The Administration appreciates the continued work by the Senate Armed Services Committee (Committee) on behalf of our national defense and supports a number of provisions in S. 1519, the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018.
The bill supports key Administration priorities including ending the defense sequester, rebuilding our military readiness, and modernizing our Armed Forces for the future. It authorizes funding for our ongoing efforts to destroy the Islamic State of Iraq and Syria (ISIS), to deter potential adversaries, and to bolster our allies. The bill also includes substantial reforms to Department of Defense (DOD) management and business practices, and the Administration looks forward to working with the Committee to continue finding efficiencies at DOD. In particular, the Administration is fully committed to DOD’s full financial statement audit efforts starting in FY 2018 and shares the Committee’s goal of achieving a positive audit opinion over time. The Administration will work closely with the Committee on language that facilitates this effort. The Administration also appreciates the bill’s inclusion of the 2010 Compact Review Agreement with Palau and its related authorities.
The bill authorizes $692.1 billion in total discretionary funding for FY 2018, consisting of $631.9 billion of base national defense funding ($36.7 billion above the President’s FY 2018 Budget request) and $60.2 billion of Overseas Contingency Operations (OCO) funding ($4.4 billion below the President’s FY 2018 Budget request). The previous Administration enacted harmful cuts to defense spending, and this Administration strongly supports eliminating them. To ensure that our military is not rebuilt on the backs of future generations of Americans, however, the Administration looks forward to enacting reductions to non-defense spending, including those proposed in its FY18 Budget.
While the bill contains many promising reforms, it prohibits a new Base Realignment and Closure (BRAC) round, which would produce substantial recurring savings and allow DOD to align infrastructure with force structure.
The Administration looks forward to working with Congress to address its concerns, a number of which are outlined in more detail below. The Administration also looks forward to reviewing the classified annex and working with the Congress to address its concerns about the bill provisions regarding classified programs.
Prohibition on Conducting Additional Base Realignment and Closure Round: The Administration strongly objects to section 2702 and strongly urges Congress to provide BRAC authorization, as requested, so that DOD can ensure it is not wasting resources on unneeded infrastructure. The Department estimates that a new BRAC round in 2021 would save an additional $2 billion or more annually, resources which could be devoted to higher priorities such as readiness and modernization.
Mixed Oxide (MOX) Fuel Fabrication Facility: The Administration strongly objects to continued construction of the Mixed Oxide (MOX) Fuel Fabrication Facility as directed in section 3112. While the Administration appreciates the waiver authority to terminate the MOX project provided to the Secretary of Energy, the project is unaffordable and risky. The most recent estimates, produced by the Department of Energy and the Army Corps of Engineers, project $12 billion in remaining costs and total construction costs of $17 billion. In addition, the projected operating costs are between $800 million and $1 billion per year for nearly two decades. The alternative, known as dilute and dispose, is a proven approach that is significantly less risky and expensive, and it can be implemented decades sooner than the MOX approach.
TRICARE Benefit Reform: The Administration appreciates the Committee’s inclusion of meaningful TRICARE benefit reform proposals reflected in sections 706 and 707. Section 706 institutes reasonable pharmacy co-pays that will retain TRICARE as one of the most generous health benefits available while also making it sustainable in the long term. Section 707 eliminates confusion and reduces administrative costs by creating one generous, consistent health benefit that is equal for all members while making special accommodations for the most vulnerable populations, including medically retired members and their families and survivors of those who died on active duty.
Authority to Provide Assistance to Counter ISIS and to the Vetted Syrian Opposition: The Administration appreciates the expanded authority in sections 1231 and 1232 for small-scale construction of temporary facilities to meet operational needs and force protection requirements in both Iraq and Syria. The Administration objects, however, to language in section 1232 that requires the Secretary to provide a 30-day notice to Congress on new initiatives. This provision will hamper DOD’s ability to respond rapidly to opportunities on the battlefield.
Modification of the President’s Authority to Determine Alternative Pay Adjustment in Annual Basic Pay of Members of the Uniformed Services: The Administration strongly objects to section 604, which would place restrictions on the President’s authority to set an alternative pay adjustment for members of the uniformed services. This change would place more restrictions on the President’s ability to set pay for members of the uniformed services than for the Federal workforce. Being able to adjust military compensation nimbly in response to serious economic conditions affecting the general welfare is not only essential to the Administration’s responsibility to recruit and retain a ready and capable uniformed services, but it is also required to balance military compensation costs against other investments critical to readiness, equipment, and modernization.
Provisions on the Organization and Structure of the Office of the Secretary of Defense (OSD): The Administration is concerned with sections 901, 902, 910, and 921, which would significantly reorganize DOD and its components. In order to address those concerns, DOD hopes to work collaboratively with the Committee to better understand the justifications for these provisions. In their current form, these sections seem to hinder DOD’s ability to stabilize its senior leadership team and manage the functions and capabilities needed to plan, execute, and oversee national security policies, capability development, and operations. Sections 901 and 902 would alter DOD’s planning and would require adjustments before DOD is able to implement changes enacted last year. The Administration is also concerned with the creation of additional Executive Schedule Level II positions in OSD. This reporting structure could complicate the relationship between the Deputy Secretary of Defense and the Secretary of Defense. In addition, section 921 would eliminate each of the military department Assistant Secretaries charged with real property, installation, and facility management. Eliminating these three Assistant Secretary positions would jeopardize each military department Secretary’s ability to comply with his or her title 10 responsibilities.
