EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503

STATEMENT OF ADMINISTRATION POLICY
(THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)


May 24, 1999
(Senate)


S. 1059 - National Defense Authorization Act for
Fiscal Year 2000

(Warner (R) VA and Levin (D) MI)

The Administration supports prompt congressional action on the national defense authorization bill for FY 2000; however, S. 1059 raises serious budget concerns and a number of policy concerns outlined below.

Funding Levels

The Administration opposes the extent of the base funding increases for defense programs proposed in S. 1059. The President's defense budget for FY 2000 provides a $9 billion increase over the FY 1999 enacted level, excluding emergencies enacted in the FY 1999 Omnibus Appropriations Act. The President's budget ensures that critical readiness needs are met, allows for weapons modernization, and proposes an appropriately generous military compensation plan, while ensuring that other critical U.S. priorities receive sufficient funding. The Senate bill, in contrast, would authorize $8 billion more in total spending for defense than the $280.8 billion requested in the President's budget, potentially draining critical resources from other programs. The Administration believes that S. 1059 must be considered in the context of deliberations on a comprehensive budget framework that addresses Social Security, Medicare, and all discretionary spending. For these reasons, the Administration opposes the magnitude of the base funding levels of S. 1059.

Base Realignment and Closure (BRAC)

The Administration is disappointed that the bill fails to support the Department of Defense's proposal to authorize two additional rounds of base closures and realignment. Defense's base infrastructure is far too large for its military forces and must be reduced. The failure to downsize Defense's base infrastructure proportionately is apparent in the fact that since FY 1989 force structure has been cut 36 percent compared to only 21 percent in base structure through four BRAC rounds. Future BRAC rounds are critical to secure funds for readiness, modernization, and quality of life priority programs and to allow the Department to reshape its base infrastructure to match changing mission requirements for the 21st century.

Military Pay and Benefits

While the Administration is pleased that S. 1059 endorses the key elements of the President's plan to improve military compensation, we are concerned about the excessive costs of the committee bill. The Administration is concerned that program costs of the bill's military pay increases exceed the Defense program for FY 2000 - 2005 by nearly $6 billion. They also create a disparity with civilian pay raises. The bill's retirement reform would be significantly more costly in the long run than the Administration's proposal.

Central Transfer Account to Fund Programs to Combat Terrorism

The Administration objects to Section 1007, which creates a central transfer account to fund the combating terrorism aspect of the force protection mission. This central funding of a fundamental command responsibility would impede efforts by commanders to insure the security and readiness of their forces. Additionally, the total amount of funding consolidated into section 1007 exceeds the amounts for combating terrorism in the President's budget request that would be otherwise located in other titles of the bill. This has the effect of unintentionally cutting critical readiness spending. The Administration would strongly prefer to work with Congress to finalize the Administration's proposed process to provide the committee with the oversight information it now finds lacking.

Department of Energy Issues

The Administration is pleased with the bill's support for most of the programs under the President's Extended Threat Reduction initiative to improve the security of weapons of mass destruction in Russia. The Administration, however, is disappointed with reductions to the Nuclear Cities Initiative (NCI) and the Initiative for Proliferation Prevention programs. Furthermore, the bill would place burdensome restrictions on these programs that could bring them to a halt. The most problematic is requiring agreement from Russia to close weapons production facilities as a condition for assistance from the NCI program.

The Secretary of Energy has taken decisive measures with regard to counter-intelligence, safeguards and security issues at Department of Energy (DOE) facilities. His efforts will be strengthened by a number of provisions in this bill. However, the Administration objects to the proposed moratorium on cooperative programs with Russia, China, and other nations pending certain security-related certifications. This provision could negatively impact a number of vital national security programs, such as disposition of Russian fissile material. With respect to the provision requiring detailed background investigations for all employees who work in the vicinity of restricted data, the Administration believes that this costly and intrusive provision is inconsistent with procedures throughout the Executive Branch established by Executive Order 12968. DOE is implementing measures that will more effectively deal with the concerns this provision seeks to address, including improved security, use of polygraphs, and counter-intelligence initiatives.

While supporting accelerated completion of DOE closure projects, the Administration opposes the provision that would authorize the Secretary of Energy to accept loans from cleanup contractors and use the funds for additional cleanup. This provision is detrimental to ongoing contract and management reform initiatives at the DOE and is inconsistent with longstanding policy on Federal agency borrowing.

