Military Construction, Veterans Affairs, and Related Agencies: FY2013 Appropriations

Daniel H. Else
Specialist in National Defense

Christine Scott
Specialist in Social Policy

Sidath Viranga Panangala
Specialist in Veterans Policy

The Military Construction, Veterans Affairs, and Related Agencies appropriations bill provides funding for the planning, design, construction, alteration, and improvement of facilities used by active and reserve military components worldwide. It capitalizes military family housing and the U.S. share of the NATO Security Investment Program and finances the implementation of installation closures and realignments. It underwrites veterans benefit and health care programs administered by the Department of Veterans Affairs (VA), provides for the creation and maintenance of U.S. cemeteries and battlefield monuments within the United States and abroad, and supports the U.S. Court of Appeals for Veterans Claims, Armed Forces Retirement Homes, and Arlington National Cemetery. The bill also funds advance appropriations for veterans’ medical services.

President Barack Obama submitted his request to Congress for FY2013 appropriations on February 13, 2012. For the appropriations accounts included in this bill, his request totaled $145.2 billion in new budget authority, divided into three major categories: Title I (military construction and family housing) at $11.2 billion; Title II (veterans affairs) at $135.6 billion; and Title III (related agencies) at $219.5 million. Of the total, $74.4 billion (49.9%) would be discretionary appropriations, with the remainder considered mandatory. On May 15, the House Committee on Appropriations reported a bill recommending appropriating $10.9 billion for Title I (less $235 million in funds rescinded from prior years), $135.4 billion for Title II, and $347 million for Title III.

Military construction funding amounts requested by the President and enacted by Congress have fallen off as the 2005 Defense Base Closure and Realignment (BRAC) round has reached completion, although Secretary of Defense Leon Panetta has requested statutory authority to carry out two new BRAC rounds in 2013 and 2015. Funding support for military family housing construction has also declined as the military departments (Army, Navy, and Air Force) continue their efforts to privatize formerly government-owned accommodations.

Funding for the VA between FY2012 and FY2013 in the Administration request, H.R. 5854, and S. 3215, reflects increases for mandatory veterans’ benefits and health care. The largest percentage increases between FY2012 and FY2013 are for mandatory benefits, primarily disability compensation and pension benefits.

The House Committee on Appropriations reported its FY2013 bill (H.R. 5854) on May 16, 2012 (H.Rept. 112-491) and passed the bill on May 31. The Senate received H.R. 5854 on June 5. The Senate Committee on Appropriations reported its bill (S. 3215) on May 22 (S.Rept. 112-168), and the bill was placed on the Legislative Calendar under General Orders.


Date of Report: July 5, 2012
Number of Pages: 32
Order Number: R42586
Price: $29.95


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Navy Aegis Ballistic Missile Defense (BMD) Program: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

The Aegis ballistic missile defense (BMD) program, which is carried out by the Missile Defense Agency (MDA) and the Navy, gives Navy Aegis cruisers and destroyers a capability for conducting BMD operations. Under MDA and Navy plans, the number of BMD-capable Navy Aegis ships is scheduled to grow from 24 at the end of FY2011 to 36 at the end of FY2018.

Under the Administration’s European Phased Adaptive Approach (EPAA) for European BMD operations, BMD-capable Aegis ships have begun operating in European waters to defend Europe from potential ballistic missile attacks from countries such as Iran. On October 5, 2011, the United States, Spain, and NATO jointly announced that, as part of the EPAA, four BMD-capable Aegis ships are to be forward-homeported (i.e., based) at Rota, Spain, in FY2014 and FY2015. BMD-capable Aegis ships also operate in the Western Pacific and the Persian Gulf to provide regional defense against potential ballistic missile attacks from countries such as North Korea and Iran.

The Aegis BMD program is funded mostly through MDA’s budget. The Navy’s budget provides additional funding for BMD-related efforts. MDA’s proposed FY2013 budget requests a total of $2,303.0 million in procurement and research and development funding for Aegis BMD efforts, including funding for Aegis Ashore sites that are to be part of the EPAA.

Issues for Congress for FY2013 include:

• the reduction under the proposed FY2013 budget in the ramp-up rate for numbers of BMD-capable Aegis ships over the next few years; 
• the cost effectiveness and U.S. economic impact of shifting four Aegis ships to Rota, Spain; 
• U.S. vs. European naval contributions to European BMD; 
• the lack of a target for simulating the endo-atmospheric (i.e., final) phase of flight of China’s DF-21 anti-ship ballistic missile; 
• the capability of the SM-3 Block IIB Aegis BMD interceptor; and 
• concurrency and technical risk in the Aegis BMD program.

