House and Senate negotiators on Tuesday reached agreement on a $612 billion defense authorization bill for fiscal 2016 that includes a 1.3 percent pay raise for service members, trims to some military benefits and a dramatic overhaul of the military retirement system.

The proposal also includes language requiring military facility commanders to develop individual policies for troops carrying firearms on base, in response to the mass shooting in Chattanooga, Tennessee, in July that killed five service members.

The measure also includes outlines for an extra $38 billion in overseas contingency funds to help the Defense Department get around mandatory spending caps for the new fiscal year that begins Thursday — a move that has prompted threats of a White House veto of the bill.

As lawmakers unveiled the deal's details Tuesday, Pentagon spokesman Peter Cook said Defense Secretary Ash Carter will still recommend a veto of the legislation.

House Armed Services Committee Chairman Mac Thornberry, R-Texas, called those threats foolish. "We need a defense authorization act now," he said. "We need to show our troops and the world that our institutions can function properly and that we're ready to stand up and defend our nation."

Thornberry said the compromise measure will be brought to a full House vote on Thursday. But the measure still faces significant Democratic opposition in both chambers.

Senate Armed Services Committee Ranking Member Jack Reed, D-R.I., said he will not vote for the final compromise bill because of concerns about the war funding workaround. But he would not say whether he thought chamber Democrats would prevent any vote on the measure, sparing President Obama from the possibility of vetoing a measure packed with military benefits and reforms.

Obama has threatened to veto each of the last six annual defense authorization bills of his presidency over a series of policy and budget fights, but eventually signed all of them into law.

The military retirement overhaul would replace the current 20-year, all-or-nothing retirement with a "blended" compensation system featuring a 401(k)-style investment plan that promises all future troops will leave the service with some money for retirement, even if they don't serve 20 years.

Military advocates praised that reform as a boost for the 83 percent of troops who leave service with no retirement benefits. But they had hoped for a larger pay raise than the 1.3 percent backed by Pentagon officials, arguing that figure fails to keep up with the rate of growth in private-sector wages.

Defense Department planners had insisted the lower-than-anticipated pay raise is needed to help pay for other training and modernization initiatives, and to keep personnel costs from overwhelming the budget.

They argued the same for other benefits trims included in the measure.

Under the authorization plan, growth in the Basic Allowance for Housing would be reduced steadily in coming years to cover only 95 percent of troops' average off-base housing costs. Also, Tricare co-pays would be increased next year for individuals filling prescriptions at off-base pharmacies.

The measure also includes language prohibiting the Defense Department from closing detention facilities at Naval Station Guantanamo Bay, Cuba, provisions to supply defensive weapons to Ukrainian fighters battling Russian separatists, and new Pentagon acquisition reforms.

Lawmakers also added language allowing commanders to develop their own policies for both personal and military firearms on base for self-defense, in accordance with local laws. Thornberry said the goal is to get rid of the military's current "one size fits all" approach in favor for a smarter, more practical policy for individual facilities.

No timetable has been set for a Senate vote on the compromise bill. In recent years, the authorization bill typically has not reached the president's desk for signature until December.

Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.

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