U.S. House pushes pay, purchasing reforms in annual defense bill

[May 16, 2015]  WASHINGTON (Reuters) - The U.S. House of Representatives passed an annual defense policy bill on Friday that would authorize $604 billion in defense spending for the 2016 fiscal year and start reforms that could help curb costs over the long run.

The Republican-dominated House approved its version of the 2016 National Defense Authorization Act by a 269-151 vote, overcoming a Democratic push to reject the bill. The White House has threatened a veto because the bill uses a procedural gimmick to circumvent budget caps for defense spending.

The measure includes reforms to speed development of new weapons systems and reduce their cost by cutting layers of bureaucracy. It also begins to reform the military compensation system, including changing retirement plans to ensure that even those who serve just a few years will have some benefits.

"Right now 83 percent of the people who serve come away with no retirement (pay). Under this bill, they can put some money aside, the government will match it and they can have a nest egg," said Representative Mac Thornberry, the committee chairman.

The measure would authorize a Pentagon base budget of $495.9 billion, plus $19 billion for nuclear weapons work in the Department of Energy, complying with spending limits imposed in the 2011 Budget Control Act. That is about $38 billion less than President Barack Obama requested in his defense budget.

But the measure also authorizes $89.2 billion in overseas war funding not covered by the budget limits, some $38 billion more than the president's request, offsetting the amount it removed from his base budget proposal.

Republicans have defended the move, saying it gives the president the funding he sought for defense without breaking the 2011 budget caps. Democrats have criticized it, noting it does not help reduce deficit spending, which was the point of the Budget Control Act.

The authorization of $604 billion for the 2016 fiscal year beginning Oct. 1 compares with about $561 billion received by the Pentagon this year, including a $496 billion base budget and about $65 billion in war funding.

The NDAA is used by the armed services committees in Congress to set policy for the U.S. Defense Department and authorize spending, but it does not actually appropriate funds. That is done by the appropriations committees in the House and Senate through a different bill.

The House version of the NDAA still must be reconciled with a Senate bill and adopted by both chambers before being sent to the president. The Republican-controlled Senate Armed Services Committee passed its version of the NDAA on Thursday.

(Reporting by David Alexander; Additional reporting by Patricia Zengerle; Editing by Dan Grebler)

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