Date of Report: July 2, 2012
Number of Pages: 82
Order Number: RL33745
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Department of Defense Energy Initiatives: Background and Issues for Congress

Moshe Schwartz
Specialist in Defense Acquisition

Katherine Blakeley
Research Associate

Ronald O'Rourke
Specialist in Naval Affairs

The Department of Defense (DOD) spends billions of dollars per year on fuel, and is pursuing numerous initiatives for reducing its fuel needs and changing the mix of energy sources that it uses. DOD’s energy initiatives pose several potential oversight issues for Congress, and have been topics of discussion and debate at hearings on DOD’s proposed FY2013 budget.

By some accounts, DOD is the largest organizational user of petroleum in the world. Even so, DOD’s share of total U.S. energy consumption is fairly small. DOD is by far the largest U.S. government user of energy. The amount of money that DOD spends on petroleum-based fuels is large in absolute terms, but relatively small as a percentage of DOD’s overall budget. DOD’s fuel costs have increased substantially over the last decade, to about $17 billion in FY2011. Petroleum-based liquid fuels are by far DOD’s largest source of energy, accounting for approximately two-thirds of DOD energy consumption. When DOD’s fuel use is divided by service, the Air Force is the largest user; when divided by platform type, aircraft are the largest user.

According to DOD, currently about 75% of DOD’s energy use is operational energy and about 25% is installation energy. Operational energy is defined in law as “the energy required for training, moving, and sustaining military forces and weapons platforms for military operations.” Installation energy is not defined in law, but in practice refers to energy used at installations, including non-tactical vehicles, that does not fall under the definition of operational energy.

DOD’s reliance on fuel can lead to financial, operational, and strategic challenges and risks. Financial challenges and risks relate to the possibility of a longer-term trend of increasing costs for fuel, and to shorter-term volatility in fuel prices. Operational challenges and risks relate to: (1) the diversion of resources to the task of moving fuel to the battlefield; (2) the negative impact of fuel requirements on the mobility of U.S. forces and the combat effectiveness of U.S. equipment, and (3) the vulnerability of fuel supply lines to disruption. Strategic challenges and risks relate to getting fuel to the overseas operating area, and ensuring the global free flow of oil.

As part of its FY2013 budget submission, DOD has requested more than $1.4 billion for operational energy initiatives in FY2013. DOD’s office of Operational Energy Plans and Programs, headed by the Assistant Secretary of Defense, Operational Energy Plans and Programs (ASD (OEPP)), is responsible for developing DOD policy for operational energy and alternative fuels, and for coordinating operational energy efforts across the services.

Congress has been concerned with energy policy since the 1970s, and has passed legislation relating to federal government energy use, including DOD installation energy use. Congress has set specific energy-reduction targets for DOD installation energy, but not for operational energy.

Potential oversight issues for Congress regarding DOD’s energy initiatives include:

• DOD’s coordination of operational energy initiatives being pursued by the military services. 
• DOD’s efforts to gather reliable data and develop metrics for evaluating DOD’s energy initiatives. 
• DOD’s estimates of future fuel costs. 
• DOD’s role in federal energy initiatives. 
• The Navy’s initiative to help jumpstart a domestic advanced biofuels industry. 
• The potential implications for DOD energy initiatives of shifts in U.S. military strategy.

Date of Report: June 26, 2012
Number of Pages: 68
Order Number: R42558
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Multiyear Procurement (MYP) and Block Buy Contracting in Defense Acquisition: Background and Issues for Congress

Ronald O'Rourke
Specialist in Naval Affairs

Moshe Schwartz
Specialist in Defense Acquisition

Multiyear procurement (MYP) and block buy contracting (BBC) are special contracting mechanisms that Congress permits the Department of Defense (DOD) to use for a limited number of defense acquisition programs. Compared to the standard or default approach of annual contracting, MYP and BBC have the potential for reducing weapon procurement costs by several percent.

Under annual contracting, DOD uses one or more contracts for each year’s worth of procurement of a given kind of item. Under MYP, DOD instead uses a single contract for two to five years’ worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year. DOD needs congressional approval for each use of MYP. There is a permanent statute governing MYP contracting—10 U.S.C. 2306b. Under this statute, a program must meet several criteria to qualify for MYP.