Spectrum

The Administration strongly opposes Section 1049, which would elevate the Defense Department's use of the spectrum above all other Federal, State and local government, and private sector uses. It would undermine the President's authority to set spectrum management priorities for the Federal Government and impair the Federal Communications Commission's (FCC) ability to manage the spectrum for the private sector and State and local governments. It could also discourage investment in new and more spectrum-efficient technologies, create disincentives for spectrum sharing, and impose significant costs on Federal, State and local governments, and the private sector.

The Administration also opposes Section 1050 which prohibits the Federal Government from providing licenses, permits and funding to entities broadcasting without specific authorization from outside the United States into the country on frequencies reserved to or used by the Defense Department. This provision infringes upon international spectrum management, which is appropriately addressed by the FCC and others through the International Telecommunications Union (ITU). It would be inconsistent with U.S. obligations under the ITU and could set a precedent that other countries could follow to the detriment of U.S. interests abroad.

Federal Prison Industries Mandatory Source Exemption

The Administration opposes Section 806 which would essentially eliminate the Federal Prison Industries (FPI) mandatory source with the Defense Department. Such action could harm the FPI program which is fundamental to the security in Federal prisons. In principle, the Administration believes that the Government should support competition for the provision of goods and services to Federal agencies. However, to ensure that Federal inmates are employed in sufficient numbers, the current mandatory source requirement should not be altered until an alternative program is designed and put in place. Finally, this provision would only address mandatory sourcing for the Defense Department, without regard to the rest of federal government.

Strategic Force Structure

The Administration appreciates the bill's endorsement of our plan to reduce the Trident submarine force from 18 to 14 boats, while maintaining a survivable, effective START I-capable force. However, we prefer repealing the bill's general provision that maintains the prohibition, first enacted in the FY 1998 Defense Authorization Act, against obligating funds to retire or dismantle any other strategic nuclear delivery systems below specified levels unless START II enters in force. The Administration believes this provision would unnecessarily restrict the President's national security authority and ability to structure the most capable, cost-effective force possible.

Theater Missile Defense Upper Tier Acquisition Strategy

The Administration strongly opposes Section 221, which proposes a management and funding structure that negates the Department's overall Ballistic Missile Defense strategy. The Department's strategy will allow for the earliest, affordable delivery of an effective upper-tier system. This would not be the case if the Department had to develop the Theater High Altitude Area Defense and the Navy Theater Wide systems concurrently. The provision cannot be implemented with the resources provided and would seriously impact the safety of our troops on the ground.

Patriot Anti-Cruise Missile (PACM)

The Defense Department's top Theater Missile Defense system priority is the Patriot Advanced Capability 3 (PAC-3) missile, and it supports the $212 million increase for this program. However the Department did not request funding for and does not support the bill's $60 million authorization for the Patriot Anti-Cruise Missile (PACM), for which the Army does not have an operational requirement.

Inventory of Major End Items

The Department of Defense objects to Section 1024, which requires each military service to conduct an inventory of all major end items (i.e. aircraft, ships, missiles etc.) and report the results, including the status and location of each accountable item. This would be a costly duplication of thorough inventories already conducted and is based on the incorrect assumption that our military commanders are derelict in their oversight of their assigned end items.

Troops-to-Teachers

The Administration believes that the Department of Defense should continue to have authority to administer the current Troops-to-Teachers program until the Administration's proposed "Transition to Teaching: Troops to Teachers" initiative is enacted to expand this important effort as part of the reauthorization of the Elementary and Secondary Education Act.

Land Withdrawal

The Administration agrees that legislation on renewal of military land withdrawals is needed and looks forward to presenting its proposal to and working with the Congress on this issue.

Procurement Reform

The Administration urges the incorporation of our proposed provisions that would further improve the acquisition process and its ability to support the Defense mission. Activities would include, among other things, reducing government-unique accounting requirements, streamlining the acquisition of commercial items, and taking greater advantage of electronic commerce.

Voluntary Early Retirement Authority

The Administration does not oppose the provision accelerating the effective date of the Defense Department's Voluntary Early Retirement Authority. However, the Administration urges the Congress to adopt the Administration's proposal to extend the availability of comparable early out authority government-wide.

Pay-as-You-Go Scoring

S. 1059 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. This office's pay-as-you-go scoring of S. 1059 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 Authorization Act for FY 2000.