That's what it means for active duty, and the active duty COLA is updated annually by law to keep up with emerging price discrepancies between locations.
This bill seems to affect primarily the retired and disabled vetrans and is tied to Social Security in some way (what that is I do not know yet). What that means is that it is an additional non-budgeted expense the GAO has to account for, and the hold on this bill may be tied to mandated reductions in Defense Department spending as ordered by the President.
Here's info on the bill from earlier this year:
House approves COLA bill for veterans - Army News | News from Afghanistan & Iraq - Army Times
The article in the OP says a hold was placed on the bill, not that the bill was killed. It's still set to be voted on. The DoD is set to experience a 7 year lean cycle soon, this may simply have been a precautionary check on the numbers.