The House last week passed (358-61) its version of the fiscal year (FY) 1999 defense appropriations bill. The Senate will vote on its version of the bill, which has already been approved by the Senate Appropriations Committee (SAC), after returning from the July 4th recess.¹ After the recess, House and Senate conferees will also meet to resolve differences between their respective versions of the FY 1999 defense authorization bills.² The House and Senate defense authorization bills would provide $270.4 billion and $271.2 billion, respectively, for defense. Taken together, the various House and Senate defense-related appropriations bills would provide roughly comparable levels of funding for national defense. In the case of both the defense authorization and appropriations bills, Congress is constrained by the 1997 balanced budget agreement (P.L. 105-33), which capped FY 1999 budget authority for national defense at just under $271 billion. This represents less than a one percent real decrease from the level of defense funding provided in FY 1998.

Highlights from the Four Bills

• The House and Senate defense authorization bills would increase both procurement and R&D funding. The House bill would add $342 million and the Senate bill, about $1 billion, to the Clinton Administration’s $48.7 billion FY 1999 request for procurement. Similarly, the House bill would add $149 million and the Senate bill, $192 million to the administration’s $36.1 billion R&D request. Likewise, the House and Senate authorization bills would add $443 million and $493 million, respectively, to the administration’s $7.8 billion request for military construction and family housing. Both bills would offset these increases in part through cuts in operations and maintenance (O&M) funding.

• The House defense appropriations and SAC defense appropriations bills would increase procurement funding by $622 million and $448 million, respectively, but would cut R&D funding by $160 million and $77 million, respectively. The administration’s $7.8 billion request for military construction and family housing would be increased to $8.2 billion in the House military construction appropriations bill and to $8.5 billion in the Senate version of the bill.

• Although both defense authorization bills would fully fund the administration’s $1.859 billion emergency funding request for FY 1999 peacekeeping operations in Bosnia, neither defense appropriations bill would provide any FY 1999 emergency funding at this time.

• The House authorization bill would provide a 3.6 percent military pay raise, 0.5 percent higher than mandated under current law (and requested by the administration). The Senate bill, as amended on the floor, would also authorize a 3.6 percent pay raise. On the other hand, both defense appropriations bills would provide funding only for the requested 3.1 percent pay raise.

• In contrast to previous years, none of the bills would add significant funding levels to ballistic missile defense programs. In fact, while the House authorization bill would provide a net increase of $22 million, the Senate authorization bill and both defense appropriations bills would reduce overall funding, primarily as a result of cuts in the troubled Theater High Altitude Area Defense (THAAD) program.

• The $12.3 billion in requested funding for Department of Energy defense-related activities would be cut by $401 million and $379 million, respectively, under the House and Senate defense authorization bills. The House energy and water appropriations bill would provide $11.8 billion, while the Senate version of the bill would provide $11.9 billion for DoE defense activities.

Strategic Forces
B-2: The FY 1999 administration request includes $190 million to cover various production support costs for the B-2 and $131 million for continued R&D. This past March the Panel to Review Long-Range Air Power recommended that the $331 million in FY 1998 appropriations for the B-2 be used to upgrade the existing fleet of 21 B-2 bombers, that no more B-2s be procured, that DoD invest more in support for and upgrades to the current bomber force, and that it develop a better long-term plan for sustaining the bomber force.

The House authorization bill would increase procurement funding by $86 million, to $276 million, for post-production support. It also requires the Air Force to submit an assessment of future bomber needs. The Senate bill would fund the B-2 at the level requested by the administration.

The House appropriations bill would appropriate the funding level authorized by the House and would direct DoD to submit its plan for the long-range bomber force by March 1, 1999. The SAC bill would cut $30 million from the procurement request for software and initial spares, but would provide the full R&D request.

Ballistic Missile Defenses: The administration requested $3.985 billion in R&D and procurement funding for ballistic missile defense-related programs. At the start of the Clinton presidency, the administration decided to shift the U.S. ballistic missile defense program’s emphasis away from efforts to develop a national missile defense (NMD) against intercontinental-range ballistic missiles, and toward the development of theater missile ballistic defenses (TMD) designed to protect against shorter range missiles (like the Iraqi Scud missile used against U.S. forces during the Gulf War). The FY 1999 budget request retains this focus on TMD programs. It proposes funding of $2.638 billion for TMD and $951 million for NMD programs. The request also contains $466 million for the development of support technologies and $325 million for joint and other technologies. The majority of the $4 billion in funding requested for ballistic missile defense programs ($3.588 billion) is for the Ballistic Missile Defense Organization (BMDO), with the remaining funds split among the Services.

