Military pay raise, TRICARE premium hikes part of defense authorization bill

Lawmakers have agreed on a $662 billion defense spending bill that includes a 1.6 percent pay raise, increases to TRICARE premiums and a cap on contractor execu...

By Jolie Lee
Federal News Radio

(Updated: Jan. 2, 2012)

The President has signed a $662 billion defense bill that sets spending and policy priorities for the Defense Department.

The 2011 Defense Authorization Act includes a 1.6 percent pay raise, increases to TRICARE premiums and extends a cap on contractor executive pay.

The House and Senate approved the bill last month.

The bill authorizes spending for military personnel, weapons systems, national security programs in the Energy Department, and the wars in Iraq and Afghanistan for the fiscal year that began on Oct. 1. The spending level is $27 billion less than the President requested and $43 billion less than Congress gave the Pentagon for fiscal 2011.

Some of the major parts of the bill affecting defense employees:

Pay and benefits

  • Increases military pay across-the-board by 1.6 percent.
  • Allows for increases to TRICARE premiums but caps increases to the cost-of-living adjustment beginning Oct. 1, 2012.
  • Does not prohibit pharmacy copayment changes.
  • Extends time limit for submitting TRICARE claims from one year to five years for care provided outside of the United States.


  • Extends a cap on government-contracting salaries to all contractor employees (not just the top five most highly paid executives in each company). The provision offers an exemption for scientists and engineers. However, the final bill does not limit all salaries to $400,000 as a Senate amendment would have done. The current cap of $698,951 — which follows a set formula — will be extended to all contracting employees.
  • Freezes spending on contract services at fiscal 2010 levels.
  • Strengthens protections against counterfeit electronic parts.
    • Requires contractors to pay for the replacement of suspect counterfeit parts.
    • Requires DoD officials and contractors to purchase electronic parts from trusted suppliers.
    • Requires DoD to set up procedures to detect counterfeit parts.

National Guard

  • Includes the chief of the National Guard Bureau as a member of the Joint Chiefs of Staff.
  • The position of the Director of the Joint Staff of the bureau wil be renamed “Vice Chief of the National Guard Bureau.”

F-35 contract

  • Requires the sixth lot of aircraft Low Rate Initial Production and all subsequent contracts are fixed-price. The contractor must assume any costs above the price in the contract.


  • Under the President’s direction, gives DoD the authority to conduct an offensive cyber operation.

Renewable energy

  • Sets a goal for DoD to get 25 percent of its energy from renewable sources by 2025.
  • Directs Army to create an investment plan to implement the Army’s Net Zero pilot programs.

Read the Senate Armed Services Committee bill summary.

Read the House Armed Services Committee bill summary.

Read the full bill.

(Correction: An earlier version of this article incorrectly stated that a $400,000 cap on contracting employees’ salary was included in the final bill. In fact, that pay cap was not included in the final version of the bill.)

The Associated Press contributed to this story.


House and Senate agree on sweeping defense bill

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