	Introduction

This report discusses the fiscal year (FY) 2017 defense budget request and provides a summary of congressional action on the National Defense Authorization Act (NDAA) for FY2017 ( H.R. 2943 / P.L. The Obama Administration's FY2017 budget request for national defense-related activities, and the initial versions of the FY2017 defense authorization and appropriations bills taken up in the House and Senate appear to be similar to one another and consistent with provisions of the Bipartisan Budget Act of 2015 (BBA/ P.L. In the Obama Administration's February 2016 budget request for FY2017, $5.1 billion of the $58.8 billion in OCO-designated funds were intended to be used for base budget purposes. 5293 —the version of the FY2017 defense appropriations bill passed by the House on June 16, 2016—the total amounts designated as base budget and as OCO conformed with the amounts specified by the BBA. However, the House bill would have increased the amount of OCO-designated funding to be used for base budget purposes, adding $15.1 billion to the $5.1 billion so-designated in the Obama Administration's request. On the other hand, the version of the defense appropriations bill reported by the Senate Appropriations Committee ( S. 3000 ) would not have increased (above the Obama Administration's request) the amount of OCO-designated funding to be used for base budget purposes. On November 10, 2016, the Obama Administration submitted an amendment to the OCO budget request, seeking an additional $5.8 billion to maintain approximately 8,400 troops in Afghanistan, to provide additional aviation assets for the Afghan Air Force, to support additional requirements in Iraq/Syria, and to address emerging force protection issues. On December 10, 2016, the initial FY2017 continuing resolution ( H.R. 114-223 ) was succeeded by a second continuing resolution ( H.R. 114-254 ) also appropriated a total of $5.8 billion for OCO-designated DOD funds for FY2017—including $1.5 billion in additional funding requested by the Obama Administration's November 2016 budget amendment. After the 115th Congress convened in January 2017, negotiators for the House and Senate Appropriations Committees drafted a new FY2017 defense appropriations bill— H.R. On May 3, 2017, a third version of the FY2017 defense appropriations bill passed the House as Division C of H.R. The FY2017 defense budget request went through two modifications after its initial presentation—an amendment by the Obama Administration in November 2016 to increase amounts for OCO by $5.8 billion and a request for additional appropriations by the Trump Administration in March 2017 for an additional $30.0 billion in funding ($24.9 billion for base and $5.1 billion for OCO). The Budgetary Context

Congressional deliberations on the FY2017 defense budget have been one facet of a broader budget discussion regarding the annual limits on discretionary appropriations (through FY2021) as established by the Budget Control Act of 2011(BCA/ P.L. The FY2017 Caps on Defense Spending