Personnel Limitations: The Administration strongly objects to section 912, which would modify the definition of personnel in section 143(b) of title 10, United States Code, by adding the contractor personnel counts against the statutory limitation of 3,767 for military, Government civilian, and detailed personnel in OSD and the OSD direct support activities of the Washington Headquarters Services. Management of the contractor personnel counts in OSD has been addressed through the funding ceiling imposed on all departmental headquarters by section 346(b). The Administration also strongly objects to section 931, which would further increase the Senior Executive Service (SES) reduction set forth in the FY 2017 NDAA by an additional 10 percent, because it would be detrimental to the overall DOD mission and, especially, the SES workforce. Requiring the Department to arbitrarily cut additional SES positions across-theboard would have long-term negative effects or likely effects for various DOD services and organizations. Any further reductions to SES positions in DOD should be made in a deliberate manner following a review and analysis of the impact of such reductions on the functioning of each component or agency.
Adjustment to Basic Allowance for Housing (BAH) of Certain Members of the Uniformed Services: The Administration objects to section 603, which would make a military member who is married to another military member ineligible for a BAH at the “with dependents” rate. This section would inappropriately penalize military families in which both spouses have chosen to serve their country and, by providing a lesser compensation package than other members of equal grade, send a clear message that their service is not valued as highly.
Aviation Bonuses: The Administration strongly objects to sections 616 and 617, which would eliminate DOD’s current flexibilities and impair DOD’s ability to manage the payment of aviation bonuses for well-established reasons. Sections 616 and 617 would harm DOD’s ability to respond to current heavy recruiting by the civilian airline industry from the military pilot community and would hamper DOD’s ability to appropriately manage bonuses and to differentiate bonus levels for enlisted members who pilot remotely piloted aircraft.
Modification of Cost Limitation Baseline for CVN-78 Class Aircraft Carrier Program: The Administration strongly objects to section 125, which would limit the procurement cost for aircraft carriers after CVN-79 to $12 billion. The Administration shares the Committee’s concern with the cost of the CVN-78 Class Aircraft Carrier Program and CVN-80 and beyond. The Navy’s estimate for CVN-80, however, is $12.6 billion, not including class spares, which is approximately $900 million lower than CVN-79 in constant dollars. Reducing procurement cost for CVN-80 and follow-on ships to $12 billion cannot be achieved without a fundamental change in acquisition strategy (such as multi-year procurement or block-buy contracts that leverage economies of scale) and continuous construction efficiencies, along with significant design modifications that will reduce ship capability. Stability in ship design and funding is the most effective way to achieve significant cost reductions.
Discharge in the Selected Reserve of the Commissioned Service Obligation of Military Service Academy Graduates who Participate in Professional Athletics: The Administration strongly objects to section 543, which would allow newly commissioned officers graduating from the military service academies, who obtain employment as professional athletes, to forego any active duty service and immediately serve in the Selected Reserve until the completion of their commissioned service obligation. The military service academies exist to develop future officers who enhance the readiness and lethality of the military services. Following graduation from a military service academy, individuals should serve as full-fledged military officers, carrying out the normal work and career expectations of an officer who has received the extraordinary benefits of a taxpayer-funded military academy education.
Transfer of Lead of Guam Oversight Council (GOC) from the Deputy Secretary of Defense to the Secretary of the Navy: The Administration strongly objects to section 951, which would transfer lead of the GOC from the Deputy Secretary of Defense to the Secretary of the Navy. The GOC oversees more than just Navy and Marine Corps activities and, when led by the Deputy Secretary of Defense, is able to balance international commitments against various Service considerations in developing policy direction. In addition to the realignment of Marine forces from Okinawa to Guam, the GOC is monitoring U.S. Pacific Command’s Commonwealth of the Northern Mariana Islands Joint Military Training proposal to develop live-fire ranges and training areas in the Commonwealth of the Northern Mariana Islands (the CNMI) (Tinian and Pagan), and U.S. Air Force Divert and Exercise Airfield for up to 12 tankers on the CNMI. The interagency coordination necessary to complete required environmental analyses for these complex initiatives is most effectively accomplished with direct oversight by the Deputy Secretary of Defense.
Workforce Issues for Relocation of Marines to Guam: The Administration appreciates the inclusion of section 1264, which would authorize the admission before December 31, 2023, of H-2B workers coming to Guam to perform certain military-related work under modified admission requirements. The Administration strongly urges Congress to adopt the Administration’s request, which would address specified needs in both Guam and the CNMI. The Department of the Navy’s current workload projections indicate that approximately 2,300 H-2B workers would be required to supplement the Guam or CNMI workforce on military buildup construction projects. Without additional H-2B workers, limited access to construction workers would harm our ability to relocate Marines to Guam on planned timelines. This could be a factor in meeting the commitment of the United States to return land to Japan.
Policy of the United States on Cyberspace, Cybersecurity, and Cyberwarfare: The Administration strongly objects to section 1621, which would establish United States policy for deterring and responding to cyber-attacks or other malicious cyber-activities against United States interests. This section would enact certain foreign policy and military determinations that are traditionally within the purview of the President. Development of such policy decisions must necessarily take into account changing circumstances on a more rapid timeline than the proposed legislative process would allow. In particular, section 1621(f) would require the United States to notify and encourage the governments of countries whose computer networks are being used by malicious cyber actors to take action themselves to eliminate the threat, to the greatest extent practicable. This would severely constrain the President’s decision space and undermine the ability of the Armed Forces to act rapidly and decisively, in accordance with applicable law, to neutralize threats and to defend United States national interests in cyberspace.