The House authorization bill would add $93 million to BMDO. But it would also cut some funding for the Services’ ballistic missile defense programs. Thus, under the House bill, overall funding for ballistic missile defense activities would be increased by only $22 million above the administration’s request. By contrast, the Senate bill would cut $98 million from BMDO and $147 million from the Services’ budgets, for an overall cut of $245 million to the request for ballistic missile defense activities. The biggest Senate cut was to the THAAD program.

The House appropriations bill would reduce overall funding by $338 million, cutting $194 million from BMDO and $144 million from the Services’ budgets. In particular, the bill would boost Navy Theater-wide funding at the expense of the troubled THAAD program. The SAC bill would cut $267 million in overall funding, with almost the entire amount coming out of the Services’ budgets. It also would decrease THAAD funding.

NMD: The request includes $951 million for national missile defense programs. This represents a substantial increase over last year’s projections for the FY 1999 request and is consistent with the May 1997 recommendations of the Quadrennial Defense Review (QDR). The QDR concluded that the administration’s plans to deploy a limited NMD system by 2003, if deemed necessary at that time, would require $2 billion more than originally programmed. In response, the administration amended its FY 1998 request from $504 million to $978 million for NMD and increased its FY 1999 request.

Both the House and Senate authorization bills would fund the NMD program at the requested level, as would both defense appropriations bills.

THAAD: The most expensive TMD program is the Theater High Altitude Area Defense (THAAD) system, a land-based, long-range interceptor designed to protect forward-deployed troops from theater-range ballistic missiles. The FY 1999 request is for $822 million, a sizable increase over the $391 million requested in FY 1998. The House authorization bill would fully fund the request. By contrast, the Senate bill would cut $254 million in THAAD testing funds. This decision was based on THAAD’s troubled development history and, in particular, the fact that in May THAAD failed in its fifth out of five intercept tests. As amended on the floor, the Senate bill would provide $498 million for THAAD development only.

The House appropriations bill would provide $416 million for THAAD, a cut of $406 million. Consistent with the Senate authorization bill, the SAC bill would provide $498 million for the program.

PAC: The request includes $137 million for development and testing and $343 million for procurement of the Patriot Advanced Capability-3 (PAC-3) missile, a land-based, short-range TMD interceptor intended as a “lower tier” defense against theater ballistic missiles. As requested by DoD, the House authorization bill would shift $40 million from procurement to development to cover a shortfall in development and testing funding. It would also add $16 million in R&D funding. Thus, altogether, the House authorization bill would provide the PAC-3 program with $193 million for R&D and $303 million for procurement. The Senate bill would likewise approve DoD’s request for the transfer of PAC-3 funding.

Both the House and Senate appropriations bills would also provide the $40 million PAC-3 funding transfer requested by DoD. In addition, the SAC bill would provide an extra $5 million for PAC-3 R&D (for a total increase of $45 million). Finally, reflecting delays in the schedule for the PAC-3’s first intercept test, the SAC bill would cut another $101 million from the procurement request for the program.

Other BMD programs: The House authorization bill would increase Navy Theater-wide funding (+$70 million), decrease funding for the Air Force’s Airborne Laser (-$74 million) and Space-Based Laser (-$20 million) programs, and fully fund the $194 million R&D request for the Space-Based Infrared System-Low (SBIRS-L) system.

By comparison, the Senate bill would add funding to both the Navy Theater-wide (+$120 million) and the Space-Based Laser (+$94 million) programs, and cut funding for the Medium Extended Air Defense System (MEADS) (-$33 million), the Army’s Aerostat program (-$50 million) and the Airborne Laser (-$97 million). Like the House bill, the Senate bill would fund the SBIRS-L program at the requested level.

The House appropriations bill would increase funding for the Navy Theater-wide (+$150 million) program, but would cut funding for the Space-Based Laser (-$10 million), and would eliminate funding for the Aerostat program (-$104 million). Similarly, the SAC bill would boost funding for the Navy Theater-wide program (+$105 million) and the Space-Based Laser (+$94 million), but would cut funding from the Aerostat program (-$59 million) and the Airborne Laser (-$57 million).

