Last week the Senate Armed Services Committee (SASC) approved the FY2016 Defense Authorization bill by a vote of 22-4. Four Democrats, including Ranking Member Sen. Jack Reed (D-RI), voted against the bill. The House passed its version of the bill this week.

The bill authorizes force levels, programs, and policies (including military pay raises) for DoD budgets and the programs and policies for the Department of Energy (DoE) nuclear weapons program.  Appropriations bills provide actual funding.

The SASC bill authorizes a total of $612 billion, including about $485 billion for the Department of Defense (DoD) base budget and $89 billion for Overseas Contingency Operations (OCO). A provision in the bill would allow DoD to transfer $38 billion from OCO to the base budget if defense and nondefense funding caps are revised in legislation.

Sen. Reed, and other Senate Democrats are concerned that including the additional base budget funding in OCO to get around defense funding caps (set in the Budget Control Act) could lead to cuts to nondefense programs. They are pushing for a deal to revise these caps. The White House has threatened a presidential veto of any bill that increases defense funding at the expense of nondefense programs.

Secretary of Defense Ash Carter also criticized this mechanism telling a Senate Committee that this approach is “a road to nowhere” that risks the incremental funding approach for OCO.

Sen. John McCain (R-AZ) SASC chairman, called the bill a “reform bill.” “It tackles acquisition reform, military retirement reform, personnel reform, headquarters and management reform,” he said. He stressed the reforms in the bill will yield savings that can be reinvested in military capabilities.

The SASC bill proposes a “multi-year effort” to improve DoD acquisition system’s structure and process. The SASC proposal is framed in five objectives: 1) establish effective accountability by streamlining decision making and giving a larger role to the service chiefs under performance agreements; 2) develop alternative acquisition pathways including “rapid prototyping and rapid fielding within five years; 3) improve access to non-traditional and commercial contractors by making it easier for such firms to do business with DoD; 4) deregulate and streamline processes by reducing unneeded requirements, reports, and certification; and 5) improve the acquisition workforce by reauthorizing the “Defense Acquisition Workforce Development Fund,” establishing direct hire authorities, and creating enhanced dual-track career paths.

The bill (similar to the House-passed bill) includes a recommendation from the Military Compensation and Retirement Modernization Commission calling for a “blended” military retirement system. Under the bill, new service members would be automatically enrolled in the Thrift Savings Plan (TSP) with a matching contribution from DoD that could go to 5 percent, starting in FY2018. Current servicemembers could choose to join the plan.

The bill also proposes a management reform plan that would “focus limited resources on operations rather than administration.” The proposal would cut funding for “headquarters and administrative functions” DoD-wide by 7.5 percent each year for four years, saving $1.7 billion in FY2016 and reaching annual savings of $6.8 billion by the fourth year. The bill directs the Secretary of Defense to conduct a “comprehensive review of the management, headquarters, and organization of the Department of Defense” and directs the DoD Inspector General to “perform financial statement audits by contracting with independent external auditors.”

The SASC bill approves the president’s request for a 1.3 percent military pay raise, lower than the 2.3 percent military raise included in the House-passed bill.

Like the House, the SASC bill rejects administration proposals to set enrollment fees for TRICARE for Life beneficiaries or consolidate the TRICARE program, retire the A-10 attack jet fleet, and to initiate another Base Realignment and Closure (BRAC) round.

Unlike the House-passed bill, the SASC bill approves the president’s request to reduce the Basic Allowance for Housing (BAH) and to use commissary surcharge funds to purchase operating supplies.

Agreeing with the House, the bill also funds 12 more F/A-18E/F Hornet aircraft for the Navy (+$1.2 billion) and 6 more F-35B aircraft for the Marine Corps (+$1 billion), which were identified by the Services as unfunded priorities.

The full Senate is expected to take up the bill in June after returning from the Memorial Day recess.