(a) Limitation. - Effective October 1, 2002, the number of major headquarters activities personnel in the Department of Defense may not exceed 85 percent of the baseline number. (b) Phased Reduction. - The number of major headquarters activities personnel in the Department of Defense - (1) as of October 1, 2000, may not exceed 95 percent of the baseline number; and (2) as of October 1, 2001, may not exceed 90 percent of the baseline number. (c) Baseline Number. - In this section, the term "baseline number" means the number of major headquarters activities personnel in the Department of Defense as of October 1, 1999. (d) Major Headquarters Activities. - (1) For purposes of this section, major headquarters activities are those headquarters (and the direct support integral to their operation) the primary mission of which is to manage or command the programs and operations of the Department of Defense, the Department of Defense components, and their major military units, organizations, or agencies.

Such term includes management headquarters, combatant headquarters, and direct support. (2) The specific elements of the Department of Defense that are major headquarters activities for the purposes of this section are those elements identified as Major DoD Headquarters Activities in accordance with Department of Defense Directive 5100.73, entitled "Major Department of Defense Headquarters Activities", issued on May 13, 1999. The provisions of that directive applicable to identification of any activity as a "Major DoD Headquarters Activity" may not be changed except as provided by law. (e) Major Headquarters Activities Personnel. - In this section, the term "major headquarters activities personnel" means military and civilian personnel of the Department of Defense who are assigned to, or employed in, functions in major headquarters activities. (f) Limitation on Reassignment of Functions. - In carrying out reductions in the number of personnel assigned to, or employed in, major headquarters activities in order to comply with this section, the Secretary of Defense and the Secretaries of the military departments may not reassign functions in order to evade the requirements of this section. (g) Flexibility. - (1) If during fiscal year 2001 or fiscal year 2002 the Secretary of Defense determines, and certifies to Congress, that the limitation under subsection (a), or a limitation under subsection (b), would adversely affect United States national security, the Secretary may take any of the following actions: (A) Increase the percentage specified in subsection (b)(1) by such amount as the Secretary determines necessary or waive the limitation under that subsection. (B) Increase the percentage specified in subsection (b)(2) by such amount as the Secretary determines necessary, not to exceed a cumulative increase of 7.5 percentage points. (C) Increase the percentage specified in subsection (a) by such amount as the Secretary determines necessary, not to exceed a cumulative increase of 7.5 percentage points. (2) Any certification under paragraph (1) shall include notice of the specific waiver or increases made pursuant to the authority provided in that paragraph.