Tactical Aircraft
F-22: The Air Force is planning to spend over $64 billion to develop and procure 339 F-22s. This next-generation, air-superiority fighter is intended to replace the existing fleet of F-15 fighters. The administration’s FY 1999 request includes $595 million to procure the first two F-22 fighters, plus $190 million in advance procurement funding, and $1.582 billion to continue development and testing. Both the House and Senate authorization bills would fully fund this request. However, the Senate expressed concern that the F-22’s flight test program is being slowed at the same time the contract award decision is being accelerated, and stated that a decision to go into full production should be made only after sufficient testing has been completed.

The House appropriations bill would cut F-22 procurement funding by $70 million, reflecting the Air Force’s decision to delay a low-rate initial production decision until FY 2000, but would fully fund the R&D request. The SAC bill would fund the program at the requested level.

F/A-18E/F: The Navy requested $260 million to continue R&D and $2.583 billion to procure 30 Super Hornets, plus $109 million in advance procurement funding for 36 aircraft in FY 2000. The Navy procured the first 12 F/A-18E/Fs in FY 1997. A multi-mission tactical fighter, the F/A-18E/F offers enhanced range, payload and survivability compared to its predecessor, the F/A-18C/D. The Navy plans to buy between 548 and 785 Super Hornets, with the precise number dependent in large part on whether the Joint Strike Fighter program experiences significant cost growth, technical problems or schedule delays.

Noting that the Navy cut the total purchase of F/A-18E/Fs from 1,000 to as few as 548 aircraft and that the aircraft’s “wing drop” problem has not been fully corrected, the House authorization bill would cut $205 million and three aircraft from the FY 1999 request. By contrast, the Senate bill would fully fund the procurement request, but cut $23.4 million in R&D funding.

The House appropriations bill would follow the authorization bill’s lead in cutting 3 aircraft and $205 million from the program. It would, moreover, trim an additional $15 million in procurement funding. The bill would also reduce R&D funding by $68.4 million. Some $25 million of this funding would be eliminated, while $43 million for the Advanced Reconnaissance Pod would be transferred to another line item. Like the Senate authorization bill, the SAC bill would fully fund the F/A-18E/F procurement request, but would cut F/A-18E/F R&D by $20.9 million.

Joint Strike Fighter (JSF): The JSF program is intended to yield an affordable, next-generation strike fighter that can replace the existing fleet of Air Force F-16s, Navy F/A-18C/Ds and F-14s, and Marine Corps F/A-18C/Ds and AV-8s. According to the QDR, the Services will buy a total of 2,852 JSF aircraft. The administration’s request contains $920 million to continue JSF development. The House authorization bill would fund the program at the requested level, while the Senate bill would add $15 million to accelerate development of an alternative engine for the JSF.

Similarly the House appropriations bill would fund the JSF at the requested level, while the SAC bill would add $15 million.

F-16 Fighter: The administration did not request any funding for new F-16s in FY 1999, but it did request $125 million for the development of upgrades. By contrast, the House authorization bill would add $60 million for the procurement two additional F-16s and cut $25 million from the R&D request. The Senate bill would fund the F-16 program at the administration’s requested level.

Like the House authorization bill, the House appropriations bill would add $60 million to procure two unrequested aircraft, while the SAC bill would add $20 million to R&D for development of an enhancement and service life extension package intended for National Guard and Reserve F-16A/Bs.

Other Aircraft
C-17: A wide-body aircraft designed for intra- and intertheater airlift, the C-17 will eventually replace the C-141. To date the Air Force has procured 57 C-17s, and plans to procure another 13 in FY 1999 and 50 more between FY 2000 and FY 2003. The Service is in the second year of a seven-year multiyear procurement contract and, for FY 1999, asked for $2.597 billion for 13 aircraft and $304 million in advance procurement funding. The request also includes $123 million for R&D.

Both the House and Senate authorization bills would fully fund the request, as would the House appropriations bill. By contrast, the SAC bill would cut $15 million from the R&D request.