Compared with estimated costs under annual contracting, estimated savings for programs being proposed for MYP have ranged from less than 5% to more than 15%, depending on the particulars of the program in question, with many estimates falling in the range of 5% to 10%. In practice, actual savings from using MYP rather than annual contracting can be difficult to observe or verify because of cost growth during the execution of the contract due to changes in the program independent of the use of MYP rather than annual contracting.

BBC is similar to MYP in that it permits DOD to use a single contract for more than one year’s worth of procurement of a given kind of item without having to exercise a contract option for each year after the first year. BBC is also similar to MYP in that DOD needs congressional approval for each use of BBC. BBC differs from MYP in the following ways:

• There is no permanent statute governing the use of BBC. 
• There is no requirement that BBC be approved in both a DOD appropriations act and an act other than a DOD appropriations act. 
• Programs being considered for BBC do not need to meet any legal criteria to qualify for BBC, because there is no permanent statute governing the use of BBC that establishes such criteria. 
• A BBC contract can cover more than five years of planned procurements. 
• Economic order quantity (EOQ) authority—the authority to bring forward selected key components of the items to be procured under the contract and purchase the components in batch form during the first year or two of the contract—does not come automatically as part of BBC authority because there is no permanent statute governing the use of BBC that includes EOQ authority as an automatic feature. 
• BBC contracts are less likely to include cancellation penalties. 

Potential issues for Congress concerning MYP and BBC include whether to use MYP and BBC in the future more frequently, less frequently, or about as frequently as they are currently used, and whether to create a permanent statute to govern the use of BBC, analogous to the permanent statute that governs the use of MYP.


Date of Report: June 27, 2012
Number of Pages: 23
Order Number: R41909
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U.S. Nuclear Cooperation with India: Issues for Congress

Paul K. Kerr
Analyst in Nonproliferation

India, which has not signed the Nuclear Nonproliferation Treaty and does not have International Atomic Energy Agency safeguards on all of its nuclear material, exploded a “peaceful” nuclear device in 1974, convincing the world of the need for greater restrictions on nuclear trade. The United States created the Nuclear Suppliers Group (NSG) as a direct response to India’s test, halted nuclear exports to India a few years later, and worked to convince other states to do the same. India tested nuclear weapons again in 1998. However, President Bush announced July 18, 2005, he would “work to achieve full civil nuclear energy cooperation with India” and would “also seek agreement from Congress to adjust U.S. laws and policies,” in the context of a broader partnership with India.

U.S. nuclear cooperation with other countries is governed by the Atomic Energy Act (AEA) of 1954 (P.L. 95-242). However, P.L. 109-401, which President Bush signed into law on December 18, 2006, allows the President to waive several provisions of the AEA. On September 10, 2008, President Bush submitted to Congress, in addition to other required documents, a written determination that P.L. 109-401’s requirements for U.S. nuclear cooperation with India to proceed had been met. President Bush signed P.L. 110-369, which approved the agreement, into law October 8, 2008. Then-Secretary of State Condoleezza Rice and India’s then-External Affairs Minister Shri Pranab Mukherjee signed the agreement two days later, and it entered into force December 6, 2008. Additionally, the United States and India signed a subsequent arrangement in July 2010 which governs “arrangements and procedures under which” India may reprocess U.S.- origin nuclear fuel in two new national reprocessing facilities, which New Delhi has not yet constructed.

The NSG, at the behest of the Bush Administration, agreed in September 2008 to exempt India from some of its export guidelines. That decision has effectively left decisions regarding nuclear commerce with India almost entirely up to individual governments. Since the NSG decision, India has concluded numerous nuclear cooperation agreements with foreign suppliers. However, U.S. companies have not yet started nuclear trade with India and may be reluctant to do so if New Delhi does not resolve concerns regarding its policies on liability for nuclear reactor operators and suppliers. Taking a step to resolve such concerns, India signed the Convention on Supplementary Compensation for Nuclear Damage, which has not yet entered into force, October 27, 2010. However, many observers have argued that Indian nuclear liability legislation adopted in August 2010 is inconsistent with the Convention.

The Obama Administration has continued with the Bush Administration’s policy regarding civil nuclear cooperation with India. According to a November 8, 2010, White House fact sheet, the United States “intends to support India’s full membership” in the NSG, as well as other multilateral export control regimes.


Date of Report: June 26, 2012
Number of Pages: 49
Order Number: RL33016
Price: $29.95


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