The Bipartisan Budget Act of 2015 (BBA/ P.L. According to the House Armed Services Committee, the remaining OCO funds authorized by H.R. 4909 —amounting to $35.7 billion—would cover the cost of OCO through April 2017. By then, the committee said, the newly elected President could request a supplemental appropriation to cover OCO funding requirements through the remaining months of FY2017. The Senate-passed NDAA also would have complied with the BCA caps and the 2015 BBA agreement on minimum funding for OCO by authorizing $523.9 billion for base budget activities and $58.8 billion for OCO. The Senate version of the defense appropriations bill, S. 3000, was reported out of the Senate Appropriations Committee on May 26, 2016 and would have provided $509.5 billion in discretionary base budget authority along with $58.6 billion for OCO requirements Unlike the House, the Senate did not use OCO-designated funds to increase the base budget. 4909 and S. 2943 ) or by H.R. By that date, DOD's FY2017 military construction budget had been funded in the annual appropriations bill that also funded the Department of Veterans Affairs and certain other agencies ( H.R. 114-223 also included a continuing resolution (CR) to provide temporary funding for federal agencies for which no FY2017 funds had been appropriated by the start of the fiscal year. This first CR ( H.R. Division B of this second FY2017 CR ( P.L. 99 / P.L. 115-30 ) was enacted April 28, 2017, to extend the provisions of the second continuing resolution ( P.L. 1301 but included a new title (Title X) which provided $14.8 billion in "Additional Appropriations" for DOD, all of which were designated as funding for Overseas Contingency Operations. In total, H.R. 1301 —the version of the FY2017 defense appropriations bill passed by the House on March 8, 2017-added to the request a total of $1.3 billion to fund both the higher end-strength authorized by the NDAA and a higher military pay raise than the Obama Administration had requested. The enacted version of the NDAA, like the versions passed by the House and Senate, authorizes the full amount requested for the second and third ships, a total of $2.7 billion The House version also would have authorized an additional $263 million for AP funding for the fourth carrier in the class, but that was not included in the final version of the authorization bill. The enacted bill ( H.R. 244 / P.L. On March 16, 2017, the Trump Administration requested additional DOD funds for FY2017, including $5.1 billion designated as OCO-related. As enacted—after President Obama increased the total FY2017 OCO request to $64.6 billion—the final version of the FY2017 NDAA authorized $67.8 billion, $9.0 billion more than the original request and $3.2 billion more than the adjusted request. 1301 (the second FY2017 defense appropriations bill) was generally based on the Obama Administration's initial FY2017 budget request, balancing the November 2016 OCO budget amendment and the amount provided by H.R. 114-328 ) as OCO funding for base budget purposes, and the "additional appropriations" designated as OCO funding in Division C, Title X of Consolidated Appropriations Act, 2017 ( P.L.
This report discusses the Obama Administration's FY2017 defense budget request and provides a summary of congressional action on the National Defense Authorization Act (NDAA) for FY2017 (S. 2943/P.L. 114-328), and the FY2017 Defense Appropriations Act (H.R. 244/P.L. 115-31).
In February 2016, the Obama Administration requested $523.9 billion to cover the FY2017 discretionary base budget of the Department of Defense (DOD) and $58.8 billion in discretionary funding for Overseas Contingency Operations (OCO). The OCO budget category generally includes funding related to the incremental cost of operations such as those in Afghanistan, Iraq, Syria and certain DOD activities aimed at deterring Russian aggression in Europe. The balance of the DOD budget—that portion not designated as OCO—comprises what is often referred to as the base budget.
Combined with an anticipated expenditure of $7.9 billion mandatory defense spending, the Obama Administration's total budget FY2017 request for DOD was $590.5 billion as of February 2016.
On November 10, 2016, the Obama Administration submitted an amendment to the OCO budget request, seeking an additional $5.8 billion to maintain approximately 8,400 troops in Afghanistan, to provide additional aviation assets for the Afghan Air Force, to support additional requirements in Iraq/Syria, and to address emerging force protection issues. This brought the FY2017 OCO discretionary budget request to $64.6 billion.
On March 16, 2017—by which date the FY2017 NDAA had been enacted, but Congress had not completed action on the FY2017 defense appropriations bill—the Trump Administration requested additional DOD funding for FY2017. The additional funds –$24.9 billion for base budget activities and $5.1 billion designated for OCO—brought the total DOD request for FY2017 to $626.3 billion.
Congressional deliberations on the FY2017 defense budget occurred in the context of broader budget discussions about the binding annual caps on base budget discretionary appropriations for defense and nondefense programs. These caps were established by the Budget Control Act of 2011 (BCA/P.L. 112-25) as last amended by the Bipartisan Budget Act of 2015 (BBA/P.L. 114-74). The BCA provides that amounts appropriated for OCO or emergencies are not counted against the established discretionary spending limits.
In addition to raising the FY2017 discretionary defense spending cap on the base budget to $551 billion, the 2015 BBA set a nonbinding target of $58.8 billion for OCO-designated defense spending in FY2017. The Obama Administration's FY2017 budget request matched the base budget cap and the OCO target that were set by the BBA. Of note, the request allocated $5.1 billion of the $58.8 billion in OCO-designated funds for base budget purposes.
In the House-passed versions of both the NDAA (H.R. 4909) and the initial defense appropriations bill (H.R. 5293) for FY2017, the total amounts for base and OCO conformed with the amounts specified by the BBA. However, both House bills would have increased the amount of OCO-designated funding to be used for base budget purposes: the authorization bill would have added $18.0 billion and the appropriations bill would have added $15.1 billion to the $5.1 billion so-designated in the Obama Administration's request. According to the House Armed Services Committee, the remaining OCO funds authorized by H.R. 4909 – amounting to $35.7 billion – would cover the cost of OCO through April 2017. By then, the committee said, the newly elected President could request a supplemental appropriation to cover OCO costs for the balance of FY2017.
Neither the Senate-passed NDAA nor the version of the defense appropriations bill reported by the Senate Appropriations Committee (S. 3000) would have increased the amount of OCO-designated funding to be used for base budget purposes above the Obama Administration's request. The enacted version of the FY2017 NDAA (S. 2943/P.L. 114-328), authorized $543.4 billion for DOD base budget activities—$2 million less than was requested—and $67.8 billion designated as OCO funding. The OCO-designated funding totaled $3.2 billion more than the Administration's OCO request as amended in November and this additional funding was directed at base budget requirements.
DOD's military construction budget for FY2017 was funded in the annual appropriations bill that also funded the Department of Veterans Affairs and certain other agencies (H.R. 5325/P.L. 114-223, enacted on September 29, 2016). That bill also incorporated a continuing resolution to provide temporary funding for federal agencies for which no FY2017 funds had been appropriated by the start of the fiscal year (October 1, 2016). This first FY2017 continuing resolution (CR) was succeeded by a second continuing resolution (H.R. 202/P.L. 114-254), enacted on December 10, 2016. Division B of this second FY2017 CR also appropriated a total of $5.8 billion for OCO-designated DOD funds for FY2017, including $1.45 billion requested in the Obama Administration's November 2016 budget amendment.
After the 115th Congress convened in January 2017, negotiators for the House and Senate Appropriations Committees drafted a new FY2017 defense appropriations bill—H.R. 1301. It was based on the original February 2016 budget request for FY2017 plus a portion of the OCO funding requested in November. The House passed H.R. 1301 on March 8, 2017. The Senate took no action on this bill.
A third CR (H.J.Res. 99/P.L. 115-30) was enacted April 28, 2017 to provide an extra week to finalize the bills. On May 3, 2017, the House passed a third version of the FY2017 defense appropriations bill as Division C of H.R. 244, the Consolidated Appropriations Act, 2017. Division C aligned with H.R. 1301 but included a new title (Title X) which provided $14.8 billion in response to the Trump Administration's request for additional appropriations. All of the amounts in Title X are designated OCO funding. In total, H.R. 244 provided $582.4 billion in funding for the DOD. The Senate passed H.R. 244 on May 5, 2017, and the bill was signed into law (P.L. 115-31) before the third FY2017 CR expired.