AV-8B: The Marine Corps requested $338 million to remanufacture 12 AV-8B Harriers in FY 1999, including $56 million in advance procurement funding for 12 in FY 2000. The service plans to procure a total of 32 remanufactured Harriers over the next three years under a multiyear procurement contract. Although it would authorize the multiyear procurement plan, the House authorization bill would cut $3.2 million associated with unexplained cost growth in the program. By contrast, the Senate bill would fully fund the request. Both bills would provide the $14 million requested for continued R&D.

The House appropriations bill would trim $3.2 million from the procurement request and add $36.6 million in R&D funding to rectify software deficiencies and develop upgrades. The SAC bill would fund the program at the requested level.

V-22: The administration’s request includes $355 million for R&D and $611 million to procure seven Marine Corps versions of the V-22 Osprey (the MV-22), $54 million for advance procurement of 10 V-22s in FY 2000, and $22 million for advance procurement of the Air Force variant, the CV-22. The V-22 is a tilt-rotor, vertical take-off and landing aircraft primarily intended to replace the Marine Corps’ CH-46 and CH-53 helicopters. Under the QDR, the Marine Corps plans to acquire 360 MV-22s, the Air Force, 50 CV-22s for special operations, and the Navy, 48 HV-22s for search and rescue missions. Over the next five years, the Marine Corps intends to buy 80 MV-22s for $6.7 billion, while the Air Force plans to buy 19 CV-22s for about $1.4 billion. The first CV-22 is scheduled for procurement in FY 2002.

The House authorization bill would add $78 million to procure one additional MV-22, but would cut $14 million from the program (attributed to “excess cost growth”), for a net increase to the request of $64 million. The bill would also defer advance procurement funding for the CV-22 until FY 2000. By contrast, the Senate bill would provide the requested level of procurement funding. Both bills would fully fund the $355 million request for R&D.

The House appropriations bill would add a total of $85.5 million to the procurement request for the V-22 ($78 million for one more aircraft plus $7.5 million to address equipment shortfalls), while the SAC bill would provide the requested level of funding. Both bills would fully fund the R&D request.

E-8 Joint Surveillance Target Attack Radar Systems (JSTARS): The administration’s request includes $124 million in R&D funding and $463 million to procure the last two JSTARS, a new system designed to locate enemy forces operating behind the forward edge of the battle area. The QDR called for acquiring a total of 13 aircraft, six fewer than originally planned. This decision was based in part on the belief that NATO would buy 12 to 16 of the aircraft. Subsequently, however, NATO decided against the JSTARS purchase, mainly due to cost concerns. In order to compensate for this development, the House authorization bill would provide $72 million in unrequested advance procurement funding for two more JSTARS in FY 2000. At the same time, the House bill would cut $6 million from the request for R&D. The Senate bill also added $72 million in advance procurement funding for two JSTARS in FY 2000. However, the Senate bill would allow the funds to be used for termination costs if the administration decides against further JSTARS procurement. Unlike the House bill, the Senate bill would fully fund the R&D request.

The House appropriations bill would provide $72 million in advance procurement funds. It would also eliminate $25.6 million from the R&D request, including $6 million in cuts recommended by the House authorization bill, plus a $20 million cut in the the radar technology improvement program. The SAC bill would similarly cut $25 million in R&D funding for the radar program, but would provide no advance procurement funding.

C-130J: The C-130J Hercules is an intratheater airlift aircraft designed to transport troops and supplies. The C-130J is intended to replace the existing fleet of C-130Es early in the next century. The administration’s request includes $64 million for one aircraft. By contrast, the House authorization bill would provide $461 million for a total of eight C-130Js. This includes $112 million for two KC-130Js, $238 million for four C-130Js, $52 million for one EC-130J for the Air National Guard and $60 million for one WC-130J for the Air Force Reserve. The Senate bill would also add funding, providing a total of $382 million for five aircraft, including $191 million for three C-130Js, $85 million for one EC-130J and $75 million for one WC-130J.

The House appropriations bill would provide the funding for the additional aircraft included in the House authorization bill. The SAC bill would eliminate funding for an active duty C-130J included in the administration’s request, but would provide $30 million for a trainer. However, the SAC bill would provide $128 million for two C-130Js, $75.4 million for one WC-130J and $85 million for one EC-130J to be used by the reserves.

