President's Budget request and allow continuation of this urgently needed program.

Advanced Concept Technology Demonstration (ACTD) Programs. S. 936 reduces the appropriation authorization for ACTD programs by $20 million. This program supports work on new and innovative defense system concepts. It could provide the basis for systems providing a decisive military edge over adversaries in the next century and should be authorized at the requested level.

TITAN IV. The Administration opposes the $100 million reduction for the Titan-IV program. DOD currently plans to reprogram $82.5 million as part of the FY 1997 Omnibus Reprogramming; a subsequent reduction in FY 1998 would result in reduced program scope, increased risk, and a necessary restoration of funds in future years.

Other Objectionable Provisions

Strategic Forces. The bill's provision that prohibits retiring certain strategic nuclear delivery systems during FY 1998, unless START II enters into force, restricts the President's national security authority. Until START II enters into force, the United States will draw-down and maintain strategic forces at levels consistent with START I.

Ready Reserve Mobilization Income Insurance Program. The Administration is gratified that S. 936 responds to concerns about the Ready Reserve Mobilization insurance program and authorizes payment of all promised benefits. The Administration objects, however, to returning premiums to members who were not deployed and, therefore, did not receive "income loss" benefits. Returning premiums sets a precedent for destroying the integrity of Federal insurance programs.

Executive Compensation. The Administration does not support a uniform cap on contractor executive compensation. The Administration believes that limitations on contractor executive compensation should reflect the position taken in the Administration's February 28, 1997, legislative proposal. That proposal recognizes that contractor executive compensation limitations should reflect pay levels based on industry norms considering the size and nature of the companies and the positions concerned.

Delay of Federal Agency Actions Determined to Affect Readiness. The Administration opposes a provision that would authorize the Secretary of Defense to delay any administrative action by a Federal agency if the Secretary believes the action would impact military readiness. The term "administrative action" is overly broad and could include anything from directives to comply with existing regulations to delay of new regulations. Further, the term "impacting military readiness" is unclear and too broad. It could enable the Secretary to block actions without consideration of other public concerns. The existing regulatory review process provides a venue for a full airing of all Federal concerns including military readiness and national security.

Naval Petroleum Reserve (NPR) Leasing. The Administration also opposes section 3402, which would provide for the leasing of NPRs 1, 2, and 3 by the DOE. This provision is contrary to an agreement recently reached between the Department of the Interior (DOI) and DOE, under which DOE would transfer these lands to DOI for leasing under the Mineral Leasing Act (MLA). Section 3402 would also deprive the State of Colorado of its share of leasing royalties under the MLA.

Panama Canal Commission (PCC). The Administration opposes the authorization of unlimited or excessive recruitment, retention, and separation incentive payments for the PCC. The Administration also opposes the waiver of restrictions on certain dual compensation payments for members of the PCC.

Procurement Reform. We understand that consideration is being given to a floor amendment to address procurement. We would strongly support adoption of the Administration's government-wide procurement provisions through such an action.

The Administration, as it continues its review of the bill, may identify other issues, and will work with the Congress to address these concerns and to develop a more acceptable bill.

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