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June 8, 2000

BILL, FY 2001

(Sponsor: Stevens (R) Alaska)

This Statement of Administration Policy provides the Administration's views on S. 2593, the Department of Defense Appropriations Bill, FY 2001, as reported by the Senate Appropriations Committee. Your consideration of the Administration's views would be appreciated. While the Committee has developed a bill providing requested funding for many of the President's defense priorities, S. 2593 raises several budget and policy concerns as outlined below. The following highlights our specific concerns with the Committee bill. We look forward to working with the Senate to resolve these issues as the bill moves forward.

Funding Levels

The Senate Committee bill would provide $3.1 billion more for Department of Defense programs in FY 2001 than requested by the President. This increase is in contrast to the President's fiscal and spending priorities, which provide a balanced approach that maintains fiscal discipline, eliminates the national debt, and extends the solvency of Social Security and Medicare. Providing additional funds for Department of Defense activities in excess of the significant increases sought by the President over FY 2000 levels would reduce resources for non-defense programs that are critical to our Nation's future.

Health Care for Medicare-Eligible Military Retirees

The Committee bill includes $137 million for the new pharmacy benefit for Medicare-eligible military retirees proposed by the Senate Armed Services Committee. The Administration supports the Committee's commitment to this new benefit and believes strongly that military retirees must have access to comprehensive prescription drug coverage. However, the Administration is concerned that this funding level will not cover the cost of the program, which we estimate to be close to $200 million in FY 2001. The Defense Health Program already faces significant challenges in managing expansive benefits in the face of fiscal constraints, which would only be compounded by the need to fund a new program. We urge the Senate to fully fund this proposal, especially in the context of funds already provided in this bill.

LPD-17 Reductions

The Administration opposes the deletion of funds to procure two LPD-17 Amphibious Transport Dock ships, an action the Committee has based on cost growth and schedule delays. The budget request accounts for schedule delays in the program and includes funds to cover cost growth for the first several ships. The LPD-17 program is a critical program in the Navy's effort to recapitalize an aging force of amphibious ships. Deletion of these funds would add further cost to the program. Moreover, the Committee's action would further delay the operational availability of these two LPD-17s, forcing the Navy to retain older, less capable ships in the fleet longer than anticipated and risking an increase in maintenance costs. The Administration urges the Senate to restore funding for these ships.

Joint Strike Fighter

The Administration opposes the deletion of the $596 million requested to initiate engineering and manufacturing development (EMD) for the Joint Strike Fighter (JSF) and the addition of $392 million to extend the demonstration and validation phase of the project -- a net reduction of $204 million to the program. The Committee is apparently concerned that the JSF will enter EMD before it is ready. The Department of Defense intends to conduct a thorough evaluation and testing of the program before starting the EMD phase. The Committee bill would remove managerial flexibility from the Department, which would be potentially disruptive to the program. We urge the Senate to fund the JSF as requested by the President.

Deletion of Shipbuilding Prior-Year Completion Funds

The Administration objects to the Committee's deletion of $263 million for completion of prior-year shipbuilding programs. Instead, the Committee has included authority for the Secretary of the Navy to transfer up to $300 million to cover cost changes to ongoing ship construction programs. The Administration opposes these actions. The Administration has requested funds to cover cost increases for the Virginia Class attack submarine, the CVN-76 nuclear aircraft carrier, and DDG-51 destroyers. This funding is critical to maintaining construction schedules. While the Committee provides the Secretary of the Navy with the authority to transfer up to $300 million to cover certain costs, such transfers would be disruptive, since they would have to come at the expense of other ongoing Navy programs. The Administration urges the Senate to restore funding in the Shipbuilding and Conversion account for completion of prior-year programs.

Unrequested Funding for Procurement and R&D Programs

Much of the additional funding in the Committee bill is for unrequested procurement and R&D programs, funding that comes at the expense of more urgent needs. The President's FY 2001 request meets the $60 billion procurement target established in the Quadrennial Defense Review (QDR) and represents a balanced approach to modernization. The Committee bill adds funding for several unrequested procurement items, including: $150 million for National Guard and Reserve Equipment; $165 million for two variants of the C-130J aircraft; $110 million for two C-40A Naval Reserve transport planes; $119 million for nine Blackhawk helicopters for the Army and Navy; and, $460 million in advance procurement funding for construction of the LHD-8 amphibious ship.

The Committee bill has likewise added funds to the request for Research, Development, Test and Evaluation. This increase includes $81 million for Army Missile Defense Systems Integration, $92 million for the Airborne Laser Program, $200 million for the Remotely Controlled Combat Systems Initiative, and $93 million for ballistic missile defense technologies. Of the increases proposed by the Committee, many are of low military value as judged by the military services.

At the same time, the Committee bill fails to fully fund the development of many new technologies of importance to DoD. For example, the Committee has made a $50 million reduction to proposed projects critical to two key information technology programs: Extensible Information Systems and Computing Systems and Communications Technology. The Committee bill would also cut the request for the chemical weapons demilitarization program by $24 million and would eliminate all funding for the coalition warfare program.

Overseas Humanitarian, Disaster, and Civic Aid

The Committee bill would cut the Overseas Humanitarian, Disaster, and Civic Aid account by $9 million below the President's request, citing concerns that the Department of Defense has been funding activities more suitable to the Department of State. The Administration objects to this reduction because it would constrain support for DoD's humanitarian assistance and demining programs, which are critical to the Commanders in Chief's (CINC's) regional engagement plans. These programs augment the CINC's ability to shape the environment and to prepare to respond rapidly and effectively to humanitarian crises. Also, the U.S. military obtains substantial training and access benefits by participating in Overseas Humanitarian, Disaster, and Civic Aid activities, enhancing readiness across a wide range of operational areas. The Administration assures the Committee that all of the programs are coordinated with the Department of State to ensure appropriate execution and compliance with national security and foreign policy interests.

National Missile Defense

Section 8116 of the Committee bill would require the Ballistic Missile Defense Organization and all associated contractors to notify Congress 30 days prior to issuing any type of information or proposal solicitation under the National Missile Defense (NMD) program. We object to this provision because it would create an overly burdensome and broad reporting requirement that could cause NMD schedule delays and cost increases.

Domestic Sourcing Restrictions

There are a number of provisions contained in the Committee bill (sections 8016, 8064, and 8092) that would preclude the Department of Defense from procuring certain foreign products. The Administration opposes domestic source restrictions on defense acquisition because they undermine DoD's ability to procure the best systems at the least cost; frustrate initiatives to increase interoperability with our allies and efforts to advance highly beneficial armaments cooperation with them; and, may cause other countries to retaliate by refusing to purchase U.S. products.

Critical Infrastructure Protection/Cyber Crime

The Administration urges the Senate to provide the President's request of $1.46 billion for the national security community for critical infrastructure protection/cyber crime. These funds are a crucial component of the national, interagency effort to protect infrastructure -- particularly information systems -- in both Government and the private sector that is essential to the functioning of our economy, national defense, and the safety of the population. The funds requested for the national security community are necessary in order to protect critical national security infrastructures against attack and ensuring the integrity and security of both DoD and intelligence community information systems.

Weapons of Mass Destruction

The Administration urges the Senate to provide the President's request of $467 million for the national security community to counter threats posed by terrorism and the use of biological and chemical weapons of mass destruction. Adversaries are expected to rely increasingly on these unconventional strategies to offset U.S. military superiority. The funds requested for the security community would improve our ability to provide support to the designated lead Federal agencies for domestic preparedness based on the national security community's long experience with defense against weapons of mass destruction and its capability to respond with specially trained and equipped personnel.