UH-60 Blackhawk: The administration’s request includes $219 million to procure 22 Blackhawk utility helicopters, 10 of which are intended for the Army National Guard. The service plans to buy 10 additional UH-60s each year through FY 2003. By comparison, under last year’s plan, procurement was to have ended in FY 1999. The House authorization bill would provide a total of $285 million to procure 30 UH-60s. The eight additional aircraft are intended for the Army National Guard. Similarly, the Senate bill also would provide $297 million for 30 UH-60s.

The House appropriations and SAC bills would provide $297 million and $293 million, respectively, for 30 UH-60s.

Comanche: The Army’s RAH-66 Comanche is intended eventually to replace the existing fleet of OH-58 scout and AH-1 attack helicopters. Altogether, the Army plans to procure 1,292 Comanches. In FY 1999 the administration requested $369 million for continued R&D. The House authorization bill would provide $430 million, an increase of $62 million to speed the development of a second prototype and to enhance testing in FY 1999. Similarly, the Senate bill would add $24 million to the program to reduce risk and support flight testing.

The House appropriations bill would add $24 million to mitigate program risk and accelerate development of a second prototype. The SAC bill would eliminate $18.6 million in R&D for the Comanche, reflecting engineering changes and delays in flight testing.

Shipbuilding
New Attack Submarine (NSSN): The FY 1999 budget request includes $1.5 billion for the procurement of the second NSSN, plus $505 million in advance procurement funding for the third submarine in FY 2001, and $300 million for R&D. Beginning in the early 1990s, Congress began vigorously debating how to approach the development and construction of a new class of attack submarines. That debate was largely resolved last year, when Congress and the administration agreed to have at least the first four NSSNs built jointly by Electric Boat (Groton, CT) and Newport News Shipbuilding (Newport News, VA), as part of a single class, and under a multi-year procurement contract. By contrast, plans originally called for the two yards to compete for the work, with each building two one-of-a-kind submarines. Currently, the Navy plans to procure one NSSN in each of the following years: FY 1998, FY 1999, FY 2001, FY 2002 and FY 2004, reaching a rate of two per year around FY 2005. Given other Navy priorities and budget constraints, even if the Navy can meet its goal of $1.5 billion per boat, the planned construction rate of two per year will be difficult to attain.

The House authorization bill would add $10 million to the procurement account for integration of non-propulsion electronic systems, while the Senate bill would add $12 million to the R&D account for integrating these systems. The Senate bill would not add any procurement funding to the request. The House authorization bill would also increase the R&D request by $22 million to integrate other new technologies into the NSSN.

The House appropriations bill would provide the additional $22 million for R&D included in the House authorization bill. The SAC bill would fund NSSN procurement at the requested level, but would add $13 million in R&D funding to improve the integration of new technologies.

CVN-77: Under the budget request submitted in February 1997, the Navy planned to request advance procurement funding in FY 2000 to cover long-lead nuclear components for CVN-77, the last Nimitz-class carrier, and to request full funding in FY 2002. The Navy and Newport News Shipbuilding argued that about $600 million could be saved if $345 million were provided to begin construction of CVN-77 in FY 1998 instead. In the end, Congress added $50 million in advance procurement funding in FY 1998. This year’s request makes a more modest attempt to accelerate procurement of CVN-77. Under this plan, the Navy is requesting another $125 million in advance procurement funding and $89 million for R&D. The Navy will request full funding in FY 2001, a year earlier than projected last year. Both the House and Senate authorization bills would fund CVN-77 at the requested level, as would both the House appropriations and SAC bills.

CV(X): The Navy requested $190 million for continued development of the CVX, the lead ship of a new class of aircraft carriers, and plans to requested funding in FY 2004 for long-lead items and full funding in FY 2006. The House and Senate authorization bills would fully fund the request. By contrast, the House appropriations bill would cut $90 million from the request for CVX development, while the SAC bill would cut $115.7 million from the request. These cuts reflect the expectation that the Navy may adopt a more evolutionary and less revolutionary approach to designing the CVX than projected earlier.

DDG-51: The Navy requested $133 million for continued R&D and $2.680 billion to procure three Arleigh Burke guided-missile destroyers in FY 1999. The request supports the second year of a multiyear procurement plan to construct three vessels per year between FY 1998 and FY 2001. Navy plans call for procuring three more ships in FY 2002 and FY 2003, and one more, the last of 57, in FY 2004. The House authorization bill would provide $2.675 billion in procurement funds, a $5 million decrease, and $133 million for R&D. By contrast, the Senate bill would fully fund the procurement request and add $2 million to the R&D request.

The House appropriations bill would cut $10 million from the procurement request, but would add $36.5 million in R&D funds, primarily for software development. The SAC bill would increase the R&D request by $2 million.

DD-21: The FY 1999 budget request calls for $85 million for continued development of the DD-21, a new class of surface combatants intended to replace existing DD-963 destroyers and FFG-7 guided missile frigates. The DD-21 will focus on land attack capabilities, complementing the DDG-51 destroyer’s primary mission of air defense. The Navy tentatively plans to acquire as many as 32 DD-21s, with construction on the first one to begin in FY 2004, a year later than anticipated in last year’s plan. However, this spring’s bidding on the concept and study phase originally attracted only one industry team. As a result, the program was delayed in hopes of creating a more competitive bidding environment. Since that decision, the Navy has announced the recent formation of two competing teams by the shipbuilding industry.

Reflecting the delays in awarding an initial development contract for the DD-21, the House authorization bill would cut $25 million from the request. For similar reasons the Senate bill would trim $8.6 million from the request; however, it would also add $4 million for propulsion system R&D, for a net decrease of $4.6 million from the request.

Similarly, the House appropriations bill would remove $68.9 million from the DD-21 development program; however, the SAC bill would provide the requested funding level.

LPD-17: Construction of the lead ship of this new class of amphibious transport dock ship began in FY 1996. The administration’s request includes $639 million to procure the second of a planned twelve ships in FY 1999. All four bills would fund the program at the requested level.

LHD-8: The administration’s FY 1999 request does not include any funding for an LHD-1 class amphibious assault ship. Instead, to maintain a fleet of 12 amphibious assault ships over the long term, the Navy plans to overhaul existing LHA-1 class ships through a service life extension program (SLEP) that would increase their lives from 35 to 50 years. However, according to the Senate, SLEPing the LHAs would be more expensive than procuring amphibious ships of a newer class. Therefore, the Senate bill would provide $50 million in unrequested advance procurement funding for an eighth LHD-1 class ship (LHD-8) in lieu of SLEPing LHA-1. Likewise, the House authorization bill would provide $10 million in unrequested advance procurement funding for the LHD-8.

The House appropriations bill would provide no LHD-8 funding, while the SAC bill, similar to the Senate authorization bill, would add $50 million in unrequested advance procurement funding.

Aid to the Former Soviet Union
The administration requested $442 million in Cooperative Threat Reduction (CTR) aid to the states of the former Soviet Union (FSU). The CTR program includes assistance to former Soviet republics engaged in destroying nuclear and chemical weapons, and support for various measures aimed at preventing the smuggling of such weapons across FSU borders to would-be proliferators. The House authorization bill would cut the request by a net $25 million, reflecting, first, the elimination of $53 million in requested construction funds for a chemical weapons destruction facility to be built in Russia and, second, a $31 million increase for additional strategic arms elimination activities in Russia and Ukraine. The Senate bill would cut the request by $2 million. Consistent with the House and Senate authorization bills, the House appropriations bill would cut $25 million, and the SAC bill, $2 million from the request.

For more information contact Elizabeth Heeter or Steven Kosiak at (202) 331-7990.

The Center for Strategic and Budgetary Assessments (CSBA) is an independent policy research institute established to promote innovative thinking about defense planning and investment strategies for the 21st century. CSBA research makes clear the inextricable link between defense strategies and budgets in fostering a more effective and efficient defense, and the need to transform the U.S. military in light of the emerging military revolution. The center is directed by Dr. Andrew F. Krepinevich.

© 1998 CSBA. All rights reserved.

1. While the defense authorization bill authorizes the appropriation of defense funding, the DoD, energy and water, military construction, and several other appropriations bills provide the actual funding. By far the largest of these appropriations bills is the DoD appropriations bill, which typically provides over 90 percent of all defense-related appropriations.

2. The defense authorization act funds not only the Department of Defense (DoD), but also defense-related activities of the Department of Energy (DoE) and other federal departments and agencies.